EXECUTION COPY
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of November 29, 1999 (the "AGREEMENT"),
between General Electric Company, a New York corporation ("PARENT"), and
Mecon, 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, Diamond 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 1,435,843 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
1,435,843 Common Shares, par value $.001 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 following the occurrence of a Triggering Event (as defined below) 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 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 or the delivery
of the Optioned Shares shall be in effect;
(iii) All applicable waiting periods under the HSR Act (as defined below)
shall have expired or been terminated; and
(iv) One or more of the following events (a "TRIGGERING EVENT") 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, other than
Parent or an affiliate of Parent, being referred to hereinafter, singularly or
collectively, as a "PERSON"), 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 (iv), 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 $11.25 (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
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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, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting creditors generally and by
general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law); (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 and, except for filings
required under the blue sky laws of any states and 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 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 20% of the
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
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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 reasonable 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 20% of the 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 (other than fees of Parent's counsel and underwriting fees and
commissions) 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(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
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 Parent hereby and with respect to
which the Parent 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 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, subject to paragraph
(c) below.
(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
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(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) $4,500,000, (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, such remedy being in addition to any other
remedy to which they are entitled at law or in equity.
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:
Diamond Merger Corp.
c/o GE Medical Systems
X.X. Xxx 000, X-000
Xxxxxxxxx, XX 00000
Attention: General Counsel
Facsimile No.: 000-000-0000
with copies to:
GE Medical Systems
0000 Xxxxx Xxxxxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
and:
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
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile No.: 000-000-0000
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(b) if to the Company, to:
Mecon, Inc.
000 Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attention: President
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx 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; JURISDICTION. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof. Each party hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court for the Southern District of
New York. Each party hereto waives any right to a trial by jury in connection
with any action, suit or proceeding and waives any objection based on FORUM NON
CONVENIENS or any other objection to venue 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) 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
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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 for
the period until the date that the Parent is permitted to sell shares of Company
Common Stock without any restrictions (including volume and manner of sale)
under Rule 144 as promulgated by the SEC under the Securities Act of 1933.
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 the amendment to the Preferred Shares
Rights Agreement as set forth in the Preferred Shares Rights Agreement
Amendment, dated as of November 29, 1999, or otherwise modify the Company's
Preferred Shares Rights Agreement in any manner which adversely affects Parent
in connection with the Parent's acquisition of the Optioned Shares, 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,
a New York Corporation
By: /s/ J. Xxxxx Xxxxxx
--------------------------------------
Name: J. Xxxxx Xxxxxx
Title: VICE PRESIDENT AND GENERAL
COUNSEL
GE MEDICAL SYSTEMS
MECON, INC.,
a Delaware Corporation
By: /s/ Xxxx Xxxxx
--------------------------------------
Name: Xxxx Xxxxx
Title: PRESIDENT AND CHIEF
EXECUTIVE OFFICER
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