EXHIBIT 2.2
-----------
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of March 30, 1998 (the "Agreement"),
between Omnicare, Inc. a Delaware corporation ("Grantee"), and IBAH, Inc., a
Delaware corporation ("Grantor").
WHEREAS, Grantee and Grantor are entering into an Agreement and Plan
of Merger, dated as of the date hereof (the "Merger Agreement"), which provides,
among other things, for the merger of Grantor with and into a wholly owned
subsidiary of Grantee (the "Merger");
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Grantee has requested that Grantor grant to Grantee an option to
purchase up to 4,685,315 (the "Option Number") shares of Common Stock, par value
$0.01 per share, of Grantor (the "Common Stock"), upon the terms and subject to
the conditions hereof; and
WHEREAS, in order to induce Grantee to enter into the Merger
Agreement, Grantor is willing to grant Grantee 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; Payment of Spread.
----------------------------------------------------
(a) Subject to the other terms and conditions set forth herein, Grantor
hereby grants to Grantee an irrevocable option (the "Option") to purchase up to
the Option Number shares of Common Stock (the "Shares") at a cash purchase price
equal to $5.75 per share (the "Purchase Price"). The Option may be exercised by
Grantee, in whole or in part, at any time, or from time to time, following the
occurrence of one of the events set forth in Section 2(c) hereof, and prior to
the termination of the Option in accordance with the terms of this Agreement.
(b) In the event Grantee wishes to exercise the Option, Grantee shall
send a written notice to Grantor (the "Stock Exercise Notice") specifying a date
(subject to the HSR Act, as defined below) not later than 10 business days and
not earlier than three business days following the date such notice is given for
the closing of such purchase. In the event of any change in the number of issued
and outstanding shares of Common Stock by reason of any stock dividend, stock
split, split-up, recapitalization, merger or other change in the corporate or
capital structure of Grantor, the number of Shares subject to this Option and
the purchase price per Share shall be appropriately adjusted to restore Grantee
to its rights hereunder, including its right to purchase Shares representing
19.9% of the capital stock of Grantor entitled to vote generally for the
election of the directors of Grantor which is issued and outstanding immediately
prior to the exercise of the Option
at an aggregate purchase price equal to the Purchase Price multiplied by the
Option Number.
(c) If at any time the Option is then exercisable pursuant to the
terms of Section 1(a) hereof, Grantee may elect, in lieu of exercising the
Option to purchase Shares provided in Section 1(a) hereof, to send a written
notice to Grantor (the "Cash Exercise Notice") specifying a date not later than
20 business days and not earlier than 10 business days following the date such
notice is given on which date Grantor shall pay to Grantee an amount in cash
equal to the Spread (as hereinafter defined) multiplied by all or such portion
of the Shares subject to the Option as Grantee shall specify. As used herein
"Spread" shall mean the excess, if any, over the Purchase Price of the higher of
(x) if applicable, the highest price per share of Common Stock (including any
brokerage commissions, transfer taxes and soliciting dealers' fees) paid or
proposed to be paid by any person pursuant to one of the transactions enumerated
in Section 2(c) hereof (the "Alternative Purchase Price") or (y) the average of
the closing prices (or the average of the closing bid and asked prices if
closing prices are unavailable) of the shares of Common Stock as reported on
Nasdaq on the last trading day immediately prior to the date of the Cash
Exercise Notice (the "Closing Price"). If the Alternative Purchase Price
includes any property other than cash, the Alternative Purchase Price shall be
the sum of (i) the fixed cash amount, if any, included in the Alternative
Purchase Price plus (ii) the fair market value of such other property. If such
other property consists of securities with an existing public trading market,
the average of the closing prices (or the average of the closing bid and asked
prices if closing prices are unavailable) for such securities in their principal
public trading market on the five trading days ending five days prior to the
date of the Cash Exercise Notice shall be deemed to equal the fair market value
of such property. If such other property consists of something other than cash
or securities with an existng public trading market and, as of the payment date
for the Spread, agreement on the value of such other property has not been
reached, the Alternative Purchase Price shall be deemed to equal the Closing
Price. Upon exercise of its right to receive cash pursuant to this Section 1(c),
the obligations of Grantor to deliver Shares pursuant to Section 3 shall be
terminated with respect to such number of Shares for which Grantee shall have
elected to be paid the Spread.
2. Conditions to Delivery of Shares. The Grantor's obligation to
--------------------------------
deliver Shares upon exercise of the Option is subject only to the conditions
that:
(a) 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 Shares shall be in effect; and
(b) Any applicable waiting periods under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 0000 (xxx "XXX Xxx") shall have expired or
been terminated; and
(c) (i) any person (other than Grantee or any of its subsidiaries)
shall have commenced (as such term is defined in Rule 14d-2 under the
Securities Exchange
2
Act of 1934 (the "Exchange Act")) a tender offer, or shall have filed a
registration statement under the Securities Act of 1933 (the "Securities
Act") with respect to an exchange offer, to purchase any shares of Common
Stock such that, upon consummation of such offer, such person or a "group"
(as such term is defined under the Exchange Act) of which such person is a
member shall have acquired beneficial ownership (as such term is defined in
Rule 13d-3 of the Exchange Act), or the right to acquire beneficial
ownership, of 25% or more of the then outstanding Common Stock; (ii) any
person (other than Grantee or any of its subsidiaries) shall have publicly
announced or delivered to Grantor a proposal, or disclosed publicly or to
Grantor an intention to make a proposal, to purchase 25% or more of the
assets or any equity securities of, or to engage in a merger,
reorganization, tender offer, share exchange, consolidation or similar
transaction involving the Grantor or any of its subsidiaries (an
"Acquisition Transaction"); (iii) Grantor or any of its subsidiaries shall
have authorized, recommended, proposed or publicly announced an intention
to authorize, recommend or propose, or entered into, an agreement,
including without limitation, an agreement in principle, with any person
(other than Grantee or any of its subsidiaries) to effect or provide for an
Acquisition Transition; (iv) any person (other than Grantee or any of its
subsidiaries) shall solicit proxies or consents or announce a bona fide
intention to solicit proxies or consents from Grantor's stockholders (y) in
opposition to the Merger, the Merger Agreement or any related transactions
or (z) relating to an Acquisition Transaction (other than solicitations of
stockholders seeking approval of the Merger, the Merger Agreement or any
related transactions), and the stockholders of the Company shall have
failed to approve the Merger; or (v) any person (other than Grantee or any
of its subsidiaries) shall have acquired beneficial ownership (as such term
is defined in Rule 13d-3 under the Exchange Act) or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under the
Exchange Act) shall have been formed which beneficially owns or has the
right to acquire beneficial ownership of, shares of Common Stock (other
than trust account shares) aggregating 25% or more of the then outstanding
Common Stock. As used in this Agreement, "person" shall have the meaning
specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
3. The Closing. (a) Any closing hereunder shall take place on the date
-----------
specified by Grantee in its Stock Exercise Notice or Cash Exercise Notice, as
the case may be, at 9:00 a.m., local time, at the offices of Xxxxx Xxxxxxxxxx
LLP, 1301 Avenue of the Americas, New York, New York, or, if the conditions set
forth in Section 2(a) or (b) have not then been satisfied, on the second
business day following the satisfaction of such conditions, or at such other
time and place as the parties hereto may agree (the "Closing Date"). On the
Closing Date, (i) in the event of a closing pursuant to Section 1(b) hereof,
Grantor will deliver to Grantee a certificate or certificates, representing the
Shares in the denominations designated by Grantee in its Stock Exercise Notice
and Grantee will purchase such Shares from Grantor at the price per Share equal
to the Purchase Price or (ii) in the event of a closing pursuant to Section 1(c)
hereof, Grantor will deliver to Grantee cash in an amount determined pursuant to
Section 1(c) hereof. Any payment
3
made by Grantee to Grantor, or by Grantor to Grantee, pursuant to this Agreement
shall be made by certified or official bank check or by wire transfer of
immediately available funds to a bank designated by the party receiving such
funds.
(b) The certificates representing the Shares shall bear an appropriate
legend relating to the fact that such Shares have not been registered under the
Securities Act.
4. Representations and Warranties of Grantor. The Grantor represents
-----------------------------------------
and warrants to Grantee that (a) Grantor 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 enter into and perform
this Agreement; (b) the execution and delivery of this Agreement by Grantor and
the consummation by it of the transactions contemplated hereby have been duly
authorized by the Board of Directors of Grantor and this Agreement has been duly
executed and delivered by a duly authorized officer of Grantor and constitutes a
valid and binding obligation of Grantor, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles; (c) Grantor has taken all
necessary corporate action to authorize and reserve the Shares issuable upon
exercise of the Option and the Shares, when issued and delivered by Grantor upon
exercise of the Option and paid for by Grantee as contemplated hereby, will be
duly authorized, validly issued, fully paid and non-assessable and free of
preemptive rights; (d) except as otherwise required by the HSR Act, the
execution and delivery of this Agreement by Grantor and the consummation by it
of the transactions contemplated hereby do not require the consent, waiver,
approval or authorization of or any filing with any person or public authority
and will not violate, result in a breach of or the acceleration of any
obligation under, or constitute a default under, any provision of Grantor's
charter or by-laws, or any material indenture, mortgage, lien, lease, agreement,
contract, instrument, order, law, rule, regulation, judgment, ordinance, or
decree, or restriction by which Grantor or any of its subsidiaries or any of
their respective properties or assets is bound; (e) Grantor (i) will not,
through reorganization, consolidation, merger, dissolution or sale of assets, or
by any other voluntary act, avoid or seek to avoid the observance or performance
of any of the covenants, stipulations or conditions to be observed or performed
hereunder by Grantor and (ii) will promptly take all action provided herein to
protects the rights of Grantee against dilution as set forth in Section 1(b)
hereof and (f) no "fair price", "moratorium", "control share acquisition,"
"interested shareholder" or other form of antitakeover statute or regulation,
including without limitation, Section 203 of the Delaware General Corporation
Act, or similar provision contained in the charter or by-laws of Grantor, is or
shall be applicable to the acquisition of Shares pursuant to this Agreement.
5. Representations and Warranties of Grantee. The Grantee represents
-----------------------------------------
and warrants to Grantor that (a) the execution and delivery of this Agreement by
Grantee and the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Grantee
and this Agreement has been duly executed and delivered by a duly authorized
officer of Grantee and
4
constitutes a valid and binding obligation of Grantee; and (b) Grantee is
acquiring the Option and, if and when it exercises the Option, will be acquiring
the 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.
6. Listing of Shares; Filings; Governmental Consents. Grantor will
-------------------------------------------------
promptly file an application to list the Shares on the Nasdaq National Market
("Nasdaq") and will use its reasonable best efforts to obtain approval of such
listing and to effect all necessary filings by Grantor under the HSR Act;
provided, however, that if Grantor is unable to effect such listing on Nasdaq by
the Closing Date, Grantor will nevertheless be obligated to deliver the Shares
upon the Closing Date. Each of the parties hereto will use its reasonable best
efforts to obtain consents of all third parties and governmental authorities, if
any, necessary to the consummation of the transactions contemplated.
7. Sale of Shares. At any time prior to the first anniversary of the
--------------
termination of the Merger Agreement in accordance with its terms (such
anniversary, the "Merger Termination Date"), Grantee shall have the right to
sell (the "Sale Right") to Grantor all, but not less than all, of the Shares at
the average of the last sales prices for shares of Common Stock on the ten
trading days ending five days prior to the date Grantee gives written notice of
its intention to exercise the Sale Right. If Grantee does not exercise the Sale
Right prior to the first anniversary of the Merger Termination Date, the Sale
Right terminates. In the event Grantee wishes to exercise the Sale Right,
Grantee shall send a written notice to Grantor specifying a date not later than
20 business days and not earlier than 10 business days following the date such
notice is given for the closing of such sale.
8. Registration Rights. (a) In the event that Grantee shall desire to
-------------------
sell any of the Shares, Grantor will cooperate with Grantee and any underwriters
in registering such Shares for resale, including, without limitation, promptly
filing a registration statement which complies with the requirements of
applicable federal and state securities laws, and entering into an underwriting
agreement with such underwriters upon such terms and conditions as are
customarily contained in underwriting agreements with respect to secondary
distributions; provided that Grantor shall not be required to have declared
effective more than two registration statements hereunder and shall be entitled
to delay the filing or effectiveness of any registration statement for up to 60
days if the offering would, in the judgment of the Board of Directors of
Grantor, require premature disclosure of any material corporate development or
material transaction involving Grantor or interfere with any previously planned
securities offering by the Company. Grantee shall use reasonable efforts to
cause, and to cause any underwriters of any sale or other disposition to use
reasonable efforts to cause, any sale or other disposition pursuant to such
registration statement to be effected on a widely distributed basis.
(b) If the Common Stock is registered pursuant to the provisions of
this Section 8, Grantor agrees (i) to furnish copies of the registration
statement and the prospectus relating to the Shares covered thereby in such
numbers as Grantee may from time to time reasonably request and (ii) if any
event shall occur as a result of which it becomes necessary to amend or
supplement any registration statement or prospectus, to prepare
5
and file under the applicable securities laws such amendments and supplements as
may be necessary to keep available for at least 45 days a prospectus covering
the Common Stock meeting the requirements of such securities laws, and to
furnish Grantee such numbers of copies of the registration statement and
prospectus as amended or supplemented as may reasonably be requested. The
Grantor shall bear the cost of the registration, including, but not limited to,
all registration and filing fees, printing expenses, and fees and disbursements
of counsel and accountants for Grantor, except that Grantee shall pay the fees
and disbursements of its counsel, and the underwriting fees and selling
commissions applicable to the shares of Common Stock sold by Grantee. The
Grantor shall indemnify and hold harmless (i) Grantee, its affiliates and its
officers and directors and (ii) each underwriter and each person who controls
any underwriter within the meaning of the Securities Act or the Exchange Act
(collectively, the "Underwriters") ((i) and (ii) being referred to as
"Indemnified Parties") against any losses, claims, damages, liabilities or
expenses, to which the Indemnified Parties may become subject, insofar as such
losses, claims, damages, liabilities (or actions in respect thereof) and
expenses arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained or incorporated by reference in any
registration statement filed pursuant to this paragraph, or arise out of or are
based upon the omission or alleged omission to state therein a material
factrequired to be stated therein or necessary to make the statements therein
not misleading; provided, however, that Grantor will not be liable in any such
case to the extent that any such loss, liability, claim, damage or expense
arises out of or is based upon an untrue statement or alleged untrue statement
in or omission or alleged omission from any such documents in reliance upon and
in conformity with written information furnished to Grantor by the Indemnified
Parties expressly for use or incorporation by reference therein.
(c) The Grantee and the Underwriters shall indemnify and hold harmless
Grantor, its affiliates and its officers and directors against any losses,
claims, damages, liabilities or expenses to which Grantor, its affiliates and
its officers and directors may become subject, insofar as such losses, claims,
damages, liabilities (or actions in respect thereof) and expenses arise out of
or are based upon any untrue statement of any material fact contained or
incorporated by reference in any registration statement filed pursuant to this
paragraph, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to Grantor by Grantee or the Underwriters, as applicable,
specifically for use or incorporation by reference therein.
9. Expenses. Each party hereto shall pay its own expenses incurred in
--------
connection with this Agreement, except as otherwise specifically provided
herein.
10. Specific Performance. The Grantor acknowledges that if Grantor
--------------------
fails to perform any of its obligations under this Agreement immediate and
irreparable harm or injury would be caused to Grantee for which money damages
would not be an adequate
6
remedy. In such event, Grantor agrees that Grantee shall have the right, in
addition to any other rights it may have, to specific performance of this
Agreement.
11. Notice. All notices, requests, demands and other communications
------
hereunder shall be in writing deemed to have been duly given upon receipt by the
person at the address set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such person:
If to Grantee:
Attention:
Telecopy:
With a copy to:
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx and Xxxxxxx X. Xxxxx
Telecopy: (000) 000-0000
If to Grantor:
Attention:
Telecopy:
With a copy to:
Xxxxxx, Xxxxx & Bockius LLP
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx
Telecopy: (000) 000-0000
12. 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; provided, however, that such successor in interest or assigns shall
agree to be bound by the provisions of this Agreement. Nothing in this
Agreement, express or implied, is intended to confer upon any person other than
Grantor or Grantee, or their successors or assigns, any rights or remedies under
or by reason of this Agreement.
13. 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,
7
but may be changed only by an agreement in writing signed by the party against
whom any waiver, change, amendment, modification or discharge may be sought.
14. Assignment. No party to this Agreement may assign any of its
----------
rights or obligations under this Agreement without the prior written consent of
the other party hereto, except that Grantee may assign its rights and
obligations hereunder to any of its direct or indirect wholly owned
subsidiaries, but no such transfer shall relieve Grantee of its obligations
hereunder if such transferee does not perform such obligations.
15. Headings. The section headings herein are for convenience only and
--------
shall not affect the construction of this Agreement.
16. Counterparts. This Agreement may be executed in any number of
------------
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.
17. Governing Law; Waiver of Jury Trial. This Agreement shall be
-----------------------------------
governed by and construed in accordance with the laws of the State of Delaware
(regardless of the laws that might otherwise govern under applicable Delaware
principles of conflicts of law). Each of the parties hereto waives any right to
trial by jury with respect to any claim or proceeding related to or arising out
of this Agreement or any of the transactions contemplated hereby.
THE GRANTOR AGREES THAT, IN CONNECTION WITH ANY LEGAL SUIT OR
PROCEEDING ARISING WITH RESPECT TO THIS AGREEMENT, IT SHALL SUBMIT TO THE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE
AND AGREES TO VENUE IN SUCH COURTS. THE GRANTOR HEREBY APPOINTS THE SECRETARY OF
THE GRANTOR AS ITS AGENT FOR SERVICE OF PROCESS FOR PURPOSES OF THE FOREGOING
SENTENCE ONLY.
18. Termination. The right to exercise the Option granted pursuant to
-----------
this Agreement shall terminate (the "Option Termination Date") at the earlier of
(i) the Effective Time (as defined in the Merger Agreement), (ii) 90 days after
the Merger Termination Date, (iii) six months from the latest date a shareholder
vote occurs or is scheduled and (iv) the termination of the Merger Agreement
under Section 12.1(i); provided that, if the Option cannot be exercised or the
Shares cannot be delivered to Grantee upon such exercise because the conditions
set forth in Section 2(a) or (b) hereof have not yet been satisfied, the Option
Termination Date shall be extended until thirty days after such impediment to
exercise or delivery has been removed.
All representations and warranties contained in this Agreement shall
survive delivery of and payment for the Shares.
19. Profit Limitation. (a) Notwithstanding any other provision of this
-----------------
Agreement, in no event shall Grantee's Total Profit (as hereinafter defined)
exceed $8.366 million
8
(the "Cap") and, if it otherwise would exceed such amount, Grantee, at its sole
election, shall either (a) deliver to Grantor for cancellation Shares previously
purchased by Grantee, (b) pay cash or other consideration to Grantor or (c)
undertake any combination thereof, so that Grantee's Total Profit shall not
exceed the Cap after taking into account the foregoing actions.
Notwithstanding any other provision of this Agreement, this Option may
not be exercised for a number of Shares as would, as of the date of the Stock
Exercise Notice, result in a Notional Total Profit (as defined below) of more
than the Cap and, if exercise of the Option otherwise would exceed such amount,
Grantee, at its discretion, may increase the Purchase Price for that number of
Shares set forth in the Stock Exercise Notice so that the Notional Total Profit
shall not exceed the Cap; provided, that nothing in this sentence shall restrict
any exercise of the Option permitted hereby on any subsequent date at the
Purchase Price set forth in Section 1(a) hereof.
As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) the amount of cash received by
Grantee pursuant to Section 12.2(b) of the Merger Agreement and Section 1(c)
hereof, (ii) (x) the amount received by Grantee pursuant to Grantor's repurchase
of Shares pursuant to Section 7 hereof, less (y) Grantee's purchase price for
such Shares, and (iii) (x) the net cash amounts received by Grantee pursuant to
the sale of Shares (or any other securities into which such Shares are converted
or exchanged) to any unaffiliated party, less (y) Grantee's purchase price for
such Shares.
As used herein, the term "Notional Total Profit" with respect to any
number of Shares as to which Grantee may propose to exercise this Option shall
be the Total Profit determined as of the date of the Stock Exercise Notice
assuming that this Option were exercised on such date for such number of Shares
and assuming that such Shares, together with all other Shares held by Grantee
and its affiliates as of such date, were sold for cash at the closing market
price for the Common Stock as of the close of business on the preceding trading
day (less customary brokerage commissions).
20. Severability. If any term, provision, covenant or restriction of
------------
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
21. Public Announcement. The Grantee will consult with Grantor and
-------------------
Grantor will consult with Grantee before issuing any press release with respect
to the initial announcement of this Agreement, the Option or the transactions
contemplated hereby and neither party shall issue any such press release prior
to such consultation except as may be required by law or the applicable rules
and regulations of Nasdaq or the NYSE.
9
IN WITNESS WHEREOF, Grantee and Grantor have caused this Agreement to
be duly executed and delivered on the day and year first above written.
OMNICARE, INC.
By: /s/ Xxxx X. Xxxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President
IBAH, INC.
By: /s/ Xxxxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
10
