STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of September 21, 2001 (the
"AGREEMENT"), between General Electric Company, a New York corporation
("PARENT"), and Imatron Inc., a New Jersey corporation (the "COMPANY").
RECITALS
A. Simultaneously with the execution and delivery of this Agreement,
Parent, Ruby Merger Corp., a newly formed New Jersey corporation and a direct
wholly owned subsidiary of Parent ("SUB"), and the Company are entering into
the 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");
B. 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 19.9% of the authorized and unissued shares of Company Common
Stock, upon the terms and subject to the conditions hereof; and
C. 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 a number of shares equal to 19.9% of the authorized and issued shares of
Common Stock, no par value per share, of the Company (the "COMPANY COMMON
STOCK") outstanding at the time of the Stock Exercise Notice (as defined
below), 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. If
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. If 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 or
the delivery of the Optioned Shares shall be in effect;
(iii) All waiting periods under the HSR Act (as defined
below) that are applicable to the exercise of the Option 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
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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-18 promulgated under the Exchange Act; and
(iii) All waiting periods under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR ACT") applicable to
the exercise of the Option 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 $1.89 (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 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
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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 New Jersey 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 the New Jersey Corporation Takeover Bid Disclosure Law and the
Business Corporation Act of New Jersey 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 shareholder 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 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.
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(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 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 single period not to exceed 90 days during
any 365 day period, 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) For a period of 90 days after the termination of the Option
granted hereunder pursuant to Section 19, 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
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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 (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) $11,000,000, (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, 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:
if to Parent or Sub, to:
Ruby Merger Corp.
c/o GE Medical Systems
X.X. Xxx 000, X-000
Xxxxxxxxx, XX 00000
Attn: General Counsel
Fax: 000-000-0000
with copies to:
GE Medical Systems
0000 Xxxxx Xxxxxxxxx Xxxx.
Xxxxxxxx, XX 00000
Attn: General Counsel
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and:
General Electric Company
0000 Xxxxxx Xxxxxxxx
Xxxxxxxxx, XX 00000-0000
Attn: Vice President and Senior Counsel - Transactions
and
Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 Xxxxxxxxxx Xxxxxx , Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Facsimile No.: 000-000-0000
and
XxXxxxxx & English, LLP
000 Xxxxxxxx Xxxxxx
Xxxxxx, X.X. 00000 - 4096
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile No.: 000-000-0000
(b) if to the Company, to:
Imatron Inc.
000 Xxxxxx Xxxxx Xxxx
Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: S. Xxxxx Xxxxx
with a copy to:
Xxxxx Xxxxxxx Xxxx Xxxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx
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
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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 New York,
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 (a) the Effective Time and (b) 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 (b)
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 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. CAPITALIZED TERMS. Capitalized terms not otherwise defined in this
Agreement shall have the meanings set forth in the Merger Agreement.
21. 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
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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.
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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
Signature Page to Option Agreement
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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.
IMATRON INC.
a New Jersey corporation
By: /s/ S. Xxxxx Xxxxx
-------------------
Name: S. Xxxxx Xxxxx
Title: Chief Executive Officer
Signature Page to Option Agreement
