EMPLOYMENT AGREEMENT
AGREEMENT, dated as of July 29, 1998, by and between ATL Ultrasound,
Inc. (the "Company") and Jacques Souquet ("Executive").
WHEREAS, Executive's current employer, ATL Ultrasound, Inc., has
entered into an Agreement and Plan of Merger, dated as of July 29, 1998 with
Philips Acquisition, Inc. and Philips Electronics North America Corporation (the
"Merger Agreement"); and
WHEREAS, the Company desires to secure the continued employment of
Executive following the successful consummation of the Offer (as such term is
defined in the Merger Agreement); and
WHEREAS, Executive and the Company desire to enter into an agreement
setting forth the terms and conditions of the employment of Executive with the
Company on and after the successful consummation of the Offer;
NOW, THEREFORE, IN CONSIDERATION OF the mutual covenants herein
contained, and other good and valuable consideration, the parties hereto agree
as follows:
1. EMPLOYMENT. Subject to the successful consummation of the Offer,
the Company hereby agrees to employ Executive, and Executive agrees to serve as
an employee of the Company, on the terms and conditions set forth in this
Agreement, effective as of the date of this Agreement. The continuation of such
employment shall be expressly conditioned on and subject to the consummation of
the transactions contemplated by the Merger Agreement; PROVIDED, THAT, Section
20 of this Agreement shall be deemed to be effective as of the successful
consummation of the Offer. This Agreement shall become null and void, and shall
have no force or effect, if the transactions contemplated under the Merger
Agreement are not consummated.
2. EMPLOYMENT PERIOD. The "Employment Period" shall be the period
commencing on the Effective Time (as defined in the Merger Agreement) and ending
on December 31, 2001.
3. DUTIES AND RESPONSIBILITIES. During the Employment Period,
Executive shall serve as the Senior Vice President -- Chief Technology Officer
of the Company with such duties and responsibilities that are customary for
such position and shall include those that are assigned to him by the Company
during the Employment Period that are not inconsistent with such position.
Executive shall devote substantially all of his working time, attention and
energies during normal business hours (other than
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absences due to illness or vacation) to the performance of his duties for the
Company. Upon the prior written approval of the Chief Executive Officer of the
Philips Medical Systems, Executive may serve as a member of the board of
directors of other companies or engage in other outside activities, provided
that such activities do not interfere with Executive's duties hereunder;
provided, further, that if Executive is already a member of any such board of
directors, as set forth on Exhibit A hereof, he shall be entitled to remain on
such board without violating the terms of this Agreement.
4. PLACE OF PERFORMANCE. The principal place of employment of
Executive shall be at the Company's executive offices in Seattle, Washington.
5. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY AND BONUS. During the Employment Period the
Company shall pay Executive a base salary at the rate of not less than $ 255,000
per year ("Base Salary") which shall be annually reviewed by the Company.
Executive's Base Salary shall be paid in approximately equal installments in
accordance with the Company's customary payroll practices. If Executive's Base
Salary is increased by the Company, such increased Base Salary shall then
constitute the Base Salary for all purposes of the Agreement. On or about
January 1, 1999, Executive shall be paid an annual bonus equal to the pro rata
portion (based on the number of days elapsed in 1998 through and including the
Effective Time) of the annual bonus that would have been payable under
Executive's annual bonus arrangement in effect on the date hereof based on the
Company's annualized performance through the last full fiscal quarter completed
before the Effective Time; PROVIDED, THAT for purposes of this sentence,
Executive's maximum annual bonus opportunity shall be deemed to be 50% of Base
Salary. For the remaining period of 1998 following the Effective Time (for
which a bonus may be paid, prorated in the proportion that the number of days
after the Effective Time through December 31, 1998 bears to 365) and during each
subsequent year of the Employment Period, Executive shall be entitled to an
annual incentive bonus ("Bonus"), based upon the achievement of performance
targets, such targets as determined in the sole discretion of the Company, to be
payable at the same time as bonuses are paid to other executive officers.
Executive's target Bonus shall be 50% of Base Salary, but may be more or less
upon achievement of performance targets.
(b) STOCK OPTION. (i) The Executive shall be granted stock
options (the "Stock Option") to acquire 7,000 shares of the common stock of
Royal Philips Electronics (the "Stock"), pursuant to the Philips Electronics
North America Corporation 1998 Stock Incentive Plan (the "Option Plan"). The
Stock Option shall be granted on the Commencement Date, and shall be granted
at an exercise price per share equal to the fair market value of the Stock on
the date of grant and shall be subject to the general terms of the Option
Plan and the stock
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option agreement thereunder (the "Option Agreement"). Stock Options granted
pursuant to this Section 5(b)(i) shall become exercisable at a rate of
33-1/3% on each of the first, second and third anniversaries of the date of
grant, provided Executive remains an employee on such date, and shall expire
ten (10) years following the date of grant, except as otherwise provided in
the Option Plan or Option Agreement. Notwithstanding the foregoing, if
Executive is terminated pursuant to Section 6(e) or 6(g) hereof, such Stock
Option shall become immediately exercisable and shall remain exercisable for
one year following such termination.
(ii) Beginning in the year 2000, Executive shall be eligible for
option grants on the same basis as other senior executives of the Company.
(c) LONG-TERM PERFORMANCE UNIT PLAN. The Company shall
establish the Long-Term Performance Unit Plan which shall provide Executive with
a bonus (the "Incentive Bonus") equal to Executive's Base Salary, to be paid in
the first quarter following the end of the Performance Period (the "Payment
Date"), if Executive is an employee on the last day of the Performance Period
and 75% of the base case strategic plan, as attached as Exhibit B (the
"Strategic Plan") has been achieved during the 1999-2001 performance period (the
"Performance Period"). If 100% of the Strategic Plan is achieved during the
Performance Period, Executive's Incentive Bonus shall be two times Base Salary
and if 100% of the Strategic Plan is achieved, including synergies, the
Incentive Bonus shall be three times Base Salary. In the first quarter
following December 31, 1999 and December 31, 2000, Executive shall receive a
payment equal to 20% of Base Salary (each, an "Advance Bonus") which shall
reduce the Incentive Bonus, on a dollar for dollar basis, otherwise payable
under this paragraph. Notwithstanding the foregoing, if Executive is terminated
pursuant to Sections 6(e) or 6(g) hereof, Executive shall be entitled to a
pro-rata Incentive Bonus, based on the ratio the number of days worked in the
Performance Period bears to the total number of days in the Performance Period,
to be paid on the Payment Date.
(d) BENEFIT PLANS. Executive shall be entitled to participate
in such employee benefit plans and insurance programs offered by the Company, or
which it may adopt from time to time, for its executive management or
supervisory personnel generally, in accordance with the eligibility requirements
for participation therein. Notwithstanding the foregoing, Executive shall not
be entitled to receive severance pursuant to the Company's severance plan if he
is entitled to receive payments pursuant to Section 8(c) of this Agreement.
Nothing herein shall be construed so as to prevent the Company from modifying or
terminating any employee benefit plans or programs, or employee fringe benefits,
it may adopt from time to time.
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(e) VACATION AND SICK LEAVE. Executive shall be entitled to the
amount of paid vacation and sick leave that is provided to other executive
officers, in accordance with the Company's customary practices.
(f) EXPENSES. The Company shall promptly reimburse Executive
for all reasonable business expenses upon the presentation of reasonably
itemized statements of such expenses in accordance with the Company's policies
and procedures now in force or as such policies and procedures may be modified
with respect to all executive officers of the Company.
6. TERMINATION. This Agreement shall be terminated upon the
earliest to occur of the following:
(a) EXPIRATION. The expiration of the Employment Period.
(b) DEATH. The death of Executive.
(c) DISABILITY. If, as a result of Executive's Disability,
Executive shall have been substantially unable to perform his duties hereunder
for a period of six (6) consecutive months and within thirty (30) days after
written Notice of Termination is given by the Company after such six (6) month
period, Executive shall not have returned to the substantial performance of his
duties on a full-time basis. For purposes of this Agreement, "Disability" shall
have the same meaning as that term is defined in the Company's Long Term
Disability Plan; PROVIDED, THAT, if no such plan exists, "Disability" shall have
the same meaning as provided in Section 22(e)(3) of the Code.
(d) CAUSE. The Company terminates Executive for Cause. For
purposes of this Agreement, the Company shall have "Cause" to terminate
Executive's employment upon Executive's (i) willful and continued failure to
substantially perform his duties with the Company (other than any such failure
resulting from his incapacity due to physical or mental illness) after a written
demand for substantial performance is delivered to Executive which identifies
the manner in which the Company believes that Executive has not substantially
performed his duties, or (ii) willful misconduct (but excluding any action that
Executive reasonably believes is in the best interests of the Company) which is
materially economically injurious to the Company or to any entity in control of,
controlled by or under common control with the Company (an "Affiliate"),
including, but not limited to, any breach of Sections 9 and 10 hereof, or
(iii) the conviction of, or plea of guilty or nolo contendere to, a felony
involving moral turpitude, or (iv) habitual drug or alcohol abuse by Executive.
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(e) WITHOUT CAUSE. The Company terminates Executive's
employment hereunder without Cause by providing Executive with a Notice of
Termination.
(f) VOLUNTARY TERMINATION. Executive terminates this Agreement
and Executive's employment hereunder at any time upon ninety (90) days prior
written notice to the Company.
(g) MATERIAL BREACH. Executive terminates his employment for a
material breach of this Agreement by the Company. For purposes of this
Agreement, a "material breach" shall be deemed to occur upon a failure by the
Company to comply with any material provision of this Agreement without
Executive's written consent, including, but not limited to, (i) a material
diminution in Executive's position, duties, status, authority or responsibility
as set forth under the terms of this Agreement, (ii) a reduction in Base Salary,
Bonus or Incentive Bonus opportunity, or (iii) a relocation of the Executive to
a location more than 50 miles from his present location, which in the case of
any alleged violation of this paragraph (g), has not been cured in all material
respects within thirty (30) days after written notice of such noncompliance has
been given by Executive to the Company.
7. TERMINATION PROCEDURE.
(a) NOTICE OF TERMINATION. Any termination of Executive by the
Company or by Executive (other than termination pursuant to Section 6(a) or (b)
hereof) shall be communicated by written Notice of Termination to the other
party hereto in accordance with Section 13. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive under the provisions so indicated.
(b) DATE OF TERMINATION. "Date of Termination" shall mean
(i) if Executive's employment is terminated by the expiration of this Agreement,
the date of expiration, (ii) if Executive's employment is terminated by his
death, the date of his death, (iii) if Executive's employment is terminated
pursuant to Section 6(c) hereof, thirty (30) days after Notice of Termination is
given (provided that Executive shall not have again become available for service
on a regular basis during such thirty (30) day period), (iv) if Executive's
employment is terminated pursuant to Sections 6(d), 6(e), or 6(g) the date
specified in the Notice of Termination, and (v) if Executive's employment is
terminated for any other reason, the date on which a Notice of Termination is
given.
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8. AMOUNTS DUE UPON TERMINATION OR DURING DISABILITY. In the event
Executive is disabled or his employment terminates during the Employment Period,
the Company shall provide Executive with the payments set forth below.
Executive acknowledges and agrees that the payments set forth in this Section 8
constitute liquidated damages for termination of his employment during the
Employment Period.
(a) During any period that Executive fails to perform his duties
hereunder as a result of Disability ("disability period"), Executive shall
continue to receive his Base Salary at the rate then in effect for such period
until his employment is terminated pursuant to Section 6(c) hereof; PROVIDED,
THAT, payments so made to Executive during the first six (6) months of the
disability period shall be reduced by the sum of the amounts, if any, paid to
the Executive at or prior to the time of any such payment under disability
benefit plans of the Company or under the Social Security disability insurance
program, and which amounts were not previously applied to reduce any such
payment. Executive shall also be entitled to any other benefits or payments
provided pursuant to any plan or policy of the Company in accordance with such
plan's or policy's terms.
(b) If Executive is terminated pursuant to Sections 6(a), 6(b),
6(d), or 6(f) the Company shall pay Executive his accrued, but unpaid Base
Salary and Bonus through the Date of Termination at the rate in effect at the
time Notice of Termination is given, and the Company shall have no further
obligations to Executive under this Agreement; PROVIDED, THAT, Executive shall
be entitled to any other benefit or payment provided pursuant to any plan or
policy of the Company in accordance with such plan's or policy's terms.
(c) If Executive's employment is terminated pursuant to Sections
6(e) or 6(g), the Company shall pay to Executive his (A) Base Salary accrued
through the Date of Termination and (B) a lump-sum payment equal to the
remaining Base Salary and Average Bonus (as defined below) that would have been
paid to Executive had his employment continued through the Employment Period
(the "Remaining Period"); PROVIDED THAT, Executive shall be entitled to a
minimum payment of one (1) times Executive's then current Base Salary and
Average Bonus. All such payments shall be made as soon as administratively
feasible following such termination. Executive shall also be entitled to any
other benefits or payments provided pursuant to any plan or policy of the
Company in accordance with such plan's or policy's terms, except as provided in
Section 5(d). For purposes of the foregoing, "Average Bonus" means the average
annual Bonus paid to Executive by the Company (or its successors) during the
three year period immediately preceding his Date of Termination.
(d) CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
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(i) Notwithstanding anything in this Agreement to the contrary,
in the event it shall be determined that any payment, award, benefit or
distribution (or any acceleration of any payment, award, benefit or
distribution) by the Company (or any of its affiliated entities) or any entity
which effectuates (or has previously effectuated) a change in control (or any of
its affiliated entities) to or for the benefit of Executive (whether pursuant to
the terms of this Agreement or otherwise) (the "Payments") would be subject to
the excise tax (the "Excise Tax") under Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code"), then the amounts payable to Executive
under this Agreement shall be the greater of (A) the Payment, if the result of
subtracting the Excise Tax from the Payment is more than the Safe Harbor Cap and
(B) the Payment, reduced to the maximum amount as will result in no portion of
the Payments being subject to the Excise Tax (the "Safe Harbor Cap"), reducing
first the payments under Section 8(c)(B), unless an alternative method of
reduction is elected by Executive. For purposes of reducing the Payments to the
Safe Harbor Cap, only amounts payable to Executive under this Agreement (and no
other Payments) shall be reduced, unless consented to by Executive.
(ii) All determinations required to be made under this Section 8
shall be made by the nationally recognized public accounting firm that is
selected by Executive (the "Accounting Firm"). If payments are reduced to the
Safe Harbor Cap, the Accounting Firm shall provide a reasonable opinion to
Executive that he is not required to report any Excise Tax on his federal income
tax return. All fees, costs and expenses (including, but not limited to, the
costs of retaining experts) of the Accounting Firm shall be borne by the
Company. The determination by the Accounting Firm shall be binding upon the
Company and Executive (except as provided in paragraph (iii) below).
(iii) If payments are reduced to the Safe Harbor Cap as
provided in Section 8(d)(i)(B) and if it is established pursuant to a final
determination of a court or an Internal Revenue Service (the "IRS") proceeding
which has been finally and conclusively resolved, that Payments have been made
to, or provided for the benefit of, Executive by the Company, which are in
excess of the limitations provided in this Section 8(d)(i)(B) (hereinafter
referred to as an "Excess Payment"), such Excess Payment shall be deemed for all
purposes to be a loan to Executive made on the date Executive received the
Excess Payment and Executive shall repay the Excess Payment to the Company on
demand, together with interest on the Excess Payment at the applicable federal
rate (as defined in Section 1274(d) of the Code) from the date of Executive's
receipt of such Excess Payment until the date of such repayment. As a result of
the uncertainty in the application of Section 4999 of the Code at the time of
the determination, it is possible that Payments which will not have been made by
the Company should have been made (an "Underpayment"), consistent with the
calculations required to be made under this Section 8. In the event that it is
determined (A) by the Accounting Firm, the Company (which shall include the
position taken by the Company, or together with its consolidated
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group, on its federal income tax return) or the IRS or (B) pursuant to a
determination by a court, that an Underpayment has occurred, the Company shall
pay an amount equal to such Underpayment to Executive within ten (10) days of
such determination together with interest on such amount at the applicable
federal rate from the date such amount would have been paid to Executive until
the date of payment.
9. CONFIDENTIAL INFORMATION AND REMOVAL OF DOCUMENTS.
(a) Executive shall hold in a fiduciary capacity for the benefit
of the Company all secret or confidential information, knowledge or data
relating to the Company or any Affiliate, and their respective businesses
("Confidential Information"), which shall have been obtained by Executive during
Executive's employment by the Company or any Affiliate and which shall not be or
become public knowledge (other than by acts by Executive or representatives of
Executive in violation of this Agreement). After termination of Executive's
employment with the Company, Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it.
(b) All records, files, drawings, documents, models, equipment,
and the like containing Confidential Information or needed in the Company's
business which Executive has control over shall not be removed from the
Company's premises without its written consent, unless such removal is in the
furtherance of the Company's business or is in connection with Executive's
carrying out his duties under this Agreement and, if so removed, shall be
returned to the Company promptly after termination of Executive's employment
hereunder, or otherwise promptly after removal if such removal occurs following
termination of employment. Executive's rolodex, telephone directory and similar
type items, and furniture, art work and property owned by Executive or otherwise
not owned by the Company shall not be deemed Company property and shall not be
covered by this Section 9(b). The Company shall be the owner of all trade
secrets and other products relating to the Company's business developed by
Executive alone or in conjunction with others as part of his employment with the
Company.
10. NON-COMPETITION.
(a) In consideration of the benefits to be provided to Executive
hereunder, Executive covenants that he will not, without the prior written
consent of the Company, during the Employment Period and the twelve (12) month
period following his termination of employment for any reason or, if terminated
pursuant to Section 6(e) hereof, the Remaining Period, if greater (the
"Restriction Period"), engage in any way, directly or indirectly, in any
business whose product or activities directly compete with
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the products or activities of Philips Medical Systems or the Company anywhere
where Philips Medical Systems or the Company conducts its businesses, other than
in his capacity as an employee of the Company.
(b) Executive hereby covenants and agrees that, at all times
during the Employment Period and for a period of one (1) years immediately
following his termination for any reason, Executive shall not employ or seek to
employ any person employed at that time by Philips Medical Systems or the
Company, or otherwise encourage or entice such person or entity to leave such
employment.
(c) Executive hereby covenants and agrees that, at all times
during the Restriction Period, Executive will not (i) pursue or attempt to
develop any project known to Executive and which Philips Medical Systems or the
Company are pursuing, developing or attempting to develop as of the Date of
Termination ("Project"), directly or indirectly, alone, in association with or
as a shareholder, principal, agent, partner, officer, director, employee or
consultant of any other organization or (ii) divert to any entity which is
engaged in any business conducted by Philips Medical Systems or the Company in
the same geographic area as Philips Medical Systems or the Company, any Project
or any customer of Philips Medical Systems or the Company.
(d) Executive acknowledges that the restrictions, prohibitions
and other provisions of this Section 10 are reasonable, fair and equitable in
scope, terms and duration, are necessary to protect the legitimate business
interests of the Company and are a material inducement to the Company to enter
into this Agreement. It is the intention of the parties hereto that the
restrictions contained in this paragraph be enforceable to the fullest extent
permitted by applicable law. Therefore, to the extent any court of competent
jurisdiction shall determine that any portion of the foregoing restrictions is
excessive, such provision shall not be entirely void, but rather shall be
limited or revised only to the extent necessary to make it enforceable.
11. REMEDY. Should Executive engage in or perform any of the acts
prohibited by Sections 9 and 10, it is agreed that the Company shall be entitled
to full injunctive relief, to be issued by any competent court of equity,
enjoining and restraining Executive and each and every other person, firm,
organization, association, or corporation concerned therein, from the
continuance of such violative acts. The foregoing remedy available to Company
shall not be deemed to limit or prevent the exercise by the Company of any or
all further rights and remedies which may be available to the Company hereunder
or at law or in equity.
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12. SUCCESSORS; BINDING AGREEMENT. This Agreement shall be binding
upon and shall inure to the benefit of Executive, his heirs, executors,
administrators, beneficiaries and assigns and shall be binding upon and shall
inure to the benefit of the Company and its successors.
13. NOTICE. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered either personally or by
United States certified or registered mail, return receipt requested, postage
prepaid, addressed, in case of Executive, to the last address on file with the
Company and if to the Company, to its executive offices or to such other address
as any party may have furnished to the others in writing in accordance herewith,
except that notices of change of address shall be effective only upon receipt.
14. RESOLUTION OF DIFFERENCES OVER BREACHES OF AGREEMENT. The
parties shall use good faith efforts to resolve any controversy or claim arising
out of, or relating to this Agreement or the breach thereof, first in accordance
with the Company's internal review procedures, except that this requirement
shall not apply to any claim or dispute under or relating to Sections 9 or 10 of
this Agreement. If despite their good faith efforts, the parties are unable to
resolve such controversy or claim through the Company's internal review
procedures, then such controversy or claim shall be resolved by a court of law
having jurisdiction thereof. If any contest or dispute shall arise between the
Company and Executive regarding any provision of this Agreement, the parties
shall be responsible for paying all of its own legal fees and expenses incurred
in connection with such contest or dispute.
15. GOVERNING LAW. This Agreement is governed by, and is to be
construed and enforced in accordance with, the laws of the State of Washington,
without regard to principles of conflicts of laws. If, under such law, any
portion of this Agreement is at any time deemed to be in conflict with any
applicable statute, rule, regulation or ordinance, such portion shall be deemed
to be modified or altered to conform thereto or, if that is not possible, to be
omitted from this Agreement, and the invalidity of any such portion shall not
affect the force, effect and validity of the remaining portion hereof.
16. AMENDMENT. No provisions of this Agreement may be amended,
modified, or waived unless such amendment or modification is agreed to in
writing signed by Executive and by a duly authorized officer of the Company, and
such waiver is set forth in writing and signed by the party to be charged. No
waiver by either party hereto at any time of any breach by the other party
hereto of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of
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similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
17. SURVIVAL. The respective obligations of, and benefits afforded
to, Executive and Company as provided in Sections 9 and 10 of this Agreement
shall survive the termination of this Agreement.
18. NO CONFLICT OF INTEREST. During the Employment Period, Executive
shall not directly, or indirectly render service, or undertake any employment or
consulting agreement with another entity without the express written consent of
the Company.
19. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
20. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
of the parties hereto (and in the case of the Company, its predecessors) in
respect of the subject matter contained herein and supersede all prior
agreements, promises, covenants, arrangements, communications, representations
or warranties, whether oral or written, by any officer, employee or
representative of any party hereto in respect of such subject matter, including,
but not limited to, the Employment Agreement by and between ATL Ultrasound, Inc.
and Executive, dated as of the first day of January, 1997 and any and all
amendments made subsequent thereto (the "Prior Agreement"), and as of the
successful consummation of the Offer, such Prior Agreement shall be void and of
no further force or effect. Any prior agreement of the parties hereto in
respect of the subject matter contained herein is hereby terminated and
canceled, as of the successful consummation of the Offer; PROVIDED THAT, this
Agreement shall not modify or terminate the provisions of any compensation or
benefit plan providing benefits upon a change in control of the Company
(excluding the Prior Agreement); PROVIDED, FURTHER, that Executive acknowledges
and agrees that he will be paid no more than 23%, 0.0% and 23.4% of Base Salary
under the 1996-98, 1997-99 and 1998-00 performance cycles, respectively, under
the Company's Long Term Incentive Plan (the "Plan"), effective as of January 1,
1993 and waives all rights for any other payments under such Plan upon payment
of such amounts. Executive acknowledges that in consideration of the benefits
to be provided hereunder, he has waived, as of the successful consummation of
the Offer, all of his rights under the Prior Agreement, including, but not
limited to Section 6 thereof.
21. SECTION HEADINGS. The section headings in this Agreement are for
convenience of reference only, and they form no part of this Agreement and shall
not affect its interpretation.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ATL Ultrasound, Inc.
By: /s/ Dennis C. Fill
----------------------------
/s/ Jacques Souquet
-------------------------------
Jacques Souquet
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EXHIBIT A
French Chamber of Commerce in Seattle
Sonosight, Inc.
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EXHIBIT B
1999-2001 Strategic Plan (*)
Income Statement 1999 2000 2001
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Total Product Revenue 427.9 466.5 511.0
Product Gross Profit 233.9 266.2 292.6
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Service Revenue 103.4 109.4 115.7
Service Gross Profit 43.9 47.2 50.6
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Total Revenue $ 531.3 $ 575.9 $ 626.7
Total Gross Profit $ 277.8 $ 313.4 $ 343.2
Gross Margin 52.3% 54.4% 54.8%
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Operating Expenses
Selling and Marketing 110.1 118.0 126.8
% Revenue 20.7% 20.5% 20.2%
General & Admin 41.6 43.6 46.1
% Revenue 7.8% 7.6% 7.4%
R&D Expense 63.2 67.0 72.0
% Revenue 11.9% 11.6% 11.5%
Other 3.6 6.2 7.8
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Total Operating Expense $ 218.5 $ 234.8 $ 252.6
41% 41% 40%
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Operating Income $ 59.3 $ 78.6 $ 90.6
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(*) The synergies expected to be realized as a result of the Merger will be
between $50 and $70 million, as mutually agreed upon by the parties.
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