<PAGE>
As filed with the Securities and Exchange Commission on October 1, 1999
Registration No. 333-
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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GENERAL ELECTRIC COMPANY
(Exact name of registrants as specified in its charter)
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<S> <C> <C>
New York 3724 14-0689340
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
3135 Easton Turnpike
Fairfield, Connecticut 06431-00001
(203) 373-2243
(Address and telephone number of registrant's principal executive offices)
Robert E. Healing
3135 Easton Turnpike
Fairfield, Connecticut 06431-00001
(203) 373-2243
(Name, address, and telephone number of agent for service)
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Copies to:
<TABLE>
<S> <C>
Richard M. Russo David R. Rudd
Gibson, Dunn & Crutcher, LLP Holland & Hart LLP
1801 California Street, Suite 4100 Suite 500, 215 South State Street
Denver, Colorado 80202 Salt Lake City, Utah 84111-2346
(303) 298-5700 (801) 595-7800
</TABLE>
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Approximate date of commencement of proposed sale of the securities to the
public: As promptly as practicable after this Registration becomes effective
and the effective time of the proposed merger of Ruby Merger Corp., a wholly
owned subsidiary of the Registrant, with and into OEC 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. [_]
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
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Proposed Proposed
Amount maximum maximum Amount of
Title of each class of to be offering price aggregate registration
securities to be registered registered per unit offering price(2) fee(3)
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<S> <C> <C> <C> <C>
Common Stock, $.16 par value.... (1) Not Applicable $ 513,405,284 $ 142,727(3)
</TABLE>
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(1) Omitted in reliance on Rule 457(o).
(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 OEC Common Stock to be exchanged in the Merger, which was
computed in accordance with 457(c), as the product of (i) $35.09 (the
average of the high and low prices per share of OEC Common Stock on
September 28, 1999 as reported by the New York Stock Exchange) and (ii)
14,629,557, the aggregate number of shares of OEC Common Stock outstanding
on September 29, 1999 or issuable pursuant to outstanding stock options.
(3) Pursuant to Rule 457(b), the registration fee has been reduced by the
$87,635 paid on September 1, 1999 upon the filing under the Securities
Exchange Act of 1934 of preliminary copies of OEC's proxy materials
included herein. Therefore, the registration fee payable upon the filing
of this Registration Statement is $55,092.
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>
OEC MEDICAL SYSTEMS, INC.
384 Wright Brothers Drive
SALT LAKE CITY, UTAH 84116
October 1, 1999
Dear Fellow Stockholder:
By notice dated September 30, 1999, you have been cordially invited to
attend the special meeting of stockholders of OEC Medical Systems, Inc., to be
held on Monday, November 29, 1999, at 12:00 p.m., local time, at the Hyatt
Regency Chicago located at 151 Wacker Drive, Chicago, Illinois.
On August 7, 1999, OEC agreed to be acquired by General Electric Company in
a merger that values your OEC shares at $36 per share. In the merger, you will
be entitled to approximately $36 worth of GE common stock in exchange for each
share of OEC common stock you own.
At the special meeting, you will be asked to approve and adopt the merger
agreement providing for the merger. 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 DETERMINED THAT THE
MERGER IS ADVISABLE, FAIR TO AND IN THE BEST INTERESTS OF OEC AND ITS
STOCKHOLDERS AND RECOMMENDS THAT OEC STOCKHOLDERS VOTE TO APPROVE AND ADOPT THE
MERGER AGREEMENT. YOUR BOARD OF DIRECTORS HAS RECEIVED THE WRITTEN OPINION OF
CHASE SECURITIES INC. DATED AUGUST 7, 1999 TO THE EFFECT THAT THE CONSIDERATION
TO BE RECEIVED BY OEC'S STOCKHOLDERS IN THE MERGER IS FAIR FROM A FINANCIAL
POINT OF VIEW AS OF SUCH DATE TO SUCH STOCKHOLDERS.
Under Delaware law, holders of OEC 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, please complete, sign, date and return the enclosed proxy card
promptly in the enclosed postage-paid envelope. Stockholders 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. We look forward to seeing you at the special meeting.
Sincerely,
Ruediger Naumann-Etienne
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 is also a Prospectus of General Electric Company with
respect to shares of GE common stock issuable to OEC's stockholders in the
merger. This Proxy Statement/Prospectus is dated October 1, 1999 and is first
being mailed to stockholders of OEC on or about October 4, 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
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SUMMARY.................................................................... 1
The Companies............................................................. 1
What You Will Receive in the Merger....................................... 2
The Special Meeting....................................................... 2
Adviser Agreement......................................................... 3
Reasons for the Merger.................................................... 3
Interests of Certain Persons in the Merger................................ 4
Treatment of Stock Options in the Merger.................................. 4
Regulatory Approvals...................................................... 5
Conditions to the Merger.................................................. 5
Termination of the Merger Agreement....................................... 5
Termination Fees.......................................................... 6
No Solicitation of Competing Transactions................................. 6
Stock Option Agreement.................................................... 6
Appraisal Rights.......................................................... 6
Material United States Federal Income Tax Consequences.................... 6
Comparison of Rights of OEC Stockholders and GE Stockholders.............. 7
Forward-looking Statements May Prove Inaccurate........................... 7
Summary Selected Financial Data........................................... 8
Selected Historical Financial Data of OEC................................. 8
Selected Historical Financial Data of GE.................................. 9
Significant Factors Affecting Operating Results........................... 9
Comparative Per Share Data................................................ 10
Comparative Market Price Data............................................. 11
THE SPECIAL MEETING........................................................ 13
General................................................................... 13
Matters to be Considered at the Special Meeting........................... 13
Voting and Proxies........................................................ 13
Solicitation of Proxies................................................... 14
THE MERGER................................................................. 14
Background of the Merger.................................................. 14
Reasons for the Merger; Recommendation of the OEC Board of Directors...... 16
Opinion of Chase Securities Inc. ......................................... 17
Interests of Certain Persons in the Merger; Conflicts of Interest......... 22
Form of the Merger........................................................ 24
Merger Consideration...................................................... 24
Effective Time............................................................ 25
Procedures for Exchange of OEC Common Stock Certificates.................. 25
Anticipated Accounting Treatment.......................................... 26
Certain Other Effects of the Merger....................................... 26
Forward-looking Statements May Prove Inaccurate........................... 26
Material United States Federal Income Tax Consequences.................... 26
Appraisal Rights.......................................................... 28
THE MERGER AGREEMENT....................................................... 28
Certain Representations and Warranties.................................... 28
Certain Covenants and Agreements.......................................... 29
Conduct of Business of OEC................................................ 29
No Solicitation........................................................... 30
Third Party Standstill Agreements......................................... 31
</TABLE>
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Page
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Reorganization........................................................... 31
Stock Option Plans....................................................... 31
Real Estate Transfer and Gains Tax....................................... 32
Indemnification; Directors' and Officers' Insurance...................... 32
Conditions Precedent to the Merger....................................... 32
Termination.............................................................. 34
Fees and Expenses........................................................ 36
Amendment; Waiver........................................................ 37
THE STOCK OPTION AGREEMENT................................................ 38
ADVISER AGREEMENT......................................................... 40
Covenants................................................................ 40
Termination.............................................................. 42
REGULATORY MATTERS........................................................ 42
COMPARISON OF RIGHTS OF OEC STOCKHOLDERS AND GE STOCKHOLDERS.............. 43
Authorized Capital Stock................................................. 43
Stockholder Voting Rights................................................ 43
Special Meetings of Stockholders; Consent to Actions of Stockholders in
Lieu of Meeting......................................................... 44
Business Combinations.................................................... 45
Business Conducted at Stockholders' Meetings............................. 45
Dividends................................................................ 45
Dissenters' Appraisal Rights............................................. 46
Warrants or Options...................................................... 46
Number and Term of Directors............................................. 46
Election of Directors.................................................... 47
Classification of the Board of Directors................................. 47
Removal of Directors..................................................... 47
Indemnification.......................................................... 48
Transactions with Interested Directors................................... 48
DESCRIPTION OF GE'S CAPITAL STOCK......................................... 49
LEGAL MATTERS............................................................. 49
EXPERTS................................................................... 49
WHERE YOU CAN FIND MORE INFORMATION....................................... 49
LIST OF DEFINED TERMS..................................................... 52
</TABLE>
<TABLE>
<S> <C>
ANNEX I........................................ AGREEMENT AND PLAN OF MERGER
ANNEX II....................................... OPINION OF CHASE SECURITIES INC.
ANNEX III...................................... STOCK OPTION AGREEMENT
ANNEX IV....................................... ADVISER AGREEMENT
</TABLE>
<PAGE>
REFERENCES TO ADDITIONAL INFORMATION
This document incorporates important business and financial information
about our companies from documents we have filed with the Securities and
Exchange Commission but have not included or delivered with this document. If
you call or write us, we will send you these documents, excluding exhibits,
without charge. You can contact us at:
<TABLE>
<S> <C>
General Electric Company OEC Medical Systems, Inc.
3135 Easton Turnpike 384 Wright Brothers Drive
Fairfield, Connecticut 06431-0001 Salt Lake City, Utah 84116
Attention: GE Corporate Investor
Communications Attention: Corporate Secretary
(203) 373-2816 (801) 328-9300
</TABLE>
PLEASE REQUEST DOCUMENTS FROM EITHER COMPANY NOT LATER THAN NOVEMBER 22,
1999. IF YOU REQUEST ANY DOCUMENTS, WE WILL MAIL THE DOCUMENTS TO YOU BY FIRST
CLASS MAIL, OR ANOTHER EQUALLY PROMPT MEANS, BY THE NEXT BUSINESS DAY AFTER WE
RECEIVE YOUR REQUEST.
See "Where You Can Find More Information" on page 49 for more information
about the documents referred to in this document.
<PAGE>
SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT. IT 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
49). FOR THE LOCATION OF DEFINITIONS OF CAPITALIZED TERMS USED IN THIS PROXY
STATEMENT/PROSPECTUS, PLEASE SEE "LIST OF DEFINED TERMS" (PAGE 52). WE HAVE
INCLUDED PAGE REFERENCES PARENTHETICALLY TO DIRECT YOU TO MORE COMPLETE
DESCRIPTIONS OF THE TOPICS PRESENTED IN THIS SUMMARY.
IN THE MERGER, RUBY MERGER CORP., A NEWLY FORMED SUBSIDIARY OF GE, WILL
MERGE WITH AND INTO OEC. OEC 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 OEC 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
OEC MEDICAL SYSTEMS, INC.
384 Wright Brothers Drive
Salt Lake City, Utah 84116
(801) 328-9300
OEC manufactures and markets products that meet the imaging and
information requirements of both conventional and minimally invasive surgery
and interventional procedures as well as emerging medical technologies. Found
in hospitals, outpatient clinics, surgery centers and physician office
settings, OEC's broad product line ranges from its mini C-arm for extremity
imaging, to specialized full-sized mobile fluoroscopic imaging systems for
orthopedic, urological, vascular, neurovascular and cardiac procedures. OEC
employs approximately 750 people in the U.S. and abroad; operates manufacturing
facilities in Wendelstein, Germany; Warsaw, Indiana; and Salt Lake City, Utah;
and has distribution subsidiaries in Switzerland, Germany, Italy and France.
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.
<PAGE>
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.
RUBY MERGER CORP.
3135 Easton Turnpike
Fairfield, Connecticut 06431-0001
(203) 373-2211
Ruby Merger Corp. is a company formed by GE on July 30, 1999 solely for use
in the merger.
What You Will Receive In The Merger
(Page 24)
If the merger agreement is approved and adopted and the merger is
consummated, for each share of OEC Common Stock you own immediately prior to
the merger, you will be entitled to approximately $36.00 worth of GE Common
Stock. You will receive cash in lieu of fractional shares of GE Common Stock.
The number of shares of GE Common Stock to which you will be entitled will be
determined by dividing $36.00 by the "Average GE Share Price," which number of
shares is referred to as the Merger Consideration. The "Average GE Share Price"
is the average of the daily volume-weighted sales prices 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 price of GE Common Stock at the time of completion of the merger
may be higher or lower than the "Average GE Share Price". As a result, the
value at that time of the shares of GE Common Stock to which you become
entitled may be more or less than $36 per share of OEC Common Stock.
EXAMPLE: IF YOU OWN 100 SHARES OF OEC COMMON STOCK WHEN THE MERGER IS
CONSUMMATED AND IF THE "AVERAGE GE SHARE PRICE" IS $110 (FOR PURPOSES OF THIS
EXAMPLE ONLY), THEN AFTER THE MERGER YOU WOULD BE ENTITLED TO RECEIVE 32 SHARES
OF GE COMMON STOCK, PLUS $80 IN CASH IN LIEU OF FRACTIONAL SHARES.
The "Average GE Share Price" will be determined during the 10 consecutive
days ending on the fifth trading day prior to the closing of the merger.
Because the closing of the merger may occur after the date of the special
meeting due to a delay in receipt of regulatory clearances, the number of
shares of GE Common Stock issuable for each share of OEC Common Stock may not
be known at the time you vote on the merger. You may call, toll-free, (800)
250-7979 for information concerning the estimated number of shares of GE Common
Stock that will be issued in exchange for your OEC Common Stock as of the date
you call.
The Special Meeting
(Page 13)
At the Special Meeting, the holders of OEC Common Stock will be asked to
approve and adopt the merger agreement. The close of business on September 30,
1999 is the record date for determining if you are entitled to vote at the
Special Meeting. At that date, there were approximately 12.7 million shares of
OEC Common Stock outstanding. Each share of OEC Common Stock is entitled to one
vote at the Special Meeting. The vote of a majority of the shares of OEC Common
Stock entitled to be cast is required to approve and adopt the merger
agreement. On the record date, directors and executive officers of OEC owned
and had the right to vote 83,053 shares of OEC Common Stock (approximately 0.7%
of the shares of OEC Common Stock then outstanding).
2
<PAGE>
Adviser Agreement
(Page 40)
To induce GE to enter into the merger agreement, William F. Harnisch, the
WFH Foundation, and FLA Advisers L.L.C. agreed to enter into an Adviser
Agreement with GE. FLA Advisers L.L.C. is an investment adviser with investment
management authority, including the sole power to vote, the OEC Common Stock
owned by certain of its clients. FLA Advisers L.L.C, Mr. Harnisch, and the WFH
Foundation have agreed, without any additional consideration being paid to
them, to vote 2,892,970 shares of OEC Common Stock owned by them or under their
authority in favor of the merger. The obligations of FLA Advisers L.L.C,
Mr. Harnisch and the WFH Foundation under the Adviser Agreement may be
terminated if the merger does not go forward.
Reasons For The Merger
(Page 16)
The OEC Board approved the merger agreement and the merger and recommends
that you vote to approve and adopt the merger agreement. The OEC Board believes
that the merger is in the best interests of OEC and its stockholders. In
reaching its decision, the OEC Board considered a number of factors, including
the following (to which no relative weights were assigned):
. the present and anticipated environment in the medical equipment
industry, the strategic options available to OEC and the difficulty of
continuing to compete effectively with companies having greater resources
than OEC;
. information concerning the financial condition, results of operations and
business prospects of both OEC and GE Medical Systems, a division of GE,
and current industry, economic and market conditions;
. information concerning the financial and business prospects for the
combined business, including the strategic benefits of the merged
operations;
. the fact that the merger is expected to reduce OEC's dependence on any
single product and the associated risks of contract cancellation;
. the fact that, in the opinion of OEC's outside legal counsel, the merger
could be accomplished on a tax-free basis;
. the presentations from, and discussions with, senior executives of OEC
and representatives of OEC's outside legal counsel;
. the interests of constituencies other than the stockholders of OEC, such
as employees, customers and suppliers;
. the presentation regarding the financial terms of the proposed merger and
the opinion dated August 7, 1999 from Chase Securities Inc. to the effect
that the Merger Consideration to be received by holders of OEC Common
Stock pursuant to the merger is fair from a financial point of view, as
of such date, to such holders;
. the opportunity for OEC's stockholders to become stockholders of GE,
which the OEC Board views as a large, diversified and well managed
company;
. the relative certainty of receiving consideration valued at $36.00 per
share of OEC Common Stock regardless of stock market fluctuations prior
to the closing of the merger; and
. the inclusion of a termination fee for OEC if GE should exercise its
rights to terminate the merger agreement under various circumstances.
3
<PAGE>
To review OEC's reasons for the merger in greater detail, see "THE MERGER--
Reasons for the Merger; Recommendation of the OEC Board of Directors." (page
16)
Interests of Certain Persons in the Merger
(Page 22)
In considering the recommendation of the OEC Board regarding the merger, you
should be aware of the interests which executive officers and directors of OEC
have in the merger that are different from your interests as stockholders.
On August 7, 1999, an aggregate of approximately 1,029,391 shares of OEC
Common Stock were subject to options granted to executive officers and
directors of OEC under various stock option plans. At the time of completion of
the merger, each stock option whose vesting is not accelerated as a result of
the merger will generally become an option to purchase shares of GE Common
Stock. According to their terms, the vesting of approximately 107,500 options
held by officers and directors will be accelerated from 4 years vesting to
immediate vesting as a result of the merger.
After consultation with GE, OEC agreed to enter into retention agreements,
to be effective only if the Merger is consummated, with 34 employees including
the following executive officers of OEC: Joseph W. Pepper, Randy W. Zundel,
Barry K. Hanover, Larry E. Harrawood and F. Daniel Edwards. Under each of these
agreements, if the merger with GE is completed, the executive will be eligible
to earn a retention bonus payment, equal to the executive's 1999 estimated
total compensation, 50% of which will be paid if the executive remains employed
by OEC for one year following completion of the merger, and the remaining 50%
of which will be paid if the executive remains employed by OEC for two years
following completion of the merger. If the executive's employment is terminated
(i) by the executive due to an involuntary and materially adverse change in the
nature or scope of the executive's authority or duties, or due to the
relocation of the executive's office to a location more than 50 miles from the
location of the executive's current office, or (ii) without "cause" (as defined
in the Agreements) or due to death or disability within the first year
following completion of the merger, OEC will pay the executive a termination
payment. As part of these arrangements, the executives have agreed not to
compete with the medical business of OEC for a specified period after
completion of the merger which generally corresponds to the period for which
the termination payment would be made.
The OEC 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 OEC Common Stock who are not executive officers or directors of OEC.
Please refer to page 22 for more information concerning the Retention
Agreements and other arrangements for OEC's executive officers and directors.
Treatment Of Stock Options In The Merger
(Page 31)
At the time of completion of the merger, each employee stock option and each
director stock option currently exercisable and, except as provided in the next
paragraph, each unvested employee option will generally become an option to
purchase shares of GE Common Stock on the same terms provided in the original
option. 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 OEC 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. Stock options held by non-employee OEC directors will be
modified to become exercisable at certain specified times or upon the happening
of certain specified events after completion of the merger.
4
<PAGE>
Unvested OEC options held by any employee or director under the 1990 Stock
Option Plan on the date of the merger will vest but will lapse unless they are
exercised within 30 days of the consummation of the merger; if such options are
exercised, such options holders will receive shares of GE Common Stock. GE will
offer holders of unvested options under the 1990 Stock Option Plan the
opportunity to waive their right to accelerate the vesting of their options and
to substitute options of GE Common Stock for options of OEC Common Stock,
subject to the vesting schedule (without acceleration for the merger) and other
terms and conditions currently applicable to such options, but modified, as all
substitute options will be, to include provisions relating to termination of
employment without cause.
Regulatory Approvals
(Page 42)
On September 24, 1999, the waiting period imposed by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 ("HSR Act") expired. The Department of
Justice has informed OEC and GE that it will not request any additional
information related to the Merger.
Conditions to the Merger
(Page 32)
GE and OEC will not complete the merger unless a number of conditions are
satisfied or waived by them, the most significant of which are:
. the holders of a majority of the shares of OEC Common Stock must approve
and adopt the merger agreement;
. the GE registration statement with respect to the GE common stock to be
issued to OEC stockholders must be declared effective by the Securities
and Exchange Commission and all necessary authorizations imposed by state
securities laws shall have been received;
. there must be no law, injunction or order that prohibits the merger;
. the representations and warranties of each of GE and OEC contained in the
merger agreement must be true and correct;
The party entitled to the benefit of some of these conditions may waive
these conditions.
Termination Of The Merger Agreement
(Page 34)
OEC 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 events occur:
. the other 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 May 7, 2000, or the date 75 days after the
waiting period applicable to the consummation of the merger under the HSR
Act has expired or been terminated;
. a court or other governmental authority permanently prohibits the merger;
. the holders of OEC Common Stock do not approve the merger; or
. OEC enters into an agreement to effect a more favorable competing offer
(subject to various conditions).
5
<PAGE>
In addition, GE may terminate the merger agreement if the OEC 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 OEC Common Stock, if the
waiting period to the consummation of the merger under the HSR Act has not
expired or been terminated by August 7, 2000, or if there has been a material
adverse change in OEC since the date of the merger agreement.
OEC may also terminate the merger agreement if the waiting period to the
consummation of the merger under the HSR Act has not expired or been terminated
by May 7, 2000, or if there has been a material adverse change in GE since the
date of the merger agreement.
Termination Fees
(Page 36)
To compensate the party that may be damaged if the merger is not
consummated, the merger agreement provides for termination fees under a variety
of circumstances. Such fee shall not exceed $25 million payable to GE,
including amounts received by GE pursuant to the Stock Option Agreement in
connection with OEC's completion of a transaction with a party other than GE.
Such fee shall also not exceed $15 million payable to OEC in the event GE
terminates the merger agreement due to a material adverse change in OEC since
the date of the merger agreement.
No Solicitation of Competing Transactions
(Page 30)
The merger agreement restricts OEC's ability to entertain or encourage any
alternative acquisition transactions with third parties beyond what is required
by the OEC Board's fiduciary duties. OEC must promptly notify GE if it receives
offers or proposals for any such alternative transactions.
Stock Option Agreement
(Page 38)
Also as a condition to GE's entering into the merger agreement, GE and OEC
entered into a Stock Option Agreement, whereby OEC has granted to GE an option
to purchase up to 2,243,346 shares (approximately 15.0% on a fully diluted
basis after the issuance of such shares) of OEC Common Stock at an exercise
price of $36.00 per share, payable in cash. The option becomes exercisable by
GE only if various events occur. The Stock Option Agreement may discourage
persons from making a competing offer for OEC Common Stock.
Appraisal Rights
(Page 28)
Under Delaware law, OEC stockholders have no right to an appraisal of the
value of their shares of OEC Common Stock in connection with the merger.
Material United States Federal Income Tax Consequences
(Page 26)
It is a condition to the completion of the merger that OEC and GE each
receive an opinion of tax counsel. The opinion of tax counsel will conclude,
among other things, that, for federal income tax purposes, no gain or loss will
be recognized by stockholders of OEC on the exchange of their shares of OEC
Common Stock for shares of GE Common Stock pursuant to the merger, except with
respect to any gain or loss attributable to cash received by OEC stockholders
in lieu of fractional shares of GE Common Stock.
6
<PAGE>
THE TAX CONSEQUENCES OF THE MERGER TO YOU WILL DEPEND ON YOUR PARTICULAR
FACTS AND CIRCUMSTANCES. WE URGE YOU TO CONSULT YOUR TAX ADVISOR TO UNDERSTAND
FULLY THE TAX CONSEQUENCES OF THE MERGER TO YOU. SEE "THE MERGER--MATERIAL
FEDERAL INCOME TAX CONSEQUENCES." (PAGE 26)
Comparison of Rights of OEC Stockholders and GE Stockholders
(Page 43)
After the merger, OEC stockholders will become stockholders of GE and their
rights as stockholders will be governed by the articles of incorporation and
bylaws of GE and the New York Business Corporation Law. There are a number of
differences between the articles of incorporation and bylaws of GE and the New
York Business Corporation Law and the certificate of incorporation and bylaws
of OEC and the Delaware General Corporation Law. These differences are
discussed under "COMPARISON OF RIGHTS OF OEC STOCKHOLDERS AND GE STOCKHOLDERS."
Forward-looking Statements May Prove Inaccurate
(Page 26)
GE and OEC 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 can be no assurance that such statements will
prove to be correct. Forward-looking statements include assumptions as to how
GE and OEC 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 OEC Board of
Directors." (page 16)
.""THE MERGER--Opinion of Chase Securities Inc." (page 17)
Also, when we use words like "believes," "expects," "anticipates" or similar
expressions, we are making forward-looking statements. For those statements, GE
and OEC 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 OEC 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 OEC; regulatory, legal, economic
and other changes in the health care industry 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.
7
<PAGE>
SUMMARY SELECTED FINANCIAL DATA
OEC 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 OEC and GE contained in the annual reports
and other information that OEC and GE have filed with the Securities and
Exchange Commission (the "Commission"). See "WHERE YOU CAN FIND MORE
INFORMATION" on page 49.
OEC and GE report quarterly and annual earnings results using methods
required by generally accepted accounting principles ("GAAP"). Both OEC and GE
prepare their respective financial statements on the basis of a fiscal year
beginning on January 1 and ending on December 31.
Selected Historical Financial Data of OEC
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Six Months
Fiscal Year Ended December 31, Ended June 30,
---------------------------------------- ---------------
1994 1995 1996 1997 1998 1998 1999
------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Data
Net sales............... 98,158 101,536 127,985 155,426 188,701 87,142 103,303
Gross Margin............ 37,482 41,206 51,279 63,726 79,312 36,751 43,283
Operating Income........ 6,803 10,312 13,671 17,928 24,424 10,581 13,382
Interest income
(Expense).............. 89 665 777 497 760 345 317
Income Tax Expense
(Benefit).............. (1,816) (856) 1,536 6,247 9,082 3,806 4,794
Net income.............. 8,708 11,833 12,912 12,178 16,102 7,120 8,905
Diluted weighted average
number of shares....... 12,552 12,585 12,797 13,079 13,391 13,391 13,352
Diluted net income per
share.................. .69 .94 1.01 .93 1.20 .53 .67
Balance Sheet Data (at
end of Period)
Working capital......... 31,199 43,900 53,847 63,961 80,732 70,161 85,996
Total Assets............ 81,555 91,462 111,946 130,687 146,247 137,909 148,581
Stockholders' equity.... 58,913 69,070 82,174 94,552 111,969 101,935 117,189
</TABLE>
8
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF GE
(Dollars In Millions, Except Per Share Data)
<TABLE>
<CAPTION>
Six Months Ended
Fiscal Year Ended December 31, June 30,
----------------------------------------------------- --------------------
1994 1995 1996 1997 1998 1998 1999
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
General Electric Company
and Consolidated
Affiliates
Revenues................ $ 60,109 $ 70,028 $ 79,179 $ 90,840 $ 100,469 $ 47,696 $ 51,575
Earnings from continuing
operations............. 5,915 6,573 7,280 8,203 9,296 4,341 4,975
Earnings (loss) from
discontinued
operations............. (1,189) -- -- -- -- -- --
Net earnings............ 4,726 6,573 7,280 8,203 9,296 4,341 4,975
Dividends declared...... 2,546 2,838 3,138 3,535 4,081 1,961 2,293
Earned on average share
owner's equity......... 18.1% 23.5% 24.0% 25.0% 25.7% 12.4% 12.7%
Per Share
Earnings from
continuing
operations-basic..... $ 1.73 $ 1.95 $ 2.20 $ 2.50 $ 2.84 $ 1.33 $ 1.52
Earnings (loss) from
discontinued
operations........... (0.35) -- -- -- -- -- --
Net earnings-diluted.. 1.37 1.93 2.16 2.46 2.80 1.31 1.50
Dividends declared.... 0.745 0.845 0.95 1.08 1.25 0.60 0.70
Total assets of
continuing operations.. 185,871 228,035 272,402 304,012 355,935 318,882 368,383
Long-term borrowings.... 36,979 51,027 49,246 46,603 59,663 48,764 60,852
Shares outstanding--
average (in
thousands)............. 3,417,476 3,367,624 3,307,394 3,274,692 3,268,998 3,268,224 3,275,107
</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 OEC and GE, are described briefly below.
The following discussion should be read with the "SUMMARY SELECTED FINANCIAL
DATA" of OEC and GE included on the previous pages and with the "Management's
Discussion and Analysis of Financial Condition and Results of Operations" of
OEC and GE that are contained in the annual reports and other information that
OEC and GE have filed with the Commission. See "WHERE YOU CAN FIND MORE
INFORMATION" on page 49.
In considering the Selected Historical Financial Data of GE, you should be
aware that:
. the consolidated financial statements represent the combined results of
all companies that GE directly or indirectly controls;
9
<PAGE>
. 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;
. the consolidated financial statements have 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 OEC and GE. The
data presented below should be read in conjunction with the historical
financial statements of OEC 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, OEC equivalent per share data cannot be computed
at this time. That information will be available via telephone, toll-free, at
(800) 250-7979. Hypothetical OEC equivalent per share data is presented below
using the closing sale price of a share of GE Common Stock on August 19, 1999
which was $111.00 and a resulting hypothetical exchange ratio of .324. The
hypothetical OEC equivalent per share data was calculated by multiplying the
actual GE per share data by the hypothetical exchange ratio of .324.
<TABLE>
<CAPTION>
Six Months Ended Fiscal Year Ended
June 30, 1999 December 31, 1998
---------------- -----------------
<S> <C> <C>
OEC Historical:
Earnings per share, diluted............... $ .67 $ 1.20
Dividends per share, net.................. -- --
Book value per share...................... $ 9.26 $ 8.76
<CAPTION>
Six Months Ended Fiscal Year Ended
June 30, 1999 December 31, 1998
---------------- -----------------
<S> <C> <C>
GE Historical:
Earnings per share, diluted............... $ 1.50 $ 2.80
Dividends per share, net.................. $ 0.70 $ 1.25
Book value per share...................... $12.08 $11.89
Hypothetical OEC Equivalent:
Earnings per share, diluted............... $ 0.49 $ 0.91
Dividends per share, net.................. $ 0.23 $ 0.41
Book value per share...................... $ 3.91 $ 3.85
</TABLE>
10
<PAGE>
Comparative Market Price Data
The following tables present certain historical trading and dividend
declaration information for the OEC Common Stock and GE Common Stock. No
dividends have been paid on shares of OEC common stock.
<TABLE>
<CAPTION>
OEC Common
Stock (In $)
---------------------
High Low
---------- ----------
<S> <C> <C> <C>
FISCAL 1999
Third Quarter (through September 30)............... 35 5/16 23 1/2
Second Quarter..................................... 26 9/16 20
First Quarter...................................... 31 5/16 17
FISCAL 1998
Fourth Quarter..................................... 31 7/16 19 3/16
Third Quarter...................................... 26 7/16 19 7/16
Second Quarter..................................... 24 1/2 19 7/16
First Quarter...................................... 24 7/16 19 3/16
FISCAL 1997
Fourth Quarter..................................... 20 13/16 16 11/16
Third Quarter...................................... 19 3/8 15 3/8
Second Quarter..................................... 17 15/16 13 3/8
First Quarter...................................... 18 1/2 14 7/8
<CAPTION>
GE Common Stock (In $)
--------------------------
High Low Div
---------- ---------- ----
<S> <C> <C> <C>
1999
Third Quarter (through September 30, 1999)......... 122 1/2 102 9/16 $.35
Second Quarter..................................... 117 7/16 99 13/16 $.35
First Quarter...................................... 114 3/16 94 1/16 $.35
1998
Fourth Quarter..................................... 103 15/16 69 $.35
Third Quarter...................................... 96 7/8 72 5/8 $.30
Second Quarter..................................... 92 80 11/16 $.30
First Quarter...................................... 87 5/8 70 1/4 $.30
1997
Fourth Quarter..................................... 76 9/16 59 $.30
Third Quarter...................................... 74 5/8 61 5/16 $.26
Second Quarter..................................... 68 1/4 48 9/16 $.26
First Quarter...................................... 54 3/16 47 15/16 $.26
</TABLE>
- --------
GE Common Stock is principally traded in the United States on the New York
Stock Exchange ("NYSE") under the symbol "GE." OEC Common Stock is currently
traded on the NYSE under the symbol "OXE."
GE declared dividends of $ 4.081 billion in fiscal year 1998, or
approximately 43.9% of GE's 1998 consolidated earnings. Per share dividends
declared of $ 1.25 in fiscal year 1998 increased 15.7% from 1997, its 24th
consecutive annual increase. Following the merger, payment of cash dividends by
GE in respect of 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.
11
<PAGE>
At year-end 1998, GE had purchased and placed into treasury a total of 287
million shares having an aggregate cost of $13.6 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 2000. 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 prices of GE Common Stock and OEC
Common Stock on August 6, 1999, the last trading day prior to the public
announcement of the execution of the merger agreement, and on September 30,
1999, the last trading day prior to the date of this Proxy
Statement/Prospectus, as reported on the NYSE.
<TABLE>
<CAPTION>
August 6, September 30,
1999 1999
--------- -------------
<S> <C> <C>
GE Common Stock...................................... 107 118 9/16
OEC Common Stock..................................... 33 5/8 35 1/8
</TABLE>
Recent Developments
On September 10, 1999, OEC announced that its results for the third quarter
of 1999 would be less than current analysts' estimates, due in part to a
revenue shortfall associated with previously reported transition issues related
to its new Series 9800 product platform. OEC stated that it expected revenue to
be in the range of $35 to $40 million in the third quarter of 1999, compared to
$48 million during the same period in 1998. In addition, OEC announced that
during the third quarter of 1999 it will have non-recurring expenses associated
with the Merger of approximately $1.5 million. OEC has announced that the
transition issues associated with the introduction of the Series 9800 product
platform had been resolved and that it expected fourth quarter results to meet
or exceed analysts' estimates.
12
<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 "OEC Board") of OEC
Medical Systems, Inc. ("OEC") for use at the special meeting of OEC
stockholders (the "Special Meeting"). This Proxy Statement/Prospectus and the
enclosed form of proxy are first being mailed to stockholders of OEC on or
about October 4, 1999.
Matters to be Considered at the Special Meeting
At the Special Meeting, holders of OEC Common Stock, par value $.01 per
share (the "OEC Common Stock"), will be asked to consider and vote on a
proposal to approve and adopt the Agreement and Plan of Merger dated as of
August 7, 1999 (the "Merger Agreement") among General Electric Company ("GE"),
Ruby Merger Corp., a wholly owned subsidiary of GE ("Sub"), and OEC. Pursuant
to the terms of the Merger Agreement, Sub will be merged with and into OEC (the
"Merger"), resulting in OEC becoming a wholly owned subsidiary of GE.
AFTER CAREFUL CONSIDERATION, YOUR BOARD OF DIRECTORS HAS DETERMINED THAT THE
MERGER IS ADVISABLE, FAIR TO AND IN THE BEST INTERESTS OF OEC AND ITS
STOCKHOLDERS AND RECOMMENDS THAT OEC STOCKHOLDERS VOTE TO APPROVE AND ADOPT THE
MERGER AGREEMENT. YOUR BOARD OF DIRECTORS HAS RECEIVED THE WRITTEN OPINION OF
CHASE SECURITIES INC. DATED AUGUST 7, 1999 TO THE EFFECT THAT THE CONSIDERATION
TO BE RECEIVED BY OEC'S STOCKHOLDERS IN THE MERGER IS FAIR FROM A FINANCIAL
POINT OF VIEW AS OF SUCH DATE TO SUCH STOCKHOLDERS.
Voting and Proxies
The OEC Board has fixed the close of business on September 30, 1999 as the
record date for the determination of the stockholders entitled to notice of,
and to vote at, the Special Meeting. At that date, there were outstanding
12,724,415 shares of OEC 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 OEC are outstanding.
The presence at the Special Meeting, in person or by proxy, of the holders
of a majority of the shares of OEC Common Stock 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 OEC Common Stock is required to approve
and adopt the Merger Agreement.
As a condition to GE's willingness to enter into the Merger Agreement,
William F. Harnisch, the WFH Foundation and FLA Advisers L.L.C. have agreed,
among other things, pursuant to an Adviser Agreement dated as of August 7, 1999
(the "Adviser Agreement"), and without any additional consideration being paid
to them, to vote 2,892,970 of the shares of OEC Common Stock under their
authority (representing approximately 23% of the outstanding shares on the
record date) in favor of approving and adopting the Merger Agreement at the
Special Meeting.
Shares of OEC 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 stockholder 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
with the Secretary of OEC at the address given on the Notice of Special
Stockholders' Meeting accompanying this Proxy Statement/Prospectus.
13
<PAGE>
Any proxy may also be revoked by the stockholder'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 OEC Board. GE and OEC
will share equally all expenses related to printing and filing 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 OEC, 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 OEC Common Stock held of record by such persons, and
GE and OEC 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
OEC have discussed the possibility of forming strategic alliances.
On May 7, 1999, Ruediger Naumann-Etienne, Chairman of the Board of OEC met
with Jeffrey R. Immelt, CEO of GE Medical Systems and Michael A. Jones, General
Manger, Global Business Development, GE Medical Systems, at the request of
William F. Harnisch, President of Forstmann-Leff Associates, Inc. ("FLA"), an
institutional money management firm which, through its affiliates, controls
approximately 23% of OEC's Common Stock. At that meeting, which was also
attended by Mr. Harnisch, Mr. Immelt expressed an interest in discussing a
possible business combination with OEC. Mr. Naumann-Etienne told Mr. Immelt
that there were no plans to sell OEC and that, given the outcome of prior
discussions with GE regarding strategic alliances, he was not prepared to
present GE's expression of interest to the OEC Board. Mr. Naumann-Etienne also
suggested that it would be impractical to discuss a potential transaction
between OEC and GE without the support of FLA, in light of FLA's substantial
ownership interest in OEC. In reply to a question from Mr. Immelt, Mr. Naumann-
Etienne indicated that OEC would not object to GE's discussing the matter
directly with FLA.
On June 1, 1999, Mr. Jones and one of his associates met with Mr. Naumann-
Etienne to obtain an overview of OEC and its business prospects, based on
publicly available information.
On July 2, 1999, Mr. Harnisch called Mr. Naumann-Etienne to inform him that
he had had various discussions with Mr. Immelt and that GE was interested in
obtaining FLA's support for a potential business combination with OEC but that
no agreement was reached. Mr. Immelt had asked whether he might contact OEC
directly to outline the merits of a possible business combination with GE, and
Mr. Harnisch agreed to call OEC to advise the Company of the substance of his
discussions with Mr. Immelt.
14
<PAGE>
Later on that day, Mr. Immelt called Mr. Naumann-Etienne and explained that,
because of a number of strategic benefits that would result from a combination
of OEC and GE Medical Systems, the two companies should explore a potential
business transaction. Mr. Immelt also confirmed his discussions with FLA and
stated that GE was prepared to offer to pay, in shares of GE Common Stock, a
premium over the then current market price of OEC's Common Stock. Mr. Naumann-
Etienne repeated that OEC was not actively seeking a business combination, but
agreed to inform Joseph W. Pepper, OEC's Chief Executive Officer, of the
conversation and to solicit his views.
On July 6, 1999, Mr. Naumann-Etienne called Mr. Immelt to inform him that,
after reviewing the matter with Mr. Pepper, both felt that the topic of a
potential business combination with GE was of sufficient interest to OEC to
warrant a meeting to see whether terms could be reached that would be
attractive to the OEC Board of Directors and OEC stockholders.
On July 11, 1999, Mr. Naumann-Etienne and Mr. Pepper met with Mr. Immelt and
Mr. Jones. During the meeting, there was a discussion regarding each company's
products and services, the customers they serve, the market segments they
address and their respective company cultures. Mr. Immelt again stressed the
strategic benefits that a possible business combination could bring to OEC's
stockholders, employees and customers. At the end of the meeting, Mr. Immelt
asked Mr. Naumann-Etienne for his view of a possible merger. Mr. Naumann-
Etienne replied that any proposal had to be acceptable to OEC's management and
Board, and that he would only be willing to present a specific proposal to
OEC's management and Board. Mr. Immelt said that, if OEC were willing to enter
into a business combination with GE, GE would be prepared to pay as much as $35
per share in GE Common Stock for the OEC Common Stock, and that GE would only
proceed on a basis that was acceptable to the OEC Board.
On July 12, 1999, Mr. Pepper met confidentially with OEC's senior management
team to discuss a potential business combination with GE. The management team
concluded that, given the many new strategic alternatives facing OEC, a
potential business combination with GE could greatly enhance the probability of
successfully implementing OEC's growth strategy and ensure a good future for
its stockholders, employees and customers.
The OEC Board met on July 13, 1999 and was informed by Mr. Naumann-Etienne
and Mr. Pepper of the discussions with GE. OEC's counsel reviewed the duties of
directors with respect to the discussions. After lengthy deliberations, the OEC
Board concluded that GE should be informed that OEC was not actively seeking a
business combination, but that OEC should engage a financial advisor to advise
the OEC Board of OEC's value, and that Mr. Pepper and Mr. Naumann-Etienne
should meet again with Mr. Immelt to obtain further information with respect to
a potential transaction with GE.
The OEC Board engaged Chase Securities Inc. on July 19, 1999 to assist OEC
in performing a review of its strategic options and in preparing a valuation
analysis of OEC.
On July 19, 1999, Mr. Pepper and Mr. Naumann-Etienne met with Mr. Immelt and
J. Keith Morgan, Vice President and General Counsel of GE Medical Systems. Mr.
Immelt described the potential benefits of a possible merger and how OEC might
function as a subsidiary of GE. Mr. Immelt cited the November 1998 acquisition
of Marquette Medical Systems by GE as an example of how OEC would operate after
a merger. The GE representatives also presented their views on how a merger
might be structured, including certain terms and conditions of the merger.
On July 22, 1999, the OEC Board of Directors met to discuss whether OEC
should agree to proceed with discussions with GE. OEC's legal counsel reviewed
with the directors the legal considerations of a potential merger with GE.
Chase reviewed with the OEC Board its valuation analysis of OEC and discussed
certain financial considerations of a potential business combination involving
OEC and GE. After extensive discussion, the OEC Board concluded that, while GE
would be the best strategic partner for OEC, the price, terms and conditions
discussed by GE were not acceptable. Mr. Naumann-Etienne was authorized to
communicate OEC's
15
<PAGE>
position and to explore a more favorable transaction with GE. The OEC Board
also ratified the selection of Chase as its financial advisor and to prepare
and deliver a fairness opinion, if requested, as to whether or not the
consideration proposed to be paid to OEC stockholders in any proposed merger
was fair to such stockholders from a financial point of view.
On July 23, 1999, Mr. Immelt and Mr. Naumann-Etienne discussed the outcome
of the OEC Board meeting. Discussions involving them and other representatives
of GE and OEC continued over the weekend and into the following week. As a
result of these discussions, on July 29, 1999, Mr. Immelt indicated to
Mr. Naumann-Etienne that GE would be willing to acquire OEC through a merger
that would provide OEC's stockholders with shares of GE common stock having a
value of approximately $36 for each share of OEC Common Stock. Mr. Naumann-
Etienne agreed to present GE's proposal to the OEC Board.
On July 30, 1999, GE and OEC executed and delivered a confidentiality
agreement in anticipation of GE's "due diligence" review of OEC. The Board of
Directors of GE approved the merger at its meeting on July 30.
Commencing on July 31, 1999 and continuing through August 7, 1999,
representatives of GE and its legal advisors met with senior OEC officers and
OEC's legal advisors and undertook a due diligence review of OEC. GE's legal
counsel delivered an initial draft of the proposed merger agreement to OEC and
its legal counsel on August 1, 1999. During the period of July 31, 1999 through
August 6, 1999, GE reviewed business, personnel, legal and financial
information relating to OEC and visited certain facilities of OEC.
Representatives of OEC and GE, together with their respective legal counsel,
conducted negotiations over the terms of the merger agreement during the course
of that week.
On August 6 and 7, 1999, various discussions were held by representatives of
GE and FLA, and their respective legal advisors, to negotiate the terms of the
proposed Adviser Agreement between GE and FLA.
On August 7, 1999, the OEC Board met and the final terms of, and conditions
to, the proposed merger agreement (which terms and conditions are summarized
below under "THE MERGER AGREEMENT") were presented by OEC's legal counsel.
Chase made a presentation to the OEC Board outlining its financial analysis of
the proposed financial terms of the Merger and delivered its opinion to the OEC
Board to the effect that, as of the date of such opinion, the Merger
Consideration to be received by the holders of OEC Common Stock pursuant to the
proposed Merger is fair, from a financial point of view, to such holders.
Further, OEC's counsel reviewed certain legal issues concerning the proposed
Merger. Following considerable discussion, including a detailed review of the
proposed documents to be signed, the OEC Board authorized Mr. Naumann-Etienne
to call Mr. Morgan to discuss several issues of concern to the OEC Board. After
some negotiation on those issues, the OEC Board approved the Stock Option
Agreement, and for purposes of (S)203 of the Delaware General Corporation Law,
the OEC Board approved the Adviser Agreement. The OEC Board also approved the
Merger Agreement (including the consideration set forth in the Merger Agreement
consisting of GE common stock, having a value of approximately $36 per share)
and authorized the performance of various acts on behalf of OEC in furtherance
of the Merger, including the submission of a proposal to approve and adopt the
Merger Agreement to the stockholders of OEC at a meeting of the stockholders to
be convened in the future. Director Allan May abstained from the vote to
approve the Merger Agreement.
Following the meeting on Saturday August 7, 1999, the Stock Option Agreement
was executed and delivered by GE and OEC, the Adviser Agreement was executed
and delivered by GE and FLA, and the Merger Agreement was executed and
delivered by GE, Sub and OEC. The proposed Merger was publicly announced on
August 9, 1999, prior to the opening of trading.
Reasons for the Merger; Recommendation of the OEC Board of Directors
The OEC Board has approved and adopted the Merger Agreement. The OEC Board
believes that the Merger is in the best interests of OEC and its stockholders
and recommends approval and adoption of the Merger Agreement by the holders of
OEC Common Stock at the Special Meeting.
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At meetings held on July 13, July 22, and August 7, 1999, the OEC Board of
Directors considered legal, financial and other issues involved in a potential
sale of the company. At its meetings on July 22 and August 7, with the
assistance of OEC's financial and legal advisors, it considered the specific
issues involved in a proposed merger with GE.
At the conclusion of its meeting on August 7, 1999, the OEC Board determined
that the Merger is in the best interests of OEC and its stockholders. In
reaching its decision to enter into and to recommend the approval and adoption
of the Merger Agreement, the OEC Board considered a number of factors,
including, without limitation, the following:
. the present and anticipated environment in the medical equipment
industry, the strategic options available to OEC and the difficulty of
continuing to compete effectively with companies having greater resources
than OEC;
. information concerning the financial condition, results of operations and
business prospects of both OEC and GE Medical Systems, a division of GE,
and current industry, economic and market conditions;
. information concerning the financial and business prospects for the
combined business, including the strategic benefits of the merged
operations;
. the fact that the Merger should reduce OEC's dependence on any single
product and the associated risks of contract cancellation;
. the fact that, in the opinion of OEC's outside legal counsel, the Merger
could be accomplished on a tax-free basis;
. the presentations from, and discussions with, senior executives of OEC
and representatives of OEC's outside legal counsel;
. the presentations from, and discussions with, OEC's financial advisor
regarding the financial terms of the proposed Merger and the opinion
dated August 7, 1999 from Chase to the OEC Board to the effect that the
Merger consideration to be received by holders of OEC Common Stock
pursuant to the Merger is fair, from a financial point of view, to such
holders;
. the interests of constituencies other than the stockholders of OEC, such
as employees, customers and suppliers;
. the opportunity for OEC's stockholders to become stockholders of GE,
which the OEC Board views as a large, diversified and well managed
company;
. the relative certainty of receiving consideration valued at $36.00 per
share of OEC Common Stock regardless of stock market fluctuations prior
to the closing of the Merger; and
. the inclusion of a termination fee for OEC if GE should exercise its
rights to terminate the Merger Agreement under various circumstances.
In view of the variety of factors considered by the OEC Board in connection
with its evaluation of the Merger, the OEC Board did not find it practicable
to, and did not, quantify or otherwise assign relative weights to such factors.
The OEC Board concluded, in light of these factors, that the Merger is
advisable, fair to, and in the best interests of, OEC and its stockholders. THE
OEC BOARD HAS APPROVED THE MERGER AGREEMENT AND RECOMMENDS THAT HOLDERS OF OEC
COMMON STOCK VOTE TO APPROVE AND ADOPT IT AT THE SPECIAL MEETING.
Opinion of Chase Securities Inc.
On August 7, 1999, Chase delivered its written opinion to the OEC Board to
the effect that, as of that date, and based upon the assumptions made, matters
considered and limits of review set forth therein, the Merger Consideration was
fair to the holders of the OEC Common Stock from a financial point of view.
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A copy of Chase's opinion, which sets forth the assumptions made, matters
considered and certain limitations on the scope of review undertaken by Chase,
is attached as Annex II to this Proxy Statement/Prospectus. Stockholders of OEC
are urged to read such opinion in its entirety. Chase's opinion was provided
for the use and benefit of the OEC Board in its evaluation of the Merger, was
directed only to the fairness to the holders of the OEC Common Stock of the
Merger Consideration from a financial point of view as of August 7, 1999, and
does not constitute a recommendation to any stockholder of OEC as to how such
stockholder should vote with respect to the Merger. The summary of Chase's
opinion set forth in this Proxy Statement/Prospectus is qualified in its
entirety by reference to the full text of its opinion attached as Annex II
hereto.
In arriving at its opinion, Chase, among other things:
1. reviewed a draft of the Merger Agreement dated August 5, 1999;
2. reviewed certain publicly available business and financial information
that Chase deemed relevant relating to OEC and GE and the industries in which
they operate;
3. reviewed certain internal non-public financial and operating data and
forecasts provided to Chase by the management of OEC relating to the business
of OEC;
4. discussed, with members of the senior management of OEC, OEC's
operations, historical financial statements and future prospects;
5. compared the financial and operating performance of OEC and GE with
publicly available information concerning certain other companies Chase deemed
comparable and reviewed the relevant historical stock prices of the OEC Common
Stock and the GE Common Stock and certain publicly traded securities of such
other companies;
6. reviewed the financial terms of certain recent business combinations and
acquisition transactions Chase deemed reasonably comparable to the Merger and
otherwise relevant to Chase's inquiry; and
7. made such other analyses and examinations as Chase deemed necessary or
appropriate.
In connection with the preparation of its opinion, Chase did not hold any
discussions with representatives of GE nor did Chase receive or review any non-
public information prepared by or relating to GE.
Chase assumed and relied upon, without assuming any responsibility for
verification, the accuracy and completeness of all of the financial and other
information provided to, discussed with or reviewed by or for Chase, or
publicly available, for purposes of its opinion and further relied upon the
assurance of the management of OEC that it was not aware of any facts that
would make such information inaccurate or misleading. Chase neither made nor
obtained any independent evaluations or appraisals of the assets or liabilities
of OEC or GE, nor did Chase conduct a physical inspection of the properties and
facilities of OEC or GE. Chase assumed that the financial forecasts provided to
it by OEC were reasonably determined on bases reflecting the best currently
available estimates and judgments of the management of OEC as to the future
financial performance of OEC. Chase expressed no view as to such forecast or
projection information or the assumptions on which they were based.
For purposes of rendering its opinion, Chase assumed that, in all respects
material to its analysis, the representations and warranties of each party
contained in the Merger Agreement were true and correct, that each party would
perform all of the covenants and agreements required to be performed by it
under the Merger Agreement and that all conditions to the consummation of the
Merger would be satisfied without waiver thereof. Chase further assumed that
all material governmental, regulatory or other consents and approvals would be
obtained and that in the course of obtaining any necessary governmental,
regulatory or other consents and approvals, or any amendments, modifications or
waivers to any documents to which any of OEC or GE was a party, as contemplated
by the Merger Agreement, no restrictions would be imposed or amendments,
modifications or waivers made that would have any material adverse effect on
the contemplated benefits to
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<PAGE>
OEC of the Merger. Chase also assumed that the definitive Merger Agreement
would not differ in any material respects from the draft thereof furnished to
it. Chase further assumed that the Merger would qualify as a tax-free
reorganization for U.S. federal income tax purposes.
In connection with the preparation of its opinion, Chase was not authorized
by OEC or the OEC Board of Directors to solicit, nor did Chase solicit, third-
party indications of interest for the acquisition of all or any part of OEC. In
addition, Chase was engaged by OEC solely for purposes of delivering its
opinion, and, as a result, Chase did not participate in the structuring or the
negotiation of the Merger.
Chase's opinion was necessarily based on market, economic and other
conditions as they existed and could be evaluated as of the date of the
opinion. Chase's opinion was limited to the fairness, from a financial point of
view, to the holders of the OEC Common Stock of the Merger Consideration and
Chase expressed no opinion as to the merits of the underlying decision by OEC
to engage in the Merger. In addition, Chase expressed no opinion as to the
prices at which the OEC Common Stock or the GE Common Stock would trade
following the announcement or the consummation, as the case may be, of the
Merger.
The following is a summary of certain financial and comparative analyses
performed by Chase in arriving at its opinion.
Discounted Cash Flow Analysis. Chase performed a discounted cash flow
("DCF") analysis of OEC using financial forecasts provided by OEC management
for the years ending December 31, 1999 through 2003. Utilizing such
information, Chase calculated a range of values based upon the discounted
present value of the sum of the projected stream of unlevered free cash flows,
less taxes, changes in working capital and capital expenditures, to OEC from
June 30, 1999 through December 31, 2003, and the projected terminal value of
OEC at December 31, 2003 based upon a range of net income multiples applied to
projected net income in 2003. The DCF was calculated for OEC assuming discount
rates ranging from 10% to 12%, utilizing the mid-year convention to determine
the discount period, and terminal multiples of net income in the year 2003
ranging from 16x to 20x. This analysis yielded a value per share of OEC common
stock ranging from approximately $29.50 to $39.00.
Comparable Public Companies Analysis. Using publicly available information,
Chase compared certain financial and operating information and ratios
(described below) for OEC with corresponding financial and operating
information and ratios for companies in lines of business believed to be
generally comparable to those of OEC in the healthcare industry, as follows:
. Acuson Corporation;
. ADAC Laboratories Inc.;
. Analogic Corporation;
. CONMED Corporation;
. Datascope Corporation;
. EndoSonics Corporation;
. Sonosite Incorporated;
. Spacelabs Medical Inc.;
. Steris Corporation;
. Trex Medical Corporation; and
. Varian Medical Systems Incorporated
In examining the comparable companies, Chase calculated the enterprise
value, defined as the total market value of equity on a fully diluted basis
plus outstanding debt, preferred stock and minority interest less cash and cash
equivalents, of each company as a multiple of its respective estimated 1999
revenue, estimated 1999
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earnings before interest, taxes, depreciation and amortization, which is
referred to as EBITDA, in each case based on selected public research analyst
estimates. Chase also calculated the equity value, defined as the total market
value of equity on a fully diluted basis, of each company as a multiple of its
respective estimated 1999 net income, in each case based on mean estimates
available from The Institutional Brokers Estimate System. In conducting this
analysis, Chase used closing share prices on August 4, 1999, except for OEC,
for which the unaffected market price, defined as the 4-week average closing
price prior to July 13, 1999, of $23.25 per share of OEC Common Stock was used.
The analysis yielded:
<TABLE>
<CAPTION>
Low High Mean OEC
----- ----- ----- -----
<S> <C> <C> <C> <C>
1999 Estimated Revenue............................... 0.53x 2.36x 1.39x 1.32x
1999 Estimated EBITDA................................ 6.0 11.8 8.2 8.8
1999 Estimated Net Income............................ 10.3 21.8 17.2 16.1
</TABLE>
Based on this analysis, Chase estimated a value per share of OEC common
stock ranging from approximately $18.25 to $30.75 based on OEC management
forecasts of 1999 revenue, EBITDA and net income.
Comparable Transactions Analysis. Chase reviewed certain publicly available
information regarding selected business combinations in the medical device
industry announced since July 1996. The comparable transactions and the months
in which each transaction was announced were as follows:
. Hologic, Inc.'s acquisition of FluoroScan Imaging Systems Inc. (July
1996);
. EndoSonics Corporation's acquisition of Cardiometrics Inc. (January
1997);
. Beckman Instruments Inc.'s acquisition of Coulter Corp. (September 1997);
. Bausch & Lomb Inc.'s acquisition of Storz Instrument Co. (October 1997);
. US Surgical Corp.'s acquisition of Valleylab Inc. (December 1997);
. GE Medical Systems' acquisition of Diasonics Ultrasound Inc. (February
1998);
. Koninklijke Philips Electronics N.V.'s acquisition of ATL Ultrasound Inc.
(July 1998);
. GE Medical Systems' acquisition of Elscint Ltd.'s nuclear medicine and
magnetic resonance imaging businesses (September 1998);
. Picker International, Inc.'s acquisition of Elscint Ltd.'s computed
tomography division (September 1998);
. GE Medical Systems' acquisition of Marquette Medical Systems Inc.
(September 1998);
. Maxxim Medical Inc.'s acquisition of Circon Corp. (November 1998); and
. Sorin Biomedical SpA's acquisition of COBE Cardiovascular Inc. (November
1998).
In examining these business combinations, Chase calculated the respective
transaction values, defined as the market value of the consideration offered to
target common stockholders on a fully diluted basis plus outstanding debt,
preferred stock, minority interest less cash and cash equivalents, as a
multiple of (i) latest twelve months revenues, which is referred to as LTM
revenues, and (ii) latest twelve months EBITDA, which is referred to as LTM
EBITDA. This analysis yielded LTM revenue multiples ranging from 0.56x to
4.23x, with a mean of 1.56x (excluding for purposes of calculating the mean
multiple EndoSonics Corporation's acquisition of Cardiometrics Corp. and
Hologic, Inc.'s acquisition of FluoroScan Imaging Systems Inc.), and LTM EBITDA
multiples ranging from 12.5x to 34.6x, with a mean of 14.3x (excluding for
purposes of calculating the mean multiple Beckman Instruments Inc.'s
acquisition of Coulter Corp. and Hologic, Inc.'s acquisition of FluoroScan
Imaging Systems Inc.). Based on this analysis, Chase estimated a value per
share of OEC common stock ranging from approximately $20.50 to $42.50 based on
LTM revenues and LTM EBITDA.
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<PAGE>
Premiums Paid Analysis. Using publicly available information, Chase reviewed
the premiums paid over the common stock trading prices for certain periods
prior to the announcement date for the following selected business combinations
announced between January 1, 1998 and July 14, 1999:
. all transactions in the medical device industry;
. all transactions in the healthcare industry having a transaction value
ranging in size from $200 million to $700 million; and
. all transactions having a transaction value ranging in size from $200
million to $700 million.
The mean premiums for these selected transactions over the common stock
trading prices for one day, one week and four weeks prior to the announcement
date were:
<TABLE>
<CAPTION>
Premium To Prior
Close
Number of ---------------------
Transactions 1-day 1-week 4-weeks
------------ ----- ------ -------
<S> <C> <C> <C> <C>
Medical Device Industry................... 31 44.6% 53.7% 62.9%
Healthcare Industry....................... 33 27.7% 38.1% 49.9%
All Industries............................ 369 31.2% 33.9% 41.2%
</TABLE>
Based on this analysis and the unaffected market price of $23.25 per share
of OEC common stock, Chase estimated a value per share of OEC common stock
ranging from approximately $33.75 to $38.25.
Other Analyses. Among other analyses performed and factors considered by
Chase in connection with its opinion, Chase reviewed the historical trading
prices of OEC Common Stock for the period from August 6, 1998 to August 6, 1999
and observed that the 52-week low and high for OEC common stock ranged from
$17.00 and $34.75, Chase also performed an analysis of the theoretical maximum
consideration that four potentially interested strategic acquirers could pay
without incurring year 2000 earnings per share dilution, which resulted in a
theoretical maximum consideration per share of OEC common stock ranging from
$30.00 to $38.00, Additionally, Chase performed an analysis of the theoretical
maximum consideration that could be paid in an acquisition of OEC by a
financial buyer, based on OEC management projections, 2003 net income exit
multiples of 16x to 20x, and required equity returns of 25% to 35%, which
resulted in a theoretical maximum consideration per share of OEC common stock
ranging from $19.75 to $26.00.
The summary set forth above does not purport to be a complete description of
the analyses performed by Chase in arriving at its opinion. Arriving at a
fairness opinion is a complex process not necessarily susceptible to partial
analysis or summary description. Chase believes that its analyses must be
considered as a whole and that selecting portions of analyses and of the
factors considered by it, without considering all such factors and analyses,
could create a misleading view of the processes underlying its opinion. Chase
did not assign relative weights to any of its analyses in preparing its
opinion. The matters considered by Chase in its analyses were based on numerous
macroeconomic, operating and financial assumptions with respect to industry
performance, general business and economic conditions and other matters, many
of which are beyond OEC's and GE's control and involve the application of
complex methodologies and educated judgment. Any estimates incorporated in the
analyses performed by Chase are not necessarily indicative of actual past or
future results or values, which may be significantly more or less favorable
than such estimates. Estimated values do not purport to be appraisals and do
not necessarily reflect the prices at which businesses or companies may be sold
in the future, and such estimates are inherently subject to uncertainty. None
of the comparable companies used in the Comparable Public Companies Analysis
described above is identical to OEC, and none of the comparable transactions
used in the Comparable Transaction Analysis described above is identical to the
proposed Merger. Accordingly, an analysis of publicly traded comparable
companies and transactions is not mathematical; rather it involves complex
considerations and judgments concerning differences in financial and operating
characteristics of the comparable companies and other factors that could affect
the public trading value of the comparable companies or company to which they
are being compared.
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The OEC Board of Directors selected Chase to act as its financial advisor on
the basis of Chase's reputation as an internationally recognized investment
banking firm with substantial expertise in transactions similar to the Merger
and because it is familiar with OEC and its business. As part of its financial
advisory business, Chase is continually engaged in the valuation of businesses
and their securities in connection with mergers and acquisitions and valuations
for estate, corporate and other purposes. Chase has acted as financial advisor
to OEC in connection with the delivery of its opinion and received a fee upon
delivery thereof. In addition, OEC has agreed to indemnify Chase for certain
liabilities arising out of its engagement. The Chase Manhattan Corporation and
its affiliates, including Chase Securities Inc., in the ordinary course of
business, have, from time to time, provided commercial and investment banking
services to GE and its affiliates, for which Chase received usual and customary
compensation and in the future may continue to provide such commercial and
investment banking services. In the ordinary course of business, Chase or its
affiliates may trade in the debt and equity securities of OEC and GE for its
own accounts and for the accounts of its customers and, accordingly, may at any
time hold a long or short position in such securities.
The terms of the engagement of Chase by OEC are set forth in letter
agreements between Chase and OEC dated as of July 19, 1999 and August 3, 1999.
Pursuant to the terms of these letter agreements, OEC paid to Chase a retainer
fee of $100,000 and an additional fee of $900,000 upon delivery of its opinion.
In addition, OEC has also agreed to reimburse Chase for its reasonable out-of-
pocket expenses (including the fees of its legal counsel) and to indemnify
Chase and certain related persons from and against certain liabilities in
connection with its engagement, including certain liabilities under the federal
securities laws, arising out of its engagement.
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 OEC have in the Merger that are different from your
interests as stockholders. In this regard, you should consider, among other
things, the stock option modifications and the agreements described below.
Stock Options. Except as noted below, at the Effective Time, each employee
stock option and each director stock option currently exercisable will
generally 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 OEC 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 OEC
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.
In addition, OEC 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 OEC 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.
OEC also has agreed in the Merger Agreement to take action to provide that,
when each person who is a non-employee director of OEC 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,
and each Substitute Option held by such person immediately following the
Effective Time which is then exercisable shall continue to be exercisable in
accordance with the original term of each such Substitute Option as if the
service of such director had not ceased.
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<PAGE>
Unvested OEC options held by any employee or director under the 1990 Stock
Option Plan on the date of the Merger will vest but will lapse unless they are
exercised within 30 days of the consummation of the Merger, in which event such
option holders will receive shares of GE Common Stock. GE will offer holders of
options under the 1990 Stock Option Plan the opportunity to waive their right
to accelerate the vesting of their options and to substitute options of GE
Common Stock for options of OEC Common Stock, subject to the vesting schedule
(without acceleration for the merger) and other terms and conditions currently
applicable to such options, but modified, as all substitute options will be, to
include the provisions relating to termination of employment without cause.
At August 7, 1999, an aggregate of approximately 1,917,630 shares of OEC
Common Stock were subject to stock options granted to employees and directors
of OEC under various stock option plans. The number of shares of OEC Common
Stock subject to stock options held by executive officers and directors of OEC
as of August 7, 1999 were as follows: Ruediger Naumann-Etienne, 170,000; Joseph
W. Pepper, 186,500; Randy W. Zundel, 165,990; Barry K. Hanover, 115,000; Larry
E. Harrawood, 155,000; F. Daniel Edwards, 36,031; Gregory K. Hinckley, 21,000;
Benno P. Lotz, 12,870; Alan W. May, 141,000; Chase N. Peterson, 26,000.
Retention Agreements. After consultation with GE, and with GE's prior
agreement given in the Merger Agreement, OEC agreed to enter into retention
agreements (the "Retention Agreements"), at or shortly before the closing, with
34 employees, including the following executive officers of OEC: Joseph W.
Pepper, Randy W. Zundel, Barry K. Hanover, Larry E. Harrawood and F. Daniel
Edwards. 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 canceled and of no force or effect. The
Retention Agreements are intended to induce these executives to remain in the
employ of OEC during and for a period of two years after the acquisition of OEC
by GE.
Under each Retention Agreement, if an executive remains continuously
employed by OEC or by a company or other entity or organization within GE's
medical systems business on a full-time basis for two years following the
Effective Time, OEC 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 estimated bonus for the 1999 fiscal
year 50% of which will be paid if the executive remains employed by OEC for one
year following completion of the Merger, and the remaining 50% of which will be
paid if the executive remains employed by OEC for two years following
completion of the Merger. If the executive's employment is terminated (i) by
the executive due to an involuntary and materially adverse change in the nature
or scope of the executive's authority or duties, or due to the relocation of
the executive's office to a location more than 50 miles from the location of
the executive's current office, or (ii) without "Cause" (as defined below) or
due to death or disability within the first year following completion of the
Merger, OEC will pay the executive a termination payment ("Termination
Payment") equal to the product of the executive's annual base salary in effect
at the Effective Time, together with such executive's estimated bonus for the
1999 fiscal year, and a severance multiplier.
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 services reasonably assigned following
notice and an opportunity to cure.
Under each Retention Agreement, the executive agrees that such executive
will be subject to certain prohibitions on competition with the medical
business of OEC during the period that such executive is receiving Termination
Payments thereunder. In addition, each executive has agreed not to disclose
confidential information of OEC or GE and, as of the date of termination of
employment, to release any claims the executive may then have against OEC or
GE.
Supplemental Executive Retirement Plan. At the Closing of the Merger, Mr.
Allan W. May, a director, will receive a payment of $348,505 under the terms of
a Supplemental Executive Retirement Plan and related life insurance contract
originally funded by Mr. May. Mr. May asserted unspecified damages arising from
tort
23
<PAGE>
claims relating to his termination as a director in connection with the merger.
OEC has offered to settle Mr. May's claims for an amount equal to $70,000 in
exchange for a complete release of all claims that Mr. May may now have or may
hereafter assert against OEC.
Form of the Merger
If the holders of OEC 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 OEC, with OEC being the surviving
corporation after the Merger (the "Surviving Corporation") and become 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 OEC anticipate that the
Closing Date will occur as promptly as practicable after the Special Meeting.
The term "Effective Time" means the time on the closing date of the filing of
the Certificate of Merger with the Secretary of State of the State of Delaware
(or such later time as may be agreed by the parties hereto and specified in the
Certificate of Merger).
Merger Consideration
The Merger Agreement provides that, at the Effective Time, each share of OEC
Common Stock issued and outstanding immediately prior to the Effective Time
(other than any shares held in treasury by OEC or its wholly owned subsidiaries
or shares owned by GE or its wholly owned subsidiaries) will be 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 $36.00 by the Average GE Share Price. The "Average GE
Share Price" is the average of the daily volume-weighted sales prices 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"). Stockholders 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 $36.00, 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
$111.00 per share, the Merger Consideration would be equal to .324 shares of GE
Common Stock. An Average GE Share Price greater than $111.00 would result in
fewer than .324 shares of GE Common Stock constituting the Merger Consideration
and an Average GE Share Price less than $111.00 would result in more than .324
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 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 $36.00.
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. Because the closing of the merger may
be postponed until after the date of the special meeting due to a delay in
receipt of regulatory clearances, you may call, toll-free, (800) 250-7979 for
information concerning the estimated number of shares of GE Common Stock that
will be issued in exchange for each share of OEC Common Stock as of the date
you call. 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."
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<PAGE>
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 Certificate of
Merger with the Secretary of State of the State of Delaware, 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 OEC 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 OEC Common Stock, certificates representing the shares of GE Common Stock
issuable pursuant to the Merger in accordance with the 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 OEC 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. OEC STOCKHOLDERS 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
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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
OEC'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 OEC 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 OEC Common Stock will cease to be
traded on the NYSE. In addition, OEC will deregister the OEC 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.
After the Merger, stockholders of OEC will become stockholders of GE. Upon
consummation of the Merger, the rights of all such former stockholders of OEC
will be governed by applicable New York law (rather than the Delaware General
Corporation Law (the "DGCL")), 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 OEC stockholders,
see "COMPARISON OF RIGHTS OF OEC STOCKHOLDERS AND GE STOCKHOLDERS."
Forward-Looking Statements May Prove Inaccurate
GE and OEC 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 OEC set forth under
"--Reasons for the Merger; Recommendation of the OEC Board of Directors" and
"--Fairness Opinion of Chase Securities Inc." 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 OEC and
GE, and could cause those results to differ materially from those expressed in
the forward-looking statements of OEC and GE: materially adverse changes in
economic conditions and in the markets served by OEC 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 United States Federal Income Tax Consequences
THE FOLLOWING DISCUSSION IS 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 OEC STOCKHOLDER WHO
IS SUBJECT TO SPECIAL TREATMENT UNDER CERTAIN UNITED STATES FEDERAL INCOME TAX
LAWS, SUCH AS STOCKHOLDERS WHO ARE DEALERS IN SECURITIES, WHO ARE FINANCIAL
INSTITUTIONS, INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS, WHO HOLD SHARES OF
OEC STOCK AS PART OF A POSITION IN A "STRADDLE" OR AS PART OF A "HEDGING"
TRANSACTION, WHO HAVE A "FUNCTIONAL CURRENCY" OTHER THAN THE
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U.S. DOLLAR, WHO ARE FOREIGN PERSONS OR WHO ACQUIRED THEIR SHARES OF OEC STOCK
THROUGH STOCK OPTION OR STOCK PURCHASE PROGRAMS OR OTHERWISE AS COMPENSATION.
IN ADDITION, THIS DISCUSSION DOES NOT ADDRESS ANY CONSEQUENCES ARISING UNDER
THE LAWS OF ANY STATE, LOCAL OR FOREIGN JURISDICTION. OEC STOCKHOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO SPECIFIC TAX CONSEQUENCES TO THEM
OF THE MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED HEREIN.
THIS SUMMARY IS BASED UPON THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE "CODE"), TREASURY REGULATIONS ISSUED THEREUNDER, JUDICIAL DECISIONS AND
ADMINISTRATIVE RULINGS AND PRACTICE IN EFFECT AS OF THE DATE HEREOF, ALL OF
WHICH ARE SUBJECT TO CHANGE. ANY SUCH CHANGE COULD BE APPLIED RETROACTIVELY AND
COULD AFFECT THE ACCURACY OF THE STATEMENTS AND THE CONCLUSIONS DISCUSSED
HEREIN AND THE TAX CONSEQUENCES OF THE MERGER TO GE, OEC, AND/OR THEIR
STOCKHOLDERS.
Neither GE nor OEC has requested or will request a ruling from the Internal
Revenue Service with regard to any of the tax consequences of the Merger.
However, as a condition to the consummation of the Merger OEC will receive an
opinion from Holland & Hart LLP, and GE will receive an opinion from Gibson,
Dunn & Crutcher LLP, 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 OEC, 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 OEC as a result
of the Merger;
(iii) no gain or loss will be recognized by the stockholders of OEC
upon the exchange of their shares of OEC Common Stock for shares of GE
Common Stock pursuant to the Merger, except with respect to any gain or
loss attributable to cash received in lieu of fractional shares of GE
Common Stock;
(iv) the aggregate tax basis of the shares of GE Common Stock received
solely in exchange for shares of OEC 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 OEC Common
Stock exchanged therefor;
(v) the holding period for shares of GE Common Stock received solely in
exchange for such shares of OEC Common Stock pursuant to the Merger will
include the period for which the OEC Common Stock surrendered in the Merger
was considered to be held by the OEC stockholder, provided that such shares
of OEC Common Stock were held as capital assets by the stockholder at the
Effective Time;
(vi) a stockholder of OEC who receives cash instead of a fractional
share of GE Common Stock will generally recognize gain or loss equal to the
difference, if any, between such stockholder's basis in the fractional
share (determined under clause (iv) above) and the amount of cash received.
With respect to cash payments received by OEC stockholders in lieu of a
fractional share of GE Common Stock, certain noncorporate stockholders of OEC
may be subject to backup withholding at a rate of 31% on such cash payments.
Backup withholding will not apply, however, to a stockholder who (i) furnishes
a correct taxpayer identification number and certifies that he or she is not
subject to backup withholding by completing the Substitute Form W-9 included in
the letter of transmittal to be delivered to holders of OEC Common Stock, or
(ii) is otherwise exempt from backup withholding. A stockholder 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.
The foregoing opinions of counsel will be subject to the limitations and
qualifications referred to in this discussion, and will be conditioned upon the
following assumptions:
. The truth and accuracy at all relevant times of the statements,
covenants, representations and warranties contained in (i) the Merger
Agreement, (ii) in the representations from OEC, GE, Sub, and certain
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stockholders of OEC which are to be delivered to counsel and are
substantially in the forms contained in Exhibits to the Merger Agreement
and the Adviser Agreement (the "Tax Representation Letters"), and (iii) in
all other instruments and documents related to GE and OEC that are relied
upon by counsel for those opinions.
. The performance of all covenants contained in the Merger Agreement and
the Tax Representation Letters without waiver or breach of any material
provision thereof.
. The accuracy of any representation or statement made "to the best of
knowledge" or qualified in a similar manner.
. The reporting of the Merger as a reorganization under Section 368(a) of
the Code by GE and OEC in their respective federal income tax returns.
. Other customary assumptions as to the accuracy and authenticity of
documents provided to counsel.
Opinions of counsel are not binding on the Internal Revenue Service or the
courts. If the Internal Revenue Service determines successfully that the Merger
is not a reorganization within the meaning of Section 368(a) of the Code, OEC
stockholders would be required to recognize gain or loss with respect to each
share of OEC stock surrendered in the Merger in an amount equal to the
difference between the tax basis in such share of stock and the fair market
value of the GE Common Stock received in exchange therefor. In such event, an
OEC stockholder's aggregate tax basis in the GE Common Stock received in the
Merger would equal its fair market value, and the stockholder's holding period
for such stock would begin the day after the Merger.
Appraisal Rights
Under Delaware law, 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. STOCKHOLDERS OF OEC 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 OEC
relating to a number of matters, including: (i) the due organization, valid
existence and good standing of OEC and its subsidiaries; (ii) the capital
structure of OEC; (iii) the authorization, execution, delivery and
enforceability of the Merger Agreement and related matters; (iv) the absence of
any conflict with OEC's or its subsidiaries' charters and bylaws, with any
agreement of OEC 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 OEC with
the Commission and the accuracy of information contained therein; (vi) the
accuracy of information supplied by OEC for the Registration Statement and this
Proxy Statement/Prospectus; (vii) the absence of certain changes or events in
OEC's business or condition (except as disclosed); (viii) OEC's possession of
all permits and regulatory approvals 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
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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; (xvii) the receipt of the opinion of OEC's financial advisor as to the
fairness of the Merger Consideration; (xviii) the inapplicability of Section
203 of the DGCL to the transactions contemplated by the Merger Agreement; (xix)
the vote required for approval of the Merger Agreement by stockholders of OEC;
(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 and distributors; (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 OEC's assets; (xxix) brokers and finders; and (xxx)
Year 2000 compliance.
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) that the GE Common Stock to be issued at
the Effective Time will be duly authorized, fully paid, non assessable, validly
issued and free of preemption rights; (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) the
accuracy of representations made to OEC.
Certain Covenants And Agreements
Conduct Of Business Of OEC. OEC 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 OEC'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 stockholders;
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;
(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 practices and
indebtedness between OEC and any of its wholly-owned subsidiaries or
between any wholly-owned subsidiaries;
(vii)alter the corporate structure or ownership of OEC or any
subsidiary;
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(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 $5
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, OEC 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 OEC 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 covenant
prohibits OEC or its directors from (i) complying with Rule 14e-2 of the
Securities Exchange Act of 1934 with regard to a tender or exchange offer, or
(ii) referring a third party to this covenant or making a copy of this
covenant available to any third party; and PROVIDED, FURTHER, that prior to
the Special Meeting, if the OEC Board reasonably determines the Takeover
Proposal constitutes a Superior Proposal (as defined below), then, to the
extent required by the fiduciary obligations of the OEC Board, as determined
in good faith by a majority thereof after consultation with independent
counsel (who may be OEC's regularly engaged independent counsel), OEC may, in
response to an unsolicited request therefor, furnish information with respect
to OEC and its subsidiaries to any person pursuant to a customary
confidentiality statement (as determined by OEC's independent counsel) and
withdraw or modify its recommendation of the Merger Agreement. 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
OEC or any of its subsidiaries or any financial advisor, attorney or other
advisor or representative of OEC or any of its subsidiaries, whether or not
such person is purporting to act on behalf of OEC or any of its subsidiaries
or otherwise, will be deemed to be a breach of this paragraph by OEC.
"Takeover Proposal" means any proposal for a merger, tender offer or other
business combination involving OEC 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 OEC 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 OEC 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 OEC
Board determines, at a duly constituted meeting of the OEC Board or by
unanimous written consent, in its reasonable good faith judgment to be more
favorable to OEC's stockholders than the Merger (based on the advice of OEC'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 OEC's independent
financial advisor), is reasonably capable of being obtained by such third
party.
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OEC has agreed to advise GE in writing within 24 hours of
(i) any Takeover Proposal or any expression of interest regarding a
potential Takeover Proposal received by any officer or director of OEC or,
to the knowledge of OEC, any financial advisor, attorney or other advisor
or representative of OEC;
(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 OEC intends to furnish any person with any information with
respect to any Takeover Proposal in accordance with the preceding
paragraph, OEC will advise GE in writing of such intention not less than 48
hours in advance of providing such information.
Third Party Standstill Agreements. During the period from the date of the
Merger Agreement through the Effective Time, OEC has agreed not to terminate,
amend, modify or waive any provision of any confidentiality or standstill
agreement to which OEC or any of is Subsidiaries is a party (other than
involving GE), and to enforce such agreements to the fullest extent permitted
under applicable law.
Reorganization. During the period from the date of the Merger Agreement
through the Effective Time, the parties have agreed not to take or fail to
take any action that would jeopardize the qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code.
Stock Option Plans. The parties have agreed that at the Effective Time,
each OEC 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 OEC Common Stock subject to
such OEC 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 OEC Common Stock subject to such OEC 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 OEC 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 (including vesting schedules) as were
applicable to the related OEC Stock Option immediately prior to the Effective
Time. OEC will take all action necessary to implement the provisions of this
paragraph, including amendment of the OEC Stock Option Plans, and to ensure
that, after giving effect to the foregoing, no OEC Stock Option will be
exercisable for OEC Common Stock following the Effective Time. OEC has agreed
to take no action to accelerate or otherwise affect the exercisability of any
OEC 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.
Unvested OEC options held by any employee or director under the 1990 Stock
Option Plan on the date of the Merger will vest but will lapse unless they are
exercised within 30 days of the consummation of the Merger, in which event
such option holders will receive shares of GE Common Stock. GE will offer
holders of options under the 1990 Stock Option Plan the opportunity to waive
their right to accelerate the vesting of their options and to substitute
options of GE Common Stock for options of OEC Common Stock, subject to the
vesting schedule (without acceleration for the merger) and other terms and
conditions currently applicable to such options, but modified, as all
substitute options will be, to include the provisions relating to termination
of employment without cause.
Prior to the Effective Time, OEC 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 OEC without Cause (as
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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 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, OEC 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 OEC by each person who is a non-employee director of
OEC 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.
Real Estate Transfer and Gains Tax. OEC has agreed that OEC will pay any
foreign, state or local tax which is attributable to the transfer of the
beneficial ownership of OEC'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.
Each of OEC and GE has agreed to cooperate with the other in the filing of any
Tax returns with respect to the Gains Taxes, if any, including supplying in a
timely manner a complete list of all real property interests held by OEC and is
subsidiaries and any information that is reasonably necessary to complete such
returns if there are any Gains Taxes applicable. The portion of the
consideration allocable to the real property of OEC and its subsidiaries shall
be determined by GE in its reasonable discretion.
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 OEC 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
OEC pursuant to the DGCL, the OEC Charter, the OEC 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 OEC pursuant
to the DGCL, the OEC Charter, the OEC 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, OEC'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 OEC'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 $70,000), 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:
Stockholder Approval. Approval of the Merger Agreement by the requisite
vote of stockholders of OEC in accordance with applicable law and the OEC
Charter and the OEC 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.
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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 restraining, prohibiting or restricting the Merger or any of
the transactions contemplated by the Merger Agreement, or would have,
individually or in the aggregate, a material adverse effect on GE (assuming
the Merger had taken place), shall have been obtained, shall have been made
or shall have occurred.
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 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 OEC,
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 OEC 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 OEC to Effect the Merger. The obligation of OEC
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, OEC shall have received a
certificate signed on behalf of each of GE and Sub by one of its officers
to such effect.
Tax Opinion. OEC having received an opinion of Holland & Hart LLP,
counsel to OEC, in form and substance reasonably satisfactory to OEC, 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 and its subsidiaries since the date of the Merger
Agreement, and OEC having received a certificate signed on behalf of GE by
an officer of GE to such effect.
OEC 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. OEC 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 OEC 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 that 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; PROVIDED, HOWEVER, that for the purpose of certain
of OEC's representations
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and warranties made in the Merger Agreement relating to the period between
the date of the Merger Agreement and the Effective Time, such
representations and warranties (which have already been qualified by the
disclosure of a potential temporary shortfall in net income associated with
the introduction of the 9800 model product) shall only be deemed to not be
true and correct if the aggregate effect of the matters as to which they
are not true and correct would constitute a "Post Signing Material Adverse
Change," as defined below. GE shall have received a certificate signed on
behalf of OEC by its Chief Executive Officer and its Chief Financial
Officer to such effect.
Tax Opinion. GE having received an opinion of Gibson, Dunn & Crutcher,
LLP 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. OEC 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 where the failure to receive such consent would not have
a material adverse effect.
Affiliate Agreements. GE having received a signed agreement from any
person who may be deemed to be an affiliate of OEC pursuant to Rule 145
under the Securities Act, stating that such affiliate will comply with
Rules 144 and 145 under the Securities Act.
Post Signing Material Adverse Change. There having been no "Post Signing
Material Adverse Change" since the date of the Merger Agreement with
respect to OEC since the date of the Merger Agreement, and GE having
received a certificate signed on behalf of OEC by the Chief Executive
Officer and the Chief Financial Officer of the OEC to such effect. A "Post
Signing Material Adverse Change" means any adverse change or changes in the
business, operations, properties, assets, liabilities, employee
relationships, customer or supplier relationships, earnings or results of
operations or the prospects of OEC and its subsidiaries, taken as a whole
after the date of the Merger Agreement that are or could reasonably be
expected (as far as can be foreseen at that time) to be adverse in an
aggregate amount in excess of $35,000,000.
OEC Stock Option Plans. OEC having taken all action required to be taken
by it to implement the provisions described under "--Certain Covenants and
Agreements--Stock Option Plans" above.
Company Warrants. All of the OEC's Common Stock Warrants (the
"Warrants") having been terminated or exercised, and the September 5, 1996
Registration Rights Agreement by and among OEC and the holders of the
Warrants having been terminated.
Termination
The Merger Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval by the stockholders of OEC of the
matters presented in connection with the Merger:
(a) by the mutual written consent of GE and OEC;
(b) by either GE or OEC if the other party has failed to comply in any
material respects with its covenants or agreements contained in the
Merger Agreement required to be complied with prior to the date of such
termination;
(c) by either GE or OEC if there has been 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 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 OEC if:
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. the Merger has not been effected on or prior to the close of
business on May 7, 2000 or the date 75 days after the waiting period
applicable to the consummation of the Merger under the HSR Act has
expired or been terminated; 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 prior to the aforesaid date; or
. 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 OEC if the stockholders of OEC do not approve the Merger
Agreement at the Special Meeting or at any adjournment or postponement
thereof;
(f) by GE if
. the OEC Board 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 OEC and its stockholders, or has resolved to
do so,
. the OEC Board, in breach of the Merger Agreement, has recommended to
the stockholders of OEC any Takeover Proposal or has resolved to do
so, or
. a tender offer or exchange offer for 20% or more of the outstanding
shares of capital stock of OEC is commenced by a third party that
not an affiliate of GE, and the OEC Board fails to recommend against
acceptance of such tender offer or exchange offer by its
stockholders (including by taking no position with respect to the
acceptance of such tender offer or exchange offer by its
stockholders);
(g) by GE or OEC if OEC enters into a merger, acquisition or other
agreement (including an agreement in principle) to effect a Superior
Proposal or the OEC Board resolves to do so; PROVIDED, HOWEVER, that
OEC may not terminate the Merger Agreement pursuant to this paragraph
unless
. OEC has delivered to GE a written notice of OEC's intent to enter
into such an agreement to effect the Superior Proposal,
. 48 hours have elapsed following delivery to GE of such written
notice by OEC, and
. during such 48 hour period OEC 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 thereby may be effected; PROVIDED,
FURTHER, that OEC may not terminate the Merger Agreement unless at
the end of such 48 hour period the OEC 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 OEC pays to GE the amounts specified under "--Fees and
Expenses" below;
(h) by GE if there has been a Post Signing Material Adverse Change;
(i) by OEC if the waiting period applicable to the consummation of the
Merger under the HSR Act has not expired or been terminated on or prior
to May 7, 2000; or
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(j) by GE if the waiting period applicable to the consummation of the
Merger under the HSR Act has not expired or been terminated on or prior
to August 7, 2000.
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 OEC.
Notwithstanding any provision in the Merger Agreement to the contrary, if
the Merger Agreement is terminated
(A) by OEC 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 OEC 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, OEC will (without
prejudice to any other rights of GE against OEC) 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 Agreement and the transactions contemplated
therein, including all fees and expenses of counsel, investment banking
firms, accountants and consultants; PROVIDED HOWEVER, that in no event
shall the amount paid pursuant to this paragraph in reimbursement of
GE's out-of-pocket fees and expenses exceed $2 million and no such fees
or expenses shall be reimbursed pursuant to this paragraph if a
Termination Fee (as defined below) has been paid to GE.
Notwithstanding any provision in the Merger Agreement to the contrary, if
the Merger Agreement is terminated:
(A) by OEC 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
OEC 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 OEC shall (in addition to any other obligation under the
Merger Agreement and without prejudice to any other rights of GE against
OEC) pay to GE the Termination Fee 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 OEC pursuant to paragraph (g)
under "-- Termination" above, then OEC will pay to GE the Termination Fee in
cash.
"Termination Fee" means $15 million, PROVIDED, HOWEVER, that (i) such amount
will be reduced to an amount not less than zero by subtracting from $15 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 which is in
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excess of $10 million, and (ii) the total of the Termination Fee and any amount
actually realized by GE under the Stock Option Agreement shall not exceed $25
million; 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) any Person (other than GE or its Affiliates and other than Forstmann-
Leff Associates, Inc., FLA Advisers, L.L.C., FLA Asset management, Inc.
and Stamford Advisers Corp., so long as the aggregate beneficial
ownership of these four entities does not exceed 25%) acquires or
becomes the beneficial owner of 20% or more of the outstanding shares of
OEC Common Stock;
(B) 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 OEC;
(C) OEC 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 OEC or a significant subsidiary
of OEC or the acquisition of a substantial interest in, or a substantial
portion of the assets, business or operations of, OEC 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 OEC Common Stock which, together with all
shares of OEC 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 OEC Common Stock; or
(E) there is a public announcement with respect to a plan or intention by
OEC to effect any of the foregoing transactions.
Notwithstanding any provision in the Merger Agreement to the contrary, if
the Merger Agreement is terminated
(i) by OEC pursuant to paragraph (b) or (c) under "--Termination" above,
then GE will reimburse OEC upon demand for all out-of-pocket fees and
expenses incurred or paid by or on behalf of OEC or any affiliate of
OEC in connection with the Merger Agreement, the Stock Option Agreement
and the transactions contemplated therein, including all fees and
expenses of counsel, investment banking firms, accountants and
consultants; PROVIDED, HOWEVER, that (A) in no event shall the amount
paid pursuant to this paragraph exceed $2 million and (B) none of OEC's
out-of-pocket fees and expenses shall be reimbursed pursuant to this
paragraph if OEC receives the full fee payable to it as a result of a
termination of this Agreement pursuant to paragraph (h), (i) or (j)
under "--Termination" above,
(ii) by GE pursuant to paragraph (h) under "--Termination" above, GE shall
pay to OEC $15 million in cash, such payment to be made no later than
the second business day following such termination, or
(iii) by OEC pursuant to paragraph (i) under "--Termination" above, or by
GE pursuant to paragraph (j) under "--Termination" above, GE shall
pay to OEC $10 million in cash, such payment to be made no later than
the second business day following such termination.
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 stockholders of OEC, but, after any such approval, no
amendment may be made which by law requires further approval by such
stockholders 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.
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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.
STOCKHOLDERS OF OEC 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 OEC entered into the Stock Option
Agreement pursuant to which OEC granted to GE an option to purchase up to
2,243,346 shares (the "Optioned Shares") of OEC Common Stock (approximately
15.0% on a fully diluted basis after issuance, based on of the outstanding
shares of OEC Common Stock as of August 7, 1999) at an exercise price of $36
per share (the "Exercise Price"), payable in cash.
The Option is exercisable only if one or more of the following events
occurs:
- - (A) or any person, entity or group (collectively and singularly referred to
as a "Person") (other than Forstmann-Leff Associates, Inc., FLA Advisers,
L.L.C., FLA Asset Management, Inc. and Stamford Adviser Corp., so long as
they beneficially own not more than 25%), acquires or becomes the beneficial
owner of 20% or more of the outstanding shares of OEC Common Stock;
- - (B) any group is formed which beneficially owns 20% or more of the
outstanding share of OEC Common Stock;
- - (C) any Person shall have commenced a tender or exchange offer for 20% or
more of the then outstanding OEC Common Stock or publicly proposed any bona
fide merger, consolidation or acquisition of all or substantially all the
assets of OEC, or other similar business combination involving OEC;
- - (D) OEC enters into, or announces that it proposes to enter into, and
agreement, including, without limitation, an agreement in principle,
providing for a merger or other business combination involving OEC or a
significant subsidiary of OEC or the acquisition of a substantial interest
in, or a substantial portion of the assets, business or operations of, OEC
or a significant subsidiary (other than the transaction contemplated in the
Merger Agreement);
- - (E) any Person is granted any option or right, conditional or otherwise, to
acquire or otherwise become the beneficial owner of shares of OEC Common
Stock which, together with all shares of OEC 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 OEC Common Stock; or
- - (F) there is a public announcement with respect to a plan or intention by OEC
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").
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GE's obligation to purchase the Optioned Shares following the exercise of
the Option, and OEC'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 three business days' prior written notice to
OEC, to require OEC to purchase the Option from GE (the "Put Right") at a cash
purchase price (the "Put Price") equal to the lesser of (x) the product
determined by multiplying (A) the number of Optioned Shares as to which the
Option has not yet been exercised by (B) the Spread (as defined below); and (y)
the difference found by subtracting any Termination Fee paid by OEC under the
Merger Agreement from $25,000,000. "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 OEC Common Stock or (ii) OEC
consummates a merger or other business combination involving OEC or a
significant subsidiary of OEC or the acquisition of a substantial interest in,
or a substantial portion of the assets, business or operations of, OEC 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 OEC Common Stock paid or to be paid within 12 months preceding the
date of exercise of the Put Right for any shares of OEC 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 OEC Common Stock
after the date of the Stock Option Agreement or (y) the average of the last
reported sales prices quoted on NYSE of OEC 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, OEC 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 OEC and with respect to which OEC 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 NYSE of OEC 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; PROVIDED, HOWEVER, that the aggregate price payable pursuant
this paragraph shall not exceed $25,000,000 less any Termination Fee paid by
OEC under the Merger Agreement.
OEC shall deliver to GE all "Excess Compensation" realized upon the sale of
any Optioned Shares. "Excess Compensation" shall mean the amount, if any, by
which the sum of (i) the aggregate gross proceeds received upon the sale of any
Optioned Shares, and (ii) any Termination Fee paid by OEC under the Merger
Agreement, exceeds the sum of (x) $25,000,000, (y) the aggregate Exercise Price
paid, and (z) any underwriters discount or selling commission incurred by GE in
connection with the acquisition and disposition of the Optioned Shares.
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 12 months after a termination pursuant to clause (ii) immediately above
if (A) the Merger Agreement is terminated by GE pursuant to paragraph (b), (c),
(f) or (h) under "THE MERGER AGREEMENT--Termination" above, (B) the Merger
Agreement is terminated by GE or OEC pursuant to paragraph (e) or (g) under
"THE MERGER AGREEMENT--Termination" above or (C) the Merger Agreement is
terminated by OEC 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 OEC 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 OEC. 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 OEC from considering or proposing such an acquisition, even if such
persons were prepared to offer to pay consideration to stockholders of OEC that
had a higher current market price than the shares of GE Common Stock to be
received for each share of OEC Common Stock pursuant to the Merger Agreement.
ADVISER AGREEMENT
THE FOLLOWING IS A SUMMARY OF CERTAIN PROVISIONS OF THE ADVISER AGREEMENT
ENTERED INTO AMONG GE AND WILLIAM F. HARNISCH AND THE WFH FOUNDATION
(COLLECTIVELY "HARNISCH"), AND FLA ADVISERS L.L.C. (THE "ADVISER"), 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 ADVISER AGREEMENT.
STOCKHOLDERS OF OEC ARE URGED TO READ THE ADVISER AGREEMENT IN ITS ENTIRETY.
Concurrently with the execution of the Merger Agreement, in order to induce
GE to enter into the Merger Agreement, Adviser and Harnisch, having
discretionary investment management authority, including the sole power to
vote, 2,892,970 shares of OEC Common Stock (the "Subject Shares")
(approximately 22.8% of the outstanding shares of OEC Common Stock as of the
Record Date), entered into the ADVISER AGREEMENT with GE.
Covenants
The Adviser Agreement provides, among other things, that:
- - (a) or Except as set forth in section (i) below, Adviser and Harnisch 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, they will vote (or cause to be voted or to act
by consent) 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) except as set forth in section (i) below, at any meeting of stockholders
of OEC or at any adjournment thereof or in any other circumstances upon
which Adviser's and Harnisch's vote, consent or other approval is sought,
they will vote (or cause to be voted or to act by consent) the Subject
Shares against (A) 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 OEC or any subsidiary thereof or any other Takeover
Proposal or (B) any amendment of the OEC Certificate of Incorporation, as
amended, or the OEC Bylaws or other proposal or transaction involving OEC 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 OEC;
- - (c) except as set forth in section (i) below, Adviser and Harnisch 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 except as follows: (A) in Transfers on the NYSE provided that during
the term of the Adviser Agreement such transfers do not exceed an aggregate
of 300,000 share of OEC Common Stock; (B) in Transfers not on the NYSE to
any person who at the closing of such
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transaction would not be the beneficial owner or a member of a group which
is the beneficial owner or of 5% or more of the outstanding shares of OEC
Common Stock or an affiliate of one the following: Grenadier Fund; Jared
Trading Ltd.; Triumph Fund LP; HH Managed Acct; Barnsville Ltd.; FLA Int'l
Fund Ltd.; Tablo Corporation; Triumph Fund II LP; and Harnisch; and (C) in
Transfers in which the transferee of the Subject Shares agrees to be bound
by, and to acquire the Subject Shares subject to, the terms of the Adviser
Agreement, including, without limitation, the Proxy granted thereby;
PROVIDED, HOWEVER, that no Harnisch Shares may be sold pursuant to the
exceptions provided in subsection (c)(i)(A), (c)(i)(B), or (c)(i)(C) of
this paragraph, above, and (ii) except as set forth herein, not to enter
into any voting arrangement, whether by proxy, voting agreement or
otherwise, in relation to the Subject Shares, and agree not to commit or
agree to take any of the foregoing actions;
- - (d) except as set forth in section (i) below, Adviser and Harnisch will not,
nor will either of them authorize any investment banker, attorney or other
advisor or representative Adviser and Harnisch 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 any information with respect to OEC 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) except as set forth in section (i) below, Adviser and Harnisch will use
their commercially 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) except as set forth in section (i) below, Adviser and Harnisch will
notify GE in writing of the nature and amount of any acquisition by Adviser
and Harnisch of any voting securities of OEC acquired by Adviser and
Harnisch after the date of the Adviser Agreement;
- - (g) except as set forth in section (i) below, Adviser and Harnisch will not
knowingly take or fail to take any action which would cause any of the
representation and warranties made by set forth in the Tax Certificate
attached to the Adviser Agreement to be untrue or incorrect;
- - (h) except as set forth in section (i) below, Adviser and Harnisch revoke
any and all prior proxies or powers of attorney in respect of any of
Subject Shares and constitute and appoint Sub and GE, or any nominee of Sub
and GE, or any of them, with full power of substitution and resubstitution,
at any time during the term of the Adviser Agreement, as its true and
lawful attorney and proxy (its "Proxy"), for and in its name, place and
stead, for any and all purposes, including without limitation, to demand
that the Secretary of OEC call a special meeting of the stockholders of OEC
for the purpose of considering any matter referred to in sections (a) and
(b) above, and to vote each of the Subject Shares as its proxy at every
annual, special, adjourned or postponed meeting of the stockholders of OEC,
including the right to sign its name (as stockholder) to any consent,
certificate or other document relating to OEC that Delaware law may permit
or require as provided in sections (a) and (b) of the paragraph (except as
set forth in section (i) below, the foregoing Proxy and power of attorney
are irrevocable and couple with an interest throughout the term of the
Adviser Agreement); and
- - (i) notwithstanding anything to the contrary contained in this paragraph, if
the OEC Board of Directors reasonably determines that a Takeover Proposal
constitutes a Superior Proposal, and to the extent required by the
fiduciary obligations of the OEC Board of Directors, as determined in good
faith by a majority thereof after consultation with independent counsel
(who may be OEC's regularly engaged independent counsel), OEC withdraws or
modifies its recommendation of the Merger Agreement, Adviser shall have the
rights to terminate its obligations under section (a) through (f) above and
to revoke the Proxy to the extent required by its fiduciary obligations as
determined in good faith.
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Termination
Adviser's and Harnisch's obligations under the Adviser Agreement terminate
on the earlier to occur of (i) May 7, 2000, (ii) termination of the Merger
Agreement pursuant to the provisions described in "THE MERGER AGREEMENT--
Termination" above and (iii) the Effective Time, and (iv) as to shares of OEC
Common Stock held by a person as to which Adviser and any of its affiliates no
longer have a discretionary investment management relationship, the date of the
termination of the last of such relationships (a "Complete Termination");
PROVIDED, HOWEVER, that to the extent a Complete Termination does not take
place, but rather only a portion of the investments of a client of the
Adviser's are withdrawn from the discretionary investment management
relationship, the obligations of the Adviser hereunder shall terminate only as
to those shares of OEC Common Stock withdrawn or sold to permit such withdrawal
and only if the portion of such client's shares of OEC Common Stock that is
sold or withdrawn is an amount which is proportionate to the portion of the
client's total investments with Adviser that are being sold or withdrawn.
REGULATORY MATTERS
Under the HSR Act and the rules promulgated thereunder by 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 DOJ
and specified waiting periods have been terminated or have expired. OEC and GE
each filed notification and report forms under the HSR Act with the FTC and the
Antitrust Division on August 23 and 24, 1999. On September 24, 1999, OEC and GE
received notification from the DOJ that the waiting period had expired and that
the DOJ would not be requesting additional information with respect to the
Merger. The agency 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 countries where such filing is required. It is
currently anticipated that necessary clearances under these laws will be
obtained prior to the Special Meeting.
GE and OEC 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.
In August, both OEC and GE received letters from the Chicago Board Options
Exchange (the "CBOE") requesting a chronology of events leading up to the
August 9, 1999 announcement of the Merger. Both parties have complied with this
request, based on their respective investigations of the facts, in confidential
letters to the CBOE.
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COMPARISON OF RIGHTS OF OEC STOCKHOLDERS AND GE STOCKHOLDERS
THE STATEMENTS SET FORTH UNDER THIS HEADING WITH RESPECT TO THE DGCL, OEC'S
RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED (THE "OEC CHARTER"), OEC'S
AMENDED AND RESTATED BY-LAWS (THE "OEC BYLAWS"), 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 QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO AND ARE SUBJECT
TO THE DETAILED PROVISIONS OF THE NYBCL, DGCL, THE OEC CHARTER, THE OEC BYLAWS,
THE GE CHARTER AND THE GE BYLAWS. SEE "WHERE YOU CAN FIND MORE INFORMATION."
Upon consummation of the Merger and delivery of their OEC Certificates to
the Exchange Agent, stockholders of OEC will become stockholders of GE. Since
GE is a New York corporation, the rights of the stockholders 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 OEC is a Delaware corporation, the
rights of the stockholders of OEC are governed by the applicable laws of the
State of Delaware, including the DGCL, and by the OEC Charter and the OEC
Bylaws.
While there are similarities between the NYBCL and the DGCL as well as
between the charters and bylaws of GE and OEC, a number of differences do
exist. The following is a summary of certain differences between the current
rights of GE stockholders and OEC stockholders under the NYBCL and the DGCL,
respectively, and under the respective charters and bylaws of GE and OEC.
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 OEC currently consists of 32,000,000 shares
of capital stock, consisting of (i) 30,000,000 shares of common Stock and (ii)
2,000,000 shares of preferred stock, par value $.01 per share.
Stockholder Voting Rights
Under the NYBCL, with respect to matters other than the election of
directors, unless a greater number of affirmative votes is required by statute,
the articles of incorporation or by-laws, if a quorum exists action on any
matter generally is approved by the stockholders if the votes cast favoring the
action exceed the votes cast opposing the action. Under the DGCL, by contrast,
unless a greater vote is required by the DGCL, the certificate of incorporation
or the by-laws, the stockholder vote to approve a matter generally is the
affirmative vote of the majority of shares present in person or by proxy and
entitled to vote. Under both the DGCL and the NYBCL, 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 OEC Common Stock is divided into classes and
each entitles holders thereof to one vote for each share on each matter upon
which stockholders have the right to vote.
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.
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The DGCL, however, requires the affirmative vote of a MAJORITY of the
outstanding shares entitled to vote to authorize a merger, consolidation,
dissolution or a sale, lease or exchange of substantially all of the
corporation's assets, except that, unless required by the certificate of
incorporation, no authorizing stockholder vote is required of a corporation
surviving a merger if (i) such corporation's certificate of incorporation is
not amended by the merger, (ii) each share of stock of such corporation will be
an identical share of the surviving corporation after the merger, and (iii)
either no shares of common stock are to be issued or delivered in the merger or
the number of shares of the surviving corporation to be issued or delivered
under the merger, plus those initially issuable upon conversion of any other
shares, securities or obligations to be issued or delivered under such plan,
does not exceed 20% of such corporation's outstanding common stock immediately
prior to the effective date of the merger. The DGCL also permits certain
holding company mergers to be effected without stockholder approval unless the
corporation's certificate of merger specifically requires such approval.
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 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 if the amendment is approved by a majority
vote of 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 stockholders after April 20, 1948, unless such
authority is granted to the GE Board by the specific provisions of a bylaw
adopted by the GE stockholders. The GE Bylaws also may be altered, amended or
repealed, at any time, in the manner provided in the GE Charter.
The OEC Charter may be amended if the amendment is approved by the OEC Board
and the affirmative vote of at least a majority of outstanding shares, except
that the affirmative vote of two-thirds of the outstanding shares is required
to amend provisions of the OEC Charter relating to the number and removal of
directors, indemnification of directors and limitations on liability of
directors for monetary damages, unless such an amendment has been approved by
two-thirds of the OEC Board. Under the DGCL and the OEC Charter, the OEC Bylaws
may be altered, amended or repealed or new bylaws may be adopted by the OEC
Board or by the affirmative vote of a majority of the outstanding shares at any
annual or special meeting of the stockholders, if notice of such alteration,
amendment, repeal or adoption is contained in the notice of such meeting or
waiver of notice; PROVIDED that the section of the OEC Bylaws concerning an
increase or reduction in the number of directors and the indemnification of
officers, directors, employees and agents may only be amended, repealed,
altered or rescinded by the OEC Board if approved by a resolution adopted by
the affirmative vote of not less than two-thirds of the directors, or by the
stockholders if approved by two-thirds of the outstanding shares. Bylaws
adopted by the OEC Board may be amended or repealed by the stockholders of OEC.
Special Meetings of Stockholders; Consent to Actions of Stockholders in Lieu of
Meeting
Special Meetings. Under both the NYBCL and the DGCL, a special meeting of
stockholders 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 GE Bylaws provide that special meetings of stockholders may be called by
the GE Board, or by the written request of stockholders holding 40% of the then
issued stock of GE.
The OEC Charter provides that special meetings of the stockholders of OEC
may be called at any time at the written request of a majority of the Board or
holders of not less than 33-1/3% of all outstanding shares of OEC, and that
stockholders are entitled to 60 days notice of any special meeting.
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Consent of Stockholders 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 stockholders, if such action is
taken without a meeting, unless otherwise provided in the corporation's charter
or bylaws. Neither the GE Charter nor the GE Bylaws contains any provision with
respect to actions by stockholders by written consent.
Under the DGCL, unless otherwise provided in the certificate of
incorporation, any action required or permitted to be taken by stockholders at
any annual or special meeting of stockholders may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, is signed by the holders of outstanding stock of not less
than the minimum number of votes necessary to authorize such action at a
meeting at which all shares entitled to vote thereon were present and voting.
The OEC Charter provides that no action shall be taken by stockholders
except at an annual or special meeting, and that no action shall be taken by
written consent.
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 stockholder" (the beneficial owner of 20% or more of the
corporation's stock) for a period of five years from the time the stockholder
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 stockholder within the five-year period if the interested
stockholder'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 stockholder's stock
acquisition date; (2) the combination was approved by the majority of
disinterested stockholders at a meeting called no earlier than five years after
the interested stockholder's stock acquisition date; or (3) the price paid to
all the stockholders meets statutory criteria establishing a formula price. The
formula price is the higher of the price paid by the interested stockholder 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 DGCL states that a corporation shall not engage in any business
combination with any interested stockholder for a period of three years
following the time such stockholder became an interested stockholder.
Generally, under the DGCL, an "interested stockholder" means any person who is
the owner of 15% or more of the outstanding voting stock of the corporation.
Business combinations are permitted within the three-year period if, prior to
the time such stockholder became an interested stockholder, the board of
directors approved either the business combination within the three year period
or the transaction which resulted in the stockholder becoming an interested
stockholder. The DGCL also allows business combinations if (i) upon
consummation of the transaction which resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least 85% of the
outstanding voting stock of the corporation at the time the transaction
commenced (excluding shares owned by directors, officers and certain employee
stock plans) or (ii) at or subsequent to the time on which such person became
an interested stockholder, the business combination is approved by the board of
directors and authorized at a stockholders' meeting by two-thirds of the
disinterested stockholders holding outstanding voting stock.
Business Conducted at Stockholders' Meetings
Under both the NYBCL and the DGCL, the business permitted to be conducted at
any special meeting of stockholders is limited to the matters stated in the
notice of meeting of stockholders.
Dividends
Under both the NYBCL and the DCGL, a corporation may pay dividends out of
surplus.
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Dissenters' Appraisal Rights
The NYBCL provides that, upon strict compliance with the applicable
statutory requirements and procedures, a dissenting stockholder has the right
to receive payment of the fair value of such stockholder's shares if such
stockholder objects to: (i) mergers; (ii) consolidations; (iii) dispositions of
assets requiring stockholder approval; (iv) certain share exchanges; or (v)
certain amendments to the certificate of incorporation which adversely affect
the rights of such stockholder.
Under the DGCL, stockholders who follow prescribed statutory procedures are
entitled, in the event of certain mergers or consolidations, to surrender their
shares to the corporation in exchange for the judicially determined "fair
value" of such shares. Such stockholders are entitled to such appraisal rights
unless the shares of stock (or depositary receipts in respect thereof) held by
the stockholder are either (i) listed on a national securities exchange or
designated as a national market system security of an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held of
record by more than 2,000 holders. Except for certain parent-subsidiary "short
form" mergers under the DGCL, no appraisal rights are available for any shares
of stock of the constituent corporation surviving a merger if the merger did
not require for its approval the vote of the stockholders of the surviving
corporation as provided in the DGCL. Regardless of the foregoing, appraisal
rights are available for the shares of any class or series of stock of a
constituent corporation if the holders thereof are required by the terms of an
agreement of merger or consolidation to accept for such stock anything except
(i) shares of stock of the corporation surviving or resulting from such merger
or consolidation, or depositary receipts in respect thereof; (ii) shares of
stock of any other corporation or depositary receipts in respect thereof, which
shares of stock or depositary receipts at the effective date of the merger or
consolidation will be either listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or held of
record by more than 2,000 holders; (iii) cash in lieu of fractional shares or
fractional depositary receipts described in the foregoing clauses (i) and (ii);
or (iv) any combination of the shares of stock, depositary receipts and cash in
lieu of fractional shares, or fractional depositary receipts described in the
foregoing clauses (i), (ii) and (iii).
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 DGCL provides that rights or options to purchase shares of any class of
stock may be authorized by a corporation's board of directors.
Number and Term of Directors
Under the NYBCL, the number of directors may be fixed by the bylaws or by
action of the stockholders or of the board of directors under the specific
provisions of a bylaw adopted by the stockholders. The number of directors may
be increased or decreased by amendment of the bylaws or by action of the
stockholders or of the board of directors under the specific provisions of a
bylaw adopted by the stockholders; 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 stockholders, such amendment or action shall require the vote of a
majority of the entire board of directors.
The DGCL permits the board of directors to change the authorized number, or
the range, of directors by amendment to the bylaws, unless the directors are
not authorized in the certificate of incorporation to amend the bylaws or the
number of directors is fixed in the certificate of incorporation, in which case
a change in the number of directors may be made only upon an amendment of the
certificate.
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
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number of directors for any year will be fixed by the stockholders of GE at any
annual statutory meeting of the stockholders by a majority vote of the
outstanding shares entitled to vote thereon. Directors of GE hold office until
the next statutory meeting of the stockholders and until their successors are
duly elected and have qualified. The number of directors of GE is currently
fixed at 15.
The OEC Charter provides that the number of directors shall be fixed by a
bylaw or an amendment thereof adopted by the OEC Board and the OEC Bylaws
provide that the exact number of directors will be determined by Resolution of
the OEC Board or by the OEC stockholders at any annual statutory meeting of the
stockholders by a majority vote of the outstanding shares. Directors of OEC
hold office until the next meeting of the stockholders and until their
successors are duly elected and have qualified. The number of directors of OEC
is currently fixed at 6.
Election of Directors
Under the NYBCL, except as otherwise provided in the certificate of
incorporation, directors are elected by a plurality of the votes cast at a
meeting of stockholders by the holders of shares entitled to vote in the
election.
Under the DGCL, except as otherwise provided in the certificate of
incorporation or bylaws, directors are elected by a plurality of the votes of
the shares present in person or represented by proxy at a meeting of
stockholders and entitled to vote on the election of directors.
The GE Bylaws provide that directors of GE shall be elected each year at the
annual statutory meeting of the stockholders of GE, and that any vacancy
occurring in the GE Board of Directors may be filled for the unexpired term by
the GE Board of Directors. Neither the GE Charter nor the GE Bylaws allows
cumulative voting for the election of directors.
The OEC Charter provides that the number of directors shall be fixed by a
bylaw or an amendment thereof adopted by the OEC Board, and the OEC Bylaws
provide that directors of OEC hold office until his or her successor has been
elected and qualified. Any vacancy may be filled by the OEC Board by the
affirmative vote of the majority of the directors then in office, even if less
than a quorum. Neither the OEC Charter nor the OEC 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 DGCL provides
that a corporation's Board of Directors may be divided into up to three classes
with staggered terms of office with no requirement as to minimum number of
directors in each class. Neither the GE Charter nor the OEC Charter 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 stockholders.
Under the DGCL, a director of a corporation may be removed, with or without
cause, by the holders of a majority of the shares then entitled to vote at a
meeting for the election of directors. If a corporation has a classified board,
the DGCL provides that directors may be removed only for cause, unless the
certificate of incorporation otherwise provides.
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 stockholders of GE.
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The OEC Charter provides that directors of OEC may be removed with or
without cause upon the vote of not less than two-thirds of the outstanding
shares.
Indemnification
Both the DGCL and the NYBCL allow a corporation to indemnify a director or
officer for certain expenses, liabilities and other amounts incurred by such
person in connection with legal proceedings. Both statutes require that, prior
to making any such indemnification, a determination must be made by a quorum of
disinterested directors (or, in the case of the DCGL, a committee thereof), an
independent legal counsel or by the company's stockholders that such person has
met the applicable statutory standard of conduct. Both the DCGL and the NYBCL
limit the corporation's ability to provide indemnification in connection with
legal proceedings brought by or in the right of the corporation. Both statutes
allow 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
person is not entitled to be indemnified by the company.
The NYBCL and the DGCL differ with respect to the indemnification and
advance payment of attorneys' expenses. The DGCL refers expressly to
administrative and investigative proceedings while the NYBCL does not, and the
DGCL expressly provides for indemnification of expenses "including attorneys'
fees," while the NYBCL refers to indemnification of attorneys' fees only in the
context of indemnification by court action.
The GE Charter provides that a person who is or was a director of GE will
have no personal liability to GE 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 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 OEC Charter and the OEC Bylaws provide that OEC will, to the fullest
extent permitted by the DGCL, indemnify any and all persons whom it shall have
the power to indemnify under the DGCL from and against all expenses,
liabilities or other matters referred to and covered by the DGCL. The OEC
Charter also provides that no director shall be personally liable for breach of
fiduciary duty, except for liability (i) for breach of the director's duty of
loyalty, (ii) for acts or omissions not in good faith, intentional misconduct
or a knowing violation of the law, (iii) unlawful dividend, stock purchase or
stock redemption, or (iv) any transaction from which the director derived any
improper personal benefit.
Transactions with Interested Directors
Generally, under the NYBCL and DGCL, 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 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 and
the board or committee in good faith authorizes the contract or transaction by
the affirmative votes of a majority of the disinterested directors (even though
less than a quorum, or, under the NYBCL, if the votes of the disinterested
directors are insufficient to constitute an act of the board, by unanimous vote
of the disinterested directors; (ii) the material facts of the transaction and
the director's interest are disclosed or known to stockholders entitled to vote
thereon, and such contract or transaction is approved in good faith by a vote
of such stockholders; or (iii) the contract or transaction is fair to the
corporation as of the time it was approved by the board, a committee or the
stockholders.
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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 in any
dividends and in any 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. Gibson, Dunn & Crutcher LLP,
counsel to GE, and Holland & Hart LLP, counsel to OEC, will deliver opinions
concerning the federal income tax consequences of the Merger.
EXPERTS
The consolidated financial statements of OEC as of December 31, 1998 and
1997 and for each of the years in the three-year period ended December 31, 1998
incorporated in this Proxy Statement/Prospectus by reference have been audited
by Deloitte & Touche LLP, independent auditors, as stated in their report,
which is incorporated by reference herein, and has been so incorporated herein
by reference in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
KPMG LLP, independent certified public accountants, audited GE's
consolidated financial statements as of December 31, 1998 and 1997, and for
each of the years in the three-year period ended December 31, 1998. GE's Annual
Report on Form 10-K includes these financial statements and the auditor's
report. This Prospectus incorporates the financial statements and report by
reference, relying on KPMG LLP's authority as experts in accounting and
auditing.
WHERE YOU CAN FIND MORE INFORMATION
OEC 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 OEC 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 OEC 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 and OEC through the websites maintained by GE and OEC,
which are "http://www.ge.com" and "http://www.oecmed.com".
49
<PAGE>
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 OEC
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 OEC have
previously filed with the Commission. These documents contain important
information about GE and OEC 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, 1998
Quarterly Reports on Form 10-Q Quarters ended March 31, 1999 and June 30, 1999
<CAPTION>
OEC Commission Filings (FILE
NO. 0-18724) Period
- ---------------------------- -----------------------------------------------
<S> <C>
Annual Report on Form 10-K Year ended December 31, 1998
Quarterly Reports on Form 10-Q Quarters ended March 31, 1999 and June 30, 1999
</TABLE>
GE and OEC also hereby incorporate by reference all additional documents
that GE and OEC 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 stockholder of GE or OEC, GE and OEC may have sent you some of
the documents incorporated by reference, but you can obtain any of them through
GE, OEC or the Commission. Documents incorporated by reference are available
from GE or OEC without charge, excluding all exhibits unless such exhibits have
been specifically incorporated by reference in this Proxy Statement/Prospectus.
Stockholders 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:
General Electric Company OEC Medical Systems, Inc.
Attention: Secretary Attention: Secretary
3135 Easton Turnpike 384 Wright Brothers Drive
Fairfield, Connecticut 06431-0001 Salt Lake City, Utah 84116
(203) 373-2816 (801) 328-9300
IF YOU WOULD LIKE TO REQUEST DOCUMENTS FROM GE OR OEC, PLEASE DO SO BY
NOVEMBER 22, 1999 TO RECEIVE THEM BEFORE THE SPECIAL MEETING.
The Board of Directors of OEC 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 OEC OR GE SINCE THE DATE HEREOF OR THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
50
<PAGE>
YOU SHOULD RELY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROXY STATEMENT/ PROSPECTUS. NEITHER GE NOR OEC 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 OEC AND ITS
SUBSIDIARIES HAS BEEN PROVIDED BY OEC, 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 OEC WARRANTS
THE ACCURACY OF INFORMATION RELATING TO THE OTHER PARTY. THIS PROXY
STATEMENT/PROSPECTUS IS DATED OCTOBER 1, 1999. 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.
51
<PAGE>
LIST OF DEFINED TERMS
<TABLE>
<CAPTION>
Defined Term Page Number
- ------------ -----------
<S> <C>
Adviser Agreement................................................... 13
Average GE Share Price.............................................. 2
Certificates........................................................ 25
Closing Date........................................................ 23
Code................................................................ 25
Commission.......................................................... 8
Conversion Number................................................... 31
D&O Insurance....................................................... 32
DCF................................................................. 19
DGCL................................................................ 25
DOJ................................................................. 5
Effective Time...................................................... 23
Exchange Act........................................................ 25
Exchange Agent...................................................... 24
Exercise Price...................................................... 38
FTC................................................................. 5
GAAP................................................................ 8
GE.................................................................. 11
GE Board............................................................ 43
GE Bylaws........................................................... 46
GE Charter.......................................................... 43
GE Common Stock..................................................... 48
Merger.............................................................. 13
Merger Agreement.................................................... 13
Merger Consideration................................................ 23
NASD................................................................ 14
NYBCL............................................................... 25
NYSE................................................................ 11
OEC................................................................. 13
OEC Board........................................................... 13
OEC Bylaws.......................................................... 42
OEC Charter......................................................... 42
Option Conditions................................................... 39
Optioned Shares..................................................... 38
Put Event........................................................... 39
Put Price........................................................... 39
Put Right........................................................... 39
Repurchase Right.................................................... 39
Retention Agreements................................................ 23
Retention Bonus Payment............................................. 23
Special Meeting..................................................... 13
Spread.............................................................. 39
Subject Shares...................................................... 40
Substitute Option................................................... 22
Superior Proposal................................................... 30
Surviving Corporation............................................... 23
Takeover Proposal................................................... 30
Termination Fee..................................................... 36
Third Party Acquisition Event....................................... 37
Transfer............................................................ 40
Valuation Period.................................................... 24
</TABLE>
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<PAGE>
ANNEX I
AGREEMENT AND PLAN OF MERGER
AMONG
GENERAL ELECTRIC COMPANY,
RUBY MERGER CORP.
AND
OEC MEDICAL SYSTEMS, INC.
Dated as of August 7, 1999
<PAGE>
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I THE MERGER...................................................... 1
Section 1.1 The Merger.................................................. 1
Section 1.2 Effective Time.............................................. 2
Section 1.3 Effects of the Merger....................................... 2
Section 1.4 Charter and Bylaws; Directors and Officers.................. 2
Section 1.5 Conversion of Securities.................................... 2
Section 1.6 Parent to Make Certificates Available....................... 3
Section 1.7 Dividends; Transfer Taxes; Withholding...................... 3
Section 1.8 No Fractional Securities.................................... 4
Section 1.9 Return of Exchange Fund..................................... 4
Section 1.10 No Further Ownership Rights in Company Common Stock........ 4
Section 1.11 Closing of Company Transfer Books.......................... 4
Section 1.12 Lost Certificates.......................................... 4
Section 1.13 Further Assurances......................................... 5
Section 1.14 Closing.................................................... 5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB............... 5
Section 2.1 Organization, Standing and Power............................ 5
Section 2.2 Authority................................................... 5
Section 2.3 Consents and Approvals; No Violation........................ 6
Section 2.4 Parent Common Stock to be Issued in the Merger.............. 7
Section 2.5 SEC Documents and Other Reports............................. 7
Section 2.6 Registration Statement and Proxy Statement.................. 7
Section 2.7 Absence of Certain Changes or Events........................ 7
Section 2.8 Reorganization.............................................. 7
Section 2.9 Operations of Sub........................................... 8
Section 2.10 Accuracy of Representations................................ 8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY................. 8
Section 3.1 Organization, Standing and Power............................ 8
Section 3.2 Capital Structure........................................... 8
Section 3.3 Authority................................................... 9
Section 3.4 Consents and Approvals; No Violation........................ 10
Section 3.5 SEC Documents and Other Reports............................. 10
Section 3.6 Registration Statement and Proxy Statement.................. 11
Section 3.7 Absence of Certain Changes or Events........................ 11
Section 3.8 Permits and Compliance...................................... 11
Section 3.9 Tax Matters................................................. 13
Section 3.10 Actions and Proceedings.................................... 13
Section 3.11 Certain Agreements......................................... 14
Section 3.12 ERISA...................................................... 14
Section 3.13 Compliance with Worker Safety Laws......................... 16
Section 3.14 Liabilities; Products...................................... 16
Section 3.15 Labor Matters.............................................. 17
Section 3.16 Intellectual Property...................................... 17
Section 3.17 Opinion of Financial Advisor............................... 18
Section 3.18 State Takeover Statutes.................................... 18
Section 3.19 Required Vote of Company Shareholders...................... 18
Section 3.20 Reorganization............................................. 18
Section 3.21 Accounts Receivable........................................ 18
</TABLE>
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<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 3.22 Inventories............................................... 18
Section 3.23 Environmental Matters..................................... 19
Section 3.24 Suppliers and Distributors................................ 20
Section 3.25 Insurance................................................. 20
Section 3.26 Accuracy of Information................................... 20
Section 3.27 Transactions with Affiliates.............................. 20
Section 3.28 Title to and Sufficiency of Assets........................ 21
Section 3.29 Brokers................................................... 21
Section 3.30 Year 2000................................................. 21
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS..................... 22
Section 4.1 Conduct of Business by the Company Pending the Merger...... 22
Section 4.2 No Solicitation............................................ 23
Section 4.3 Third Party Standstill Agreements.......................... 24
Section 4.4 Reorganization............................................. 25
ARTICLE V ADDITIONAL AGREEMENTS.......................................... 25
Section 5.1 Shareholder Meeting........................................ 25
Section 5.2 Preparation of the Registration Statement and the Proxy
Statement............................................................. 25
Section 5.3 Access to Information...................................... 25
Section 5.4 Rule 145 Letters........................................... 26
Section 5.5 Stock Exchange Listings.................................... 26
Section 5.6 Fees and Expenses.......................................... 26
Section 5.7 Company Stock Options...................................... 28
Section 5.8 Reasonable Best Efforts.................................... 28
Section 5.9 Public Announcements....................................... 29
Section 5.10 Real Estate Transfer and Gains Tax........................ 29
Section 5.11 State Takeover Laws....................................... 29
Section 5.12 Indemnification; Directors and Officers Insurance......... 30
Section 5.13 Notification of Certain Matters........................... 30
Section 5.14 Suspension of Employee Incentive Stock Acquisition Plan... 30
ARTICLE VI CONDITIONS PRECEDENT TO THE MERGER............................ 30
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger................................................................ 30
Section 6.2 Conditions to Obligation of the Company to Effect the
Merger................................................................ 31
Section 6.3 Conditions to Obligations of Parent and Sub to Effect the
Merger................................................................ 32
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER............................ 34
Section 7.1 Termination................................................ 34
Section 7.2 Effect of Termination...................................... 35
Section 7.3 Amendment.................................................. 35
Section 7.4 Waiver..................................................... 35
ARTICLE VIII GENERAL PROVISIONS.......................................... 36
Section 8.1 Non-Survival of Representations and Warranties............. 36
Section 8.2 Notices.................................................... 36
Section 8.3 Interpretation............................................. 37
Section 8.4 Counterparts............................................... 37
Section 8.5 Entire Agreement; No Third-Party Beneficiaries............. 37
Section 8.6 Governing Law.............................................. 37
Section 8.7 Assignment................................................. 37
Section 8.8 Severability............................................... 37
Section 8.9 Enforcement of this Agreement.............................. 37
Section 8.10 Defined Terms............................................. 38
</TABLE>
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<PAGE>
LIST OF EXHIBITS
<TABLE>
<CAPTION>
Description
-----------
<S> <C>
Exhibit A........................................................... Recital C
Exhibit B........................................................... Recital C
Exhibit C........................................................... Section 1.4
Exhibit D........................................................... Section 5.4
</TABLE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 7, 1999 (this "Agreement"),
among General Electric Company, a New York corporation ("Parent"), Ruby Merger
Corp., a Delaware corporation and a wholly-owned subsidiary of Parent ("Sub"),
and OEC Medical Systems, Inc., a Delaware corporation (the "Company") (Sub and
the Company being hereinafter collectively referred to as the "Constituent
Corporations").
RECITALS:
A. The respective Boards of Directors of Parent, Sub and the Company have
approved and declared advisable the merger of Sub with and into the Company
(the "Merger"), and the respective Boards of Directors of Sub and the Company
have approved and adopted this Agreement;
B. 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;
C. 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 Adviser Agreement dated as of the date
hereof (the "Adviser Agreement") in the form of the attached Exhibit B; and
D. For federal income tax purposes, it is intended by the parties hereto
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 General Corporation Law of the State of Delaware
(the "DGCL"), Sub shall be merged with and into the Company at the Effective
Time (as defined in Section 1.2). 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 DGCL. 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
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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 the
certificate of merger (the "Certificate of Merger"), executed in accordance
with the relevant provisions of the DGCL, is filed with the Secretary of State
of the State of Delaware; provided, however, that, upon mutual consent of the
Constituent Corporations, the Certificate of Merger may provide for a later
date of effectiveness of the Merger not more than 30 days after the date the
Certificate of Merger are filed. When used in this Agreement, the term
"Effective Time" shall mean the date and time at which the Certificate of
Merger is accepted for filing or such later time established by the Certificate
of Merger. The filing of the Certificate of Merger shall be made on the date of
the Closing (as defined in Section 1.14).
Section 1.3 Effects of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL.
Section 1.4 Charter and By-laws; Directors and Officers. (a) The Certificate
of Incorporation of the Company in effect at the Effective Time will be amended
in its entirety at the Effective time to read as set forth in Exhibit C hereto
and shall be the Certificate of Incorporation of Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law. The By-
laws of Sub in effect at the Effective Time will be the Bylaws of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
(b) The directors of Sub at the Effective Time 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 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 share of Common Stock 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 Sub shall automatically be
canceled and retired and shall cease to exist 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 Common Stock, par value $0.01 per share of the Company ("Company
Common Stock") issued and outstanding immediately prior to the Effective
Time (other than shares to be canceled 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 $36.00 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 daily volume-weighted sales
prices per share of Parent Common Stock on the New York Stock Exchange,
Inc. (the "NYSE") Composite Tape for each of 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
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<PAGE>
outstanding and shall automatically be canceled 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 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 canceled.
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
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<PAGE>
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 to
any holder of shares of Company Common Stock 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 or the Exchange
Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Company Common
Stock 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
canceled 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
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<PAGE>
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 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 Gibson Dunn & Crutcher, LLP,
Suite 4100, 1801 California Street, Denver, CO 80202, 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) (the "Closing Date") 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 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 or the prospects of Parent and
its Subsidiaries, taken as a whole.
Section 2.2 Authority. On or prior to the date of this Agreement, the
respective Boards of Directors of Parent and Sub have declared the Merger
advisable and have approved and adopted this Agreement in accordance with the
DGCL. 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 Adviser 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 Adviser 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 an
appropriate Certificate of Merger as required by the DGCL. This Agreement has
been duly executed and delivered by Parent and Sub, the Stock Option Agreement
and the Adviser 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
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by the Company, the valid authorization, execution and delivery of the Adviser
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 Adviser 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 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 Adviser 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 Adviser 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 Adviser
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 Adviser 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 Certificate
of Merger with the Secretary of State of the State of Delaware 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 Adviser 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
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or the Adviser 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 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 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 set forth in Section 2.5 of the Parent Letter,
disclosed in the Parent SEC Documents or as required by generally accepted
accounting principles, Parent has not, since December 31, 1998, 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 Adviser 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, 1998, 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, Taxes of Parent, neither Parent nor any of its Subsidiaries
has taken any action or failed to take any action which
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action or failure would jeopardize the qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code.
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 Accuracy of Representations. Neither this Agreement nor any
other document provided by Parent or Sub or any of their respective employees
or agents to the Company in connection with the transactions contemplated
herein contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained therein, in
light of the circumstances under which they are made, not misleading.
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 Delaware 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 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 or the prospects of the Company and its Subsidiaries, taken as a
whole; provided, however, that any effect arising from or relating to the
announcement or pendency of the Merger shall not be taken into account in
determining the occurrence of a Material Adverse Effect.
Section 3.2 Capital Structure.
(a) As of the date hereof, the authorized capital stock of the Company
consists of 30,000,000 shares of Company Common Stock and 2,000,000 shares of
preferred stock, no par value ("Company Preferred Stock"). At the close of
business on August 4, 1999, (i) 12,712,293 shares of Company Common Stock were
issued and outstanding, all of which were validly issued, fully paid and
nonassessable and free of preemptive rights, (ii) 1,445,173 shares of Company
Common Stock were held in the treasury of the Company or by Subsidiaries of the
Company, (iii) 2,094,264 shares of Company Common Stock were reserved for
future issuance pursuant to the Company's 1983, 1990 and 1998 Stock Option
Plans 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"), (iv) 93,047 shares of Company Common Stock were
reserved for future issuance pursuant to the Company's 1993 Employee Incentive
Stock Acquisition Plan, as amended and restated, and (v) 38,000 warrants to
purchase Company Common Stock (the "Company Warrants") were issued and
outstanding. No shares of Company Preferred Stock are outstanding.
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(b) Section 3.2 (b) 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 (i) each
outstanding option to purchase shares of Company Common Stock issued under 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 and (ii) each outstanding warrant,
including the holder, date of grant, exercise price and number of shares of
Company Common Stock subject thereto. Except for the Company Stock Options and
the Company Warrants, 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.
(c) 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
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 December 31, 1998, as filed with the SEC (the "1998
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. As of the date hereof, neither the Company nor any
of its subsidiaries is party to or bound by (x) any agreement or commitment
pursuant to which the Company or any Subsidiary of the Company is or could be
required to register any securities under the Securities Act or (y) any debt
agreements or instruments which grant any rights to vote (contingent or
otherwise) on matters on which stockholders of the Company may vote.
(d) Section 3.2(d) of the Company Letter contains a correct and complete
list as of the date of this Agreement of each entity in which the Company owns
an equity interest (other than a Subsidiary), including the number of
outstanding shares of the stock of each such entity (if such entity is a
corporation, and, if not a corporation, then the appropriate corresponding
ownership stake in such entity), the percentage interest represented by the
Company's ownership in the entity, and the date of acquisition of the ownership
interest in any such entity.
Section 3.3 Authority. On or prior to the date of this Agreement, the Board
of Directors of the Company has 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 DGCL, 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, in the case of the consummation of the
merger, 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 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
Certificate of Merger as required by the DGCL. 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
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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
2,243,346 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 any of its Subsidiaries under, any provision of (i) the
certificate of incorporation of the Company (as amended from time to time, the
"Company Charter") or the By-laws, (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
Certificate of Merger with the Secretary of State of the State of Delaware 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
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 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 with the SEC since December 31, 1995 (the "Company SEC
Documents"), except as disclosed in Section 3.5 of the Company Letter. 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
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accepted accounting principles (except, in the case of the unaudited
statements, to the extent 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 December 31, 1995, 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 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,
(i) 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, (ii) the Company and its Subsidiaries have not sustained any loss or
interference with their business or properties from fire, flood, earthquake,
windstorm, accident or other calamity (whether or not covered by insurance)
that has had a Material Adverse Effect on the Company, (iii) 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, (iv) there has not been (A) any adoption of a new Company Plan (as
hereinafter defined), (B) any amendment to a Company Plan materially increasing
benefits thereunder, (C) 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, (D) 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 (E) except as set forth in Section 3.7(iv)(E) of the
Company Letter, 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, (v) 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 1998 Company Annual Report, and (vi) except as set forth
in Section 3.7(vi) of the Company Letter, 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,
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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 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 December 31, 1998, 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. 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 in those jurisdictions in which the Company products are sold,
except to the extent that the failure to obtain such approvals would not,
individually or in the aggregate, have a Material Adverse Effect. Neither the
Company nor any Subsidiary, nor the officers, directors, managing employees or
agents (as those terms are defined in 42 C.F.R. (S)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. (S) 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 business as currently
conducted or would reasonably be expected to materially impair Parent's
ability to conduct its 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
officers of the Company.
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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 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; (viii) no
withholding is required under Section 1445 of the Code in connection with the
Merger; (ix) neither the Company nor any of its Subsidiaries has engaged in any
transaction that would constitute a "tax shelter" within the meaning of Section
6111 or 6662 of the Code; (x) neither the Company nor any of its Subsidiaries
has submitted a request for a ruling to the IRS or a State tax authority since
December 31, 1997; (xi) neither the Company nor any of its subsidiaries has
made or rescinded any express or deemed election relating to Taxes since
December 31, 1997, (xii) neither the Company nor any of its Subsidiaries has
changed any of its methods of reporting income or deductions for Tax purposes
from those employed in the preparation of its Tax Returns for the year ending
December 31, 1997; and (xiii) except as set fort on Section 3.9(xiii) of the
Company Letter, the Company and its Subsidiaries have each established adequate
reserves for the payment of any potential liability relating to Taxes. 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
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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.
(a) Except as set forth in Section 3.11(a) 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, pension plan (as defined in Section 3(2) of ERISA) or
welfare plan (as defined in Section 3(1) of ERISA) (collectively the
"Compensation Agreements"), any of the benefits of which will be increased, or
the vesting of the benefits of 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 except as provided in Section
5.7. Section 3.11(a) 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.
(b) Set forth in Section 3.11(b) of the Company Letter is a list of all
contracts that are significant to the Company and its Subsidiaries' businesses
(whether oral or written), including all distribution contracts, sole-source
supply contracts, national accounts contracts and real property leases,
(collectively, "Significant Contracts"). Prior to the date hereof, the Company
has provided true and complete copies of all such contracts to Parent.
(c) Each Significant Contract is a legal, valid and binding agreement of the
Company or its Subsidiaries, neither the Company nor any of its Subsidiaries
(or to the Knowledge of the Company, and any other party thereto) is in default
under any Significant Contract, and none of such Significant Contracts has been
canceled by the other party thereto; each Significant Contract is in full force
and effect and no event has occurred which, with the passage of time or the
giving of notice or both, would constitute a default, event of default or other
breach by the Company or any Subsidiary party thereto which would entitle the
other party to such Significant Contract to terminate the same or declare a
default or event of default thereunder; the Company and the Subsidiaries are
not in receipt of any claim of default under any such agreement; the Company or
any Subsidiary party to such Significant Contract maintains good business
relationships with the other party to such agreement; in each instance, except
where it would have a Material Adverse Effect on the Company.
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
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intended to be qualified under section 401(a) of the Code, (viii) any request
for a determination currently pending before the IRS, (ix) all correspondence
with the IRS, the Department of Labor, the SEC or Pension Benefit Guaranty
Corporation relating to any outstanding controversy and (x) all forms and
certificate samples used to comply with Sections 4980, 9801 and 9802 of the
Code. 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 or withdraw from any
Company Plan subject to Title IV of ERISA and there is no reason to believe the
Pension Benefit Guaranty Corporation would initiate the termination of any such
Plan. 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 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,
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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, acceleration or enhancement of any benefit as a result of the
transactions contemplated hereby including, without limitation, the payment of
any "excess parachute payments" within the meaning of Section 280G of the Code
or any payments not deductible under Section 162(m) 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.
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, 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 1998 Company
Annual Report, or disclosed in the footnotes thereto and as disclosed in the
Company Letter, 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, there was no indebtedness for borrowed money
of the Company and its Subsidiaries.
(b) Except as set forth in Section 3.14(b) of the Company Letter, since
December 31, 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 in Section 3.14(c) of the Company Letter a
schedule of products in development and planned introductions. 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
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Company. 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 agency 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. "Company Intellectual Property" means
all United States and foreign trademarks, trademark registrations, trademark
rights and renewals thereof, trade names, trade name rights, trade dress,
patents, patent rights, patent applications, industrial models, inventions,
invention disclosures, author's rights, designs, 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 its 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 its 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 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 its 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. Except as disclosed in the Company SEC
Documents
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filed with the SEC prior to the date hereof or in Section 3.16 of the Company
Letter, there are no infringements of, or conflicts with, any Company
Intellectual Property 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.
Section 3.17 Opinion of Financial Advisor. The Company has received the
written opinion of Chase Securities Inc. dated the date hereof to the effect
that, as of the date hereof, the Merger Consideration is fair to the Company's
shareholders from a financial point of view, a copy of which opinion has been
delivered to Parent.
Section 3.18 State Takeover Statutes. The Board of Directors of the Company
has, to the extent such statute is applicable, taken all action (including
appropriate approvals of the Board of Directors of the Company) necessary to
render the provisions of Section 203 of the DGCL inapplicable to the Merger,
this Agreement, the Stock Option Agreement, the Adviser Agreement and the
transactions contemplated hereby and thereby. To the Knowledge of the Company,
no other state takeover statute is applicable to the Merger, this Agreement,
the Stock Option Agreement, the Adviser 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 By-laws 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) except as set forth on Section 3.21(iii) of
the Company Letter, 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 saleable in the ordinary course of
business, are saleable 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.
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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 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 its 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 its 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 its
Subsidiaries' properties or any other property but arising from the Company's
or any of its 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 its Subsidiaries' current or former properties or
operations or any other properties, (D) alleging noncompliance by the Company
or any of its 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 its
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 its
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 its Subsidiaries have provided 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 its
Subsidiaries relating to any real property currently or formerly owned, leased
or occupied by the Company or any of its Subsidiaries.
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Section 3.24 Suppliers; and Distributors.
(a) Except as set forth in Section 3.24(a) of the Company Letter, neither
the Company nor any Subsidiary has received any notice, oral or written, or has
any reason to believe that any significant supplier, including without
limitation any sole source 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 its Subsidiaries, subject only to
general and customary price increases, unless comparable raw materials,
supplies, merchandise or other goods are readily available from other sources
on comparable terms and conditions.
(b) Except as set forth in Section 3.24 (b) of the Company Letter, neither
the Company nor any Subsidiary has received any notice, oral or written, or has
any reason to believe that any distributors, sales representatives, sales
agents, manufacturer's representatives, or other third party product sellers,
will not sell the products of 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 and distribution contracts of the Company and its
Subsidiaries.
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 its 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 in order to make the statements contained therein, in
light of the circumstances under which they are made, 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 December
31, 1998, the Company and its 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.
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(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 its 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 its 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 its Subsidiaries own, and as of the Effective Time the Company
and its Subsidiaries will own, good and marketable title to all of their assets
constituting personal property which is material to their business (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 its 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 its Subsidiaries own, and as of
the Effective Time the Company and its Subsidiaries will own, good and
marketable title to all of their Real Estate (as defined below) 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 its 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 its 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 Chase Securities Inc. the fees and expenses of which will be paid by the
Company (as reflected in an agreement between Chase Securities Inc. 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.
Section 3.30 Year 2000. Except as set forth in Section 3.30 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
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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. Neither the Company nor any of its Subsidiaries have any
obligations under any warranty agreements, agreements, or otherwise to remedy
any information technology defect relating to a failure to be Year 2000
Compliant, except where any such warranty agreements, agreements or obligations
to remedy would not, individually or in the aggregate, have a Material Adverse
Effect on 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 (xviii) 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
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 the Company Charter or by-laws;
(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 (B) indebtedness,
loans, advances, capital contributions and investments between the Company
and any of its wholly-owned Subsidiaries or between
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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, employment
agreement (with an employee at or above management level), or any
consulting agreement out of the ordinary course;
(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;
(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 or rescind any express or deemed election relating to Taxes,
change any of its methods of reporting income or deductions for Tax
purposes, 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, renew, terminate or amend any agreement or contract
material to the Company and its Subsidiaries, taken as a whole, including
any Significant Contract; or purchase any real property or make or agree to
make any new capital expenditure or expenditures which in the aggregate are
in excess of $5 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
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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, (A) in response to an
unsolicited request therefor, furnish information with respect to the Company
and its Subsidiaries to any person pursuant to a customary confidentiality
statement (as determined by the Company's independent counsel) and (B) withdraw
or modify its recommendation of this Agreement. 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, tender offer 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 in writing within 24 hours of (i) any
Takeover Proposal or any expression of interest regarding a potential Takeover
Proposal that is received by or communicated to 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 with respect to which the Board
decides to furnish information pursuant to Section 4.2(a) (an "Approved
Inquiry"), (ii) the material terms of such Takeover Proposal or Approved
Inquiry (including a copy of any written proposal), and (iii) the identity of
the person making any such Takeover Proposal or Approved Inquiry. If the
Company intends to furnish any Person with any information with respect to any
Approved Inquiry or Takeover Proposal in accordance with Section 4.2(a), the
Company shall advise Parent in writing of such intention not less than 48 hours
in advance of providing such information.
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.
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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.
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 unless, in compliance with
Section 4.2 hereof, the Board's fiduciary duties require it to do so with
respect to a Superior Offer. 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.
(a) 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.
(b) Parent and the Company promptly will notify each other of the receipt of
comments from the SEC and of any request by the SEC for amendments or
supplements to the Registration Statement or the Proxy Statement or for
additional information, and promptly will supply each other with copies of all
correspondence between the parties and the SEC with respect thereto. If, at any
time prior to the Shareholder Meeting, any event should occur relating to or
affecting the Company, Parent or Sub, or to their respective Subsidiaries,
officers or directors, which event should be described in an amendment or
supplement to the Registration Statement or the Proxy Statement, the parties
promptly will inform each other and cooperate in preparing, filing and having
declared effective or clearing with the SEC and, if required by applicable
state securities laws, distributing to the Company's stockholders such
amendment or supplement.
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
Parent and its Subsidiaries and each of their 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,
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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, (iii) promptly make
available to Parent all personnel of the Company and its Subsidiaries
knowledgeable about matters relevant to such inspections and (iv) provide
reasonable access to the Company's facilities and operation to enable Parent to
conduct an environmental, health and safety review of the business, including
the right to take samples. 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 July 29, 1999 between
Parent and the Company (the "Confidentiality Agreement").
Section 5.4 Rule 145 Letters. On the date hereof, the Company shall cause to
be prepared and delivered to Parent a list (reasonably satisfactory to counsel
for Parent) identifying 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
person who is identified as a Rule 145 Affiliate in such list 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.
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 (collectively, "Parent Fees"), provided, however, that (y) in no
event shall the amount paid pursuant to this Section 5.6(b) in reimbursement of
Parent Fees exceed $2 million, and (z) no Parent Fees shall be reimbursed
pursuant to this Section 5.6(b) if a Termination Fee has been paid to Parent.
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
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(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 $15 million, provided, however, that (i) such
amount shall be reduced to an amount not less than zero by subtracting from
$15 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 which is in excess of $10 million, and (ii) the total of
the Termination Fee and any amount actually realized by Parent under the
Stock Option Agreement shall not exceed $25 million; provided further that
if such Fee shall be so reduced by an amount so 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 the amount by which the Termination Fee was reduced hereunder promptly
following such termination.
A "Third Party Acquisition Event" means any of the following events: (A)
any Person (other than Parent or its Affiliates and other than Forstmann-
Leff Associates, Inc., FLA Advisers, L.L.C., FLA Asset Management, Inc. and
Stamford Advisers Corp., so long as the aggregate beneficial ownership of
these four entities does not exceed 25%) acquires or becomes the beneficial
owner of 20% or more of the outstanding shares of Company Common Stock; (B)
any group (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(w) of Regulation S-X
as promulgated by the SEC) of the Company or the acquisition of a
substantial interest in, or a substantial portion of the assets, business
or operations of, the Company or a significant subsidiary (other than the
transactions contemplated by 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 (i) 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 (collectively, "Company Fees"), provided,
however, that (A) in no event shall the amount paid pursuant to this
Section 5.6(d) in reimbursement of the Company Fees exceed $2 million, and
(B) no Company Fees
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shall be reimbursed pursuant to this Section 5.6(d) if the Company receives
the full fee payable to it as a result of a termination of this Agreement
pursuant to Section 7.1(h), 7.1(i) or 7.1(j), (ii) by Parent pursuant to
Section 7.1(h), Parent shall pay to the Company $15 million in cash, such
payment to be made no later than the second business day following such
termination, or (iii) by the Company pursuant to Section 7.1(i) or by the
Parent pursuant to Section 7.1(j), Parent shall pay to the Company $10
million in cash, such payment to be made no later than the second business
day following either such termination.
Section 5.7 Company Stock Options. (a) Except as provided in Section 5.7(a)
of the Company Letter, 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 (including vesting schedules) 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) or (c), 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.
(b) 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(b), "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.
(c) 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, (i) 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; and (ii) each
Substitute Option held by such person immediately following the Effective Time
which is then exercisable shall continue to be exercisable in accordance with
the original term of each such Substitute Option 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
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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 or vigorously
defend 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.
(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.
(d) Parent and the Company acknowledge the rights to terminate this
Agreement set forth in Section 7.1(i) and 7.1(j) hereof, but also acknowledge
that if they agree at any time after May 6, 2000 that progress is being made
toward the satisfactory resolution of any then pending issues under the HSR
Act, they will continue to use their reasonable best efforts to attempt to
secure a mutually satisfactory resolution of those issues which will permit the
closing of the merger.
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, if any, 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 if there are any Gains
Taxes applicable. 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
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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 DGCL, the Company Charter, the Company's By-laws 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
DGCL, the Company Charter, the Company's By-laws.
(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 neither the Parent nor the
Surviving Corporation shall be required to pay an annual premium for the D&O
Insurance in excess of the last annual premiums paid prior to the date hereof
(which premiums the Company represents and warrants to be approximately $70,000
per annum), 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 Suspension of Employee Incentive Stock Acquisition Plan. The
Company shall amend, effective as of the date hereof, the 1993 Employee
Incentive Stock Acquisition Plan to halt purchases under the Plan at the end of
the payroll period in which this Agreement is executed.
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 each 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, the Company Charter and the Company's By-laws.
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(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, directly or indirectly, restraining, prohibiting
or restricting the Merger or any of the transactions contemplated hereby 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.
(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, directly or indirectly, restraining, prohibiting or restricting
the Merger or any of the transactions contemplated hereby.
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 each 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 and covenants 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 have been true and correct when made, and
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 have been true and correct in all material respects
when made, and 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 Holland &
Hart, counsel to the Company, in form and substance reasonably satisfactory
to the Company, 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
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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.
In rendering such opinion, Holland & Hart 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 Adviser Agreement
substantially similar to the representations in the Adviser Tax Certificate
attached to the Adviser Agreement.
(c) Material Adverse Change. Since the date of this Agreement, there
shall have been no change 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, or
the prospects of Parent and its subsidiaries taken as a whole. 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 each of the following
additional conditions:
(a) Performance of Obligations; Representations and Warranties. The
Company shall have performed in all material respects each of its covenants
and 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 have been true and correct when made, and 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), each
of the representations and warranties that is not so qualified shall have
been true and correct in all material respects when made, and 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, provided, however,
that for the purpose of this Section 6.3(a) and of Section 7.1(c), in the
case of the representations and warranties made in Section 3.7 hereof
relating to the period between the date of this Agreement and the Effective
Time, such representations and warranties shall only be deemed to not be
true and correct if the aggregate effect of the matters as to which they
are not true and correct would constitute a Post Signing Material Adverse
Change as defined in Section 6.3(e) hereof. 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.
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(b) Tax Opinion. Parent shall have received an opinion of Gibson, Dunn &
Crutcher LLP, 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 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, Gibson, Dunn & Crutcher LLP 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 Adviser Agreement
substantially similar to the representations in the Adviser Tax Certificate
attached to the Adviser 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 Adviser Agreement.
(ii) In obtaining any approval or consent required to consummate any of
the transactions contemplated herein, in the Stock Option Agreement or the
Adviser 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) Post Signing Material Adverse Change. Since the date of this
Agreement, there shall have been no Post Signing Material Adverse Change
(as hereinafter defined). 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. For purposes of this
Section 6.3(e), the term "Post Signing Material Adverse
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Change" shall mean any adverse change or changes in the business,
operations, properties, assets, liabilities, employee relationships,
customer or supplier relationships, earnings or results of operations or
the prospects of the Company and its subsidiaries, taken as a whole after
the date of this Agreement that are or could reasonably be expected (as far
as can be foreseen at the time) to be adverse in an aggregate amount in
excess of $35,000,000. Notwithstanding anything to the contrary contained
herein, the definition of Post Signing Material Adverse Change shall not
relate to any other definition of materiality, and in no way shall be read
to create a materiality standard for any other purpose related to this
Agreement.
(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.
(g) Company Warrants. All of the Company Warrants shall have been
terminated or been exercised. In addition, the Registration Rights
Agreement, dated as of September 5, 1996, by and among the Company and the
holders of the Company Warrants shall have been terminated.
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) by either Parent or the Company if the other party shall have failed
to comply in any material respect 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 either Parent or the Company if: (i) the Merger has not been
effected on or prior to the close of business on the later of May 7, 2000
or the date 75 days after the waiting period applicable to the consummation
of the Merger under the HSR Act has expired or been terminated; 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 either 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 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 shall have recommended to
the shareholders of the Company any Takeover Proposal or shall have
resolved to do so
A-34
<PAGE>
or (iii) a tender offer or exchange offer for 20% or more of the
outstanding shares of capital stock of the Company is commenced by a third
party that is not on Affiliate of Parent, 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);
(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) 48 hours have
elapsed following delivery to Parent of such written notice by the Company
and (iii) during such 48 hour period the Company has fully cooperated with
Parent, including informing Parent of the terms and conditions of the
Takeover Proposal and the identity of 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 Company may
not terminate this Agreement pursuant to this Section 7.1(g) unless at the
end of such 48 hour period the Board of Directors of 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 Company pays to Parent the amounts specified under Sections
5.6(a), (b) and (c);
(h) by Parent if there has been a Post Signing Material Adverse Change;
(i) by Company if the waiting period applicable to the consummation of
the Merger under the HSR Act has not expired or been terminated on or prior
to May 7, 2000; or
(j) by Parent if the waiting period applicable to the consummation of
the Merger under the HSR Act has not expired or been terminated on or prior
to August 7, 2000.
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 Company, as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability hereunder
on the part of 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 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 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.
A-35
<PAGE>
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.
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, WI 53201
Attention: General Counsel
Facsimile No.: 414-544-3575
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 06431-00001
Attention: Vice President and Senior Counsel--Transactions
Facsimile No.: 203-373-3008
and
Gibson, Dunn & Crutcher, LLP
1801 California Street, Suite 4100
Denver, CO 80202
Attention: Richard M. Russo, Esq.
Facsimile No.: 303-296-5310
(b) if to the Company, to:
OEC Medical Systems, Inc.
384 Wright Brothers Drive
Salt Lake City, UT 84116
Attention: President
Facsimile No.: 801-328-4300
with a copy to:
Holland & Hart LLP
215 South State Street, Suite 500
Salt Lake City, UT 84111-2317
Attention: David R. Rudd
Facsimile No.: 801-364-9124
A-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 Company, as the
case may be (either alone or through or together with any other Subsidiary),
owns or controls, 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 Delaware are mandatorily applicable to the Merger, this Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
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 District of Delaware), 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.
A-37
<PAGE>
Section 8.10 Defined Terms.
Each of the following terms is defined in the Section identified below:
1998 Company Annual Report. Section 3.2(c)
Adviser Agreement. Recitals
Affiliate. Section 5.5(b)
Affiliated Person. Section 3.27
Agreement. Preamble
Average Parent Share Price. Section 1.5(c)
Blue Sky Laws. Section 2.3
Cause. Section 5.7(c)
Certificate of Merger. Section 1.2
Certificates. Section 1.6(b)
Closing. Section 1.14
Company. Preamble
Company Business Personnel. Section 3.15
Company Charter. Section 3.4
Company Common Stock. Section 1.5(c)
Company Foreign Benefit Plan. Section 3.12(d)
Company Intellectual Property. Section 3.16
Company Letter. Section 3.2(b)
Company Licenses. Section 3.16
Company Multiemployer Plan. Section 3.12(c)
Company Permits. Section 3.8
Company Plan, 21
Company Preferred Stock. Section 3.2(a)
Company SEC Documents. Section 3.5
Company Stock Option Plans. Section 3.2(a)
Company Stock Options. Section 3.2(b)
Company Warrants. Section 3.2(a)
Compensation Agreements. Section 3.11(a)
Confidentiality Agreement. Section 5.3
Constituent Corporations. Preamble
Conversion Number. Section 5.7(a)
D&O Insurance. Section 5.12(b)
DGCL. Section 1.1
Effective Time. Section 1.2
Environmental Law. Section 3.23(a)(ii)
Environmental Permit. Section 3.23(a)(iii)
ERISA. Section 3.12(a)
ERISA Affiliate. Section 3.12(c)
Exchange Act. Section 2.3
Exchange Agent. Section 1.6(a)
Exchange Fund. Section 1.6(a)
FDA. Section 3.8
Gains Taxes. Section 5.10
Governmental Entity. Section 2.3
Hazardous Substances. Section 3.23(a)(i)
HSR Act. Section 2.3
A-38
<PAGE>
IRS. Section 3.9
Knowledge of the Company. Section 3.8
Liens. Section 3.28
Material Adverse Effect. Section 3.1. Section 2.1
Merger. Recitals
Merger Consideration. Section 1.5(c)
NYSE. Section 1.5(c)
Parent. Preamble
Parent Letter. Section 2.3
Parent SEC Documents. Section 2.5
Post Signing Material Adverse Change. Section 6.3(e)
Proxy Statement. Section 2.6
Real Estate. Section 3.28
Registration Statement. Section 2.2
reorganization. Recitals
Rule 145 Affiliates. Section 5.4
SEC, 8
Securities Act. Section 2.2
Shareholder Meeting. Section 5.1
Significant Contracts. Section 3.11(b)
SSA. Section 3.8
State Takeover Approvals. Section 2.3
Stock Option Agreement. Recitals
Sub. Preamble
Subsidiary. Section 8.3(b)
Substitute Option. Section 5.7(a)
Superior Proposal. Section 4.2(a)
Surviving Corporation. Section 1.1
Takeover Proposal. Section 4.2(a)
Tax Return. Section 3.9
Taxes. Section 3.9
Termination Fee. Section 5.6(c)(ii)
Third Party Acquisition Event. Section 5.6(c)(ii)
Valuation Period. Section 1.5(c)
Worker Safety Laws. Section 3.13
Year 2000 Compliant. Section 3.30
A-39
<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.
General Electric Company,
a New York Corporation
/s/ Jeffrey R. Immelt
By: _________________________________
Name: Jeffrey R. Immelt
Title: Senior Vice President
Ruby Merger Corp.
a Delaware Corporation
/s/ J. Keith Morgan
By: _________________________________
Name: J. Keith Morgan
Title: President
OEC Medical Systems, Inc.
a Delaware Corporation
/s/ Ruediger Naumann-Etienne
By: _________________________________
Name: Ruediger Naumann-Etienne
Title: Chairman
A-40
<PAGE>
ANNEX II
Chase Securities Inc.
270 Park Avenue
New York, NY 10017-2070
August 7, 1999
Board of Directors
OEC Medical Systems, Inc.
384 Wright Brothers Drive
Salt Lake City, Utah 84116
Members of the Board:
You have informed us that OEC Medical Systems, Inc. (the "Company"), General
Electric Corporation ("Parent") and Ruby Merger Corp., a wholly owned
subsidiary of Parent ("Merger Sub"), propose to enter into an Agreement and
Plan of Merger (the "Merger Agreement") which provides, among other things,
that Merger Sub will be merged with and into the Company (the "Merger") in a
transaction in which each outstanding share of common stock of the Company, par
value $.01 per share (the "Company Common Stock"), other than shares of the
Company Common Stock that are owned by the Company, Parent or any of their
respective subsidiaries, all of which will be canceled, will be converted into
the right to receive the number of shares of common stock of Parent, par value
$.16 per share (the "Parent Common Stock") determined by dividing $36.00 by the
Average Parent Share Price (as defined below) and rounding the result to the
nearest one thousandth of a share (the "Consideration"). For purposes of our
opinion, "Average Parent Share Price" means the average of the daily volume-
weighted sales prices per share of the Parent Common Stock on the New York
Stock Exchange Composite Tape for each of the 10 consecutive trading days
ending on the trading day which is five days prior to the closing of the
Merger. As a result of the Merger, the Company will become a wholly-owned
subsidiary of Parent.
You have requested that we render our opinion as to the fairness, from a
financial point of view, to the holders of the Company Common Stock of the
Consideration.
In arriving at the opinion set forth below, we have, among other things:
(a) reviewed a draft of the Merger Agreement dated August 5, 1999;
(b) reviewed certain publicly available business and financial
information that we deemed relevant relating to the Company and Parent and
the industries in which they operate;
(c) reviewed certain internal non-public financial and operating data
and forecasts provided to us by the management of the Company relating to
the business of the Company;
(d) discussed, with members of the senior management of the Company, the
Company's operations, historical financial statements and future prospects;
(e) compared the financial and operational performance of the Company
and Parent with publicly available information concerning certain other
companies we deemed comparable and reviewed the relevant historical stock
prices of the Company Common Stock and the Parent Common Stock and certain
publicly traded securities of such other companies;
(f) reviewed the financial terms of certain recent business combinations
and acquisition transactions we deemed reasonably comparable to the Merger
and otherwise relevant to our inquiry; and
(g) made such other analyses and examinations as we have deemed
necessary or appropriate.
Chase Securities Inc. is a member NASD/SIPC, and is a wholly-owned subsidiary
of The Chase Manahttan Corporation.
B-1
<PAGE>
In connection with the preparation of this opinion, we have not held any
discussions with representatives of Parent nor have we received or reviewed any
non-public information prepared by or relating to Parent.
We have assumed and relied upon, without assuming any responsibility for
verification, the accuracy and completeness of all of the financial and other
information provided to, discussed with or reviewed by or for us, or publicly
available, for purposes of this opinion and have further relied upon the
assurance of the management of the Company that they are not aware of any facts
that would make such information inaccurate or misleading. We have neither made
nor obtained any independent evaluations or appraisals of the assets or
liabilities of the Company or Parent, nor have we conducted a physical
inspection of the properties and facilities of the Company or Parent. We have
assumed that the financial forecasts provided to us by the Company have been
reasonably determined on bases reflecting the best currently available
estimates and judgments of the management of the Company as to the future
financial performance of the Company. We express no view as to such forecast or
projection information or the assumptions on which they were based.
For purposes of rendering our opinion, we have assumed that, in all respects
material to our analysis, the representations and warranties of each party
contained in the Merger Agreement are true and correct, that each party will
perform all of the covenants and agreements required to be performed by it
under the Merger Agreement and that all conditions to the consummation of the
Merger will be satisfied without waiver thereof. We have further assumed that
all material governmental, regulatory or other consents and approvals will be
obtained and that in the course of obtaining any necessary governmental,
regulatory or other consents and approvals, or any amendments, modifications or
waivers to any documents to which any of the Company or Parent are a party, as
contemplated by the Merger Agreement, no restrictions will be imposed or
amendments, modifications or waivers made that would have any material adverse
effect on the contemplated benefits to the Company of the Merger. We have also
assumed that the definitive Merger Agreement will not differ in any material
respects from the draft thereof furnished to us. We have further assumed that
the Merger will qualify as a tax-free reorganization for U.S. federal income
tax purposes.
In connection with the preparation of this opinion, we have not been
authorized by the Company or the Board of Directors to solicit, nor have we
solicited, third-party indications of interest for the acquisition of all or
any part of the Company. In addition, we were engaged by the Company solely for
purposes of delivering this opinion, and, as a result, we did not participate
in the structuring or the negotiation of the Merger.
Our opinion herein is necessarily based on market, economic and other
conditions as they exist and can be evaluated on the date of this letter. Our
opinion is limited to the fairness, from a financial point of view, to the
holders of the Company Common Stock of the Consideration and we express no
opinion as to the merits of the underlying decision by the Company to engage in
the Merger. This opinion does not constitute a recommendation to any
stockholder of the Company as to how such stockholder should vote with respect
to the Merger. In addition, we express no opinion as to the prices at which the
Company Common Stock or the Parent Common Stock will trade following the
announcement or the consummation, as the case may be, of the Merger.
Chase Securities Inc., as part of its financial advisory business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions and valuations for estate, corporate
and other purposes. We have acted as financial advisor to the Company in
connection with this opinion and will receive a fee for our services upon
delivery hereof. In addition, the Company has agreed to indemnify us for
certain liabilities arising out of our engagement. As we have previously
advised you, The Chase Manhattan Corporation and its affiliates, including
Chase Securities Inc., in the ordinary course of business, have from time to
time, provided commercial and investment banking services to Parent and its
affiliates, for which we received usual and customary compensation and in the
future may continue to provide such commercial and investment banking services.
In the ordinary course of business, we or our affiliates may trade in the debt
and equity securities of the Company and Parent for our own accounts and for
the accounts of our customers and, accordingly, may at any time hold a long or
short position in such securities.
Based upon and subject to the foregoing, we are of the opinion that, as of
the date hereof, the Consideration is fair, from a financial point of view, to
the holders of the Company Common Stock.
B-2
<PAGE>
This opinion is for the use and benefit of the Board of Directors of the
Company in its evaluation of the Merger and shall not be used for any other
purpose without the prior written consent of Chase Securities Inc. This opinion
shall not be reproduced, disseminated, quoted, summarized or referred to at any
time, in any manner or for any purpose, nor shall any public references to
Chase Securities Inc. be made by the Company, without the prior written consent
of Chase Securities Inc.
Very truly yours,
CHASE SECURITIES INC.
B-3
<PAGE>
ANNEX III
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of August 7, 1999 (the "Agreement"),
between General Electric Company, a New York corporation ("Parent"), and OEC
Medical Systems, Inc., a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, simultaneously with the execution and delivery of this Agreement,
Parent, Ruby Merger Corp., a newly formed Delaware corporation and a direct
wholly owned subsidiary of Parent ("Sub"), and the Company are entering into an
Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), which provides for the merger of Sub with and into the Company
(the "Merger");
WHEREAS, as a condition to Parent's willingness to enter into the Merger
Agreement, Parent has requested that the Company grant to Parent an option to
purchase up to 2,243,346 shares of Company Common Stock, upon the terms and
subject to the conditions hereof; and
WHEREAS, in order to induce Parent to enter into the Merger Agreement, the
Company has agreed to grant Parent the requested option.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
1. The Option; Exercise; Adjustments. The Company hereby grants to Parent an
irrevocable option (the "Option") to purchase from time to time up to 2,243,346
Common Shares, par value $.01 per share, of the Company (the "Company Common
Stock"), upon the terms and subject to the conditions set forth herein (the
"Optioned Shares"). Subject to the conditions set forth in Section 2, the
Option may be exercised by Parent in whole or from time to time in part, at any
time after the date hereof and prior to the termination of the Option in
accordance with Section 19. In the event Parent wishes to exercise the Option,
Parent shall send a written notice to the Company (the "Stock Exercise Notice")
specifying the total number of Optioned Shares it wishes to purchase and a date
(not later than 20 business days and not earlier than two business days from
the date such notice is given) for the closing of such purchase (the "Closing
Date"). Parent may revoke an exercise of the Option at any time prior to the
Closing Date by written notice to the Company. In the event of any change in
the number of issued and outstanding shares of Company Common Stock by reason
of any stock dividend, stock split, split-up, recapitalization, merger or other
change in the corporate or capital structure of the Company, the number of
Optioned Shares subject to the Option and the Exercise Price (as hereinafter
defined) per Optioned Share shall be appropriately adjusted. In the event that
any additional shares of Company Common Stock are issued after the date of this
Agreement (other than pursuant to an event described in the preceding sentence
or pursuant to this Agreement), the number of Optioned Shares subject to the
Option shall be adjusted so that, after such issuance, it equals (but does not
exceed) 15% of the number of shares of Company Common Stock then issued and
outstanding and 15% of the voting power of shares of capital stock of the
Company then issued and outstanding.
2. Conditions to Exercise of Option and Delivery of Optioned
Shares. (a) Parent's right to exercise the Option is subject to the following
conditions:
(i) Neither Parent nor Sub shall have breached any of its material
obligations under the Merger Agreement;
(ii) No preliminary or permanent injunction or other order issued by any
federal or state court of competent jurisdiction in the United States
invalidating the grant or prohibiting the exercise of the Option shall be
in effect; and
C-1
<PAGE>
(iii) One or more of the following events shall have occurred on or
after the date hereof: (A) any person, corporation, partnership, limited
liability company or other entity or group (such person, corporation,
partnership, limited liability company or other entity or group being
referred to hereinafter, singularly or collectively, as a "Person") (other
than Forstmann-Leff Associates, Inc., FLA Advisers, L.L.C., FLA Asset
Management, Inc. and Stamford Advisers Corp., so long as the aggregate
beneficial ownership of these four entities does not exceed 25%), acquires
or becomes the beneficial owner of 20% or more of the outstanding shares of
Company Common Stock; (B) any group is formed which beneficially owns 20%
or more of the outstanding shares of Company Common Stock; (C) any Person
shall have commenced a tender or exchange offer for 20% or more of the then
outstanding shares of Company Common Stock or publicly proposed any bona
fide merger, consolidation or acquisition of all or substantially all the
assets of the Company, or other similar business combination involving the
Company; (D) the Company enters into, or announces that it proposes to
enter into, an agreement, including, without limitation, an agreement in
principle, providing for a merger or other business combination involving
the Company or a "significant subsidiary" (as defined in Rule 1.02(w) of
Regulation S-X as promulgated by the Securities and Exchange Commission
(the "SEC")) of the Company or the acquisition of a substantial interest
in, or a substantial portion of the assets, business or operations of, the
Company or a significant subsidiary (other than the transactions
contemplated by the Merger Agreement); (E) any Person is granted any option
or right, conditional or otherwise, to acquire or otherwise become the
beneficial owner of shares of Company Common Stock which, together with all
shares of Company Common Stock beneficially owned by such Person, results
or would result in such Person being the beneficial owner of 20% or more of
the outstanding shares of Company Common Stock; or (F) there is a public
announcement with respect to a plan or intention by the Company, other than
Parent or its affiliates, to effect any of the foregoing transactions. For
purposes of this subparagraph (iii), the terms "group" and "beneficial
owner" shall be defined by reference to Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated thereunder.
(b) Parent's obligation to purchase the Optioned Shares following the
exercise of the Option, and the Company's obligation to deliver the Optioned
Shares, are subject to the conditions that:
(i) No preliminary or permanent injunction or other order issued by any
federal or state court of competent jurisdiction in the United States
prohibiting the delivery of the Optioned Shares shall be in effect;
(ii) The purchase of the Optioned Shares will not violate Rule 10b-13
promulgated under the Exchange Act; and
(iii) All applicable waiting periods under the 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 $36.00 of Merger Agreement (the "Exercise Price"),
payable in cash. Payment made by Parent to the Company pursuant to this
Agreement shall be made by wire transfer of federal funds to a bank designated
by the Company or a check payable in immediately available funds. After payment
of the Exercise Price for the Optioned Shares covered by the Stock Exercise
Notice, the Option shall be deemed exercised to the extent of the Optioned
Shares specified in the Stock Exercise Notice as of the date such Stock
Exercise Notice is given to the Company.
4. Representations and Warranties of the Company. The Company represents and
warrants to Parent that (a) the execution and delivery of this Agreement by the
Company and the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Company and this Agreement has been duly executed and delivered by the Company
and constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms; (b) the
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Company has taken all necessary corporate action to authorize and reserve the
Optioned Shares for issuance upon exercise of the Option, and the Optioned
Shares, when issued and delivered by the Company to Parent upon exercise of the
Option, will be duly authorized, validly issued, fully paid and nonassessable
and free of preemptive rights; (c) except as otherwise required by the HSR Act,
except for routine filings and subject to Section 7, the execution and delivery
of this Agreement by the Company and the consummation by it of the transactions
contemplated hereby do not require the consent, approval or authorization of,
or filing with, any person or public authority and will not violate or conflict
with the Company's Certificate of Incorporation, or Bylaws, or result in the
acceleration or termination of, or constitute a default under, any indenture,
license, approval, agreement, understanding or other instrument, or any
statute, rule, regulation, judgment, order or other restriction binding upon or
applicable to the Company or any of its subsidiaries or any of their respective
properties or assets; (d) the Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby; and (e) the
Company has taken all appropriate actions so that the restrictions on business
combinations contained in Section 203 of the DGCL will not apply with respect
to or as a result of the transactions contemplated hereby.
5. Representations and Warranties of Parent. Parent represents and warrants
to the Company that (a) the execution and delivery of this Agreement by Parent
and the consummation by it of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Parent and
this Agreement has been duly executed and delivered by Parent and constitutes a
valid and binding agreement of Parent; and (b) Parent is acquiring the Option
and, if and when it exercises the Option, will be acquiring the Optioned Shares
issuable upon the exercise thereof, for its own account and not with a view to
distribution or resale in any manner which would be in violation of the
Securities Act of 1933, as amended (the "Securities Act"), and will not sell or
otherwise dispose of the Optioned Shares except pursuant to an effective
registration statement under the Securities Act or a valid exemption from
registration under the Securities Act.
6. The Closing. Any closing hereunder shall take place on the Closing Date
specified by Parent in its Stock Exercise Notice pursuant to Section 1 at 10:00
A.M., local time, or the first business day thereafter on which all of the
conditions in Section 2 are met, at the principal executive office of the
Company, or at such other time and place as the parties hereto may agree.
7. Filings Related to Optioned Shares. The Company will make such filings
with the SEC as are required by the Exchange Act, and will use its best efforts
to effect all necessary filings by the Company under the HSR Act and to have
the Optioned Shares approved for quotation on New York Stock Exchange (the
"NYSE").
8. Registration Rights. (a) If the Company effects any registration or
registrations of shares of Company Common Stock under the Securities Act for
its own account or for any other stockholder of the Company at any time after
the exercise of the Option (other than a registration on Form 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 250,000
Optioned Shares and provided, further, that if the managing underwriters in
such offering advise the Company that, in their written opinion, the number of
Optioned Shares requested by Parent to be included in such registration exceeds
the number of shares of Company Common Stock which can be sold in such
offering, the Company may exclude from such registration all or a portion, as
may be appropriate, of the Optioned Shares requested for inclusion by Parent.
(b) At any time after the exercise of the Option, upon the request of
Parent, the Company will promptly file and use its best efforts to cause to be
declared effective a registration statement under the Securities Act (and
applicable Blue Sky statutes) with respect to any or all of the Optioned Shares
acquired upon the exercise of the Option; provided, however, that any request
of Parent pursuant to this Section 8(b) shall be with respect to at least
1,000,000 Optioned Shares and provided, further, that the Company shall not be
required to have declared effective more than two registration statements
hereunder and shall be entitled to delay the
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effectiveness of each such registration statement, for a period not to exceed
90 days in the aggregate, if the commencement of such offering would, in the
reasonable good faith judgment of the Board of Directors of the Company,
require premature disclosure of any material corporate development or otherwise
materially interfere with or materially adversely affect any pending or
proposed offering of securities of the Company. In connection with any such
registration requested by Parent, the costs of such registration shall be borne
by the Company, and the Company and Parent each shall provide the other and any
underwriters with customary indemnification and contribution agreements.
9. Optional Put; Optional Repurchase; Excess Compensation. (a) Prior to the
termination of the Option in accordance with Section 19, if a Put Event has
occurred, Parent shall have the right, upon three business days' prior written
notice to the Company, to require the Company to purchase the Option from
Parent (the "Put Right") at a cash purchase price (the "Put Price") equal to
the lesser of (x) the product determined by multiplying (A) the number of
Optioned Shares as to which the Option has not yet been exercised by (B) the
Spread (as defined below); and (y) the difference found by subtracting any
Termination Fee paid by the Company under Section 5.6 of the Merger Agreement
from $25,000,000. As used herein, "Put Event" means the occurrence on or after
the date hereof of any of the following: (i) any Person (other than Parent or
its affiliates) acquires or becomes the beneficial owner of 50% or more of the
outstanding shares of Company Common Stock or (ii) the Company consummates a
merger or other business combination involving the Company or a "significant
subsidiary" (as defined in Rule 1.02(w) of Regulation S-X as promulgated by the
SEC) of the Company or the acquisition of a substantial interest in, or a
substantial portion of the assets, business or operations of, the Company or a
significant subsidiary (other than the transactions contemplated by the Merger
Agreement). As used herein, the term "Spread" shall mean the excess, if any, of
(i) the greater of (x) the highest price (in cash or fair market value of
securities or other property) per share of Company Common Stock paid or to be
paid within 12 months preceding the date of exercise of the Put Right for any
shares of Company Common Stock beneficially owned by any Person who shall have
acquired or become the beneficial owner of 20% or more of the outstanding
shares of Company Common Stock after the date hereof or (y) the average of the
daily volume-weighted sales prices quoted on NYSE of the Company Common Stock
during the five trading days immediately preceding the written notice of
exercise of the Put Right over (ii) the Exercise Price.
(b) At any time after the termination of the Option granted hereunder
pursuant to Section 19 and for a period of 90 days thereafter, the Company
shall have the right, upon three business days' prior written notice, to
repurchase from Parent (the "Repurchase Right"), all (but not less than all) of
the Optioned Shares acquired by the Company hereby and with respect to which
the Company then has beneficial ownership (as defined in Rule 13d-3 under the
Exchange Act) at a price per share equal to the greater of (i) the average of
the daily volume-weighted sales price quoted on NYSE of the Company Common
Stock during the five trading days immediately preceding the written notice of
exercise of the Repurchase Right and (ii) the Exercise Price, plus interest at
a rate per annum equal to the costs of funds to Parent at the time of exercise
of the Repurchase Right; provided, however, that the aggregate price payable
pursuant to this Section 9(b) shall not exceed $25,000,000 less any Termination
Fee paid by the Company under Section 5.6 of the Agreement.
(c) Parent shall deliver to the Company all "Excess Compensation" realized
upon the sale of any Optioned Shares. "Excess Compensation" shall mean the
amount, if any, by which the sum of (i) the aggregate gross proceeds received
upon the sale of any Optioned Shares, and (ii) any Termination Fee paid by the
Company under Section 5.6 of the Merger Agreement, exceeds the sum of (x)
$25,000,000, (y) the aggregate Exercise Price paid, and (z) any underwriters
discount or selling commission incurred by Parent in connection with the
acquisition and disposition of the Optioned Shares.
10. Expenses. Each party hereto shall pay its own expenses incurred in
connection with this Agreement, except as otherwise provided in Section 8 or as
specified in the Merger Agreement.
11. Specific Performance. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were
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otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state thereof having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity. Each party hereby
irrevocably submits to the exclusive jurisdiction of the United States District
Court for either the District of Connecticut or the District of Delaware in any
action, suit or proceeding arising in connection with this Agreement, and
agrees that any such action, suit or proceeding shall be brought only in such
courts (and waives any objection based on forum non conveniens or any other
objection to venue therein). Each party hereto waives any right to a trial by
jury in connection with any such action, suit or proceeding.
12. Notice. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given and made if in writing and if
served by personal delivery upon the party for whom it is intended or if sent
by telex or telecopier (and also confirmed in writing) to the person at the
address set forth below, or such other address as may be designated in writing
hereafter, in the same manner, by such person:
(a) if to Parent or Sub, to:
General Electric Company
c/o GE Medical Systems
P.O. Box 414, W-410
Milwaukee, WI 53201
Attention: General Counsel
Facsimile No.: 414-544-3575
for overnight courier deliveries, to:
General Electric Company
c/o GE Medical Systems
Company3000 North Grandview Boulevard
Waukesha, WI 53188
Attention: General Counsel
with copies to:
General Electric Company
3135 Easton Turnpike
Fairfield, Connecticut 06431-00001
Attention: Vice President and Senior Counsel--Transactions
Facsimile No.: 203-373-3008
and
Gibson, Dunn & Crutcher, LLP
1801 California Street, Suite 4100
Denver, CO 80202
Attention: Richard M. Russo, Esq.
Facsimile No.: 303-296-5310
(b) if to the Company, to:
OEC Medical Systems, Inc.
384 Wright Brothers Drive
Salt Lake City, UT 84116
Attention: President
Facsimile No.:
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with a copy to:
Holland & Hart LLP
215 South State Street, Suite 500
Salt Lake City, UT 84111-2317
Attention: David R. Rudd
Facsimile No.: 801-364-9124
13. Parties in Interest. This Agreement shall inure to the benefit of and be
binding upon the parties named herein and their respective successors and
assigns. Nothing in this Agreement, expressed or implied, is intended to confer
upon any Person other than Parent or the Company, or their permitted successors
or assigns, any rights or remedies under or by reason of this Agreement.
14. Entire Agreement; Amendments. This Agreement, together with the Merger
Agreement and the other documents referred to therein, contains the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior and contemporaneous agreements and understandings,
oral or written, with respect to such transactions. This Agreement may not be
changed, amended or modified orally, but only by an agreement in writing signed
by the party against whom any waiver, change, amendment, modification or
discharge may be sought.
15 Assignment. No party to this Agreement may assign any of its rights or
delegate any of its obligations under this Agreement (whether by operation of
law or otherwise) without the prior written consent of the other party hereto,
except that Parent may, without a written consent, assign its rights and
delegate its obligations hereunder in whole or in part to one or more of its
direct or indirect wholly owned subsidiaries.
16. Headings. The section headings herein are for convenience only and shall
not affect the construction of this Agreement.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall constitute one and the same document.
18. Governing Law. Except to the extent that the laws of the State of
Delaware are mandatorily applicable to the Merger, this Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
19. Termination. This Agreement and the Option shall terminate upon the
earlier of (i) the Effective Time and (ii) the termination of the Merger
Agreement in accordance with its terms; provided, however, the Option shall not
terminate until 12 months after a termination pursuant to clause (ii)
immediately above if (A) the Merger Agreement is terminated by Parent pursuant
to Section 7.1(b), (c), (f) or (h) thereof, (B) the Merger Agreement is
terminated by Parent or the Company pursuant to Section 7.1(e) or (g) thereof
or (C) the Merger Agreement is terminated by the Company pursuant to Section
7.1(d)(i) thereof after receipt of a Superior Proposal; provided, further, that
this Agreement shall not terminate with respect to the Repurchase Right set
forth in Section 9(b) until 90 days after the termination of the Option
pursuant to the foregoing proviso. Notwithstanding the foregoing, the
provisions of Section 8 shall survive the termination of this Agreement until
such time as Parent or any of its affiliates ceases to beneficially own at
least 250,000 of the Optioned Shares.
20. Capitalized Terms. Capitalized terms not otherwise defined in this
Agreement shall have the meanings set forth in the Merger Agreement.
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22. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and legal
substance of the transactions contemplated hereby are not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated by this Agreement
may be consummated as originally contemplated to the fullest extent possible.
IN WITNESS WHEREOF, Parent and the Company have caused this Agreement to be
duly executed and delivered on the day and year first above written.
General Electric Company,
a New York corporation
/s/ Jeffrey R. Immelt
By:__________________________________
Name: Jeffrey R. Immelt Title:
Senior Vice President
OEC Medical Systems, Inc.
a Delaware corporation
/s/ Ruediger Naumann-Etienne
By:__________________________________
Name: Ruediger Naumann-Etienne
Title: Chairman
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ANNEX IV
ADVISER AGREEMENT
ADVISER AGREEMENT, dated as of August 7, 1999 (this "Agreement"), among
William F. Harnisch and the WFH Foundation (collectively, "Harnisch"), FLA
Advisers L.L.C., a New York Limited Liability Company (the "Adviser") and
General Electric Company, a New York corporation ("Parent").
RECITALS
A. Parent, Ruby Merger Corp., a Delaware corporation and a direct wholly
owned subsidiary of Parent ("Sub"), and OEC Medical Systems, Inc., a Delaware
corporation are entering into an Agreement and Plan of Merger, dated as of
August 7, 1999 (the "Merger Agreement"), whereby, upon the terms and subject to
the conditions set forth in the Merger Agreement, each issued and outstanding
share of Common Stock, par value $0.01 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") as described in Exhibit C hereto;
B. As of the date hereof, the Adviser is an investment adviser with
discretionary investment management authority, including, until revoked, the
sole power to vote, over client assets that include that number of shares of
Company Common Stock appearing on Schedule A (such shares of Company Common
Stock together with the shares of Company Common Stock set forth on Schedule A
owned by Harnisch and any other shares of capital stock of the Company acquired
by Harnisch (the "Harnisch Shares") or by clients of the Adviser listed on
Schedule A as to which the Adviser has discretionary investment management
authority including, until revoked, the sole power to vote, after the date
hereof during the term of this Agreement, whether upon the exercise of options
or by means of purchase, dividend, distribution or otherwise, being
collectively referred to herein as the "Subject Shares"); and
C. As a condition to its willingness to enter into the Merger Agreement,
Parent has required that the Adviser and Harnisch agree, and in order to induce
Parent to enter into the Merger Agreement the Adviser and Harnisch have agreed,
to enter into this Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
and agreements set forth herein, the Adviser and Harnisch agree as follows:
1. Covenants of Adviser and Harnisch. Until the termination of this
Agreement in accordance with Section 3, the Adviser and Harnisch severally
agree as follows:
(a) Except as set forth in Section 1(i) below, the Adviser and Harnisch
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 Adviser and Harnisch
shall vote (or cause to be voted or to act by consent) 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) Except as provided in Section 1(i) below, at any meeting of
shareholders of the Company or at any adjournment thereof or in any other
circumstances upon which the Adviser's and Harnisch's vote, consent or
other approval is sought, the Adviser and Harnisch shall vote (or cause to
be voted or to act by consent) 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 Certificate of Incorporation, as amended, or 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
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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 Adviser and Harnisch further agree not to commit
or agree to take any action inconsistent with the foregoing.
(c) Except as provided in Section 1(i) below, the Adviser and Harnisch
agree (i) not to 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 except as
follows: (A) in Transfers on the New York Stock Exchange provided that
during the term of this Agreement such transfers do not exceed an aggregate
of 300,000 shares of Company Common Stock; (B) in Transfers not on the New
York Stock Exchange to any "person" who at the closing of such transaction
would not be either the "beneficial owner" or a member of a "group" which
is the "beneficial owner" of 5% or more of the outstanding shares of
Company Common Stock or an "affiliate" of one of the "persons" listed on
Schedule A; and (C) in Transfers in which the transferee of the Subject
Shares agrees to be bound by, and to acquire the Subject Shares subject to,
the terms of this Agreement, including, without limitation, the Proxy
granted in Section 1(h) below; provided, however, that no Harnisch Shares
may be sold pursuant to the exceptions provided in Sections 1(c)(i)(A),
1(c)(i)(B) or 1(c)(i)(C) above and (ii) except as set forth herein, not to
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. For purposes of this Agreement,
the terms "group" and "beneficial owner" shall be defined as they are
defined for purposes of Section 13(d) of the Securities Exchange Act of
1934, the term "affiliate" shall be defined as it is defined in Rule 144
thereunder and the term "person" shall mean any individual, corporation,
limited liability company, partnership, joint venture, association, joint
stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof. To the extent a Transfer of shares
of Company Common Stock is made in compliance with Sections 1(c)(i)(A) or
1(c)(i)(B) above, upon such Transfer, the provisions of Sections 1(a) and
1(b) hereof and the Proxy granted in Section 1(h) hereof shall terminate.
(d) Except as provided in Section 1(i) below, the Adviser and Harnisch
shall not, nor shall either of them authorize any investment banker,
attorney or other advisor or representative of the Adviser and Harnisch to,
directly or indirectly (i) solicit, initiate or encourage the submission
of, any Takeover Proposal or (ii) 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) Except as provided in Section 1(i) below, the Adviser and Harnisch
shall use the Adviser's and Harnisch's commercially 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) Except as provided in Section 1(i) below, the Adviser and Harnisch
agree to promptly notify Parent in writing of the nature and amount of any
acquisition by such Adviser and Harnisch of any voting securities of the
Company acquired by such Adviser and Harnisch hereinafter.
(g) Except as provided in Section 1(i) below, the Adviser and Harnisch
shall not knowingly take or fail to take any action which would cause any
of the representations and warranties set forth in the Tax Certificate
attached hereto as Schedule B to be untrue or incorrect.
(h) The Adviser and Harnisch hereby revoke any and all prior proxies or
powers of attorney in respect of any of Subject Shares and constitute and
appoint Sub and Parent, or any nominee of Sub and Parent, or any of them,
with full power of substitution and resubstitution, at any time during the
term hereof, as its true and lawful attorney and proxy (its "Proxy"), for
and in its name, place and stead, for any and all purposes, including
without limitation, to demand that the Secretary of the Company call a
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special meeting of the shareholders of the Company for the purpose of
considering any matter referred to in Section 1(a) and 1(b) hereof and to
vote each of such Subject Shares as its proxy at every annual, special,
adjourned or postponed meeting of the shareholders of the Company,
including the right to sign its name (as shareholder) to any consent,
certificate or other document relating to the Company that Delaware Law may
permit or require as provided in Sections 1(a) and 1(b).
EXCEPT AS PROVIDED IN SECTION 1(i) THE FOREGOING PROXY AND POWER OF
ATTORNEY ARE IRREVOCABLE AND COUPLED WITH AN INTEREST THROUGHOUT THE TERM
OF THIS AGREEMENT.
(i) Notwithstanding anything to the contrary contained herein, if the
Board of Directors of the Company reasonably determines that a Takeover
Proposal (as defined below) constitutes a Superior Proposal (as defined
below), and, 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 withdraws
or modifies its recommendation of the Merger Agreement, Adviser shall have
the right to terminate its obligations under Sections 1(a) through 1(f)
hereof and to revoke the Proxy to the extent required by its fiduciary
obligations as determined in good faith. For purposes of this Agreement,
"Takeover Proposal" means any proposal for a merger, tender offer 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 the Merger Agreement and this 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.
2. Representations and Warranties. Each of the Adviser and Harnisch
severally represents and warrants to Parent as follows:
(a) The Adviser is an investment adviser with discretionary investment
management authority over the Subject Shares, including, until revoked, the
sole power to vote the Subject Shares. The Adviser does not have
discretionary investment authority over more than 575,000 shares of capital
stock of the Company other than the Subject Shares. The Adviser and
Harnisch collectively have 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
that the Adviser's clients retain the right to direct the disposition of
the Subject Shares and to withdraw the Adviser's discretionary investment
management authority over, and right to vote, the Subject Shares.
(b) This Agreement has been duly executed and delivered by the Adviser
and Harnisch. Assuming the due authorization, execution and delivery of
this Agreement by Parent, this Agreement constitutes the valid and binding
agreement of the Adviser and Harnisch enforceable against the Adviser and
Harnisch in accordance with its terms. The execution and delivery of this
Agreement by the Adviser and Harnisch does not and will not conflict with
any agreement, order or other instrument binding upon the Adviser or
Harnisch, as the case may be, nor require any regulatory filing (other than
filings on Schedule 13D) or approval.
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(c) To the Knowledge of the Adviser and Harnisch, the representations
set forth in the Tax Certificate attached hereto as Schedule B, 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 Adviser and Harnisch hereunder shall
terminate upon the earlier to occur of (i) May 7, 2000, (ii) termination of the
Merger Agreement pursuant to Section 7.1 thereof (iii) the Effective Time and
(iv) as to shares of Company Common Stock held by a person as to which Adviser
and any of its affiliates no longer have a discretionary investment management
relationship, the date of the termination of the last of such relationships (a
"Complete Termination"); provided, however, that to the extent a Complete
Termination does not take place, but rather only a portion of the investments
of a client of the Adviser's are withdrawn from the discretionary investment
management relationship, the obligations of the Adviser hereunder shall
terminate only as to those shares of Company Common Stock withdrawn or sold to
permit such withdrawal and only if the portion of such client's shares of
Company Common Stock that is sold or withdrawn is an amount which is
proportionate to the portion of the client's total investments with Adviser
that are being sold or withdrawn (i.e. if 10% of a client's funds under
discretionary investment management are withdrawn from Adviser's management,
only 10% of such Client's shares of Company Common Stock may be sold and have
the Adviser's obligations hereunder terminate with respect thereto). No such
termination of this Agreement shall relieve any party hereto from any liability
for any breach of this Agreement prior to termination.
4. Further Assurances. The Adviser and Harnisch 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. The Adviser shall by the third business day of
each month provide confidential notice to Parent of any sales of Subject Shares
during the immediately preceding month during the term of 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 Adviser or Harnisch, such as an executor or heir) shall be bound
by the terms hereof, and the Adviser and Harnisch 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; Tax Certificate. The Adviser and Harnisch agree 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 hereto and (ii) the
Tax Certificate attached hereto as Schedule B.
7. Remedies. The Adviser and Harnisch acknowledge 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 Adviser and Harnisch agree 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 the Adviser and Harnisch 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 District of Delaware in any action, suit or proceeding
arising in connection with this Agreement, and agrees that any such action,
suit or proceeding shall be brought
D-4
<PAGE>
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
Delaware are mandatorily applicable to the Merger, this Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
12. Notice. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given and made if in writing and if
served by personal delivery upon the party for whom it is intended or if sent
by telex or telecopier (and also confirmed in writing) to the person at the
address set forth below, or such other address as may be designated in writing
hereafter, in the same manner, by such person:
(a) if to Parent or Sub, to:
General Electric Company
c/o GE Medical Systems
P.O. Box 414, W-410
Milwaukee, WI 53201
Attention: General Counsel
Facsimile No.: 414-544-3575
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 06431-00001
Attention: Vice President and Senior Counsel--Transactions
Facsimile No.: 203-373-3008
and
Gibson, Dunn & Crutcher, LLP
1801 California Street, Suite 4100
Denver, CO 80202
Attention: Richard M. Russo, Esq.
Facsimile No.: 303-296-5310
(b) if to the Adviser, Harnisch or WFH Foundation to:
FLA Advisers L.L.C.
90 Madison Avenue
New York, New York 10022
Attn: William F. Harnisch
Facsimile No.: (212) 407-9636
D-5
<PAGE>
with a copy to:
Fulbright & Jaworski LLP
666 Fifth Avenue
New York, New York 10103
Attention: William Bush, Esq.
Facsimile No.: (212) 752-5958
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.
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. Stop Transfer. Neither the Adviser, Harnisch nor WFH Foundation shall
request that the Company register the transfer (book-entry or otherwise) of any
certificate or uncertificated interest representing any of the Subject Shares,
unless such transfer is made in compliance with this Agreement.
IN WITNESS WHEREOF, the Adviser and Parent have caused this Agreement to be
duly executed and delivered on the day first above written.
FLA Advisers L.L.C.
/s/ William F. Harnisch
_____________________________________
William F. Harnisch
WFH Foundation
/s/ William F. Harnisch
_____________________________________
By: William F. Harnisch
President
/s/William F. Harnisch
_____________________________________
William F. Harnisch
General Electric Company
/s/ J. Keith Morgan
_____________________________________
Keith Morgan
Vice President and General Counsel
of GE Medical Systems
D-6
<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 August 7, 1999 among General
Electric Company, Ruby Merger Corp. and OEC 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 Gibson Dunn & Crutcher, LLP as to the United States federal
income tax consequences of the Merger.
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
8.2* Opinion of Holland & Hart LLP as to the United States federal income
tax consequences of the Merger
23.1* Consent of Deloitte and Touche LLP.
23.2* Consent of KPMG LLP.
23.3* Consent of Robert E. Healing (included in Exhibit 5.1 to this
Registration Statement).
23.4* Consent of Gibson, Dunn & Crutcher, LLP (included in Exhibit 8.1 to
this Registration Statement).
23.5* Consent of Holland & Hart, LLP (included in Exhibit 8.2 to this
Registration Statement)
24.1* Powers of Attorney.
99.1 Stock Option Agreement dated as of August 7, 1999 between GE and OEC
(included as Annex III to the Proxy Statement/Prospectus).
99.2 Adviser Agreement dated as of August 7, 1999 among GE and William F.
Harnisch, the WFH Foundation, and FLA Advisers L.L.C. (included as
Annex IV to the Proxy Statement/Prospectus)
99.3* Form of proxy card to be mailed to shareholders of OEC.
</TABLE>
(b) Not applicable.
(c) Not applicable.
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 to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other
II-3
<PAGE>
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 request.
(c) 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 1, 1999.
General Electric Company
/s/ Philip D. Ameen
By___________________________________
Vice President and Comptroller
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>
*John F. Welch, Jr. Chairman of the Board, Chief October 1, 1999
Executive Officer and Director
(Principal Executive Officer)
*Dennis D. Dammerman Vice Chairman of the Board, Executive October 1, 1999
Officer and Director
*John D. Opie Vice Chairman of the Board, Executive October 1, 1999
Officer and Director
*Keith S. Sherin Senior Vice President Finance, Chief October 1, 1999
Financial Officer and Director
(Principal Financial Officer)
*Philip D. Ameen Vice President and Comptroller October 1, 1999
(Principal Accounting Officer)
*Ann Fudge Director October 1, 1999
*Claudio X. Gonzalez Director October 1, 1999
*Gertrude G. Michelson Director October 1, 1999
*Sam Nunn Director October 1, 1999
*Roger S. Penske Director October 1, 1999
*Frank H.T. Rhodes Director October 1, 1999
*Andrew C. Sigler Director October 1, 1999
</TABLE>
/s/ Philip D. Ameen
*By: __________________________
Philip D. Ameen
As Attorney-in-Fact
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
-------
<C> <S>
2.1 Agreement and Plan of Merger dated as of August 7, 1999 among General
Electric Company, Ruby Merger Corp. and OEC 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 Gibson, Dunn & Crutcher, LLP as to the United States
federal income tax consequences of the Merger.
*8.2 Opinion of Holland & Hart LLP as to the United States federal income
tax consequences of the Merger
*23.1 Consent of Deloitte and Touche LLP.
*23.2 Consent of KPMG LLP.
*23.3 Consent of Robert E. Healing (included in Exhibit 5.1 to this
Registration Statement).
*23.4 Consent of Gibson, Dunn & Crutcher, LLP (included in Exhibit 8.1 to
this Registration Statement).
*23.5 Consent of Holland & Hart, LLP (included in Exhibit 8.2 to this
Registration Statement)
*24.1 Powers of Attorney.
99.1 Stock Option Agreement dated as of August 7, 1999 between GE and OEC
(included as Annex III to the Proxy Statement/Prospectus).
99.2 Adviser Agreement dated as of August 7, 1999 among GE and William F.
Harnisch, the WFH Foundation, and FLA Advisers L.L.C. (included as
Annex IV to the Proxy Statement/Prospectus)
*99.3 Form of proxy card to be mailed to shareholders of OEC.
</TABLE>
- --------
* Filed herewith
<PAGE>
Exhibit 5.1
October 1, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Common Stock of General Electric Company to be Issued to Stockholders of
-------------------------------------------------------------------------
OEC Medical Systems, Inc.
-------------------------
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 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 August 7, 1999 among the Company, Ruby Merger Corp., a Delaware
corporation and a wholly owned subsidiary of the Company ("Sub"), and OEC
Medical Systems, Inc., a Delaware corporation ("OEC"), which provides for the
merger (the "Merger") of Sub with and into OEC, with OEC 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 General Corporation Law of the State of Delaware.
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.
Very truly yours,
Robert E. Healing
<PAGE>
EXHIBIT 8.1
October 1, 1999
(213) 229-7000 C 35475-00070
General Electric Company
3135 Easton Turnpike
Fairfield, Connecticut 06431
Re: Acquisition of OEC Medical Systems, Inc..
Ladies and Gentlemen:
We have acted as counsel for General Electric Company, a New York
corporation, in connection with the preparation and execution of the Agreement
and Plan of Merger dated as of August 7, 1999 (the "Merger Agreement") by and
among General Electric Company ("Parent"), OEC Medical Systems, Inc., a Delaware
corporation ("Company"), and Ruby Merger Corp., a wholly-owned subsidiary of
Parent incorporated in Delaware ("Sub"). Pursuant to the Merger Agreement, Sub
will merge with and into Company (the "Merger"), and Company will become a
wholly-owned subsidiary of Parent. All section references, unless otherwise
indicated, are to the Internal Revenue Code of 1986, as amended (the "Code").
You have requested our opinion regarding certain United States federal
income tax consequences of the Merger and the accuracy of the discussion under
the caption "Material United Stated Federal Income Tax Consequences" in the
Registration Statement. In delivering this opinion, we have reviewed (without
any independent investigation) the Merger Agreement, the Registration Statement
on Form S-4 filed with the Securities and Exchange Commission (the "Registration
Statement") and such other documents pertaining to the Merger as we have deemed
necessary or appropriate. We have relied upon the truth and accuracy at all
relevant times of the statements, covenants, representations and warranties
contained in the Merger Agreement and the Registration Statement, and the
representation letters from Parent, Company, Sub, and certain shareholders of
the Company, to be delivered on or at the Closing,
<PAGE>
[Closing Date]
Page 2
copies of the form of which are attached hereto and made a part hereof. We have
also assumed the authenticity of original documents submitted to us, the
conformity to the originals of documents submitted to us as copies, and the due
and valid execution and delivery of all such documents where due execution and
delivery are a prerequisite to the effectiveness thereof.
Based upon the foregoing, we are of the opinion that:
(i) The Merger will constitute a "reorganization" within the
meaning of Section 368(a), and Parent, Company and Sub will each be a party to
the reorganization within the meaning of Section 368(b).
(ii) No gain or loss will be recognized by Parent, Company, or Sub
as a result of the Merger.
(iii) No gain or loss will be recognized by the stockholders of the
Company upon the exchange of their shares of Company Common Stock for shares of
Parent Common Stock pursuant to the Merger, except with respect to gain or loss
attributable to cash received in lieu of fractional shares of Parent Common
Stock.
(iv) The aggregate tax basis of shares of Parent Common Stock
received solely in exchange for shares of Company Common Stock (including
fractional shares 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 such shares of Company Common Stock pursuant to the
merger will include the period for which the Company Common Stock surrendered in
the Merger was considered to be held by the Company shareholder, provided that
such shares of Company Common Stock were held as capital assets at the Effective
Time.
(vi) A Company shareholder who receives cash in lieu of a fractional
share of Parent Common Stock will generally 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.
This opinion represents our best judgment regarding the application of
federal income tax laws under the Code, existing judicial decisions,
administrative regulations and published rulings and procedures. Our opinion is
not binding upon the Internal Revenue Service or the courts, and there is no
assurance that the Internal Revenue Service will not successfully assert a
contrary position. Furthermore, no assurance can be given that future
legislative, judicial or administrative changes, on either a prospective or
retroactive basis, would not adversely affect the accuracy of the conclusions
stated herein. We undertake no responsibility to advise you of
<PAGE>
[Closing Date]
Page 3
any new developments in the application or interpretation of the federal income
tax laws. Furthermore, in the event any one of the statements, representations,
warranties or assumptions upon which we have relied to issue this opinion is
incorrect, our opinion might be adversely affected and may not be relied upon.
This opinion addresses only the matters described above, and does not
address any other federal, state, local or foreign tax consequences that may
result from the Merger or any other transaction (including any transaction
undertaken in connection with the Merger).
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and further consent to the use of our name under the
caption "Material United States Federal Income Tax Consequences" in the Proxy
Statement/Prospectus included in the Registration Statement.
Very truly yours,
Gibson, Dunn & Crutcher LLP
<PAGE>
EXHIBIT A TO TAX OPINION OF GIBSON, DUNN & CRUTCHER LLP
SHAREHOLDER TAX REPRESENTATION LETTER
[Closing Date]
Gibson, Dunn & Crutcher LLP Holland & Hart
333 South Grand Avenue 215 S. State Street, Suite 500
Los Angeles, CA 90071 Salt Lake City, UT 8411-2317
Ladies and Gentlemen:
You have been requested to render opinions regarding certain federal income
tax consequence of the merger (the "Merger") of Ruby Merger Corp. ("Sub"), a
Delaware corporation and a wholly owned subsidiary of General Electric, a New
York corporation ("Parent"), with and into OEC Medical Systems, Inc., a Delaware
corporation (the "Company"), upon the terms and conditions set forth in the
Agreement and Plan of Merger dated as of August 7, 1999 (the "Merger Agreement")
among Parent, Sub and the Company. Capitalized terms not defined herein have
the meanings specified in the Merger Agreement.
In connection with the Merger, and recognizing that you will rely upon this
letter in rendering such opinions, the undersigned, a beneficial owner of issued
and outstanding shares of Company Common Stock and acting as such, hereby
certifies and represents to you that the facts and representations stated herein
are true, correct and complete in all respects at the date hereof and will be
true, correct and complete in all respects as of the Effective Time (as if made
as of the Effective Time):
1. The undersigned has no present plan or intention to sell or otherwise
transfer any shares of Parent Common Stock to be received pursuant to
the Merger to Parent (or any person that is or may become related to
Parent within the meaning of Treas. Reg. (S) 1.368-1(e)(3)).
2. The undersigned has not sold or otherwise transferred to the Company
(or any person related to the Company within the meaning of Temp.
Treas. Reg. (S) 1.368-1T(e)(2)(ii)) any shares of Company Common
Stock, as part of any overall plan that includes the Merger.
<PAGE>
[Closing Date]
Page 2
The undersigned hereby undertakes to inform you, Parent and Company
immediately should any of the foregoing statements or representations become
untrue, incorrect or incomplete in any respect on or prior to the Effective
Time.
Very truly yours,
______________________________
Name:
<PAGE>
EXHIBIT B TO TAX OPINION OF GIBSON, DUNN & CRUTCHER LLP
PARENT TAX REPRESENTATION LETTER
[Closing Date]
Gibson, Dunn & Crutcher LLP Holland & Hart
1801 California Street 215 S. State Street
Denver, CO 80202-2641 Suite 500
Salt Lake City, UT 8411-2317
Ladies and Gentlemen:
We refer to the Agreement and Plan of Merger dated as of August 7, 1999
(the "Agreement") among General Electric Company, a New York corporation
("Parent"), Ruby Merger Corp., a Delaware corporation and a direct wholly owned
subsidiary of Parent ("Sub"), and OEC Medical Systems, Inc., a Delaware
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." Parent and the Company have requested that Gibson, Dunn &
Crutcher LLP, and Holland & Hart, counsel to Parent and the Company,
respectively, render opinions to Parent and the Company, respectively, dated on
or about the date hereof, regarding certain United States federal income tax
consequences of the Merger. Capitalized terms used but not defined herein have
the meanings specified in the Agreement.
In connection with such opinions to be rendered by you, and acknowledging
that you will rely, with Parent's consent, upon the statements and
representations made in this letter in rendering such opinions, Parent hereby
certifies and represents to you that the statements and representations stated
herein are true, correct and complete in all respects at the date hereof and
will be true, correct and complete in all respects as of the Effective Time (as
if made as of the Effective Time):
1. The consideration to be received in the Merger by holders of Company
Common Stock was determined by arms'-length negotiations between the management
of Parent and the Company. The fair market value of the Parent Common Stock and
cash in lieu of a fractional share of Parent Common Stock received by each
Company stockholder will be approximately equal to the fair market value of the
Company Common Stock to be exchanged therefor in the
<PAGE>
[Closing Date]
Page 2
Merger. In connection with the Merger, no holder of Company Stock will receive,
directly or indirectly, any consideration from Parent other than Parent Common
Stock and cash in lieu of a fractional share thereof in exchange for such
holder's shares of Company Common Stock.
2. No shares of Sub (or, following the Effective Time, the Company) have
been or will be used as consideration or issued to stockholders of the Company
pursuant to the Merger.
3. The assets transferred to the Company pursuant to the Merger will
represent at least ninety percent (90%) of the fair market value of the net
assets and at least seventy percent (70%) of the fair market value of the gross
assets held by Sub immediately prior to the Merger. At least ninety percent
(90%) of the fair market value of the net assets and at least seventy percent
(70%) of the fair market value of the gross assets held by the Company
immediately prior to the Merger will continue to be held by the Company
immediately after the Merger. For purposes of this Paragraph, amounts used by
the Company or Sub to pay Merger expenses, amounts paid by the Company or Sub to
redeem stock, securities, warrants, or options of the Company or Sub as part of
any overall plan of which the Merger is a part, and amounts distributed by the
Company (including, without limitation, after the Effective Time to Parent or
any subsidiary of Parent) or Sub to stockholders of the Company or Sub (except
for regular, normal dividends) as part of any overall plan of which the Merger
is a part, in each case will be treated as constituting assets of the Company or
Sub, as the case may be, immediately prior to the Effective Time.
4. Sub has been formed solely in order to consummate the Merger. At no
time prior to the Effective Time has or will Sub conduct any business activities
or operations of any kind.
5. Immediately prior to the Effective Time, Parent will be in "control"
of Sub within the meaning of Section 368(c) of the Internal Revenue Code of
1986, as amended (the "Code").
6. Parent has no present plan or intention to cause or permit the
Company, after the Effective Time, to issue additional shares of stock (or
equity equivalents, or securities, options, warrants or instruments giving the
holder thereof the right to acquire Company stock or equity equivalents) that
would (or if exercised would) result in Parent losing "control" of the Company
within the meaning of Section 368(c) of the Code.
7. Neither Parent nor any person that is or may become "related" to
Parent within the meaning of Treasury Regulation Section l.368-1(e)(3): (i)
will, as of the Effective Time, be under any obligation or have entered into any
agreement, to redeem or repurchase any shares of Parent Common Stock issued in
the Merger; (ii) will, in connection with the Merger, directly or indirectly,
reacquire any of the Parent Common Stock issued in the Merger, or (iii) has a
plan or intention to reacquire any shares of Parent Common Stock issued in the
Merger; provided, however, that it is understood that, for valid business
-----------------
reasons, Parent may purchase a small
<PAGE>
[Closing Date]
Page 3
percentage of Parent Common Stock in the open market (without regard to whether
the selling shareholder formerly held Company Common Stock) pursuant to an
ongoing share repurchase program that was neither created nor modified in
connection with the Merger. After the Merger, no dividends or distributions
will be made to the former Company stockholders by Parent other than dividends
or distributions made to all holders of Parent Common Stock.
8. Neither Parent nor any corporation affiliated with Parent has any
present plan or intention: (i) to liquidate the Company; (ii) to merge the
Company with or into another corporation (except pursuant to the Merger); (iii)
to sell or otherwise dispose of any shares of Company stock, except for any
transfer to a corporation controlled by Parent in accordance with Treasury
Regulation Section l.368-2(k)(2); or (iv) to cause the Company or any
corporation affiliated with the Company immediately prior to the Effective Time
to sell, distribute, transfer or otherwise dispose of any of its assets
(including by means of a spin-off) or any of the assets acquired from Sub,
except for any such disposition in the ordinary course of business or any
transfer of assets to a corporation controlled by the Company in accordance with
Treasury Regulation Section 1 .368-2(k)(2).
9. Sub will not have any liabilities assumed by the Company, and will not
transfer to the Company any assets subject to liabilities, as a part of the
Merger.
10. Assuming the correctness of Paragraph 19 of the Company Tax
Certificate, following the Merger, Parent will cause the Company to continue its
"historic business" or to use a "significant portion" of its "historic business
assets" in a business, as each such term is used in Treas. Reg. (S) 1.368-1(d).
11. Each of Parent and Sub has paid and will pay only its respective
expenses, if any, incurred in connection with the Merger, and neither Parent nor
Sub has agreed to pay or assume, nor will it directly or indirectly pay or
assume, any expense or other liability, whether fixed or contingent, of any
holder of Company Common Stock. All printing expenses and all filing fees
(including, without limitation, filing fees under the Securities Act, the
Exchange Act and the HSR Act) shall be divided equally between Parent and the
Company. The apportionment of expenses as described in the immediately
preceding sentence is reasonable.
12. There is no intercorporate indebtedness currently existing between
Parent and the Company or between Sub and the Company that was issued, was
acquired or was or will be settled at a discount.
13. The Parent Common Stock into which Company Common Stock will be
converted in the Merger is "voting stock" within the meaning of Sections
368(a)(1)(B) and 368(a)(2)(E) of the Code.
<PAGE>
[Closing Date]
Page 4
14. All shares of Parent Common Stock into which shares of Company Common
Stock will be converted pursuant to the Merger will be newly issued or treasury
shares, and will be issued by Parent directly to holders of Company Common Stock
pursuant to the Merger.
15. In the Merger, Parent will deliver solely Parent Common Stock, except
for cash in lieu of fractional shares, and all of the shares of Company Common
Stock, which represents control of the Company as defined in Section 368(c) of
the Code, will be exchanged therefor. For purposes of this Paragraph, any
shares of Company stock exchanged for cash or other property furnished by Parent
will be treated as outstanding Company stock at the Effective Time.
16. In the Merger, no liabilities of shareholders of the Company will be
assumed by Parent, and none of the Company Common Stock acquired by Parent will
be subject to liabilities.
17. The Agreement and the documents described in the Agreement represent
the entire understanding of Parent, Sub and the Company with respect to the
Merger.
18. As of the Effective Time, any shares of Company stock owned
beneficially or of record by Parent, any Subsidiary of Parent, or any person
that is related to Parent within the meaning of Treasury Regulation Section
1.368-1(e)(3) will represent less than 2% of the outstanding stock of the
Company.
19. Neither Parent nor Sub is an "investment company", as defined in
Section 368(a)(2)(F) of the Code.
20. Neither Parent nor Sub is under the jurisdiction of a court in a Title
11 or similar case within the meaning of Section 368(a)(3)(A) of the Code.
20. The payment of cash in lieu of fractional shares of Parent Common
Stock is solely for the purpose of avoiding the expense and inconvenience to
Parent of issuing fractional shares and does not represent separately bargained-
for consideration.
21. The total cash consideration that will be paid in the Merger to
holders of Company Common Stock in lieu of issuing fractional shares of Parent
Common Stock will not exceed 1% of the total consideration that will be issued
in the Merger to the holders of Company Common Stock in exchange for their
Company Common Stock.
22. None of the compensation to be received by any Company stockholder who
is an employee of the Company or any affiliate of the Company at the Effective
Time, whether for past or future services to the Company or future services to
Parent, will be separate consideration for, or allocable to, any of his or her
shares of Company Common Stock. Any such compensation will be determined by
bargaining at arms' length.
<PAGE>
[Closing Date]
Page 5
23. None of the Parent Common Stock to be received in the Merger by any
Company stockholder who is an employee of the Company or any affiliate of the
Company at the Effective Time in exchange for Company Common Stock will be
separate consideration for, or allocable to, any employment arrangement or
covenant not to compete.
24. The compensation to be paid to any Company stockholder who is an
employee of the Company or any affiliate of the Company at the Effective Time
with respect to periods after the Effective Time will be for services actually
rendered and will not be separate consideration for, or allocable to, any of his
or her shares of Company Common Stock.
25. The Merger is being effected for bona fide business reasons and will
be carried out strictly in accordance with the Agreement and none of the
material terms and conditions thereof have been or will be waived or modified.
26. Parent will not take any position on any federal, state or local
income or franchise Tax Return, or take any other tax reporting position that is
inconsistent with the treatment of the Merger as a reorganization within the
meaning of Section 368(a) of the Code, unless otherwise required by a
"determination" (as defined in Section 1313(a)(1) of the Code) or by a similar
determination under applicable state or local income or franchise tax law.
Parent hereby undertakes to inform you and the Company immediately should
any of the foregoing Statements or representations become untrue, incorrect or
incomplete in any respect at or prior to the Effective Time.
Very truly yours,
GENERAL ELECTRIC COMPANY
By:_________________________________
Name: Jeffrey R. Immelt
Title: Senior Vice President
<PAGE>
EXHIBIT C TO TAX OPINION OF GIBSON, DUNN & CRUTCHER LLP
COMPANY TAX REPRESENTATION LETTER
[Closing Date]
Gibson, Dunn & Crutcher LLP Holland & Hart
1801 California Street 215 S. State Street
Denver, CO 80202-2641 Suite 500
Salt Lake City, UT 8411-2317
Ladies and Gentlemen:
We refer to the Agreement and Plan of Merger dated as of August 7, 1999
(the "Agreement") among General Electric Company, a New York corporation
("Parent"), Ruby Merger Corp., a Delaware corporation and a direct wholly owned
subsidiary of Parent ("Sub"), and OEC Medical Systems, Inc., a Delaware
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." Parent and the Company have requested that Gibson, Dunn &
Crutcher LLP, and Holland & Hart, counsel to Parent and the Company,
respectively, render opinions to Parent and the Company, respectively, dated on
or about the date hereof, regarding certain United States federal income tax
consequences of the Merger. Capitalized terms used but not defined herein have
the meanings specified in the Agreement.
In connection with such opinions to be rendered by you, and acknowledging
that you will rely, with Company's consent, upon the statements and
representations made in this letter in rendering such opinions, Company hereby
certifies and represents to you that the statements and representations stated
herein are true, correct and complete in all respects at the date hereof and
will be true, correct and complete in all respects as of the Effective Time (as
if made as of the Effective Time):
1. The Company Common Stock is the only class of stock of the Company
stock issued and outstanding. The consideration to be received in the Merger by
holders of Company Common Stock was determined by arms'-length negotiations
between the management of the Company and Parent. The fair market value of the
Parent Common Stock and cash in lieu of a fractional share of Parent Common
stock received by each Company stockholder will be approximately equal to the
fair market value of the Company Common Stock to be exchanged therefor in the
Merger. In connection with the Merger, no holder of Company stock will receive,
<PAGE>
[Closing Date]
Page 7
directly or indirectly, any consideration from Parent other than Parent Common
Stock and cash in lieu of a fractional share thereof in exchange for such
holder's shares of Company Common Stock.
2. Other than purchases of approximately 475,000 shares of Company stock
by the Company, neither the Company nor a corporation "related" to the Company
within the meaning of Temporary Treasury Regulation Section 1.368-1T(e)(2)(ii)
has since January 1, 1998, redeemed or acquired any shares of Company stock or
entered into any agreement, arrangement, or understanding to redeem or acquire
any shares of Company stock. The Company will not redeem or acquire, or enter
into any such agreement, arrangement or understanding to redeem or acquire, any
shares of its stock anytime during the period commencing on the execution hereof
and through the Effective Time.
3. Dividends, if any, that the Company has paid or will pay to its
shareholders prior to the Effective Time have been and will be regular and
normal distributions made in accordance with the Company's past practices, and
the Company has not made any extraordinary distributions (as determined under
Treasury Regulation Section 1.368-1T(e)(1)(ii)(A)) in connection with the
Merger.
4. At the Effective Time, the Company will hold at least 90% of the fair
market value of the net assets and at least 70% of the fair market value of the
gross assets that it held immediately prior to the Effective Time. For purposes
of this representation, amounts used by the Company to pay Merger expenses
(including, without limitation, Gains Taxes, if any), amounts paid by the
Company to redeem stock, securities, warrants or options of the Company as part
of any overall plan of which the Merger is a part, and amounts distributed by
the Company to stockholders of the Company (except for regular, normal
dividends) as part of any overall plan of which the Merger is a part, in each
case will be treated as constituting assets of the Company immediately prior to
the Effective Time. Without limiting the foregoing, in the last two years there
has been no spin-off or other irregular distribution by the Company or, other
than in the ordinary course of business or pursuant to a refinancing, no
significant debt repayment by the Company.
5. The Company has no plan or intention to sell or otherwise dispose of
any of its assets or of any of the assets acquired from Sub in the Merger,
except for dispositions made in the ordinary course of business.
6. Any dispositions prior to the Merger, in contemplation or as part of
the Merger, of assets held by the Company have been for full fair market value.
7. Each of the Company and its stockholders has paid and will pay only
its respective expenses, if any, incurred in connection with the Merger, and the
Company has not agreed to assume, nor will it directly or indirectly assume, any
expense or other liability, whether fixed or contingent, of any holder of
Company Common Stock (other than Gains Taxes pursuant to Section 5.10 of the
Agreement). All printing expenses and all filing fees (including, without
7
<PAGE>
[Closing Date]
Page 8
limitation, filing fees under the Securities Act, the Exchange Act and the HSR
Act) shall be divided equally between Parent and the Company. The apportionment
of expenses as described in the immediately preceding sentence is reasonable.
8. There is no intercorporate indebtedness currently existing between
Parent and the Company or between Sub and the Company that was issued, was
acquired or was or will be settled at a discount.
9. The Company has no present plan or intention to issue additional
shares of its stock (or equity equivalents, or securities, options, warrants or
instruments giving the holder thereof the right to acquire Company stock or
equity equivalents) after the Effective Time that would (or if exercised would)
result in Parent losing "control" of the Company within the meaning of Section
368(c) of the Internal Revenue Code of 1986, as amended (the "Code").
10. At the Effective Time, the Company will not have outstanding any
warrants, options, convertible securities, or any other type of right pursuant
to which any person could acquire stock in the Company that, if exercised or
converted, would affect Parent's acquisition or retention of "control" of the
Company, as defined in Section 368(c) of the Code. Immediately prior to the
Effective Time, other than Company Stock Options, which relate to Company Common
Stock and which will be assumed by Parent pursuant to the Merger, the Company
will not have outstanding any warrants, options, convertible securities, or any
other type of right pursuant to which any person could acquire stock in the
Company. In no case is the exercise price of any of the Company Stock Options
less than the fair market value of the underlying Company Common Stock at the
time such option was granted.
11. The Company is not an "investment company" as defined in Section
368(a)(2)(F) of the Code.
12. The Company is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
13. At the Effective Time, the total fair market value of the assets of
the Company will exceed the sum of its liabilities, plus (without duplication)
the amount of any liabilities to which such assets are subject.
14. None of the compensation to be received by any Company stockholder who
is an employee of the Company or any affiliate of the Company at the Effective
Time, whether for past or future services to the Company, will be separate
consideration for, or allocable to, any of his or her shares of Company Common
Stock.
15. None of the Parent Common Stock to be received in the Merger by any
Company stockholder who is an employee of the Company or an affiliate of the
Company at the Effective Time in exchange for Company Common Stock will be
separate consideration for, or allocable to, any employment arrangement or any
covenant not to compete. Any compensation paid or to
8
<PAGE>
[Closing Date]
Page 9
be paid to any Company stockholder who will be an employee of or perform
services for Parent, the Company or Sub or any affiliate thereof after the
Merger will be determined by bargaining at arms' length.
16. Assuming the correctness of the representation in Paragraph 24 of the
Parent Tax Certificate, the compensation paid (or to be paid) to any Company
stockholder who is an employee of the Company at the Effective Time was paid (or
will be paid) for services actually rendered and will not be separate
consideration for, or allocable to, any of his or her shares of Company Common
Stock.
17. In the Merger, shares of Company stock representing "control" of the
Company (within the meaning of Section 368(c) of the Code) will be exchanged
solely for Parent Common Stock. For purposes of this Paragraph, shares of
Company stock exchanged in the Merger for cash and other property (including,
without limitation, cash paid to stockholders of the Company in lieu of
fractional shares of Parent Common Stock) will be treated as outstanding shares
on the date of the Merger but not exchanged for shares of Parent Common Stock.
To the best knowledge of the Company, there are no voting agreements or
arrangements with respect to the Company Common Stock. Immediately following
the Effective Time, Parent will be in "control" of the Company within the
meaning of Section 368(c) of the Code.
18. The Company is not currently, and during the five years preceding the
Effective Time will not have been, a "United States real property holding
corporation" within the meaning of Section 897(c)(2) of the Code.
19. The business currently carried on by the Company is its "historic
business," within the meaning of Treasury Regulation Section 1.368-1(d) and no
assets of the Company have been acquired, or sold, transferred or otherwise
disposed of, which would prevent Parent from continuing the "historic business"
of the Company or from using a "significant portion" of the Company's "historic
business" assets in a business following the Merger, as such terms are used in
Treasury Regulation Section l.368-l(d).
20. The payment of cash in lieu of fractional shares of Parent Common
Stock is solely for the purposes of avoiding the expense and inconvenience to
Parent of issuing fractional shares and does not represent separately bargained-
for consideration. The total cash consideration that will be paid in the Merger
to the holders of Company Common Stock in lieu of issuing fractional shares of
Parent Common Stock will not exceed 1% of the total consideration that will be
issued in the Merger to the holders of Company Common Stock in exchange for
their Company Common Stock.
21. At the Effective Time of the Merger, there will be no accrued but
unpaid dividends on Company Common Stock.
22. In the Merger, no liabilities of shareholders of the Company will be
assumed by Parent, and none of the Company stock acquired by Parent will be
subject to liabilities.
9
<PAGE>
[Closing Date]
Page 10
23. No holder of Company stock will have dissenters' rights with respect
to the Merger under applicable laws.
24. The Merger is being effected for bona fide business reasons and will
be carried out strictly in accordance with the Agreement and none of the
material terms and conditions therein have been or will be waived or modified.
25. The Company will not take any position on any federal, state or local
income or franchise Tax Return, or take any other tax reporting position, that
is inconsistent with the treatment of the Merger as a reorganization within the
meaning of Section 368(a) of the Code, unless otherwise required by a
"determination" (as defined in Section 1313(a)(1) of the Code) or by a similar
determination under applicable state or local income or franchise tax law.
The Company hereby undertakes to inform you and Parent immediately should
any of the foregoing statements or representations become untrue, incorrect or
incomplete in any respect on or prior to the Effective Time.
Very truly yours,
OEC MEDICAL SYSTEMS, INC.,
By: _________________________________________
Name:
Title:
10
<PAGE>
October 1, 1999
OEC Medical Systems, Inc.
384 Wright Brothers Drive
Salt Lake City, UT 84116
Re: General Electric Acquisition of OEC Medical Systems, Inc..
Ladies and Gentlemen:
We have acted as counsel for OEC, a Delaware corporation, in connection
with the preparation and execution of the Agreement and Plan of Merger dated as
of August 7, 1999 (the "Merger Agreement") by and among General Electric Company
("Parent"), OEC Medical Systems, Inc., a Delaware corporation ("Company"), and
Ruby Merger Corp., a wholly-owned subsidiary of Parent incorporated in Delaware
("Sub"). Pursuant to the Merger Agreement, Sub will merge with and into Company
(the "Merger"), and Company will become a wholly-owned subsidiary of Parent.
All section references, unless otherwise indicated, are to the Internal Revenue
Code of 1986, as amended (the "Code").
You have requested our opinion regarding certain United States federal
income tax consequences of the Merger and the accuracy of the discussion under
the caption "Material United States Federal Income Tax Consequences" in the
Registration Statement. In delivering this opinion, we have reviewed (without
any independent investigation) the Merger Agreement, the Registration Statement
on Form S-4 filed with the Securities and Exchange Commission (the "Registration
Statement") and such other
<PAGE>
[Closing Date]
Page 2
documents pertaining to the Merger as we have deemed necessary or appropriate.
We have relied upon the truth and accuracy at all relevant times of the
statements, covenants, representations and warranties contained in the Merger
Agreement and the Registration Statement, and have assumed the accuracy of the
statements, covenants, representations and warranties to be contained in the
representation letters from Parent, Company, Sub, and certain shareholders of
the Company, to be delivered on or at the Closing, copies of the form of which
are attached hereto and made a part hereof. We have also assumed the
authenticity of original documents submitted to us, the conformity to the
originals of documents submitted to us as copies, and the due and valid
execution and delivery of all such documents where due execution and delivery
are a prerequisite to the effectiveness thereof.
Based upon the foregoing, we are of the opinion that:
(i) The Merger will constitute a "reorganization" within the meaning of
Section 368(a), and Parent, Company and Sub will each be a party to the
reorganization within the meaning of Section 368(b).
(ii) No gain or loss will be recognized by Parent, Company, or Sub as
a result of the Merger.
(iii) No gain or loss will be recognized by the stockholders of the Company upon
the exchange of their shares of Company Common Stock for shares of Parent Common
Stock pursuant to the Merger, except with respect to gain or loss attributable
to cash received in lieu of fractional shares of Parent Common Stock.
(iv) The aggregate tax basis of shares of Parent Common Stock received solely
in exchange for shares of Company Common Stock (including fractional shares 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 such shares of Company Common Stock pursuant to the merger will
include the period for which the Company Common Stock surrendered in the Merger
was considered to be held by the Company shareholder, provided that such shares
of Company Common Stock were held as capital assets at the Effective Time.
(vi) A Company shareholder who receives cash in lieu of a fractional share of
Parent Common Stock will generally 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.
This opinion represents our best judgment regarding the application of
federal income tax laws under the Code, existing judicial decisions,
administrative regulations
<PAGE>
[Closing Date]
Page 3
and published rulings and procedures. Our opinion is not binding upon the
Internal Revenue Service or the courts, and there is no assurance that the
Internal Revenue Service will not successfully assert a contrary position.
Furthermore, no assurance can be given that future legislative, judicial or
administrative changes, on either a prospective or retroactive basis, would not
adversely affect the accuracy of the conclusions stated herein. We undertake no
responsibility to advise you of any new developments in the application or
interpretation of the federal income tax laws. Furthermore, in the event any one
of the statements, representations, warranties or assumptions upon which we have
relied to issue this opinion is incorrect, our opinion might be adversely
affected and may not be relied upon.
This opinion addresses only the matters described above, and does not
address any other federal, state, local or foreign tax consequences that may
result from the Merger or any other transaction (including any transaction
undertaken in connection with the Merger).
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and further consent to the use of our name under the
caption "Material United States Federal Income Tax Consequences" in the Proxy
Statement/Prospectus included in the Registration Statement.
Very truly yours,
Holland & Hart LLP
<PAGE>
EXHIBIT A TO TAX OPINION OF HOLLAND & HART LLP
SHAREHOLDER TAX REPRESENTATION LETTER
[Closing Date]
Gibson, Dunn & Crutcher LLP Holland & Hart
333 South Grand Avenue 215 S. State Street, Suite 500
Los Angeles, CA 90071 Salt Lake City, UT 8411-2317
Ladies and Gentlemen:
You have been requested to render opinions regarding certain federal income
tax consequence of the merger (the "Merger") of Ruby Merger Corp. ("Sub"), a
Delaware corporation and a wholly owned subsidiary of General Electric, a New
York corporation ("Parent"), with and into OEC Medical Systems, Inc., a Delaware
corporation (the "Company"), upon the terms and conditions set forth in the
Agreement and Plan of Merger dated as of August 7, 1999 (the "Merger Agreement")
among Parent, Sub and the Company. Capitalized terms not defined herein have
the meanings specified in the Merger Agreement.
In connection with the Merger, and recognizing that you will rely upon this
letter in rendering such opinions, the undersigned, a beneficial owner of issued
and outstanding shares of Company Common Stock and acting as such, hereby
certifies and represents to you that the facts and representations stated herein
are true, correct and complete in all respects at the date hereof and will be
true, correct and complete in all respects as of the Effective Time (as if made
as of the Effective Time):
1. The undersigned has no present plan or intention to sell or otherwise
transfer any shares of Parent Common Stock to be received pursuant to
the Merger to Parent (or any person that is or may become related to
Parent within the meaning of Treas. Reg. (S) 1.368-1(e)(3)).
2. The undersigned has not sold or otherwise transferred to the Company
(or any person related to the Company within the meaning of Temp.
Treas. Reg. (S) 1.368-1T(e)(2)(ii)) any shares of Company Common
Stock, as part of any overall plan that includes the Merger.
<PAGE>
[Closing Date]
Page 2
The undersigned hereby undertakes to inform you, Parent and Company
immediately should any of the foregoing statements or representations become
untrue, incorrect or incomplete in any respect on or prior to the Effective
Time.
Very truly yours,
______________________________
Name:
<PAGE>
EXHIBIT B TO TAX OPINION OF HOLLAND & HART LLP
PARENT TAX REPRESENTATION LETTER
[Closing Date]
Gibson, Dunn & Crutcher LLP Holland & Hart
1801 California Street 215 S. State Street
Denver, CO 80202-2641 Suite 500
Salt Lake City, UT 8411-2317
Ladies and Gentlemen:
We refer to the Agreement and Plan of Merger dated as of August 7, 1999
(the "Agreement") among General Electric Company, a New York corporation
("Parent"), Ruby Merger Corp., a Delaware corporation and a direct wholly owned
subsidiary of Parent ("Sub"), and OEC Medical Systems, Inc., a Delaware
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." Parent and the Company have requested that Gibson, Dunn &
Crutcher LLP, and Holland & Hart, counsel to Parent and the Company,
respectively, render opinions to Parent and the Company, respectively, dated on
or about the date hereof, regarding certain United States federal income tax
consequences of the Merger. Capitalized terms used but not defined herein have
the meanings specified in the Agreement.
In connection with such opinions to be rendered by you, and acknowledging
that you will rely, with Parent's consent, upon the statements and
representations made in this letter in rendering such opinions, Parent hereby
certifies and represents to you that the statements and representations stated
herein are true, correct and complete in all respects at the date hereof and
will be true, correct and complete in all respects as of the Effective Time (as
if made as of the Effective Time):
1. The consideration to be received in the Merger by holders of Company
Common Stock was determined by arms'-length negotiations between the management
of Parent and the Company. The fair market value of the Parent Common Stock and
cash in lieu of a fractional share of Parent Common Stock received by each
Company stockholder will be approximately equal to the fair market value of the
Company Common Stock to be exchanged therefor in the
<PAGE>
[Closing Date]
Page 2
Merger. In connection with the Merger, no holder of Company Stock will receive,
directly or indirectly, any consideration from Parent other than Parent Common
Stock and cash in lieu of a fractional share thereof in exchange for such
holder's shares of Company Common Stock.
2. No shares of Sub (or, following the Effective Time, the Company) have
been or will be used as consideration or issued to stockholders of the Company
pursuant to the Merger.
3. The assets transferred to the Company pursuant to the Merger will
represent at least ninety percent (90%) of the fair market value of the net
assets and at least seventy percent (70%) of the fair market value of the gross
assets held by Sub immediately prior to the Merger. At least ninety percent
(90%) of the fair market value of the net assets and at least seventy percent
(70%) of the fair market value of the gross assets held by the Company
immediately prior to the Merger will continue to be held by the Company
immediately after the Merger. For purposes of this Paragraph, amounts used by
the Company or Sub to pay Merger expenses, amounts paid by the Company or Sub to
redeem stock, securities, warrants, or options of the Company or Sub as part of
any overall plan of which the Merger is a part, and amounts distributed by the
Company (including, without limitation, after the Effective Time to Parent or
any subsidiary of Parent) or Sub to stockholders of the Company or Sub (except
for regular, normal dividends) as part of any overall plan of which the Merger
is a part, in each case will be treated as constituting assets of the Company or
Sub, as the case may be, immediately prior to the Effective Time.
4. Sub has been formed solely in order to consummate the Merger. At no
time prior to the Effective Time has or will Sub conduct any business activities
or operations of any kind.
5. Immediately prior to the Effective Time, Parent will be in "control"
of Sub within the meaning of Section 368(c) of the Internal Revenue Code of
1986, as amended (the "Code").
6. Parent has no present plan or intention to cause or permit the
Company, after the Effective Time, to issue additional shares of stock (or
equity equivalents, or securities, options, warrants or instruments giving the
holder thereof the right to acquire Company stock or equity equivalents) that
would (or if exercised would) result in Parent losing "control" of the Company
within the meaning of Section 368(c) of the Code.
7. Neither Parent nor any person that is or may become "related" to
Parent within the meaning of Treasury Regulation Section l.368-1(e)(3): (i)
will, as of the Effective Time, be under any obligation or have entered into any
agreement, to redeem or repurchase any shares of Parent Common Stock issued in
the Merger; (ii) will, in connection with the Merger, directly or indirectly,
reacquire any of the Parent Common Stock issued in the Merger, or (iii) has a
plan or intention to reacquire any shares of Parent Common Stock issued in the
Merger; provided, however, that it is understood that, for valid business
-----------------
reasons, Parent may purchase a small
<PAGE>
[Closing Date]
Page 3
percentage of Parent Common Stock in the open market (without regard to whether
the selling shareholder formerly held Company Common Stock) pursuant to an
ongoing share repurchase program that was neither created nor modified in
connection with the Merger. After the Merger, no dividends or distributions
will be made to the former Company stockholders by Parent other than dividends
or distributions made to all holders of Parent Common Stock.
8. Neither Parent nor any corporation affiliated with Parent has any
present plan or intention: (i) to liquidate the Company; (ii) to merge the
Company with or into another corporation (except pursuant to the Merger); (iii)
to sell or otherwise dispose of any shares of Company stock, except for any
transfer to a corporation controlled by Parent in accordance with Treasury
Regulation Section l.368-2(k)(2); or (iv) to cause the Company or any
corporation affiliated with the Company immediately prior to the Effective Time
to sell, distribute, transfer or otherwise dispose of any of its assets
(including by means of a spin-off) or any of the assets acquired from Sub,
except for any such disposition in the ordinary course of business or any
transfer of assets to a corporation controlled by the Company in accordance with
Treasury Regulation Section 1 .368-2(k)(2).
9. Sub will not have any liabilities assumed by the Company, and will not
transfer to the Company any assets subject to liabilities, as a part of the
Merger.
10. Assuming the correctness of Paragraph 19 of the Company Tax
Certificate, following the Merger, Parent will cause the Company to continue its
"historic business" or to use a "significant portion" of its "historic business
assets" in a business, as each such term is used in Treas. Reg. (S) 1.368-1(d).
11. Each of Parent and Sub has paid and will pay only its respective
expenses, if any, incurred in connection with the Merger, and neither Parent nor
Sub has agreed to pay or assume, nor will it directly or indirectly pay or
assume, any expense or other liability, whether fixed or contingent, of any
holder of Company Common Stock. All printing expenses and all filing fees
(including, without limitation, filing fees under the Securities Act, the
Exchange Act and the HSR Act) shall be divided equally between Parent and the
Company. The apportionment of expenses as described in the immediately
preceding sentence is reasonable.
12. There is no intercorporate indebtedness currently existing between
Parent and the Company or between Sub and the Company that was issued, was
acquired or was or will be settled at a discount.
13. The Parent Common Stock into which Company Common Stock will be
converted in the Merger is "voting stock" within the meaning of Sections
368(a)(1)(B) and 368(a)(2)(E) of the Code.
<PAGE>
[Closing Date]
Page 4
14. All shares of Parent Common Stock into which shares of Company Common
Stock will be converted pursuant to the Merger will be newly issued or treasury
shares, and will be issued by Parent directly to holders of Company Common Stock
pursuant to the Merger.
15. In the Merger, Parent will deliver solely Parent Common Stock, except
for cash in lieu of fractional shares, and all of the shares of Company Common
Stock, which represents control of the Company as defined in Section 368(c) of
the Code, will be exchanged therefor. For purposes of this Paragraph, any
shares of Company stock exchanged for cash or other property furnished by Parent
will be treated as outstanding Company stock at the Effective Time.
16. In the Merger, no liabilities of shareholders of the Company will be
assumed by Parent, and none of the Company Common Stock acquired by Parent will
be subject to liabilities.
17. The Agreement and the documents described in the Agreement represent
the entire understanding of Parent, Sub and the Company with respect to the
Merger.
18. As of the Effective Time, any shares of Company stock owned
beneficially or of record by Parent, any Subsidiary of Parent, or any person
that is related to Parent within the meaning of Treasury Regulation Section
1.368-1(e)(3) will represent less than 2% of the outstanding stock of the
Company.
19. Neither Parent nor Sub is an "investment company", as defined in
Section 368(a)(2)(F) of the Code.
20. Neither Parent nor Sub is under the jurisdiction of a court in a Title
11 or similar case within the meaning of Section 368(a)(3)(A) of the Code.
20. The payment of cash in lieu of fractional shares of Parent Common
Stock is solely for the purpose of avoiding the expense and inconvenience to
Parent of issuing fractional shares and does not represent separately bargained-
for consideration.
21. The total cash consideration that will be paid in the Merger to
holders of Company Common Stock in lieu of issuing fractional shares of Parent
Common Stock will not exceed 1% of the total consideration that will be issued
in the Merger to the holders of Company Common Stock in exchange for their
Company Common Stock.
22. None of the compensation to be received by any Company stockholder who
is an employee of the Company or any affiliate of the Company at the Effective
Time, whether for past or future services to the Company or future services to
Parent, will be separate consideration for, or allocable to, any of his or her
shares of Company Common Stock. Any such compensation will be determined by
bargaining at arms' length.
<PAGE>
[Closing Date]
Page 5
23. None of the Parent Common Stock to be received in the Merger by any
Company stockholder who is an employee of the Company or any affiliate of the
Company at the Effective Time in exchange for Company Common Stock will be
separate consideration for, or allocable to, any employment arrangement or
covenant not to compete.
24. The compensation to be paid to any Company stockholder who is an
employee of the Company or any affiliate of the Company at the Effective Time
with respect to periods after the Effective Time will be for services actually
rendered and will not be separate consideration for, or allocable to, any of his
or her shares of Company Common Stock.
25. The Merger is being effected for bona fide business reasons and will
be carried out strictly in accordance with the Agreement and none of the
material terms and conditions thereof have been or will be waived or modified.
26. Parent will not take any position on any federal, state or local
income or franchise Tax Return, or take any other tax reporting position that is
inconsistent with the treatment of the Merger as a reorganization within the
meaning of Section 368(a) of the Code, unless otherwise required by a
"determination" (as defined in Section 1313(a)(1) of the Code) or by a similar
determination under applicable state or local income or franchise tax law.
Parent hereby undertakes to inform you and the Company immediately should
any of the foregoing Statements or representations become untrue, incorrect or
incomplete in any respect at or prior to the Effective Time.
Very truly yours,
GENERAL ELECTRIC COMPANY
By:_________________________________
Name: Jeffrey R. Immelt
Title: Senior Vice President
<PAGE>
EXHIBIT C TO TAX OPINION OF HOLLAND & HART LLP
COMPANY TAX REPRESENTATION LETTER
[Closing Date]
Gibson, Dunn & Crutcher LLP Holland & Hart
1801 California Street 215 S. State Street
Denver, CO 80202-2641 Suite 500
Salt Lake City, UT 8411-2317
Ladies and Gentlemen:
We refer to the Agreement and Plan of Merger dated as of August 7, 1999
(the "Agreement") among General Electric Company, a New York corporation
("Parent"), Ruby Merger Corp., a Delaware corporation and a direct wholly owned
subsidiary of Parent ("Sub"), and OEC Medical Systems, Inc., a Delaware
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." Parent and the Company have requested that Gibson, Dunn &
Crutcher LLP, and Holland & Hart, counsel to Parent and the Company,
respectively, render opinions to Parent and the Company, respectively, dated on
or about the date hereof, regarding certain United States federal income tax
consequences of the Merger. Capitalized terms used but not defined herein have
the meanings specified in the Agreement.
In connection with such opinions to be rendered by you, and acknowledging
that you will rely, with Company's consent, upon the statements and
representations made in this letter in rendering such opinions, Company hereby
certifies and represents to you that the statements and representations stated
herein are true, correct and complete in all respects at the date hereof and
will be true, correct and complete in all respects as of the Effective Time (as
if made as of the Effective Time):
1. The Company Common Stock is the only class of stock of the Company
stock issued and outstanding. The consideration to be received in the Merger by
holders of Company Common Stock was determined by arms'-length negotiations
between the management of the Company and Parent. The fair market value of the
Parent Common Stock and cash in lieu of a fractional share of Parent Common
stock received by each Company stockholder will be approximately equal to the
fair market value of the Company Common Stock to be exchanged therefor in the
Merger. In connection with the Merger, no holder of Company stock will receive,
<PAGE>
[Closing Date]
Page 7
directly or indirectly, any consideration from Parent other than Parent Common
Stock and cash in lieu of a fractional share thereof in exchange for such
holder's shares of Company Common Stock.
2. Other than purchases of approximately 475,000 shares of Company stock
by the Company, neither the Company nor a corporation "related" to the Company
within the meaning of Temporary Treasury Regulation Section 1.368-1T(e)(2)(ii)
has since January 1, 1998, redeemed or acquired any shares of Company stock or
entered into any agreement, arrangement, or understanding to redeem or acquire
any shares of Company stock. The Company will not redeem or acquire, or enter
into any such agreement, arrangement or understanding to redeem or acquire, any
shares of its stock anytime during the period commencing on the execution hereof
and through the Effective Time.
3. Dividends, if any, that the Company has paid or will pay to its
shareholders prior to the Effective Time have been and will be regular and
normal distributions made in accordance with the Company's past practices, and
the Company has not made any extraordinary distributions (as determined under
Treasury Regulation Section 1.368-1T(e)(1)(ii)(A)) in connection with the
Merger.
4. At the Effective Time, the Company will hold at least 90% of the fair
market value of the net assets and at least 70% of the fair market value of the
gross assets that it held immediately prior to the Effective Time. For purposes
of this representation, amounts used by the Company to pay Merger expenses
(including, without limitation, Gains Taxes, if any), amounts paid by the
Company to redeem stock, securities, warrants or options of the Company as part
of any overall plan of which the Merger is a part, and amounts distributed by
the Company to stockholders of the Company (except for regular, normal
dividends) as part of any overall plan of which the Merger is a part, in each
case will be treated as constituting assets of the Company immediately prior to
the Effective Time. Without limiting the foregoing, in the last two years there
has been no spin-off or other irregular distribution by the Company or, other
than in the ordinary course of business or pursuant to a refinancing, no
significant debt repayment by the Company.
5. The Company has no plan or intention to sell or otherwise dispose of
any of its assets or of any of the assets acquired from Sub in the Merger,
except for dispositions made in the ordinary course of business.
6. Any dispositions prior to the Merger, in contemplation or as part of
the Merger, of assets held by the Company have been for full fair market value.
7. Each of the Company and its stockholders has paid and will pay only
its respective expenses, if any, incurred in connection with the Merger, and the
Company has not agreed to assume, nor will it directly or indirectly assume, any
expense or other liability, whether fixed or contingent, of any holder of
Company Common Stock (other than Gains Taxes pursuant to Section 5.10 of the
Agreement). All printing expenses and all filing fees (including, without
7
<PAGE>
[Closing Date]
Page 8
limitation, filing fees under the Securities Act, the Exchange Act and the HSR
Act) shall be divided equally between Parent and the Company. The apportionment
of expenses as described in the immediately preceding sentence is reasonable.
8. There is no intercorporate indebtedness currently existing between
Parent and the Company or between Sub and the Company that was issued, was
acquired or was or will be settled at a discount.
9. The Company has no present plan or intention to issue additional
shares of its stock (or equity equivalents, or securities, options, warrants or
instruments giving the holder thereof the right to acquire Company stock or
equity equivalents) after the Effective Time that would (or if exercised would)
result in Parent losing "control" of the Company within the meaning of Section
368(c) of the Internal Revenue Code of 1986, as amended (the "Code").
10. At the Effective Time, the Company will not have outstanding any
warrants, options, convertible securities, or any other type of right pursuant
to which any person could acquire stock in the Company that, if exercised or
converted, would affect Parent's acquisition or retention of "control" of the
Company, as defined in Section 368(c) of the Code. Immediately prior to the
Effective Time, other than Company Stock Options, which relate to Company Common
Stock and which will be assumed by Parent pursuant to the Merger, the Company
will not have outstanding any warrants, options, convertible securities, or any
other type of right pursuant to which any person could acquire stock in the
Company. In no case is the exercise price of any of the Company Stock Options
less than the fair market value of the underlying Company Common Stock at the
time such option was granted.
11. The Company is not an "investment company" as defined in Section
368(a)(2)(F) of the Code.
12. The Company is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
13. At the Effective Time, the total fair market value of the assets of
the Company will exceed the sum of its liabilities, plus (without duplication)
the amount of any liabilities to which such assets are subject.
14. None of the compensation to be received by any Company stockholder who
is an employee of the Company or any affiliate of the Company at the Effective
Time, whether for past or future services to the Company, will be separate
consideration for, or allocable to, any of his or her shares of Company Common
Stock.
15. None of the Parent Common Stock to be received in the Merger by any
Company stockholder who is an employee of the Company or an affiliate of the
Company at the Effective Time in exchange for Company Common Stock will be
separate consideration for, or allocable to, any employment arrangement or any
covenant not to compete. Any compensation paid or to
8
<PAGE>
[Closing Date]
Page 9
be paid to any Company stockholder who will be an employee of or perform
services for Parent, the Company or Sub or any affiliate thereof after the
Merger will be determined by bargaining at arms' length.
16. Assuming the correctness of the representation in Paragraph 24 of the
Parent Tax Certificate, the compensation paid (or to be paid) to any Company
stockholder who is an employee of the Company at the Effective Time was paid (or
will be paid) for services actually rendered and will not be separate
consideration for, or allocable to, any of his or her shares of Company Common
Stock.
17. In the Merger, shares of Company stock representing "control" of the
Company (within the meaning of Section 368(c) of the Code) will be exchanged
solely for Parent Common Stock. For purposes of this Paragraph, shares of
Company stock exchanged in the Merger for cash and other property (including,
without limitation, cash paid to stockholders of the Company in lieu of
fractional shares of Parent Common Stock) will be treated as outstanding shares
on the date of the Merger but not exchanged for shares of Parent Common Stock.
To the best knowledge of the Company, there are no voting agreements or
arrangements with respect to the Company Common Stock. Immediately following
the Effective Time, Parent will be in "control" of the Company within the
meaning of Section 368(c) of the Code.
18. The Company is not currently, and during the five years preceding the
Effective Time will not have been, a "United States real property holding
corporation" within the meaning of Section 897(c)(2) of the Code.
19. The business currently carried on by the Company is its "historic
business," within the meaning of Treasury Regulation Section 1.368-1(d) and no
assets of the Company have been acquired, or sold, transferred or otherwise
disposed of, which would prevent Parent from continuing the "historic business"
of the Company or from using a "significant portion" of the Company's "historic
business" assets in a business following the Merger, as such terms are used in
Treasury Regulation Section l.368-l(d).
20. The payment of cash in lieu of fractional shares of Parent Common
Stock is solely for the purposes of avoiding the expense and inconvenience to
Parent of issuing fractional shares and does not represent separately bargained-
for consideration. The total cash consideration that will be paid in the Merger
to the holders of Company Common Stock in lieu of issuing fractional shares of
Parent Common Stock will not exceed 1% of the total consideration that will be
issued in the Merger to the holders of Company Common Stock in exchange for
their Company Common Stock.
21. At the Effective Time of the Merger, there will be no accrued but
unpaid dividends on Company Common Stock.
22. In the Merger, no liabilities of shareholders of the Company will be
assumed by Parent, and none of the Company stock acquired by Parent will be
subject to liabilities.
9
<PAGE>
[Closing Date]
Page 10
23. No holder of Company stock will have dissenters' rights with respect
to the Merger under applicable laws.
24. The Merger is being effected for bona fide business reasons and will
be carried out strictly in accordance with the Agreement and none of the
material terms and conditions therein have been or will be waived or modified.
25. The Company will not take any position on any federal, state or local
income or franchise Tax Return, or take any other tax reporting position, that
is inconsistent with the treatment of the Merger as a reorganization within the
meaning of Section 368(a) of the Code, unless otherwise required by a
"determination" (as defined in Section 1313(a)(1) of the Code) or by a similar
determination under applicable state or local income or franchise tax law.
The Company hereby undertakes to inform you and Parent immediately should
any of the foregoing statements or representations become untrue, incorrect or
incomplete in any respect on or prior to the Effective Time.
Very truly yours,
OEC MEDICAL SYSTEMS, INC.,
By: _________________________________________
Name:
Title:
10
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
General Electric Company on Form S-4 of our report dated January 20, 1999,
appearing in the Annual Report on Form 10-K of OEC Medical Systems, Inc. for the
year ended December 31, 1998 and to the reference to us under the heading
"Experts" in the Prospectus/Proxy, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Salt Lake City, Utah
October 1, 1999
<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 12, 1999 relates to the statement of financial position of
General Electric Company and consolidated affiliates as of December 31, 1998 and
1997 and the related statements of earnings, changes in share owners' equity and
cash flows for each of the years in the three-year period ended December 31,
1998 and appears in the December 31, 1998 annual report on Form 10-K of General
Electric Company.
We also consent to the reference to our firm as experts under the heading
"Experts" in the Registration Statement.
/s/ KPMG LLP
- ------------
KPMG LLP
Stamford, Connecticut
October 1, 1999
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being a director
or officer of General Electric Company, a New York corporation (the "Company"),
hereby constitutes and appoints Benjamin W. Heineman, Jr., Philip D. Ameen, and
Robert E. Healing, and each of them, his or her true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for him or her
and in his or her name, place and stead in any and all capacities, to sign one
or more Registration Statements under the Securities Act of 1933, as amended, on
Form S-4 or such other form as such attorneys-in-fact, or any of them, may deem
necessary or desirable, any amendments thereto, and all post-effective
amendments and supplements to such registration statement, including amendments
filed on Form S-8, for the registration of shares of Company common stock to be
offered and sold in connection with the acquisition by the Company of OEC
Medical Systems, Inc., in such forms as they or any one of them may approve, and
to file the same with all exhibits thereto and other documents in connection
therewith with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done to
the end that such Registration Statement or Registration Statements shall comply
with the Securities Act of 1933, as amended, and the applicable Rules and
Regulations adopted or issued pursuant thereto, as fully and to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them or their
substitute or resubstitute, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his or her
hand this 10th day of September, 1999.
John F. Welch, Jr.
Keith S. Sherin
Dennis D. Dammerman
Ann M. Fudge
Claudio X. Gonzalez
Gertrude G. Michelson
Sam Nunn
John D. Opie
Roger S. Penske
Frank H.T. Rhodes
Andrew C. Sigler
<PAGE>
FOLD AND DETACH HERE
OEC MEDICAL SYSTEMS, INC. PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR A SPECIAL MEETING TO BE HELD ON NOVEMBER 29, 1999
The undersigned shareholder(s) of OEC Medical Systems, Inc., a Delaware
corporation (the "Company"), hereby appoint(s) Ruediger Naumann-Etienne and
Joseph W. Pepper, 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 the Hyatt Regency Chicago located at 151 Wacker Drive, Chicago,
Illinois on Monday, November 29, 1999 at 12:00 p.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 Proxy
Statement/Prospectus and revokes 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.
(Continued on the other side)
<PAGE>
X
Signature(s) in box ____________________ Date: ________________________________
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.
FOLD AND DETACH HERE
- ---
Please mark your vote as indicated in the example
FOR
AGAINST
ABSTAIN
1. Proposal for approval and adoption of the Agreement and Plan of Merger dated
as of August 7, 1999 by and among General Electric Company, Ruby Merger Corp.
and the Company.
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
OEC MEDICAL SYSTEMS, INC. 1999 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.
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.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY DETACH BELOW
AND RETURN USING THE ENVELOPE PROVIDED
