-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D9Sl/UrBLquRkfJHFiJSB1iNJC+2CREy3Mkt2ktPTrwZTTlfrH7ujVuFQr0UQIZU ctAA/IBbh0rH0haw/PznjA== 0000040545-98-000020.txt : 19980612 0000040545-98-000020.hdr.sgml : 19980612 ACCESSION NUMBER: 0000040545-98-000020 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19980611 SROS: BSE SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: INNOSERV TECHNOLOGIES INC CENTRAL INDEX KEY: 0000746072 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS REPAIR SERVICES [7600] IRS NUMBER: 963619990 STATE OF INCORPORATION: CA FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-36064 FILM NUMBER: 98646612 BUSINESS ADDRESS: STREET 1: 320 WESTWAY STREET 2: STE 520 CITY: ARLINGTON STATE: TX ZIP: 76018 BUSINESS PHONE: 8008485385 MAIL ADDRESS: STREET 1: 320 WESTWAY STREET 2: STE 250 CITY: ARLINGTON STATE: TX ZIP: 76018 FORMER COMPANY: FORMER CONFORMED NAME: MMI MEDICAL INC DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL ELECTRIC CO CENTRAL INDEX KEY: 0000040545 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC & OTHER ELECTRICAL EQUIPMENT (NO COMPUTER EQUIP) [3600] IRS NUMBER: 140689340 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 3135 EASTON TURNPIKE STREET 2: C/O BANK OF NEW YORK CITY: FAIRFIELD STATE: CT ZIP: 06431 BUSINESS PHONE: 2033732816 MAIL ADDRESS: STREET 1: 3135 EASTON TURNPIKE CITY: FAIRFIELD STATE: CT ZIP: 06431 SC 13D 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------------------------- SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 INNOSERV TECHNOLOGIES, INC. (Name of Issuer) Common Stock, $.01 Par Value (Title of Class of Securities) 45765F106 --------- (CUSIP Number) Robert E. Healing General Electric Company 3135 Easton Turnpike Fairfield, CT (203) 373-2243 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) June 4, 1998 (Date of Event which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box: / / The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 (the "Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, SEE the NOTES). (Continued on following pages) (Page 1 of 15 Pages) SCHEDULE 13D CUSIP NO. 45765F106 PAGE __OF 15 --------- 1 NAME OF REPORTING PERSON GENERAL ELECTRIC COMPANY, ACTING THROUGH ITS GE MEDICAL SYSTEMS DIVISION, AND AS THE SOLE SHAREHOLDER OF NATIONAL MEDICAL DIAGNOSTICS, INC., A DELAWARE CORPORATION 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / 3 SEC USE ONLY 4 SOURCE OF FUNDS WC 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) /x/ 6 CITIZENSHIP OR PLACE OF ORGANIZATION NEW YORK NUMBER OF SHARES 7 SOLE VOTING POWER BENEFICIALLY OWNED BY EACH REPORTING PERSON 700,000 WITH 8 SHARED VOTING POWER 0 9 SOLE DISPOSITIVE POWER 700,000 10 SHARED DISPOSITIVE POWER 0 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 700,000 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 18.9% 14 TYPE OF REPORTING PERSON CO ITEM 1. SECURITY AND ISSUER The class of equity securities to which this Statement relates is the common stock, par value $.01 per share ("InnoServ Common Stock"), of InnoServ Technologies, Inc., a California corporation ("InnoServ"), which may be acquired beneficially by the Reporting Person upon the conversion of InnoServ's Series B Convertible Preferred Stock, par value $.01 per share (the "InnoServ Preferred Stock") presently owned by National Medical Diagnostics, Inc., a Delaware corporation and wholly-owned subsidiary of the Reporting Person ("NMD"). InnoServ's principal executive offices are located at 320 Westway, Suite 520, Arlington, Texas 76018. ITEM 2. IDENTITY AND BACKGROUND This Statement is filed by General Electric Company, a New York corporation ("GE" or the "Reporting Person"), whose principal business address is 3135 Easton Turnpike, Fairfield Connecticut 06431-0001. GE and its consolidated affiliates comprise one of the largest and most diversified industrial corporations in the world. From the time of its incorporation in 1892, GE has engaged in developing, manufacturing and marketing a wide variety of products for the generation, transmission, distribution, control and utilization of electricity. Over the years, development and application of related and new technologies have broadened considerably the scope of activities of GE and its affiliates. GE's products include, but are not limited to, lamps and other lighting products; major appliances for the home; industrial automation products and components; motors; electrical distribution and control equipment; locomotives; power generation and delivery products; nuclear reactors, nuclear power support services and fuel assemblies; commercial and military aircraft jet engines; materials, including plastics, silicones and superabrasive industrial diamonds; and a wide variety of high-technology products, including products used in medical diagnostic applications. GE also offers a wide variety of services, including product support services; electrical product supply houses; electrical apparatus installation, engineering, repair and rebuilding services; and computer-related information services. The National Broadcasting Company, Inc., a wholly-owned subsidiary, is engaged principally in furnishing network television services, in operating television stations, and in providing cable programming and distribution services in the United States, Europe, and Asia. Through another wholly-owned subsidiary, General Electric Capital Services, Inc. ("GECS"), and its two principal subsidiaries, GE offers a broad array of financial services including consumer financing, commercial and industrial financing, real estate financing, asset management and leasing, mortgage services, consumer savings and insurance services, specialty insurance and reinsurance. Other services offered by GECS include satellite communications furnished by its subsidiary, GE Americom, Inc. GE also licenses patents and provides technical services related to products it has developed, but such activities are not material to GE. Except as described below, during the past five years, the GE has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), nor has it been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. In April, 1994, a U.K. subsidiary of GE, IGE Medical Systems Limited ("IGEMS") discovered the loss of a radioactive barium source at the Radlett, England facility. The lost source, used to calibrate nuclear camera detectors, emits a very low level of radiation. IGEMS immediately reported the loss as required by the U.K. Radioactive Substances Act. An ensuing investigation, conducted in cooperation with government authorities, failed to locate the source. On July 21, 1994, Her Majesty's Inspectorate of Pollution ("HMIP") charged IGEMS with violating the Radioactive Substances Act by failing to comply with a condition of registration. Such Act provides that a registrant like IGEMS, which "does not comply with a limitation or condition subject to which (it) is so registered ... shall be guilty of (a criminal) offense." Condition 7 of IGEMS' registration states that it "shall so far as is reasonably practicable prevent ... loss of any registered source." At the beginning of trial on February 24, 1995, IGEMS entered a guilty plea and agreed to pay of fine of (pound)5,000 and assessed costs of (pound)5,754. The prosecutor's presentation focused primarily on the 1991 change in internal IGEMS procedures and, in particular, the source logging procedure. The prosecutor complimented IGEMS' investigation and efforts to locate the source and advised the court that IGEMS had no previous violations of the Radioactive Substances Act. He also told the court that the Radlett plant had been highlighted as an exemplary facility to HMIP inspectors as part of their training. In mitigation, IGEMS emphasized the significant infrastructure and expense undertaken by IGEMS to provide security for radiation sources and the significant effort and expense incurred in attempting to locate the missing source. The names, principal occupations and business addresses of the executive officers and directors of GE are set forth in Schedule A attached hereto, which is incorporated herein by reference. Except as expressly noted in Schedule A, each such executive officer and director is a citizen of the United States of America. During the past five years, none of the executive officers or directors has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION GE, through its wholly-owned subsidiary NMD, beneficially acquired 700,000 shares of the InnoServ Preferred Stock (which is, in certain circumstances, convertible into 700,000 shares of InnoServ Common Stock) for consideration in the amount of $2,800,000. Such amount was obtained from GE's working capital. ITEM 4. PURPOSE OF TRANSACTION On May 19, 1998, GE, Diamond Merger Sub, Inc., a California corporation and a wholly-owned subsidiary of NMD ("Sub"), and InnoServ entered into an Agreement and Plan of Merger (the "Merger Agreement"), providing for the merger of Sub with and into InnoServ (the "Merger"), with InnoServ surviving the Merger and becoming a wholly-owned subsidiary of NMD and an indirect wholly-owned subsidiary of GE. Pursuant to the Merger Agreement, by virtue of the Merger each outstanding share of InnoServ Common Stock (other than shares held by InnoServ, GE or their respective subsidiaries) will be converted into the right to receive a range of cash consideration between approximately $3.97 to $4.25 per share. In addition, pursuant to the Merger Agreement, upon consummation of the Merger, the officers and directors of Sub will replace the existing officers and directors of InnoServ and the existing bylaws of Sub will become the by-laws of InnoServ. It is anticipated that, following the consummation of the Merger, the InnoServ Common Stock will be delisted from the Nasdaq National Market and the InnoServ Common Stock will be terminated from registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended. A copy of the Merger Agreement is included as Exhibit 99 (a) hereto and the description of the Merger Agreement contained herein is qualified in its entirety by reference to such exhibit, which is incorporated herein by reference. Pursuant to the Merger Agreement, in order to induce InnoServ to enter into the Merger Agreement, GE agreed to purchase, directly or through a designee, 700,000 shares of InnoServ Preferred Stock; on June 4, 1998 GE's wholly-owned subsidiary NMD purchased such shares for consideration in the amount of $2,800,000. Upon consummation of the Merger, GE, through NMD, will retain beneficial ownership of such InnoServ Preferred Stock. In the event that the Merger Agreement is terminated and the Merger is not consummated, GE will evaluate InnoServ's financial condition, operations and prospects and other business and investment opportunities, economic market conditions and contractual obligations and in connection with such evaluation (and others which may occur from time to time) may change its purpose with respect to its investment and take such actions as it deems appropriate in light of the circumstances existing at the time. GE may also sell all or a portion of its InnoServ Preferred Stock, or the InnoServ Common Stock acquired on conversion of the InnoServ Preferred Stock, in a private placement, public sale or as otherwise provided pursuant to the terms of the certificate of designation with respect to the InnoServ Preferred Stock (the "Designation"). A copy of the Designation is filed as Exhibit 99(b) hereto, and the description of the InnoServ Preferred Stock contained herein is qualified in its entirety by reference to such exhibit, which is incorporated herein by reference. Except as described above, none of the persons named in Item 2 has any present plan or proposal that relates to or would result in any of the actions described in clauses (a) through (j) of Item 4 of Schedule 13D. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) - (c) GE, through its wholly-owned subsidiary NMD, has the right, in certain circumstances, to acquire beneficial ownership of 700,000 shares of InnoServ Common Stock upon the conversion of the InnoServ Preferred Stock, representing 18.9% of the outstanding shares of such class of stock. Except as described in this Schedule 13D, neither GE nor, to the best knowledge of GE, any of the persons listed in Item 2 above beneficially owns any shares of InnoServ Common Stock. Except as described in this Schedule 13D, neither GE nor, to the best of its knowledge, any of the persons listed in Item 2 above has effected any transactions in InnoServ Common Stock during the past 60 days. (d) When declared by the board of directors of InnoServ out of legally available funds, GE through NMD, has the right to receive cumulative dividends on each share of InnoServ Preferred Stock in the amount of $.32. Beginning on December 6, 1998, such dividends accrue, whether or not earned or declared, and are due and payable semiannually on the last day of June and December of each year, beginning on December 31, 1998. Dividends on InnoServ Common Stock may not be paid or declared unless any accrued but unpaid dividends owed to the holders of the InnoServ Preferred Stock are paid in full and the outstanding shares of InnoServ Preferred Stock are included in such dividend PARI PASSU to the shares of InnoServ Common Stock by assuming conversion of such shares of InnoServ Preferred Stock into InnoServ Common Stock. As noted in Item 4, a copy of the Designation is filed as Exhibit 99(b) hereto, and the description of the InnoServ Preferred Stock contained herein is qualified in its entirety by reference to such exhibit, which is incorporated herein by reference. (e) Not applicable Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. GE, through its wholly-owned subsidiary NMD, and InnoServ are parties to a Registration Rights Agreement (the "Registration Rights Agreement") pursuant to which GE beneficially has the right (with certain limited exceptions) to participate in registrations of InnoServ's securities under the Securities Act of 1933, as amended, and the right to demand certain additional such registrations, with the expenses of such registration to be paid by GE. A copy of the Registration Rights Agreement is filed as Exhibit 99(c) hereto, and the description of such agreement contained herein is qualified in its entirety by reference to such exhibit, which is incorporated herein by reference. Concurrently with the execution of the Merger Agreement, certain shareholders (the "Shareholders") of InnoServ possessing sole voting and dispositive power and/or full voting power as to a total of 1,589,279 shares (approximately 52.8%) of the outstanding shares of InnoServ Common Stock, entered into a shareholder agreement (the "Shareholder Agreement") with GE. The Shareholder Agreement provides, among other things, that: (a) at the shareholders meeting of InnoServ to be held to approve and adopt the Merger Agreement (or at any adjournment thereof) or in any other circumstances upon which a vote, consent or other approval with respect to the Merger or the Merger Agreement is sought, each Shareholder shall vote (or cause to be voted) the shares of InnoServ Common Stock owned by such Shareholder as of the date of the Shareholder Agreement and any other shares of capital stock of InnoServ acquired by such Shareholder after the date of the Shareholder Agreement and during the term of the Shareholder Agreement (the "Subject Shares") in favor of the approval and adoption of the Merger Agreement and the Merger; (b) at any meeting of shareholders of InnoServ or at any adjournment thereof or in any other circumstances upon which the Shareholder's vote, consent or other approval is sought, the Shareholder shall vote (or cause to be voted) the Subject Shares against (i) any merger (other than the Merger), consolidation, combination, sale of assets, reorganization, recapitalization, dissolution, liquidation or other business combination or similar transaction involving InnoServ or its subsidiaries (including any Business Combination Proposal) (as defined in the Merger Agreement) which is not approved in writing by GE and (ii) any amendment to the articles of Incorporation or by-laws of InnoServ or other proposal or transaction involving InnoServ or any subsidiary, which amendment or other proposal or transaction would in any manner impede, frustrate, prevent or nullify the Merger, the Merger Agreement or any of the other transactions contemplated by the Merger Agreement or which could result in any of the conditions to InnoServ's obligations under the Merger Agreement not being fulfilled; and (c) each Shareholder agrees (i) not to sell, pledge, transfer, tender or dispose of (collectively, "Transfer"), or enter into any contract, option or other arrangement (including any profit-sharing arrangement) with respect to the Transfer of the Subject Shares to any person (except to other Shareholders), (ii) in his capacity as a shareholder of InnoServ, not to take any action to encourage, solicit or initiate the submission of any Business Combination Proposal or participate in any way in discussions with or furnish non-public written information to, any person in connection with any Business Combination Proposal, (iii) to notify GE of any acquisition of any voting securities of InnoServ; and (iv) not to enter into any voting arrangement, whether by proxy, voting agreement or otherwise, inconsistent with the Shareholder Agreement. The obligations of the Shareholders under the Shareholder Agreement terminate upon the earlier of the close of business on September 30, 1998, the effective date of the Merger or the termination of the Merger Agreement, except that if the Merger Agreement is terminated pursuant to certain sections of the Merger Agreement that may result in a termination fee being paid to GE by InnoServ, certain obligations set forth in the Shareholder Agreement shall not terminate until 180 days following the termination. A copy of the Shareholder Agreement is filed as Exhibit 99(d) hereto, and the description of the Shareholder Agreement contained herein is qualified in its entirety by reference to such exhibit, which is incorporated herein by reference. As described in Item 4, GE presently anticipates that it will acquire beneficially the entire equity interest in InnoServ pursuant to the Merger Agreement. Other than the Merger Agreement described in Item 4, the Designation described in Item 5 and the Registration Rights Agreement and the Shareholder Agreement referred to in this Item 6, to the best knowledge of GE, there are no contracts, arrangements, understandings or relationships (legal or otherwise) between the persons listed in Item 2 and any person with respect to InnoServ Common Stock. Item 7. MATERIAL TO BE FILED AS EXHIBITS. 99(a) Agreement and Plan of Merger dated as of May 19, 1998 among General Electric Company, Diamond Merger Sub, Inc. and InnoServ Technologies, Inc. 99(b) Certificate of Designation of Series B Preferred Stock of InnoServ Technologies, Inc. 99(c) Registration Rights Agreement dated as of June 4, 1998 between National Medical Diagnostics, Inc., and InnoServ Technologies, Inc. 99(d) Shareholder Agreement dated as of May 19, 1998 between General Electric Company certain shareholders of InnoServ Technologies, Inc. 99(e) Power of Attorney for Robert E. Healing and Eliza W. Fraser dated July 31, 1997. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. GENERAL ELECTRIC COMPANY Dated: June 11, 1998 By: /S/ ROBERT E. HEALING --------------------- Robert E. Healing Corporate Counsel EXHIBIT INDEX ------------- EXHIBIT NO. DESCRIPTION - ----------- ----------- 99(a) Agreement and Plan of Merger dated as of May 19, 1998 among General Electric Company, Diamond Merger Sub, Inc. and InnoServ Technologies, Inc. 99(b) Certificate of Designation of Series B Preferred Stock of InnoServ Technologies, Inc. 99(c) Registration Rights Agreement dated as of June 4, 1998 between National Medical Diagnostics, Inc., and InnoServ Technologies, Inc. 99(d) Shareholder Agreement dated as of May 19, 1998 between General Electric Company certain shareholders of InnoServ Technologies, Inc. 99(e) Power of Attorney for Robert E. Healing and Eliza W. Fraser dated July 31, 1997. SCHEDULE A DIRECTORS AND EXECUTIVE OFFICERS OF GENERAL ELECTRIC COMPANY The name, business address, title, present principal occupation or employment of each of the directors and executive officers of GE are set forth below. If no business address is given, the director's or officer's business address is GE's address. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to GE. Unless otherwise indicated below, all of the persons listed below are citizens of the United States of America. GENERAL ELECTRIC COMPANY DIRECTORS
NAME PRESENT BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION - ---- ------------------------ ---------------------------- D.W. Calloway PepsiCo, Inc. Director and Retired 700 Anderson Hill Road Chairman of the Board, Purchase, NY 10577 Pepsico, Inc. J.I. Cash, Jr. Harvard Business School Professor of Business Baker Library 187 Administration-Graduate Soldiers Field School of Business Administration, Boston, MA 02163 Harvard University S.S. Cathcart 222 Wisconsin Avenue Retired Chairman, Suite 103 Illinois Tool Works Lake Forest, IL 60045 D.D. Dammerman General Electric Company Senior Vice President--Finance, 3135 Easton Turnpike General Electric Company Fairfield, CT 06431 P. Fresco General Electric Company Vice Chairman of the (U.S.A.) Board and Executive Officer, 3 Shortlands, Hammersmith General Electric Company London, W6 8BX, England C.X. Gonzalez Kimberly-Clark de Mexico, Chairman of the Board S.A. de C.V. and Chief Executive Officer, Jose Luis Lagrange 103, Kimberly-Clark de Mexico, Tercero Piso S.A. de C.V. Colonia Los Morales Mexico, D.F. 11510, Mexico
G.G. Michelson Federated Department Stores Former Member of the 151 West 34th Street Board of Directors, New York, NY 10001 Federated Department Stores E.F. Murphy General Electric Company Vice Chairman of the Board and 3135 Easton Turnpike Executive Officer Fairfield, CT 064321 S. Nunn King & Spalding Partner, King & Spalding 191 Peachtree Street, N.E. Atlanta, Georgia 30303 J.D. Opie General Electric Company Vice Chairman of the 3135 Easton Turnpike Board and Executive Officer Fairfield, CT 06431 R.S. Penske Penske Corporation Chairman of the Board and 13400 Outer Drive, West President, Detroit, MI 48239-4001 Penske Corporation F.H.T. Rhodes Cornell University President Emeritus 3104 Snee Building Cornell University Ithaca, NY 14853 A.C. Sigler Champion International Retired Chairman of the Corporation Board and CEO and 1 Champion Plaza former Director, Stamford, CT 06921 Champion International Corporation D.A. Warner III J. P. Morgan & Co., Inc. Chairman of the Board, & Morgan Guaranty Trust Co. President, and Chief 60 Wall Street Executive Officer, New York, NY 10260 J.P. Morgan & Co. Incorporated and Morgan Guaranty Trust Company J.F. Welch, Jr. General Electric Company Chairman of the Board 3135 Easton Turnpike and Chief Executive Officer, Fairfield, CT 06431 General Electric Company
Citizenship ----------- C. X. Gonzalez Mexico P. Fresco Italy All Others U.S.A. GENERAL ELECTRIC COMPANY EXECUTIVE OFFICERS
NAME PRESENT BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION - ---- ------------------------ ---------------------------- J.F. Welch, Jr. General Electric Company Chairman of the Board and 3135 Easton Turnpike Chief Executive Officer Fairfield, CT 06431 P. Fresco General Electric Company (U.S.A.) Vice Chairman of the Board 3 Shortlands, Hammersmith Board and Executive Officer London, W6 8BX, England P.D. Ameen General Electric Company Vice President and Comptroller 3135 Easton Turnpike Fairfield, CT 06431 J.R. Bunt General Electric Company Vice President and Treasurer 3135 Easton Turnpike Fairfield, CT 06431 D.L. Calhoun General Electric Company Senior Vice President - GE Lighting Nela Park Cleveland, OH 44122 W.J. Conaty General Electric Company Senior Vice President--Human 3135 Easton Turnpike Resources Fairfield, CT 06431 D. M. Cote General Electric Company Senior Vice President--GE 3135 Easton Turnpike Appliances Fairfield, CT 06431 D.D. Dammerman General Electric Company Senior Vice President--Finance 3135 Easton Turnpike Fairfield, CT 06431
L.S. Edelheit General Electric Company Senior Vice President--Corporate P. O. Box 8 Research and Development Schenectady, NY 12301 B.W. Heineman, Jr. General Electric Company Senior Vice President--General 3135 Easton Turnpike Counsel and Secretary Fairfield, CT 06431 J. R. Immelt General Electric Company Senior Vice President--GE Medical P.O. Box 414 Systems Milwaukee, WI 53201 G. S. Malm General Electric Company Senior Vice President--Asia 3135 Easton Turnpike Fairfield, CT 06431 W.J. McNerney, Jr. General Electric Company Senior Vice President--GE Aircraft 1 Neumann Way Engines Cincinnati, OH 05215 E.F. Murphy General Electric Company Vice Chairman of the Board and 3135 Easton Turnpike Executive Officer Fairfield, CT 06431 R.L. Nardelli General Electric Company Senior Vice President--GE Power 1 River Road Systems Schenectady, NY 12345 R.W. Nelson General Electric Company Vice President--Corporate Financial 3135 Easton Turnpike Planning and Analysis Fairfield, CT 06431 J.D. Opie General Electric Company Vice Chairman of the Board 3135 Easton Turnpike and Executive Officer Fairfield, CT 06431 G.M. Reiner General Electric Company Senior Vice President--Chief 3135 Easton Turnpike Information Officer Fairfield, CT 06431
J.G. Rice General Electric Company Vice President - GE Transportation 2901 East Lake Road Systems Erie, PA 16531 G.L. Rogers General Electric Company Senior Vice President--GE Plastics 1 Plastics Avenue Pittsfield, MA 01201 J.W. Rogers General Electric Company Vice President--GE Motors 1635 Broadway Fort Wayne, IN 46801 L.G. Trotter General Electric Company Vice President--GE Electrical 41 Woodford Avenue Distribution and Control Plainville, CT 06062
Citizenship ----------- P. Fresco Italy G. S. Malm Sweden All Others U.S.A. EX-99.A 2 EXHIBIT 99(A) AGREEMENT AND PLAN OF MERGER DATED AS OF MAY 19, 1998 BY AND AMONG GENERAL ELECTRIC COMPANY DIAMOND MERGER SUB, INC. AND INNOSERV TECHNOLOGIES, INC. TABLE OF CONTENTS PAGE ---- ARTICLE I THE MERGER..............................................................................................1 Section 1.1 THE MERGER..................................................................................1 Section 1.2 EFFECTIVE DATE OF THE MERGER................................................................1 ARTICLE II THE SURVIVING CORPORATION..............................................................................2 Section 2.1 ARTICLES OF INCORPORATION...................................................................2 Section 2.2 BY-LAWS.....................................................................................2 Section 2.3 BOARD OF DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION................................2 Section 2.4 EFFECTS OF MERGER...........................................................................2 Section 2.5 FURTHER ASSURANCES..........................................................................2 ARTICLE III CONVERSION OF SECURITIES..............................................................................2 Section 3.1 Per Share MERGER CONSIDERATION; CONVERSION AND CANCELLATION OF COMPANY SHARES...............2 Section 3.2 PAYING AGENT AND SURRENDER OF CERTIFICATES..................................................3 Section 3.3 DISSENTING SHARES...........................................................................6 Section 3.4 CONVERSION OF SUB SECURITIES................................................................7 Section 3.5 SHAREHOLDERS TO HAVE NO FURTHER RIGHTS......................................................7 Section 3.6 STOCK OPTIONS...............................................................................7 Section 3.7 MEDIQ PAYMENT...............................................................................8 Section 3.8 ESCROW PAYMENT..............................................................................8 Section 3.9 CLOSING OF THE COMPANY'S TRANSFER BOOKS.....................................................8 Section 3.10 CLOSING....................................................................................8 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT...............................................................8 Section 4.1 ORGANIZATION AND QUALIFICATION..............................................................8 Section 4.2 AUTHORITY RELATIVE TO THIS AGREEMENT........................................................9 Section 4.3 INFORMATION IN PROXY STATEMENT..............................................................9 Section 4.4 FINANCIAL ADVISOR...........................................................................9 Section 4.5 PARENT NOT AN INTERESTED SHAREHOLDER........................................................9 Section 4.6 FINANCING..................................................................................10 Section 4.7 PARENT ADVERSE EFFECT......................................................................10 ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................................................10 Section 5.1 ORGANIZATION AND QUALIFICATION.............................................................10 Section 5.2 CAPITALIZATION.............................................................................10 Section 5.3 AUTHORITY RELATIVE TO THIS AGREEMENT.......................................................11
Section 5.4 REPORTS AND FINANCIAL STATEMENTS...........................................................12 Section 5.5 ABSENCE OF CERTAIN CHANGES OR EVENTS; LITIGATION...........................................13 Section 5.6 BENEFIT PLANS; EMPLOYEES AND EMPLOYMENT PRACTICES..........................................14 Section 5.7 TAXES......................................................................................16 Section 5.8 ENVIRONMENTAL MATTERS......................................................................17 Section 5.9 INTELLECTUAL PROPERTY MATTERS..............................................................18 Section 5.10 MATERIAL CONTRACTS........................................................................18 Section 5.11 COMPLIANCE WITH LAWS; PERMITS.............................................................18 Section 5.12 TAKEOVER STATUTES.........................................................................18 Section 5.13 FAIRNESS OPINION.........................................................................19 Section 5.14 FINANCIAL ADVISOR.........................................................................19 Section 5.15 INDUSTRY CONDITIONS.......................................................................19 Section 5.16 CUSTOMERS.................................................................................19 Section 5.17 COMPANY MATERIAL ADVERSE EFFECT...........................................................19 Section 5.18 KNOWLEDGE.................................................................................19 ARTICLE VI REPRESENTATIONS AND WARRANTIES REGARDING SUB..........................................................20 Section 6.1 ORGANIZATION...............................................................................20 Section 6.2 CAPITALIZATION.............................................................................20 Section 6.3 AUTHORITY RELATIVE TO THIS AGREEMENT.......................................................20 Section 6.4 SUB ACTION.................................................................................20 Section 6.5 INTERIM OPERATIONS OF SUB..................................................................20 ARTICLE VII CONDUCT OF BUSINESS PENDING THE MERGER...............................................................21 Section 7.1 CONDUCT OF BUSINESS BY THE COMPANY.........................................................21 Section 7.2 REPORTS....................................................................................23 Section 7.3 OBLIGATIONS OF PARENT AND SUB; CONDUCT OF BUSINESS OF SUB..................................24 ARTICLE VIII ADDITIONAL AGREEMENTS...............................................................................24 Section 8.1 ACCESS AND INFORMATION.....................................................................24 Section 8.2 SHAREHOLDERS' MEETING......................................................................24 Section 8.3 PROXY STATEMENT............................................................................25 Section 8.4 EMPLOYEE MATTERS...........................................................................25 Section 8.5 INDEMNIFICATION............................................................................27 Section 8.6 ANTITRUST MATTERS..........................................................................28 Section 8.7 REASONABLE EFFORTS; NOTIFICATION...........................................................28 Section 8.8 NO SOLICITATION............................................................................29 Section 8.9 BONUS PAYMENTS.............................................................................30 Section 8.10 SIDE AGREEMENT............................................................................31 Section 8.11 PREFERRED STOCK DESIGNATION...............................................................31
ARTICLE IX CONDITIONS PRECEDENT..................................................................................31 Section 9.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.................................31 Section 9.2 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE MERGER...............................31 Section 9.3 CONDITIONS TO OBLIGATIONS OF PARENT AND SUB TO EFFECT THE MERGER...........................32 ARTICLE X TERMINATION, AMENDMENT AND WAIVER......................................................................33 Section 10.1 TERMINATION...............................................................................33 Section 10.2 EFFECT OF TERMINATION.....................................................................35 Section 10.3 AMENDMENT.................................................................................35 Section 10.4 WAIVER....................................................................................35 ARTICLE XI GENERAL PROVISIONS....................................................................................35 Section 11.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS................................35 Section 11.2 NOTICES...................................................................................35 Section 11.3 EXPENSES..................................................................................36 Section 11.4 PUBLICITY.................................................................................37 Section 11.5 INTERPRETATION............................................................................37 Section 11.6 OBLIGATIONS OF PARENT AND OF THE COMPANY..................................................37 Section 11.7 SEVERABILITY..............................................................................37 Section 11.8 MISCELLANEOUS.............................................................................37
INDEX OF DEFINED TERMS PAGE ---- 1998 Company Balance Sheet..........................................13 Affected Employees..................................................26 Agreement............................................................1 Business Combination................................................30 Business Combination Proposal.......................................30 Certificate..........................................................3 CGCL.................................................................1 Closing..............................................................8 Closing Date.........................................................8 Code.................................................................5 Commission..........................................................12 Company..............................................................1 Company Common Stock.................................................2 Company Disclosure Schedule.........................................10 Company Financial Advisor...........................................19 Company Holder Agreement.............................................1 Company Licenses....................................................18 Company Material Adverse Effect.....................................19 Company Meeting.....................................................25 Company Preferred Stock.............................................10 Company SEC Reports.................................................12 Company Subsidiaries.................................................3 Company Subsidiary...................................................3 Company Voting Debt.................................................11 Compensation Commitments............................................14 Confidentiality Agreement...........................................24 Constituent Corporations.............................................1 Dissenting Shares....................................................7 Effective Date.......................................................1 Environmental Laws..................................................18 ERISA...............................................................14 ERISA Affiliate.....................................................15 Escrow Agreement.....................................................8 Escrow Payment.......................................................8 Exchange Act.........................................................9 PAGE ---- Executive Bonus Payments............................................31 FIRPTA..............................................................17 Former Holders.......................................................5 GAAP................................................................12 Governmental Entity.................................................31 Hazardous Material..................................................18 Holder...............................................................3 HSR Act..............................................................9 Indemnified Parties.................................................27 Laws................................................................18 Material Contracts..................................................18 MEDIQ................................................................5 MEDIQ Payment........................................................8 Merger...............................................................1 Merger Consideration.................................................3 Non-ERISA Plans.....................................................14 Order...............................................................31 Outstanding Options..................................................7 Parent...............................................................1 Parent Benefit Plans................................................26 Parent Material Adverse Effect......................................10 Parent Subsidiaries..................................................3 Parent Subsidiary....................................................3 Paying Agent.........................................................3 Pension Plans.......................................................14 Plans...............................................................14 Principal Holders....................................................1 Proxy Statement......................................................9 Puls Agreement.......................................................7 Refund Request.......................................................4 Securities Act......................................................12 Share................................................................2 PAGE ---- Shareholders' Committee..............................................5 Stock Option Plan....................................................7 Stock Payment Fund...................................................3 Sub..................................................................1 Superior Proposal...................................................30 Surviving Corporation................................................1 Takeover Statute....................................................18 Tax.................................................................16 Tax Return..........................................................16 Tax Sharing Arrangement.............................................16 Taxes...............................................................16 Termination Date....................................................34 Third Party.........................................................29 Welfare Plans.......................................................14 INDEX OF EXHIBITS Exhibit A Company Holder Agreement Exhibit B Outstanding Option Cancellation Agreement Exhibit C Escrow Agreement Exhibit D Certain Actions Exhibit E Executive Bonus Agreements Exhibit F Side Agreement Exhibit G Preferred Stock Designation Exhibit H Opinion of Company's Counsel 1 AGREEMENT AND PLAN OF MERGER THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of May 19, 1998, by and among General Electric Company, a New York corporation acting on behalf of its GE Medical Systems business ("PARENT"), Diamond Merger Sub, Inc., a California corporation and a wholly owned subsidiary of a wholly owned subsidiary of Parent ("SUB"), and InnoServ Technologies, Inc., a California corporation (the "COMPANY"). Sub and the Company are sometimes referred to herein as the "CONSTITUENT CORPORATIONS." W I T N E S S E T H: -------------------- WHEREAS, Parent and the Company desire to effect a business combination by means of the merger of Sub with and into the Company; WHEREAS, the respective Boards of Directors of Sub and the Company have approved, and have determined that it is advisable and in the best interests of their respective shareholders to consummate, the merger of Sub with and into the Company (the "MERGER"), upon the terms and subject to the conditions set forth herein; WHEREAS, concurrently with the execution and delivery of this Agreement and as an inducement to Parent to enter into this Agreement, certain shareholders of the Company (the "PRINCIPAL HOLDERS") have entered into an agreement with Parent, in the form attached hereto as EXHIBIT A (the "COMPANY HOLDER AGREEMENT"), pursuant to which the Principal Holders have agreed, among other things, to vote their Shares (as defined in SECTION 3.1) in favor of the Merger; NOW, THEREFORE, in consideration of the foregoing premises and the respective representations, warranties and agreements contained herein, the parties hereto agree as follows: ARTICLE I THE MERGER Section 1.1 THE MERGER. Upon the terms and subject to the conditions set forth in this Agreement and in accordance with the California General Corporation Laws (the "CGCL"), on the Effective Date (as defined in SECTION 1.2), Sub shall be merged with and into the Company and the separate existence of Sub shall thereupon cease, and the Company, as the surviving corporation in the Merger (the "SURVIVING CORPORATION"), shall by virtue of the Merger continue its corporate existence under the laws of the State of California. Section 1.2 EFFECTIVE DATE OF THE MERGER. The Merger shall become effective at the date and time (the "EFFECTIVE DATE") when a properly executed copy of this Agreement and appropriate officers' certificates, in such form as is required by the CGCL, are duly filed with and accepted by the Secretary of State of the State of California, which filing shall be made by the Company and Sub as soon as practicable on the Closing Date (as defined in SECTION 3.10), or at such time thereafter as is provided in such certificate. 2 ARTICLE II THE SURVIVING CORPORATION Section 2.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of the Company as in effect on the Effective Date shall be the Articles of Incorporation of the Surviving Corporation until amended in accordance with the CGCL. Section 2.2 BY-LAWS. The By-Laws of Sub as in effect immediately prior to the Effective Date shall be the By-Laws of the Surviving Corporation until amended in accordance with the CGCL. Section 2.3 BOARD OF DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The directors and officers of Sub immediately prior to the Effective Date shall be the directors and officers of the Surviving Corporation until their respective successors shall be duly elected or appointed and qualified. Section 2.4 EFFECTS OF MERGER. The Merger shall have the effects set forth in Section 1107 of the CGCL. Section 2.5 FURTHER ASSURANCES. If, at any time after the Effective Date, the Surviving Corporation shall consider or be advised that any deeds, bills of sales, assignments or assurances or any other acts or things are necessary, desirable or proper to vest, perfect or confirm, of record or otherwise, in the Surviving Corporation its rights, title and interest in, to or under any of the rights, privileges, powers, franchises, properties or assets of either of the Constituent Corporations, the Surviving Corporation and its proper officers and directors or their designees shall be authorized to execute and deliver, in the name and on behalf of either Constituent Corporation, all such deeds, bills of sale, assignments and assurances and to do, in the name and on behalf of either Constituent Corporation, all such other acts and things as may be necessary, desirable or proper to vest, perfect or confirm the Surviving Corporation's right, title and interest in, to and under any of the rights, privileges, powers, franchises, properties or assets of such Constituent Corporation. ARTICLE III CONVERSION OF SECURITIES Section 3.1 PER SHARE MERGER CONSIDERATION; CONVERSION AND CANCELLATION OF COMPANY SHARES. At the Effective Date, by virtue of the Merger and without any action on the part of Parent, Sub, the Company or their respective shareholders (other than the filing of the documents referred to in SECTION 1.2 hereof): (a) each share (a "SHARE") of common stock, par value $0.01 per share, of the Company ("COMPANY COMMON STOCK") issued and outstanding immediately prior to the Effective Date (other than (i) Shares held by Parent or Sub, (ii) Shares held by any corporation, partnership, joint venture, or other entity in which the Company (A) owns directly or indirectly, 50% or more of the outstanding voting securities or equity interests other than the Shares held by the InnoServ Technologies, Inc. 3 Employee Stock Purchase Plan or (B) is a general partner (individually, a "COMPANY SUBSIDIARY," and collectively, the "COMPANY SUBSIDIARIES"), (iii) Shares held by any corporation, partnership, joint venture or other entity in which Parent (A) owns, directly or indirectly, 50% or more of the outstanding voting securities or equity interests or (B) is a general partner (individually, a "PARENT SUBSIDIARY," and collectively, the "PARENT SUBSIDIARIES"), and (iv) Dissenting Shares (as defined in SECTION 3.3) in respect of which appraisal rights are properly exercised and perfected) shall be converted into (i) the right to receive, in cash, an amount equal to (A) the remainder of (I) $16,000,000 minus (II) (a) the MEDIQ Payment (as defined in SECTION 3.7), and (b) the Escrow Payment (as defined in SECTION 3.8), DIVIDED by (B) the number of shares outstanding as of the Effective Date, without interest thereon (the "PER SHARE MERGER CONSIDERATION") and (ii) the contingent right to receive additional consideration pursuant to the Escrow Agreement (as defined in SECTION 3.8). The Per Share Merger Consideration shall be payable upon surrender of the certificate previously representing such Share (a "CERTIFICATE") in the manner provided in SECTION 3.2. (b) each Share then owned by any Company Subsidiary shall be canceled without conversion and without payment of consideration and shall cease to exist; and (c) each Share owned beneficially or of record by Parent, Sub or any other Parent Subsidiary immediately prior to the Effective Date shall be canceled without conversion and without payment of consideration and shall cease to exist. Section 3.2 PAYING AGENT AND SURRENDER OF CERTIFICATES. (a) Prior to the Effective Date, the Company and Parent shall appoint The Bank of New York or such other bank or trust company selected by Parent and reasonably acceptable to the Company, and having a place of business in New York City, as paying agent (the "PAYING AGENT") for purposes of this Agreement. (b) Immediately after the Effective Date, Parent shall cause the Surviving Corporation to deposit with the Paying Agent, for the benefit of the persons entitled to payment hereunder, funds equal to the remainder of (A) $16,000,000 MINUS (B) (I) the MEDIQ Payment, and (II) the Escrow Payment (the "STOCK PAYMENT FUND"). The Paying Agent shall invest the Stock Payment Fund as Parent directs, in direct obligations of the United States of America, obligations for which the full faith and credit of the United States of America is pledged to provide for the payment of all principal and interest, commercial paper obligations receiving the highest rating from either Moody's Investors Services, Inc. or Standard & Poor's Corporation, or certificates of deposit, bank repurchase agreements or banker's acceptances of commercial banks with capital exceeding $25,000,000,000. The Stock Payment Fund shall not be used for any other purpose except as provided in this Agreement. (c) On or as soon as practicable after the Effective Date, the Surviving Corporation shall cause the Paying Agent to mail to each person who was a record holder of Company Common Stock at the Effective Date (individually, a "HOLDER" and collectively, the "HOLDERS") (other 4 than Parent, Sub, the Company, Parent Subsidiaries or Company Subsidiaries), a form of letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Paying Agent and shall otherwise be in such form and have such provisions as Parent and the Company may reasonably specify) and instructions for use in effecting the surrender for payment of Certificates that immediately prior to the Effective Date represented Company Common Stock. Upon surrender of a Certificate to the Paying Agent, together with a duly executed letter of transmittal, the holder of the Certificate shall be entitled to receive immediately, in exchange therefor cash in an amount equal to the product of the number of Shares previously represented by such Certificate or Certificates surrendered and the Per Share Merger Consideration. No interest will be paid or accrued on the cash payable upon the surrender of the Certificates. If a payment is to be made to a person other than the person in whose name a surrendered Certificate is registered, it shall be a condition of payment that (x) the Certificate so surrendered shall be properly endorsed or otherwise in proper form for transfer and that (y) 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 Parent or the Paying Agent that such tax has been paid or is not applicable. After the Effective Date, until surrendered in accordance with the provisions of this SECTION 3.2, a Certificate shall represent only the right to receive the Per Share Merger Consideration in cash multiplied by the number of Shares previously evidenced by such Certificate, without any interest thereon and the contingent right to receive additional consideration pursuant to the Escrow Agreement. (d) On or after the one hundred eightieth day following the Effective Date, the Surviving Corporation may by written request require the Paying Agent to remit to the Surviving Corporation (on terms reasonably satisfactory to the Paying Agent) (a "REFUND REQUEST") any funds held in the Stock Payment Fund that (i) have not been applied prior to any such Refund Request to make payments in respect of Certificates or (ii) are not required at the time of such Refund Request to permit the Paying Agent to make payment to the holders of any Certificates that have been surrendered by the date of such Refund Request for which payment is pending, but with respect to which no such payment has yet been made at the time of such Refund Request. Any holders of Shares who have not theretofore complied with Section 3.2(c) shall thereafter look only to the Surviving Corporation (subject to abandoned property, escheat or other similar laws) for payment of their claim for the Per Share Merger Consideration, without any interest thereon, but shall have no greater rights against the Surviving Corporation than may be accorded to general creditors of the Surviving Corporation under California law. (e) The Surviving Corporation shall pay all charges and expenses, including those of the Paying Agent, in connection with the exchange of cash for the Shares. 5 (f) Neither Parent, Sub nor the Company shall be liable to any holder of Shares for any Per Share Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. (g) The Paying Agent and Surviving Corporation shall be entitled to deduct and withhold from the Per Share Merger Consideration otherwise payable pursuant to this Agreement to any holder of Shares such amounts as the Paying Agent or Surviving Corporation is required to deduct and withhold with respect to the making of such payment under the Internal Revenue Code of 1986, as amended (the "CODE"), or any provision of state, local or foreign tax law. To the extent that amounts are so withheld by the Paying Agent or Surviving Corporation, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Shares in respect of which such deduction and withholding was made by the Paying Agent or Surviving Corporation. (h) In the event any Certificates shall have been lost, stolen or destroyed, the Paying Agent shall deliver in exchange for such lost, stolen or destroyed Certificates the Per Share Merger Consideration as may be required pursuant to SECTION 3.2 upon (i) the making of an affidavit of that fact by the holder thereof, and (ii) if required by Parent, the posting by such person of a bond in customary amount as indemnity against any claim that may be made against it with respect to such Certificate. (i) Effective as of the date hereof, the Shareholders' Committee (the "SHAREHOLDERS' COMMITTEE") will be constituted and will be composed of Michael Puls, President and Chief Executive Officer of the Company, Dudley Rauch, Chairman of the Board of the Company and a third Holder to be appointed by Mr. Puls and Mr. Rauch, each of whom has agreed to serve as a member of the Shareholders' Committee. The Shareholders' Committee will continue in existence until all of its duties under this Agreement and the Escrow Agreement are discharged. (ii) The Shareholders' Committee will have full and irrevocable power and authority to act for and in the name of, and as the agent for, the Holders and the holders of Outstanding Options (as defined in SECTION 3.6) (collectively, the "FORMER HOLDERS") without giving notice to the Former Holders or obtaining their consent, in connection with all matters relating to the Escrow Payment and to enforce, pursue, compromise, settle and waive the rights of the Former Holders relating to the Escrow Payment, subject to the specific limitations set forth below, and to do all such things and execute all such instruments as it deems necessary, proper or desirable in order to promote the interests of the Former Holders, including, without limitation, to settle any dispute with MEDIQ Incorporated ("MEDIQ") relating to the Escrow Agreement; provided that in no event will the Shareholders' Committee have the power or authority to settle any dispute among the Holders with respect to their individual proportion of the Escrow Payment as disbursed by the Escrow Agent (as defined in the Escrow Agreement), if any, to be received by any Former Holder. 6 Any determination as to what is in the interests of the Former Holders made by the Shareholders' Committee in good faith will be conclusive and binding on all Former Holders and their successors and assigns. (iii) The Shareholders' Committee (A) may rely on any document believed by it to be genuine and to have been signed or presented by the proper person, (B) need not investigate any fact or matter stated in such document, and (C) may act through its attorneys and agents and will not be responsible for the misconduct or negligence of any agent appointed with due care. The Shareholders' Committee may consult with counsel and the advice or opinion of such counsel as to matters of law will be full and complete authorization and protection in respect of any action taken, omitted, or suffered by it under this Agreement in good faith and in accordance with the advice or opinion of such counsel. (iv) Any action to be taken by the Shareholders' Committee may be taken by a majority of its members present at a meeting of the Shareholders' Committee (a quorum being present), including any meeting held by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, or by written consents of all members of the Shareholders' Committee. If a member of the Shareholders' Committee resigns, dies, or becomes incapacitated, the remaining members of the Shareholders' Committee will appoint a successor member, notwithstanding the absence of a quorum. If all three positions on the Shareholders' Committee become simultaneously vacant, successors may be appointed by the written action of the Former Holders of a majority of the shares of Company Common Stock and the Outstanding Options as of the Effective Date, except that if such vacancy results from the simultaneous resignation of members of the Shareholders' Committee, the resigning member(s) may appoint successors. The number of members of the Shareholders' Committee will be three. Unless he resigns, each member of the Shareholders' Committee will serve until the duties of the Shareholders' Committee have been fully discharged. At any meetings of the Shareholders' Committee, two members will constitute a quorum. (v) The Shareholders' Committee and its members will not be liable for any action they take or omit to take in good faith that they believe to be authorized or within their rights or powers. All out-of-pocket expenses reasonably incurred on or after the Effective Date by the Shareholders' Committee (including attorneys' and professionals' fees) in discharging the duties of the Shareholders' Committee under this Agreement will be paid out of the Escrow Payment pursuant to the terms of the Escrow Agreement. The Surviving Corporation shall indemnify, defend and hold harmless each member of the Shareholders' Committee (and their respective successors, assigns, 7 heirs, executors, administrators and representatives) against any and all costs, expenses, claims, damages or liabilities arising out of or based upon any action or inaction of the Shareholders' Committee under or in connection with this Agreement or the Escrow Agreement. Section 3.3 DISSENTING SHARES. Notwithstanding anything in this Agreement to the contrary, Shares which are issued and outstanding immediately prior to the Effective Date and which are held by shareholders who have properly exercised appraisal rights with respect thereto under Section 1301 of the CGCL (the "DISSENTING SHARES") shall not be converted into the right to receive the Per Share Merger Consideration as provided in SECTION 3.1, but the holders of Dissenting Shares shall be entitled to receive such payment as shall be determined pursuant to Chapter 13 of the CGCL; provided, that if any such holder shall have failed to perfect or shall withdraw or lose the right to appraisal and payment under the CGCL, then such holder shall forfeit the right of dissent and each such holder's Shares shall thereupon be deemed to have been converted as of the Effective Date into the right to receive the Per Share Merger Consideration, without any interest thereon, as provided in SECTION 3.1, and such Shares shall no longer be Dissenting Shares. The Company shall give Parent prompt notice of any demands for payment under Section 1301 of the CGCL received by the Company. Except as required by applicable law, prior to the Effective Date, the Company shall not, except with the prior written consent of Parent, make any payment with respect to, or settle or offer to settle, any such demands. Section 3.4 CONVERSION OF SUB SECURITIES. At the Effective Date, each share of common stock, par value $0.01 per share, of Sub issued and outstanding immediately prior to the Effective Date shall be converted, by virtue of the Merger and without any action on the part of the holder thereof, into one fully paid and nonassessable share of the common stock, par value $0.01 per share, of the Surviving Corporation. Section 3.5 SHAREHOLDERS TO HAVE NO FURTHER RIGHTS. At and after the Effective Date, the holder of a Certificate shall cease to have any rights as a shareholder of the Company, except for (i) the right to surrender such Certificate in exchange for the amount of Per Share Merger Consideration and the contingent right to receive additional consideration pursuant to the Escrow Agreement to which such holder is entitled under this Agreement and (ii) the rights available under the CGCL for Dissenting Shares. In no event shall the holder of a Certificate have any rights as a shareholder of the Surviving Corporation. Section 3.6 STOCK OPTIONS. At the Effective Date, each of the options to purchase Company Common Stock granted under (i) the Company's 1992 Stock Incentive Plan, as amended (the "STOCK OPTION PLAN") that is outstanding as of the Effective Date and (ii) the Stock Option Agreement dated as of December 11, 1996 between the Company and Michael G. Puls (the "PULS AGREEMENT," and collectively with the options outstanding under the Stock Option Plan, the "OUTSTANDING OPTIONS"), whether or not then vested, exercisable or effective, shall, by action of the Board of Directors of the Company or a duly authorized Committee thereof, under the terms of the Stock Option Plan and the agreements evidencing the options granted thereunder or the Puls Agreement, as applicable, and without any action on the part of the holder thereof, vest and become effective and exercisable solely for the Per Share Merger Consideration (without interest). Prior to the Effective Date, each holder of Outstanding Options shall 8 be offered the right to execute an agreement, substantially in the form attached hereto as Exhibit B, to cancel such Outstanding Options. Immediately after the Effective Date and in no event later than the first payment to a Holder pursuant to SECTION 3.2, Parent shall cause the Surviving Corporation to pay to each holder of an Outstanding Option who executes such an agreement, in consideration for such cancellation, an amount in cash (less applicable withholding taxes, if any) equal to the amount and in the manner set forth in the agreement attached hereto as Exhibit B; provided that if such amount is equal to or less than zero, such Outstanding Option shall be deemed canceled and terminated. For purposes of this SECTION 3.6, each of the Company, Sub and Parent agree that each option listed on SECTION 5.2 of the Company's Disclosure Schedule (as hereinafter defined), unless such option is exercised or expires in accordance with the provisions of Stock Option Plan or Puls Agreement prior to the Effective Date, is an Outstanding Option. Section 3.7 MEDIQ PAYMENT. Immediately after the Effective Date, and in no event later than the first payment to a Holder pursuant to SECTION 3.2, the Parent shall cause the Surviving Corporation to pay to MEDIQ in cash, without interest thereon and less applicable withholding taxes, if any, by wire transfer to an account designated by MEDIQ an amount equal to $3,218,997 (the "MEDIQ Payment.") Section 3.8 Escrow Payment. Immediately after the Effective Date, Parent shall cause the Surviving Corporation to deposit with the Paying Agent, an amount, in cash, equal to $833,879 (the "Escrow Payment"), to be disbursed by the Paying Agent pursuant to the terms and conditions of the escrow agreement attached hereto as Exhibit C (the "Escrow Agreement"). In the event that the parties to the Escrow Agreement shall provide written notice to the Parent, duly executed by each such party prior to the Effective Date that such parties have reached agreement with respect to the disbursement of the Escrow Payment, the Company, Parent and Sub each hereby agrees to amend this Agreement to reflect such agreement. Section 3.9 CLOSING OF THE COMPANY'S TRANSFER BOOKS. After the close of business on the Effective Date, the stock transfer books of the Company shall be closed and no transfer of Shares shall be made thereafter. In the event that, after the Effective Date, Certificates are presented to the Surviving Corporation, they shall be forwarded to the Paying Agent and be subject to the provisions of SECTION 3.2. Section 3.10 CLOSING. Unless this Agreement is terminated and the transactions contemplated herein abandoned pursuant to SECTION 10.1, and subject to the satisfaction or, if permissible, waiver of the conditions set forth in ARTICLE IX, the consummation of the Merger and the closing of the transactions contemplated by this Agreement (the "CLOSING") shall take place (i) at the offices of Gibson, Dunn & Crutcher, 1717 Main Street, Suite 5400, Dallas, Texas, at 9:00 A.M. local time on a date to be specified by Parent and the Company, but as soon as practicable (and in any event within two business days) after the day on which the last of the conditions set forth in ARTICLE IX is fulfilled or, if permissible, waived or (ii) at such other time and place as Parent and the Company shall agree in writing. The date on which the Closing occurs is referred to herein as the "CLOSING DATE." 9 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT Parent represents and warrants to the Company as follows: Section 4.1 ORGANIZATION AND QUALIFICATION. Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of New York and has all requisite corporate power and authority to own and operate its properties and assets and to carry on its business as it is now being conducted. Parent is duly qualified as a foreign corporation, and is in good standing, in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities make such qualification necessary, except where the failure to be so qualified and in good standing will not have a Parent Material Adverse Effect (as defined in SECTION 4.7). Section 4.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Parent has the requisite corporate power and authority to enter into this Agreement and to carry out its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by Parent and the consummation of the transactions contemplated hereby by Parent have been duly authorized by all necessary corporate action on the part of Parent. This Agreement has been duly executed by Parent and constitutes a valid and binding obligation of Parent enforceable in accordance with its terms except as enforcement may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate the charter or by-laws of Parent or (b) result in any breach or constitute a default (with or without notice or lapse of time, or both) or give rise in others to any rights of termination, cancellation or acceleration under any agreement, indenture, contract, loan agreement, license, franchise, permit, order, decree, concession, lease, instrument, judgment, statute, law, ordinance, rule or regulation applicable to Parent or any Parent Subsidiary or its or their respective assets, other than, in the case of clause (b) only, breaches, defaults, violations and losses of rights that would not have a Parent Material Adverse Effect and the laws and regulations referred to in the next sentence. Except in connection, or in compliance, with the provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (which filing has been made) (the "HSR ACT"), the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and the corporation, securities or blue sky laws or regulations of the various states, no filing or registration with, or authorization, consent or approval of, any governmental or regulatory body or authority is necessary for the consummation by Parent of the Merger or the other transactions contemplated by this Agreement, except where the failure to make any such filing or registration or obtain any such authorization, consent or approval would not have a Parent Material Adverse Effect or prevent or materially delay consummation of the Merger. Section 4.3 INFORMATION IN PROXY STATEMENT. None of the information supplied by Parent or Sub to be included or incorporated by reference in the proxy statement of the Company (the "PROXY STATEMENT") required to be mailed to the shareholders of the Company in connection with the Merger will at the time 10 of the mailing of the Proxy Statement and any amendments or supplements thereto, and at the time of the Company Meeting (as defined in SECTION 8.2) to be held in connection with the Merger, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Section 4.4 FINANCIAL ADVISOR. No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the Merger or the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Parent. Section 4.5 PARENT NOT AN INTERESTED SHAREHOLDER. Neither Parent nor any of its affiliates is an "Interested Party" pursuant to Section 1203 of CGCL. Section 4.6 FINANCING. Parent and Sub have available to them funds necessary to satisfy their respective obligations hereunder. Section 4.7. PARENT ADVERSE EFFECT. For purposes of this Agreement, "PARENT MATERIAL ADVERSE EFFECT" means any change, effect, circumstance or event that is materially adverse to the business, operations or financial condition of Parent and the Parent Subsidiaries taken as a whole, other than changes, effects, circumstances or events: (i) affecting Parent's industry generally, (ii) resulting from general economic conditions, or (iii) resulting from the transactions contemplated by this Agreement or the announcement thereof. ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to Parent and Sub that, except as set forth in the disclosure schedule delivered by the Company to Parent and Sub on the date of this Agreement (the "COMPANY DISCLOSURE SCHEDULE") (it being understood that disclosure of any items, facts, circumstances or the like as an exception with respect to a representation, warranty or covenant of the Company in the Company Disclosure Schedule with reference to a particular section of this Agreement shall be deemed to be disclosed, and an exception with respect to all representations, warranties and covenants of the Company, if a reasonable person knowledgeable of the Company's industry would determine, in light of the level and particularity of the disclosure, that such disclosure is relevant or an exception would be applicable): Section 5.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of California. Each Company Subsidiary is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction set forth opposite its name on SECTION 5.1 of the Company Disclosure Schedule. Each of the Company and the Company Subsidiaries has all requisite corporate power and authority to own and operate its properties and assets and to carry on its business as it is now being conducted. Each of the Company and the Company Subsidiaries is duly qualified as a foreign corporation, and is in good standing, in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary, except where the failure to be so qualified or in good standing will not have a Company Material Adverse Effect. Complete and correct copies as of the date hereof of the charter and by-laws or comparable 11 organizational documents of the Company and each of the Company Subsidiaries have been delivered to Parent, and such charters, by-laws or comparable organizational documents are in full force and effect. Section 5.2 CAPITALIZATION. The authorized capital stock of the Company consists of (a) 10,000,000 shares of Company Common Stock, par value $0.01 per share, and (b) 5,000,000 shares of preferred stock, par value $0.01 per share (the "COMPANY PREFERRED STOCK"). As of the date hereof, (i) 3,009,395 shares of Company Common Stock were outstanding and no shares of Company Common Stock were held by the Company or any Company Subsidiary, (ii) 405,200 shares of Company Common Stock were reserved for issuance pursuant to Outstanding Options, and (iii) no shares of Company Preferred Stock were outstanding. All of the shares of outstanding Company Common Stock were validly issued, fully paid and non-assessable. SECTION 5.2 of the Company Disclosure Schedule contains a correct and complete list as of the date hereof of each outstanding option to purchase Shares under the Stock Option Plan and Puls Agreement, including the holder, date of grant, exercise price, expiration date and number of Shares subject thereto. Each of the outstanding shares of capital stock or other securities of each Company Subsidiary is duly authorized, validly issued, fully paid and nonassessable and owned by the Company or another Company Subsidiary, free and clear of any lien, pledge, security interest, right of first refusal, agreement limitation on voting rights, claim or other encumbrance. As of the date hereof, there are no bonds, debentures, notes or other evidences of indebtedness having the right to vote on any matters on which the Company's shareholders may vote ("COMPANY VOTING DEBT") issued or outstanding. Except as set forth in SECTION 5.2 of the Company Disclosure Schedule, there are no options, warrants, calls or other rights, agreements or commitments outstanding obligating the Company to issue, reserve for issuance, deliver or sell shares of its capital stock or debt securities, or obligating the Company to grant, extend or enter into any such option, warrant, call or other such right, agreement or commitment. Section 5.3 AUTHORITY RELATIVE TO THIS AGREEMENT. The Board of Directors of the Company has duly approved the Merger and this Agreement in accordance with Section 1101 of the CGCL and has resolved to recommend the approval of this Agreement by the Company's shareholders and directed that this Agreement be submitted to the Company's shareholders for approval; provided such recommendation may be modified or withdrawn as contemplated by SECTION 8.8 or if the Board of Directors of the Company determines in good faith, and after consultation with independent counsel, that such action is necessary to properly discharge its fiduciary duties. The Company has the requisite corporate power and authority to enter into this Agreement and, subject to approval of this Agreement by the affirmative vote of the holders of a majority of the outstanding shares of Company Common Stock, in accordance with the provisions of the CGCL and the Company's Articles of Incorporation and By-Laws, as amended, to carry out its obligations hereunder and consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by the Company and the consummation of the transactions contemplated hereby by the Company have been duly authorized by all necessary corporate action on the part of the Company (except for the approval by affirmative vote of the holders of a majority of the outstanding shares of Company Common Stock in accordance with the provisions of the CGCL and the Company's Articles of Incorporation and By-Laws). This Agreement has been duly executed by the Company and constitutes a 12 valid and binding obligation of the Company enforceable in accordance with its terms except as enforcement may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors' rights generally. Except as set forth in SECTION 5.3 of the Company Disclosure Schedule, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or violate the charter, bylaws or the equivalent organizational documents of the Company or any of its Subsidiaries, or (b) result in any breach or constitute a default (with or without notice or lapse of time, or both) under, or give rise in others to any rights of termination, cancellation or acceleration under, any agreement, indenture, contract, loan agreement, license, franchise, permit, order, decree, concession, lease, instrument, judgment, statute, law, ordinance, rule or regulation applicable to the Company or any Company Subsidiary or its or their respective assets, other than, in the case of clause (b) only, such breaches, defaults, violations and losses of rights that would not have a Company Material Adverse Effect and the laws and regulations referred to in the next sentence. Except as disclosed in SECTION 5.3 of the Company Disclosure Schedule or in connection or in compliance with the provisions of the HSR Act (which filing has been made), the Exchange Act, and the corporation, securities or blue sky laws or regulations of the various states, no filing or registration with, or authorization, consent or approval of, any governmental or regulatory body or authority is necessary for the consummation by the Company of the Merger or the other transactions contemplated hereby, except where the failure to make such filing or registration or obtain such authorization, consent or approval would not have a Company Material Adverse Effect or prevent or materially delay consummation of the Merger. Section 5.4 REPORTS AND FINANCIAL STATEMENTS. (a) Since April 30, 1995, the Company has filed all reports and other documents that it was required to file with the Securities and Exchange Commission (the "COMMISSION"). The Company has furnished Parent with true and complete copies of its (i) Annual Reports on Form 10-K for the fiscal years ended April 30, 1996 and April 30, 1997, as filed with the Commission, (ii) Quarterly Reports on Form 10-Q for the quarters ended July 31, 1997, October 31, 1997, and January 31, 1998 as filed with the Commission, (iii) proxy statements related to all meetings of its shareholders (whether annual or special) held since April 30, 1996, and (iv) all reports on Forms 8-K filed with, and registration statements declared effective by, the Commission since April 30, 1996, except registration statements on Form S-8 relating to employee benefit plans, which are all the documents (other than preliminary material and Reports on Form 10-Q not referred to in clause (ii) above) that the Company was required to file with the Commission from April 30, 1996 to the date hereof (clauses (i) through (iv) being referred to herein collectively as the "COMPANY SEC REPORTS"). As of their respective dates, the Company SEC Reports complied in all material respects with the applicable requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT"), or the Exchange Act, as the case may be, and the rules and regulations of the Commission thereunder applicable to such Company SEC Reports. As of their respective dates, the Company SEC Reports did not contain any untrue statement of a material fact or omit to state a material fact required 13 to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (b) The financial statements included or incorporated by reference in the Company SEC Reports (i) have been prepared in accordance with generally accepted accounting principles applied on a consistent basis ("GAAP") during the periods presented (except as may be indicated therein or in the notes thereto or, in the case of the unaudited statements, to normal year-end audit adjustments), (ii) present fairly, in all material respects, the consolidated financial position of the Company and the Company Subsidiaries as at the dates thereof and the consolidated results of their operations and cash flow for the periods then ended subject, in the case of the unaudited interim financial statements, to normal year-end audit adjustments and any other adjustments described therein and the fact that certain information and notes have been condensed or omitted in accordance with the Exchange Act and the rules promulgated thereunder, and (iii) are in all material respects, in accordance with the books of account and records of the Company. (c) Neither the Company nor any Company Subsidiary has any liability or is subject to any loss contingency, other than (i) as reflected or disclosed in the financial statements or notes thereto included in the Company SEC Reports, (ii) in the aggregate adequately provided for in the Company's unaudited balance sheet (including any related notes thereto) as of January 31, 1998 (the "1998 COMPANY BALANCE SHEET"), (iii) incurred in the ordinary course of business and not required under GAAP to be reflected on the 1998 Company Balance Sheet, (iv) incurred since January 31, 1998 in the ordinary course of business consistent with past practice, (v) incurred in connection with this Agreement, (vi) as set forth in SECTIONS 5.4, 5.5, 5.6, 5.7, 5.8, 5.10 and 5.14 of the Company Disclosure Schedule, or (vii) which would not have a Company Material Adverse Effect. Section 5.5 ABSENCE OF CERTAIN CHANGES OR EVENTS; LITIGATION. Except as disclosed in the Company SEC Reports or as disclosed in SECTION 5.5 of the Company Disclosure Schedule, since April 30, 1997: (a) there has not been (i) any events which, individually or in the aggregate, have had or are reasonably likely to have a Company Material Adverse Effect; (ii) any declaration, setting aside or payment of any dividend or other distribution in respect of the capital stock of the Company; or (iii) any material change by the Company in accounting principles, practices or methods; (b) there has not been any increase in the compensation payable or that could become payable by the Company or any Company Subsidiary to executive officers or any amendment of any of the plans described in SECTION 5.6 (other than increases or amendments in the ordinary course); (c) there are no civil, criminal or administrative actions, suits, claims, hearings, investigations or proceedings (i) pending or, to the knowledge of the executive officers of the Company, threatened against the Company or any Company Subsidiary or (ii) to the knowledge 14 of the executive officers of the Company, pending against any current or former director or executive officer of the Company in their capacity as such, in the case of each of (i) and (ii) that, individually or in the aggregate, would have a Company Material Adverse Effect; (d) there are no outstanding orders, judgments, injunctions, awards or decrees of any Governmental Entity (as defined in SECTION 9.1) against the Company or any Company Subsidiary, any of its or their properties, assets or business, or, to the knowledge of the executive officers of the Company, any of its or their current or former directors or executive officers in their capacity as such, except as would not have, individually or in the aggregate, a Company Material Adverse Effect; and (e) the Company and the Company Subsidiaries have conducted their business in the ordinary course in all material respects. Section 5.6 BENEFIT PLANS; EMPLOYEES AND EMPLOYMENT PRACTICES. (a) SECTION 5.6(A) of the Company Disclosure Schedule sets forth a true and complete list of each of the following to which the Company or any Company Subsidiary is a party or by which it is bound or pursuant to which it may be required to make any payment: (i) other than those described in SECTION 5.6(B) of the Company Disclosure Schedule, each retirement, savings, thrift, deferred compensation, severance, stock ownership, stock purchase, stock option, performance, bonus, incentive, vacation or holiday pay, hospitalization or other medical, disability, life or other insurance, or other welfare, retiree welfare or benefit plan, policy, trust, understanding or arrangement of any kind, whether written or oral (THE "NON-ERISA PLANS"); and (ii) other than the Non-ERISA Plans and other than those described in Section 5.6(b) of the Company Disclosure Schedule, each employee collective bargaining agreement and each agreement, commitment, understanding, plan, policy or arrangement of any kind, whether written or oral, with or for the benefit of any current or former officer, director, employee or consultant (including, without limitation, each employment, compensation, deferred compensation, severance, supplemental pension, life insurance, termination or consulting agreement or arrangement and any agreements or arrangements associated with a change in control) (the "COMPENSATION COMMITMENTS"). True and complete copies of all written Non-ERISA Plans and Compensation Commitments and of all related insurance and annuity policies and contracts and other documents with respect to each Non-ERISA Plan and Compensation Commitment have been delivered to Parent. SECTION 5.6(A) of the Company Disclosure Schedule contains a true and complete description of all oral Non-ERISA Plans and Compensation Commitments. Except as set forth in SECTION 5.6(A) of the 15 Company Disclosure Schedule, no payments under any Non-ERISA Plan or Compensation Commitment will be triggered as a result of the Merger. (b) (i) SECTION 5.6(B) of the Company Disclosure Schedule sets forth a true and complete list of each "employee pension benefit plan" (as such term is defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) covering any employee or former employee of the Company or any Company Subsidiary (the "PENSION PLANS") and each "employee welfare benefit plan" (as such term is defined in Section 3(1) of ERISA) covering any employee or former employee of the Company or any Company Subsidiary (the "WELFARE PLANS") (collectively the "PLANS"). Except as disclosed in SECTION 5.6(B) of the Company Disclosure Schedule: (A) neither the Company nor any Company Subsidiary has ever maintained any defined benefit Pension Plan, and (B) none of the Company or any Company Subsidiary, or any other person or entity that, together with the Company and the Company Subsidiaries, is treated as a single employer under Section 414 of the Code (an "ERISA AFFILIATE") has ever been required to contribute to any "multiemployer plan" (as such term is defined in Section 3(37) of ERISA). (ii) The Company has delivered to Parent, with respect to each Plan, correct and complete copies, where applicable, of (A) all Plan documents and amendments, trust agreements and insurance and annuity contracts and policies, (B) the most recent determination letter received from the Internal Revenue Service, (C) the Annual Reports (Form 5500 Series) and accompanying schedules, as filed, for the most recently completed three Plan years, and (D) the current and most recent summary plan description. (iii) Each Plan which is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service that such Plan is so qualified under the Code or a request for a determination letter has been submitted to the Internal Revenue Service; and, to the knowledge of the executive officers of the Company, no circumstance exists which would cause a Plan which is so qualified to cease being so qualified. (c) Except as disclosed in SECTION 5.6(C) of the Company Disclosure Schedule: (i) each Plan complies, and has been administered to comply, with all requirements of law and regulations applicable thereto, except as would not result in a Company Material Adverse Effect, and the Company has received no notice from any governmental authority questioning or challenging such compliance and there are no actions, suits or claims (other than routine claims for benefits) pending or, to the knowledge of the executive officers of the Company, threatened involving such Plans or the assets of such Plans, except as would not result in a Company Material Adverse Effect; (ii) neither the Company nor any Company Subsidiary has any obligations under any of the Welfare Plans or otherwise to provide health or death benefits to or in respect of former employees, except as specifically required by the continuation requirements of Part 6 of Title I of ERISA; and (iii) neither the Company nor any Company Subsidiary has any liability of any kind whatsoever, whether direct, indirect, contingent or otherwise, on account of (A) any violation of the health care requirements of Part 6 16 of Title I of ERISA or Section 4980B of the Code, (B) under Section 502(i) or Section 502(l) of ERISA or Section 4975 of the Code, (C) under Section 302 of ERISA or Section 412 of the Code or (D) under Title IV of ERISA, except as would not result in a Company Material Adverse Effect. (d) As of the date of this Agreement, except as disclosed in SECTION 5.6(D) of the Company Disclosure Schedule, there are no controversies, strikes, work stoppages or disputes pending between the Company or any Company Subsidiary and any current or former employees except such as would not result in a Company Material Adverse Effect. To the knowledge of the executive officers of the Company, no organizational effort by any labor union or other collective bargaining unit currently is under way with respect to any employees of the Company and the Company Subsidiaries. Neither the Company nor any Company Subsidiary is a party to any labor union contract or collective bargaining agreements with respect to persons employed by the Company and the Company Subsidiaries. Neither the Company nor any Company Subsidiary has engaged in any unfair labor practice, and there is no unfair labor practice complaint pending against the Company or any Company Subsidiary, in either case that would result in a Company Material Adverse Effect. Section 5.7 TAXES. (a) The following definitions apply to the terms set forth below when used in this Agreement: (i) "TAX" (and, with correlative meaning, "TAXES") shall mean: (i) any federal, state, local or foreign net income, gross income, gross receipts, windfall profit, severance, property, production, sales, use, license, excise, franchise, employment, payroll, withholding, alternative or add-on minimum, ad valorem, value-added, transfer, stamp, or environmental tax, or any other tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or penalty, addition to tax or additional amount imposed by any governmental authority; and (ii) any liability of the Company or any Company Subsidiary for the payment of amounts with respect to payments of a type described in clause (i) as a result of being a member or an affiliated, consolidated, combined or unitary group, or as a result of any obligation of the Company or any Company Subsidiary under any Tax Sharing Arrangement or Tax indemnity arrangement. (ii) "TAX RETURN" shall mean any return, report or similar statement required to be filed with any governmental agency or other governmental authority with respect to any Tax (including any attached schedules), including, without limitation, any information return, claim for refund, amended return or declaration of estimated Tax. 17 (iii) "TAX SHARING ARRANGEMENT" shall mean any written or unwritten arrangement for the allocation or payment of Tax liabilities or payment for Tax benefits with respect to a consolidated, combined or unitary Tax Return which Tax Return includes or has included the Company or any Company Subsidiary. (b) Except as set forth in SECTION 5.7 of the Company Disclosure Schedule, (i) the Company and each Company Subsidiary have filed all Tax Returns required to be filed and have paid all Taxes shown to be due on such Tax Returns, except those where the failure to file or pay would not, individually or in the aggregate, result in a Company Material Adverse Effect; (ii) all Tax Returns filed by the Company and each Company Subsidiary are complete and accurate in all material respects; (iii) to the knowledge of the executive officers of the Company, neither the Company nor any Company Subsidiary has waived in writing any statute of limitations in respect of Taxes that is currently in effect; (iv) to the knowledge of the executive officers of the Company, there is no action, suit, investigation, audit, claim or assessment pending or proposed or threatened in writing with respect to Taxes of the Company or any Company Subsidiary; (v) all material deficiencies successfully asserted or material assessments successfully made as a result of any examination of the Tax Returns referred to in clause (i) and that have become due and payable have been paid in full; (vi) there are no material liens for Taxes upon the assets of the Company or any Company Subsidiary; (vii) all Taxes which the Company or any Company Subsidiary are required by law to withhold or to collect for payment have been duly withheld and collected, and have been paid or accrued, reserved against and entered on the books of the Company, except where the failure to withhold or collect for payment would not result in a Company Material Adverse Effect; and (viii) to the knowledge of the executive officers of the Company, neither the Company nor any Company Subsidiary has been a member of any group of corporations filing Tax Returns on a consolidated, combined, unitary or similar basis other than each such group of which it is currently a member. (c) No transaction contemplated by this Agreement is subject to withholding under Section 1445 of the Code (relating to "FIRPTA") and no stock transfer Taxes, sales Taxes, use Taxes, real estate transfer Taxes, or other similar Taxes will be imposed on the transactions contemplated by this Agreement, other than Taxes for which neither the Company, Parent or Sub are liable. (d) Since the 1998 Company Balance Sheet date, the Company has not prepared or filed any Tax Return inconsistent with past practice or, on any such Tax Return, taken any position, made any election, or adopted any method that is inconsistent with positions taken, elections made or methods used in preparing or filing similar Tax Returns in prior periods. (e) As a result of the transactions contemplated by this Agreement (including the termination of employment of any employee of the Company or any Company Subsidiary after the Effective Date), neither the Company nor any Company Subsidiary will be obligated to 18 make a payment (i) that would be a "parachute payment" to an individual that is currently a "disqualified individual" with respect to the Company as those terms are defined in Section 280G of the Code, without regard to whether such payment is reasonable compensation for personal services performed or to be performed in the future or (ii) of compensation that would not be deductible under Section 162 of the Code. Section 5.8 ENVIRONMENTAL MATTERS. Except as set forth in SECTION 5.8 of the Company Disclosure Schedule, and to the knowledge of the executive officers of the Company: (i) the operations of the Company comply and have complied with all Environmental Laws applicable to it including, without limitation, with respect to the handling and disposal of Hazardous Material, except as would not have a Company Material Adverse Effect; (ii) the Company maintains all permits required pursuant to Environmental Laws applicable to it, except as would not have a Company Material Adverse Effect and is not party to any judicial or administrative proceeding alleging the violation of any Environmental Law applicable to it; (iii) none of the Company's operations or properties is the subject of an investigation by a governmental authority evaluating whether any remedial action is needed to respond to a release of Hazardous Material into the environment; (iv) the Company has not filed any notice under any Environmental Law applicable to it reporting a spill or release of a Hazardous Material into the environment; and (v) the Company (or its predecessors in interest) has not arranged for, or transported, disposed, released or spilled any Hazardous Material at the Company's facilities or at any other location, except as would not result in a Company Material Adverse Effect. For the purposes of this SECTION 5.8, "ENVIRONMENTAL LAWS" shall mean any federal, state, or local law, rule, regulation or other binding order or determination of any governmental authority, including permits, relating to or imposing liability or standards of care with respect to pollution, protection of the environment or occupational safety and health; and "HAZARDOUS MATERIAL" shall mean any pollutant, contaminant, hazardous substance, toxic substance, hazardous waste or any constituent of such substances or wastes regulated under Environmental Laws including, without limitation, petroleum, including any fraction thereof, radioactive material, asbestos and polychlorinated biphenyls. Section 5.9 INTELLECTUAL PROPERTY MATTERS. SECTION 5.9 of the Company Disclosure Schedule contains a list of all trademarks, copyrights, and patents owned by the Company. Except as set forth in SECTION 5.9 of the Company Disclosure Schedule, the Company or a Company Subsidiary owns, or is licensed or otherwise possess legally enforceable rights to use, all trademarks, copyrights, patents and other intellectual property that are used in the business of the Company and the Company Subsidiaries as currently conducted, except as would not, individually or in the aggregate, have a Company Material Adverse Effect. Section 5.10 MATERIAL CONTRACTS. Except for such failures as set forth in SECTION 5.10 of the Company Disclosure Schedule or as would not have a Company Material Adverse Effect, the Company and the Company Subsidiaries have substantially performed their respective obligations under each lease, contract or other agreement to which it is a party and under which the consequences of a default or termination would have a Company Material Adverse Effect (the "MATERIAL CONTRACTS"). 19 Section 5.11 COMPLIANCE WITH LAWS; PERMITS. Except as set forth in the Company SEC Reports or SECTION 5.11 of the Company Disclosure Schedule, the businesses of each of the Company and the Company Subsidiaries are being conducted in compliance with applicable federal, state, local and foreign laws (collectively, "LAWS"), except for such violations that, individually or in the aggregate, would not have a Company Material Adverse Effect. Except as set forth in SECTION 5.11 of the Company Disclosure Schedule, the Company and the Company Subsidiaries each has all permits, license, franchises, variances, exemptions, orders and other governmental authorizations, consents and approvals (the "COMPANY LICENSES") necessary to own or lease and operate their respective properties and conduct its business as presently conducted except those the absence of which, individually or in the aggregate, would not have a Company Material Adverse Effect. Section 5.12 TAKEOVER STATUTES. No "fair price," "moratorium," "control share acquisition" or other similar anti-takeover statute or regulation (each a "TAKEOVER STATUTE") or any applicable anti-takeover provision in the Company's Articles of Incorporation and By-Laws or any shareholder rights agreement is, or at the Effective Date will be, applicable to the Company, the Shares, the Merger or the other transactions contemplated by this Agreement or the Company Holder Agreement. Assuming the accuracy of Parent's representations and warranties contained in SECTION 4.5, the Board of Directors of the Company has taken all action so that Parent will not become an "Interested Party" pursuant to Section 1203 of the CGCL. Section 5.13 FAIRNESS OPINION. The Company has received the written opinion of SBC Warburg Dillon Read, Inc., financial advisors to the Company (the "COMPANY FINANCIAL ADVISOR"), as of the date of delivery of such opinion, to the effect that the Per Share Merger Consideration paid to the Holders pursuant to SECTION 3.2 is fair to the shareholders of the Company from a financial point of view. Section 5.14 FINANCIAL ADVISOR. Except as set forth in SECTION 5.14 of the Company Disclosure Schedule, no broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the Merger or the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company. A complete and correct copy of all agreements referenced in SECTION 5.14 of the Company Disclosure Schedule have been provided to Parent. Section 5.15 INDUSTRY CONDITIONS. Except as set forth in SECTION 5.15 of the Company Disclosure Schedule, as of the date of this Agreement, the executive officers of the Company have no knowledge of any pending or proposed consolidation effecting any current customer or supplier of the Company or the non-availability of any parts or components required by the Company or the Company Subsidiaries that would be materially adverse to the business, operations or financial condition of the Company and the Company Subsidiaries taken as a whole. Section 5.16. CUSTOMERS. Except as set forth in SECTION 5.16 of the Company Disclosure Schedule, as of the date of this Agreement no single customer 20 or group of related customers accounts for more than ten percent of the consolidated revenues of the Company and the Company Subsidiaries for the most recent 12 full calendar months. Section 5.17. COMPANY MATERIAL ADVERSE EFFECT. For purposes of this Agreement, "COMPANY MATERIAL ADVERSE EFFECT" means any change, effect, circumstance or event that is materially adverse to the business, operations or financial condition of the Company and the Company Subsidiaries taken as a whole, other than changes, effects, circumstances or events: (i) set forth in SECTION 5.5 of the Company Disclosure Schedule, (ii) affecting the Company's and the Company Subsidiaries' industry generally or resulting from general industry trends, including, without limitation, the consolidation of hospitals and other healthcare providers or affecting the Company's customers, the consolidation of suppliers of parts and components used in the business of the Company and the Company's Subsidiaries, the non-availability of parts and components required by the Company and the Company Subsidiaries, or actions by competitors of the Company or the Company Subsidiaries, (iii) resulting from general economic conditions or continuing trends with respect to Company operating losses or liquidity concerns or (iv) resulting from the transactions contemplated by this Agreement or the announcement thereof, it being agreed that any change, effect, circumstance or event shall be presumed, unless there is clear evidence to the contrary, to have resulted from the transactions contemplated by this Agreement or the announcement thereof. Section 5.18. KNOWLEDGE. Any reference herein to "the knowledge of the executive officers of the Company" or words of similar importance shall mean to the actual knowledge of the officers of the Company and the employees identified in Section 5.18 of the Company Disclosure Schedule. ARTICLE VI REPRESENTATIONS AND WARRANTIES REGARDING SUB Parent and Sub jointly and severally represent and warrant to the Company as follows: Section 6.1 ORGANIZATION. Sub is a corporation duly organized, validly existing and in good standing under the laws of the State of California. Complete and correct copies of the Articles of Incorporation and By-Laws of Sub have been delivered to the Company. Section 6.2 CAPITALIZATION. The authorized capital stock of Sub consists of 1,000 shares of common stock, par value $0.01 per share, all of which shares are validly issued and outstanding, fully paid and nonassessable and are owned by a wholly owned subsidiary of Parent free and clear of all liens, claims and encumbrances. Section 6.3 AUTHORITY RELATIVE TO THIS AGREEMENT. Sub has the requisite corporate power and authority to enter into this Agreement and to carry out its obligations hereunder and consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by Sub and the consummation of the transactions contemplated hereby by Sub have been duly authorized by all necessary corporate action on the part of Sub, including any necessary action of Sub's shareholder. This Agreement has been duly executed by Sub and constitutes a valid and binding obligation of Sub enforceable in accordance with its terms except as enforcement may be limited to bankruptcy, 21 insolvency or other laws affecting the enforcement of creditors' rights generally and except that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding therefor may be brought. Sub is not subject to or obligated under any charter or by-law provision which would be breached or violated by its executing and carrying out this Agreement. Except as referred to herein or in connection, or in compliance, with the provisions of the HSR Act amended (which filing has been made), the Exchange Act and the corporation, securities or blue sky laws or regulations of the various states, no filing or registration with, or authorization, consent or approval of, any governmental or regulatory body or authority is necessary for the consummation by Sub of the Merger or the transactions contemplated by this Agreement, except where the failure to make such filing or registration or obtain such authorization, consent or approval would not prevent or materially delay consummation of the Merger or have a Parent Material Adverse Effect. Section 6.4 SUB ACTION. The Board of Directors of Sub (at a meeting duly called and held or by unanimous written consent in lieu of meeting) has by the requisite vote or consent of directors approved the Merger and Merger Agreement in accordance with the applicable provisions of Section 1101 of the CGCL. Section 6.5 INTERIM OPERATIONS OF SUB. Sub was formed solely for the purpose of engaging in the transactions contemplated hereby, has engaged in no other business activities and has conducted its operations only as contemplated hereby. Sub is not a party to any contract or agreement other than this Agreement. ARTICLE VII CONDUCT OF BUSINESS PENDING THE MERGER Section 7.1 CONDUCT OF BUSINESS BY THE COMPANY. Prior to the Effective Date or earlier termination of this Agreement, except as expressly contemplated by this Agreement or as set forth in SECTION 7.1 of the Company Disclosure Schedule, unless Parent shall otherwise agree in writing, which agreement shall not be unreasonably withheld or delayed (except in the case of SECTIONS 7.1(B), 7.1(C)(I), 7.1(C)(II), 7.1(C)(III), 7.1(C)(IV), 7.1(C)(V), 7.1(C)(VII), 7.1(D), and 7.1(E), where such agreement is within the sole discretion of Parent): (a) subject to the limitations expressly contemplated by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, carry on their respective operations in the usual and ordinary course consistent with past practice, and shall use its commercially reasonable efforts, and shall cause each of the Company Subsidiaries to use its commercially reasonable efforts, to preserve substantially intact its present business organization, keep available the services of its present executive officers and key employees and preserve its present relationships and goodwill with customers, suppliers, creditors, lessors, employees and others having business dealings with it to the end that its goodwill and on-going businesses shall not be materially impaired at the Effective Date; 22 (b) the Company shall not, nor shall it propose to, except as required or permitted by this Agreement, (i) sell or pledge or agree to sell or pledge any capital stock owned by it in any of the Company Subsidiaries, (ii) amend its Articles of Incorporation or By-Laws, (iii) split, combine or reclassify its outstanding capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of the capital stock, or declare, set aside or pay any dividend or other distribution payable in cash, stock or property, or (iv) directly or indirectly redeem, purchase or otherwise acquire or agree to redeem, purchase or otherwise acquire any shares of its capital stock (except in connection with any exercise of any existing stock option pursuant to which the exercise price is paid in shares of the Company Common Stock); (c) the Company shall not, nor shall it permit any of the Company Subsidiaries to, (i) except as required by this Agreement, issue, deliver or sell or agree to issue, deliver or sell any additional shares of, or stock appreciation rights or rights of any kind to acquire any shares of, its capital stock of any class, any Company Voting Debt, or any option, rights or warrants to acquire, or securities convertible into, shares of capital stock (except in connection with the exercise of any existing stock option), (ii) amend in any respect existing agreements evidencing any existing stock option (including, without limitation, the exercise or strike prices thereof) or the Stock Option Plan or the Puls Agreement pursuant to which such options were granted, except as provided in SECTION 3.6 hereof, and provided that the Company shall have the right to cancel any Outstanding Options which will expire on their terms prior to July 30, 1998 in exchange for payment to the holders of such Outstanding Options of an amount which shall not exceed the amount that would be payable to such holder pursuant to SECTION 3.6 hereof, (iii) acquire, lease or dispose or agree to acquire, lease or dispose of any capital assets, or make any other capital expenditures, with a value, in the aggregate for all such capital assets or other capital expenditures, in excess of $50,000 (including in such calculation the proceeds of any sale/leaseback transactions), (iv) (A) create, incur, assume or permit additional indebtedness for borrowed money (including obligations in respect of capital leases), other than loans and advances to and from Company Subsidiaries and periodic drawdowns under the Company's credit facilities existing as of the date hereof, provided that the amount available under such facilities as of the date hereof is not increased, (B) other than in the ordinary course of business consistent with past practice, assume, guarantee, endorse or otherwise become liable or responsible for the obligations of any other person, (C) other than in the ordinary course of business consistent with past practice, encumber or grant a security interest in any asset, or (D) other than in the ordinary course of business consistent with past practice, make any loans or advances to any other person, or enter into any agreement or instrument relating to the borrowing of money or the extension of credit, (v) acquire or agree to acquire by merging or consolidating with, or by purchasing an equity interest in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof, (vi) enter into any contracts, agreements or other arrangements with vendors (A) pursuant to which the Company or any of the Company Subsidiaries would be obligated to purchase products or services from such vendors having a 23 value in excess of $100,000 in any year or (B) which are not terminable within six months without penalty (excluding contracts, agreements or other arrangements entered into or assumed in the ordinary course of business to satisfy customer requirements) or (vii) purchase, transfer, lease, sell, mortgage, pledge, dispose of or encumber any real property, (viii) effect any improvements or expansions thereof (excluding maintenance and repairs in the ordinary course of business) or (ix) in each case subject to the exclusions and exceptions set forth above, adopt, enter into, amend or terminate any contract, agreement, commitment or arrangement with respect to any of the foregoing; (d) the Company shall not, nor shall it permit any of the Company Subsidiaries to, except as required to comply with applicable law, (i) adopt, enter into, terminate or amend any bonus, profit sharing, compensation, severance, termination, stock option, pension, retirement, deferred compensation, employment or other employee benefit plan, agreement, trust, fund or other arrangement for the benefit or welfare of any current or former director, officer or employee (excluding arrangements not involving capital stock of the Company with new employees in the ordinary course of business and consistent with past practice), (ii) increase in any manner the compensation or fringe benefits of any director, executive officer or employee (provided, that the Company and the Company Subsidiaries shall be permitted to award normal salary increases to employees (other than executive officers) of the Company and the Company Subsidiaries in the ordinary course of business that are consistent with past practice (including without limitation in connection with any promotion of such employee) and that, in the aggregate, do not result in a material increase in compensation expense to the Company and the Company Subsidiaries relative to the level in effect prior to such increase), (iii) pay any benefit not provided under any existing plan or arrangement (excluding arrangements not involving capital stock of the Company with new employees in the ordinary course of business and consistent with past practice), (iv) grant any awards under the Stock Option Plan or, except in the ordinary course of business consistent with past practice and not involving the capital stock of the Company, any other bonus, incentive, performance or other compensation plan or arrangement (including, without limitation, the grant of stock options, stock appreciation rights, stock based or stock related awards, performance units or restricted stock, or the removal of existing restrictions in any benefit plans or agreements or awards made thereunder), (v) take any action to fund or in any other way secure the payment of compensation or benefits under any employee plan, agreement, contract or arrangement or employee benefit plan, other than in the ordinary course of business consistent with past practice, or (vi) adopt, enter into, amend or terminate any contract, agreement, commitment or arrangement to do any of the foregoing; provided, that notwithstanding the provisions of this clause (d), the Company and the Company Subsidiaries shall be permitted to settle disputes with employees, hire new employees and to promote employees, provided that such settlements, hirings and promotions are in the ordinary course of business consistent with past practice; (e) the Company shall not, nor shall it permit the Company Subsidiaries to, make any change in its accounting policies or procedures, including without limitation its accounting for inventory 24 and its practices in determining reserves, except as required under generally accepted accounting principles; (f) the Company shall not, nor shall it permit the Company Subsidiaries to, modify, amend or terminate any Material Contract or waive, release or assign any material rights or claims thereunder, except in the ordinary course of business or as would not result in a Company Material Adverse Effect; (g) the Company shall not, nor shall it permit any Company Subsidiary to, file any Tax Return or make any Tax election inconsistent with past practice; (h) the Company shall not, or shall it permit the Company Subsidiaries, to settle or compromise any litigation, except for an amount less than the amount set forth in SECTION 7.1(H) of the Company Disclosure Schedule $50,000 in the aggregate; and (i) the Company shall use reasonable efforts to refrain from taking, and shall not permit any of the Company Subsidiaries to take, any action that would, or reasonably might be expected to, result in any of the conditions to the Merger set forth in ARTICLE IX not being satisfied, or (unless such action is required by applicable law) that would adversely affect the ability of the Company to obtain any of the regulatory approvals required to consummate the Merger. Section 7.2 REPORTS. All reports that the Company files with the Commission after the date hereof and prior to the Effective Date or the earlier termination of this Agreement shall, as of their respective dates, comply in all material respects with the applicable requirements of the Exchange Act, and the rules and regulations of the Commission thereunder applicable to such reports and, as of their respective dates, shall 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 therein, in light of the circumstances under which they were made, not misleading. Section 7.3 OBLIGATIONS OF PARENT AND SUB; CONDUCT OF BUSINESS OF SUB. Each of Parent and Sub shall use reasonable efforts to refrain from taking any action that would, or reasonably might be expected to, result in any of the conditions to the Merger set forth in ARTICLE IX not being satisfied, or (unless such action is required by applicable law) that would adversely affect the ability of Parent or Sub to obtain any of the regulatory approvals required to consummate the Merger) and provided further that notwithstanding anything to the contrary in this Agreement, neither Parent nor Sub shall be in any way obligated to take any action in order to obtain the termination or expiration of the waiting period under the HSR Act, except as provided in EXHIBIT D. During the period from the date of this Agreement to the Effective Date, Sub shall not engage in any activities of any nature except as provided in or contemplated by this Agreement. 25 ARTICLE VIII ADDITIONAL AGREEMENTS Section 8.1 ACCESS AND INFORMATION. Upon reasonable notice, the Company and the Company Subsidiaries shall afford to Parent and to Parent's accountants, counsel and other representatives full access during normal business hours (and at such other times as the parties may mutually agree), and in a manner so as not to interfere materially with the normal business operations of the Company and the Company Subsidiaries, throughout the period prior to the Effective Date to all of their properties, books, contracts, commitments, records and personnel. During such period, the Company shall furnish promptly to Parent (i) a copy of each report, schedule and other document filed or received by it pursuant to the requirements of federal or state securities laws, and (ii) all other information concerning the business, properties and personnel of the Company and the Company Subsidiaries as Parent may reasonably request. Parent and Sub shall hold, and shall cause its affiliates, employees and agents to hold, in confidence all such information in accordance with the terms of the Confidentiality Agreement, dated November 8, 1996, between Parent and Dillon, Read & Co. (now known as SBC Warburg Dillon Read, Inc.) (on behalf of the Company), as amended (the "CONFIDENTIALITY AGREEMENT"), and, in the event of termination of this Agreement for any reason, will promptly comply with the terms of the Confidentiality Agreement. During the period prior to the Effective Date, upon Parent's reasonable request sufficiently in advance to allow the Company to make arrangements therefore, the Company shall make its accountants, counsel, lenders and other representatives available to Parent and to Parent's accountants, counsel and other representatives at reasonable times. Section 8.2 SHAREHOLDERS' MEETING. Subject to its fiduciary duties, as determined by the Board of Directors of the Company after consultation with and based upon the advice of independent legal counsel (who may be the Company's regularly engaged independent legal counsel) or as contemplated by SECTION 8.8 in connection with the receipt by the Company of a Business Combination Proposal (as defined in SECTION 8.8) that the Board of Directors of the Company reasonably determines will result in a Superior Proposal (as defined in SECTION 8.8), as promptly as practicable: (a) the Company shall take all action necessary, in accordance with applicable law and its Articles of Incorporation, as amended, and By-Laws, to call a special meeting of the holders of Company Common Stock (the "COMPANY MEETING") for the purpose of considering and taking action to authorize this Agreement and the Merger contemplated hereby pursuant to the CGCL; and (b) include in the Proxy Statement the recommendation of the Board of Directors of the Company that holders of Company Common Stock vote in favor of and approve the Merger and the adoption of this Agreement at the Company Meeting. At the Company Meeting, all of the shares of Company Common Stock then owned by Parent, Sub or any other Parent Subsidiary, or with respect to which 26 Parent, Sub or any other Parent Subsidiary holds the power to direct the voting, will be voted in favor of approval of the Merger and adoption of this Agreement. Section 8.3 PROXY STATEMENT. (a) As promptly as reasonably practicable after the execution of this Agreement, the Company shall prepare and file with the Commission preliminary proxy materials with respect to the actions to be taken at the Company Meeting, which, as to those matters relating to Parent, shall be in form and substance reasonably satisfactory to Parent. As promptly as reasonably practicable after comments are received from the Commission with respect to such preliminary proxy materials, the Company shall use reasonable efforts to respond to the comments of the Commission. Parent shall provide the Company with such information as may be required to be included in the proxy statement or as may be reasonably required to respond to any comment of the Commission. After all the comments received from the Commission have been cleared by the Commission staff and all information required to be contained in the proxy statement has been included therein by the Company, the Company shall file with the Commission the Proxy Statement and the Company shall use reasonable efforts to have the Proxy Statement cleared by the Commission as soon thereafter as practicable. The Company shall cause the Proxy Statement to be mailed to its shareholders of record as promptly as reasonably practicable after clearance by the Commission. (b) Parent and the Company shall make all necessary filings applicable to it with respect to the Merger under the Exchange Act and the rules and regulations thereunder and under applicable blue sky or similar securities laws and shall use its best reasonable efforts to obtain required approvals and clearances with respect thereto. Section 8.4 EMPLOYEE MATTERS. (a) As of and after the Effective Date, Parent shall cause the Surviving Corporation and the Company Subsidiaries to provide or continue to provide such plans, programs, agreements or arrangements on behalf of the employees of the Company and the Company Subsidiaries immediately prior to the Effective Date ("AFFECTED EMPLOYEES") so as to provide, in the aggregate, employee benefits which are substantially equivalent or superior (including cost to the employees) to the benefits provided to such Affected Employees immediately prior to the Effective Date, and shall credit all past service of such Affected Employees for all purposes under such plans, programs, agreements and arrangements to the same extent such service was recognized immediately prior to the Effective Date. To the extent that any Affected Employee becomes eligible for participation in employee benefit plans and programs maintained by Parent (the "PARENT BENEFIT PLANS"), such Affected Employee's years of service with the Company and the Company Subsidiaries prior to the Effective Date shall be recognized for purposes of eligibility and vesting (including waiting periods and pre-existing conditions), and, with respect to vacation and severance plans, for purposes of benefit accrual and benefit determination. 27 (b) Without limiting the foregoing, Parent shall cause the Surviving Corporation and its subsidiaries to provide or continue to provide severance benefits equal or superior to the severance benefits described in SECTION 5.6(A) of the Company Disclosure Schedule, and shall cause the Surviving Corporation and its subsidiaries to honor all severance obligations to the Affected Employees in accordance with their terms. (c) As soon as practicable after the date hereof, but in no event later than 10 days from the date hereof, the Company (after consultation with and approval by Parent) shall take action (i) to amend the Company's Employee Stock Purchase Plan to provide that a participant in such plan may not increase his or her compensation contribution percentages after the date of such amendment and (ii) to provide that such Employee Stock Purchase Plan shall be terminated as of the Effective Date. (d) After the date of this Agreement and prior to the Effective Date, the Company and the Company Subsidiaries, after consultation with, and upon the consent of, Parent (which consent shall not be unreasonably withheld), shall have the right to enter into agreements with certain of its employees to pay retention bonuses after consultation with Parent, and upon such terms and conditions as the Company may reasonably determine are necessary to retain the services of such employees through, and in some cases, beyond, the Effective Date, provided that the amount of such bonuses shall not exceed $250,000 in the aggregate. (e) Prior to the Effective Date, (i) Parent shall contact employees of the Company and the Company Subsidiaries respecting employment or termination of employment after the Effective Date only with the prior consent of the Company which consent shall not be unreasonably withheld, and Parent shall consult with the Company as to the terms and conditions thereof and (ii) Parent shall cooperate with, and shall take such actions as the Company may reasonably request, with respect to the transition of the employees of the Company and the Company Subsidiaries, with a view to preserving the relationship and goodwill of the Company and the Company Subsidiaries with their employees. (f) No provision of this SECTION 8.4 shall create any third-party beneficiary rights in any employee or former employee (including any beneficiary or dependent thereof) of Parent, the Company, any Company Subsidiary, or any of their affiliates in respect of continued employment (or resumed employment) for any specified period of any nature or kind whatsoever. (g) In the event this Agreement is terminated prior to the Effective Date, without the prior written consent of the Company, neither the Medical Systems division of Parent nor Sub shall for a period of one year after the date on which this Agreement is terminated, directly or indirectly solicit for employment, any person or persons employed by the Company or any Company Subsidiary at any time prior to the time this Agreement is terminated. The foregoing restriction on solicitation of employment shall not be deemed to apply to unsolicited inquiries concerning possible employment which are 28 received by Parent, Sub or any Parent Subsidiary from or on behalf of such person, nor shall it apply to general solicitations of employment not specifically directed toward any such employees of the Company or any Company Subsidiary. Section 8.5 INDEMNIFICATION. (a) From and after the Effective Date, to the fullest extent permitted under the CGCL, Parent shall indemnify, defend and hold harmless each current and former officer, director or employee of the Company or any Company Subsidiary (together with their respective successors, assigns, heirs, executors, administrators and representatives, the "INDEMNIFIED PARTIES") against all investigations, actions, suits, proceedings, judgments, costs, fines, amounts paid in settlement, losses, expenses (including, without limitation, reasonable attorneys' fees and ancillary related costs), claims, damages or liabilities, whether civil, criminal, administrative or investigative, arising in whole or in part out of, or based in whole or in part on, any matter existing or occurring at or prior to the Effective Date or out of the transactions contemplated by this Agreement. In the event of any such claim, action, suit, proceeding or investigation (whether arising before or after the Effective Date), (i) any counsel retained by the Indemnified Parties for any period after the Effective Date shall be reasonably satisfactory to Parent, (ii) after the Effective Date, Parent shall pay the reasonable fees and expenses of such counsel, promptly after statements therefor are received, and (iii) Parent shall, and shall cause the Surviving Corporation to, cooperate in the defense of any such matter; provided, however, that Parent shall not be liable for any settlement effected without its written consent (which consent shall not be unreasonably withheld or delayed). The Indemnified Parties as a group may retain only one law firm to represent them with respect to any single action unless there is, under applicable standards of professional conduct, a conflict between the positions of any two or more Indemnified Parties. The indemnity agreements of Parent in this SECTION 8.5(A) shall extend, on the same terms to, and shall inure to the benefit of and shall be enforceable by, each person or entity who controls, or in the past controlled, any present or former director, officer or employee of the Company or any of the Company Subsidiaries. (b) Parent agrees that all rights to indemnification existing in favor of the current or former directors, officers or employees of the Company or any Company Subsidiary under the Company's Articles of Incorporation, as amended, and By-Laws as in existence on the date hereof arising in whole or in part out of, or based in whole or in part on, any matter existing or occurring at or prior to the Effective Date, shall survive the Merger and shall continue in full force and effect in respect of claims made during a period of ten years from the Effective Date, and Parent shall guaranty the obligations of the Surviving Corporation in respect thereof. (c) The Surviving Corporation shall honor and fulfill in all respects the obligations of the Company pursuant to the indemnification agreements with the Company's directors and executive officers existing at the date hereof and Parent shall guaranty the obligations of the 29 Surviving Corporation in respect thereto. True and correct copies of such indemnification agreements have been furnished to Parent. (d) This SECTION 8.5 is intended for the benefit of, and shall be enforceable by, the persons referenced herein and their respective heirs and/or personal representatives, and shall be binding upon Parent and its successors and assigns. Section 8.6 ANTITRUST MATTERS. The Company and Parent have filed notifications under the HSR Act in connection with the Merger and the transactions contemplated hereby. The Company, Parent and Sub shall use their reasonable efforts to respond as promptly as practicable to all inquiries and requests received from any State Attorney General or other governmental authority in connection with antitrust matters relating to the transactions contemplated by this Agreement. Section 8.7 REASONABLE EFFORTS; NOTIFICATION. (a) Subject to the terms and conditions of this Agreement, including SECTION 8.8, each of the parties hereto agrees to cooperate with each other and use reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, in each case consistent with the fiduciary duties of their respective Boards of Directors, all things necessary, proper or advisable (i) under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement as soon as reasonably practicable, including to obtain all necessary waivers, consents and approvals, to effect all necessary registrations and filings (including, but not limited to, filings with all applicable Governmental Entities) and (ii) to lift any injunction or other legal bar to the Merger as soon as reasonably practicable (and, in such case, to proceed with the Merger as expeditiously as possible); provided, however, that notwithstanding anything to the contrary in this Agreement, neither Parent nor Sub shall be in any way obligated to take any action in order to obtain the termination of the waiting period under the HSR Act, except as provided in EXHIBIT D. (b) Parent shall give prompt notice to the Company, and the Company shall give prompt notice to Parent, of: (i) the occurrence or non-occurrence of any event of which it has knowledge, the occurrence or non-occurrence of which would cause (A) any representations or warranties contained in this Agreement to be untrue or inaccurate in any material respect, (B) any of its covenants, conditions or agreements contained in this Agreement not to be complied with or satisfied or (C) a need to supplement the Proxy Statement; and (ii) any failure of Parent or the Company, as the case may be, to comply with or satisfy any of its covenants, conditions or agreements to be complied with or satisfied by it hereunder; provided, that the delivery of any notice pursuant to this SECTION 8.7 shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice. 30 Section 8.8 NO SOLICITATION. (a) Prior to the Effective Date or the earlier termination of this Agreement pursuant to SECTION 10.1, the Company shall not, directly or indirectly, take (nor shall the Company authorize or permit any Company Subsidiary or its or their officers, directors, employees, representatives, investment bankers, financial advisors, attorneys, accountants or other agents or affiliates, to take) any action to (i) encourage, solicit or initiate the submission of any Business Combination Proposal (as defined below), (ii) enter into any agreement with respect to any Business Combination Proposal or (iii) participate in any way in discussions or negotiations with, or furnish any non-public written information to, any person in connection with, or take any other action to encourage the making of any proposal that constitutes, or may reasonably be expected to lead to, any Business Combination Proposal; provided, that the Company may (i) participate in discussions or negotiations with or furnish information to any persons or group (other than Parent or an affiliate of Parent) (a "THIRD PARTY") that makes an unsolicited Business Combination Proposal that the Board of Directors of the Company determines (after consultation with its financial advisors) may reasonably be expected to result in a Superior Proposal (as defined below), and enter into any confidentiality agreement or standstill agreement with such Third Party in connection with such a Business Combination Proposal (provided, that any such information so furnished or any such confidentiality or standstill agreements so entered into shall, at the time such information is furnished or such agreement is entered into, be promptly delivered to Parent), (ii) comply with Rule 14e-2 promulgated under the Exchange Act with regard to any Business Combination Proposal (assuming that such Business Combination Proposal includes a tender offer requiring the Company's response pursuant to such Rule), (iii) fail to make or withdraw or modify its recommendation referred to in SECTION 8.2 if there exists a Business Combination Proposal that is a Superior Proposal or if the Board of Directors of the Company determines, in good faith and after consultation with independent counsel, that such action is required to discharge properly its fiduciary duties, or (iv) after terminating this Agreement in accordance with Section 10.1(e) enter into an agreement with respect to or recommend to its shareholders a Business Combination Proposal that is a Superior Proposal. Any actions permitted under, and taken in compliance with this SECTION 8.8, shall not be deemed a breach of any other covenant or agreement of the Company contained in this Agreement. (b) Notwithstanding the foregoing, the Company may not enter into an agreement with respect to or recommend to its shareholders a Business Combination Proposal that is a Superior Proposal or fail to make or withdraw or modify its recommendation referred to in SECTION 8.2 if there exists a Business Combination Proposal that is a Superior Proposal unless (i) two business days shall have elapsed after delivery to Parent of a written notice informing Parent of the terms and conditions of the Business Combination Proposal, and (ii) Parent does not, within such two business day period, make an offer which the Board of Directors of the Company determines in good faith (based on the advice of its financial adviser) to be as favorable to the Company's shareholders as such Business Combination Proposal. 31 (c) For purposes of this Agreement, "BUSINESS COMBINATION PROPOSAL" shall mean, with respect to the Company, the commencement of any tender or exchange offer, any bona fide, written proposal for a merger, consolidation or other Business Combination involving the shareholders of the Company, the Company or any Company Subsidiary or any public announcement of a proposal, plan or intention to do any of the foregoing. "BUSINESS COMBINATION" means any transaction which contemplates (i) the acquisition of more than 35% of the assets of the Company and the Company Subsidiaries taken as a whole or (ii) any other agreement that contemplates the acquisition of beneficial ownership of more than 35% of the outstanding shares of the Company's Common Stock. "SUPERIOR PROPOSAL" shall mean, with respect to the Company, any Business Combination Proposal, for which any required financing is supported by reasonable commitments, that the Board of Directors of the Company in good faith determines (after consultation with its financial advisors) will be more favorable to its shareholders than the Merger. (d) In addition to the obligations of the Company set forth in SECTION 8.8(A) and SECTION 8.8(B), the Company shall promptly advise Parent of any request for non-public written information or of any Business Combination Proposal, or any inquiry with respect to or which appears to be intended to or could reasonably be expected to lead to any Business Combination Proposal, the material terms and conditions of such request, Business Combination Proposal or inquiry, and in the case of a Business Combination Proposal that involves consideration other than all cash, the identity of the party making such Business Combination Proposal. The Company shall keep Parent fully informed of the status and details of any such request, Business Combination Proposal or inquiry. (e) During the period from the date of this Agreement through the Effective Date, the Company shall not terminate, amend, modify or waive any provision of any confidentiality or standstill agreement in connection with a potential business combination to which it or any of its Subsidiaries is a party. During such period, the Company shall use commercially reasonable efforts to enforce, to the fullest extent permitted under applicable law, the provisions of any such agreements if and to the extent the executive officers of the Company have knowledge of a breach of the terms thereof, including, but not limited to, by obtaining injunctions to prevent any breaches of such agreements and to enforce specifically the terms and provisions thereof in any court of the United States of America or of any state having jurisdiction. Section 8.9 BONUS PAYMENTS. Immediately after the Effective Date and in no event later than the first payment to a Holder pursuant to SECTION 3.2, the Parent shall cause the Surviving Corporation to pay, on behalf of the Company, (i) to Michael Puls, an amount equal to the Bonus (as defined in Paragraph 1 of the Bonus Agreement, dated December 20, 1996 by and between the Company and Michael Puls and amended by Paragraph 2 of the Amendment to Bonus Agreement, dated April 2, 1998, and as further amended by a letter agreement dated May 15, 1998, each attached hereto as EXHIBIT E) and (ii) to Thomas Hoefert, an amount equal to the Bonus (as defined in Paragraph 4 of the Bonus Agreement, dated September 29, 1997 by and between the Company and Thomas Hoefert, attached 32 hereto as EXHIBIT E). Together, the amounts paid to Michael Puls and Thomas Hoefert pursuant to this SECTION 8.9 shall be referred to as the "EXECUTIVE BONUS PAYMENTS." Section 8.10 SIDE AGREEMENT. Simultaneously with the execution of this Agreement, the parties hereto shall have executed and delivered to one another, the Side Agreement, dated as of the date hereof, a copy of which is attached hereto as EXHIBIT F. Section 8.11 PREFERRED STOCK DESIGNATION. As soon as practicable after the date hereof, but in no event later than five (5) business days after the date the Preferred Stock Designation, attached hereto as EXHIBIT G, has been approved by the California Secretary of State, the Company shall authorize and issue preferred shares in form and substance substantially similar to the terms of the Preferred Stock Designation, and the Parent or its designee shall purchase such shares for $2,800,000. The Company shall grant customary demand registration rights and "piggy back" rights to Parent or its designee upon the reasonable request of Parent it being agreed that (i) fees and costs associated with granting such rights shall be borne by Parent; and (ii) such rights will be set forth in a registration rights agreement that the Company and Parent or its designee will negotiate in good faith and enter into as soon as practicable after the date hereof. ARTICLE IX CONDITIONS PRECEDENT Section 9.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The respective obligations of each party to effect the Merger shall be subject to the fulfillment at or prior to the Effective Date of the following conditions, any one or more of which may be waived (as permitted by law) in a writing executed by Parent and the Company subject to and in accordance with SECTION 10.4 hereof: (a) This Agreement and the Merger shall have been approved and adopted by the requisite vote of the holders of the Company Common Stock. (b) The waiting period under the HSR Act shall have expired or been terminated; and no court or governmental authority or instrumentality, domestic or foreign of competent jurisdiction (each a "GOVERNMENTAL ENTITY") shall have enacted, issued, promulgated, enforced or entered any law, statute, ordinance, rule, regulation, judgment, decree, injunction or other order (whether temporary, preliminary or permanent) that is in effect and restrains, enjoins or otherwise prohibits consummation of the Merger (collectively, an "ORDER"). Section 9.2 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE MERGER. The obligation of the Company to effect the Merger shall be subject to the fulfillment at or prior to the Effective Date of the following additional conditions, unless waived in writing by the Company in accordance with SECTION 10.4 hereof: (a) Parent and Sub shall have performed in all material respects their agreements contained in this Agreement required to be 33 performed on or prior to the Effective Date; and the Company shall have received a certificate of Parent and Sub executed by a Vice President of Parent and Sub, dated the Closing Date, to that effect. (b) Each of the representations and warranties of Parent and Sub contained in this Agreement (i) that is qualified by materiality or Parent Material Adverse Effect shall be true and correct when made and at and as of the Effective Date and (ii) that is not so qualified shall be true and correct when made and at and as of the Effective Date except where the failure of any such representations or warranties to be so true and correct, individually or in the aggregate with other such failures, would not have a Parent Material Adverse Effect (except in the case of each of (i) and (ii) to the extent they expressly relate to the date of this Agreement or any other particular date, in which case, as of such date), and the Company shall have received a certificate of Parent and Sub executed by a Vice President of Parent and Sub, dated the Closing Date, to that effect. Section 9.3 CONDITIONS TO OBLIGATIONS OF PARENT AND SUB TO EFFECT THE MERGER. The obligations of Parent and Sub to effect the Merger shall be subject to the fulfillment at or prior to the Effective Date of the following additional conditions, unless waived in writing by Parent in accordance with SECTION 10.4 hereof: (a) The Company shall have performed in all material respects its agreements contained in this Agreement required to be performed on or prior to the Effective Date; and Parent and Sub shall have received a certificate of the Company executed by the Chief Executive Officer and Chief Financial Officer of the Company, dated the Closing Date, to that effect. (b) Each of the representations and warranties of the Company contained in this Agreement (i) that is qualified by materiality or Company Material Adverse Effect shall be true and correct when made and at and as of the Effective Date and (ii) that is not so qualified shall be true and correct when made and at and as of the Effective Date except where the failure of any such representations or warranties to be so true and correct, individually or in the aggregate with other such failures, would not have a Company Material Adverse Effect, (except in the case and each of (i) and (ii) to the extent they expressly relate to the date of this Agreement or any other particular date, in which case, as of such date), and Parent and Sub shall have received a certificate of the Company executed by the Chief Executive Officer and Chief Financial Officer of the Company, dated the Closing Date, to that effect. (c) Parent shall have received opinions of counsel to the Company, dated the Closing Date, substantially in form and substance set forth in EXHIBIT H. ARTICLE X TERMINATION, AMENDMENT AND WAIVER Section 10.1 TERMINATION. This Agreement may be terminated, and the Merger abandoned, at any time prior to the Effective Date, whether before or 34 after approval of the matters presented in connection with the Merger by the shareholders of the Company or the shareholder of Sub: (a) by mutual written consent of the Company, duly authorized by its Board of Directors and Parent, duly authorized by any Vice President; (b) by Parent, by written notice to the Company, if (i) the Company shall have failed to comply in any material respects with any of its covenants or agreements contained in this Agreement required to be complied with prior to the date of such termination, provided that Parent is not then in material breach of any representation, warranty, covenant or other agreement contained in this Agreement; provided further that if such failure is curable by the Company prior to the Termination Date (as defined below) through the exercise of its reasonable efforts and for so long as the Company continues to exercise such reasonable efforts, Parent may not terminate this Agreement under this SECTION 10.1(B)(I), (ii) the shareholders of the Company shall not approve the Merger at the Company Meeting or any adjournment thereof or if a Company Meeting has not otherwise been called prior to the Termination Date; or (iii) there has been (A) a material breach at the time when made by the Company of any representation or warranty that is not qualified as to materiality or (B) a breach at the time when made by the Company of any representation or warranty that is qualified as to materiality, provided that Parent is not then in material breach of any representation, warranty, covenant or other agreement contained in this Agreement; provided further that if such breach is curable by the Company prior to the Termination Date through the exercise of its reasonable efforts and for so long as the Company continues to exercise such reasonable efforts, Parent may not terminate this Agreement under this SECTION 10.1(B)(III); (c) by the Company, by written notice to Parent, (i) if Parent or Sub shall have failed to comply in any material respect with any of its respective covenants or agreements contained in this Agreement required to be complied with prior to the date of such termination, provided that the Company is not then in material breach of any representation, warranty, covenant or other agreement contained in this Agreement; provided further that if such failure is curable by Parent prior to the Termination Date through the exercise of its reasonable efforts and for so long as Parent continues to exercise such reasonable efforts, the Company may not terminate this Agreement under this SECTION 10.1(2)(I), (ii) the shareholders of the Company shall not approve the Merger at the Company Meeting or any adjournment thereof or if a Company Meeting has not otherwise been called prior to the Termination Date or (iii) there has been (A) a material breach at the time when made by Parent or Sub of any representation or warranty that is not qualified as to materiality or (B) a breach at the time when made by Parent or Sub of any representation or warranty that is qualified as to materiality; provided that the Company is not then in material breach of any representation, warranty, covenant or other agreement contained in this Agreement; provided further that if such failure is curable by Parent prior to the Termination Date through the exercise of its reasonable efforts and for so long as Parent continues to exercise such reasonable efforts, the Company may not terminate this Agreement under this SECTION 10.1(C)(III); 35 (d) by either Parent or the Company, by written notice from the terminating party to the other parties, if (i) the Merger has not been effected on or prior to the close of business on, September 30, 1998 (the "TERMINATION DATE"); provided, that (A) the right to terminate this Agreement pursuant to this clause (d) shall not be available to any party whose willful and material failure to fulfill any obligation of this Agreement has been the cause of, or resulted in, the failure of the Merger to have occurred on or prior to such date and (B) if Parent has given notice to the Company, or the Company has given notice to Parent, pursuant to SECTIONS 8.7(B)(I)(A) or 8.7(B)(I)(B) with respect to any inaccuracy or failure on the part of the other, after September 20, 1998, the Termination Date shall automatically be extended by the number of days necessary to provide the party so notified with 10 days in which to effect a cure as permitted in SECTIONS 10.1(B)(I); 10.1(B)(III), SECTION 10.1(C)(I) and 10.1(C)(III) or (ii) any court or other Governmental Entity having jurisdiction over a party hereto shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the transactions contemplated by this Agreement and such order, decree, ruling or other action shall have become final and nonappealable, provided the terminating party shall have complied with its obligations under SECTION 8.7; or (iii) any order or directive that does not directly enjoin or otherwise prohibit the consummation of the transactions contemplated by this Agreement, but that would, if Parent or the Company were to comply with such order or directive as a condition to consummating the transactions contemplated hereby, have a material adverse effect on the business, operations or financial condition of the Surviving Corporation and such order or directive has become final and nonappealable, provided the terminating party shall have used all reasonable efforts to remove such order or directive; (e) by the Company by written notice to Parent if the Board of Directors of the Company reasonably determines that a Business Combination Proposal is a Superior Proposal (and the Company has complied with its obligations under SECTION 8.8(B)); (f) by Parent, by written notice to the Company, if (i) the Board of Directors of the Company shall have failed to recommend the Merger to Company's shareholders, or shall have modified in a manner adverse to Parent or withdrawn its recommendation of the Merger to the Company's shareholders as being advisable and fair to and in the best interests of the Company and its shareholders, or shall have modified in a manner adverse to Parent or withdrawn its approval of this Agreement or (ii) the Board of Directors of the Company shall have recommended to the shareholders of the Company any Business Combination Proposal or shall have resolved to do so; provided that any disclosure that the Board of Directors of the Company is compelled to make of the receipt of Business Combination Proposal in order to comply with its fiduciary duties or Rule 14d-9 or 14e-2 shall not in and of itself constitute the modification or rescission of the Board's recommendation; provided, further, that such disclosure states that no action will be taken by the Board with respect to the withdrawal of its recommendation of the transactions contemplated hereby or the approval or recommendation of any Business Combination Proposal except in accordance with SECTION 8.8. 36 The right of Parent or the Company to terminate this Agreement pursuant to this SECTION 10.1 shall remain operative and in full force and effect regardless of any investigation made by or on behalf of such party, whether prior to or after the execution of this Agreement. Section 10.2 EFFECT OF TERMINATION. In the event of the termination of this Agreement by either Parent or the Company as provided in SECTION 10.1, this Agreement shall become void without any liability hereunder on the part of the Company, Parent, Sub or their respective directors or officers, except for the next to last sentence of SECTION 8.1, SECTION 8.4(H), this SECTION 10.2, SECTION 11.3 and 11.8, which shall survive any such termination, unless such termination results from the willful and material breach by a party of any of its covenants or other agreements set forth in this Agreement or the material breach with fraudulent purpose at the time made by a party of any of its representations and warranties, in which event the terminating party shall retain its rights and remedies against such other party in respect of such other party's breach. Section 10.3 AMENDMENT. This Agreement may be amended by the parties hereto, by or pursuant to action taken by their respective Boards of Directors (or committee thereof) in the case of the Company and Sub and by any Vice President in the case of Parent, at any time before or after approval hereof by the shareholders of the Company, but, after such approval, no amendment shall be made that under applicable law requires further approval of such shareholders without such further approval. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. Section 10.4 WAIVER. At any time prior to the Effective Date, the parties hereto, by or pursuant to action authorized by their respective Boards of Directors (or committee thereof) in the case of the Company and Sub and by any Vice President in the case of Parent, may, as permitted by law, (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties of any other party contained herein or in any documents delivered pursuant hereto by any other party and (iii) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid if set forth in an instrument in writing signed on behalf of such party. ARTICLE XI GENERAL PROVISIONS Section 11.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All representations and warranties set forth in this Agreement shall terminate at the earlier of (x) the Effective Date and (y) except as provided in SECTION 10.2 hereof, termination of this Agreement in accordance with ARTICLE X hereof. All covenants and agreements set forth in this Agreement shall survive in accordance with their terms. Section 11.2 NOTICES. All notices or other communications under this Agreement shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by facsimile transmission 37 or by delivery service (with confirmation of receipt obtained), or by registered or certified mail, postage prepaid, return receipt requested, addressed as follows: If to the Company: InnoServ Technologies, Inc. 320 Westway, Suite 520 Arlington, Texas 76018 Telecopy No.: 817-472-2926 Attn: Michael Puls With a copy to: Gibson, Dunn & Crutcher LLP 1717 Main Street, Suite 5400 Dallas, Texas 75201 Telecopy No.: 214-698-3400 Attn: Stephen C. Johnson If to Parent or Sub: General Electric Company c/o GE Medical Systems 3000 North Grandview Boulevard Waukesha, Wisconsin 53188 Telecopy No.: 414-544-3573 Attn: General Counsel or to such other address as any party may have furnished to the other parties in writing in accordance with this SECTION 11.2. Section 11.3 EXPENSES. (a) If the Merger shall not be consummated for any reason other than as a result of this Agreement having been terminated pursuant to Sections 10.1(b), 10.1(c)(ii), 10.1(e) or 10.1(f), Parent hereby agrees to pay to the Company the lesser of (A) the Company's legal fees and expenses associated with (1) any such filings and compliance with the HSR Act, and (2) the preparation and review of the letter of intent associated with this Agreement, or (B) $75,000. (b) Except as otherwise provided in this SECTION 11.3, whether or not the Merger shall be consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby, including, without limitation, the fees and disbursements of counsel, financial advisors, accountants, actuaries and consultants, shall be paid by the party incurring such costs and expenses. 38 (c) Notwithstanding any provision in this Agreement to the contrary, provided that Parent or Sub is not then in material breach of its obligations under this Agreement, if this Agreement shall have been terminated pursuant to SECTIONS 10.1(B), 10.1(C)(II), 10.1(E) OR 10.1(F), the Company shall within 90 days of such termination pay to Parent an amount in cash equal to $550,000. Section 11.4 PUBLICITY. The initial press release concerning this Agreement and the transactions contemplated hereby shall be a press release from the Company (as agreed to by the Company and Parent) and thereafter, except as may be required by law or by obligations pursuant to any listing agreement with or rules of any national securities exchange or quotation service, so long as this Agreement is in effect, Parent, Sub and the Company agree to consult with each other in issuing any press release or otherwise making any public statement with respect to the transactions contemplated by this Agreement, and none of them shall issue any press release or make any public statement prior to such consultation. The commencement of litigation relating to this Agreement or the transactions contemplated hereby or any proceedings in connection therewith shall not be deemed a violation of this SECTION 11.4. Section 11.5 INTERPRETATION. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Section 11.6. OBLIGATIONS OF PARENT AND OF THE COMPANY. Whenever this Agreement requires Sub or a Parent Subsidiary to take any action, such requirement shall be deemed to constitute an undertaking on the part of Parent to cause Sub or such Parent Subsidiary to take such action. Whenever this Agreement requires a Company Subsidiary to take any action, such requirement shall be deemed to constitute an undertaking on the part of the Company to cause such Company Subsidiary to take such action and, after the Effective Date, on the part of the Surviving Corporation to cause such Company Subsidiary to take such action. Section 11.7. SEVERABILITY. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability or the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Person or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction. Section 11.8 MISCELLANEOUS. This Agreement (together with the exhibits, the Company Disclosure Schedule and the Parent Disclosure Schedule referred to herein) and the Confidentiality Agreement (i) constitute the entire agreement and supersede all other prior agreements and understandings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof, (ii) except as provided in SECTION 8.5, is not intended to confer upon any other person any rights or remedies hereunder and shall be binding upon and inure to the benefit solely of each party hereto, and their respective successors and assigns, (iii) shall not be assigned by operation of law or 39 otherwise, except that Sub shall have the right to assign to any direct wholly owned subsidiary of Parent incorporated under the laws of California any and all rights and obligations of Sub under this Agreement and Parent guarantees the full and punctual performance of all of the obligations hereunder of Sub and any such assignees; (iv) shall be governed in all respects, including validity, interpretation and effect, by the laws of the State of New York (except to the extent the laws of the State of California may mandatorily apply). The parties hereby irrevocably submit to the jurisdiction of the courts of the State of New York and the Federal courts of the United States of America located in the Southern District, State of New York, solely in respect of the interpretation and enforcement of the provisions of this Agreement and of the documents referred to in this Agreement, and in respect of the transactions contemplated hereby, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or any of such document, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement or any such document may not be enforced in or by such courts, and the parties hereto irrevocably agree that all claims with respect to such action or proceeding shall be heard and determined in such a New York State or Federal court. The parties hereby consent to and grant any such court jurisdiction over the person of such parties and over the subject matter of such dispute and agree that mailing of process or other papers in connection with any such action or proceeding in the manner provided in SECTION 11.2 or in such other manner as may be permitted by law shall be valid and sufficient service thereof. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.8. This Agreement may be executed in any number of counterparts which together shall constitute a single agreement. EX-99.B 3 EXHIBIT 99(B) CERTIFICATE OF DETERMINATION OF SERIES B PREFERRED STOCK OF INNOSERV TECHNOLOGIES, INC. ---------------------- Pursuant to Sections 400 & 401 of the General Corporation Law of the State of California ---------------------- I, Michael Puls, President and Tom Hoefert, Assistant Secretary of InnoServ Technologies, Inc., a corporation organized and existing under the General Corporation Law of the State of California (the "Company"), in accordance with the provisions of Section 401 thereof, HEREBY CERTIFY: That pursuant to the authority conferred upon the Board of Directors of the Company (the "Board") by the Articles of Incorporation of the Company, the Board duly adopted the following resolution designating a Series B of Preferred Stock consisting of 700,000 shares, none of which has been issued as of the date of this Certificate of Determination: RESOLVED, that pursuant to the authority vested in the Board in accordance with the provisions of the Articles of Incorporation of the Company, a Series B of Preferred Stock of the Company be and hereby is created, and that the designation and number of shares of such series and the voting powers, preferences and relative, optional and other rights of the shares thereof, and the qualifications, limitations and restrictions thereof, are as follows: SERIES B PREFERRED STOCK. 1. DESIGNATION, AMOUNT AND RANKING. (a) DESIGNATION AND AMOUNT. The shares of the series created in this resolution shall be designated as "Series B Preferred Stock" (the "Series B Preferred Stock") and the number of shares constituting such series shall be Seven Hundred Thousand (700,000). (b) RANKING. With regard to rights to receive dividends, rights to distributions of assets upon liquidation, dissolution or winding up of the affairs of the Company, and rights to payment upon redemption, the Series B Preferred Stock shall rank senior and prior in right to (i) the Common Stock, par value $.01 per share, of the Company as constituted on the date of this Certificate of Designation or as such stock may be reconstituted from time to time after such date (the "Common Stock"), and (ii) as to any other series of Preferred Stock, as established by the Board. 2. DIVIDENDS. (a) ACCRUAL OF DIVIDENDS. The holders of the Series B Preferred Stock shall have no right to receive dividends except as provided in this Section 2. Each holder of a share of Series B Preferred Stock shall be entitled to receive, when declared by the Board, out of the funds of the Corporation legally available therefor pursuant to the California General Corporation Law ("Legally Available Funds"), cumulative dividends in cash in the amount of $0.32 per share per annum. Such dividends shall accrue from day to day, beginning six (6) months from the date of issuance of such share, whether or not earned or declared, and shall be due and payable semi-annually on the last day of each June, and December, beginning the last day of December 1998; provided that whenever any such payment date is a Saturday, Sunday or public or bank holiday or the equivalent for banks generally under the laws of the State of Texas (any other day being a "business day"), such dividends may be paid on the next succeeding business day (the day on which such payment is to be made, a "Dividend Payment Date"). Any such dividends not paid when due or otherwise not thereafter paid as set forth in Section 2(b) shall become part of the Liquidation Value except with respect to such dividends with respect to shares that are converted pursuant to Section 6, which dividends shall be payable pursuant to Section 6(b). (b) OTHER DIVIDENDS. Other than dividends of Common Stock on the Common Stock, no dividend or other distribution shall be paid, or declared and set apart for payment, on the shares of any class or series of capital stock of the Company, unless any accrued but unpaid dividends owed to holders or former holders Series B Preferred Stock are first paid in full pursuant to Sections 2(a) or 6(b) and the outstanding shares of Series B Preferred Stock are included in such dividend or distribution PARI PASSU to the shares of capital stock of the Company to which the dividend or distribution is being paid or declared with respect to, by applying the Conversion Ratio (as hereinafter defined in Section 6) to such shares of Series B Preferred Stock as if such shares had been converted immediately prior to the record date of such dividend or distribution. 3. LIQUIDATION. (a) PREFERENCE. In the event of any voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, after payment or provision for payment of the debts and other liabilities of the Company and payment or provision for payment of any class or series of capital stock of the Company ranking as to assets senior to the Series B Preferred Stock then outstanding, the holder of each share of Series B Preferred Stock shall be entitled to receive out of the assets of the Company, whether such assets are capital, surplus or earnings, an amount equal to the Liquidation Value (as hereinafter defined) of such share before any payment shall be made or assets distributed on the Common Stock or any other class or series of capital stock of the Company ranking as to assets junior to the Series B Preferred Stock. After payment to the holders of Series B Preferred Stock of the amounts to which such holders are entitled as set forth in this Section 3(a), the holders of the Series B Preferred Stock shall have no claim, in their capacity as holders, to any of the remaining assets of the Company. (b) PARTIAL PAYMENT. If upon any dissolution, liquidation or winding up of the affairs of the Company, the assets of the Company distributable among the holders of the Series B Preferred Stock shall be insufficient to permit the payment to them of the full preferential amounts to which they are entitled, then the entire assets of the Company so to be distributed shall be distributed ratably among the holders of the Series B Preferred Stock. (c) REMAINING ASSETS After payment or distribution to the holders of the Series B Preferred Stock of the full amounts set forth in Section 3(a), the holders of the Common Stock and any other class or series of capital stock of the Company ranking as to assets junior to the Series B Preferred Stock then outstanding shall be entitled to receive in accordance with their respective preferences and, in the absence thereof, ratably all remaining assets of the Company to be distributed. (d) REORGANIZATION. For the purposes of this Section 3, a liquidation, dissolution or winding up of the affairs of the Company shall not be deemed to be occasioned by or to include any Reorganization. For the purposes of this Agreement, a "Reorganization" shall mean any of, or any combination of, a capital reorganization, any reclassification of the Common Stock (other than a change in par value or as a result of a stock dividend, subdivision, split-up or combination of shares), the consolidation or merger of the Company with or into another person, any agreement or arrangement (including any tender offer) that contemplates the acquisition of beneficial ownership of more than 35% of the outstanding shares of the Company's Common Stock, or the sale or other disposition of all or substantially all of the property and assets of the Company to another person. (e) LIQUIDATION VALUE. The "Liquidation Value" per share of the Series B Preferred Stock as of any particular date shall be the sum of (i) $4.00 plus (ii) all accrued but unpaid dividends as of such date. 4. REDEMPTION. (a) OPTIONAL REDEMPTION. To the extent the Company shall have Legally Available Funds therefor, the Company shall have the right, but not the obligation, to redeem all, or any portion thereof, of the shares of Series B Preferred Stock outstanding at any time after the date of the issuance thereof at a redemption price per share equal to the Liquidation Value thereof at such date; provided, that the holder of such shares shall have the right, at such holder's option, to exercise such holder's conversion rights granted under Section 6 hereof, if applicable, prior to the applicable redemption date. (b) REORGANIZATION REDEMPTION. The Company shall notify each of the holders of Series B Preferred Stock as soon as practicable after, but in no event later than ten (10) days after the consummation of a Reorganization. Within twenty (20) days of such notice from the Company, each of the holders of Series B Preferred Stock shall, at any such holder's option, have the right to cause the Company to redeem all, and not less than all, of the outstanding Series B Preferred Stock held by such holder at a price per share equal to the Liquidation Value thereof. (c) MANDATORY REDEMPTION. On May 19, 2008 (or if not a business day on the next business day after May 19, 2008), the Company shall redeem, to the extent the Company shall have Legally Available Funds therefor, all shares of Series B Preferred Stock then outstanding at the close of business upon such date at a redemption price per share equal to the Liquidation Value thereof at such date. (d) PAYMENT OF REDEMPTION PRICE. For each share of Series B Preferred Stock which is to be redeemed, the Company shall be obligated, on the applicable redemption date to pay to the holder thereof (upon surrender by such holder at the Company's office of the certificate representing such share) the applicable redemption price thereof. If the Company lacks Legally Available Funds for redemption of shares of Series B Preferred Stock on any such redemption date required to redeem the total number of shares to be redeemed on such date, the maximum possible number of shares shall be redeemed to the extent of Legally Available Funds ratably among the holders of the shares to be redeemed based upon the aggregate applicable redemption price of such shares held by each such holder. At any time thereafter if Legally Available Funds become available for the redemption of shares of Series B Preferred Stock, such funds will immediately be used to redeem the balance of the shares which the Company has become obligated to redeem on any such redemption date but which it has not redeemed. (e) NOTICE OF REDEMPTION; REDEMPTION DATE. (i) In the case of a redemption pursuant to Section 4(a), the Company shall provide written notice of each redemption of Series B Preferred Stock to each record holder thereof not less than five (5) business days prior to the applicable redemption date, stating the date and place of redemption, the applicable redemption price and the number of shares held by such holder to be redeemed. (ii) In the case of a redemption pursuant to Section 4(b), the Company shall cause the redemption date to occur not more than five (5) business days after notice of a demand for redemption is received by the Company from the holder. (iii) In the case of a redemption pursuant to Section 4(c), the Company shall provide written notice of each redemption of Series B Preferred Stock to each record holder thereof not more than sixty (60) nor less than thirty (30) days prior to the applicable redemption date, stating the date and place of redemption, the applicable redemption price and the number of shares held by such holder to be redeemed. (f) EFFECT OF REDEMPTION. If notice of redemption shall have been given by the Company as provided in Section 4(d), and if on or before such redemption date the aggregate redemption price of the shares to be redeemed which shall not have theretofore been converted as provided in Section 6 shall have been set aside by the Company in a separate account so as to be available for the redemption of such shares, then such shares, whether or not the certificates therefor shall have been surrendered for redemption, shall be deemed no longer outstanding for any purpose and all rights of the holders with respect to such shares shall thereupon cease and terminate, except only if not so converted, the right to receive out of the funds so set aside such redemption price, without interest, upon endorsement, if required, and surrender by the holders of their certificates for such shares. 5. VOTING RIGHTS. Except as otherwise expressly provided by law, shares of Series B Preferred Stock shall not have any right to vote for the election of directors or for any other purpose, and said shares shall not be entitled to any notice of any meeting of stockholders of the Company. 6. CONVERSION. The rights of the holders of shares of Series B Preferred Stock to convert such shares into shares of Common Stock and the terms and conditions of such conversion shall be as follows: (a) RIGHT TO CONVERT. Each share of Series B Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the earlier of (i) payment of all amounts due to the Company pursuant to that certain agreement referenced in Section 8.10 of the Agreement and Plan of Merger, dated May 19, 1998, ("the Merger Agreement") by and among General Electric Company, Diamond Merger Sub, Inc., and the Company, or (ii) the later of (A) September 30, 1998 or (B) termination of the Merger Agreement, and prior to the applicable redemption date therefor (unless the Company shall fail to pay or provide for the payment of the applicable redemption price in respect thereof), at the office of the Company or any transfer agent for the Series B Preferred Stock or the Common Stock, into the number of the fully paid and nonassessable shares of Common Stock determined in accordance with Section 6. In order to convert shares of the Series B Preferred Stock into shares of Common Stock, the holder thereof shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Company or to the transfer agent for the Series B Preferred Stock or the Common Stock, together with written notice to the Company stating that such holder elects to convert the same and setting forth the name or names in which such holder wishes the certificate or certificates for Common Stock to be issued, and the number of shares of Series B Preferred Stock being converted. (b) CONVERSION MECHANICS. The Company shall, as soon as practicable after the surrender of the certificate or certificates evidencing shares of Series B Preferred Stock for conversion at the office of the Company or the transfer agent for the Series B Preferred Stock or the Common Stock, issue to each holder of such shares, or such holder's nominee or nominees, a certificate or certificates evidencing the number of shares of Common Stock (and any other securities and property) to which such holder shall be entitled and, in the event that only a part of the shares evidenced by such certificate or certificates is converted, a certificate evidencing the number of shares of Series B Preferred Stock which are not converted. A conversion shall be deemed to have been effective immediately prior to the close of business on the date the holder surrenders its shares of Series B Preferred Stock to be converted, so that, with respect to such conversion, except with respect to the rights set forth in the last sentence of this Section 6(b), the rights of the holder of such shares of Series B Preferred Stock as such shall cease at the effective time of such conversion and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock at such time. If the last day for the exercise of the right of conversion shall not be a business day such conversion right may be exercised on the next succeeding business day. Upon any conversion of Series B Preferred Stock, to the extent there are any accrued but unpaid dividends due and owing the holders of such Series B Preferred Stock so converting, the Company shall, within one (1) year from the date of such conversion, pay to such converting holders the full amount of such accrued but unpaid dividends, with interest accumulating at the rate of eight percent (8%) per annum, from the date of such conversion; and provided that the restrictions set forth in Section 2(b) shall survive until such declaration and payment. (c) CONVERSION RATIO. Subject to Sections 6(d) and 6(e), each share of Series B Preferred Stock shall be convertible into one (1) share of Common Stock (the "Conversion Ratio"). (d) ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If outstanding shares of the Common Stock shall be subdivided into a greater number of shares, or a dividend in Common Stock or other securities of the Company convertible into or exchangeable for Common Stock (in which latter event the number of shares of Common Stock issuable upon the conversion or exchange of such securities shall be deemed to have been distributed), shall be paid in respect to the Common Stock, the Conversion Ratio in effect immediately prior to such subdivision or at the record date of such dividend shall, simultaneously with the effectiveness of such subdivision or immediately after the record date of such dividend, be proportionately increased, and conversely, if outstanding shares of the Common Stock shall be combined into a smaller number of shares, the Conversion Price in effect immediately prior to such combination shall simultaneously with the effectiveness of such combination, be proportionately reduced. (e) REORGANIZATION. In the event that the Company shall propose or be subject to a Reorganization, the Company shall give five (5) business days written notice to holders of Series B Preferred Stock prior to such Reorganization. In the event of a Reorganization, the holders of the Series B Preferred Stock shall thereafter be entitled to receive upon conversion of the Series B Preferred Stock the kind and number of shares of Common Stock or other securities or property (including cash) of the Company, or other corporation resulting from such consolidation or surviving such merger or to which such property and assets shall have been sold or otherwise disposed of, to which a holder of the number of shares of the Common Stock into which the Series B Preferred Stock was convertible immediately prior to such Reorganization would have been entitled to receive (together with any accrued but unpaid dividends owed to holders of Series B Preferred Stock pursuant to Section 2(a), as payable pursuant to Section 6(b)); and in any such case appropriate adjustment shall be made by the Board in the application of the provisions herein set forth with respect to the rights and interests thereafter of the holders of the Series B Preferred Stock, to the end that the provisions set forth herein (including the specified changes and other adjustments to the Conversion Ratio) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares, other securities or property thereafter receivable upon conversion of the Series B Preferred Stock. The provisions of this Section 6(e) shall similarly apply to successive Reorganizations. (f) CERTIFICATE OF ADJUSTMENT. In each case of an adjustment or readjustment of the Conversion Ratio or the number of shares of Common Stock or other securities or property deliverable upon conversion of the Series B Preferred Stock, the Company shall compute such adjustment or readjustment in accordance with this Section 6, prepare a certificate showing such adjustment or readjustment, and mail such certificate to each registered holder of Series B Preferred Stock at the holder's address as shown on the books of the Company. The certificate shall set forth such adjustment or readjustment, showing the facts upon which such adjustment or readjustment is based, including a statement of (i) the Conversion Ratio at the time in effect and (ii) the type and amount, if any, of other securities or property which at the time would be received upon conversion of the Series B Preferred Stock. Such notice may be given in advance of such adjustment or readjustment and may be included as part of a notice required to be given pursuant to Section 6(g). (g) NOTICES OF RECORD DATE. In the event the Company shall propose to take any action of the type or types requiring an adjustment to the Conversion Ratio or the number, kind or class of shares or other securities or property into which the Series B Preferred Stock shall be convertible pursuant to this Section 6, the Company shall give five (5) business days' prior written notice to the holders of the Series B Preferred Stock in the manner set forth in Section 6(f), which notice shall specify the record date, if any, with respect to any such action and the date on which such action is to take place. Such notice shall also set forth such facts with respect thereto as shall be reasonably necessary to indicate the effect of such action (to the extent such effect may be known at the date of such notice) on the Conversion Ratio and the number, kind or class of shares or other securities or property which shall be deliverable upon the occurrence of such action or deliverable upon the conversion of the Series B Preferred Stock. The omission or delay in giving such notice shall not affect the validity or effectiveness of such action. (h) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of Series B Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect a conversion of all outstanding shares of the Series B Preferred Stock, and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series B Preferred Stock, the Company shall promptly seek such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose. (i) PAYMENT OF TAXES. The Company shall pay all taxes and other governmental charges (other than any income or other taxes imposed upon the profits realized by the recipient) that may be imposed in respect of the issue or delivery of shares of Common Stock or other securities or property upon conversion of shares of Series B Preferred Stock; provided, however, that the Company shall not be required to pay any tax or other governmental charge which may be payable in respect of any transfer involved in the issue or delivery of any certificate in a name other than that of the holder of the Series B Preferred Stock converted, and the Company shall not be required to issue or deliver such certificate unless and until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or other governmental charge or shall have established to the satisfaction of the Company that such tax or other governmental charge has been paid. (j) SURRENDERED SHARES. All certificates representing Series B Preferred Stock surrendered for conversion or redeemed shall be appropriately canceled on the books of the Company, and the shares so converted represented by such certificates shall be restored to the status of authorized but unissued shares of Preferred Stock of the Company. EX-99.C 4 EXHIBIT 99(C) REGISTRATION RIGHTS AGREEMENT BETWEEN INNOSERV TECHNOLOGIES, INC. AND NATIONAL MEDICAL DIAGNOSTICS, INC. DATED AS OF JUNE 4, 1998 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (this "Agreement") is entered into as of the 4th day of June, 1998, between National Medical Diagnostics, Inc., a Delaware corporation (the "Investor"), and InnoServ Technologies, Inc., a California corporation (the "Company"). PRELIMINARY STATEMENTS: WHEREAS, General Electric Company ("GE"), Diamond Merger Sub, Inc., and the Company are parties to an agreement and plan of merger dated as of May 19, 1998 (the "Merger Agreement"). WHEREAS, the Merger Agreement provides that GE (or its designee) shall purchase for $2,800,000, and the Company shall deliver to GE (or its designee), 700,000 shares of a newly created Series B Preferred Stock, par value $.01 per share, of the Company ("Series B") within five business days after the designation for such Series B has been approved by the Secretary of State of the State of California. WHEREAS, such designation has been so approved, GE has designated the Investor as the person to purchase such Series B, the Investor has purchased such Series B and the Company has delivered to the Investor such Series B. WHEREAS, the Merger Agreement provides that the Company and GE (or its designee) will enter into a registration rights agreement in which the Company will grant certain registration rights to GE (or its designee). TERMS AND CONDITIONS: NOW THEREFORE, the Investor and the Company agree as follows: ARTICLE I REGISTRATION RIGHTS 1.1 PIGGYBACK REGISTRATION RIGHTS. (a) RIGHT TO PIGGYBACK. Subject to the limitations set forth in Section 1.1(e) hereof, whenever the Company proposes to file a registration statement (a "Proposed Registration") under the Securities Act of 1933, as amended (the "Securities Act"), with respect to any equity security (as defined in the Securities Act) (other than a registration statement on Form S-4, Form S-8 or any successor form for the registration of securities to be offered in a transaction subject to Rule 145 under the Securities Act or to employees of, and/or consultants and advisors to, the Company and/or its subsidiaries pursuant to any "employee benefit plan," as such term is defined in Rule 405 promulgated under the Securities Act) and the registration form to be used may be used for the registration (the "Piggyback Registration") of Piggyback Registrable Securities, the Company will give written notice (the "Piggyback Notice") to the Investor as soon as practicable (but in no event less than 45 days) before the initial filing with the SEC of such registration statement, which notice shall (i) specify the kind and number of securities proposed to be registered and the proposed offering price or prices and distribution arrangements; (ii) include such other information that at the time and under the circumstances would be appropriate to include in such notice; and (iii) subject to the provisions of Section 1.1(e), offer the Investor the opportunity to include in such filing all Piggyback Registrable Securities which the Investor may request in accordance with subsection 1.1(b) below. "Piggyback Registrable Securities" shall mean any shares of common stock of the Company, par value $.01 (the "Common Stock"), receivable by Investor as a result of the conversion and anti-dilution rights pertaining to the Series B. (b) REQUESTS TO PIGGYBACK. The Investor shall advise the Company in writing (a "Piggyback Registration Request") within 15 days after the date of receipt of the Piggyback Notice of the number or amount of each class or series of Piggyback Registrable Securities which the Investor desires to have registered. (c) SELECTION OF UNDERWRITERS. If the Piggyback Registration is an underwritten offering, the Board of Directors of the Company will select a managing underwriter or underwriters to administer the offering, who shall be reasonably satisfactory to the Investor. (d) PIGGYBACK EXPENSES. Subject to the limitations set forth in Section 1.3(d) hereof, all Registration Expenses (as defined in Section 1.3(d)) of the Piggyback Registration will be paid by the Investor. (e) LIMITATIONS ON PIGGYBACK RIGHTS. The Investor will be entitled to an unlimited number of Piggyback Registrations. The exercise of a Piggyback Registration shall not affect the Investor's Demand Registration rights under Section 1.2 hereof. The Investor shall not be permitted to exercise its Piggyback Registration rights with regard to any underwritten Piggyback Registration where a first or second tier underwriter, or underwriters, provides the Investor with an opinion that the amount or kind of the Investor's shares to be included in such offering would adversely affect the success of the securities proposed to be distributed for the account of the Company in such offering. However, the Investor shall be entitled to include all of its Piggyback Registrable Securities in any such Piggyback Registration before any other securities which are entitled to be registered pursuant to the exercise of contractual rights comparable to the rights granted in this Section 1.1. 1.2 DEMAND REGISTRATION RIGHTS. (a) REQUESTS FOR REGISTRATION. Subject to the limitations set forth in Section 1.2(d), at any time after the Investor has the right to convert the Series B to Common Stock pursuant to the Series B designation, the Investor may request the Company to register under the Securities Act all or part of its Demand Registrable Securities on Form S-1, Form S-3 or any other registration form available for use by the Company (a "Demand Registration"). The request for a Demand Registration (the "Demand Notice") shall specify the number of Demand Registrable Securities requested to be registered and the anticipated per share price range for such offering. However, the Company may postpone, for a reasonable period of time not to exceed 90 days (but in any event not to extend beyond the date of public disclosure of the information, or the date of abandonment or termination of the transactions or negotiations, hereinafter referred to), the filing of a registration statement otherwise required to be prepared and filed by it pursuant to this subsection 1.2(a) if (i) at the time the Company receives a Demand Notice, the Board of Directors of the Company determines, in good faith and in its reasonable business judgment, that (A) such Demand Registration would require the public disclosure of material non-public information concerning any pending or ongoing material transaction or negotiations involving the Company which, in the opinion of the Company's outside legal counsel, is not yet required to be publicly disclosed, and (B) such disclosure would materially interfere with such transaction or negotiations or have a material adverse effect on the Company, and (ii) the Company diligently and in good faith continues to pursue such transaction or negotiations throughout the period of such postponement. The Company may not postpone a Demand Registration pursuant to this Section 1.2(a) more than once in any 12-month period. "Demand Registrable Securities" means, the Series B and any other shares of Common Stock received by the Investor as a result of the conversion and anti-dilution rights pertaining to the Series B. (b) SELECTION OF UNDERWRITERS. If the Demand Registration is for or includes an underwritten offering, the Investor shall select the managing underwriter or underwriters to administer such offering, who shall be reasonably satisfactory to the Company. (c) DEMAND EXPENSES. Subject to the limitations set forth in Section 1.3(d) hereof, the Investor shall pay for all Registration Expenses relating to the Demand Registration. (d) LIMITATIONS ON DEMAND RIGHTS. The Investor may only request two Demand Registrations. However, in addition to such two Demand Registrations, the Investor may make four other Demand Registrations that involve the use of Form S-3 or such other equivalent "short-form" registration form then in use. A registration will not count as one of the permitted Demand Registrations until the registration statement relating thereto has become effective. 1.3 PROCEDURE. With respect to any Piggyback Registration or Demand Registration, the Company shall use its best efforts to effect the registration of all the Piggyback Registrable Securities or Demand Registrable Securities, as the case may be (collectively, the "Request Securities"), which the Investor has requested to be included therein, as quickly as practicable. In connection with any such request, the Company shall do the following as expeditiously as possible: (i) prepare and file with the SEC a registration statement on any form for which the Company then qualifies and which is available for the registration of the Request Securities; (ii) include in the registration on such form all the Request Securities and use its reasonable efforts to cause such registration statement to become effective; PROVIDED, HOWEVER, that at least two days before filing such registration statement or any prospectus or any amendment or supplement thereto, including documents to be incorporated be reference upon or after the initial filing of such registration statement, the Company shall furnish to the Investor copies of all such documents proposed to be filed (including documents to be incorporated by reference therein), which documents will be subject to reasonable review and comments of the Investor; (iii) unless the Company qualifies to use a Form S-3 registration statement or any similar form then in effect, prepare and file with the SEC such amendments and post-effective amendments and supplements to the registration statement or any prospectus as may be necessary to keep the registration statement effective for a period of not more than 180 days and comply with the provisions of the Securities Act applicable to the Company with respect to the disposition of all the Request Securities, covered by such registration statement or any supplement to any such prospectus; (iv) if the Company qualifies to use a Form S-3 registration statement or any similar form then in effect and if the Company receives a request for a Demand Registration, prepare and file with the SEC such registration statement to permit the offering of the Demand Registrable Securities to be made on a continuous basis pursuant to Rule 415 (or any similar rule that may be adopted by the SEC) under the Securities Act (a "Shelf Registration") and keep the Shelf Registration current and continuously effective until 12 months from the effective date of the Shelf Registration. (v) furnish to the Investor, such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement and such other documents as the Investor may reasonably request; (vi) use its best efforts to register or qualify such Request Securities under such other securities or blue sky laws of such jurisdiction as the Investor reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable the Investor to consummate the disposition in such jurisdiction (provided that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph, (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction); (vii) notify the Investor at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement contains an untrue statement of material fact or omits any fact necessary to make the statements therein in light of the circumstances under which they were made, not misleading, and, at the request of the Investor, the Company will, at the Investor's own expense, prepare a supplement or amendment to such prospectus so that, as thereafter delivered to subsequent purchasers of such Request Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (viii) cause all such Request Securities, to be listed on each securities exchange or system on which similar securities issued by the Company are then listed; (ix) provide a transfer agent and registrar for all such Request Securities, not later than the effective date of such registration statement; (x) enter into such customary agreements (including underwriting agreements in customary form for transactions of comparable size and terms) and take all such other actions as the Investor or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Request Securities, (including, without limitation, effecting a stock split or a combination of shares); (xi) make available for inspection by any underwriter participating in any distribution pursuant to such registration statement and any attorney, accountant or other agent retained by the underwriter (together the "Agents"), all financial and other records, pertinent corporate documents and properties of the Company (collectively, the "Records") to the extent reasonably necessary to enable such person to exercise their due diligence responsibilities and cause the Company's officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement; (xii) in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any securities included in such registration statement for sale in any jurisdiction, use its reasonable efforts promptly to obtain the withdrawal of such order; (xiii) use its reasonable efforts to obtain a "cold comfort" letter from the independent public accountants of the Company which is addressed to the Investor and any underwriters and contains such matters of the type customarily covered by "cold comfort" letters; and (xiv) use its reasonable efforts to obtain an opinion from counsel for the Company which is addressed to the Investor and underwriter and contains such matters of the type customarily covered by counsel for the issuer of securities. (a) AFFIDAVITS OF THE INVESTOR. With respect to any Piggyback Registration or Demand Registration, the Investor shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with the registration of the Request Securities. (b) PUBLIC SALE BY THE INVESTOR. The Investor shall not effect any public sale or distribution of Request Securities, of any class or series being registered in a Demand Registration or Piggyback Registration for offering to the public, any security issued by the issuer of such class or series or any security exchangeable or exercisable for or convertible into any such class or series of any such Request Securities or any such similar security, including a sale pursuant to Rule 144 (or any similar rule then in force) under the Securities Act, during, in the case of a Piggyback Registration, the 14 days prior to, and during the 180 day period beginning on, the effective date of the Piggyback Registration (except as part of such registration or pursuant to registrations on Form S-4 or S-8 or any successor form to either such form) and, in the case of any Demand Registration, the period commencing on the date of filing the Demand Registration and ending on the 180th day following the effective date of the Demand Registration (except as part of such Demand Registration). (c) PUBLIC SALE BY THE COMPANY AND OTHERS. Neither the Company nor any of its Affiliates (other than the Investor, if deemed to be an Affiliate) will effect any public sale or distribution of any securities of any class or series being registered in a Piggyback Registration or Demand Registration for offering to the public, any similar security issued by the issuer of such class or series or any security convertible into or exchangeable or exercisable for any such security during, in the case of a Piggyback Registration, the 14 days prior to, and during the 180 day period beginning on, the effective date of the Piggyback Registration (except as part of such registration or pursuant to registrations on Form S-4 or S-8 or any successor form to either such form) and, in the case of any Demand Registration, the period commencing on the date of filing the Demand Registration and ending on the 180th day following the effective date of the Demand Registration. "Affiliate" shall mean, with respect to any specified Person (as defined in Section 1.4), any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person. (d) REGISTRATION EXPENSES. The Investor shall pay for the Company's out-of-pocket costs and out-of-pocket expenses ("Registration Expenses") of each registration hereunder, including the following: (i) registration and filing fees with respect to the Request Securities, (ii) reasonable fees and disbursements of counsel in connection with blue sky qualifications with respect to the Request Securities, (iii) expenses incident to the preparation, printing and filing of the registration statement, each preliminary prospectus and definitive prospectus and each amendment or supplement to any of the foregoing and copies thereof with respect to the Request Securities, (iv) underwriting fees, discounts or commissions attributable to the sale of Request Securities, as the case may be, by the Investor, (v) fees and expenses incurred in connection with the listing of the Request Securities, (vi) fees and disbursements of counsel for the Company and fees and expenses of independent certified public accountants retained by the Company with respect to the Request Securities, and (vii) fees and expenses associated with any filings with or submission to the NASD with respect to the Request Securities. Notwithstanding the foregoing, the Investor shall not have any obligation to pay any internal costs and expenses (including, without limitation, all salaries and expenses of officers and employees of the Company performing legal or accounting duties) or any costs and expenses to the extent that (x) such costs and expenses would have been incurred by the Company absent such registration hereunder or (y) another party is contractually obligated to pay such costs and expenses. 1.4 INDEMNIFICATION REGARDING REGISTRATION RIGHTS. (a) INDEMNIFICATION BY THE COMPANY. The Company shall indemnify the Investor and, if applicable, its officers and directors and each person or entity (a "Person") who controls the Investor (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses, including reasonable attorneys' fees and disbursements and expenses of investigation, incurred by such party pursuant to any actual or threatened action, suit, proceeding or investigation, or to which any of the foregoing Persons may become subject under the Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or other federal or state laws, insofar as such losses, claims, damages, liabilities and expenses arise out of or are caused by any untrue or alleged untrue statement of material fact contained in any registration statement, preliminary prospectus or definitive prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are caused by or contained in any information furnished in writing to the Company by the Investor specifically for use in the preparation thereof or by the Investor's failure, if required, to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after the Company has furnished the Investor with copies of the same pursuant to Section 1.3(v). (b) INDEMNIFICATION BY THE INVESTOR. In connection with any registration statement in which the Investor is participating, the Investor shall indemnify the Company, its directors and officers and each Person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses, including reasonable attorneys' fees and disbursements and expenses of investigation, incurred by such party pursuant to any actual or threatened action, suit, proceeding or investigation, or to which any of the foregoing Persons may become subject under the Securities Act, the Exchange Act or other federal or state laws, insofar as such losses, claims, damages, liabilities and expenses arise out of or are caused by any untrue or alleged untrue statement of material fact contained in the registration statement, preliminary prospectus or definitive prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in information furnished, in writing, by the Investor to the Company specifically for use in the preparation of such registration statement or prospectus. The amount of any indemnity under this Section 1.4(b) shall not exceed the gross proceeds received by the Investor from the applicable offering. (c) PROCEDURE. Any Person entitled to indemnification hereunder will (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification, provided that the failure of any indemnified party to give notice shall not relieve the indemnifying party of its obligations hereunder except to the extent the indemnifying party is actually prejudiced by such failure and (ii) unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party will not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. (d) SURVIVAL. The indemnification provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and will survive the transfer of securities. (e) CONTRIBUTION. If the indemnification provided for in this Section 1.4 from the indemnifying party is unavailable to the indemnified party, then the indemnifying party, instead of indemnifying the indemnified party, shall contribute to and pay the amount paid or payable by such indemnified party as a result of the loss, claim, damage, liability or expenses (collectively, the "Claim") giving rise to indemnification hereunder in such proportion as is appropriate to reflect the relative fault of the indemnifying and indemnified party in connection with the actions which gave rise to the Claim. The relative fault of the indemnifying party and the indemnified party shall be determined by reference to, among other things, whether the action in question has been made by, or relates to, information supplied by such indemnifying party or indemnified party, and the parties' relevant intent, knowledge, access to information and opportunity to correct or prevent such action. The Company and the Investor agree that it would not be just and equitable if contribution and payment pursuant to this Section 1.4 were determined by pro rata allocation or by any other allocation method which does not take into account the equitable considerations referred to in the preceding sentence. The amount paid or payable as a result of a Claim shall include any legal or other fees and expenses reasonably incurred by such party in connection with such Claim. However, no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contributions and payment from any Person who was not guilty of such fraudulent misrepresentation. 1.5 PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may participate in any underwritten registration hereunder unless such Person (a) agrees to sell its securities on the basis provided in any underwriting arrangements reasonably approved by the Persons entitled hereunder to approve such arrangements and (b) accurately completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents customarily required under the terms of such underwriting arrangements. 1.6 RULE 144. The Company shall file, on a timely basis, any reports required to be filed by it under the Securities Act and the Exchange Act (and if the Company is not required to file reports pursuant to the Exchange Act, the Company shall, upon the request of the Investor, make publicly available the information specified in subparagraph (c)(2) of Rule 144 of the Securities Act) so as to enable the Investor to sell the Piggyback Registrable Securities and Demand Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may be amended from time to time or (b) any similar rule adopted by the SEC. 1.7 TRANSFER OF REGISTRATION RIGHTS. Rights with respect to Piggyback Registrable Securities and Demand Registrable Securities may be transferred by the Investor (or any subsequent transferee pursuant to this Section 1.7) to any Person in connection with the transfer of Piggyback Registrable Securities and Demand Registrable Securities to such Person, in all cases, if (a) any such transferee shall have executed and delivered to the Secretary of the Company a properly completed agreement substantially in the form of EXHIBIT 1.7, (b) the transferor shall have delivered to the Secretary of the Company, no later than 15 days following the date of the transfer, written notification of such transfer setting forth the name of the transferor, name and address of the transferee, and the number of Piggyback Registrable Securities and Demand Registrable Securities which shall have been so transferred and (c) the number of Piggyback Registrable Securities and Demand Registrable Securities, as the case may be, which shall have been so transferred is equal to or exceeds 50% of the total number of the Piggyback Registrable Securities and Demand Registrable Securities, as the case may be. 1.8 MERGERS, CONSOLIDATIONS, ETC. The Company shall not, directly or indirectly enter into any merger, consolidation or reorganization in which the Company shall not be the surviving corporation, unless prior to such merger, consolidation or reorganization, the surviving corporation shall have agreed in writing to assume the obligations of the Company under this Agreement, and for that purpose references hereunder to "Piggyback Registrable Securities" and "Demand Registrable Securities" shall be deemed to include the securities which the holders of Piggyback Registrable Securities and Demand Registrable Securities would be entitled to receive in exchange for such securities pursuant to any such merger, consolidation or reorganization. ARTICLE II MISCELLANEOUS 2.1 AMENDMENT AND CERTAIN WAIVERS. This Agreement may be amended or modified only by a written agreement executed by all parties to this Agreement. 2.2 BENEFIT OF PARTIES; ASSIGNABILITY. All of the terms and conditions of this Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. This Agreement may not be assigned, in whole or in part, by either party without the prior written consent of the other party, except (a) pursuant to Section 1.7 hereof and (b) that the Investor may assign this Agreement in whole to an Affiliate of the Investor without the necessity for securing prior written consent of the Company. 2.3 SEVERABILITY. If any court or any governmental authority or agency declares all or any part of any Section of this Agreement to be unlawful or invalid, such unlawfulness or invalidity shall not serve to invalidate any other Section of this Agreement, and if only a portion of any Section is so declared to be unlawful or invalid, such unlawfulness or invalidity shall not serve to invalidate the balance of such Section. 2.4 NOTICES. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made) upon the earliest to occur of (a) receipt, if made by personal service, (b) three business days after dispatch, if made by reputable overnight courier service or (c) upon the delivering party's receipt of a written confirmation of a transmission made by telecopy to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 2.4): If to the Company: InnoServ Technologies, Inc. 320 Westway, Suite 520 Arlington, Texas 76018 Telecopy No.: 817-472-2926 Attn: Michael Puls With a copy to: Gibson, Dunn & Crutcher LLP 1717 Main Street, Suite 5400 Dallas, Texas 75201 Telecopy No.: 214-698-3400 Attn: Stephen C. Johnson If to Parent or Sub: General Electric Company c/o GE Medical Systems 3000 North Grandview Boulevard Waukesha, Wisconsin 53188 Telecopy No.: 414-544-3573 Attn: General Counsel 2.5 GOVERNING LAW. The validity, meaning and effect of this Agreement shall be determined in accordance with the laws of the State of New York applicable to contracts made and to be performed in that state. 2.6 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which shall together constitute one and the same document. 2.7 HEADINGS. The headings used herein are solely for the convenience of the parties and shall not constitute a part hereof or serve to modify or interpret the text of this Agreement. 2.8 ENTIRE AGREEMENT. This Agreement, together with the Merger Agreement, constitute and encompass the entire agreement and understanding of the parties hereto with regard to the transactions contemplated or provided for herein or therein. 2.9 EXPENSES. Each party shall bear and pay its own expenses incurred in connection with negotiating and preparing this Agreement. EXHIBIT 1.7 AGREEMENT TO BE BOUND BY THE REGISTRATION RIGHTS PROVISIONS OF STOCK PURCHASE AGREEMENT The undersigned, being the transferee of ________________ shares of the __________________ stock, $_________ par value per share (the "Registrable Securities"), of INNOSERV TECHNOLOGIES, INC., a California corporation (the "Company"), as a condition to the receipt of such Registrable Securities, acknowledges that matters pertaining to the registration of such Registrable Securities are governed by Article I of the Registration Rights Agreement dated as of May_____, 1998 initially among the Company and the Investor referred to therein (the "Agreement"), and the undersigned hereby (1) acknowledges receipt of a copy of the Agreement, and (2) agrees to be bound by the terms of the Agreement, as the same has been or may be amended from time to time. Agreed to this __ day of ______________________, _________________. [Name] [Address] EX-99.D 5 EXHIBIT 99(D) SHAREHOLDERS AGREEMENT SHAREHOLDERS AGREEMENT, dated as of May 19, 1998, by and among General Electric Company, a New York corporation acting through its GE Medical Systems division ("Parent"), on the one hand, and the persons set forth in the signature page hereto in their capacities as shareholders of InnoServ Technologies, Inc., a California corporation (the "Company") (collectively, the "Shareholders" and individually, a "Shareholder"), on the other hand. WHEREAS, concurrently herewith, Parent, a subsidiary of a subsidiary of Parent and the Company are entering into an Agreement and Plan of Merger (the "Merger Agreement"; capitalized terms used without definition herein having the meanings ascribed thereto in the Merger Agreement); WHEREAS, each Shareholder has sole, or together with such Shareholder's spouse as necessary, has complete voting and dispositive power and/or full voting power as to the aggregate number of shares of Common Stock, par value $.01 per share, of the Company (the "Company Common Stock") set opposite such Shareholder's name on SCHEDULE I attached hereto, whether as certificated shares in the name of such Shareholder or held in brokerage accounts in the name of such Shareholder; such shares of Company Common Stock, as such shares may be adjusted by any stock dividend, stock split, recapitalization, combination or exchange of shares, merger, consolidation, reorganization or other change or transaction of or by the Company, being referred to herein as the "Shares"; WHEREAS, approval of the Merger Agreement by the Company's shareholders is a condition to the consummation of the Merger; WHEREAS, as a condition to its entering into the Merger Agreement, Parent has required that the Shareholders agree, and the Shareholders have agreed, to enter into this Agreement; WHEREAS, the Shareholders have been informed that the Board of Directors of the Company has approved the Merger Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set forth herein, the parties hereto agree as follows: Section 1. AGREEMENT TO VOTE, RESTRICTIONS ON DISPOSITIONS, ETC. During the term of the Agreement: a. Each of the Shareholders hereby agrees to attend the Company Meeting, in person or by proxy, and to vote (or cause to be voted) all Shares, and any other voting securities of the Company, whether issued heretofore or hereafter, that such person owns or has the right to vote, for approval and adoption of the Merger Agreement and the Merger, such agreement to vote to apply also to any adjournment or adjournments of the Company Meeting. Each Shareholder agrees not to grant any proxies or enter into any voting agreement or arrangement inconsistent with this Agreement. b. Each of the Shareholders hereby agrees to vote (or cause to be voted) all Shares, and any other voting securities of the Company, whether issued heretofore or hereafter, that such person owns or has the right to vote, against (i) any merger (other than the Merger), consolidation, combination, sale of assets, reorganization, recapitalization, dissolution, liquidation or other business combination or similar transaction involving the Company or its Subsidiaries, securities or assets (including any Business Combination Proposal) which is not approved in writing by Parent or (ii) any amendment of the Company's articles of incorporation or by-laws or other proposal involving the Company or any Subsidiary, which amendment or proposal would in any manner impede, frustrate, prevent or nullify the Merger, the Merger Agreement or any of the transactions contemplated by the Merger Agreement or which could result in any of the conditions to the Company's obligations under the Merger Agreement not being fulfilled. c. Each of the Shareholders hereby agrees that, without the prior written consent of Parent, such Shareholder shall not, directly or indirectly, sell, offer to sell, grant any option for the sale of or otherwise, pledge, transfer, tender or dispose of, or enter into any agreement to sell, pledge (other than existing margin call pledge agreements with respect to Shares held in brokerage accounts in the name of a Shareholder), transfer, tender or dispose of, any Shares and any other voting securities of the Company, issued heretofore or hereinafter that such person owns or has the right to vote; PROVIDED, HOWEVER, that Parent shall consent to any such sale, pledge, transfer or disposition of any such Shares or other voting securities by and between Shareholders. d. Each of the Shareholders, solely in his capacity as a shareholder, hereby agrees not to directly or indirectly take (nor shall such Shareholder authorize or permit any representative, investment banker, financial advisor, attorney, accountant or other agent of such Shareholder to take) any action to (i) encourage, solicit or initiate the submission of any Business Combination Proposal or (ii) participate in any way in discussions or negotiations with, or furnish any non-public written information to, any person in connection with, or take any other action to encourage the making of any proposal that constitutes, or may reasonably be expected to lead to, any Business Combination Proposal; ; provided, that with respect to Shareholders who serve as officers or directors of the Company, such Shareholders acting solely in their capacity as officers or directors may (i) participate in discussions or negotiations with or furnish information to any Third Party that makes an unsolicited Business Combination Proposal that the Board of Directors of the Company determines (after consultation with its financial advisors) may reasonably be expected to result in a Superior Proposal, and permit the Company to enter into any confidentiality agreement or standstill agreement with such Third Party in connection with such a Business Combination Proposal, (ii) take all steps necessary to cause the Company to comply with Rule 14e-2 promulgated under the Exchange Act with regard to any Business Combination Proposal (assuming that such Business Combination Proposal includes a tender offer requiring the Company's response pursuant to such Rule), (iii) take the steps necessary as directors to fail to make or withdraw or modify the Board of Directors' recommendation referred to in SECTION 8.2 of the Merger Agreement if there exists a Business Combination Proposal that is a Superior Proposal or if such director determines, in good faith and after consultation with independent counsel, that such action is required to discharge properly his fiduciary duties, or (iv) if the Company terminates the Merger Agreement in accordance with Section 10.1(e) thereof, cause the Company to enter into an agreement with respect to or recommend to its shareholders a Business Combination Proposal that is a Superior Proposal. e. Each of the Shareholders agrees to promptly notify Parent in writing of the nature and amount of any acquisition by such Shareholder of any voting securities of the Company acquired by such Shareholder hereinafter. Section 2. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. Each of the Shareholders, as to himself, herself or itself, as an individual shareholder, represents and warrants to Parent as follows: (a) this Agreement has been duly executed and delivered by such Shareholder; (b) assuming the due authorization, execution and delivery of this Agreement by Parent, this Agreement constitutes the valid and binding agreement of such Shareholder enforceable against such Shareholder in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws of general application which may affect the enforcement of creditors' rights generally and by general equitable principles; (c) the shares of Company Common Stock listed next to the name of such Shareholder on SCHEDULE I hereto are the only voting securities of the Company owned (beneficially or of record) by such Shareholder and are held by such Shareholder either as certificated shares or in brokerage accounts in the name of such Shareholder free and clear of all liens, charges, encumbrances, restrictions and commitments of any kind; and (d) the execution and delivery of this Agreement by such Shareholder does not conflict with any agreement, order or other instrument binding upon such Shareholder, nor requires any regulatory filing or approval. Section 3. FURTHER ASSURANCES. Each party shall execute and deliver such additional instruments and other documents and shall take such further actions as may be necessary or appropriate to effectuate, carry out and comply with all of their obligations under this Agreement. Without limiting the generality of the foregoing, none of the parties hereto shall enter into any agreement or arrangement (or alter, amend or terminate any existing agreement or arrangement) if such action would materially impair the ability of any party to effectuate, carry out or comply with all the terms of this Agreement. Section 4. REPRESENTATIONS AND WARRANTIES OF PARENT. Parent represents and warrants to each Shareholder as follows: (a) each of this Agreement and the Merger Agreement has been duly executed and delivered by a duly authorized officer or employee of Parent; and (b) assuming the due authorization, execution and delivery of this Agreement by the Company and the Shareholders, each of this Agreement and the Merger Agreement constitutes a valid and binding agreement of Parent, enforceable against Parent in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws of general application which may affect the enforcement of creditors' rights generally and by general equitable principles. Section 5. EFFECTIVENESS AND TERMINATION. It is a condition precedent to the effectiveness of this Agreement that the Merger Agreement shall have been executed and delivered and be in full force and effect. This Agreement shall terminate upon the earliest of (i) the close of business on September 30, 1998, (ii) the Effective Date or (iii) the termination of the Merger Agreement in accordance with its terms; PROVIDED, that if any Business Combination Proposal shall have been made prior to the termination of the Agreement and the Merger Agreement is terminated pursuant to Sections 10.1(b)(ii) or (c)(ii) of the Merger Agreement, Sections 1(b), (c) and (d) hereof shall survive for 180 days after termination of this Agreement. Upon any such termination of this Agreement, except for any rights any party may have in respect of any breach by any other party of its or his obligations hereunder, none of the parties hereto shall have any further obligation or liability hereunder. Section 6. MISCELLANEOUS. a. NOTICES, ETC. All notices, requests, demands or other communications required by or otherwise with respect to this Agreement shall be in writing and shall be deemed to have been duly given to any party when delivered personally (by courier service or otherwise), or seven days after being mailed by first-class mail, postage prepaid in each case to the applicable addresses set forth below: If to Parent: GE Medical Systems 3000 North Grandview Boulevard Waukesha, Wisconsin 53188 Attention: J. Keith Morgan with a copy to: Sidley & Austin One First National Plaza Chicago, Illinois 60603 Attention: Dennis V. Osimitz If to any of the Shareholders: to the addresses set forth on SCHEDULE I: with a copy to: Gibson, Dunn & Crutcher LLP 1717 Main Street Dallas, Texas 75201-7390 Attention: Stephen C. Johnson and with an additional copy to: InnoServ Technologies, Inc. 320 Westway, Suite 520 Arlington, TX 76018 Attn: Michael Puls or to such other address as such party shall have designated by notice so given to each other party. b. AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended, changed, supplemented, waived or otherwise modified or terminated except by an instrument in writing signed by Parent, the Company and the Shareholders affected thereby; PROVIDED that: without the consent of any party no such amendment, change, supplement, waiver, modification or termination shall in any way further restrict the transferability of any Company Common Stock held by such party, impose any obligation on such party, diminish the benefits of such party hereunder or restrict the rights of such party as set forth herein), without the consent of such party. c. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the parties and their respective successors and assigns, including without limitation any trustee, executor, heir, legatee or personal representative succeeding to the ownership or voting power of such Shareholder's shares of Company Common Stock or other securities subject to this Agreement. Notwithstanding any transfer of shares of Company Common Stock, the transferor shall remain liable for the performance of all obligations under this Agreement of such transferor. d. ENTIRE AGREEMENT. This Agreement (together with the Merger Agreement) embodies the entire agreement and understanding among the parties relating to the subject matter hereof and supersedes all prior agreements and understandings relating to such subject matter. There are no representations, warranties or covenants by the parties hereto relating to such subject matter other than those expressly set forth in this Agreement and the Merger Agreement. e. SEVERABILITY. If any term of this Agreement or the application thereof to any party or circumstance shall be held invalid or unenforceable to any extent, the remainder of this Agreement and the application of such term to the other parties or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by applicable law, PROVIDED that in such event the parties shall negotiate in good faith in an attempt to agree to another provision (in lieu of the term or application held to be invalid or unenforceable) that will be valid and enforceable and will carry out the parties' intentions hereunder. f. SPECIFIC PERFORMANCE. The parties acknowledge that money damages are not an adequate remedy for violations of this Agreement and that any party may, in its sole discretion, apply to a court of competent jurisdiction for specific performance or injunction or such other relief as such court may deem just and proper in order to enforce this Agreement or prevent any violation hereof and, to the extent permitted by applicable law, each party waives any objection to the imposition of such relief. g. REMEDIES CUMULATIVE. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise or beginning of the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such rights, power or remedy by such party. h. NO WAIVER. The failure of any party hereto to exercise any right, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, and any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance. i. NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to be for the benefit of and shall not be enforceable by any person or entity who or which is not a party hereto. j. JURISDICTION. Each party hereby irrevocably submits to the exclusive jurisdiction of the Circuit Court in the State of New York or the United States District Court for the Southern District of New York or any court of the State of New York located in the City of New York in any action, suit or proceeding arising in connection with this Agreement, and agrees that any such action, suit or proceeding shall be brought only in such court (and waives any objection based on FORUM NON CONVENIENS or any other objection to venue therein). Each party hereto waives any right to a trial by jury in connection with any such action, suit or proceeding. k. GOVERNING LAW. This Agreement and all disputes hereunder shall be governed by and construed and enforced in accordance with the California General Corporation Law to the fullest extent possible and in the absence of applicability of the aforementioned California General Corporation law, by the internal laws of the State of New York without regard to principles of conflicts of law. l. NAME, CAPTIONS, GENDER. The name assigned this Agreement and the section captions used herein are for convenience of reference only and shall not affect the interpretation or construction hereof. Whenever the context may require, any pronoun used herein shall include the corresponding masculine, feminine or neuter forms. m. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies each signed by less than all, but together signed by all, the parties hereto. n. LIMITATION ON LIABILITY. No Shareholder shall have any liability hereunder for any actions or omissions of any other Shareholder. o. EXPENSES. Except as otherwise provided in the Merger Agreement, each party shall bear its own expenses incurred in connection with this Agreement and the transactions contemplated hereby, except that in the event of a dispute concerning the terms or enforcement of this Agreement, the prevailing party in any such dispute shall be entitled to reimbursement of reasonable legal fees and disbursements from the other party or parties to such dispute. p. SHAREHOLDER CAPACITY. Each Shareholder signs this Agreement solely in his capacity as the record holder and/or beneficial owner of the Shares set opposite his name on SCHEDULE I and nothing herein shall limit, impose any obligation on, or affect any actions taken by such Shareholder, as applicable, serving in his capacity as an officer or director of the Company, including without limitation, any actions taken by such Shareholder in the fulfillment of his fiduciary duties in his capacity as an officer or director of the Company. For the purposes of this Agreement, all actions taken by a Shareholder acting in his capacity as an officer or director of the Company shall be viewed as if taken by a person separate and apart from such Shareholder, without consideration to such person's ownership of equity interests in the Company SCHEDULE I NAME AND ADDRESS OF SHAREHOLDER NUMBER OF SHARES % OUTSTANDING -------------- ---------------- ------------- Dudley A. Rauch 962,399 31.98 Cecila B. Rauch 52,868 1.76 The Rauch Family Foundation 13,743 .46 Henry B Rauch Trust 26,322 .87 The Moehring Charitable Remainder 102,548 3.41 Trust Michael M. Sachs 65,587 2.18 Westrec Rollover P/S Plan 52,755 1.75 Dr. Samuel Salen IRRA 70,000 2.33 The Salen Family 1995 Revocable 121,962 4.05 Living Trust MSB Radiology Medical Group, Inc. 89,095 2.96 Profit Sharing Trust MSB Radiology Medical Group, Inc. 11,000 .37 Bernard J. Korman 21,000 .70 TOTAL 1,589,279 52.82 EX-99.E 6 EXHIBIT 99(e) POWER OF ATTORNEY KNOWN ALL MEN BY THESE PRESENTS that General Electric Company ("GE") constitutes and appoints each of Robert E. Healing and Eliza W. Fraser as its true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for and on behalf of GE and in GE's respective name, place and stead, in any and all capacities, to sign any Statements on Schedule 13D, Schedule 14D, Form 3, Form 4 or Form 5 under the Securities Exchange Act of 1934, and any and all amendments to any thereof and other documents in connection therewith (including, without limitation, any joint filing agreement with respect to any Statement on Schedule 13D or 14D or amendment thereto) and to file the same, with all exhibits thereto, with the Securities and Exchange Commission, granting unto each said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully and to all intents and purposes as GE might or could do in person, hereby ratifying and confirming all that each said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: July 31, 1997 GENERAL ELECTRIC COMPANY By: /s/ B.W. Heineman, Jr. ------------------------------------ Name: B.W. Heineman, Jr. Title: Senior Vice President, General Counsel and Secretary -----END PRIVACY-ENHANCED MESSAGE-----