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EXHIBIT 99(B)
STOCK OPTION AGREEMENT
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STOCK OPTION AGREEMENT, dated as of June 2, 2000 (the
"AGREEMENT"), between GE Medical Systems, a division of General Electric
Company, a New York corporation ("PARENT"), and Lunar Corporation, a Wisconsin
corporation (the "COMPANY").
W I T N E S S E T H:
WHEREAS, simultaneously with the execution and delivery of
this Agreement, Parent, Topaz Merger Corp., a newly formed Wisconsin corporation
and a direct wholly owned subsidiary of Parent ("SUB"), and the Company are
entering into an Agreement and Plan of Merger, dated as of the date hereof (the
"MERGER AGREEMENT"), which provides for the merger of Sub with and into the
Company (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 19.9% 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 2,014,067 Common Shares, $0.01 par value per share, of the Company
(the "COMPANY COMMON STOCK"), upon the terms and subject to the conditions set
forth herein (the "OPTIONED SHARES"). Subject to the conditions set forth in
Section 2, the Option may be exercised by Parent in whole or from time to time
in part, at any time following the occurrence of a Triggering Event (as defined
below) and prior to the termination of the Option in accordance with Section 19.
In the event Parent wishes to exercise the Option, Parent shall send a written
notice to the Company (the "STOCK EXERCISE NOTICE") specifying the total number
of Optioned Shares it wishes to purchase and a date (not later than 20 business
days and not earlier than two business days from the date such notice is given)
for the closing of such purchase (the "CLOSING DATE"). Parent may revoke an
exercise of the Option at any time prior to the Closing Date by written notice
to the Company. In the event of any change in the number of issued and
outstanding shares of Company Common Stock by reason of any stock dividend,
stock split, split-up, recapitalization, merger or other change in the corporate
or capital structure of the Company, the number of Optioned Shares subject to
the Option and the Exercise Price (as hereinafter defined) per Optioned Share
shall be appropriately adjusted. In the event that any additional shares of
Company Common Stock are issued after the date of this Agreement (other than
pursuant to an event described in the preceding sentence or pursuant to this
Agreement), the number of Optioned Shares subject to the Option shall be
adjusted so that, after such issuance, it equals (but does not exceed) 19.9% of
the voting power of shares of capital stock of the Company then issued and
outstanding, after reduction, to the extent necessary to comply with the
exception to the shareholder approval requirements of the Nasdaq National Market
("NASDAQ"), for any shares issued pursuant to the Option.
2. CONDITIONS TO EXERCISE OF OPTION AND DELIVERY OF OPTIONED
SHARES. (a) Parent's right to exercise the Option is subject to the following
conditions:
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(i) Neither Parent nor Sub shall have breached any of its material
obligations under the Merger Agreement;
(ii) No preliminary or permanent injunction or other order issued by
any federal or state court of competent jurisdiction in the United States
invalidating the grant or prohibiting the exercise of the Option or the delivery
of the Optioned Shares shall be in effect;
(iii) All applicable waiting periods under the HSR Act (as defined
below) shall have expired or been terminated; and
(iv) One or more of the following events (a "TRIGGERING EVENT") shall
have occurred on or after the date hereof: (A) any person, corporation,
partnership, limited liability company or other entity or group (such person,
corporation, partnership, limited liability company or other entity or group,
other than Parent or an affiliate of Parent, being referred to hereinafter,
singularly or collectively, as a "PERSON"), acquires or becomes the beneficial
owner of 20% or more of the outstanding shares of Company Common Stock; (B) any
group is formed which beneficially owns 20% or more of the outstanding shares of
Company Common Stock; (C) any Person shall have commenced a tender or exchange
offer for 20% or more of the then outstanding shares of Company Common Stock or
publicly proposed any bona fide merger, consolidation or acquisition of all or
substantially all the assets of the Company, or other similar business
combination involving the Company; (D) the Company enters into, or announces
that it proposes to enter into, an agreement, including, without limitation, an
agreement in principle, providing for a merger or other business combination
involving the Company or a "significant subsidiary" (as defined in Rule 1.02(w)
of Regulation S-X as promulgated by the Securities and Exchange Commission (the
"SEC")) of the Company or the acquisition of a substantial interest in, or a
substantial portion of the assets, business or operations of, the Company or a
significant subsidiary (other than the transactions contemplated by the Merger
Agreement); (E) any Person is granted any option or right, conditional or
otherwise, to acquire or otherwise become the beneficial owner of shares of
Company Common Stock which, together with all shares of Company Common Stock
beneficially owned by such Person, results or would result in such Person being
the beneficial owner of 20% or more of the outstanding shares of Company Common
Stock; or (F) there is a public announcement with respect to a plan or intention
by the Company, other than Parent or its affiliates, to effect any of the
foregoing transactions. For purposes of this subparagraph (iv), the terms
"group" and "beneficial owner" shall be defined by reference to Section 13(d) of
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and the
rules and regulations promulgated thereunder.
(b) Parent's obligation to purchase the Optioned Shares
following the exercise of the Option, and the Company's obligation to deliver
the Optioned Shares, are subject to the conditions that:
(i) No preliminary or permanent injunction or other order issued by any
federal or state court of competent jurisdiction in the United States
prohibiting the delivery of the Optioned Shares shall be in effect;
(ii) The purchase of the Optioned Shares will not violate Rule 10b-13
promulgated under the Exchange Act; and
(iii) All applicable waiting periods under the 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 $17.00 (the "EXERCISE PRICE"), payable in
cash. Payment made by Parent to the
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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 (assuming the valid authorization, execution and
delivery of this Agreement by Parent and the validity and binding effect of this
Agreement on Parent) constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting creditors generally and by
general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law); (b) the Company has taken all
necessary corporate action to authorize and reserve the Optioned Shares for
issuance upon exercise of the Option, and the Optioned Shares, when issued and
delivered by the Company to Parent upon exercise of the Option, will be duly
authorized, validly issued, fully paid and nonassessable (except to the extent
otherwise provided in Section 180.0622(2)(b) of the Wisconsin Business
Corporation Law ("WBCL")) and free of preemptive rights; (c) except as otherwise
required by the HSR Act and, except for filings required under the blue sky laws
of any states and routine filings and subject to Section 7, the execution and
delivery of this Agreement by the Company and the consummation by it of the
transactions contemplated hereby do not require the consent, approval or
authorization of, or filing with, any person or public authority and will not
(i) violate or conflict with any provision of the articles of incorporation or
the Bylaws of the Company, or (ii) result in the acceleration or termination of,
or constitute a default under, any indenture, license, approval, agreement,
understanding or other instrument, or (iii) violate or conflict with 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, other than, in the case of clauses (ii) and (iii) of this
sentence, any such violations, defaults, rights, losses, liens, security
interest, charges or encumbrances that, individually or in the aggregate, would
not have a Material Adverse Effect on the Company; (d) the Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Wisconsin and has all requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby; and (e) the Company has taken all appropriate actions so
that the restrictions on business combinations contained in Section 180.1140
through Section 180.1144 of the WBCL will not apply with respect to or as a
result of the transactions contemplated hereby.
5. REPRESENTATIONS AND WARRANTIES OF PARENT. Parent represents
and warrants to the Company that (a) the execution and delivery of this
Agreement by Parent and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Parent and this Agreement has been duly executed and delivered by Parent and
constitutes a valid and binding agreement of Parent; and (b) Parent is acquiring
the Option and, if and when it exercises the Option, will be acquiring the
Optioned Shares issuable upon the exercise thereof, for its own account and not
with a view to distribution or resale in any manner which would be in violation
of the Securities Act of 1933, as amended (the "SECURITIES ACT"), and will not
sell or otherwise dispose of the Optioned Shares except pursuant to an effective
registration statement under the Securities Act or a valid exemption from
registration under the Securities Act.
6. THE CLOSING. Any closing hereunder shall take place on the
Closing Date specified by Parent in its Stock Exercise Notice pursuant to
Section 1 at 10:00 A.M., local time, or the first business day thereafter on
which all of the conditions in Section 2 are met, at the principal executive
office of the Company, or at such other time and place as the parties hereto may
agree.
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7. FILINGS RELATED TO OPTIONED SHARES. The Company will make
such filings with the SEC as are required by the Exchange Act, and will use its
best efforts to effect all necessary filings by the Company under the HSR Act
and to have the Optioned Shares approved for quotation on NASDAQ.
8. REGISTRATION RIGHTS. (a) If the Company effects any
registration or registrations of shares of Company Common Stock under the
Securities Act for its own account or for any other shareholder of the Company
at any time after the exercise of the Option (other than a registration on Form
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 20% of the Optioned Shares and PROVIDED, FURTHER, that if the managing
underwriters in such offering advise the Company that, in their written opinion,
the number of Optioned Shares requested by Parent to be included in such
registration exceeds the number of shares of Company Common Stock which can be
sold in such offering, the Company may exclude from such registration all or a
portion, as may be appropriate, of the Optioned Shares requested for inclusion
by Parent.
(b) At any time after the exercise of the Option, upon the
request of Parent, the Company will promptly file and use its reasonable best
efforts to cause to be declared effective a registration statement under the
Securities Act (and applicable Blue Sky statutes) with respect to any or all of
the Optioned Shares acquired upon the exercise of the Option; PROVIDED, HOWEVER,
that any request of Parent pursuant to this Section 8(b) shall be with respect
to at least 20% of the Optioned Shares and PROVIDED, FURTHER, that the Company
shall not be required to have declared effective more than two registration
statements hereunder and shall be entitled to delay the effectiveness of each
such registration statement, for a period not to exceed 90 days in the
aggregate, if the commencement of such offering would, in the reasonable good
faith judgment of the Board of Directors of the Company, require premature
disclosure of any material corporate development or otherwise materially
interfere with or materially adversely affect any pending or proposed offering
of securities of the Company. In connection with any such registration requested
by Parent, the costs of such registration (other than fees of Parent's counsel
and underwriting fees and commissions) shall be borne by the Company, and the
Company and Parent each shall provide the other and any underwriters with
customary indemnification and contribution agreements.
9. OPTIONAL PUT; OPTIONAL REPURCHASE. (a) Prior to the
termination of the Option in accordance with Section 19, if a Put Event has
occurred, Parent shall have the right, upon three business days' prior written
notice to the Company, to require the Company to purchase the Option from Parent
(the "PUT RIGHT") at a cash purchase price (the "PUT PRICE") equal to the
product determined by multiplying (A) the number of Optioned Shares as to which
the Option has not yet been exercised by (B) the Spread (as defined below). As
used herein, "PUT EVENT" means the occurrence on or after the date hereof of any
of the following: (i) any Person (other than Parent or its affiliates) acquires
or becomes the beneficial owner of 50% or more of the outstanding shares of
Company Common Stock or (ii) the Company consummates a merger or other business
combination involving the Company or a "significant subsidiary" (as defined in
Rule 1.02(w) of Regulation S-X as promulgated by the SEC) of the Company or the
acquisition of a substantial interest in, or a substantial portion of the
assets, business or operations of, the Company or a significant subsidiary
(other than the transactions contemplated by the Merger Agreement). As used
herein, the term "SPREAD" shall mean the excess, if any, of (i) the greater of
(x) the highest price (in cash or fair market value of securities or other
property) per share of Company Common Stock paid or to be paid within 12 months
preceding the date of exercise of the Put Right for any shares of Company Common
Stock beneficially owned by any Person who shall have acquired or become the
beneficial owner of 20% or more of the outstanding shares of Company Common
Stock after the date hereof or (y) the average of the daily volume-weighted
sales prices quoted on NASDAQ of the Company Common Stock during the five
trading days immediately preceding the written notice of exercise of the Put
Right over (ii) the Exercise Price.
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(b) At any time after the termination of the Option granted
hereunder pursuant to Section 19 and for a period of 90 days thereafter, the
Company shall have the right, upon three business days' prior written notice, to
repurchase from Parent (the "Repurchase Right"), all (but not less than all) of
the Optioned Shares acquired by the Parent hereby and with respect to which the
Parent then has beneficial ownership (as defined in Rule 13d-3 under the
Exchange Act) at a price per share equal to the greater of (i) the average of
the daily volume-weighted sales price quoted on NASDAQ of the Company Common
Stock during the five trading days immediately preceding the written notice of
exercise of the Repurchase Right and (ii) the Exercise Price, plus interest at a
rate per annum equal to the costs of funds to Parent at the time of exercise of
the Repurchase Right, subject to paragraph (c) below.
(c) Parent shall deliver to the Company all "Excess
Compensation" realized upon the sale of any Optioned Shares or the exercise of
the Put Right. "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 or the exercise of the Put Right, and (ii) any Termination Fee paid by
the Company under Section 5.6 of the Merger Agreement, exceeds the sum of (x)
$6,500,000, (y) the aggregate Exercise Price paid, and (z) any underwriters
discount or selling commission incurred by Parent in connection with the
acquisition and disposition of the Optioned Shares.
10. EXPENSES. Each party hereto shall pay its own expenses
incurred in connection with this Agreement, except as otherwise provided in
Section 8 or as specified in the Merger Agreement.
11. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, such remedy being in
addition to any other remedy to which they are entitled at law or in equity.
12. NOTICE. All notices, requests, demands and other
communications hereunder shall be deemed to have been duly given and made if in
writing and if served by personal delivery upon the party for whom it is
intended or if sent by telex or telecopier (and also confirmed in writing) to
the person at the address set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such person:
(a) if to Parent or Sub, to:
Topaz Merger Corp.
c/o GE Medical Systems
P.O. Box 414, W-410
Milwaukee, WI 53201
Attn: General Counsel
Fax: 414-544-3575
with copies to:
GE Medical Systems
3000 North Grandview Blvd.
Waukesha, WI 53188
Attn: General Counsel
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and:
General Electric Company
3135 Easton Turnpike
Fairfield, CT 06431-0001
Attn: Vice President and Senior Counsel - Transactions
and
Gibson, Dunn & Crutcher, LLP
200 Park Avenue
New York, New York 10166-0193
Attention: Steve Shoemate
Facsimile No.: 212-351-4035
(b) if to the Company, to:
Lunar Corporation
726 Heartland Trail
Madison, WI 53717
Attn: General Counsel
Fax: 608-826-7106
with a copy to:
Sidley & Austin
Banc One Plaza
10 South Deerborn Street
Chicago, IL 60603
Attn: Steven Sutherland
Fax: 312-853-7036
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.
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16. HEADINGS. The section headings herein are for convenience
only and shall not affect the construction of this Agreement.
17. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which, when executed, shall be deemed to be an
original and all of which together shall constitute one and the same document.
18. GOVERNING LAW; JURISDICTION. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof. Each party hereby irrevocably submits
to the exclusive jurisdiction of the United States District Court for the
Southern District of New York. Each party hereto waives any right to a trial by
jury in connection with any action, suit or proceeding and waives any objection
based on FORUM NON CONVENIENS or any other objection to venue thereof.
19. TERMINATION. This Agreement and the Option shall terminate
upon the earlier of (i) the Effective Time and (ii) the termination of the
Merger Agreement in accordance with its terms; PROVIDED, HOWEVER, the Option
shall not terminate until 12 months after a termination pursuant to clause (ii)
immediately above if (A) the Merger Agreement is terminated by Parent pursuant
to Section 7.1(b), (c) or (f) thereof, (B) the Merger Agreement is terminated by
Parent or the Company pursuant to Section 7.1(e) or (g) thereof or (C) the
Merger Agreement is terminated by the Company pursuant to Section 7.1(d)(i)
thereof after receipt of a Superior Proposal; PROVIDED, FURTHER, that this
Agreement shall not terminate with respect to the Repurchase Right set forth in
Section 9(b) until 90 days after the termination of the Option pursuant to the
foregoing proviso. Notwithstanding the foregoing, the provisions of Section 8
shall survive the termination of this Agreement for the period until the date
that the Parent is permitted to sell shares of Company Common Stock without any
restrictions (including volume and manner of sale) under Rule 144 as promulgated
by the SEC under the Securities Act of 1933.
20. CAPITALIZED TERMS. Capitalized terms not otherwise defined
in this Agreement shall have the meanings set forth in the Merger Agreement.
21. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated by this Agreement may be consummated as
originally contemplated to the fullest extent possible.
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IN WITNESS WHEREOF, Parent and the Company have caused this
Agreement to be duly executed and delivered on the day and year first above
written.
GENERAL ELECTRIC COMPANY,
a New York corporation
By: /s/ J. Keith Morgan
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Name: J. Keith Morgan
Title: Vice President and General Counsel
GE Medical Systems
LUNAR CORPORATION
a Wisconsin corporation
By:
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Name:
Title:
