EXHIBIT 99(b)
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EXECUTION COPY
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STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of August 7, 1999 (the
"Agreement"), between General Electric Company, a New York corporation
("Parent"), and OEC Medical Systems, Inc., a Delaware corporation (the
"Company").
W I T N E S S E T H:
WHEREAS, simultaneously with the execution and delivery of
this Agreement, Parent, Ruby Merger Corp., a newly formed Delaware corporation
and a direct wholly owned subsidiary of Parent ("Sub"), and the Company are
entering into an Agreement and Plan of Merger, dated as of the date hereof (the
"Merger Agreement"), which provides for the merger of Sub with and into the
Company (the "Merger");
WHEREAS, as a condition to Parent's willingness to enter into
the Merger Agreement, Parent has requested that the Company grant to Parent an
option to purchase up to 2,243,346 shares of Company Common Stock, upon the
terms and subject to the conditions hereof; and
WHEREAS, in order to induce Parent to enter into the Merger
Agreement, the Company has agreed to grant Parent the requested option.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements set forth herein, the parties hereto agree as
follows:
1. The Option; Exercise; Adjustments. The Company hereby
grants to Parent an irrevocable option (the "Option") to purchase from time to
time up to 2,243,346 Common Shares, par value $.01 per share, of the Company
(the "Company Common Stock"), upon the terms and subject to the conditions set
forth herein (the "Optioned Shares"). Subject to the conditions set forth in
Section 2, the Option may be exercised by Parent in whole or from time to time
in part, at any time after the date hereof and prior to the termination of the
Option in accordance with Section 19. In the event Parent wishes to exercise the
Option, Parent shall send a written notice to the Company (the "Stock Exercise
Notice") specifying the total number of Optioned Shares it wishes to purchase
and a date (not later than 20 business days and not earlier than two business
days from the date such notice is given) for the closing of such purchase (the
"Closing Date"). Parent may revoke an exercise of the Option at any time prior
to the Closing Date by written notice to the Company. In the event of any change
in the number of issued and outstanding shares of Company Common Stock by reason
of any stock dividend, stock split, split-up, recapitalization, merger or other
change in the corporate or capital structure of the Company, the number of
Optioned Shares subject to the Option and the Exercise Price (as hereinafter
defined) per Optioned Share shall be appropriately adjusted. In the event that
any additional shares of Company Common Stock are issued after the date of this
Agreement (other than pursuant to an event described in the preceding sentence
or pursuant to this Agreement), the number of Optioned Shares subject to the
Option shall be adjusted so that, after such issuance, it equals (but does not
exceed) 15% of the number of shares of Company Common Stock then issued and
outstanding and 15% of the voting power of shares of capital stock of the
Company then issued and outstanding.
2. Conditions to Exercise of Option and Delivery of Optioned
Shares. (a) Parent's right to exercise the Option is subject to the following
conditions:
(i) Neither Parent nor Sub shall have breached any of its material
obligations under the Merger Agreement;
(ii) No preliminary or permanent injunction or other order issued by
any federal or state court of competent jurisdiction in the United States
invalidating the grant or prohibiting the exercise of the Option shall be in
effect; and
(iii) One or more of the following events shall have occurred on or
after the date hereof: (A) any person, corporation, partnership, limited
liability company or other entity or group (such person, corporation,
partnership, limited liability company or other entity or group being referred
to hereinafter, singularly or collectively, as a "Person") (other than
Xxxxxxxxx-Xxxx Associates, Inc., FLA Advisers, L.L.C., FLA Asset Management,
Inc. and Stamford Advisers Corp., so long as the aggregate beneficial ownership
of these four entities does not exceed 25%), acquires or becomes the beneficial
owner of 20% or more of the outstanding shares of Company Common Stock; (B) any
group is formed which beneficially owns 20% or more of the outstanding shares of
Company Common Stock; (C) any Person shall have commenced a tender or exchange
offer for 20% or more of the then outstanding shares of Company Common Stock or
publicly proposed any bona fide merger, consolidation or acquisition of all or
substantially all the assets of the Company, or other similar business
combination involving the Company; (D) the Company enters into, or announces
that it proposes to enter into, an agreement, including, without limitation, an
agreement in principle, providing for a merger or other business combination
involving the Company or a "significant subsidiary" (as defined in Rule 1.02(w)
of Regulation S-X as promulgated by the Securities and Exchange Commission (the
"SEC")) of the Company or the acquisition of a substantial interest in, or a
substantial portion of the assets, business or operations of, the Company or a
significant subsidiary (other than the transactions contemplated by the Merger
Agreement); (E) any Person is granted any option or right, conditional or
otherwise, to acquire or otherwise become the beneficial owner of shares of
Company Common Stock which, together with all shares of Company Common Stock
beneficially owned by such Person, results or would result in such Person being
the beneficial owner of 20% or more of the outstanding shares of Company Common
Stock; or (F) there is a public announcement with respect to a plan or intention
by the Company, other than Parent or its affiliates, to effect any of the
foregoing transactions. For purposes of this subparagraph (iii), the terms
"group" and "beneficial owner" shall be defined by reference to Section 13(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations promulgated thereunder.
(b) Parent's obligation to purchase the Optioned Shares
following the exercise of the Option, and the Company's obligation to deliver
the Optioned Shares, are subject to the conditions that:
(i) No preliminary or permanent injunction or other order issued by any
federal or state court of competent jurisdiction in the United States
prohibiting the delivery of the Optioned Shares shall be in effect;
(ii) The purchase of the Optioned Shares will not violate Rule 10b-13
promulgated under the Exchange Act; and
(iii) All applicable waiting periods under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), shall have
expired or been terminated.
3. Exercise Price for Optioned Shares. At any Closing Date,
the Company will deliver to Parent a certificate or certificates representing
the Optioned Shares in the denominations designated by Parent in its Stock
Exercise Notice and Parent will purchase the Optioned Shares from the Company at
a price per Optioned Share equal to $36.00 of Merger Agreement (the "Exercise
Price"), payable in cash. Payment made by Parent to the Company pursuant to this
Agreement shall be made by wire transfer of federal funds to a bank designated
by the Company or a check payable in immediately available funds. After payment
of the Exercise Price for the Optioned Shares covered by the Stock Exercise
Notice, the Option shall be deemed exercised to the extent of the Optioned
Shares specified in the Stock Exercise Notice as of the date such Stock Exercise
Notice is given to the Company.
4. Representations and Warranties of the Company. The Company
represents and warrants to Parent that (a) the execution and delivery of this
Agreement by the Company and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company and this Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms; (b) the
Company has taken all necessary corporate action to authorize and reserve the
Optioned Shares for issuance upon exercise of the Option, and the Optioned
Shares, when issued and delivered by the Company to Parent upon exercise of the
Option, will be duly authorized, validly issued, fully paid and nonassessable
and free of preemptive rights; (c) except as otherwise required by the HSR Act,
except for routine filings and subject to Section 7, the execution and delivery
of this Agreement by the Company and the consummation by it of the transactions
contemplated hereby do not require the consent, approval or authorization of, or
filing with, any person or public authority and will not violate or conflict
with the Company's Certificate of Incorporation, or Bylaws, or result in the
acceleration or termination of, or constitute a default under, any indenture,
license, approval, agreement, understanding or other instrument, or any statute,
rule, regulation, judgment, order or other restriction binding upon or
applicable to the Company or any of its subsidiaries or any of their respective
properties or assets; (d) the Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby; and (e) the
Company has taken all appropriate actions so that the restrictions on business
combinations contained in Section 203 of the DGCL will not apply with respect to
or as a result of the transactions contemplated hereby.
5. Representations and Warranties of Parent. Parent represents
and warrants to the Company that (a) the execution and delivery of this
Agreement by Parent and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Parent and this Agreement has been duly executed and delivered by Parent and
constitutes a valid and binding agreement of Parent; and (b) Parent is acquiring
the Option and, if and when it exercises the Option, will be acquiring the
Optioned Shares issuable upon the exercise thereof, for its own account and not
with a view to distribution or resale in any manner which would be in violation
of the Securities Act of 1933, as amended (the "Securities Act"), and will not
sell or otherwise dispose of the Optioned Shares except pursuant to an effective
registration statement under the Securities Act or a valid exemption from
registration under the Securities Act.
6. The Closing. Any closing hereunder shall take place on the
Closing Date specified by Parent in its Stock Exercise Notice pursuant to
Section 1 at 10:00 A.M., local time, or the first business day thereafter on
which all of the conditions in Section 2 are met, at the principal executive
office of the Company, or at such other time and place as the parties hereto may
agree.
7. Filings Related to Optioned Shares. The Company will make
such filings with the SEC as are required by the Exchange Act, and will use its
best efforts to effect all necessary filings by the Company under the HSR Act
and to have the Optioned Shares approved for quotation on New York Stock
Exchange (the "NYSE").
8. Registration Rights. (a) If the Company effects any
registration or registrations of shares of Company Common Stock under the
Securities Act for its own account or for any other stockholder of the Company
at any time after the exercise of the Option (other than a registration on Form
X-0, Xxxx X-0 or any successor forms), it will allow Parent to participate in
such registration or registrations with respect to any or all of the Optioned
Shares acquired upon the exercise of the Option; provided, however, that any
request of Parent pursuant to this Section 8(a) shall be with respect to at
least 250,000 Optioned Shares and provided, further, that if the managing
underwriters in such offering advise the Company that, in their written opinion,
the number of Optioned Shares requested by Parent to be included in such
registration exceeds the number of shares of Company Common Stock which can be
sold in such offering, the Company may exclude from such registration all or a
portion, as may be appropriate, of the Optioned Shares requested for inclusion
by Parent.
(b) At any time after the exercise of the Option, upon the
request of Parent, the Company will promptly file and use its best efforts to
cause to be declared effective a registration statement under the Securities Act
(and applicable Blue Sky statutes) with respect to any or all of the Optioned
Shares acquired upon the exercise of the Option; provided, however, that any
request of Parent pursuant to this Section 8(b) shall be with respect to at
least 1,000,000 Optioned Shares and provided, further, that the Company shall
not be required to have declared effective more than two registration statements
hereunder and shall be entitled to delay the effectiveness of each such
registration statement, for a period not to exceed 90 days in the aggregate, if
the commencement of such offering would, in the reasonable good faith judgment
of the Board of Directors of the Company, require premature disclosure of any
material corporate development or otherwise materially interfere with or
materially adversely affect any pending or proposed offering of securities of
the Company. In connection with any such registration requested by Parent, the
costs of such registration shall be borne by the Company, and the Company and
Parent each shall provide the other and any underwriters with customary
indemnification and contribution agreements.
9. Optional Put; Optional Repurchase; Excess Compensation. (a)
Prior to the termination of the Option in accordance with Section 19, if a Put
Event has occurred, Parent shall have the right, upon three business days' prior
written notice to the Company, to require the Company to purchase the Option
from Parent (the "Put Right") at a cash purchase price (the "Put Price") equal
to the lesser of (x) the product determined by multiplying (A) the number of
Optioned Shares as to which the Option has not yet been exercised by (B) the
Spread (as defined below); and (y) the difference found by subtracting any
Termination Fee paid by the Company under Section 5.6 of the Merger Agreement
from $25,000,000. As used herein, "Put Event" means the occurrence on or after
the date hereof of any of the following: (i) any Person (other than Parent or
its affiliates) acquires or becomes the beneficial owner of 50% or more of the
outstanding shares of Company Common Stock or (ii) the Company consummates a
merger or other business combination involving the Company or a "significant
subsidiary" (as defined in Rule 1.02(w) of Regulation S-X as promulgated by the
SEC) of the Company or the acquisition of a substantial interest in, or a
substantial portion of the assets, business or operations of, the Company or a
significant subsidiary (other than the transactions contemplated by the Merger
Agreement). As used herein, the term "Spread" shall mean the excess, if any, of
(i) the greater of (x) the highest price (in cash or fair market value of
securities or other property) per share of Company Common Stock paid or to be
paid within 12 months preceding the date of exercise of the Put Right for any
shares of Company Common Stock beneficially owned by any Person who shall have
acquired or become the beneficial owner of 20% or more of the outstanding shares
of Company Common Stock after the date hereof or (y) the average of the daily
volume-weighted sales prices quoted on NYSE of the Company Common Stock during
the five trading days immediately preceding the written notice of exercise of
the Put Right over (ii) the Exercise Price.
(b) At any time after the termination of the Option granted
hereunder pursuant to Section 19 and for a period of 90 days thereafter, the
Company shall have the right, upon three business days' prior written notice, to
repurchase from Parent (the "Repurchase Right"), all (but not less than all) of
the Optioned Shares acquired by the Company hereby and with respect to which the
Company then has beneficial ownership (as defined in Rule 13d-3 under the
Exchange Act) at a price per share equal to the greater of (i) the average of
the daily volume-weighted sales price quoted on NYSE of the Company Common Stock
during the five trading days immediately preceding the written notice of
exercise of the Repurchase Right and (ii) the Exercise Price, plus interest at a
rate per annum equal to the costs of funds to Parent at the time of exercise of
the Repurchase Right; provided, however, that the aggregate price payable
pursuant to this Section 9(b) shall not exceed $25,000,000 less any Termination
Fee paid by the Company under Section 5.6 of the Agreement.
(c) Parent shall deliver to the Company all "Excess
Compensation" realized upon the sale of any Optioned Shares. "Excess
Compensation" shall mean the amount, if any, by which the sum of (i) the
aggregate gross proceeds received upon the sale of any Optioned Shares, and (ii)
any Termination Fee paid by the Company under Section 5.6 of the Merger
Agreement, exceeds the sum of (x) $25,000,000, (y) the aggregate Exercise Price
paid, and (z) any underwriters discount or selling commission incurred by Parent
in connection with the acquisition and disposition of the Optioned Shares.
10. Expenses. Each party hereto shall pay its own expenses
incurred in connection with this Agreement, except as otherwise provided in
Section 8 or as specified in the Merger Agreement.
11. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state thereof having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity. Each party hereby
irrevocably submits to the exclusive jurisdiction of the United States District
Court for either the District of Connecticut or the District of Delaware 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 courts
(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.
12. Notice. All notices, requests, demands and other
communications hereunder shall be deemed to have been duly given and made if in
writing and if served by personal delivery upon the party for whom it is
intended or if sent by telex or telecopier (and also confirmed in writing) to
the person at the address set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such person:
(a) if to Parent or Sub, to:
General Electric Company
c/o GE Medical Systems
X.X. Xxx 000, X-000
Xxxxxxxxx, XX 00000
Attention: General Counsel
Facsimile No.: 000-000-0000
for overnight courier deliveries, to:
General Electric Company
c/o GE Medical Systems
0000 Xxxxx Xxxxxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
with copies to:
General Electric Company
0000 Xxxxxx Xxxxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000-00000
Attention: Vice President and Senior Counsel - Transactions
Facsimile No.: 000-000-0000
and
Xxxxxx, Xxxx & Xxxxxxxx, LLP
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Facsimile No.: 000-000-0000
(b) if to the Company, to:
OEC Medical Systems, Inc.
000 Xxxxxx Xxxxxxxx Xxxxx
Xxxx Xxxx Xxxx, XX 00000
Attention: President
Facsimile No.:
with a copy to:
Holland & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000-0000
Attention: Xxxxx X. Xxxx
Facsimile No.: 000-000-0000
13. Parties in Interest. This Agreement shall inure to the
benefit of and be binding upon the parties named herein and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any Person other than Parent or the Company, or their
permitted successors or assigns, any rights or remedies under or by reason of
this Agreement.
14. Entire Agreement; Amendments. This Agreement, together
with the Merger Agreement and the other documents referred to therein, contains
the entire agreement between the parties hereto with respect to the subject
matter hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such transactions. This
Agreement may not be changed, amended or modified orally, but only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge may be sought.
15 Assignment. No party to this Agreement may assign any of
its rights or delegate any of its obligations under this Agreement (whether by
operation of law or otherwise) without the prior written consent of the other
party hereto, except that Parent may, without a written consent, assign its
rights and delegate its obligations hereunder in whole or in part to one or more
of its direct or indirect wholly owned subsidiaries.
16. Headings. The section headings herein are for convenience
only and shall not affect the construction of this Agreement.
17. Counterparts. This Agreement may be executed in one or
more counterparts, each of which, when executed, shall be deemed to be an
original and all of which together shall constitute one and the same document.
18. Governing Law. Except to the extent that the laws of the
State of Delaware are mandatorily applicable to the Merger, this Agreement shall
be governed by, and construed in accordance with, the laws of the State of New
York, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
19. Termination. This Agreement and the Option shall terminate
upon the earlier of (i) the Effective Time and (ii) the termination of the
Merger Agreement in accordance with its terms; provided, however, the Option
shall not terminate until 12 months after a termination pursuant to clause (ii)
immediately above if (A) the Merger Agreement is terminated by Parent pursuant
to Section 7.1(b), (c), (f) or (h) thereof, (B) the Merger Agreement is
terminated by Parent or the Company pursuant to Section 7.1(e) or (g) thereof or
(C) the Merger Agreement is terminated by the Company pursuant to Section
7.1(d)(i) thereof after receipt of a Superior Proposal; provided, further, that
this Agreement shall not terminate with respect to the Repurchase Right set
forth in Section 9(b) until 90 days after the termination of the Option pursuant
to the foregoing proviso. Notwithstanding the foregoing, the provisions of
Section 8 shall survive the termination of this Agreement until such time as
Parent or any of its affiliates ceases to beneficially own at least 250,000 of
the Optioned Shares.
20. Capitalized Terms. Capitalized terms not otherwise defined
in this Agreement shall have the meanings set forth in the Merger Agreement.
22. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated by this Agreement may be consummated as
originally contemplated to the fullest extent possible.
IN WITNESS WHEREOF, Parent and the Company have caused this
Agreement to be duly executed and delivered on the day and year first above
written.
GENERAL ELECTRIC COMPANY,
a New York corporation
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
OEC MEDICAL SYSTEMS, INC.
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: President & Chief Executive Officer
