<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 16, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
GENERAL ELECTRIC COMPANY
(Exact Name of Registrant as Specified in its Charter)
------------------------------
<TABLE>
<S> <C> <C>
NEW YORK 3724 14-0689340
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
Incorporation or Organization) No.)
</TABLE>
3135 EASTON TURNPIKE
FAIRFIELD, CONNECTICUT 06431-0001
(203) 373-2211
(Address and telephone number of Registrant's principal executive offices)
ROBERT E. HEALING
3135 EASTON TURNPIKE
FAIRFIELD, CONNECTICUT 06431-0001
(203) 373-2243
(Name, address and telephone number of agent for service)
------------------------------
Copies to:
THOMAS A. COLE MELVIN S. NEWMAN
Sidley & Austin Schoenberg, Fisher, Newman &
One First National Plaza Rosenberg, Ltd.
Chicago, Illinois 60603 222 South Riverside Plaza, Suite 2100
(312) 853-7000 Chicago, Illinois 60606
(312) 648-2300
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As promptly
as practicable after this Registration Statement becomes effective and the
effective time of the proposed merger of Emerald Merger Corp., a wholly owned
subsidiary of the Registrant, with and into Marquette Medical Systems, Inc., as
described herein.
------------------------------
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
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If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
- ---------
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED(1) PER SHARE OFFERING PRICE(2) REGISTRATION FEE(2)
<S> <C> <C> <C> <C>
Common Stock, $.16 par value.................. 11,630,850 Not applicable $890,077,490 $262,573(3)
</TABLE>
(1) Based upon the maximum number of shares of Common Stock that the Registrant
may be required to issue in the Merger, calculated as the product of (i)
20,157,452, the aggregate number of shares of Common Stock, par value $.10
each per share, of Marquette outstanding on September 20, 1998 or issuable
pursuant to outstanding stock options and (ii) an exchange ratio of .577
shares of GE Common Stock for each share of Marquette Common Stock, computed
from a GE share price of $77.94 (the average of the 52-week high and low
sale prices for GE Common Stock).
(2) Estimated solely for the purpose of calculating the registration fee
required by Section 6(b) of the Securities Act of 1933, as amended, and
computed pursuant to Rule 457(f)(1) thereunder on the basis of the market
value of the Marquette Common Stock to be exchanged in the Merger, which was
computed, in accordance with Rule 457(c), as the product of (i) $44.15625
(the average of the high and low prices per share of Marquette Common Stock
on October 13, 1998 as reported by The Nasdaq National Market) and (ii)
20,157,452, the aggregate number of shares of Marquette Common Stock
outstanding on October 15, 1998 or issuable pursuant to outstanding stock
options.
(3) Pursuant to Rule 457(b), the registration fee has been reduced by the
$175,748 paid on October 2, 1998 upon the filing under the Securities
Exchange Act of 1934 of preliminary copies of Marquette's proxy materials
included herein. Therefore, the registration fee payable upon the filing of
this Registration Statement is $86,825.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE>
MARQUETTE MEDICAL SYSTEMS, INC.
8200 WEST TOWER AVENUE
MILWAUKEE, WISCONSIN 53223
------------------------
October 16, 1998
Dear Fellow Shareholder:
You are cordially invited to attend the special meeting of shareholders of
Marquette Medical Systems, Inc., to be held on Friday, November 20, 1998, at
9:00 a.m., local time, at Marquette's offices located at 8200 West Tower Avenue,
Milwaukee, Wisconsin.
On September 20, 1998, Marquette agreed to be acquired by General Electric
in a merger that values your Marquette shares at $45.00 per share. In the
merger, you will be entitled to receive, in exchange for each Marquette Common
Share you own, a fraction of a share of General Electric common stock that will
be calculated based on the market value of GE common stock shortly before the
completion of the merger.
At the special meeting, you will be asked to approve and adopt the Merger
Agreement. A majority of the votes entitled to be cast at the special meeting
must vote for approval and adoption of the Merger Agreement for the merger to be
completed. If the Merger Agreement is approved and all other conditions
described in the Merger Agreement have been met or, where permissible, waived,
the merger is expected to occur as soon as possible after the special meeting.
AFTER CAREFUL CONSIDERATION, YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY
DETERMINED THAT THE MERGER IS FAIR TO AND IN THE BEST INTERESTS OF MARQUETTE AND
ITS SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT MARQUETTE SHAREHOLDERS VOTE TO
APPROVE AND ADOPT THE MERGER AGREEMENT. YOUR BOARD OF DIRECTORS HAS RECEIVED THE
WRITTEN OPINION OF ROBERT W. BAIRD & CO. INCORPORATED THAT THE CONSIDERATION TO
BE RECEIVED BY MARQUETTE'S SHAREHOLDERS IN THE MERGER IS FAIR FROM A FINANCIAL
POINT OF VIEW TO SUCH HOLDERS.
Under Wisconsin law, holders of Marquette Common Stock are not entitled to
appraisal rights in connection with the merger.
The accompanying Proxy Statement/Prospectus describes the terms and
conditions of the Merger Agreement and includes, as Annex I, a complete text of
the Merger Agreement. I urge you to read the enclosed materials carefully for a
complete description of the merger. Whether or not you plan to attend the
special meeting in person and regardless of the number of shares you own, please
complete, sign, date and return the enclosed proxy card as promptly as possible.
We look forward to seeing you at the special meeting.
Sincerely,
[SIGNATURE]
Michael J. Cudahy
CHAIRMAN OF THE BOARD
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the shares of GE Common Stock to be
issued under this Proxy Statement/Prospectus or determined if this Proxy
Statement/Prospectus is accurate or adequate. Any representation to the contrary
is a criminal offense.
This Proxy Statement/Prospectus is dated October 16, 1998 and is first being
mailed to shareholders on or about October 19, 1998.
<PAGE>
MARQUETTE MEDICAL SYSTEMS, INC.
8200 WEST TOWER AVENUE
MILWAUKEE, WISCONSIN 53223
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 20, 1998
TO THE SHAREHOLDERS OF MARQUETTE MEDICAL SYSTEMS, INC.:
A Special Meeting of Shareholders (the "Special Meeting") of Marquette
Medical Systems, Inc., a Wisconsin corporation ("Marquette"), will be held on
Friday, November 20, 1998, at Marquette's offices located at 8200 West Tower
Avenue, Milwaukee, Wisconsin, commencing at 9:00 a.m., local time, for the
following purposes:
(1) To consider and vote on a proposal to approve and adopt the
Agreement and Plan of Merger dated as of September 20, 1998 (the "Merger
Agreement") among General Electric Company, a New York corporation ("GE"),
Emerald Merger Corp., a Wisconsin corporation and a wholly owned subsidiary
of GE ("Sub"), and Marquette, a copy of which is attached as Annex I to the
Proxy Statement/Prospectus accompanying this notice. The Merger Agreement
provides for the merger of Sub with and into Marquette (the "Merger"),
resulting in Marquette becoming a wholly owned subsidiary of GE. In the
Merger, each Marquette shareholder will be entitled to receive, in exchange
for each Marquette Common Share, par value $.10 per share (the "Marquette
Common Stock"), held by such shareholder, that number of shares of common
stock, par value $.16 per share, of GE (the "GE Common Stock") as shall be
determined by dividing $45.00 by the Average GE Share Price (as defined
below) (the "Merger Consideration"). The "Average GE Share Price" is defined
as the average of the last sale price per share of GE Common Stock on The
New York Stock Exchange, Inc. Composite Tape for the 10 consecutive trading
days ending on the trading day which is five days prior to the closing date
of the Merger.
(2) To consider and transact such other business as may properly be
brought before the Special Meeting or any adjournment thereof.
AFTER CAREFUL CONSIDERATION, YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY
DETERMINED THAT THE MERGER CONSIDERATION IS FAIR TO AND IN THE BEST INTERESTS OF
MARQUETTE AND ITS SHAREHOLDERS. THE BOARD OF DIRECTORS OF MARQUETTE HAS
UNANIMOUSLY APPROVED AND ADOPTED THE MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AT THE SPECIAL
MEETING. You are urged to read the accompanying Proxy Statement/ Prospectus
carefully for a description of the Merger Agreement.
Under Wisconsin law, holders of Marquette Common Stock are not entitled to
appraisal rights in connection with the Merger.
Only holders of Marquette Common Stock of record at the close of business on
October 13, 1998 will be entitled to notice of, and to vote at, the Special
Meeting. A list of the holders of Marquette Common Stock entitled to vote at the
Special Meeting will be open for examination, during ordinary business hours, at
Marquette's principal offices beginning two business days after delivery of this
Notice.
By Order of the Board of Directors,
[LOGO]
Gordon W. Petersen
SECRETARY
Milwaukee, Wisconsin
October 16, 1998
Whether or not you plan to attend the Special Meeting, please complete,
sign, date and return the enclosed proxy card promptly in the enclosed
postage-paid envelope. Shareholders who attend the Special Meeting may revoke
their proxies and vote in person if they desire. PLEASE DO NOT SEND YOUR STOCK
CERTIFICATES WITH YOUR PROXY CARDS AT THIS TIME. Do not send in your stock
certificates until you receive a letter of transmittal.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
SUMMARY................................................................... 1
The Companies........................................................... 1
What You Will Receive in the Merger..................................... 2
The Special Meeting..................................................... 2
Shareholder Agreement................................................... 2
Reasons for the Merger.................................................. 2
Interests of Certain Persons in the Merger.............................. 3
Treatment of Stock Options in the Merger................................ 4
Regulatory Approvals.................................................... 4
Conditions to the Merger................................................ 4
Termination of the Merger Agreement..................................... 5
Termination Fee......................................................... 5
No Solicitation of Competing Transactions............................... 5
Stock Option Agreement.................................................. 5
Appraisal Rights........................................................ 5
Material Federal Income Tax Consequences................................ 5
Forward-Looking Statements May Prove Inaccurate......................... 5
SUMMARY SELECTED FINANCIAL DATA........................................... 7
Selected Historical Financial Data of Marquette......................... 7
Selected Historical Financial Data of GE................................ 8
Significant Factors Affecting Operating Results......................... 8
Comparative Per Share Data.............................................. 9
Comparative Market Price Data........................................... 10
THE SPECIAL MEETING....................................................... 12
General................................................................. 12
Matters to Be Considered at the Special Meeting......................... 12
Voting and Proxies...................................................... 12
Solicitation of Proxies................................................. 13
THE MERGER................................................................ 13
Background of the Merger................................................ 13
Reasons for the Merger; Recommendation of the Marquette Board of
Directors............................................................. 15
Interests of Certain Persons in the Merger; Conflicts of Interest....... 16
Opinion of Robert W. Baird & Co. Incorporated........................... 18
Form of the Merger...................................................... 22
Merger Consideration.................................................... 22
Effective Time.......................................................... 23
Procedures for Exchange of Marquette Common Stock Certificates.......... 23
Anticipated Accounting Treatment........................................ 24
Certain Other Effects of the Merger..................................... 24
Forward-Looking Statements May Prove Inaccurate......................... 25
Material Federal Income Tax Consequences................................ 25
Appraisal Rights........................................................ 26
THE MERGER AGREEMENT...................................................... 26
Certain Representations and Warranties.................................. 26
Certain Covenants and Agreements........................................ 27
Conduct of Business of Marquette...................................... 27
No Solicitation....................................................... 28
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Stock Option Plans.................................................... 29
<S> <C>
Indemnification; Directors' and Officers' Insurance................... 30
Conditions Precedent to the Merger.................................... 30
Termination........................................................... 32
Fees and Expenses..................................................... 33
Amendment; Waiver..................................................... 35
THE STOCK OPTION AGREEMENT................................................ 35
SHAREHOLDER AGREEMENT..................................................... 37
Covenants............................................................... 37
Termination............................................................. 38
REGULATORY MATTERS........................................................ 38
COMPARISON OF RIGHTS OF MARQUETTE SHAREHOLDERS AND GE SHAREHOLDERS........ 38
Authorized Capital Stock................................................ 39
Shareholder Voting Rights Generally..................................... 39
Shareholder Voting in Certain Significant Transactions.................. 39
Special Meetings of Shareholders; Consent to Actions of Shareholders in
Lieu of Meeting....................................................... 40
Business Combinations................................................... 41
Business Conducted at Shareholders' Meetings............................ 42
Dividends............................................................... 42
Dissenters' Appraisal Rights............................................ 42
Warrants or Options..................................................... 42
Number and Term of Directors............................................ 42
Election of Directors................................................... 43
Classification of the Board of Directors................................ 43
Removal of Directors.................................................... 43
Statutory Shareholder Liability......................................... 44
Indemnification......................................................... 44
Transactions with Interested Directors.................................. 45
Shareholder Rights Agreement............................................ 45
DESCRIPTION OF GE'S CAPITAL STOCK......................................... 47
LEGAL MATTERS............................................................. 47
EXPERTS................................................................... 47
FUTURE SHAREHOLDER PROPOSALS.............................................. 48
WHERE YOU CAN FIND MORE INFORMATION....................................... 48
LIST OF DEFINED TERMS..................................................... 50
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
ANNEX I Agreement and Plan of Merger
ANNEX II Opinion of Robert W. Baird & Co. Incorporated
ANNEX III Stock Option Agreement
ANNEX IV Shareholder Agreement
</TABLE>
ii
<PAGE>
SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT AND MAY NOT
CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. TO UNDERSTAND THE
MERGER FULLY AND FOR A MORE COMPLETE DESCRIPTION OF THE LEGAL TERMS OF THE
MERGER, YOU SHOULD READ CAREFULLY THIS ENTIRE DOCUMENT AND THE DOCUMENTS TO
WHICH WE HAVE REFERRED YOU. SEE "WHERE YOU CAN FIND MORE INFORMATION" (PAGE 48).
FOR THE LOCATION OF DEFINITIONS OF CAPITALIZED TERMS USED IN THIS PROXY
STATEMENT/PROSPECTUS, PLEASE SEE "LIST OF DEFINED TERMS" (PAGE 50). WE HAVE
INCLUDED PAGE REFERENCES PARENTHETICALLY TO DIRECT YOU TO MORE COMPLETE
DESCRIPTIONS OF THE TOPICS PRESENTED IN THIS SUMMARY.
IN THE MERGER, EMERALD MERGER CORP., A NEWLY FORMED SUBSIDIARY OF GE, WILL
MERGE WITH AND INTO MARQUETTE. MARQUETTE WILL BE THE SURVIVING CORPORATION IN
THE MERGER AND WILL BECOME A WHOLLY OWNED SUBSIDIARY OF GE. YOU WILL RECEIVE GE
COMMON STOCK IN EXCHANGE FOR YOUR SHARES OF MARQUETTE COMMON STOCK.
THE MERGER AGREEMENT IS ATTACHED AS ANNEX I TO THIS DOCUMENT. WE ENCOURAGE
YOU TO READ THE MERGER AGREEMENT, AS IT IS THE LEGAL DOCUMENT THAT GOVERNS THE
MERGER.
THE COMPANIES
MARQUETTE MEDICAL SYSTEMS, INC.
8200 West Tower Avenue
Milwaukee, Wisconsin 53223
(414) 355-5000
Marquette is a worldwide leader in the development and manufacture of
medical equipment and integrated systems for patient monitoring and diagnostic
cardiology applications. Marquette also develops clinical information systems,
designed to be integrated with medical equipment, consisting of hardware and
software used by integrated health care delivery networks and individual
hospitals to electronically acquire, record, store, analyze and distribute
patient medical data.
GENERAL ELECTRIC COMPANY
3135 Easton Turnpike
Fairfield, Connecticut 06431-000
(203) 373-2211
GE is one of the largest and most diversified industrial corporations in the
world. GE has engaged in developing, manufacturing and marketing a wide variety
of products for the generation, transmission, distribution, control and
utilization of electricity since its incorporation in 1892. Over the years, GE
has developed or acquired new technologies or services that have broadened
considerably the scope of its activities.
GE's products include major appliances; lighting products; industrial
automation products; medical diagnostic imaging equipment; motors; electrical
distribution and control equipment; locomotives; power generation and delivery
products; nuclear power support services and fuel assemblies; commercial and
military aircraft jet engines; and engineered materials, such as plastics,
silicones and superabrasive industrial diamonds.
GE's services include product services; electrical product supply houses;
electrical apparatus installation, engineering, repair and rebuilding services;
and computer-related information services. Through its affiliate, the National
Broadcasting Company, Inc., GE delivers network television services, operates
television stations, and provides cable programming and distribution services.
Through another affiliate, General Electric Capital Services, Inc., GE offers a
broad array of financial and other services, including consumer financing,
commercial and industrial financing, real estate financing, asset management and
leasing, mortgage services, consumer savings and insurance services, specialty
insurance and reinsurance, and satellite communications.
EMERALD MERGER CORP.
3135 Easton Turnpike
Fairfield, Connecticut 06431-0001
(203) 373-2211
Emerald Merger Corp. is a company formed by GE on September 18, 1998 solely
for use in the merger.
1
<PAGE>
WHAT YOU WILL RECEIVE IN THE MERGER (PAGE 22)
If the Merger Agreement is approved and adopted and the merger is
consummated, you will receive, for each share of Marquette Common Stock you own
immediately prior to the merger, approximately $45.00 worth of GE Common Stock.
You will also receive cash instead of fractional shares of GE Common Stock. The
number of shares of GE Common Stock you will receive will be determined by
dividing $45.00 by the "average GE share price." The "average GE share price" is
the average of the last sale price per share of GE Common Stock on the NYSE
Composite Tape for the 10 consecutive trading days ending on the trading day
which is five days prior to the date on which the merger occurs. The last sale
price of GE Common Stock at the time of completion of the merger may be higher
or lower than the "average GE share price" and, as a result, the value at that
time of the shares of GE Common Stock to be received by you may be more or less
than $45 per Marquette share.
EXAMPLE: IF YOU OWN 100 SHARES OF MARQUETTE COMMON STOCK WHEN THE MERGER IS
CONSUMMATED AND IF THE "AVERAGE GE SHARE PRICE" IS $82 (FOR PURPOSES OF THIS
EXAMPLE ONLY), THEN AFTER THE MERGER YOU WOULD BE ENTITLED TO RECEIVE 54 SHARES
OF GE COMMON STOCK, PLUS $73.80 IN CASH IN LIEU OF FRACTIONAL SHARES.
If the Marquette special meeting occurs prior to the end of the period
during which the "average GE share price" is determined, the number of shares of
GE Common Stock issuable for each share of Marquette Common Stock may not be
known at the time you vote on the merger. You may call, toll-free, (800)
507-9357 for information concerning the estimated number of shares of GE Common
Stock that will be issued in exchange for your Marquette Common Stock.
THE SPECIAL MEETING (PAGE 12)
At the special meeting, the holders of Marquette Common Stock will be asked
to approve and adopt the Merger Agreement. The close of business on October 13,
1998 is the record date for determining if you are entitled to vote at the
special meeting. At that date, there were 18,348,292 shares outstanding. Each
share is entitled to one vote at the special meeting. The vote of a majority of
the shares entitled to be cast is required to approve and adopt the Merger
Agreement. On the record date, directors and executive officers of Marquette
owned and had the right to vote 3,924,494 shares of Marquette Common Stock
(approximately 21.4% of the shares of Marquette Common Stock then outstanding).
SHAREHOLDER AGREEMENT (PAGE 37)
As a condition to GE's willingness to enter into the Merger Agreement, GE
entered into a Shareholder Agreement with Michael J. Cudahy, Chairman of the
Board of Marquette. Mr. Cudahy has agreed, without any additional consideration
being paid to him, to vote all of his shares in favor of the merger. As of the
record date, Mr. Cudahy owned and had the right to vote a total of 3,262,588
shares of Marquette Common Stock, approximately 17.8% of the total shares
outstanding on the record date.
REASONS FOR THE MERGER (PAGE 15)
The Marquette Board unanimously approved the Merger Agreement and the merger
and recommends that you vote to approve and adopt the Merger Agreement. The
Marquette Board believes that the merger is in the best interests of Marquette
and its shareholders. In reaching its decision, the Marquette Board considered a
number of factors, including the following:
- the strategic benefits of the merger, including the complementary product
lines of Marquette and GE Medical Systems, a division of GE, which will
give the combined company a broader range of products to offer to
customers;
- the results of operations, financial condition, competitive position and
prospects of Marquette and GE, both on an historical and future basis and
as separate and combined entities;
- the written opinion of Robert W. Baird & Co. Incorporated to the effect
that, as of the date of such opinion, the merger consideration is fair,
from a financial point of view, to the holders of Marquette Common Stock
(other than GE and its affiliates). The full text of Baird's opinion is
attached
2
<PAGE>
as Annex II to this document, and you are urged to read it carefully and
in its entirety. See page 18;
- the Marquette Board's belief that the analyses of Baird supported the
Marquette Board's conclusion that the merger consideration is fair, from a
financial point of view, to, and is in the best interests of, the
Marquette shareholders, both in terms of the immediate financial
consideration to be received and the potential for future appreciation in
value of the GE Common Stock;
- the trading prices and volumes (as well as prospects for future growth in
value) of Marquette Common Stock (with Marquette as a stand-alone entity);
- the opportunity for Marquette's shareholders to become shareholders of GE,
which the Marquette Board viewed as a large, diversified and stable
organization;
- the price certainty of the proposed merger--$45.00 per share regardless of
stock market fluctuations prior to the closing of the merger;
- the benefits of the merger to Marquette's employees, customers and the
communities in which Marquette operates; and
- the structure of the merger, which is intended to permit Marquette
shareholders to exchange their Marquette Common Stock for GE Common Stock
on a tax-free basis, except to the extent that they receive cash for
fractional shares. See "THE MERGER--Material Federal Income Tax
Consequences." (page 25)
To review Marquette's reasons for the merger in greater detail, see "THE
MERGER--Reasons for the Merger; Recommendation of the Marquette Board of
Directors." (page 15)
INTERESTS OF CERTAIN PERSONS IN THE MERGER (PAGE 16)
In considering the recommendation of the Marquette Board regarding the
merger, you should be aware of the interests which executive officers and
directors of Marquette have in the merger that are different from your and their
interests as shareholders.
At October 13, 1998, an aggregate of approximately 863,659 shares of
Marquette Common Stock were subject to options granted to executive officers and
directors of Marquette under various stock option plans. At the time of
completion of the merger, each stock option will become an option to purchase
shares of GE Common Stock.
At the time of signing the Merger Agreement, Michael J. Cudahy, Chairman of
the Board of Marquette, and GE entered into a consulting agreement in which Mr.
Cudahy agreed to act as an advisor to GE and not to compete with the medical
businesses of Marquette or GE during the period Mr. Cudahy acts as an advisor
and for one year after such period. As compensation to Mr. Cudahy, GE will pay
him $200,000 per year for three years.
After consultation with GE, Marquette entered into retention agreements with
each of the executive officers of Marquette, except Mr. Cudahy, including Steven
G. Books, Gary Close, Mary M. Kabacinski, Gerald J. Lentz, Kevin Lindsey,
Frederick A. Robertson and Louis P. Scafuri. Under each of these agreements, if
the merger with GE is completed, Marquette will pay the executive a retention
bonus if the executive remains employed by Marquette for one year following
completion of the merger. If the executive's employment is terminated without
cause or due to death or disability within the first year following completion
of the merger, Marquette will pay the executive a pro rata portion of such
retention bonus and, in the case of termination without cause, the executive
will receive a severance payment. In addition, if the executive remains employed
by Marquette for one year following completion of the merger or if the
employment of the executive is terminated without cause or due to death or
disability, the unexercisable stock options then held by the executive will
become exercisable. The retention agreements also provide that Marquette will
not reduce the base salary or target bonus of any of the executives. As part of
these arrangements, the executives have agreed not to compete with the medical
businesses of Marquette and GE for a specified period after completion of the
merger.
3
<PAGE>
The Marquette Board recognized all the interests described above and
concluded that these interests did not detract from the fairness of the merger
to the holders of Marquette Common Stock who are not executive officers or
directors of Marquette. Please refer to pages 16 through 18 for more information
concerning retention incentives and severance arrangements for Marquette's
executive officers and directors.
TREATMENT OF STOCK OPTIONS IN THE MERGER (PAGE 29)
At the time of completion of the merger, each employee stock option and each
director stock option will become an option to purchase shares of GE Common
Stock. The number of shares of GE Common Stock that will become subject to each
such stock option will be the same as the number of shares of GE Common Stock
into which the shares of Marquette Common Stock subject to such stock option
would have been converted had they been outstanding at the time of completion of
the merger. The per share exercise price of each such stock option will be
adjusted at the time of completion of the merger so that the aggregate exercise
price for all shares subject to such stock option does not change as a result of
the merger. In addition, these stock options will be modified to become
exercisable at certain specified times or upon the happening of certain
specified events after completion of the merger.
REGULATORY APPROVALS (PAGE 38)
The Hart-Scott-Rodino Antitrust Improvements Act of 1976 prohibits Marquette
and GE from completing the merger until Marquette and GE have furnished certain
information and materials to the Antitrust Division of the Department of Justice
and the Federal Trade Commission and the required waiting period has ended. The
waiting period may be extended by requests for additional information. On
October 6, 1998, GE and Marquette filed the required notification and report
forms with the FTC and the Antitrust Division.
CONDITIONS TO THE MERGER (PAGE 30)
GE and Marquette will not complete the merger unless a number of conditions
are satisfied or waived by them. These include the following:
- the holders of a majority of the shares of Marquette Common Stock must
approve and adopt the Merger Agreement;
- the shares of GE Common Stock to be issued in the merger and not
previously listed must be authorized for listing on the New York Stock
Exchange;
- the waiting period applicable to the merger under the HSR Act must come to
an end or be terminated;
- the relevant governmental authorities and other third parties must approve
the merger;
- there must be no law, injunction or order that prohibits the merger;
- Marquette, GE and Emerald Merger Corp. must perform all of their
obligations under the Merger Agreement;
- GE and Marquette must each certify to the other that its representations
and warranties contained in the Merger Agreement are true and correct;
- GE and Marquette each must receive an opinion from tax counsel that, among
other things, the merger will qualify for U.S. federal income tax purposes
as a tax-free reorganization;
- Marquette and GE must each certify that there has been no material adverse
change in their respective companies;
- Marquette and GE must take all action necessary to implement the
provisions in the Merger Agreement relating to Marquette stock options;
and
- GE must receive an agreement from any person who may be deemed to be an
affiliate of Marquette pursuant to Rule 145 under the Securities Act of
1933, stating that such affiliate will comply with Rules 144 and 145 under
the Securities Act.
4
<PAGE>
The party entitled to the benefit of some of these conditions may waive these
conditions.
TERMINATION OF THE MERGER AGREEMENT (PAGE 32)
Marquette and GE can agree at any time to terminate the Merger Agreement
without completing the merger, and the Merger Agreement may be terminated by
either company if any of the following occurs:
- either party materially breaches any of its representations, warranties or
obligations under the Merger Agreement and does not cure such breach
within 5 business days of receiving notice of it;
- the merger is not completed by April 30, 1999;
- a court or other governmental authority permanently prohibits the merger;
- the holders of Marquette Common Stock do not approve the merger; or
- Marquette enters into an agreement to effect a more favorable competing
offer (subject to certain conditions).
In addition, GE may terminate the Merger Agreement if the Marquette Board
changes its recommendation in favor of the merger, recommends in favor of a
business combination other than the merger with GE or fails to recommend against
the acceptance of any tender offer or exchange offer for Marquette Common Stock.
TERMINATION FEE (PAGE 33)
The Merger Agreement requires Marquette to pay GE a termination fee of $35
million under certain circumstances in connection with the termination of the
Merger Agreement. The termination fee may discourage persons from making a
competing offer for Marquette Common Stock.
NO SOLICITATION OF COMPETING TRANSACTIONS (PAGE 28)
The Merger Agreement restricts Marquette's ability to entertain or encourage
any alternative acquisition transactions with third parties beyond what is
required by the Marquette Board's fiduciary duties. Marquette must promptly
notify GE if it receives offers or proposals for any such alternative
transactions.
STOCK OPTION AGREEMENT (PAGE 35)
Also as a condition to GE's willingness to enter into the Merger Agreement,
GE and Marquette entered into a Stock Option Agreement, whereby Marquette has
granted to GE an option to purchase up to 3,643,066 shares (approximately 19.9%)
of Marquette Common Stock at an exercise price of $45.00 per share, payable in
cash. The option becomes exercisable by GE only if certain events occur. The
Stock Option Agreement may discourage persons from making a competing offer for
Marquette Common Stock.
APPRAISAL RIGHTS (PAGE 26)
Marquette shareholders have no right to an appraisal of the value of their
shares in connection with the merger.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES (PAGE 25)
It is a condition to the completion of the merger that Marquette and GE each
receive an opinion of tax counsel. The opinion of tax counsel will conclude,
among other things, that no gain or loss generally should be recognized by a
Marquette shareholder for federal income tax purposes on the conversion of
shares of Marquette Common Stock for shares of GE Common Stock. Federal income
tax may be payable, however, on cash received by Marquette shareholders instead
of fractional shares.
TAX MATTERS ARE VERY COMPLICATED AND THE TAX CONSEQUENCES OF THE MERGER TO
YOU WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR TAX
ADVISORS TO UNDERSTAND FULLY THE TAX CONSEQUENCES OF THE MERGER TO YOU. SEE "THE
MERGER--MATERIAL FEDERAL INCOME TAX CONSEQUENCES." (PAGE 25)
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE (PAGE 25)
GE and Marquette have made forward-looking statements in this document and
in documents to which we have referred you. These statements are subject to
risks and uncertainties, and there
5
<PAGE>
can be no assurance that such statements will prove to be correct.
Forward-looking statements include assumptions as to how GE and Marquette may
perform in the future. You will find many of these statements in the following
sections:
- "THE MERGER--Reasons for the Merger; Recommendation of the Marquette Board
of Directors." (page 15)
- "THE MERGER--Opinion of Robert W. Baird & Co. Incorporated." (page 18)
Also, when we use words like "believes," "expects," "anticipates" or similar
expressions, we are making forward-looking statements. For those statements, GE
and Marquette claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.
You should understand that the following important factors, in addition to those
discussed elsewhere in this document and in the documents which we incorporate
by reference, could affect the future results of GE and Marquette and could
cause those results to differ materially from those expressed in our forward-
looking statements. These factors include: materially adverse changes in
economic conditions and in the markets served by GE and Marquette; regulatory,
legal, economic and other changes in the health care industry environment
generally; changes in the law or in the policies and practices related to
governmental and third party reimbursements; and a significant delay in the
expected completion of the merger.
6
<PAGE>
SUMMARY SELECTED FINANCIAL DATA
Marquette and GE are providing the following financial information to help
you in your analysis of the financial aspects of the merger. The annual selected
historical financial data presented below have been derived from the audited
consolidated financial statements of each company. The interim selected
historical financial data presented below have been derived from the unaudited
consolidated financial statements of each company. As this information is only a
summary, you should read it in conjunction with the historical financial
statements (and related notes) of Marquette and GE contained in the annual
reports and other information that Marquette and GE have filed with the
Securities and Exchange Commission (the "Commission"). See "WHERE YOU CAN FIND
MORE INFORMATION" on page 48.
Marquette and GE report quarterly and annual earnings results using methods
required by generally accepted accounting principles ("GAAP"). Marquette
prepares its financial statements on the basis of a fiscal year beginning on May
1 and ending on April 30 and GE does so on the basis of a fiscal year beginning
on January 1 and ending on December 31.
SELECTED HISTORICAL FINANCIAL DATA OF MARQUETTE
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEARS ENDED APRIL 30, JULY 31,
----------------------------------------------------- --------------------
1994 1995 1996 1997 1998 1997 1998
--------- --------- --------- --------- --------- --------- ---------
(AUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales.............. $ 253,808 $ 342,176 $ 416,293 $ 543,317 $ 578,260 $ 132,069 $ 143,599
Gross profit........... 131,621 175,046 201,346 269,162 290,619 67,808 71,203
Operating income
(loss)............... 27,983 33,896 (13,756) 38,924 49,672 9,184 9,050
Interest expense....... 322 2,973 4,386 8,434 5,982 1,565 1,335
Net income (loss)...... 18,641 19,557 (24,868) 21,191 26,639 4,301 5,604
Diluted weighted
average number of
shares............... 16,172 16,475 16,254 16,725 18,250 18,155 18,485
Diluted net income
(loss) per share..... $ 1.15 $ 1.19 $ (1.53) $ 1.27 $ 1.46 $ 0.24 $ 0.30
Cash dividends declared
per share of common
stock................ -- -- -- -- -- -- --
BALANCE SHEET DATA (AT
PERIOD END):
Working capital........ $ 109,560 $ 100,367 $ 133,197 $ 149,182 $ 162,227 $ 146,496 $ 165,776
Total assets........... 203,180 264,865 431,718 428,332 459,360 440,753 467,217
Long-term debt......... 102 8,112 81,254 57,000 37,500 52,500 30,000
Shareholders' equity... 149,421 170,893 147,925 183,200 214,316 186,854 220,726
</TABLE>
7
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF GE
(Dollars in millions, except per share data)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
FISCAL YEARS ENDED DECEMBER 31, 30,
--------------------------------------------------------------- ------------------------
1993 1994 1995 1996 1997 1997 1998
----------- ----------- ----------- ----------- ----------- ----------- -----------
(AUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
GENERAL ELECTRIC COMPANY
AND CONSOLIDATED
AFFILIATES
Revenues............... $ 55,701 $ 60,109 $ 70,028 $ 79,179 $ 90,840 $ 42,154 $ 47,696
Earnings from
continuing
operations........... 4,184 5,915 6,573 7,280 8,203 3,839 4,341
Earnings (loss) from
discontinued
operations........... 993 (1,189) -- -- -- -- --
Effect of accounting
change............... (862) -- -- -- -- -- --
Net earnings........... 4,315 4,726 6,573 7,280 8,203 3,839 4,341
Dividends declared..... 2,229 2,546 2,838 3,138 3,535 1,704 1,953
Earned on average share
owners' equity....... 17.5% 18.1% 23.5% 24.0% 25.0% 25.3% 25.6%
PER SHARE
Earnings from
continuing
operations-basic... $ 1.22 $ 1.73 $ 1.95 $ 2.20 $ 2.50 $ 1.17 $ 1.33
Earning (loss) from
discontinued
operations......... 0.29 (0.35) -- -- -- -- --
Effect of accounting
change............. (0.25) -- -- -- -- -- --
Net earnings-basic... 1.26 1.38 1.95 2.20 2.50 1.17 1.33
Net
earnings-diluted... 1.25 1.37 1.93 2.16 2.46 1.15 1.31
Dividends declared... 0.6525 0.745 0.845 0.95 1.08 0.52 0.60
Total assets of
continuing
operations............. 166,413 185,871 228,035 272,402 304,012 278,897 318,882
Long-term borrowings... 28,194 36,979 51,027 49,246 46,603 46,792 48,764
Shares
outstanding--average
(in thousands)....... 3,415,958 3,417,476 3,367,624 3,307,394 3,274,692 3,278,713 3,268,224
</TABLE>
SIGNIFICANT FACTORS AFFECTING OPERATING RESULTS
Sometimes financial results reported in accordance with GAAP include unusual
or infrequent events and factors which are not expected to occur regularly in
the future. Examples of these events and factors include gains or losses on the
sale of businesses, the costs of completing major acquisitions and of other
business development activities, and the costs of business restructurings.
Certain unusual or infrequent events and transactions, as well as other
significant factors and trends, which may be helpful in understanding the past
performance and future prospects of Marquette and GE, are described briefly
below. The following discussion should be read with the "SUMMARY SELECTED
FINANCIAL DATA" of Marquette and GE included on the previous pages and with the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" of Marquette and GE that are contained in the annual reports and
other information that Marquette and GE have filed with the Commission. See
"WHERE YOU CAN FIND MORE INFORMATION" on page 48.
MARQUETTE. In considering the Selected Historical Financial Data of
Marquette, you should be aware that:
- data are presented on the basis of a fiscal year which ends on April 30;
- both operating income and net income in fiscal 1996 included certain
non-recurring charges. In fiscal 1996, Marquette acquired E for M
Corporation. This acquisition was accounted for as a purchase and
approximately $35.7 million of the purchase price was allocated to
in-process research and development and was written-off immediately. In
addition, in fiscal 1996 Marquette initiated a restructuring of its
worldwide operations and took a non-recurring restructuring charge of
approximately $4.0 million, or approximately $2.5 million net-of-tax
effect. Operating income in fiscal 1996 before non-recurring charges was
approximately $25.9 million and net income in fiscal 1996 before
non-recurring charges was approximately $13.3 million, or $0.82 per share
of Marquette Common Stock; and
8
<PAGE>
- in fiscal year 1997 Marquette issued and sold, through an underwritten
public offering, 1,373,422 shares of Marquette Common Stock at a net price
of $17.37 per share.
GE. In considering the Selected Historical Financial Data of GE, you should
be aware that:
- the consolidated financial statements represent the adding together of all
affiliates--companies that GE directly or indirectly controls;
- results of associated companies--generally companies that are 20% to 50%
owned by GE and over which GE, directly or indirectly, has significant
influence--are included in the financial statements on a "one-line" basis;
- discontinued operations reflect the results of Kidder, Peabody, a
securities broker-dealer wholly owned by GE in 1994 and 1993, and the
results of GE's Aerospace businesses in 1993;
- the 1993 accounting change represents the adoption of SFAS No. 112,
EMPLOYERS' ACCOUNTING FOR POSTEMPLOYMENT BENEFITS; and
- the consolidated financial statements have also been restated to reflect a
two-for-one stock split, which took effect on April 28, 1997.
COMPARATIVE PER SHARE DATA
The following tables present historical per share data of Marquette and GE.
The data presented below should be read in conjunction with the historical
financial statements of Marquette and GE incorporated by reference in this
document. Only the earnings per share data are calculated using the diluted
weighted average of shares outstanding. Because the number of shares of GE
Common Stock to be issued in the merger will not be known until five business
days prior to the completion of the merger, Marquette equivalent per share data
cannot be computed at this time. That information will be available via
telephone, toll-free, at (800) 507-9357. Hypothetical Marquette equivalent per
share data is presented below using the closing sale price of a share of GE
Common Stock on October 15, 1998 which was $82 and a resulting hypothetical
exchange ratio of .549. The hypothetical Marquette equivalent per share data was
calculated by multiplying the actual GE per share data by the hypothetical
exchange ratio of .549.
<TABLE>
<CAPTION>
THREE MONTHS ENDED FISCAL YEAR ENDED
JULY 31, 1998 APRIL 30, 1998
------------------- -----------------
<S> <C> <C>
MARQUETTE HISTORICAL:
Earnings per share, diluted........................... $ 0.30 $ 1.46
Dividends per share, net.............................. -- --
Book value per share.................................. 12.30 11.97
<CAPTION>
SIX MONTHS ENDED FISCAL YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
------------------- -----------------
<S> <C> <C>
GE HISTORICAL:
Earnings per share, diluted........................... $ 1.31 $ 2.46
Dividends per share, net.............................. 0.60 1.08
Book value per share.................................. 10.89 10.52
HYPOTHETICAL MARQUETTE EQUIVALENT:
Earnings per share, diluted........................... $ 0.72 $ 1.35
Dividends per share, net.............................. 0.33 0.59
Book value per share.................................. 5.98 5.78
</TABLE>
9
<PAGE>
COMPARATIVE MARKET PRICE DATA
The following tables present certain historical trading and dividend
declaration information for the Marquette Common Stock and GE Common Stock.
<TABLE>
<CAPTION>
MARQUETTE COMMON
STOCK
(IN $)
------------------
HIGH LOW
------- -------
<S> <C> <C>
FISCAL 1999
Second Quarter (through October 15)........................................ 44 1/4 22 3/4
First Quarter.............................................................. 28 1/2 24
FISCAL 1998
Fourth Quarter............................................................. 29 24 3/4
Third Quarter.............................................................. 28 1/4 22 1/4
Second Quarter............................................................. 31 3/4 23
First Quarter.............................................................. 28 1/2 19 7/8
FISCAL 1997
Fourth Quarter............................................................. 21 3/4 18 3/8
Third Quarter.............................................................. 22 3/8 14 3/4
Second Quarter............................................................. 18 1/2 15 1/2
First Quarter.............................................................. 18 3/4 15 3/4
</TABLE>
<TABLE>
<CAPTION>
GE COMMON STOCK
(IN $)
--------------------------------
HIGH(A) LOW(A) DIV(A)
------- ------- -----------
<S> <C> <C> <C>
1998
Fourth Quarter (through October 15).................................. 82 15/16 68 7/8 --
Third Quarter........................................................ 96 7/8 72 5/8 0.30
Second Quarter....................................................... 92 80 11/16 0.30
First Quarter........................................................ 87 5/8 70 1/4 0.30
1997
Fourth Quarter....................................................... 76 9/16 59 0.30
Third Quarter........................................................ 74 5/8 61 5/16 0.26
Second Quarter....................................................... 68 1/4 48 9/16 0.26
First Quarter........................................................ 54 3/16 47 15/16 0.26
1996
Fourth Quarter....................................................... 53 1/16 45 1/4 0.26
Third Quarter........................................................ 46 38 15/16 0.23
Second Quarter....................................................... 44 1/16 37 1/16 0.23
First Quarter........................................................ 40 1/4 34 3/4 0.23
</TABLE>
- ------------------------
(a) The per share amounts above reflect the 2-for-1 stock split effective on
April 28, 1997.
GE Common Stock is principally traded in the United States on the New York
Stock Exchange under the symbol "GE." Marquette Common Stock is currently traded
on the Nasdaq National Market ("Nasdaq") under the symbol "MARQ."
Marquette has never paid cash dividends and has no plans to do so in the
future.
GE declared dividends of $3.535 billion in fiscal year 1997, or
approximately 43% of GE's 1997 consolidated earnings. Per share dividends
declared of $1.08 in fiscal year 1997 increased 14% from 1996, its 22nd
consecutive annual increase. Following the merger, payment of cash dividends by
GE in respect of
10
<PAGE>
GE Common Stock will depend on GE's financial condition, results of operations
and any other factor GE's Board of Directors may consider relevant.
At year-end 1997, GE had purchased and placed into treasury a total of 244
million shares having an aggregate cost of $9.9 billion under a share repurchase
program begun in December 1994. In December 1997, GE's Board of Directors
increased the authorization to repurchase GE Common Stock to $17 billion and
authorized the program to continue through 1999. Such shares are from time to
time reissued upon the exercise of employee stock options, conversion of
convertible securities and for other corporate purposes. GE intends to continue
repurchases of shares in the ordinary course under its ongoing repurchase
program between the date of this document and the Merger, and during the
valuation period for the Merger.
Set forth below are the last reported sale price of GE Common Stock and bid
price for Marquette Common Stock on September 18, 1998, the last trading day
prior to the public announcement of the execution of the Merger Agreement, and
on October 15, 1998, the last trading day prior to the date of this Proxy
Statement/Prospectus, as reported on the NYSE Composite Tape and on Nasdaq,
respectively.
<TABLE>
<CAPTION>
SEPTEMBER OCTOBER
18, 15,
1998 1998
------- -------
<S> <C> <C>
GE Common Stock...................................................... $77 7/8 $82
Marquette Common Stock............................................... $27 3/8 $44 1/8
</TABLE>
11
<PAGE>
THE SPECIAL MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished in connection with the
solicitation of proxies by the Board of Directors (the "Marquette Board") of
Marquette Medical Systems, Inc. ("Marquette") for use at the special meeting of
Marquette shareholders (the "Special Meeting"). This Proxy Statement/
Prospectus, the attached Notice of Shareholders' Meeting and the enclosed form
of proxy are first being mailed to shareholders of Marquette on or about October
19, 1998.
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING
At the Special Meeting, holders of Common Shares, par value $.10 per share
(the "Marquette Common Stock"), of Marquette will be asked to consider and vote
on a proposal to approve and adopt the Agreement and Plan of Merger dated as of
September 20, 1998 (the "Merger Agreement") among General Electric Company
("GE"), Emerald Merger Corp., a wholly owned subsidiary of GE ("Sub"), and
Marquette. Pursuant to the terms of the Merger Agreement, Sub will be merged
with and into Marquette (the "Merger"), resulting in Marquette becoming a wholly
owned subsidiary of GE.
AFTER CAREFUL CONSIDERATION, THE MARQUETTE BOARD HAS UNANIMOUSLY DETERMINED
THAT THE MERGER IS FAIR TO AND IN THE BEST INTERESTS OF MARQUETTE AND ITS
SHAREHOLDERS. THE MARQUETTE BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT
AND UNANIMOUSLY RECOMMENDS THAT HOLDERS OF MARQUETTE COMMON STOCK VOTE TO
APPROVE AND ADOPT IT AT THE SPECIAL MEETING.
VOTING AND PROXIES
The Marquette Board has fixed the close of business on October 13, 1998 as
the record date for the determination of the shareholders entitled to notice of,
and to vote at, the Special Meeting. At that date, there were outstanding
18,348,292 shares of Marquette Common Stock, the holders of which will be
entitled to one vote per share on each matter submitted to the Special Meeting.
No other voting securities of Marquette are outstanding.
The presence at the Special Meeting, in person or by proxy, of the holders
of a majority of the shares entitled to vote constitutes a quorum for the
transaction of business at the Special Meeting. If a quorum should not be
present, the Special Meeting may be adjourned from time to time until a quorum
is obtained. Assuming a quorum is present, the vote of a majority of the
outstanding shares of Marquette Common Stock entitled to be cast at the Special
Meeting is required to approve and adopt the Merger Agreement.
As of October 13, 1998, Michael J. Cudahy, Chairman of the Board of
Marquette, owned and held the power to vote 3,262,588 shares of Marquette Common
Stock, representing 17.8% of the outstanding shares on the record date. As a
condition to GE's willingness to enter into the Merger Agreement, Mr. Cudahy has
agreed, pursuant to a Shareholder Agreement dated as of September 20, 1998 (the
"Shareholder Agreement"), and without any additional consideration being paid to
him, among other things, to vote all of his shares of Marquette Common Stock in
favor of approving and adopting the Merger Agreement at the Special Meeting.
Shares of Marquette Common Stock represented by properly executed proxies
will, unless such proxies have been revoked, be voted in accordance with the
instructions indicated on such proxies or, if no instructions have been
indicated, will be voted for approval and adoption of the Merger Agreement and
in the best judgment of the individuals named in the accompanying proxy on any
other matters which may properly come before the Special Meeting. Any proxy may
be revoked by the shareholder giving it, at any time prior to its being voted,
by filing a notice of revocation or a duly executed proxy bearing a later date
12
<PAGE>
with the Secretary of Marquette at the address given on the Notice of
Shareholders' Meeting accompanying this Proxy Statement/Prospectus. Any proxy
may also be revoked by the shareholder's attendance at the Special Meeting and
voting in person. A notice of revocation need not be on any specific form.
Abstentions may be specified with respect to the approval and adoption of the
Merger Agreement by properly marking the "ABSTAIN" box on the proxy for such
proposal, and will be counted as present for the purpose of determining the
existence of a quorum. Under the rules of the National Association of Securities
Dealers, Inc. (the "NASD"), while brokers who hold shares in street name have
the authority to vote on certain items when they have not received instructions
from beneficial owners, brokers will not be entitled to vote on the approval and
adoption of the Merger Agreement without instructions. Brokers who do not
receive instructions but who are present, in person or by proxy, at the Special
Meeting will be counted as present for quorum purposes (a "broker nonvote").
Abstentions and broker nonvotes will have the same effect as a vote against the
approval and adoption of the Merger Agreement at the Special Meeting.
SOLICITATION OF PROXIES
Proxies are being solicited by and on behalf of the Marquette Board. GE and
Marquette will share equally all expenses related to printing, filing and
mailing the Proxy Statement/Prospectus and all the Commission and other
regulatory filing fees incurred in connection with the Proxy
Statement/Prospectus. See "THE MERGER AGREEMENT--Expenses." In addition to
soliciting proxies by mail, officers, directors and employees of Marquette,
without receiving additional compensation therefor, may solicit proxies by
telephone, telegraph, in person or by other means. Arrangements also will be
made with brokerage firms and other custodians, nominees and fiduciaries to
forward proxy solicitation material to the beneficial owners of Marquette Common
Stock held of record by such persons, and GE and Marquette will reimburse such
brokerage firms, custodians, nominees and fiduciaries for reasonable
out-of-pocket expenses incurred by them in connection therewith.
THE MERGER
BACKGROUND OF THE MERGER
From time to time over the years, GE Medical Systems, a division of GE, and
Marquette have discussed the possibility of forming strategic alliances or
otherwise engaging in corporate transactions.
In July 1998, Michael J. Cudahy, Chairman of the Board of Marquette,
contacted Jeffrey R. Immelt, President of GE Medical Systems, to discuss the
possibility of cooperative efforts in the development of a cardiology reading
station for a common customer. At a meeting on July 27, 1998 in Milwaukee,
Wisconsin, Mr. Immelt suggested to Mr. Cudahy that, because of the synergy of
each company's product lines with those of the other and little overlap, the
possibility of GE acquiring Marquette should be explored.
On August 17, 1998, Mr. Immelt and Mr. Cudahy met again. At that meeting,
Mr. Immelt told Mr. Cudahy that GE was interested in a merger of the two
organizations for the reasons previously discussed. Mr. Cudahy replied that
other companies had from time to time expressed an interest in acquiring
Marquette but he believed that GE would make a better partner because of the
synergy and product fit.
On August 18, 1998, Dr. Frederick A. Robertson, Marquette's Chief Executive
Officer, met with Mr. Immelt. They exchanged views regarding each company's
products, the market segments they address and the synergies that a merger would
bring. They also compared company cultures and the role that Mr. Cudahy has
played in the growth and direction of Marquette.
On August 27, 1998, Mr. Immelt and Mr. Cudahy met again and discussed the
possible financial terms of a merger. Mr. Immelt asked Mr. Cudahy to meet with
John F. Welch, Jr., Chairman of the Board and Chief Executive Officer of GE, to
carry on further discussions.
13
<PAGE>
On September 11, 1998, Mr. Cudahy, Mr. Immelt and Mr. Welch met at Mr.
Welch's office in New York City. At this meeting, they discussed the
complementary nature of Marquette's business and GE Medical System's business
and the favorable impact of a merger on the customers of Marquette and of GE
Medical Systems. Mr. Welch and Mr. Cudahy also preliminarily agreed to pursue a
merger providing for a price of $45 per share of Marquette stock. Mr. Welch also
requested that Mr. Cudahy serve as an advisor to GE following consummation of a
merger. In the morning on September 11, 1998, the Board of Directors of GE had
authorized the general terms for the acquisition of Marquette.
On September 14, 1998, Mr. Cudahy, Dr. Robertson and other Marquette
representatives, including Melvin S. Newman, Marquette's counsel, met with Mr.
Immelt and other GE representatives, including J. Keith Morgan, Vice President
and General Counsel of GE Medical Systems. Mr. Morgan outlined GE's proposed
structure of the transaction. Mr. Morgan said that GE would require certain
protections with respect to the merger, including a termination fee, an option
to purchase Marquette stock directly from Marquette upon the occurrence of
certain events and the execution by Mr. Cudahy of an agreement obliging him to
vote his shares in support of the merger. Mr. Morgan stated that GE's attorneys
were in the process of preparing a draft merger agreement and related agreements
which were expected to be available for review the next day. GE and Marquette
also executed and delivered a confidentiality agreement in anticipation of GE's
"due diligence" review of Marquette.
On September 15, 1998, GE's counsel sent an initial draft merger agreement
and certain related documents to Marquette's counsel.
Commencing on September 15, 1998 and continuing through September 19, 1998,
representatives of GE and its legal advisors met with senior Marquette officers
and undertook a due diligence investigation of Marquette. In that connection, GE
received from, and discussed with, Marquette certain business, personnel, legal
and financial information relating to Marquette and visited certain facilities
of Marquette. Also, between September 17 and September 19, 1998, representatives
and outside legal advisors of GE and Marquette met at the Chicago offices of GE
counsel to negotiate the specific terms of the proposed business combination.
On September 17, 1998, the Marquette Board met to consider the GE proposal.
Marquette's counsel reviewed the draft merger agreement and related agreements
and the proposal was discussed at length. The Marquette Board ratified the
selection of Robert W. Baird & Co. Incorporated ("Baird") to prepare and deliver
an opinion, if requested, as to whether or not the consideration proposed to be
paid to Marquette shareholders in any proposed transaction was fair to such
shareholders from a financial point of view. Marquette's counsel reviewed with
the directors their duties under Wisconsin law as it related to the proposed
transaction. Representatives of Baird reviewed certain financial information
regarding Marquette and GE and the methodology to be used in the preparation of
the opinion to be delivered by Baird. It was agreed that the Marquette Board
would reconvene when the terms of the merger had been fully agreed by the
management of both companies and the merger documents could be reviewed in final
form.
On September 20, 1998, a meeting of the Marquette Board was held at which
the final terms of and conditions to the proposed merger (which terms and
conditions are summarized below under "THE MERGER AGREEMENT") were presented by
Marquette's counsel. Baird made a presentation outlining its financial analyses
of the proposed financial terms of the merger and delivered its opinion to the
effect that, as of the date of such opinion, the consideration to be paid
pursuant to the proposed merger was fair, from a financial point of view, to the
holders of Marquette Common Stock (other than GE and its affiliates). Following
considerable discussion, including a detailed review of the proposed documents
to be signed, the Marquette Board unanimously approved and authorized the
execution of the Merger Agreement (including the consideration set forth in the
Merger Agreement consisting of GE common stock, having a value of approximately
$45 per share), the Stock Option Agreement, the Shareholder Agreement and a
Consulting Agreement between Mr. Cudahy and GE, and authorized the transaction
for purposes of Section 180.1141 of the WBCL and the performance of various acts
on behalf of Marquette in furtherance
14
<PAGE>
of the merger, including the submission of a proposal to approve and adopt the
Merger Agreement to shareholders of Marquette at a meeting to be convened in the
future.
Following the meeting, the Merger Agreement was executed and delivered by
GE, Sub and Marquette, the Stock Option Agreement was executed and delivered by
GE and Marquette and the Shareholder Agreement and the Consulting Agreement were
executed and delivered by GE and Mr. Cudahy. The proposed Merger was publicly
announced on September 21, 1998 prior to the opening of trading.
REASONS FOR THE MERGER; RECOMMENDATION OF THE MARQUETTE BOARD OF DIRECTORS
The Marquette Board has approved and adopted the Merger Agreement, believes
that the Merger is in the best interests of Marquette and its shareholders and
unanimously recommends approval and adoption of the Merger Agreement by the
holders of Marquette Common Stock at the Special Meeting.
At a meeting held on September 20, 1998, the Marquette Board of Directors,
with the assistance of Marquette's financial and legal advisors, considered the
legal, financial and other terms of the Merger.
The Marquette Board concluded that the Merger is in the best interests of
Marquette and its shareholders. In reaching its decision to enter into and to
recommend the approval and adoption of the Merger Agreement, the Marquette Board
considered a number of factors, including, without limitation, the following:
- the strategic benefits of the Merger, including the complementary product
lines of Marquette and GE Medical Systems, which will give the combined
company a broader range of products to offer to customers;
- the results of operations, financial condition, competitive position and
prospects of Marquette and GE, both on an historical and future basis and
as separate and combined entities;
- the opinion of Baird to the effect that, as of the date of such opinion,
the consideration to be paid in the Merger is fair, from a financial point
of view, to the holders of Marquette Common Stock (other than GE and its
affiliates). See "--Opinion of Robert W. Baird & Co. Incorporated";
- the Marquette Board's belief that the analyses of Baird supported the
Marquette Board's conclusion that the consideration to be paid in the
Merger is fair, from a financial point of view, to, and is in the best
interests of, the Marquette shareholders, both in terms of the immediate
financial consideration to be received and the potential for future
appreciation in value of the GE Common Stock. See "--Opinion of Robert W.
Baird & Co. Incorporated";
- the trading prices and volumes (as well as prospects for future growth in
value) of Marquette Common Stock (as a stand-alone entity);
- the opportunity for Marquette's shareholders to become shareholders of GE,
which the Marquette Board viewed as a large, diversified and stable
organization;
- the price certainty of the proposed Merger--$45.00 per share
notwithstanding stock market fluctuations through the closing of the
Merger;
- the benefits of the Merger to Marquette's employees, customers and the
communities in which Marquette operates; and
- the structure of the Merger, which is intended to permit Marquette
shareholders to exchange their Marquette Common Stock for GE Common Stock
on a tax-free basis, except to the extent they receive cash for fractional
shares. See "--Material Federal Income Tax Consequences."
In view of the variety of factors considered by the Marquette Board in
connection with its evaluation of the Merger, the Marquette Board did not find
it practicable to, and did not, quantify or otherwise assign relative weights to
such factors.
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The Marquette Board concluded, in light of these factors, that the Merger is
fair to and in the best interests of Marquette and its shareholders. THE
MARQUETTE BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND UNANIMOUSLY
RECOMMENDS THAT HOLDERS OF MARQUETTE COMMON STOCK VOTE TO APPROVE AND ADOPT IT
AT THE SPECIAL MEETING.
INTERESTS OF CERTAIN PERSONS IN THE MERGER; CONFLICTS OF INTEREST
In considering the Merger, you should be aware of the interests executive
officers and directors of Marquette have in the Merger that are different from
your and their interests as shareholders. In this regard, you should consider,
among other things, the stock option modifications and the agreements described
below.
STOCK OPTIONS. At the Effective Time, each employee stock option and each
director stock option will become an option to purchase shares of GE Common
Stock (a "Substitute Option"). The number of shares of GE Common Stock that will
become subject to each Substitute Option will be the same as the number of
shares of GE Common Stock into which the shares of Marquette Common Stock
subject to such stock option immediately prior to the Effective Time would have
been converted had they been outstanding at the Effective Time. The per share
exercise price of each Substitute Option will be adjusted at the Effective Time
so that the aggregate exercise price for all shares of GE Common Stock subject
to such Substitute Option will be the same as the aggregate exercise price for
all shares of Marquette Common Stock subject thereto immediately prior to the
Effective Time. Except as described below, Substitute Options which are not
exercisable at the Effective Time continue to become exercisable in accordance
with their original vesting schedules.
Marquette has agreed in the Merger Agreement to take action to provide that
each Substitute Option, other than those held by persons who were non-employee
directors of Marquette immediately prior to the Effective Time, which is
outstanding on the second anniversary of the Effective Time and not then
exercisable shall become fully exercisable on such second anniversary of the
Effective Time. However, Marquette is not required to take this action unless it
receives a private letter ruling from the Internal Revenue Service or an opinion
of counsel selected by GE to the effect that no income will be recognized by any
holder of a Substitute Option as a result of this action.
In addition, Marquette has agreed in the Merger Agreement to take action to
provide that upon the termination of employment of a holder of a Substitute
Option by Marquette without "Cause" (defined in the same manner as in the
Retention Agreements described below) or due to death or disability, each
Substitute Option then held by such holder which is not then exercisable shall
become fully exercisable on the date of such termination of employment.
Marquette also has agreed in the Merger Agreement to take action to provide
that when each person who is a non-employee director of Marquette immediately
prior to the Effective Time ceases to be such a director, each Substitute Option
held by such person immediately following the Effective Time which is not then
exercisable shall continue to become exercisable in accordance with its original
vesting schedule as if the service of such director had not ceased.
At October 13, 1998, an aggregate of approximately 1,850,590 shares of
Marquette Common Stock were subject to stock options granted to employees and
directors of Marquette under various stock option plans. The number of shares of
Marquette Common Stock subject to stock options held by executive officers and
directors of Marquette as of October 13, 1998 were as follows: John G.
Bollinger, 9,000; Steven G. Books 79,749; Gary Close, 83,250; Mary M.
Kabacinski, 86,121; Gerald J. Lentz, 38,600; Kevin Lindsey, 64,870; Frederick G.
Luber, 10,000; Melvin S. Newman, 10,000; Walter L. Robb, 24,000; Frederick A.
Robertson, 204,963; and Louis P. Scafuri, 253,106.
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CONSULTING AGREEMENT. At GE's request prior to the execution of the Merger
Agreement, Mr. Cudahy entered into a consulting agreement dated as of September
20, 1998 (the "Consulting Agreement") to become effective only if the Merger is
consummated. Pursuant to the Consulting Agreement, among other things, Mr.
Cudahy agreed that he would act as an advisor to GE from and after the Effective
Time until the third anniversary thereof. In addition, Mr. Cudahy agreed that he
would be subject to certain prohibitions on competition with the medical
businesses of GE and Marquette during the consulting period and for one year
after the end of such period. Mr. Cudahy also agreed not to disclose
confidential information of Marquette or GE and to release any claims he may
have against Marquette or GE. As compensation for the non-competition and
related covenants contained in the Consulting Agreement and the services to be
performed by Mr. Cudahy, if the Merger is consummated GE will pay Mr. Cudahy a
fee of $200,000 per year for three years.
RETENTION AGREEMENTS. After consultation with GE, and with GE's prior
agreement given in the Merger Agreement, Marquette entered into retention
agreements dated as of October 15, 1998 (the "Retention Agreements") with each
of the following executive officers: Steven G. Books, Gary Close, Mary M.
Kabacinski, Gerald J. Lentz, Kevin Lindsey, Frederick A. Robertson and Louis P.
Scafuri. The Retention Agreements become effective at the Effective Time, but if
the Merger Agreement is terminated, then at the time of such termination, the
Retention Agreements will be deemed cancelled and of no force or effect. The
Retention Agreements are intended to induce these executives to remain in the
employ of Marquette during and for a period of one year after the acquisition of
Marquette by GE without being distracted by the uncertainties that could arise
in the event of their termination of employment following the Effective Time,
thereby avoiding disruption of Marquette's business.
Under each Retention Agreement, if an executive remains continuously
employed by Marquette or by a company or other entity or organization within
GE's medical systems business on a full-time basis for one year following the
Effective Time, Marquette will pay to such executive an amount (the "Retention
Bonus Payment") equal to the sum of the executive's annual base salary in effect
at the Effective Time and such executive's target bonus for the 1999 fiscal
year. If the employment of an executive is terminated without "Cause" (as
defined below) or upon death or disability, in each case within one year
following the Effective Time, Marquette will pay such executive a retention
bonus equal to the product of the Retention Bonus Payment and a fraction, the
numerator of which is the number of days that such executive was employed by
Marquette following the Effective Time and the denominator of which is 365.
In addition, if the employment of the executive is terminated by Marquette
without Cause within one year following the Effective Time, Marquette will make
the monthly severance payments described below to such executive for the period
commencing on the date, following notice of termination, on which such executive
ceases to perform services for Marquette and ending on the earlier to occur of
(i) one year following the date of such cessation of services and (ii) the date
on which such executive begins employment with a different employer. The amount
of such monthly severance payments will be equal to one-twelfth of the sum of
such executive's annual base salary in effect at the Effective Time and such
executive's target bonus for the 1999 fiscal year, provided that the sum of such
payments will not be less than the amount that otherwise would be payable under
Marquette's current severance policy. For purposes of the Retention Agreements,
"Cause" means conviction of a criminal offense, theft, fraud, breach of trust,
willful violation of GE's integrity policies or refusal to perform sevices
reasonably assigned following notice and an opportunity to cure.
If an executive remains continuously employed by Marquette or by a company
or other entity or organization within GE's medical systems business on a
full-time basis for one year following the Effective Time or if the employment
of an executive is terminated without Cause or due to death or disability, each
Substitute Option held by the Executive which is not then exercisable will
become fully exercisable at that time.
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The Retention Agreements also provide that Marquette will not reduce the
base salary or target bonus of any of the executives and that it is the
intention of Marquette that each executive's position during such employment
will be reasonably similar to that held by the executive at the Effective Time.
Under each Retention Agreement, the executive agreed that such executive would
be subject to certain prohibitions on competition with the medical businesses of
GE and Marquette during the period that such executive is receiving payments
thereunder and for one year after the cessation of such payments. In addition,
each executive agreed not to disclose confidential information of Marquette or
GE and, as of the date of such termination of employment, to release any claims
the executive may then have against Marquette or GE.
OPINION OF ROBERT W. BAIRD & CO. INCORPORATED
Marquette retained Baird to render its opinion as to the fairness, from a
financial point of view, of the Merger Consideration to the holders of Marquette
Common Stock (other than GE and its affiliates). On September 20, 1998, Baird
rendered its opinion to the Marquette Board to the effect that, as of such date,
the Merger Consideration was fair, from a financial point of view, to the
holders of Marquette Common Stock (other than GE and its affiliates).
THE FULL TEXT OF BAIRD'S OPINION, DATED SEPTEMBER 20, 1998, WHICH SETS FORTH
THE ASSUMPTIONS MADE, GENERAL PROCEDURES FOLLOWED, MATTERS CONSIDERED AND
LIMITATIONS ON THE SCOPE OF REVIEW UNDERTAKEN BY BAIRD IN RENDERING ITS OPINION,
IS ATTACHED AS EXHIBIT II TO THIS PROXY STATEMENT/ PROSPECTUS AND IS
INCORPORATED HEREIN BY REFERENCE. BAIRD'S OPINION IS DIRECTED ONLY TO THE
FAIRNESS, FROM A FINANCIAL POINT OF VIEW, OF THE MERGER CONSIDERATION TO THE
HOLDERS OF MARQUETTE COMMON STOCK (OTHER THAN GE AND ITS AFFILIATES) AND DOES
NOT CONSTITUTE A RECOMMENDATION TO ANY MARQUETTE SHAREHOLDER AS TO HOW SUCH
SHAREHOLDER SHOULD VOTE WITH RESPECT TO THE PROPOSAL TO APPROVE AND ADOPT THE
MERGER AGREEMENT. THE SUMMARY OF BAIRD'S OPINION SET FORTH BELOW IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION ATTACHED AS EXHIBIT
II. MARQUETTE SHAREHOLDERS ARE URGED TO READ THE OPINION CAREFULLY IN ITS
ENTIRETY.
In conducting its investigation and analysis and in arriving at its opinion,
Baird reviewed such information and took into account such financial and
economic factors as it deemed relevant under the circumstances. In that
connection, Baird, among other things: (i) reviewed certain internal
information, primarily financial in nature, including projections, concerning
the business and operations of Marquette furnished to Baird for purposes of its
analysis, as well as publicly available information, including but not limited
to Marquette's and GE's recent filings with the Commission and equity analyst
research reports prepared by various investment banking firms including Baird;
(ii) reviewed the Merger Agreement in the form presented to the Marquette Board;
(iii) compared the historical market prices and trading activity of Marquette
Common Stock and GE Common Stock with those of certain other publicly traded
companies Baird deemed relevant; (iv) compared the financial position and
operating results of Marquette and GE with those of other publicly traded
companies Baird deemed relevant; (v) compared the proposed financial terms of
the Merger with the financial terms of certain other business combinations Baird
deemed relevant; and (vi) reviewed certain potential pro forma effects of the
Merger. Baird held discussions with members of Marquette's senior management
concerning Marquette's historical and current financial condition and operating
results, as well as the future prospects of Marquette. Baird was not requested
to, and did not, solicit third party indications of interest in acquiring all or
any part of Marquette. Baird also considered such other information, financial
studies, analysis and investigations and financial, economic and market criteria
which Baird deemed relevant for the preparation of its opinion. Marquette and GE
determined the Merger Consideration in arms-length negotiations. Marquette did
not place any limitation upon Baird with respect to the procedures followed or
factors considered by Baird in rendering its opinion.
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In arriving at its opinion, Baird assumed and relied upon the accuracy and
completeness of all of the financial and other information that was publicly
available or provided to Baird by or on behalf of Marquette, and was not engaged
to independently verify any such information. Baird assumed, with Marquette's
consent, that (i) all material assets and liabilities (contingent or otherwise,
known or unknown) of Marquette and GE are as set forth in their respective
financial statements and (ii) the Merger will be accounted for under the
purchase method. Baird also assumed that the financial forecasts examined by it
were reasonably prepared on bases reflecting the best available estimates and
good faith judgments of Marquette's management as to future performance of
Marquette. At the direction of Marquette, Baird did not consider any expense
increases, cost savings or operating synergies that might result from the
Merger, and excluded transaction expenses relating to the Merger from its
analyses. In conducting its review, Baird did not undertake nor obtain an
independent evaluation or appraisal of any of the assets or liabilities
(contingent or otherwise) of Marquette or GE nor did it make a physical
inspection of the properties or facilities of Marquette or GE. Baird's opinion
necessarily was based upon economic, monetary and market conditions as they
existed and could be evaluated on the date of its opinion, and did not predict
or take into account any changes which may occur, or information which may
become available, after the date of such opinion. Furthermore, Baird expressed
no opinion as to the price or trading range at which any of Marquette's or GE's
securities will trade following the date of such opinion.
The following is a summary of the material financial analyses performed by
Baird in connection with rendering its opinion.
ANALYSIS OF MARQUETTE'S VALUATION PREMIUMS. Baird compared the premium to
holders of Marquette Common Stock represented by the "Equity Value Per Share" of
$45.00 reflected by the Merger Consideration to the closing prices for Marquette
Common Stock on September 15, 1998 and on the dates 30 days, 60 days, 90 days,
180 days and 52 weeks prior to such date. Baird calculated that the Equity Value
Per Share represented the following premiums to holders of Marquette Common
Stock: (i) a premium of 87.5% over the closing price of $24.00 for Marquette
Common Stock on September 15, 1998; (ii) a premium of 89.5% over the closing
price of $23.75 for Marquette Common Stock 30 days prior thereto; (iii) a
premium of 69.8% over the closing price of $26.50 for Marquette Common Stock 60
days prior thereto; (iv) a premium of 62.2% over the closing price of $27.75 for
Marquette Common Stock 90 days prior thereto; (v) a premium of 65.9% over the
closing price of $27.13 for Marquette Common Stock 180 days prior thereto; and
(vi) a premium of 64.4% over the closing price of $27.38 for Marquette Common
Stock 52 weeks prior thereto.
ANALYSIS OF MARQUETTE VALUATION MULTIPLES. Baird calculated the "Implied
Total Equity Value" and "Enterprise Value" of Marquette as a result of the
Merger to be $866.9 million and $948.2 million, respectively. The Implied Total
Equity Value was obtained by multiplying the Equity Value Per Share by the total
number of outstanding shares of Marquette Common Stock as of August 31, 1998,
plus shares issuable upon exercise of stock options as of September 15, 1998
(but excluding option exercises and cancellations since April 30, 1998), less
net proceeds from the exercise of such stock options. The Enterprise Value was
obtained by adding Marquette's outstanding total debt and subtracting
Marquette's cash and cash equivalents balances (as of July 31, 1998, as provided
by Marquette management) to the Implied Total Equity Value. In performing its
analysis, Baird used, among other items, operating statistics for the latest
twelve months ("LTM") (with respect to Marquette, the twelve month period ended
July 31,1998, as provided by Marquette management). Baird calculated multiples
of the Implied Total Equity Value to Marquette's LTM net income and its
projected net income for calendar years 1998 and 1999 (based on Marquette
management's estimates) and multiples of Marquette's Enterprise Value to its LTM
sales, operating income before depreciation and amortization, interest and taxes
("EBITDA") and its operating income ("EBIT"). The calculations resulted in
multiples of the Implied Total Equity Value to net income ("P/E Ratios") of
31.0x based on LTM results, 28.7x based on estimated calendar 1998 results, and
24.9x based on estimated calendar 1999 results. The ratio of Enterprise Value to
LTM sales was 1.6x, the ratio of Enterprise Value to LTM EBITDA was 13.5x and
the ratio of Enterprise Value to LTM EBIT was 19.1x.
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IMPLIED EXCHANGE RATIO ANALYSIS. Baird performed an analysis of the
historical trading ratio between Marquette Common Stock and GE Common Stock
based on the closing market price per share of Marquette Common Stock relative
to the closing market price per share of GE Common Stock for each trading day
from September 15, 1997 to September 15, 1998. This analysis yielded an average
historical trading ratio of 0.337, as compared with the 0.576 exchange ratio
implied by Equity Value Per Share (as reflected by the Merger Consideration) and
the market price of GE Common Stock as of September 15, 1998.
ANALYSIS OF SELECTED PUBLICLY TRADED MARQUETTE COMPARABLE COMPANIES. Baird
reviewed certain publicly available financial information as of the most
recently reported period and stock market information as of September 15, 1998,
for five publicly traded companies that Baird deemed relevant. Such comparable
companies consisted of medical diagnostics companies. For each comparable
company, Baird calculated multiples as of September 15, 1998, of Enterprise
Value to LTM sales, LTM EBITDA and LTM EBIT. Baird then compared these multiples
to the relevant Marquette multiples based on the Equity Value Per Share. An
analysis of the multiples of Enterprise Value to LTM sales, LTM EBITDA and LTM
EBIT yielded 1.6x, 13.5x and 19.1x, respectively, for Marquette compared to
medians of 1.0x, 9.3x and 14.6x, respectively, for Marquette's comparable
companies. For Marquette and each comparable company, Baird also calculated P/E
Ratios based upon the Equity Value Per Share for Marquette and the closing stock
prices as of September 15, 1998 for the comparable companies and net income
statistics for LTM and projected calendar years ending 1998 and 1999 (based on
First Call estimates). An analysis of the P/E Ratios based on Marquette's net
income for LTM and estimated calendar years 1998 and 1999 yielded 31.0x, 28.7x
and 24.9x, respectively, compared to LTM, estimated calendar years 1998 and 1999
medians of 21.5x, 19.0x and 13.8x, respectively, for Marquette's comparable
companies.
ANALYSIS OF SELECTED PUBLICLY TRADED GE COMPARABLE COMPANIES. In order to
assess the relative public market valuation of GE Common Stock to be used by GE
in exchange for Marquette Common Stock, Baird reviewed certain publicly
available financial information as of the most recently reported period and
stock market information as of September 15, 1998, for certain selected publicly
traded companies which Baird deemed relevant. Such comparable companies
consisted of seven large-capitalization diversified companies and six
large-capitalization growth companies. For each comparable company, Baird
calculated multiples as of September 15, 1998, of Enterprise Value to LTM sales,
LTM EBITDA and LTM EBIT. Baird then compared these multiples to the relevant GE
multiples based on GE's closing share price of $78.06 on September 15, 1998, and
GE's LTM operating performance statistics, as provided by publicly available
sources and analyst research reports. An analysis of the multiples of Enterprise
Value to sales, EBITDA and EBIT yielded 2.7x, 15.5x and 17.3x, respectively, for
GE compared to medians of 2.0x, 10.9x and 14.6x, respectively, for the
comparable diversified companies and 2.8x, 13.7x and 17.0x for the comparable
growth companies. For GE and each comparable company, Baird also calculated P/E
Ratios based on the closing stock prices as of September 15, 1998, for the
comparable companies and LTM earnings per share and estimated earnings per share
for calendar years 1998 and 1999 (based on First Call consensus estimates). An
analysis of the P/E Ratios based on earnings per share for GE's LTM and
estimated calendar years 1998 and 1999 yielded 29.9x, 27.9x and 24.6x,
respectively, compared to LTM and estimated calendar years 1998 and 1999 medians
of 22.2x, 20.9x and 16.5x, respectively, for the comparable diversified
companies, and 28.9x, 27.4x and 24.0x, respectively, for the comparable growth
companies.
ANALYSIS OF SELECTED COMPARABLE ACQUISITION TRANSACTIONS. Baird reviewed
eight completed acquisition transactions which Baird deemed relevant. Baird also
reviewed two pending but not completed acquisition transactions (not included in
the following calculations) for the purpose of assessing the effects, if any, of
recent market conditions on its analyses. Such transactions were chosen based on
a review of acquired companies that possessed general business, operating and
financial characteristics representative of companies in the industry in which
Marquette operates. Baird noted that none of the selected transactions reviewed
was identical to the Merger and that, accordingly, the analysis of comparable
transactions
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necessarily involves complex considerations and judgments concerning differences
in financial and operating characteristics of Marquette and other factors that
would affect the acquisition value of comparable transactions including, among
others, the general market conditions prevailing in the equity capital markets
at the time of such transaction. For each comparable transaction, Baird
calculated multiples of Enterprise Value to LTM sales, LTM EBITDA and LTM EBIT;
calculated P/E Ratios based on LTM net income; and calculated the premiums paid
for the equity in these transactions over the public market value of the equity
at various times prior to the announcement of such transaction. Baird then
compared those multiples and premiums to the relevant Marquette multiples and
premiums. These calculations yielded multiples of Enterprise Value to LTM sales,
LTM EBITDA and LTM EBIT of 1.6x, 13.5x and 19.1x, respectively, for Marquette,
compared to the LTM medians of 1.4x, 10.6x and 19.7x, respectively, for the
comparable acquisition transactions. An analysis of the P/E Ratios based on LTM
earnings per share yielded 31.0x for Marquette, compared to a LTM median of
30.9x for the comparable transactions. An analysis of the Equity Value Per Share
to the closing price of Marquette Common Stock one day, 30 days and 90 days
prior to September 15, 1998, compared to the prices paid for the equity in such
comparable acquisition transactions relative to the market value of equity one
day, 30 days and 90 days prior to the announcement date of such transactions,
yielded a one day premium of 87.5%, a 30 day premium of 89.5% and a 90 day
premium of 62.2% for Marquette, compared to median premiums of 29.7%, 42.5% and
65.5%, respectively, for the comparable acquisition transactions.
CONTRIBUTION ANALYSIS. Baird analyzed Marquette's and GE's relative
contribution to the combined company with respect to certain measurements,
including sales, EBITDA, EBIT, and net income. As a result of the Merger,
Marquette's shareholders will own approximately 0.33% of the outstanding GE
Common Stock assuming an exchange ratio of 0.576x based upon the closing price
of GE Common Stock on September 15, 1998 and based on shares of GE Common Stock
outstanding as of June 30, 1998. This compares to Marquette's contribution,
based on actual calendar 1997 and estimated calendar 1998 statistics for the
combined company, of approximately 0.60% to 0.63% of net sales, 0.44% to 0.45%
of EBITDA, 0.34% to 0.35% of EBIT and 0.30% to 0.32% of net income.
DISCOUNTED CASH FLOW ANALYSIS. Baird performed a discounted cash flow
analysis of Marquette on a stand-alone basis using Marquette management's
projections for fiscal 1999 through 2003 without taking into account any expense
increases, cost savings or synergies which may be realized following the Merger.
In such analysis, Baird assumed terminal value multiples of 14.0x to 16.0x EBIT
in fiscal year 2003 and discount rates of 11.3% to 13.3%. Such analysis produced
implied values of Marquette Common Stock ranging from $36.10 to $44.23.
In order to assess the relative public market valuation of GE Common Stock
to be used by GE in exchange for Marquette Common Stock, Baird performed a
discounted cash flow analysis of GE, on a stand alone-basis, using publicly
available analyst research reports for financial projections for calendar 1998
through calendar 2000 without taking into account any expenses increases, cost
savings or synergies which may be realized following the Merger. In such
analysis, Baird assumed terminal value multiples of 15.0x to 20.0x EBIT in the
year 2000 and discount rates of 11.5% to 13.5%. Such analysis produced implied
values of GE Common Stock ranging from $69.43 to $93.49.
CASH PURCHASE SCENARIO. Baird performed an analysis to assess the maximum
amount a prospective purchaser could pay for Marquette without incurring
earnings dilution assuming a cash purchase, 100% debt financing, non-deductible
goodwill amortized over 40 years and no transaction-related expenses, cost
savings or synergies. Based on these assumptions and Marquette management
projections for fiscal 1999 and fiscal 2000, Baird calculated that a purchaser
could pay approximately $29.00 per share without incurring earnings dilution in
fiscal 1999 and slightly less than $32.00 without incurring earnings dilution in
fiscal 2000.
PRO FORMA MERGER ANALYSIS. Baird prepared a pro forma analysis of the
financial impact of the Merger. In conducting its analysis, Baird relied upon
certain assumptions described above and projected earnings estimates for
Marquette (prepared by Marquette management) and GE (provided by publicly
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available analyst research reports). Baird compared the earnings per share of GE
Common Stock, on a stand-alone basis, to the earnings per share of the common
stock of the combined companies on a calendar pro forma basis. The analysis
(assuming no transaction-related expenses, cost savings or synergies) indicated
that the proposed transaction would be slightly dilutive to GE on an earnings
per share basis in calendar 1998 and 1999. The results of the pro forma merger
analysis are not necessarily indicative of future operating results or financial
position.
The foregoing summary does not purport to be a complete description of the
analyses performed by Baird. The preparation of a fairness opinion is a complex
process and is not susceptible to partial analyses or summary description. Baird
believes that its analyses must be considered as a whole, and that selecting
portions of such analyses without considering all analyses and factors, would
create an incomplete view of the processes underlying its opinion. Baird did not
attempt to assign specific weights to particular analyses. Any estimates
contained in Baird's analyses are not necessarily indicative of actual values,
which may be significantly more or less favorable than as set forth therein.
Estimates of values of companies do not purport to be appraisals or necessarily
reflect the prices at which companies may actually be sold. Because such
estimates are inherently subject to uncertainty, Baird does not assume
responsibility for their accuracy.
Baird, as part of its investment banking business, is engaged in the
evaluation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements, and
valuations for estate, corporate and other purposes. Marquette retained Baird
because of its experience and expertise in the valuation of businesses and their
securities in connection with mergers and acquisitions. In the ordinary course
of business, Baird may from time to time trade equity securities of Marquette
and GE for its own account and for accounts of its customers and, accordingly,
may at any time hold a long or short position in such securities.
COMPENSATION. Pursuant to an engagement letter dated September 15, 1998
between Marquette and Baird, Marquette agreed to pay Baird a retainer fee of
$50,000 and an additional fee of $750,000, payable upon delivery of its opinion,
regardless of the conclusions reached by Baird in such opinion. Marquette has
also agreed to reimburse Baird for its reasonable out-of-pocket expenses.
Marquette has also agreed to indemnify Baird, its affiliates and their
respective directors, officers, employees and agents and controlling persons
against certain liabilities relating to or arising out of its engagement,
including liabilities under the federal securities laws. In the past, Baird has
provided investment banking services to Marquette, including acting as financial
advisor in connection with its acquisition of E for M Corporation and as
co-manager in its secondary offering of Marquette Common Stock in 1997, for
which Baird received customary compensation.
FORM OF THE MERGER
If the holders of Marquette Common Stock approve and adopt the Merger
Agreement and all other conditions to the Merger are satisfied or waived, where
permissible, Sub will be merged with and into Marquette, with Marquette being
the surviving corporation after the Merger (the "Surviving Corporation") and
becoming a wholly owned subsidiary of GE. The date on which the closing of the
Merger occurs is referred to herein as the "Closing Date." GE and Marquette
anticipate that the Closing Date will occur as promptly as practicable after the
Special Meeting. The term "Effective Time" means the date and time of the filing
of the Articles of Merger with the Secretary of State of the State of Wisconsin
(or such later time as may be agreed by the parties hereto and specified in the
Articles of Merger).
MERGER CONSIDERATION
The Merger Agreement provides that, at the Effective Time, each share of
Marquette Common Stock issued and outstanding immediately prior to the Effective
Time (other than any shares held in treasury by Marquette or its wholly owned
subsidiaries or shares owned by GE or its wholly owned subsidiaries) will be
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converted into the right to receive the Merger Consideration. The "Merger
Consideration" is the number of shares of GE Common Stock approximately equal to
the quotient determined by dividing $45.00 by the Average GE Share Price. The
"Average GE Share Price" is the average of the last sale price per share of GE
Common Stock on the NYSE Composite Tape for the 10 consecutive trading days
ending on the trading day which is five days prior to the Closing Date (the
"Valuation Period"). Shareholders will receive cash in lieu of fractional shares
of GE Common Stock.
The Merger Consideration generally is intended to provide shares of GE
Common Stock valued at $45.00, based upon the Average GE Share Price, and,
therefore, a higher Average GE Share Price would result in fewer shares of GE
Common Stock constituting the Merger Consideration, and a lower Average GE Share
Price would result in more shares of GE Common Stock constituting the Merger
Consideration. For example, if the Average GE Share Price were equal to $82 per
share, the Merger Consideration would be equal to .549 shares of GE Common
Stock. An Average GE Share Price greater than $82 would result in fewer than
.549 shares of GE Common Stock constituting the Merger Consideration and an
Average GE Share Price less than $82 would result in more than .549 shares of GE
Common Stock constituting the Merger Consideration.
The Merger Agreement provides that the Valuation Period will end on the
trading day which is five days prior to the Closing Date, and therefore the
number of shares of GE Common Stock constituting the Merger Consideration will
be fixed at that time. The market price of GE Common Stock and hence the value
of the Merger Consideration could fluctuate with the performance of GE and
general market conditions during the five-day period between the end of the
Valuation Period and the Closing Date. Thus, the last sale price of GE Common
Stock on the Closing Date may be higher or lower than the Average GE Share Price
and, as a result, the value of the Merger Consideration at the Closing Date may
be more or less than $45.00.
If the Special Meeting occurs prior to the end of the Valuation Period, the
precise number of shares of GE Common Stock constituting the Merger
Consideration will not be known at the time the vote on the approval and
adoption of the Merger Agreement is held. You may call, toll-free, (800)
507-9357 for information concerning the estimated number of shares of GE Common
Stock that will be issued in exchange for each share of Marquette Common Stock.
As part of its ongoing stock repurchase program, GE may reacquire shares of its
common stock during the Valuation Period. See "SUMMARY SELECTED FINANCIAL
DATA--Comparative Per Share Data."
If between the date of the Merger Agreement and the Effective Time the
outstanding shares of GE Common Stock have been changed into a different number
of shares or a different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
the Merger Agreement provides that the Merger Consideration will be
correspondingly adjusted to the extent appropriate to reflect such changes. In
lieu of fractional shares of GE Common Stock, GE shall pay to each holder who
would otherwise be entitled to receive a fractional share an amount in cash
equal to the product of (i) the fractional share interest to which such holder
would otherwise be entitled and (ii) the Average GE Share Price.
EFFECTIVE TIME
The Merger will become effective upon the filing of the Articles of Merger
with the Secretary of State of the State of Wisconsin, in accordance with
applicable law. Such filing will be made as promptly as practicable after
satisfaction or, if permissible, waiver of the conditions to the Merger.
PROCEDURES FOR EXCHANGE OF MARQUETTE COMMON STOCK CERTIFICATES
As soon as practicable after the Effective Time, GE will deposit with a bank
or trust company (the "Exchange Agent"), for the benefit of holders of shares of
Marquette Common Stock, certificates representing the shares of GE Common Stock
issuable pursuant to the Merger in accordance with the
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Merger Agreement. The Exchange Agent will deliver the certificates representing
shares of GE Common Stock upon surrender for exchange of the Certificates (as
defined below).
As soon as reasonably practicable after the Effective Time, the Exchange
Agent will mail letter of transmittal forms and other transmittal forms,
together with exchange instructions, to each holder of record of a certificate
or certificates which immediately prior to the Effective Time represented
outstanding shares of Marquette Common Stock (the "Certificates"), for use in
effecting the surrender and exchange of Certificates for certificates
representing shares of GE Common Stock (and cash in lieu of any fractional
shares) to which such holder has become entitled. After receipt of such letters
of transmittal and other transmittal forms, each holder of Certificates will be
able to surrender such certificates to the Exchange Agent, and each such holder
will receive in exchange therefor a certificate representing the number of whole
shares of GE Common Stock (and cash in lieu of any fractional shares) to which
such holder is entitled. Such transmittal forms will be accompanied by
instructions specifying other details of the exchange. MARQUETTE SHAREHOLDERS
SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY RECEIVE A LETTER OF
TRANSMITTAL.
After the Effective Time and until surrendered, each Certificate will be
deemed to represent only the right to receive upon surrender a certificate
representing shares of GE Common Stock and cash in lieu of fractional shares of
GE Common Stock. No dividends or other distributions declared or made after the
Effective Time with respect to GE Common Stock with a record date after the
Effective Time will be paid to the holder of any unsurrendered Certificate with
respect to the shares of GE Common Stock represented thereby, and no cash
payment in lieu of fractional shares will be paid to any such holder, until the
holder of record of such Certificate shall surrender such Certificate. Subject
to the effect of applicable laws, following surrender of any such Certificate,
there will be paid to the record holder of the new certificates representing
whole shares of GE Common Stock issued in exchange therefor, without interest,
(i) at the time of such surrender, the amount of any cash payable in lieu of
fractional shares of GE Common Stock to which such holder is entitled and the
amount of dividends or other distributions with a record date after the
Effective Time previously paid with respect to such whole shares of GE Common
Stock, and (ii) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole shares of GE Common Stock.
GE or the Exchange Agent will be entitled to deduct and withhold from the
consideration otherwise payable pursuant to the Merger Agreement such amounts as
GE or the Exchange Agent are required to deduct and withhold under the Internal
Revenue Code of 1986, as amended (the "Code"), or any provision of state, local
or foreign tax law, with respect to the making of such payment. To the extent
that amounts are so withheld by GE or the Exchange Agent, such withheld amounts
shall be treated for all purposes of the Merger Agreement as having been paid to
the person in respect of whom such deduction and withholding was made by GE or
the Exchange Agent.
ANTICIPATED ACCOUNTING TREATMENT
The Merger will be accounted for by GE under the "purchase" method of
accounting in accordance with generally accepted accounting principles.
Therefore, the aggregate Merger Consideration paid by GE in connection with the
Merger, together with the direct costs of acquisition, will be allocated to
Marquette's assets and liabilities based on their fair market values with any
excess being treated as goodwill. The assets and liabilities and results of
operations of Marquette will be consolidated into the assets and liabilities and
results of operations of GE subsequent to the Effective Time.
CERTAIN OTHER EFFECTS OF THE MERGER
If the Merger is consummated, shares of Marquette Common Stock will cease to
be quoted on Nasdaq. In addition, Marquette will deregister the Marquette Common
Stock under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, accordingly, will no longer be required to file periodic reports
pursuant to the Exchange Act.
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After the Merger, shareholders of Marquette will become shareholders of GE.
Upon consummation of the Merger, the rights of all such former shareholders of
Marquette will be governed by applicable New York law (rather than the Wisconsin
Business Corporation Law (the "WBCL")), including the New York Business
Corporation Law (the "NYBCL"), and by the certificate of incorporation and
bylaws of GE. For a description of the differences between the rights of GE and
Marquette shareholders, see "COMPARISON OF RIGHTS OF MARQUETTE SHAREHOLDERS AND
GE SHAREHOLDERS."
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
GE and Marquette have made forward-looking statements, as such term is used
in the Private Securities Litigation Reform Act of 1995, in this document and
those documents to which we have referred you that are subject to risks and
uncertainties. Forward-looking statements include the information concerning
possible or assumed future results of operations of GE and Marquette set forth
under "--Reasons for the Merger; Recommendation of the Marquette Board of
Directors" and "--Fairness Opinion of Robert W. Baird & Co. Incorporated" and
those preceded by, followed by or that include the words "believes," "expects,"
"anticipates" or similar expressions. You should understand that the following
important factors, in addition to those discussed elsewhere in this document and
in the documents which are incorporated by reference, could affect the future
results of Marquette and GE, and could cause those results to differ materially
from those expressed in the forward-looking statements of Marquette and GE:
materially adverse changes in economic conditions and in the markets served by
Marquette and GE; regulatory, legal, economic and other changes in the health
care industry environment generally; changes in the law or in the policies and
practices related to governmental and third party reimbursements; and a
significant delay in the expected closing of the Merger.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING IS INTENDED AS A SUMMARY OF CERTAIN MATERIAL UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER. THE DISCUSSION DOES NOT ADDRESS
THE TAX CONSEQUENCES THAT MAY BE RELEVANT TO A PARTICULAR MARQUETTE SHAREHOLDER
SUBJECT TO SPECIAL TREATMENT UNDER CERTAIN UNITED STATES FEDERAL INCOME TAX
LAWS, SUCH AS DEALERS IN SECURITIES, FINANCIAL INSTITUTIONS, INSURANCE
COMPANIES, CERTAIN RETIREMENT PLANS, TAX-EXEMPT ORGANIZATIONS, PERSONS THAT HOLD
SHARES OF MARQUETTE AS PART OF A POSITION IN A "STRADDLE" OR AS PART OF A
"HEDGING" TRANSACTION FOR UNITED STATES FEDERAL INCOME TAX PURPOSES, OR PERSONS
WITH A "FUNCTIONAL CURRENCY" (AS DEFINED IN THE CODE) OTHER THAN THE U.S. DOLLAR
AND DOES NOT ADDRESS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL
OR FOREIGN JURISDICTION.
THIS SUMMARY IS BASED UPON FEDERAL INCOME TAX LAWS, REGULATIONS, RULINGS AND
DECISIONS IN EFFECT AS OF THE DATE HEREOF, ALL OF WHICH ARE SUBJECT TO CHANGE
(RETROACTIVELY OR PROSPECTIVELY) AND TO DIFFERING INTERPRETATION. MARQUETTE
SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO SPECIFIC TAX
CONSEQUENCES TO THEM OF THE MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED
HEREIN.
GENERAL. For each of Marquette and GE, it is a condition to the
consummation of the Merger that Marquette and GE, respectively, receive an
opinion from Sidley & Austin, special counsel to GE, substantially to the effect
that for federal income tax purposes: (i) the Merger will constitute a
"reorganization" within the meaning of Section 368(a) of the Code, and
Marquette, Sub and GE will each be a party to that reorganization within the
meaning of Section 368(b) of the Code; (ii) no gain or loss will be recognized
by GE, Sub or Marquette as a result of the Merger; (iii) no gain or loss will be
recognized by the shareholders of Marquette upon the conversion of their shares
of Marquette Common Stock solely into shares of GE Common Stock pursuant to the
Merger, except with respect to cash, if any, received in lieu of fractional
shares of GE Common Stock; (iv) the aggregate tax basis of the shares of GE
Common
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Stock received solely in exchange for shares of Marquette Common Stock pursuant
to the Merger (including a fractional share of GE Common Stock for which cash is
paid) will be the same as the aggregate tax basis of such shares of Marquette
Common Stock exchanged therefor; (v) the holding period for shares of GE Common
Stock received solely in exchange for such shares of Marquette Common Stock
pursuant to the Merger will include the shareholder's holding period for such
shares of Marquette Common Stock, provided such shares of Marquette Common Stock
were held as capital assets by the shareholder at the Effective Time; and (vi) a
shareholder of Marquette who receives cash in lieu of a fractional share of GE
Common Stock will recognize gain or loss equal to the difference, if any,
between such shareholder's basis in the fractional share (determined under
clause (iv) above) and the amount of cash received.
The opinions set forth above may not be applicable to Marquette shareholders
who, for United States federal income tax purposes, are nonresident alien
individuals, foreign corporations, foreign partnerships, foreign trusts or
foreign estates, or to Marquette shareholders who received their shares of
Marquette Common Stock upon the exercise of options or otherwise as
compensation.
In rendering such opinions, Sidley & Austin may receive and rely upon
representations contained in certificates of Marquette, GE, Michael J. Cudahy,
and others.
BACKUP WITHHOLDING; INFORMATION REPORTING. Certain noncorporate
shareholders of Marquette may be subject to backup withholding at a rate of 31%
on cash payments received in lieu of a fractional share interest in GE Common
Stock. Backup withholding will not apply, however, to a shareholder who (i)
furnishes a correct taxpayer identification number and certifies that he or she
is not subject to backup withholding on the substitute From W-9 included in
letter of transmittal to be delivered to holders of Certificates, (ii) provides
a certificate of foreign status on Form W-8 or (iii) is otherwise exempt from
backup withholding. A shareholder who fails to provide the correct taxpayer
identification number on Form W-9 may be subject to a $50 penalty imposed by the
Internal Revenue Service.
APPRAISAL RIGHTS
There are no rights of appraisal available in connection with the Merger.
THE MERGER AGREEMENT
THE FOLLOWING IS A SUMMARY OF CERTAIN PROVISIONS OF THE MERGER AGREEMENT.
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MERGER AGREEMENT,
WHICH IS INCORPORATED BY REFERENCE IN ITS ENTIRETY AND ATTACHED TO THIS PROXY
STATEMENT/PROSPECTUS AS ANNEX I. SHAREHOLDERS OF MARQUETTE ARE URGED TO READ THE
MERGER AGREEMENT IN ITS ENTIRETY FOR A MORE COMPLETE DESCRIPTION OF THE MERGER.
CERTAIN REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains certain representations and warranties by
Marquette relating to a number of matters, including: (i) the due organization,
valid existence and good standing of Marquette and its subsidiaries; (ii) the
capital structure of Marquette; (iii) the authorization, execution, delivery and
enforceability of the Merger Agreement and related matters; (iv) the absence of
any conflict with Marquette's or its subsidiaries' charters and bylaws, with any
agreement of Marquette or its subsidiaries (except as disclosed) or under any
governmental order or law as a result of the execution of the Merger Agreement
and related matters and that, subject to exceptions set forth in the Merger
Agreement, no governmental filings and approvals will be necessary to effect the
Merger; (v) the filing of documents and financial statements by Marquette with
the Commission and the accuracy of information contained
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therein; (vi) the accuracy of information supplied by Marquette for the
Registration Statement and this Proxy Statement/Prospectus; (vii) the absence of
certain changes or events in Marquette's business or condition; (viii)
Marquette's possession of all permits necessary to conduct its business, the
lack of violations by it or its subsidiaries under its charter and bylaws, under
applicable laws and regulations, including those of the Food and Drug
Administration, and under orders of governmental entities, and the absence of
defaults under certain agreements; (ix) certain tax matters and the payment of
taxes; (x) the absence of material pending or threatened litigation; (xi)
certain compensation agreements; (xii) the absence of changes to, and the
qualification, operation and liability under, employee benefit plans; (xiii)
compliance with worker safety laws; (xiv) product development and the absence of
certain liabilities; (xv) labor matters; (xvi) ownership and validity of
intellectual property rights and Year 2000 compliance; (xvii) the receipt of the
opinion of Marquette's financial advisor as to the fairness of the Merger
Consideration; (xviii) the inapplicability of Sections 180.1140 through 180.1144
of the WBCL to the transactions contemplated by the Merger Agreement and
Marquette's election not to be governed by Section 180.1131 of the WBCL; (xix)
the vote required for approval of the Merger Agreement by shareholders of
Marquette; (xx) the absence of actions that would prevent the Merger from
constituting a reorganization qualifying under Section 368(a) of the Code; (xxi)
accounts receivable; (xxii) quality and quantity of inventories; (xxiii)
environmental matters; (xxiv) relations with suppliers; (xxv) insurance policies
maintained and the absence of defaults thereunder; (xxvi) the accuracy of
information provided to GE; (xxvii) interested party transactions; (xxviii)
title to and sufficiency of Marquette's assets and (xxix) brokers and finders.
The Merger Agreement also contains certain representations and warranties by
GE and Sub relating to a number of matters, including: (i) the due organization,
valid existence and good standing of GE and Sub; (ii) the authorization,
execution, delivery and enforceability of the Merger Agreement and related
matters; (iii) the absence of any conflict with GE's or its subsidiaries'
charters and bylaws, with any agreement of GE or its subsidiaries or under any
governmental order or law as a result of the execution of the Merger Agreement
and related matters and that, subject to exceptions set forth in the Merger
Agreement, no governmental filings and approvals will be necessary to effect the
Merger; (iv) the GE Common Stock to be issued at the Effective Time; (v) the
filing of documents and financial statements by GE with the Commission and the
accuracy of information contained therein; (vi) the accuracy of information
supplied by GE for the Registration Statement and this Proxy
Statement/Prospectus; (vii) the absence of certain changes or events in GE's
business or condition; (viii) the absence of actions that would prevent the
Merger from constituting a reorganization qualifying under Section 368(a) of the
Code; (ix) the operations of Sub; and (x) brokers and finders.
CERTAIN COVENANTS AND AGREEMENTS
CONDUCT OF BUSINESS OF MARQUETTE. Marquette has agreed, for itself and its
subsidiaries, that, during the period from the date of the Merger Agreement and
continuing until the Effective Time, it will carry on its business in the
ordinary course of business as currently conducted and use reasonable best
efforts to preserve intact its current business organizations, keep available
the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings with
it. Without limiting the foregoing, the Merger Agreement limits Marquette's
ability, without GE's prior written consent, to (and will cause its subsidiaries
not to): (i) pay any dividends or otherwise make any payments to its
shareholders; effect a stock split, combination or reclassification or authorize
the issuance of any other securities in respect of shares of its capital stock;
or acquire any shares of its capital stock or any rights to acquire any such
shares; (ii) issue, sell or otherwise encumber capital stock or any related
warrants or options; (iii) amend its charter or by-laws or amend the Marquette
Rights Agreement (as defined below); (iv) acquire, merge or consolidate with, or
purchase a substantial portion of the assets of any business organization; (v)
sell, lease or otherwise dispose of any of its assets, other than sales of
inventory in the ordinary course of business consistent with past practice; (vi)
incur or guarantee any indebtedness for borrowed money other than in the
ordinary course of business consistent with past
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practices and in an amount not to exceed $10 million (provided that GE will not
unreasonably withhold its consent to increases of not more than $30 million) and
indebtedness between Marquette and any of its wholly-owned subsidiaries or
between any wholly-owned subsidiaries; (vii) alter the corporate structure or
ownership of Marquette or any subsidiary; (viii) enter into or amend any
severance plan or employment agreement; (ix) increase the compensation payable
to its directors, officers or employees or enter into or amend any employment
agreement or collective bargaining agreement; (x) knowingly violate any
applicable material law; (xi) make any change to accounting policies or
procedures; (xii) take any position with respect to taxes that is inconsistent
with positions taken in prior periods; (xiii) make any tax election or settle
any material income tax liability; (xiv) commence any litigation or settle any
material claims or litigation; (xv) enter into or amend any material agreement
or contract, purchase any real property or agree to make any new capital
expenditure in excess of $7 million; (xvi) discharge liabilities and obligations
outside the ordinary course of business; or (xvii) authorize any of the
foregoing.
NO SOLICITATION. Pursuant to the Merger Agreement, Marquette has agreed
that it will not, nor will it permit any of its subsidiaries to, nor will it
authorize or permit any officer, director or employee of or any financial
advisor, attorney or other advisor or representative, to solicit, initiate or
encourage the submission of, any Takeover Proposal (as defined below), enter
into any agreement with respect to or approve or recommend any Takeover Proposal
or participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to Marquette or any subsidiary in connection
with, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Takeover Proposal; PROVIDED, HOWEVER, that nothing contained in this paragraph
prohibits Marquette or its directors from (i) complying with Rule 14e-2
promulgated under the Exchange Act with regard to a tender or exchange offer or
(ii) referring a third party to this paragraph or making a copy of this
paragraph available to any third party; and PROVIDED, FURTHER, that prior to the
Special Meeting, if the Marquette Board reasonably determines the Takeover
Proposal constitutes a Superior Proposal (as defined below), then, to the extent
required by the fiduciary obligations of the Marquette Board, as determined in
good faith by a majority thereof after consultation with independent counsel
(who may be Marquette's regularly engaged independent counsel), Marquette may,
in response to an unsolicited request therefor, furnish information with respect
to Marquette and its subsidiaries to any person pursuant to a customary
confidentiality statement (as determined by Marquette's independent counsel).
Without limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by any officer or director of
Marquette or any of its subsidiaries or any financial advisor, attorney or other
advisor or representative of Marquette or any of its subsidiaries, whether or
not such person is purporting to act on behalf of Marquette or any of its
subsidiaries or otherwise, will be deemed to be a breach of this paragraph by
Marquette. "Takeover Proposal" means any proposal for a merger or other business
combination involving Marquette or any of its subsidiaries or any proposal or
offer to acquire in any manner, directly or indirectly, an equity interest in,
any voting securities of, or a substantial portion of the assets of Marquette or
any of its subsidiaries, other than the transactions contemplated by the Merger
Agreement and the Stock Option Agreement. "Superior Proposal" means a bona fide
proposal made by a third party to acquire Marquette pursuant to a tender or
exchange offer, a merger, a sale of all or substantially all its assets or
otherwise on terms which a majority of the disinterested members of the
Marquette Board determines, at a duly constituted meeting of the Marquette Board
or by unanimous written consent, in its reasonable good faith judgment to be
more favorable to Marquette's shareholders than the Merger (based on the advice
of Marquette's independent financial advisor that the value of the consideration
provided for in such proposal exceeds the value of the consideration provided
for in the Merger) and for which financing, to the extent required, is then
committed or which, in the reasonable good faith judgment of a majority of such
disinterested members, as expressed in a resolution adopted at a duly
constituted meeting of such members (based on the advice of Marquette's
independent financial advisor), is reasonably capable of being obtained by such
third party.
Marquette has agreed to advise GE orally and in writing of (i) any Takeover
Proposal or any inquiry with respect to or which could lead to any Takeover
Proposal received by any officer or director of
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Marquette or, to the knowledge of Marquette, any financial advisor, attorney or
other advisor or representative of Marquette, (ii) the material terms of such
Takeover Proposal (including a copy of any written proposal), and (iii) the
identity of the person making any such Takeover Proposal or inquiry no later
than 24 hours following receipt of such Takeover Proposal or inquiry. If
Marquette intends to furnish any person with any information with respect to any
Takeover Proposal in accordance with the preceding paragraph, Marquette will
advise GE orally and in writing of such intention not less than 5 business days
in advance of providing such information. Marquette will keep GE fully informed
of the status and details of any such Takeover Proposal or inquiry.
STOCK OPTION PLANS. The parties have agreed that at the Effective Time,
each Marquette Stock Option outstanding immediately prior to the Effective Time
will become and represent an option to purchase the number of shares of GE
Common Stock (a "Substitute Option"), decreased to the nearest whole share,
determined by multiplying the number of shares of Marquette Common Stock subject
to such Marquette Stock Option immediately prior to the Effective Time by the
Conversion Number (as defined below), at an exercise price per share of GE
Common Stock, increased to the nearest whole cent, equal to the exercise price
per share of Marquette Common Stock subject to such Marquette Stock Option
immediately prior to the Effective Time divided by the Conversion Number. GE
shall pay cash to holders of Substitute Options in lieu of issuing fractional
shares of GE Common Stock upon the exercise thereof. The "Conversion Number"
means the number of shares of GE Common Stock into which each share of Marquette
Common Stock is converted as of the Effective Time, determined in accordance
with the Merger Agreement. After the Effective Time, except as otherwise
expressly provided in the Merger Agreement, each Substitute Option will be
exercisable upon the same terms and conditions as were applicable to the related
Marquette Stock Option immediately prior to the Effective Time. Marquette will
take all action necessary to implement the provisions of this paragraph,
including amendment of the Marquette Stock Option Plans, and to ensure that,
after giving effect to the foregoing, no Marquette Stock Option will be
exercisable for Marquette Common Stock following the Effective Time. Marquette
has agreed to take no action to accelerate or otherwise affect the
exercisability of any Marquette Stock Option, except as expressly provided in
the immediately following paragraphs, or otherwise affect the exercise period
thereof. As soon as reasonably practicable, and in no event later than 20 days
after the Effective Time, GE has agreed to file a registration statement on Form
S-8 (or any successor or other appropriate form) with respect to GE Common Stock
subject to all Substitute Options.
Following the execution of the Merger Agreement, GE has agreed that it will
request a private letter ruling from the Internal Revenue Service or obtain an
opinion of a law firm selected by GE, in either case to the effect that no
income will be recognized by any holder of a Substitute Option as a result of
any action to provide that each Substitute Option which is outstanding on the
second anniversary of the Effective Time and not then fully exercisable will
become fully exercisable on such second anniversary of the Effective Time. If,
prior to the Effective Time, the Internal Revenue Service has issued such a
private letter ruling or GE has obtained such an opinion, in either case
reasonably satisfactory to Marquette and GE, then, prior to the Effective Time,
Marquette will take such action satisfactory to GE as will be necessary to
provide that each Substitute Option, other than Substitute Options held by
persons who had been non-employee directors of Marquette immediately prior to
the Effective Time, which is outstanding on the second anniversary of the
Effective Time and not then exercisable will become fully exercisable on such
second anniversary of the Effective Time. If such ruling or opinion is obtained
by Marquette after the Effective Time, GE will cause Marquette to take the
action contemplated by the immediately preceding sentence.
Prior to the Effective Time, Marquette has agreed to take such action
satisfactory to GE as shall be necessary to provide that upon the termination of
employment of a holder of a Substitute Option by Marquette without Cause (as
defined below) or due to death or disability, each Substitute Option then held
by such holder which is not then exercisable will become fully exercisable on
the date of such termination of employment. For purposes of this paragraph,
"Cause" means conviction of a criminal
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offense, theft, fraud, breach of trust or refusal to perform services reasonably
assigned following notice and an opportunity to cure.
Prior to the Effective Time, Marquette has agreed that it will take such
action satisfactory to GE as shall be necessary to provide that upon the
cessation of service as a director of Marquette by each person who is a
non-employee director of Marquette immediately prior to the Effective Time, each
Substitute Option held by such person immediately following the Effective Time
which is not then exercisable in accordance with its original vesting schedule
will continue to become exercisable in accordance with such original vesting
schedule as if the service of such director had not ceased.
INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. From and after the
Effective Time, GE has agreed to cause the Surviving Corporation to indemnify
and hold harmless all past and present officers and directors of Marquette and
of its subsidiaries to the same extent and in the same manner such persons were
indemnified as of the date of the Merger Agreement by Marquette pursuant to the
WBCL, the Marquette Charter, the Marquette Bylaws or certain indemnity
agreements for acts or omissions occurring at or prior to the Effective Time
(including indemnifying and holding harmless such persons for acts or omissions
occurring at or prior to the Effective Time in respect of the Merger and the
transactions contemplated thereby to the same extent and in the manner as such
persons were indemnified as of the date of the Merger Agreement by Marquette
pursuant to the WBCL, the Marquette Charter, the Marquette Bylaws or such
indemnity agreements).
GE has also agreed to cause the Surviving Corporation to provide, for an
aggregate period of not less than 3 years from the Effective Time, Marquette's
current directors and officers an insurance and indemnification policy that
provides coverage for events occurring prior to the Effective Time (the "D&O
Insurance") that is substantially similar to Marquette's policy existing as of
the Merger Agreement or, if substantially equivalent insurance coverage is
unavailable, the best available coverage; PROVIDED, HOWEVER, that the Surviving
Corporation will not be required to pay an annual premium for the D&O Insurance
in excess of the last annual premiums paid prior to the date of the Merger
Agreement (approximately $195,000), but in such case shall purchase as much
coverage as possible for such amount.
Under the terms of the Merger Agreement GE also agrees that, effective at
the Effective Time, it will guarantee the obligations of the Surviving
Corporation under the preceding two paragraphs.
CONDITIONS PRECEDENT TO THE MERGER
CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The respective
obligations of each party to effect the Merger are subject to the fulfillment of
the following conditions:
- SHAREHOLDER APPROVAL. Approval of the Merger Agreement by the requisite
vote of shareholders of Marquette in accordance with applicable law and
the Marquette Charter and the Marquette Bylaws.
- STOCK EXCHANGE LISTINGS. The authorization of the GE Common Stock
issuable in the Merger for listing on the NYSE, subject to official notice
of issuance.
- HSR AND OTHER APPROVALS. The expiration or termination of the waiting
period (and any extension thereof) applicable to the consummation of the
Merger under the HSR Act, and the obtaining, making or occurring of all
authorizations, consents, orders, declarations or approvals of, or filings
with, or terminations or expirations of waiting periods imposed by, any
governmental entity, which the failure to obtain, make or occur would have
the effect of making the Merger or any of the transactions contemplated by
the Merger Agreement illegal or would have, individually or in the
aggregate, a material adverse effect on GE (assuming the Merger had taken
place).
- REGISTRATION STATEMENT. The effectiveness of the Registration Statement
in accordance with the provisions of the Securities Act; the absence of
any stop order suspending the effectiveness of the
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Registration Statement having been issued by the Commission and the
absence of any proceedings for that purpose having been initiated or, to
the knowledge of GE or Marquette, threatened by the Commission; and the
receipt of all necessary state securities or blue sky authorizations
(including state takeover approvals).
- NO ORDER. The absence of any law, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or
permanent) having been enacted, issued, promulgated, enforced or entered
by any court or other governmental entity having jurisdiction over
Marquette or GE, which is then in effect and has the effect of making the
Merger or any of the transactions contemplated by the Merger Agreement
illegal.
CONDITIONS TO OBLIGATION OF MARQUETTE TO EFFECT THE MERGER. The obligation
of Marquette to effect the Merger shall be subject to the fulfillment of the
following additional conditions:
- PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND WARRANTIES. Each of GE
and Sub having performed in all material respects each of its agreements
contained in the Merger Agreement required to be performed on or prior to
the Effective Time, each of the representations and warranties of GE and
Sub contained in the Merger Agreement that is qualified by materiality
being true and correct on and as of the Effective Time as if made on and
as of such date (other than representations and warranties which address
matters only as of a certain date which will be true and correct as of
such certain date) and each of the representations and warranties that is
not so qualified being true and correct in all material respects on and as
of the Effective Time as if made on and as of such date (other than
representations and warranties which address matters only as of a certain
date which will be true and correct in all material respects as of such
certain date), in each case except as contemplated or permitted by the
Merger Agreement, and Marquette having received certificates signed on
behalf of each of GE and Sub by one of its officers to such effect.
- TAX OPINION. Marquette having received an opinion of Sidley & Austin,
special counsel to GE, in form and substance reasonably satisfactory to
Marquette and its counsel, dated the Effective Time, substantially to the
effect described in "THE MERGER--Material Federal Income Tax
Consequences".
- MATERIAL ADVERSE CHANGE. There having been no material adverse change
with respect to GE since the date of the Merger Agreement, and Marquette
having received a certificate signed on behalf of GE by an officer of GE
to such effect.
- MARQUETTE STOCK OPTION PLANS. GE having taken all action required to be
taken by it to implement the provisions described under "--Certain
Covenants and Agreements--Stock Option Plans" above.
CONDITIONS TO OBLIGATIONS OF GE AND SUB TO EFFECT THE MERGER. The
obligations of GE and Sub to effect the Merger are subject to the fulfillment of
the following additional conditions:
- PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND WARRANTIES. Marquette
having performed in all material respects each of its agreements contained
in the Merger Agreement required to be performed on or prior to the
Effective Time, each of the representations and warranties of Marquette
contained in the Merger Agreement that is qualified by materiality being
true and correct on and as of the Effective Time as if made on and as of
such date (other than representations and warranties which address matters
only as of a certain date which will be true and correct as of such
certain date) and each of the representations and warranties that is not
so qualified being true and correct in all material respects on and as of
the Effective Time as if made on and as of such date (other than
representations and warranties which address matters only as of a certain
date which will be true and correct in all material respects as of such
certain date), in each case except as contemplated or permitted by the
Merger Agreement, and GE having received a certificate signed on behalf of
Marquette by its Chief Executive Officer and its Chief Financial Officer
to such effect.
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- TAX OPINION. GE having received an opinion of Sidley & Austin, special
counsel to GE, in form and substance reasonably satisfactory to GE, dated
the Effective Time, substantially to the effect set forth in "THE
MERGER--Material Federal Income Tax Consequences".
- CONSENTS. Marquette having obtained the consent or approval of each
person or governmental entity whose consent or approval is required in
connection with the transactions contemplated by the Merger Agreement
under any loan or credit agreement, note, mortgage, indenture, lease or
other agreement or instrument, except as to which the failure to obtain
such consents and approvals would not, in the reasonable opinion of GE,
individually or in the aggregate, have a material adverse effect on
Marquette or GE or upon the consummation of the transactions contemplated
in the Merger Agreement, the Stock Option Agreement or the Shareholder
Agreement. In obtaining any approval or consent required to consummate any
of the transactions contemplated by the Merger Agreement, the Stock Option
Agreement or the Shareholder Agreement, no governmental entity will have
imposed or having sought to impose any condition, penalty or requirement
which, in the reasonable opinion of GE, individually or in aggregate would
have a material adverse effect on Marquette or GE.
- AFFILIATE AGREEMENTS. GE having received a signed agreement from any
person who may be deemed to be an affiliate of Marquette pursuant to Rule
145 under the Securities Act, stating that such affiliate will comply with
Rules 144 and 145 under the Securities Act.
- MATERIAL ADVERSE CHANGE. There having been no material adverse change
with respect to Marquette since the date of the Merger Agreement, and GE
having received a certificate signed on behalf of Marquette by the Chief
Executive Officer and the Chief Financial Officer of the Marquette to such
effect.
- MARQUETTE STOCK OPTION PLANS. Marquette having taken all action required
to be taken by it to implement the provisions described under "--Certain
Covenants and Agreements--Stock Option Plans" above.
TERMINATION
The Merger Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval by the shareholders of Marquette of the
matters presented in connection with the Merger:
(a) by the mutual written consent of GE and Marquette;
(b) by either GE or Marquette if the other party has failed to comply in
all material respects with its covenants or agreements contained in the
Merger Agreement required to be complied with prior to the date of such
termination, which failure to comply has not been cured within 5 business
days following receipt by such other party of written notice of such failure
to comply, with certain exceptions;
(c) by either GE or Marquette if there has been (i) a breach by the
other party (in the case of GE, including any material breach by Sub) of any
representation or warranty that is not qualified as to materiality which has
the effect of making such representation or warranty not true and correct in
all material respects or (ii) a breach by the other party (in the case of
GE, including any material breach by Sub) of any representation or warranty
that is qualified as to materiality, in each case which breach has not been
cured within 5 business days following receipt by the breaching party of
written notice of the breach;
(d) by GE or Marquette if: (i) the Merger has not been effected on or
prior to the close of business on April 30, 1999; PROVIDED, HOWEVER, that
the right to terminate under this paragraph will not be available to any
party whose failure to fulfill any of its obligations contained in the
Merger Agreement has been the cause of, or resulted in, the failure of the
Merger to have occurred on or
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prior to the aforesaid date; or (ii) any court or other governmental entity
having jurisdiction over a party to the Merger Agreement has issued an
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the transactions contemplated by the
Merger Agreement and such order, decree, ruling or other action has become
final and nonappealable;
(e) by GE or Marquette if the shareholders of Marquette do not approve
the Merger Agreement at the Special Meeting or at any adjournment or
postponement thereof;
(f) by GE if (i) the Marquette Board, in breach of the Merger Agreement,
has not recommended, or has resolved not to recommend, or has qualified,
modified or withdrawn its recommendation of the Merger or declaration that
the Merger is advisable and fair to and in the best interest of Marquette
and its shareholders, or has resolved to do so, (ii) the Marquette Board, in
breach of the Merger Agreement, has recommended to the shareholders of
Marquette any Takeover Proposal or has resolved to do so or (iii) a tender
offer or exchange offer for 20% or more of the outstanding shares of capital
stock of Marquette is commenced, and the Marquette Board fails to recommend
against acceptance of such tender offer or exchange offer by its
shareholders (including by taking no position with respect to the acceptance
of such tender offer or exchange offer by its shareholders); or
(g) by GE or Marquette if Marquette enters into a merger, acquisition or
other agreement (including an agreement in principle) to effect a Superior
Proposal or the Marquette Board resolves to do so; PROVIDED, HOWEVER, that
Marquette may not terminate the Merger Agreement pursuant to this paragraph
unless (i) Marquette has delivered to GE a written notice of Marquette's
intent to enter into such an agreement to effect the Superior Proposal, (ii)
5 business days have elapsed following delivery to GE of such written notice
by Marquette and (iii) during such 5 business day period Marquette has fully
cooperated with GE, including informing GE of the terms and conditions of
the Takeover Proposal and the identity of the person making the Takeover
Proposal, with the intent of enabling GE to agree to a modification of the
terms and conditions of the Merger Agreement so that the transactions
contemplated hereby may be effected; PROVIDED, FURTHER, that Marquette may
not terminate the Merger Agreement pursuant to this paragraph unless at the
end of such 5 business day period the Marquette Board continues reasonably
to believe that the Takeover Proposal constitutes a Superior Proposal when
compared to the Merger (taking into account any such modification as may be
proposed by GE) and concurrently with such termination Marquette pays to GE
the amounts specified under "--Fees and Expenses" below.
FEES AND EXPENSES
Except as described below, whether or not the Merger is consummated, all
costs and expenses incurred in connection with the Merger Agreement and the
transactions contemplated thereby, including the fees and disbursements of
counsel, financial advisors and accountants, will be paid by the party incurring
such costs and expenses, provided that all printing expenses and all filing fees
(including filing fees under the Securities Act, the Exchange Act and the HSR
Act) will be divided equally between GE and Marquette.
Notwithstanding any provision in the Merger Agreement to the contrary, if
the Merger Agreement is terminated (A) by Marquette pursuant to clause (i) of
paragraph (d) under "--Termination" above after receipt of a Superior Proposal,
(B) by GE pursuant to paragraph (b), (c) or (f) under "--Termination" above, or
(C) by GE or Marquette pursuant to paragraph (e) under "--Termination" above
(after receipt of a publicly disclosed Superior Proposal or after the occurrence
of any of the events described in clause (i), (ii) or (iii) of paragraph (f)
under "--Termination" above) or pursuant to paragraph (g) under "-- Termination"
above, then, in each case, Marquette will (without prejudice to any other rights
of GE against Marquette) reimburse GE upon demand for all out-of-pocket fees and
expenses incurred or paid by or on behalf of GE or any affiliate of GE in
connection with the Merger Agreement, the Stock Option
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Agreement and the transactions contemplated therein, including all fees and
expenses of counsel, investment banking firms, accountants and consultants.
Notwithstanding any provision in the Merger Agreement to the contrary, if
the Merger Agreement is terminated: (A) by Marquette pursuant to clause (i) of
paragraph (d) under "--Termination" above after receipt of a Superior Proposal,
(B) by GE pursuant to paragraph (b) or (f) under "--Termination" above, or (C)
by GE pursuant to paragraph (c) under "--Termination" above or by GE or
Marquette pursuant to paragraph (e) under "--Termination" above in either case
after receipt of a publicly disclosed Superior Proposal or after the occurrence
of any of the events described in clause (i), (ii) or (iii) of paragraph (f)
under "--Termination" above, and, in the case of (A), (B) or (C), prior to,
concurrently with or within twelve months after such a termination a Third Party
Acquisition Event (as defined below) occurs, then Marquette shall (in addition
to any other obligation under the Merger Agreement and without prejudice to any
other rights of GE against Marquette) pay to GE the Termination Fee (as defined
below) in cash, such payment to be made promptly, but in no event later than the
second business day following the later to occur of such termination and such
Third Party Acquisition Event.
If the Merger Agreement is terminated by GE or Marquette pursuant to
paragraph (g) under "-- Termination" above, then Marquette will (in addition to
any obligation under the Merger Agreement and without prejudice to any other
rights of GE against Marquette) pay to GE the Termination Fee in cash, such
payment to be made by Marquette concurrently with such termination if the
termination is by Marquette, or no later than the second business day following
such termination if the termination is by GE.
"Termination Fee" means $35 million, PROVIDED, HOWEVER, that such amount
will be reduced to an amount not less than zero by subtracting from $35 million
the amount realized or realizable (based on the facts as they exist on the date
such fee shall become due) by GE under the Stock Option Agreement; PROVIDED
FURTHER that if such fee shall be so reduced by an amount realizable by GE and
thereafter the Stock Option Agreement shall terminate without receipt by GE of
such amount, then an additional payment will be made to GE in such amount
promptly following such termination.
A "Third Party Acquisition Event" means any of the following events: (A)
Marquette redeems the Rights (as defined below) or amends or fails to resist a
legal challenge to the Marquette Rights Agreement and any person (other than GE
or its affiliates and other than Michael J. Cudahy so long as his beneficial
ownership does not exceed 25%) acquires or becomes the beneficial owner of 20%
or more of the outstanding shares of Marquette Common Stock; (B) Marquette
redeems the Rights or amends or fails to resist a legal challenge to the
Marquette Rights Agreement and any group (other than a group which includes or
may reasonably be deemed to include GE or any of its affiliates) is formed
which, at the time of formation, beneficially owns 20% or more of the
outstanding shares of Marquette Common Stock; (C) Marquette enters into, or
announces that it proposes to enter into, an Agreement, including, an Agreement
in principle, providing for a merger or other business combination involving
Marquette or a significant subsidiary of Marquette or the acquisition of a
substantial interest in, or a substantial portion of the assets, business or
operations of, Marquette or a significant subsidiary (other than the
transactions contemplated by the Merger Agreement); (D) any person (other than
GE or its affiliates) is granted any option or right, conditional or otherwise,
to acquire or otherwise become the beneficial owner of shares of Marquette
Common Stock which, together with all shares of Marquette 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 Marquette
Common Stock; or (E) there is a public announcement with respect to a plan or
intention by Marquette to effect any of the foregoing transactions.
Notwithstanding any provision in the Merger Agreement to the contrary, if
the Merger Agreement is terminated by Marquette pursuant to paragraph (b) or (c)
under "--Termination" above, then GE will (without prejudice to any other rights
of Marquette against GE) reimburse Marquette upon demand for all out-of-pocket
fees and expenses incurred or paid by or on behalf of Marquette or any affiliate
of Marquette in connection with the Merger Agreement, the Stock Option Agreement
and the transactions
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contemplated therein, including all fees and expenses of counsel, investment
banking firms, accountants and consultants.
AMENDMENT; WAIVER
The Merger Agreement may be amended by the parties thereto at any time prior
to the approval of the matters presented in connection with the Merger Agreement
to the shareholders of Marquette, but, after any such approval, no amendment may
be made which by law requires further approval by such shareholders without such
further approval. The Merger Agreement may not be amended except by an
instrument in writing signed by each of the parties to the Merger Agreement.
Pursuant to the Merger Agreement, at any time prior to the Effective Time,
the parties to the Merger Agreement may (i) extend the time for the performance
of any obligation or other act of the other parties to the Merger Agreement,
(ii) waive any inaccuracy in the representations and warranties contained in the
Merger Agreement or in any document delivered pursuant to the Merger Agreement
and (iii) waive compliance with any agreement or condition contained in the
Merger Agreement which may be legally waived. Any such extension or waiver will
be valid only if set forth in an instrument in writing signed on behalf of such
party.
THE STOCK OPTION AGREEMENT
THE FOLLOWING IS A SUMMARY OF CERTAIN PROVISIONS OF THE STOCK OPTION
AGREEMENT, A CONFORMED COPY OF WHICH IS ATTACHED AS ANNEX III TO THIS PROXY
STATEMENT/PROSPECTUS AND INCORPORATED HEREIN BY REFERENCE. THIS SUMMARY IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE STOCK OPTION AGREEMENT.
SHAREHOLDERS OF MARQUETTE ARE URGED TO READ THE STOCK OPTION AGREEMENT IN ITS
ENTIRETY.
Concurrently with the execution of the Merger Agreement, in order to induce
GE to enter into the Merger Agreement, GE and Marquette entered into the Stock
Option Agreement pursuant to which Marquette granted to GE an option to purchase
up to 3,643,066 shares (the "Optioned Shares") of Marquette Common Stock
(approximately 19.9% of the outstanding shares of Marquette Common Stock as of
October 13, 1998) at an exercise price of $45 per share (the "Exercise Price"),
payable in cash.
The Option is exercisable only if one or more of the following events
occurs: (A) Marquette redeems the Rights or amends or fails to resist a legal
challenge to the Marquette Rights Agreement and any person (other than GE or its
affiliates or Michael J. Cudahy so long as he beneficially owns less than 25%),
acquires or becomes the beneficial owner of 20% or more of the outstanding
shares of Marquette Common Stock; (B) Marquette redeems the Rights or amends or
fails to resist a legal challenge to the Marquette Rights Agreement and any
group (other than a group which includes or may reasonably be deemed to include
GE or any of its affiliates) is formed which beneficially owns 20% or more of
the outstanding shares of Marquette Common Stock; (C) any person (other than GE
or its affiliates) has commenced a tender or exchange offer for 20% or more of
the then outstanding shares of Marquette Common Stock or has publicly proposed
any bona fide merger, consolidation or acquisition of all or substantially all
the assets of Marquette, or other similar business combination involving
Marquette; (D) Marquette 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 Marquette or a
significant subsidiary of Marquette or the acquisition of a substantial interest
in, or a substantial portion of the assets, business or operations of, Marquette
or a significant subsidiary (other than the transactions contemplated by the
Merger Agreement); (E) any person (other than GE or its affiliates) is granted
any option or right, conditional or otherwise, to acquire or otherwise become
the beneficial owner of shares of Marquette Common Stock which, together with
all shares of Marquette 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 Marquette Common Stock; or (F) there is a
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public announcement with respect to a plan or intention by Marquette, other than
with GE or its affiliates, to effect any of the foregoing transactions.
Additionally, GE may not exercise the Option if (a) GE or Sub has breached
any of their material obligations under the Merger Agreement or (b) a
preliminary or permanent injunction or other order issued by any federal or
state court of competent jurisdiction which invalidates the grant or prohibits
the exercise of the Option is in effect (clauses (a) and (b) being collectively
referred to as the "Option Conditions").
GE's obligation to purchase the Optioned Shares following the exercise of
the Option, and Marquette'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 HSR Act have expired or been terminated.
Prior to the termination of the Option, if a Put Event (as defined below)
occurs, GE has the right, upon 3 business days' prior written notice to
Marquette, to require Marquette to purchase the Option from GE (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). "Put Event" means the
occurrence on or after the date of the Stock Option Agreement of any of the
following: (i) any person (other than GE or its affiliates) acquires or becomes
the beneficial owner of 50% or more of the outstanding shares of Marquette
Common Stock or (ii) Marquette consummates a merger or other business
combination involving Marquette or a significant subsidiary of Marquette or the
acquisition of a substantial interest in, or a substantial portion of the
assets, business or operations of, Marquette or a significant subsidiary (other
than the transactions contemplated by the Merger Agreement). "Spread" means 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 Marquette Common
Stock paid or to be paid within 12 months preceding the date of exercise of the
Put Right for any shares of Marquette 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 Marquette Common Stock after the date of the Stock
Option Agreement or (y) the average of the last reported sales prices quoted on
Nasdaq of Marquette Common Stock during the 5 trading days immediately preceding
the written notice of exercise of the Put Right over (ii) the Exercise Price.
At any time after the termination of the Option and for a period of 90 days
thereafter, Marquette has the right, upon 3 business days' prior written notice,
to repurchase from GE (the "Repurchase Right"), all (but not less than all) of
the Optioned Shares acquired by Marquette and with respect to which Marquette
then has beneficial ownership at a price per share equal to the greater of (i)
the average of the last reported sales price quoted on Nasdaq of Marquette
Common Stock during the 5 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 GE at the time of exercise of
the Repurchase Right.
The Stock Option Agreement and the Option 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 will not terminate
until 180 days after a termination pursuant to clause (ii) immediately above if
(A) the Merger Agreement is terminated by GE pursuant to paragraph (b), (c) or
(f) under "THE MERGER AGREEMENT--Termination" above, (B) the Merger Agreement is
terminated by GE or Marquette pursuant to paragraph (e) or (g) under "THE MERGER
AGREEMENT--Termination" above or (C) the Merger Agreement is terminated by
Marquette pursuant to clause (i) of paragraph (d) under "THE MERGER
AGREEMENT--Termination" above after receipt of a Superior Proposal; PROVIDED,
FURTHER, that the Stock Option Agreement will not terminate with respect to the
preceding paragraph until 90 days after the termination of the Option pursuant
to the foregoing proviso.
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The Option, which GE required that Marquette grant as a condition to GE
entering into the Merger Agreement, might increase the likelihood of
consummation of the Merger by discouraging competing offers for Marquette.
Certain aspects of the Stock Option Agreement may have the effect of
discouraging persons who may, now or prior to the Effective Time, be interested
in acquiring all of or a significant interest in Marquette from considering or
proposing such an acquisition, even if such persons were prepared to offer to
pay consideration to shareholders of Marquette that had a higher current market
price than the shares of GE Common Stock to be received for each share of
Marquette Common Stock pursuant to the Merger Agreement.
SHAREHOLDER AGREEMENT
THE FOLLOWING IS A SUMMARY OF CERTAIN PROVISIONS OF THE SHAREHOLDER
AGREEMENT ENTERED INTO BETWEEN GE AND MR. CUDAHY, A COPY OF WHICH IS ATTACHED
HERETO AS ANNEX IV AND INCORPORATED HEREIN BY REFERENCE. THIS SUMMARY IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE SHAREHOLDER AGREEMENT.
SHAREHOLDERS OF MARQUETTE ARE URGED TO READ THE SHAREHOLDER AGREEMENT IN ITS
ENTIRETY.
Concurrently with the execution of the Merger Agreement, in order to induce
GE to enter into the Merger Agreement, Michael J. Cudahy, the Chairman of the
Marquette Board and the owner of 3,262,588 shares of Marquette Common Stock (the
"Subject Shares") (approximately 17.8% of the outstanding shares of Marquette
Common Stock as of the Record Date), entered into the Shareholder Agreement with
GE.
COVENANTS. The Shareholder Agreement provides, among other things, that:
(a) Mr. Cudahy will attend the Special Meeting, in person or by proxy, and at
the Special Meeting (or at any adjournment thereof) or in any other
circumstances upon which a vote, consent or other approval with respect to the
Merger or the Merger Agreement is sought, he will vote (or cause to be voted)
the Subject Shares in favor of the Merger, the adoption of the Merger Agreement
and the approval of the terms thereof and each of the other transactions
contemplated by the Merger Agreement; (b) at any meeting of shareholders of
Marquette or at any adjournment thereof or in any other circumstances upon which
his vote, consent or other approval is sought, he will vote (or cause to be
voted) the Subject Shares against (i) any merger agreement or merger (other than
the Merger Agreement and the Merger), consolidation, combination, sale of
substantial assets, reorganization, recapitalization, dissolution, liquidation
or winding up of or by Marquette or any subsidiary thereof or any other Takeover
Proposal or (ii) any amendment of the Marquette Charter or the Marquette Bylaws
or other proposal or transaction involving Marquette or any of its subsidiaries,
which amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Merger, the Merger Agreement or any of the
other transactions contemplated by the Merger Agreement or change in any manner
the voting rights of any class of capital stock of Marquette; (c) he will not,
with certain exceptions, (i) sell, transfer, pledge, assign or otherwise dispose
of (including by gift) (collectively "Transfer") or enter into any contract,
option or other arrangement (including any profit-sharing arrangement) with
respect to the Transfer of the Subject Shares to any person or (ii) enter into
any voting arrangement, whether by proxy, voting agreement or otherwise, in
relation to the Subject Shares, and agrees not to commit or agree to take any of
the foregoing actions; (d) he will not, nor will he authorize any investment
banker, attorney or other advisor or representative to directly or indirectly
solicit, initiate or encourage the submission of, any Takeover Proposal, or
directly or indirectly participate in any discussions or negotiations regarding,
or furnish to any person with respect to Marquette or any subsidiary in
connection with, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes or may reasonably be expected to lead
to, any Takeover Proposal; (e) he will use his reasonable best efforts to take,
or cause to be taken, all actions and to do, or cause to be done, and to assist
and cooperate with GE in doing, all things necessary, proper or advisable to
support and to consummate and make effective, in the most expeditious manner
practicable, the Merger Agreement and the other transactions contemplated by the
Merger Agreement; (f) he will notify GE in writing of the nature and amount of
any acquisition by him of any voting securities of Marquette; and (g) he will
not
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knowingly take or fail to take any action which would cause certain
representation and warranties made by him to be untrue or incorrect. The
Shareholder Agreement is not intended to limit the action that Mr. Cudahy may
take to discharge his fiduciary duties as a director of Marquette.
TERMINATION. Mr. Cudahy's obligations under the Shareholder Agreement
terminate on the earlier to occur of (i) six months after the termination of the
Merger Agreement pursuant to the provisions described in "THE MERGER
AGREEMENT--Termination" above and (ii) the Effective Time; PROVIDED, HOWEVER,
that if the Merger Agreement is terminated by Marquette pursuant to paragraphs
(b), (c) or (d) under "THE MERGER AGREEMENT--Termination" above (other than
pursuant to clause (i) of such paragraph (d) following the receipt of a Superior
Proposal) or if the Merger Agreement is terminated pursuant to paragraph (a)
under "THE MERGER AGREEMENT--Termination" above, then such obligations will
terminate upon the termination of the Merger Agreement.
REGULATORY MATTERS
Under the HSR Act and the rules promulgated thereunder by the Federal Trade
Commission (the "FTC"), the Merger may not be consummated until notifications
have been given and certain information has been furnished to the FTC and the
Antitrust Division of the U.S. Department of Justice (the "Antitrust Division")
and specified waiting periods have been terminated or have expired. Marquette
and GE each filed notification and report forms under the HSR Act with the FTC
and the Antitrust Division on October 6, 1998. At any time before or after
consummation of the Merger, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the consummation of the Merger or seeking
divestiture of substantial assets of Marquette or GE. The Antitrust Division has
the authority to challenge the Merger on antitrust grounds before or after the
Merger is completed.
GE has also made or expects to make filings with regulatory authorities
pursuant to antitrust laws in Austria, Germany, Italy and Sweden. It is
currently anticipated that necessary clearances under these laws will be
obtained prior to the Special Meeting.
GE and Marquette are not aware of any material governmental or regulatory
approvals required to be obtained in order to consummate the Merger, other than
compliance with the HSR Act, the foreign laws mentioned above and applicable
federal and state securities and corporate laws.
COMPARISON OF RIGHTS OF MARQUETTE SHAREHOLDERS
AND GE SHAREHOLDERS
THE STATEMENTS SET FORTH UNDER THIS HEADING WITH RESPECT TO THE WBCL,
MARQUETTE'S AMENDED AND RESTATED ARTICLES OF INCORPORATION, AS AMENDED (THE
"MARQUETTE CHARTER"), MARQUETTE'S AMENDED AND RESTATED BY-LAWS (THE "MARQUETTE
BYLAWS"), THE RIGHTS AGREEMENT BETWEEN MARQUETTE AND FIRSTAR TRUST COMPANY (THE
"MARQUETTE RIGHTS AGREEMENT"), GE'S CERTIFICATE OF INCORPORATION, AS AMENDED
(THE "GE CHARTER") AND GE'S BY-LAWS, AS AMENDED (THE "GE BYLAWS"), ARE BRIEF
SUMMARIES THEREOF AND DO NOT PURPORT TO BE COMPLETE; SUCH STATEMENTS ARE SUBJECT
TO THE DETAILED PROVISIONS OF THE NYBCL, WBCL, THE MARQUETTE CHARTER, THE
MARQUETTE BYLAWS, THE MARQUETTE RIGHTS AGREEMENT, THE GE CHARTER AND THE GE
BYLAWS. SEE "WHERE YOU CAN FIND MORE INFORMATION."
Upon consummation of the Merger and delivery of their Marquette Certificates
to the Exchange Agent, shareholders of Marquette will become shareholders of GE.
Since GE is a New York corporation, the rights of the shareholders of GE are
governed by the applicable laws of the State of New York. including the NYBCL,
and by the GE Charter and the GE Bylaws. Since Marquette is a Wisconsin
corporation, the rights of the shareholders of Marquette are governed by the
applicable laws of the State of Wisconsin, including the WBCL, and by the
Marquette Charter and the Marquette Bylaws.
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While there are similarities between the NYBCL and the WBCL as well as
between the charters and bylaws of GE and Marquette, a number of differences do
exist. The following is a summary of certain material differences between the
current rights of GE shareholders and Marquette shareholders under the NYBCL and
the WBCL, respectively, and under the respective charters and bylaws of GE and
Marquette. Additionally, Marquette has a shareholder rights plan, while GE does
not.
AUTHORIZED CAPITAL STOCK
The authorized capital stock of GE currently consists of 4,450,000,000
shares of capital stock, consisting of (i) 4,400,000,000 shares of GE Common
Stock, and (ii) 50,000,000 shares of preferred stock, par value $1.00 per share.
The authorized capital stock of Marquette currently consists of 60,000,000
shares of capital stock, consisting of (i) 30,000,000 shares of Marquette Common
Stock and (ii) 30,000,000 shares of preferred stock, no par value.
SHAREHOLDER VOTING RIGHTS GENERALLY
Under the NYBCL and the WBCL, with respect to matters other than the
election of directors, unless a greater number of affirmative votes is required
by statute, the articles or certificate of incorporation or by-laws, if a quorum
exists, action on any matter generally is approved by the shareholders if the
votes cast favoring the action exceed the votes cast opposing the action. Unless
otherwise provided in the certificate or articles of incorporation, directors
are elected by a plurality of the votes cast by the shares entitled to vote.
Neither GE Common Stock nor Marquette Common Stock is divided into classes
and each entitles holders thereof to one vote for each share on each matter upon
which shareholders have the right to vote.
SHAREHOLDER VOTING IN CERTAIN SIGNIFICANT TRANSACTIONS
The NYBCL requires that, for corporations in existence on February 22, 1998
whose certificates of incorporation do not expressly provide otherwise, the
affirmative vote of two-thirds of a corporation's outstanding shares entitled to
vote is required in order to authorize a merger, consolidation, dissolution or
disposition of substantially all of the corporation's assets. The GE Charter
does not expressly provide otherwise.
Under the WBCL, a corporation may sell, lease, exchange or otherwise dispose
of all, or substantially all, of its property, other than in the usual and
regular course of business, if such disposition is approved by a majority of all
the votes entitled to be cast thereon. A merger or share exchange plan must be
approved by each voting group entitled to vote separately on the plan by a
majority of all the votes entitled to be cast on the plan by that voting group.
The WBCL contains certain provisions that, unless a corporation elects not
to be covered by such provisions, require approval of a supermajority of
shareholders for certain "business combinations" involving persons who are
"significant shareholders" before the transaction or become "significant
shareholders" after the transaction. A "significant shareholder" is, among
others, a person who is, or an affiliate who was, within two years of the
transaction, a beneficial owner of 10% or more of the voting power of the
applicable corporation. In such a case, unless the business combination
satisfies certain "fair price" criteria, the business combination must be
approved by the affirmative vote of 80% of the votes entitled to be cast by the
outstanding voting shares of the corporation voting as a single voting group and
two-thirds of all such shares excluding the shares owned by a significant
shareholder. Marquette has elected, in the Marquette Charter, not to be covered
by this provision.
The NYBCL requires that any amendment to the certificate of incorporation
specifying a vote requirement for the transaction of specified items of
business, which vote requirement is higher than that
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otherwise required by law, must be authorized by a two-thirds vote of all
outstanding shares entitled to vote thereon and present at a meeting.
The GE Charter may be amended by a majority vote by the Board of Directors
of GE (the "GE Board") and the affirmative vote of at least a majority of
outstanding shares of GE Common Stock. The GE Charter confers the power to amend
or repeal the GE Bylaws upon the GE Board, except that the GE Board does not
have the authority to amend or repeal any bylaw which is adopted by the GE
shareholders after April 20, 1948, unless such authority is granted to the GE
Board by the specific provisions of a bylaw adopted by the GE shareholders. The
GE Bylaws also may be altered, amended or repealed, at any time, in the manner
provided in the GE Charter.
In general, the WBCL provides that a corporation's articles of incorporation
may be amended through a proposal submitted by the board of directors to the
shareholders for their approval. Unless the articles of incorporation or by-laws
provide otherwise, or unless class voting is required, or unless the WBCL
provides otherwise, the amendment may be approved by a majority vote of the
shares entitled to vote thereon. Class votes are required in certain
circumstances which, in general, affect a class of stock adversely or uniquely.
In certain very limited circumstances, either specified in the corporation's
articles of incorporation or which involve certain ministerial actions which are
likely to be immaterial to the shareholders, the WBCL permits the articles of
incorporation to be amended by action of the board of directors without
shareholder approval. In general, under Wisconsin law, the by-laws of a
corporation may be amended by the board of directors, except in those instances
in which the corporation's articles of incorporation or by-laws provide
otherwise. Action by shareholders to amend or repeal amendments to the by-laws
can overrule action taken by the board of directors. The Marquette Charter and
the Marquette Bylaws provide that the by-laws may be adopted, amended or
repealed by the Marquette Board, except for such by-laws as may have been
adopted by the shareholders.
SPECIAL MEETINGS OF SHAREHOLDERS; CONSENT TO ACTIONS OF SHAREHOLDERS IN LIEU OF
MEETING
SPECIAL MEETINGS. Under both the NYBCL and the WBCL, a special meeting of
shareholders may be called by the board of directors or by any person authorized
to do so in the certificate or articles of incorporation or bylaws. The WBCL
provides that a special meeting of shareholders may also be called by holders of
at least 10% of the outstanding voting shares of the corporation.
The GE Bylaws provide that special meetings of shareholders may be called by
the GE Board, or by the written request of shareholders holding 40% of the then
issued stock of GE.
The Marquette Bylaws provide that special meetings of the shareholders of
Marquette may be called at any time by the Marquette Board, the President or
upon the written request of holders of not less than 10% of all outstanding
shares of Marquette.
CONSENT OF SHAREHOLDERS IN LIEU OF MEETING. The NYBCL requires the
unanimous consent in writing of the holders of all outstanding shares entitled
to vote thereon for any action requiring a vote of shareholders, if such action
is taken without a meeting. Neither the GE Charter nor the GE Bylaws contains
any provision with respect to actions by shareholders by written consent.
The WBCL permits action otherwise required to be taken at a shareholders'
meeting to be taken without a meeting if (1) written consents are signed by all
shareholders entitled to vote on the action, or (2) if the articles of
incorporation so provide, written consents are signed by shareholders having not
less than the minimum number of votes that would be necessary to authorize the
proposed action at a meeting at which all shares entitled to vote were present
and voted. Neither the Marquette Charter nor the Marquette Bylaws contains any
provision with respect to actions by shareholders by written consent.
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BUSINESS COMBINATIONS
The NYBCL generally prohibits a resident domestic corporation (as that term
is defined in the NYBCL) from engaging in a business combination with an
"interested shareholder" (the beneficial owner of 20% or more of the
corporation's stock) for a period of five years from the time the shareholder
acquired the stock in such resident domestic corporation, unless certain
conditions are met.
The resident domestic corporation may engage in a business combination with
the interested shareholder within the five-year period if the interested
shareholder's stock purchase was approved by the corporation's board of
directors prior to the purchase. The business combination is also permitted if
any of the following criteria are met: (1) the business combination was approved
by the board of directors prior to the interested shareholder's stock
acquisition date; (2) the combination was approved by the majority of
disinterested shareholders at a meeting called no earlier than five years after
the interested shareholder's stock acquisition date; or (3) the price paid to
all the shareholders meets statutory criteria establishing a formula price. The
formula price is the higher of the price paid by the interested shareholder or
the market value of the stock, computed as the higher of the value when acquired
or when the announcement of the business combination was made.
The WBCL regulates a broad range of "business combinations" between a
corporation and an "interested shareholder." "Business combinations" are
generally defined to include a merger or a share exchange, an asset sale, the
issuance of stock or rights to purchase stock and certain related party
transactions, in each case involving an interested shareholder. An "interested
shareholder" is a person who beneficially owns, directly or indirectly, 10% or
more of the outstanding voting stock of the corporation, or a person who is an
affiliate or associate of the corporation and has beneficially owned 10% or more
of the voting stock within the last three years. The WBCL generally prohibits a
corporation from engaging in a business combination with an interested
shareholder for a period of three years following the date on which the
interested shareholder first acquired 10% or more of the outstanding voting
stock (the "Share Acquisition Date") unless the board of directors approved the
business combination or the acquisition of stock prior to the Share Acquisition
Date. After three years from the Share Acquisition Date, the WBCL continues to
generally prohibit a business combination with an interested shareholder unless
(i) the board of directors approved the business combination or the acquisition
of stock prior to the Share Acquisition Date, (ii) the business combination is
approved by a majority of the outstanding voting stock not owned by the
interested shareholder, (iii) the consideration to be received by shareholders
meets certain requirements of the statute with respect to form and amount or
(iv) the business combination is of a type specifically excluded from the
coverage of the statute.
While a takeover offer is being made, or after a takeover offer has been
publicly announced and before it is concluded, the WBCL requires the approval of
the holders of a majority of shares entitled to vote before a public corporation
may acquire more than 5% of its voting shares at a price above market value from
a person who holds more than 3% of its voting shares and has held such shares
for less than two years, unless at least an "equal" offer is made to acquire all
voting shares and all securities which may be converted into voting shares.
Similar approval is required before a public corporation may sell or option
assets which amount to at least 10% of its market value unless the corporation
has at least three directors who are not either officers or employees of the
corporation and a majority of the directors who are not either officers or
employees vote not to be governed by this provision.
The WBCL provides that in certain circumstances the voting rights of shares
of a "resident public corporation" held by any person in excess of 20% of the
voting power of such corporation is limited to 10% of the full voting power of
such excess shares. Full voting power may be restored if a majority of the
voting power of shares represented at a meeting are voted in favor of such
restoration. A "resident domestic corporation" is a Wisconsin corporation that
satisfies any of the following: its principal offices are located in Wisconsin;
it has significant business operations in Wisconsin; more than 10% of the record
holders of
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its shares are Wisconsin residents; or more than 10% of its shares are held of
record by Wisconsin residents.
BUSINESS CONDUCTED AT SHAREHOLDERS' MEETINGS
Under both the NYBCL and the WBCL, the business permitted to be conducted at
any special meeting of shareholders is limited to the matters stated in the
notice of meeting of shareholders.
DIVIDENDS
Under the NYBCL, a corporation may pay dividends out of surplus. Under the
WBCL, no distribution may be made if, after giving it effect, either (1) the
corporation would not be able to pay its debts as they become due in the usual
course of business, or (2) the corporation's total assets would be less than the
sum of its total liabilities plus, unless the articles of incorporation permit
otherwise, the amount that would be needed, if the corporation were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of shareholders whose preferential rights are superior to those
receiving the distribution.
DISSENTERS' APPRAISAL RIGHTS
The NYBCL provides that, upon strict compliance with the applicable
statutory requirements and procedures, a dissenting shareholder has the right to
receive payment of the fair value of such shareholder's shares if such
shareholder objects to: (i) mergers; (ii) consolidations; (iii) dispositions of
assets requiring shareholder approval; (iv) certain share exchanges; or (v)
certain amendments to the certificate of incorporation which adversely affect
the rights of such shareholder.
Under the WBCL, a shareholder of a corporation is generally entitled to
receive payment of the fair value of such shareholder's stock if such
shareholder dissents from a proposed merger or stock exchange or sale or
exchange of all or substantially all of the property and assets of the
corporation. However, except with respect to business combinations involving
significant shareholders (as such terms are described in the first paragraph
under "Shareholder Voting in Certain Significant Transactions" above),
dissenters' rights are not available to holders of shares that are registered on
a national securities exchange or quoted on Nasdaq. Currently, Marquette Common
Stock is quoted on Nasdaq.
WARRANTS OR OPTIONS
The NYBCL requires the approval of the holders of a majority of the votes
cast for the issuance of any rights or options to directors, officers or other
employees or for a plan to issue such rights or options.
The WBCL does not specifically limit or require special approval procedures
in connection with the issuance of rights or options to directors, officers or
other employees of a corporation.
NUMBER AND TERM OF DIRECTORS
Under the NYBCL, the number of directors may be fixed by the bylaws or by
action of the shareholders or of the board of directors under the specific
provisions of a bylaw adopted by the shareholders. The number of directors may
be increased or decreased by amendment of the bylaws or by action of the
shareholders or of the board of directors under the specific provisions of a
bylaw adopted by the shareholders; PROVIDED that, if the board of directors is
authorized by the bylaws to change the number of directors, whether by amending
the bylaws or by taking action under the specific provisions of a bylaw adopted
by the shareholders, such amendment or action shall require the vote of a
majority of the entire board of directors.
Under the WBCL, the authorized number of directors constituting the board of
directors is specified in, or fixed in accordance with, the articles of
incorporation or by-laws and may be increased or decreased by amendment to, or
in a manner provided in, the articles of incorporation or the by-laws. Under the
Marquette Bylaws, the number of directors is six.
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The GE Charter provides that the GE Board may not consist of less than 10
directors, the exact number to be determined pursuant to the procedures set
forth in the GE Bylaws. The GE Bylaws provide that the exact number of directors
will be determined by a vote of the majority of the entire GE Board, except that
the number of directors for any year will be fixed by the shareholders of GE at
any annual statutory meeting of the shareholders by a majority vote of the
outstanding shares entitled to vote thereon. Directors of GE hold office until
the next statutory meeting of the shareholders and until their successors are
duly elected and have qualified. The number of directors of GE is currently
fixed at 15.
ELECTION OF DIRECTORS
Under the NYBCL and the WBCL, except as otherwise provided in the
certificate or articles of incorporation, directors are elected by a plurality
of the votes cast at a meeting of shareholders by the holders of shares entitled
to vote in the election.
The GE Bylaws provide that directors of GE shall be elected each year at the
annual statutory meeting of the shareholders of GE, and that any vacancy
occurring in the GE Board may be filled for the unexpired term by the GE Board.
Neither the GE Charter nor the GE Bylaws allows cumulative voting for the
election of directors.
The Marquette Bylaws provide that directors of Marquette hold office until
the next annual meeting of shareholders and until his or her successor has been
elected and qualified. Any vacancy may be filled by the Marquette Board by the
affirmative vote of the majority of the directors then in office, even if less
than a quorum. Neither the Marquette Charter nor the Marquette Bylaws provides
for cumulative voting in the election of directors.
CLASSIFICATION OF THE BOARD OF DIRECTORS
The NYBCL provides that a corporation's certificate of incorporation or
bylaws may provide that the directors be divided into either two, three or four
classes; PROVIDED that all classes will be as nearly equal in number as
possible, and no class may include less than three directors. The WBCL permits
the staggering of terms of directors by dividing the directors into two or three
groups if the corporation's articles of incorporation or by-laws so provide.
None of the GE Charter, the GE Bylaws, the Marquette Charter and the Marquette
Bylaws contains a classified board provision.
REMOVAL OF DIRECTORS
The NYBCL provides that any or all of the directors of a corporation may be
removed for cause and, if the certificate of incorporation or bylaws of the
corporation provide, without cause by vote of the shareholders.
Under the WBCL, a director may generally be removed by the shareholders,
with or without cause, if the number of votes cast to remove the director
exceeds the number of votes cast not to remove him or her, unless the articles
of incorporation, or by-laws adopted under authority granted in the articles of
incorporation, provide for a greater voting requirement or provide that
directors may only be removed for cause.
Under the WBCL, the circuit court for the county where a corporation's
principal office or registered office is located may remove a director of the
corporation from office in a proceeding brought either by the corporation or by
shareholders holding at least 10% of the outstanding shares of any class, if the
court finds that the director engaged in fraudulent or dishonest conduct or
gross abuse of authority or discretion with respect to the corporation and that
removal is in the best interests of the corporation.
Neither the GE Charter nor the GE Bylaws provides for removal of GE
directors. Consequently, GE directors may be removed only for cause by vote of
the shareholders of GE.
Neither the Marquette Charter nor the Marquette Bylaws provides for removal
of Marquette directors. Consequently, directors of Marquette may be removed with
or without cause by the shareholder vote referred to above.
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STATUTORY SHAREHOLDER LIABILITY
The WBCL provides that the shareholders of a Wisconsin corporation are
personally liable in certain circumstances for debts owing to employees of the
corporation for services performed for such corporation, but not exceeding six
months' service in any case. The NYBCL does not have a similar provision.
INDEMNIFICATION
The NYBCL allows for the advance payment of expenses to a director or
officer by the corporation prior to the final disposition of an action. The
NYBCL requires that, prior to any such advance, a determination must be made by
a quorum of disinterested directors, an independent legal counsel or by the
company's shareholders that such executive has met the applicable statutory
standard of conduct. Furthermore, the NYBCL allows for the advance payment of
expenses prior to the final disposition of an action upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that such executive is not entitled to be
indemnified by the company.
The GE Charter provides that a person who is or was a director of GE will
have no personal liability to GE or its shareholders for damages for any breach
of duty in such capacity except that the foregoing shall not eliminate or limit
liability where such liability is imposed under the NYBCL. The GE Bylaws provide
that GE shall, to the fullest extent permitted by applicable law, indemnify any
person who is or was or has agreed to become a director of GE against damages;
PROVIDED that no indemnification shall be provided to any person if a judgment
or other final adjudication adverse to the director establishes that (i) his or
her acts were committed in bad faith or were the result of active and deliberate
dishonesty and, in either case, were material to the cause of action so
adjudicated, or (ii) he or she personally gained in fact a financial profit or
other advantage to which he or she was not legally entitled.
The WBCL provides that a director is not liable to the corporation, its
shareholders, or any person asserting rights on behalf of the corporation or its
shareholders for liabilities arising from a breach of, or failure to perform,
any duty resulting solely from his or her status as director, unless the person
asserting liability proves that the breach or failure to perform constitutes any
of the following: (1) wilful failure to deal fairly with the corporation or its
shareholders in connection with a matter in which the director has a material
conflict of interest; (2) a violation of criminal law, unless the director had
reasonable cause to believe that the conduct was lawful or no reasonable cause
to believe that the conduct was unlawful; (3) a transaction from which the
director derived an improper personal profit; or (4) wilful misconduct. Although
the WBCL permits a corporation to limit the statutory immunity from director
liability in its articles of incorporation, the Marquette Charter does not
contain such a limitation.
The WBCL provides that a corporation shall indemnify a director or officer,
to the extent that he or she has been successful on the merits or otherwise in
the defense of a proceeding, for all reasonable expenses incurred in the
proceeding if the director or officer was a party because of his or her status
as a director or officer. Additionally, a corporation shall indemnify a director
or officer against liability incurred by a director or officer in a proceeding
to which the director or officer was a party because he or she is a director or
officer of the corporation, unless liability was incurred because the director
or officer breached or failed to perform a duty that he or she owes to the
corporation and the breach or failure to perform constitutes any of the conduct
enumerated above relating to liability of directors. Further, a court of law may
order that the corporation provide indemnification to a director or officer if
it finds that the director or officer is entitled thereto under the applicable
statutory provision or is fairly and reasonably entitled thereto in view of all
the relevant circumstances, whether or not such indemnification is required
under the applicable statutory provision.
The WBCL permits a corporation to provide additional rights to
indemnification under its articles of incorporation or by-laws, by written
agreement, by resolution of its board of directors or by a vote of the holders
of a majority of its outstanding shares, except that the corporation may not
indemnify a director or officer unless it is determined by or on behalf of the
corporation that the director or officer did not breach
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or fail to perform a duty owed to the corporation which constitutes conduct as
enumerated above relating to liability of directors. The Marquette Bylaws
provide for indemnification and reimbursement or advancement of expenses to
directors and officers to the fullest extent permitted by the WBCL. This
provision is not exclusive of any other rights to indemnification or the
advancement of expenses to which a director or officer may be entitled to under
any written agreement, resolution of directors, vote of shareholders, by law or
otherwise.
TRANSACTIONS WITH INTERESTED DIRECTORS
Generally, under the NYBCL, a contract or transaction between a corporation
and one or more of its directors or between a corporation and any other entity
in which one or more of its directors are directors or officers, or have a
substantial financial interest, is not void or voidable solely because of such
relationship or interest, if any of the following is true: (i) the material
facts of the contract or transaction and the director's interest are disclosed
or known to the board of directors or a committee of the board of directors
which approves the transaction by a vote sufficient for such purpose without
counting the vote of such interested director or, if the votes of the
disinterested directors are insufficient to constitute an act of the board under
the NYBCL, by unanimous vote of the disinterested directors; (ii) the material
facts of the transaction and the director's interest are disclosed or known to
shareholders entitled to vote thereon, and such contract or transaction is
approved by a vote of such shareholders; or (iii) the parties to such contract
or transaction establish affirmatively that such transaction or contract was
fair and reasonable to the corporation when it was approved by the board, a
committee or the shareholders.
Generally, under the WBCL, a contract or transaction between a corporation
and one or more of its directors or between a corporation and another entity in
which one or more of its directors are directors or officers or in which one or
more of its directors have a material financial interest is not voidable solely
because of such relationship or interest, if any of the following is true: (i)
the material facts of the transaction and the director's interest are disclosed
or known to the board of directors or a committee of the board of directors
which specifically authorizes, approves or ratifies the transaction by the vote
of a majority of directors who have no direct or indirect interest in the
transaction; (ii) the material facts of the transaction and the director's
interest are disclosed or known to shareholders entitled to vote and they
authorize, approve or ratify the transaction by a majority of the shares
entitled to vote (shares held or voted by the interested director are not
entitled to vote); or (iii) the transaction is fair to the corporation.
Marquette's Bylaws provide that directors with a real or perceived "conflict
of interest" are required to disclose such conflict at the earliest practical
time and are not entitled to vote on any matter in which such conflict of
interest is relevant. "Conflicts of interest" are considered to exist if (i) the
director has an existing or potential financial or other interest which impairs
or might reasonably appear to impair his or her independent, unbiased judgment,
(ii) the director is aware of a member of his or her immediate family or a
family member that resides in his or her house that has such an existing or
potential conflict, or (iii) any organization in which the director or a member
of his or her family is an officer, director, employee, member, partner, trustee
or controlling shareholder has such an existing or potential conflict.
SHAREHOLDER RIGHTS AGREEMENT
GE does not have a shareholder rights plan. By contrast, Marquette has a
shareholder rights plan. Pursuant to the Marquette Rights Agreement, each holder
of an outstanding share of Marquette Common Stock has received a right (a
"Right") entitling the holder thereof to purchase from Marquette one one-
hundredth of a share of Series A Preferred Stock, without par value (the
"Preferred Shares"), of Marquette at a price of $80.00 (the "Purchase Price"),
subject to adjustment.
Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") have acquired beneficial ownership of 20% or more of the outstanding
shares of Marquette Common Stock or (ii) 10 business days (or such later date as
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may be determined by action of the Marquette Board prior to such time as any
person of group of affiliated persons becomes an Acquiring Person) following the
commencement of, or announcement of an intention to make a tender offer or
exchange offer, the consummation of which would result in the beneficial
ownership by a person or group of 20% or more of the outstanding shares of
Marquette Common Stock (the earlier of such dates being called the "Distribution
Date"), the Rights will be evidenced by certificates representing Marquette
Common Stock. The Rights Agreement provides that, until the Distribution Date
(or earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the shares of Marquette Common Stock.
Marquette, any subsidiary of Marquette, any employee benefit plan of
Marquette or a subsidiary, any person holding shares of Marquette Common Stock
for or pursuant to the terms of any employee benefit plan of Marquette or a
subsidiary or Michael J. Cudahy, his affiliates or associates, his heirs and any
trust or foundation to which he has transferred or may transfer shares of
Marquette Common Stock are exempt from the applicability of the Marquette Rights
Agreement as it relates to the acquisition of 20% or more of the outstanding
shares of Marquette Common Stock. Pursuant to an amendment to the Marquette
Rights Agreement, GE is also exempt from these provisions until the latest to
occur of the termination of the Merger Agreement, the termination of the Stock
Option Agreement and the termination of the Shareholder Agreement.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on December 18, 2006 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case as described below. In addition, the
Rights will expire immediately prior to the Effective Time of the Merger.
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power is sold after a person or group has become an Acquiring Person, proper
provision will be made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right that number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of two times the
exercise price of the Right. In the event that any person or group of affiliated
or associated persons becomes an Acquiring Person, proper provision shall be
made so that each holder of a Right, other than Rights beneficially owned by the
Acquiring Person (which Rights will thereafter be void), will thereafter have
the right to receive upon exercise that number of shares of Marquette Common
Stock having a market value of two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the outstanding
shares of Marquette Common Stock, the Marquette Board may exchange the Rights
(other than Rights owned by such person or group which will have become void),
in whole or in part, at an exchange ratio of one share of Marquette Common
Stock, or one one-hundredth of the Preferred Share (or of a share of a class or
series of the Company's preferred stock having equivalent rights, preferences
and privileges), per Right (subject to adjustment).
At any time prior to the earlier of (i) the acquisition by a person or group
or affiliated or associated persons of beneficial ownership of 20% or more of
the outstanding shares of Marquette Common Stock or (ii) a majority of the
Marquette Board being removed by the written consent of the shareholders of
Marquette under certain circumstances, the Marquette Board may redeem the Rights
in whole, but not in part, at a price of $.01 per Right (the "Redemption
Price"). The redemption of the Rights may be made effective at such time, on
such basis and with such conditions as the Marquette Board in its sole
discretion may establish. Immediately upon any redemption of the Rights, the
right to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Marquette Board without the
consent of the holders of the Rights, including an amendment to lower the 20%
threshold described above to not less than 10%,
46
<PAGE>
except that from and after such time as any person or group of affiliated or
associated persons becomes an Acquiring Person no such amendment may adversely
affect the interests of the holders of the Rights.
In connection with the execution of the Merger Agreement, the Marquette
Board amended the Marquette Rights Agreement to provide that none of the
approval, execution or delivery of the Merger Agreement, the Stock Option
Agreement or the Shareholder Agreement, the acquisition of shares of Marquette
Common Stock pursuant to the terms of the Stock Option Agreement or the
consummation of the Merger and the other transactions contemplated by the Merger
Agreement, the Stock Option Agreement and the Shareholder Agreement will cause
(i) GE to be deemed an Acquiring Person, (ii) a Share Acquisition Date (as
defined in the Marquette Rights Agreement) to occur or (iii) a Distribution Date
to occur.
DESCRIPTION OF GE'S CAPITAL STOCK
SET FORTH BELOW IS A DESCRIPTION OF THE GE COMMON STOCK. THE FOLLOWING
STATEMENTS ARE BRIEF SUMMARIES OF, AND ARE SUBJECT TO THE DETAILED PROVISIONS
OF, THE GE CHARTER, THE GE BYLAWS AND THE RELEVANT PROVISIONS OF THE NYBCL. SEE
"WHERE YOU CAN FIND MORE INFORMATION."
GE currently is authorized to issue up to 4,400,000,000 shares of Common
Stock, par value $.16 per share ("GE Common Stock"). GE is also authorized to
issue up to 50,000,000 shares of preferred stock, par value $1.00 per share, in
series, but has not issued any such shares. If such shares are issued, GE's
Board of Directors may fix the designation, relative rights, preferences and
limitations of the shares of each series.
Dividends may be paid on the GE Common Stock out of funds legally available
therefor, when and if declared by the GE's Board of Directors.
Holders of the GE Common Stock are entitled to share ratably therein and in
assets available for distribution on liquidation, dissolution or winding up,
subject, if preferred stock of GE is then outstanding, to any preferential
rights of such preferred stock. Each share of the GE Common Stock entitles the
holder thereof to one vote at all meetings of share owners, and such votes are
noncumulative. The GE Common Stock is not redeemable, has no subscription or
conversion rights and does not entitle the holder thereof to any preemptive
rights.
LEGAL MATTERS
The legality of the GE Common Stock offered hereby will be passed upon for
GE by Robert E. Healing, Corporate Counsel of GE. Sidley & Austin, special
counsel to GE, will deliver an opinion concerning the federal income tax
consequences of the Merger.
EXPERTS
The consolidated financial statements of Marquette incorporated in this
Proxy Statement/Prospectus by reference from Marquette's Annual Report on Form
10-K for each of the years in the three-year period ended April 30, 1998 have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are incorporated herein by
reference in reliance upon the authority of said firm as experts in accounting
and auditing.
The financial statements and schedule of GE and its consolidated affiliates
as of December 31, 1997 and 1996, and for each of the years in the three-year
period ended December 31, 1997, appearing in GE's Annual Report on Form 10-K for
the year ended December 31, 1997, incorporated by reference herein, have been
incorporated herein in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
47
<PAGE>
FUTURE SHAREHOLDER PROPOSALS
In order to be considered for inclusion in Marquette's proxy materials for
the 1999 annual meeting of shareholders, any shareholder proposals should be
addressed to the Secretary of Marquette at Marquette's offices located at 8200
West Tower Avenue, Milwaukee, Wisconsin 53233, and must be received no later
than February 20, 1999. In addition, Marquette's Bylaws establish an advance
notice procedure for shareholder proposals to be brought before any annual
meeting of shareholders, including proposed nominations of persons for election
to the Marquette Board. A shareholder proposal or nomination intended to be
brought before the 1999 annual meeting of shareholders must be received by the
Secretary of Marquette on or after April 7, 1999 and on or prior to May 2, 1999.
WHERE YOU CAN FIND MORE INFORMATION
Marquette and GE file annual, quarterly and special reports, proxy
statements and other information with the Commission. You may read and copy any
reports, statements or other information filed by GE or Marquette at the
Commission's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C
20549. Please call the Commission at 1-800-SEC-0330 for further information on
the operation of the Public Reference Room. Commission filings of GE and
Marquette are also available to the public from commercial document retrieval
services. The website maintained by the Commission is "http://www.sec.gov". You
may also access the Commission filings of GE through the website maintained by
GE, which is "http://www.ge.com".
GE has filed with the Commission a Registration Statement on Form S-4 to
register the GE Common Stock to be issued pursuant to the Merger Agreement. This
Proxy Statement/Prospectus is a part of that Registration Statement and
constitutes a prospectus of GE in addition to being a proxy statement of
Marquette for the Special Meeting. As allowed by Commission rules, this Proxy
Statement/Prospectus does not contain all the information you can find in the
Registration Statement and the exhibits to the Registration Statement.
The Commission allows us to "incorporate by reference" information into this
Proxy Statement/ Prospectus, which means that we can disclose important
information to you by referring you to another document filed separately with
the Commission. The information incorporated by reference is deemed to be part
of this Proxy Statement/Prospectus, except for any information superseded by
information in this Proxy Statement/Prospectus. This Proxy Statement/Prospectus
incorporates by reference the documents set forth below that GE and Marquette
have previously filed with the Commission. These documents contain important
information about GE and Marquette and their finances.
<TABLE>
<CAPTION>
GE COMMISSION FILINGS
(FILE NO. 1-00035) PERIOD
- ---------------------------------- ----------------------------------
<S> <C>
Annual Report on Form 10-K Year ended December 31, 1997
Quarterly Reports on Form 10-Q Quarters ended March 31, 1998 and
June 30, 1998
<CAPTION>
MARQUETTE COMMISSION FILINGS
(FILE NO. 0-18724) PERIOD
- ---------------------------------- ----------------------------------
<S> <C>
Annual Report on Form 10-K Year ended April 30, 1998
Quarterly Report on Form 10-Q Quarter ended July 31, 1998
Current Report on Form 8-K Filed on September 24, 1998
Description of Marquette preferred Filed on December 20, 1996, as
share purchase rights contained amended by an amendment filed on
in Marquette's registration September 24, 1998
statement on Form 8-A
</TABLE>
48
<PAGE>
GE and Marquette also hereby incorporate by reference all additional
documents that GE and Marquette file with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act between the date of this Proxy
Statement/Prospectus and the date of the Special Meeting.
If you are a shareholder of GE or Marquette, GE and Marquette may have sent
you some of the documents incorporated by reference, but you can obtain any of
them through GE, Marquette or the Commission. Documents incorporated by
reference are available from GE or Marquette without charge, excluding all
exhibits unless such exhibits have been specifically incorporated by reference
in this Proxy Statement/Prospectus. Shareholders may obtain documents
incorporated by reference in this Proxy Statement/Prospectus by requesting them
in writing or by telephone from the appropriate party at the following
addresses:
<TABLE>
<S> <C>
General Electric Company Marquette Medical Systems, Inc.
Attention: Secretary Attention: Secretary
3135 Easton Turnpike 8200 West Tower Avenue
Fairfield, Connecticut 06431-0001 Milwaukee, Wisconsin 53223
(203) 373-2211 (414) 355-5000
</TABLE>
IF YOU WOULD LIKE TO REQUEST DOCUMENTS FROM GE OR MARQUETTE, PLEASE DO SO BY
NOVEMBER 13, 1998 TO RECEIVE THEM BEFORE THE SPECIAL MEETING.
The Board of Directors of Marquette does not intend to bring any other
matters, and does not know of any other matters to be brought, before the
Special Meeting.
THIS PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES, OR THE SOLICITATION OF A PROXY,
IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY
SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROXY STATEMENT/ PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF MARQUETTE OR GE SINCE THE DATE HEREOF OR THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
YOU SHOULD RELY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROXY STATEMENT/ PROSPECTUS. NEITHER GE NOR MARQUETTE HAS AUTHORIZED ANYONE
TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS
PROXY STATEMENT/PROSPECTUS. ALL INFORMATION CONTAINED (OR INCORPORATED BY
REFERENCE) IN THIS PROXY STATEMENT/PROSPECTUS WITH RESPECT TO MARQUETTE AND ITS
SUBSIDIARIES HAS BEEN PROVIDED BY MARQUETTE, AND ALL INFORMATION CONTAINED (OR
INCORPORATED BY REFERENCE) IN THIS PROXY STATEMENT/PROSPECTUS WITH RESPECT TO GE
AND ITS SUBSIDIARIES HAS BEEN PROVIDED BY GE. NEITHER GE NOR MARQUETTE WARRANTS
THE ACCURACY OF INFORMATION RELATING TO THE OTHER PARTY. THIS PROXY
STATEMENT/PROSPECTUS IS DATED OCTOBER 16, 1998. YOU SHOULD NOT ASSUME THAT THE
INFORMATION CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS IS ACCURATE AS OF ANY
DATE OTHER THAN SUCH DATE, AND NEITHER THE MAILING OF THIS PROXY
STATEMENT/PROSPECTUS NOR THE ISSUANCE OF GE COMMON STOCK IN THE MERGER SHALL
CREATE ANY IMPLICATION TO THE CONTRARY.
49
<PAGE>
LIST OF DEFINED TERMS
<TABLE>
<CAPTION>
DEFINED TERM PAGE NUMBER
- ---------------------------------------------------------------------------------------------------- -----------------
<S> <C>
Acquiring Person.................................................................................... 45
Antitrust Division.................................................................................. 38
Average GE Share Price.............................................................................. 23
Baird............................................................................................... 14
broker nonvote...................................................................................... 13
Certificates........................................................................................ 24
Closing Date........................................................................................ 22
Code................................................................................................ 24
Commission.......................................................................................... 7
Consulting Agreement................................................................................ 17
Conversion Number................................................................................... 29
D&O Insurance....................................................................................... 30
Distribution Date................................................................................... 46
Effective Time...................................................................................... 22
Exchange Act........................................................................................ 24
Exchange Agent...................................................................................... 23
Exercise Price...................................................................................... 35
Final Expiration Date............................................................................... 46
FTC................................................................................................. 38
GAAP................................................................................................ 7
GE.................................................................................................. 12
GE Board............................................................................................ 40
GE Bylaws........................................................................................... 38
GE Charter.......................................................................................... 38
GE Common Stock..................................................................................... 47
Marquette........................................................................................... 12
Marquette Board..................................................................................... 12
Marquette Bylaws.................................................................................... 38
Marquette Charter................................................................................... 38
Marquette Common Stock.............................................................................. 12
Marquette Rights Agreement.......................................................................... 38
Merger Agreement.................................................................................... 12
Merger Consideration................................................................................ 23
Merger.............................................................................................. 12
NASD................................................................................................ 13
Nasdaq.............................................................................................. 10
NYBCL............................................................................................... 25
Option Conditions................................................................................... 36
Optioned Shares..................................................................................... 35
Preferred Shares.................................................................................... 45
Purchase Price...................................................................................... 45
Put Event........................................................................................... 36
Put Price........................................................................................... 36
Put Right........................................................................................... 36
Redemption Price.................................................................................... 46
Repurchase Right.................................................................................... 36
Retention Agreements................................................................................ 17
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
DEFINED TERM PAGE NUMBER
- ---------------------------------------------------------------------------------------------------- -----------------
<S> <C>
Retention Bonus Payment............................................................................. 17
Right............................................................................................... 45
Share Acquisition Date.............................................................................. 41
Shareholder Agreement............................................................................... 12
Special Meeting..................................................................................... 12
Spread.............................................................................................. 36
Sub................................................................................................. 12
Subject Shares...................................................................................... 37
Substitute Option................................................................................... 16
Superior Proposal................................................................................... 28
Surviving Corporation............................................................................... 22
Takeover Proposal................................................................................... 28
Termination Fee..................................................................................... 34
Third Party Acquisition Event....................................................................... 34
Transfer............................................................................................ 37
Valuation Period.................................................................................... 23
WBCL................................................................................................ 25
</TABLE>
51
<PAGE>
ANNEX I
AGREEMENT AND PLAN OF MERGER
AMONG
GENERAL ELECTRIC COMPANY,
EMERALD MERGER CORP.
AND
MARQUETTE MEDICAL SYSTEMS, INC.
DATED AS OF SEPTEMBER 20, 1998
<PAGE>
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
ARTICLE I
THE MERGER............................................................................................... I-1
Section 1.1 The Merger................................................................................... I-1
Section 1.2 Effective Time............................................................................... I-1
Section 1.3 Effects of the Merger........................................................................ I-2
Section 1.4 Charter and Bylaws; Directors and Officers................................................... I-2
Section 1.5 Conversion of Securities..................................................................... I-2
Section 1.6 Parent to Make Certificates Available........................................................ I-2
Section 1.7 Dividends; Transfer Taxes; Withholding....................................................... I-3
Section 1.8 No Fractional Securities..................................................................... I-4
Section 1.9 Return of Exchange Fund...................................................................... I-4
Section 1.10 No Further Ownership Rights in Company Common Stock......................................... I-4
Section 1.11 Closing of Company Transfer Books........................................................... I-4
Section 1.12 Lost Certificates........................................................................... I-4
Section 1.13 Further Assurances.......................................................................... I-4
Section 1.14 Closing..................................................................................... I-5
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB......................................................... I-5
Section 2.1 Organization, Standing and Power............................................................. I-5
Section 2.2 Authority.................................................................................... I-5
Section 2.3 Consents and Approvals; No Violation......................................................... I-6
Section 2.4 Parent Common Stock to be Issued in the Merger............................................... I-6
Section 2.5 SEC Documents and Other Reports.............................................................. I-7
Section 2.6 Registration Statement and Proxy Statement................................................... I-7
Section 2.7 Absence of Certain Changes or Events......................................................... I-7
Section 2.8 Reorganization............................................................................... I-7
Section 2.9 Operations of Sub............................................................................ I-8
Section 2.10 Brokers..................................................................................... I-8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................................ I-8
Section 3.1 Organization, Standing and Power............................................................. I-8
Section 3.2 Capital Structure............................................................................ I-8
Section 3.3 Authority.................................................................................... I-9
Section 3.4 Consents and Approvals; No Violation......................................................... I-9
Section 3.5 SEC Documents and Other Reports.............................................................. I-10
Section 3.6 Registration Statement and Proxy Statement................................................... I-10
Section 3.7 Absence of Certain Changes or Events......................................................... I-11
Section 3.8 Permits and Compliance....................................................................... I-11
Section 3.9 Tax Matters.................................................................................. I-12
Section 3.10 Actions and Proceedings..................................................................... I-13
Section 3.11 Certain Agreements.......................................................................... I-13
Section 3.12 ERISA....................................................................................... I-14
Section 3.13 Compliance with Worker Safety Laws.......................................................... I-15
</TABLE>
I-i
<PAGE>
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Section 3.14 Liabilities; Products....................................................................... I-16
Section 3.15 Labor Matters............................................................................... I-16
Section 3.16 Intellectual Property; Year 2000............................................................ I-16
Section 3.17 Opinion of Financial Advisor................................................................ I-17
Section 3.18 State Takeover Statutes..................................................................... I-18
Section 3.19 Required Vote of Company Shareholders....................................................... I-18
Section 3.20 Reorganization.............................................................................. I-18
Section 3.21 Accounts Receivable......................................................................... I-18
Section 3.22 Inventories................................................................................. I-18
Section 3.23 Environmental Matters....................................................................... I-18
Section 3.24 Suppliers................................................................................... I-19
Section 3.25 Insurance................................................................................... I-20
Section 3.26 Accuracy of Information..................................................................... I-20
Section 3.27 Transactions with Affiliates................................................................ I-20
Section 3.28 Title to and Sufficiency of Assets.......................................................... I-20
Section 3.29 Brokers..................................................................................... I-21
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS................................................................ I-21
Section 4.1 Conduct of Business by the Company Pending the Merger........................................ I-21
Section 4.2 No Solicitation.............................................................................. I-23
Section 4.3 Third Party Standstill Agreements............................................................ I-24
Section 4.4 Reorganization............................................................................... I-24
ARTICLE V
ADDITIONAL AGREEMENTS.................................................................................... I-25
Section 5.1 Shareholder Meeting.......................................................................... I-25
Section 5.2 Preparation of the Registration Statement and the Proxy Statement............................ I-25
Section 5.3 Access to Information........................................................................ I-25
Section 5.4 Compliance with the Securities Act........................................................... I-25
Section 5.5 Stock Exchange Listings...................................................................... I-26
Section 5.6 Fees and Expenses............................................................................ I-26
Section 5.7 Company Stock Options........................................................................ I-27
Section 5.8 Reasonable Best Efforts...................................................................... I-28
Section 5.9 Public Announcements......................................................................... I-29
Section 5.10 Real Estate Transfer and Gains Tax.......................................................... I-29
Section 5.11 State Takeover Laws......................................................................... I-29
Section 5.12 Indemnification; Directors and Officers Insurance........................................... I-29
Section 5.13 Notification of Certain Matters............................................................. I-30
Section 5.14 Consulting Agreement........................................................................ I-30
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER....................................................................... I-30
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger................................... I-30
Section 6.2 Conditions to Obligation of the Company to Effect the Merger................................. I-31
Section 6.3 Conditions to Obligations of Parent and Sub to Effect the Merger............................. I-32
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER........................................................................ I-34
Section 7.1 Termination.................................................................................. I-34
</TABLE>
I-ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Section 7.2 Effect of Termination........................................................................ I-35
Section 7.3 Amendment.................................................................................... I-35
Section 7.4 Waiver....................................................................................... I-35
ARTICLE VIII
GENERAL PROVISIONS....................................................................................... I-35
Section 8.1 Non-Survival of Representations and Warranties............................................... I-35
Section 8.2 Notices...................................................................................... I-36
Section 8.3 Interpretation............................................................................... I-37
Section 8.4 Counterparts................................................................................. I-37
Section 8.5 Entire Agreement; No Third-Party Beneficiaries............................................... I-37
Section 8.6 Governing Law................................................................................ I-37
Section 8.7 Assignment................................................................................... I-37
Section 8.8 Severability................................................................................. I-37
Section 8.9 Enforcement of this Agreement................................................................ I-37
</TABLE>
I-iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 20, 1998 (this
"Agreement"), among General Electric Company, a New York corporation ("Parent"),
Emerald Merger Corp., a Wisconsin corporation and a wholly-owned subsidiary of
Parent ("Sub"), and Marquette Medical Systems, Inc., a Wisconsin corporation
(the "Company") (Sub and the Company being hereinafter collectively referred to
as the "Constituent Corporations").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have approved and declared advisable the merger of Sub and the Company (the
"Merger"), upon the terms and subject to the conditions set forth herein,
whereby each issued and outstanding Common Share, par value $.10 per share, of
the Company ("Company Common Stock") not owned directly or indirectly by Parent
or the Company will be converted into shares of Common Stock, par value $.16 per
share, of Parent ("Parent Common Stock"), and the respective Boards of Directors
of Sub and the Company have approved and adopted this Agreement;
WHEREAS, the respective Boards of Directors of Parent and the Company have
determined that the Merger is in furtherance of and consistent with their
respective long-term business strategies and is in the best interest of their
respective shareholders;
WHEREAS, in order to induce Parent and Sub to enter into this Agreement,
concurrently herewith (i) Parent and the Company are entering into the Stock
Option Agreement dated as of the date hereof (the "Stock Option Agreement") in
the form of the attached EXHIBIT A and (ii) Parent and one of the shareholders
of the Company are entering into the Shareholder Agreement dated as of the date
hereof (the "Shareholder Agreement") in the form of the attached EXHIBIT B; and
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises, representations,
warranties and agreements herein contained, the parties agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the conditions
hereof, and in accordance with the Wisconsin Business Corporation Law (the
"WBCL"), Sub shall be merged with and into the Company at the Effective Time (as
hereinafter defined). Following the Merger, the separate corporate existence of
Sub shall cease and the Company shall continue as the surviving corporation (the
"Surviving Corporation") and shall succeed to and assume all the rights and
obligations of Sub in accordance with the WBCL. Notwithstanding anything to the
contrary herein, at the election of Parent, any direct wholly-owned Subsidiary
(as hereinafter defined) of Parent may be substituted for Sub as a constituent
corporation in the Merger. In such event, the parties agree to execute an
appropriate amendment to this Agreement, in form and substance reasonably
satisfactory to Parent and the Company, in order to reflect such substitution.
Section 1.2 EFFECTIVE TIME. The Merger shall become effective when
articles of merger (the "Articles of Merger"), executed in accordance with the
relevant provisions of the WBCL, are filed with the Secretary of State of the
State of Wisconsin; PROVIDED, HOWEVER, that, upon mutual consent of the
Constituent Corporations, the Articles of Merger may provide for a later date of
effectiveness of the Merger not more than 30 days after the date the Articles of
Merger are filed. When used in this Agreement, the term "Effective Time" shall
mean the date and time at which the Articles of Merger are accepted for record
or such later time established by the Articles of Merger. The filing of the
Articles of Merger shall be made on the date of the Closing (as defined in
Section 1.14).
<PAGE>
Section 1.3 EFFECTS OF THE MERGER. (a) The Merger shall have the effects
set forth in Section 1106 of the WBCL.
Section 1.4 CHARTER AND BYLAWS; DIRECTORS AND OFFICERS. (a) At the
Effective Time, the Amended and Restated Articles of Incorporation, as amended,
of the Company (the "Company Charter") shall be the Articles of Incorporation of
the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law. At the Effective Time, the Amended and Restated
Bylaws of the Company, as in effect immediately prior to the Effective Time,
shall be the Bylaws of the Surviving Corporation until thereafter changed or
amended as provided therein or by the Articles of Incorporation.
(b) The directors of Sub at the Effective Time of the Merger shall be the
directors of the Surviving Corporation, until the earlier of their resignation
or removal or until their respective successors are duly elected and qualified,
as the case may be. The officers of the Company at the Effective Time of the
Merger shall be the officers of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
Section 1.5 CONVERSION OF SECURITIES. As of the Effective Time, by virtue
of the Merger and without any action on the part of Sub, the Company or the
holders of any securities of the Constituent Corporations:
(a) Each issued and outstanding share of common stock, par value $.01
per share, of Sub shall be converted into one validly issued, fully paid and
nonassessable Common Share of the Surviving Corporation.
(b) All shares of Company Common Stock that are held in the treasury of
the Company or by any wholly-owned Subsidiary of the Company and any shares
of Company Common Stock owned by Parent or by any wholly-owned Subsidiary of
Parent shall be cancelled and no capital stock of Parent or other
consideration shall be delivered in exchange therefor.
(c) Subject to the provisions of Sections 1.8 and 1.10 hereof, each
share of Company Common Stock issued and outstanding immediately prior to
the Effective Time (other than shares to be cancelled in accordance with
Section 1.5(b)) shall be converted into the right to receive the number of
shares of Parent Common Stock determined by dividing $45.00 by the Average
Parent Share Price (as defined below) and rounding the result to the nearest
one thousandth of a share (the "Merger Consideration"); provided, however,
that if between the first day of the Valuation Period (as defined below) and
the Effective Time, the outstanding shares of Parent Common Stock shall have
been changed into a different number of shares or a different class, by
reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the Merger
Consideration shall be correspondingly adjusted to the extent appropriate to
reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares. The "Average
Parent Share Price" means the average of the last sales prices per share of
Parent Common Stock on the New York Stock Exchange, Inc. (the "NYSE")
Composite Tape for the 10 consecutive trading days ending on the trading day
which is five days prior to the Closing Date (the "Valuation Period"). All
such shares of Company Common Stock, when so converted, shall no longer be
outstanding and shall automatically be cancelled and retired and each holder
of a certificate representing any such shares shall cease to have any rights
with respect thereto, except the right to receive any dividends and other
distributions in accordance with Section 1.7, certificates representing the
shares of Parent Common Stock into which such shares are converted and any
cash, without interest, in lieu of fractional shares to be issued or paid in
consideration therefor upon the surrender of such certificate in accordance
with Section 1.6.
Section 1.6 PARENT TO MAKE CERTIFICATES AVAILABLE. (a) EXCHANGE OF
CERTIFICATES. Parent shall authorize a bank or trust company (or such other
person or persons as shall be reasonably acceptable to Parent and the Company)
to act as Exchange Agent hereunder (the "Exchange Agent"). As soon as
practicable
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after the Effective Time, Parent shall deposit with the Exchange Agent, in trust
for the holders of shares of Company Common Stock converted in the Merger,
certificates representing the shares of Parent Common Stock issuable pursuant to
Section 1.5(c) in exchange for outstanding shares of Company Common Stock and
cash, as required to make payments in lieu of any fractional shares pursuant to
Section 1.8 (such cash and shares of Parent Common Stock, together with any
dividends or distributions with respect thereto, being hereinafter referred to
as the "Exchange Fund"). The Exchange Agent shall deliver the Parent Common
Stock contemplated to be issued pursuant to Section 1.5(c) out of the Exchange
Fund. Except as contemplated by Section 1.9, the Exchange Fund shall not be used
for any other purpose.
(b) EXCHANGE PROCEDURES. As soon as practicable after the Effective Time,
the Exchange Agent shall mail to each record holder of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock converted in the Merger (the
"Certificates") a letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass, only
upon actual delivery of the Certificates to the Exchange Agent, and shall
contain instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Parent Common Stock and cash in
lieu of fractional shares). Upon surrender for cancellation to the Exchange
Agent of all Certificates held by any record holder of a Certificate, together
with such letter of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor a certificate representing
that number of whole shares of Parent Common Stock into which the shares
represented by the surrendered Certificate shall have been converted at the
Effective Time pursuant to this Article I, cash in lieu of any fractional share
in accordance with Section 1.8 and certain dividends and other distributions in
accordance with Section 1.7, and any Certificate so surrendered shall forthwith
be cancelled.
Section 1.7 DIVIDENDS; TRANSFER TAXES; WITHHOLDING. No dividends or other
distributions that are declared on or after the Effective Time on Parent Common
Stock, or are payable to the holders of record thereof on or after the Effective
Time, will be paid to any person entitled by reason of the Merger to receive a
certificate representing Parent Common Stock until such person surrenders the
related Certificate or Certificates, as provided in Section 1.6, and no cash
payment in lieu of fractional shares will be paid to any such person pursuant to
Section 1.8 until such person shall so surrender the related Certificate or
Certificates. Subject to the effect of applicable law, there shall be paid to
each record holder of a new certificate representing such Parent Common Stock:
(i) at the time of such surrender or as promptly as practicable thereafter, the
amount of any dividends or other distributions theretofore paid with respect to
the shares of Parent Common Stock represented by such new certificate and having
a record date on or after the Effective Time and a payment date prior to such
surrender; (ii) at the appropriate payment date or as promptly as practicable
thereafter, the amount of any dividends or other distributions payable with
respect to such shares of Parent Common Stock and having a record date on or
after the Effective Time but prior to such surrender and a payment date on or
subsequent to such surrender; and (iii) at the time of such surrender or as
promptly as practicable thereafter, the amount of any cash payable with respect
to a fractional share of Parent Common Stock to which such holder is entitled
pursuant to Section 1.8. In no event shall the person entitled to receive such
dividends or other distributions be entitled to receive interest on such
dividends or other distributions. If any cash or certificate representing shares
of Parent Common Stock is to be paid to or issued in a name other than that in
which the Certificate surrendered in exchange therefor is registered, it shall
be a condition of such exchange that the Certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer and that the person
requesting such exchange shall pay to the Exchange Agent any transfer or other
taxes required by reason of the issuance of certificates for such shares of
Parent Common Stock in a name other than that of the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not applicable. Parent or the Exchange
Agent shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement such amounts as Parent or the Exchange Agent
is required to deduct and withhold with respect to the making of such payment
under the Code or under any provision of state, local or foreign tax law. To the
extent that amounts are so withheld by Parent
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or the Exchange Agent, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the person in respect of which such
deduction and withholding was made by Parent or the Exchange Agent.
Section 1.8 NO FRACTIONAL SECURITIES. No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates pursuant to this Article I, and no Parent
dividend or other distribution or stock split shall relate to any fractional
share, and no fractional share shall entitle the owner thereof to vote or to any
other rights of a security holder of Parent. In lieu of any such fractional
share, each holder of Company Common Stock who would otherwise have been
entitled to a fraction of a share of Parent Common Stock upon surrender of
Certificates for exchange pursuant to this Article I will be paid an amount in
cash (without interest), rounded to the nearest cent, determined by multiplying
(i) the Average Parent Share Price by (ii) the fractional interest to which such
holder would otherwise be entitled. As promptly as practicable after the
determination of the amount of cash, if any, to be paid to holders of fractional
share interests, the Exchange Agent shall so notify the Parent, and the Parent
shall deposit such amount with the Exchange Agent and shall cause the Exchange
Agent to forward payments to such holders of fractional share interests subject
to and in accordance with the terms of Section 1.7 and this Section 1.8.
Section 1.9 RETURN OF EXCHANGE FUND. Any portion of the Exchange Fund
which remains undistributed to the former shareholders of the Company for six
months after the Effective Time shall be delivered to Parent, upon demand of
Parent, and any such former shareholders who have not theretofore complied with
this Article I shall thereafter look only to Parent for payment of their claim
for Parent Common Stock, any cash in lieu of fractional shares of Parent Common
Stock and any dividends or distributions with respect to Parent Common Stock.
Neither Parent nor the Surviving Corporation shall be liable to any former
holder of Company Common Stock for any such shares of Parent Common Stock, cash
and dividends and distributions held in the Exchange Fund which is delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
Section 1.10 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All
shares of Parent Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms hereof (including any cash paid
pursuant to Section 1.8) shall be deemed to have been issued in full
satisfaction of all rights pertaining to the shares of Company Common Stock
represented by such Certificates.
Section 1.11 CLOSING OF COMPANY TRANSFER BOOKS. At the Effective Time, the
stock transfer books of the Company shall be closed and no transfer of shares of
Company Common Stock shall thereafter be made on the records of the Company. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation, the Exchange Agent or the Parent, such Certificates shall be
cancelled and exchanged as provided in this Article I.
Section 1.12 LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent or the Exchange Agent, the posting by such person of a bond, in such
reasonable amount as Parent or the Exchange Agent may direct as indemnity
against any claim that may be made against them with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the shares of Parent Common Stock, any cash in lieu of
fractional shares of Parent Common Stock to which the holders thereof are
entitled pursuant to Section 1.8 and any dividends or other distributions to
which the holders thereof are entitled pursuant to Section 1.7.
Section 1.13 FURTHER ASSURANCES. If at any time after the Effective Time
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are necessary,
desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation its right, title or interest in, to or under any of
the rights, privileges, powers, franchises, properties or assets of either of
the Constituent Corporations, or (b) otherwise to carry out the purposes of this
Agreement, the Surviving Corporation and its proper officers and directors or
their
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designees shall be authorized to execute and deliver, in the name and on behalf
of either of the Constituent Corporations, all such deeds, bills of sale,
assignments and assurances and to do, in the name and on behalf of either
Constituent Corporation, all such other acts and things as may be necessary,
desirable or proper to vest, perfect or confirm the Surviving Corporation's
right, title or interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets of such Constituent Corporation and otherwise
to carry out the purposes of this Agreement.
Section 1.14 CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") and all actions specified in this Agreement to occur
at the Closing shall take place at the offices of Sidley & Austin, One First
National Plaza, Chicago, Illinois 60603, at 10:00 a.m., local time, no later
than the second business day following the day on which the last of the
conditions set forth in Article VI shall have been fulfilled or waived (if
permissible) or at such other time and place as Parent and the Company shall
agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as follows:
Section 2.1 ORGANIZATION, STANDING AND POWER. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of its place of incorporation and has the requisite corporate power and
authority to carry on its business as now being conducted. Each of Parent and
Sub are duly qualified to do business, and are in good standing, in each
jurisdiction where the character of their properties owned or held under lease
or the nature of their activities makes such qualification necessary, except
where the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect on Parent. For purposes of this
Agreement, "Material Adverse Change" or "Material Adverse Effect" means, when
used with respect to Parent, any change or effect that is or could reasonably be
expected (as far as can be foreseen at the time) to be materially adverse to the
business, operations, properties, assets, liabilities, employee relationships,
customer or supplier relationships, earnings or results of operations, financial
projections or forecasts, or the business prospects and condition (financial or
otherwise), of Parent and its Subsidiaries, taken as a whole.
Section 2.2 AUTHORITY. On or prior to the date of this Agreement, the
Boards of Directors of Parent and Sub have declared the Merger advisable and the
Board of Directors of Sub has approved and adopted this Agreement in accordance
with the WBCL. Each of Parent and Sub has all requisite corporate power and
authority to enter into this Agreement, Parent has all requisite corporate power
and authority to enter into the Stock Option Agreement and the Shareholder
Agreement, and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement by Parent and Sub, the execution
and delivery of the Stock Option Agreement and the Shareholder Agreement by
Parent and the consummation by Parent and Sub of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
(including all Board action) on the part of Parent and Sub, subject to the
filing of appropriate Articles of Merger as required by the WBCL. This Agreement
has been duly executed and delivered by Parent and Sub, the Stock Option
Agreement and the Shareholder Agreement has been duly executed and delivered by
Parent, and (assuming the valid authorization, execution and delivery of this
Agreement and the Stock Option Agreement by the Company, the valid
authorization, execution and delivery of the Shareholder Agreement by the
shareholder of the Company that is a party thereto and the validity and binding
effect hereof and thereof on the Company and such shareholder) this Agreement
constitutes the valid and binding obligation of Parent and Sub enforceable
against each of them in accordance with its terms and the Stock Option Agreement
and the Shareholder Agreement constitute the valid and binding obligation of
Parent enforceable against Parent in accordance with its terms. The filing of a
registration statement on Form S-4 with the Securities and Exchange Commission
(the "SEC") by Parent under the Securities Act of 1933, as amended (together
with the
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rules and regulations promulgated thereunder, the "Securities Act"), for the
purpose of registering the shares of Parent Common Stock to be issued in the
Merger (together with any amendments or supplements thereto, whether prior to or
after the effective date thereof, the "Registration Statement") has been duly
authorized by Parent's Board of Directors.
Section 2.3 CONSENTS AND APPROVALS; NO VIOLATION. Assuming that all
consents, approvals, authorizations and other actions described in this Section
2.3 have been obtained and all filings and obligations described in this Section
2.3 have been made, and except as set forth in Section 2.3 of the letter dated
the date hereof and delivered on the date hereof by Parent to the Company, which
letter relates to this Agreement and is designated therein as the Parent Letter
(the "Parent Letter"), the execution and delivery of this Agreement, the Stock
Option Agreement and the Shareholder Agreement do not, and the consummation of
the transactions contemplated hereby and thereby and compliance with the
provisions hereof and thereof will not, result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give to others a
right of termination, cancellation or acceleration of any obligation or result
in the loss of a material benefit under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
Parent or any of its Subsidiaries under, any provision of (i) the Certificate of
Incorporation or the By-Laws of Parent, each as amended to date, (ii) any
provision of the comparable charter or organization documents of any of Parent's
Subsidiaries, (iii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to Parent or any of its Subsidiaries or (iv) any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Parent
or any of its Subsidiaries or any of their respective properties or assets,
other than, in the case of clauses (ii), (iii) or (iv), any such violations,
defaults, rights, liens, security interests, charges or encumbrances that,
individually or in the aggregate, would not have a Material Adverse Effect on
Parent, materially impair the ability of Parent or Sub to perform their
respective obligations hereunder or under the Stock Option Agreement or the
Shareholder Agreement or prevent the consummation of any of the transactions
contemplated hereby or thereby. No filing or registration with, or
authorization, consent or approval of, any domestic (federal and state), foreign
or supranational court, commission, governmental body, regulatory agency,
authority or tribunal (a "Governmental Entity") is required by or with respect
to Parent or any of its Subsidiaries in connection with the execution and
delivery of this Agreement, the Stock Option Agreement or the Shareholder
Agreement by Parent or Sub or is necessary for the consummation of the Merger
and the other transactions contemplated by this Agreement, the Stock Option
Agreement or the Shareholder Agreement, except for (i) in connection, or in
compliance, with the provisions of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), the Securities Act and the Securities
Exchange Act of 1934, as amended (together with the rules and regulations
promulgated thereunder, the "Exchange Act"), (ii) the filing of the Articles of
Merger with the Secretary of State of the State of Wisconsin and appropriate
documents with the relevant authorities of other states in which the Company or
any of its Subsidiaries is qualified to do business, (iii) such filings and
consents as may be required under any environmental, health or safety law or
regulation pertaining to any notification, disclosure or required approval
triggered by the Merger or by the transactions contemplated by this Agreement,
the Stock Option Agreement or the Shareholder Agreement, (iv) such filings,
authorizations, orders and approvals as may be required by state takeover laws
(the "State Takeover Approvals"), (v) such filings as may be required in
connection with the taxes described in Section 5.10, (vi) applicable
requirements, if any, of state securities or "blue sky" laws ("Blue Sky Laws")
and the NYSE, (vii) as may be required under foreign laws and (viii) such other
consents, orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect on Parent, materially impair the
ability of Parent or Sub to perform its obligations hereunder or under the Stock
Option Agreement or the Shareholder Agreement or prevent the consummation of any
of the transactions contemplated hereby or thereby.
Section 2.4 PARENT COMMON STOCK TO BE ISSUED IN THE MERGER. All of the
shares of Parent Common Stock issuable in exchange for Company Common Stock at
the Effective Time in accordance with this
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Agreement will be, when so issued, duly authorized, validly issued, fully paid
and nonassessable and free of preemptive rights created by statute, Parent's
Certificate of Incorporation or By-Laws or any agreement to which Parent is a
party or by which Parent is bound and will, when issued, be registered under the
Securities Act and the Exchange Act and registered or exempt from registration
under applicable Blue Sky laws.
Section 2.5 SEC DOCUMENTS AND OTHER REPORTS. Parent has filed all required
documents (including proxy statements) with the SEC since January 1, 1995 (the
"Parent SEC Documents"). As of their respective dates, the Parent SEC Documents
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and, at the respective times they were
filed, none of the Parent SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The consolidated financial statements
(including, in each case, any notes thereto) of Parent included in the Parent
SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with United States generally
accepted accounting principles (except, in the case of the unaudited statements,
as permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto)
and fairly presented in all material respects the consolidated financial
position of Parent and its consolidated Subsidiaries as at the respective dates
thereof and the consolidated results of their operations and their consolidated
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments and to any other adjustments
described therein). Except as disclosed in the Parent SEC Documents or as
required by generally accepted accounting principles, Parent has not, since
December 31, 1997, made any change in the accounting practices or policies
applied in the preparation of financial statements.
Section 2.6 REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information to be supplied by Parent or Sub for inclusion or incorporation by
reference in the Registration Statement or the proxy statement/prospectus
included therein (together with any amendments or supplements thereto, the
"Proxy Statement") relating to the Shareholder Meeting (as defined in Section
5.1) will (i) in the case of the Registration Statement, at the time it becomes
effective, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading or (ii) in the case of the Proxy Statement, at
the time of the mailing of the Proxy Statement, at the time of the Shareholder
Meeting and at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. If at any time prior to the Effective
Time any event with respect to Parent, its officers and directors or any of its
Subsidiaries shall occur which is required to be described in the Proxy
Statement or the Registration Statement, such event shall be so described, and
an appropriate amendment or supplement shall be promptly filed with the SEC and,
as required by law, disseminated to the shareholders of the Company. The
Registration Statement will comply (with respect to Parent) as to form in all
material respects with the provisions of the Securities Act, and the Proxy
Statement will comply (with respect to Parent) as to form in all material
respects with the provisions of the Exchange Act.
Section 2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Parent SEC Documents filed with the SEC prior to the date of this Agreement,
since December 31, 1997, there has been no event causing a Material Adverse
Effect on Parent, nor any development that would, individually or in the
aggregate, result in a Material Adverse Effect on Parent.
Section 2.8 REORGANIZATION. To the actual knowledge of the Vice President
and Senior Counsel, Corporate Taxes of Parent, neither Parent nor any of its
Subsidiaries has taken any action or failed to take any action which action or
failure would jeopardize the qualification of the Merger as a reorganization
within the meaning of Section 368(a) of the Code.
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Section 2.9 OPERATIONS OF SUB. Sub is a direct, wholly-owned subsidiary of
Parent, was formed solely for the purpose of engaging in the transactions
contemplated hereby, has engaged in no other business activities and has
conducted its operations only as contemplated hereby.
Section 2.10 BROKERS. No broker, investment banker or other person, is
entitled to any broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or Sub.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
Section 3.1 ORGANIZATION, STANDING AND POWER. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Wisconsin and has the requisite corporate power and authority to carry
on its business as now being conducted. Each Subsidiary of the Company is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite corporate (in the
case of a Subsidiary that is a corporation) or other power and authority to
carry on its business as now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power or authority would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company. The Company and each of its Subsidiaries are duly qualified to do
business, and are in good standing, in each jurisdiction where the character of
their properties owned or held under lease or the nature of their activities
makes such qualification necessary, except where the failure to be so qualified
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company. For purposes of this Agreement, "Material Adverse Change" or
"Material Adverse Effect" means, when used with respect to the Company, any
change or effect that is or could reasonably be expected (as far as can be
foreseen at the time) to be materially adverse to the business, operations,
properties, assets, liabilities, employee relationships, customer or supplier
relationships, earnings or results of operations, financial projections or
forecasts, or the business prospects and condition (financial or otherwise), of
the Company and its Subsidiaries, taken as a whole.
Section 3.2 CAPITAL STRUCTURE. As of the date hereof, the authorized
capital stock of the Company consists of 30,000,000 shares of Company Common
Stock and 30,000,000 shares of preferred stock, no par value ("Company Preferred
Stock"). The Company has designated 200,000 shares of Company Preferred Stock as
"Series A Preferred Shares" and has reserved such shares for issuance upon the
exercise of preferred share purchase rights (the "Rights") under a Rights
Agreement dated as of December 18, 1996 (the "Company Rights Agreement"),
between the Company and Firstar Trust Company, as Rights Agent. The amendment to
the Company Rights Agreement in the form of EXHIBIT C has been duly approved by
the Company's Board of Directors and duly executed and delivered by the Company.
At the close of business on September 18, 1998, (i) 18,306,862 shares of Company
Common Stock were issued and outstanding, all of which were validly issued,
fully paid and nonassessable (except to the extent otherwise provided in Section
180.0622(2)(b) of the WBCL) and free of preemptive rights, (ii) no shares of
Company Common Stock were held in the treasury of the Company or by Subsidiaries
of the Company and (iii) 886,178 shares of Company Common Stock were reserved
for future issuance pursuant to the Company's Amended and Restated Stock Option
Plan for Employees or the Company's Directors' (Non-employee) Stock Option Plan,
the E for M 1991 Stock Option Plan and the E for M 1991 Key Employee Stock
Option Plan or pursuant to any other plans assumed by the Company in connection
with any acquisition, business combination or similar transaction (collectively,
the "Company Stock Option Plans"). No shares of Company Preferred Stock are
outstanding. Section 3.2 of the letter dated the date hereof and delivered on
the date hereof by the Company to Parent, which relates to this Agreement and is
designated therein as the Company Letter (the "Company Letter"), contains a
correct and complete list as of the date of this Agreement of each outstanding
option to purchase shares of Company Common Stock issued under
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the Company Stock Option Plans (collectively, the "Company Stock Options"),
including the holder, date of grant, exercise price and number of shares of
Company Common Stock subject thereto. Except for the Company Stock Options,
there are no options, warrants, calls, rights or agreements to which the Company
or any of its Subsidiaries is a party or by which any of them is bound
obligating the Company or any of its Subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock of the
Company or any of its Subsidiaries or obligating the Company or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
right or agreement. Except as set forth in Section 3.2 of the Company Letter,
there are no outstanding contractual obligations of the Company or any
Subsidiary to repurchase, redeem or otherwise acquire any shares of Company
Common Stock or any capital stock of or any equity interests in any Subsidiary.
Each outstanding share of capital stock of each Subsidiary of the Company that
is a corporation is duly authorized, validly issued, fully paid and
nonassessable (except, with respect to any Subsidiary which is organized under
the laws of the State of Wisconsin, to the extent otherwise provided in Section
180.0622(2)(b) of the WBCL) and, except as disclosed in the Company SEC
Documents filed prior to the date of this Agreement, each such share is owned by
the Company or another Subsidiary of the Company, free and clear of all security
interests, liens, claims, pledges, options, rights of first refusal, agreements,
limitations on voting rights, charges and other encumbrances of any nature
whatsoever. The Company does not have any outstanding bonds, debentures, notes
or other obligations the holders of which have the right to vote (or convertible
into or exercisable for securities having the right to vote) with the
shareholders of the Company on any matter. Exhibit 21 to the Company's Annual
Report on Form 10-K for the year ended April 30, 1998, as filed with the SEC
(the "Company Annual Report"), is a true, accurate and correct statement in all
material respects of all of the information required to be set forth therein by
the regulations of the SEC.
Section 3.3 AUTHORITY. On or prior to the date of this Agreement, the
Board of Directors of the Company has unanimously declared the Merger advisable
and fair to and in the best interest of the Company and its shareholders,
approved and adopted this Agreement in accordance with the WBCL, resolved to
recommend the adoption of this Agreement by the Company's shareholders and
directed that this Agreement be submitted to the Company's shareholders for
adoption. The Company has all requisite corporate power and authority to enter
into this Agreement and the Stock Option Agreement, to consummate the
transactions contemplated by the Stock Option Agreement and, subject to approval
by the shareholders of the Company of this Agreement, to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the Stock Option Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action (including Board action) on the
part of the Company, subject, in the case of this Agreement, to (x) approval and
adoption of this Agreement by the shareholders of the Company and (y) the filing
of the Articles of Merger as required by the WBCL. This Agreement and the Stock
Option Agreement have been duly executed and delivered by the Company and
(assuming the valid authorization, execution and delivery of this Agreement by
Parent and Sub and the Stock Option Agreement by Parent and the validity and
binding effect of the Agreement on Parent and Sub and the Stock Option Agreement
on Parent) constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms. The filing of the
Proxy Statement with the SEC and the issuance of up to 3,643,066 shares of
Company Common Stock pursuant to the Stock Option Agreement have been duly
authorized by the Company's Board of Directors.
Section 3.4 CONSENTS AND APPROVALS; NO VIOLATION. Assuming that all
consents, approvals, authorizations and other actions described in this Section
3.4 have been obtained and all filings and obligations described in this Section
3.4 have been made, the execution and delivery of this Agreement and the Stock
Option Agreement do not, and the consummation of the transactions contemplated
hereby and thereby and compliance with the provisions hereof and thereof will
not, result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give to others a right of termination, cancellation or
acceleration of any obligation or result in the loss of a material benefit
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company or
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any of its Subsidiaries under, any provision of (i) the Company Charter or the
Amended and Restated Bylaws of the Company, (ii) any provision of the comparable
charter or organization documents of any of the Company's Subsidiaries, (iii)
any loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable to
the Company or any of its Subsidiaries or (iv) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or any of
its Subsidiaries or any of their respective properties or assets, other than, in
the case of clauses (ii), (iii) or (iv), any such violations, defaults, rights,
liens, security interests, charges or encumbrances that, individually or in the
aggregate, would not have a Material Adverse Effect on the Company, materially
impair the ability of the Company to perform its obligations hereunder or under
the Stock Option Agreement or prevent the consummation of any of the
transactions contemplated hereby or thereby. No filing or registration with, or
authorization, consent or approval of, any Governmental Entity is required by or
with respect to the Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement or the Stock Option Agreement by the
Company or is necessary for the consummation of the Merger and the other
transactions contemplated by this Agreement or the Stock Option Agreement,
except for (i) in connection, or in compliance, with the provisions of the HSR
Act, the Securities Act and the Exchange Act, (ii) the filing of the Articles of
Merger with the Secretary of State of the State of Wisconsin and appropriate
documents with the relevant authorities of other states in which the Company or
any of its Subsidiaries is qualified to do business, (iii) such filings and
consents as may be required under any environmental, health or safety law or
regulation pertaining to any notification, disclosure or required approval
triggered by the Merger or by the transactions contemplated by this Agreement or
the Stock Option Agreement, (iv) such filings, authorizations, orders and
approvals as may be required to obtain the State Takeover Approvals, (v) such
filings as may be required in connection with the taxes described in Section
5.10, (vi) applicable requirements, if any, of Blue Sky Laws or the Nasdaq
National Market, (vii) as may be required under foreign laws and (viii) such
other consents, orders, authorizations, registrations, declarations and filings
the failure of which to be obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, materially impair the
ability of the Company to perform its obligations hereunder or under the Stock
Option Agreement or prevent the consummation of any of the transactions
contemplated hereby or thereby.
Section 3.5 SEC DOCUMENTS AND OTHER REPORTS. The Company has filed all
required documents (including proxy statements) with the SEC since April 30,
1994 (the "Company SEC Documents"). As of their respective dates, the Company
SEC Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and, at the respective
times they were filed, none of the Company SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements (including, in each case, any notes thereto) of the Company
included in the Company SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
United States generally accepted accounting principles (except, in the case of
the unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated therein
or in the notes thereto) and fairly presented in all material respects the
consolidated financial position of the Company and its consolidated Subsidiaries
as at the respective dates thereof and the consolidated results of their
operations and their consolidated cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein). Except as disclosed
in the Company SEC Documents or as required by generally accepted accounting
principles, the Company has not, since April 30, 1994, made any change in the
accounting practices or policies applied in the preparation of financial
statements.
Section 3.6 REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information to be supplied by the Company for inclusion or incorporation by
reference in the Registration Statement or the Proxy Statement will (i) in the
case of the Registration Statement, at the time it becomes effective, contain
any
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untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein not
misleading or (ii) in the case of the Proxy Statement, at the time of the
mailing of the Proxy Statement, at the time of the Shareholder Meeting and at
the Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. If at any time prior to the Effective Time any event with
respect to the Company, its officers and directors or any of its Subsidiaries
shall occur which is required to be described in the Proxy Statement or the
Registration Statement, such event shall be so described, and an appropriate
amendment or supplement shall be promptly filed with the SEC and, as required by
law, disseminated to the shareholders of the Company. The Registration Statement
will comply (with respect to the Company) as to form in all material respects
with the provisions of the Securities Act, and the Proxy Statement will comply
(with respect to the Company) as to form in all material respects with the
provisions of the Exchange Act.
Section 3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Company SEC Documents filed with the SEC prior to the date of this Agreement
or as set forth in the Company Letter, since April 30, 1998, (A) the Company and
its Subsidiaries have not incurred any material liability or obligation
(indirect, direct or contingent), or entered into any material oral or written
agreement or other transaction, that is not in the ordinary course of business
or that would result in a Material Adverse Effect on the Company, (B) the
Company and its Subsidiaries have not sustained any loss or interference with
their business or properties from fire, flood, windstorm, accident or other
calamity (whether or not covered by insurance) that has had a Material Adverse
Effect on the Company, (C) there has been no change in the capital stock of the
Company except for the issuance of shares of the Company Common Stock pursuant
to Company Stock Options and no dividend or distribution of any kind declared,
paid or made by the Company on any class of its stock, (D) there has not been
(v) any adoption of a new Company Plan (as hereinafter defined), (w) any
amendment to a Company Plan materially increasing benefits thereunder, (x) any
granting by the Company or any of its Subsidiaries to any executive officer or
other key employee of the Company or any of its Subsidiaries of any increase in
compensation, except in the ordinary course of business consistent with prior
practice or as was required under employment agreements in effect as of the date
of the most recent audited financial statements included in the Company SEC
Documents, (y) any granting by the Company or any of its Subsidiaries to any
such executive officer or other key employee of any increase in severance or
termination agreements in effect as of the date of the most recent audited
financial statements included in the Company SEC Documents or (z) any entry by
the Company or any of its Subsidiaries into any employment, severance or
termination agreement with any such executive officer or other key employee, (E)
there has not been any material changes in the amount or terms of the
indebtedness of the Company and its Subsidiaries from that described in the
Company Annual Report and (F) there has been no event causing a Material Adverse
Effect on the Company, nor any development that would, individually or in the
aggregate, result in a Material Adverse Effect on the Company.
Section 3.8 PERMITS AND COMPLIANCE. Each of the Company and its
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for the Company or any
of its Subsidiaries to own, lease and operate its properties or to carry on its
business as it is now being conducted (the "Company Permits"), except where the
failure to have any of the Company Permits would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, and no suspension or
cancellation of any of the Company Permits is pending or, to the Knowledge of
the Company (as hereinafter defined), threatened, except where the suspension or
cancellation of any of the Company Permits would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. Neither the Company
nor any of its Subsidiaries is in violation of (A) its charter, by-laws or other
organizational documents, (B) any applicable law, ordinance, administrative, or
governmental rule or regulation, including any consumer protection, equal
opportunity, health, health care industry regulation and third-party
reimbursement laws including under any Federal Health Care Program (as defined
in
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Section 1128B(f) of the U.S. Federal Social Security Act (together with all
regulations promulgated thereunder, the "SSA")), or (C) any order, decree or
judgment of any Governmental Entity having jurisdiction over the Company or any
of its Subsidiaries, except, in the case of clauses (A), (B) and (C), for any
violations that, individually or in the aggregate, would not have a Material
Adverse Effect on the Company. Without limiting the foregoing, the Company is in
compliance, in all material respects, with all current applicable statutes,
rules, regulations or orders administered or issued by the United States Food
and Drug Administration (the "FDA") or comparable foreign Governmental Entity;
the Company does not have knowledge of any facts which furnish any reasonable
basis for any warning letters from the FDA, Section 305 notices, or other
similar communications from the FDA or comparable foreign entity; and since
April 30, 1997, there have been no recalls, field notifications, alerts or
seizures requested or threatened relating to the Company's products, except set
forth in Section 3.8 of the Company Letter. The Company's products, where
required, are being marketed under valid 510(k) or Pre-Market Approval
Applications. To the Knowledge of the Company, there is no false information or
significant omission in any product application or product-related submission to
the FDA or comparable foreign Governmental Entity. The Company has obtained all
necessary regulatory approvals from any foreign regulatory agencies related to
the products distributed and sold by the Company. Neither the Company nor any
Subsidiary, nor the officers, directors, managing employees or agents (as those
terms are defined in 42 C.F.R. Section 1001.1001) of the Company or any
Subsidiary: (i) have engaged in any activities which are prohibited under, or
are cause for civil penalties or mandatory or permissive exclusion from, any
Federal Health Care Program under Sections 1128, 1128A, 1128B, or 1877 of SSA or
related state or local statutes, including knowingly and willfully offering,
paying, soliciting or receiving any remuneration (including any kickback, bribe
or rebate), directly or indirectly, overtly or covertly, in cash or in kind in
return for, or to induce, the purchase, lease, or order, or the arranging for or
recommending of the purchase, lease or order, of any item or service for which
payment may be made in whole or in part under any such program; (ii) have had a
civil monetary penalty assessed against them under Section 1128A of SSA; (iii)
have been excluded from participation under any Federal Health Care Program; or
(iv) have been convicted (as defined in 42 C.F.R. Section 1001.2) of any of the
categories of offenses described in Sections 1128(a) or 1128(b)(1), (b)(2), or
(b)(3) of SSA. Except as disclosed in the Company SEC Documents filed prior to
the date of this Agreement, there are no contracts or agreements of the Company
or its Subsidiaries having terms or conditions which would have a Material
Adverse Effect on the Company or having covenants not to compete that materially
impair the ability of the Company to conduct its cardiology diagnostic and
patient monitoring businesses as currently conducted or would reasonably be
expected to materially impair Parent's ability to conduct its medical systems
businesses. Except as set forth in the Company SEC Documents filed prior to the
date of this Agreement, no event of default or event that, but for the giving of
notice or the lapse of time or both, would constitute an event of default exists
or, upon the consummation by the Company of the transactions contemplated by
this Agreement or the Stock Option Agreement, will exist under any indenture,
mortgage, loan agreement, note or other agreement or instrument for borrowed
money, any guarantee of any agreement or instrument for borrowed money or any
lease, contractual license or other agreement or instrument to which the Company
or any of its Subsidiaries is a party or by which the Company or any such
Subsidiary is bound or to which any of the properties, assets or operations of
the Company or any such Subsidiary is subject, other than any defaults that,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company. "Knowledge of the Company" means the actual knowledge of the
directors and executive officers of the Company.
Section 3.9 TAX MATTERS. Except as otherwise set forth in Section 3.9 of
the Company Letter, (i) the Company and each of its Subsidiaries have filed all
federal, and all material state, local, foreign and provincial, Tax Returns (as
hereinafter defined) required to have been filed, and such Tax Returns are
correct and complete, except to the extent that any failure to so file or any
failure to be correct and complete would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company; (ii)
all Taxes (as hereinafter defined) shown to be due on such Tax Returns have been
timely paid or extensions for payment have been properly obtained, or such Taxes
are being timely
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and properly contested; (iii) the Company and each of its Subsidiaries have
complied with all rules and regulations relating to the withholding of Taxes and
the remittance of withheld Taxes, except to the extent that any failure to
comply with such rules and regulations would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company; (iv) neither the Company nor any of its Subsidiaries has waived any
statute of limitations in respect of its Taxes; (v) any Tax Returns required to
have been filed by or with respect to the Company and each of its Subsidiaries
relating to federal and state income Taxes have been examined by the Internal
Revenue Service ("IRS") or the appropriate state taxing authority or the period
for assessment of the Taxes in respect of which such Tax Returns were required
to be filed has expired; (vi) no issues that have been raised by the relevant
taxing authority in connection with the examination of Tax Returns required to
have been filed by or with respect to the Company and each of its Subsidiaries
are currently pending; (vii) all deficiencies asserted or assessments made as a
result of any examination of such Tax Returns by any taxing authority have been
paid in full; and (viii) no withholding is required under Section 1445 of the
Code in connection with the Merger. To the Knowledge of the Company, the
representations set forth in the Company Tax Certificate attached to the Company
Letter, if made on the date hereof (assuming the Merger were consummated on the
date hereof), would be true and correct. For purposes of this Agreement: (i)
"Taxes" means any federal, state, local, foreign or provincial income, gross
receipts, property, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or added minimum, ad valorem, value-added, transfer or
excise tax, or other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or
penalty imposed by any Governmental Entity, and (ii) "Tax Return" means any
return, report or similar statement (including the attached schedules) required
to be filed with respect to any Tax, including any information return, claim for
refund, amended return or declaration of estimated Tax.
Section 3.10 ACTIONS AND PROCEEDINGS. Except as set forth in the Company
SEC Documents filed prior to the date of this Agreement, there are no
outstanding orders, judgments, injunctions, awards or decrees of any
Governmental Entity against or involving the Company or any of its Subsidiaries,
or against or involving any of the present or former directors, officers,
employees, consultants, agents or shareholders of the Company or any of its
Subsidiaries, as such, any of its or their properties, assets or business or any
Company Plan (as hereinafter defined) that, individually or in the aggregate,
would have a Material Adverse Effect on the Company or materially impair the
ability of the Company to perform its obligations hereunder or under the Stock
Option Agreement. Except as set forth in Section 3.10 of the Company Letter,
there are no actions, suits or claims or legal, administrative or arbitrative
proceedings or investigations (including claims for workers' compensation)
pending or, to the Knowledge of the Company, threatened against or involving the
Company or any of its Subsidiaries or any of its or their present or former
directors, officers, employees, consultants, agents or shareholders, as such, or
any of its or their properties, assets or business or any Company Plan that,
individually or in the aggregate, would have a Material Adverse Effect on the
Company or materially impair the ability of the Company to perform its
obligations hereunder or under the Stock Option Agreement. There are no actions,
suits, labor disputes or other litigation, legal or administrative proceedings
or governmental investigations pending or, to the Knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries or any of
its or their present or former officers, directors, employees, consultants,
agents or shareholders, as such, or any of its or their properties, assets or
business relating to the transactions contemplated by this Agreement and the
Stock Option Agreement.
Section 3.11 CERTAIN AGREEMENTS. Except as set forth in Section 3.11 of
the Company Letter, neither the Company nor any of its Subsidiaries is a party
to any oral or written agreement or plan, including any employment agreement,
severance agreement, stock option plan, stock appreciation rights plan,
restricted stock plan or stock purchase plan (collectively, the "Compensation
Agreements"), pension plan (as defined in Section 3(2) of ERISA) or welfare plan
(as defined in Section 3(1) of ERISA) any of the benefits of which will be
increased, or (except as contemplated by Section 5.7) the vesting of the
benefits of
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which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the Stock Option Agreement or the value of any
of the benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement or the Stock Option Agreement. No
holder of any option to purchase shares of Company Common Stock, or shares of
Company Common Stock granted in connection with the performance of services for
the Company or its Subsidiaries, is or will be entitled to receive cash from the
Company or any Subsidiary in lieu of or in exchange for such option or shares as
a result of the transactions contemplated by this Agreement or the Stock Option
Agreement. Section 3.11 of the Company Letter sets forth (i) for each officer,
director or employee who is a party to, or will receive benefits under, any
Compensation Agreement as a result of the transactions contemplated herein, the
total amount that each such person may receive, or is eligible to receive,
assuming that the transactions contemplated by this Agreement are consummated on
the date hereof, and (ii) the total amount of indebtedness owed to the Company
or its Subsidiaries from each officer, director or employee of the Company and
its Subsidiaries.
Section 3.12 ERISA. (a) Each Company Plan is listed in Section 3.12(a) of
the Company Letter. With respect to each Company Plan, the Company has made
available to Parent a true and correct copy of (i) the three most recent annual
reports (Form 5500) filed with the IRS, (ii) each such Company Plan that has
been reduced to writing and all amendments thereto, (iii) each trust agreement,
insurance contract or administration agreement relating to each such Company
Plan, (iv) a written summary of each unwritten Company Plan, (v) the most recent
summary plan description or other written explanation of each Company Plan
provided to participants, (vi) the three most recent actuarial reports or
valuations relating to a Company Plan subject to Title IV of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), (vii) the most
recent determination letter and request therefore, if any, issued by the IRS
with respect to any Company Plan intended to be qualified under section 401(a)
of the Code, (viii) any request for a determination currently pending before the
IRS and (ix) all correspondence with the IRS, the Department of Labor, the SEC
or Pension Benefit Guaranty Corporation relating to any outstanding controversy.
Except as would not have a Material Adverse Effect on the Company, each Company
Plan complies in all respects with ERISA, the Code and all other applicable
statutes and governmental rules and regulations. Except as set forth in Section
3.12(a) of the Company Letter, no "reportable event" (within the meaning of
Section 4043 of ERISA) has occurred with respect to any Company Plan for which
the 30-day notice requirement has not been waived. Neither the Company nor any
of its Subsidiaries or ERISA Affiliates (as hereinafter defined) has withdrawn
from any Company Multiemployer Plan (as hereinafter defined) and would not incur
any withdrawal liability if it withdrew from all Company Multiemployer Plans on
the date of this Agreement. No action has been taken, or is currently being
considered, to terminate any Company Plan subject to Title IV of ERISA. No
Company Plan, nor any trust created thereunder, has incurred any "accumulated
funding deficiency" (as defined in Section 302 of ERISA), whether or not waived.
(b) Except as listed in Section 3.12(b) of the Company Letter, with respect
to the Company Plans, no event has occurred and, to the Knowledge of the
Company, there exists no condition or set of circumstances in connection with
which the Company or any Subsidiary or ERISA Affiliate or Company Plan fiduciary
could be subject to any liability under the terms of such Company Plans, ERISA,
the Code or any other applicable law which would have a Material Adverse Effect
on the Company. All Company Plans that are intended to be qualified under
Section 401(a) of the Code have been determined by the IRS to be so qualified,
or a timely application for such determination is now pending and the Company is
not aware of any reason why any such Company Plan is not so qualified in
operation. Neither the Company nor any of its Subsidiaries or ERISA Affiliates
has been notified by any Company Multiemployer Plan that such Company
Multiemployer Plan is currently in reorganization or insolvency under and within
the meaning of Section 4241 or 4245 of ERISA or that such Company Multiemployer
Plan intends to terminate or has been terminated under Section 4041A of ERISA.
No event has occurred and, to the Knowledge of the Company, there exists no
condition or set of circumstances that would result in a material increase in
the contributions required to be made to any Company Multiemployer Plan by the
Company or any Subsidiary
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or ERISA Affiliate. Except as disclosed in Section 3.12(b) of the Company
Letter, neither the Company nor any of its Subsidiaries or ERISA Affiliates has
any liability or obligation under any welfare plan to provide benefits after
termination of employment to any employee or dependent other than as required by
Section 4980B of the Code.
(c) As used herein, (i) "Company Plan" means a "pension plan" (as defined in
Section 3(2) of ERISA (other than a Company Multiemployer Plan)), a "welfare
plan" (as defined in Section 3(1) of ERISA), or any other written or oral bonus,
profit sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock, restricted stock, stock
appreciation right, holiday pay, vacation, severance, medical, dental, vision,
disability, death benefit, sick leave, fringe benefit, personnel policy,
insurance or other plan, arrangement or understanding, in each case established
or maintained by the Company or any of its Subsidiaries or ERISA Affiliates or
as to which the Company or any of its Subsidiaries or ERISA Affiliates has
contributed or otherwise may have any liability, (ii) "Company Multiemployer
Plan" means a "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA)
to which the Company or any of its Subsidiaries or ERISA Affiliates is or has
been obligated to contribute or otherwise may have any liability, and (iii)
"ERISA Affiliate" means any trade or business (whether or not incorporated)
which would be considered a single employer with the Company pursuant to Section
414(b), (c), (m) or (o) of the Code and the regulations promulgated under those
sections or pursuant to Section 4001(b) of ERISA and the regulations promulgated
thereunder.
(d) Section 3.12(d) of the Company Letter contains a list of all (i)
severance and employment agreements with employees of the Company and each
Subsidiary and ERISA Affiliate, (ii) severance programs and policies of the
Company and each Subsidiary and ERISA Affiliate with or relating to its
employees and (iii) plans, programs, agreements and other arrangements of the
Company and each Subsidiary and ERISA Affiliate with or relating to its
employees containing change of control or similar provisions.
(e) Except as set forth in Section 3.12(e) of the Company Letter, neither
the Company nor any of its Subsidiaries is a party to any agreement, contract or
arrangement that could result, separately or in the aggregate, in the payment of
any "excess parachute payments" within the meaning of Section 280G of the Code.
(f) Except as set forth in Section 3.12(f) of the Company Letter, with
respect to each Company Plan not subject to United States law (a "Company
Foreign Benefit Plan"), except as would not have a Material Adverse Effect on
the Company, (i) the fair market value of the assets of each funded Company
Foreign Benefit Plan, the liability of each insurer for any Company Foreign
Benefit Plan funded through insurance or the reserve shown on the Company's
consolidated financial statements for any unfunded Company Foreign Benefit Plan,
together with any accrued contributions, is sufficient to procure or provide for
the projected benefit obligations, as of the Effective Time, with respect to all
current and former participants in such plan according reasonable, country
specific actuarial assumptions and valuations and no transaction contemplated by
this Agreement shall cause such assets or insurance obligations or book reserve
to be less than such projected benefit obligations; and (ii) each Company
Foreign Benefit Plan required to be registered has been registered and has been
maintained in good standing with the appropriate regulatory authorities.
(g) The statements in the notes to the consolidated financial statements of
the Company included in the Company Annual Report concerning the Marquette
Hellige GmbH noncontributory defined pension plan are accurate in all material
respects.
Section 3.13 COMPLIANCE WITH WORKER SAFETY LAWS. The properties, assets
and operations of the Company and its Subsidiaries are in compliance with all
applicable federal, state, local and foreign laws, rules and regulations,
orders, decrees, judgments, permits and licenses relating to public and worker
health and safety (collectively, "Worker Safety Laws"), except for any
violations that, individually or in the aggregate, would not have a Material
Adverse Effect on the Company. With respect to such properties,
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assets and operations, including any previously owned, leased or operated
properties, assets or operations, there are no past, present or reasonably
anticipated future events, conditions, circumstances, activities, practices,
incidents, actions or plans of the Company or any of its Subsidiaries that may
interfere with or prevent compliance or continued compliance with applicable
Worker Safety Laws, other than any such interference or prevention as would not,
individually or in the aggregate with any such other interference or prevention,
have a Material Adverse Effect on the Company.
Section 3.14 LIABILITIES; PRODUCTS. (a) Except as fully reflected or
reserved against in the financial statements included in the Company Annual
Report, or disclosed in the footnotes thereto, the Company and its Subsidiaries
had no liabilities (including Tax liabilities) at the date of such financial
statements, absolute or contingent, other than liabilities that, individually or
in the aggregate, would not have a Material Adverse Effect on the Company, and
had no liabilities (including Tax liabilities) that were not incurred in the
ordinary course of business. As of the date hereof, the indebtedness for
borrowed money of the Company and its Subsidiaries does not exceed $84 million.
(b) Except as set forth in Section 3.14(b) of the Company Letter, since
April 30, 1995, neither the Company nor any Subsidiary has received a claim for
or based upon breach of product warranty (other than warranty service and repair
claims in the ordinary course of business not material in amount or
significance), strict liability in tort, negligent manufacture of product,
negligent provision of services or any other allegation of liability, including
or resulting in product recalls, arising from the materials, design, testing,
manufacture, packaging, labeling (including instructions for use), or sale of
its products or from the provision of services; and, to the Knowledge of the
Company, there is no basis for any such claim which, if asserted, would likely
have a Material Adverse Effect on the Company.
(c) The Company has provided to Parent a schedule of products in development
and planned introductions, a copy of which is attached to the Company Letter.
The Company reasonably expects the goals set forth therein to be achieved in all
material respects, except for such deviations as would not have a Material
Adverse Effect on the Company or on the Company's diagnostic cardiology or
patient monitoring businesses. The product and service engineering, development,
manufacturing and quality control processes which have been and are being
followed by the Company are reasonably designed to produce products and services
which (i) are consistent with the claims made about them in the Company's sales
brochures and other statements made about them by or on behalf of the Company,
(ii) otherwise meet the reasonable expectations of customers, (iii) comply with
applicable regulatory requirements and (iv) avoid claims of the type described
in Section 3.14(b).
Section 3.15 LABOR MATTERS. Except as set forth in Section 3.15 of the
Company Letter, neither the Company nor any of its Subsidiaries is a party to
any collective bargaining agreement or labor contract. Neither the Company nor
any of its Subsidiaries has engaged in any unfair labor practice with respect to
any persons employed by or otherwise performing services primarily for the
Company or any of its Subsidiaries (the "Company Business Personnel"), and there
is no unfair labor practice complaint or grievance against the Company or any of
its Subsidiaries by any person pursuant to the National Labor Relations Act or
any comparable state or foreign law pending or threatened in writing with
respect to the Company Business Personnel, except where such unfair labor
practice, complaint or grievance would not have a Material Adverse Effect on the
Company. There is no labor strike, dispute, slowdown or stoppage pending or, to
the Knowledge of the Company, threatened against or affecting the Company or any
of its Subsidiaries which may interfere with the respective business activities
of the Company or any of its Subsidiaries, except where such dispute, strike or
work stoppage would not have a Material Adverse Effect on the Company.
Section 3.16 INTELLECTUAL PROPERTY; YEAR 2000. "Company Intellectual
Property" means all trademarks, trademark registrations, trademark rights and
renewals thereof, trade names, trade name rights, patents, patent rights, patent
applications, industrial models, inventions, invention disclosures, designs,
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utility models, inventor rights, software, copyrights, copyright registrations
and renewals thereof, servicemarks, servicemark registrations and renewals
thereof, servicemark rights, trade secrets, applications for trademark and
servicemark registrations, know-how, confidential information and other
proprietary rights, and any data and information of any nature or form used or
held for use in connection with the businesses of the Company and/or the
Subsidiaries as currently conducted or as currently contemplated by the Company,
together with all applications currently pending or in process for any of the
foregoing. Except as disclosed in the Company SEC Documents filed with the SEC
prior to the date hereof, the Company and the Subsidiaries own, or possess
adequate licenses or other valid rights to use (including the right to
sublicense to customers, suppliers or others as needed), all of the material
Company Intellectual Property that is necessary or appropriate for the conduct
or contemplated conduct of the Company's or Subsidiaries' businesses. Section
3.16 of the Company Letter lists each material license or other agreement
pursuant to which the Company or any Subsidiary has the right to use Company
Intellectual Property utilized in connection with any product of, or service
provided by, the Company and the Subsidiaries, the cancellation or expiration of
which would have a Material Adverse Effect on the Company (the "Company
Licenses"). There are no pending, and between the date hereof and the Effective
Time, there shall not be any pending, or to the Knowledge of the Company,
threatened interferences, re-examinations, oppositions or cancellation
proceedings involving any patents or patent rights, trademarks or trademark
rights, or applications therefor, of the Company or any Subsidiary, except such
as may be commenced by Parent or any Subsidiary of Parent and except such as
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company. There is no breach or violation by the Company or by any Subsidiary
under, and, to the Knowledge of the Company, there is no breach or violation by
any other party to, any Company License that is reasonably likely to give rise
to any termination or any loss of rights thereunder. To the Knowledge of the
Company, there has been no unauthorized disclosure or use of confidential
information, trade secret rights, processes and formulas, research and
development results and other know-how of the Company or any Subsidiary, the
value of which to the Company and its Subsidiaries is dependent upon the
maintenance of the confidentiality thereof. The conduct of the business of the
Company and the Subsidiaries as currently conducted or contemplated does not and
will not infringe upon or conflict with, in any way, any license, trademark,
trademark right, trade name, trade name right, patent, patent right, industrial
model, invention, service mark, service mark right, copyright, trade secret or
any other intellectual property rights of any third party that, individually or
in the aggregate, would have a Material Adverse Effect on the Company or on the
Company's diagnostic cardiology or patient monitoring businesses. Except as
disclosed in the Company SEC Documents filed with the SEC prior to the date
hereof, there are no infringements of, or conflicts with, any Company
Intellectual Property which, individually or in the aggregate, would have a
Material Adverse Effect on the Company or on the Company's diagnostic cardiology
or patient monitoring businesses. Except as set forth in Section 3.16 of the
Company Letter, neither the Company nor any Subsidiary has licensed or otherwise
permitted the use by any third party of any proprietary information or Company
Intellectual Property on terms or in a manner which, individually or in the
aggregate, would have a Material Adverse Effect on the Company. Except as set
forth in Section 3.16 of the Company Letter, the current and previously sold
products of the Company and its Subsidiaries and software, operations, systems
and processes (including, to the Knowledge of the Company, software, operations,
systems and processes obtained from third parties) used in the conduct of the
business of the Company and its Subsidiaries, are Year 2000 Compliant and the
Company has delivered to Parent true and correct copies of any consultant or
other third-party reports prepared on behalf of the Company with respect to such
compliance. For purposes of this Agreement, "Year 2000 Compliant" means the
ability to process (including calculate, compare, sequence, display or store),
transmit or receive data or data/time data from, into and between the twentieth
and twenty-first centuries, and the years 1999 and 2000, and leap year
calculations without error or malfunction.
Section 3.17 OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of Robert W. Baird & Co. Incorporated to the effect that, as of the date
hereof, the Merger Consideration is fair to the
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Company's shareholders from a financial point of view, a copy of which opinion
will be delivered to Parent promptly after the execution and delivery of this
Agreement.
Section 3.18 STATE TAKEOVER STATUTES. The Board of Directors of the
Company has, to the extent such statutes are applicable, taken all action
(including appropriate approvals of the Board of Directors of the Company)
necessary to render the provisions of Section 180.1140 through Section 180.1144
of the WBCL inapplicable to the Merger, this Agreement, the Stock Option
Agreement, the Shareholder Agreement and the transactions contemplated hereby
and thereby. The Company has elected, pursuant to the Company Charter, not to be
governed by the provisions of Section 180.1131 of the WBCL. To the Knowledge of
the Company, no other state takeover statute or similar charter or bylaw
provisions are applicable to the Merger, this Agreement, the Stock Option
Agreement, the Shareholder Agreement and the transactions contemplated hereby
and thereby.
Section 3.19 REQUIRED VOTE OF COMPANY SHAREHOLDERS. The affirmative vote
of the holders of a majority of the outstanding shares of Company Common Stock
is required to adopt this Agreement. No other vote of the security holders of
the Company is required by law, the Company Charter or the Amended and Restated
Bylaws of the Company or otherwise in order for the Company to consummate the
Merger and the transactions contemplated hereby and in the Stock Option
Agreement.
Section 3.20 REORGANIZATION. To the Knowledge of the Company, neither it
nor any of its Subsidiaries has taken any action or failed to take any action
which action or failure would jeopardize the qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code.
Section 3.21 ACCOUNTS RECEIVABLE. All of the accounts and notes receivable
of the Company and its Subsidiaries set forth on the books and records of the
Company (net of the applicable reserves reflected on the books and records of
the Company and in the financial statements included in the Company SEC
Documents) (i) represent sales actually made or transactions actually effected
in the ordinary course of business for goods or services delivered or rendered
to unaffiliated customers in bona fide arm's length transactions, (ii)
constitute valid claims, and (iii) are good and collectible at the aggregate
recorded amounts thereof (net of such reserves) without right of recourse,
defense, deduction, return of goods, counterclaim, or offset and have been or
will be collected in the ordinary course of business and consistent with past
experience.
Section 3.22 INVENTORIES. Except as set forth in Section 3.22 of the
Company Letter, all inventories of the Company and its Subsidiaries consist of
items of merchantable quality and quantity usable or salable in the ordinary
course of business, are salable at prevailing market prices that are not less
than the book value amounts thereof or the price customarily charged by the
Company or the applicable Subsidiary therefor, conform to the specifications
established therefor, and have been manufactured in accordance with applicable
regulatory requirements, except to the extent that the failure of such
inventories so to consist, be saleable, conform, or be manufactured would not
have a Material Adverse Effect on the Company. Except as set forth in Section
3.22 of the Company Letter, the quantities of all inventories, materials, and
supplies of the Company and each Subsidiary (net of the obsolescence reserves
therefor shown in the financial statements included in the Company SEC Documents
and determined in the ordinary course of business consistent with past practice)
are not obsolete, damaged, slow-moving, defective, or excessive, and are
reasonable and balanced in the circumstances of the Company and its
Subsidiaries, except to the extent that the failure of such inventories to be in
such conditions would not have a Material Adverse Effect on the Company.
Section 3.23 ENVIRONMENTAL MATTERS.
(a) For purposes of this Agreement, the following terms shall have the
following meanings: (i) "Hazardous Substances" means (A) petroleum and petroleum
products, by-products or breakdown products, radioactive materials,
asbestos-containing materials and polychlorinated biphenyls, and (B) any other
chemicals, materials or substances regulated as toxic or hazardous or as a
pollutant, contaminant or
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waste under any applicable Environmental Law; (ii) "Environmental Law" means any
law, past, present or future and as amended, and any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent
decree or judgment, or common law, relating to pollution or protection of the
environment, health or safety or natural resources, including those relating to
the use, handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Substances; and (iii) "Environmental Permit" means any
permit, approval, identification number, license or other authorization required
under any applicable Environmental Law.
(b) Except as disclosed in Section 3.23 of the Company Letter, the Company
and the Subsidiaries are and have been in compliance with all applicable
Environmental Laws, have obtained all Environmental Permits and are in
compliance with their requirements, and have resolved all past non-compliance
with Environmental Laws and Environmental Permits without any pending, on-going
or future obligation, cost or liability, except in each case for the notices set
forth in Section 3.23 of the Company Letter or where such non-compliance would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company.
(c) Except as disclosed in Section 3.23 of the Company Letter, neither the
Company nor any of the Subsidiaries has (i) placed, held, located, released,
transported or disposed of any Hazardous Substances on, under, from or at any of
the Company's or any of the Subsidiaries' properties or any other properties,
other than in a manner that would not, in all such cases taken individually or
in the aggregate, result in a Material Adverse Effect on the Company, (ii) any
Knowledge or reason to know of the presence of any Hazardous Substances on,
under, emanating from, or at any of the Company's or any of the Subsidiaries'
properties or any other property but arising from the Company's or any of the
Subsidiaries' current or former properties or operations, other than in a manner
that would not result in a Material Adverse Effect on the Company, or (iii) any
Knowledge or reason to know, nor has it received any written notice (A) of any
violation of or liability under any Environmental Laws, (B) of the institution
or pendency of any suit, action, claim, proceeding or investigation by any
Governmental Entity or any third party in connection with any such violation or
liability, (C) requiring the investigation of, response to or remediation of
Hazardous Substances at or arising from any of the Company's or any of the
Subsidiaries' current or former properties or operations or any other
properties, (D) alleging noncompliance by the Company or any of the Subsidiaries
with the terms of any Environmental Permit in any manner reasonably likely to
require material expenditures or to result in material liability or (E)
demanding payment for response to or remediation of Hazardous Substances at or
arising from any of the Company's or any of the Subsidiaries' current or former
properties or operations or any other properties, except in each case for the
notices set forth in Section 3.23 of the Company Letter.
(d) Except as disclosed in Section 3.23 of the Company Letter, no
Environmental Law imposes any obligation upon the Company or any of the
Subsidiaries arising out of or as a condition to any transaction contemplated by
this Agreement, including any requirement to modify or to transfer any permit or
license, any requirement to file any notice or other submission with any
Governmental Entity, the placement of any notice, acknowledgment or covenant in
any land records, or the modification of or provision of notice under any
agreement, consent order or consent decree.
(e) The Company and the Subsidiaries will provide Parent with copies of any
Environmental assessment or audit report or other similar studies or analyses
currently in the possession of or available to the Company or any of the
Subsidiaries relating to any real property currently or formerly owned, leased
or occupied by the Company or any of the Subsidiaries.
Section 3.24 SUPPLIERS. Except as set forth in Section 3.24 of the Company
Letter, neither the Company nor any Subsidiary has received any notice or has
any reason to believe that any significant supplier will not sell raw materials,
supplies, merchandise and other goods to the Company or any Subsidiary at any
time after the Effective Time on terms and conditions substantially similar to
those used in its current sales to the Company and the Subsidiaries, subject
only to general and customary price
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increases, unless comparable raw materials, supplies, merchandise or other goods
are readily available from other sources on comparable terms and conditions.
Section 3.25 INSURANCE. All material fire and casualty, general liability,
business interruption, product liability, and sprinkler and water damage
insurance policies maintained by the Company or any of its Subsidiaries are with
reputable insurance carriers, provide full and adequate coverage for all normal
risks incident to the business of the Company and the Subsidiaries and their
respective properties and assets, and are in character and amount at least
equivalent to that carried by persons engaged in similar businesses and subject
to the same or similar perils or hazards, except for any such failures to
maintain insurance policies that, individually or in the aggregate, would not
have a Material Adverse Effect on the Company. The Company and each Subsidiary
have made any and all payments required to maintain such policies in full force
and effect. Except as set forth in Section 3.25 of the Company Letter, neither
the Company nor any Subsidiary has received notice of default under any such
policy, and has not received written notice or, to the Knowledge of the Company,
oral notice of any pending or threatened termination or cancellation, coverage
limitation or reduction or material premium increase with respect to such
policy.
Section 3.26 ACCURACY OF INFORMATION. Neither this Agreement nor any other
document provided by the Company or the Subsidiaries or any of their respective
employees or agents to Parent in connection with the transactions contemplated
herein contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained therein not misleading.
Section 3.27 TRANSACTIONS WITH AFFILIATES. (a) For purposes of this
Section 3.27, the term "Affiliated Person" means (i) any holder of 2% or more of
the Company Common Stock, (ii) any director, officer or senior executive of the
Company or any Subsidiary, (iii) any person, firm or corporation that directly
or indirectly controls, is controlled by, or is under common control with, any
of the Company or any Subsidiary or (iv) any member of the immediate family or
any of such persons.
(b) Except as set forth in Section 3.27 of the Company Letter or in the
Company SEC Reports filed with the SEC prior to the date hereof, since April 30,
1994, the Company and the Subsidiaries have not, in the ordinary course of
business or otherwise, (i) purchased, leased or otherwise acquired any material
property or assets or obtained any material services from, (ii) sold, leased or
otherwise disposed of any material property or assets or provided any material
services to (except with respect to remuneration for services rendered in the
ordinary course of business as director, officer or employee of the Company or
any Subsidiary), (iii) entered into or modified in any manner any contract with,
or (iv) borrowed any money from, or made or forgiven any loan or other advance
(other than expenses or similar advances made in the ordinary course of
business) to, any Affiliated Person.
(c) Except as set forth in Section 3.27 of the Company Letter or in the
Company SEC Reports filed with the SEC prior to the date hereof, (i) the
contracts of the Company and the Subsidiaries do not include any material
obligation or commitment between the Company or any Subsidiary and any
Affiliated Person, (ii) the assets of the Company or any Subsidiary do not
include any receivable or other obligation or commitment from an Affiliated
Person to the Company or any Subsidiary and (iii) the liabilities of the Company
and the Subsidiaries do not include any payable or other obligation or
commitment from the Company or any Subsidiary to any Affiliated Person.
(d) To the Knowledge of the Company and except as set forth in Section 3.27
of the Company Letter or in the Company SEC Reports filed with the SEC prior to
the date hereof, no Affiliated Person of any of the Company or any Subsidiary is
a party to any contract with any customer or supplier of the Company or any
Subsidiary that affects in any material manner the business, financial condition
or results of operation of the Company or any Subsidiary.
Section 3.28. TITLE TO AND SUFFICIENCY OF ASSETS. (a) As of the date
hereof, the Company and the Subsidiaries own, and as of the Effective Time the
Company and the Subsidiaries will own, good and marketable title to all of their
assets constituting personal property which is material to their business
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(excluding, for purposes of this sentence, assets held under leases), free and
clear of any and all mortgages, liens, encumbrances, charges, claims,
restrictions, pledges, security interests or impositions (collectively,
"Liens"), except as set forth in the Company SEC Documents filed with the SEC
prior to the date hereof, or Section 3.28 of the Company Letter. Such assets,
together with all assets held by the Company and the Subsidiaries under leases,
include all tangible and intangible personal property, contracts and rights
necessary or required for the operation of the businesses of the Company as
presently conducted.
(b) As of the date hereof, the Company and the Subsidiaries own, and as of
the Effective Time the Company and the Subsidiaries will own, good and
marketable title to all of their Real Estate which is material to such persons
(excluding, for purposes of this sentence, Real Estate leases), free and clear
of any and all Liens, except as set forth in the Company SEC Documents filed
with the SEC prior to the date hereof or in Section 3.28 of the Company Letter
or such other Liens on Real Estate which would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. Such Real Estate
assets, together with all Real Estate assets held by the Company and the
Subsidiaries under leases, are adequate for the operation of the businesses of
the Company as presently conducted. The leases to all Real Estate occupied by
the Company and the Subsidiaries which are material to the operation of the
businesses of the Company are in full force and effect and no event has occurred
which with the passage of time, the giving of notice, or both, would constitute
a default or event of default by the Company or any Subsidiary or, to the
Knowledge of the Company, any other person who is a party signatory thereto,
other than such defaults or events of default which, individually or in the
aggregate, would not have a Material Adverse Effect on the Company. For purposes
of this Agreement, "Real Estate" means, with respect to the Company or any
Subsidiary, as applicable, all of the fee or leasehold ownership right, title
and interest of such person, in and to all real estate and improvement owned or
leased by any such person and which is used by any such person in connection
with the operation of its business.
Section 3.29 BROKERS. No broker, investment banker or other person, other
than Robert W. Baird & Co. Incorporated the fees and expenses of which will be
paid by the Company (as reflected in an agreement between Robert W. Baird & Co.
Incorporated and the Company, a copy of which has been furnished to Parent), is
entitled to any broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement and by the Stock
Option Agreement based upon arrangements made by or on behalf of the Company.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. Except
as expressly permitted by clauses (i) through (xvii) of this Section 4.1, during
the period from the date of this Agreement through the Effective Time, the
Company shall, and shall cause each of its Subsidiaries to, in all material
respects carry on its business in the ordinary course of its business as
currently conducted and, to the extent consistent therewith, use reasonable best
efforts to preserve intact its current business organizations, keep available
the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings with
it to the end that its goodwill and ongoing business shall be unimpaired at the
Effective Time. Without limiting the generality of the foregoing, and except as
otherwise expressly contemplated by this Agreement or as set forth in the
Company Letter (with specific reference to the applicable subsection below), the
Company shall not, and shall not permit any of its Subsidiaries to, without the
prior written consent of Parent:
(i) (A) other than dividends paid by wholly-owned Subsidiaries, declare,
set aside or pay any dividends on, or make any other actual, constructive or
deemed distributions in respect of, any of its capital stock, or otherwise
make any payments to its shareholders in their capacity as such, (B) other
than in the case of any Subsidiary, split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its
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capital stock or (C) purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge, dispose of or otherwise encumber any
shares of its capital stock, any other voting securities or equity
equivalent or any securities convertible into, or any rights, warrants or
options (including options under the Company Stock Option Plans) to acquire
any such shares, voting securities, equity equivalent or convertible
securities, other than (A) the issuance of shares of Company Common Stock
upon the exercise of Company Stock Options outstanding on the date of this
Agreement in accordance with their current terms and (B) the issuance of
shares of Company Common Stock pursuant to the Stock Option Agreement;
(iii) amend its charter or by-laws or amend the Company Rights Agreement,
except that the Company shall cause the Rights Agent to execute and deliver
the amendment to the Company Rights Agreement in the form of EXHIBIT C
hereto;
(iv) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of or equity in, or by any
other manner, any business or any corporation, limited liability company,
partnership, association or other business organization or division thereof
or otherwise acquire or agree to acquire any assets;
(v) sell, lease or otherwise dispose of, or agree to sell, lease or
otherwise dispose of, any of its assets, other than sales of inventory that
are in the ordinary course of business consistent with past practice;
(vi) incur any indebtedness for borrowed money, guarantee any such
indebtedness or make any loans, advances or capital contributions to, or
other investments in, any other person, other than (A) in the ordinary
course of business consistent with past practices and, in the case of
indebtedness and guarantees, in an amount not to exceed $10 million
(provided that Parent shall not unreasonably withhold its consent to
increases of not more than $30 million) in the aggregate and (B)
indebtedness, loans, advances, capital contributions and investments between
the Company and any of its wholly-owned Subsidiaries or between any of such
wholly-owned Subsidiaries, in each case in the ordinary course of business
consistent with past practices;
(vii) alter (through merger, liquidation, reorganization, restructuring
or in any other fashion) the corporate structure or ownership of the Company
or any Subsidiary;
(viii) except as provided in Section 4.1(viii) of the Company Letter,
enter into or adopt any, or amend any existing, severance plan, agreement or
arrangement or enter into or amend any Company Plan or employment or
consulting agreement;
(ix) except as provided in Section 4.1(ix) of the Company Letter,
increase the compensation payable or to become payable to its directors,
officers or employees (except for increases in the ordinary course of
business consistent with past practice in salaries or wages of employees of
the Company or any of its Subsidiaries who are not officers of the Company
or any of its Subsidiaries) or grant any severance or termination pay to, or
enter into any employment or severance agreement with, any director or
officer of the Company or any of its Subsidiaries, or establish, adopt,
enter into, or, except as may be required to comply with applicable law,
amend in any material respect or take action to enhance in any material
respect or accelerate any rights or benefits under, any labor, collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee;
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(x) knowingly violate or knowingly fail to perform any obligation or
duty imposed upon it or any Subsidiary by any applicable material federal,
state or local law, rule, regulation, guideline or ordinance;
(xi) make any change to accounting policies or procedures (other than
actions required to be taken by generally accepted accounting principles);
(xii) prepare or file any Tax Return inconsistent with past practice or,
on any such Tax Return, take any position, make any election, or adopt any
method that is inconsistent with positions taken, elections made or methods
used in preparing or filing similar Tax Returns in prior periods;
(xiii) make any tax election or settle or compromise any material federal,
state, local or foreign income tax liability;
(xiv) commence any litigation or proceedings or settle or compromise any
material claims or litigation;
(xv) enter into or amend any agreement or contract with any customer or
supplier (i) having a term in excess of 12 months and which is not
terminable by the Company or a Subsidiary without penalty or premium by
notice of 30 days or less or (ii) which involves or is expected to involve
payments of $10 million or more during the term thereof (provided that in
the case of agreements or contracts with any customer, the margins
anticipated from any such agreement or contract shall be consistent in all
material respects with historical margins); enter into or amend any other
agreement or contract material to the Company and its Subsidiaries, taken as
a whole; or purchase any real property, except as set forth in Section
4.1(xv) of the Company Letter, or make or agree to make any new capital
expenditure or expenditures (other than the purchase of real property) which
in the aggregate are in excess of $7 million;
(xvi) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of
business consistent with past practice or in accordance with their terms, of
liabilities reflected or reserved against in, or contemplated by, the most
recent financial statements (or the notes thereto) of the Company included
in the Company SEC Documents or incurred in the ordinary course of business
consistent with past practice; or
(xvii) authorize, recommend, propose or announce an intention to do any of
the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
Section 4.2 NO SOLICITATION. (a) The Company shall not, nor shall it
permit any of its Subsidiaries to, nor shall it authorize or permit any officer,
director or employee of or any financial advisor, attorney or other advisor or
representative of, the Company or any of its Subsidiaries to, (i) solicit,
initiate or encourage the submission of, any Takeover Proposal (as hereafter
defined), (ii) enter into any agreement with respect to or approve or recommend
any Takeover Proposal or (iii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to the Company
or any Subsidiary in connection with, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Takeover Proposal; PROVIDED, HOWEVER, that nothing
contained in this Section 4.2(a) shall prohibit the Company or its directors
from (i) complying with Rule 14e-2 promulgated under the Exchange Act with
regard to a tender or exchange offer or (ii) referring a third party to this
Section 4.2(a) or making a copy of this Section 4.2(a) available to any third
party; and PROVIDED, FURTHER, that prior to the Shareholder Meeting, if the
Board of Directors of the Company reasonably determines the Takeover Proposal
constitutes a Superior Proposal (as defined below), then, to the extent required
by the fiduciary obligations of the Board of Directors of the Company, as
determined in good faith by a majority thereof after consultation with
independent counsel (who may be the Company's regularly engaged independent
counsel), the Company may, in response to an unsolicited request therefor,
furnish information with respect to the Company and its Subsidiaries to any
person
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pursuant to a customary confidentiality statement (as determined by the
Company's independent counsel). Without limiting the foregoing, it is understood
that any violation of the restrictions set forth in the preceding sentence by
any officer or director of the Company or any of its Subsidiaries or any
financial advisor, attorney or other advisor or representative of the Company or
any of its Subsidiaries, whether or not such person is purporting to act on
behalf of the Company or any of its Subsidiaries or otherwise, shall be deemed
to be a breach of this Section 4.2(a) by the Company. For purposes of this
Agreement, "Takeover Proposal" means any proposal for a merger or other business
combination involving the Company or any of its Subsidiaries or any proposal or
offer to acquire in any manner, directly or indirectly, an equity interest in,
any voting securities of, or a substantial portion of the assets of the Company
or any of its Subsidiaries, other than the transactions contemplated by this
Agreement and the Stock Option Agreement, and "Superior Proposal" means a bona
fide proposal made by a third party to acquire the Company pursuant to a tender
or exchange offer, a merger, a sale of all or substantially all its assets or
otherwise on terms which a majority of the disinterested members of the Board of
Directors of the Company determines, at a duly constituted meeting of the Board
of Directors or by unanimous written consent, in its reasonable good faith
judgment to be more favorable to the Company's shareholders than the Merger
(based on the advice of the Company's independent financial advisor that the
value of the consideration provided for in such proposal exceeds the value of
the consideration provided for in the Merger) and for which financing, to the
extent required, is then committed or which, in the reasonable good faith
judgment of a majority of such disinterested members, as expressed in a
resolution adopted at a duly constituted meeting of such members (based on the
advice of the Company's independent financial advisor), is reasonably capable of
being obtained by such third party.
(b) The Company shall advise Parent orally and in writing of (i) any
Takeover Proposal or any inquiry with respect to or which could lead to any
Takeover Proposal received by any officer or director of the Company or, to the
Knowledge of the Company, any financial advisor, attorney or other advisor or
representative of the Company, (ii) the material terms of such Takeover Proposal
(including a copy of any written proposal), and (iii) the identity of the person
making any such Takeover Proposal or inquiry no later than 24 hours following
receipt of such Takeover Proposal or inquiry. If the Company intends to furnish
any Person with any information with respect to any Takeover Proposal in
accordance with Section 4.2(a), the Company shall advise Parent orally and in
writing of such intention not less than five business days in advance of
providing such information. The Company will keep Parent fully informed of the
status and details of any such Takeover Proposal or inquiry.
Section 4.3 THIRD PARTY STANDSTILL AGREEMENTS. During the period from the
date of this Agreement through the Effective Time, the Company shall not
terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which the Company or any of its Subsidiaries is a party
(other than any involving Parent). During such period, the Company agrees to
enforce, to the fullest extent permitted under applicable law, the provisions of
any such agreements, including, but not limited to, obtaining injunctions to
prevent any breaches of such agreements and to enforce specifically the terms
and provisions thereof in any court of the United States or any state thereof
having jurisdiction.
Section 4.4 REORGANIZATION. During the period from the date of this
Agreement through the Effective Time, unless the other party shall otherwise
agree in writing, none of Parent, the Company or any of their respective
Subsidiaries shall take or fail to take any action with the actual knowledge of
those taking or failing to take such action (or those directing such action or
failure to take action) that such action or failure would jeopardize the
qualification of the Merger as a reorganization within the meaning of Section
368(a) of the Code or would cause any of the representations and warranties set
forth in the Company Tax Certificate attached to the Company Letter or the
Parent Tax Certificate attached to the Parent Letter to be untrue or incorrect.
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ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 SHAREHOLDER MEETING. The Company will, as soon as practicable
following the date of this Agreement, duly call, give notice of, convene and
hold a meeting of shareholders (the "Shareholder Meeting") for the purpose of
considering the approval and adoption of this Agreement and at such meeting call
for a vote and cause proxies to be voted in respect of the approval and adoption
of this Agreement. The Company will, through its Board of Directors, recommend
to its shareholders the adoption and approval of this Agreement, and shall not
withdraw or modify such recommendation. Without limiting the generality of the
foregoing, the Company agrees that its obligations pursuant to the first
sentence of this Section 5.1 shall not be affected by the commencement, public
proposal, public disclosure or communication to the Company of a Takeover
Proposal.
Section 5.2 PREPARATION OF THE REGISTRATION STATEMENT AND THE PROXY
STATEMENT. The Company and Parent shall promptly prepare and file with the SEC
the Proxy Statement and Parent shall prepare and file with the SEC the
Registration Statement, in which the Proxy Statement will be included as a
prospectus. Each of Parent and the Company shall use its reasonable best efforts
to have the Registration Statement declared effective under the Securities Act
as promptly as practicable after such filing. As promptly as practicable after
the Registration Statement shall have become effective, the Company shall mail
the Proxy Statement to its shareholders. Parent shall also take any action
(other than qualifying to do business in any jurisdiction in which it is now not
so qualified) required to be taken under any applicable state securities laws in
connection with the issuance of Parent Common Stock in the Merger and upon the
exercise of the Substitute Options (as defined in Section 5.7), and the Company
shall furnish all information concerning the Company and the holders of Company
Common Stock as may be reasonably requested in connection with any such action.
Section 5.3 ACCESS TO INFORMATION. Subject to currently existing
contractual and legal restrictions applicable to the Company or any of its
Subsidiaries, the Company shall, and shall cause each of its Subsidiaries to,
afford to the accountants, counsel, financial advisors and other representatives
of Parent reasonable access to, and permit them to make such inspections as they
may reasonably require of, during the period from the date of this Agreement
through the Effective Time, all of their respective properties, books,
contracts, commitments and records (including engineering records and Tax
Returns and the work papers of independent accountants, if available and subject
to the consent of such independent accountants) and, during such period, the
Company shall, and shall cause each of its Subsidiaries to (i) furnish promptly
to Parent a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of federal
or state securities laws, (ii) furnish promptly to Parent all other information
concerning its business, properties and personnel as Parent may reasonably
request and (iii) promptly make available to Parent all personnel of the Company
and its Subsidiaries knowledgeable about matters relevant to such inspections.
No investigation pursuant to this Section 5.3 shall affect any representation or
warranty in this Agreement of any party hereto or any condition to the
obligations of the parties hereto. All information obtained by Parent pursuant
to this Section 5.3 shall be kept confidential in accordance with the
Confidentiality Agreement, dated September 14, 1998 between Parent and the
Company (the "Confidentiality Agreement").
Section 5.4 COMPLIANCE WITH THE SECURITIES ACT. The Company has informed
Parent that the directors of the Company are all persons who, at the time of the
Shareholder Meeting, may be deemed to be "affiliates" of the Company as that
term is used in paragraphs (c) and (d) of Rule 145 under the Securities Act (the
"Rule 145 Affiliates"). The Company shall use its reasonable best efforts to
cause each such person to deliver to Parent within 30 days of the date hereof a
written agreement in substantially the form of EXHIBIT D hereto, executed by
each of such persons identified in the foregoing list.
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Section 5.5 STOCK EXCHANGE LISTINGS. Parent shall use its reasonable best
efforts to list on the NYSE, upon official notice of issuance, any shares of
Parent Common Stock to be issued in connection with the Merger which have not
been previously listed.
Section 5.6 FEES AND EXPENSES. (a) Except as provided in this Section 5.6
and Section 5.10, whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, including the fees and disbursements of counsel, financial
advisors and accountants, shall be paid by the party incurring such costs and
expenses, provided that all printing expenses and all filing fees (including
filing fees under the Securities Act, the Exchange Act and the HSR Act) shall be
divided equally between Parent and the Company.
(b) Notwithstanding any provision in this Agreement to the contrary, if this
Agreement is terminated (A) by the Company pursuant to Section 7.1(d)(i) after
receipt of a Superior Proposal or (B) by Parent pursuant to Section 7.1(b), (c)
or (f), (C) by Parent or the Company pursuant to Section 7.1(e) (after receipt
of a publicly disclosed Superior Proposal or after the occurrence of any of the
events described in clause (i), (ii) or (iii) of Section 7.1(f)) or (g), then,
in each case, the Company shall (without prejudice to any other rights of Parent
against the Company) reimburse Parent upon demand for all out-of-pocket fees and
expenses incurred or paid by or on behalf of Parent or any Affiliate (as
hereinafter defined) of Parent in connection with this Agreement, the Stock
Option Agreement and the transactions contemplated herein or therein, including
all fees and expenses of counsel, investment banking firms, accountants and
consultants. As used herein, "Affiliate" shall have the meaning set forth in
Rule 405 under the Securities Act.
(c) Notwithstanding any provision in this Agreement to the contrary:
(i) if this Agreement is terminated:
(A) by the Company pursuant to Section 7.1(d)(i) after receipt of a
Superior Proposal, or
(B) by Parent pursuant to Section 7.1(b) or (f), or
(C) by Parent pursuant to Section 7.1(c) or by Parent or the Company
pursuant to Section 7.1(e) in either case after receipt of a publicly
disclosed Superior Proposal or after the occurrence of any of the events
described in clause (i), (ii) or (iii) of Section 7.1(f),
and, in the case of (A), (B) or (C), prior to, concurrently with or within
twelve months after such a termination a Third Party Acquisition Event (as
defined below) occurs, then the Company shall (in addition to any obligation
under Section 5.6(b) and without prejudice to any other rights of Parent
against the Company) pay to Parent the Termination Fee (as defined below) in
cash, such payment to be made promptly, but in no event later than the
second business day following, the later to occur of such termination and
such Third Party Acquisition Event; or
(ii) if this Agreement is terminated by Parent or the Company pursuant
to Section 7.1(g), then the Company shall (in addition to any obligation
under Section 5.6(b) and without prejudice to any other rights of Parent
against the Company) pay to Parent the Termination Fee in cash, such payment
to be made by the Company concurrently with such termination if the
termination is by the Company, or no later than the second business day
following such termination if the termination is by Parent.
"Termination Fee" means $35 million, PROVIDED, HOWEVER, that such amount
shall be reduced to an amount not less than zero by subtracting from $35 million
the amount realized or realizable (based on the facts as they exist on the date
such fee shall become due) by Parent under the Stock Option Agreement; PROVIDED
FURTHER that if such fee shall be so reduced by an amount realizable by Parent
and thereafter the Stock Option Agreement shall terminate without receipt by
Parent of such amount, then an additional payment shall be made to Parent in
such amount promptly following such termination.
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A "Third Party Acquisition Event" means any of the following events: (A) the
Company redeems the Rights or amends or fails to resist a legal challenge to the
Company Rights Agreement and any Person (other than Parent or its Affiliates and
other than Michael J. Cudahy so long as his beneficial ownership does not exceed
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, at the time of formation,
beneficially owns 20% or more of the outstanding shares of Company Common Stock;
(C) the Company enters into, or announces that it proposes to enter into, an
agreement, including, 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 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 this Agreement); (D) 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 (E) there is a public announcement with respect to a plan or
intention by the Company to effect any of the foregoing transactions. For
purposes of this Section 5.6(c), the terms "group" and "beneficial owner" shall
be defined by reference to Section 13(d) of the Exchange Act.
(d) Notwithstanding any provision in this Agreement to the contrary, if this
Agreement is terminated by the Company pursuant to Section 7.1(b) or (c), then
Parent shall (without prejudice to any other rights of the Company against
Parent) reimburse the Company upon demand for all out-of-pocket fees and
expenses incurred or paid by or on behalf of the Company or any Affiliate of the
Company in connection with this Agreement, the Stock Option Agreement and the
transactions contemplated herein or therein, including all fees and expenses of
counsel, investment banking firms, accountants and consultants.
Section 5.7 COMPANY STOCK OPTIONS. (a) At the Effective Time, each Company
Stock Option which is outstanding immediately prior to the Effective Time shall
become and represent an option to purchase the number of shares of Parent Common
Stock (a "Substitute Option"), decreased to the nearest whole share, determined
by multiplying the number of shares of Company Common Stock subject to such
Company Stock Option immediately prior to the Effective Time by the Conversion
Number (as defined below), at an exercise price per share of Parent Common
Stock, increased to the nearest whole cent, equal to the exercise price per
share of Company Common Stock subject to such Company Stock Option immediately
prior to the Effective Time divided by the Conversion Number. Parent shall pay
cash to holders of Substitute Options in lieu of issuing fractional shares of
Parent Common Stock upon the exercise thereof. The "Conversion Number" means the
number of shares of Parent Common Stock into which each share of Company Common
Stock is converted as of the Effective Time, determined in accordance with
Section 1.5(c) hereof. After the Effective Time, except as otherwise expressly
provided in this Section 5.7, each Substitute Option shall be exercisable upon
the same terms and conditions as were applicable to the related Company Stock
Option immediately prior to the Effective Time. The Company shall take all
action necessary to implement the provisions of this Section 5.7, including
amendment of the Company Stock Option Plans, and to ensure that, after giving
effect to the foregoing, no Company Stock Option shall be exercisable for
Company Common Stock following the Effective Time. The Company shall take no
action to accelerate or otherwise affect the exercisability of any Company Stock
Option, except as expressly provided in Section 5.7(b), (c) or (d), or otherwise
affect the exercise period thereof. As soon as reasonably practicable, and in no
event later than 20 days after the Effective Time, Parent shall file a
registration statement on Form S-8 (or any successor or other appropriate form)
with respect to Parent Common Stock subject to all Substitute Options.
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(b) Following the execution of this Agreement, Parent shall request a
private letter ruling from the Internal Revenue Service or obtain an opinion of
a law firm selected by Parent, in either case to the effect that no income will
be recognized by any holder of a Substitute Option as a result of any action to
provide that each Substitute Option which is outstanding on the second
anniversary of the Effective Time and not then fully exercisable shall become
fully exercisable on such second anniversary of the Effective Time. If, prior to
the Effective Time, the Internal Revenue Service shall have issued such a
private letter ruling or Parent shall have obtained such an opinion, in either
case reasonably satisfactory to the Company and Parent, then, prior to the
Effective Time, the Company shall take such action satisfactory to Parent as
shall be necessary to provide that each Substitute Option, other than Substitute
Options held by persons who had been non-employee directors of the Company
immediately prior to the Effective Time, which is outstanding on the second
anniversary of the Effective Time and not then exercisable shall become fully
exercisable on such second anniversary of the Effective Time. If such ruling or
opinion is obtained by the Company after the Effective Time, Parent shall cause
the Company to take the action contemplated by the immediately preceding
sentence.
(c) Prior to the Effective Time, the Company shall take such action
satisfactory to Parent as shall be necessary to provide that upon the
termination of employment of a holder of a Substitute Option by the Company
without "Cause" (as defined below) or due to death or disability, each
Substitute Option then held by such holder which is not then exercisable shall
become fully exercisable on the date of such termination of employment. For
purposes of this Section 5.7(c), "Cause" shall mean conviction of a criminal
offense, theft, fraud, breach of trust or refusal to perform services properly
assigned following notice and an opportunity to cure.
(d) Prior to the Effective Time, the Company shall take such action
satisfactory to Parent as shall be necessary to provide that upon the cessation
of service as a director of the Company by each person who is a non-employee
director of the Company immediately prior to the Effective Time, each Substitute
Option held by such person immediately following the Effective Time which is not
then exercisable in accordance with its original vesting schedule shall continue
to become exercisable in accordance with such original vesting schedule as if
the service of such director had not ceased.
Section 5.8 REASONABLE BEST EFFORTS. (a) Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties agrees to use
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Merger and the other
transactions contemplated by this Agreement, including: (i) the obtaining of all
necessary actions or non-actions, waivers, consents and approvals from all
Governmental Entities and the making of all necessary registrations and filings
(including filings with Governmental Entities) and the taking of all reasonable
steps as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity (including those in connection
with the HSR Act and State Takeover Approvals), (ii) the obtaining of all
necessary consents, approvals or waivers from third parties, (iii) the defending
of any lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement, the Stock Option Agreement or the consummation of
the transactions contemplated hereby and thereby, including seeking to have any
stay or temporary restraining order entered by any court or other Governmental
Entity vacated or reversed, and (iv) the execution and delivery of any
additional instruments necessary to consummate the transactions contemplated by
this Agreement. No party to this Agreement shall consent to any voluntary delay
of the consummation of the Merger at the behest of any Governmental Entity
without the consent of the other parties to this Agreement, which consent shall
not be unreasonably withheld.
(b) Each party shall use all reasonable best efforts to not take any action,
or enter into any transaction, which would cause any of its representations or
warranties contained in this Agreement to be untrue or result in a breach of any
covenant made by it in this Agreement.
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(c) Notwithstanding anything to the contrary contained in this Agreement, in
connection with any filing or submission required or action to be taken by
either Parent or the Company to effect the Merger and to consummate the other
transactions contemplated hereby, the Company shall not, without Parent's prior
written consent, commit to any divestiture transaction, and neither Parent nor
any of its Affiliates shall be required to divest or hold separate or otherwise
take or commit to take any action that limits its freedom of action with respect
to, or its ability to retain, the Company or any of the businesses, product
lines or assets of Parent or any of its Subsidiaries or that otherwise would
have a Material Adverse Effect on Parent.
Section 5.9 PUBLIC ANNOUNCEMENTS. Parent and the Company will not issue
any press release with respect to the transactions contemplated by this
Agreement or otherwise issue any written public statements with respect to such
transactions without prior consultation with the other party, except as may be
required by applicable law or by obligations pursuant to any listing agreement
with any national securities exchange.
Section 5.10 REAL ESTATE TRANSFER AND GAINS TAX. Parent and the Company
agree that either the Company or the Surviving Corporation will pay any foreign,
state or local tax which is attributable to the transfer of the beneficial
ownership of the Company's or its Subsidiaries' real property, if any
(collectively, the "Gains Taxes"), and any penalties or interest with respect to
the Gains Taxes, payable in connection with the consummation of the Merger. The
Company and Parent agree to cooperate with the other in the filing of any Tax
returns with respect to the Gains Taxes, including supplying in a timely manner
a complete list of all real property interests held by the Company and its
Subsidiaries and any information with respect to such property that is
reasonably necessary to complete such returns. The portion of the consideration
allocable to the real property of the Company and its Subsidiaries shall be
determined by Parent in its reasonable discretion.
Section 5.11 STATE TAKEOVER LAWS. If any "fair price," "business
combination" or "control share acquisition" statute or other similar statute or
regulation shall become applicable to the transactions contemplated hereby or in
the Stock Option Agreement, Parent and the Company and their respective Boards
of Directors shall use their best efforts to grant such approvals and take such
actions as are necessary so that the transactions contemplated hereby and
thereby may be consummated as promptly as practicable on the terms contemplated
hereby and thereby and otherwise act to minimize the effects of any such statute
or regulation on the transactions contemplated hereby and thereby.
Section 5.12 INDEMNIFICATION; DIRECTORS AND OFFICERS INSURANCE. (a) From
and after the Effective Time, Parent shall cause the Surviving Corporation to
indemnify and hold harmless all past and present officers and directors of the
Company and of its Subsidiaries to the same extent and in the same manner such
persons are indemnified as of the date of this Agreement by the Company pursuant
to the WBCL, the Company Charter, the Company's Amended and Restated Bylaws or
the indemnity agreements described in Section 5.12 of the Company Letter for
acts or omissions occurring at or prior to the Effective Time (including
indemnifying and holding harmless such persons for acts or omissions occurring
at or prior to the Effective Time in respect of the Merger and the transactions
contemplated thereby to the same extent and in the manner as such persons are
indemnified as of the date of this Agreement by the Company pursuant to the
WBCL, the Company Charter, the Company's Amended and Restated Bylaws or such
indemnity agreements).
(b) Parent shall cause the Surviving Corporation to provide, for an
aggregate period of not less than three years from the Effective Time, the
Company's current directors and officers an insurance and indemnification policy
that provides coverage for events occurring prior to the Effective Time (the
"D&O Insurance") that is substantially similar to the Company's existing policy
or, if substantially equivalent insurance coverage is unavailable, the best
available coverage; PROVIDED, HOWEVER, that the Surviving Corporation shall not
be required to pay an annual premium for the D&O Insurance in excess of the last
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annual premiums paid prior to the date hereof (which premiums the Company
represents and warrants to be approximately $195,000), but in such case shall
purchase as much coverage as possible for such amount.
(c) Parent hereby agrees that, effective at the Effective Time, Parent will
guarantee the obligations of the Surviving Corporation under Section 5.12(a) and
(b).
Section 5.13 NOTIFICATION OF CERTAIN MATTERS. Parent shall use its
reasonable best efforts to give prompt notice to the Company, and the Company
shall use its reasonable best efforts to give prompt notice to Parent, of: (i)
the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which it is aware and which would be reasonably likely to
cause (x) any representation or warranty contained in this Agreement and made by
it to be untrue or inaccurate in any material respect or (y) any covenant,
condition or agreement contained in this Agreement and made by it not to be
complied with or satisfied in all material respects, (ii) any failure of Parent
or the Company, as the case may be, to comply in a timely manner with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder or (iii) any change or event which would be reasonably likely to have
a Material Adverse Effect on Parent or the Company, as the case may be;
PROVIDED, HOWEVER, that the delivery of any notice pursuant to this Section 5.13
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
Section 5.14 CONSULTING AGREEMENT. Parent and Michael J. Cudahy have
entered into a Consulting Agreement as of the date hereof in the form of EXHIBIT
E hereto, which agreement shall become effective as of the Effective Time.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) SHAREHOLDER APPROVAL. This Agreement shall have been duly
approved by the requisite vote of shareholders of the Company in
accordance with applicable law and the Company Charter and Amended and
Restated Bylaws of the Company.
(b) STOCK EXCHANGE LISTINGS. The Parent Common Stock issuable in
the Merger and not previously listed shall have been authorized for
listing on the NYSE, subject to official notice of issuance.
(c) HSR AND OTHER APPROVALS. (i) The waiting period (and any
extension thereof) applicable to the consummation of the Merger under the
HSR Act shall have expired or been terminated.
(ii) All authorizations, consents, orders, declarations or approvals
of, or filings with, or terminations or expirations of waiting periods
imposed by, any Governmental Entity, which the failure to obtain, make or
occur would have the effect of making the Merger or any of the
transactions contemplated hereby illegal or would have, individually or
in the aggregate, a Material Adverse Effect on Parent (assuming the
Merger had taken place), shall have been obtained, shall have been made
or shall have occurred.
(d) REGISTRATION STATEMENT. The Registration Statement shall have
become effective in accordance with the provisions of the Securities Act.
No stop order suspending the effectiveness of the Registration Statement
shall have been issued by the SEC and no proceedings for that purpose
shall have been initiated or, to the Knowledge of Parent or the Company,
threatened by the SEC. All necessary state securities or blue sky
authorizations (including State Takeover Approvals) shall have been
received.
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(e) NO ORDER. No court or other Governmental Entity having
jurisdiction over the Company or Parent, or any of their respective
Subsidiaries, shall have enacted, issued, promulgated, enforced or
entered any law, rule, regulation, executive order, decree, injunction or
other order (whether temporary, preliminary or permanent) which is then
in effect and has the effect of making the Merger or any of the
transactions contemplated hereby illegal.
Section 6.2 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following additional
conditions:
(a) PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND
WARRANTIES. Each of Parent and Sub shall have performed in all material
respects each of its agreements contained in this Agreement required to
be performed on or prior to the Effective Time, each of the
representations and warranties of Parent and Sub contained in this
Agreement that is qualified by materiality shall be true and correct on
and as of the Effective Time as if made on and as of such date (other
than representations and warranties which address matters only as of a
certain date which shall be true and correct as of such certain date) and
each of the representations and warranties that is not so qualified shall
be true and correct in all material respects on and as of the Effective
Time as if made on and as of such date (other than representations and
warranties which address matters only as of a certain date which shall be
true and correct in all material respects as of such certain date), in
each case except as contemplated or permitted by this Agreement, and the
Company shall have received certificates signed on behalf of each of
Parent and Sub by one of its officers to such effect.
(b) TAX OPINION. The Company shall have received an opinion of
Sidley & Austin, counsel to Parent, in form and substance reasonably
satisfactory to the Company and its counsel, dated the Effective Time,
substantially to the effect that on the basis of facts, representations
and assumptions set forth in such opinion which are consistent with the
state of facts existing as of the Effective Time, for federal income tax
purposes:
(i) the Merger will constitute a "reorganization" within the
meaning of Section 368(a) of the Code, and the Company, Sub and
Parent will each be a party to that reorganization within the meaning
of Section 368(b) of the Code;
(ii) no gain or loss will be recognized by Parent, Sub or the
Company as a result of the Merger;
(iii) no gain or loss will be recognized by the shareholders of
the Company upon the conversion of their shares of Company Common
Stock solely into shares of Parent Common Stock pursuant to the
Merger, except with respect to cash, if any, received in lieu of
fractional shares of Parent Common Stock;
(iv) the aggregate tax basis of the shares of Parent Common
Stock received solely in exchange for shares of Company Common Stock
pursuant to the Merger (including a fractional share of Parent Common
Stock for which cash is paid) will be the same as the aggregate tax
basis of such shares of Company Common Stock exchanged therefor;
(v) the holding period for shares of Parent Common Stock
received solely in exchange for shares of Company Common Stock
pursuant to the Merger will include the shareholder's holding period
for such shares of Company Common Stock, provided such shares of
Company Common Stock were held as capital assets by the shareholder
at the Effective Time; and
(vi) a shareholder of the Company who receives cash in lieu of a
fractional share of Parent Common Stock will recognize gain or loss
equal to the difference, if any, between
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such shareholder's basis in the fractional share (determined under
clause (iv) above) and the amount of cash received.
In rendering such opinion, Sidley & Austin may receive and rely upon
representations from Parent, the Company, and others, including
representations from Parent substantially similar to the representations
in the Parent Tax Certificate attached to the Parent Letter,
representations from the Company substantially similar to the
representations in the Company Tax Certificate attached to the Company
Letter, and representations from the shareholder who is entering into
the Shareholder Agreement substantially similar to the representations
in the Shareholder Tax Certificate attached to the Shareholder
Agreement.
(c) MATERIAL ADVERSE CHANGE. Since the date of this Agreement,
there shall have been no Material Adverse Change with respect to Parent.
The Company shall have received a certificate signed on behalf of Parent
by an officer of Parent to such effect.
(d) COMPANY STOCK OPTION PLANS. Parent shall have taken all action
required to be taken by it to implement the provisions of Section 5.7.
Section 6.3 CONDITIONS TO OBLIGATIONS OF PARENT AND SUB TO EFFECT THE
MERGER. The obligations of Parent and Sub to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following additional
conditions:
(a) PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND WARRANTIES. The
Company shall have performed in all material respects each of its
agreements contained in this Agreement required to be performed on or
prior to the Effective Time, each of the representations and warranties
of the Company contained in this Agreement that is qualified by
materiality shall be true and correct on and as of the Effective Time as
if made on and as of such date (other than representations and warranties
which address matters only as of a certain date which shall be true and
correct as of such certain date) and each of the representations and
warranties that is not so qualified shall be true and correct in all
material respects on and as of the Effective Time as if made on and as of
such date (other than representations and warranties which address
matters only as of a certain date which shall be true and correct in all
material respects as of such certain date), in each case except as
contemplated or permitted by this Agreement, and Parent shall have
received a certificate signed on behalf of the Company by its Chief
Executive Officer and its Chief Financial Officer to such effect.
(b) TAX OPINION. Parent shall have received an opinion of Sidley &
Austin, counsel to Parent, in form and substance reasonably satisfactory
to Parent, dated the Effective Time, substantially to the effect that on
the basis of facts, representations and assumptions set forth in such
opinion which are consistent with the state of facts existing as of the
Effective Time, for federal income tax purposes:
(i) the Merger will constitute a "reorganization" within the
meaning of Section 368(a) of the Code, and the Company, Sub and
Parent will each be a party to that reorganization within the meaning
of Section 368(b) of the Code;
(ii) no gain or loss will be recognized by Parent, Sub or the
Company as a result of the Merger;
(iii) no gain or loss will be recognized by the shareholders of
the Company upon the conversion of their shares of Company Common
Stock solely into shares of Parent Common Stock pursuant to the
Merger, except with respect to cash, if any, received in lieu of
fractional shares of Parent Common Stock;
(iv) the aggregate tax basis of the shares of Parent Common
Stock received solely in exchange for shares of Company Common Stock
pursuant to the Merger (including a
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fractional share of Parent Common Stock for which cash is paid) will
be the same as the aggregate tax basis of such shares of Company
Common Stock exchanged therefor;
(v) the holding period for shares of Parent Common Stock
received solely in exchange for shares of Company Common Stock
pursuant to the Merger will include the shareholder's holding period
for such shares of Company Common Stock, provided such shares of
Company Common Stock were held as capital assets by the shareholder
at the Effective Time; and
(vi) a shareholder of the Company who receives cash in lieu of a
fractional share of Parent Common Stock will recognize gain or loss
equal to the difference, if any, between such shareholder's basis in
the fractional share (determined under clause (iv) above) and the
amount of cash received.
In rendering such opinion, Sidley & Austin may receive and rely upon
representations from Parent, the Company, and others, including
representations from Parent substantially similar to the representations
in the Parent Tax Certificate attached to the Parent Letter,
representations from the Company substantially similar to the
representations in the Company Tax Certificate attached to the Company
Letter, and representations from the shareholder who is entering into
the Shareholder Agreement substantially similar to the representations
in the Shareholder Tax Certificate attached to the Shareholder
Agreement.
(c) CONSENTS. (i) The Company shall have obtained the consent or
approval of each person or Governmental Entity whose consent or approval
shall be required in connection with the transactions contemplated hereby
under any loan or credit agreement, note, mortgage, indenture, lease or
other agreement or instrument, except as to which the failure to obtain
such consents and approvals would not, in the reasonable opinion of
Parent, individually or in the aggregate, have a Material Adverse Effect
on the Company or Parent or upon the consummation of the transactions
contemplated in this Agreement, the Stock Option Agreement or the
Shareholder Agreement.
(ii) In obtaining any approval or consent required to consummate any
of the transactions contemplated herein, in the Stock Option Agreement or
the Shareholder Agreement, no Governmental Entity shall have imposed or
shall have sought to impose any condition, penalty or requirement which,
in the reasonable opinion of Parent, individually or in aggregate would
have a Material Adverse Effect on the Company or Parent.
(d) AFFILIATE AGREEMENTS. Parent shall have received the written
agreements from Rule 145 Affiliates of the Company described in Section
5.4.
(e) MATERIAL ADVERSE CHANGE. Since the date of this Agreement,
there shall have been no Material Adverse Change with respect to the
Company. Parent shall have received a certificate signed on behalf of the
Company by the Chief Executive Officer and the Chief Financial Officer of
the Company to such effect.
(f) COMPANY STOCK OPTION PLANS. The Company shall have taken all
action required to be taken by it to implement the provisions of Section
5.7.
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<PAGE>
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after any approval of the matters
presented in connection with the Merger by the shareholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) except for a breach by the Company of Section 5.1, by either Parent
or the Company if the other party shall have failed to comply in all
material respects with any of its covenants or agreements contained in this
Agreement required to be complied with prior to the date of such
termination, which failure to comply has not been cured within five business
days following receipt by such other party of written notice of such failure
to comply;
(c) by either Parent or the Company if there has been (i) a breach by
the other party (in the case of Parent, including any material breach by
Sub) of any representation or warranty that is not qualified as to
materiality which has the effect of making such representation or warranty
not true and correct in all material respects or (ii) a breach by the other
party (in the case of Parent, including any material breach by Sub) of any
representation or warranty that is qualified as to materiality, in each case
which breach has not been cured within five business days following receipt
by the breaching party of written notice of the breach;
(d) by Parent or the Company if: (i) the Merger has not been effected on
or prior to the close of business on April 30, 1999; PROVIDED, HOWEVER, that
the right to terminate this Agreement pursuant to this Section 7.1(d)(i)
shall not be available to any party whose failure to fulfill any of its
obligations contained in this Agreement has been the cause of, or resulted
in, the failure of the Merger to have occurred on or prior to the aforesaid
date; or (ii) any court or other Governmental Entity having jurisdiction
over a party hereto shall have issued an order, decree or ruling or taken
any other action permanently enjoining, restraining or otherwise prohibiting
the transactions contemplated by this Agreement and such order, decree,
ruling or other action shall have become final and nonappealable;
(e) by Parent or the Company if the shareholders of the Company do not
approve this Agreement at the Shareholder Meeting or at any adjournment or
postponement thereof;
(f) by Parent if (i) the Board of Directors of the Company, in breach of
Section 5.1, shall not have recommended, or shall have resolved not to
recommend, or shall have qualified, modified or withdrawn its recommendation
of the Merger or declaration that the Merger is advisable and fair to and in
the best interest of the Company and its shareholders, or shall have
resolved to do so, (ii) the Board of Directors of the Company, in breach of
Section 4.2, shall have recommended to the shareholders of the Company any
Takeover Proposal or shall have resolved to do so or (iii) a tender offer or
exchange offer for 20% or more of the outstanding shares of capital stock of
the Company is commenced, and the Board of Directors of the Company fails to
recommend against acceptance of such tender offer or exchange offer by its
shareholders (including by taking no position with respect to the acceptance
of such tender offer or exchange offer by its shareholders); or
(g) by Parent or the Company if the Company enters into a merger,
acquisition or other agreement (including an agreement in principle) to
effect a Superior Proposal or the Board of Directors of the Company resolves
to do so; PROVIDED, HOWEVER, that the Company may not terminate this
Agreement pursuant to this Section 7.1(g) unless (i) the Company has
delivered to Parent a written notice of the Company's intent to enter into
such an agreement to effect the Superior Proposal, (ii) five business days
have elapsed following delivery to Parent of such written notice by the
Company and (iii) during such five business day period the Company has fully
cooperated with Parent, including informing Parent of the terms and
conditions of the Takeover Proposal and the identity of
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<PAGE>
the Person making the Takeover Proposal, with the intent of enabling Parent
to agree to a modification of the terms and conditions of this Agreement so
that the transactions contemplated hereby may be effected; PROVIDED,
FURTHER, that the Company may not terminate this Agreement pursuant to this
Section 7.1(g) unless at the end of such five business day period the Board
of Directors of the Company continues reasonably to believe that the
Takeover Proposal constitutes a Superior Proposal when compared to the
Merger (taking into account any such modification as may be proposed by
Parent) and concurrently with such termination the Company pays to Parent
the amounts specified under Sections 5.6(a), (b) and (c).
The right of any party hereto to terminate this Agreement pursuant to this
Section 7.1 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers or directors,
whether prior to or after the execution of this Agreement.
Section 7.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Parent or the Company, as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability hereunder
on the part of the Company, Parent, Sub or their respective officers or
directors (except for the last sentence of Section 5.3 and the entirety of
Section 5.6, which shall survive the termination); PROVIDED, HOWEVER, that
nothing contained in this Section 7.2 shall relieve any party hereto from any
liability for any willful breach of a representation or warranty contained in
this Agreement or the breach of any covenant contained in this Agreement.
Section 7.3 AMENDMENT. This Agreement may be amended by the parties
hereto, by or pursuant to action taken by their respective Boards of Directors,
in the case of Sub or the Company, or a Senior Vice President of Parent, at any
time before or after approval of the matters presented in connection with the
Merger by the shareholders of the Company, but, after any such approval, no
amendment shall be made which by law requires further approval by such
shareholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
Section 7.4 WAIVER. At any time prior to the Effective Time, the parties
hereto may (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions contained herein which may legally be waived. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall terminate at the Effective Time.
I-35
<PAGE>
Section 8.2 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given when delivered personally, one day after
being delivered to an overnight courier or when telecopied (with a confirmatory
copy sent by overnight courier) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to:
General Electric Company
c/o GE Medical Systems
P. O. Box 414, W-410
Milwaukee, Wisconsin 53201
Attention: General Counsel
Facsimile No.: 414-544-3573
for overnight courier deliveries, to:
General Electric Company
c/o GE Medical Systems
3000 North Grandview Boulevard
Waukesha, Wisconsin 53188
Attention: General Counsel
with copies to:
General Electric Company
3135 Easton Turnpike
Fairfield, Connecticut 06431-0001
Attention: Vice President and Senior
Counsel--Transactions
Facsimile No.: 203-373-3008
and
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Thomas A. Cole, Esq.
Dennis V. Osimitz, Esq.
Facsimile No.: 312-853-7036
(b) if to the Company, to:
Marquette Medical Systems, Inc.
8200 W. Tower Avenue
Milwaukee, Wisconsin 53223
Attention: Michael J. Cudahy
Mary M. Kabacinski
Facsimile No.: 414-362-3553
with a copy to:
Schoenberg, Fisher, Newman & Rosenberg, Ltd.
222 South Riverside Plaza, Suite 2100
Chicago, Illinois 60606
Attention: Melvin S. Newman, Esq.
Facsimile No.: 312-648-1212
I-36
<PAGE>
Section 8.3 INTERPRETATION. (a) When a reference is made in this Agreement
to a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
(b) "Subsidiary" means any corporation, partnership, limited liability
company, joint venture or other legal entity of which Parent or the Company, as
the case may be (either alone or through or together with any other Subsidiary),
owns, directly or indirectly, 50% or more of the stock or other equity interests
the holders of which are generally entitled to vote for the election of the
board of directors or other governing body of such corporation, partnership,
limited liability company, joint venture or other legal entity.
Section 8.4 COUNTERPARTS. This Agreement may be executed in counterparts,
all of which shall be considered one and the same agreement, and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties.
Section 8.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement, except for the Stock Option Agreement and as provided in the last
sentence of Section 5.3, constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof. This Agreement, except for the
provisions of Section 5.12, is not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder.
Section 8.6 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.
Section 8.7 ASSIGNMENT. Subject to Section 1.1, neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties.
Section 8.8 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 terms, 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.
Section 8.9 ENFORCEMENT OF THIS AGREEMENT. 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 wording or were
otherwise breached. It is accordingly agreed that the parties hereto shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof (but any such
proceeding shall be brought exclusively in either the U.S. District Court for
the District of Connecticut or the Eastern District of Wisconsin), such remedy
being in addition to any other remedy to which any party is entitled at law or
in equity. Each party hereto waives any right to a trial by jury in connection
with any such action, suit or proceeding and waives any objection based on FORUM
NON CONVENIENS or any other objection to venue thereof.
I-37
<PAGE>
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized all as of
the date first written above.
<TABLE>
<S> <C> <C>
GENERAL ELECTRIC COMPANY
By: /s/ JEFFREY R. IMMELT
-----------------------------------------
Name: Jeffrey R. Immelt
TITLE: SENIOR VICE PRESIDENT
EMERALD MERGER CORP.
By: /s/ JEFFREY R. IMMELT
-----------------------------------------
Name: Jeffrey R. Immelt
Title: PRESIDENT
MARQUETTE MEDICAL SYSTEMS, INC.
/s/ MICHAEL J. CUDAHY
-----------------------------------------
Name: Michael J. Cudahy
Title: CHAIRMAN OF THE BOARD
</TABLE>
I-38
<PAGE>
[LETTERHEAD]
ANNEX II
September 20, 1998
Board of Directors
Marquette Medical Systems, Inc.
8200 West Tower Avenue
Milwaukee, Wisconsin 53223
Gentlemen:
Marquette Medical Systems, Inc. (the "Company") proposes to enter into an
Agreement and Plan of Merger (the "Agreement") with General Electric Company
("Parent") and Emerald Merger Corp., a wholly-owned subsidiary of Parent
("Sub"). Pursuant to the Agreement, at the Effective Time (as defined in the
Agreement), Sub will be merged with and into the Company (the "Merger") and each
Common Share, par value $0.10 per share ("Company Common Stock") of the Company
(other than shares owned by the Company, Parent or any of their respective
wholly-owned subsidiaries) will be converted into the right to receive the
number of shares of common stock, par value $0.16 per share ("Parent Common
Stock") of Parent equal to the Merger Consideration (as hereinafter defined).
The "Merger Consideration" means the number of shares determined by dividing
$45.00 by the Average Parent Share Price (as hereinafter defined) and rounding
the result to the nearest one thousandth of a share. The "Average Parent Share
Price" means the average of the last sales prices per share of Parent Common
Stock for the ten consecutive trading days ending on the trading day which is
five days prior to the closing date of the Merger.
You have requested our opinion as to the fairness, from a financial point of
view, of the Merger Consideration to the holders of Company Common Stock (other
than Parent and its affiliates).
Robert W. Baird & Co. Incorporated ("Baird"), as part of its investment
banking business, is engaged in the evaluation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements, and valuations for estate, corporate
and other purposes.
In conducting our investigation and analysis and in arriving at our opinion
herein, we have reviewed such information and taken into account such financial
and economic factors as we have deemed relevant under the circumstances. In that
connection, we have, among other things: (i) reviewed certain internal
information, primarily financial in nature, including projections, concerning
the business and operations of the Company furnished to us for purposes of our
analysis, as well as publicly available information including but not limited to
the Company's and Parent's recent filings with the Securities and Exchange
Commission (the "SEC") and equity analyst research reports prepared by various
investment banking firms including Baird; (ii) reviewed the Agreement in the
form presented to the Company's Board of Directors; (iii) compared the
historical market prices and trading activity of the Company's and Parent's
common stock with those of certain other publicly traded companies we deemed
relevant; (iv) compared the financial position and operating results of the
Company and Parent with those of other publicly traded companies we deemed
relevant; (v) compared the proposed financial terms of the Merger with the
financial terms of certain other business combinations we deemed relevant; and
(vi) reviewed certain potential pro forma effects of the Merger. We have held
discussions with members of the Company's senior management concerning the
Company's historical and current financial condition and operating results, as
well as the future prospects of the Company. We have not been requested to, and
did not, solicit third party indications of interest in acquiring all or any
part of the Company. We have also considered such other information, financial
studies, analysis and investigations and financial, economic and market criteria
which we deemed relevant for the preparation of this opinion.
MEMBER NEW YORK STOCK EXCHANGE, INC. AND OTHER PRINCIPAL EXCHANGES. MEMBER SIPC.
<PAGE>
Board of Directors
Marquette Medical Systems, Inc.
September 20, 1998
Page 2
In arriving at our opinion, we have assumed and relied upon the accuracy and
completeness of all of the financial and other information that was publicly
available or provided us by or on behalf of the Company, and have not been
engaged to independently verify any such information. We have assumed, with your
consent, (i) that all material assets and liabilities (contingent or otherwise,
known or unknown) of the Company and Parent are as set forth in their respective
financial statements and (ii) the Merger will be accounted for under the
purchase method. We have also assumed that the financial forecasts examined by
us were reasonably prepared on bases reflecting the best available estimates and
good faith judgments of the Company's management as to future performance of the
Company. At the direction of the Company, we have not considered any expense
increases, cost savings or operating synergies that might result from the
Merger, and have excluded transaction expenses relating to the Merger from our
analyses. In conducting our review, we have not undertaken nor obtained an
independent evaluation or appraisal of any of the assets or liabilities
(contingent or otherwise) of the Company or Parent nor have we made a physical
inspection of the properties or facilities of the Company or Parent. Our opinion
necessarily is based upon economic, monetary and market conditions as they exist
and can be evaluated on the date hereof, and does not predict or take into
account any changes which may occur, or information which may become available,
after the date hereof. Furthermore, we express no opinion as to the price or
trading range at which any of the Company's or Parent's securities will trade
following the date hereof.
Our opinion has been prepared at the request and for the information of the
Board of Directors of the Company, and shall not be used for any other purpose
or disclosed to any other party without the prior written consent of Baird;
provided, however, that this letter may be reproduced in full in the Proxy
Statement/Prospectus to be provided to the Company's shareholders in connection
with the Merger. This opinion does not address the relative merits of the Merger
and any other potential transactions or business strategies considered by the
Company's Board of Directors, and does not constitute a recommendation to any
shareholder of the Company as to how any such shareholder should vote with
respect to the Merger. Baird will receive a fee for rendering this opinion. In
the past, we have provided investment banking services to the Company, including
acting as financial advisor to the Company in connection with its acquisition of
E for M Corporation and as co-manager of its secondary offering of Company
Common Stock in 1997, for which we received our customary compensation.
In the ordinary course of our business, we may from time to time trade the
securities of the Company or Parent for our own account or the accounts of our
customers and, accordingly, may at any time hold long or short positions in such
securities.
Based upon and subject to the foregoing, we are of the opinion that, as of
the date hereof, the Merger Consideration is fair, from a financial point of
view, to the holders of Company Common Stock (other than Parent and its
affiliates).
Very truly yours,
ROBERT W. BAIRD & CO. INCORPORATED
II-2
<PAGE>
ANNEX III
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
<PAGE>
(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 Michael J. Cudahy 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 Hart-Scott-Rodino
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.
III-2
<PAGE>
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 S-4, Form S-8 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
III-3
<PAGE>
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
III-4
<PAGE>
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
c/o GE Medical Systems
P. O. Box 414, W-410
Milwaukee, WI 53201
Attention: General Counsel
Facsimile No.: 414-544-3573
for overnight courier deliveries, to:
General Electric Company
c/o GE Medical Systems
3000 North Grandview Boulevard
Waukesha, WI 53188
Attention: General Counsel
with copies to:
General Electric Company
3135 Easton Turnpike
Fairfield, Connecticut 06431-0001
Attention: Vice President and Senior
Counsel--Transactions
Facsimile No.: 203-373-3008
and
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Thomas A. Cole, Esq.
Dennis V. Osimitz, Esq.
Facsimile No.: 312- 853-7036
III-5
<PAGE>
(b) if to the Company, to:
Marquette Medical Systems, Inc.
8200 W. Tower Avenue
Milwaukee, Wisconsin 53223
Attention: Michael J. Cudahy
Mary M. Kabacinski
Facsimile No.: 414-362-3553
with a copy to:
Schoenberg, Fisher, Newman & Rosenberg, Ltd.
222 South Riverside Plaza, Suite 2100
Chicago, Illinois 60606
Attention: Melvin S. Newman, Esq.
Facsimile No.: 312-648-1212
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
III-6
<PAGE>
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.
<TABLE>
<S> <C> <C>
GENERAL ELECTRIC COMPANY
By: /s/ JEFFREY R. IMMELT
-----------------------------------------
Name: Jeffrey R. Immelt
TITLE: SENIOR VICE PRESIDENT
MARQUETTE MEDICAL SYSTEMS, INC.
By: /s/ MICHAEL J. CUDAHY
-----------------------------------------
Name: Michael J. Cudahy
TITLE: CHAIRMAN
</TABLE>
III-7
<PAGE>
ANNEX IV
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT, dated as of September 20, 1998 (this "AGREEMENT"), by
the undersigned shareholder (the "SHAREHOLDER") of Marquette Medical Systems,
Inc., a Wisconsin corporation (the "COMPANY"), for the benefit of General
Electric Company, a New York corporation ("PARENT").
RECITALS
WHEREAS, Parent, Emerald Merger Corp., a 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 September 20, 1998 (the "MERGER
AGREEMENT"), whereby, upon the terms and subject to the conditions set forth in
the Merger Agreement, each issued and outstanding Common Shares, par value $.10
per share, of the Company ("COMPANY COMMON STOCK"), not owned directly or
indirectly by Parent or the Company, will be converted into shares of Common
Stock, par value $.16 per share, of Parent ("PARENT COMMON STOCK");
WHEREAS, the Shareholder owns that number of shares of Company Common Stock
appearing on the signature page hereof (such shares of Company Common Stock,
together with any other shares of capital stock of the Company acquired by such
Shareholder after the date hereof and during the term of this Agreement, being
collectively referred to herein as the "SUBJECT SHARES"); and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Parent has required that the Shareholder agree, and in order to
induce Parent to enter into the Merger Agreement the Shareholder has agreed, to
enter into this Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
and agreements set forth herein, the Shareholder agrees as follows:
1. COVENANTS OF SHAREHOLDER. Until the termination of this Agreement in
accordance with Section 3, the Shareholder agrees as follows:
(a) The Shareholder shall attend the Shareholder Meeting, in person or
by proxy, and at the Shareholder Meeting (or at any adjournment thereof) or
in any other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the Shareholder
shall vote (or cause to be voted) the Subject Shares in favor of the Merger,
the adoption of the Merger Agreement and the approval of the terms thereof
and each of the other transactions contemplated by the Merger Agreement.
(b) At any meeting of shareholders of the Company or at any adjournment
thereof or in any other circumstances upon which the Shareholder's vote,
consent or other approval is sought, the Shareholder shall vote (or cause to
be voted) the Subject Shares against (i) any merger agreement or merger
(other than the Merger Agreement and the Merger), consolidation,
combination, sale of substantial assets, reorganization, recapitalization,
dissolution, liquidation or winding up of or by the Company or any
Subsidiary or any other Takeover Proposal or (ii) any amendment of the
Company's Amended and Restated Articles of Incorporation, as amended, or
Amended and Restated By-Laws or other proposal or transaction involving the
Company or any of its Subsidiaries, which amendment or other proposal or
transaction would in any manner impede, frustrate, prevent or nullify the
Merger, the Merger Agreement or any of the other transactions contemplated
by the Merger Agreement or change in any manner the voting rights of any
class of capital stock of the Company. The Shareholder further agrees not to
commit or agree to take any action inconsistent with the foregoing.
(c) The Shareholder agrees not to (i) sell, transfer, pledge, assign or
otherwise dispose of (including by gift) (collectively, "TRANSFER"), or
enter into any contract, option or other arrangement (including any
profit-sharing arrangement) with respect to the Transfer of the Subject
Shares to any person or (ii) enter into any voting arrangement, whether by
proxy, voting agreement or otherwise, in relation to the Subject Shares, and
agrees not to commit or agree to take any of the foregoing actions;
<PAGE>
PROVIDED, HOWEVER, that the Shareholder may (A) Transfer up to 5,000 of the
Subject Shares by gift to charitable organizations and up to 12,000 of the
Subject Shares by gift to members of the "immediate family" (as defined in
Rule 16a-1(e) of the Exchange Act) of the Shareholder; (B) Transfer up to
200,000 of the Subject Shares in connection with the exercise of Shareholder
Stock Options (as defined below); and (C) pledge as collateral up to 250,000
of the Subject Shares in connection with the exercise of Company Stock
Options held by the Shareholder pursuant to the Company Stock Option Plans;
provided, that any pledgee of such Subject Shares agrees in writing to be
bound by the terms of this Agreement in the event such pledgee exercises its
right to foreclose or otherwise acquires such Subject Shares.
(d) The Shareholder shall not, nor shall the Shareholder authorize any
investment banker, attorney or other advisor or representative of the
Shareholder to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to the Company or any Subsidiary in
connection with, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes or may reasonably be expected to
lead to, any Takeover Proposal.
(e) The Shareholder shall use the Shareholder's reasonable best efforts
to take, or cause to be taken, all actions, and to do, or cause to be done,
and to assist and cooperate with Parent in doing, all things necessary,
proper or advisable to support and to consummate and make effective, in the
most expeditious manner practicable, the Merger and the other transactions
contemplated by the Merger Agreement.
(f) The Shareholder agrees to promptly notify Parent in writing of the
nature and amount of any acquisition by such Shareholder of any voting
securities of the Company acquired by such Shareholder hereinafter.
(g) The Shareholder shall not knowingly take or fail to take any action
which would cause any of the representations and warranties set forth in the
Shareholder Tax Certificate attached hereto as ATTACHMENT A to be untrue or
incorrect.
2. REPRESENTATIONS AND WARRANTIES. The Shareholder represents and warrants
to Parent as follows:
(a) The Shareholder is the record and beneficial owner of, and has good
and marketable title to, the Subject Shares. The Shareholder does not own,
of record or beneficially, any shares of capital stock of the Company other
than the Subject Shares. The Shareholder has granted to the employees of the
Company listed on ATTACHMENT B hereto the option to purchase from the
Shareholder the number of Subject Shares set forth opposite the name of each
such employee on ATTACHMENT B pursuant to the form of option agreement
delivered by the Shareholder to the Company (collectively, the "Shareholder
Stock Options"). The Shareholder has the sole right to vote, and the sole
power of disposition with respect to, the Subject Shares, and none of the
Subject Shares is subject to any voting trust, proxy or other agreement,
arrangement or restriction with respect to the voting or disposition of such
Subject Shares, except as contemplated by this Agreement and except for
Subject Shares that are subject to the Shareholder Stock Options.
(b) This Agreement has been duly executed and delivered by the
Shareholder. Assuming the due authorization, execution and delivery of this
Agreement by Parent, this Agreement constitutes the valid and binding
agreement of the Shareholder enforceable against the Shareholder in
accordance with its terms. The execution and delivery of this Agreement by
the Shareholder does not and will not conflict with any agreement, order or
other instrument binding upon the Shareholder, nor require any regulatory
filing or approval.
IV-2
<PAGE>
(c) To the Knowledge of the Shareholder, the representations set forth
in the Shareholder Tax Certificate attached hereto as ATTACHMENT A, if made
on the date hereof (assuming the Merger were consummated as of the date
hereof), would be true and correct.
3. TERMINATION. The obligations of the Shareholder hereunder shall
terminate upon the earlier to occur of (i) six months after the termination of
the Merger Agreement pursuant to Section 7.1 thereof and (ii) the Effective
Time; PROVIDED, HOWEVER, that if the Merger Agreement is terminated by the
Company pursuant to Section 7.1(b), (c) or (d) thereof (other than a termination
pursuant to Section 7.1(d)(i) following receipt of a Superior Proposal) or if
the Merger Agreement is terminated pursuant to Section 7.1(a) thereof, then such
obligations shall terminate upon the termination of the Merger Agreement.
4. FURTHER ASSURANCES. The Shareholder will, from time to time, execute
and deliver, or cause to be executed and delivered, such additional or further
consents, documents and other instruments as Parent may reasonably request for
the purpose of effectively carrying out the transactions contemplated by this
Agreement.
5. SUCCESSORS, ASSIGNS AND TRANSFEREES BOUND. Any successor, assignee or
transferee (including a successor, assignee or transferee as a result of the
death of the Shareholder, such as an executor or heir) shall be bound by the
terms hereof, and the Shareholder shall take any and all actions necessary to
obtain the written confirmation from such successor, assignee or transferee that
it is bound by the terms hereof.
6. AFFILIATE LETTER; SHAREHOLDER TAX CERTIFICATE. The Shareholder agrees
to execute and deliver on a timely basis, when and if requested by Parent, (i) a
written agreement in substantially the form of Exhibit D to the Merger Agreement
and (ii) the Shareholder Tax Certificate attached hereto as ATTACHMENT A.
7. REMEDIES. The Shareholder acknowledges that money damages would be both
incalculable and an insufficient remedy for any breach of this Agreement by it,
and that any such breach would cause Parent irreparable harm. Accordingly, the
Shareholder agrees that in the event of any breach or threatened breach of this
Agreement, Parent, in addition to any other remedies at law or in equity it may
have, shall be entitled, without the requirement of posting a bond or other
security, to equitable relief, including injunctive relief and specific
performance.
8. SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement in any jurisdiction shall not affect the validity or
enforceability of any other provision of this Agreement in such jurisdiction, or
the validity or enforceability of any provision of this Agreement in any other
jurisdiction.
9. AMENDMENT. This Agreement may be amended only by means of a written
instrument executed and delivered by both the Shareholder and Parent.
10. JURISDICTION. 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.
11. 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.
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
IV-3
<PAGE>
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
c/o GE Medical Systems
P. O. Box 414, W-410
Milwaukee, Wisconsin 53201
Attention: General Counsel
Facsimile No.: 414-544-3573
for overnight courier deliveries, to:
General Electric Company
c/o GE Medical Systems
3000 North Grandview Boulevard
Waukesha, Wisconsin 53188
Attention: General Counsel
with copies to:
General Electric Company
3135 Easton Turnpike
Fairfield, Connecticut 06431-0001
Attention: Vice President and Senior
Counsel--Transactions
Facsimile No.: 203-373-3008
and
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Thomas A. Cole, Esq.
Dennis V. Osimitz, Esq.
Facsimile No.: 312-853-7036
(b) if to the Shareholder to:
Michael J. Cudahy
1748 Lakefield Road
Cedarburg, Wisconsin 53012
Facsimile No.: 414-376-1418
with a copy to:
Schoenberg, Fisher, Newman & Rosenberg, Ltd.
222 South Riverside Plaza, Suite 2100
Chicago, Illinois 60606
Attention: Melvin S. Newman, Esq.
Facsimile No.: 312-648-1212
13. CAPITALIZED TERMS. Capitalized terms used in this Agreement that are
not defined herein shall have such meanings as set forth in the Merger
Agreement.
IV-4
<PAGE>
14. COUNTERPARTS. For the convenience of the parties, this Agreement may
be executed in counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
15. NO LIMITATION ON ACTIONS OF THE SHAREHOLDER AS
DIRECTOR. Notwithstanding anything to the contrary in this Agreement, nothing
in this Agreement is intended or shall be construed to require the Shareholder
to take or in any way limit any action that the Shareholder may take to
discharge the Shareholder's fiduciary duties as a director of the Company,
including but not limited to the right to vote for or support a Superior
Proposal in accordance with the terms of the Merger Agreement.
/s/ MICHAEL J. CUDAHY
--------------------------------------
Michael J. Cudahy
Number of shares of Company Common
Stock owned on the date hereof:
3,157,842
Accepted and Agreed to
as of the date set forth above:
GENERAL ELECTRIC COMPANY
<TABLE>
<S> <C>
By: /s/ JEFFREY R. IMMELT
-------------------------
Name: Jeffrey R. Immelt
Title: Senior Vice
President
</TABLE>
IV-5
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 721 of the New York Business Corporation Law ("NYBCL") provides
that, in addition to indemnification provided in Article 7 of the NYBCL, a
corporation may indemnify a director or officer by a provision contained in the
certificate of incorporation or bylaws or by a duly authorized resolution of its
stockholders or directors or by agreement, PROVIDED that no indemnification may
be made to or on behalf of any director or officer if a judgment or other final
adjudication adverse to the director or officer establishes that his acts were
committed in bad faith or were the result of active and deliberate dishonesty
and were material to the cause of action so adjudicated, or that he personally
gained in fact a financial profit or other advantage to which he was not legally
entitled.
Section 722(a) of the NYBCL provides that a corporation may indemnify a
director or officer made, or threatened to be made, a party to any action other
than a derivative action, whether civil or criminal, against judgments, fines,
amounts paid in settlement and reasonable expenses actually and necessarily
incurred as a result of such action, if such director or officer acted, in good
faith, for a purpose which he reasonably believed to be in, or not opposed to,
the best interests of the corporation and, in criminal actions or proceedings,
in addition, had no reasonable cause to believe that his conduct was unlawful.
Section 722(c) of the NYBCL provides that a corporation may indemnify a
director or officer, made or threatened to be made a party in a derivative
action, against amounts paid in settlement and reasonable expenses actually and
necessarily incurred by him in connection with the defense or settlement of such
action, or in connection with an appeal therein if such director or officer
acted, in good faith, for a purpose which he reasonably believed to be in, or
not opposed to, the best interests of the corporation, except that no
indemnification will be available under Section 722(c) of the NYBCL in respect
of (1) a threatened or pending action which is settled or otherwise disposed of,
or (2) any claim as to which such director or officer shall have been adjudged
liable to the corporation, unless and only to the extent that the court in which
the action was brought, or, if no action was brought, any court of competent
jurisdiction, determines upon application, that, in view of all the
circumstances of the case, the director or officer is fairly and reasonably
entitled to indemnity for such portion of the settlement amount and expenses as
the court deems proper.
Section 723 of the NYBCL specifies the manner in which payment of
indemnification under Section 722 of the NYBCL or indemnification permitted
under Section 721 of the NYBCL may be authorized by the corporation. It provides
that indemnification by a corporation is mandatory in any case in which the
director or officer has been successful, whether on the merits or otherwise, in
defending an action. In the event that the director or officer has not been
successful or the action is settled, indemnification must be authorized by the
appropriate corporate action as set forth in Section 723.
Section 724 of the NYBCL provides that, upon application by a director or
officer, indemnification may be awarded by a court to the extent authorized
under Section 722 and Section 723 of the NYBCL. Section 725 of the NYBCL
contains certain other miscellaneous provisions affecting the indemnification of
directors and officers.
Section 726 of the NYBCL authorizes a corporation to purchase and maintain
insurance to indemnify (1) a corporation for any obligation which it incurs as a
result of the indemnification of directors and officers under the provisions of
Article 7 of the NYBCL, (2) directors and officers in instances in which they
may be indemnified by a corporation under the provisions of Article 7 of the
NYBCL, and (3) directors and officers in instances in which they may not
otherwise be indemnified by a corporation under such section, provided the
contract of insurance covering such directors and officers provides, in a manner
acceptable to the New York State Superintendent of Insurance, for a retention
amount and for co-insurance.
II-1
<PAGE>
Section 6 of the Restated Certificate of Incorporation, as amended, of the
Registrant provides in part as follows:
A person who is or was a director of the corporation shall have no
personal liability to the corporation or its stockholders for damages for
any breach of duty in such capacity except that the foregoing shall not
eliminate or limit liability where such liability is imposed under the
Business Corporation Law of the State of New York.
Article XI of the bylaws, as amended, of GE provides, in part, as follows:
The Company shall, to the fullest extent permitted by applicable law as
the same exists or may hereafter be in effect, indemnify any person who
is or was or has agreed to become a director or officer of the Company
and who is or was made or threatened to be made a party to or is involved
in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, including an
action by or in the right of the Company to procure a judgment in its
favor and an action by or in the right of any other corporation of any
type or kind, domestic or foreign, or any partnership, joint venture,
trust, employee benefit plan or other enterprise, which such person is
serving, has served or has agreed to serve in any capacity at the request
of the Company, by reason of the fact that he or she is or was or has
agreed to become a director or officer of the Company, or is or was
serving or has agreed to serve such other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise in any
capacity, against judgments, fines, amounts paid or to be paid in
settlement, taxes or penalties, and costs, charges and expenses,
including attorney's fees, incurred in connection with such action or
proceeding or any appeal therein, PROVIDED, HOWEVER, that no
indemnification shall be provided to any such person if a judgment or
other final adjudication adverse to the director or officer establishes
that (i) his or her acts were committed in bad faith or were the result
of active and deliberate dishonesty and, in either case, were material to
the cause of action so adjudicated, or (ii) he or she personally gained
in fact a financial profit or other advantage to which he or she was not
legally entitled. The benefits of this Paragraph A shall extend to the
heirs and legal representatives of any person entitled to indemnification
under this paragraph.
The Registrant has purchased certain liability insurance for its officers
and directors as permitted by Section 727 of the NYBCL.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following is a list of Exhibits included as part of this
Registration Statement. The Registrant agrees to furnish supplementally a copy
of any omitted exhibit or schedule to the Commission upon request. Items marked
with an asterisk are filed herewith.
<TABLE>
<C> <S>
2.1 Agreement and Plan of Merger dated as of September 20, 1998 among General
Electric Company, Emerald Merger Corp. and Marquette Medical Systems,
Inc. (included as Annex I to the Proxy Statement/Prospectus).
4.1 The Certificate of Incorporation, as amended, and By-laws, as amended, of
General Electric Company are incorporated by reference to Exhibit (3) of
General Electric's Current Report on Form 8-K dated April 28, 1997.
4.2 The instruments defining the rights of holders of long-term debt
securities of General Electric and its subsidiaries are omitted pursuant
to item 601(b)(4)(iii)(A) of Regulation S-K. General Electric hereby
agrees to furnish copies of these instrument to the SEC upon request.
*5.1 Opinion of Robert E. Healing, Corporate Counsel for General Electric
Company, as to the legality of the securities being registered.
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
*8.1 Opinion of Sidley & Austin as to the United States federal income tax
consequences of the Merger.
*23.1 Consent of Arthur Andersen LLP.
*23.2 Consent of KPMG Peat Marwick LLP.
*23.3 Consent of Robert E. Healing (included in Exhibit 5.1 to this Registration
Statement).
*23.4 Consent of Sidley & Austin (included in Exhibit 8.1 to this Registration
Statement).
*24.1 Powers of Attorney.
99.1 Stock Option Agreement dated as of September 20, 1998 between GE and
Marquette (included as Annex III to the Proxy Statement/Prospectus).
99.2 Shareholder Agreement dated as of September 20, 1998 between GE and
Michael J. Cudahy (included as Annex IV to the Proxy
Statement/Prospectus)
*99.3 Form of proxy card to be mailed to shareholders of Marquette.
</TABLE>
(b) Not applicable.
(c) The opinion of Robert W. Baird & Co. Incorporated (included as Annex II
to the Proxy Statement/Prospectus).
ITEM 22. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the Proxy Statement/Prospectus any facts or
events arising after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total dollar
amount of securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual
II-3
<PAGE>
report pursuant to section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA FIDE offering
thereof.
(c) (1) The undersigned Registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use
of a prospectus which is a part of this Registration Statement, by any
person or party who is deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes that such reoffering prospectus will
contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other Items of the applicable
form.
(2) The Registrant undertakes that every prospectus (i) that is filed
pursuant to the paragraph immediately preceding, or (ii) that purports to
meet the requirements of section 10(a)(3) of the Securities Act and is used
in connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to the Registration Statement and will not
be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial BONA FIDE offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(e) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Proxy
Statement/Prospectus pursuant to Item 4, 10(b), 11, or 13 of this Form S-4,
within one business day of receipt of such requests, and to send the
incorporated documents by first class mail or other equally prompt means. This
includes information contained in documents filed subsequent to the effective
date of the Registration Statement through the date of responding to the
requests.
(f) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Fairfield,
State of Connecticut, on October 15, 1998.
<TABLE>
<S> <C> <C>
GENERAL ELECTRIC COMPANY
By: /s/ PHILIP D. AMEEN
-----------------------------------------
Philip D. Ameen
VICE PRESIDENT AND COMPTROLLER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Chairman of the Board,
* Chief Executive Officer
- ------------------------------ and Director (Principal October 15, 1998
John F. Welch, Jr. Executive Officer)
* Vice Chairman of the
- ------------------------------ Board, Executive Officer October 15, 1998
Eugene F. Murphy and Director
* Vice Chairman of the
- ------------------------------ Board, Executive Officer October 15, 1998
John D. Opie and Director
Senior Vice President
* Finance, Chief Financial
- ------------------------------ Officer and Director October 15, 1998
Dennis D. Dammerman (Principal Financial
Officer)
/s/ PHILIP D. AMEEN Vice President and
- ------------------------------ Comptroller (Principal October 15, 1998
Philip D. Ameen Accounting Officer)
*
- ------------------------------ Director October 15, 1998
James I. Cash, Jr.
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
*
- ------------------------------ Director October 15, 1998
Claudio X. Gonzalez
*
- ------------------------------ Director October 15, 1998
Andrea Jung
*
- ------------------------------ Director October 15, 1998
Gertrude G. Michelson
*
- ------------------------------ Director October 15, 1998
Sam Nunn
*
- ------------------------------ Director October 15, 1998
Roger S. Penske
*
- ------------------------------ Director October 15, 1998
Frank H.T. Rhodes
*
- ------------------------------ Director October 15, 1998
Andrew C. Sigler
*
- ------------------------------ Director October 15, 1998
Douglas A. Warner III
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By /s/ PHILIP D. AMEEN
-------------------------
Philip D. Ameen
AS ATTORNEY-IN-FACT
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
- -----------
<C> <S>
2.1 Agreement and Plan of Merger dated as of September 20, 1998 among General Electric Company, Emerald
Merger Corp. and Marquette Medical Systems, Inc. (included as Annex I to the Proxy Statement/Prospectus).
4.1 The Certificate of Incorporation, as amended, and By-laws, as amended, of General Electric Company are
incorporated by reference to Exhibit (3) of General Electric's Current Report on Form 8-K dated April 28,
1997.
4.2 The instruments defining the rights of holders of long-term debt securities of General Electric and its
subsidiaries are omitted pursuant to item 601(b)(4)(iii)(A) of Regulation S-K. General Electric hereby
agrees to furnish copies of these instrument to the SEC upon request.
*5.1 Opinion of Robert E. Healing, Corporate Counsel for General Electric Company, as to the legality of the
securities being registered.
*8.1 Opinion of Sidley & Austin as to the United States federal income tax consequences of the Merger.
*23.1 Consent of Arthur Andersen LLP.
*23.2 Consent of KPMG Peat Marwick LLP.
*23.3 Consent of Robert E. Healing (included in Exhibit 5.1 to this Registration Statement).
*23.4 Consent of Sidley & Austin (included in Exhibit 8.1 to this Registration Statement).
*24.1 Powers of Attorney.
99.1 Stock Option Agreement dated as of September 20, 1998 between GE and Marquette (included as Annex III to
the Proxy Statement/Prospectus).
99.2 Shareholder Agreement dated as of September 20, 1998 between GE and Michael J. Cudahy (included as Annex
IV to the Proxy Statement/Prospectus)
*99.3 Form of proxy card to be mailed to shareholders of Marquette.
</TABLE>
- ------------------------
* Filed herewith
<PAGE>
EXHIBIT 5.1
[General Electric Company Letterhead]
October 15, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: 11,630,850 Shares of Common Stock,
$.16 par value per share, of General Electric Company
-------------------------------------------------------
Ladies and Gentlemen:
I am Corporate Counsel to General Electric Company, a New York
corporation (the "Company"), and, in such capacity, I am familiar with the
proceedings to date in connection with the preparation and filing with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Securities Act"), of the Company's registration statement on
Form S-4 (as the same may be subsequently amended, the "Registration
Statement") relating to the registration of 11,630,850 shares of Common
Stock, $.16 par value per share, of the Company (the "New Shares") pursuant
to the terms of the Agreement and Plan of Merger dated as of September 20,
1998 among the Company, Emerald Merger Corp., a Wisconsin corporation and a
wholly owned subsidiary of the Company ("Sub"), and Marquette Medical
Systems, Inc., a Wisconsin corporation ("Marquette"), which provides for the
merger (the "Merger") of Sub with and into Marquette, with Marquette
surviving as a wholly owned subsidiary of the Company.
Based on the foregoing, I am of the opinion that:
1. The Company is duly incorporated and validly existing under
the laws of the State of New York.
2. The New Shares will be legally issued, fully paid and
non-assessable when (i) the Registration Statement, as finally amended, shall
have become effective under the Securities Act and (ii) the Merger shall have
become effective under the Business Corporation Law of the State of Wisconsin.
<PAGE>
The foregoing opinions are limited to the federal laws of the
United States of America and the Business Corporation Law of the State of New
York. I express no opinion as to the application of the securities or blue
sky laws of the various states to the sale of the New Shares.
I hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to all references to my name included in or made a
part of the Registration Statement.
Very truly yours,
/s/ Robert E. Healing
------------------------
Robert E. Healing
<PAGE>
[Sidley & Austin Letterhead]
October 14, 1998
General Electric Company
3135 Easton Turnpike
Fairfield, Connecticut 06431
Marquette Medical Systems, Inc.
8200 West Tower Avenue
Milwaukee, Wisconsin 53223
Ladies and Gentlemen:
We refer to the Agreement and Plan of Merger dated as of September
20, 1998 (the "Agreement") among General Electric Company, a New York
corporation ("Parent"), Emerald Merger Corp., a Wisconsin corporation and a
direct wholly owned subsidiary of Parent ("Sub"), and Marquette Medical
Systems, Inc., a Wisconsin corporation (the "Company"), which provides for
the merger (the "Merger") of Sub with and into the Company on the terms and
conditions therein set forth, the time at which the Merger becomes effective
being hereinafter referred to as the "Effective Time." Capitalized terms
used but not defined herein have the meanings specified in the Agreement.
As provided in the Agreement, at the Effective Time, by reason of
the Merger: (i) each issued and outstanding share of common stock, par
value $.01 per share, of Sub shall be converted into one validly issued,
fully paid and nonassessable share of common stock of the Surviving
Corporation; (ii) all shares of Company Common Stock that are held in the
treasury of the Company or by any wholly owned Subsidiary of the Company and
any shares of Company Common Stock owned by Parent or by any wholly owned
Subsidiary of Parent shall be cancelled and no capital stock of Parent or
other consideration shall be delivered in exchange therefor; and (iii) each
share of Company Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares to be cancelled as described above) shall
be converted into validly issued, fully paid and nonassessable shares of
Parent Common Stock. The Rights have been amended and will not apply to the
Merger and will expire immediately prior to the Effective
<PAGE>
General Electric Company and
Marquette Medical Systems, Inc.
October 14, 1998
Page 2
Time. All such shares of Company Common Stock, when so converted, shall no
longer be outstanding and shall automatically be cancelled and retired and
each holder of a certificate representing any such shares shall cease to have
any rights with respect thereto, except the right to receive certain
dividends and other distributions, certificates representing the shares of
Parent Common Stock into which such shares are converted and any cash,
without interest, in lieu of fractional shares to be issued or paid in
consideration therefor upon the surrender of such certificate.
The Merger and the Agreement are more fully described in the
Parent's Registration Statement on Form S-4 (the "Registration Statement")
relating to the registration of shares of Parent Common Stock to which this
opinion is an exhibit, which is being filed by Parent with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended. The
Registration Statement includes the Proxy Statement/Prospectus (the
"Prospectus") of Parent and the Company.
In rendering the opinions expressed below, we have relied upon the
accuracy of the facts, information and representations and the completeness
of the covenants contained in the Agreement, the Prospectus and such other
documents as we have deemed relevant and necessary (including, without
limitation, those described above). Such opinions are conditioned, among
other things, not only upon such accuracy and completeness as of the date
hereof, but also the continuing accuracy and completeness thereof as of the
Effective Time. Moreover, we have assumed the absence of any change to any of
such instruments between the date thereof and the Effective Time.
We have assumed the authenticity of all documents submitted to us
as originals, the genuineness of all signatures, the legal capacity of all
natural persons and the conformity with original documents of all copies
submitted to us for our examination. We have further assumed that: (i) the
transactions related to the Merger or contemplated by the Agreement will be
consummated (A) in accordance with the Agreement and (B) as described in the
Prospectus; (ii) the Merger will qualify as a statutory merger under the laws
of the State of Wisconsin; and (iii) as of the date hereof, and as of the
Effective Time (as if made as of the Effective Time), the written statements
made by Michael J. Cudahy in a Company shareholder tax certificate and the
written statements made by executives of Parent and the Company contained in
the Parent Tax Certificate and the Company Tax Certificate, respectively,
each dated on or about the date hereof, will be accurate in all respects.
In rendering the opinions expressed below, we have considered the
applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), Regulations promulgated thereunder by the United States Treasury
Department (the "Regulations"), pertinent judicial authorities, rulings and
interpretations of the Internal Revenue Service and such other
<PAGE>
General Electric Company and
Marquette Medical Systems, Inc.
October 14, 1998
Page 3
authorities as we have considered relevant. It should be noted that the
Code, the Regulations and such judicial decisions, rulings, administrative
interpretations and other authorities are subject to change at any time and,
in some circumstances, with retroactive effect; and any such change could
affect the opinions stated herein. Furthermore, the opinions expressed below
might not be applicable to Company shareholders who, for United States
federal income tax purposes, are nonresident alien individuals, foreign
corporations, foreign partnerships, foreign trusts or foreign estates, or who
acquired their Company Common Stock pursuant to the exercise of employee
stock options or otherwise as compensation.
Based upon and subject to the foregoing, it is our opinion, as
counsel for Parent, that for federal income tax purposes:
(i) the Merger will constitute a "reorganization" within the
meaning of Section 368(a) of the Code, and the Company, Sub and Parent
will each be a party to that reorganization within the meaning of
Section 368(b) of the Code;
(ii) no gain or loss will be recognized by Parent, Sub or the
Company as a result of the Merger;
(iii) no gain or loss will be recognized by the shareholders
of the Company upon the conversion of their shares of Company Common
Stock solely into shares of Parent Common Stock pursuant to the Merger,
except with respect to cash, if any, received in lieu of fractional
shares of Parent Common Stock;
(iv) the aggregate tax basis of the shares of Parent Common
Stock received solely in exchange for shares of Company Common Stock
pursuant to the Merger (including a fractional share of Parent Common
Stock for which cash is paid) will be the same as the aggregate tax
basis of such shares of Company Common Stock exchanged therefor;
(v) the holding period for shares of Parent Common Stock
received solely in exchange for shares of Company Common Stock pursuant
to the Merger will include the shareholder's holding period for such
shares of Company Common Stock, provided such shares of Company Common
Stock were held as capital assets by the shareholder at the Effective
Time; and
(vi) a shareholder of the Company who receives cash in lieu
of a fractional share of Parent Common Stock will recognize gain or loss
equal to the difference, if any, between such shareholder's basis in the
fractional share (determined under clause (iv) above) and the amount of
cash received.
<PAGE>
General Electric Company and
Marquette Medical Systems, Inc.
October 14, 1998
Page 4
Except as expressly set forth in paragraphs (i) through (vi),
inclusive, you have not requested, and we do not herein express, any opinion
concerning the tax consequences of, or any other matters related to, the
Merger.
We assume no obligation to update or supplement this letter to
reflect any facts or circumstances which may hereafter come to our attention
with respect to the opinions expressed above, including any changes in
applicable law which may hereafter occur.
This opinion is provided to you only, and without our prior
consent, may not be relied upon, used, circulated, quoted or otherwise
referred to in any manner by any person, firm, governmental authority or
entity whatsoever other than reliance thereon by you. Notwithstanding the
prior sentence, we hereby consent to the filing of this letter as an exhibit
to the Registration Statement and to all references to our firm included in
or made part of the Registration Statement.
Very truly yours,
Sidley & Austin
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated June 1, 1998
included (or incorporated by reference) in Marquette Medical Systems, Inc.'s
Annual Report on Form 10-K for the year ended April 30, 1998 and to all
references to our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
October 15, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
General Electric Company:
We consent to the use of our report incorporated by reference in the
Registration Statement on Form S-4 of General Electric Company, which report
dated February 13, 1998 relates to the statement of financial position of
General Electric Company and consolidated affiliates as of December 31, 1997
and 1996 and the related statements of earnings and cash flows for each of
the years in the three-year period ended December 31, 1997, and the related
schedule, appears in the December 31, 1997 annual report on Form 10-K of
General Electric Company.
We also consent to the reference to our firm under the heading "Experts" in
the prospectus.
KPMG Peat Marwick LLP
Stamford, Connecticut
October 15, 1998
<PAGE>
POWER OF ATTORNEY
GENERAL ELECTRIC COMPANY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby
constitute and appoint Robert E. Healing, Benjamin W. Heineman, Jr. and
Philip D. Ameen, and each of them acting individually, his true and lawful
attorneys-in-fact and agents, each with power to act without the other and
full power of substitution and resubstitution, to execute, sign, deliver and
file, for and on his behalf, and in his name, place and stead, in any and all
capacities, a Registration Statement on Form S-4 (or other appropriate form)
for filing with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, and any other documents in support thereof or
supplemental or amendatory thereto, including amendments filed on Form S-8,
with respect to the registration of shares of General Electric Company Common
Stock, par value $.16 per share, issued pursuant to the merger of Marquette
Medical Systems, Inc. with and into General Electric Company's wholly-owned
subsidiary, Emerald Merger Corp., hereby granting to such attorneys-in-fact
and each of them full power and authority to do and perform each and every
act and thing whatsoever as such attorney-in-fact or attorneys-in-fact may
deem necessary or advisable to carry out fully the intent of the foregoing as
the undersigned might or could do personally or in any and all capacities,
hereby ratifying and confirming all acts and things which such
attorney-in-fact or attorneys-in-fact or their agents may do or cause to be
done by virtue of this power of attorney.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney
as of this 15th day of October, 1998.
John F. Welch, Jr. Dennis D. Dammerman Philip D. Ameen
Chairman of the Board Senior Vice President-Finance Comptroller
(Principal Executive (Principal Financial Officer (Principal Accounting
Officer and Director) and Director) Officer)
James I. Cash, Jr.
Claudio X. Gonzalez
Andrea Jung
Gertrude G. Michelson
Eugene F. Murphy
Sam Nunn
John D. Opie
Roger S. Penske
Frank H.T. Rhodes
Andrew C. Sigler
Douglas A. Warner III
A MAJORITY OF THE BOARD OF DIRECTORS
<PAGE>
MARQUETTE MEDICAL SYSTEMS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR A SPECIAL MEETING TO BE HELD ON NOVEMBER 20, 1998
The undersigned shareholder(s) of Marquette Medical Systems, Inc., a
Wisconsin corporation (the "Company"), hereby appoint(s) Michael J. Cudahy
and Mary M. Kabacinski, and each of them, as proxies for the undersigned,
with full power of substitution, for and in the name, place and stead of the
undersigned, to attend the Special Meeting of Shareholders of the Company to
be held at Marquette's offices located at 8200 West Tower Avenue, Milwaukee,
Wisconsin 53223 on Friday, November 20, 1998 at 9:00 a.m. local time, and any
adjournment(s) or postponement(s) thereof, and to cast on behalf of the
undersigned the number of votes the undersigned would be entitled to vote if
personally present as set forth herein and otherwise to represent the
undersigned at the meeting with all powers possessed by the undersigned if
personally present at the meeting. The undersigned acknowledges receipt of
the Notice of the Special Meeting of Shareholders and the accompanying Proxy
Statement/Prospectus and releases any proxy heretofore given with respect to
such meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AS SET FORTH
IN PARAGRAPH 1 BELOW.
<PAGE>
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED
MARQUETTE MEDICAL SYSTEMS, INC. 1998 SPECIAL MEETING
This proxy is revocable at any time before it is exercised and the
undersigned reserve(s) the right to attend the meeting and vote in person.
The Board of Directors recommends a vote "FOR" the listed proposal.
1. Proposal for approval and adoption of the Agreement and Plan of
Merger dated as of September 20, 1998 by and among General Electric Company,
Emerald Merger Corp. and the Company.
/ / FOR / / AGAINST / / ABSTAIN
2. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting.
The undersigned hereby ratifies and confirms all that said attorneys and
proxies, or any one or more of them or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof and any prior proxies are
hereby revoked.
Check appropriate box Date ________ NO. OF SHARES
indicate changes below:
Address Change? / / Name Change? / /
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SIGNATURE(s) IN BOX
YOUR SIGNATURE SHOULD BE AS YOUR
NAME APPEARS HEREON. WHEN SIGNED
IN A FIDUCIARY OR REPRESENTATIVE
CAPACITY PLEASE SHOW YOUR FULL
TITLE AS SUCH. FOR JOINT
ACCOUNTS EACH JOINT OWNER SHOULD
SIGN.
