AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER (hereinafter called this "AGREEMENT"),
dated as of July 29, 1998, among
ATL Ultrasound, Inc., a Washington corporation (the "COMPANY"), Philips
Electronics North America Corporation, a Delaware corporation ("PARENT"), and
Philips Acquisition, Inc., a Washington corporation and a wholly-owned
subsidiary of Parent ("MERGER SUB"), the Company and Merger Sub sometimes being
hereinafter collectively referred to as the "CONSTITUENT CORPORATIONS."
RECITALS
WHEREAS, the Boards of Directors of Parent and the Company each have
unanimously adopted this Agreement and approved the Offer (as defined herein)
and the Merger (as defined herein) and determined that it is in the best
interests of their respective companies and shareholders for Parent to acquire
the Company upon the terms and subject to the conditions set forth herein; and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
The Tender Offer
1.1. TENDER OFFER. (a) Provided that this Agreement shall not have
been terminated in accordance with Article IX hereof and none of the events set
forth in Annex A hereto (the "OFFER CONDITIONS") shall have occurred or be
existing, within five business days of the date hereof, Merger Sub will commence
a tender offer (the "OFFER") for all of the outstanding shares of common stock,
par value $0.01 per share (the "SHARES"), of the Company, together with the
associated rights to purchase (the
"RIGHTS") Series A Participating Cumulative Preferred Stock, par value $1.00 per
share, of the Company (the "SERIES A PREFERRED") at a price of $50.50 per Share
in cash, net to the seller. The obligation of Merger Sub to accept for payment
and pay for any Shares tendered pursuant to the Offer shall be subject only to
the satisfaction or waiver of the Offer Conditions. Merger Sub will not,
without the prior written consent of the Company (such consent to be authorized
by the Board of Directors of the Company) (i) waive the Minimum Condition (as
defined in Annex A), (ii) decrease the price per Share or change the form of
consideration payable in the Offer, (iii) decrease the number of Shares sought
in the Offer, (iv) impose additional conditions to the Offer, (v) change any
Offer Condition or amend any other term of the Offer if any such change or
amendment would be in any manner adverse to the holders of Shares or (vi) except
as provided below, extend the Offer if all of the Offer Conditions have been
satisfied; PROVIDED, HOWEVER, and notwithstanding anything herein to the
contrary, it is understood and agreed that Merger Sub may extend the expiration
date of the Offer after all of the Offer Conditions have been satisfied or
waived if it reasonably determines such extension is appropriate in order to
enable it to purchase at least 90% of the outstanding Shares in the Offer (in
which case Merger Sub may extend the expiration date on one occasion for up to
ten business days beyond the time it would otherwise be required to accept
validly tendered Shares for payment). Parent and Merger Sub further agree that:
(A) in the event of the failure of one or more of the Offer Conditions to be
satisfied or waived on any date the Offer would otherwise expire, Merger Sub
shall from time to time extend the Offer until such time as such condition is or
conditions are satisfied or waived, provided that, except as set forth below,
Merger Sub shall not be required to extend the Offer beyond October 30, 1998,
and (B) in the event, after October 30, 1998, of the failure of the Regulatory
Condition (as defined in Annex A) to be satisfied or waived on the date the
Offer would otherwise expire (and the satisfaction or waiver on such date of the
other Offer Conditions other than the Minimum Condition), Merger Sub shall give
the Company notice thereof and, at the request of the Company, from time to time
extend the Offer until the earlier of (1) five business days after such time as
the Regulatory Condition is satisfied or waived and (2) the date chosen by the
Company which shall not be later than the earlier of (x) December 31, 1998 or
(y) five business days after the earliest date on which the Company
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reasonably believes the Regulatory Condition will be satisfied, provided that if
such condition is not satisfied by any date chosen by the Company pursuant to
this clause (y), the Company may request further extensions of the Offer in
accordance with the terms of this Section 1.1. On the terms of the Offer and
subject to the Offer Conditions, Merger Sub shall pay for all Shares validly
tendered and not withdrawn pursuant to the Offer that Merger Sub becomes
obligated to purchase pursuant to the Offer as soon as practicable after the
expiration of the Offer. The Company's Board of Directors shall recommend
acceptance of the Offer to its stockholders in a Solicitation/Recommendation
Statement on Schedule 14D-9 (as supplemented or amended from time to time, the
"SCHEDULE 14D-9") to be filed with the Securities and Exchange Commission (the
"SEC") upon commencement of the Offer; PROVIDED, HOWEVER, that the Company's
Board of Directors may thereafter amend or withdraw its recommendation in
accordance with the second paragraph of Section 7.2.
(b) Parent and Merger Sub agree, as to the Offer to Purchase and
related Letter of Transmittal (which documents, as supplemented or amended from
time to time, together constitute the "OFFER DOCUMENTS"), and the Company
agrees, as to the Schedule 14D-9, that such documents shall, in all material
respects, comply with the requirements of the Exchange Act and the rules and
regulations thereunder and other applicable laws. The Company and its counsel,
as to the Offer Documents, and Merger Sub and its counsel, as to the
Schedule 14D-9, shall be given an opportunity to review such documents prior to
their being filed with the SEC. Parent, Merger Sub and the Company each agrees
promptly to correct any information provided by it for use in the Offer
Documents or the Schedule 14D-9 that shall have become false or misleading in
any material respect. Parent and Merger Sub further agree to take all steps
necessary to cause the Schedule 14D-1 as so corrected to be filed with the SEC
and the other Offer Documents as so corrected to be disseminated to holders of
Shares, in each case as and to the extent required by applicable federal
securities laws. The Company further agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws.
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(c) In connection with the Offer, the Company will cause its transfer
agent to furnish promptly to Merger Sub a list, as of the most recent date
practicable, of the record holders of Shares and their addresses, as well as
mailing labels containing the names and addresses of all record holders of
Shares, any non-objecting beneficial owner lists and lists of security positions
of Shares held in stock depositories in the Company's possession or control.
The Company will furnish Merger Sub with such additional information (including,
but not limited to, updated lists of holders of Shares and their addresses,
mailing labels, non-objecting beneficial owner lists and lists of security
positions) and such other assistance as Parent or Merger Sub or their agents may
reasonably request in communicating the Offer to the record and beneficial
holders of Shares. Subject to the requirements of applicable law, and except
for such steps as are necessary to disseminate the Offer Documents and any
other documents necessary to consummate the Offer, Parent and Merger Sub shall
hold in confidence the information contained in any such labels, listings and
files, shall use such information only in connection with the Offer and the
Merger and, if this Agreement shall be terminated, shall, upon request, deliver
to the Company all copies of such information then in their possession.
ARTICLE II
The Merger; Closing; Effective Time
2.1. THE MERGER. (a) Upon the terms and subject to the conditions of
this Agreement, including, without limitation, Section 2.1(b), at the Effective
Time (as defined in Section 2.3) Merger Sub shall be merged with and into the
Company and the separate corporate existence of Merger Sub shall thereupon cease
(the "MERGER"). Subject to Section 2.1(b), the Company shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the "SURVIVING
CORPORATION") and shall continue to be governed by the laws of the State of
Washington, and the separate corporate existence of the Company with all its
rights, privileges, immunities, powers and franchises shall continue unaffected
by the Merger, except as set forth in Section 3.1. The Merger shall have the
effects specified in Section 23B.11.060 of the Washington Business Corporation
Act (the "WBCA").
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(b) In the event that over 90% of the outstanding Shares have been
accepted for payment by Merger Sub in the Offer, Parent may, by written notice
to the Company and in lieu of the provisions set forth in the first two
sentences of Section 2.1(a), elect to cause the Company to merge with and into
Merger Sub at the Effective Time, in which case, at the Effective Time, the
Company shall be merged with and into Merger Sub and the separate corporate
existence of the Company shall thereupon cease; PROVIDED, HOWEVER, that the
Company shall not be deemed to have breached any of its representations,
warranties or covenants set forth in this Agreement solely by reason of such
election. In such circumstance, the merger of the Company into Merger Sub shall
be deemed the "Merger" for all purposes hereunder and Merger Sub shall be deemed
the "Surviving Corporation" for all purposes hereunder.
2.2. CLOSING. The closing of the Merger (the "CLOSING") shall take
place (i) at the offices of Xxxxxxxx & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx at 10:00 A.M. on the first business day on which the last to be satisfied
or waived of the conditions set forth in Article VIII hereof shall be satisfied
or waived in accordance with this Agreement or (ii) at such other place and time
and/or on such other date as the Company and Parent may agree.
2.3. EFFECTIVE TIME. As soon as practicable following the Closing,
the Company and Parent will cause articles of merger (the "WASHINGTON ARTICLES
OF MERGER") to be executed and filed with the Secretary of State of the State of
Washington (the "SECRETARY OF STATE") as provided in Section 23B.11.050 of the
WBCA. The Merger shall become effective at the time specified in the Washington
Articles of Merger as filed with the Secretary of State, and such time is
hereinafter referred to as the "EFFECTIVE TIME." Unless Parent and the Company
agree otherwise, the Washington Articles of Merger shall specify that the Merger
shall become effective at the time of filing such articles with the Secretary of
State.
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ARTICLE III
Articles of Incorporation and By-Laws
of the Surviving Corporation
3.1. ARTICLES OF INCORPORATION. The Restated Articles of
Incorporation of the Company (the "ARTICLEs") in effect at the Effective Time
shall be the Articles of Incorporation of the Surviving Corporation, until duly
amended in accordance with the terms thereof and the WBCA, except that Article 3
of the Articles shall be amended to read in its entirety as follows:
"The aggregate number of shares which the Corporation shall have the
authority to issue is 1,000 shares of Common Stock, par value $0.01 per
share."
3.2. THE BY-LAWS. The By-Laws of Merger Sub in effect at the
Effective Time shall be the By-Laws of the Surviving Corporation, until duly
amended in accordance with the terms thereof and the WBCA.
ARTICLE IV
Officers and Directors
of the Surviving Corporation
4.1. OFFICERS AND DIRECTORS. The directors of Merger Sub and the
officers of the Company at the Effective Time shall, from and after the
Effective Time, be the directors and officers, respectively, of the Surviving
Corporation until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Articles of Incorporation and By-Laws.
4.2. ACTIONS BY DIRECTORS. For purposes of Article IX and
Sections 2.2, 2.3, 10.3 and 10.4, no action taken by the Board of Directors of
the Company after the consummation of the Offer and prior to the Merger shall be
effective unless such action is approved by the affirmative vote of at least a
majority of the Independent Directors (as defined in Section 4.3).
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4.3. BOARDS OF DIRECTORS; COMMITTEES. (a) If requested by Parent, the
Company will, subject to compliance with applicable law, immediately following
the acceptance for payment of, and payment by Merger Sub for, more than 50
percent of the outstanding Shares pursuant to the Offer, take all actions
necessary to cause persons designated by Parent to become directors of the
Company so that the total number of such persons equals at least that number of
directors, rounded up to the next whole number, which represents the product of
(x) the total number of directors on the Board of Directors multiplied by
(y) the percentage that the number of Shares so accepted for payment and paid
for plus any Shares beneficially owned by Parent or its affiliates on the date
hereof bears to the number of Shares outstanding at the time of such payment.
In furtherance thereof, the Company will increase the size of the Board, or use
its best efforts to secure the resignation of directors, or both, as is
necessary to permit Parent's designees to be elected to the Company's Board of
Directors; provided, however, that prior to the Effective Time, the Company's
Board of Directors shall always have at least three members (the "INDEPENDENT
DIRECTORS") who are neither officers of Parent nor designees, shareholders or
affiliates of Parent or Parent's affiliates ("PARENT INSIDERS"); and PROVIDED
FURTHER that, in such event, if the number of Independent Directors shall be
reduced below three for any reason whatsoever, any remaining Independent
Directors (or Independent Director, if there shall be only one remaining) shall
be entitled to designate persons to fill such vacancies who shall be deemed to
be Independent Directors for purposes of this Agreement or, if no Independent
Directors then remain, the other directors shall designate three persons to fill
such vacancies who shall not be officers or affiliates of Parent or any of
Parent's affiliates, and such persons shall be deemed to be Independent
Directors for purposes of this Agreement. At such time, the Company, if so
requested, will use its best efforts to cause persons designated by Parent to
constitute the same percentage of each committee of such board, each board of
directors of each subsidiary of the Company and each committee of each such
board (in each case to the extent of the Company's ability to elect such
persons). The Company's obligations to appoint designees to the Board of
Directors shall be subject to Section 14(f) of the Securities Exchange Act of
1934 (the "EXCHANGE ACT") and Rule 14f-1 thereunder. The Company shall promptly
take all actions required pursuant to such Section and Rule in order
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to fulfill its obligations under this Section 4.3 and shall provide for
inclusion in the Schedule 14D-9 being mailed to shareholders contemporaneously
with the commencement of the Offer such information with respect to Parent and
its designees as is required under such Section and Rule in order to fulfill its
obligations under this Section 4.3 (provided that Parent shall have provided to
the Company on a timely basis all information required to be included under such
Section and Rule with respect to the designees of Parent).
ARTICLE V
Conversion or Cancellation of Shares in the Merger
5.1. CONVERSION OR CANCELLATION OF SHARES. The manner of converting
or canceling shares of the Company and Merger Sub in the Merger shall be as
follows:
(a) At the Effective Time, each Share issued and outstanding
immediately prior to the Effective Time (other than Shares owned by Parent,
Merger Sub or any other subsidiary of Parent (collectively, the "PARENT
COMPANIES")) or Shares which are held by stockholders ("DISSENTING
STOCKHOLDERS") exercising dissenters' rights pursuant to Section 23B.13.020 of
the WBCA) shall, by virtue of the Merger and without any action on the part of
the holder thereof, be converted into the right to receive, without interest, an
amount in cash equal to $50.50 or such greater amount which may be paid pursuant
to the Offer (the "MERGER CONSIDERATION"). All such Shares, by virtue of the
Merger and without any action on the part of the holders thereof, shall no
longer be outstanding and shall be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such Shares shall
thereafter cease to have any rights with respect to such Shares, except the
right to receive the Merger Consideration for such Shares upon the surrender of
such certificate in accordance with Section 5.2 or the right, if any, to receive
payment from the Surviving Corporation of the "fair value" of such Shares as
determined in accordance with Section 23B.13.020 of the WBCA.
(b) At the Effective Time, each Share issued and outstanding at the
Effective Time and owned by any of the Parent Companies, and each Share issued
and held in the
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Company's treasury at the Effective Time, shall, by virtue of the Merger and
without any action on the part of the holder thereof, cease to be outstanding,
shall be canceled and retired without payment of any consideration therefor and
shall cease to exist.
(c) At the Effective Time, each share of Common Stock, par value $0.01
per share, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of Merger Sub or the holders of such shares, be converted into one Share, unless
Parent has made the election provided for in Section 2.1(b) hereof, in which
case each such share of Merger Sub shall remain outstanding and each certificate
therefor shall continue to evidence one share of Common Stock of the Surviving
Corporation.
5.2. PAYMENT FOR SHARES. Parent shall make available or cause to be
made available as and when needed to the bank or trust company appointed by
Parent as paying agent prior to the consummation of the Offer, which paying
agent shall be reasonably acceptable to the Company (the "PAYING AGENT"),
amounts sufficient in the aggregate to provide all funds necessary for the
Paying Agent to make payments pursuant to Section 5.1(a) hereof to holders of
Shares issued and outstanding immediately prior to the Effective Time. Promptly
after the Effective Time, the Surviving Corporation shall instruct the Paying
Agent to mail to each person who was, at the Effective Time, a holder of record
(other than any of the Parent Companies) of issued and outstanding Shares a form
of letter of transmittal and instructions in customary form for use in effecting
the surrender of the certificates which, immediately prior to the Effective
Time, represented any of such Shares in exchange for payment therefor. Upon
surrender to the Paying Agent of such a certificate, together with such letter
of transmittal, duly executed and completed in accordance with the instructions
thereto, the Surviving Corporation shall promptly cause to be paid to the
persons entitled thereto a check in the amount to which such persons are
entitled, after giving effect to any required tax withholdings. No interest
will be paid or will accrue on the amount payable upon the surrender of any such
certificate. If payment is to be made to a person other than the registered
holder of the certificate surrendered, it shall be a condition of such payment
that the certificate so surrendered shall be properly endorsed or otherwise in
proper form for transfer
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and that the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of the certificate surrendered or establish to the satisfaction of the
Surviving Corporation and the Paying Agent that such tax has been paid or is not
applicable. 180 days following the Effective Time, the Surviving Corporation
shall be entitled to cause the Paying Agent to deliver to it any funds
(including any interest received with respect thereto) made available to the
Paying Agent which have not been disbursed to holders of certificates formerly
representing Shares outstanding immediately prior to the Effective Time, and
thereafter such holders shall be entitled to look to the Surviving Corporation
only as general creditors thereof with respect to the cash payable upon due
surrender of their certificates. Notwithstanding the foregoing, neither the
Paying Agent nor any party hereto shall be liable to any holder of certificates
formerly representing Shares for any amount paid to a public official pursuant
to any applicable abandoned property, escheat or similar law. The Surviving
Corporation shall pay all charges and expenses of the Paying Agent in connection
with the exchange of cash for Shares and Parent shall reimburse the Surviving
Corporation for such charges and expenses.
5.3. DISSENTERS' RIGHTS. If any Dissenting Stockholder shall be
entitled to be paid the "fair value" of such Dissenting Stockholder's Shares, as
provided in Section 23B.13.020 of the WBCA, the Company shall give Parent notice
thereof and Parent shall have the right to participate in all negotiations and
proceedings with respect to any such demands. Neither the Company nor the
Surviving Corporation shall, except with the prior written consent of Parent,
voluntarily make any payment with respect to, or settle or offer to settle, any
such demand for payment. If any Dissenting Stockholder shall fail to perfect or
shall have effectively withdrawn or lost the right to dissent, the Shares held
by such Dissenting Stockholder shall thereupon be treated as though such Shares
had been converted into the right to receive the Merger Consideration pursuant
to Section 5.1.
5.4. TRANSFER OF SHARES AFTER THE EFFECTIVE TIME. No transfers of
Shares shall be made on the stock transfer books of the Surviving Corporation at
or after the Effective Time.
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ARTICLE VI
Representations and Warranties
6.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set
forth in the corresponding section of the disclosure letter, dated the date
hereof, delivered by the Company to Parent prior to the execution hereof (the
"DISCLOSURE LETTER"), the Company hereby represents and warrants to Parent and
Merger Sub that:
(a) CORPORATE ORGANIZATION AND QUALIFICATION. Each of the Company and
its subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation and is
in good standing as a foreign corporation in each jurisdiction where the
properties owned, leased or operated, or the business conducted, by it require
such qualification, except for any such failure to so qualify or be in such good
standing which, when taken together with all other such failures, is not
reasonably likely to have a Material Adverse Effect. Each of the Company and
its subsidiaries has the requisite corporate power and authority to carry on its
respective businesses in all material respects as they are now being conducted.
The Company has made available to Parent a complete and correct copy of the
Company's Articles and By-Laws and the comparable governing instruments of each
of its subsidiaries, each as amended to date. The Company's Articles and
By-Laws and the comparable governing instruments of each of its subsidiaries so
delivered are in full force and effect.
(b) AUTHORIZED CAPITAL. The authorized capital stock of the Company
consists of 50,000,000 Shares, of which 14,759,713 Shares were outstanding as of
July 3, 1998, and 6,000,000 shares of Preferred Stock, par value $1.00 per share
(the "PREFERRED SHARES"), of which no shares are outstanding. All of the
outstanding Shares and Preferred Shares have been duly authorized and all of the
outstanding Shares are validly issued, fully paid and nonassessable. The
Company has no Shares or Preferred Shares reserved for issuance, except that, as
of July 3, 1998, there were 2,452,482 Shares reserved for issuance upon exercise
of outstanding options under (or, in the case of the Employee Stock Purchase
Plan, reserved for issuance under such plan) pursuant to the Westmark
International Incorporated 1986
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Amended and Restated Option, Restricted Stock, Stock Appreciation Right and
Performance Unit Plan, Westmark International Incorporated 1986 Amended and
Restated Nonofficers Employee Option, Restricted Stock and Stock Grant Plan,
1986 Management Incentive Plan, Amended 1992 Option, Stock Appreciation Right,
Restricted Stock, Stock Grant and Performance Unit Plan, 1992 Nonofficers
Employee Stock Plan, Amended Nonemployee Directors Stock Option Plan, and
Employee Stock Purchase Plan (collectively, the "STOCK PLANS"), and
500,000 shares of Series A Preferred reserved for issuance pursuant to the
Amended and Restated Rights Agreement, dated as of June 26, 1992, between the
Company and First Chicago Trust Company of New York (the "RIGHTS AGREEMENT").
Each of the outstanding shares of capital stock of each of the Company's
subsidiaries is duly authorized, validly issued, fully paid and nonassessable
and owned, either directly or indirectly, by the Company free and clear of all
liens, pledges, security interests, claims or other encumbrances. Except as set
forth above, there are no shares of capital stock of the Company authorized,
issued or outstanding and except as set forth above, there are no preemptive
rights or outstanding subscriptions, options, warrants, rights or convertible
securities of the Company or any of its subsidiaries, or agreements or
commitments of the Company or any of its subsidiaries of any character relating
to the issued or unissued capital stock or other securities of the Company or
any of its subsidiaries. Immediately prior to the consummation of the Offer, no
Shares, Preferred Shares or other securities of the Company will be issuable
pursuant to the Rights Agreement, and after the Effective Time the Surviving
Corporation will have no obligation to issue, transfer or sell any Shares or
common stock of the Surviving Corporation pursuant to any Compensation and
Benefit Plan (as defined in Section 6.1(h)).
(c) CORPORATE AUTHORITY. Subject only to approval of this Agreement
by the holders of a majority of the outstanding Shares, the Company has the
requisite corporate power and authority and has taken all corporate action
necessary in order to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement is a valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms. The Board of Directors of the Company has (A) unanimously adopted this
Agreement and approved the Offer and the Merger and (B) received the opinion of
its financial advisor, BT Alex. Xxxxx, to the effect that, as of
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the date of this Agreement, the consideration to be received by the holders of
Shares (other than Parent and its affiliates) in the Offer and the Merger is
fair to such holders from a financial point of view, a copy of the written
opinion of which will promptly be provided to Parent.
(d) GOVERNMENTAL FILINGS; NO VIOLATIONS.
(i) Other than those notices, reports, filings, consents,
registrations, approvals, permits or authorizations provided for in Section 2.3,
as required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx
"XXX XXX") and the antitrust or competition laws and regulations of Belgium (if
required by law), Austria and Germany (the "FOREIGN FILINGS"), and the
Exchange Act and the Investment Canada Act ("ICA") (collectively, the
"REGULATORY FILINGS"), no notices, reports or other filings are required to be
made by the Company with, nor are any consents, registrations, approvals,
permits or authorizations required to be obtained by the Company from, any
governmental or regulatory authority, agency, commission or other entity,
domestic or foreign ("GOVERNMENTAL ENTITY"), in connection with the execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby, except for those the failure of
which to be made or obtained would not, individually or in the aggregate,
reasonably be likely to adversely affect the Company in a material way or to
prevent the consummation of, or materially impair the Company's ability to
consummate, the transactions contemplated hereby.
(ii) The execution and delivery of this Agreement by the Company does
not, and the consummation by the Company of the transactions contemplated by
this Agreement will not, constitute or result in (A) a breach or violation of,
or a default under, the Articles or By-Laws of the Company or the comparable
governing instruments of any of its subsidiaries, (B) a breach or violation of,
a default under or the triggering of any payment or other obligations pursuant
to, any of the Company's existing Compensation and Benefit Plans or any grant or
award made under any of the foregoing, (C) a breach or violation of, or a
default under, the acceleration of or the creation of a lien, pledge, security
interest or other encumbrance on assets (with or without the giving of notice or
the lapse of time) pursuant to, any provision of any agreement, lease, license,
contract, note, mortgage,
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indenture, arrangement or other obligation ("CONTRACTS") of the Company or any
of its subsidiaries or any law, rule, ordinance or regulation or judgment,
decree, order, award or governmental or non-governmental permit or license to
which the Company or any of its subsidiaries is subject or (D) any change in the
rights or obligations of any party under any of the Contracts, except in the
case of clauses (B), (C) or (D) above, any such breach, violation, default,
triggering, acceleration or creation that, individually or in the aggregate,
would not reasonably be likely to have a Material Adverse Effect or to prevent
the consummation of, or materially impair the ability of the Company to
consummate, the transactions contemplated hereby. Schedule 6.1(d)(ii) of the
Disclosure Letter sets forth, to the knowledge of the Company, a list of (x) any
material consents required under any Contracts to be obtained prior to
consummation of the transactions contemplated by this Agreement (whether or not
subject to the exception set forth with respect to clause (C) above) and (y) any
Contracts containing any covenants of the Company or any of its subsidiaries not
to compete in any line of business or with any person. The Company will use its
reasonable best efforts to obtain the consents referred to in the Disclosure
Letter.
(e) COMPANY REPORTS; FINANCIAL STATEMENTS. The Company has made
available to Parent each registration statement, schedule, report, proxy
statement or information statement filed by it since December 31, 1997 (the
"AUDIT DATE"), including, without limitation, (i) the Company's Annual Report on
Form 10-K for the year ended December 31, 1997 and (ii) the Company's Quarterly
Report on Form 10-Q for the periods ended March 31, 1998, each in the form
(including exhibits and any amendments thereto) filed with the SEC (all such
statements, schedules and reports, the "COMPANY REPORTS"). As of their
respective dates, the Company Reports did not, and any Company Reports filed
with the SEC subsequent to the date hereof will not, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading. Each of the consolidated
balance sheets included in or incorporated by reference into the Company Reports
(including the related notes and schedules) fairly presents in all material
respects the consolidated financial position of the Company and its subsidiaries
as of its date and each of the consolidated statements of income and of changes
in
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financial position included in or incorporated by reference into the Company
Reports (including any related notes and schedules) fairly presents in all
material respects the results of operations, retained earnings and changes in
financial position, as the case may be, of the Company and its subsidiaries for
the periods set forth therein (subject, in the case of unaudited statements, to
normal year-end audit adjustments which will not be material in amount or
effect), in each case in accordance with generally accepted accounting
principles consistently applied during the periods involved, except as may be
noted therein.
(f) ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Company
Reports filed with the SEC prior to the date hereof, since December 31, 1997,
the Company and its subsidiaries have conducted their respective businesses only
in, and have not engaged in any material transaction other than according to,
the ordinary and usual course of such businesses and there has not been (i) any
change or development that, individually or in the aggregate, has had, or,
individually or in the aggregate, is reasonably likely to have, a Material
Adverse Effect; (ii) any declaration, setting aside or payment of any dividend
or other distribution with respect to the capital stock of the Company; or
(iii) any change by the Company in accounting principles, practices or methods.
Since December 31, 1997, except as provided for herein or as disclosed in the
Company Reports filed with the SEC prior to the date hereof or as required under
agreements disclosed on Schedule 6.1(h) of the Disclosure Letter and other than
in the ordinary course, there has not been any increase in the compensation
payable or which could become payable by the Company and its subsidiaries to
their officers or key employees, or any amendment of any Compensation and
Benefit Plans (as hereinafter defined).
(g) LITIGATION AND LIABILITIES. Except as disclosed in the Company
Reports filed with the SEC prior to the date hereof, there are no (i) civil,
criminal or administrative actions, suits, claims, hearings, investigations or
proceedings pending or, to the knowledge of the Company, threatened against the
Company or any of its subsidiaries or (ii) obligations or liabilities, whether
or not accrued, contingent or otherwise, including, without limitation, those
relating to matters involving any Environmental Law (as hereinafter defined), in
each of cases (i) and (ii), other than those that, individually or
-15-
in the aggregate, are not reasonably likely to have a Material Adverse Effect.
(h) EMPLOYEE BENEFITS.
(i) All bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock and stock option plans, all employment, termination,
severance, welfare, fringe benefit, compensation, medical or health contract or
other plan, contract, policy or arrangement which covers employees or former
employees (the "EMPLOYEES") and current and former directors of the Company or
its subsidiaries or their respective predecessors (the "COMPENSATION AND BENEFIT
PLANS"), including, but not limited to, "employee benefit plans" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended("ERISA"), are listed in Schedule 6.1(h)(i) of the Disclosure Letter.
True and complete copies of all Compensation and Benefit Plans and such other
benefit plans, contracts or arrangements, including, but not limited to, any
material trust instruments and/or insurance contracts, if any, forming a part of
any such plans and agreements, and all amendments thereto have been made
available to Parent.
(ii) All Compensation and Benefit Plans are in material compliance
with applicable law and all Compensation and Benefit Plans which are employee
benefit plans, other than "multiemployer plans" within the meaning of
Sections 3(37) of ERISA, covering Employees (the "PLANS"), to the extent subject
to ERISA, are in substantial compliance with ERISA. Each Plan which is an
"employee pension benefit plan" within the meaning of Section 3(2) of ERISA
("PENSION PLAN") and which is intended to be qualified under Section 401(a) of
the Internal Revenue Code of 1986, as amended (the "CODE"), has received a
favorable determination letter from the Internal Revenue Service with respect to
"TRA" (as defined in Section 1 of Internal Revenue Service Revenue
Procedure 93-39), and the Company has no knowledge of any circumstances likely
to result in revocation of any such favorable determination letter. There is no
pending or, to the knowledge of the Company, threatened material litigation
relating to the Compensation and Benefit Plans. Neither the Company nor any of
its subsidiaries has engaged in a transaction with respect to any Plan that,
assuming the taxable period of such
-16-
transaction expired as of the date hereof, could subject the Company or any of
its subsidiaries to a tax or penalty imposed by either Section 4975 of the Code
or Section 502(i) of ERISA in an amount which would be material.
(iii) No material liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by the Company or any of its subsidiaries
with respect to any ongoing, frozen or terminated "single-employer plan", within
the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by
any of them, or the single-employer plan of any entity which is considered one
employer with the Company under Section 4001 of ERISA or Section 414 of the Code
(an "ERISA AFFILIATE"). None of the Company, its subsidiaries or any ERISA
Affiliate has contributed to a "multiemployer plan", within the meaning of
Section 3(37) of ERISA, at any time on or after September 26, 1980. No notice
of a "reportable event", within the meaning of Section 4043 of ERISA for which
the 30-day reporting requirement has not been waived, has been required to be
filed for any Pension Plan or by any ERISA Affiliate within the 12-month period
ending on the date hereof.
(iv) All material contributions required to be made under the terms of
any Plan have been timely made. Neither any Pension Plan nor any
single-employer plan of an ERISA Affiliate has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412 of the
Code or Section 302 of ERISA. Neither the Company nor any of its subsidiaries
has provided, or is required to provide, security to any Pension Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the
Code.
(v) There has been no material adverse change in the financial
condition of any single-employer plan since the last day of the most recent Plan
year.
(vi) Neither the Company nor any of its subsidiaries have any
obligations for retiree health and life benefits under any Compensation and
Benefit Plan. There are no restrictions on the rights of the Company or any of
its subsidiaries to amend or terminate any such Plan without incurring any
material liability thereunder.
-17-
(vii) All Compensation and Benefit Plans covering foreign employees
comply with applicable local law. Except as disclosed in the Company Reports
filed with the SEC prior to the date hereof, neither the Company nor any of its
subsidiaries has any material unfunded liabilities with respect to any Pension
Plan which covers foreign Employees.
(viii) The consummation of the transactions contemplated by this
Agreement will not (x) entitle any employees of the Company or any of its
subsidiaries to severance pay, (y) accelerate the time of payment or vesting or
trigger any payment of compensation or benefits under, increase the amount
payable or trigger any other material obligation pursuant to, any of the
Compensation and Benefit Plans or (z) result in any breach or violation of, or a
default under any of the Compensation and Benefit Plans.
(ix) No payment (or acceleration of benefits) required to be made to
any Employee as a result of the transactions contemplated by this Agreement
under any Compensation and Benefit Plan or otherwise will, if made, constitute
an "excess parachute payment" within the meaning of Section 280G of the Code.
Notwithstanding the foregoing, the Company is not a party to any Contract
pursuant to which it could be liable to indemnify any "disqualified individual"
as defined in Section 280G(c) of the Code for any excise tax under Section 4999
of the Code with respect to any "excess parachute payment".
(i) BROKERS AND FINDERS. Neither the Company nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders fees in connection with
the transactions contemplated herein, except that the Company has employed BT
Alex. Xxxxx as its financial advisor, the arrangements with which have been
disclosed in writing to Parent prior to the date hereof.
(j) RIGHTS PLAN. (i) The Company has amended the Rights Agreement to
provide that neither Parent nor any of its "affiliates" or "associates" (each as
defined in the Rights Agreement) (including Merger Sub) shall be deemed an
Acquiring Person (as defined in the Rights Agreement) and that the Distribution
Date (as defined in the Rights Agreement) shall not be deemed to occur, and that
the Rights will not separate from the Shares, as a result of the entering into
this Agreement, the commencement of the Offer
-18-
or the consummation of the Merger or the other transactions contemplated hereby;
(ii) the Company will take all necessary action with respect to all of the
outstanding Rights, so that the Company, as of the time immediately prior to the
purchase of any Shares by Parent or any of the Parent Companies pursuant to the
Offer, will have no obligations under the Rights or the Rights Agreement and the
holders will have no rights under the Rights or the Rights Agreement, in each
case, other than the right to receive the redemption payment of $0.01 per Right
in cash as provided in the Rights Agreement.
(k) TAKEOVER STATUTES. No "fair price", "moratorium", "control share
acquisition", "interested shareholder", "business combination" or other similar
antitakeover statute or regulation (including, without limitation, the business
combination provisions of Chapter 23B.19 of the WBCA) (each a "TAKEOVER
STATUTE") is, or at the Effective Time will be, applicable to the Company, the
Shares, the Offer or the Merger or the transactions contemplated hereby.
(l) ENVIRONMENTAL MATTERS. Except (other than in the case of
clause (iii) below) for such matters that, individually or in the aggregate,
would not reasonably be likely to have a Material Adverse Effect, (i) the
Company and its subsidiaries have at all times complied with all applicable
Environmental Laws; (ii) the properties presently owned or operated by the
Company or its subsidiaries (including, without limitation, soil, groundwater or
surface water on or under the properties, and buildings thereon) (the
"PROPERTIES") do not contain and have not contained any Hazardous Substance (as
hereinafter defined) other than as permitted under applicable Environmental Law,
do not contain, and have not contained, any underground storage tanks, do not
have any asbestos present and have not been used as a sanitary landfill, dump or
hazardous waste disposal site; (iii) neither the Company nor any of its
subsidiaries has within the last five years received any notices, demand letters
or requests for information from any Governmental Entity or any third party that
the Company may be in violation of, or liable under, any Environmental Law and
none of the Company, its subsidiaries or the Properties are subject to any court
order, administrative order or decree arising under any Environmental Law; and
(iv) no Hazardous Substance has been disposed of, transferred, released or
transported from any of the Properties during
-19-
the time such Property was owned or operated by the Company or one of its
subsidiaries, other than as permitted under and as would not reasonably be
expected to result in any liability under applicable Environmental Law, which,
in any such case, is not the subject of a fully adequate reserve.
"ENVIRONMENTAL LAW" means (i) any applicable Federal, state, foreign or local
law, statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, common law, legal doctrine, order, judgment, decree,
injunction, requirement or agreement with any governmental entity, (x) relating
to the protection, preservation or restoration of the environment (including,
without limitation, air, water vapor, surface water, groundwater, drinking water
supply, surface land, subsurface land, plant and animal life or any other
natural resource), or to human health or safety, or (y) the exposure to, or the
use, presence, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of Hazardous
Substances, in each case as amended and as now in effect. "HAZARDOUS SUBSTANCE"
means any substance presently listed, defined, designated or classified as
hazardous, toxic, radioactive or dangerous, or otherwise regulated, under any
Environmental Law, whether by type or by quantity, including any substance
containing any such substance as a component.
(m) INTELLECTUAL PROPERTY.
(i) The Company and/or each of its subsidiaries owns, or is licensed
or otherwise possesses legally enforceable rights to use, all material patents,
trademarks, trade names, service marks, copyrights, and any applications
therefor, technology, know-how, computer software programs or applications, and
tangible or intangible proprietary information or materials that are used in the
business of the Company and its subsidiaries as currently conducted, and all
material patents, trademarks, trade names, service marks and copyrights held by
the Company and/or its subsidiaries are valid and subsisting.
(ii) Except as disclosed in Company Reports filed prior to the date
hereof:
(A) neither the Company nor any of its subsidiaries is, nor will the
Company or any of its subsidiaries be as a result of the execution and
-20-
delivery of this Agreement or the performance of the Company's obligations
hereunder, in violation of any licenses, sublicenses or other agreements as
to which the Company or any of its subsidiaries is a party or pursuant to
which the Company or any of its subsidiaries is authorized to use any
third-party patents, trademarks, tradenames, service marks, copyrights,
trade secrets, technology, know-how or computer software (collectively,
"THIRD-PARTY INTELLECTUAL PROPERTY RIGHTS"), in each case which violation
would, individually or in the aggregate, reasonably be likely to adversely
affect the Company in a material manner;
(B) no material claims with respect to (I) the patents, registered and
unregistered trademarks and service marks, registered copyrights, trade
names, and any applications therefor, trade secrets, know-how, technology
or computer software owned by the Company or any of its subsidiaries
(collectively, the "COMPANY INTELLECTUAL PROPERTY RIGHTS"); or
(II) Third-Party Intellectual Property Rights are currently pending or, to
the knowledge of the Company, are threatened by any person; and
(C) to the knowledge of the Company, there is no material unauthorized
use, infringement or misappropriation of any of the Company Intellectual
Property Rights by any third party, including any employee of the Company
or any of its subsidiaries.
(n) TAX MATTERS.
(i) The Company has timely filed or caused to be filed all federal,
state, local and foreign tax returns and tax reports required to be filed by, or
with respect to, the Company and its subsidiaries on or prior to the date
hereof, except to the extent that any failure to so file would not, individually
or in the aggregate, reasonably be likely to adversely affect the Company in any
material manner. Such returns and reports are complete and accurate in all
material respects. The Company and its subsidiaries have timely paid (A) all
taxes shown as due on such tax returns and (B) all taxes for which no return is
required to be filed, except to the extent that any failure to so pay would not,
individually or in the aggregate, reasonably be likely to adversely affect the
Company in any material manner. All
-21-
U.S. federal income and employment tax returns and reports of the Company and
its subsidiaries have been examined by the Internal Revenue Service for all
years through 1993. No material issues have been raised in writing by the
relevant taxing authority in connection with any examination of the tax returns
and reports referred to in the first sentence of this clause (i).
(ii) The Company will timely file or cause to be filed all federal,
state, local and foreign tax returns and tax reports required to be filed by, or
with respect to, the Company and its subsidiaries between the date hereof and
the Effective Time, except to the extent that any failure to so file would not,
individually or in the aggregate, reasonably be likely to adversely affect the
Company in any material manner. Such returns and reports will be complete and
accurate in all material respects.
(iii) No waivers of statutes of limitations have been given or
requested with respect to any material taxes of the Company or its subsidiaries.
(iv) The Company is not, nor was it at any time during the five-year
period ending on the date on which the Effective Time occurs, a "United States
real property holding corporation" within the meaning of Section 897(C) of the
Code.
(o) INSURANCE. All material fire and casualty, general liability,
business interruption, product liability, and sprinkler and water damage
insurance policies maintained by the Company or any of its subsidiaries are with
reputable insurance carriers, provide adequate coverage for risks incident to
the business of the Company and its subsidiaries and their respective properties
and assets in character and amount generally comparable with those carried by
persons engaged in similar businesses and subject to generally comparable perils
or hazards. All such policies are in full force and effect and no notice of
cancellation, termination or default has been received with respect to any such
policy. All premiums due and payable on such policies covering all periods up
to and including the Closing Date have been paid in full or accrued.
(p) PRODUCT WARRANTIES. (i) There are no material warranties,
express or implied, written or oral, with respect to the products of the Company
or any of its
-22-
subsidiaries ("COMPANY PRODUCTS"); (ii) as of the date hereof there are no
pending or threatened material claims with respect to any such warranty; (iii)
there are no statements, citations or decisions by any Governmental Entity
declaring any Company Products defective or unsafe; (iv) no Company Product
fails to meet in any material respect any standards promulgated by any
applicable Governmental Entity; (v) there have been no recalls ordered within
the past five years by any such Governmental Entity with respect to any Company
Product; and (vi) there are no material pending, or, to the knowledge of the
Company as of the date hereof, threatened, product liability claims against or
involving the Company or any of its subsidiaries or any Company Product and no
such claims have been settled or adjudicated since December 31, 1995.
(q) YEAR 2000. The Company has a Year 2000 program in place which,
to the knowledge of the Company, is adequate to cause all computer software and
data processing devices (i) used in or for the manufacturing of Company Products
by the Company and/or any of its subsidiaries, or (ii) utilized in or by any
Company Products, including any Company Products sold and/or installed prior to
the date hereof, to become "Year 2000 Compliant" during 1999 and the Company
reasonably believes that all material costs associated with such program are
included in the Company's 1998 Budget and in its 1999 Strategic Plan, in each
case except as would not reasonably be likely, individually or in the aggregate,
to have a Material Adverse Effect. "YEAR 2000 COMPLIANT" means that the product
or software accurately processes and stores date/time data (including, but not
limited to calculating, comparing, displaying, recording and sequencing
operations involving date/time data) during, from and into and between the
twentieth and twenty-first centuries, and the years 1999 and 2000, including
correct processing of leap year data.
(r) COMPLIANCE WITH APPLICABLE LAWS. Each of the Company and its
subsidiaries has in effect all material federal, state, local and foreign
governmental approvals, authorizations, certificates, filings, franchises,
licenses, notices, permits and rights ("PERMITS") necessary for it to own, lease
or operate its properties and assets and to carry on its business as now
conducted in all material respects, and there has occurred no material default
under any such Permit. The Company and its subsidiaries are in compliance in
all material respects with all applicable statutes, laws,
-23-
ordinances, rules, orders and regulations of any Governmental Entity.
6.2. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB. Parent
and Merger Sub represent and warrant to the Company that:
(a) CORPORATE ORGANIZATION AND QUALIFICATION. Each of Parent and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation and is
in good standing as a foreign corporation in each jurisdiction where the
properties owned, leased or operated, or the business conducted, by it require
such qualification except for such failure to so qualify or to be in such good
standing, which, when taken together with all other such failures, is not
reasonably likely to have a material adverse effect on the financial condition,
properties, business or results of operations of Parent and its subsidiaries,
taken as a whole or on the ability of Parent or Merger Sub to perform their
obligations under this Agreement. Merger Sub has made available to the Company
true and complete copies of its articles of incorporation and bylaws.
(b) CORPORATE AUTHORITY. Parent and Merger Sub each has the requisite
corporate power and authority and has taken all corporate action necessary in
order to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement is a valid and binding agreement of Parent
and Merger Sub enforceable against Parent and Merger Sub in accordance with its
terms.
(c) GOVERNMENTAL FILINGS; NO VIOLATIONS. (i) Other than the
Regulatory Filings, no notices, reports or other filings are required to be made
by Parent and Merger Sub with, nor are any consents, registrations, approvals,
permits or authorizations required to be obtained by Parent and Merger Sub from,
any Governmental Entity in connection with the execution and delivery of this
Agreement by Parent and Merger Sub and the consummation of the transactions
contemplated hereby by Parent and Merger Sub, except for those the failure of
which to be made or obtained would not, individually or in the aggregate,
reasonably be likely to prevent the consummation of, or materially impair the
ability of Parent or Merger Sub to consummate, the transactions contemplated
hereby.
-24-
(ii) The execution and delivery of this Agreement by Parent and Merger
Sub do not, and the consummation of the transactions contemplated hereby by
Parent and Merger Sub will not, constitute or result in (A) a breach or
violation of, or a default under, the Certificate or Articles of Incorporation
or By-Laws of Parent or Merger Sub or (B) a breach or violation of, a default
under, the acceleration of or the creation of a lien, pledge, security interest
or other encumbrance on assets (with or without the giving of notice or the
lapse of time) pursuant to, any provision of any Contract of Parent or Merger
Sub or any law, ordinance, rule or regulation or judgment, decree, order, award
or governmental or non-governmental permit or license to which Parent or Merger
Sub is subject, except in the case of clause (B) above, any such breach,
violation, default, acceleration or creation that, individually or in the
aggregate, is not reasonably likely to prevent the consummation of, or
materially impair the ability of Parent or Merger Sub to consummate, the
transactions contemplated hereby.
(d) FUNDS. Parent has or will have the funds necessary to consummate
the Offer and the Merger.
ARTICLE VII
Covenants
7.1. INTERIM OPERATIONS OF THE COMPANY. The Company covenants and
agrees that, prior to the Effective Time (unless Parent shall otherwise agree
in writing and except as otherwise contemplated by this Agreement or as set
forth in the Disclosure Letter):
(a) the business of the Company and its subsidiaries shall be
conducted only in the ordinary and usual course and, to the extent
consistent therewith, each of the Company and its subsidiaries shall use
its reasonable best efforts to preserve its business organization intact
and maintain its existing relations with customers, suppliers, employees
and business associates;
(b) the Company shall not (i) sell or pledge or agree to sell or
pledge any stock owned by it in any of its subsidiaries; (ii) amend its
Articles or By-Laws or
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amend, modify or terminate the Rights Agreement; (iii) split, combine or
reclassify the outstanding Shares or Preferred Shares; or (iv) declare, set
aside or pay any dividend payable in cash, stock or property with respect
to the Shares or Preferred Shares;
(c) neither the Company nor any of its subsidiaries shall (i) issue,
sell, pledge, dispose of or encumber any additional shares of, or
securities convertible or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of its capital
stock other than, in the case of the Company, Shares issuable pursuant to
options outstanding on the date hereof under the Stock Plans;
(ii) transfer, lease, license, guarantee, sell, mortgage, pledge, dispose
of or encumber any assets or incur or modify any indebtedness or other
liability other than in the ordinary and usual course of business;
(iii) acquire directly or indirectly by redemption or otherwise any shares
of the capital stock of the Company; or (iv) authorize capital expenditures
in any manner not reflected in the capital budget of the Company attached
to the Disclosure Letter or make any acquisition of, or investment in, any
business or stock of any other person or entity;
(d) other than (i) the employment agreements entered into in
connection with this Agreement, (ii) as otherwise provided herein, (iii) as
required by law or (iv) as required under an existing plan as of the date
hereof, neither the Company nor any of its subsidiaries shall (A) grant any
severance or termination pay to, or enter into any employment or severance
agreement with, any director, officer or other employee of the Company or
such subsidiaries; or (B) establish, adopt, enter into, make any new grants
or awards (or accelerate the vesting, or increase the value of any benefit)
under, or amend, any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, employee
stock ownership, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the
benefit of any directors, officers or employees;
(e) neither the Company nor any of its subsidiaries shall settle or
compromise any material claims or
-26-
litigation or, except in the ordinary and usual course of business, modify,
amend or terminate any of its material Contracts or waive, release or
assign any material rights or claims;
(f) neither the Company nor any of its subsidiaries shall make any
material tax election or permit any material insurance policy naming it as
a beneficiary or a loss payable payee to be canceled or terminated without
the prior written approval of Parent, except in the ordinary and usual
course of business;
(g) neither the Company nor any of its subsidiaries shall
(i) terminate the employment of any Employee who is covered by a change in
control, employment, termination or similar agreement, except for Cause (as
defined in such agreements) or (ii) permit circumstances to exist that
would provide such Employee with Good Reason (as defined in such
agreements) to terminate employment; and
(h) neither the Company nor any of its subsidiaries shall authorize or
enter into an agreement to do any of the foregoing.
7.2. ACQUISITION PROPOSALS. The Company agrees that neither the
Company nor any of its subsidiaries nor any of the respective officers and
directors of the Company or its subsidiaries shall, and the Company shall direct
and use its best efforts to cause its employees, agents and representatives
(including, without limitation, any investment banker, attorney or accountant
retained by the Company or any of its subsidiaries) not to, directly or
indirectly, initiate, solicit, encourage or otherwise facilitate (including by
providing any confidential information or data to or having any negotiations or
discussions with any person (other than Parent or its affiliates) making or
inquiring with respect to making an Acquisition Proposal), any inquiries or the
making of any proposal or offer (including, without limitation, any proposal or
offer to stockholders of the Company) with respect to a merger, reorganization,
share exchange, consolidation or similar transaction involving the Company, or
any purchase of more than 15% (on a fair market value basis) of the assets of
the Company and its subsidiaries on a consolidated basis (including any such
purchase of assets
-27-
effected indirectly through the purchase of such subsidiaries), or any purchase
of, or tender offer for, more than 15% of any equity securities of the Company
(any such proposal or offer being hereinafter referred to as an "ACQUISITION
PROPOSAL"), except that the Company shall have the right, if, and only to the
extent that, the Company's Board of Directors concludes in good faith after
consultation with outside legal counsel that such actions are required to comply
with the fiduciary duties of the Company's Board of Directors under applicable
law in response to a bona fide, written Acquisition Proposal not solicited on or
after the date hereof, to engage in negotiations concerning, provide
confidential information or data to, or have discussions with, any person
relating to an Acquisition Proposal. The Company will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any of the foregoing. The
Company will take the necessary steps to promptly inform the individuals or
entities referred to in the first sentence hereof of the obligations undertaken
in this Section 7.2. The Company will notify Parent promptly, and in any event
within 24 hours, if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with, the Company or any of its
subsidiaries, indicating, in connection with such notice, the name of such
person and the material terms of any such proposals or offers, and shall
thereafter keep Parent informed on a current basis of the status and material
terms of any such proposals or offers and the status of any such discussions or
negotiations. The Company also will promptly request each person which has
heretofore executed a confidentiality agreement in connection with its
consideration of acquiring the Company and/or any of its subsidiaries to return
all confidential information heretofore furnished to such person by or on behalf
of the Company.
Nothing contained in this Agreement shall prohibit the Company from
taking and disclosing to its stockholders a position required by Rule 14e-2(a)
promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders if, in the good faith judgment of the Board of Directors
of the Company after consultation with outside counsel, failure to do so would
be a violation of its obligations under applicable law.
-28-
7.3. MEETINGS OF THE COMPANY'S STOCKHOLDERS. If the approval of the
Agreement by the Company's stockholders is required by law following
consummation of the Offer, the Company will take, consistent with applicable law
and its Articles and By-Laws, all action necessary to convene a meeting of
holders of Shares as promptly as practicable to consider and vote upon the
approval of this Agreement and the Merger. Subject to fiduciary requirements of
applicable law, the Board of Directors of the Company shall recommend such
approval and the Company shall take all lawful action to solicit such approval.
At any such meeting of the Company all of the Shares then owned by the Parent
Companies will be voted in favor of this Agreement and the Merger. The
Company's proxy or information statement with respect to such meeting of
shareholders (the "PROXY STATEMENT"), at the date thereof and at the date of
such meeting, will 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, in light of the circumstances under which they were made,
not misleading; PROVIDED, HOWEVER, that the foregoing shall not apply to the
extent that any such untrue statement of a material fact or omission to state a
material fact was made by the Company in reliance upon and in conformity with
written information concerning the Parent Companies furnished to the Company by
Parent specifically for use in the Proxy Statement. The Proxy Statement shall
not be filed, and no amendment or supplement to the Proxy Statement will be made
by the Company, without prior consultation with Parent and its counsel.
7.4. FILINGS; OTHER ACTION. Subject to the terms and conditions
herein provided, the Company and Parent shall: (a) promptly make their
respective filings and thereafter make any other required submissions under the
HSR Act and other Regulatory Filings with respect to the Offer and the Merger;
and (b) use their respective reasonable best efforts to promptly take, or cause
to be taken, all other action and do, or cause to be done, all other things
necessary, proper or appropriate under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement as
soon as practicable after the date hereof; PROVIDED, however, that neither
Parent nor Merger Sub will be required to divest or hold separate any of their,
the Company's or any of their respective affiliates' businesses or assets.
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7.5. ACCESS. Upon reasonable notice, the Company shall (and shall
cause each of its subsidiaries to) afford Parent's officers, employees, counsel,
accountants and other authorized representatives ("REPRESENTATIVES") access,
during normal business hours throughout the period prior to the Effective Time,
to its properties, books, Contracts and records and, during such period, the
Company shall (and shall cause each of its subsidiaries to) furnish promptly to
Parent all information concerning its business, properties and personnel as
Parent or its Representatives may reasonably request, provided that no
investigation pursuant to this Section 7.5 shall affect or be deemed to modify
any representation or warranty made by the Company and PROVIDED, further, that
the foregoing shall not require the Company to permit any inspection, or to
disclose any information, which in the reasonable judgment of the Company would
result in the disclosure of any trade secrets of third parties or violate any
obligation of the Company with respect to confidentiality if the Company shall
have used reasonable efforts to obtain the consent of such third party to such
inspection or disclosure. All information exchanged pursuant to this
Section 7.5 shall be subject to the confidentiality agreement dated October 8,
1997, between the Company and Parent. All requests for information made
pursuant to this Section shall be directed to an executive officer of the
Company or such person as may be designated by any such officer. Upon any
termination of this Agreement, Parent will collect and deliver to the Company
all documents obtained by it or any of its Representatives then in their
possession and any copies thereof.
7.6. NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt
notice to Parent of: (a) any notice of, or other communication relating to, any
material environmental matter or any material default or event that, with notice
or lapse of time or both, would become a material default, received by the
Company or any of its subsidiaries subsequent to the date of this Agreement and
prior to the Effective Time, under any Contract to which the Company or any of
its subsidiaries is a party or is subject; and (b) any change or development
that, individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect. Each of the Company and Parent shall give prompt notice to the
other party of any notice or other communication from any third party alleging
that the consent of such third party is or may be required in connection with
the transactions contemplated by this Agreement.
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7.7. PUBLICITY. The initial press release by the parties hereto with
respect to this Agreement shall be a joint press release and thereafter the
Company and Parent shall consult with each other prior to issuing any press
releases or otherwise making public statements with respect to the transactions
contemplated hereby and prior to making any filings with any Governmental Entity
or with any national securities exchange with respect thereto.
7.8. BENEFITS. (a) STOCK OPTIONS. Prior to the Effective Time, the
Company shall use its reasonable best efforts to take such actions as may be
necessary such that at the Effective Time, each stock option outstanding
pursuant to the Stock Plans ("OPTION"), whether or not then exercisable, shall
be canceled and only entitle the holder thereof, upon surrender thereof, to
receive an amount in cash equal to the difference between the Merger
Consideration over the exercise price per Share of such Option multiplied by the
number of Shares previously subject to such Option, less all applicable
withholding Taxes. Such payment shall be made by the Company as soon as
administratively feasible after the Effective Time.
(b) EMPLOYEE BENEFITS. Parent agrees that, for a period of two years
following the Effective Time, it will cause the Company to continue to provide
the Employees with compensation and employee benefit plans (other than stock
option or other plans involving the potential issuance of securities of the
Company or of any of the Parent Companies) which in the aggregate are
substantially comparable to those currently provided by the Company to such
employees immediately prior to the Effective Time, provided that employees
covered by collective bargaining agreements need not be provided such benefits.
Parent will, or will cause the Surviving Corporation to, honor without
modification all employee (or former employee) benefit obligations accrued as of
the Effective Time.
(c) MISCELLANEOUS. The Company shall use its best efforts to take the
actions set forth on Schedule 7.8(c) of the Disclosure Letter.
Section 7.9. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) From and after the Effective Time, Parent agrees that it will indemnify and
hold harmless each present and former director and officer of the Company and
its subsidiaries, determined as of the Effective Time (the
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"INDEMNIFIED PARTIES"), against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "COSTS") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of matters existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective
Time, to the fullest extent that the Company would have been permitted under
Washington law and its Articles or By-Laws in effect on the date hereof to
indemnify such person (and Parent shall also advance expenses as incurred to the
fullest extent permitted under applicable law, provided that the person to whom
expenses are advanced provides an undertaking to repay such advances if it is
ultimately determined that such person is not entitled to indemnification).
(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of Section 7.9, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify Parent thereof. In the event
of any such claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), (i) Parent or the Surviving Corporation
shall have the right to assume the defense thereof and Parent shall not be
liable to such Indemnified Parties for any legal expenses of other counsel or
any other expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof, except that if Parent or the Surviving
Corporation elects not to assume such defense or counsel for the Indemnified
Parties advises that there are issues which raise conflicts of interest between
Parent or the Surviving Corporation and the Indemnified Parties, the Indemnified
Parties may retain counsel satisfactory to them, and Parent or the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly after statements therefor are received; PROVIDED,
HOWEVER, that Parent shall be obligated pursuant to this paragraph (b) to pay
for only one firm of counsel for all Indemnified Parties in any jurisdiction
unless the use of one counsel for such Indemnified Parties would present such
counsel with a conflict of interest, (ii) the Indemnified Parties will cooperate
in the defense of any such matter and (iii) Parent shall not be liable for any
settlement effected without its prior written consent; and provided further that
Parent shall not have any obligation hereunder to any
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Indemnified Party when and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law.
(c) For a period of six years after the Effective Time, Parent shall
cause to be maintained in effect the current policies of directors' and
officers' liability insurance maintained by the Company (provided that Parent
may substitute therefor policies with reputable and financially sound carriers
of at least the same coverage and amounts containing terms and conditions which
are no less advantageous) with respect to claims arising from or related to
facts or events which occurred at or before the Effective Time; PROVIDED,
HOWEVER, that Parent shall not be obligated to make annual premiums for such
insurance to the extent such premiums exceed 150% of the annual premiums paid as
of the date hereof by the Company for such insurance (such 150% amount, the
"MAXIMUM PREMIUM"). If such insurance coverage cannot be obtained at all, or
can only be obtained at an annual premium in excess of the Maximum Premium,
Parent shall maintain the most advantageous policies of directors' and officers'
insurance obtainable for an annual premium equal to the Maximum Premium. The
Company represents to Parent that the Maximum Premium is $284,523.
7.10. TAKEOVER STATUTES. If any Takeover Statute is or shall become
applicable to the transactions contemplated hereby, the Company and the Board of
Directors of the Company shall grant such approvals and take such actions as are
necessary so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act to
eliminate the effects of such statute or regulation on the transactions
contemplated hereby.
ARTICLE VIII
Conditions
8.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER. The
respective obligations of each party to consummate the Merger shall be subject
to the satisfaction or waiver, where permissible, prior to the Effective Time,
of the following conditions:
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(a) STOCKHOLDER APPROVAL. If approval of the Merger by the holders
of Shares is required by applicable law, the Merger shall have been duly
approved by the holders of a majority of the Shares, in accordance with
applicable law and the Articles and By-Laws of the Company;
(b) PURCHASE OF SHARES. Merger Sub (or one of the Parent Companies)
shall have purchased Shares pursuant to the Offer; and
(c) LITIGATION. No court or other Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and prohibits
consummation of the Merger (collectively, an "ORDER").
ARTICLE IX
Termination
9.1. TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, before
or after the approval by holders of Shares, by the mutual consent of Parent
(also acting on behalf of Merger Sub) and the Company, by action of their
respective Boards of Directors.
9.2. TERMINATION BY EITHER PARENT OR THE COMPANY. This Agreement may
be terminated and the Merger may be abandoned by action of the Board of
Directors of either Parent or the Company if (i) Merger Sub shall not have
accepted for payment any Shares pursuant to the Offer prior to December 31,
1998; PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant to
this Section 9.2(i) shall not be available to (A) Parent if any Shares have been
accepted for payment pursuant to the Offer or (B) any party whose failure to
perform any of its obligations under this Agreement results in the failure of
any Offer Condition; or (ii) any Governmental Entity shall have issued an Order
which shall have become final and nonappealable.
9.3. TERMINATION BY PARENT. Unless the Offer shall have been
consummated, this Agreement may be
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terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the approval by holders of Shares, by action of the Board
of Directors of Parent, if (x) (i) the Company shall have breached or failed to
perform in any material respect any of its covenants or agreements hereunder
(other than any immaterial covenants or agreements) or (ii) a representation or
warranty of the Company set forth in this Agreement shall have been inaccurate
when made or shall thereafter become inaccurate, except for such inaccuracies
which, when taken together (in each case without regard to any qualification as
to materiality or a Material Adverse Effect contained in the applicable
representations and warranties) would not reasonably be likely to have a
Material Adverse Effect, and, with respect to any such breach, failure to
perform or inaccuracy that can be remedied, the breach, failure or inaccuracy is
not remedied within 15 business days after the giving of written notice of such
breach, failure or inaccuracy to the Company; or (y) the Board of Directors of
the Company shall have withdrawn or modified in any manner adverse to Parent or
Merger Sub its approval or recommendation of the Offer, this Agreement or the
Merger or shall have adopted or recommended any Acquisition Proposal, or the
Board of Directors of the Company, upon request by Parent, shall fail to
reaffirm such approval or recommendation within 10 business days after such
request if an Acquisition Proposal is pending, or shall have resolved to do any
of the foregoing.
9.4. TERMINATION BY THE COMPANY. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, before or
after the approval by holders of Shares, by action of the Board of Directors of
the Company, (x) if Parent or Merger Sub (or another Parent Company) (i) shall
have breached in any material respect any of the representations, warranties,
covenants or agreements contained in this Agreement (other than any immaterial
covenants or agreements) and, with respect to any such breach that can be
remedied, the breach is not remedied within 15 business days after the Company
has provided Parent with written notice of such breach or (ii) shall have failed
to commence the Offer within the time required in Section 1.1 or to pay for the
Shares pursuant to the Offer in accordance with the terms thereof, (y) if
(i) the Board of Directors of the Company receives a written offer not solicited
on or after the date hereof, with respect to a merger, reorganization, share
exchange,
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consolidation or sale of all or substantially all of the Company's assets or a
tender or exchange offer not solicited on or after the date hereof for more than
50% of the outstanding Shares is commenced, and with respect to which the Board
of Directors of the Company concludes in good faith, after consultation with its
independent financial advisor and its outside counsel, that approval, acceptance
or recommendation of such transaction is required by the fiduciary duties of the
Company's Board of Directors under applicable law (any such transaction, a
"SUPERIOR PROPOSAL"), (ii) the Company has given Purchaser three business days
prior written notice of its intention to terminate this Agreement to accept the
Superior Proposal and Purchaser shall have failed to offer to amend the Offer so
that it is at least as favorable to the stockholders of the Company as the
Superior Proposal and (iii) the Company prior to such termination pays to
Purchaser in immediately available funds the fee required to be paid pursuant to
Section 9.5.
9.5. EFFECT OF TERMINATION AND ABANDONMENT. (a) In the event of
termination of this Agreement and abandonment of the Merger pursuant to this
Article IX, no party hereto (or any of its directors or officers) shall have any
liability or further obligation to any other party to this Agreement, except as
provided in Section 9.5(b) below and Section 10.2 and except that nothing herein
will relieve any party from liability for any wilful and material breach of its
covenants under this Agreement.
(b) If (x) (i) the Offer shall have remained open for a minimum of at
least 20 business days, (ii) after the date hereof any corporation, partnership,
person, other entity or group (as defined in Section 13(d)(3) of the Exchange
Act) other than Parent or Merger Sub or any of their respective subsidiaries or
affiliates (collectively, a "PERSON") shall have become the beneficial owner of
15% or more of the outstanding Shares or made any Acquisition Proposal, (iii)
the Minimum Condition shall not have been satisfied and the Offer is terminated
pursuant to Section 9.3(x) (but only if such termination relates to a breach of
the Company's obligations under Section 7.2) or pursuant to Section 9.2(i)
without the purchase of any Shares thereunder and (iv) within twelve months of
such termination the Company enters into an agreement (other than a
confidentiality agreement in customary form) with respect to an Acquisition
Proposal (as such term is defined in
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Section 7.2, except that the reference in such definition to 15% shall be deemed
a reference to 40% for purposes of this clause (iv) only) or any person or other
entity (other than Parent or any of its affiliates) becomes the beneficial owner
of 40% or more of the outstanding Shares, (y) Parent shall have terminated this
Agreement pursuant to Section 9.3(y), or (z) the Company shall have terminated
this Agreement pursuant to Section 9.4(y), then the Company shall promptly, but
in no event later than five business days after the date of a request by Parent
for payment of such fee (other than a termination pursuant to Section 9.4(y), in
which case payment shall be concurrent with termination), pay Parent a fee of
$23,700,000, which amount shall be payable in same day funds. The Company
acknowledges that the agreements contained in this Section 9.5(b) are an
integral part of the transactions contemplated in this Agreement, and that,
without these agreements, Parent and Merger Sub would not enter into this
Agreement; accordingly, if the Company fails to promptly pay the amount due
pursuant to this Section 9.5(b), and, in order to obtain such payment, Parent or
Merger Sub commences a suit which results in a judgment against the Company for
the fee set forth in this paragraph (b), the Company shall pay to Parent or
Merger Sub its costs and expenses (including attorneys' fees) in connection with
such suit, together with interest on the amount of the fee at the prime rate of
Citibank N.A. on the date such payment was required to be made.
ARTICLE X
Miscellaneous and General
10.1. PAYMENT OF EXPENSES. (a) Except as otherwise set forth in
Section 9.5, whether or not the Merger shall be consummated, each party hereto
shall pay its own expenses incident to preparing for, entering into and carrying
out this Agreement and the consummation of the Merger.
(b) Except as otherwise provided in the fifth sentence of Section 5.2
of this Agreement, all state, local, foreign or provincial sales, use, real
property transfer, stock transfer or similar taxes (including any interest,
penalties or additions thereto) attributable to the transactions contemplated by
this Agreement shall be timely paid by Parent or Merger Sub.
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10.2. SURVIVAL. The agreements of the Company, Parent and Merger Sub
contained in Sections 5.2 (but only to the extent that such Section expressly
relates to actions to be taken after the Effective Time), 5.3, 5.4, 7.8, 7.9,
7.10 and 10.1 and this Section 10.2 shall survive the consummation of the
Merger. The agreements of the Company, Parent and Merger Sub contained in
Sections 7.5, 9.5 and 10.1 shall survive the termination of this Agreement. No
representation or warranty shall survive the consummation of the Offer.
10.3. MODIFICATION OR AMENDMENT. Subject to the applicable provisions
of the WBCA, at any time prior to the Effective Time, the parties hereto may
modify or amend this Agreement, by written agreement executed and delivered by
duly authorized officers of the respective parties.
10.4. WAIVER OF CONDITIONS. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
10.5. COUNTERPARTS. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
10.6. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, except as otherwise
required by the WBCA.
10.7. NOTICES. Any notice, request, instruction or other document to
be given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, or by
facsimile:
IF TO PARENT OR MERGER SUB
Philips Electronics North America Corporation
1251 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
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with a copy to
Xxxx X. Xxxxxxxx, Esq.
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xx.
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
IF TO THE COMPANY
ATL Ultrasound, Inc.
00000 Xxxxxxx Xxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
with a copy to
Xxxxxx X. Xxxxxxxx, III, Esq.
Cravath, Swaine & Xxxxx
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
10.8. ENTIRE AGREEMENT, ETC. This Agreement (including the
Disclosure Letter and Annex A hereto) and the Confidentiality Agreement, taken
together, (a) constitutes the entire agreement, and supersedes all other prior
agreements, understandings, representations and warranties both written and
oral, among the parties, with respect to the subject matter hereof, and (b)
shall not be assignable by operation of law or otherwise and is not intended to
create any obligations to, or (except with respect to the provisions of
Section 7.9) rights in respect of, any person other than the parties hereto;
PROVIDED, HOWEVER, that Parent may designate, by written notice to the Company,
another wholly-owned direct or indirect subsidiary to be a Constituent
Corporation in lieu of Merger Sub, in which event all references herein to
Merger Sub shall be deemed references to such other subsidiary except that all
representations and warranties made herein with respect to Merger Sub as of the
date of this Agreement shall be deemed
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representations and warranties made with respect to such other subsidiary as of
the date of such designation.
10.9. DEFINITIONS OF "SUBSIDIARY", "AFFILIATE", "PERSON", "KNOWLEDGE"
AND MATERIAL ADVERSE EFFECT. When a reference is made in this Agreement to a
subsidiary of a party, the word "subsidiary" means any corporation or other
organization whether incorporated or unincorporated of which at least a majority
of the securities or interests having by the terms thereof ordinary voting power
to elect at least a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such party or by any one or more
of its subsidiaries, or by such party and one or more of its subsidiaries. When
a reference is made in this Agreement to an affiliate of a party, the word
"affiliate" means any person directly or indirectly controlling, controlled by
or under common control with such other person at the time at which the
determination of affiliation is being made. The term "control" (including, with
correlative meanings, the term "controlled by" or "under common control with"),
as applied to any person, means the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of such person,
whether through the ownership of voting securities or other ownership interests,
by contract or otherwise. When a reference is made in this Agreement to a
person, the word "person" means any individual, corporation, partnership,
association, trust or other entity or organization of whatever nature. When the
word "knowledge" is used in this Agreement with reference to the Company or its
management or officers, such word will be deemed to refer to the actual
knowledge of the executive officers of the Company and such other officer that
has primary responsibility for the subject matter with respect to which
"knowledge" is being considered. For purposes of this Agreement, "Material
Adverse Effect" means any material adverse effect on the financial condition,
properties, business or results of operations of the Company and its
subsidiaries taken as a whole (excluding any change or development resulting
from the announcement of this Agreement or the transactions contemplated
hereby).
10.10. OBLIGATION OF PARENT. Whenever this Agreement requires Merger
Sub to take any action, such requirement shall be deemed to include an
undertaking on the part of Parent to cause Merger Sub to take such action.
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10.11. CAPTIONS. The Article, Section and paragraph captions herein
are for convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit or otherwise affect any of the provisions
hereof.
10.12 SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto on the date
first hereinabove written.
PHILIPS ELECTRONICS NORTH AMERICA CORPORATION
By /s/ XXXXXXX X. XXXXXX
-----------------------------------
Senior Vice President and
Chief Financial Officer
PHILIPS ACQUISITION, INC.
By /s/ XXXXXXX X. XXXXXX
-----------------------------------
President
ATL ULTRASOUND, INC.
By /s/ XXXXXX X. FILL
-----------------------------------
Chairman of the Board, President
and Chief Executive Officer
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Annex A
CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision
of the Offer, but subject to the terms and conditions of the Merger Agreement
(and provided that Merger Sub shall not be obligated to accept for payment any
Shares until expiration or termination of all applicable waiting periods under
the H-S-R Act and any applicable waiting periods relating to the Foreign
Filings, in each case with respect to the Offer and/or the Merger (the
"REGULATORY CONDITION")), Merger Sub (x) shall not be required to accept for
payment or, subject to any applicable rules and regulations of the Commission,
including Rule 14e-1(c) promulgated under the Exchange Act (relating to Merger
Sub's obligation to pay for or return tendered Shares promptly after termination
or withdrawal of the Offer), pay for, and (y) may delay the acceptance for
payment of or (subject to such rules and regulations, including Rule 14e-1(c))
payment for, any tendered Shares, in each case if a majority of the total Shares
outstanding on a fully diluted basis and as will permit Merger Sub to effect the
Merger without the vote of any person other than Merger Sub shall not have been
properly and validly tendered pursuant to the Offer and not withdrawn prior to
the expiration of the Offer (the "MINIMUM CONDITION"), or, if on or after
July 29, 1998, and at or before the time of acceptance for payment of any of
such Shares, any of the following events shall occur:
(a) (i) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements (other than any
immaterial covenants or agreements) under the Merger Agreement or (ii) any
representation or warranty of the Company set forth in the Merger Agreement
shall have been inaccurate when made or shall be inaccurate as of the
expiration of the Offer, except in the case of clause (a)(ii) for such
inaccuracies which, when taken together (in each case without regard to any
qualifications as to materiality or a Material Adverse Effect contained in
the applicable representations and warranties) would not reasonably be
likely to have a Material Adverse Effect;
-1-
(b) there shall be threatened, instituted or pending any action,
litigation or proceeding (hereinafter, an "ACTION") by any Governmental
Entity: (i) challenging the acquisition by Parent or Merger Sub of Shares
or seeking to restrain or prohibit the consummation of the Offer or the
Merger; (ii) seeking to prohibit or impose any material limitations on
Parent's, Merger Sub's or any of their respective affiliates' ownership or
operation of all or any material portion of the business or assets of the
Company and its subsidiaries taken as a whole or the business or assets of
any significant subsidiary of Koninklijke Philips Electronics N.V., or to
compel Parent or Merger Sub to dispose of or hold separate all or any
portion of Parent's or Merger Sub's or the Company's business or assets
(including the business or assets of their respective affiliates and
subsidiaries) as a result of the Offer or the Merger; (iii) seeking to
impose material limitations on the ability of Parent or Merger Sub
effectively to acquire or hold, or to exercise full rights of ownership of,
the Shares including, without limitation, the right to vote the Shares
purchased by them on an equal basis with all other Shares on all matters
properly presented to the shareholders of the Company; or (iv) that, in any
event, would, individually or in the aggregate, reasonably be likely to
have a Material Adverse Effect;
(c) any statute, rule, regulation, order or injunction shall be
enacted, promulgated, entered, enforced or deemed to or become applicable
to the Offer or the Merger, or any other action shall have been taken,
proposed or threatened, by any court or other Governmental Entity, that is
reasonably expected to result in any of the effects of, or have any of the
consequences sought to be obtained or achieved in, any Action referred to
in clauses (i) through (iv) of paragraph (b) above;
-2-
(d) any change or development shall have occurred that, individually
or in the aggregate, is reasonably likely to have a Material Adverse
Effect; or
(e) the Merger Agreement shall have been terminated by the Company or
Parent or Merger Sub in accordance with its terms;
which, in the reasonable judgment of Parent and Merger Sub, in any such case,
and regardless of the circumstances (including any action or inaction by Parent
or Merger Sub) giving rise to any such conditions, makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment of or payment for
Shares.
The foregoing conditions may be asserted by Parent or Merger Sub
regardless of the circumstances (including any action or inaction by Parent or
Merger Sub) giving rise to such condition. The conditions set forth in
paragraphs (a) through (e) above are for the sole benefit of Parent and Merger
Sub and may be waived by Parent or Merger Sub, by express and specific action to
that effect, in whole or in part at any time and from time to time in their sole
discretion.
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