EXHIBIT 10.3
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
Acuson Corporation,
a Delaware corporation;
Echo Acquisition Corp.,
a Delaware corporation;
and
▇▇▇▇▇, Inc.,
a Pennsylvania corporation
______________________________
Dated as of September 15, 1999
______________________________
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Table Of Contents
Page
Section 1 Description of Transaction.......................................... 1
1.1 Merger of the Company into Merger Sub............................. 1
1.2 Effect of the Merger.............................................. 1
1.3 Closing; Effective Time........................................... 2
1.4 Certificate of Incorporation and Bylaws; Directors and Officers... 2
1.5 Conversion of Shares.............................................. 2
1.6 Post-Closing Payments............................................. 3
1.7 Closing of the Company's Transfer Books........................... 8
1.8 Exchange of Certificates; Escrow Shares........................... 9
1.9 Dissenting Shares................................................. 10
1.10 Tax Consequences.................................................. 10
1.11 Accounting Treatment.............................................. 10
1.12 Further Action.................................................... 11
Section 2 Representations and Warranties of the Company....................... 11
2.1 Due Organization; No Subsidiaries; Etc............................ 11
2.2 Articles of Incorporation and Bylaws; Records..................... 11
2.3 Capitalization, Etc............................................... 12
2.4 Financial Statements.............................................. 13
2.5 Bank Accounts, etc................................................ 13
2.6 Absence of Changes................................................ 13
2.7 Title to Assets................................................... 15
2.8 Equipment......................................................... 15
2.9 Title to Real Property............................................ 15
2.10 Intellectual Property............................................. 16
2.11 Contracts......................................................... 17
2.12 Liabilities....................................................... 18
2.13 Compliance with Legal Requirements................................ 18
2.14 Governmental Authorizations....................................... 18
2.15 Tax Matters....................................................... 19
2.16 Employee and Labor Matters; Benefit Plans......................... 19
2.17 Environmental Matters............................................. 20
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Table Of Contents
Continued
Page
2.18 Insurance......................................................... 21
2.19 Related Party Transactions........................................ 21
2.20 Legal Proceedings; Orders......................................... 22
2.21 Authority; Binding Nature of Agreement............................ 22
2.22 Non-Contravention; Consents....................................... 22
2.23 Full Disclosure................................................... 23
2.24 Vote Required..................................................... 23
2.25 No Brokers........................................................ 23
Section 3 Representations and Warranties of Parent and Merger Sub............. 23
3.1 Corporate Existence and Power..................................... 23
3.2 Authority; Binding Nature of Agreement............................ 24
3.3 No Conflict; Consents............................................. 24
3.4 SEC Filings; Financial Statements................................. 24
3.5 Valid Issuance.................................................... 25
3.6 Merger Sub........................................................ 25
3.7 Pennsylvania Law.................................................. 25
Section 4 Certain Covenants of the Company.................................... 25
4.1 Access and Investigation.......................................... 25
4.2 Operation of the Business of the Company.......................... 25
4.3 Notification; Updates to Disclosure Schedule...................... 27
4.4 No Negotiation.................................................... 27
4.5 Post-Closing Audited Financial Statements......................... 28
4.6 Insurance......................................................... 28
4.7 Repayment of Loan................................................. 28
Section 5 Additional Covenants of the Parties................................. 28
5.1 Filings and Consents.............................................. 28
5.2 Company Shareholders' Meeting/Written Consent..................... 28
5.3 Exercise of Options and Warrants.................................. 29
5.4 Public Announcements.............................................. 29
5.5 Reasonable Efforts................................................ 29
5.6 Termination of Agreements......................................... 30
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Table Of Contents
Continued
Page
5.7 Employee and Related Matters...................................... 30
5.8 FIRPTA Matters.................................................... 30
5.9 Tax Matters....................................................... 30
Section 6 Conditions Precedent to Obligations of Parent and Merger Sub........ 30
6.1 Accuracy of Representations....................................... 30
6.2 Performance of Covenants.......................................... 31
6.3 Shareholder Approval.............................................. 31
6.4 Consents.......................................................... 31
6.5 Employee Matters.................................................. 31
6.6 Agreements and Documents.......................................... 31
6.7 Stock Certificates................................................ 32
6.8 FIRPTA Compliance................................................. 33
6.9 Listing........................................................... 33
6.10 No Restraints..................................................... 33
6.11 No Legal Proceedings.............................................. 33
6.12 Evidence of Exercise of Options and Warrants...................... 33
Section 7 Conditions Precedent to Obligations of the Company.................. 33
7.1 Accuracy of Representations....................................... 33
7.2 Performance of Covenants.......................................... 34
7.3 Agreements and Documents.......................................... 34
7.4 Listing........................................................... 34
7.5 No Restraints..................................................... 34
Section 8 Termination......................................................... 34
8.1 Termination Events................................................ 34
8.2 Termination Procedures............................................ 35
8.3 Effect of Termination............................................. 35
Section 9 Indemnification, Etc................................................ 35
9.1 Survival of Representations, Etc.................................. 35
9.2 Indemnification................................................... 36
9.3 Setoff............................................................ 38
9.4 No Contribution................................................... 39
9.5 Defense of Third Party Claims..................................... 39
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Table Of Contents
Continued
Page
Section 10 Miscellaneous Provisions............................................ 40
10.1 Shareholders' Agent............................................... 40
10.2 Further Assurances................................................ 40
10.3 Fees and Expenses................................................. 40
10.4 Attorneys' Fees................................................... 40
10.5 Notices........................................................... 40
10.6 Time of the Essence............................................... 41
10.7 Headings.......................................................... 41
10.8 Counterparts...................................................... 41
10.9 Governing Law..................................................... 41
10.10 Successors and Assigns............................................ 42
10.11 Remedies Cumulative; Specific Performance......................... 42
10.12 Waiver............................................................ 42
10.13 Amendments........................................................ 42
10.14 Severability...................................................... 42
10.15 Parties in Interest............................................... 42
10.16 Entire Agreement.................................................. 43
10.17 Waiver of Jury Trial.............................................. 43
10.18 Construction...................................................... 43
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AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
This Agreement and Plan of Merger and Reorganization ("Agreement") is made
and entered into as of September 15, 1999, by and among Acuson Corporation, a
Delaware corporation ("Parent"); Echo Acquisition Corp., a Delaware corporation
and a wholly owned subsidiary of Parent ("Merger Sub"); and ▇▇▇▇▇, Inc., a
corporation organized under the laws of the Commonwealth of Pennsylvania (the
"Company"). Certain capitalized terms used in this Agreement are defined in
Exhibit A.
Recitals
A. Parent, Merger Sub and the Company intend to effect a merger of the
Company into Merger Sub in accordance with this Agreement, the Delaware General
Corporation Law and the Pennsylvania Business Corporation Law (the "Merger").
Upon consummation of the Merger, the Company will cease to exist.
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). For accounting purposes, it is intended that the Merger
be treated as a "purchase."
C. This Agreement has been approved by the respective boards of directors
of Parent, Merger Sub and the Company.
D. Contemporaneously with the execution and delivery of this Agreement,
certain holders of voting capital stock of the Company are executing and
delivering to Parent a voting agreement (a "Voting Agreement") of even date
herewith substantially in the form of Exhibit B.
E. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a registration rights agreement
(a "Registration Rights Agreement") of even date herewith substantially in the
form of Exhibit J.
Agreement
The parties to this Agreement agree as follows:
Section 1. Description of Transaction
1.1 Merger of the Company into Merger Sub. Upon the terms and subject to
the conditions set forth in this Agreement, at the Effective Time (as defined in
Section 1.3), the Company shall be merged with and into Merger Sub, and the
separate existence of the Company shall cease. Merger Sub will continue as the
surviving corporation in the Merger (the "Surviving Corporation").
1.2 Effect of the Merger. The Merger shall have the effects set forth in
this Agreement and in the applicable provisions of the Delaware General
Corporation Law and the Pennsylvania Business Corporation Law.
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1.3 Closing; Effective Time. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of ▇▇▇▇▇▇ Godward LLP, Five ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at
10:00 a.m. on a date to be designated by Parent and the Company as soon as
practicable after the satisfaction (or, to the extent permitted, waiver) of the
conditions set forth in Section 6 and Section 7. (The date on which the Closing
actually takes place is referred to in this Agreement as the "Closing Date.")
Contemporaneously with or as promptly as practicable after the Closing, a
properly executed certificate of merger conforming to the requirements of the
Delaware General Corporation Law shall be filed with the Secretary of State of
the State of Delaware and properly executed articles of merger conforming to the
requirements of the Pennsylvania Business Corporation Law shall be filed in the
Department of State of the Commonwealth of Pennsylvania. The Merger shall
become effective at the latest to occur of the time such certificate of merger
is filed with the Secretary of State of the State of Delaware and such articles
of merger is filed in the Department of State of the Commonwealth of
Pennsylvania (the "Effective Time").
1.4 Certificate of Incorporation and Bylaws; Directors and Officers.
Unless otherwise determined by Parent prior to the Effective Time:
(a) the certificate of incorporation of the Surviving Corporation
shall be amended and restated to reflect the transactions contemplated by this
Agreement as of the Effective Time in a form acceptable to Parent and the
Shareholders' Agent (as defined in Section 10.1), acting on behalf of and for
the Merger Shareholders;
(b) the bylaws of the Surviving Corporation shall be the bylaws
of Merger Sub as in effect immediately prior to the Effective Time; and
(c) the directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the respective individuals who are
directors and officers of Merger Sub immediately prior to the Closing and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, who shall be both a director and officer of the Surviving
Corporation.
1.5 Conversion of Shares.
(a) Subject to Sections 1.8(c) and 1.9, at the Effective Time, by
virtue of the Merger and without any further action on the part of Parent,
Merger Sub, the Company or any shareholder of the Company, each share of the
common stock (par value $0.01 per share) of the Company (the "Company Common
Stock") outstanding immediately prior to the Effective Time shall be converted
into the right to receive the Applicable Fraction (as defined below) of a share
of the common stock (par value $0.0001 per share) of Parent ("Parent Common
Stock"). The "Applicable Fraction" shall be the fraction (A) having a numerator
equal to $23,000,000 minus the Excess Accounting and Legal Expenses, if any, and
(B) having a denominator equal to the amount determined by multiplying (1) the
Parent Average Stock Price by (2) the Fully Diluted Number of Company Shares.
(b) If any shares of Company Common Stock outstanding immediately
prior to the Effective Time are unvested or are subject to a repurchase option,
risk of forfeiture or other
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condition under any applicable restricted stock purchase agreement or other
agreement with the Company, then the shares of Parent Common Stock issued in
exchange for such shares of Company Common Stock will also be unvested and
subject to the same repurchase option, risk of forfeiture or other condition,
and the certificates representing such shares of Parent Common Stock may
accordingly be marked with appropriate legends.
(c) A portion of the shares of Parent Common Stock issued in the
Merger shall be delivered into escrow and held as specified in Section 1.8
hereof.
(d) In the event Parent at any time or from time to time between
the date of this Agreement and the Effective Time declares or pays any dividend
on Parent Common Stock payable in Parent Common Stock or in any right to acquire
Parent Common Stock or cash or makes any other distribution to holders of Parent
Common Stock, or effects a subdivision of the outstanding shares of Parent
Common Stock into a greater number of shares of Parent Common Stock (by stock
dividends, combinations, splits, recapitalizations and the like), or in the
event the outstanding shares of Parent Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser number of shares
of Parent Common Stock, then the Applicable Fraction shall be appropriately
adjusted.
1.6 Post-Closing Payments.
(a) For purposes of this Section 1.6, the following terms have
the meanings set forth below:
(i) "Cause" has the meaning attributed to that term
as set forth in the Employment Agreement in the form of Exhibit F attached
hereto;
(ii) "Corporate Event" means (x) a merger,
consolidation, reorganization, sale of securities or similar transaction in
which the stockholders of Parent before such transaction own less than 50%
of the voting stock of the surviving entity (and less than 50% of the
voting stock of the acquiring entity) immediately after such transaction or
(y) the sale or disposition of all or substantially all of Parent's assets;
(iii) "Distribution Date" means the date determined by
Parent in its sole discretion within 90 days after the end of each Post-
Closing Payment Year on which a Post-Closing Payment is scheduled to be
made;
(iv) "Good Reason" has the meaning attributed to that
term as set forth in the Employment Agreement in the form of Exhibit F
attached hereto;
(v) "Gross Profit" means, with respect to each Post-
Closing Payment Year, the revenues of Parent (on a consolidated basis) that
are attributable to the sale or license of the Products during such Post-
Closing Payment Year (net of discounts and returns reserves), less the cost
of goods sold and associated period costs applicable to the sale or license
of such products during such Post-Closing Payment Year, including reserves
for warranty, and all other costs associated with manufacturing,
warehousing, installing and shipping the Products (and similar or related
activities), but not including
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general and administrative expenses and sales, marketing or product
development expenses (it being understood that all components of "Gross
Profit" shall be determined in accordance with U.S. generally accepted
accounting principles as reasonably applied by Parent);
(vi) the "Percentage Interest" of a particular Merger
Shareholder means the number of shares of Company Common Stock owned by the
particular Merger Shareholder immediately prior to the Effective Time,
divided by the Fully Diluted Number of Company Shares;
(vii) "Post-Closing Parent Average Stock Price" means the
average of the closing sale prices of a share of Parent Common Stock as
reported on the New York Stock Exchange for each of the 10 consecutive
trading days ending on the trading day immediately preceding the fifth day
prior to the applicable Distribution Date;
(viii) "Post-Closing Payment" means any payment a Merger
Shareholder may be entitled to receive from Parent pursuant to the terms
and conditions set forth in this Section 1.6;
(ix) "Post-Closing Payment Year" means each of the four
fiscal years ending December 31, 2000, December 31, 2001, December 31, 2002
and December 31, 2003; and
(x) "Products" means all products, product upgrades and
associated peripherals developed by the Company before the Closing Date and
by the Surviving Corporation after the Closing Date, and all service(s)
delivered by the Company or the Surviving Corporation for such products and
product upgrades.
(b) Subject to any right of setoff that Parent may be entitled to
exercise (pursuant to Section 9.3 or otherwise), and subject to the other
provisions of this Section 1.6:
(i) for the purposes of this Section 1.6, the "Threshold
Gross Profit," the "Pay-Out Rate," the "Maximum Pay-Out Amount" and the "Gross
Profit at Maximum Pay-Out" used to determine the Post-Closing Payment for each
Post-Closing Payment Year shall be based on the figures set forth in Schedule
1.6 (b)(i);
(ii) for each Post-Closing Payment Year, Parent shall pay
to each Merger Shareholder such Merger Shareholder's Percentage Interest of the
amount, if greater than zero, determined by multiplying (A) the amount, if any,
by which the Gross Profit for such Post-Closing Payment Year exceeds the
Threshold Gross Profit for such Post-Closing Year as set forth in Section
1.6(b)(i) by (B) the Pay-Out Rate for such Post-Closing Payment Year as set
forth in Section 1.6(b)(i) (it being understood that (A) no Post-Closing Payment
shall be earned in any Post-Closing Payment Year unless the Gross Profit for
such Post-Closing Payment Year exceeds such Post-Closing Year's Threshold Gross
Profit as set forth in Section 1.6(b)(i), and (B) the Post-Closing Payment for
any particular Post-Closing Payment Year shall never exceed
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the Maximum Pay-Out Amount (as adjusted in the manner set forth below) for such
Post-Closing Payment Year);
(iii) in the event that the Gross Profit earned in any Post-
Closing Payment Year ended December 31, 2000, December 31, 2001 or December 31,
2002 is in excess of the Gross Profit at Maximum Pay-Out Amount set forth in
Section 1.6(b)(i) for such Post-Closing payment Year, such excess Gross Profit
shall be carried forward to the following Post-Closing Payment Year and applied
to increase the Gross Profit for that following Post-Closing Payment Year;
(iv) if in the Post-Closing Payment Year ended December 31,
2000 the Threshold Gross Profit is attained but the Maximum Pay-Out Amount for
such Post-Closing Payment Year is not achieved, then 20% of the difference
between the Maximum Pay-Out Amount for that Post-Closing Payment Year and the
actual Post-Closing Payment for such Post-Closing Payment Year shall be carried
forward to the following Post-Closing Payment Year ended December 31, 2001 (such
difference being referred to as the "Year 2000 Carry Forward Amount"). The
Maximum Pay-Out Amount for the following Post-Closing Payment Year ended
December 31, 2001 (the "Year 2001 New Maximum Pay Out") shall be equal to the
Maximum Pay-Out Amount as set forth in Section 1.6(b)(i) for the Post-Closing
Payment Year ended December 31, 2001 plus any Year 2000 Carry Forward Amount,
and the Pay-Out Rate for the Post-Closing Year ended December 31, 2001 shall be
determined by the following formula:
A / (B-C)
Where "A" is equal to the Year 2001 New Maximum Pay-Out; "B" is the
Gross Profit at Maximum Pay-Out for the Post-Closing Payment Year
ended December 31, 2001 as set forth in Section 1.6(b)(i) and "C" is
the Threshold Gross Profit for the Post-Closing Payment Year ended
December 31, 2001 as set forth in Section 1.6(b)(i);
(v) if in either of the Post-Closing Payment Years ended
December 31, 2001 or December 31, 2002 (but not December 31, 2000 or December
31, 2003), the Threshold Gross Profit is attained but the Maximum Pay-Out Amount
for such Post-Closing Payment Year is not achieved, then 50% of the difference
between the Maximum Pay-Out Amount (including, with respect to the Post-Closing
Payment Year ended December 31, 2001 only, any amount carried forward pursuant
to the terms of Section 1.6(b)(iv)) for that Post-Closing Payment Year and the
actual Post-Closing Payment for such Post-Closing Payment Year shall be carried
forward to the following Post-Closing Payment Year (such difference being
referred to as the "Carry Forward Amount"). The Maximum Pay-Out Amount for such
following Post-Closing Payment Year (the "New Maximum Pay-Out") shall be equal
to the sum of the existing Maximum Pay-Out Amount as set forth in Section
1.6(b)(i) for such following Post-Closing Payment Year plus any Carry Forward
Amount, and the Pay-Out Rate for such following Post-Closing Payment Year shall
be determined by the following formula:
A / (B-C)
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Where "A" is equal to the New Maximum Pay-Out for that Post-Closing
Payment Year; "B" is the Gross Profit at Maximum Pay-Out for that
Post-Closing Payment Year as set forth in Section 1.6(b)(i) and "C" is
the Threshold Gross Profit for that Post-Closing Payment Year as set
forth in Section 1.6(b)(i).
(vi) Any Post-Closing Payment required to be made pursuant to
this Section 1.6 shall be made on the Distribution Date; provided, however,
that if the Shareholders' Agent delivers an Objection Notice in accordance
with Section 1.6(f), then the Post-Closing Payment with respect to which an
Objection Notice is so delivered shall not be made until the dispute
identified in such Objection Notice is resolved.
(c) Within 75 days after the last day of each Post-Closing Payment
Year, Parent or the Surviving Corporation shall: (i) prepare or cause to be
prepared a statement setting forth in detail the Gross Profit of each Product
and its method of calculation (including the dollar amount of costs of goods
sold applicable to each Product), the total Gross Profit with respect to the
Post-Closing Payment Year covered by such statement and any Post-Closing Payment
for the particular Post-Closing Payment Year covered by such statement (the
"Post-Closing Payment Statement"); and (ii) deliver or cause to be delivered
such Post-Closing Payment Statement to the Shareholders' Agent for and on behalf
of the Merger Shareholders.
(d) Parent shall determine, in its sole discretion, whether a
particular Post-Closing Payment shall be payable in cash or in Parent Common
Stock (or in a combination thereof). For any Post-Closing Payment (or portion
thereof) that Parent elects to pay in Parent Common Stock, the number of shares
of Parent Common Stock distributed on the Distribution Date with respect to such
Post-Closing Payment (or portion thereof) shall be determined by dividing the
Post-Closing Payment (or portion thereof) payable in Parent Common Stock by the
Post-Closing Parent Average Stock Price. Notwithstanding the above, Post-Closing
Payments shall not be payable in cash if such cash payment would cause the
aggregate non-Parent Common Stock portion of the Merger consideration ("boot")
to equal or exceed fifty percent (50%) of the aggregate consideration paid in
the Merger.
(e) Notwithstanding anything to the contrary contained in this
Section 1.6 or elsewhere in this Agreement:
(i) Parent shall not be required to pay/distribute cash
and/or Parent Common Stock pursuant to this Section 1.6 having a value measured
on each Distribution Date aggregating more than $17,000,000, and Parent's
obligations to make payments/distributions pursuant to this Section 1.6 shall
terminate at such time the aggregate value measured on each Distribution Date of
all payments/distributions made by Parent pursuant to this Section 1.6 equals
$17,000,000;
(ii) no payment or distribution of any Post-Closing Payment
shall be made to any Key Employee for the fiscal year ended December 31, 2003
unless such Key Employee continues to be employed by the Surviving Corporation
until the last day of such Post-Closing Payment Year; provided, however, that
notwithstanding the foregoing:
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(a) if the employment of such Key Employee shall have been
terminated as a result of the death or disability of such Key
Employee or by Parent or the Surviving Corporation without Cause
or by such Key Employee for Good Reason, then such payment or
distribution of the Post-Closing Payment shall be made to such
Key Employee (or in the event of death, to the estate, heirs or
successors of such Key Employee) notwithstanding the termination
of such Key Employee's employment; and
(b) a Key Employee who acquired shares of Company Common Stock
in certain specified financing rounds of the Company made prior
to the Effective Time (the "Specified Financing Rounds") other
than the founders round of financing, shall be entitled to that
portion of the Post-Closing Payment otherwise due for the fiscal
year ended December 31, 2003 equal to the product of (1) the
portion of such Post-Closing Payment such Key Employee would have
been entitled to receive had such Key Employee remained employed
by the Surviving Corporation until the last day of such Post-
Closing Payment Year, multiplied by (2) a fraction (x) whose
numerator is the number of shares of Company Common Stock
acquired by such Key Employee in the Specified Financing Rounds
(or upon the exercise of warrants acquired by such Key Employee
in the specified Financing Rounds) and owned by such Key Employee
immediately prior to the Effective Time, and (y) whose
denominator is the total number of shares of Company Common Stock
owned by such Key Employee immediately prior to the Effective
Time; and
(iii) subject to Section 1.6(e)(i) and Section 1.6(e)(ii), (A)
in the event of a Corporate Event which is not approved by at least a majority
of the board of directors of Parent, each Merger Shareholder shall be entitled
to receive promptly following the closing of such Corporate Event such Merger
Shareholder's Percentage Interest of consideration having a value equal to the
sum of the Maximum Pay-Out Amounts for each Post-Closing Payment Year that
remains following such Corporate Event (including, for greater certainty, the
Post-Closing Payment Year in which the Corporate Event takes place, provided the
Merger Shareholders have not already received a Post-Closing Payment for that
Post-Closing Payment Year as of the closing date of the Corporate Event); and
(B) in the event of a Corporate Event which is approved by at least a majority
of the board of directors of Parent, each Merger Shareholder shall be entitled
to receive on the date determined in accordance with Section 1.6(b)(vi) with
respect to each remaining Post-Closing Payment Year following such Corporate
Event (including, for greater certainty, the Post-Closing Payment Year in which
the Corporate Event takes place, provided the Merger Shareholders have not
already received a Post-Closing Payment for that Post-Closing Payment Year as of
the closing date of the Corporate Event), such Merger Shareholder's Percentage
Interest of consideration having a value equal to the greater of (x) the Post-
Closing Payment that would otherwise be due for that Post-Closing Payment Year
calculated in accordance with this Section 1.6 or (y) 33-1/3%
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of the Maximum Pay-Out Amount for that Post-Closing Year as set forth in Section
1.6(b)(i) and if applicable, as modified by Sections 1.6(b)(iv) and/or
1.6(b)(v).
(f) In the event that the Shareholders' Agent objects to Parent's
calculation of the Gross Profit or Post-Closing Payment for any particular Post-
Closing Payment Year, then, within 30 days after the delivery to the
Shareholders' Agent of the Post-Closing Payment Statement for such Post-Closing
Payment Year, the Shareholders' Agent shall deliver to Parent a written notice
describing in reasonable detail the Shareholders' Agent's objections to Parent's
calculation of the Gross Profit and/or Post-Closing Payment (an "Objection
Notice"), accompanied by a statement setting forth the dollar amount determined
by the Shareholders' Agent to represent the Gross Profit and/or Post-Closing
Payment or a request for additional information from Parent or the Surviving
Corporation that the Shareholders' Agent may require in order to determine the
Gross Profit and/or Post-Closing Payment. If the Shareholders' Agent shall not
deliver an Objection Notice to Parent within the 30-day period referred to in
the preceding sentence, then Parent's calculation of the Gross Profit and the
Post-Closing Payment, if any, shall be binding and conclusive on Parent, the
Merger Shareholders, the Shareholders' Agent and the Surviving Corporation. If
the Shareholders' Agent delivers an Objection Notice to Parent within the 30-day
period referred to in the first sentence of this Section 1.6(f), and if the
Shareholders' Agent and Parent are unable to agree upon the calculation of the
Gross Profit and/or Post-Closing Payment, if any, within 30 days after an
Objection Notice is delivered to Parent, the dispute shall be finally settled by
a "Big Five" or similar independent accounting firm selected by Shareholders'
Agent (and reasonably acceptable to Parent). The determination by the
independent accounting firm of the Gross Profit and the Post-Closing Payment, if
any (the "Determined Post-Closing Payment") shall be conclusive and binding on
Parent, the Merger Shareholders, the Shareholders' Agent and the Surviving
Corporation. Parent and the Merger Shareholders shall each bear and pay 50% of
the fees and other expenses of such independent accounting firm (the "Fees").
Upon the sole discretion of Parent, the amount of Fees payable by the Merger
Shareholders pursuant to this Section 1.6(f) may be deducted from the Determined
Post-Closing Payment in full satisfaction of the Merger Shareholders' liability
for such Fees as set forth in this Section 1.6(f).
(g) No rights or interest of any Merger Shareholder under Section 1.6
may be assigned, transferred or otherwise disposed of, in whole or in part.
(h) Parent and affiliates shall maintain separate records of account
(the "Records of Account") upon which all transactions involving the Products
will be entered. The Shareholders' Agent shall at all reasonable times during
normal business hours have access to and the right to inspect and audit such
Records of Account; provided that the Shareholders' Agent agrees that he shall
hold all information contained in the Records of Account in strict confidence
and shall use such information only for purposes of making calculations under
this Section 1.6. Parent intends to develop, market and sell the Products,
subject to changes in market conditions and the business environment generally.
1.7 Closing of the Company's Transfer Books. At the Effective Time, holders
of certificates representing shares of the Company's capital stock that were
outstanding immediately prior to the Effective Time shall cease to have any
rights as shareholders of the
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Company, and the stock transfer books of the Company shall be closed with
respect to all shares of such capital stock outstanding immediately prior to the
Effective Time. No further transfer of any such shares of the Company's capital
stock shall be made on such stock transfer books after the Effective Time. If,
after the Effective Time, a valid certificate previously representing any of
such shares of the Company's capital stock (a "Company Stock Certificate") is
presented to the Surviving Corporation or Parent, such Company Stock Certificate
shall be canceled and shall be exchanged as provided in Section 1.8.
1.8 Exchange of Certificates; Escrow Shares.
(a) At the Closing, each Company shareholder that does not perfect
its dissenters' rights and is otherwise entitled to receive shares of Parent
Common Stock pursuant to Section 1.5 (a "Merger Shareholder") shall surrender to
Parent all certificates representing shares of Company Common Stock (properly
endorsed for transfer). At or as soon as practicable after the Effective Time,
Parent shall (i) deliver to each Shareholder a certificate representing 90% of
the number of whole shares of Parent Common Stock that such Merger Shareholder
has the right to receive pursuant to the provisions of Section 1.5 and (ii)
deliver to the escrow agent under the Escrow Agreement in the form of Exhibit C
hereto (the "Escrow Agreement"), on behalf and in the name of each Merger
Shareholder, a certificate representing 10% of the number of whole shares of
Parent Common Stock that such Merger Shareholder has the right to receive
pursuant to the provisions of Section 1.5 (the "Escrow Shares"). If any Company
Stock Certificate shall have been lost, stolen or destroyed, Parent may, in its
discretion and as a condition precedent to the issuance of any certificate
representing Parent Common Stock, require the owner of such lost, stolen or
destroyed Company Stock Certificate to provide an appropriate affidavit and to
deliver a bond (in such sum as Parent may reasonably direct) as indemnity
against any claim that may be made against Parent or the Surviving Corporation
with respect to such Company Stock Certificate.
(b) No dividends or other distributions declared or made with
respect to Parent Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Company Stock Certificate with
respect to the shares of Parent Common Stock represented thereby, and no cash
payment in lieu of any fractional share shall be paid to any such holder, until
such holder surrenders such Company Stock Certificate in accordance with this
Section 1.8 (at which time such holder shall be entitled receive all such
dividends and distributions and such cash payment).
(c) No fractional shares of Parent Common Stock shall be issued in
connection with the Merger, and no certificates for any such fractional shares
shall be issued. In lieu of such fractional shares, any holder of capital stock
of the Company who would otherwise be entitled to receive a fraction of a share
of Parent Common Stock (after aggregating all fractional shares of Parent Common
Stock issuable to such holder) shall, upon surrender of such holder's Company
Stock Certificate(s), be paid in cash the dollar amount (rounded to the nearest
whole cent), without interest, determined by multiplying such fraction by the
Parent Average Stock Price.
(d) Parent and the Surviving Corporation shall be entitled to
deduct and withhold from any consideration payable or otherwise deliverable to
any holder or former holder of capital
9
stock of the Company pursuant to this Agreement such amounts as Parent or the
Surviving Corporation may be required to deduct or withhold therefrom under the
Code or under any provision of state, local or foreign tax law, including
without limiting the generality of the foregoing, any imputed interest. To the
extent such amounts are so deducted or withheld, such amounts shall be treated
for all purposes under this Agreement as having been paid to the Person to whom
such amounts would otherwise have been paid.
(e) Neither Parent nor the Surviving Corporation shall be liable to
any holder or former holder of capital stock of the Company for any shares of
Parent Common Stock (or dividends or distributions with respect thereto), or for
any cash amounts, delivered to any public official pursuant to any applicable
abandoned property, escheat or similar law.
1.9 Dissenting Shares. Notwithstanding anything to the contrary contained
in this Agreement, shares ("Dissent Shares") of Company Common Stock that are
outstanding immediately prior to the Effective Time and that are held by any
Person who is entitled to demand and properly demands payment of the fair value
of such Dissent Shares pursuant to, and who complies in all respects with,
Subchapter D of Chapter 15 of the Pennsylvania Business Corporation Law
("Subchapter D") shall not be converted into or be exchangeable for the right to
receive Parent Common Stock in accordance with Section 1.5 (or cash in lieu of
fractional shares in accordance with Section 1.8(c)), but rather the holders of
Dissent Shares shall be entitled to payment of the fair value of such Dissent
Shares in accordance with Subchapter D; provided, however, that if any such
holder shall fail to perfect or otherwise shall waive, withdraw or lose the
right to receive payment of fair value under Subchapter D, then the right of
such holder to be paid the fair value of such holder's Dissent Shares shall
cease and such Dissent Shares shall be deemed to have been converted as of the
Effective Time into, and to have become exchangeable solely for the right to
receive Parent Common Stock in accordance with Section 1.5 (or cash in lieu of
fractional shares in accordance with Section 1.8(c)). The Company shall serve
prompt notice to Parent and Merger Sub of any demands received by the Company
for appraisal of any shares of Company Common Stock, and Parent and Merger Sub
shall have the right to participate in and direct all negotiations and
proceedings with respect to such demands. Prior to the Effective Time, the
Company shall not, without the prior written consent of Parent, make any payment
with respect to, or settle or offer to settle, any such demands or agree to do
any of the foregoing.
1.10 Tax Consequences. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations. Notwithstanding the foregoing, any Tax or
fee that may become or is payable by the Merger Shareholders in connection with
the transactions contemplated by this Agreement shall be borne solely and fully
by the Merger Shareholders.
1.11 Accounting Treatment. For accounting purposes, the Merger is intended
to be treated as a "purchase."
10
1.12 Further Action. If, at any time after the Effective Time, any further
action is determined by Parent to be necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation or Parent with
full right, title and possession of and to all rights and property of Merger Sub
and the Company, the officers and directors of the Surviving Corporation and
Parent shall be fully authorized (in the name of Merger Sub, in the name of the
Company and otherwise) to take such action.
Section 2. Representations and Warranties of the Company
The Company represents and warrants, to and for the benefit of the
Indemnitees, as follows:
2.1 Due Organization; No Subsidiaries; Etc.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the Commonwealth of Pennsylvania and has
all necessary power and authority: (i) to conduct its business in the manner in
which its business is currently being conducted and is currently proposed to be
conducted; (ii) to own and use its assets in the manner in which its assets are
currently owned and used and (iii) to perform its obligations under all Company
Contracts.
(b) The Company is not and has never been required to be qualified,
authorized, registered or licensed to do business as a foreign corporation in
any jurisdiction.
(c) Part 2.1(c) of the Disclosure Schedule accurately sets forth
(i) the names of the members of the Company's board of directors and (ii) the
names and titles of the Company's officers.
(d) The Company does not own any interest in any Entity, and the
Company has never owned, beneficially or otherwise, any shares of other
securities of, or any direct or indirect equity interest in, any Entity. The
Company has not agreed and is not obligated to make any future investment in or
capital contribution to any Entity.
2.2 Articles of Incorporation and Bylaws; Records. The Company has
delivered to Parent accurate and complete copies of: (a) the Company's articles
of incorporation and bylaws, including all amendments thereto; (b) the stock
records of the Company and (c) except as set forth in Part 2.2 of the Disclosure
Schedule, the minutes and other records of the meetings and other proceedings
(including any actions taken by written consent or otherwise without a meeting)
of the shareholders of the Company, the board of directors of the Company and
all committees of the board of directors of the Company. There has not been any
violation of any of the provisions of the Company's articles of incorporation or
bylaws, and the Company has not taken any action that is inconsistent in any
material respect with any resolution adopted by the Company's shareholders, the
Company's board of directors or any committee of the Company's board of
directors. The books of account, stock records, minute books and other records
of the Company are accurate, up-to-date and complete in all material respects.
11
2.3 Capitalization, Etc.
(a) The authorized capital stock of the Company consists of
10,000,000 shares of Company Common Stock, of which 2,209,968 shares are issued
and outstanding.
(b) As of the date of this Agreement: (i) 236,949 shares of Company
Common Stock are subject to issuance pursuant to outstanding options to purchase
shares of Company Common Stock (the "Company Options"); and (ii) 254,006 shares
of Company Common Stock have been reserved for issuance pursuant to outstanding
warrants to purchase shares of Company Common Stock. Part 2.3(b) of the
Disclosure Schedule sets forth the following information with respect to each
Company Option outstanding as of the date of this Agreement: (i) the particular
plan (if any) pursuant to which such Company Option was granted; (ii) the name
of the optionee; (iii) the number of shares of Company Common Stock subject to
such Company Option; (iv) the exercise price of such Company Option; (v) the
date on which such Company Option was granted; (vi) the applicable vesting
schedules (which applicable vesting schedule may be provided by means of a
general description of the vesting schedules applicable to outstanding Company
Options), and the extent to which such Company Option is vested and exercisable
as of the date of this Agreement; and (vii) the date on which such Company
Option expires. The Company has delivered to Parent accurate and complete copies
of all stock option plans pursuant to which the Company has ever granted stock
options and the forms of all stock option agreements evidencing such options.
The Company has delivered to Parent accurate and complete copies of all warrants
to purchase shares of Company Common Stock.
(c) All of the outstanding shares of Company Common Stock have been
duly authorized and validly issued and are fully paid and nonassessable and have
been issued in compliance with all applicable federal and state securities laws
and other applicable Legal Requirements, and were not issued in violation of any
preemptive rights or other rights to subscribe for or purchase securities of the
Company. Except as set forth in Part 2.3(c) of the Disclosure Schedule, there
are no preemptive rights applicable to any shares of capital stock of the
Company. All outstanding Company Options and all outstanding warrants to
purchase shares of Company Common Stock have been issued and granted in
compliance with (A) all applicable federal and state securities laws and other
applicable Legal Requirements, and (B) all material requirements set forth in
applicable Contracts.
(d) Except as set forth in Part 2.3(d) of the Disclosure Schedule,
there is no: (i) outstanding subscription, option, call, warrant or right
(whether or not currently exercisable) to acquire any shares of the capital
stock or other securities of the Company; (ii) outstanding security, instrument
or obligation that is or may become convertible into or exchangeable for any
shares of the capital stock or other securities of the Company; (iii) Contract
under which the Company is or may become obligated to sell or otherwise issue
any shares of its capital stock or any other securities or (iv) to the best of
the knowledge of the Company, condition or circumstance that may give rise to or
provide a basis for the assertion of a claim by any Person to the effect that
such Person is entitled to acquire or receive any shares of capital stock or
other securities of the Company.
12
(e) Except as set forth in Part 2.3(e) of the Disclosure
Schedule, the Company has not repurchased, redeemed or otherwise reacquired any
of its shares of capital stock or other securities, including but without
limiting the generality of the foregoing, the repurchase of any vested or
unvested Company Common Stock pursuant to the terms of the Founders Shareholders
Agreement. All securities so reacquired by the Company were reacquired in
compliance with (i) all applicable Legal Requirements and (ii) all requirements
set forth in applicable Contracts.
2.4 Financial Statements.
(a) The Company has delivered to Parent the following financial
statements and notes (collectively, the "Company Financial Statements"): (i) the
audited balance sheets of the Company as of December 31, 1998 and December 31,
1997, and the related audited income statements, statements of shareholders'
equity and statements of cash flows of the Company for the years ended December
31, 1998, December 31, 1997 and December 31, 1996, together with the notes
thereto and the unqualified report and opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP relating
thereto and (ii) the unaudited interim balance sheet of the Company as of June
30, 1999 and the related unaudited interim income statement for the Company for
the six months ended June 30, 1999.
(b) The Company Financial Statements are accurate and complete
in all material respects and present fairly the financial position of the
Company and the results of operations as of the respective dates thereof and for
the periods covered thereby. The Company Financial Statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods covered.
(c) The systems of internal accounting controls maintained by
the Company are sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific authorization
and (iv) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences.
2.5 Bank Accounts, etc. Part 2.5 of the Disclosure Schedule is a complete
and correct list (including addresses and account numbers) of each bank, trust
company or similar institution in which the Company has an account or safety
deposit box and the names of all Persons, including any individual or firm
holding a power of attorney, authorized to draw thereon or to have access
thereto.
2.6 Absence of Changes. Except as set forth in Part 2.6 of the Disclosure
Schedule, between June 30, 1999 and the date of this Agreement:
(a) there has not been any material adverse change in the
business, condition, operations or financial performance of the Company, and, to
the best of the knowledge of the Company, no event has occurred that will, or
could reasonably be expected to, have a Material Adverse Effect on the Company;
13
(b) there has not been any material loss, damage or destruction
to, or any material interruption in the use of, any of the material assets of
the Company;
(c) the Company has not declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any shares of capital
stock, nor has the Company repurchased, redeemed or otherwise reacquired any
shares of its capital stock or other securities;
(d) the Company has not sold, issued or authorized the issuance
of (i) any capital stock or other security, (ii) any option or right to acquire
any capital stock or any other security or (iii) any instrument convertible into
or exchangeable for any capital stock or other security of the Company;
(e) there has been no amendment to the articles of incorporation
or bylaws of the Company, and the Company has not effected or been a party to
any Acquisition Transaction, recapitalization, reclassification of shares, stock
split, reverse stock split or similar transaction;
(f) the Company has not formed any subsidiary or acquired any
equity interest or other interest in any other Entity;
(g) the Company has not made any capital expenditure that, when
added to all other capital expenditures made on behalf of the Company since June
30, 1999, exceeds $100,000;
(h) the Company has not (i) entered into or permitted any of the
assets owned or used by it to become bound by any Contract) or (ii) amended or
prematurely terminated, or waived any material right or remedy under, any such
Contract;
(i) the Company has not (i) acquired, leased or licensed any
right or other asset from any other Person, (ii) sold or otherwise disposed of,
or leased or licensed, any right or other asset to any other Person or (iii)
waived or relinquished any right, except in each case for rights or other assets
acquired, leased, licensed or disposed of in the ordinary course of business and
on a consistent basis;
(j) the Company has not written off as uncollectible, or
established any extraordinary reserve with respect to, any account receivable or
other indebtedness;
(k) the Company has not made any pledge of any of its assets or
otherwise permitted any of its assets to become subject to any Encumbrance,
except for pledges of immaterial assets made in the ordinary course of business
and on a consistent basis;
(l) the Company has not (i) lent money to any Person (other than
pursuant to routine travel advances made to employees in the ordinary course of
business) or (ii) incurred or guaranteed any indebtedness for borrowed money;
(m) the Company has not changed any of its methods of accounting
or accounting practices in any material respect;
14
(n) the Company has not made any Tax election;
(o) the Company has not commenced or settled any Legal
Proceeding;
(p) the Company has not entered into any transaction or taken
any other action outside the ordinary course of business; and
(q) the Company has not agreed or committed to take any of the
actions referred to in clauses "(c)" through "(p)" above.
2.7 Title to Assets.
(a) The Company owns, and has good, valid and marketable title
to, all assets purported to be owned by it. Except as set forth in Part 2.7(a)
of the Disclosure Schedule, all of the assets are owned by the Company free and
clear of any liens or other Encumbrances, except for (x) any lien for current
taxes not yet due and payable and (y) minor liens that have arisen in the
ordinary course of business and that do not (in any individual case or in the
aggregate) materially detract from the value of the assets subject thereto or
materially impair the operations of the Company.
(b) Part 2.7(b) of the Disclosure Schedule identifies all assets
that are material to the business of the Company and that are being leased or
licensed to the Company.
2.8 Equipment. All material items of equipment and other tangible assets
owned by or leased to the Company are adequate for the uses to which they are
being put, are in good condition and repair (ordinary wear and tear excepted)
and are adequate for the conduct of the Company in the manner in which such
business is currently being conducted.
2.9 Title to Real Property. The Company does not own any real property or
interests in real property other than leasehold interests in real property.
Part 2.9 of the Disclosure Schedule sets forth a complete list of all real
property and interest in real property leased by the Company ("Leased Real
Property"). The Company has good and valid title to the leasehold interests in
all Leased Real Property, in each case free and clear of all Encumbrances,
except (i) such as are set forth in Part 2.9 of the Disclosure Schedule, (ii)
leases, subleases and similar agreements set forth in Part 2.9 of the Disclosure
Schedule, (iii) easements, covenants, rights-of-way and other similar
restrictions of record set forth in Part 2.9 of the Disclosure Schedule that do
not (in any case or in the aggregate) materially detract from the value of the
assets subject thereto or materially impair the operations of the Company (iv)
any conditions that may be shown by a current, accurate survey or physical
inspection of any Leased Real Property made prior to Closing other than
conditions, if any, that do not, individually or in the aggregate, materially
detract from the value of the assets subject thereto or materially impair the
operations of the Company and (v) minor liens that have arisen in the ordinary
course of business and have been or will be paid promptly and that do not (in
any case or in the aggregate) materially detract from the value of the assets
subject thereto or materially impair the operations of the Company.
15
2.10 Intellectual Property.
(a) Part 2.10(a)(i) of the Disclosure Schedule sets forth each
trademark, trade name, service ▇▇▇▇, service name, patent, patent application
and material copyright owned by the Company. Part 2.10(a)(ii) of the Disclosure
Schedule identifies and provides a brief description of each trademark, trade
name, service ▇▇▇▇, service name, patent, patent application and copyright
licensed to the Company by any Person (except for any trademark, trade name,
service ▇▇▇▇, service name, patent, patent application and copyright that is
licensed to the Company under any third party software license generally
available to the public at a cost of less than US$10,000), and identifies the
license agreement under which such trademark, trade name, service ▇▇▇▇, service
name, patent, patent application and copyright is being licensed to the Company.
Except as set forth in Part 2.10(a)(iii) of the Disclosure Schedule, the Company
has good and valid title to all of the Company Proprietary Assets identified in
Parts 2.10(a)(i) of the Disclosure Schedule, free and clear of all liens and
other Encumbrances, and has a valid right to use all Proprietary Assets
identified in Part 2.10(a)(ii) of the Disclosure Schedule. Except as set forth
in Part 2.10(a)(iv) of the Disclosure Schedule, the Company has not developed
jointly with any other Person any Company Proprietary Asset with respect to
which such other Person has any rights.
(b) The Company has taken all measures and precautions reasonably
necessary to protect and maintain the confidentiality and secrecy of all Company
Proprietary Assets (except Company Proprietary Assets whose value would be
unimpaired by public disclosure) and otherwise to maintain and protect the value
of all Company Proprietary Assets. Except as set forth in Part 2.10(b)(i) of the
Disclosure Schedule, the Company has not (other than pursuant to license
agreements identified in Part 2.11 of the Disclosure Schedule) disclosed or
delivered to any Person, or permitted the disclosure or delivery to any Person
of, (i) the source code, or any portion or aspect of the source code, of any
Company Proprietary Asset or (ii) the object code, or any portion or aspect of
the object code, of any Company Proprietary Asset. Except as set forth in Part
2.10(b)(ii) of the Disclosure Schedule, all current and former employees,
consultants, investigators, advisors and independent contractors that are or
were involved in the creation, invention, research or development of the Company
Proprietary Assets have executed and delivered to the Company an agreement that
is substantially identical to the form of the Invention and Secrecy Agreement
previously delivered to Parent.
(c) None of the Company Proprietary Assets infringes or conflicts
with any Proprietary Asset owned or used by any other Person. The Company is not
infringing, misappropriating or making any unlawful use of, and the Company has
not at any time infringed, misappropriated or made any unlawful use of, or
received any notice or other communication of any actual or alleged
infringement, misappropriation or unlawful use of, any Proprietary Asset owned
or used by any other Person.
(d) Except as set forth in Part 2.10(d) of the Disclosure Schedule,
(i) the Company has not licensed any of the Company Proprietary Assets to any
Person on an exclusive basis and (ii) the Company has not entered into any
covenant not to compete or Contract limiting its ability to exploit fully any of
its Proprietary Assets or to transact business in any market or geographical
area or with any Person.
16
(e) Except as set forth in Part 2.10(e) of the Disclosure Schedule,
the computer systems and other applicable Company Proprietary Assets are Year
2000 Compliant.
(f) Except with respect to demonstration or trial copies, no
product, system, program or software module designed, developed, sold, licensed
or otherwise made available by the Company to any Person contains any "back
door", "time bomb," "Trojan horse," "worm," "drop dead device," "virus" or other
software routines or hardware components designed to permit unauthorized access
or to disable or erase software, hardware or data without the consent of the
user.
(g) To the best of the knowledge of the Company, no Person is
infringing, misappropriating or making any unlawful use of, and no Proprietary
Asset owned or used by any Person infringes or conflicts with, any Company
Proprietary Asset.
2.11 Contracts.
(a) Part 2.11(a) of the Disclosure Schedule identifies:
(i) each Company Contract relating to the employment of,
or the performance of services by, any employee, consultant or independent
contractor;
(ii) each Company Contract imposing any restriction on the
Company's right or ability (A) to compete with any other Person or (B) to
transact business or deal in any other manner with any other Person;
(iii) each Company Contract creating or relating to any
partnership or joint venture or any sharing of revenues, profits, losses, costs
or liabilities;
(iv) each Company Contract relating to the license of any
patent, copyright, trade secret or other Proprietary Asset to or from the
Company;
(v) each Company Contract relating to the grant of rights
to manufacture, produce, assemble, license, market or sell the Company's
products to any other Person or otherwise affecting the Company's exclusive
right to develop, manufacture, assemble, distribute, market or sell its
products; and
(vi) each other Company Contract.
(b) The Company has delivered to Parent accurate and complete copies
of all written Contracts identified in Part 2.11 of the Disclosure Schedule,
including all amendments thereto. Part 2.11 of the Disclosure Schedule provides
an accurate description of the terms of each Contract that is not in written
form. Each Contract identified in Part 2.11 of the Disclosure Schedule is valid
and in full force and effect, and, to the best of the knowledge of the Company,
is enforceable by the Company in accordance with its terms, subject to (i) laws
of general application relating to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of creditors generally and
(ii) rules of law governing specific performance,
17
injunctive relief, and other equitable principles and remedies (whether
considered in a proceeding in equity or at law).
(c) Except as set forth in Part 2.11 of the Disclosure Schedule:
(i) the Company has not violated or breached, or
committed any default under, any Company Contract, and, to the best of the
knowledge of the Company, no other Person has violated or breached, or committed
any default under, any Company Contract;
(ii) to the best of the knowledge of the Company, no event
has occurred, and no circumstance or condition exists, that (with or without
notice or lapse of time) will, or could reasonably be expected to, (A) result in
a violation or breach of any of the provisions of any Company Contract, (B) give
any Person the right to declare a default or exercise any remedy under any
Company Contract, (C) give any Person the right to accelerate the maturity or
performance of any Company Contract or (D) give any Person the right to cancel,
terminate or modify any Company Contract;
(iii) the Company has not received any notice or other
communication regarding any actual or possible violation or breach of, or
default under, any Company Contract; and
(iv) the Company has not waived any of its material rights
under any Contract.
2.12 Liabilities. The Company does not have any accrued, contingent or
other liabilities of any nature, either matured or unmatured (whether or not
required to be reflected in financial statements in accordance with generally
accepted accounting principles, and whether due or to become due), except for:
(a) liabilities identified in the liabilities column of the December 31, 1998
balance sheet of the Company; (b) liabilities incurred by the Company since
December 31, 1998 in the ordinary course of business consistent with past
practice; (c) liabilities under the Company Contracts identified in Part 2.11 of
the Disclosure Schedule, to the extent the nature and magnitude of such
liabilities can be specifically ascertained by reference to the text of such
Company Contract and (d) the liabilities identified in Part 2.12 of the
Disclosure Schedule.
2.13 Compliance with Legal Requirements. The Company is, and has at all
times been, in compliance with all applicable Legal Requirements, except where
the failure to comply with such Legal Requirements has not had and will not (and
will not reasonably be expected to) have a Material Adverse Effect on the
Company. Except as set forth in Part 2.13 of the Disclosure Schedule, the
Company has never received any notice or other communication from any
Governmental Body regarding any actual or possible violation of, or failure to
comply with, any Legal Requirement.
2.14 Governmental Authorizations. Part 2.14 of the Disclosure Schedule
identifies each material Governmental Authorization held by the Company, and the
Company has delivered to Parent accurate and complete copies of all Governmental
Authorizations identified in Part 2.14 of the Disclosure Schedule. The
Governmental Authorizations identified in Part 2.14 of the Disclosure Schedule
are valid and in full force and effect, and collectively constitute
18
all Governmental Authorizations necessary to enable the Company to conduct its
business in the manner in which its business is currently being conducted. The
Company is, and at all times has been, in substantial compliance with the terms
and requirements of the respective Governmental Authorizations identified in
Part 2.14 of the Disclosure Schedule. The Company has never received any notice
or other communication from any Governmental Body regarding (a) any actual or
possible violation of or failure to comply with any term or requirement of any
Governmental Authorization or (b) any actual or possible revocation, withdrawal,
suspension, cancellation, termination or modification of any Governmental
Authorization.
2.15 Tax Matters. The Company has filed all federal, state, local and
foreign Tax Returns that are required to be filed or has requested extension
thereof and has paid all Taxes, including sales and withholding taxes, penalties
and interest, assessments, fees and other charges to the extent that the same
have become due and payable. No tax assessment or deficiency has been made or
proposed against the Company nor has the Company received any notice of any
proposed tax audit, assessment or deficiency. No claim or Proceeding is pending
or has been threatened against or with respect to the Company in respect of any
Tax. There is no agreement, plan, arrangement or other Contract covering any
employee or independent contractor or former employee or independent contractor
of the Company that, considered individually or considered collectively with any
other such Contracts, will, or could reasonably be expected to, give rise
directly or indirectly to the payment of any amount that would not be deductible
pursuant to Section 280G or Section 162 of the Code. The Company is not, and has
never been, a party to or bound by any tax indemnity agreement, tax sharing
agreement, tax allocation agreement or similar agreement. The Company has not
entered into or become bound by any agreement or consent pursuant to Section
341(f) of the Code. The Company has not been and will not be, required to
include any adjustment in taxable income for any tax period (or portion thereof)
pursuant to Section 481 or 263A of the Code or any comparable provision under
state or foreign tax laws as a result of transactions or events occurring, or
accounting methods employed, prior to the Closing.
2.16 Employee and Labor Matters; Benefit Plans.
(a) Part 2.16(a) of the Disclosure Schedule identifies each salary,
bonus, deferred compensation, incentive compensation, stock purchase, stock
option, severance pay, termination pay, hospitalization, medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program or agreement (collectively, the "Plans") sponsored,
maintained, contributed to or required to be contributed to by the Company for
the benefit of any employee of the Company ("Employee").
(b) Except as set forth in Part 2.16(a) of the Disclosure Schedule,
the Company does not maintain, sponsor or contribute to, and, to the best of the
knowledge of the Company, the Company has not at any time in the past
maintained, sponsored or contributed to, any employee pension benefit plan for
the benefit of Employees or former Employees (a "Pension Plan").
19
(c) The Company maintains, sponsors or contributes only to those
employee welfare benefit plans for the benefit of Employees or former Employees
that are described in Part 2.16(c) of the Disclosure Schedule (the "Welfare
Plans").
(d) With respect to each Plan, the Company has delivered to Parent:
(i) an accurate and complete copy of such Plan (including all amendments
thereto) and (ii) an accurate and complete copy of all reports, summary plan
descriptions, material employee communications, trust or other funding
agreements, financial statements and Contract relating to or with respect to
such Plan.
(e) Except as set forth in Part 2.16(e) of the Disclosure Schedule,
no Welfare Plan provides death, medical or health benefits (whether or not
insured) with respect to any current or former Employee after any such
Employee's termination of service (other than (i) benefit coverage mandated by
applicable law and (ii) benefits the full cost of which are borne by current or
former Employees (or the Employees' beneficiaries)).
(f) Each of the Plans has been operated and administered in all
material respects in accordance with applicable Legal Requirements.
(g) Except as set forth in Part 2.16(g) of the Disclosure Schedule,
neither the execution, delivery or performance of this Agreement, nor the
consummation of the Merger or any of the other transactions contemplated by this
Agreement, will result in any payment (including any bonus, golden parachute or
severance payment) to any current or former Employee or director of the Company
(whether or not under any Plan), or materially increase the benefits payable
under any Plan, or result in any acceleration of the time of payment or vesting
of any such benefits.
(h) Part 2.16(h) of the Disclosure Schedule contains a list of all
salaried employees of the Company as of the date of this Agreement, and
correctly reflects, in all material respects, their salaries, any other
compensation payable to them (including compensation payable pursuant to bonus,
deferred compensation or commission arrangements), their dates of employment and
their positions. The Company is not a party to any collective bargaining
contract or other Contract with a labor union involving any of its Employees.
All of the employees of the Company are "at will" employees.
(i) Except as set forth in Part 2.16(i) of the Disclosure Schedule,
the Company has good labor relations, and the Company does not have any reason
to believe that the consummation of the Merger or any of the other transactions
contemplated by this Agreement will have a material adverse effect on the labor
relations of the Company and has no knowledge that any of the employees of the
Company intends to terminate his or her employment with the Company.
2.17 Environmental Matters. The Company is in compliance in all material
respects with all applicable Environmental Laws, which compliance includes the
possession by the Company of all permits and other Governmental Authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof. The Company has
20
not received any notice or other communication (in writing or otherwise),
whether from a Governmental Body, citizens group, employee or otherwise, that
alleges that the Company is not in compliance with any Environmental Law, and,
to the best of the knowledge of the Company, there are no circumstances that may
prevent or interfere with the compliance by the Company with any Environmental
Law in the future. To the best of the knowledge of the Company, no current or
prior owner of any property leased or controlled by the Company has received any
notice or other communication (in writing or otherwise), whether from a
Government Body, citizens group, employee or otherwise, that alleges that such
current or prior owner or the Company is not in compliance with any
Environmental Law. All Governmental Authorizations currently held by the Company
pursuant to Environmental Laws are identified in Part 2.17 of the Disclosure
Schedule. To the best of the knowledge of the Company, there has been no release
or discharge of any Materials of Environmental Concern that would or would
reasonably be expected to give rise to an obligation by the Company to effect
any environmental cleanup or remediation.
2.18 Insurance. Part 2.18 of the Disclosure Schedule identifies all
insurance policies maintained by, at the expense of or for the benefit of the
Company, identifies any material claims made thereunder, and includes a summary
of the amounts and types of coverage and the deductibles under each such
insurance policy. Each of the insurance policies identified in Part 2.18 of the
Disclosure Schedule is in full force and effect. The Company has not received
any notice or other communication regarding any actual or possible (a)
cancellation or invalidation of any insurance policy, (b) refusal of any
coverage or rejection of any claim under any insurance policy or (c) material
adjustment in the amount of the premiums payable with respect to any insurance
policy.
2.19 Related Party Transactions.
(a) Except as set forth in Part 2.19(a) of the Disclosure Schedule:
(a) no Related Party has, and no Related Party has at any time had, any direct
or indirect interest in any material asset used in or otherwise relating to the
business of the Company; (b) no Related Party is, or has at any time been,
indebted to the Company; (c) no Related Party has entered into, or has had any
direct or indirect financial interest in, any material Contract, transaction or
business dealing involving the Company; (d) no Related Party is competing, or
has at any time competed, directly or indirectly, with the Company; and (e) no
Related Party has any claim or right against the Company (other than rights to
receive compensation for services performed as an employee of the Company). (For
purposes of this Section 2.19 each of the following shall be deemed to be a
"Related Party": (i) each of the shareholders of the Company; (ii) each
individual who is, or who has at any time been, an officer of the Company; (iii)
each member of the immediate family of each of the individuals referred to in
clauses "(i)" and "(ii)" above; and (iv) any trust or other Entity (other than
the Company) in which any one of the individuals referred to in clauses "(i)",
"(ii)" and "(iii)" above holds (or in which more than one of such individuals
collectively hold), beneficially or otherwise, a material voting, proprietary or
equity interest.)
(b) Part 2.19(b) of the Disclosure Schedule sets forth an accurate
description of any transfer of capital stock of the Company that has ever
occurred between or among any existing or former shareholders of the Company.
21
2.20 Legal Proceedings; Orders.
(a) Except as set forth in Part 2.20(a) of the Disclosure Schedule,
there is no pending Legal Proceeding, and, to the best of the knowledge of the
Company, no Person has threatened to commence any Legal Proceeding: (i) that
involves the Company or any of the assets owned or used by the Company; or (ii)
that challenges, or that may have the effect of preventing, delaying, making
illegal or otherwise interfering with, the Merger or any of the other
transactions contemplated by this Agreement. To the best of the knowledge of the
Company, except as set forth in Part 2.20 of the Disclosure Schedule, no event
has occurred, and no claim, dispute or other condition or circumstance exists,
that will, or that could reasonably be expected to, give rise to or serve as a
basis for the commencement of any such Legal Proceeding.
(b) Except as set forth in Part 2.20(b) of the Disclosure Schedule,
no Legal Proceeding has ever been commenced by or has ever been pending against
the Company.
(c) There is no order, writ, injunction, judgment or decree to which
the Company, or any of the assets owned or used by the Company, is subject. To
the knowledge of the Company, none of the shareholders of the Company is subject
to any order, writ, injunction, judgment or decree that relates to the business
of the Company or to any of the assets owned or used by the Company.
2.21 Authority; Binding Nature of Agreement. This Agreement has been duly
authorized, executed and delivered by, and constitutes the valid and binding
obligation of, the Company, enforceable against the Company in accordance with
its terms, except insofar as enforceability may be affected by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, and general principles of equity (whether considered in a
proceeding in equity or at law).
2.22 Non-Contravention; Consents. Except as set forth in Part 2.22 of the
Disclosure Schedule, neither (1) the execution, delivery or performance of this
Agreement or any of the other agreements referred to in this Agreement, nor (2)
the consummation of the Merger or any of the other transactions contemplated by
this Agreement, will directly or indirectly (with or without notice or lapse of
time):
(a) contravene, conflict with or result in a violation of (i) any of
the provisions of the articles of incorporation or bylaws of the Company or (ii)
any resolution adopted by the shareholders of the Company, the board of
directors of the Company or any committee of the board of directors of the
Company;
(b) contravene, conflict with or result in a violation of, or give
any Governmental Body or other Person the right to challenge any of the
transactions contemplated by this Agreement or to exercise any remedy or obtain
any relief under, any Legal Requirement or any order, writ, injunction, judgment
or decree to which the Company, or any of the assets owned or used by the
Company, is subject;
(c) contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel,
22
terminate or modify, any Governmental Authorization that is held by the Company
or that otherwise relates to the business of the Company or to any of the assets
owned or used by the Company;
(d) contravene, conflict with or result in a violation or breach of,
or result in a default under, any provision of any Company Contract, or give any
Person the right to (i) declare a default or exercise any remedy under any such
Company Contract, (ii) accelerate the maturity or performance of any such
Company Contract or (iii) cancel, terminate or modify any such Company Contract;
(e) result in the disclosure or delivery to any Person of the source
code, or any portion or aspect of the source code, of any Company Proprietary
Asset; or
(f) result in the imposition or creation of any lien or other
Encumbrance upon or with respect to any asset owned or used by the Company
(except for minor liens that will not, in any case or in the aggregate,
materially detract from the value of the assets subject thereto or materially
impair the operations of the Company.
Except as set forth in Part 2.22 of the Disclosure Schedule, the Company is not
and will not be, required to make any filing with, or give any notice to, or to
obtain any Consent from, any Person in connection with (x) the execution,
delivery or performance of this Agreement or any of the other agreements
referred to in this Agreement or (y) the consummation of the Merger or any of
the other transactions contemplated by this Agreement.
2.23 Full Disclosure. This Agreement (including the Disclosure Schedule)
does not, and the Company Closing Certificate will not, (i) contain any
representation, warranty or information that is false or misleading with respect
to any material fact or (ii) omit to state any material fact necessary in order
to make the representations, warranties and information contained herein (in the
light of the circumstances under which such representations, warranties and
information were made or provided) not false or misleading.
2.24 Vote Required. The affirmative vote of the holders of a majority of
the outstanding shares of Company Common Stock is the only vote of the holders
of any class or series of the Company's capital stock necessary to adopt and
approve this Agreement, the Merger and the other transactions contemplated by
this Agreement.
2.25 No Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based on arrangements made by or on
behalf of the Company.
Section 3. Representations and Warranties of Parent and Merger Sub
Parent and Merger Sub jointly and severally represent and warrant to
the Company as follows:
3.1 Corporate Existence and Power. Each of Parent and Merger Sub is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware,
23
and has all corporate power required to conduct its business as now conducted
and is currently proposed to be conducted, and is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction in which
the conduct of its business or the ownership or leasing of its properties
requires such qualification, except where the failure to be so qualified would
not have a material adverse effect on Parent's business, financial condition or
results of operations.
3.2 Authority; Binding Nature of Agreement. Parent and Merger Sub have
the absolute and unrestricted right, power and authority to enter into and to
perform their obligations under this Agreement; and the execution, delivery and
performance by Parent and Merger Sub of this Agreement (including the
contemplated issuance of Parent Common Stock in the Merger in accordance with
this Agreement) have been duly authorized by all necessary action on the part of
Parent and Merger Sub and their respective boards of directors. No vote of
Parent's stockholders is needed to approve the Merger. This Agreement
constitutes the legal, valid and binding obligation of Parent and Merger Sub,
enforceable against them in accordance with its terms, subject to (a) laws of
general application relating to bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally, and (b) rules
of law governing specific performance, injunctive relief and general principles
of equity (whether considered in a proceeding in equity or at law).
3.3 No Conflict; Consents. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby by Parent and
Merger Sub are not prohibited by, and will not violate or conflict with, any
provision of the certificate of incorporation or bylaws of Parent or Merger Sub,
or of any Legal Requirement and will not violate, conflict with, constitute a
breach of any provision of any Contract or potentially result in the
acceleration of any material payments or material obligations other than
pursuant to the credit agreement dated as of April 9, 1999 by and among Parent,
the financial institutions party thereto and named as "Lenders" therein, and ABN
AMRO Bank N.V., as agent for the Lenders, which violation or conflict will be
removed by a consent from ABN-AMRO Bank N.V. prior to Closing, or the
termination of any Contract, to which Parent or any of its affiliates (taken as
a whole) is a party, except where any of the foregoing would not have,
individually or in the aggregate, a material adverse effect on the business,
financial condition, results of operation or properties of Parent or its
affiliates. No Consent of any Governmental Body or Person is necessary on the
part of Parent or Merger Sub for the consummation by Parent and Merger Sub of
the transactions contemplated by this Agreement.
3.4 SEC Filings; Financial Statements. Parent has filed with the
Securities and Exchange Commission (the "SEC") and has heretofore made available
to the Company true and complete copies of, all forms, reports, schedules,
statements and other documents required to be filed by it and its subsidiaries
since September 1, 1998 under the Exchange Act (collectively, the "Parent SEC
Documents"). As of their respective dates or, if amended, as of the date of the
last such amendment, the Parent SEC Documents, including, without limitation,
any financial statements or schedules included therein, complied in all material
respects with the applicable requirements of the Securities Act as the Exchange
Act, and did not contain any untrue statement of a material fact or omit to
state a 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,
24
not misleading. Each of the consolidated balance sheets (including the related
notes) included in the Parent SEC Documents fairly presented in all material
respects the financial position of Parent and its consolidated subsidiaries as
of the respective dates thereof, and the other related statements (including the
related notes) included therein fairly presented in all material respects the
results of operations and cash flows of Parent and its consolidated subsidiaries
for the respective periods or as of the respective dates set forth therein. Each
of the consolidated balance sheets and statements of operations and cash flows
(including the related notes) included in the Parent SEC Documents has been
prepared in all material respects in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved,
except as otherwise noted therein and subject, in the case of unaudited interim
financial statements, to normal year-end adjustments.
3.5 Valid Issuance. The Parent Common Stock to be issued in the Merger
will, when issued in accordance with the provisions of this Agreement, be
validly issued, fully paid and nonassessable and free and clear of all liens or
encumbrances.
3.6 Merger Sub. Merger Sub has been formed solely for the purpose of
executing and delivering this Agreement and consummating the transactions
contemplated hereby. Merger Sub has not engaged in any business or activity
other than activities related to its corporate organization and the execution
and delivery of this Agreement.
3.7 Pennsylvania Law. Parent and Merger Sub were not immediately prior
to the execution of this Agreement, an "interested shareholder" within the
meaning of Sections 2538 and 2555 of the Pennsylvania Business Corporation Law.
Section 4. Certain Covenants of the Company
4.1 Access and Investigation. During the period from the date of this
Agreement through the Closing Date (the "Pre-Closing Period"), the Company
shall, and shall cause its Representatives to: (a) provide Parent and Parent's
Representatives with reasonable access to the Company's Representatives,
personnel and assets and to all existing books, records, tax returns, work
papers and other documents and information relating to the Company; and (b)
provide Parent and Parent's Representatives with copies of such existing books,
records, tax returns, work papers and other documents and information relating
to the Company, and with such additional financial, operating and other data and
information regarding the Company, as Parent may reasonably request.
4.2 Operation of the Business of the Company. Without the prior written
consent of Parent, during the Pre-Closing Period:
(a) the Company shall conduct its business and operations in the
ordinary course and in substantially the same manner as such business and
operations have been conducted prior to the date of this Agreement;
(b) the Company shall use reasonable efforts to preserve intact
its current business organization, keep available the services of its current
officers and employees and
25
maintain its relations and good will with all suppliers, customers, landlords,
creditors, employees and other Persons having business relationships with the
Company;
(c) the Company shall keep in full force all insurance policies identified
in Part 2.18 of the Disclosure Schedule;
(d) the Company shall not declare, accrue, set aside or pay any dividend or
make any other distribution in respect of any shares of capital stock, and the
Company shall not repurchase, redeem or otherwise reacquire any shares of
capital stock or other securities;
(e) except for the issuance of shares of Company Common Stock upon the
valid exercise of any Company Options or warrants to purchase shares of Company
Common Stock outstanding as of the date of this Agreement, the Company shall not
sell, issue or authorize the issuance of (i) any capital stock or other
security, (ii) any option or right to acquire any capital stock or other
security or (iii) any instrument convertible into or exchangeable for any
capital stock or other security;
(f) the Company shall not amend or permit the adoption of any amendment to
the articles of incorporation or bylaws of the Company, or effect or permit the
Company to become a party to any Acquisition Transaction, recapitalization,
reclassification of shares, stock split, reverse stock split or similar
transaction;
(g) the Company shall not form any subsidiary or acquire any equity
interest or other interest in any other Entity;
(h) the Company shall not make any capital expenditure, except for capital
expenditures that, when added to all other capital expenditures made on behalf
of the Company during the Pre-Closing Period, do not exceed $100,000 in
aggregate;
(i) the Company shall not (i) enter into, or permit any of the assets owned
or used by it to become bound by, any Contract or (ii) amend or prematurely
terminate, or waive any material right or remedy under, any such Contract;
(j) the Company shall not (i) lend money to any Person (except that the
Company may make routine travel advances to employees in the ordinary course of
business) or (ii) incur or guarantee any indebtedness for borrowed money;
(k) the Company shall not (i) establish, adopt or amend any Employee
Benefit Plan, (ii) other than in the ordinary course of business consistent with
past practice, pay any bonus or make any profit-sharing payment, cash incentive
payment or similar payment to, or increase the amount of the wages, salary,
commissions, fringe benefits or other compensation or remuneration payable to,
any of its directors, officers or employees or (iii) hire any new employee;
(l) the Company shall not change any of its methods of accounting or
accounting practices in any material respect;
26
(m) the Company shall not make any tax election;
(n) the Company shall not commence or settle any Legal Proceeding;
and
(o) the Company shall not agree or commit to take any of the actions
described in clauses "(e)" through "(n)" above.
4.3 Notification; Updates to Disclosure Schedule.
(a) During the Pre-Closing Period, the Company shall promptly notify
Parent in writing of: (i) the discovery by the Company of any event, condition,
fact or circumstance that occurred or existed on or prior to the date of this
Agreement and that caused or constitutes an inaccuracy in or breach of any
representation or warranty made by the Company in this Agreement; (ii) any
event, condition, fact or circumstance that occurs, arises or exists after the
date of this Agreement and that would cause or constitute an inaccuracy in or
breach of any representation or warranty made by the Company in this Agreement
if (A) such representation or warranty had been made as of the time of the
occurrence, existence or discovery of such event, condition, fact or
circumstance or (B) such event, condition, fact or circumstance had occurred,
arisen or existed on or prior to the date of this Agreement; (iii) any breach of
any covenant or obligation of the Company; and (iv) any event, condition, fact
or circumstance that would make the timely satisfaction of any of the conditions
set forth in Section 6 or Section 7 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is required to
be disclosed pursuant to Section 4.3(a) requires any change in the Disclosure
Schedule, or if any such event, condition, fact or circumstance would require
such a change assuming the Disclosure Schedule were dated as of the date of the
occurrence, existence or discovery of such event, condition, fact or
circumstance, then the Company shall promptly deliver to Parent an update to the
Disclosure Schedule specifying such change. Except as expressly set forth in
this Agreement, no such update shall be deemed to supplement or amend the
Disclosure Schedule for the purpose of (i) determining the accuracy of any of
the representations and warranties made by the Company in this Agreement or (ii)
determining whether any of the conditions set forth in Section 6 has been
satisfied.
4.4 No Negotiation. From and after the date hereof until the earlier of the
Closing Date or the termination date of this Agreement, the Company shall not,
directly or indirectly:
(a) solicit or encourage the initiation of any inquiry, proposal or
offer from any Person (other than Parent) relating to a possible Acquisition
Transaction;
(b) participate in any discussions or negotiations or enter into any
agreement with, or provide any non-public information to, any Person (other than
Parent) relating to or in connection with a possible Acquisition Transaction; or
(c) consider, entertain or accept any proposal or offer from any
Person (other than Parent) relating to a possible Acquisition Transaction.
27
The Company shall promptly notify Parent in writing of any material inquiry,
proposal or offer relating to a possible Acquisition Transaction that is
received by the Company or any of its affiliates during the Pre-Closing Period.
4.5 Post-Closing Audited Financial Statements. Not later than (60) days
after the Closing Date, the Company shall cause financial statements of the
Company as of the Closing Date to be prepared and delivered to Parent, which
financial statements shall be prepared in accordance with generally accepted
accounting principles in a manner consistent with that of the financial
statements comprising part of the Company Financial Statements previously
delivered to Parent, and which shall be audited by the Company's auditors.
4.6 Insurance. Until the Closing Date, the Company shall maintain in full
force and effect all policies of insurance now in effect (or renewals thereof)
and under which it or its properties are insured. The Company shall at the
request and expense of Parent place such additional insurance as may be
reasonably requested by Parent and give all notices and present all claims under
all polices of insurance in due and timely fashion.
4.7 Repayment of Loan. Prior to the Closing Date, the Company shall at the
request of Parent cause to be paid in full any loans or other advances made by
Ben Franklin Technology Center of Southeastern Pennsylvania ("Ben Franklin") to
the Company and shall take such further actions as shall be reasonably necessary
or advisable to ensure that all obligations of the Company to Ben Franklin are
performed in full and any encumbrances held by Ben Franklin with respect to any
assets of the Company are fully discharged.
Section 5. Additional Covenants of the Parties
5.1 Filings and Consents. As promptly as practicable after the execution
of this Agreement, each party to this Agreement (a) shall make all filings, if
any, and give all notices, if any, required to be made and given by such party
in connection with the Merger and the other transactions contemplated by this
Agreement and (b) shall use all commercially reasonable efforts to obtain all
Consents, if any, required to be obtained (pursuant to any applicable Legal
Requirement or Contract, or otherwise) by such party in connection with the
Merger and the other transactions contemplated by this Agreement. The Company
shall (upon request) promptly deliver to Parent a copy of each such filing made,
each such notice given and each such Consent obtained by the Company during the
Pre-Closing Period.
5.2 Company Shareholders' Meeting/Written Consent.
(a) Subject to Section 5.2(b), as promptly as practicable after the
execution of this Agreement, the Company and Parent shall jointly prepare an
Information Statement relating to the approval of the Merger by the Company's
shareholders and the exercise of dissenters' rights in connection therewith (the
"Information Statement"). The Company shall provide and include in the
Information Statement such information relating to the Company and its
shareholders as may be required pursuant to Rule 502 under the Securities Act.
The Company shall, in accordance with its articles of incorporation and bylaws
and the applicable requirements of the Pennsylvania Business Corporation Law,
call and hold a special meeting of its
28
shareholders or solicit the written consent of its shareholders as promptly as
practicable for the purpose of permitting them to consider and to vote upon and
approve the Merger and this Agreement (the "Company Shareholders' Meeting"). The
Company shall cause a copy of the Information Statement to be delivered to each
shareholder of the Company who is entitled to vote at the Company Shareholders'
Meeting or act by written consent. As promptly as practicable after the delivery
of copies of the Information Statement to all shareholders entitled to vote at
the Company Shareholders' Meeting or act by written consent, the Company shall
use its best efforts (i) to solicit from each of such shareholders a proxy or
written consent in favor of the approval of the Merger and this Agreement, (ii)
to cause each of such shareholders who is not an "accredited investor" (as
defined in Rule 501 under the Securities Act) to identify in writing a person
reasonably acceptable to Parent as his or her "purchaser representative" (as
defined in Rule 501 under the Securities Act) in connection with evaluating the
merits and risks of investing in Parent Common Stock and (iii) to cause each of
such shareholders to execute and deliver to Parent a Shareholder Representation
Letter in the form of Exhibit D hereto.
(b) In lieu of calling and holding the Company Shareholders' Meeting,
the Company may solicit the approval of the shareholders of the Merger and the
other transactions contemplated by this Agreement by written consent.
5.3 Exercise of Options and Warrants. At or prior to the Closing, the
Company shall cause each Company Option that is then outstanding, whether vested
or unvested, and each warrant to purchase shares of capital stock of the Company
to be exercised for Company Common Stock or terminated.
5.4 Public Announcements. During the Pre-Closing Period, (a) the Company
shall not (and the Company shall not permit any of its Representatives to) issue
any press release or make any public statement regarding this Agreement or the
Merger, or regarding any of the other transactions contemplated by this
Agreement, without Parent's prior written consent and (b) Parent will provide
the Company with a copy of any press release or statement it plans to issue or
make, prior to issuing any press release or making any public statement
regarding the Merger.
5.5 Reasonable Efforts.
(a) During the Pre-Closing Period, (i) the Company shall use its
reasonable efforts to cause the conditions set forth in Section 6 to be
satisfied on a timely basis and (ii) Parent and Merger Sub shall use their
reasonable efforts to cause the conditions set forth in Section 7 to be
satisfied on a timely basis; and
(b) Notwithstanding anything to the contrary contained in this
Agreement, if Parent (after consultation with legal counsel) determines that the
exemption provided by Regulation D under the Securities Act is not available
with respect to the Merger and such determination is communicated in writing to
the Shareholders' Agent then (i) the Company shall cooperate (and shall use its
reasonable efforts to cause the Merger Shareholders and the holders of options
and warrants to purchase shares of Company Common Stock to cooperate) with
Parent in an effort to cause the exemption provided under Regulation D or other
provisions under
29
the Securities Act to be available with respect to the Merger; (ii) Parent may
(but shall not be obligated to), in its sole discretion, decide to register
Parent Common Stock to be issued in connection with the Merger on a registration
statement on Form S-4; and (iii) if Parent decides to register such Parent
Common Stock then (A) the Company shall cooperate with Parent in connection with
the preparation, filing and circulation of Form S-4, and (B) the reference to
"December 15, 1999" in Sections 8.1(c) and 8.1(d) shall be replaced with "March
15, 2000".
5.6 Termination of Agreements. Prior to the Closing, at the request of
Parent, the Company shall ensure that the emerging company investment funding
agreement dated November 25, 1996 between the Company and Ben Franklin and the
applied research and development funding agreement dated October, 1997 between
the Company and Ben Franklin are terminated.
5.7 Employee and Related Matters. Those employees of the Company that
continue to be employees of Parent or any of its affiliates, including the
Company, following the Closing would, subject to any necessary transition period
and the terms of such plans, be eligible to participate in Parent's health,
vacation, employee stock purchase, 401(k) and other plans, to the same extent as
comparably situated employees of Parent and would receive credit under Parent's
benefit plans for time served as an employee of the Company.
5.8 FIRPTA Matters. At the Closing, (a) the Company shall deliver to
Parent a statement (in such form as may be reasonably requested by ▇▇▇▇▇▇
Godward llp) conforming to the requirements of Section 1.897-2(h)(1)(i) of the
United States Treasury Regulations, and (b) the Company shall deliver to the
Internal Revenue Service the notification required under Section 1.897-2(h)(2)
of the United States Treasury Regulations.
5.9 Tax Matters. Prior to the Closing, each of Parent, Merger Sub and the
Company shall execute and deliver, to ▇▇▇▇▇▇ Godward llp and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
llp, tax representation letters in substantially the form of Exhibit E (which
will be used in connection with the legal opinions contemplated by Sections
6.6(g) and 7.3(e)).
Section 6. Conditions Precedent to Obligations of Parent and Merger Sub
The obligations of Parent and Merger Sub to effect the Merger and
otherwise consummate the transactions contemplated by this Agreement are subject
to the satisfaction (or waiver by Parent), at or prior to the Closing, of each
of the following conditions:
6.1 Accuracy of Representations.
(a) Each of the representations and warranties made by the Company
in Section 2.3(a), Section 2.3(b) and Section 2.3(d) shall have been accurate in
all respects on and as of the date of this Agreement.
(b) Except for the representations and warranties set forth in
Section 6.1(a) above, each of the representations and warranties made by the
Company in this Agreement and in each of the other agreements and instruments
delivered to Parent in connection with the transactions contemplated by this
Agreement shall have been accurate in all respects as of the date of this
30
Agreement, and shall be accurate in all respects as of the Closing Date as if
made at the Closing, except to the extent such representations and warranties
expressly relate to any earlier date (in which case such representations and
warranties shall be accurate on and as of such date), and except for
inaccuracies in any such representations or warranties that have not had, and
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
No update to the Disclosure Schedule and no "Material Adverse Effect" or other
materiality qualifications, or any similar qualifications, contained in the
representations and warranties in this Agreement, shall be given effect for
purposes of determining whether the condition contained in Section 6.1(b) has
been satisfied (it being understood, however, that the "Material Adverse Effect"
qualifier contained in Section 6.1(b) shall be given effect for such purposes).
6.2 Performance of Covenants. All of the covenants and obligations that
the Company is required to comply with or to perform at or prior to the Closing
shall have been complied with and performed in all material respects.
6.3 Shareholder Approval. The Merger and this Agreement shall have been
duly approved by holders of at least 51% of the outstanding shares of Company
Common Stock. The number of Dissenting Shares shall be less than 10% of the
Company Common Stock outstanding immediately prior to the Effective Time.
6.4 Consents. All Consents (a) listed in Part 6.4 of the Disclosure
Schedule, (b) required to be obtained from any Governmental Entity and (c)
otherwise required to be obtained, in each case in connection with the Merger
and the other transactions contemplated by this Agreement shall have been
obtained and shall be in full force and effect, except in the case of clause (c)
to the extent that the failure to obtain any such Consents has not had, and is
not reasonably likely to have, a Material Adverse Effect on the Company.
6.5 Employee Matters. Parent shall have received satisfactory evidence
that none of the Key Employees shall have indicated that he or she does not
intend to continue his or her employment with the Company after the Closing.
6.6 Agreements and Documents. Parent and the Company shall have received
the following agreements and documents, each of which shall be in full force and
effect:
(a) Employment Agreements in the form of Exhibit F hereto, executed
by the individuals identified on Exhibit G hereto;
(b) Noncompetition Agreements in the form of Exhibit H hereto,
executed by the individuals identified on Exhibit G hereto;
(c) a FIRPTA Statement in the form of Exhibit I hereto, executed by
the Company;
31
(d) Shareholder Representation Letters substantially in the form of
Exhibit D-1 or D-2 hereto, as applicable, executed by each of the Merger
Shareholders and by each holder of options and warrants to purchase shares of
Company Common Stock;
(e) a Registration Rights Agreement in the form of Exhibit J hereto,
executed by the Shareholders' Agent on behalf of each of the Merger
Shareholders;
(f) an Escrow Agreement substantially in the form of Exhibit C hereto,
executed by each of the Merger Shareholders and the Escrow Agent;
(g) a legal opinion of ▇▇▇▇▇▇ Godward llp dated as of the Closing Date
and addressed to Parent, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368 of the Code (it being
understood that, in rendering such opinion, ▇▇▇▇▇▇ Godward llp may rely upon the
tax representation letters referred to in Section 5.9); provided, however, that
if ▇▇▇▇▇▇ Godward llp does not render such opinion or withdraws or modifies such
opinion, this condition shall nonetheless be deemed satisfied if ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
llp, counsel to the Company, renders such opinion to Parent;
(h) a certificate executed by the Company and containing the
representation and warranty of the Company that the conditions set forth in
Sections 6.1, 6.2, 6.3, 6.4 and 6.11 have been duly satisfied (the "Company's
Closing Certificate");
(i) a certificate of merger executed by the Company to be filed with
the Secretary of State of the State of Delaware in accordance with Section 1.3
and the articles of merger executed by the Company to be filed in the Department
of State of the Commonwealth of Pennsylvania in accordance with Section 1.3;
(j) written resignations of all directors and officers of the Company,
effective as of the Closing Date;
(k) written acknowledgements from the Company's Counsel and the
Company's Accountants setting forth the total amount of fees, costs and expenses
payable to the Company's Counsel and the Company's Accountants, respectively, in
connection with all services provided by such advisors with respect to the
transactions contemplated by this Agreement;
(l) the valid and effective termination as of the Effective Time of
provisions in Contracts that provide any Person with rights of any nature with
respect to the board of directors of the Company, except as provided generally
by the Company's articles of incorporation and bylaws or by applicable law; and
(m) a Setoff Escrow Agreement substantially in the form of Exhibit L
hereto, executed by each of the Merger Shareholders and the Escrow Agent.
6.7 Stock Certificates. Parent shall have received certificates
representing all of the capital stock of the Company, less any Dissenting
Shares, duly endorsed in blank or accompanied by stock powers duly endorsed in
blank in proper form for transfer, with appropriate transfer stamps, if any,
affixed and, immediately following the Closing, Parent shall
32
own all of the outstanding capital stock and rights to acquire capital stock of
the Company less any Dissenting Shares.
6.8 FIRPTA Compliance. The Company shall have filed with the Internal
Revenue Service the notification referred to in Section 6.6(c).
6.9 Listing. The shares of Parent Common Stock to be issued in the Merger
shall have been approved for listing (subject to notice of issuance) on the New
York Stock Exchange.
6.10 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
6.11 No Legal Proceedings. No Governmental Body or other Person shall have
commenced or threatened to commence any Legal Proceeding (a) challenging or
seeking the recovery of a material amount of damages in connection with the
Merger, (b) seeking to prohibit or limit the exercise by Parent of any material
right pertaining to its ownership of stock of Merger Sub or the Company, or (c)
claiming to own any capital stock of the Company, or option or other right to
acquire capital stock of the Company, or right to receive consideration as a
result of the Merger.
6.12 Evidence of Exercise of Options and Warrants. The Company shall have
provided to Parent evidence satisfactory to Parent that all Company Options and
warrants to purchase shares of the capital stock of the Company have been
exercised in full or terminated and that all related option and warrant
agreements are no longer in effect.
Section 7. Conditions Precedent to Obligations of the Company
The obligations of the Company to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction (or waiver), at or prior to the Closing, of the following
conditions:
7.1 Accuracy of Representations. Each of the representations and
warranties made by Parent and Merger Sub in this Agreement shall have been
accurate in all respects as of the date of this Agreement, and shall be accurate
in all respects as of the Closing Date as if made at the Closing, except for
inaccuracies in such representations and warranties that have not had, and are
not reasonably likely to have, a material adverse effect on Parent's business,
financial condition or results of operation.
No "Material Adverse Effect" or other materiality qualifications, or any
similar qualifications, contained in the representations and warranties in this
Agreement shall be given effect for purposes of determining whether the
condition contained in Section 7.1 has been satisfied (it being understood,
however, that the "Material Adverse Effect" qualifier contained in Section 7.1
shall be given effect for such purposes).
33
7.2 Performance of Covenants. All of the covenants and obligations that
Parent and Merger Sub are required to comply with or to perform at or prior to
the Closing shall have been complied with and performed in all material
respects.
7.3 Agreements and Documents. The Company shall have received the
following documents.
(a) a Registration Rights Agreement in the form of Exhibit J hereto,
executed by Parent;
(b) an Escrow Agreement substantially in the form of Exhibit C,
executed by Parent;
(c) a Setoff Escrow Agreement substantially in the form of Exhibit L
hereto, executed by each of the Merger Shareholders and the Escrow Agent;
(d) Employment Agreements in the form of Exhibit F hereto, with the
persons identified on Exhibit G hereto, executed by Parent; and
(e) a legal opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ llp dated as of the Closing
Date and addressed to the Company, to the effect that the Merger will constitute
a reorganization within the meaning of Section 368 of the Code (it being
understood that, in rendering such opinion, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ llp may rely upon
the tax representation letters referred to in Section 5.9); provided, however,
that if ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ llp does not render such opinion or withdraws or
modifies such opinion, this condition shall nonetheless be deemed satisfied if
▇▇▇▇▇▇ Godward llp, counsel to Parent, renders such opinion to the Company.
7.4 Listing. The shares of Parent common stock to be issued in the Merger
shall have been approved for listing (subject to notice of issuance) on the New
York Stock Exchange.
7.5 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
Section 8. Termination
8.1 Termination Events. This Agreement may be terminated prior to the
Closing:
(a) by Parent if Parent reasonably determines that the timely
satisfaction of any condition set forth in Section 6 has become impossible
(other than as a result of any failure on the part of Parent or Merger Sub to
comply with or perform any covenant or obligation of Parent or Merger Sub set
forth in this Agreement or in any other agreement or instrument delivered to the
Company);
(b) by the Company if the Company reasonably determines that the
timely satisfaction of any condition set forth in Section 7 has become
impossible (other than as a result
34
of any failure on the part of the Company to comply with or perform any covenant
or obligation set forth in this Agreement or in any other agreement or
instrument delivered to Parent);
(c) by Parent if the Closing has not taken place on or before
December 15, 1999 (other than as a result of any failure on the part of Parent
or Merger Sub to comply with or perform any covenant or obligation of Parent or
Merger Sub set forth in this Agreement or in any other agreement or instrument
delivered to the Company);
(d) by the Company if the Closing has not taken place on or before
December 15, 1999 (other than as a result of the failure on the part of the
Company to comply with or perform any covenant or obligation set forth in this
Agreement or in any other agreement or instrument delivered to Parent); or
(e) by the mutual written consent of Parent and the Company.
8.2 Termination Procedures. If Parent wishes to terminate this Agreement
pursuant to Section 8.1(a) or Section 8.1(c), Parent shall deliver to the
Company a written notice stating that Parent is terminating this Agreement and
setting forth a brief description of the basis on which Parent is terminating
this Agreement. If the Company wishes to terminate this Agreement pursuant to
Section 8.1(b) or Section 8.1(d), the Company shall deliver to Parent a notice,
in writing, stating that the Company is terminating this Agreement and setting
forth a brief description of the basis on which it is terminating this
Agreement.
8.3 Effect of Termination. If this Agreement is terminated pursuant to
Section 8.1 and 8.2, all further obligations of the parties under this Agreement
shall terminate; provided, however, that: (a) none of the parties shall be
relieved of any obligation or liability arising from any prior willful breach by
such party of any provision of this Agreement; (b) the parties shall, in all
events, remain bound by and continue to be subject to the provisions set forth
in Section 10; and (c) the Company shall, in all events, remain bound by and
continue to be subject to Section 5.4.
Section 9. Indemnification, Etc.
9.1 Survival of Representations, Etc.
(a) Subject to Sections 9.1(b) and 9.1(e), the representations and
warranties made by the Company (including, for greater certainty, the
representation and warranty made in Section 2.10(g)) shall survive the Closing
and shall expire twelve (12) months after the Closing Date. Notwithstanding the
foregoing, if, at any time prior to the date twelve (12) months after the
Closing Date, any Indemnitee (acting in good faith) delivers to the
Shareholders' Agent a written notice alleging the existence of a breach of any
of the representations and warranties made by the Company (and setting forth in
reasonable detail the basis for such Indemnitee's belief that such a breach may
exist) and asserting a claim for recovery under Section 9.2 based on such
alleged breach, then the claim asserted in such notice shall survive beyond the
date twelve (12) months after the Closing Date until such time as such claim is
fully and finally resolved.
35
(b) Subject to Section 9.1(e), the representations and warranties
made by the Company in Sections 2.10(a) through 2.10(f), inclusive, shall
survive the Closing and shall expire on the earlier of (A) March 31, 2002 or (B)
730 days after the date of the first commercial shipment of Products is made
after the Closing Date (the "IP Representation Termination Date").
Notwithstanding the foregoing, if, at any time prior to the IP Representation
Termination Date, any Indemnitee (acting in good faith) delivers to the
Shareholders' Agent a written notice alleging the existence of a breach of any
of such representations and warranties made by the Company (and setting forth in
reasonable detail the basis for such Indemnitee's belief that such a breach may
exist) and asserting a claim for recovery under Section 9.2 based on such
alleged breach, then the claim asserted in such notice shall survive beyond the
IP Representation Termination Date until such time as such claim is fully and
finally resolved.
(c) Subject to Section 9.1(e), the representations and warranties
made by Parent and Merger Sub shall survive the Closing and shall expire twelve
(12) months after the Closing Date. Notwithstanding the foregoing, if, at any
time prior to the date twelve (12) months after the Closing Date, the
Shareholders' Agent (acting in good faith) delivers to Parent or Merger Sub a
written notice alleging the existence of a breach of any of the representations
and warranties made by Parent or Merger Sub (and setting forth in reasonable
detail the basis for the Shareholders' Agent's belief that such a breach may
exist) and asserting a claim for recovery based on such alleged breach, then the
claim asserted in such notice shall survive beyond the date twelve (12) months
after the Closing Date until such time as such claim is fully and finally
resolved.
(d) For purposes of this Agreement, each statement or other item of
information set forth in the Disclosure Schedule or in any update to the
Disclosure Schedule shall be deemed to be a representation and warranty made by
the Company in this Agreement.
(e) The limitations set forth in Sections 9.1(a) and (b) shall not
apply in the case of fraud.
9.2 Indemnification.
(a) (A) From and after the Closing Date (but subject to Section
9.1(a)), the shareholders of the Company who shall have received, or shall be
entitled to receive, Parent Common Stock pursuant to Section 1.5 (the
"Indemnitors"), severally, shall hold harmless and indemnify each of the
Indemnitees from and against, and the Escrow Shares and Parent's setoff rights
set forth in Section 9.3 shall be available to compensate and reimburse each of
the Indemnitees for, any Damages that are directly or indirectly suffered or
incurred by any of the Indemnitees or to which any of the Indemnitees may
otherwise become subject (regardless of whether or not such Damages relate to
any third-party claim) and that arise from or as a result of, or are directly or
indirectly connected with: (i) any breach of any representation or warranty set
forth in Section 2, as of the date of this Agreement (without giving effect to
any update to the Disclosure Schedule delivered by the Company to Parent prior
to the Closing); (ii) any breach of any representation or warranty set forth in
Section 2 as if such representation and warranty had been made on and as of the
Closing Date (it being understood that no update to the Disclosure Schedule
delivered by the Company to Parent prior to the Closing shall cure any breach of
a
36
representation or warranty made by the Company); (iii) any breach of any
covenant or obligation of the Company (including the covenants set forth in
Section 4 and Section 5); (iv) any claim or demand made by the Company's Counsel
or the Company's Accountants with respect to fees, costs and expenses payable to
them in connection with the transactions contemplated by this Agreement to the
extent that such fees, costs and expenses exceed the Excess Legal and Accounting
Expenses; and (v) any Legal Proceeding relating to any matter of the type
referred to in clause "(i)," "(ii)", "(iii)" or "(iv)" above (including any
Legal Proceeding commenced by any Indemnitee for the purpose of enforcing any of
its rights under this Section 9).
(B) From and after the Closing Date (but subject to Section 9.1(c)),
Parent and Merger Sub shall hold harmless and indemnify each of the
Indemnitors from and against any Damages that are directly or indirectly
suffered or incurred by any of the Indemnitors or to which any of the
Indemnitors may otherwise become subject (regardless of whether or not such
Damages relate to any third-party claim) and that arise from or as a result
of, or are directly or indirectly connected with: (i) any breach of any
representations or warranty set forth in Section 3, as of the date of this
Agreement; (ii) any breach of any representation or warranty set forth in
Section 3 as if such representation and warranty had been made on and as of
the Closing Date; (iii) any breach of any covenant or obligation of Parent
and Merger Sub (including the covenants set forth in Section 5); (iv) any
Legal Proceeding relating to any matter of the type referred to in clause
"(i)", "(ii)" or "(iii)" above (including any Legal Proceeding commenced by
any Indemnitor for the purpose of enforcing any of its rights under this
Section 9).
(b) Deductible.
(i) Except for any claim for indemnification made by an
Indemnitee pursuant to Section 9.2(a)(A)(iv) (to which the deductible referred
to in this Section shall not apply) or any Legal Proceeding commenced by any
Indemnitee for the purpose of enforcing any of its rights under Section
9.2(a)(A)(iv) (to which the deductible referred to in this Section shall not
apply), the Indemnitors shall not be required to make any indemnification
payment pursuant to Section 9.2(a)(A) for any breach of any of their
representations and warranties set forth in Section 2 until such time as the
total amount of all Damages (including the Damages arising from such breach and
all other Damages arising from any other breaches of any representations or
warranties) that have been directly or indirectly suffered or incurred by any
one or more of the Indemnitees, or to which any one or more of the Indemnitees
has or have otherwise become subject, exceeds $150,000 in the aggregate. (If the
total amount of such Damages exceeds $150,000, then the Indemnitees shall be
entitled to be indemnified against and compensated and reimbursed only for the
portion of such Damages exceeding $150,000.)
(ii) Parent and Merger Sub shall not be required to make any
indemnification payment pursuant to Section 9.2(a)(B) for any breach of any of
their representations and warranties set forth in Section 3 until such time as
the total amount of all Damages (including the Damages arising from such breach
and all other Damages arising from any other breaches of any representations or
warranties) that have been directly or indirectly suffered or incurred by any
one or more of the Indemnitors, or to which any one or more of the Indemnitors
has or have otherwise become subject, exceeds $150,000 in the aggregate. (If
the
37
total amount of such Damages exceeds $150,000, then the Indemnitors shall be
entitled to be indemnified against and compensated and reimbursed only for the
portion of such Damages exceeding $150,000.)
(c) Maximum Liability. Subject to Sections 9.2(d) and 9.2(e),
recourse of the Indemnitees to the Escrow Shares shall be the sole and exclusive
remedy of the Indemnitees for monetary damages relating to any breach by the
Company of any representation or warranty, covenant or other provision contained
in this Agreement. Subject to Section 9.2(e), the maximum liability of Parent to
the Merger Shareholders for Damages relating to any breach by Parent or Merger
Sub of any representation or warranty, covenant or other provision contained in
this Agreement shall be limited to an amount equal to the product of (x) the
Escrow Shares and (y) the Stipulated Value (as defined in the Escrow Agreement).
Subject to Section 9.2(e), any claim by the Indemnitees for monetary damages
relating to any breach by the Company of any representation or warranty,
covenant or other provision contained in this Agreement shall be satisfied only
out of the Escrow Shares and/or pursuant to Parent?s setoff rights as set forth
in Section 9.3.
(d) Maximum Liability Relating to Intellectual Property. Subject
to Section 9.2(e), the maximum liability of the Merger Shareholders to the
Indemnitees for a breach of a representation or warranty contained in Sections
2.10(a) through 2.10(f), inclusive, shall not exceed $5,750,000 (it being
understood that (i) the $5,750,000 referred to in the foregoing portion of this
sentence shall include amounts delivered out of the Escrow Shares and (ii) for
purposes of determining whether the maximum liability set forth in this Section
9.2(d) has been attained, (A) any Escrow Shares shall have a value equal to the
Stipulated Value, and (B) any shares issuable pursuant to Section 1.6 shall have
a value equal to the Post-Closing Parent Average Stock Price applicable to such
shares). Subject to Section 9.2(e), any claim by the Indemnitees for monetary
damages relating to any breach by the Company of any representation or warranty
contained in Section 2.10 shall be satisfied only out of the Escrow Shares
and/or pursuant to Parent's setoff rights as set forth in Section 9.3.
(e) Exclusions from Limitations. The limitations that are set
forth in Sections 9.2(b), 9.2(c) and 9.2(d) shall not apply in the case of
common law fraud.
9.3 Setoff. In addition to any rights that any Indemnitee may have under
Section 9, Parent shall have the right to withhold and deduct an amount equal to
any amount that may be owed (or that may be claimed to be owed) to any
Indemnitee under Section 9 with respect to a breach (or an alleged breach) of
any representation or warranty by the Company or with respect to a claim based
upon fraud from any amount payable under Section 1.6 or otherwise by any
Indemnitee to the Shareholders' Agent or to any shareholder of the Company. If
Parent exercises its setoff rights pursuant to this Section 9.3 with respect to
any matter (a "Setoff Matter"), Parent shall deposit with the Escrow Agent the
cash or shares of Parent Common Stock to be delivered to Merger Shareholders
pursuant to Section 1.6 (or a combination thereof) having a value equal to
Parent's reasonable estimate of the Damages incurred or suffered by the
Indemnitees with respect to such Setoff Matter (it being understood that for the
purposes of the setoff rights referred to in this Section 9.3, any shares of
Parent Common Stock otherwise issuable under Section 1.6 shall be valued at the
Post-Closing Parent Average Stock Price
38
applicable to such shares). The cash or shares of Parent Common Stock deposited
into escrow pursuant to this Section 9.3 shall be held and administered in
accordance with the terms of the Setoff Escrow Agreement.
9.4 No Contribution. No shareholder of the Company shall have any right of
contribution, right of indemnity or other right or remedy against Merger Sub or
the Company in connection with any indemnification obligation or any other
liability to which she, he or it may become subject under or in connection with
this Agreement.
9.5 Defense of Third Party Claims. In the event of the assertion or
commencement by any Person of any claim or Legal Proceeding (whether against
Merger Sub or the Company, against Parent or against any other Person) with
respect to which any of the Indemnitors may become obligated to hold harmless,
indemnify, compensate or reimburse any Indemnitee pursuant to this Section 9,
Parent shall have the right, at its election, to proceed with the defense of
such claim or Legal Proceeding on its own. If Parent so proceeds with the
defense of any such claim or Legal Proceeding:
(a) all reasonable expenses relating to the defense of such
claim or Legal Proceeding shall be borne and paid exclusively from the Escrow
Shares and/or pursuant to Parent's setoff rights set forth in Section 9.3 upon a
final non-appealable order (or an order for which the appeal period has expired)
or settlement agreement or agreement of any court of competent jurisdiction or
arbitrators empanelled pursuant to any agreement contemplated by this Agreement
or by agreement of Parent and the Company;
(b) each Indemnitor shall make available to Parent any documents
and materials in his or its possession or control that may be necessary to the
defense of such claim or Legal Proceeding; and
(c) Parent shall have the right to settle, adjust or compromise
such claim or Legal Proceeding with the consent of the Shareholders' Agent (as
defined in Section 10.1); provided, however, that such consent shall not be
unreasonably withheld and such settlement shall not be conclusive evidence as to
whether there has been a breach or violation by the Company of any
representation or warranty, covenant or any other provision contained in this
Agreement which would give rise to an indemnification obligation under this
Section 9.
Parent shall give the Shareholders' Agent prompt notice of the commencement of
any such Legal Proceeding against Parent, Merger Sub or the Company; provided,
however, any failure on the part of Parent to so notify the Shareholders' Agent
shall not limit any of the obligations of the Indemnitors under this Section 9
(except to the extent such failure materially prejudices the defense of such
Legal Proceeding). If Parent does not elect to proceed with the defense of any
such claim or Legal Proceeding, the Shareholders' Agent may proceed with the
defense of such claim or Legal Proceeding with counsel reasonably satisfactory
to Parent; provided, however, that the Shareholders' Agent may not settle,
adjust or compromise any such claim or Legal Proceeding without the prior
written consent of Parent (which consent may not be unreasonably withheld).
39
Notwithstanding anything to the contrary contained in this Agreement, no
indemnification payment need be made under this Agreement with respect to a
claim or Legal Proceeding asserted or commenced by a third party against any
Indemnitee until (i) a final non-appealable order (or an order for which the
appeal period has expired) of any court of competent jurisdiction is rendered,
(ii) a final arbitration award by arbitrators empanelled pursuant to any
agreement contemplated by this Agreement is rendered, (iii) a settlement
agreement is entered, or (iv) an agreement by Parent and the Company is reached.
With respect to a claim by any Indemnitee for indemnification in situations
other than those described in the preceding sentence, the procedures set forth
in the Escrow Agreement and the Setoff Escrow Agreement shall govern.
Section 10. Miscellaneous Provisions
10.1 Shareholders' Agent. By virtue of their approval of the Merger, the
Merger Shareholders shall irrevocably appoint ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as their agent for
purposes of Sections 1.6 and Section 9 (the "Shareholders' Agent"), and ▇▇▇▇▇▇▇
▇▇▇▇▇▇ hereby accepts his appointment as the Shareholders' Agent. Parent shall
be entitled to deal exclusively with the Shareholders' Agent on all matters
relating to Section 1.6 and Section 9, and shall be entitled to rely
conclusively (without further evidence of any kind whatsoever) on any document
executed or purported to be executed on behalf of any Indemnitor by the
Shareholders' Agent, and on any other action taken or purported to be taken on
behalf of any Indemnitor by the Shareholders' Agent, as fully binding upon such
Indemnitor or shareholder of the Company. If the Shareholders' Agent shall die,
become disabled or otherwise be unable to fulfill his responsibilities as agent
of the Indemnitors or otherwise, then the Indemnitors shall, within ten days
after such death or disability, appoint a successor agent and, promptly
thereafter, shall notify Parent of the identity of such successor. Any such
successor shall become the "Shareholders' Agent" for purposes of Section 1.6,
Section 9 and this Section 10.1. If for any reason there is no Shareholders'
Agent at any time, all references herein to the Shareholders' Agent shall be
deemed to refer to the Indemnitors.
10.2 Further Assurances. Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (prior
to, at or after the Closing) for the purpose of carrying out or evidencing any
of the transactions contemplated by this Agreement.
10.3 Fees and Expenses. Subject to any other provision in this Agreement,
each party to this Agreement shall bear and pay all fees, costs and expenses
(including legal fees and accounting fees) that have been incurred or that are
incurred by such party in connection with the transactions contemplated by this
Agreement.
10.4 Attorneys' Fees. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
10.5 Notices. Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in writing and shall be
deemed properly
40
delivered, given and received when delivered (by hand, by registered mail, by
courier or express delivery service or by facsimile) to the address or facsimile
telephone number set forth beneath the name of such party below (or to such
other address or facsimile telephone number as such party shall have specified
in a written notice given to the other parties hereto):
if to Parent or Merger Sub:
Acuson Corporation
Legal Department
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Attention: General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Company:
▇▇▇▇▇, Inc.
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Attention: President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Shareholders' Agent or any of the Indemnitors:
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c/▇ ▇▇▇▇▇, Inc.
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Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
10.6 Time of the Essence. For the purposes of this Agreement and the
transactions contemplated by this Agreement, time is of the essence.
10.7 Headings. The underlined headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
10.8 Counterparts. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
10.9 Governing Law. This Agreement shall be construed in accordance with,
and governed in all respects by, the internal laws of the Commonwealth of
Pennsylvania (without giving effect to principles of conflicts of laws).
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10.10 Successors and Assigns. This Agreement shall be binding upon each of
the parties hereto and each of their respective successors and assigns, if any.
This Agreement shall inure to the benefit of: the Company; Parent; Merger Sub;
the other Indemnitees; and the respective successors and assigns, if any, of the
foregoing. After the Closing, Parent may freely assign any or all of its rights
under this Agreement (including its indemnification rights under Section 9), in
whole or in part, to any other Person without obtaining the consent or approval
of any other party hereto or of any other Person. The Company may not assign any
of its rights or delegate any of its obligations to any Person without the prior
written consent of Parent.
10.11 Remedies Cumulative; Specific Performance. The rights and remedies
of the parties hereto shall be cumulative (and not alternative). The parties to
this Agreement agree that, in the event of any breach or threatened breach by
any party to this Agreement of any covenant, obligation or other provision set
forth in this Agreement for the benefit of any other party to this Agreement,
such other party shall be entitled (in addition to any other remedy that may be
available to it) to (a) a decree or order of specific performance or mandamus to
enforce the observance and performance of such covenant, obligation or other
provision and (b) an injunction restraining such breach or threatened breach.
10.12 Waiver. No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy. No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
10.13 Amendments. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered: (a) prior to the Closing Date, on behalf of Parent, Merger Sub, the
Company and the Shareholders' Agent (acting exclusively for and on behalf of all
of the Merger Shareholders); and (b) after the Closing Date, on behalf of Parent
and the Shareholders' Agent (acting exclusively for and on behalf of all of the
Merger Shareholders).
10.14 Severability. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
10.15 Parties in Interest. Except for the provisions of Section 1.3 and
▇▇▇▇▇▇▇ ▇, ▇▇▇▇ of the provisions of this Agreement is intended to provide any
rights or remedies to any Person other than the parties hereto and their
respective successors and assigns, if any.
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10.16 Entire Agreement. This Agreement and the other agreements referred
to herein set forth the entire understanding of the parties hereto relating to
the subject matter hereof and thereof and supersede all prior agreements and
understandings among or between any of the parties relating to the subject
matter hereof and thereof; provided, however, that the Proprietary Information
Agreement executed on behalf of Parent and the Company on November 19, 1998
shall not be superseded by this Agreement and shall remain in effect in
accordance with its terms until the earlier of (a) the Closing Date or (b) the
date on which such Proprietary Information Agreement is terminated in accordance
with its terms.
10.17 Waiver of Jury Trial. Each of the parties hereto hereby irrevocably
waives any and all right to trial by jury in any Legal Proceeding arising out of
or related to this Agreement or the transactions contemplated hereby.
10.18 Construction.
(a) For purposes of this Agreement, whenever the context requires:
the singular number shall include the plural, and vice versa; the masculine
gender shall include the feminine and neuter genders; the feminine gender shall
include the masculine and neuter genders; and the neuter gender shall include
the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including,"
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation."
(d) Except as otherwise indicated, all references in this Agreement
to "Sections", "Schedules" and "Exhibits" are intended to refer to Sections of
this Agreement and Schedules and Exhibits to this Agreement.
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The parties hereto have caused this Agreement to be executed and delivered
as of the date first written above.
Acuson Corporation,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President
Echo Acquisition Corp.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President
▇▇▇▇▇, Inc.,
a Pennsylvania corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
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EXHIBITS
Exhibit A - Certain definitions
Exhibit B - Form of Voting Agreement
Exhibit C - Form of Escrow Agreement
Exhibit D - Form of Shareholder Representation Letter
Exhibit E - Form of Tax Representation Letter
Exhibit F - Employment Agreement
Exhibit G - Persons to sign Employment and Noncompetition Agreements
Exhibit H - Form of Noncompetition Agreement
Exhibit I - FIRPTA Statement
Exhibit J - Form of Registration Rights Agreement
Exhibit K - Individuals included in definition of knowledge
Exhibit L - Setoff Escrow Agreement
Exhibit A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
Acquisition Transaction. "Acquisition Transaction" means any transaction
involving:
(a) the sale, license, disposition or acquisition of all or a material
portion of the business or assets of the Company (taken as a whole);
(b) the issuance, disposition or acquisition of (i) any capital stock or
other equity security of the Company, (ii) any option, call, warrant or right
(whether or not immediately exercisable) to acquire any capital stock or other
equity security of the Company or (iii) any security, instrument or obligation
that is or may become convertible into or exchangeable for any capital stock or
other equity security of the Company; or
(c) any merger, consolidation, business combination, reorganization or
similar transaction involving the Company.
Agreement. "Agreement" means the Agreement and Plan of Merger and
Reorganization to which this Exhibit A is attached (including the Disclosure
Schedule), as it may be amended from time to time.
Company Contract. "Company Contract" means any Contract: (a) to which
the Company is a party; (b) by which the Company or any of its assets is or may
become bound or under which the Company has, or may become subject to, any
obligation; or (c) under which the Company has or may acquire any right or
interest.
Company Proprietary Asset. "Company Proprietary Asset" means any
Proprietary Asset owned by or licensed to the Company or otherwise used by the
Company.
Company's Accountants. "Company's Accountants" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
and any other accountant(s) that have provided services to or on behalf of the
Company in connection with the transactions contemplated by this Agreement.
Company's Counsel. "Company's Counsel" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and any
other legal counsel that has provided services to or on behalf of the Company in
connection with the transactions contemplated by this Agreement.
Consent. "Consent" means any approval, consent, ratification, permission,
waiver or authorization (including any Governmental Authorization).
Contract. "Contract" means any written, oral or other agreement, contract,
subcontract, lease, understanding, instrument, note, warranty, insurance policy,
benefit plan or legally binding commitment or undertaking of any nature.
Damages. "Damages" include any loss, damage, injury, decline in value,
lost opportunity, liability, claim, demand, settlement, judgment, award, fine,
penalty, tax, fee
(including reasonable attorneys' fees), charge, cost (including costs of
investigation) or expense of any nature.
Disclosure Schedule. "Disclosure Schedule" means the schedule (dated as
of the date of the Agreement) delivered to Parent on behalf of the Company.
Encumbrance. "Encumbrance" means any lien, pledge, hypothecation, charge,
mortgage, security interest, encumbrance, claim, infringement, interference,
option, right of first refusal, preemptive right, community property interest or
restriction of any nature (including any restriction on the voting of any
security, any restriction on the transfer of any security or other asset, any
restriction on the receipt of any income derived from any asset, any restriction
on the use of any asset and any restriction on the possession, exercise or
transfer of any other attribute of ownership of any asset).
Entity. "Entity" means any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
Environmental Law. "Environmental Law" means any federal, state, local or
foreign Legal Requirement relating to pollution or protection of human health or
the environment (including ambient air, surface water, ground water, land
surface or subsurface strata), including any law or regulation relating to
emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern.
Excess Accounting and Legal Expenses. "Excess Accounting and Legal
Expenses" means the sum of (A) the amount by which legal fees and expenses
payable to the Company's Counsel and incurred in connection with the
transactions contemplated by this Agreement exceed $75,000; (B) the amount by
which accounting expenses payable to the Company's Accountants and incurred in
connection with the transactions contemplated by this Agreement exceed $175,000;
and (C) all fees or other amounts payable by the Company to any other financial
or other advisor(s) (other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP).
Exchange Act. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
Founders Shareholders Agreement. "Founders Shareholders Agreement" means
the founders shareholders agreement dated April 4, 1996 between the Company and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇.
Fully Diluted Number of Company Shares. "Fully Diluted Number of Company
Shares" means the sum of (i) the aggregate number of shares of capital stock of
the Company outstanding immediately prior to the Effective Time, plus (ii) the
aggregate number of shares of capital stock of the Company (if any) issuable
upon the exercise of any option, warrant or other right to acquire capital stock
of the Company, or the conversion of any convertible securities, outstanding
immediately prior to the Effective Time to the extent that the holder thereof
has
agreed to exercise or convert such option, warrant or other security in
connection with the Merger.
Governmental Authorization. "Governmental Authorization" means any: (a)
permit, license, certificate, franchise, permission, clearance, registration,
qualification or authorization issued, granted, given or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement; or (b) right under any Contract with any Governmental Body.
Governmental Body. "Governmental Body" means any: (a) nation, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any court or
other tribunal).
Indemnitees. "Indemnitees" means the following Persons: (a) Parent; (b)
Parent's current and future affiliates (including Merger Sub); (c) the
respective Representatives of the Persons referred to in clauses "(a)" and "(b)"
above; and (d) the respective successors and assigns of the Persons referred to
in clauses "(a)", "(b)" and "(c)" above; provided, however, that the
shareholders of the Company are not deemed to be "Indemnitees."
Key Employees. "Key Employees" means ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
Knowledge; Best of Knowledge. Information shall be deemed to be known to
the "best of knowledge" or to the "knowledge" of the Company if that information
is actually known or reasonably should have been known by any officer or
director of the Company, or any of the other persons listed on Exhibit K
attached hereto, in each case after due inquiry by such persons of the
appropriate Company personnel and records.
Legal Proceeding. "Legal Proceeding" means any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding), hearing, inquiry, audit, examination or
investigation commenced, brought, conducted or heard by or before, or otherwise
involving, any court or other Governmental Body or any arbitrator or arbitration
panel.
Legal Requirement. "Legal Requirement" means any federal, state, local,
municipal, foreign or other law, statute, constitution, principle of common law,
resolution, ordinance, code, edict, decree, rule, regulation, ruling or
requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Body.
Material Adverse Effect. A violation or other matter will be deemed to
have a "Material Adverse Effect" on the Company if such violation or other
matter (considered together with all other matters that would constitute
exceptions to the representations and warranties set forth in the Agreement or
in the Company's Closing Certificate but for the presence of "Material Adverse
Effect" or other materiality qualifications, or any similar qualifications, in
such
representations and warranties) would have a material adverse effect on the
business, condition, operations or financial performance of the Company.
Materials of Environmental Concern. "Materials of Environmental Concern"
include chemicals, pollutants, contaminants, wastes, toxic substances, petroleum
and petroleum products and any other substance that is now or hereafter
regulated by any Environmental Law or that is otherwise a danger to health,
reproduction or the environment.
Parent Average Stock Price. "Parent Average Stock Price" means the average
of the closing sale prices of a share of Parent Common Stock as reported on the
New York Stock Exchange for each of the 10 consecutive trading days ending on
the trading day immediately preceding publication of the first public
announcement of the Merger, which shall be made on the business day immediately
following the date of this Agreement.
Person. "Person" means any individual, Entity or Governmental Body.
Proprietary Asset. "Proprietary Asset" means any: (a) patent, patent
application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service ▇▇▇▇ (whether
registered or unregistered), service ▇▇▇▇ application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, computer program, invention, design, blueprint, engineering drawing,
proprietary product, technology, proprietary right or other intellectual
property right or intangible asset; or (b) right to use or exploit any of the
foregoing.
Representatives. "Representatives" means officers, directors, employees,
agents, attorneys, accountants, advisors and representatives.
SEC. "SEC" means the United States Securities and Exchange Commission.
Securities Act. "Securities Act" means the Securities Act of 1933, as
amended.
Tax. "Tax" means any tax (including any income tax, franchise tax, capital
gains tax, gross receipts tax, value-added tax, surtax, estimated tax,
unemployment tax, national health insurance tax, excise tax, ad valorem tax,
transfer tax, stamp tax, recording tax, registration tax, sales tax, use tax,
property tax, business tax, benefits tax, withholding tax or payroll tax), levy,
assessment, tariff, duty (including any customs duty), deficiency or fee, and
any related charge or amount (including any fine, penalty or interest), imposed,
assessed or collected by or under the authority of any Governmental Body.
Tax Return. "Tax Return" shall mean any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
Year 2000 Compliant. "Year 2000 Compliant" means that the computer systems
(i) are capable of recognizing, processing, managing, representing, interpreting
and manipulating
correctly date related data for dates earlier and later than January 1, 2000;
(ii) have the ability to provide date recognition for any data element without
limitation; (iii) have the ability to function automatically into and beyond the
year 2000 without human intervention and without any change in operations
associated with the advent of the year 2000; (iv) have the ability to interpret
data, dates and time correctly into and beyond the year 2000; (v) have the
ability not to produce noncompliance in existing information, nor otherwise
corrupt such data into and beyond the year 2000; (vi) have the ability to
process correctly after January 1, 2000 data containing dates before that date;
and (vii) have the ability to recognize all "leap years," including February 29,
2000.
Exhibit B
Form of Voting Agreement
VOTING AGREEMENT
This Voting Agreement is entered into as of September __, 1999, by and
between Acuson Corporation, a Delaware corporation ("Parent"), and the
undersigned ("Shareholder").
Recitals
A. Parent, Echo Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of Parent ("Merger Sub"), and ▇▇▇▇▇, Inc., a Pennsylvania
corporation (the "Company"), are entering into an Agreement and Plan of Merger
and Reorganization of even date herewith (the "Reorganization Agreement") which
provides (subject to the conditions set forth therein) for the merger of the
Company with and into Merger Sub (the "Merger").
B. In order to induce Parent and Merger Sub to enter into the
Reorganization Agreement, Shareholder is entering into this Voting Agreement.
Agreement
The parties to this Voting Agreement, intending to be legally bound, agree
as follows:
Section 1. Certain Definitions
For purposes of this Voting Agreement:
(a) "Company Common Stock" shall mean the common stock, $0.01 par
value per share, of the Company.
(b) "Expiration Date" shall mean the earlier of (i) the date upon
which the Reorganization Agreement is validly terminated or (ii) the date upon
which the Merger becomes effective.
(c) Shareholder shall be deemed to "Own" or to have acquired
"Ownership" of a security if Shareholder: (i) is the record owner of such
security or (ii) is the "beneficial owner" (within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934) of such security.
(d) "Person" shall mean any (i) individual, (ii) corporation, limited
liability company, partnership or other entity or (iii) governmental authority.
(e) "Subject Securities" shall mean: (i) all securities of the
Company (including all shares of Company Common Stock and all options, warrants
and other rights to acquire shares of Company Common Stock) Owned by Shareholder
as of the date of this Agreement and (ii) all additional securities of the
Company (including all additional shares of Company Common Stock and all
additional options, warrants and other rights to acquire shares of
Company Common Stock) of which Shareholder acquires Ownership during the period
from the date of this Agreement through the Expiration Date.
(f) A Person shall be deemed to have effected a "Transfer" of a
security if such Person directly or indirectly: (i) sells, pledges, encumbers,
grants an option with respect to, transfers or disposes of such security or any
interest in such security or (ii) enters into an agreement or commitment
contemplating the possible sale of, pledge of, encumbrance of, grant of an
option with respect to, transfer of or disposition of such security or any
interest therein.
Section 2. Transfer of Subject Securities
2.1 Transferee of Subject Securities to be Bound by this Agreement.
Shareholder agrees that, during the period from the date of this Voting
Agreement through the Expiration Date, Shareholder shall not cause or permit any
Transfer of any of the Subject Securities to be effected unless each Person to
which any of such Subject Securities, or any interest in any of such Subject
Securities, is or may be transferred shall have: (a) executed a counterpart of
this Voting Agreement and a proxy in the form attached hereto as Exhibit A (with
such modifications as Parent may reasonably request) and (b) agreed to hold such
Subject Securities (or interest in such Subject Securities) subject to all of
the terms and provisions of this Voting Agreement.
2.2 Transfer of Voting Rights. Shareholder agrees that, during the period
from the date of this Voting Agreement through the Expiration Date, Shareholder
shall ensure that: (a) none of the Subject Securities is deposited into a voting
trust and (b) no proxy is granted, and no voting agreement or similar agreement
is entered into, with respect to any of the Subject Securities.
Section 3. Voting of Shares
3.1 Voting Agreement. Shareholder agrees that, during the period from the
date of this Voting Agreement through the Expiration Date:
(a) at any meeting of shareholders of the Company, however called,
Shareholder shall (unless otherwise directed in writing by Parent) cause all
outstanding shares of Company Common Stock that are Owned by Shareholder as of
the record date fixed for such meeting to be voted in favor of the approval and
adoption of the Reorganization Agreement and the approval of the Merger, and in
favor of each of the other actions contemplated by the Reorganization Agreement;
(b) in the event written consents are solicited or otherwise sought
from shareholders of the Company with respect to the approval or adoption of the
Reorganization Agreement, with respect to the approval of the Merger or with
respect to any of the other actions contemplated by the Reorganization
Agreement, Shareholder shall (unless otherwise directed in writing by Parent)
cause to be executed, with respect to all shares of Company Common Stock that
are Owned by Shareholder as of the record date fixed for the consent to the
proposed action, a written consent or written consents to such proposed action;
and
(c) Shareholder shall cause all outstanding shares of Company Common
Stock that are Owned by Shareholder to be voted against any Acquisition
Transaction involving any
Person other than Parent and against any other matter or transaction that is
inconsistent with the transactions contemplated by the Reorganization Agreement
or that would cause the consummation of such transactions to be delayed.
3.2 Proxy; Further Assurances.
(a) Contemporaneously with the execution of this Voting Agreement:
(i) Shareholder shall deliver to Parent a proxy in the form attached to this
Voting Agreement as Exhibit A, which shall be irrevocable to the fullest extent
permitted by law, with respect to the shares referred to therein (the "Proxy")
and (ii) Shareholder shall cause to be delivered to Parent an additional proxy
(in the form attached hereto as Exhibit A) executed on behalf of the record
owner of any outstanding shares of Company Common Stock that are owned
beneficially (within the meaning of Rule 13d-3 under the Securities Exchange Act
of 1934), but not of record, by Shareholder.
(b) Shareholder shall, at his own expense, perform such further acts
and execute such further documents and instruments as may reasonably be required
to vest in Parent the power to carry out and give effect to the provisions of
this Voting Agreement.
3.3 Reservation of Other Voting Rights. Except to the extent described in
Section 3.1, Shareholder reserves the right to vote the Shares in Shareholder's
discretion.
Section 4. Waiver of Dissenters' Rights
Shareholder hereby irrevocably and unconditionally waives, and agrees to
cause to be waived and to prevent the exercise of, any rights of appraisal, any
dissenters' rights and any similar rights relating to the Merger or any related
transaction that Shareholder or any other Person may have by virtue of the
ownership of any outstanding shares of Company Common Stock Owned by
Shareholder.
Section 5. No Solicitation
Shareholder agrees that, during the period from the date of this Voting
Agreement through the Expiration Date, Shareholder shall not, directly or
indirectly, and Shareholder shall ensure that his Representatives (as defined in
the Reorganization Agreement) do not, directly or indirectly: (i) solicit,
initiate, encourage or induce the making, submission or announcement of any
Acquisition Transaction (as defined in the Reorganization Agreement) or take any
action that could reasonably be expected to lead to an Acquisition Transaction;
(ii) furnish any information regarding the Company or any direct or indirect
subsidiary of the Company to any Person in connection with or in response to an
Acquisition Transaction or potential Acquisition Transaction or (iii) engage in
discussions with any Person with respect to any Acquisition Transaction.
Shareholder shall immediately cease and discontinue, and Shareholder shall
ensure that his Representatives immediately cease and discontinue, any existing
discussions with any Person that relate to any Acquisition Transaction.
Section 6. Representations and Warranties of Shareholder
Shareholder hereby represents and warrants to Parent as follows:
6.1 Authorization, etc. Shareholder has the absolute and unrestricted
right, power, authority and capacity to execute and deliver this Voting
Agreement and the Proxy and to perform his obligations hereunder and thereunder.
This Voting Agreement and the Proxy have been duly executed and delivered by
Shareholder and constitute legal, valid and binding obligations of Shareholder,
enforceable against Shareholder in accordance with their terms, subject to (i)
laws of general application relating to bankruptcy, insolvency and the relief of
debtors and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
6.2 No Conflicts or Consents.
(a) The execution and delivery of this Voting Agreement and the Proxy
by Shareholder do not, and the performance of this Voting Agreement and the
Proxy by Shareholder will not: (i) conflict with or violate any law, rule,
regulation, order, decree or judgment applicable to Shareholder or by which he
or any of his properties is or may be bound or affected; or (ii) result in or
constitute (with or without notice or lapse of time) any breach of or default
under, or give to any other Person (with or without notice or lapse of time) any
right of termination, amendment, acceleration or cancellation of, or result
(with or without notice or lapse of time) in the creation of any encumbrance or
restriction on any of the Subject Securities pursuant to, any contract to which
Shareholder is a party or by which Shareholder or any of his affiliates or
properties is or may be bound or affected.
(b) The execution and delivery of this Voting Agreement and the Proxy
by Shareholder do not, and the performance of this Voting Agreement and the
Proxy by Shareholder will not, require any consent or approval of any Person.
6.3 Title to Securities. As of the date of this Voting Agreement: (a)
Shareholder holds of record (free and clear of any encumbrances or restrictions)
the number of outstanding shares of Company Common Stock set forth under the
heading "Shares Held of Record" on the signature page hereof; (b) Shareholder
holds (free and clear of any encumbrances or restrictions) the options, warrants
and other rights to acquire shares of Company Common Stock set forth under the
heading "Options and Other Rights" on the signature page hereof; (c) Shareholder
Owns the additional securities of the Company set forth under the heading
"Additional Securities Beneficially Owned" on the signature page hereof and (d)
Shareholder does not directly or indirectly Own any shares of capital stock or
other securities of the Company, or any option, warrant or other right to
acquire (by purchase, conversion or otherwise) any shares of capital stock or
other securities of the Company, other than the shares and options, warrants and
other rights set forth on the signature page hereof.
6.4 Accuracy of Representations. The representations and warranties
contained in this Voting Agreement are accurate in all respects as of the date
of this Voting Agreement, will be accurate in all respects at all times through
the Expiration Date and will be accurate in all respects as of the date of the
consummation of the Merger as if made on that date.
Section 7. Miscellaneous
7.1 Survival of Representations and Warranties. All representations and
warranties made by Shareholder in this Voting Agreement shall survive (i) the
consummation of the Merger, (ii) any termination of the Reorganization Agreement
and (iii) the Expiration Date.
7.2 Further Assurances. From time to time and without additional
consideration, Shareholder shall (at Parent's sole expense) execute and deliver,
or cause to be executed and delivered, such additional transfers, assignments,
endorsements, proxies, consents and other instruments, and shall (at Parent's
sole expense) take such further actions, as Parent may request for the purpose
of carrying out and furthering the intent of this Voting Agreement.
7.3 Termination. This Agreement shall terminate and shall have no further
force or effect as of the Expiration Date.
7.4 Expenses. All costs and expenses incurred in connection with the
transactions contemplated by this Voting Agreement shall be paid by the party
incurring such costs and expenses.
7.5 Notices. Any notice or other communication required or permitted to be
delivered to either party under this Voting Agreement shall be in writing and
shall be deemed properly delivered, given and received when delivered (by hand,
by registered mail, by courier or express delivery service or by facsimile) to
the address or facsimile telephone number set forth beneath the name of such
party below (or to such other address or facsimile telephone number as such
party shall have specified in a written notice given to the other party):
if to Shareholder:
at the address set forth below Shareholder's signature on
the signature page hereof
if to Parent:
Acuson Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
7.6 Severability. If any provision of this Voting Agreement or any part of
any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (b) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c) the
invalidity or unenforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Voting Agreement.
Each provision of this Voting
Agreement is separable from every other provision of this Voting Agreement, and
each part of each provision of this Voting Agreement is separable from every
other part of such provision.
7.7 Entire Agreement. This Voting Agreement, the Proxy and any other
documents delivered by the parties in connection herewith constitute the entire
agreement between the parties with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings between the
parties with respect thereto. No addition to or modification of any provision
of this Voting Agreement shall be binding upon either party unless made in
writing and signed by both parties.
7.8 Assignment; Binding Effect. Except as provided herein, neither this
Voting Agreement nor any of the interests or obligations hereunder may be
assigned or delegated by Shareholder and any attempted or purported assignment
or delegation of any of such interests or obligations shall be void. Subject to
the preceding sentence, this Voting Agreement shall be binding upon Shareholder
and his heirs, estate, executors, personal representatives, successors and
assigns, and shall inure to the benefit of Parent and its successors and
assigns. Without limiting any of the restrictions set forth in Section 2 or
elsewhere in this Voting Agreement, this Voting Agreement shall be binding upon
any Person to whom any Subject Securities are transferred. Nothing in this
Voting Agreement is intended to confer on any Person (other than Parent and its
successors and assigns) any rights or remedies of any nature.
7.9 Specific Performance. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Voting Agreement or the
Proxy was not performed in accordance with its specific terms or was otherwise
breached. Shareholder agrees that, in the event of any breach or threatened
breach by Shareholder of any covenant or obligation contained in this Voting
Agreement or in the Proxy, Parent shall be entitled (in addition to any other
remedy that may be available to it, including monetary damages) to seek and
obtain (a) a decree or order of specific performance to enforce the observance
and performance of such covenant or obligation, and (b) an injunction
restraining such breach or threatened breach. Shareholder further agrees that
neither Parent nor any other Person shall be required to obtain, furnish or post
any bond or similar instrument in connection with or as a condition to obtaining
any remedy referred to in this Section 7.9, and Shareholder irrevocably waives
any right he may have to require the obtaining, furnishing or posting of any
such bond or similar instrument.
7.10 Non-Exclusivity. The rights and remedies of Parent under this Voting
Agreement are not exclusive of or limited by any other rights or remedies which
it may have, whether at law, in equity, by contract or otherwise, all of which
shall be cumulative (and not alternative). Without limiting the generality of
the foregoing, the rights and remedies of Parent under this Voting Agreement,
and the obligations and liabilities of Shareholder under this Voting Agreement,
are in addition to their respective rights, remedies, obligations and
liabilities under common law requirements and under all applicable statutes,
rules and regulations. Nothing in this Voting Agreement shall limit any of
Shareholder's obligations, or the rights or remedies of Parent, under any
Affiliate Agreement between Parent and Shareholder; and nothing in any such
Affiliate Agreement shall limit any of Shareholder's obligations, or any of the
rights or remedies of Parent, under this Voting Agreement.
7.11 Governing Law. This Voting Agreement and the Proxy shall be construed
in accordance with, and governed in all respects by, the laws of the
Commonwealth of Pennsylvania (without giving effect to principles of conflicts
of laws).
7.12 Counterparts. This Voting Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.
7.13 Captions. The captions contained in this Voting Agreement are for
convenience of reference only, shall not be deemed to be a part of this Voting
Agreement and shall not be referred to in connection with the construction or
interpretation of this Voting Agreement.
7.14 Attorneys' Fees. If any legal action or other legal proceeding
relating to this Voting Agreement or the enforcement of any provision of this
Voting Agreement is brought against Shareholder, the prevailing party shall be
entitled to recover reasonable attorneys' fees, costs and disbursements (in
addition to any other relief to which the prevailing party may be entitled).
7.15 Waiver. No failure on the part of Parent to exercise any power,
right, privilege or remedy under this Voting Agreement, and no delay on the part
of Parent in exercising any power, right, privilege or remedy under this Voting
Agreement, shall operate as a waiver of such power, right, privilege or remedy;
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy. Parent shall not be deemed to have waived any claim
available to Parent arising out of this Voting Agreement, or any power, right,
privilege or remedy of Parent under this Voting Agreement, unless the waiver of
such claim, power, right, privilege or remedy is expressly set forth in a
written instrument duly executed and delivered on behalf of Parent; and any such
waiver shall not be applicable or have any effect except in the specific
instance in which it is given.
7.16 Construction.
(a) For purposes of this Voting Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include masculine and feminine genders.
(b) The parties agree that any rule of construction to the effect
that ambiguities are to be resolved against the drafting party shall not be
applied in the construction or interpretation of this Voting Agreement.
(c) As used in this Voting Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this Voting
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of this
Voting Agreement and Exhibits to this Voting Agreement.
In Witness Whereof, Parent and Shareholder have caused this Voting
Agreement to be executed as of the date first written above.
Acuson Corporation
By:__________________________________
_____________________________________
Name:
Address:____________________
____________________
Facsimile:__________________
Shares Held of Record Options and Other Rights Additional Securities
--------------------- ------------------------ ---------------------
Beneficially Owned
------------------
Irrevocable Proxy
The undersigned Shareholder of ▇▇▇▇▇, Inc., a Pennsylvania corporation (the
"Company"), hereby irrevocably (to the fullest extent permitted by law) appoints
and constitutes ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and Acuson Corporation, a
Delaware corporation ("Parent"), and each of them, the attorneys and proxies of
the undersigned with full power of substitution and resubstitution, to vote, in
the manner described below, the following securities of the undersigned, until
the Expiration Date, as such term is defined in the Voting Agreement, dated as
of the date hereof, between Parent and the undersigned (the "Voting Agreement"):
(i) the outstanding shares of capital stock of the Company owned of record by
the undersigned as of the date of this proxy, which shares are specified on the
final page of this proxy, and (ii) any and all other shares of capital stock of
the Company which the undersigned may acquire on or after the date hereof. (The
shares of the capital stock of the Company referred to in clauses "(i)" and
"(ii)" of the immediately preceding sentence are collectively referred to as the
"Shares.") Upon the execution hereof, all prior proxies given by the
undersigned with respect to any of the Shares are hereby revoked, and the
undersigned agrees that no subsequent proxies will be given with respect to any
of the Shares prior to the Expiration Date.
This proxy is irrevocable, is coupled with an interest and is granted in
connection with the Voting Agreement, and is granted in consideration of Parent
entering into the Agreement and Plan of Merger and Reorganization, dated as of
the date hereof, among Parent, Echo Acquisition Corp. and the Company (the
"Reorganization Agreement").
The attorneys and proxies named above will be empowered, and may exercise
this proxy, to vote the Shares at any time until the Expiration Date, at any
meeting of the Shareholders of the Company, however called, or in connection
with any solicitation of written consents from Shareholders of the Company (i)
in favor of the approval and adoption of the Reorganization Agreement and the
approval of the Merger contemplated by the Reorganization Agreement, and in
favor of each of the other actions contemplated by the Reorganization Agreement,
and (ii) against any Acquisition Transaction involving any Person other than
Parent and against any other matter or transaction that is inconsistent with the
transactions contemplated by the Reorganization Agreement or that would cause
the consummation of such transactions to be delayed.
The undersigned may vote the Shares on all other matters in the discretion
of the undersigned, and this Proxy grants no authority or power to vote the
Shares except to the extent and in the manner set forth in the preceding
paragraph.
This proxy shall be binding upon the heirs, estate, executors, personal
representatives, successors and assigns of the undersigned (including any
transferee of any of the Shares).
If any provision of this proxy or any part of any such provision is held
under any circumstances to be invalid or unenforceable in any jurisdiction, then
(a) such provision or part thereof shall, with respect to such circumstances and
in such jurisdiction, be deemed amended to conform to applicable laws so as to
be valid and enforceable to the fullest possible extent, (b) the invalidity or
unenforceability of such provision or part thereof under such circumstances and
in such jurisdiction shall not affect the validity or enforceability of such
provision or part thereof under any other circumstances or in any other
jurisdiction, and (c) the invalidity or unenforceability of such provision or
part thereof shall not affect the validity or enforceability of the remainder of
such provision or the validity or enforceability of any other provision of this
proxy. Each provision of this proxy is separable from every other provision of
this proxy, and each part of each provision of this proxy is separable from
every other part of such provision.
This proxy shall terminate upon the Expiration Date.
Dated: September __, 1999
________________________________________
Name:
Number of shares of common stock of the
Company owned of record as of the date of
this proxy:
_________________________________________
Exhibit C
Form of Escrow Agreement
ESCROW AGREEMENT
This Escrow Agreement ("Agreement") is made and entered into as of _______,
1999 by and among: Acuson Corporation, a Delaware corporation ("Parent"), the
shareholders of ▇▇▇▇▇, Inc., a Pennsylvania corporation (the "Company"),
identified on Exhibit A hereto (the "Shareholders"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as
Shareholders" Agent ("Shareholders' Agent"), and State Street Bank and Trust
Company of California, N.A., a national banking association (the "Escrow
Agent").
Recitals
A. Parent, Echo Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of Parent ("Merger Sub"), and the Company have entered into an
Agreement and Plan of Merger and Reorganization dated as of September 15, 1999
(the "Reorganization Agreement"), pursuant to which the Company will merge with
and into Merger Sub and the Shareholders will have the right to receive shares
of common stock of Parent.
B. The Reorganization Agreement contemplates the establishment of an
escrow arrangement to secure the indemnification and other obligations of the
Shareholders under the Reorganization Agreement.
C. Pursuant to Section 10.1 of the Reorganization Agreement, the
Shareholders have irrevocably appointed ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ to serve as
Shareholders' Agent for, among other things, all matters set forth in Section 9
of the Reorganization Agreement.
Agreement
The parties, intending to be legally bound, agree as follows:
1. Defined Terms. Capitalized terms used in this Agreement and not
otherwise defined shall have the meanings given to them in the Reorganization
Agreement, a copy of which is attached hereto.
2. Escrow and Indemnification.
(a) Shares and Stock Powers Placed in Escrow. At the Effective Time,
the date of which shall be set forth in a notice to Escrow Agent: (i) Parent
shall issue certificates for shares of Parent Common Stock registered in the
names of the Merger Shareholders as set forth on Exhibit B hereto, evidencing
the shares of Parent Common Stock to be held in escrow in accordance with this
Agreement and (ii) each of the Shareholders shall deliver to Parent five
original "assignments separate from certificate" ("Stock Powers") endorsed by
each such Shareholder in blank with signatures guaranteed by a commercial bank
or by a member firm of the New York Stock Exchange. The shares of Parent Common
Stock being held in escrow pursuant to this Agreement (the "Escrow Shares")
shall constitute an escrow fund (the "Escrow Fund") with respect to the
indemnification obligations of the Shareholders under the Reorganization
Agreement. The Escrow Fund shall be held as a trust fund and it is the intention
of Parent, the Company, the Shareholders and the Shareholders' Agent that the
Escrow Fund shall not be subject to any lien, attachment, trustee process or any
other judicial process of any
creditor of any Shareholder or of any party hereto. The Escrow Agent agrees to
accept delivery of the Escrow Fund and to hold the Escrow Fund in an escrow
account (the "Escrow Account"), subject to the terms and conditions of this
Agreement.
(b) Voting of Escrow Shares. The record owner of the Escrow Shares
shall be entitled to exercise all voting rights with respect to such Escrow
Shares.
(c) Dividends, Etc. Parent and each of the Shareholders agree among
themselves, for the benefit of Parent and the Escrow Agent, that any cash,
securities or other property distributable (whether by way of dividend, stock
split or otherwise) in respect of or in exchange for any Escrow Shares shall not
be distributed to the record owners of such Escrow Shares, but rather shall be
distributed to and held by the Escrow Agent in the Escrow Account. Unless and
until the Escrow Agent shall actually receive such cash, securities or other
property, it may assume without inquiry that the Escrow Shares currently being
held by it in the Escrow Account are all that the Escrow Agent is required to
hold. At the time any Escrow Shares are required to be released from the Escrow
Account to any Person pursuant to this Escrow Agreement, any cash, securities or
other property previously received by the Escrow Agent in respect of or in
exchange for such Escrow Shares shall be released from the Escrow to such
Person.
(d) Transferability. The interests of the Shareholders in the Escrow
Account and in the Escrow Shares shall not be assignable or transferable, other
than by operation of law.
(e) Fractional Shares. No fractional shares of Parent Common Stock
shall be retained in or released from the Escrow Account pursuant to this Escrow
Agreement. In connection with any release of Escrow Shares from the Escrow
Account, Parent and the Escrow Agent shall "round down" in order to avoid
retaining any fractional share in the Escrow Account and in order to avoid
releasing any fractional share from the Escrow Account. When shares are "rounded
down", no cash-in-lieu payments need to be made.
3. Administration of Escrow Account. Except as otherwise provided
herein, the Escrow Agent shall administer the Escrow Account as follows:
(a) If any Indemnitee has or claims to have incurred or suffered
Damages for which it is or may be entitled to indemnification, compensation or
reimbursement under Section 9.2 of the Reorganization Agreement, such Indemnitee
may, on or prior to the first anniversary of the date of the Effective Time (the
"Termination Date"), deliver a claim notice (a "Claim Notice") to the
Shareholders' Agent and to the Escrow Agent. Each Claim Notice shall state that
such Indemnitee believes in good faith and after investigation that there is or
has been a breach of a representation, warranty or covenant contained in the
Reorganization Agreement or that such Indemnitee is otherwise entitled to
indemnification, compensation or reimbursement under the Reorganization
Agreement and contain a brief description of the circumstances supporting such
Indemnitee's belief that there is or has been such a breach or that such
Indemnitee is so entitled to indemnification, compensation or reimbursement and
shall, to the extent possible, contain a non-binding, preliminary estimate of
the amount of Damages such Indemnitee claims to have so incurred or suffered
(the "Claimed Amount").
(b) Within 20 business days after receipt by the Shareholders' Agent
of a Claim Notice, the Shareholders' Agent may deliver to the Indemnitee who
delivered the Claim Notice and to the Escrow Agent a written response (the
"Response Notice") in which the Shareholders' Agent: (i) agrees that a whole
number of Escrow Shares having a "Stipulated Value" (as defined below) equal to
the full Claimed Amount may be released from the Escrow Account to the
Indemnitee; (ii) agrees that Escrow Shares having a Stipulated Value equal to
part, but not all, of the Claimed Amount (the "Agreed Amount") may be released
from the Escrow Account to the Indemnitee or (iii) indicates that no part of the
Claimed Amount may be released from the Escrow Account to the Indemnitee. Any
part of the Claimed Amount that is not to be released to the Indemnitee shall be
the "Contested Amount." If a Response Notice is not received by the Escrow Agent
within such 20 business-day period, then the Shareholders' Agent shall be deemed
to have agreed that Escrow Shares having a Stipulated Value equal to the full
Claimed Amount may be released to the Indemnitee from the Escrow Account.
(c) If the Shareholders' Agent delivers a Response Notice agreeing
that Escrow Shares having a Stipulated Value equal to the full Claimed Amount
may be released from the Escrow Account to the Indemnitee, or if the
Shareholders' Agent does not deliver a Response Notice in accordance with
Section 3(b), the Escrow Agent shall promptly following the receipt of the
Response Notice (or, if the Shareholders' Agent has not delivered a Response
Notice, promptly following the expiration of the 20 business-day period referred
to in Section 3(b)), deliver (or cause the stock transfer agent of the Escrow
Shares to deliver) to such Indemnitee such Escrow Shares.
(d) If the Shareholders' Agent delivers a Response Notice agreeing
that Escrow Shares having a Stipulated Value equal to part, but not all, of the
Claimed Amount may be released from the Escrow Account to the Indemnitee, the
Escrow Agent shall promptly following the receipt of the Response Notice deliver
(or cause the stock transfer agent of the Escrow Shares to deliver) to such
Indemnitee Escrow Shares having a Stipulated Value equal to the Agreed Amount.
(e) If the Shareholders' Agent delivers a Response Notice indicating
that there is a Contested Amount, the Shareholders' Agent and the Indemnitee
shall attempt in good faith to resolve the dispute related to the Contested
Amount. If the Indemnitee and the Shareholders' Agent shall resolve such
dispute, such resolution shall be binding on all of the Shareholders and a
settlement agreement containing the terms and conditions of such resolution
shall be signed by the Indemnitee and the Shareholders' Agent and sent to the
Escrow Agent, who shall, upon receipt thereof, release (or cause the stock
transfer agent of the Escrow Shares to release) Escrow Shares from the Escrow
Account in accordance with such agreement.
(f) If the Shareholders' Agent and the Indemnitee are unable to
resolve the dispute relating to any Contested Amount within 30 business days
after the delivery of the Claim Notice, then the claim described in the Claim
Notice shall be settled by binding arbitration in Wilmington, Delaware in
accordance with the Commercial Arbitration Rules then in effect of the American
Arbitration Association (the "AAA Rules"). Arbitration will be conducted by
three arbitrators; one selected by Parent, one selected by the Shareholders'
Agent and the third selected by the first two arbitrators. If either the
Shareholders' Agent or Parent fails to select an arbitrator prior to the
expiration of the 30-business day period commencing on the expiration of
the 30-business day period referred to in the first sentence of this Section
3(f), then either the Shareholders' Agent or Parent, as the case may be, shall
be entitled to select the second arbitrator. The parties agree to use all
reasonable efforts to cause the arbitration hearing to be conducted within 60
calendar days after the appointment of the last of the three arbitrators and to
use all reasonable efforts in the circumstances to cause the arbitrators'
decision to be furnished within 95 calendar days after the appointment of the
last of the three arbitrators. The parties further agree that, to the extent
practicable, discovery shall be completed at least 20 business days prior to the
date of the arbitration hearing. The arbitrators' decision shall relate solely
to whether the Indemnitee is entitled to recover the Contested Amount (or a
portion thereof), and the portion of such Contested Amount the Indemnitee is
entitled to recover. The final decision of the arbitrators shall be furnished to
the Shareholders' Agent, the Indemnitee and the Escrow Agent in writing and
shall constitute a conclusive determination of the issue in question, binding
upon the Shareholders, the Indemnitee and the Escrow Agent and shall not be
contested by any of them. The non-prevailing party in any arbitration shall pay
the reasonable expenses (including attorneys' fees) of the prevailing party, any
additional reasonable fees and expenses (including reasonable legal fees) of the
Escrow Agent, and the fees and expenses associated with the arbitration
(including the arbitrators' fees and expenses). For purposes of this Section
3(f), the non-prevailing party shall be deemed to be the Indemnitee if it is
entitled to recover less than 50% of the Contested Amount; otherwise it shall be
the Shareholders.
(g) The Escrow Agent shall release Escrow Shares from the Escrow
Account in connection with any Contested Amount within 5 business days after the
delivery to it of: (i) a copy of a settlement agreement executed by the
Indemnitee and the Shareholders' Agent setting forth instructions to the Escrow
Agent as to the number of Escrow Shares, if any, to be released from the Escrow
Account, with respect to such Contested Amount or (ii) a copy of the award of
the arbitrators referred to and as provided in Section 3(f) setting forth
instructions to the Escrow Agent as to the number of Escrow Shares, if any, to
be released from the Escrow Account, with respect to such Contested Amount.
(h) Any Escrow Shares released from the Escrow Account to an
Indemnitee shall be deemed to reduce the Escrow Shares pro rata with respect to
each Shareholder in accordance with each Shareholder's percentage interest in
the Escrow Fund as set forth in Exhibit B.
4. Release of Escrow Shares. The Escrow Agent is not the stock transfer
agent for the Parent Common Stock. Accordingly, if a distribution of a number
of shares of Parent Common Stock less than all of the Escrow Shares is to be
made, the Escrow Agent must requisition the appropriate number of shares from
such stock transfer agent, delivering to it the appropriate stock certificates
and related Stock Powers. For the purposes of this Agreement, the Escrow Agent
shall be deemed to have delivered Parent Common Stock to the Person entitled to
it when the Escrow Agent has delivered such certificates and Stock Powers to
such stock transfer agent with instructions to deliver it to the appropriate
Person. Distributions of Parent Common Stock shall be made to Parent or the
Shareholders, as appropriate, at the addresses described in Section 10(b).
Whenever a distribution is to be made to the Shareholders, pro rata
distributions shall be made to each of them based on the Percentage Interests in
the Escrow Fund set forth in Exhibit B. Within five business days after the
Termination Date, the Escrow Agent shall distribute (or cause the stock transfer
agent for the Parent Common Stock to distribute) to each of
the Shareholders such Shareholder's pro-rata portion of the Escrow Shares then
held in escrow at their addresses and based on the percentage interests in the
Escrow Fund set forth in Exhibit B; provided, however, that notwithstanding the
foregoing, if, prior to the Termination Date, any Indemnitee has given a Claim
Notice containing a claim which has not been resolved prior to the Termination
Date in accordance with Section 3, the Escrow Agent shall retain in the Escrow
Account after the Termination Date Escrow Shares having a Stipulated Value equal
to 100% of the Claimed Amount or Contested Amount, as the case may be, with
respect to all claims which have not then been resolved.
5. Valuation of Escrow Shares, Etc.
(a) Stipulated Value. For purposes of this Agreement, the "Stipulated
Value" of each Escrow Share shall be deemed to be equal to $__________ [the
closing sales price of a share of Parent Common Stock on the Closing Date will
be inserted in the blank].
(b) Stock Splits. All numbers contained in, and all calculations
required to be made pursuant to, this Agreement shall be adjusted as appropriate
to reflect any stock split, reverse stock split, stock dividend or similar
transaction effected by Parent after the date hereof; provided, however, that
the Escrow Agent shall have received (i) notice of such stock split or other
action, (ii) the appropriate number of additional shares of Parent Common Stock
or other property pursuant to Section 2(c) hereof, and (iii) a revised version
of Exhibit B as contemplated by Section 10(o).
6. Fees and Expenses. Upon the execution of this Agreement by all
parties hereto and the initial deposit of the Escrow Fund in the Escrow Account,
fees and expenses, in accordance with Exhibit C attached hereto, will be payable
to the Escrow Agent. This annual Escrow Agent fee will cover the first twelve
months of the escrow. In accordance with Exhibit C attached hereto, the Escrow
Agent will also be entitled to reimbursement for reasonable and documented out-
of-pocket expenses incurred by the Escrow Agent in the performance of its duties
hereunder. All such fees and expenses shall be paid by Parent.
7. Limitation of Escrow Agent's Liability.
(a) The Escrow Agent undertakes to perform such duties as are
specifically set forth in this Agreement only and shall have no duty under any
other agreement or document notwithstanding their being referred to herein or
attached hereto as an exhibit. The Escrow Agent shall not be liable except for
the performance of such duties as are specifically set forth in this Agreement,
and no implied covenants or obligations shall be read into this Agreement
against the Escrow Agent. The Escrow Agent shall incur no liability with respect
to any action taken by it or for any inaction on its part in reliance upon any
notice, direction, instruction, consent, statement or other document believed by
it to be genuine and duly authorized, nor for any other action or inaction
except for its own willful misconduct or negligence. In no event shall the
Escrow Agent be liable for punitive, incidental or consequential damages. The
Escrow Agent may rely on and use the Stock Powers and shall not be liable in
connection therewith. In all questions arising under this Agreement, the Escrow
Agent may rely on the advice of counsel, and for anything done, omitted or
suffered in good faith by the Escrow Agent based upon such advice the Escrow
Agent shall not be liable to anyone. The Escrow Agent shall not be required
to take any action hereunder involving any expense unless the payment of such
expense is made or provided for in a manner reasonably satisfactory to it.
(b) Parent hereby agrees to indemnify the Escrow Agent for, and hold
it harmless against, any loss, liability or expense incurred without negligence
or willful misconduct on the part of Escrow Agent, arising out of or in
connection with its carrying out of its duties hereunder. This right of
indemnification shall survive the termination of this Agreement, and the
resignation of the Escrow Agent. The costs and expenses of enforcing this right
of indemnification shall also be paid by Parent.
8. Termination. This Agreement shall terminate on the Termination Date
or, if earlier, upon the release by the Escrow Agent of the entire Escrow Fund
in accordance with this Agreement; provided, however, that if the Escrow Agent
has received from any Indemnitee a Claim Notice setting forth a claim that has
not been resolved by the Termination Date, then this Agreement shall continue in
full force and effect until the claim has been resolved and the Escrow Shares
released in accordance with this Agreement.
9. Successor Escrow Agent. In the event the Escrow Agent becomes
unavailable or unwilling to continue as escrow agent under this Agreement, the
Escrow Agent may resign and be discharged from its duties and obligations
hereunder by giving its written resignation to the parties to this Agreement.
Such resignation shall take effect not less than 30 calendar days after it is
given to all parties hereto. Parent may appoint a successor Escrow Agent only
with the consent of the Shareholders' Agent (which consent shall not be
unreasonably withheld or delayed). The Escrow Agent shall act in accordance
with written instructions from Parent as to the transfer of the Escrow Fund to a
successor escrow agent.
10. Miscellaneous.
(a) Attorneys' Fees. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
(b) Notices. Any notice or other communication required or permitted
to be delivered to any party under this Agreement shall be in writing and shall
be deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth in Section 10.5 of the
Reorganization Agreement or to the Escrow Agent at the address set forth below
(or to such other address or facsimile telephone number as such party shall have
specified in a written notice given to the other parties hereto):
State Street Bank and Trust Company of California, N.A.
Library Tower
▇▇▇ ▇▇▇▇ ▇/▇▇/ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If any Claim Notice, Response Notice or other document or notice of any kind is
required to be delivered to the Escrow Agent and any other person, the Escrow
Agent may assume without inquiry that such document has been delivered to such
other person if it has been delivered to the Escrow Agent.
(c) Headings. The underlined headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
(d) Counterparts. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
(e) Governing Law. This Agreement shall be construed in accordance
with, and governed in all respects by, the internal laws of the State of
California (without giving effect to principles of conflicts of laws).
(f) Successors and Assigns. This Agreement shall be binding upon each
of the parties hereto and each of their respective permitted successors and
assigns, if any. No Shareholder may assign such Shareholder's rights under this
Agreement without the express prior written consent of Parent, provided,
however, that (i) upon the death of a Shareholder, such Shareholder's rights
under this Agreement shall be transferred to the person(s) who receive such
Shareholder's Parent Common Stock under the laws of descent and distribution and
(ii) a Shareholder may assign such Shareholder's rights under this Agreement to
any organization qualified under Section 501(c)(3) of the Internal Revenue Code
to which the Shareholder transfers Registerable Shares or in connection with an
estate planning transaction. Nothing in this Agreement is intended to confer, or
shall be deemed to confer, any rights or remedies upon any person or entity
other than the parties hereto and their permitted successors and assigns. This
Agreement shall inure to the benefit of: the Shareholders; Parent; Escrow Agent
and the respective successors and assigns, if any, of the foregoing.
(g) Waiver. No failure on the part of any Person to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part
of any Person in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or remedy;
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy. No Person shall be deemed to have waived any claim
arising out of this Agreement, or any power, right, privilege or remedy under
this Agreement, unless the waiver of such claim, power, right, privilege or
remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such Person; and any such waiver shall not be applicable
or have any effect except in the specific instance in which it is given.
(h) Amendments. This Agreement may not be amended, modified, altered
or supplemented other than by means of a written instrument duly executed and
delivered on behalf of all of the parties hereto; provided, however, that any
amendment duly executed and delivered by the Shareholders' Agent shall be deemed
to have been duly executed and delivered by all of the Shareholders.
(i) Severability. In the event that any provision of this Agreement,
or the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
(j) Parties in Interest. None of the provisions of this Agreement is
intended to provide any rights or remedies to any Person other than the parties
hereto and their respective successors and assigns, if any.
(k) Entire Agreement. This Agreement and the other agreements referred
to herein set forth the entire understanding of the parties hereto relating to
the subject matter hereof and thereof and supersede all prior agreements and
understandings among or between any of the parties relating to the subject
matter hereof and thereof.
(l) Waiver of Jury Trial. Each of the parties hereto hereby
irrevocably waives any and all right to trial by jury in any Legal Proceeding
arising out of or related to this Agreement or the transactions contemplated
hereby.
(m) Tax Reporting Information and Certification of Tax Identification
Numbers.
(i) The parties hereto agree that, for tax reporting purposes,
all interest on or other income, if any, attributable to the Escrow Shares or
any other amount held in escrow by the Escrow Agent pursuant to this Agreement
shall be allocable to the Shareholders in accordance with their percentage
interests in the Escrow Fund set forth in Exhibit B.
(ii) Parent and each of the Shareholders agree to provide the
Escrow Agent with certified tax identification numbers for each of them by
furnishing appropriate forms W-9 (or Forms W-8, in the case of non-U.S. persons)
and other forms and documents that the Escrow Agent may reasonably request
(collectively, "Tax Reporting Documentation") to the Escrow Agent within 30 days
after the date hereof. The parties hereto understand that, if such Tax Reporting
Documentation is not so certified to the Escrow Agent, the Escrow Agent may be
required by the Internal Revenue Code, as it may be amended from time to time,
to withhold a portion of any interest or other income earned on the investment
of monies or other property held by the Escrow Agent pursuant to this Escrow
Agreement.
(n) Construction.
(i) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(ii) The parties hereto agree that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not be applied in the construction or interpretation of this Agreement.
(iii) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(o) Recalculation of Percentage Interests. If for any reason Exhibit
B should need to be recalculated, Parent and the Shareholders' Agent shall
jointly (i) calculate revised percentage interests for the Shareholders and (ii)
submit to the Escrow Agent a revised version of Exhibit B, on which the Escrow
Agent may rely without inquiry.
In Witness Whereof, the parties have duly executed this Agreement as of the
day and year first above written.
Acuson Corporation
__________________________________
By:_______________________________
Title:____________________________
Shareholders' Agent:
__________________________________
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Shareholder:
__________________________________
By:_______________________________
Print Name:_______________________
State Street Bank and Trust
Company of California, N.A.
__________________________________
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Exhibit A to Escrow Agreement
Shareholders
Exhibit B to Escrow Agreement
------------------------------------------------------------------------------------------
Name, Address and Taxpayer Identification Number of Shares Pro Rata Share of Escrow
Number of Shareholder Fund
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Exhibit C to Escrow Agreement
Escrow Fees and Expenses
Exhibit D
Form of Shareholder Representation Letter
SHAREHOLDER REPRESENTATION LETTER
(For Accredited Investors)
This Shareholder Representation Letter ("Letter") is being executed and
delivered as of _____________, 1999, by the undersigned shareholder of ▇▇▇▇▇,
Inc., a Pennsylvania corporation (the "Company"), to and in favor of, and for
the benefit of, Acuson Corporation, a Delaware corporation ("Parent") and its
affiliates.
RECITALS
A. The undersigned shareholder of the Company (the "Shareholder")
represents to Parent that he owns the number of shares of the common stock, $.01
par value per share, of the Company set forth below the Shareholder's signature
at the end of this Letter. Said shares are referred to in this Letter as the
"Shares."
B. Pursuant to an Agreement and Plan of Merger and Reorganization, dated
as of September 15, 1999 (the "Reorganization Agreement"), by and among Parent,
Echo Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Parent ("Merger Sub") and the Company, it is contemplated that the Company will
merge into Merger Sub (the merger of the Company into Merger Sub being referred
to in this Letter as the "Merger") with Merger Sub being the surviving
corporation. Upon the consummation of the Merger, the Company's shareholders
are to receive shares of common stock of Parent ("Parent Common Stock") in
exchange for their shares of common stock of the Company in accordance with the
Reorganization Agreement. Accordingly, it is contemplated that the Shareholder
will receive shares of Parent Common Stock in connection with the Merger.
C. Capitalized terms used in this Letter have the meaning ascribed to
them in the Reorganization Agreement unless otherwise stated herein.
CERTIFICATION
1. Representations and Warranties of the Shareholder. The Shareholder
represents, warrants and certifies to Parent as follows:
(a) The Shareholder is aware (i) that the Parent Common Stock to be
issued to the Shareholder in connection with the Merger will not be issued
pursuant to a registration statement under the Securities Act of 1933, as
amended (the "Act"), but will instead be issued in reliance on the exemption
from registration set forth in Section 4(2) of the Act and in Regulation D under
the Act, and (ii) that neither the Merger nor the issuance of such Parent Common
Stock has been approved or reviewed by the SEC or by any other Governmental
Body.
(b) The Shareholder is aware that the Parent Common Stock to be issued
in connection with the Merger cannot be resold unless such Parent Common Stock
is registered under the Act or unless an exemption from registration is
available. The Shareholder is also aware that: (i) except pursuant to the
Registration Rights Agreement and the Reorganization
Agreement, Parent is under no obligation to file a registration statement with
respect to the Parent Common Stock to be issued to the Shareholder in connection
with the Merger; and (ii) the provisions of Rule 144 under the Act will permit
resale of the Parent Common Stock to be issued to the Shareholder in connection
with the Merger only under limited circumstances, and such Parent Common Stock
must be held by the Shareholder for at least one year before it can be sold
pursuant to Rule 144.
(c) The Parent Common Stock to be issued to the Shareholder in
connection with the Merger will be acquired by the Shareholder for investment
and for his own account, and not with a view to, or for resale in connection
with, any unregistered distribution thereof.
(d) The Shareholder has received and examined Parent's Quarterly
Report on Form 10-Q for the quarter ended July 3, 1999, Annual Report on Form
10-K for the year ended December 31, 1998 and Definitive Proxy Statement filed
with the SEC on April 28, 1999, including the risk factors described in the
foregoing documents.
(e) The Shareholder has been given the opportunity: (i) to ask
questions of, and to receive answers from, persons acting on behalf of the
Company and Parent concerning the terms and conditions of the Merger and the
contemplated issuance of Parent Common Stock in connection with the Merger, and
the business, properties, prospects and financial condition of the Company and
Parent; and (ii) to obtain any additional information (to the extent the Company
or Parent possesses such information or is able to acquire it without
unreasonable effort or expense and without breach of confidentiality
obligations) that is necessary to verify the accuracy of the information set
forth in the documents, provided or made available to the Shareholder.
(f) The Shareholder is knowledgeable, sophisticated and experienced in
making, and is qualified to make, decisions with respect to investments in
securities presenting investment decisions like that involved in the
Shareholder's contemplated investment in the Parent Common Stock to be issued in
connection with the Merger.
(g) The Shareholder is an "accredited investor" (as such term is
defined Rule 501 under the Act).
(h) The Shareholder understands that until the Parent Common Stock
issued to the Shareholder is either registered for resale under the Act, sold in
conformity with the requirements of Rule 144 under the Act, or eligible for sale
in conformity with paragraph (k) of Rule 144: (i) stop transfer instructions
will be given to Parent's transfer agent with respect to the Parent Common Stock
to be issued to the Shareholder in connection with the Merger, and (ii) there
will be placed on the certificate or certificates representing such Parent
Common Stock a legend identical or similar in effect to the following legend
(together with any other legend or legends required by applicable state
securities laws or otherwise):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED
OR HYPOTHECATED UNLESS REGISTERED
UNDER THE ACT OR UNLESS AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT IS AVAILABLE."
2. Reliance. The Shareholder acknowledges that Parent will rely on his
representations, warranties and certifications set forth in Section 1 above for
purposes of determining his suitability as an investor in Parent Common Stock
and for purposes of confirming the availability of an exemption from the
registration requirements of the Act.
3. Prohibitions Against Transfer. The Shareholder shall not effect any
sale, transfer or other disposition of any of the Parent Common Stock that he is
to receive in connection with the Merger unless:
(a) such sale, transfer or other disposition has been registered under
the Act;
(b) such sale, transfer or other disposition is made in conformity
with the requirements of Rule 144 under the Act, as evidenced by a broker's
letter and a representation letter executed by the Shareholder (satisfactory in
form and content to Parent) stating that such requirements have been met;
(c) counsel reasonably satisfactory to Parent shall have advised
Parent in a written opinion letter (satisfactory in form and content to Parent),
upon which Parent may rely, that such sale, transfer or other disposition will
be exempt from registration under the Act; or
(d) an authorized representative of the SEC shall have rendered
written advice to the Shareholder to the effect that the SEC would take no
action, or that the staff of the SEC would not recommend that the SEC take
action, with respect to such sale, transfer or other disposition, and a copy of
such written advice and all other related communications with the SEC shall have
been delivered to Parent.
The Shareholder has executed and delivered this Letter as of the date first
written above.
___________________________________
Name:______________________________
Number of shares:__________________
State of Residence:________________
Exhibit E
Form of Tax Representation Letters
TAX REPRESENTATION LETTER
TO BE EXECUTED BY ▇▇▇▇▇, INC.
October __, ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
One Maritime Plaza, 20/th/ Floor ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Eighteenth and ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Re: Merger pursuant to the Agreement and Plan of Merger and Reorganization (the
"Reorganization Agreement") dated September 15, 1999, among Acuson
Corporation, a Delaware corporation ("Parent"), Echo Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of Parent ("Merger
Sub"), and ▇▇▇▇▇, Inc., a Pennsylvania corporation (the "Company"), and the
related Certificate of Merger and Articles of Merger between Merger Sub and
the Company (collectively, the "Certificate of Merger").
Ladies and Gentlemen:
This letter is supplied to you in connection with your rendering of opinions
regarding certain federal income tax consequences of the Merger. Unless
otherwise indicated, capitalized terms not defined herein have the meanings set
forth in the Reorganization Agreement. The Reorganization Agreement and the
Certificate of Merger, including exhibits and schedules attached thereto, are
collectively referred to as the "Agreements."
After consulting with its counsel and auditors regarding the meaning of and
factual support for the following representations, the undersigned hereby
certifies and represents that the following facts are now true and will continue
to be true as of the Effective Time of the Merger and thereafter where relevant:
1. Pursuant to the Merger, the Company will merge with and into Merger
Sub, and Merger Sub will acquire all of the assets and liabilities of the
Company. Specifically, the assets transferred to Merger Sub pursuant to the
Merger will represent at least ninety percent (90%) of the fair market value of
the net assets and at least seventy percent (70%) of the fair market value of
the gross assets held by the Company immediately prior to the Merger. In
addition, at least ninety percent (90%) of the fair market value of the net
assets and at least seventy percent (70%) of the fair market value of the gross
assets held by Merger Sub immediately prior to the Merger will continue to be
held by Merger Sub immediately after the Merger. For the purpose of determining
the percentage of the Company's and Merger Sub's net and gross assets held by
Merger Sub immediately following the Merger, the following assets will be
treated as property held by Merger Sub or the Company, as the case may be,
immediately prior but not subsequent to the Merger: (i) assets disposed of by
the Company or Merger Sub (other than assets transferred from the Company to
Merger Sub in the Merger) prior to or subsequent to the Merger and in
contemplation thereof (including without limitation any asset disposed of by the
Company, other than in the ordinary course of business, pursuant to a plan or
intent existing during the period ending on the Effective Time of the Merger and
beginning with the
commencement of negotiations (whether formal or informal) with Parent regarding
the Merger (the "Pre-Merger Period")), (ii) assets used by the Company or Merger
Sub to pay shareholders perfecting dissenters' rights or other expenses or
liabilities incurred in connection with the Merger and (iii) assets used to make
distribution, redemption or other payments in respect of stock of the Company or
rights to acquire such stock (including payments treated as such for tax
purposes) that are made in contemplation of the Merger or that are related
thereto;
2. Other than in the ordinary course of business or pursuant to its
obligations under the Agreements, the Company has made no transfer of any of its
assets (including any distribution of assets with respect to, or in redemption
of, stock) in contemplation of the Merger or during the Pre-Merger Period;
3. The Company's principal reasons for participating in the Merger are
bona fide business purposes unrelated to taxes;
4. At the Effective Time of the Merger, the Company will have no
outstanding equity interests other than those disclosed in Section 2.3 of the
Reorganization Agreement. At the time of the Merger, except as specified in the
Reorganization Agreement, the Company will have no outstanding warrants,
options, or convertible securities or any other type of right outstanding
pursuant to which any person could acquire shares of the Company capital stock
or any other equity interest in the Company, other than those disclosed in
Section 2.3 of the Reorganization Agreement or the Disclosure Schedule with
respect thereto;
5. The total fair market value of all consideration other than shares of
Parent Common Stock received by shareholders of the Company in the Merger
(including, without limitation, cash paid to Company shareholders perfecting
dissenters' rights, cash paid in lieu of fractional shares and the cash portion
of any Post-Closing Payments) will be less than fifty percent (50%) of the
aggregate fair market value of shares of stock of the Company outstanding
immediately prior to the Merger;
6. The Company has no plan or intention that Merger Sub will issue
additional shares of stock after the Merger, or take any other action, that
would result in Parent losing Control of Merger Sub. As used in this letter,
"Control" shall consist of direct ownership of shares of stock possessing at
least eighty percent (80%) of the total combined voting power of shares of all
classes of stock entitled to vote and at least eighty percent (80%) of the total
number of shares of all other classes of stock of the corporation. For purposes
of determining Control, a person shall not be considered to own shares of voting
stock if rights to vote such shares (or to restrict or otherwise control the
voting of such shares) are held by a third party (including a voting trust)
other than an agent of such person;
7. Except for transfers described in Section 368(a)(2)(C) of the Code and
the Treasury Regulations promulgated thereunder, the Company has no plan or
intention to sell or otherwise dispose of any of its assets except for
dispositions made in the ordinary course of business or to pay expenses incurred
by the Company pursuant to the Merger;
8. The Company intends that Merger Sub shall continue the Company's
historic business or use a significant portion of its historic business assets
in a business following the Merger;
9. The liabilities of the Company have been incurred by the Company in
the ordinary course of its business;
10. The fair market value of the Company's assets will, on the Effective
Time of the Merger, exceed the aggregate liabilities of the Company plus the
amount of liabilities, if any, to which such assets are subject;
11. The Company is not and will not be on the Effective Time of the Merger
an "investment company" within the meaning of Section 368(a)(2)(F)(iii) and (iv)
of the Code;
12. The Company is not and will not be on the Effective Time of the Merger
under the jurisdiction of a court in a Title 11 or similar case within the
meaning of Section 368(a)(3)(A) of the Code;
13. The Company has made no extraordinary distributions within the meaning
of Temporary Federal Treasury Regulation Section 1.368-1T(e) with respect to its
stock, prior to and in connection with the Merger;
14. The Company has not redeemed and no "related person" with respect to
the Company, as such term is defined by Treasury Regulation Section 1.368-
1(e)(3), has purchased any Company capital stock prior to and in connection with
the Merger;
15. Except with respect to: (i) payments of cash to shareholders of the
Company perfecting dissenters' rights, (ii) payments of cash to shareholders of
the Company in lieu of fractional shares of Parent Common Stock and (iii) any
Post-Closing Payments paid in cash, one hundred percent (100%) of the shares of
stock of the Company outstanding immediately prior to the Merger will be
exchanged solely for shares of Parent Common Stock. Thus, except as set forth in
the preceding sentence, the Company intends that no consideration be paid or
received (directly or indirectly, actually or constructively) for shares of
stock of the Company other than shares of Parent Common Stock;
16. The fair market value of the shares of Parent Common Stock and the
right to Post-Closing Payments received by each shareholder of the Company will
be approximately equal to the fair market value of the shares of stock of the
Company surrendered in exchange therefor and the aggregate consideration
received by shareholders of the Company in exchange for their shares of stock of
the Company will be approximately equal to the fair market value of all of the
outstanding shares of stock of the Company immediately prior to the Merger;
17. Except as otherwise provided in the Agreements, each of Merger Sub,
Parent and the Company and each shareholder of the Company will each pay
separately his, her or its own expenses relating to the Merger;
18. Except for a loan of up to $500,000 from Parent to Company used by the
Company to pay normal operating expenses, there is no intercorporate
indebtedness existing
between Parent and the Company or between Merger Sub and the Company that was
issued, acquired, or will be settled at a discount as a result of the Merger;
Parent will assume no liabilities of the Company or any shareholder of the
Company in connection with the Merger;
19. The terms of the Reorganization Agreement and the other agreements
relating thereto are the product of arm's length negotiations;
20. None of the compensation received by any shareholder-employees of the
Company will be separate consideration for, or allocable to, any of their shares
of stock of the Company; none of the shares of Parent Common Stock received by
any shareholder-employees of the Company will be separate consideration for, or
allocable to, any employment agreement or any covenants not to compete; and the
compensation paid to any shareholder-employees of the Company will be for
services actually rendered and will be commensurate with amounts paid to third
parties bargaining at arm's length for similar services;
21. With respect to each instance, if any, in which shares of stock of the
Company have been purchased by a stockholder of Parent (a "Stockholder") during
the Pre-Merger period (a "Stock Purchase"): (i) to the best knowledge of the
Company, (A) the Stock Purchase was made by such Stockholder on its own behalf,
rather than as a representative, or for the benefit, of Parent, (B) the Stock
Purchase was entered into solely to satisfy the separate interests of such
Stockholder and the seller, and (C) the purchase price paid by such Stockholder
pursuant to the Stock Purchase was the product of arm's length negotiations; and
(ii) the Stock Purchase was not a formal or informal condition to consummation
of the Merger; and
22. The Company is authorized to make all of the representations set forth
herein.
The undersigned recognizes that (i) your opinions will be based on the
representations set forth herein and on the statements contained in the
Agreements and documents related thereto, and (ii) your opinions will be subject
to certain limitations and qualifications including that they may not be relied
upon if any such representations are not accurate in all material respects.
Notwithstanding anything herein to the contrary, the undersigned makes no
representations regarding any actions or conduct of the Company pursuant to
Parent's exercise of control over the Company after the Merger.
The undersigned recognizes that your opinions will not address any tax
consequences of the Merger or any action taken in connection therewith except as
expressly set forth in such opinions.
Very truly yours,
▇▇▇▇▇, Inc.,
a Pennsylvania corporation
By:________________________________
Title:_____________________________
TAX REPRESENTATION LETTER
TO BE EXECUTED BY ACUSON CORPORATION AND
ECHO ACQUISITION CORP.
October __, 1999
▇▇▇▇▇▇ Godward LLP ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
One Maritime Plaza, 20/th/ Floor ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Eighteenth and ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Re: Merger pursuant to the Agreement and Plan of Merger and Reorganization (the
"Reorganization Agreement") dated September 15, 1999, among Acuson
Corporation, a Delaware corporation ("Parent"), Echo Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of Parent ("Merger
Sub"), and ▇▇▇▇▇, Inc., a Pennsylvania corporation (the "Company"), and the
related Certificate of Merger and Articles of Merger between Merger Sub and
the Company (collectively, the "Certificate of Merger").
Ladies and Gentlemen:
This letter is supplied to you in connection with your rendering of opinions
regarding certain federal income tax consequences of the Merger. Unless
otherwise indicated, capitalized terms not defined herein have the meanings set
forth in the Reorganization Agreement. The Reorganization Agreement and the
Certificate of Merger, including exhibits and schedules attached thereto, are
collectively referred to as the "Agreements."
After consulting with their counsel and auditors regarding the meaning of and
factual support for the following representations, the undersigned hereby
certify and represent that the following facts are now true and will continue to
be true as of the Effective Time of the Merger and thereafter where relevant:
1. Pursuant to the Merger, the Company will merge with and into Merger
Sub,and Merger Sub will acquire all of the assets and liabilities of the
Company. Specifically, the assets transferred to Merger Sub pursuant to the
Merger will represent at least ninety percent (90%) of the fair market value of
the net assets and at least seventy percent (70%) of the fair market value of
the gross assets held by the Company immediately prior to the Merger. In
addition, at least ninety percent (90%) of the fair market value of the net
assets and at least seventy percent (70%) of the fair market value of the gross
assets held by Merger Sub immediately prior to the Merger will continue to be
held by Merger Sub immediately after the Merger. For the purpose of determining
the percentage of the Company's and Merger Sub's net and gross assets held by
Merger Sub immediately following the Merger, the following assets will be
treated as property held by Merger Sub or the Company, as the case may be,
immediately prior but not subsequent to the Merger: (i) assets disposed of by
the Company or Merger Sub (other than assets transferred from the Company to
Merger Sub in the Merger) prior to or subsequent to the Merger and in
contemplation thereof (including without limitation any asset disposed of by the
Company, other than in the ordinary course of business, pursuant to a plan or
intent existing
during the period ending at the Effective Time of the Merger and beginning with
the commencement of negotiations (whether formal or informal) with Parent
regarding the Merger (the "Pre-Merger Period")); (ii) assets used by the Company
or Merger Sub to pay shareholders perfecting dissenters' rights or other
expenses or liabilities incurred in connection with the Merger and (iii) assets
used to make distribution, redemption or other payments in respect of stock of
the Company or rights to acquire such stock (including payments treated as such
for tax purposes) that are made in contemplation of the Merger or that are
related thereto;
2. Parent's principal reasons for participating in the Merger are bona
fide business purposes not related to taxes;
3. Prior to the Merger, Parent will be in "Control" of Merger Sub. As
used in this letter, "Control" shall consist of direct ownership of shares of
stock possessing at least eighty percent (80%) of the total combined voting
power of all classes of stock entitled to vote and at least eighty percent (80%)
of the total number of shares of all other classes of stock of the corporation.
For purposes of determining Control, a person shall not be considered to own
shares of voting stock if rights to vote such shares (or to restrict or
otherwise control the voting of such shares) are held by a third party
(including a voting trust) other than an agent of such person;
4. Parent has no plan or intention to cause Merger Sub to issue
additional shares of stock after the Merger, or take any other action, that
would result in Parent losing Control of Merger Sub;
5. Except for transfers described in Section 368(a)(2)(C) of the Code and
the Treasury Regulations promulgated thereunder, Parent has no plan or intention
to: (a) liquidate Merger Sub; (b) merge Merger Sub with or into another
corporation including Parent or its affiliates; (c) sell, distribute or
otherwise dispose of the stock of Merger Sub, or cause Merger Sub to sell or
otherwise dispose of the stock of Merger Sub; or (d) cause Merger Sub to sell or
otherwise dispose of any of its assets or of any assets acquired from the
Company, except for dispositions made in the ordinary course of business or
payment of expenses incurred by Merger Sub pursuant to the Merger;
6. Parent intends that, following the Merger, Merger Sub will continue
the Company's historic business or use a significant portion of its historic
business assets in a business;
7. Neither Parent nor Merger Sub is an "investment company" within the
meaning of Section 368(a)(2)(F)(iii) and (iv) of the Code;
8. No shareholder of the Company is acting as agent for Parent in
connection with the Merger or the approval thereof; Parent will not reimburse
any shareholder of the Company for any stock of the Company such shareholder may
have purchased or for other obligations such shareholder may have incurred;
9. Except for repurchases or redemptions of Parent Common Stock that are
consistent with past practices and pursuant to pre-existing purchase programs
that were not created or modified in connection with the Merger, neither Merger
Sub nor Parent nor any
"related person" of Merger Sub or Parent (as such term is defined by Treasury
Regulation Section 1.368-1(e)(3)) will repurchase or redeem any of the Parent
Common Stock to be issued to the shareholders of the Company in connection with
the Merger;
10. Except with respect to: (i) payments of cash to shareholders of the
Company perfecting dissenters' rights, (ii) payments of cash to shareholders of
the Company in lieu of fractional shares of Parent Common Stock and (iii) any
Post-Closing Payments paid in cash, one hundred percent (100%) of the stock of
the Company outstanding immediately prior to the Merger will be exchanged solely
for Parent Common Stock. Thus, except as set forth in the preceding sentence,
Merger Sub and Parent intend that no consideration be paid or received (directly
or indirectly, actually or constructively) for stock of the Company other than
Parent Common Stock;
11. The total fair market value of all consideration other than Parent
Common Stock received by shareholders of the Company in the Merger (including,
without limitation, cash paid to shareholders of the Company perfecting
dissenters' rights, cash paid in lieu of fractional shares and the cash portion
of any Post-Closing Payments) will be less than fifty percent (50%) of the
aggregate fair market value of stock of the Company outstanding immediately
prior to the Merger;
12. The fair market value of the Parent Common Stock and the right to
Post-Closing Payments received by each shareholder of the Company will be
approximately equal to the fair market value of the stock of the Company
surrendered in exchange therefor, and the aggregate consideration received by
shareholders of the Company in exchange for their stock of the Company will be
approximately equal to the fair market value of all of the outstanding shares of
stock of the Company immediately prior to the Merger;
13. No stock of Merger Sub will be issued pursuant to the Merger;
14. Except as otherwise provided in the Agreements, each of Merger Sub,
Parent and the Company and each shareholder of the Company will pay separately
his, her or its own expenses relating to the Merger;
15. Except for a loan of up to $500,000 from Parent to Company used by the
Company to pay normal operating expenses, there is no intercorporate
indebtedness existing between Parent and the Company or between Merger Sub and
the Company that was issued, acquired or will be settled at a discount as a
result of the Merger, and Parent will assume no liabilities of any shareholder
of the Company in connection with the Merger;
16. The terms of the Reorganization Agreement and the agreements related
thereto are the product of arm's length negotiations;
17. None of the compensation received by any shareholder-employee of the
Company will be separate consideration for, or allocable to, any of their shares
of stock of the Company; none of the shares of Parent Common Stock received by
any shareholder-employee of the Company will be separate consideration for, or
allocable to, any employment agreement or any covenants not to compete; and the
compensation paid to any shareholder-employee of the
Company will be for services actually rendered and will be commensurate with
amounts paid to third parties bargaining at arm's length for similar services;
18. With respect to each instance, if any, in which shares of stock of the
Company have been purchased by a stockholder of Parent (a "Stockholder") during
the Pre-Merger Period (a "Stock Purchase"): (i) the Stock Purchase was made by
such Stockholder not as a representative of Parent; (ii) to the best of Parent's
knowledge, the purchase price paid by such Stockholder pursuant to the Stock
Purchase was the product of arm's length negotiations; (iii) such purchase price
was not advanced, and will not be reimbursed, either directly or indirectly, by
Parent; (iv) at no time was such Stockholder or any other party required or
obligated to surrender to Parent the Company capital stock acquired in the Stock
Purchase, and neither such Stockholder nor any other party will be required to
surrender to Parent the Parent Common Stock for which such shares of stock of
the Company will be exchanged in the Merger; and (v) the Stock Purchase was not
a formal or informal condition to consummation of the Merger;
19. The payment of cash in lieu of fractional shares of Parent Common
Stock is solely for the purpose of avoiding the expense and inconvenience to
Parent of issuing fractional shares and does not represent separately bargained-
for consideration. The total cash consideration that will be paid in the
transaction to the Company shareholders instead of issuing fractional shares of
Parent Common Stock is not expected to exceed one percent (1%) of the total
consideration that will be issued in the transaction to the Company shareholders
in exchange for their shares of Company capital stock. The fractional share
interests of each Company shareholder will be aggregated, and no Company
shareholder will receive cash in an amount equal to or greater than the value of
one full share of Parent Common Stock; and
20. Parent and Merger Sub are authorized to make all of the
representations set forth herein.
The undersigned recognize that (i) your opinions will be based on the
representations set forth herein and on the statements contained in the
Agreements and documents related thereto, and (ii) your opinions will be subject
to certain limitations and qualifications including that they may not be relied
upon if any such representations are not accurate in all material respects.
The undersigned recognize that your opinions will not address any tax
consequences of the Merger or any action taken in connection therewith except as
expressly set forth in such opinions.
Very truly yours,
Acuson Corporation,
a Delaware corporation
By:______________________________
Title:___________________________
Echo Acquisition Corp.,
a Delaware corporation
By:______________________________
Title:___________________________
Exhibit F
Form of Employment Agreement
____________, 1999
[Name]
[Address]
Re: Employment Agreement
Dear _________:
This letter will confirm the terms of your offer of employment with Acuson
Corporation (the "Company"). Such terms are as follows:
1. Position and Responsibilities. You will serve in the position of
_______________ of the Company, reporting to the ____________________ or such
other individual as the Company may require on the conditions and for the
remuneration hereinafter set out. You will have such duties, responsibilities
and authority as are commensurate with the position described above in this
paragraph 1. You will assume and discharge such duties and responsibilities as
the Company may designate from time to time. During the term of your employment,
you will devote full time, skill and attention to your duties and
responsibilities and shall perform them faithfully and diligently. In addition,
you will comply with and be bound by the operating policies, procedures and
practices of the Company in effect and communicated to you from time to time
during your employment.
2. "At-Will" Employment. You acknowledge that your employment with the
Company constitutes "at-will" employment, and that either you or the Company can
terminate this relationship at any time, with or without cause and with or
without notice. In the event of termination of your employment, (a) by you for
Good Reason (as defined below) or (b) by the Company other than for Cause (as
defined below), you will be entitled to the compensation set forth in paragraph
5 below.
3. Compensation.
(a) In consideration of your services, you will initially be paid a
base salary of $___________ per annum, payable in accordance with the Company's
standard payroll practices. Your base salary will normally be reviewed annually
by the Company.
(b) In addition to your base salary, the Company may award you a
discretionary bonus from time to time.
4. Other Benefits. In addition to the benefits described above, during
your employment term, you will be entitled to receive the following benefits.
(a) You will be entitled to paid vacation in accordance with the
Company's vacation policy applicable to similarly situated employees. Your
service with ▇▇▇▇▇, Inc. will be considered in determining your vacation
benefits under Company policies.
(b) You will be permitted, to the extent eligible, to participate in
any 401(k), profit sharing, sabbatical, group medical, dental, life insurance
and disability insurance plans, or similar benefit plan of the Company that is
available to employees generally. Participation in any such plan shall be
consistent with your rate of compensation to the extent that compensation is a
determinative factor with respect to coverage under any such plan. Your service
with ▇▇▇▇▇, Inc. will be considered in determining your eligibility for and
benefits under any such plans.
(c) The Company will recommend to the board of directors that you be
granted an option to purchase _____ shares of the Company's common stock based
on the Company's standard vesting schedule and at an exercise price equal to the
fair market value of the shares of the Company's common stock on the date of the
grant, which date of grant will be no later than 15 days after the consummation
of the merger between ▇▇▇▇▇, Inc. and the Company.
(d) You will be reimbursed for all reasonable expenses actually
incurred or paid by you in the performance of your services on behalf of the
Company. You agree to account to the Company for such expenses in accordance
with the Company's expense reimbursement policy as in effect from time to time.
5. Payment Upon Termination. If your employment is terminated by the
Company for any reason other than for Cause or you voluntarily terminate your
employment with the Company for Good Reason, (x) you will be entitled to receive
severance pay equal to the amount you would have been entitled to receive as
base salary under paragraph 3(a) if your employment had not been terminated for
a period of one year after the termination date, and (y) all options granted to
you under paragraph 4(c) shall be treated as fully vested and immediately
exercisable upon your employment termination date; provided, however, that the
acceleration referred to in clause "(y)" shall not apply if the Company's
accountants determine that any transaction involving the Company that was
intended to be accounted for as a "pooling of interests" could not be accounted
for as a "pooling of interests" as a result of such acceleration. For purposes
hereof, (i) "Cause" means, as determined in good faith by the board of directors
of the Company, (A) the failure by you to substantially perform those reasonable
duties assigned to you from time to time by the Company in accordance with this
agreement; provided, however, that "Cause" shall not exist under this clause
"(A)" unless either (1) you receive notice of nonperformance and fail to cure
such nonperformance within 30 days after receipt of such notice, or (2) you
receive notice of nonperformance on more than two occasions; (B) an act by you
which constitutes gross misconduct and which is injurious to the Company, its
subsidiaries or its affiliates; (C) a willful breach by you of a material
provision of any agreement (including any employee confidentiality agreement)
between the Company, its subsidiaries or any of its affiliates and you; (D) a
material violation by you of a federal or state law or regulation applicable to
the business of the Company, its subsidiaries or its affiliates; or (E) a
conviction or
a plea of nolo contendre to a felony or a misdemeanor involving moral turpitude;
and (ii) "Good Reason" means (A) a material reduction in your duties and
responsibilities, unless you agree to such reduction; (B) a greater than 10%
reduction in your salary as specified in paragraph 3(a); (C) a material adverse
change in your benefits taken as a whole (unless (1) all other employees are
similarly and contemporaneously affected by such change, or (2) such change
results from cost increases imposed by third parties); or (D) a relocation of
your principal work location to a site more than 30 miles away from the
Company's existing offices in Plymouth Meeting, Pennsylvania unless you agree to
such relocation. In the event you voluntarily terminate your employment with the
Company for any reason other than for the reasons set forth in this Section 5,
you will not be entitled to receive any severance pay or similar compensation.
6. Post-Closing Payment. Subject and pursuant to the terms and conditions
set forth in the agreement and plan of merger and reorganization dated
_________, 1999 by and among the Company, Echo Acquisition Corp. and ▇▇▇▇▇, Inc.
(the "Reorganization Agreement"), no payment or distribution of any Post-Closing
Payment shall be made to you for the fiscal year ended December 31, 2003 unless
you continue to be employed by the Company until December 31, 2003; provided,
however, that notwithstanding the foregoing:
(a) if your employment shall have been terminated as a result of your
death or disability or by the Company without Cause or by you for Good
Reason, then such payment or distribution of the Post-Closing Payment shall
be made to you (or in the event of death, to your estate, heirs or
successors) notwithstanding the termination of your employment; and
(b) if you acquired shares of common stock of ▇▇▇▇▇, Inc. in
certain specified financing rounds of ▇▇▇▇▇, Inc. made prior to the Effective
Date (the "Specified Financing Rounds") other than the founders round of
financing, you shall be entitled to that portion of any payment or distribution
otherwise due for the fiscal year ended December 31, 2003 equal to the product
of (1) the portion of such payment or distribution you would have been entitled
to receive had you remained employed by the Company until December 31, 2003,
multiplied by (2) a fraction (x) whose numerator is the number of shares of
common stock of ▇▇▇▇▇, Inc. acquired by you in the Specified Financing Rounds
(or upon the exercise of warrants acquired by you in the Specified Financing
Rounds) and owned by you immediately prior to the Effective Time, and (y) whose
denominator is the number of shares of common stock of ▇▇▇▇▇, Inc. owned by you
immediately prior to the Effective Time.
7. Effective Date. Subject to the foregoing, this agreement shall become
effective upon consummation of the Merger (the "Effective Date").
8. General Provisions.
(a) Capitalized terms used herein but not defined have the meanings
attributed to them in the Reorganization Agreement.
(b) This agreement will be governed by the laws of the Commonwealth
of Pennsylvania, applicable to agreements made and to be performed entirely
within such state.
(c) This agreement sets forth the entire agreement and understanding
between the Company and you relating to your employment and supersedes all prior
verbal discussions between us. Any subsequent change or changes in your duties,
salary or other compensation will not affect the validity or scope of this
agreement. Any change to the terms hereof must be executed in writing and signed
by you and the Company.
(d) This agreement will be binding upon your heirs, executors,
administrators and other legal representatives and will be for the benefit of
the Company and its respective successors and assigns.
All of us at the Company are very excited about you joining our team
and look forward to a beneficial and fruitful relationship. However, should any
dispute arise with respect to your employment or the termination of that
employment (other than a dispute which relates to the enforcement or breach of
the noncompetition agreement between you and the Company (the "Noncompetition
Agreement")), we both agree that such dispute shall be conclusively resolved by
final, binding and confidential arbitration in accordance with the Voluntary
Labor Arbitration Rules of the American Arbitration Association ("AAA") at the
AAA office closest to Plymouth Meeting, Pennsylvania, rather than by a jury,
court or administrative agency. For greater certainty, you agree that any legal
action or other legal proceeding relating to the Noncompetition Agreement or the
enforcement of any provision of the Noncompetition Agreement shall be brought or
otherwise commenced in any state or federal court whose venue encompasses
Plymouth Meeting, Pennsylvania. The Company will bear all AAA administrative
costs and fees of any such arbitration.
Please acknowledge and confirm your acceptance of this agreement by signing
and returning the enclosed copy of this agreement as soon as possible. If you
have any questions about this agreement, please call me directly.
The Company
By:__________________
ACCEPTANCE
I accept the terms of my employment with the Company as set forth herein. I
understand that this agreement constitutes an "at will" employment relationship,
and that my employment relationship may be terminated by either party, with or
without cause and with or without notice.
___________________________________ _________________________
Name: Date
Exhibit G
Persons to sign Employment and Noncompetition Agreements
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Exhibit H
Form of Noncompetition Agreement
NONCOMPETITION AGREEMENT
This Noncompetition Agreement is being executed and delivered as of
_________, 1999 by _______________ ("________"), in favor of, and for the
benefit of the following entities (the "Beneficiaries"): Acuson Corporation, a
Delaware corporation ("Parent"), ▇▇▇▇▇, Inc., a Pennsylvania corporation (the
"Company"), and the other "Indemnitees" (as hereinafter defined). Certain
capitalized terms used in this Noncompetition Agreement are defined in Section
18.
Recitals
A. As [an employee of] [a consultant to] the Company, _____________ has
obtained extensive and valuable knowledge and information concerning the
business of the Company (including confidential information relating to the
operations, assets, contracts, customers, personnel, plans and prospects of the
Company).
B. Pursuant to and subject to the terms and conditions of an Agreement
and Plan of Merger and Reorganization dated as of September _________, 1999,
among Parent, Echo Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Merger Sub"), and the Company (the "Reorganization
Agreement"), the Company is expected to merge with and into Merger Sub (the
"Merger"), with Merger Sub becoming the surviving corporation in the Merger.
C. In connection with the Merger, and as a condition to the consummation
of the Merger, and to enable Parent to secure more fully the benefits of the
Merger, Parent has required that ____________ enter into this Noncompetition
Agreement.
D. Parent, the Company and Parent's subsidiaries have conducted and are
conducting their respective businesses on a worldwide basis.
Agreement
In order to induce Parent to consummate the transactions contemplated by
the Reorganization Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, __________, intending
to be legally bound, agrees as follows:
1. Restriction on Competition. _________ agrees that, during the
Noncompetition Period, [he/she] shall not, and shall not permit any of [his/her]
Affiliates to:
(a) engage directly or indirectly in Competition in any Restricted
Territory; or
(b) directly or indirectly be or become an officer, director,
stockholder, owner, co-owner, Affiliate, partner, promoter, employee,
agent, representative, designer, consultant, advisor, manager, licensor,
sublicensor, licensee or sublicensee of, for or to, or otherwise be or
become associated with or acquire or hold (of record, beneficially or
otherwise) any direct or indirect interest in, any Person that engages
directly or indirectly in Competition in any Restricted Territory;
provided, however, that __________ may, without violating this Section 1,
own, as a passive investment, shares of capital stock of a publicly-held
corporation that engages in Competition if (i) such shares are actively traded
on an established national securities market in the United States, (ii) the
number of shares of such corporation's capital stock that are owned beneficially
(directly or indirectly) by _________ and the number of shares of such
corporation's capital stock that are owned beneficially (directly or indirectly)
by Affiliates of _________ collectively represent less than two percent of the
total number of shares of such corporation's capital stock outstanding, and
(iii) neither ________ nor any Affiliate of _________ is otherwise associated
directly or indirectly with such corporation or with any Affiliate of such
corporation.
2. No Hiring or Solicitation of Employees, Consultants or Independent
Contractors. Unless agreed to in writing by the Company with respect to a
Specified Individual, ___________ agrees that, during the period commencing on
the Effective Date and ending on the fifth anniversary of the Effective Date,
[he/she] shall not, and shall not permit any of [his/her] Affiliates to: (a)
hire any Specified Individual as an employee, consultant or independent
contractor, or (b) directly or indirectly, personally or through others,
encourage, induce, attempt to induce, solicit or attempt to solicit (on
________'s own behalf or on behalf of any other Person) any Specified Individual
to leave his or her employment, consulting or independent contractor
relationship with Parent or any of Parent's current or future Affiliates
(including the Company). (For purposes of this Section 2, "Specified Individual"
shall mean any individual who (i) is or was an employee, consultant or
independent contractor of Parent or the Company on the Effective Date or during
the 180-day period prior to and ending on the Effective Date, and (ii) remains
or becomes an employee, consultant or independent contractor of Parent or any of
Parent's Affiliates on the Effective Date or at any time during the period
commencing on the Effective Date and ending on the fifth anniversary of the
Effective Date.)
3. Confidentiality. _________ agrees that [he/she] shall hold all
Confidential Information in strict confidence and shall not at any time (whether
during or after the Noncompetition Period), except as required by law: (a)
reveal, report, publish, disclose or transfer any Confidential Information to
any Person (other than Parent or any of its current or future Affiliates,
including the Company); (b) use any Confidential Information for any purpose
(other than on behalf of Parent or its current or future Affiliates, including
the Company); or (c) use any Confidential Information for the benefit of any
Person (other than Parent or any of its current or future Affiliates, including
the Company).
4. Representations and Warranties. _________ represents and warrants, to
and for the benefit of the Indemnitees, that: (a) [he/she] has full power and
capacity to execute and deliver, and to perform all of [his/her] obligations
under, this Noncompetition Agreement; and (b) neither the execution and delivery
of this Noncompetition Agreement nor the performance of this Noncompetition
Agreement will result directly or indirectly in a violation or breach of (i) any
agreement or obligation by which _________ or any of [his/her] Affiliates is or
may be bound, or (ii) any law, rule or regulation. _________'s representations
and warranties shall survive the expiration of the Noncompetition Period for an
unlimited period of time.
5. Specific Performance. _________ agrees that, in the event of any
breach or threatened breach by [him/her] of any covenant, obligation or other
provision set forth in this Noncompetition Agreement, each of Parent and the
other Indemnitees shall be entitled (in addition to any other remedy that may be
available to it, including monetary damages) to (a) a decree or order of
specific performance or mandamus to enforce the observance and performance of
such covenant, obligation or other provision, and (b) an injunction restraining
such breach or threatened breach. _________ further agrees that no Indemnitee
shall be required to obtain, furnish or post any bond or similar instrument in
connection with or as a condition to obtaining any remedy referred to in this
Section 5, and ________ irrevocably waives any right [he/she] may have to
require any Indemnitee to obtain, furnish or post any such bond or similar
instrument.
6. Remedies Cumulative. The rights and remedies of Parent and the other
Indemnitees under this Noncompetition Agreement are not exclusive of or limited
by any other rights or remedies which they may have, whether at law, in equity,
by contract or otherwise, all of which shall be cumulative (and not
alternative). Without limiting the generality of the foregoing, the rights and
remedies of Parent and the other Indemnitees under this Noncompetition
Agreement, and the obligations and liabilities of ________ under this
Noncompetition Agreement, are in addition to their respective rights, remedies,
obligations and liabilities under the law of unfair competition, under laws
relating to misappropriation of trade secrets, under other laws and common law
requirements and under all applicable rules and regulations. Nothing in this
Noncompetition Agreement shall limit any of _____'s obligations, or the rights
or remedies of Parent or any of the other Indemnitees, under the Reorganization
Agreement; and nothing in the Reorganization Agreement shall limit any of
________'s obligations, or any of the rights or remedies of Parent or any of the
other Indemnitees, under this Noncompetition Agreement. No breach on the part of
Parent or any other party of any covenant or obligation contained in the
Reorganization Agreement or any other agreement shall limit or otherwise affect
any right or remedy of Parent or any of the other Indeminitees under this
Noncompetition Agreement.
7. Severability. If any provision of this Noncompetition Agreement or any
part of any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (b) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c) the
invalidity or unenforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Noncompetition
Agreement. Each provision of this Noncompetition Agreement is separable from
every other provision of this Noncompetition Agreement, and each part of each
provision of this Noncompetition Agreement is separable from every other part of
such provision.
8. Governing Law; Venue.
(a) This Noncompetition Agreement shall be construed in accordance
with, and governed in all respects by, the internal laws of the Commonwealth of
Pennsylvania (without giving effect to principles of conflicts of laws).
(b) Any legal action or other legal proceeding relating to this
Noncompetition Agreement or the enforcement of any provision of this
Noncompetition Agreement shall be brought or otherwise commenced in any state or
federal court whose venue encompasses Plymouth Meeting, Pennsylvania. Each party
to this Noncompetition Agreement: (i) expressly and irrevocably consents and
submits to the jurisdiction of each state and federal court whose venue
encompasses Plymouth Meeting, Pennsylvania (and each appellate court located in
the Commonwealth of Pennsylvania) in connection with any such legal proceeding;
(ii) agrees that service of any process, summons, notice or document by U.S.
mail addressed to him at the address set forth on the signature page of this
Noncompetition Agreement shall constitute effective service of such process,
summons, notice or document for purposes of any such legal proceeding; (iii)
agrees that each state and federal court whose venue encompasses Plymouth
Meeting, Pennsylvania shall be deemed to be a convenient forum; and (iv) agrees
not to assert (by way of motion, as a defense or otherwise), in any such legal
proceeding commenced in any state or federal court whose venue encompasses
Plymouth Meeting, Pennsylvania, any claim that such party is not subject
personally to the jurisdiction of such court, that such legal proceeding has
been brought in an inconvenient forum, that the venue of such proceeding is
improper or that this Noncompetition Agreement or the subject matter of this
Noncompetition Agreement may not be enforced in or by such court.
(c) _________ IRREVOCABLY WAIVES THE RIGHT TO A JURY TRIAL IN
CONNECTION WITH ANY LEGAL PROCEEDING RELATING TO THIS NONCOMPETITION AGREEMENT
OR THE ENFORCEMENT OF ANY PROVISION OF THIS NONCOMPETITION AGREEMENT.
9. Waiver. No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Noncompetition Agreement, and no delay on
the part of any Person in exercising any power, right, privilege or remedy under
this Noncompetition Agreement, shall operate as a waiver of such power, right,
privilege or remedy; and no single or partial exercise of any such power, right,
privilege or remedy shall preclude any other or further exercise thereof or of
any other power, right, privilege or remedy. No Person shall be deemed to have
waived any claim arising out of this Noncompetition Agreement, or any power,
right, privilege or remedy under this Noncompetition Agreement, unless the
waiver of such claim, power, right, privilege or remedy is expressly set forth
in a written instrument duly executed and delivered on behalf of such Person;
and any such waiver shall not be applicable or have any effect except in the
specific instance in which it is given.
10. Successors and Assigns. This Noncompetition Agreement shall be binding
upon ____________ and [his/her] successors and assigns (if any) and shall inure
to the benefit of Parent and the other Indemnitees and the respective successors
and assigns (if any) of the foregoing. Parent may freely assign any or all of
its rights under this Agreement, in whole or in part, to any other Person
without obtaining the consent or approval of any other Person.
11. Further Assurances. __________ shall execute and/or cause to be
delivered to Parent (and each Indemnitee, if applicable) such instruments and
other documents, and take such other actions, as Parent and such Indemnitee may
reasonably request at any time (whether during or after the Noncompetition
Period) for the purpose of carrying out or evidencing any of the provisions of
this Noncompetition Agreement.
12. Attorneys' Fees. If any legal action or other legal proceeding
relating to this Noncompetition Agreement or the enforcement of any provision of
this Noncompetition Agreement is brought against __________, the prevailing
party shall be entitled to recover reasonable attorneys' fees, costs and
disbursements (in addition to any other relief to which the prevailing party may
be entitled).
13. Captions. The captions contained in this Noncompetition Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Noncompetition Agreement and shall not be referred to in connection with the
construction or interpretation of this Noncompetition Agreement.
14. Construction. Whenever required by the context, the singular number
shall include the plural, and vice versa; the masculine gender shall include the
feminine and neuter genders; and the neuter gender shall include the masculine
and feminine genders. Any rule of construction to the effect that ambiguities
are to be resolved against the drafting party shall not be applied in the
construction or interpretation of this Noncompetition Agreement. Neither the
drafting history nor the negotiating history of this Noncompetition Agreement
shall be used or referred to in connection with the construction or
interpretation of this Noncompetition Agreement. As used in this Noncompetition
Agreement, the words "include" and "including," and variations thereof, shall
not be deemed to be terms of limitation, and shall be deemed to be followed by
the words "without limitation." Except as otherwise indicated in this
Noncompetition Agreement, all references in this Noncompetition Agreement to
"Sections" are intended to refer to Sections of this Noncompetition Agreement.
15. Survival of Obligations. Except as specifically provided herein, the
obligations of _________ under this Noncompetition Agreement (including
[his/her] obligations under Sections 3 and 11) shall survive the expiration of
the Noncompetition Period. The expiration of the Noncompetition Period shall not
operate to relieve _______ of any obligation or liability arising from any prior
breach by __________ of any provision of this Noncompetition Agreement.
16. Obligations Absolute. _______'s obligations under this Noncompetition
Agreement are absolute and shall not be terminated or otherwise limited by
virtue of any breach (on the part of Parent, any other Indemnitee or any other
Person) of any provision of the Reorganization Agreement or any other agreement,
or by virtue of any failure to perform or other breach of any obligation of
Parent, any other Indemnitee or any other Person.
17. Amendment. This Noncompetition Agreement may not be amended, modified,
altered or supplemented other than by means of a written instrument duly
executed and delivered on behalf of the parties sought to be bound by any such
amendment, modification, alteration or supplement.
18. Defined Terms. For purposes of this Noncompetition Agreement:
(a) "Affiliate" means, with respect to any specified Person, any
other Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by or is under common control with such specified
Person.
(b) "Cause" means, as determined in good faith by the board of
directors of Parent (A) the failure by __________ to substantially perform those
reasonable duties assigned to ____________ from time to time by Parent, its
subsidiaries or affiliates in accordance with the employment agreement dated
_____________, 1999 between ___________ and Parent; provided, however, that
"Cause" shall not exist under this clause "(A)" unless either (1) __________
receives notice of nonperformance and fails to cure such nonperformance within
30 days after receipt of such notice, or (2) ______________ receives notice of
nonperformance on more than two occasions; (B) an act by ___________ which
constitutes gross misconduct and which is injurious to Parent, its subsidiaries
or its affiliates; (C) a willful breach by ________ of a material provision of
any agreement (including any employee confidentiality agreement) between Parent,
its subsidiaries or any of its affiliates and ______________; (D) a material
violation by _____________ of a federal or state law or regulation applicable to
the business of Parent, its subsidiaries or its affiliates; or (E) a conviction
or a plea of nolo contendre to a felony or a misdemeanor involving moral
turpitude.
(c) "Competing Product" means any product, equipment, device or
system related to medical diagnostic ultrasound.
(d) "Competing Service" means any (i) service that facilitates,
supports or otherwise relates to the design, development, manufacture, assembly,
promotion, sale, support, maintenance, licensing or leasing of any Competing
Product; or (ii) service that is substantially the same as, is based upon or
competes in any material respect with any service referred to in clause "(i)" of
this sentence.
(e) A Person shall be deemed to be engaged in "Competition" if: (i)
such Person or any of such Person's subsidiaries or other Affiliates is engaged
directly or indirectly in the design, development, manufacture, sale, support,
maintenance, licensing or leasing of any Competing Product; or (ii) such Person
or any of such Person's subsidiaries or other Affiliates is engaged directly or
indirectly in providing, performing or offering any Competing Service.
(f) "Confidential Information" means any non-public information
(whether or not in written form and whether or not expressly designated as
confidential) relating directly or indirectly to: (i) the business of the
Company as conducted on or prior to the Effective Date; (ii) the information and
materials disclosed, provided or transferred to Parent pursuant to the
Reorganization Agreement; and (iii) Parent or any of Parent's subsidiaries or
relating directly or indirectly to the business, operations, financial affairs,
performance, assets, technology, processes, products, contracts, customers,
licensees, sublicensees, suppliers, personnel, consultants or plans of Parent or
any of Parent's subsidiaries (including any such information consisting of or
otherwise relating to trade secrets, know-how, technology, inventions,
prototypes, designs, drawings, sketches, processes, license or sublicense
arrangements, formulae, proposals, research and development activities, customer
lists or preferences, pricing lists,
referral sources, marketing or sales techniques or plans, operations manuals,
service manuals, financial information, projections, lists of consultants, lists
of suppliers or lists of distributors); provided, however, that "Confidential
Information" shall not be deemed to include information described in clauses
"(i)" through "(iii)" that was already publicly known and in the public domain
prior to the time of its initial disclosure to __________.
(g) "Effective Date" shall mean the date on which the Merger is
consummated.
(h) "Indemnitees" shall include: (i) Parent; (ii) each Person who is
or becomes an Affiliate of Parent (including the Company); and (iii) the
successors and assigns of each of the Persons referred to in clauses "(i)" and
"(ii)" of this sentence.
(i) "Noncompetition Period" shall mean the period commencing on the
Effective Date and ending on the fifth anniversary of the Effective Date;
provided however, that (x) if ________ terminates [his/her] employment with
Parent, its subsidiaries or affiliates or Parent, its subsidiaries or affiliates
terminates _______________'s employment for Cause, the Noncompetition Period
shall end on the earlier of (A) the third anniversary of the date of termination
or (B) the fifth anniversary of the Effective Date or (y) if Parent, its
subsidiaries or affiliates terminates _______________'s employment without
Cause, the Noncompetition Period shall end on the earlier of (A) the second
anniversary of the date of termination or (B) the fifth anniversary of the
Effective Date.
(j) "Person" means any: (i) individual; (ii) corporation, general
partnership, limited partnership, limited liability partnership, trust, company
(including any limited liability company or joint stock company) or other
organization or entity; or (iii) governmental body or authority.
(k) "Restricted Territory" means (A) each county or similar political
subdivision of each State of the United States of America (including each of the
counties in the State of California), (B) each State, territory or possession of
the United States of America, and (C) each country, province, territory or other
jurisdiction throughout the world.
In Witness Whereof, _________ has duly executed and delivered this
Noncompetition Agreement as of the date first above written.
______________________________
NAME:
Address:______________________________
______________________________
EXHIBIT I
FIRPTA Statement Letters
[▇▇▇▇▇, INC. LETTERHEAD]
__________, 1999
Via Certified Mail
Return Receipt Requested
Assistant Commissioner (International)
Director, Office of Compliance
OP:I:C:E: 666
950 L'Enfant Plaza South, S.W.
COMSTAT Building
Washington, D.C. 20024
Re: Notice of Non Real Property Holding Corporation Status
Dear Sir:
At the request of Acuson Corporation, a Delaware corporation, in
connection with the acquisition by Acuson Corporation of all of the outstanding
shares of capital stock of ▇▇▇▇▇, Inc., a Pennsylvania corporation (the
"Company"), we provided the attached statement to Acuson Corporation on
________, 1999.
(i) This notice was provided pursuant to the requirements of
Treasury Regulation Section 1.897-2(h)(2);
(ii) The following information relates to the Company which is
providing the notice:
Name ▇▇▇▇▇, Inc.
Address ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(iii) Taxpayer Identification Number: _______________
(iv) The following information relates to Acuson Corporation which
requested this statement:
Name Acuson Corporation
Address ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Taxpayer identification Number: ▇▇-▇▇▇▇▇▇▇
(v) The interest in question, shares of capital stock of the
Company, is not a United States real property interest.
Under penalties of perjury, the undersigned declares that the above notice
(including the attachment hereto) is correct to my knowledge and belief.
Sincerely,
▇▇▇▇▇, INC.
By:_____________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
[▇▇▇▇▇, INC. LETTERHEAD]
___________, 1999
Acuson Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
In connection with your acquisition of all of the outstanding shares of
capital stock of ▇▇▇▇▇, Inc., a Pennsylvania corporation (the "Company"), we are
providing this information to you in order to establish that the shares of
capital stock of the Company are not a United States real property interest and
accordingly no withholding is required pursuant to Internal Revenue Code Section
1445. We represent that the shares of capital stock of the Company do not
constitute a United States real property interest as of the date of this letter.
Under penalties of perjury, the undersigned declares that the above
information is correct to the best of my knowledge and belief.
Sincerely,
▇▇▇▇▇, Inc.
By:__________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
Exhibit J
Form of Registration Rights Agreement
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement") is made and entered
into as of September 15, 1999, by and among: Acuson Corporation, a Delaware
corporation ("Parent") and the representative of the shareholders of ▇▇▇▇▇,
Inc., a Pennsylvania corporation (the "Company"), identified on the signature
page hereto (the "Shareholders' Agent").
Recitals
A. Parent, Echo Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of Parent ("Merger Sub"), and the Company have entered into an
Agreement and Plan of Merger and Reorganization of even date (the
"Reorganization Agreement"), pursuant to which the Company will merge with and
into Merger Sub (the "Merger") and the shareholders of the Company (the
"Shareholders") will receive shares of common stock of Parent. Capitalized terms
used in this Agreement and not otherwise defined shall have the meanings given
to them in the Reorganization Agreement.
B. Parent has agreed to provide the Shareholders with certain
registration rights as more fully described herein.
Agreement
The parties, intending to be legally bound, agree as follows:
Registration
1. Registerable Shares. As used in this Agreement, "Registerable
Shares" means the shares of Parent Common Stock issued to the Shareholders
pursuant to Section 1.5 of the Reorganization Agreement and any shares of Parent
Common Stock issued in respect thereof as a result of any stock split, stock
dividend, share exchange, merger, consolidation or similar recapitalization;
provided, however, that Registerable Shares shall cease to be Registerable
Shares when (i) a registration statement covering such Registerable Shares shall
have become effective under the Securities Act of 1933, as amended (the "1933
Act"), and such Registerable Shares shall have been disposed of in accordance
with the Registration Statement, or (ii) such Registerable Shares (together with
(A) all other shares of Parent Common Stock issued to the same "person" (within
the meaning of Rule 144) pursuant to the Reorganization Agreement and held by
such person and (B) all shares of Parent Common Stock issued pursuant to the
Reorganization Agreement and held by any other "person," the sale of which is
required by paragraph (e) of Rule 144 to be aggregated with the sale of shares
described in (A) above) may be transferred in any single calendar quarter
pursuant to Rule 144 under the 1933 Act, as such rule may be amended from time
to time, or any other similar rule or regulation of the SEC that may at any time
permit the investors to sell restricted securities of the Company to the public
without registration ("Rule 144"); and provided further, that Registerable
Shares shall not include any shares of Parent Common Stock held in any "Escrow
Account" pursuant to the Escrow Agreement to be entered into among the
Shareholders, Parent, the Shareholders' Agent (as defined therein) and the
escrow agent referred to therein. The Shareholders desiring to sell
shares of Parent Common Stock received pursuant to Section 1.5 or 1.6 of the
Reorganization Agreement pursuant to Rule 144 (whether or not such shares
constitute Registerable Shares) shall provide such Rule 144 representation
letters in usual and customary form and other usual and customary documents as
may reasonably be requested by Parent, and, if the requirements of Rule 144 are
satisfied, Parent will thereupon cause its transfer agent to permit the transfer
of such shares, with the certificates representing the transferred shares to be
issued free of any restrictive legend..
1.1 Registration.
(a) Except as set forth in the next sentence, promptly (and
in any event within five days) after the Closing, Parent shall prepare and file
with the Securities and Exchange Commission ("SEC") a registration statement on
Form S-3 (the "Registration Statement") covering the resale of the Registerable
Shares. Parent shall use its commercially reasonable efforts to cause the
Registration Statement to be declared effective as soon as practicable after the
filing. If Parent (in its sole discretion after consultation with counsel of its
choice) determines that the Registration Statement may be filed under the 1933
Act prior to the Closing without violating or contravening any securities law,
rule or regulation or policy or position of the SEC, then Parent shall file such
Registration Statement as promptly as practicable after Parent makes such
determination.
(b) The Shareholders shall furnish such information as
Parent may reasonably request in connection with the preparation of the
Registration Statement. Upon the effectiveness of the Registration Statement
with the SEC, pursuant to the terms of this Agreement, the Registerable Shares
may be sold in accordance with the Registration Statement under the 1933 Act.
Subject to the terms of this Agreement, Parent shall use commercially reasonable
efforts to cause the Registration Statement to remain effective until the
earlier of (i) the date on which all Registerable Shares covered by the
Registration Statement have been sold to the public pursuant to the Registration
Statement or (ii) the date on which none of the shares of Parent Common Stock
covered by the Registration Statement which have not yet been sold to the public
pursuant to the Registration Statement remain Registerable Shares.
1.2 Other Shares. Parent may include in the Registration Statement
under this Section 1 any other shares of Parent Common Stock (including issued
and outstanding shares of Parent Common Stock as to which the holders thereof
have contracted with Parent for "piggyback" registration rights).
Parent's Obligations
In connection with the Registration Statement referred to in Section
1.2, Parent shall:
1.3 Registration Statement. Prepare and file with the SEC the
Registration Statement with respect to the Registerable Shares and thereafter
use commercially reasonable efforts to cause the Registration Statement to
become and remain effective for the period set forth in Section 1.2. In the
event the number of shares of Parent Common Stock available under the
Registration Statement filed pursuant to this Agreement is insufficient to cover
all Registerable Shares, Parent shall file a new Registration Statement (on the
short form available
therefor, if applicable) or shall amend the Registration Statement previously
filed under this Agreement so as to cover all of the Registerable Shares, in
each case, as soon as practicable, but in any event within twenty (20) business
days after the necessity therefor arises.
1.4 Amendments and Supplements. Prepare and file with the SEC such
amendments and supplements to the Registration Statement and the prospectus used
in connection therewith as may be necessary to keep the Registration Statement
effective for the period set forth in Section 1.2 and to comply with the
provisions of the 1933 Act with respect to the sale or other disposition of the
shares of Parent Common Stock covered by the Registration Statement.
1.5 Copies of Offering Documents. Furnish to the Shareholders such
numbers of copies of the Registration Statement, prospectus, and any amendments
and supplements thereto, in conformity with the requirements of the 1933 Act,
such documents incorporated by reference in the Registration Statement and such
other documents as the Shareholders reasonably request, in order to facilitate
the public sale or other disposition of the Registerable Shares.
1.6 Misleading Prospectus. Promptly notify each Shareholder, at
any time when a prospectus relating thereto covered by the Registration
Statement is required to be delivered under the 1933 Act, upon Parent becoming
aware that the prospectus included in the Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and
immediately thereafter use commercially reasonable efforts to prepare and file
with the SEC and furnish to each Shareholder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Registerable Shares, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they are made.
1.7 Rule 144.
(a) Use its commercially reasonable efforts to file in a timely
manner any reports required to be filed by it under the 1933 Act and the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and take such
further action as the Shareholders may reasonably request, all from time to time
to enable each Shareholder to sell the Registerable Shares owned by it without
registration under the 1933 Act pursuant to the exemption provided by Rule 144;
(b) Use its commercially reasonable efforts to make and keep
public information available, as those terms are understood and defined in Rule
144; and
(c) Furnish to each Shareholder, promptly upon request, (i) a
written statement by Parent as to the status of its compliance with the
reporting requirements of Rule 144, the 1933 Act and the 1934 Act, and (ii) such
other information as may be reasonably requested to permit the Shareholder to
sell Registerable Shares pursuant to Rule 144 without registration.
1.8 Blue Sky Filings. Use its commercially reasonable efforts to
register and qualify the securities covered by the Registration Statement under
the Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Shareholders, provided that Parent shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
1.9 NYSE Filing. Provided the shares of Parent Common Stock are or
remain listed on the New York Stock Exchange, use its commercially reasonable
efforts to register and qualify the securities covered by the Registration
Statement to be included for quotation on the New York Stock Exchange (it being
understood that if shares of Parent Common Stock cease to be listed on the New
York Stock Exchange, but are listed on another national securities exchange or
interdealer quotation system, Parent shall use its commercially reasonable
efforts to register and qualify the securities covered by the Registration
Statement to be included for quotation on such exchange or system).
1.10 Stock Certificates. Cooperate with the Shareholders who hold
Registerable Shares to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registerable
Shares to be offered pursuant to the Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
Shareholders may reasonably request and registered in such names as the
Shareholders may request.
The Shareholders' Obligations
In connection with the Registration Statement referred to in
Section 1.2, the Shareholders shall each:
1.11 Other Documents and Information. Complete, execute,
acknowledge and/or deliver such questionnaires, indemnification agreements,
custody agreements, underwriting agreements (if the registration is
underwritten) and other documents, certificates and instruments as are
reasonably required by Parent or any underwriter(s) or are otherwise necessary
in connection with the registration and offering. Each Shareholder shall
promptly provide to Parent such information concerning such Shareholder, their
ownership of Parent's securities, the intended method of distribution and such
other information as may be required by applicable law or regulation or as may
be reasonably requested by Parent.
1.12 Cessation of Offering. Upon receipt of any notice from Parent
of the happening of any event of the kind described in Section 2.4, immediately
discontinue disposition of the Registerable Shares pursuant to the Registration
Statement covering such shares until the Shareholders' receipt of the copies of
the supplemented or amended prospectus contemplated by Section 2.4, and, if so
directed by Parent, deliver to Parent all copies of the prospectus covering such
Registerable Shares in such Shareholder's possession at the time of receipt of
such notice.
1.13 No Preliminary Prospectus. No Shareholder and no person or
entity acting on any Shareholder's behalf (other than an underwriter selected by
Parent or approved by Parent) shall offer any Registerable Shares by means of
any preliminary prospectus.
Limitations
1.14 Other Transactions. Parent shall not be obligated to effect a
registration pursuant to this Agreement, or to file any amendment or supplement
thereto, and may suspend the Shareholders' rights to make sales pursuant to an
effective registration pursuant to Section 1, at any time when Parent, in the
good faith judgment of its Board of Directors, reasonably believes that the
filing thereof at the time requested, or the offering of securities pursuant
thereto, would (i) materially and adversely affect a pending or proposed
acquisition, merger, recapitalization, consolidation, reorganization or similar
transaction, or negotiations, discussions or pending proposals related thereto
or (ii) be seriously detrimental to Parent and its stockholders, in which event
(under clause (i) or (ii) above) Parent's sole relief from its registration
obligations is the right to defer filing of a registration statement (or to
suspend the Shareholders' rights to make sales pursuant to an effective
registration pursuant to Section 1) for a period of not more than 90 days;
provided, however, that Parent shall not utilize the right described in this
Section 4.1 more than twice in any 12-month period. Parent shall exercise its
rights pursuant to this Section 4.1 by providing the Shareholders' Agent, for
and on behalf of the Shareholders, with written notice that Parent is exercising
its rights in accordance with this Section 4.1 (the "Written Notice"). The
Shareholders' Agent agrees that he shall hold any and all information provided
to him in connection with Parent's rights set forth in this Section 4.1
including, without limiting the generality of the foregoing, any information
contained in the Written Notice (the "Confidential Information") in strict
confidence and shall not at any time: (a) reveal, report, publish, disclose or
transfer any Confidential Information to any Person (other than to Shareholders
to inform them solely and without details that Parent has exercised its rights
pursuant to this Section 4.1); (b) use any Confidential Information for any
purpose; or (c) use any Confidential Information for the benefit of any Person;
provided, however, that the Shareholders' Agent may disclose Confidential
Information to the extent required by law or legal process if the Shareholders'
Agent (to the extent practicable) provides Parent with a reasonable opportunity
to seek a protective order or other similar remedy to prevent such disclosure.
Expenses and Indemnification
1.15 Certain Fees and Commissions. Parent shall pay its own legal
and accounting fees and all printing fees in connection with the Registration
Statement. Parent shall reimburse the Shareholders up to a total of $5,000 for
reasonable legal fees and costs incurred by the Shareholders in connection with
the initial preparation and filing of each of the Registration Statement and up
to $2,500 for reasonable legal fees and costs incurred by the Shareholders in
connection with any amendment or supplement to the Registration Statement. The
Shareholders shall pay any additional fees and costs of their own counsel and
all underwriting discounts, commissions and expenses of underwriters or brokers
incurred in connection with the offering and sale of the Registerable Shares.
1.16 Other Expenses. Parent shall pay all registration and filing
fees attributable to the Registerable Shares and the listing fee payable to the
New York Stock Exchange.
1.17 Indemnification. In the event any Registerable Shares are
included in a registration statement under Section 1:
(a) Indemnification by Parent. To the extent permitted by law,
Parent will indemnify and hold harmless each Shareholder, such Shareholder's
heirs, successors and assigns, any underwriter (as defined in the ▇▇▇▇ ▇▇▇) for
such Shareholder (if selected by Parent or approved by Parent), and each person,
if any, who controls such Shareholder or underwriter within the meaning of the
1933 Act or the 1934 Act, against any losses, claims, damages, liabilities or
actions to which they may become subject under the 1933 Act, the 1934 Act or
other federal or state law, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, including any preliminary prospectus (not prohibited by Section 3.3)
or final prospectus contained therein or any amendments or supplements thereto,
or arising out of or based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in the context in which made, not misleading; and Parent
will reimburse each such Shareholder, such Shareholder's heirs, successors and
assigns, underwriter (if selected by Parent or approved by Parent) or
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnification and other
rights provided for in this Section 5.3(a) shall not apply (i) to any such loss,
claim, damage, liability, or action insofar as it arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, preliminary prospectus or final prospectus
or any amendment or supplement thereto, in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by any Shareholder or (ii) if the person asserting any such loss,
claim, damage, liability or action who purchased the Registerable Shares which
are the subject thereof did not receive a copy of an amended preliminary
prospectus or the final prospectus (or the final prospectus as amended or
supplemented) at or prior to the written confirmation of the sale of such
Registerable Shares to such person because of the failure of such Shareholder or
underwriter to so provide such amended preliminary or final prospectus (where
such amended preliminary or final prospectus was supplied to such Shareholder or
underwriter by Parent a reasonable period prior to the time of such written
confirmation of sale) and the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact made in such preliminary
prospectus was corrected in the amended preliminary prospectus or the final
prospectus (or the final prospectus as amended and supplemented). Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Shareholder, underwriter or controlling person and shall
survive the transfer of the Registerable Shares by such Shareholder.
(b) Indemnification by Shareholders. To the extent permitted by
law, each Shareholder will severally (but not jointly and pro rata with the
other Shareholders) indemnify and hold harmless Parent, its successors and
assigns, its officers and directors, any underwriter (as defined in the ▇▇▇▇
▇▇▇) with respect to the Registerable Shares, and each person, if any, who
controls Parent or any such underwriter within the meaning of the 1933 Act or
the 1934 Act, against any losses, claims, damages, liabilities or actions (joint
or several) to which they may become subject under the 1933 Act, the 1934 Act or
other federal or state law, arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, or arising out of or
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
the context in which made, not
misleading; provided that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished by such Shareholder expressly for use in such
registration by such Shareholder, or (ii) the failure of such Shareholder or any
underwriter with respect to the Registerable Shares held by such Shareholder at
or prior to the written confirmation of the sale of the Registerable Shares held
by such Shareholder to send or arrange delivery of a copy of an amended
preliminary prospectus or the final prospectus (or the final prospectus as
amended or supplemented) to the person asserting any such loss, claim, damage,
liability or action who purchased the Registerable Shares which is the subject
thereof (where such amended preliminary or final prospectus was supplied to such
Shareholder or underwriter by Parent a reasonable period prior to the time of
such written confirmation of sale) and the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact made in such
preliminary prospectus was corrected in the amended preliminary prospectus or
the final prospectus (or the final prospectus as amended and supplemented). Each
Shareholder will reimburse Parent and each such officer or director or
controlling person for any legal or other expenses reasonably incurred by him or
her in connection with investigating or defending any such loss, claim, damage,
liability, or action. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of Parent or any such
officer, director, underwriter or controlling person and shall survive the
transfer of the Registerable Shares by such Shareholder.
(c) Indemnification Procedures. Promptly after receipt by a
person who may be entitled to indemnification under this Section 5.3 (an
"indemnified party") of notice of the commencement of any action (including any
governmental action) for which indemnification may be available under this
Section 5.3, such indemnified party will, if a claim in respect thereof is to be
made against any person who must provide indemnification under this Section 5.3
(an "indemnifying party"), deliver to the indemnifying party a written notice of
the commencement thereof, and the indemnifying party shall have the right to
participate in and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party shall have the right to retain its own counsel (and
the reasonable fees of such counsel shall be paid by the indemnifying party) and
assume its own defense if (i) the retention of such counsel has been
specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party has failed to promptly assume the defense and employ
experienced counsel reasonably acceptable to the indemnified party after the
indemnifying party has received the notice of the indemnification matter from
the indemnified party, or (iii) the named parties to any such action include
both the indemnified party and the indemnifying party, and the representation of
both parties by the same counsel would be inappropriate due to a conflict of
interest between them. It is understood, however, that the indemnifying party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys for all
indemnified parties unless the indemnified parties in good faith conclude and
are advised by their counsel that there is an actual or potential conflict of
interest among the indemnified parties. No indemnification provided for in
Section 5.3(a) or Section 5.3(b) shall be available to any party who shall fail
to give notice as provided in this Section 5.3(c) to the extent that the party
to whom notice was not given was unaware of the proceeding to which such notice
would have related and was materially prejudiced by the failure to give such
notice.
Other Provisions
1.18 Eligibility for Form S-3. Parent represents and warrants that it
meets as of the date hereof the requirements for the use of Form S-3 for
registration of the sale by the Shareholders of the Registerable Shares and
Parent shall use its commercially reasonable efforts to file all reports
required to be filed by Parent with the SEC in a timely manner so as to maintain
such eligibility for the use of Form S-3.
1.19 Notices. Any notice or other communication required or permitted
to be delivered to any party under this Agreement shall be in writing and shall
be deemed properly delivered, given and received when delivered in the manner
and to the address or facsimile telephone number set forth in Section 10.5 of
the Reorganization Agreement (or to such other address or facsimile telephone
number as such party shall have specified in a written notice given to the other
parties hereto).
1.20 Headings. The bold-faced headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
1.21 Counterparts. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
1.22 Governing Law. This Agreement shall be construed in accordance
with, and governed in all respects by, the internal laws of the State of
California (without giving effect to principles of conflicts of laws).
1.23 Successors and Assigns. This Agreement shall be binding upon each
of the parties hereto and each of their respective permitted successors and
assigns, if any. No Shareholder may assign such Shareholder's rights under this
Agreement without the express prior written consent of Parent, provided,
however, that upon the death of a Shareholder, such Shareholder's rights under
this Agreement shall be transferred to the person(s) who receive such
Shareholder's Parent Common Stock under the laws of descent and distribution.
Except as specifically provided herein, nothing in this Agreement is intended to
confer, or shall be deemed to confer, any rights or remedies upon any person or
entity other than the parties hereto and their permitted successors and assigns.
This Agreement shall inure to the benefit of: the Shareholders' Agent; the
Shareholders; Parent; and the respective successors and assigns, if any, of the
foregoing.
1.24 Waiver. No failure on the part of any Person to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part
of any Person in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or remedy;
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy. No Person shall be deemed to have waived any claim
arising out of this Agreement, or any power, right, privilege or remedy under
this Agreement, unless the waiver of such claim, power, right, privilege or
remedy is expressly set forth in a written
instrument duly executed and delivered on behalf of such Person; and any such
waiver shall not be applicable or have any effect except in the specific
instance in which it is given.
1.25 Amendments. This Agreement may not be amended, modified, altered
or supplemented other than by means of a written instrument duly executed and
delivered on behalf of Parent and the Shareholders' Agent.
1.26 Severability. In the event that any provision of this Agreement,
or the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
1.27 Entire Agreement. This Agreement and the other agreements
referred to herein set forth the entire understanding of the parties hereto
relating to the subject matter hereof and thereof and supersede all prior
agreements and understandings among or between any of the parties relating to
the subject matter hereof and thereof.
1.28 Waiver of Jury Trial. Each of the parties hereto hereby
irrevocably waives any and all right to trial by jury in any Legal Proceeding
arising out of or related to this Agreement or the transactions contemplated
hereby.
1.29 Effective Date. This Agreement shall become effective upon the
consummation of the Merger, and shall be of no force or effect if the Merger is
not consummated.
1.30 Construction.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
This Registration Rights Agreement has been executed and delivered as of
the date first stated above.
Acuson Corporation
By: ____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President
Shareholders' Agent:
________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Exhibit K
Individuals included in definition of knowledge
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▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ Hagegard
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D.
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▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ Flower
Exhibit L
Setoff Escrow Agreement
SETOFF ESCROW AGREEMENT
This Setoff Escrow Agreement ("Agreement") is made and entered into as of
_______, 1999 by and among: Acuson Corporation, a Delaware corporation
("Parent"), the shareholders of ▇▇▇▇▇, Inc., a Pennsylvania corporation (the
"Company"), identified on Exhibit A hereto (the "Shareholders"), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
as Shareholders' Agent ("Shareholders' Agent"), and State Street Bank and Trust
Company of California, N.A., a national banking association (the "Escrow
Agent").
Recitals
A. Parent, Echo Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of Parent ("Merger Sub"), and the Company have entered into an
Agreement and Plan of Merger and Reorganization dated as of September 15, 1999
(the "Reorganization Agreement"), pursuant to which the Company will merge with
and into Merger Sub and the Shareholders will have the right to receive shares
of common stock of Parent and may have the right to receive certain cash
payments.
B. The Reorganization Agreement contemplates the establishment of an
escrow arrangement with respect to the setoff rights of the Indemnitees under
the Reorganization Agreement.
C. Pursuant to Section 10.1 of the Reorganization Agreement, the
Shareholders have irrevocably appointed ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ to serve as Shareholders'
Agent for, among other things, all matters set forth in Sections 1.6 and 9 of
the Reorganization Agreement.
Agreement
The parties, intending to be legally bound, agree as follows:
1. Defined Terms. Capitalized terms used in this Agreement and not
otherwise defined shall have the meanings given to them in the Reorganization
Agreement, a copy of which is attached hereto.
2. Escrow and Indemnification.
(a) Shares, Stock Powers and Cash Placed in Escrow. From time to time
after the date hereof Parent may (i) issue and deliver to the Escrow Agent
certificates for shares of Parent Common Stock registered in the names of the
Merger Shareholders as set forth on Exhibit B hereto, evidencing shares of
Parent Common Stock to be held in escrow in accordance with this Agreement,
and/or (ii) deliver to the Escrow Agent cash to be held in escrow in accordance
with this Agreement. To the extent that shares of Parent Common Stock are
deposited in escrow under this Agreement, each of the Shareholders shall deliver
to Parent upon request, and upon receipt Parent shall deliver to Escrow Agent,
five original "assignments separate from certificate" ("Stock Powers") endorsed
by each such Shareholder in blank with signatures guaranteed by a commercial
bank or by a member firm of the New York Stock Exchange (it being understood
that until such Stock Powers are delivered to Parent in accordance with this
Section 2(a), Parent may authorize Escrow Agent to use any stock powers
delivered to
Parent pursuant to the other Escrow Agreement executed and delivered pursuant to
the Reorganization Agreement). Any shares of Parent Common Stock being held in
escrow pursuant to this Agreement (the "Setoff Shares"), together with any cash
being held in escrow pursuant to this Agreement, shall constitute an escrow fund
(the "Escrow Fund") with respect to the setoff rights set forth in Section 9.3
of the Reorganization Agreement. The Escrow Fund shall be held as a trust fund
and it is the intention of Parent, the Company, the Shareholders and the
Shareholders' Agent that the Escrow Fund shall not be subject to any lien,
attachment, trustee process or any other judicial process of any creditor of any
Shareholder or of any party hereto. The Escrow Agent agrees to accept delivery
of the Escrow Fund and to hold the Escrow Fund in an escrow account (the "Escrow
Account"), subject to the terms and conditions of this Agreement.
(b) Voting of Setoff Shares. The record owner of any Setoff Shares
shall be entitled to exercise all voting rights with respect to such Setoff
Shares.
(c) Dividends, Etc. Parent and each of the Shareholders agree among
themselves, for the benefit of Parent and the Escrow Agent, that any cash,
securities or other property distributable (whether by way of dividend, stock
split or otherwise) in respect of or in exchange for any Setoff Shares shall not
be distributed to the record owners of such Setoff Shares, but rather shall be
distributed to and held by the Escrow Agent in the Escrow Account. Unless and
until the Escrow Agent shall actually receive such cash, securities or other
property, it may assume without inquiry that the Setoff Shares currently being
held by it in the Escrow Account are all that the Escrow Agent is required to
hold. At the time any Setoff Shares are required to be released from the Escrow
Account to any Person pursuant to this Agreement, any cash, securities or other
property previously received by the Escrow Agent in respect of or in exchange
for such Setoff Shares shall be released from the Escrow to such Person.
(d) Investment of Cash. Any cash in the Escrow Account shall be
invested in the SSgA U.S. Treasury Money Market Fund (or in such other
investments as Parent and the Shareholders' Agent may agree). Any interest on
the cash portion of the Escrow Account shall become part of the Escrow Account.
(e) Transferability. The interests of the Shareholders in the Escrow
Account and in the Escrow Fund shall not be assignable or transferable, other
than by operation of law.
(f) Fractional Shares. No fractional shares of Parent Common Stock
shall be retained in or released from the Escrow Account pursuant to this
Agreement. In connection with any release of Setoff Shares from the Escrow
Account, Parent and the Escrow Agent shall "round down" in order to avoid
retaining any fractional share in the Escrow Account and in order to avoid
releasing any fractional share from the Escrow Account. When shares are "rounded
down", no cash-in-lieu payments need to be made.
3. Administration of Escrow Account. Except as otherwise provided herein,
the Escrow Agent shall administer the Escrow Account as follows:
(a) If any Indemnitee has or claims to have incurred or suffered
Damages for which it is or may be entitled to setoff rights under Section 9.3 of
the Reorganization Agreement,
such Indemnitee may deliver a claim notice (a "Claim Notice") to the
Shareholders' Agent and to the Escrow Agent. Each Claim Notice shall state that
such Indemnitee believes in good faith and after investigation that there is or
has been a breach of a representation, warranty or covenant contained in the
Reorganization Agreement or that such Indemnitee is otherwise entitled to setoff
rights under the Reorganization Agreement and contain a brief description of the
circumstances supporting such Indemnitee's belief that there is or has been such
a breach or that such Indemnitee is so entitled to setoff rights and shall, to
the extent possible, contain a non-binding, preliminary estimate of the amount
of Damages such Indemnitee claims to have so incurred or suffered (the "Claimed
Amount").
(b) Within 20 business days after receipt by the Shareholders' Agent
of a Claim Notice, the Shareholders' Agent may deliver to the Indemnitee who
delivered the Claim Notice and to the Escrow Agent a written response (the
"Response Notice") in which the Shareholders' Agent: (i) agrees that a portion
of the Escrow Fund having a value equal to the full Claimed Amount may be
released from the Escrow Account to the Indemnitee; (ii) agrees that a portion
of the Escrow Fund having a value equal to part, but not all, of the Claimed
Amount (the "Agreed Amount") may be released from the Escrow Account to the
Indemnitee or (iii) indicates that no part of the Claimed Amount may be released
from the Escrow Account to the Indemnitee. Any part of the Claimed Amount that
is not to be released to the Indemnitee shall be the "Contested Amount." If a
Response Notice is not received by the Escrow Agent within such 20 business-day
period, then the Shareholders' Agent shall be deemed to have agreed that a
portion of the Escrow Fund having a value equal to the full Claimed Amount may
be released to the Indemnitee from the Escrow Account.
(c) If the Shareholders' Agent delivers a Response Notice agreeing
that a portion of the Escrow Fund having a value equal to the full Claimed
Amount may be released from the Escrow Account to the Indemnitee, or if the
Shareholders' Agent does not deliver a Response Notice in accordance with
Section 3(b), the Escrow Agent shall promptly following the receipt of the
Response Notice (or, if the Shareholders' Agent has not delivered a Response
Notice, promptly following the expiration of the 20 business-day period referred
to in Section 3(b)), deliver (or cause the stock transfer agent of the Setoff
Shares to deliver) to such Indemnitee such portion of the Escrow Fund.
(d) If the Shareholders' Agent delivers a Response Notice agreeing
that a portion of the Escrow Fund having a value equal to part, but not all, of
the Claimed Amount may be released from the Escrow Account to the Indemnitee,
the Escrow Agent shall promptly following the receipt of the Response Notice
deliver (or cause the stock transfer agent of the Setoff Shares to deliver) to
such Indemnitee a portion of the Escrow Fund having a value equal to the Agreed
Amount.
(e) If the Shareholders' Agent delivers a Response Notice indicating
that there is a Contested Amount, the Shareholders' Agent and the Indemnitee
shall attempt in good faith to resolve the dispute related to the Contested
Amount. If the Indemnitee and the Shareholders' Agent shall resolve such
dispute, such resolution shall be binding on all of the Shareholders and a
settlement agreement containing the terms and conditions of such resolution
shall be signed by the Indemnitee and the Shareholders' Agent and sent to the
Escrow Agent, who shall, upon
receipt thereof, release a portion of the Escrow Fund from the Escrow Account in
accordance with such agreement.
(f) If the Shareholders' Agent and the Indemnitee are unable to
resolve the dispute relating to any Contested Amount within 30 business days
after the delivery of the Claim Notice, then the claim described in the Claim
Notice shall be settled by binding arbitration in Wilmington, Delaware in
accordance with the Commercial Arbitration Rules then in effect of the American
Arbitration Association (the "AAA Rules"). Arbitration will be conducted by
three arbitrators; one selected by Parent, one selected by the Shareholders'
Agent and the third selected by the first two arbitrators. If either the
Shareholders' Agent or Parent fails to select an arbitrator prior to the
expiration of the 30-business day period commencing on the expiration of the
30-business day period referred to in the first sentence of this Section 3(f),
then either the Shareholders' Agent or Parent, as the case may be, shall be
entitled to select the second arbitrator. The parties agree to use all
reasonable efforts to cause the arbitration hearing to be conducted within 60
calendar days after the appointment of the last of the three arbitrators and to
use all reasonable efforts in the circumstances to cause the arbitrators'
decision to be furnished within 95 calendar days after the appointment of the
last of the three arbitrators. The parties further agree that, to the extent
practicable, discovery shall be completed at least 20 business days prior to the
date of the arbitration hearing. The arbitrators' decision shall relate solely
to whether the Indemnitee is entitled to recover the Contested Amount (or a
portion thereof), and the portion of such Contested Amount the Indemnitee is
entitled to recover. The final decision of the arbitrators shall be furnished to
the Shareholders' Agent, the Indemnitee and the Escrow Agent in writing and
shall constitute a conclusive determination of the issue in question, binding
upon the Shareholders, the Indemnitee and the Escrow Agent and shall not be
contested by any of them. The non-prevailing party in any arbitration shall pay
the reasonable expenses (including attorneys' fees) of the prevailing party, any
additional reasonable fees and expenses (including reasonable legal fees) of the
Escrow Agent, and the fees and expenses associated with the arbitration
(including the arbitrators' fees and expenses). For purposes of this Section
3(f), the non-prevailing party shall be deemed to be the Indemnitee if it is
entitled to recover less than 50% of the Contested Amount; otherwise it shall be
the Shareholders.
(g) The Escrow Agent shall release any applicable portion of the
Escrow Fund from the Escrow Account in connection with any Contested Amount
within 5 business days after the delivery to it of: (i) a copy of a settlement
agreement executed by the Indemnitee and the Shareholders' Agent setting forth
instructions to the Escrow Agent as to the portion of the Escrow Fund, if any,
to be released from the Escrow Account, with respect to such Contested Amount or
(ii) a copy of the award of the arbitrators referred to and as provided in
Section 3(f) setting forth instructions to the Escrow Agent as to the portion of
the Escrow Fund, if any, to be released from the Escrow Account, with respect to
such Contested Amount.
(h) Any portion of the Escrow Fund released from the Escrow Account
to an Indemnitee shall be deemed to reduce the Escrow Fund pro rata with respect
to each Shareholder in accordance with each Shareholder's Percentage Interest in
the Escrow Fund as set forth in Exhibit B.
4. Release of Escrow Fund.
(a) If any portion of the Escrow Fund is to be released to any of the
Indemnitees under this Agreement, Parent shall be entitled (in its sole
discretion), upon written notice to the Escrow Agent, to determine whether cash,
Setoff Shares or a combination thereof is to be so released to the Indemnitees.
With its delivery of such notice, Parent shall deliver to the Escrow Agent a
revised version of Exhibit B, as contemplated by Section 10(n).
(b) The Escrow Agent is not the stock transfer agent for the Parent
Common Stock. Accordingly, if a distribution of a number of shares of Parent
Common Stock less than all of the Setoff Shares is to be made, the Escrow Agent
must requisition the appropriate number of shares from such stock transfer
agent, delivering to it the appropriate stock certificates and related Stock
Powers. For the purposes of this Agreement, the Escrow Agent shall be deemed to
have delivered Parent Common Stock to the Person entitled to it when the Escrow
Agent has delivered such certificates and Stock Powers to such stock transfer
agent with instructions to deliver it to the appropriate Person. Distributions
from the Escrow Fund shall be made to Parent or the Shareholders, as
appropriate, at the addresses described in Section 10(b).
(c) Whenever a distribution is to be made to the Shareholders, pro
rata distributions shall be made to each of them at their addresses and based on
the Percentage Interests in the Escrow Fund set forth in Exhibit B. Within five
business days after the complete resolution of the claim that caused cash or
shares to be deposited into escrow in accordance with this Agreement and the
Reorganization Agreement (the "Applicable Claim"), the Escrow Agent shall
distribute or cause the stock transfer agent for the Parent Common Stock to
distribute to each of the Shareholders such Shareholder's pro-rata portion of
the Escrow Fund then held in escrow based on the Percentage Interests in the
Escrow Fund set forth in Exhibit B; provided, however, that notwithstanding the
foregoing, if, prior to the date on which the Applicable Claim is completely
resolved (the "Resolution Date"), any Indemnitee has given a Claim Notice
containing a claim which has not been resolved prior to the resolution Date in
accordance with Section 3, the Escrow Agent shall retain in the Escrow Account
after the Resolution Date Setoff Shares or cash having a value equal to 100% of
the Claimed Amount or Contested Amount, as the case may be, with respect to all
claims which have not then been resolved.
5. Valuation of Setoff Shares, Etc.
(a) Setoff Share Value. For purposes of this Agreement (including all
references to distributions of a portion of the Escrow Fund "having a value"
equal to a specified amount), each Setoff Share shall be deemed to have a value
equal to the Post-Closing Parent Average Stock Price applicable to such Setoff
Share. Parent shall deliver to the Escrow Agent a certificate setting forth the
Post-Closing Parent Average Stock Price applicable to Setoff Shares after such
Post-Closing Parent Average Stock Price shall be determined.
(b) Stock Splits. All numbers contained in, and all calculations
required to be made pursuant to, this Agreement shall be adjusted as appropriate
to reflect any stock split, reverse stock split, stock dividend or similar
transaction effected by Parent after the date hereof; provided, however, that
the Escrow Agent shall have received (i) notice of such stock split or other
action, (ii) the appropriate number of additional shares of Parent Common Stock
or other
property pursuant to Section 2(c) hereof, and (iii) a revised version of Exhibit
B as contemplated by Section 10(n).
6. Fees and Expenses. Upon the execution of this Agreement by all parties
hereto, fees and expenses, in accordance with Exhibit C attached hereto, will be
payable to the Escrow Agent. This annual Escrow Agent fee will cover the first
twelve months of the escrow. In accordance with Exhibit C attached hereto, the
Escrow Agent will also be entitled to reimbursement for reasonable and
documented out-of-pocket expenses incurred by the Escrow Agent in the
performance of its duties hereunder. All such fees and expenses shall be paid by
Parent.
7. Limitation of Escrow Agent's Liability.
(a) The Escrow Agent undertakes to perform such duties as are
specifically set forth in this Agreement only and shall have no duty under any
other agreement or document notwithstanding their being referred to herein or
attached hereto as an exhibit. The Escrow Agent shall not be liable except for
the performance of such duties as are specifically set forth in this Agreement,
and no implied covenants or obligations shall be read into this Agreement
against the Escrow Agent. The Escrow Agent shall incur no liability with respect
to any action taken by it or for any inaction on its part in reliance upon any
notice, direction, instruction, consent, statement or other document believed by
it to be genuine and duly authorized, nor for any other action or inaction
except for its own willful misconduct or negligence. In no event shall the
Escrow Agent be liable for punitive, incidental or consequential damages. The
Escrow Agent may rely on and use the Stock Powers and shall not be liable in
connection therewith. In all questions arising under this Agreement, the Escrow
Agent may rely on the advice of counsel, and for anything done, omitted or
suffered in good faith by the Escrow Agent based upon such advice the Escrow
Agent shall not be liable to anyone. The Escrow Agent shall not be required to
take any action hereunder involving any expense unless the payment of such
expense is made or provided for in a manner reasonably satisfactory to it.
(b) Parent hereby agrees to indemnify the Escrow Agent for, and hold
it harmless against, any loss, liability or expense incurred without negligence
or willful misconduct on the part of Escrow Agent, arising out of or in
connection with its carrying out of its duties hereunder. This right of
indemnification shall survive the termination of this Agreement, and the
resignation of the Escrow Agent. The costs and expenses of enforcing this right
of indemnification shall also be paid by Parent.
8. Termination. This Agreement shall terminate on March 31, 2004;
provided, however, that if the Escrow Agent has received from any Indemnitee a
Claim Notice setting forth a claim that has not been resolved by March 31, 2004,
then this Agreement shall continue in full force and effect until the claim has
been resolved and the Escrow Fund released in accordance with this Agreement.
9. Successor Escrow Agent. In the event the Escrow Agent becomes
unavailable or unwilling to continue as escrow agent under this Agreement, the
Escrow Agent may resign and be discharged from its duties and obligations
hereunder by giving its written resignation to the parties to this Agreement.
Such resignation shall take effect not less than 30 calendar days after it is
given to all parties hereto. Parent may appoint a successor Escrow Agent only
with the consent of the Shareholders' Agent (which consent shall not be
unreasonably withheld or delayed). The Escrow Agent shall act in accordance with
written instructions from Parent as to the transfer of the Escrow Fund to a
successor escrow agent.
10. Miscellaneous.
(a) Attorneys' Fees. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
(b) Notices. Any notice or other communication required or permitted
to be delivered to any party under this Agreement shall be in writing and shall
be deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth in Section 10.5 of the
Reorganization Agreement or to the Escrow Agent at the address set forth below
(or to such other address or facsimile telephone number as such party shall have
specified in a written notice given to the other parties hereto):
State Street Bank and Trust Company of California, N.A.
Library Tower
▇▇▇ ▇▇▇▇ ▇/▇▇/ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If any Claim Notice, Response Notice or other document or notice of any kind is
required to be delivered to the Escrow Agent and any other person, the Escrow
Agent may assume without inquiry that such document has been delivered to such
other person if it has been delivered to the Escrow Agent.
(c) Headings. The underlined headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
(d) Counterparts. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
(e) Governing Law. This Agreement shall be construed in accordance
with, and governed in all respects by, the internal laws of the State of
California (without giving effect to principles of conflicts of laws).
(f) Successors and Assigns. This Agreement shall be binding upon each
of the parties hereto and each of their respective permitted successors and
assigns, if any. No Shareholder may assign such Shareholder's rights under this
Agreement without the express prior written consent of Parent, provided,
however, that (i) upon the death of a Shareholder, such Shareholder's rights
under this Agreement shall be transferred to the person(s) who receive such
Shareholder's Parent Common Stock under the laws of descent and distribution and
(ii) a Shareholder may assign such Shareholder's rights under this Agreement to
any organization qualified under Section 501(c)(3) of the Internal Revenue Code
to which the Shareholder transfers Registerable Shares or in connection with an
estate planning transaction. Nothing in this Agreement is intended to confer, or
shall be deemed to confer, any rights or remedies upon any person or entity
other than the parties hereto and their permitted successors and assigns. This
Agreement shall inure to the benefit of: the Shareholders; Parent; Escrow Agent
and the respective successors and assigns, if any, of the foregoing.
(g) Waiver. No failure on the part of any Person to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part
of any Person in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or remedy;
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy. No Person shall be deemed to have waived any claim
arising out of this Agreement, or any power, right, privilege or remedy under
this Agreement, unless the waiver of such claim, power, right, privilege or
remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such Person; and any such waiver shall not be applicable
or have any effect except in the specific instance in which it is given.
(h) Amendments. This Agreement may not be amended, modified, altered
or supplemented other than by means of a written instrument duly executed and
delivered on behalf of all of the parties hereto; provided, however, that any
amendment duly executed and delivered by the Shareholders' Agent shall be deemed
to have been duly executed and delivered by all of the Shareholders.
(i) Severability. In the event that any provision of this Agreement,
or the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
(j) Parties in Interest. None of the provisions of this Agreement is
intended to provide any rights or remedies to any Person other than the parties
hereto and their respective successors and assigns, if any.
(k) Entire Agreement. This Agreement and the other agreements
referred to herein set forth the entire understanding of the parties hereto
relating to the subject matter hereof and thereof and supersede all prior
agreements and understandings among or between any of the parties relating to
the subject matter hereof and thereof.
(l) Waiver of Jury Trial. Each of the parties hereto hereby
irrevocably waives any and all right to trial by jury in any Legal Proceeding
arising out of or related to this Agreement or the transactions contemplated
hereby.
(m) Tax Reporting Information and Certification of Tax Identification
Numbers.
(i) The parties hereto agree that, for tax reporting purposes,
all interest on or other income, if any, attributable to the Setoff Shares or
any other amount held in escrow by the Escrow Agent pursuant to this Agreement
shall be allocable in equal shares to the Shareholders in accordance with their
Percentage Interests in the Escrow Fund set forth in Exhibit B.
(ii) Parent and each of the Shareholders agree to provide the
Escrow Agent with certified tax identification numbers for each of them by
furnishing appropriate forms W-9 (or Forms W-8, in the case of non-U.S. persons)
and other forms and documents that the Escrow Agent may reasonably request
(collectively, "Tax Reporting Documentation") to the Escrow Agent within 30 days
after the date hereof. The parties hereto understand that, if such Tax Reporting
Documentation is not so certified to the Escrow Agent, the Escrow Agent may be
required by the Internal Revenue Code, as it may be amended from time to time,
to withhold a portion of any interest or other income earned on the investment
of monies or other property held by the Escrow Agent pursuant to this Agreement.
(n) Recalculation of Percentage Interests. If for any reason Exhibit
B should need to be recalculated (because, for example, a Shareholder's
entitlement to any Post-Closing Payment for the year ending December 31, 2003 is
modified in accordance with Section 1.6 of the Reorganization Agreement), Parent
and the Shareholders' Agent shall jointly (i) calculate revised Percentage
Interests for the Shareholders and (ii) submit such calculations in the form of
a revised Exhibit B to the Escrow Agent.
(o) Construction.
(i) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(ii) The parties hereto agree that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not be applied in the construction or interpretation of this Agreement.
(iii) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
Acuson Corporation
_____________________________________
By:__________________________________
Title:_______________________________
Shareholders' Agent:
_____________________________________
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Shareholder:
_____________________________________
By:__________________________________
Print Name:__________________________
State Street Bank and Trust
Company of California, N.a.
_____________________________________
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Exhibit A to Setoff Escrow Agreement
Shareholders
Exhibit B to Setoff Escrow Agreement
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Name, Address and Taxpayer Identification Cash Portion "Setoff Shares" Percentage Interest
Number of Shareholder Portion of Escrow Fund
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Exhibit C to Setoff Escrow Agreement
Escrow Fees and Expenses