EXHIBIT 2
STOCK OPTION AGREEMENT
----------------------
STOCK OPTION AGREEMENT, dated as of September 20, 1998 (the
"Agreement"), between General Electric Company, a New York corporation
---------
("Parent"), and Marquette Medical Systems, Inc., a Wisconsin corporation (the
------
"Company").
-------
W I T N E S S E T H:
WHEREAS, simultaneously with the execution and delivery of this
Agreement, Parent, Emerald Merger Corp., a newly formed Wisconsin 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;
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 3,643,066 authorized and unissued 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
------
3,643,066 authorized and unissued Common Shares, par value $.10 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) 19.9% of
the number of shares of Company Common Stock then issued and outstanding and
19.9% of the voting power of shares of capital stock of the Company then issued
and outstanding, after reduction, to the extent necessary to comply with the
exception to the shareholder approval requirements of the Nasdaq National Market
("NASDAQ"), for any shares issued pursuant to the Option.
------
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) the Company redeems the Rights or amends or
fails to resist a legal challenge to the Company Rights Agreement and 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 Parent or its affiliates or
------
Xxxxxxx X. Xxxxxx so long as he beneficially owns less than 25%), acquires
or becomes the beneficial owner of 20% or more of the outstanding shares of
Company Common Stock; (B) the Company redeems the Rights or amends or fails
to resist a legal challenge to the Company Rights Agreement and any group
(other than a group which includes or may reasonably be deemed to include
Parent or any of its affiliates) is formed which beneficially owns 20% or
more of the outstanding shares of Company Common Stock; (C) any Person
(other than Parent or its affiliates) 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(v) 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 (other than Parent or its affiliates) 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 $45.00 (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
Amended and Restated Articles of Incorporation, as amended, or Amended and
Restated 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 Wisconsin 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 180.1141 of
the WBCL 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 NASDAQ.
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 100,000 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. (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 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). 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(v) 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 last reported sales prices
quoted on NASDAQ 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 last reported sales price quoted on NASDAQ 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.
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 Eastern District of
Wisconsin 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, to:
General Electric Company
x/x XX Xxxxxxx Xxxxxxx
X. X. Xxx 000, X-000
Milwaukee, WI 53201
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 00000-0000
Attention: Vice President and Senior
Counsel - Transactions
Facsimile No.: 000-000-0000
and
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Xxxxxx X. Xxxxxxx, Esq.
Facsimile No.: 312- 853-7036
(b) if to the Company, to:
Marquette Medical Systems, Inc.
0000 X. Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Xxxx X. Xxxxxxxxxx
Facsimile No.: 000-000-0000
with a copy to:
Schoenberg, Fisher, Xxxxxx & Xxxxxxxxx, Ltd.
000 Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
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 Wisconsin 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 180 days 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) or (f) 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 100,000 of the Optioned
Shares.
20. Company Rights Agreement. Until this Agreement and the Option
------------------------
shall terminate in accordance with the terms of Section 19, the Company
covenants and agrees with Parent that it shall not amend Section 35 of the
Company Rights Agreement as set forth in the
First Amendment to the Company Rights Agreement or otherwise modify the Company
Rights Agreement in any manner which adversely affects Parent, the Option or the
Optioned Shares.
21. 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
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
MARQUETTE MEDICAL SYSTEMS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman of the Board
