<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 27, 1998
REGISTRATION NO. [ ]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
OMNICARE, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 5912 31-1001351
(State of or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
------------------------------
50 EAST RIVERCENTER BLVD.--SUITE 1530
COVINGTON, KENTUCKY 41011
(606) 655-1180
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------------
CHERYL D. HODGES
C/O OMNICARE MANAGEMENT COMPANY
2800 CHEMED CENTER
255 EAST FIFTH STREET
CINCINNATI, OHIO 45202-4728
(513) 762-6666
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
MORTON A. PIERCE THOMAS J. SHARBAUGH
RICHARD D. PRITZ MORGAN, LEWIS & BOCKIUS LLP
DEWEY BALLANTINE LLP 2000 ONE LOGAN SQUARE
1301 AVENUE OF THE AMERICAS PHILADELPHIA, PA 19103
NEW YORK, NEW YORK 10019 (215) 963-5000
(212) 259-8000
</TABLE>
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective and all other conditions to the merger (the "Merger") of a subsidiary
of the Registrant with and into IBAH, Inc. ("IBAH") pursuant to the Agreement
and Plan of Merger described in the enclosed Proxy Statement/Prospectus have
been satisfied or waived.
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
<TABLE>
<CAPTION>
TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
REGISTERED(1) REGISTERED SHARE PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $1.00 par value 5,336,338(2) N/A $161,707,203(3) $47,703.62(4)
Warrants to Purchase Common Stock, $1.00 par value 430,696(5) N/A (5) (5)
</TABLE>
(1) This Registration Statement relates to Common Stock, par value $1.00 per
share ("Omnicare Shares"), of the Registrant issuable to holders of Common
Stock, par value $.01 per share, of IBAH ("IBAH Common Shares") and Series A
Convertible Preferred Stock, par value $.01 per share, of IBAH ("IBAH
Preferred Shares", and together with the IBAH Common Shares, the "IBAH
Shares") and warrants to purchase Common Stock (the "Warrants") in
connection with the Merger.
(2) The number of Omnicare Shares to be registered pursuant to this Registration
Statement is based on the maximum number of Omnicare Shares issuable to
holders of IBAH Common Shares, IBAH Preferred Shares, warrants to purchase
IBAH Common Shares and options to purchase IBAH Common Shares in the Merger
at an assumed maximum exchange ratio of .1650 of an Omnicare Share in
exchange for each IBAH Common Share (assuming that all IBAH Shares are
exchanged for Omnicare Shares) and assuming the maximum number of IBAH
Shares to be acquired in the Merger for Omnicare Shares is 32,341,446.
(3) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(f)(1) of the Securities Act of 1933, based upon the estimated
market value of up to 32,341,446 IBAH Shares to be acquired by Omnicare in
the Merger (based upon the average of the high and low prices of IBAH Common
Shares on The Nasdaq National Market on May 22, 1998 of $5.00 per share).
(4) A fee of $34,123.78 was paid on May 6, 1998 pursuant to Section 14(g)(1)(A)
of the Securities Exchange Act of 1934 and Rules 0-11 and 14a-(6)(i)
promulgated thereunder in connection with the filing of preliminary proxy
materials relating to the Merger as described herein, and pursuant to Rule
457(b), such fee has been credited against the registration fee payable in
connection with this Registration Statement.
(5) Included in the amount shown above. See Notes 2, 3 and 4.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE TIME 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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
IBAH, INC.
FOUR VALLEY SQUARE
512 TOWNSHIP LINE ROAD
BLUE BELL, PENNSYLVANIA 19422
May 27, 1998
Dear Fellow Stockholder:
I am pleased to inform you that on March 30, 1998, IBAH, Inc. and Omnicare,
Inc. entered into a merger agreement under which each outstanding IBAH common
share will be converted into the right to receive $5.75 market value (determined
in accordance with, and subject to the terms of, the merger agreement) of
Omnicare common shares and IBAH will become a wholly-owned subsidiary of
Omnicare. The transaction is structured as a reorganization and a "pooling of
interests".
At a Special Meeting of Stockholders of IBAH to be held at 10:00 a.m. on
June 29, 1998, you will be asked to vote upon the proposal to approve and adopt
the merger agreement. The merger is conditioned on the approval of this proposal
by IBAH stockholders holding a majority of the voting power of the outstanding
shares of IBAH.
The IBAH Board of Directors has unanimously approved the merger agreement
and has determined that the merger contemplated by the merger agreement is fair
to, and in the best interest of, IBAH and its stockholders. THE BOARD
UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO APPROVE AND ADOPT THE
MERGER AGREEMENT.
Salomon Smith Barney has acted as financial advisor to IBAH in connection
with the merger and has delivered its opinion dated March 30, 1998 to the IBAH
Board to the effect that, as of the date of such opinion and based upon and
subject to certain matters stated therein, the consideration to be received by
holders of IBAH common shares in the merger was fair, from a financial point of
view, to such holders. The full text of Salomon Smith Barney's written opinion,
which sets forth a description of the assumptions made, matters considered and
limitations on the review undertaken, is attached as Appendix E to the
accompanying Proxy Statement/Prospectus and should be read carefully in its
entirety.
Details of the proposed merger and other important information concerning
IBAH and Omnicare are contained in the Proxy Statement/Prospectus. Please give
this material your careful attention.
Whether or not you plan to attend the Special Meeting, please complete, sign
and date the accompanying proxy card and return it in the enclosed prepaid
envelope. Your prompt cooperation will be greatly appreciated.
We are gratified by your continued support.
Sincerely yours,
[LOGO]
Geraldine A. Henwood
Chief Executive Officer
<PAGE>
IBAH, INC.
FOUR VALLEY SQUARE
512 TOWNSHIP LINE ROAD
BLUE BELL, PENNSYLVANIA 19422
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 29, 1998
To the Stockholders of
IBAH, Inc.:
NOTICE IS HEREBY GIVEN that IBAH, Inc. ("IBAH") will hold a Special Meeting
of its Stockholders on June 29, 1998 at 10:00 a.m., local time, at the Sheraton
Valley Forge Hotel, 1160 First Avenue, King of Prussia, Pennsylvania (including
any adjournment or postponement thereof, the "Special Meeting"), for the
following purposes:
1. To consider and vote upon a proposal to approve and adopt an Agreement
and Plan of Merger, dated as of March 30, 1998 (the "Merger Agreement"),
among IBAH, Omnicare, Inc., a Delaware corporation ("Omnicare"), and
Impala Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Omnicare ("Sub"), and the transactions contemplated
thereby. Upon the terms and subject to the conditions of the Merger
Agreement, Sub will be merged (the "Merger") with and into IBAH, and IBAH
will become a wholly-owned subsidiary of Omnicare.
2. To transact such other business as may properly come before the Special
Meeting.
IBAH has fixed the close of business on May 21, 1998 (the "Record Date") as
the record date for the determination of the stockholders entitled to notice of,
and to vote at, the Special Meeting.
THE IBAH BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE TO
APPROVE AND ADOPT THE MERGER AGREEMENT. The affirmative vote of a majority of
the outstanding voting power of the shares of common stock of IBAH, par value
$.01 per share (the "IBAH Common Shares"), and shares of Series A Convertible
Preferred Stock, par value $.01 per share ("IBAH Preferred Shares"), voting
together as a single class, entitled to vote at the Special Meeting is required
to approve and adopt the Merger Agreement. IBAH Common Shares are entitled to
one vote per share, while IBAH Preferred Shares are entitled to three votes per
share. FAILURE TO RETURN A PROPERLY EXECUTED PROXY CARD OR TO VOTE AT THE
SPECIAL MEETING WILL GENERALLY HAVE THE SAME EFFECT AS A VOTE AGAINST THE
MERGER. Holders of IBAH Preferred Shares who did not vote for the Merger may, by
complying with the procedures prescribed in the Delaware General Corporation
Law, be entitled to appraisal rights as described therein. See "APPRAISAL RIGHTS
AVAILABLE TO HOLDERS OF IBAH PREFERRED SHARES."
Stockholders are invited to attend the Special Meeting. Whether or not you
expect to attend, WE URGE YOU TO SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED
PROXY CARD IN THE ENCLOSED POSTAGE PREPAID ENVELOPE. If you attend the meeting,
you may vote your shares in person, which will revoke any previously executed
proxy.
If your shares are held of record by a broker, bank or other nominee, you
must instruct your broker, bank or other nominee on how to vote your shares, or
else your shares will not be voted. If you require assistance in completing your
proxy card or if you have questions about the voting procedure, please contact
D.F. King & Co., Inc., 77 Water Street, New York, NY 10005, (212) 269-5500
(collect), (800) 628-8532 (toll-free).
Regardless of how many shares you own, your vote is very important. Please
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD TODAY.
By Order of the Board of Directors
[LOGO]
Winston J. Churchill
Chairman of the Board
Blue Bell, Pennsylvania
May 27, 1998
<PAGE>
IBAH, INC.
PROXY STATEMENT
------------------
OMNICARE, INC.
PROSPECTUS
RELATING TO THE OFFERING OF UP TO 5,336,338 OMNICARE COMMON SHARES AND WARRANTS
TO
PURCHASE UP TO 430,696 OMNICARE COMMON SHARES.
This Proxy Statement/Prospectus is being furnished to the holders of common
stock, par value $.01 per share ("IBAH Common Shares"), and to the holders of
Series A Convertible Preferred Stock, par value $.01 per share ("IBAH Preferred
Shares", and together with the IBAH Common Shares, the "IBAH Shares"), of IBAH,
Inc. ("IBAH") in connection with the solicitation of proxies by the Board of
Directors of IBAH (the "IBAH Board") for use at the special meeting of
stockholders of IBAH to be held at the Sheraton Valley Forge Hotel, 1160 First
Avenue, King of Prussia, Pennsylvania on June 29, 1998 commencing at 10:00 a.m.,
local time, and any adjournments or postponements thereof (the "Special
Meeting").
At the Special Meeting, stockholders of IBAH as of the close of business on
May 21, 1998 (the "Record Date") will consider and vote on the proposed merger
described in this Proxy Statement/Prospectus by which Impala Acquisition Corp.
("Sub"), a wholly-owned subsidiary of Omnicare, Inc. ("Omnicare"), will merge
(the "Merger") with and into IBAH and IBAH will become a wholly-owned subsidiary
of Omnicare, pursuant to the terms of the Agreement and Plan of Merger, dated as
of March 30, 1998, among Omnicare, Sub and IBAH (the "Merger Agreement"). If the
Merger is consummated, (i) each outstanding IBAH Common Share will be converted
into the right to receive a number of shares of the common stock, par value
$1.00 per share, of Omnicare (the "Omnicare Shares"), as set forth below (the
"Conversion Number") and (ii) each outstanding IBAH Preferred Share (other than
shares as to which appraisal rights are properly exercised under Delaware law)
will be converted into the right to receive a number of Omnicare Shares equal to
three times the Conversion Number, in each case determined pursuant to a formula
based upon the average of the closing price per Omnicare Share on the New York
Stock Exchange for the fifteen consecutive trading days immediately prior to the
second trading day prior to the closing of the Merger (the "Omnicare Average
Market Price"). If the Omnicare Average Market Price is (a) greater than $43.83,
then the Conversion Number is equal to $6.50 divided by the Omnicare Average
Market Price; (b) greater than $38.77 and less than or equal to $43.83, then the
Conversion Number is equal to 0.1483; (c) greater than $34.85 and less than or
equal to $38.77, then the Conversion Number is equal to $5.75 divided by the
Omnicare Average Market Price; (d) greater than or equal to $30.30 and less than
or equal to $34.85, then the Conversion Number is equal to 0.1650; or (e) less
than $30.30, then, subject to certain conditions, the Conversion Number is equal
to $5.00 divided by the Omnicare Average Market Price. If the Omnicare Average
Market Price is less than $30.30, Omnicare shall have the right to fix the
Conversion Number at 0.1650 and, after the exercise of such right by Omnicare,
IBAH shall have the right to terminate the Merger Agreement. Assuming that the
Merger had been consummated on May 28, 1998, the Omnicare Average Market Price
would have been $35.89 and (i) each IBAH Common Share surrendered in the Merger
would have been converted into the right to receive 0.1602 Omnicare Shares and
(ii) each IBAH Preferred Share surrendered in the Merger would have been
converted into the right to receive 0.4806 Omnicare Shares. The actual
conversion ratio will be determined immediately prior to the closing of the
Merger (the "Closing") and, therefore, may not be known at the time of the
Special Meeting.
FOR A MORE COMPLETE DESCRIPTION OF THE TERMS OF THE MERGER, INCLUDING A
DESCRIPTION OF THE CONSIDERATION TO BE RECEIVED BY IBAH STOCKHOLDERS, SEE "THE
MERGER."
Omnicare Shares are quoted on the New York Stock Exchange (the "NYSE") under
the symbol "OCR." IBAH Common Shares are quoted on The Nasdaq National Market
under the symbol "IBAH."
This Proxy Statement also constitutes a Prospectus relating to the Omnicare
Shares and warrants to purchase Omnicare Shares ("Omnicare Warrants") to be
issued in connection with the proposed Merger and the Omnicare Shares issuable
upon exercise of the Omnicare Warrants.
The information contained in this Proxy Statement/Prospectus relating to
Omnicare has been furnished by Omnicare. Omnicare is a leading independent
provider of pharmacy and related services to long-term care institutions such as
nursing homes, retirement centers and other institutional health care
facilities. The principal executive offices of Omnicare are located at 50 East
RiverCenter Blvd., Suite 1530, Covington, Kentucky 41011, telephone number (606)
291-6800.
The information contained in this Proxy Statement/Prospectus relating to
IBAH has been furnished by IBAH. IBAH is a worldwide leader in providing
comprehensive product development services to client companies in the
pharmaceutical, biotechnology, medical device and diagnostics industries. The
principal executive offices of IBAH are located at Four Valley Square, 512
Township Line Road, Blue Bell, Pennsylvania 19422, telephone number (215)
283-0770.
See "GLOSSARY" for a list of certain defined terms used in this Proxy
Statement/Prospectus.
This Proxy Statement/Prospectus and the accompanying proxy card are first
being mailed to IBAH stockholders on or about May 28, 1998.
FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT STOCKHOLDERS SHOULD CONSIDER
BEFORE VOTING FOR OR AGAINST THE MERGER, SEE "RISK FACTORS" BEGINNING ON PAGE
12.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Proxy Statement/Prospectus is May 27, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER..................................................................... 1
FORWARD-LOOKING STATEMENTS................................................................................. 3
AVAILABLE INFORMATION...................................................................................... 3
INCORPORATION OF DOCUMENTS BY REFERENCE.................................................................... 4
SUMMARY.................................................................................................... 5
RISK FACTORS............................................................................................... 12
OMNICARE SUMMARY SELECTED FINANCIAL DATA................................................................... 16
IBAH SUMMARY SELECTED FINANCIAL DATA....................................................................... 18
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA....................................................... 20
MARKET PRICE INFORMATION................................................................................... 22
COMPARATIVE PER SHARE DATA................................................................................. 24
THE MERGER................................................................................................. 26
Background of the Merger................................................................................. 26
Reasons for the Merger................................................................................... 28
Opinion of IBAH's Financial Advisor...................................................................... 30
Accounting Treatment of the Merger....................................................................... 34
Governmental and Regulatory Approvals.................................................................... 34
Interests of Certain Persons in the Merger; Possible Conflicts of Interest............................... 34
Certain Federal Income Tax Consequences of the Merger.................................................... 36
THE MERGER AGREEMENT AND RELATED AGREEMENTS................................................................ 38
General.................................................................................................. 38
Consideration to be Received in the Merger............................................................... 38
Exchange of Shares....................................................................................... 39
Treatment of Options and Warrants........................................................................ 39
Representations and Warranties........................................................................... 40
Conduct of IBAH's Business............................................................................... 40
Exclusivity.............................................................................................. 41
Indemnification.......................................................................................... 42
Resales of Omnicare Shares............................................................................... 42
Conditions to the Merger................................................................................. 43
Termination of the Merger Agreement...................................................................... 44
Termination Fees; Expenses of the Merger................................................................. 45
Stock Option Agreement................................................................................... 47
Voting Agreement......................................................................................... 48
Consent of Holders of IBAH Preferred Shares and IBAH Warrants............................................ 49
APPRAISAL RIGHTS AVAILABLE TO HOLDERS OF IBAH PREFERRED SHARES............................................. 50
IBAH SPECIAL MEETING....................................................................................... 53
Date, Time and Place..................................................................................... 53
Matters to be Considered................................................................................. 53
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Record Date.............................................................................................. 53
Quorum................................................................................................... 53
Required Vote............................................................................................ 53
Proxies and Revocation................................................................................... 53
Solicitation of Proxies.................................................................................. 54
Independent Accountants.................................................................................. 54
DESCRIPTION OF OMNICARE CAPITAL STOCK...................................................................... 55
General.................................................................................................. 55
Common Stock............................................................................................. 55
Certain Antitakeover Provisions.......................................................................... 55
Transfer Agent........................................................................................... 55
COMPARISON OF STOCKHOLDER RIGHTS........................................................................... 56
Authorized Capital....................................................................................... 56
Election and Size of Board of Directors.................................................................. 56
Removal of Directors..................................................................................... 57
Vacancies on the Board of Directors...................................................................... 57
Amendments to Charter.................................................................................... 58
Dividends................................................................................................ 58
Vote on Extraordinary Corporate Transactions; Business Combination Restrictions.......................... 58
RECENT DEVELOPMENTS........................................................................................ 60
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION......................................................... 61
EXPERTS.................................................................................................... 68
LEGAL OPINIONS............................................................................................. 68
STOCKHOLDER PROPOSALS FOR NEXT IBAH ANNUAL MEETING......................................................... 68
GLOSSARY................................................................................................... 69
</TABLE>
<TABLE>
<S> <C> <C>
Appendices
- -----------
Appendix A - Agreement and Plan of Merger, dated as of March 30, 1998, among Omnicare,
Inc., Impala Acquisition Corp. and IBAH, Inc.
Appendix B - Stock Option Agreement, dated as of March 30, 1998, between Omnicare, Inc.
and IBAH, Inc.
Appendix C - Voting Agreement, dated as of March 30, 1998, between the persons listed on
Schedule A thereto and Omnicare, Inc.
Appendix D - Section 262 of the Delaware General Corporation Law Regarding Appraisal
Rights
Appendix E - Opinion of Salomon Smith Barney
</TABLE>
ii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
THE IBAH BOARD UNANIMOUSLY RECOMMENDS VOTING IN FAVOR OF THE PROPOSED MERGER
AND BELIEVES IT TO BE IN THE BEST INTERESTS OF IBAH AND THE IBAH STOCKHOLDERS.
<TABLE>
<S> <C>
Q: WHAT WILL HAPPEN AS A RESULT OF THE PROPOSED MERGER?
A: If the Merger is approved and consummated, each IBAH Share will be converted into the
right to receive the merger consideration described below and IBAH will become a
wholly-owned subsidiary of Omnicare.
Q: WHAT DO I NEED TO DO NOW?
A: After you have carefully read this Proxy Statement/Prospectus, just indicate on your
proxy card how you want to vote, and sign and mail the proxy card in the enclosed
return envelope as soon as possible, so that your IBAH Shares will be represented at
the Special Meeting. If you sign and send in your proxy card and do not indicate how
you want to vote, your proxy will be counted as a vote in favor of the Merger. If you
do not vote in favor of the Merger or you abstain, it will have the effect of a vote
against the Merger.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY SHARES FOR
ME?
A: Your broker will vote your shares only if you provide instructions on how to vote. You
should instruct your broker to vote your shares, following the directions provided by
your broker. Without instructions, your shares will not be voted, which for purposes of
voting on the proposed Merger is the same as voting against the proposed Merger.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. After the Merger is completed, we will send former IBAH stockholders written
instructions for exchanging their stock certificates.
Q: WHAT WILL I RECEIVE IN THE MERGER?
A: If the Merger is consummated, you will have the right to receive (i) in exchange for
each IBAH Common Share you own, a number of Omnicare Shares determined based upon the
average of the closing price per Omnicare Share on the New York Stock Exchange for the
fifteen consecutive trading days immediately prior to the second trading day prior to
the Closing (the "Omnicare Average Market Price") and (ii) in exchange for each IBAH
Preferred Share you own (other than shares as to which appraisal rights are properly
exercised under Delaware law), a number of Omnicare Shares equal to three times the
number of Omnicare Shares exchanged for each IBAH Common Share.
If the Omnicare Average Market Price is (a) greater than $43.83, then the number of
Omnicare Shares exchanged for each IBAH Common Share (the "Conversion Number") is equal
to $6.50 divided by the Omnicare Average Market Price; (b) greater than $38.77 and less
than or equal to $43.83, then the Conversion Number is equal to 0.1483; (c) greater
than $34.85 and less than or equal to $38.77, then the Conversion Number is equal to
$5.75 divided by the Omnicare Average Market Price; (d) greater than or equal to $30.30
and less than or equal to $34.85, then the Conversion Number is equal to 0.1650; or (e)
less than $30.30, then, subject to certain conditions, the Conversion Number is equal
to $5.00 divided by the Omnicare Average Market Price. If the Omnicare Average Market
Price is less than $30.30, Omnicare shall have the right to fix the Conversion Number
at 0.1650 and, after the exercise of such right by Omnicare, IBAH shall have the right
to terminate the Merger Agreement.
Omnicare will not issue fractional shares. Instead, former IBAH stockholders will
receive cash for any fractional Omnicare Shares owed to them based on the Omnicare
Average Market Price.
</TABLE>
1
<PAGE>
<TABLE>
<S> <C>
The following examples are based on the various prices of Omnicare Shares (which are,
of course, not assured):
</TABLE>
<TABLE>
<CAPTION>
VALUE OF OMNICARE
SHARES RECEIVED PER
OMNICARE AVERAGE IBAH COMMON SHARE
MARKET PRICE IN THE MERGER
- ---------------------------------------------------- ---------------------
<S> <C>
$30 $ 5.00
$33 $ 5.445
$36 $ 5.75
$39 $ 5.784
$44 $ 6.50
</TABLE>
<TABLE>
<S> <C>
The value of Omnicare Shares received for each IBAH Common Share in the Merger is
calculated by multiplying the Conversion Number by the market price of Omnicare Shares
on the date the Merger closes (the "Closing Date"). The value of Omnicare Shares
received for each IBAH Preferred Share is equal to three times the value received in
exchange for each IBAH Common Share. The price of an Omnicare Share may not equal the
Omnicare Average Market Price because (i) the Omnicare Average Market Price is
calculated over the fifteen trading days immediately prior to the second trading day
prior to the Closing, and (ii) the price per Omnicare Share may fluctuate between the
date the Omnicare Average Market Price is determined and the Closing Date.
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: We are working toward completing the Merger as quickly as possible. We hope to complete
the Merger promptly following the Special Meeting.
Q: WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO ME?
A: The exchange of shares by IBAH stockholders is generally intended to be tax-free to
IBAH stockholders for federal income tax purposes. However, IBAH stockholders will be
subject to taxation with respect to cash received for fractional shares. To review
certain federal income tax consequences to stockholders in greater detail, see pages 36
and 37. IBAH stockholders are urged to consult their own tax advisors as to the
specific tax consequences to them of the Merger, including the applicable federal,
state, local and foreign tax consequences.
Q: ARE THERE ANY RISKS ASSOCIATED WITH THE MERGER?
A: The Merger does involve risks. For a discussion of certain risk factors that should be
considered in evaluating the Merger, see "RISK FACTORS," beginning on page 12.
WHO CAN HELP ANSWER YOUR QUESTIONS
If you have more questions about the Merger you should contact:
IBAH, Inc.
Four Valley Square
512 Township Line Road
Blue Bell, Pennsylvania 19422
Attention: Kathy E. Herman
Phone Number: (215) 283-0770
If you would like additional copies of the Proxy Statement/Prospectus, or have
questions regarding the procedures for voting your shares or executing, changing or
revoking a proxy, you should contact:
D.F. King & Co., Inc.
Attention: Daniel M. Sullivan
Phone Number: (800) 628-8532
</TABLE>
2
<PAGE>
FORWARD-LOOKING STATEMENTS
This Proxy Statement/Prospectus contains and incorporates by reference
certain statements that constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include all statements regarding the intent, belief
or current expectations regarding the matters discussed or incorporated by
reference in this Proxy Statement/ Prospectus (including statements as to
"beliefs," "expectations," "anticipations," "intentions" or similar words) and
all statements which are not statements of historical fact. Such statements are
subject to risks, uncertainties and assumptions, including, but not limited to,
trends for the continued growth of the businesses of Omnicare and IBAH, the
realization of anticipated revenues, profitability and cost synergies of the
combined companies, and other risks and uncertainties described in "RISK
FACTORS." Should one or more of these risks or uncertainties materialize or
should underlying assumptions prove incorrect, Omnicare's or IBAH's actual
results, performance or achievements in 1998 and beyond could differ materially
from those expressed in, or implied by, such forward-looking statements.
AVAILABLE INFORMATION
Omnicare and IBAH file annual, quarterly and special reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission" or the "SEC"). You may read and copy any reports, statements
or other information we file at the SEC's public reference rooms at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, 7 World Trade Center, 13th
Floor, New York, New York 10048 and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from commercial document retrieval
services and at the SEC's site on the World Wide Web at http://www.sec.gov.
Omnicare has filed a Registration Statement on Form S-4 (together with any
amendments thereto, the "Registration Statement") under the Securities Act of
1933 (the "Securities Act"), to register with the SEC the Omnicare Shares and
Omnicare Warrants to be issued pursuant to the proposed Merger and the Omnicare
Shares issuable upon exercise of the Omnicare Warrants. As allowed by SEC rules,
this Proxy Statement/Prospectus does not contain all the information you can
find in the Registration Statement or the exhibits to the Registration
Statement.
Omnicare Shares are listed and traded on the NYSE. Reports, proxy statements
and other information concerning Omnicare can be inspected at the NYSE, 20 Broad
Street, New York, New York 10005. IBAH Common Shares are listed and traded on
The Nasdaq National Market. Reports, proxy statements and other information
concerning IBAH can be inspected at The Nasdaq National Market, Operations, 1735
K Street, N.W., Washington, D.C. 20006.
3
<PAGE>
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC 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 SEC. 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 following documents previously filed with the SEC by Omnicare
(File No. 1-8269) and by IBAH (File No. 0-19892) pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act"):
1. Omnicare's Annual Report on Form 10-K for the year ended December 31,
1997.
2. IBAH's Annual Report on Form 10-K/A-2 for the year ended December 31,
1997.
3. Omnicare's Quarterly Report on Form 10-Q for the quarter ended March 31,
1998.
4. IBAH's Quarterly Report on Form 10-Q/A for the quarter ended March 31,
1998.
5. IBAH's Current Report on Form 8-K, dated March 30, 1998.
6. Omnicare's Current Reports on Form 8-K, dated February 18, 1998, April
17, 1998 and May 19, 1998.
7. The description of Omnicare Shares in Omnicare's Registration Statement
on Form 8-A under the Exchange Act filed September 14, 1993, including all
amendments and reports filed for the purpose of updating such description.
We are also incorporating by reference additional documents that we file
with the SEC between the date of this Proxy Statement/Prospectus and the date of
the Special Meeting.
Omnicare has supplied all information contained or incorporated by reference
in this Proxy Statement/Prospectus relating to Omnicare, and IBAH has supplied
all information contained or incorporated by reference in this Proxy
Statement/Prospectus relating to IBAH.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS TO VOTE ON THE MERGER. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS
CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS. THIS PROXY STATEMENT/PROSPECTUS IS
DATED MAY 27, 1998. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS
PROXY STATEMENT/ PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN SUCH DATE, AND
NEITHER THE MAILING OF THIS PROXY STATEMENT/ PROSPECTUS TO STOCKHOLDERS NOR THE
ISSUANCE OF ANY OMNICARE SECURITIES IN THE MERGER SHALL CREATE ANY IMPLICATION
TO THE CONTRARY.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE
UPON REQUEST FROM OMNICARE, INC., ATTENTION: CHERYL D. HODGES, 50 EAST
RIVERCENTER BLVD., SUITE 1530, COVINGTON, KENTUCKY 41011, TELEPHONE NUMBER (606)
291-6800. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST
SHOULD BE MADE BY JUNE 22, 1998.
4
<PAGE>
SUMMARY
THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE
IN THIS PROXY STATEMENT/ PROSPECTUS. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY
BY THE MORE DETAILED INFORMATION CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS,
IN ITS APPENDICES AND IN THE DOCUMENTS REFERRED TO HEREIN, TO WHICH REFERENCE IS
MADE FOR A MORE COMPLETE STATEMENT OF THE MATTERS DISCUSSED BELOW.
THE COMPANIES
OMNICARE
Omnicare is a leading independent provider of pharmacy and related services
to long-term care institutions such as nursing homes, retirement centers and
other institutional health care facilities. Omnicare purchases, repackages and
dispenses pharmaceuticals, both prescription and non-prescription, and provides
computerized medical recordkeeping and third-party billing for residents in such
facilities. Omnicare also provides consultant pharmacist services, including
evaluating monthly patient drug therapy, monitoring the control, distribution
and administration of drugs within the nursing facility and assisting in
compliance with state and federal regulations. In addition, Omnicare provides
ancillary services, such as infusion therapy, distributes medical supplies and
offers clinical care plan and financial software information systems to its
client nursing home facilities. Omnicare currently provides these services to
over 463,000 residents in over 5,800 long-term care and other institutional
health care facilities in 40 states. Omnicare also provides comprehensive
clinical research services for the pharmaceutical and biotechnology industries.
On February 23, 1998, Omnicare entered into a definitive merger agreement
pursuant to which Omnicare is to acquire CompScript, Inc., a Florida corporation
("CompScript"). See "RECENT DEVELOPMENTS."
Omnicare's executive offices are located at 50 East RiverCenter Blvd., Suite
1530, Covington, Kentucky 41011, and its telephone number is (606) 291-6800.
IBAH
IBAH is a worldwide leader in providing comprehensive product development
services to client companies in the pharmaceutical, biotechnology, medical
device and diagnostics industries. IBAH is a contract research organization
which offers services for all stages of drug development. IBAH provides its
services through two primary operating divisions, the Clinical Services Division
and the Pharmaceutics Services Division. The Clinical Services Division's
primary services are the design of product development programs, design and
conduct of clinical trials, clinical data management and biostatistical
analysis, writing reports of study findings, quality assurance consulting,
health economics analysis and post-marketing studies, and regulatory dossier
filings. The Pharmaceutics Services Division provides traditional product
formulation services, manufacturing process development, manufacture of drugs
and placebos for clinical trials, pilot plant manufacturing, analytical methods
development, analytical testing and clinical trials drug packaging and
distribution.
IBAH's executive offices are located at Four Valley Square, 512 Township
Line Road, Blue Bell, Pennsylvania 19422, and its telephone number is (215)
283-0770.
RECOMMENDATION OF THE IBAH BOARD
The IBAH Board has unanimously approved the Merger Agreement and unanimously
recommends that IBAH stockholders vote FOR the proposal to approve and adopt the
Merger Agreement. This recommendation is based on a number of factors described
in this Proxy Statement/Prospectus. See "THE MERGER--Reasons for the Merger."
5
<PAGE>
OPINION OF IBAH'S FINANCIAL ADVISOR
On March 30, 1998, Smith Barney Inc. and Salomon Brothers Inc (collectively
doing business as, and referred to herein as, "Salomon Smith Barney") delivered
its written opinion to the IBAH Board to the effect that, as of the date of such
opinion and based upon and subject to certain matters stated therein, the
consideration to be received by the holders of IBAH Common Shares in the Merger
was fair, from a financial point of view, to such holders. A copy of Salomon
Smith Barney's written opinion dated March 30, 1998, which sets forth the
assumptions made, matters considered and limitations on the review undertaken by
Salomon Smith Barney, is attached as Appendix E to this Proxy
Statement/Prospectus. THE OPINION OF SALOMON SMITH BARNEY IS DIRECTED TO THE
IBAH BOARD AND RELATES ONLY TO THE FAIRNESS OF THE CONSIDERATION TO BE RECEIVED
BY THE HOLDERS OF IBAH COMMON SHARES FROM A FINANCIAL POINT OF VIEW, DOES NOT
ADDRESS ANY OTHER ASPECT OF THE MERGER OR RELATED TRANSACTIONS, AND DOES NOT
CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER AS TO HOW SUCH STOCKHOLDER SHOULD
VOTE AT THE SPECIAL MEETING. IBAH STOCKHOLDERS ARE URGED TO READ SUCH OPINION IN
ITS ENTIRETY. See "THE MERGER--Opinion of IBAH's Financial Advisor."
MERGER CONSIDERATION
If the Merger is consummated, (i) holders of IBAH Common Shares will have
the right to receive, in exchange for each IBAH Common Share they own, the
number of Omnicare Shares equal to the Conversion Number and (ii) holders of
IBAH Preferred Shares will have the right to receive, in exchange for each IBAH
Preferred Share they own (other than shares as to which appraisal rights are
properly exercised under Delaware law), the number of Omnicare Shares equal to
three times the Conversion Number. The Conversion Number is determined based
upon the Omnicare Average Market Price.
If the Omnicare Average Market Price is (a) greater than $43.83, then the
Conversion Number is equal to $6.50 divided by the Omnicare Average Market
Price; (b) greater than $38.77 and less than or equal to $43.83, then the
Conversion Number is equal to 0.1483; (c) greater than $34.85 and less than or
equal to $38.77, then the Conversion Number is equal to $5.75 divided by the
Omnicare Average Market Price; (d) greater than or equal to $30.30 and less than
or equal to $34.85, then the Conversion Number is equal to 0.1650; or (e) less
than $30.30, then, subject to certain conditions, the Conversion Number is equal
to $5.00 divided by the Omnicare Average Market Price. If the Omnicare Average
Market Price is less than $30.30, Omnicare shall have the right to fix the
Conversion Number at 0.1650 and, after the exercise of such right by Omnicare,
IBAH shall have the right to terminate the Merger Agreement.
The following examples are based on the various prices of Omnicare Shares
(which are, of course, not assured):
<TABLE>
<CAPTION>
VALUE OF OMNICARE
SHARES RECEIVED PER
OMNICARE AVERAGE IBAH COMMON
MARKET PRICE SHARE IN THE MERGER
- --------------------- -------------------
<S> <C>
$ 30 $ 5.00
$ 33 $ 5.445
$ 36 $ 5.75
$ 39 $ 5.784
$ 44 $ 6.50
</TABLE>
The value of Omnicare Shares received for each IBAH Common Share in the
Merger is calculated by multiplying the Conversion Number by the market price of
Omnicare Shares on the Closing Date. The value of Omnicare Shares received for
each IBAH Preferred Share is equal to three times the value received in exchange
for each IBAH Common Share. The price of an Omnicare Share may not equal the
Omnicare Average Market Price because (i) the Omnicare Average Market Price is
calculated over the fifteen trading days immediately prior to the second trading
day prior to the Closing, and (ii) the price per
6
<PAGE>
Omnicare Share may fluctuate between the date the Omnicare Average Market Price
is determined and the Closing Date.
Assuming that the Merger had been consummated on May 28, 1998, the Omnicare
Average Market Price would have been $35.89 and the Conversion Number would have
been 0.1602. The actual Conversion Number will be determined immediately prior
to the Closing Date and, therefore, may not be known at the time of the Special
Meeting and will likely differ from the examples shown above.
No fractional shares will be issued. Instead, former IBAH stockholders will
receive a check in payment for any fractional shares based on the Omnicare
Average Market Price.
See "THE MERGER." See also "RISK FACTORS."
REQUIRED VOTE
The approval of a majority of the voting power of the outstanding IBAH
Common Shares and the outstanding IBAH Preferred Shares, voting as a single
class, is required to approve and adopt the Merger.
As of the Record Date, directors and executive officers of IBAH and their
affiliates were beneficial owners of approximately 25.4% of the outstanding
voting power of the IBAH Shares. Each of the directors and executive officers
has indicated an intention to vote for the proposal to approve and adopt the
Merger Agreement. In order to induce Omnicare to enter into the Merger
Agreement, certain stockholders of IBAH (the "Securityholders"), including the
Chairman of the Board and the Chief Executive Officer, who collectively hold
approximately 23.9% of the voting power of the outstanding IBAH Shares (which
percentage of outstanding shares is included within the 25.4% held by IBAH's
directors and executive officers and their affiliates), entered into an
agreement with Omnicare (the "Voting Agreement") pursuant to which each
Securityholder has agreed, in general, to vote all of the IBAH Shares
beneficially owned and all shares subsequently acquired (i) in favor of the
Merger, the adoption by IBAH of the Merger Agreement and the approval of the
other transactions contemplated by the Merger Agreement at any meeting of
stockholders of IBAH at which such matters are considered and at every
adjournment or postponement thereof and (ii) against any action or proposal that
would impede, frustrate, prevent or nullify the Merger or the Merger Agreement.
In addition, all holders of IBAH Preferred Shares have agreed that they will not
consent to or otherwise facilitate any transaction that is inconsistent with the
Merger. See "THE MERGER AGREEMENT AND RELATED AGREEMENTS--Voting Agreement" and
"--Consent of Holders of IBAH Preferred Shares and IBAH Warrants." Attached as
Appendix C is the full text of the Voting Agreement.
CONDITIONS TO THE MERGER
Each party's obligation to complete the Merger is subject to a number of
conditions, including the following:
(a) the approval of a majority of the outstanding voting power of IBAH
Shares,
(b) the receipt of requisite governmental consents and approvals to
consummate the Merger,
(c) the receipt of letters from Omnicare's and IBAH's independent
accountants to the effect that the Merger will qualify for "pooling of
interests" accounting treatment,
(d) the receipt of opinions of counsel to the effect that the Merger
will be treated as a reorganization for federal income tax purposes,
(e) the accuracy of the representations and warranties of the other
party to the Merger Agreement and the performance of the obligations of the
other party to the Merger Agreement,
(f) the absence of an injunction or law prohibiting the Merger or any
legal action likely to have a material adverse effect, and
7
<PAGE>
(g) the absence of a material adverse effect on the other party.
In addition, Omnicare's obligation to complete the Merger is also
conditioned on:
(a) the receipt of certain consents from third parties,
(b) the receipt of consents (which consents have been obtained) of the
holders of the IBAH Preferred Shares and warrants to purchase IBAH Common
Shares (the "IBAH Warrants"), and
(c) IBAH's Chief Executive Officer entering into an employment and
non-competition agreement (see "THE MERGER--Interests of Certain Persons in
the Merger; Possible Conflicts of Interest--IBAH Employment Agreements") and
IBAH having used commercially reasonable efforts to cause certain other
employees of IBAH to enter into employment and non-competition agreements.
The parties' obligations are also subject to certain other conditions set
forth in the Merger Agreement.
See "THE MERGER AGREEMENT AND RELATED AGREEMENTS--Conditions to the Merger."
TERMINATION
The Merger Agreement is subject to termination:
(a) by mutual consent of Omnicare and IBAH,
(b) by either Omnicare or IBAH if (i) there is a permanent injunction
prohibiting the Merger or the transactions contemplated thereby, (ii) the
Merger is not consummated by October 31, 1998 or (iii) the other materially
breaches its representations, warranties or covenants set forth in the
Merger Agreement,
(c) by Omnicare if the IBAH Board modifies or withdraws its approval or
recommendation of the Merger, and
(d) by IBAH if (i) the IBAH Board determines, under certain
circumstances, that its fiduciary duties require it to terminate the Merger
Agreement to execute a definitive agreement to implement another
transaction, (ii) the required approval of IBAH's stockholders is not
received, or (iii) the Omnicare Average Market Price is less than $30.30 and
Omnicare shall have exercised its right to fix the Conversion Number at
0.1650.
See "THE MERGER AGREEMENT AND RELATED AGREEMENTS--Termination of the Merger
Agreement" and "--Consideration to be Received in the Merger."
INTERESTS OF CERTAIN PERSONS IN THE MERGER; POSSIBLE CONFLICTS OF INTEREST
In considering the approval by the IBAH Board of the Merger, IBAH
stockholders should be aware that certain members of the IBAH Board and senior
management of IBAH have certain interests in, and will receive benefits from,
the Merger that are in addition to, and differ from, the interests of, and
benefits to, IBAH stockholders generally. Geraldine A. Henwood, director and
Chief Executive Officer of IBAH and a major stockholder, (i) will enter into an
employment agreement with IBAH, (ii) will enter into a non-competition agreement
with IBAH and (iii) subject to the prior consummation of the Merger, will be
nominated by Omnicare for election as a director of the Omnicare Board of
Directors at Omnicare's 1999 annual meeting of stockholders. Other executive
officers of IBAH and its subsidiaries will also enter into continuing employment
agreements with IBAH. Omnicare has agreed that following the Merger it will
cause IBAH, as the corporation surviving the Merger (the "Surviving
Corporation"), to indemnify the officers and directors of IBAH against liability
for acts undertaken by such persons during their tenure as
8
<PAGE>
officers and directors and to maintain the current policies of directors and
officers liability insurance, all as set forth in the Merger Agreement. These
interests and benefits may constitute potential conflicts of interest with the
stockholders of IBAH in the negotiation, approval and consummation of the
Merger. See "THE MERGER--Interests of Certain Persons in the Merger; Possible
Conflicts of Interests."
TREATMENT OF OPTIONS AND WARRANTS
At the date and time when the Merger shall become effective (the "Effective
Time"), Omnicare shall assume IBAH's rights and obligations under each
outstanding option to acquire IBAH Common Shares (each, an "IBAH Option"). Each
holder of IBAH Options outstanding immediately prior to the Effective Time shall
have the right to receive, in accordance with the terms and conditions of such
IBAH Option, the number of Omnicare Shares equal to the Conversion Number had
such holder of IBAH Options exercised such IBAH Options immediately prior to the
Effective Time.
Each IBAH Warrant outstanding immediately prior to the Effective Time shall
be converted into and exchanged for an Omnicare Warrant exercisable for the
Conversion Number of Omnicare Shares for each IBAH Common Share for which the
IBAH Warrant is exercisable immediately prior to the Effective Time, at an
exercise price per Omnicare Share that has been adjusted in accordance with the
terms of the IBAH Warrant converted as a result of the Merger. The Omnicare
Warrants shall have the terms and conditions of the IBAH Warrants converted as a
result of the Merger.
See "THE MERGER AGREEMENT AND RELATED AGREEMENTS--Treatment of Options and
Warrants."
GOVERNMENTAL AND REGULATORY APPROVALS
The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), prohibits IBAH and Omnicare from completing the Merger until after
IBAH and Omnicare have furnished certain information and materials to the
Antitrust Division of the Department of Justice (the "Antitrust Division") and
the Federal Trade Commission (the "FTC") and a required waiting period has
ended. The parties completed their required filings by May 7, 1998 and have
received early termination of the waiting period. However, the Antitrust
Division and the FTC will continue to have authority to challenge the Merger on
antitrust grounds before or after the Merger is complete. See "THE
MERGER--Governmental and Regulatory Approvals."
APPRAISAL RIGHTS AVAILABLE TO HOLDERS OF IBAH PREFERRED SHARES
If the Merger is consummated, holders of IBAH Preferred Shares who did not
vote for the Merger may, by complying with the procedures prescribed in Section
262 of the Delaware General Corporation Law (the "DGCL"), be entitled to
appraisal rights as described therein. Attached as Appendix D is the full text
of Section 262 of the DGCL. Holders of IBAH Preferred Shares as of March 30,
1998 have agreed to waive any appraisal rights that they may have pursuant to
the DGCL. Failure to comply precisely with the requirements of the applicable
provision will result in the loss of appraisal rights. See "APPRAISAL RIGHTS
AVAILABLE TO HOLDERS OF IBAH PREFERRED SHARES" and "THE MERGER AGREEMENT AND
RELATED AGREEMENTS--Consent of Holders of IBAH Preferred Shares and IBAH
Warrants."
TERMINATION FEES; EXPENSES OF THE MERGER
Under certain circumstances, including a termination by Omnicare if the IBAH
Board withdraws, modifies or changes its recommendation of the Merger or a
termination by IBAH to execute a definitive agreement to implement another
transaction, upon termination of the Merger Agreement, IBAH shall be required to
pay Omnicare a termination fee. The amount of the termination fee shall be $5
million if the
9
<PAGE>
termination fee is payable prior to the Option Termination Date (as defined
below), and $8.366 million if the termination fee is payable thereafter (the
"Termination Fee").
The "Option Termination Date" shall mean the earlier of (i) the Effective
Time, (ii) 90 days after the first anniversary of the termination of the Merger
Agreement in accordance with its terms, (iii) six months from the latest date a
stockholder vote occurs or is scheduled, and (iv) the termination of the Merger
Agreement by IBAH, if the Omnicare Average Market Price is less than $30.30 and
Omnicare shall have exercised its right to adjust the Conversion Number to
0.1650.
Under certain other circumstances, upon the termination of the Merger
Agreement, Omnicare or IBAH will be required to reimburse the other's expenses
incurred in connection with the Merger Agreement, up to an aggregate of
$1,500,000. Other than expenses incurred in connection with the filing, printing
and mailing of this Proxy Statement/Prospectus, which shall be borne equally
between Omnicare and IBAH, expenses incurred in connection with the Merger
Agreement will be paid by the party incurring such expenses. See "THE MERGER
AGREEMENT AND RELATED AGREEMENTS--Termination Fees; Expenses of the Merger."
STOCK OPTION AGREEMENT
In order to induce Omnicare to enter into the Merger Agreement, IBAH entered
into a stock option agreement with Omnicare, dated March 30, 1998 (the "Stock
Option Agreement"). Pursuant to the Stock Option Agreement, Omnicare has the
option (the "Option"), under certain circumstances, including a third party
making an Acquisition Proposal (as defined in "THE MERGER AGREEMENT AND RELATED
AGREEMENTS--Exclusivity"), to purchase up to 4,685,315 IBAH Common Shares (the
"Option Shares") (or approximately 19.9% of the outstanding IBAH Common Shares
as of March 30, 1998 prior to giving effect to the exercise of the Option), at a
cash price equal to $5.75 per share (the "Option Price"). Subject to the terms
and conditions of the Stock Option Agreement, the combined value of the
Termination Fee described above and the Option is limited to $8.366 million. The
Stock Option Agreement may make it more difficult and expensive for a third
party to consummate a business combination with IBAH. See "THE MERGER AGREEMENT
AND RELATED AGREEMENTS--Stock Option Agreement."
EXCLUSIVITY
Pursuant to the Merger Agreement, IBAH has agreed not to initiate, solicit
or encourage any Acquisition Proposal or, subject to the fiduciary duties of the
IBAH Board to the IBAH stockholders, engage in any negotiations or discussions
with, or provide any information to, any person relating to an Acquisition
Proposal. See "THE MERGER AGREEMENT AND RELATED AGREEMENTS--Exclusivity."
ACCOUNTING TREATMENT OF THE MERGER
Omnicare and IBAH believe that the Merger will qualify as a "pooling of
interests" for accounting and financial reporting purposes, and have been so
advised by their respective independent public accountants. The consummation of
the Merger is subject to (i) receipt of a letter from Price Waterhouse LLP,
independent public accountants for Omnicare, to the effect that Omnicare and the
Merger and transactions contemplated thereby qualify for "pooling of interests"
accounting treatment and (ii) receipt of a letter from Arthur Andersen LLP,
independent public accountants for IBAH, to the effect that IBAH will qualify as
a "combining company" as required for "pooling of interests" accounting
treatment. See "THE MERGER--Accounting Treatment of the Merger."
10
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
Omnicare and IBAH have structured the Merger so that it will be treated as a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), and the Merger is conditioned on the receipt
of legal opinions that such is the case. Assuming the Merger so qualifies as a
reorganization, in general, IBAH stockholders who exchange their IBAH Shares for
Omnicare Shares pursuant to the Merger will not recognize any gain or loss for
federal income tax purposes in the Merger (except for such gain or loss as may
be recognized with respect to cash received in lieu of fractional shares).
Holders of IBAH Shares are urged to consult their own tax advisors to
determine the particular consequences of the Merger to them under federal,
state, local and foreign tax laws. For a further discussion of certain federal
income tax consequences of the Merger, see "THE MERGER--Certain Federal Income
Tax Consequences of the Merger."
11
<PAGE>
RISK FACTORS
IBAH STOCKHOLDERS SHOULD CAREFULLY CONSIDER THE FOLLOWING MATTERS, TOGETHER
WITH THE OTHER INFORMATION CONTAINED ELSEWHERE IN THIS PROXY
STATEMENT/PROSPECTUS, BEFORE MAKING A DECISION WITH RESPECT TO THE MERGER.
RISKS RELATING TO ACQUISITION PROGRAM. In accordance with its strategy for
growth, which is to build its institutional pharmacy business into a national
organization dedicated to serving the long-term care market, Omnicare is
presently engaged in a geographic expansion program which incorporates an active
acquisition program in the long-term care pharmacy industry. The success of
Omnicare's acquisition program and of its underlying growth strategy will
depend, among other things, on the continued availability of suitable
acquisition candidates. Although Omnicare historically has not had difficulty in
identifying suitable acquisition candidates, there can be no assurance that
Omnicare will consummate any additional acquisitions due to the potential for
increased competition for acquisitions from other firms seeking to enter this
market or to enhance their institutional pharmacy businesses.
Omnicare's strategy also contemplates the continued internal growth of the
acquired businesses. Any business acquisition, however, involves inherent
uncertainties, such as the effect on the acquired businesses of integration into
a larger organization and the availability of management resources to oversee
the operations of acquired businesses. Potential obstacles to the successful
integration of acquired businesses include, among others, consolidation of
financial and managerial functions and elimination of operational redundancies,
achievement of purchasing efficiencies and the addition and integration of key
personnel. Even though an acquired business may have enjoyed excellent growth as
an independent company prior to an acquisition, there can be no assurance that
such growth would continue after an acquisition. Over the past nine years,
Omnicare has experienced no materially adverse consequences arising from its
integration activities. There can be no assurance, however, that any acquisition
will be integrated successfully or will not have an adverse impact on Omnicare's
results of operations or financial condition.
The Merger would involve the integration of companies that have previously
operated independently. No assurances can be given that Omnicare will integrate
the operations of Omnicare and IBAH without encountering difficulties or that
the expected benefits of such integration will be realized. In addition, there
can be no assurance that anticipated synergies will be realized.
RISKS OF GOVERNMENT REGULATION. Omnicare's pharmacy business is subject to
federal, state and local regulations, and its pharmacies are required to be
licensed in the states in which they are located. The failure to obtain or renew
any required regulatory approvals or licenses could adversely affect the
continued operation of Omnicare's business. In addition, the long-term care
facilities that contract for Omnicare's services are also subject to federal,
state and local regulations and are required to be licensed in the states in
which they are located. The failure by these institutions to comply with such
regulations or to obtain or renew any required licenses could result in the loss
of Omnicare's ability to provide pharmacy services to their residents. Omnicare
is also subject to federal and state laws that prohibit certain direct and
indirect payments between health care providers that are intended, among other
things, to induce or encourage the referral of patients to, or the
recommendation of, a particular provider of items or services. Violation of
these laws can result in loss of licensure, civil and criminal penalties and
exclusion from the Medicare, Medicaid and other federal health care programs.
DEPENDENCE UPON GOVERNMENT-SPONSORED AND THIRD PARTY
REIMBURSEMENT. Approximately one-half of Omnicare's pharmacy services billings
are reimbursed by government sponsored programs, largely Medicaid and to a
lesser extent Medicare, and the remainder is paid or reimbursed by individual
patients, long-term care facilities and other third party payors, including
private insurers. Medicaid and Medicare are highly regulated. The failure, even
if inadvertent, of Omnicare and/or its client institutions to comply with
applicable reimbursement regulations could adversely affect Omnicare's business.
Omnicare's sales and profitability are, and will continue to be, affected by
the efforts of all payors to contain or reduce the cost of health care by
lowering reimbursement rates, limiting the scope of covered
12
<PAGE>
services, and negotiating reduced or capitated pricing arrangements. Any changes
which serve to lower reimbursement levels under Medicare, Medicaid or private
pay programs, including managed care contracts, could adversely affect Omnicare.
Furthermore, other changes in such reimbursement programs or in regulations
related thereto, such as modifications in the timing or processing of payments
and other changes intended to limit or decrease the growth of Medicaid, Medicare
or third party expenditures, could adversely affect Omnicare's business.
UNCERTAINTIES ASSOCIATED WITH HEALTH CARE REFORM AND FEDERAL BUDGET
LEGISLATION. In recent years, a number of legislative proposals have been
introduced in Congress that would effect major changes in the health care
system, either nationally or at the state level. The Balanced Budget Act of 1997
("Balanced Budget Act") signed into law on August 5, 1997, seeks to achieve a
balanced federal budget by, among other things, reducing federal spending on the
Medicare and Medicaid programs. With respect to Medicare, the law mandates
establishment of a prospective payment system ("PPS") for services provided for
Medicare qualified patients in Medicare skilled nursing facilities ("SNFs")
under which facilities will be paid a federal per diem rate for virtually all
covered SNF services. It is anticipated that the PPS will be phased-in over
three cost reporting periods, starting with cost reporting periods beginning on
or after July 1, 1998. In the accompanying Conference Report, the conferees
specifically note that, to ensure that the frail elderly residing in SNFs
receive needed and appropriate medication therapy, the Secretary of the
Department of Health and Human Services is to consider, as part of the PPS for
SNFs, the results of studies conducted by independent organizations, including
those which examine appropriate payment mechanisms and payment rates for
medication therapy, and to develop case mix adjustments that reflect the needs
of such residents. The Balanced Budget Act also imposes limits on annual updates
in payments for routine Medicare SNF services, and institutes consolidated
billing for SNF services for most non-physician Medicare Part B items and
services for SNF residents, effective beginning July 1, 1998. (In April 1998,
the Health Care Financing Administration issued instructions on the SNF
consolidated billing rules, including a transition period until January 1,
1999.) The Balanced Budget Act also imposes numerous other cost savings measures
affecting Medicare SNF services. In addition, the law requires, as a condition
of issuance or renewal of a Medicare Part B supplier number, for the supplier to
obtain a surety bond. In January 1998, new rules were proposed to establish
additional supplier standards, including the requirement to obtain a surety
bond. A supplier must obtain a surety bond for each tax identification number
for which it has a Medicare supplier number.
The Balanced Budget Act also repeals the "Boren Amendment" federal payment
standard for Medicaid payments to Medicaid nursing facilities effective October
1, 1997. There can be no assurance that budget constraints or other factors will
not cause states to reduce Medicaid reimbursement to nursing facilities or that
payments to nursing facilities will be made on a timely basis. The law also
grants greater flexibility to states to establish Medicaid managed care projects
without the need to obtain a federal waiver. Although these waiver projects
generally exempt institutional care, including nursing facility and
institutional pharmacy services, no assurances can be given that these projects
ultimately will not change the Medicaid reimbursement system for long-term care,
including pharmacy services, from fee-for-service to managed care negotiated or
capitated rates. Omnicare anticipates that federal and state governments will
continue to review and assess alternative health care delivery systems and
payment methodologies. It is not possible to predict the effect of the recent
budget legislation or the interpretation or administration of such legislation
on Omnicare's business. Accordingly, there can be no assurance that these
changes or any future health care legislation will not adversely effect
Omnicare's business.
COMPETITION. The long-term care pharmacy business is highly regionalized
and, within a given geographic region of operations, highly competitive. In the
geographic regions it serves, Omnicare competes with numerous local and regional
institutional pharmacies, as well as the pharmacy operations owned by other
long-term care facilities. In its program of acquiring institutional pharmacy
providers, Omnicare competes with other companies with similar acquisition
strategies. Certain of Omnicare's competitors have substantial financial
resources. There can be no assurance that Omnicare will not
13
<PAGE>
encounter increased competition which could adversely affects its business,
results of operations or financial condition.
INTERESTS OF CERTAIN PERSONS IN THE MERGER; POSSIBLE CONFLICTS OF
INTEREST. In considering the approval by the IBAH Board of the Merger, IBAH
stockholders should be aware that certain members of the IBAH Board and senior
management of IBAH have certain interests in, and will receive benefits from,
the Merger that are in addition to, and differ from, the interests of, and
benefits to, IBAH stockholders generally. Geraldine A. Henwood, director and
Chief Executive Officer of IBAH and a major stockholder, (i) will enter into an
employment agreement with IBAH, (ii) will enter into a non-competition agreement
with IBAH and (iii) subject to the prior consummation of the Merger, will be
nominated by Omnicare for election as a director of the Omnicare Board of
Directors at Omnicare's 1999 annual meeting of stockholders. These interests and
benefits may constitute potential conflicts of interest with the stockholders of
IBAH in the negotiation, approval and consummation of the Merger. See "THE
MERGER-- Interests of Certain Persons in the Merger; Possible Conflicts of
Interest."
STOCK PRICE FLUCTUATIONS. If the Omnicare Average Market Price is less than
$34.85, then the Omnicare Shares that IBAH stockholders will receive in the
Merger would have a market value of less than $5.75 per IBAH Common Share. If
the Omnicare Average Market Price is less than $30.30, Omnicare shall have the
right to fix the Conversion Number at 0.1650 and, if Omnicare exercises such
right, IBAH shall have the right (but not the obligation) to terminate the
Merger Agreement.
The Omnicare Average Market Price will be determined two NYSE trading days
prior to the closing of the Merger and will be based on the trading prices
during the preceding fifteen trading days. Accordingly, it is possible that the
market price of the Omnicare Shares at the closing of the Merger will be higher
or lower than the Omnicare Average Market Price and, if so, the market value of
the consideration to be received by the IBAH stockholders, as of the Closing
Date, will be more or less than $5.75 per IBAH Common Share depending on the
direction of the price movement. There can be no assurances that the price of
the Omnicare Shares will not vary significantly from the market prices used in
the calculation of the Omnicare Average Market Price.
Each IBAH stockholder is urged to obtain updated market information. See
"MARKET PRICE INFORMATION" and "THE MERGER AGREEMENT AND RELATED
AGREEMENTS--Consideration to be Received in the Merger."
DIFFERENCES BETWEEN RIGHTS OF OMNICARE STOCKHOLDERS AND IBAH
STOCKHOLDERS. Upon completion of the Merger, stockholders of IBAH will become
stockholders of Omnicare, and their rights as stockholders of Omnicare will be
governed by the Omnicare Restated Certificate of Incorporation (the "Omnicare
Certificate") and the Omnicare Bylaws, rather than the IBAH Certificate of
Incorporation, as amended (the "IBAH Certificate"), and the IBAH Bylaws. There
are certain significant differences between the Omnicare Certificate and the
IBAH Certificate, including as to removal of directors and mergers and other
business combinations with holders of a significant amount of stock. See
"COMPARISON OF STOCKHOLDER RIGHTS."
IMPACT OF THE YEAR 2000 ISSUE. Omnicare utilizes information systems
throughout its business to carry out its day to day operations effectively.
Further, Omnicare has, and will continue, to invest in financial and operational
systems to support its growth strategy. Omnicare is in the process of assuring
that its systems are capable of recognizing and processing information properly
as the year 2000 approaches. Omnicare has completed a preliminary assessment of
its Year 2000 compliance and is currently correcting, upgrading or replacing
those systems that are not Year 2000 compliant. Omnicare believes it will be
able to modify or replace its affected systems in time to avoid any
interruptions in its operations. Omnicare does not anticipate that costs
associated with this project will have a material impact on its financial
position or results of operations in future periods, although there can be no
assurances in this regard.
14
<PAGE>
Omnicare is currently determining the extent to which it may be impacted by
any third parties' failure to remediate their own Year 2000 issues. Omnicare is
having, and will continue to have, formal communications with all of its
significant customers, payors, suppliers and other third parties to determine
the extent, if any, to which Omnicare's interface systems could be impacted by
any third party Year 2000 issues and related remedies. There can be no assurance
that the systems of other companies with which Omnicare's systems interact will
be timely converted and would not have an adverse effect on Omnicare's business.
15
<PAGE>
OMNICARE SUMMARY SELECTED FINANCIAL DATA
OMNICARE AND SUBSIDIARIES
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following selected consolidated financial data of Omnicare as of and for
the years ended December 31, 1997, 1996, 1995, 1994 and 1993 are derived from
consolidated financial statements of Omnicare which have been audited by Price
Waterhouse LLP, independent accountants. Such data is qualified in its entirety
by reference to historical financial information set forth in Omnicare's Annual
Report on Form 10-K for the year ended December 31, 1997. References to the
notes to this table to Notes to Consolidated Financial Statements are to the
notes to consolidated financial statements included in such Form 10-K. The
selected consolidated financial data as of and for the three months ended March
31, 1998 and 1997 are derived from unaudited consolidated financial statements
and is qualified in its entirety by reference to historical financial
information set forth in Omnicare's Quarterly Report on Form 10-Q for the period
ended March 31, 1998. Operating results for the three months ended March 31,
1998 are not necessarily indicative of the results that may be expected for the
entire year ending December 31, 1998.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED AND AT
MARCH 31, FOR THE YEARS ENDED AND AT DECEMBER 31,
-------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995 1994 1993
--------- --------- --------- --------- --------- --------- ---------
INCOME STATEMENT DATA: (a)
Sales....................... $ 299,752 $ 181,608 $ 895,702 $ 536,604 $ 399,636 $ 307,655 $ 223,129
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Income from continuing
operations................ $ 19,349(n) $ 13,443(o) $ 55,705 ,c) $ 43,450(d) $ 24,760(e) $ 13,531(f) $ 10,970(g)
Cumulative effect of
accounting change......... -- -- -- -- -- -- 280(h)
--------- --------- --------- --------- --------- --------- ---------
Net income.................. $ 19,349(n) $ 13,443(o) $ 55,705 ,c) $ 43,450(d) $ 24,760(e) $ 13,531(f) $ 11,250(g)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Earnings per share data: (m)
Basic:
Income from continuing
operations................ $ .23(n) $ .17(o) $ .70 ,c) $ .67(d) $ .47(e) $ .30(f) $ .26(g)
Cumulative effect of
accounting change......... -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income.................. $ .23(n) $ .17(o) $ .70 ,c) $ .67(d) $ .47(e) $ .30(f) $ .26(g)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Diluted:
Income from continuing
operations................ $ .23(n) $ .17(o) $ .69 ,c) $ .61(d) $ .43(e) $ .29(f) $ .26(g)
Cumulative effect of
accounting change......... -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income.................. $ .23(n) $ .17(o) $ .69 ,c) $ .61(d) $ .43(e) $ .29(f) $ .26(g)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Dividends per share......... $ .02 $ .0175 $ .07 $ .06 $ .05 $ .045 $ .04
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
BALANCE SHEET DATA:
Working capital............. $ 353,366 $ 279,732 $ 343,854 $ 329,002 $ 106,384 $ 125,550 $ 80,570
Total assets................ 1,338,234 796,617 1,289,629 721,697 360,836 317,205 241,318
Long-term debt (i)(j)....... 350,468 1,383 352,579 1,992 82,692 85,323 86,477
Stockholders' equity
(k)(l).................... 811,338 690,612 774,196 634,378 214,761 180,104 102,750
</TABLE>
- ------------------------
(a) Omnicare has had an active acquisition program in effect since 1989. See
Note 2 of the Notes to Consolidated Financial Statements for information
concerning these acquisitions.
16
<PAGE>
(b) Includes acquisition expenses related to 1997 "pooling of interests"
transactions of $3,456. Such expenses, on an after tax basis, were $3,070,
or $.04 per basic and diluted share. Net income, excluding these expenses as
well as the nonrecurring charge of $5,958 disclosed in (c) below, was
$64,733, or $.81 per basic and diluted share.
(c) A nonrecurring charge of $6,313 before taxes and $5,958 after taxes ($.07
per basic and diluted share) was recorded in the third quarter of 1997 for
the estimated costs and legal and other expenses associated with the
tentative settlement of the government investigation of Home Pharmacy
Services, Inc., a wholly-owned subsidiary of Omnicare. For the year ended
December 31, 1997, net income, excluding this charge as well as the "pooling
of interests" expenses of $3,070 disclosed in (b) above, was $64,733, or
$.81 per basic and diluted share.
(d) Includes acquisition expenses related to the 1996 "pooling of interests"
transaction of $690. Such expenses, on an after tax basis, were $534, or
$.01 per basic and diluted share. Net income, excluding these expenses, was
$43,984, or $.67 per basic share ($.61 diluted).
(e) Includes acquisition expenses related to the 1995 Specialized "pooling of
interests" transaction of $1,292. Such expenses, on an aftertax basis, were
$989, or $.02 per basic and diluted share. Net income, excluding these
expenses, was $25,749, or $.49 per basic share ($.44 diluted).
(f) Includes acquisition expenses related to the 1994 Evergreen "pooling of
interests" transaction of $2,380. Such expenses, on an aftertax basis, were
$1,860, or $.04 per basic share ($.03 diluted). Net income, excluding these
expenses, was $15,391, or $.34 per basic share ($.33 diluted).
(g) Includes a one-time cumulative tax benefit of $450, or $.01 per share (basic
and diluted), arising from a change in tax laws enacted in August 1993
relating to the amortization of intangibles.
(h) After tax gain representing the cumulative effect of a change in accounting
for income taxes.
(i) In 1997, Omnicare issued $345 million of Convertible Subordinated Notes due
2007 (See Note 6 of the Notes to Consolidated Financial Statements).
(j) In 1993, Omnicare issued $80.5 million of Convertible Subordinated Notes due
2003 (See Note 6 of the Notes to Consolidated Financial Statements).
(k) In 1996, Omnicare sold 5,750 (pre-1996 stock split) shares of Omnicare
Common Stock in a public offering, resulting in net proceeds of $279,159.
(See Note 7 of the Notes to Consolidated Financial Statements.)
(l) In 1994, Omnicare sold approximately 6,495 shares of Omnicare Common Stock,
in a public offering, resulting in net proceeds of $59,211.
(m) The earnings per share data have been restated with Omnicare's required
adoption of Statement of Financial Accounting Standard No. 128, "Earnings
per Share."
(n) Includes acquisition expenses related to a 1998 first quarter "pooling of
interests" transaction of $491. Such expenses, on an after tax basis, were
$415, or $.01 per basic and diluted share. Net income, excluding these
expenses, was $19,764, or $.24 per basic and diluted share.
(o) Includes acquisition expenses related to a 1997 first quarter "pooling of
interests" transaction of $978. Such expenses, on an after tax basis, were
$854, or $.01 per basic and diluted share. Net income, excluding these
expenses, was $14,297, or $.18 per basic and diluted share.
17
<PAGE>
IBAH SUMMARY SELECTED FINANCIAL DATA
IBAH AND SUBSIDIARIES
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following selected consolidated financial data of IBAH as of and for the
years ended December 31, 1997, 1996, 1995, 1994 and 1993 are derived from
consolidated financial statements of IBAH which have been audited by Arthur
Andersen LLP, independent public accountants. Such data is qualified in its
entirety by reference to historical financial information set forth in IBAH's
Annual Report on Form 10-K/A-2 for the year ended December 31, 1997. References
to the notes to this table to Notes to Consolidated Financial Statements are to
the notes to consolidated financial statements included in such Form 10-K/A-2.
The selected consolidated financial data as of and for the three months ended
March 31, 1998 and 1997 are derived from unaudited consolidated financial
statements and is qualified in its entirety by reference to historical financial
information set forth in IBAH's Quarterly Report on Form 10-Q/A for the period
ended March 31, 1998. Operating results for the three months ended March 31,
1998 are not necessarily indicative of the results that may be expected for the
entire year ending December 31, 1998.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
---------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA: 1998 1997 1997(1) 1996(2) 1995 1994(3) 1993
- ----------------------------------------- ---------- ---------- --------- --------- --------- --------- ---------
Revenues................................. $ 38,465 $ 28,580 $ 131,821 $ 82,573 $ 56,985 $ 50,132 $ 25,584
Less-reimbursed costs.................. 11,808 9,263 43,770 20,453 14,119 16,512 7,799
---------- ---------- --------- --------- --------- --------- ---------
Net revenues......................... 26,657 19,317 88,051 62,120 42,866 33,620 17,785
Operating expenses..................... 25,182 18,788 86,510(4) 61,166(5) 45,768 53,503(5) 19,042
---------- ---------- --------- --------- --------- --------- ---------
Operating income (loss).................. 1,475 529 1,541 954 (2,902) (19,883) (1,257)
Interest income (expense), net......... (71) 152 199 475 (111) (86) (263)
---------- ---------- --------- --------- --------- --------- ---------
Income (loss) before taxes............... 1,404 681 1,740 1,429 (3,013) (19,969) (1,520)
Income taxes........................... 645 236 983 60 -- -- --
---------- ---------- --------- --------- --------- --------- ---------
Income (loss) from continuing
operations............................. 759 445 757 1,369 (3,013) (19,969) (1,520)
Loss from discontinued operations(6)... -- (300) (2,154) (389) (1,546) (1,245) --
---------- ---------- --------- --------- --------- --------- ---------
Net income (loss)........................ 759 145 (1,397) 980 (4,559) (21,214) (1,520)
Deemed dividend on preferred stock(7).... -- -- -- -- (2,712) -- --
---------- ---------- --------- --------- --------- --------- ---------
Net income (loss) to common
stockholders........................... $ 759 $ 145 $ (1,397) $ 980 $ (7,271) $ (21,214) $ (1,520)
---------- ---------- --------- --------- --------- --------- ---------
---------- ---------- --------- --------- --------- --------- ---------
Income (loss) per common share--Basic(8)
Continuing operations.................. $ 0.03 $ 0.02 $ 0.03 $ 0.08 $ (0.40) $ (1.66) $ (0.15)
Discontinued operations................ -- (0.01) (0.09) (0.03) (0.11) (0.10) --
---------- ---------- --------- --------- --------- --------- ---------
Income (loss) per common
share--Basic......................... $ 0.03 $ 0.01 $ (0.06) $ 0.05 $ (0.51) $ (1.76) $ (0.15)
---------- ---------- --------- --------- --------- --------- ---------
---------- ---------- --------- --------- --------- --------- ---------
Income (loss) per common
share--Diluted(8)
Continuing operations.................. $ 0.03 $ 0.02 $ 0.03 $ 0.05 $ (0.40) $ (1.66) $ (0.15)
Discontinued operations................ -- (0.01) $ (0.08) $ (0.01) $ (0.11) $ (0.10) --
---------- ---------- --------- --------- --------- --------- ---------
Income (loss) per common
share--Diluted....................... $ 0.03 $ 0.01 $ (0.05) $ 0.04 $ (0.51) $ (1.76) $ (0.15)
---------- ---------- --------- --------- --------- --------- ---------
---------- ---------- --------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
---------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA: 1998 1997 1997 1996 1995 1994 1993
- ---------------------------------------- ---------- ---------- --------- --------- --------- --------- ---------
Cash, cash equivalents and
investments........................... $ 12,112 $ 15,366 $ 10,821 $ 20,823 $ 8,321 $ 4,357 $ 2,027
Working capital......................... 8,494 9,529 8,509 9,206 4,640 2,122 1,985
Total assets............................ 95,963 86,830 102,936 92,126 39,525 30,572 11,863
Long-term debt (9)...................... 8,206 2,943 8,983 3,261 3,503 4,098 4,582
Retained earnings (accumulated deficit)
(4,5)................................. (25,302) (24,648) (26,061) (24,793) (25,773) (21,214) (1,064)
Stockholders' equity (deficit).......... 51,281 50,795 50,110 49,556 11,473 8,882 (924)
</TABLE>
18
<PAGE>
The Company has paid no cash dividends since its inception.
- ------------------------
(1) Includes for the year ended December 31, 1997, the merger of PPL which
closed on May 5, 1997.
(2) Includes, for the year ended December 31, 1996, the acquisition of RBI which
closed on July 18, 1996, and the acquisition of THG which closed on October
1, 1996.
(3) Includes, for the year ended December 31, 1994, the acquisition of EPIC
which closed on January 4, 1994, and the merger with Affinity Biotech, Inc.,
which took place on April 27, 1994.
(4) Includes non-recurring charges of $1,208,000 for the restructuring of the
International Clinical Services Division and $176,000 for merger costs
associated with the PPL transaction.
(5) Includes a non-recurring charge of $18.3 million for acquired research and
development in connection with the Affinity merger in 1994 and $510,000 of
acquired research and development in connection with the RBI acquisition in
1996.
(6) Represents the divestiture of the Drug Delivery Services Division in 1994
and 1995 and the closure of the software commercialization unit of RBI in
1996 and 1997. See Notes 6 and 7 of the Notes to Consolidated Financial
Statements.
(7) Restated to give effect to the change in accounting for its convertible
security having a beneficial conversion feature, of which $2,712,000 was
recorded analogous to a deemed dividend. See Note 5 of the Notes to
Consolidated Financial Statements.
(8) See Note 2 of the Notes to Consolidated Financial Statements.
(9) Includes both current and long-term portions.
19
<PAGE>
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table sets forth certain selected pro forma combined financial
data for (i) Omnicare and IBAH and (ii) Omnicare, IBAH and CompScript. The pro
forma amounts included in the table below relating to Omnicare and IBAH assume
the consummation of the Merger and are based on the "pooling of interests"
method of accounting. The pro forma amounts included in the table below relating
to Omnicare, IBAH and CompScript assume the consummation of the Merger and the
merger between a subsidiary of Omnicare and CompScript (the "CompScript Merger")
and are based on the "pooling of interests" method of accounting. There can be
no assurances that the CompScript Merger will be consummated. The following
table should be read in conjunction with the historical financial statements of
Omnicare, IBAH and CompScript and the pro forma financial data included herein
under the caption "UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION." See the
historical financial statements of Omnicare and IBAH incorporated by reference
herein. See "RECENT DEVELOPMENTS" for information concerning CompScript and the
CompScript Merger.
The pro forma amounts below are presented for informational purposes only
and are not necessarily indicative of the results of operations of the combined
company that would have actually occurred had the Merger and the CompScript
Merger been consummated as of January 1, 1995 or of the financial condition of
the combined company had the Merger and the CompScript Merger been consummated
as of March 31, 1998 or of the future results of operations or financial
condition of the combined company. The pro forma information does not reflect
any synergies anticipated as a result of (i) the Merger and the CompScript
Merger, and in particular the elimination of costs associated with IBAH's and
CompScript's status as public companies and other administrative savings, and
(ii) the CompScript Merger, and in particular improvements in gross margins
attributable to Omnicare's purchasing leverage associated with purchases of
pharmaceuticals and other products. There can be no assurances that such
synergies will be realized. In addition, (a) the pro forma income statement
information does not reflect investment banking, legal and miscellaneous
transaction costs related to the Merger and the CompScript Merger and (b) the
pro forma income statement and balance sheet information does not reflect costs
associated with the combining of the companies, which costs Omnicare and IBAH
cannot presently estimate. See "RISK FACTORS."
20
<PAGE>
COMBINED OMNICARE AND IBAH:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE YEARS ENDED
ENDED AND AT MARCH 31, DECEMBER 31,
------------------------ ------------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995
------------ ---------- ------------ ---------- ----------
INCOME STATEMENT DATA:
Sales.......................................... $ 326,409 $ 200,925 $ 983,753 $ 598,724 $ 442,502
Operating income............................... 36,655 21,686 98,836 65,464 40,757
Income from continuing operations available to
common stockholders.......................... 20,108 13,888 56,462 44,819 19,035
Earnings per share from continuing operations
available to common stockholders:
Basic........................................ $ .23 $ .17 $ .67 $ .66 $ .35
Diluted...................................... .23 .17 .67 .59 .33
Weighted average shares outstanding:
Basic........................................ 86,245 81,698 83,858 68,234 54,706
Diluted...................................... 87,207 82,835 84,866 79,368 67,890
BALANCE SHEET DATA (March 31, 1998):
Working capital................................ $ 356,637 -- -- -- --
Total assets................................... 1,434,197 -- -- -- --
Long-term debt................................. 355,710 -- -- -- --
Stockholders' equity........................... 857,396 -- -- -- --
</TABLE>
COMBINED OMNICARE, IBAH AND COMPSCRIPT:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE YEARS ENDED
ENDED AND AT MARCH 31, DECEMBER 31,
-------------------------- ------------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995
------------ ------------ ------------ ---------- ----------
INCOME STATEMENT DATA:
Sales........................................ $ 340,258 $ 212,424 $ 1,034,384 $ 641,440 $ 477,359
Operating income............................. 37,295 20,959 97,569 64,469 37,021
Income from continuing operations available
to common stockholders..................... 20,406 12,272 54,105 43,663 14,809
Earnings per share from continuing operations
available to common stockholders:
Basic...................................... $ .23 $ .15 $ .63 $ .63 $ .26
Diluted.................................... .23 .15 .62 .57 .26
Weighted average shares outstanding:
Basic...................................... 88,033 83,422 85,613 69,818 56,160
Diluted.................................... 88,995 84,559 86,621 81,008 69,344
BALANCE SHEET DATA (March 31, 1998):
Working capital.............................. $ 354,644 -- -- -- --
Total assets................................. 1,455,064 -- -- -- --
Long-term debt............................... 356,428 -- -- -- --
Stockholders' equity......................... 858,494 -- -- -- --
</TABLE>
21
<PAGE>
MARKET PRICE INFORMATION
OMNICARE. Omnicare Shares are listed on the NYSE under the symbol "OCR."
The following table shows the high and low sales prices of Omnicare Shares on
the NYSE and the cash dividends paid or declared per share for the periods
presented, based on published financial sources.
<TABLE>
<CAPTION>
PRICE PER OMNICARE
SHARE
--------------------
<S> <C> <C> <C>
HIGH LOW DIVIDENDS
--------- --------- -----------
1996
First Quarter....................................................................... 27 3/8 19 1/8 .015
Second Quarter...................................................................... 30 3/8 23 1/8 .015
Third Quarter....................................................................... 30 3/4 21 1/2 .015
Fourth Quarter...................................................................... 32 1/2 26 .015
1997
First Quarter....................................................................... 32 1/4 23 1/2 .0175
Second Quarter...................................................................... 31 5/8 22 3/8 .0175
Third Quarter....................................................................... 32 1/2 26 9/16 .0175
Fourth Quarter...................................................................... 34 9/16 26 .0175
1998
First Quarter....................................................................... 39 13/16 28 1/8 .02
Second Quarter (through May 26)..................................................... 39 11/16 34 .02
</TABLE>
IBAH. IBAH Common Shares are listed on The Nasdaq National Market under the
symbol "IBAH." The following table sets forth the high and low bid quotations of
IBAH Common Shares as reported on The Nasdaq National Market during each of the
quarters presented. These prices reflect inter-dealer quotations, without retail
mark-up, mark-downs or other fees or commissions, and may not necessarily
represent actual transactions.
<TABLE>
<CAPTION>
PRICE PER
IBAH SHARE
----------------------
<S> <C> <C>
HIGH LOW
--------- ---
1996
First Quarter..................................................................................... 7 5 1/2
Second Quarter.................................................................................... 8 5/8 6 1/4
Third Quarter..................................................................................... 8 5 1/2
Fourth Quarter.................................................................................... 8 1/4 5 3/4
1997
First Quarter..................................................................................... 8 1/8 6
Second Quarter.................................................................................... 6 1/8 3 3/8
Third Quarter..................................................................................... 5 1/8 3
Fourth Quarter.................................................................................... 4 11/16 2 7/8
1998
First Quarter..................................................................................... 5 9/16 3 1/8
Second Quarter (through May 26)................................................................... 5 7/16 5
</TABLE>
IBAH has never declared or paid any cash dividends on the IBAH Shares. The
Merger Agreement provides that IBAH may not pay any dividends on the IBAH
Shares.
The following table sets forth (i) the closing price of Omnicare Shares,
(ii) the closing price of IBAH Common Shares, and (iii) the equivalent per share
price of IBAH Common Shares, in each case as of March 30, 1998, the last trading
day prior to the announcement of the execution of the Merger Agreement, and May
26, 1998, the last trading day prior to the date of this Proxy
Statement/Prospectus. The equivalent
22
<PAGE>
per share price of IBAH Common Shares at each specified date is determined by
dividing $5.75 by the price of Omnicare Shares and multiplying the resulting
conversion number by the price of Omnicare Shares. All historical prices are as
reported by published financial sources. STOCKHOLDERS ARE URGED TO OBTAIN
CURRENT MARKET PRICES.
<TABLE>
<CAPTION>
OMNICARE SHARES IBAH SHARES EQUIVALENT PER SHARE
---------------- --------------- ---------------------
<S> <C> <C> <C>
March 30, 1998.............................................. 38 1/16 5 1/8 5 3/4
May 26, 1998................................................ 35 3/16 5 5 3/4
</TABLE>
23
<PAGE>
COMPARATIVE PER SHARE DATA
(UNAUDITED)
The following table presents historical and pro forma per share data for
Omnicare and historical and equivalent pro forma per share data for IBAH.
Equivalent pro forma per share amounts for IBAH were calculated by multiplying
the relevant Omnicare amount by 0.1618, the Conversion Number calculated using
the average closing price of the Omnicare Shares over the fifteen days ended May
13, 1998. The following tables should be read in conjunction with the historical
financial statements of Omnicare, IBAH and CompScript and the pro forma
financial data included herein under the caption "UNAUDITED PRO FORMA COMBINED
FINANCIAL INFORMATION." See the historical financial statements of Omnicare and
IBAH incorporated by reference herein. See "RECENT DEVELOPMENTS" for information
concerning CompScript and the CompScript Merger.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, -------------------------------
1998 1997 1996 1995
--------------- --------- --------- ---------
<S> <C> <C> <C> <C>
OMNICARE
Net Income:
Historical--Basic........................................................ $ 0.23 $ 0.70 $ 0.67 $ 0.47
Historical--Diluted...................................................... 0.23 0.69 0.61 0.43
Pro Forma--Basic (including IBAH)(1)..................................... 0.23 0.67 0.66 0.35
Pro Forma--Diluted (including IBAH)(1)................................... 0.23 0.67 0.59 0.33
Pro Forma--Basic (including IBAH and CompScript)(1)...................... 0.23 0.63 0.63 0.26
Pro Forma--Diluted (including IBAH and CompScript)(1).................... 0.23 0.62 0.57 0.26
Dividends:
Historical (4)........................................................... 0.02 0.07 0.06 0.05
Book Value:
Historical............................................................... 9.79 9.42 -- --
Pro Forma (Including IBAH)(2)............................................ 9.85 9.49 -- --
Pro Forma (Including IBAH and CompScript)(2)............................. 9.66 9.31 -- --
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, -------------------------------
1998 1997 1996 1995
--------------- --------- --------- ---------
<S> <C> <C> <C> <C>
IBAH
Net Income/(Loss):
Historical--Basic....................................................... $ 0.03 $ 0.03 $ 0.08 $ (0.40)
Historical--Diluted..................................................... 0.03 0.03 0.05 (0.40)
Equivalent Pro Forma (Omnicare and IBAH)--Basic (1)..................... 0.04 0.11 0.11 0.06
Equivalent Pro Forma (Omnicare and IBAH)--Diluted (1)................... 0.04 0.11 0.10 0.05
Equivalent Pro Forma (Omnicare, IBAH and CompScript)-- Basic (1)........ 0.04 0.10 0.10 0.04
Equivalent Pro Forma (Omnicare, IBAH and CompScript)-- Diluted (1)...... 0.04 0.10 0.09 0.04
Dividends:
Historical.............................................................. 0 0 0 0
Equivalent Pro Forma (1)................................................ 0 0.01 0.01 0.01
Book Value:
Historical.............................................................. 1.99 1.95 -- --
Equivalent Pro Forma (Omnicare and IBAH) (2)............................ 1.59 1.54 -- --
Equivalent Pro Forma (Omnicare, IBAH and CompScript) (2)................ 1.56 1.51 -- --
</TABLE>
24
<PAGE>
- ------------------------
(1) Pro forma amounts for Omnicare have been multiplied by the conversion ratio
of 0.1618 (the assumed Conversion Number) to arrive at IBAH's Equivalent Pro
Forma per share amounts (including and excluding CompScript). The assumed
Conversion Number has been estimated based on an assumed Omnicare Average
Market Price of the Omnicare Shares of $35.5333 per share, which represents
the Omnicare Average Market Price per Omnicare Shares for the fifteen
trading days ended May 13, 1998. Assuming an Omnicare Average Market Price
of $30.30, (i) IBAH's Equivalent Pro Forma Net Income (basic) for the three
months ended March 31, 1998 and the years ended December 31, 1997, 1996 and
1995 would have been $0.04, $0.11, $0.11 and $0.06, respectively; and IBAH's
Equivalent Pro Forma Net Income (basic and including CompScript) for the
three months ended March 31, 1998 and the years ended December 31, 1997,
1996 and 1995 would have been $0.04, $0.10, $0.10 and $0.04, respectively;
and (ii) IBAH's Equivalent Pro Forma Net Income (diluted) for the three
months ended March 31, 1998 and the years ended December 31, 1997, 1996 and
1995 would have been $0.04, $0.11, $0.10 and $0.05, respectively; and IBAH's
Equivalent Pro Forma Net Income (diluted and including CompScript) for the
three months ended March 31, 1998 and the years ended December 31, 1997,
1996 and 1995 would have been $0.04, $0.10, $0.09 and $0.04, respectively.
Assuming an Omnicare Average Market Price of $43.83, (i) IBAH's Equivalent
Pro Forma Net Income (basic) for the three months ended March 31, 1998 and
the years ended December 31, 1997, 1996 and 1995 would have been $0.03,
$0.10, $0.10 and $0.05, respectively; and IBAH's Equivalent Pro Forma Net
Income (basic and including CompScript) for the three months ended March 31,
1998 and the years ended December 31, 1997, 1996 and 1995 would have been
$0.03, $0.09, $0.09 and $0.04, respectively; and (ii) IBAH's Equivalent Pro
Forma Net Income (diluted) for the three months ended March 31, 1998 and the
years ended December 31, 1997, 1996 and 1995 would have been $0.03, $0.10,
$0.09 and $0.05, respectively; and IBAH's Equivalent Pro Forma Net Income
(diluted and including CompScript) for the three months ended March 31, 1998
and the years ended December 31, 1997, 1996 and 1995 would have been $0.03,
$0.09, $0.08 and $0.04, respectively. Pro Forma Net Income (basic and
diluted) amounts for Omnicare (including IBAH, and including IBAH and
CompScript) and Equivalent Pro Forma Dividend amounts for IBAH (including
and excluding CompScript) have not been presented using the collar
limitations of $30.30 and $43.83 because such amounts do not materially
differ from those presented using the Omnicare Average Market Price. See
also note (3).
(2) Pro forma amounts for Omnicare have been multiplied by the conversion ratio
of 0.1618 (the assumed Conversion Number) to arrive at IBAH's Equivalent Pro
Forma per share amounts (including and excluding CompScript). The assumed
Conversion Number has been estimated based on an assumed Omnicare Average
Market Price of the Omnicare Shares of $35.5333 per share described in note
(1) above. Assuming an Omnicare Average Market Price of $30.30, (i)
Omnicare's Pro Forma Book Value (including IBAH) and Omnicare's Pro Forma
Book Value (including IBAH and CompScript) as of March 31, 1998 would have
been $9.84 and 9.61, respectively; and (ii) IBAH's Equivalent Pro Forma Book
Value (excluding and including CompScript) as of March 31, 1998 would have
been $1.62 and $1.59, respectively. Assuming an Omnicare Average Market
Price of $43.83, (i) Omnicare's Pro Forma Book Value (including IBAH) and
Omnicare's Pro Forma Book Value (including IBAH and CompScript) as of March
31, 1998 would have been $9.89 and $9.72, respectively; and (ii) IBAH's
Equivalent Pro Forma Book Value (excluding and including CompScript) as of
March 31, 1998 would have been $1.47 and $1.44, respectively. Assuming an
Omnicare Average Market Price of $30.30, (i) Omnicare's Pro Forma Book Value
(including IBAH) and Omnicare's Pro Forma Book Value (including IBAH and
CompScript) as of December 31, 1997 would have been $9.48 and $9.26,
respectively; and (ii) IBAH's Equivalent Pro Forma Book Value (excluding and
including CompScript) as of December 31, 1997 would have been $1.56 and
$1.53, respectively. Assuming an Omnicare Average Market Price of $43.83,
(i) Omnicare's Pro Forma Book Value (including IBAH) and Omnicare's Pro
Forma Book Value (including IBAH and CompScript) as of December 31, 1997
would have been $9.53 and $9.36, respectively; and (ii) IBAH's Equivalent
Pro Forma Book Value (excluding and including CompScript) as of December 31,
1997 would have been $1.41 and $1.39, respectively. See also note (3).
(3) The actual Omnicare Average Market Price will likely vary from the
assumptions set forth above, which would result in a different actual
Conversion Number.
(4) Omnicare's Historical and Pro Forma Dividends per share amounts are the
same.
25
<PAGE>
THE MERGER
BACKGROUND OF THE MERGER
The terms of the Merger Agreement are the result of arm's-length
negotiations between IBAH and Omnicare. The following is a discussion of the
background of these negotiations, the Merger and related transactions.
In the fall of 1996 though early 1997, representatives of IBAH had separate
discussions with a number of financial advisors regarding various strategies for
IBAH. During this time, IBAH became increasingly focused on the importance of
maintaining a leadership position in the contract research services industry as
a stand-alone entity or through a business combination.
In the fall of 1997, representatives of IBAH met with Salomon Smith Barney
to discuss generally financing and other strategic alternatives potentially
available to IBAH. On November 24, 1997, IBAH retained Salomon Smith Barney to
act as a financial advisor in connection with evaluating and recommending
financial and strategic alternatives with respect to potential business
transactions.
In November 1997, representatives of IBAH and representatives of another
company (the "Other Party") met to discuss their respective businesses and
opportunities for collaborations between the companies, in particular, in the
pharmaceutics area. IBAH entered into a confidentiality agreement with the Other
Party in early December.
Salomon Smith Barney contacted Omnicare in late November 1997 to discuss
whether IBAH and Omnicare had similar strategic views for future health care
market evolution and whether there might be opportunities for collaboration. As
a result, in late December 1997, representatives of IBAH met with
representatives of Omnicare to explore the possibility of collaborative
opportunities. IBAH and Omnicare entered into a confidentiality agreement in
December 1997.
During January 1998, representatives of IBAH met with the Other Party and
began discussions regarding a potential acquisition of IBAH by the Other Party.
The Other Party indicated that it would be willing to pay approximately $5.50
market value in its shares for each outstanding IBAH Common Share, in a
stock-for-stock merger transaction, subject to due diligence and other
conditions.
During January 1998, representatives of IBAH and Omnicare began discussions
regarding a potential acquisition of IBAH by Omnicare. Omnicare indicated to
IBAH's financial advisor that it might be willing to pay approximately $4.75 to
$5.00 market value in Omnicare Shares for each outstanding IBAH Common Share,
subject to due diligence and other conditions. IBAH's advisor indicated to
Omnicare that this range did not represent sufficient value.
On January 29, 1998, members of the Executive Committee of the IBAH Board
met separately with representatives of Salomon Smith Barney and two other
investment banks to discuss IBAH's alternatives as an independent company, as an
acquiror and as an acquisition candidate. The Committee and IBAH's advisors
discussed certain specific potential acquirors, including Omnicare and the Other
Party, in addition to general strategic options.
During February 1998, Salomon Smith Barney continued to contact selected
potential buyers to inquire whether these companies would have an interest in
further discussions relating to a possible transaction with IBAH. In late
February, Omnicare indicated that it would be willing to pay approximately $5.50
market value in Omnicare Shares for each outstanding IBAH Common Share, subject
to due diligence and other conditions.
In late February 1998, representatives of the Other Party and IBAH each
began conducting due diligence on one another. In late February, the Other Party
indicated it would be willing to pay approximately $6.00 market value in its
shares for each outstanding IBAH Common Share. The due diligence process
continued through mid-March 1998. During the period of mid-February through mid-
26
<PAGE>
March, management of IBAH and members of the IBAH Board regularly discussed
various acquisition alternatives and strategic options for IBAH.
In early through late March 1998, representatives of Omnicare and IBAH met
to conduct due diligence. The parties continued discussions of the terms of a
possible business combination.
On March 16, 1998, at a regular meeting of the IBAH Board, the IBAH Board
reviewed the status of the Omnicare negotiations, as well as other potential
transactions and strategic options. The IBAH Board directed management of IBAH
to continue due diligence with Omnicare and the Other Party and to continue
evaluating these and any new potential transactions.
Due diligence and discussions of the terms of a possible business
combination (including the terms of a possible merger agreement) continued with
Omnicare and the Other Party.
In late March 1998, the IBAH Board received an unsolicited proposal from a
third party which was not competitive with terms discussed with the Other Party
or Omnicare. Accordingly, the IBAH Board instructed management not to pursue
this proposal.
On March 27, 1998, the IBAH Board met to consider the terms of the proposed
business combination with Omnicare and with the Other Party. At this meeting,
Salomon Smith Barney made a presentation to the IBAH Board regarding Omnicare
and the Other Party. Based on the relative advantages and disadvantages of the
two proposed business combinations including, among other things, the short- and
long-term stock performance of the potential acquirors, the accretive or
dilutive effect of the acquisition on the potential acquirors' stocks, the
relative liquidity in the potential acquirors' stocks, the long-term prospects
of the combined entity and potential synergies, the IBAH Board authorized
representatives of IBAH to proceed with negotiations with Omnicare to determine
whether an agreement could be negotiated on terms acceptable to the IBAH Board.
Between March 28, 1998 and March 30, 1998, representatives of IBAH and
Omnicare negotiated the terms of the Merger Agreement and related agreements. As
a result of these discussions, Omnicare increased the market value of the
Omnicare Shares it was prepared to issue for each IBAH Common Share from $5.50
to $5.75.
In the afternoon of March 30, 1998, the IBAH Board held a special meeting to
consider the terms of the Merger Agreement and the related agreements. At this
meeting, Salomon Smith Barney made a presentation to the IBAH Board on the
financial terms of the Merger which included the opinion of Salomon Smith Barney
that, as of the date of such opinion and based upon and subject to certain
matters stated therein, the consideration to be received by the holders of IBAH
Common Shares pursuant to the Merger Agreement was fair, from a financial point
of view, to such holders. The IBAH Board unanimously approved the Merger as
being in the best interests of IBAH and its stockholders for the reasons set
forth under "THE MERGER--Reasons for the Merger" and approved the execution of
the Merger Agreement and the related agreements, including the Stock Option
Agreement. The IBAH Board then directed that the Merger Agreement be submitted
to a vote of IBAH's stockholders with the recommendation that it be approved.
On March 30, 1998, the Omnicare Board met to consider the proposed
transaction. Following presentations regarding IBAH, the Merger Agreement and
related documents, the Omnicare Board unanimously approved the execution of the
Merger Agreement and related documents.
IBAH and Omnicare then entered into the definitive Merger Agreement and the
Stock Option Agreement, Omnicare and certain IBAH stockholders entered into the
Voting Agreement and certain holders of IBAH Preferred Shares and IBAH Warrants
executed consents to the treatment of such securities in the Merger. On March
31, 1998, IBAH and Omnicare issued a joint press release announcing the
execution of the Merger Agreement.
27
<PAGE>
REASONS FOR THE MERGER
IBAH. THE IBAH BOARD HAS UNANIMOUSLY DETERMINED THAT THE MERGER IS FAIR TO
AND IN THE BEST INTERESTS OF IBAH AND ITS STOCKHOLDERS. THE IBAH BOARD
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND RECOMMENDS TO ITS STOCKHOLDERS
THAT THEY VOTE FOR THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT. THE IBAH
BOARD BELIEVES THAT IBAH AND ITS STOCKHOLDERS WILL BENEFIT FROM THE MERGER.
The IBAH Board consulted with Salomon Smith Barney and IBAH's legal advisors
and management in reaching this determination. The IBAH Board believes that the
business combination with Omnicare will facilitate IBAH's growth by enhancing
IBAH's financial stability and clinical trial and data warehousing capabilities,
enhancing its relationships within the pharmaceutical industry and creating a
more significant presence in the contract research services industry through
Omnicare's commitment to the expansion of its contract research business. At its
meeting on March 30, 1998, the IBAH Board unanimously determined that the Merger
Agreement was fair to and in the best interests of IBAH and its stockholders and
recommended that the holders of the IBAH Shares approve and adopt the Merger
Agreement. The IBAH Board also approved the Stock Option Agreement.
In reaching these conclusions, the IBAH Board considered the following
material factors:
(i) The IBAH Board's knowledge of IBAH's business, operations, assets,
financial performance and condition, operating results and prospects including,
in particular, IBAH's ability to grow competitively and add services and expand
geographically, in light of Omnicare's substantially greater resources, compared
to IBAH's projected future financial performance as a stand-alone entity.
Specifically, the IBAH Board considered that the Merger would (a) enhance IBAH's
financial stability and provide access to less expensive capital to finance
IBAH's growth and expansion, (b) open new opportunities for provision of IBAH's
services, (c) enhance the design and development of products that address the
diseases of an aging population by providing IBAH with access to a large and
unique pool of patient information that comprises a significant population of
the elderly and (d) enable IBAH to provide enhanced services to customers
through the utilization of Omnicare's data warehousing capabilities;
(ii) The IBAH Board's belief that larger, more diversified companies with
greater scale, scope and financial resources will be better able to compete
effectively in the rapidly changing and competitive contract research services
industry, coupled with Omnicare's commitment to building a leading presence in
the industry;
(iii) The IBAH Board's judgment as to the current and future prospects of
the clinical research services industry, economic and market conditions and
trends, including the likelihood of continuing consolidation and increasing
competition in contract research services for the pharmaceutical and
biotechnology industries (and the corresponding decrease in the number of
suitable merger partners for IBAH);
(iv) The IBAH Board's belief that the Merger might provide for synergies not
available to IBAH as a stand-alone company;
(v) Alternate transactions including, among others, continuing to operate
IBAH as an independent public company, merging with a strategic partner in the
contract research services industry or being acquired by a financial buyer. The
IBAH Board believed that (a) remaining an independent public company would
restrict IBAH's ability to offer additional services and continue to expand
geographically given its current resources, (b) the business combination with
Omnicare would provide a greater opportunity to maximize stockholder value as
compared to a transaction with other potential acquirors or business combination
partners and (c) a leveraged transaction with a financial buyer would limit
IBAH's ability to grow;
(vi) The presentation of Salomon Smith Barney and the opinion of Salomon
Smith Barney that, as of the date of such opinion and based upon and subject to
certain matters stated therein, the consideration to be received by the holders
of IBAH Common Shares pursuant to the Merger Agreement was fair, from a
28
<PAGE>
financial point of view, to such holders. See "THE MERGER--Opinion of IBAH's
Financial Advisor" for a discussion of the factors Salomon Smith Barney
considered in rendering its opinion. A copy of Salomon Smith Barney's written
opinion dated March 30, 1998, which sets forth the assumptions made, matters
considered and limitations on the review undertaken by Salomon Smith Barney, is
attached as Appendix E to this Proxy Statement/Prospectus;
(vii) The fact that the consideration to be received by IBAH's stockholders
represents an approximately 52% premium over the average closing price of IBAH
Common Shares for the four weeks prior to the date of the Merger Agreement;
(viii) The current and historical market prices of IBAH Common Shares and
Omnicare Shares, as well as Omnicare's prospects for future growth;
(ix) The views of IBAH's management that Omnicare represented an attractive
strategic merger partner for IBAH and that Omnicare is a proven leader and
innovator in the institutional pharmacy industry with a strong record of
consistent earnings growth and stock price appreciation, and that IBAH's
relationships with suppliers, customers and potential customers could be
strengthened through Omnicare's established relationships within the
pharmaceutical industry;
(x) The interests of IBAH's customers, which the IBAH Board believed would
be best served by a merger with a strategic partner such as Omnicare that could
offer such customers various value-added services, such as access to a
significant amount of clinical data on the geriatric population, the ability to
expedite the process of identifying potential elderly patients who could be
offered access to clinical studies and Omnicare's existing knowledge base of
geriatric pharmaceutical care;
(xi) Omnicare's intention to expand IBAH's business, and the resulting
increased opportunities for IBAH's employees and the benefits to the communities
in which IBAH's facilities are located;
(xii) The terms and conditions of the Merger Agreement, the Stock Option
Agreement, the Voting Agreement and the consents of the holders of IBAH
Preferred Shares and IBAH Warrants, including the representations and warranties
made by Omnicare and lack of significant regulatory approvals needed to
consummate the Merger. The IBAH Board considered in particular the
"no-solicitation" provision of the Merger Agreement, the circumstances under
which the Merger Agreement could be terminated (including by IBAH in order to
execute an acquisition agreement with a third party under certain circumstances)
and the amounts which might be payable upon the termination of the Merger
Agreement (under certain specified circumstances IBAH could be required to pay
Omnicare up to an aggregate of $8.366 million). See "THE MERGER AGREEMENT AND
RELATED AGREEMENTS." The IBAH Board considered the impact of these agreements on
IBAH's ability to negotiate with any third parties who might express an interest
in acquiring IBAH; and
(xiii) The expectation that the Merger will qualify as a reorganization for
federal income tax purposes, thereby generally not requiring IBAH's stockholders
to recognize gain on the exchange of their shares for Omnicare Shares in the
Merger. See "THE MERGER--Certain Federal Income Tax Consequences of the Merger."
In reaching its decision to approve the Merger and to recommend that IBAH's
stockholders approve and adopt the Merger Agreement, the IBAH Board did not
assign any relative or specific weight to the various factors considered and
individual directors may have given differing weight to different factors. There
can be no assurances that the expected benefits of the Merger will be realized.
See "RISK FACTORS."
FOR THE REASONS DISCUSSED ABOVE, THE IBAH BOARD HAS UNANIMOUSLY DETERMINED
THAT THE TERMS OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY
ARE FAIR TO, AND IN THE BESTS INTERESTS OF, IBAH AND ITS STOCKHOLDERS.
ACCORDINGLY, THE IBAH BOARD RECOMMENDS THAT IBAH'S STOCKHOLDERS VOTE FOR THE
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
29
<PAGE>
OMNICARE. The Omnicare Board of Directors (the "Omnicare Board") believes
that the acquisition of IBAH is fair to and in the best interest of Omnicare and
its stockholders. In reaching such determination, the Omnicare Board considered
the following material factors:
(i) Omnicare's review of IBAH, including its business, operations,
management, earnings and financial condition on a historical and prospective
basis;
(ii) the terms and conditions of the Merger Agreement including, without
limitation, provisions relating to the number of Omnicare Shares to be issued in
the Merger and the conditions to the consummation of the Merger;
(iii) its belief that the Merger will significantly expand Omnicare's
contract research services and substantially strengthen its research
capabilities, both domestically and in international markets;
(iv) the potential to leverage Omnicare's existing assets, including its
geriatric pharmaceutical drug formulary, its large geriatric patient base and
its ability to capture data for disease and outcomes management analysis;
(v) the business reputation and experience of IBAH's management, and the
employment, consulting and non-competition agreements to be entered into with
IBAH management in connection with the Merger; and
(vi) the expectation that the Merger will be treated as a reorganization for
federal income tax purposes and will be accounted for as a "pooling of
interests."
After reviewing the factors described above in their totality, the Omnicare
Board determined that the Merger is in the best interests of Omnicare and its
stockholders. In view of the variety of factors considered in connection with
its evaluation of the Merger, the Omnicare Board found it impractical to, and
did not, quantify or attempt to assign relative weight to the specific factors
considered in reaching its determination. There can be no assurances that the
expected benefits of the Merger will be realized. See "RISK FACTORS."
OPINION OF IBAH'S FINANCIAL ADVISOR
In connection with Salomon Smith Barney's engagement as financial advisor,
IBAH requested that Salomon Smith Barney evaluate the fairness, from a financial
point of view, to holders of IBAH Common Shares of the consideration to be
received by such holders pursuant to the terms of the proposed merger. On March
30, 1998, at a meeting of the IBAH Board held to evaluate the Merger, Salomon
Smith Barney delivered its opinion to the IBAH Board to the effect that, as of
the date of such opinion and based upon and subject to certain matters stated
therein, the consideration to be received by the holders of IBAH Common Shares
was fair, from a financial point of view, to such holders.
In arriving at its opinion dated March 30, 1998, Salomon Smith Barney
reviewed a draft of the Merger Agreement and held discussions with certain
senior officers, directors and other representatives and advisors of IBAH and
certain senior officers and other representatives and advisors of Omnicare
concerning the businesses, operations and prospects of IBAH and Omnicare.
Salomon Smith Barney examined certain publicly available business and financial
information relating to IBAH and Omnicare as well as certain financial forecasts
for IBAH and other information and data for IBAH and Omnicare which were
provided to or otherwise discussed with Salomon Smith Barney by the respective
managements of IBAH and Omnicare, including information relating to certain
strategic implications and operational benefits anticipated to result from the
Merger. Salomon Smith Barney reviewed the financial terms of the Merger as set
forth in the Merger Agreement in relation to, among other things: (i) current
and historical market price and trading volume of IBAH Common Shares and
Omnicare Shares; (ii) the historical and projected earnings and other operating
data of IBAH and Omnicare; and (iii) the capitalization and financial condition
of IBAH and Omnicare. Salomon Smith Barney also considered, to the extent
publicly
30
<PAGE>
available, the financial terms of certain other similar transactions recently
effected which Salomon Smith Barney considered relevant in evaluating the Merger
and analyzed certain financial, stock market and other publicly available
information relating to the businesses of other companies whose operations
Salomon Smith Barney considered relevant in evaluating those of IBAH and
Omnicare. Salomon Smith Barney also evaluated the potential pro forma financial
impact of the Merger on Omnicare. In addition to the foregoing, Salomon Smith
Barney conducted such other analyses and examinations and considered such other
financial, economic and market criteria as Salomon Smith Barney deemed
appropriate in arriving at its opinion. Salomon Smith Barney noted that its
opinion was necessarily based upon information available, and financial, stock
market and other conditions and circumstances existing and disclosed to Salomon
Smith Barney, as of the date of its opinion.
In rendering its opinion dated March 30, 1998, Salomon Smith Barney assumed
and relied, without independent verification, upon the accuracy and completeness
of all financial and other information and data publicly available or furnished
to or otherwise reviewed by or discussed with Salomon Smith Barney. Salomon
Smith Barney also assumed, with the consent of the IBAH Board, that the final
terms of the Merger Agreement reviewed by Salomon Smith Barney in draft form
would not vary materially from the draft reviewed by Salomon Smith Barney. With
respect to financial forecasts and other information and data furnished to or
otherwise reviewed by or discussed with Salomon Smith Barney, IBAH's management
advised Salomon Smith Barney that such forecasts and other information and data
were reasonably prepared on bases reflecting the best currently available
estimates and judgments of the managements of IBAH and Omnicare as to the future
financial performance of IBAH and Omnicare and the strategic implications and
operational benefits anticipated to result from the Merger. Salomon Smith Barney
assumed with the consent of the IBAH Board that the Merger would qualify as a
tax-free reorganization for federal income tax purposes and would be accounted
for as a "pooling of interests" for financial accounting purposes. Salomon Smith
Barney's opinion, as set forth therein, relates to the relative values of IBAH
and Omnicare. Salomon Smith Barney did not express any opinion as to what the
value of the Omnicare Shares actually will be when issued pursuant to the Merger
or the price at which the Omnicare Shares will trade subsequent to the
consummation of the Merger. Salomon Smith Barney did not make and was not
provided with an independent evaluation or appraisal of the assets or
liabilities (contingent or otherwise) of IBAH or Omnicare nor did Salomon Smith
Barney make any physical inspection of the properties or assets of IBAH or
Omnicare. No other limitations were imposed by IBAH on Salomon Smith Barney with
respect to the investigations made or procedures followed by Salomon Smith
Barney in rendering its opinion.
In preparing its opinion to the IBAH Board, Salomon Smith Barney performed a
variety of financial and comparative analyses, including those described below.
The summary of such analyses does not purport to be a complete description of
the analyses underlying Salomon Smith Barney's opinion. The preparation of a
financial opinion is a complex analytic process involving various determinations
as to the most appropriate and relevant methods of financial analyses and the
application of those methods to the particular circumstances and, therefore,
such an opinion is not readily susceptible to summary description. Salomon Smith
Barney believes that its analyses must be considered as a whole and that
selecting portions of such analyses or any of the individual factors considered,
without considering all analyses and factors, could create a misleading or
incomplete view of the processes underlying such analyses and its opinion. In
its analyses, Salomon Smith Barney made numerous assumptions with respect to
IBAH, Omnicare, industry performance, general business, economic, market and
financial conditions and other matters, many of which are beyond the control of
IBAH and Omnicare. The estimates contained in such analyses and the valuation
ranges resulting from any particular analysis are not necessarily indicative of
actual values or predictive of future results or values, which may be
significantly more or less favorable than those suggested by such analyses. In
addition, analyses relating to the value of businesses or securities do not
purport to be appraisals or to reflect the prices at which businesses or
securities actually may be sold. Accordingly, such analyses and estimates are
inherently subject to substantial uncertainty. Salomon Smith Barney's opinion
dated March 30, 1998 and its financial analyses were only one of many factors
considered
31
<PAGE>
by the IBAH Board in its evaluation of the Merger and should not be viewed as
determinative of the views of the IBAH Board or management with respect to the
Merger.
The following is a summary of the material financial analyses performed by
Salomon Smith Barney in connection with its opinion dated March 30, 1998:
SELECTED PUBLIC COMPANY ANALYSIS. Using publicly available information,
Salomon Smith Barney analyzed, among other things, the market values and trading
multiples of IBAH and a number of selected publicly traded clinical research
organizations. From these public companies, Salomon Smith Barney identified the
following companies that it believed to be the most comparable to IBAH: Applied
Analytical Industries, Inc., BioReliance Corporation, Covance Inc., Kendle
International, Inc., Pharmaceutical Product Development, Inc. and Phoenix
International Life Sciences, Inc. (collectively, the "Selected Companies").
Salomon Smith Barney compared, among other things, market values of the Selected
Companies as multiples of, among other things, last twelve months ("LTM")
earnings before interest, taxes, depreciation and amortization ("EBITDA"),
estimated 1998 net income and estimated 1999 net income. All multiples were
based on closing stock prices as of March 27, 1998. Applying a range of selected
multiples for the Selected Companies of LTM EBITDA, estimated 1998 net income
and estimated 1999 net income of 12.4x to 22.4x, 22.3x to 44.4x and 17.1x to
32.4, respectively, to the 1997 EBITDA, 1998 estimated net income and 1999
estimated net income for IBAH resulted in an average equity reference range for
IBAH Common Shares of approximately $3.58 to $6.83 per share on a diluted basis.
Net income projections for IBAH were based on estimates of IBAH's management,
and net income projections for the Selected Companies were based on estimates of
certain investment banking firms.
SELECTED PRECEDENT TRANSACTIONS ANALYSIS. Using publicly available
information, Salomon Smith Barney analyzed the purchase price and implied
transaction multiples paid in nine selected precedent transactions consisting of
(target/acquiror): MIRAI B.V. & LOGOS GmbH/PAREXEL International; ACER/EXCEL,
Inc./Kendle International, Inc.; GMI Gesellschaft fur/Kendle International,
Inc.; Coromed, Inc./Omnicare; BRI International Inc./Quintiles Transnational
Corporation; Innovex Holdings Ltd./Quintiles Transnational Corporation; Harris
Laboratories, Inc./MDS Health Group Ltd.; Applied Bioscience International,
Inc./Pharmaceutical Product Development, Inc.; and CliniTrials Research, Inc./
Bio-Research Laboratories Ltd. (collectively, the "Selected Transactions").
Salomon Smith Barney compared the purchase prices in such transactions as
multiples of, among other things: LTM revenues; LTM EBITDA; LTM earnings before
interest and taxes ("EBIT"); and LTM net income. All multiples for the Selected
Transactions were based on publicly available information. Applying a range of
selected multiples for the Selected Transactions (other than the Innovex
Holdings Ltd./Quintiles Transnational Corporation transaction) of LTM revenues,
LTM EBITDA, LTM EBIT and LTM net income of .98x to 2.90x, 12.2x to 25.7x, 17.9
to 35.7x and 8.6x to 24.1x, respectively, to the 1997 revenues, 1997 EBITDA,
1997 EBIT and 1997 net income for IBAH resulted in an average equity reference
range for IBAH Common Shares of approximately $1.97 to $4.96 per share on a
diluted basis. The multiples for the Innovex Holdings Ltd./ Quintiles
Transnational Corporation transaction were excluded from the calculation of the
range of multiples because the multiples for that transaction differed
significantly from those for the other Selected Transactions.
No company, business or transaction used as a comparison in the "Selected
Public Company Analysis" or "Selected Precedent Transactions Analysis" is
identical to IBAH, Omnicare or the Merger. Accordingly, an analysis of the
results of the foregoing is not entirely mathematical; rather, it involves
complex considerations and judgments concerning differences in financial and
operating characteristics and other factors that could affect the acquisition,
public trading or other values of the Selected Companies, Selected Transactions
or the business segment, company or transaction to which they are being
compared.
DISCOUNTED CASH FLOW ANALYSIS. Salomon Smith Barney performed a discounted
cash flow analysis of the projected free cash flow of IBAH for fiscal years 1998
through 2001, based on internal estimates of IBAH's management. The range of the
estimated terminal value for IBAH at the end of the four-year
32
<PAGE>
period was calculated by applying terminal multiples ranging from 7.0x to 9.0x
to IBAH's projected 2001 EBITDA, representing IBAH's estimated terminal value at
December 31, 2001. The terminal value of IBAH and projected free cash flow of
IBAH for the four-year period were discounted to January 1, 1998 using rates
ranging from 14.0% to 18.0%. This analysis using a 16.0% discount rate resulted
in an equity reference range for IBAH Common Shares of approximately $5.09 to
$6.44 per share on a diluted basis.
OTHER FACTORS AND COMPARATIVE ANALYSES. In rendering its opinion, Salomon
Smith Barney considered certain other factors and conducted certain other
comparative analyses including, among other things, a review of: (i) the impact
on the estimated Omnicare earnings per share from the addition of the estimated
IBAH earnings per share and the issuance of Omnicare Shares in the Merger; (ii)
the historical and projected financial results of IBAH and Omnicare; (iii) the
comparative historical trading prices and volumes for IBAH Common Shares and
Omnicare Shares; and (iv) the pro forma ownership of the combined company.
Pursuant to the terms of Salomon Smith Barney's engagement, IBAH has agreed
to pay Salomon Smith Barney an aggregate financial advisory fee of approximately
$2.2 million (assuming a market value of $5.75 of Omnicare Shares received for
each IBAH Common Share in the Merger), a substantial portion of which is
contingent upon the consummation of the Merger. IBAH has also agreed to
reimburse Salomon Smith Barney for reasonable travel and other reasonable
out-of-pocket expenses incurred by Salomon Smith Barney in performing its
services, including the reasonable fees and expenses of its legal counsel and to
indemnify Salomon Smith Barney and related persons against certain liabilities,
including liabilities under the federal securities laws, arising out of Salomon
Smith Barney's engagement.
Salomon Smith Barney has advised IBAH that, in the ordinary course of
business, Salomon Smith Barney and its affiliates may actively trade or hold the
securities of IBAH and Omnicare for their own account or for the account of
customers and, accordingly, may at any time hold a long or short position in
such securities. Salomon Smith Barney has in the past provided certain
investment banking services to Omnicare unrelated to the Merger, for which
services Salomon Smith Barney has received compensation. In addition, Salomon
Smith Barney and its affiliates (including Travelers Group Inc. and its
affiliates) may maintain relationships with IBAH and Omnicare.
Salomon Smith Barney is a nationally recognized investment banking firm and
was selected by IBAH based on Salomon Smith Barney's experience, expertise and
familiarity with IBAH and its business. Salomon Smith Barney regularly engages
in the valuation of businesses and their securities in connection with mergers
and acquisitions, negotiated underwritings, competitive bids, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes.
THE FULL TEXT OF THE WRITTEN OPINION OF SALOMON SMITH BARNEY, DATED MARCH
30, 1998, WHICH SETS FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND
LIMITATIONS ON THE REVIEW UNDERTAKEN, IS ATTACHED HERETO AS APPENDIX E AND IS
INCORPORATED HEREIN BY REFERENCE. SALOMON SMITH BARNEY HAS CONSENTED TO THE USE
OF ITS OPINION IN THIS PROXY STATEMENT/PROSPECTUS. HOLDERS OF IBAH COMMON SHARES
ARE URGED TO READ THIS OPINION CAREFULLY IN ITS ENTIRETY. SALOMON SMITH BARNEY'S
OPINION IS DIRECTED TO THE IBAH BOARD AND RELATES ONLY TO THE FAIRNESS OF THE
CONSIDERATION TO BE RECEIVED FROM A FINANCIAL POINT OF VIEW TO HOLDERS OF IBAH
COMMON SHARES AND DOES NOT ADDRESS ANY OTHER ASPECT OF THE MERGER OR RELATED
TRANSACTIONS AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER AS TO
HOW SUCH STOCKHOLDER SHOULD VOTE AT THE SPECIAL MEETING. THE SUMMARY OF THE
OPINION OF SALOMON SMITH BARNEY SET FORTH IN THIS PROXY STATEMENT/ PROSPECTUS IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION.
33
<PAGE>
ACCOUNTING TREATMENT OF THE MERGER
Omnicare and IBAH believe that the Merger will qualify as a "pooling of
interests" for accounting and financial reporting purposes, and have been so
advised by their respective independent public accountants. The unaudited pro
forma financial information contained in this Proxy Statement/Prospectus has
been prepared using the "pooling of interests" accounting method to account for
the Merger. See "UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION."
The obligations of IBAH and Omnicare to consummate the Merger are subject to
(i) receipt of a letter from Price Waterhouse LLP, independent public
accountants for Omnicare, to the effect that Omnicare and the Merger and
transactions contemplated thereby qualify for "pooling of interests" accounting
treatment and (ii) receipt of a letter from Arthur Andersen LLP, independent
public accountants for IBAH, to the effect that IBAH will qualify as a
"combining company" as required for "pooling of interests" accounting treatment.
In addition, both Omnicare and IBAH have agreed not to take any action or fail
to take any action that would jeopardize the treatment of the Merger as a
"pooling of interests".
GOVERNMENTAL AND REGULATORY APPROVALS
Under the HSR Act, and the rules promulgated thereunder by the FTC, the
Merger cannot be consummated until notifications have been given and certain
information has been furnished to the FTC and the Antitrust Division and
specified waiting period requirements have been satisfied. The parties completed
their required filings by May 7, 1998 and have received early termination of the
waiting period.
At any time before or after consummation of the Merger, the Antitrust
Division or the FTC or any state could take such action under the antitrust laws
as it deems necessary or desirable in the public interest, including seeking to
enjoin the consummation of the Merger or seeking divestiture of substantial
assets of Omnicare or IBAH. Private parties may also seek to take legal action
under the antitrust laws under certain circumstances.
INTERESTS OF CERTAIN PERSONS IN THE MERGER; POSSIBLE CONFLICTS OF INTEREST
In considering the approval by the IBAH Board of the Merger, IBAH
stockholders should be aware that the members of the IBAH Board and senior
management of IBAH have certain interests in, and will receive benefits from,
the Merger that are in addition to, and differ from, the interests of, and
benefits to, IBAH stockholders generally. No director or executive officer of
IBAH had or is expected to have a business relationship with Omnicare prior to
the Effective Time.
NOMINATION FOR ELECTION AS A DIRECTOR OF THE OMNICARE BOARD
At the Effective Time, Omnicare shall include Geraldine A. Henwood, director
and Chief Executive Officer of IBAH and a major stockholder of IBAH, in its
program under which certain nominations for membership on the Omnicare Board are
on occasion rotated among senior operating executives of Omnicare and its
subsidiaries. Subject to the prior consummation of the Merger, Geraldine A.
Henwood will be nominated by Omnicare for election as a director of the Omnicare
Board at Omnicare's 1999 annual meeting of stockholders.
IBAH STOCK OPTIONS
Certain of IBAH's directors and executive officers have previously been
granted options to purchase IBAH Common Shares. As of the Record Date, directors
and executive officers of IBAH held options to purchase an aggregate of
1,621,827 IBAH Common Shares, including options to purchase an aggregate of
286,000 IBAH Common Shares held by non-employee directors. Such options are
exercisable for various periods through March 2008, at prices ranging from $0.12
to $7.75 per share. In the event that the Merger is consummated, a number of
IBAH Options held by certain IBAH executive officers will be cancelled
34
<PAGE>
immediately prior to the Merger. IBAH Options held by certain IBAH executive
officers to purchase an aggregate of 114,000 IBAH Common Shares will become
fully vested upon the consummation of the Merger in accordance with the terms of
such IBAH Options as follows:
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
- --------------------------------------------------------------------------- -----------------
<S> <C>
Mark K. Brunhofer.......................................................... 6,250
John H. Dillon, II......................................................... 10,250
Geraldine A. Henwood....................................................... 32,500
Cornelius H. Lansing, II................................................... 25,000
John Santoro............................................................... 7,500
Leonard F. Stigliano....................................................... 7,500
Rudi Weekers............................................................... 25,000
</TABLE>
IBAH EMPLOYMENT AGREEMENTS
As of the Closing Date, IBAH will enter into an employment agreement with
Ms. Henwood that provides that Ms. Henwood will serve IBAH as its Chief
Executive Officer for a term of five years, subject to earlier termination as
provided in the employment agreement. The employment agreement sets forth a
minimum base salary of $290,000, subject to increase by IBAH in accordance with
its policies, and provides for Ms. Henwood's participation in all of IBAH's
employee benefit plans generally available to its employees, as well as six
weeks of paid vacation. The employment agreement provides that in the event Ms.
Henwood's employment is terminated by IBAH other than for "cause" (as defined in
the employment agreement), Ms. Henwood will be entitled to continued payment of
her base salary at the time of termination and continued coverage under all of
IBAH's medical and life insurance plans for the then-remaining term of the
employment agreement. The employment agreement includes certain restrictive
covenants for the benefit of IBAH relating to (i) nondisclosure of IBAH's
confidential business information, (ii) IBAH's right to business and inventions,
(iii) nonsolicitation of IBAH's employees, customers and clients, and (iv)
noncompetition with IBAH's business.
Additionally, in connection with the Merger, it is anticipated that Messrs.
Santoro, Stigliano and Weekers will enter into employment agreements with IBAH,
under which they will provide services to IBAH following the Merger. The terms
of these agreements have not yet been determined.
Certain executive officers of IBAH have provisions in existing employment
agreements that may be triggered upon a change of control of IBAH, including the
Merger. IBAH's employment agreement with Cornelius H. Lansing, II, Chief
Financial Officer, provides that if the agreement is terminated without cause or
due to a change of control, Mr. Lansing is entitled to receive his base salary
(approximately $170,000 annually) for one year after termination. IBAH's
employment agreement with Rudi Weekers, President, International CRO, provides
that if the agreement is terminated without cause, Mr. Weekers is entitled to
receive his base salary (DM 428,408 annually, or approximately U.S. $239,000
based on exchange rates on April 21, 1998) through the end of the calendar
quarter of the termination notice plus an additional six months' base salary.
IBAH's employment agreement with Leonard F. Stigliano, President, U.S. CRO,
provides that if the agreement is terminated without cause, or as a result of
management changes, a merger or acquisition or incompatibility, Mr. Stigliano is
entitled to receive his base salary (approximately $235,000 annually) for one
year after termination, reduced by payments received from a subsequent employer
during such period. IBAH's employment agreement with Sidney Jevons, Ph.D.,
Chairman, U.K., Executive Vice President, International Development and a
director, provides that if the agreement is terminated without cause, Dr. Jevons
is entitled to his base salary (L138,000, or approximately U.S. $231,000 based
on exchange rates on April 21, 1998) for six months after termination and to
continue to participate in standard bonus and benefit plans of IBAH during such
period. IBAH's employment agreement with John H. Dillon, II, Executive Vice
President, Worldwide Corporate Development, provides that if the agreement is
terminated without cause, Mr. Dillon is entitled to receive his base salary
35
<PAGE>
(approximately $189,000 annually) for six months after such termination. Mark K.
Brunhofer, Corporate Controller, has an agreement with IBAH that if his
employment is terminated due to a change in control of IBAH, he is entitled to
receive his base salary (approximately $112,000 annually) for six months after
termination.
INDEMNIFICATION OF OFFICERS AND DIRECTORS OF IBAH
Omnicare has agreed that following the Merger it will cause IBAH, as the
Surviving Corporation, to indemnify the officers and directors of IBAH against
liability for acts undertaken by such persons during their tenure as officers
and directors and to maintain the current policies of directors and officers
liability insurance, all as set forth in the Merger Agreement. These interests
and benefits may constitute potential conflicts of interest with IBAH's
stockholders in the negotiation, approval and consummation of the Merger.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following discussion summarizes the material federal income tax
considerations generally applicable to holders of IBAH Shares. It is a condition
to the obligation of Omnicare to consummate the Merger that Omnicare shall have
received an opinion of Dewey Ballantine LLP, in form and substance reasonably
satisfactory to Omnicare, and it is a condition to the obligation of IBAH to
consummate the Merger that IBAH shall have received an opinion of Morgan, Lewis
& Bockius LLP, in form and substance reasonably satisfactory to IBAH, in each
case dated as of the Closing Date and based on reasonably requested
representations contained in certificates of Omnicare, IBAH and Sub, to the
effect that the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code and that IBAH, Omnicare and Sub will each be a party
to that reorganization within the meaning of Section 368(b) of the Code. The
discussion below under "--Exchange of IBAH Shares for Omnicare Shares," "--Cash
Received in Lieu of Fractional Shares" and "--Reporting Requirements" assumes
that the Merger will be treated in accordance with the opinions of Dewey
Ballantine LLP and Morgan, Lewis & Bockius LLP described in the preceding
sentence. There can be no assurance that the Internal Revenue Service (the
"IRS") will not take a contrary view, and no ruling from the IRS has been or
will be sought.
The discussion below is based upon the Code, the applicable Treasury
Department regulations thereunder, judicial authority and current administrative
rulings and practice, all as in effect as of the date hereof. Future
legislative, judicial or administrative changes or interpretations could alter
or modify the statements and conclusions set forth herein, and any such changes
or interpretations could have retroactive effect and could affect the federal
income tax consequences to holders of IBAH Shares.
The following discussion does not address the consequences of the Merger
under state, local or foreign law nor does the discussion address all aspects of
federal income taxation that may be important to an IBAH stockholder in light of
such stockholder's particular circumstances or to stockholders subject to
special rules including, without limitation, financial institutions, insurance
companies, foreign individuals and entities, tax-exempt entities, dealers in
securities, persons who acquired IBAH Shares pursuant to the exercise of an
employee option (or otherwise as compensation) or persons holding IBAH Shares as
part of an integrated investment (including a "straddle") comprised of IBAH
Shares and one or more other positions. This discussion assumes that IBAH
stockholders hold their respective IBAH Shares as capital assets within the
meaning of Section 1221 of the Code.
EXCHANGE OF IBAH SHARES FOR OMNICARE SHARES. Except as discussed below
under "--Cash Received in Lieu of Fractional Shares," no gain or loss will be
recognized for federal income tax purposes by holders of IBAH Shares who
exchange their IBAH Shares for Omnicare Shares pursuant to the Merger. The
aggregate tax basis of Omnicare Shares received as a result of the Merger will
be the same as the stockholder's aggregate tax basis in the IBAH Shares
surrendered in the exchange (reduced by any tax
36
<PAGE>
basis allocable to fractional shares exchanged for cash) and the holding period
of the Omnicare Shares received will include the holding period of the IBAH
Shares surrendered therefor.
CASH RECEIVED IN LIEU OF FRACTIONAL SHARES. The payment of cash to a holder
of IBAH Shares in lieu of a fractional share interest in Omnicare Shares will be
treated as if the fractional share had been distributed as part of the exchange
and then redeemed by Omnicare. The cash payment will be treated as having been
received as a distribution in payment for the Omnicare Shares hypothetically
redeemed as provided in Section 302 of the Code and generally should result in
the recognition of capital gain or loss measured by the difference between the
amount of cash received and the portion of the tax basis of the IBAH Shares
allocable to such fractional share interest. In the case of an individual,
capital gain recognized with respect to cash received in lieu of fractional
share interests in Omnicare Shares generally will be subject to United States
federal income tax at a maximum rate of 20% if such individual held his or her
IBAH Shares for more than 18 months at the Effective Time, a maximum rate of 28%
if such individual held his or her IBAH Shares for more than one year but not
more than 18 months at the Effective Time and at ordinary income rates if such
individual held his or her IBAH Shares for one year or less at the Effective
Time. The deductibility of capital losses is subject to limitations.
DISSENTERS. The tax consequences to an IBAH stockholder who holds IBAH
Preferred Shares and who exercises dissenter's rights with respect to such IBAH
Preferred Shares and receives payment for such IBAH Preferred Shares in cash
generally will not depend on the qualification of the Merger as a reorganization
for federal income tax purposes. Such stockholder generally will recognize
capital gain or loss for federal income tax purposes, measured by the difference
between the holder's basis in such IBAH Preferred Shares and the amount of cash
received (other than the amount of cash received, if any, that is or is deemed
to be interest for federal income tax purposes (which amount will be taxed as
ordinary income)). In the case of an individual, capital gain recognized with
respect to the IBAH Preferred Shares generally will be subject to United States
federal income tax at a maximum rate of 20% if such individual held his or her
IBAH Preferred Shares for more than 18 months, a maximum rate of 28% if such
individual held his or her IBAH Preferred Shares for more than one year but not
more than 18 months and at ordinary income rates if such individual held his or
her IBAH Preferred Shares for one year or less. The deductibility of capital
losses is subject to limitations.
REPORTING REQUIREMENTS. Each holder of IBAH Shares that receives Omnicare
Shares in the Merger will be required to retain records and file with such
holder's federal income tax return a statement setting forth certain facts
relating to the Merger.
BACKUP WITHHOLDING. Unless an exemption applies under applicable law and
regulations, the Exchange Agent (as defined in "THE MERGER AGREEMENT AND RELATED
AGREEMENTS-- Consideration to be Received in the Merger") is required to
withhold, and will withhold, 31% of any cash payments to an IBAH stockholder in
the Merger unless the stockholder provides the appropriate form as described
below. Each IBAH stockholder should complete and sign the Substitute Form W-9
included as part of the letter of transmittal to be sent to each IBAH
stockholder, so as to provide the information (including such stockholder's
taxpayer identification number) and certification necessary to avoid backup
withholding, unless an applicable exemption exists and is proved in a manner
satisfactory to Omnicare and the Exchange Agent.
THE FOREGOING GENERAL DISCUSSION OF THE MATERIAL FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER IS WITHOUT REFERENCE TO THE FACTS AND CIRCUMSTANCES
OF ANY PARTICULAR STOCKHOLDER AND IS NOT TAX ADVICE. THE DISCUSSION DOES NOT
ADDRESS ANY NON-INCOME TAX OR ANY FOREIGN, STATE OR LOCAL TAX CONSEQUENCES OF
THE MERGER. MOREOVER, THE DISCUSSION DOES NOT ADDRESS THE TAX CONSEQUENCES OF
ANY TRANSACTION OTHER THAN THE MERGER. ACCORDINGLY, EACH STOCKHOLDER IS URGED
AND EXPECTED TO CONSULT WITH SUCH STOCKHOLDER'S TAX ADVISOR TO DETERMINE THE
PARTICULAR UNITED STATES FEDERAL, STATE, LOCAL OR FOREIGN INCOME OR OTHER TAX
CONSEQUENCES OF THE MERGER TO SUCH STOCKHOLDER.
37
<PAGE>
THE MERGER AGREEMENT AND RELATED AGREEMENTS
THIS PROXY STATEMENT/PROSPECTUS CONTAINS A BRIEF SUMMARY OF THE MERGER
AGREEMENT, THE STOCK OPTION AGREEMENT AND THE VOTING AGREEMENT. THIS SUMMARY IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXTS OF SUCH AGREEMENTS,
WHICH ARE INCLUDED AS APPENDICES A, B AND C HERETO AND WHICH ARE INCORPORATED
HEREIN BY REFERENCE.
GENERAL
Pursuant to the Merger Agreement, Sub will be merged with and into IBAH and
IBAH will become a wholly-owned subsidiary of Omnicare. At the Effective Time,
each outstanding IBAH Share (other than IBAH Preferred Shares held by holders
who properly exercise appraisal rights under Delaware law) will be converted
into Omnicare Shares (or cash in lieu of fractional shares) as described herein.
The name of the Surviving Corporation shall be "IBAH, Inc."
CONSIDERATION TO BE RECEIVED IN THE MERGER
At the Effective Time, each IBAH Common Share issued and outstanding
immediately prior to the Effective Time, shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive such number of Omnicare Shares as set forth below:
(i) If the Omnicare Average Market Price is greater than $43.83, then the
Conversion Number is equal to $6.50 divided by the Omnicare Average Market
Price;
(ii) If the Omnicare Average Market Price is greater than $38.77 and less
than or equal to $43.83, then the Conversion Number is equal to 0.1483;
(iii) If the Omnicare Average Market Price is greater than $34.85 and less
than or equal to $38.77, then the Conversion Number is equal to $5.75 divided by
the Omnicare Average Market Price;
(iv) If the Omnicare Average Market Price is greater than or equal to $30.30
and less than or equal to $34.85, then the Conversion Number is equal to 0.1650;
(v) If the Omnicare Average Market Price is less than $30.30, then the
Conversion Number is equal to $5.00 divided by the Omnicare Average Market
Price.
Each IBAH Preferred Share issued and outstanding immediately prior to the
Effective Time (other than shares as to which appraisal rights are properly
exercised under the DGCL), shall, by virtue of the Merger and without any action
on the part of the holder thereof, be converted into the right to receive the
number of Omnicare Shares equal to three times the number of Omnicare Shares
exchanged for each IBAH Common Share.
"Omnicare Average Market Price" means the average of the closing prices of
the Omnicare Shares on the NYSE for the fifteen trading days immediately prior
to the second trading day prior to the Closing Date. In the event of any change
in the IBAH Shares or the Omnicare Shares by reason of any stock split,
readjustment, stock dividend, exchange, reclassification, recapitalization or
similar event, the amounts set forth above shall be appropriately adjusted.
Notwithstanding the foregoing, if the Omnicare Average Market Price is less than
$30.30, then Omnicare shall have the right, by written notice to IBAH prior to
the Effective Time, to adjust the Conversion Number to 0.1650; provided,
however, that upon receipt of such notice of adjustment, IBAH shall have the
right, by written notice to Omnicare, to elect to abandon the Merger and
terminate the Merger Agreement by action of the IBAH Board, which termination
shall occur at 5:00 p.m., Cincinnati, Ohio time, two business days after the
Termination Notice.
No fractional Omnicare Shares will be issued in the Merger. Each holder of
IBAH Shares who upon surrender of certificates representing such IBAH Shares
(each, a "Certificate") therefor would be entitled to receive a fraction of an
Omnicare Share will receive, in lieu of such fractional Omnicare Share, cash in
38
<PAGE>
an amount equal to such fraction multiplied by the Omnicare Average Market
Price, less the amount of any withholding taxes which may be required thereon
under any provision of federal, state, local or foreign tax law.
Each IBAH Share issued and held in IBAH's treasury at the Effective Time
shall, by virtue of the Merger, cease to be outstanding and shall be cancelled
and retired without payment of any consideration thereof.
EXCHANGE OF SHARES
Promptly after the Effective Time, Omnicare will send, or will cause the
Exchange Agent (the "Exchange Agent"), to send, to each record holder of IBAH
Shares a letter of transmittal for use in the exchange of IBAH Shares. Omnicare
will make available to the Exchange Agent the aggregate consideration for the
Merger (the "Merger Consideration") to be paid in respect of the IBAH Shares to
the holders thereof.
Upon surrender to the Exchange Agent of a Certificate or Certificates,
together with a properly completed letter of transmittal, the holder of such
Certificate shall be entitled to receive in exchange therefor that number of
Omnicare Shares which such holder has the right to receive (and any amount of
cash payable in lieu of fractional shares), after giving effect to any required
withholding tax.
If any portion of the Merger Consideration is to be paid to a person other
than the registered holder of the IBAH Shares formerly represented by the
Certificate or Certificates surrendered in exchange for the Merger
Consideration, it shall be a condition to such payment that the Certificate or
Certificates so surrendered shall be properly endorsed or otherwise be in proper
form for transfer and that the person requesting such payment shall pay to the
Exchange Agent any transfer or other taxes required as a result of such payment
to a person other than the registered holder of such IBAH Shares or establish to
the satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
Any portion of the Merger Consideration made available to the Exchange Agent
pursuant to these procedures that remains unclaimed by the holders of IBAH
Shares six months after the Effective Time shall be returned to Omnicare, upon
demand, and any such person who has not exchanged properly such person's
Certificate or Certificates for the Merger Consideration prior to that time
shall thereafter look only to Omnicare for payment of the Merger Consideration.
Notwithstanding the foregoing, Omnicare shall not be liable to any person for
any amount paid to a public official pursuant to applicable abandoned property
laws. Any amounts remaining unclaimed two years after the Effective Time (or
such earlier date immediately prior to such time as such amounts would otherwise
escheat to or become property of any governmental entity) shall become the
property of Omnicare free and clear of any claims or interest of any person
previously entitled to the property.
No dividends or other distributions with respect to securities of Omnicare
constituting part of the Merger Consideration shall be paid to the holder of any
unsurrendered Certificates until such Certificates are properly surrendered.
Upon such surrender, there shall be paid, without interest, to the person in
whose name the Certificates representing the securities of Omnicare into which
such IBAH Shares were converted are registered, all dividends and other
distributions payable in respect of such securities on a date subsequent to, and
in respect of a record date after, the Effective Time, less the amount of any
required withholding taxes.
IBAH STOCKHOLDERS SHOULD NOT FORWARD STOCK CERTIFICATES TO THE EXCHANGE
AGENT UNTIL THEY HAVE RECEIVED TRANSMITTAL LETTERS. IBAH STOCKHOLDERS SHOULD NOT
RETURN STOCK CERTIFICATES WITH THE ENCLOSED PROXY.
TREATMENT OF OPTIONS AND WARRANTS
As of the Record Date, there were outstanding IBAH Options to purchase a
total of 3,805,610 IBAH Common Shares and outstanding IBAH Warrants to purchase
a total of 2,610,280 IBAH Common Shares.
39
<PAGE>
In the event that the Merger is consummated, a number of IBAH Options held by
certain executive officers and other employees of IBAH will be cancelled
immediately prior to the Merger.
At the Effective Time, Omnicare shall assume IBAH's rights and obligations
under each IBAH Option that is outstanding immediately prior to the Effective
Time (an "Existing Option"). Under each Existing Option existing immediately
after the Effective Time (an "Assumed Option"), the optionee shall have the
right to receive from Omnicare, in accordance with the terms and subject to the
conditions of the Existing Option, the number of Omnicare Shares equal to the
Conversion Number that such optionee would have been entitled to receive had the
optionee exercised his or her Existing Option immediately prior to the Effective
Time, but only in accordance with the terms and conditions of the Existing
Option (including payment of the aggregate exercise price thereof). No Assumed
Option shall give the optionee any additional benefits that the holder thereof
did not have under the Existing Option; provided, however, that the terms of
such Existing Options shall govern the vesting thereof including, if applicable,
any vesting of Existing Options as a result of the Merger. Each Assumed Option
shall constitute a continuation of the Existing Option, substituting Omnicare
for IBAH and, in the case of employees, employment by an Omnicare company for
employment by an IBAH company. If and to the extent required by the terms of the
plans governing the Existing Options or pursuant to the terms of any Existing
Option granted thereunder, IBAH shall use reasonable efforts to obtain the
consent of each holder of outstanding Existing Options to the treatment of the
Existing Options as provided in the Merger Agreement.
Each IBAH Warrant that is outstanding immediately prior to the Effective
Time and that does not expire at the Effective Time by the terms thereof shall,
by virtue of the Merger and pursuant to the terms of the IBAH Warrant or with
the consent of the majority of the holders thereof, be converted into and
exchanged for an Omnicare Warrant exercisable for the Conversion Number of
Omnicare Shares for each IBAH Common Share for which the IBAH Warrant is
exercisable immediately prior to the Effective Time, at an exercise price per
Omnicare Share that has been adjusted in accordance with the terms of the IBAH
Warrant converted as a result of the Merger. The Omnicare Warrants shall have
the terms and conditions of the IBAH Warrants converted as a result of the
Merger.
REPRESENTATIONS AND WARRANTIES
IBAH and Omnicare have made representations in the Merger Agreement relating
to, among other things: (a) each of IBAH's and Omnicare's capitalization and
organization and similar corporate matters, (b) authorization, execution,
delivery and enforceability of the Merger Agreement, (c) conflicts under
governing documents, required consents or approvals, and violations of any
agreements or law, (d) documents filed with the Commission and the accuracy of
information contained therein, (e) absence of material adverse events, changes
or effects, (f) brokers and finders, (g) tax and accounting matters relating to
the proposed Merger, (h) the absence of undisclosed liabilities, and (i)
compliance with certain health care laws.
IBAH has made additional representations, among others, relating to: (a)
compliance with law, including compliance with environmental and tax laws and
regulations, (b) retirement and other employee plans and matters relating to the
Employee Retirement Income Security Act of 1974, as amended, (c) the disclosure
and enforceability of certain material contracts, (d) litigation, (e) certain
business matters relating to permits and licenses, insurance and intellectual
property, and (f) the absence of contracts or disputes with labor unions or
organizations.
None of the representations and warranties of IBAH or Omnicare in the Merger
Agreement shall survive the Closing.
CONDUCT OF IBAH'S BUSINESS
IBAH has covenanted to Omnicare that from the date of the Merger Agreement
to the Effective Time, IBAH and its subsidiaries will conduct their operations
only in the ordinary course of business,
40
<PAGE>
except as previously agreed to in writing by Omnicare, consistent with sound
financial, operational and regulatory practice and will take not action which
would materially adversely affect their ability to consummate the Merger and the
other transactions contemplated by the Merger Agreement, certain employment
agreements, the Voting Agreement and the Stock Option Agreement. The Merger
Agreement contains specific restrictions on, among other things (a) changes in
capitalization, (b) dividends and distributions, (c) incurrence of debt, (d)
certain changes in compensation or benefit plans and (e) acquisitions or
dispositions of assets or securities.
EXCLUSIVITY
IBAH agrees that from and after the date of the Merger Agreement, IBAH,
without the prior written consent of Omnicare, will not, and will not authorize
or permit any of its subsidiaries or its officers, directors, employees,
auditors, counsel, financial advisors and agents ("Party Representatives") to,
directly or indirectly, solicit, initiate or encourage (including by way of
furnishing information) or take any other action to facilitate knowingly any
inquiries or the making of any proposal which constitutes or may reasonably be
expected to lead to an Acquisition Proposal (as defined below) from any person
or entity, or engage in any discussion or negotiations relating to an
Acquisition Proposal or accept any Acquisition Proposal; provided, however, that
notwithstanding any other provision of the Merger Agreement, IBAH may (a) at any
time prior to the time IBAH's stockholders shall have voted to approve the
Merger Agreement, engage in discussions or negotiations with a third party who
(without any solicitation, initiation, encouragement, discussion or negotiation,
directly or indirectly, by or with IBAH or its subsidiaries or their respective
Party Representatives after the date hereof) seeks to initiate such discussions
or negotiations and may furnish such third party information concerning IBAH and
its business and assets if, and only to the extent that, (i)(x) the third party
has first made an Acquisition Proposal that is (as determined in good faith by
the IBAH Board after consultation with its financial advisors) financially
superior to the Merger and the other transactions contemplated by the Merger
Agreement, the Voting Agreement and the Stock Option Agreement and has
demonstrated that the funds necessary for the Acquisition Proposal are
reasonably likely to be available and the Acquisition Proposal is reasonably
capable of consummation in accordance with its terms (as determined in good
faith in each case by the IBAH Board after consultation with its financial
advisors) and (y) the IBAH Board shall conclude in good faith, after considering
applicable provisions of applicable law, on the basis of advice of its counsel,
that such action is necessary for the IBAH Board to act in a manner consistent
with its fiduciary duties under applicable law and (ii) prior to furnishing such
information to or entering into discussions or negotiations with such third
party, IBAH (x) provides prompt notice to Omnicare to the effect that it is
furnishing information to or entering into discussions or negotiations with such
third party and (y) receives from such third party an executed confidentiality
agreement in reasonably customary form on terms not in the aggregate materially
more favorable to such third party than the terms contained in the
Confidentiality Agreement between Omnicare and IBAH, dated December 17, 1997,
(b) comply with Rule 14e-2 promulgated under the Exchange Act with regard to a
tender or exchange offer, and/or (c) provided IBAH terminates the Merger
Agreement pursuant to its terms where, as a result of an Acquisition Proposal
received by IBAH from a third party, the IBAH Board determines in good faith
that its fiduciary obligations under applicable law require that such
Acquisition Proposal be accepted, accept such an Acquisition Proposal from such
third party.
IBAH shall immediately cease and terminate any existing solicitation,
initiation, encouragement, activity, discussion or negotiation with any other
party conducted by IBAH or its Party Representatives prior to the execution of
the Merger Agreement with respect to the foregoing. IBAH shall not release any
third party from, or waive any provision of, any standstill agreement to which
it is a party or any confidentiality agreement between it and another person or
entity who has made an Acquisition Proposal, unless such person or entity has
made an Acquisition Proposal meeting the criteria described in (a)(i)(x) above
and the IBAH Board shall conclude in good faith, after considering applicable
provisions of applicable law, on the basis of advice of its counsel, that such
action is necessary for the IBAH Board to act
41
<PAGE>
in a manner consistent with its fiduciary duties under applicable law. IBAH
shall (a) immediately notify Omnicare orally (with a prompt written
confirmation) of any such inquiries, offers or proposals (including the terms
and conditions of any such proposal and the identity of the person making it and
shall provide copies of any such written inquiries, offers or proposals), (b)
keep Omnicare informed of the status and details of any such inquiry, offer or
proposal (and IBAH agrees that any material modification of the terms of an
inquiry or proposal shall constitute a new inquiry or proposal), and (c) give
Omnicare five days' advance notice of any agreement to be entered into with, or
any information to be supplied to, any person making such inquiry, offer or
proposal, provided that no agreement, other than a confidentiality agreement as
described above, shall be executed or agreed prior to the termination of the
Merger Agreement in accordance with its terms.
As used herein, "Acquisition Proposal" means a bona fide proposal or offer
(other than by Omnicare) for a tender or exchange offer, merger, consolidation
or other business combination involving IBAH or any subsidiary thereof, or any
proposal to acquire in any manner a substantial equity interest in, or a
substantial amount of the assets of, IBAH or any such subsidiary.
INDEMNIFICATION
The Merger Agreement provides that for six years after the Effective Time,
Omnicare shall cause the Surviving Corporation to (a) maintain in effect the
current provisions regarding indemnification of officers and directors contained
in the charter and bylaws of IBAH and in any indemnification agreements of IBAH
and (b) indemnify the officers and directors of IBAH to the fullest extent to
which IBAH is permitted to indemnify such officers and directors under its
charter, bylaws and applicable law. Further, Omnicare shall or shall cause the
Surviving Corporation to maintain in effect for a period of six years after the
Effective Time, the current policies of directors and officers liability
insurance maintained by IBAH; provided that Omnicare or the Surviving
Corporation, as applicable, shall not be required to spend as an annual premium
for such insurance an amount in excess of 150% of the annual premium paid for
such insurance in effect prior to the date of the Merger Agreement (which IBAH
represented is no more than $125,000).
RESALES OF OMNICARE SHARES
All Omnicare Shares received by IBAH stockholders in the Merger will be
freely transferable pursuant to the Securities Act, except that Omnicare Shares
received by persons who are deemed to be "affiliates" (as such term is defined
under the Securities Act) of IBAH prior to the Merger may be resold by them only
in transactions permitted by the resale provisions of Rule 145 promulgated under
the Securities Act or as otherwise permitted under the Securities Act. Persons
who may be deemed to be "affiliates" generally include individuals or entities
that control, are controlled by, or are under common control with, such company
and may include certain officers and directors of such company as well as
principal stockholders of such company. The Merger Agreement requires IBAH to
cause each of its affiliates to execute a written agreement (the "Affiliate
Letter") to the effect that, among other things, such stockholder will not offer
to sell, sell or otherwise dispose of Omnicare Shares issued to such stockholder
in the Merger except (i) pursuant to an effective registration statement, (ii)
pursuant to the provisions of Rule 145 under the Securities Act, or (iii)
pursuant to another exemption from registration under the Securities Act, which
in the opinion of counsel reasonably acceptable to Omnicare is available.
The Affiliate Letters provide that such affiliate will not dispose of any
Omnicare Shares issued to such stockholder in the Merger until the financial
results of at least 30 days of post-Merger combined operations of IBAH and
Omnicare have been made publicly available. Omnicare has agreed to publish such
financial results as promptly as practicable following the Closing and in no
event later than 20 days after the end of the first full monthly period
following the Closing.
42
<PAGE>
CONDITIONS TO THE MERGER
The respective obligations of IBAH, Omnicare and Sub to effect the Merger
are subject to the fulfillment at or prior to the Effective Time of the
following conditions:
(a) all required governmental approvals shall have been obtained, any
applicable waiting periods, including those under the HSR Act, shall have
expired, no law or court order shall have been enacted, entered, promulgated or
enforced that has the effect of making the Merger illegal or otherwise
prohibiting the consummation of the Merger and no legal action shall be pending
or threatened which is reasonably likely to have a material adverse effect on
either Omnicare or IBAH, (b) the Registration Statement shall have become
effective under the Securities Act and shall not be the subject of any stop
order or proceedings seeking a stop order, (c) the Omnicare Shares issued in the
Merger shall have been duly approved for listing on the NYSE, subject to
official notice of issuance, (d) Omnicare shall have received a letter from
Price Waterhouse LLP, independent public accountants for Omnicare, to the effect
that Omnicare and the Merger and transactions contemplated thereby qualify for
"pooling of interests" accounting treatment, (e) IBAH shall have received a
letter from Arthur Andersen LLP, independent public accountants for IBAH, to the
effect that IBAH will qualify as a "combining company" as required for "pooling
of interests" accounting treatment, (f) the Merger Agreement shall have been
approved by the requisite vote of the IBAH stockholders, and (g) Omnicare shall
have received an opinion of Omnicare's counsel, in form and substance reasonably
satisfactory to Omnicare, and IBAH shall have received an opinion of IBAH's
counsel, in form and substance reasonably satisfactory to IBAH, in each case
based on reasonably requested representations contained in certificates of
Omnicare, IBAH and Sub, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code and that
Omnicare, Sub and IBAH shall each be a party to that reorganization within the
meaning of Section 368(b) of the Code.
The obligations of IBAH to effect the Merger are subject to the satisfaction
or waiver on or before the Effective Time of the following conditions:
(a) The representations and warranties of Omnicare and Sub contained in the
Merger Agreement shall be true and correct on the date of the Merger Agreement
(except to the extent such representations and warranties speak as of an earlier
date) and shall also be true and correct on and as of the Closing Date, except
for changes contemplated in the Merger Agreement, with the same force and effect
as if made on and as of the Closing Date; provided, however, that for purposes
of this condition only, such representations and warranties shall be deemed to
be true and correct unless the failure or failures of such representations and
warranties to be true and correct (without regard to materiality qualifiers
contained therein), individually or in the aggregate, results or would
reasonably be expected to result in a material adverse effect on Omnicare, (b)
Omnicare and Sub shall have performed or complied, in all material respects,
with all agreements, conditions and covenants required by the Merger Agreement
to be performed or complied with by them on or before the Effective Time, (c)
IBAH shall have received a certificate of an executive officer of each of
Omnicare and Sub certifying as to compliance with the conditions set forth in
clauses (a) and (b) above, (d) there shall have been no material adverse effect
on Omnicare and its subsidiaries taken as a whole, and (e) each of Omnicare and
Sub shall have tendered executed copies of all documents contemplated by the
Merger Agreement to which it is intended to be a party.
The obligations of Omnicare and Sub to consummate the Merger and the
transactions contemplated thereby shall be subject to the satisfaction or waiver
on or before the Effective Time of each of the following conditions:
(a) The representations and warranties of IBAH contained in the Merger
Agreement shall be true and correct on the date of the Merger Agreement (except
to the extent such representations and warranties speak as of an earlier date)
and shall also be true and correct on and as of the Closing Date, except for
changes contemplated in the Merger Agreement, with the same force and effect as
if made on
43
<PAGE>
and as of the Closing Date; provided, however, that for purposes of this
condition only, such representations and warranties shall be deemed to be true
and correct unless the failure or failures of such representations and
warranties to be true and correct (without regard to materiality qualifiers
contained therein), individually or in the aggregate, results or would
reasonably be expected to result in a material adverse effect on IBAH, (b) IBAH
shall have performed or complied, in all material respects, with all agreements,
conditions and covenants required by the Merger Agreement to be performed or
complied with by it on or before the Effective Time, (c) Omnicare shall have
received a certificate of an executive officer of IBAH to the effect set forth
in clauses (a) and (b) above, (d) IBAH shall have obtained all consents from
third parties necessary to consummate the Merger and all other consents the
absence of which would result in a material adverse effect, (e) there shall have
been no material adverse effect on IBAH and its subsidiaries taken as a whole,
(f) IBAH shall have tendered executed copies of all documents contemplated by
the Merger Agreement to which it is intended to be a party, (g) the consent of
the requisite holders of IBAH Preferred Shares and IBAH Warrants shall have been
received by IBAH prior to the Effective Time, or if such consents have not been
received at or prior to the Effective Time, all such holders shall have approved
the transactions contemplated by the Merger Agreement, and (h) IBAH's Chief
Executive Officer shall have entered into an employment and non-competition
agreement (see "THE MERGER--Interests of Certain Persons in the Merger; Possible
Conflicts of Interest--IBAH Employment Agreements") and IBAH shall have used
commercially reasonable efforts to cause certain other employees of IBAH to
enter into employment and non-competition agreements.
TERMINATION OF THE MERGER AGREEMENT
The Merger Agreement may be terminated at any time before the Effective
Time, in each case as authorized by the respective Boards of Directors of
Omnicare and IBAH:
(a) by mutual written consent of each of Omnicare and IBAH;
(b) by either Omnicare or IBAH if the Merger shall not have been consummated
on or before October 31, 1998, provided that the right to terminate the Merger
Agreement in this manner shall not be available to any party whose failure to
fulfill any obligation under the Merger Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before October 31,
1998;
(c) by either Omnicare or IBAH if a court of competent jurisdiction or
governmental, regulatory or administrative agency or commission shall have
issued a court order (which court order the parties shall use commercially
reasonable efforts to lift) that permanently restrains, enjoins or otherwise
prohibits the Merger or any of the transactions contemplated in the Merger
Agreement, and such court order shall have become final and nonappealable;
(d) by Omnicare if IBAH shall have breached, or failed to comply with, in
any material respect, any of its obligations under the Merger Agreement or any
representation or warranty made by IBAH shall have been incorrect in any
material respect when made, and such breach, failure or misrepresentation is not
cured within 20 days after notice thereof, and in either case, any such
breaches, failures or misrepresentations, individually or in the aggregate,
results or would reasonably be expected to result in a failure to satisfy a
condition to IBAH's obligations to consummate the transactions contemplated in
the Merger Agreement;
(e) by IBAH if Omnicare or Sub shall have breached, or failed to comply
with, in any material respect, any of its obligations under the Merger Agreement
or any representation or warranty made by such party shall have been incorrect
in any material respect when made, and such breach, failure or misrepresentation
is not cured within 20 days after notice thereof, and in either case, any such
breaches, failures or misrepresentations, individually or in the aggregate,
results or would reasonably be expected to result in a failure to satisfy a
condition to Omnicare's or Sub's obligations to consummate the transactions
contemplated in the Merger Agreement;
44
<PAGE>
(f) by IBAH, if at the Special Meeting the Merger Agreement and the Merger
shall fail to be approved and adopted by the affirmative vote of the IBAH
stockholders as required under the DGCL;
(g) by IBAH, prior to the approval of the Merger Agreement by the IBAH
stockholders, upon five days' notice to Omnicare, if, as a result of an
Acquisition Proposal received by IBAH from a person other than a party to the
Merger Agreement or any of its affiliates, the IBAH Board determines in good
faith that its fiduciary obligations under applicable law require that such
Acquisition Proposal be accepted; provided, however, that (i) immediately
following such termination IBAH executes with such third party a definitive
agreement to implement such Acquisition Proposal, (ii) the IBAH Board shall have
concluded in good faith, after considering applicable provisions of applicable
law and after giving effect to all concessions which may be offered by Omnicare
pursuant to clause (iii) below, on the basis of advice of counsel, that such
action is necessary for the IBAH Board to act in a manner consistent with its
fiduciary duties under applicable law, (iii) prior to any such termination, (x)
IBAH shall have provided Omnicare with five days' notice of the terms of the
proposal and otherwise complied with the terms of the Merger Agreement and (y)
IBAH shall, and shall cause its financial and legal advisors to, negotiate with
Omnicare to make such adjustments in the terms and conditions of the Merger
Agreement as would enable IBAH to proceed with the transactions contemplated by
the Merger Agreement and (iv) IBAH shall have paid Omnicare the Termination Fee
(as defined below, and the circumstances giving rise to such termination
described in this clause (g) to be hereinafter referred to as a "Third-Party
Offer");
(h) by Omnicare if the IBAH Board shall withdraw, modify or change its
recommendation of the Merger Agreement or the Merger or shall have failed to
reaffirm its recommendation within five business days of Omnicare's request that
it do so or shall have recommended or issued a neutral recommendation (or taken
no position) with respect to any Acquisition Proposal; or
(i) by IBAH, if the Omnicare Average Market Price is less than $30.30 and
Omnicare shall have exercised its right to adjust the Conversion Number to
0.1650.
TERMINATION FEES; EXPENSES OF THE MERGER
If the Merger Agreement is terminated by any of the means described above,
the Merger Agreement shall forthwith become void and there shall be no liability
on the part of any of the parties; notwithstanding the foregoing, nothing herein
shall relieve any party from liability for any willful breach of the Merger
Agreement.
IBAH shall pay Omnicare a Termination Fee equal to $5 million (or $8.366
million in certain circumstances described below) upon the occurrence of any of
the following events:
(a) if following an Acquisition Proposal, the Merger Agreement is terminated
by either Omnicare or IBAH because the Merger was not consummated on or prior to
October 31, 1998 (provided that the right to terminate the Merger Agreement in
this manner shall not be available to any party whose failure to fulfill any
obligation under the Merger Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before October 31, 1998), and
within 12 months after such termination IBAH executes with a third party a
definitive agreement to implement an Acquisition Proposal;
(b) if following an Acquisition Proposal, the Merger Agreement is terminated
by either Omnicare or IBAH because at the Special Meeting the IBAH stockholders
shall have failed to approve and adopt by the affirmative vote as required under
the DGCL the Merger Agreement and the Merger, and within 12 months after such
termination IBAH executes with a third party a definitive agreement to implement
an Acquisition Proposal;
(c) if the Merger Agreement is terminated by IBAH due to a Third-Party
Offer; or
(d) if the Merger Agreement is terminated by Omnicare because the IBAH Board
shall have withdrawn, modified or changed its recommendation of the Merger
Agreement or the Merger or shall
45
<PAGE>
have failed to reaffirm its recommendation within five business days of
Omnicare's request that it do so or shall have recommended or issued a neutral
recommendation (or taken no position) with respect to any Acquisition Proposal.
If the Merger Agreement is terminated (i) by Omnicare, because IBAH shall
have breached, or failed to comply with, in any material respect, any of its
obligations under the Merger Agreement or any representation or warranty made by
IBAH shall have been incorrect in any material respect when made, and such
breach, failure or misrepresentation is not cured within 20 days after notice
thereof, and in either case, any such breaches, failures or misrepresentations,
individually or in the aggregate, results or would reasonably be expected to
result in a failure to satisfy a condition to IBAH's obligations to consummate
the transactions contemplated in the Merger Agreement or (ii) by IBAH, because
Omnicare or Sub shall have breached, or failed to comply with, in any material
respect, any of its obligations under the Merger Agreement or any representation
or warranty made by it shall have been incorrect in any material respect when
made, and such breach, failure or misrepresentation is not cured within 20 days
after notice thereof, and in either case, any such breaches, failures or
misrepresentations, individually or in the aggregate, results or would
reasonably be expected to result in a failure to satisfy a condition to
Omnicare's or Sub's obligations to consummate the transactions contemplated in
the Merger Agreement, then in each case, such breaching party shall reimburse
the other party for its reasonable out-of-pocket expenses in connection with the
Merger Agreement and the transactions contemplated thereby including, without
limitation, attorneys', accountants' and investment bankers' fees and expenses
up to an aggregate of $1,500,000. If Omnicare terminates the Merger Agreement
pursuant to clause (i) above and within 12 months after such termination IBAH
executes with a third party a definitive agreement to implement an Acquisition
Proposal, then IBAH shall pay Omnicare a Termination Fee (less any fees payable
in respect of reimbursement for expenses as described above).
If the Merger Agreement is terminated as set forth above, the Termination
Fee shall be in the amount of $5 million if the Termination Fee is payable prior
to the Option Termination Date, and shall be in the amount of $8.366 million if
the Termination Fee is payable thereafter.
If IBAH fails to pay promptly the amount due in Termination Fees or expenses
and, in order to obtain such payment, Omnicare commences a suit which results in
a judgment against IBAH for such Termination Fees and expenses, IBAH shall pay
to Omnicare its costs and expenses (including reasonable attorneys' fees) in
connection with such suit, together with interest on the amount of the fee at a
rate equal to the prime rate of First Chicago NBD at the time of payment from
the date such fee was required to be paid.
Except as provided above, Omnicare and Sub, on the one hand, and IBAH, on
the other hand, shall bear their respective expenses incurred in connection with
the Merger including, without limitation, the preparation, execution and
performance of the Merger Agreement and the transactions contemplated thereby,
including all fees and expenses of its representatives, counsel and accountants,
except that expenses incurred in printing, mailing and filing this Proxy
Statement/Prospectus shall be shared equally by IBAH and Omnicare.
46
<PAGE>
STOCK OPTION AGREEMENT
THE OPTION
In order to induce Omnicare to enter into the Merger Agreement, IBAH entered
into the Stock Option Agreement. Pursuant to the Stock Option Agreement,
Omnicare has been granted an Option to purchase the Option Shares (approximately
19.9% of the outstanding IBAH Common Shares as of March 30, 1998 prior to giving
effect to the exercise of such Option), at the Option Price (which is equal to
$5.75 per share). The Stock Option Agreement could have the effect of making an
acquisition of IBAH by a third party more costly because of the need to acquire
in any such transaction the Option Shares issued under the Stock Option
Agreement, and could also jeopardize the ability of a third party to acquire
IBAH in a transaction accounted for as a "pooling of interests."
The Option may be exercised by Omnicare, in whole or in part, at any time,
or from time to time, following the occurrence of one of the Triggering
Conditions described in the following paragraph. Omnicare may exercise the
Option by either (a) paying the Option Price in cash and receiving the Option
Shares (which exercise requires the satisfaction of certain additional
conditions) or (b) electing, in lieu of the payment of the Option Price and the
receipt of the Option Shares, to receive a cash payment (the "Cash Payment")
from IBAH (which Cash Payment shall not be payable unless and until certain
additional conditions have been satisfied). Such Cash Payment shall be in the
amount of the excess, if any, over the Option Price of the higher of (x) if
applicable, the highest price per IBAH Common Share (including any brokerage
commissions, transfer taxes and soliciting dealers' fees) paid or proposed to be
paid by any person pursuant to one of the Triggering Conditions or (y) the
average of the closing prices (or the average of the closing bid and asked
prices if closing prices are unavailable) of an IBAH Common Share as reported on
The Nasdaq National Market on the last trading day immediately prior to the
receipt by IBAH of Omnicare's notice of its intention to receive the Cash
Payment, multiplied by all or such portion of the Option Shares as Omnicare
specifies in such notice.
TRIGGERING CONDITIONS
The Option may be exercised on satisfaction of certain conditions, including
the occurrence of at least one of the following "Triggering Conditions": (i) any
person (other than Omnicare or any of its subsidiaries) shall have commenced (as
such term is defined in Rule 14d-2 under the Exchange Act) a tender offer, or
shall have filed a registration statement under the Securities Act with respect
to an exchange offer, to purchase any IBAH Common Shares 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 IBAH Common Shares, (ii) any person (other than Omnicare or any of
its subsidiaries) shall have publicly announced or delivered to IBAH a proposal,
or disclosed publicly to IBAH 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 IBAH or any of its subsidiaries (an "Acquisition
Transaction"), (iii) IBAH 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 Omnicare or any of its
subsidiaries) to effect or provide for an Acquisition Transaction, (iv) any
person (other than Omnicare or any of its subsidiaries) shall solicit proxies or
consents or announce a bona fide intention to solicit proxies or consents from
IBAH'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 IBAH stockholders shall have
failed to approve the Merger, or (v) any person (other than Omnicare 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
47
<PAGE>
under the Exchange Act) shall have been formed which beneficially owns or has
the right to acquire beneficial ownership of, IBAH Common Shares (other than
trust account shares) aggregating 25% or more of the then outstanding IBAH
Common Shares.
SALE AND REGISTRATION RIGHTS
The Stock Option Agreement provides that at any time prior to the first
anniversary of the termination of the Merger Agreement, Omnicare shall have the
right to sell to IBAH all (but not less than all) of the Option Shares
previously purchased by Omnicare at a price equal to the average of the last
sales prices for IBAH Common Shares on the ten trading days ending five days
prior to the date Omnicare gives notice of its intention to exercise such right.
The Stock Option Agreement further provides that if Omnicare desires to sell any
of the Option Shares, IBAH will cooperate with Omnicare and any underwriters in
registering such Option Shares for resale including, without limitation,
promptly filing a registration statement which complies with the requirements of
applicable federal and state securities laws. IBAH shall not be required to have
declared effective more than two such registration statements.
TERMINATION
The Option Termination Date is the earlier of (i) the Effective Time, (ii)
90 days after the first anniversary of the termination of the Merger Agreement
in accordance with its terms, (iii) six months from the latest date a
stockholder vote occurs or is scheduled and (iv) the termination of the Merger
Agreement by IBAH, if the Omnicare Average Market Price is less than $30.30 and
Omnicare shall have exercised its right to adjust the Conversion Number to
0.1650. If the Option cannot be exercised or the Option Shares cannot be
delivered to Omnicare upon such exercise because the conditions set forth in the
Stock Option Agreement (excluding the condition that one or more of the
Triggering Conditions shall have occurred) have not been satisfied, the Option
Termination Date shall be extended until thirty days after such impediment to
exercise or delivery has been removed.
PROFIT LIMITATION
Notwithstanding any other provision of the Stock Option Agreement, (i) in no
event shall Omnicare's Total Profit (as defined below) exceed $8.366 million and
(ii) the Option may not be exercised for a number of Option Shares that would
result in a Notional Total Profit (as defined below) of more than $8.366
million.
"Total Profit" means the aggregate amount (before taxes) of (i) any
termination fees received by Omnicare pursuant to the Merger Agreement and any
Cash Payments received by Omnicare pursuant to the Stock Option Agreement, (ii)
the amount received by Omnicare pursuant to IBAH's repurchase of Option Shares
less Omnicare's purchase price for such Option Shares, and (iii) the net cash
amounts received by Omnicare pursuant to the sale of the Option Shares to any
unaffiliated party less Omnicare's purchase price for such Option Shares.
"Notional Total Profit" with respect to any number of Option Shares as to which
Omnicare may propose to exercise the Option shall be the Total Profit determined
as of the date on which Omnicare gives notice of its intention to exercise the
Option, assuming that the Option was exercised on such date for the designated
number of Option Shares and assuming that such Option Shares, together with all
other Option Shares held by Omnicare and its affiliates as of such date, were
sold for cash at the closing market price for the IBAH Common Shares as of the
close of business on the preceding trading day (less customary brokerage
commissions).
VOTING AGREEMENT
VOTING AND PROXIES
In order to induce Omnicare to enter into the Merger Agreement, the
Securityholders have entered into the Voting Agreement. Pursuant to and during
the term of the Voting Agreement, each Securityholder
48
<PAGE>
has agreed, severally and not jointly, among other things, to vote (or cause to
be voted) all of the IBAH Shares beneficially owned by such holder and all
shares subsequently acquired by such holder (i) to adopt and approve the Merger
and the Merger Agreement and the approval of the other transactions contemplated
by the Merger Agreement at any meeting of IBAH stockholders at which such
matters are considered and at every adjournment or postponement thereof and (ii)
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 IBAH, or any other Acquisition Proposal (collectively, "Alternative
Transactions") or (b) any amendment of the IBAH Certificate or the IBAH bylaws
or other proposal or transaction involving IBAH or any of its subsidiaries,
which 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 (collectively, "Frustrating Transactions"). See "THE MERGER AGREEMENT
AND RELATED AGREEMENTS-- Exclusivity."
Each Securityholder has granted to any individual designated by Omnicare a
proxy which is coupled with an interest and irrevocable in accordance with the
DGCL to vote each Securityholder's IBAH Shares (i) in favor of the Merger, the
adoption by IBAH of the Merger Agreement and the approval of the other
transactions contemplated by the Merger Agreement and (ii) against any
Alternative Transaction or Frustrating Transaction.
PROHIBITED ACTIONS
Each Securityholder has agreed that such holder will not, (i) sell,
transfer, pledge, assign or otherwise dispose of, or enter into any contract,
option or other arrangement (including any profit sharing arrangement) or
understanding with respect to the sale, transfer, pledge, assignment or other
disposition of, the IBAH Shares to any person other than Omnicare or Omnicare's
designee, (ii) enter into any voting arrangement, whether by proxy, voting
agreement, voting trust, power-of-attorney or otherwise, with respect to the
IBAH Shares or (iii) take any other action that would in any way restrict, limit
or interfere with the performance of such holder's obligations under the Voting
Agreement or the transactions contemplated thereby; provided, however, that any
Securityholder that is an individual may transfer all or part of his or her
securities of IBAH to any sibling or any other member of his or her immediate
family or lineal descendants or any trust for the benefit of any of them, so
long as the recipient of the IBAH securities agrees to be bound by the Voting
Agreement; and provided, further, that Vector Later-Stage Equity Fund, L.P. may
exercise any of its IBAH Warrants and sell the underlying IBAH Shares at any
time prior to 30 days prior to the Effective Time of the Merger.
OTHER PROVISIONS
The Voting Agreement also contains provisions relating to, among other
things, representations and warranties by each Securityholder and specific
enforcement of the Voting Agreement. The Voting Agreement terminates upon the
first anniversary of the date of any termination of the Merger Agreement in
accordance with its terms.
CONSENT OF HOLDERS OF IBAH PREFERRED SHARES AND IBAH WARRANTS
Pursuant to, and as a condition of, the Merger Agreement, holders of IBAH
Preferred Shares have consented to the exchange in the Merger of the IBAH
Preferred Shares outstanding immediately prior to the Effective Time for a
number of Omnicare Shares equivalent to such number of Omnicare Shares the
holders of IBAH Preferred Shares would receive in the Merger had such holders
converted their IBAH Preferred Shares immediately prior to the Effective Time.
In addition, holders of IBAH Preferred Shares (i) have agreed that they will not
consent to or otherwise facilitate any transaction that is inconsistent with the
Merger and (ii) have waived any rights of appraisal that they may have pursuant
to Section 262 of the DGCL. See "APPRAISAL RIGHTS AVAILABLE TO HOLDERS OF IBAH
PREFERRED SHARES."
49
<PAGE>
Holders of IBAH Preferred Shares have also consented to the assumption and
exchange in the Merger of the IBAH Warrants received by such holders in
connection with such holders' purchase of IBAH Preferred Shares for Omnicare
Warrants at a per share exercise price equivalent to the Conversion Number,
subject to certain adjustments.
APPRAISAL RIGHTS AVAILABLE TO HOLDERS OF IBAH PREFERRED SHARES
HOLDERS OF IBAH COMMON SHARES DO NOT HAVE APPRAISAL RIGHTS UNDER THE DGCL.
If the Merger is consummated, dissenting holders of IBAH Preferred Shares
who follow the procedures specified in Section 262 of the DGCL are entitled to
have their IBAH Preferred Shares appraised by the Delaware Court of Chancery
(the "Court") and to receive the "fair value" of such shares ("Dissenting
Shares") in cash, as determined by the Court, in lieu of the consideration that
such holders of IBAH Preferred Shares would otherwise be entitled to receive
pursuant to the Merger Agreement.
Holders of IBAH Preferred Shares as of March 30, 1998 have agreed to waive
any appraisal rights that they may have pursuant to Section 262 of the DGCL. See
"THE MERGER AGREEMENT AND RELATED AGREEMENTS--Consent of Holders of IBAH
Preferred Shares and IBAH Warrants."
The following is a brief summary of Section 262 of the DGCL, which sets
forth the procedures for holders of IBAH Preferred Shares dissenting from the
Merger and demanding statutory appraisal rights, if such rights are available.
This summary does not purport to be a complete statement of the provisions of
the DGCL relating to the rights of holders of IBAH Preferred Shares to an
appraisal of the value of their IBAH Preferred Shares and is qualified in its
entirety by reference to Section 262, the full text of which is attached as
Appendix D hereto. Failure to follow these procedures exactly could result in
the loss of appraisal rights. This Proxy Statement/Prospectus constitutes notice
to holders of IBAH Preferred Shares concerning the availability of appraisal
rights under Section 262. Under Section 262, a stockholder of record wishing to
assert appraisal rights must hold his or her IBAH Preferred Shares on the date
of making a demand for appraisal rights with respect to such IBAH Preferred
Shares and must continuously hold such IBAH Preferred Shares through the
Effective Time of the Merger.
HOLDERS OF IBAH PREFERRED SHARES WHO DESIRE TO EXERCISE THEIR APPRAISAL
RIGHTS MUST SATISFY ALL OF THE CONDITIONS OF SECTION 262. A WRITTEN DEMAND FOR
APPRAISAL OF IBAH PREFERRED SHARES MUST BE FILED WITH IBAH BEFORE THE TAKING OF
THE VOTE ON THE MERGER. THIS WRITTEN DEMAND FOR APPRAISAL OF IBAH PREFERRED
SHARES MUST BE IN ADDITION TO AND SEPARATE FROM ANY PROXY VOTE ABSTAINING FROM
OR VOTING AGAINST THE MERGER. ANY SUCH ABSTENTION OR VOTE AGAINST THE MERGER
WILL NOT CONSTITUTE A DEMAND FOR APPRAISAL WITHIN THE MEANING OF SECTION 262.
HOLDERS OF IBAH PREFERRED SHARES ELECTING TO EXERCISE THEIR APPRAISAL RIGHTS
UNDER SECTION 262 MUST NOT VOTE FOR APPROVAL OF THE MERGER. IF A STOCKHOLDER
RETURNS A SIGNED PROXY BUT DOES NOT SPECIFY A VOTE AGAINST APPROVAL OF THE
MERGER OR A DIRECTION TO ABSTAIN, THE PROXY WILL BE VOTED FOR APPROVAL OF THE
MERGER, WHICH WILL HAVE THE EFFECT OF WAIVING THAT STOCKHOLDER'S APPRAISAL
RIGHTS WITH RESPECT TO IBAH PREFERRED SHARES.
A demand for appraisal must be executed by or for the stockholder of record,
fully and correctly, as such stockholder's name appears on the certificates
representing IBAH Preferred Shares. If the IBAH Preferred Shares are owned of
record in a fiduciary capacity, such as by a trustee, guardian or custodian,
such demand must be executed by or for the fiduciary. If the IBAH Preferred
Shares are owned of record by or for more than one person, as in a joint tenancy
or tenancy in common, such demand must be executed by or for all joint owners.
An authorized agent, including an agent for two or more joint owners, may
execute the demand for appraisal for a stockholder of record; however, the agent
must identify the record owner and expressly disclose that, in exercising the
demand, the agent is acting as agent for the record owner. A person having a
beneficial interest in IBAH Preferred Shares held of record in the name of
another person, such as a broker or nominee, must act promptly to cause the
record holder to follow the
50
<PAGE>
steps summarized below and in a timely manner to perfect whatever appraisal
rights the beneficial owners may have.
A record owner, such as a broker, who holds stock as a nominee for others,
may exercise appraisal rights with respect to the IBAH Preferred Shares held for
all or less than all beneficial owners of IBAH Preferred Shares as to which the
holder is the record owner. In such case the written demand must set forth the
number of IBAH Preferred Shares covered by such demand. Where the number of IBAH
Preferred Shares is not expressly stated, the demand will be presumed to cover
all IBAH Preferred Shares outstanding in the name of such record owner.
A holder of IBAH Preferred Shares who elects to exercise appraisal rights
will be required to mail or deliver such holder's written demand to: IBAH, Inc.,
Four Valley Square, 512 Township Line Road, Blue Bell, PA 19422, Attention:
Secretary. The written demand for appraisal should specify the stockholder's
name and mailing address, the number of IBAH Preferred Shares owned, and that
the stockholder is thereby demanding appraisal of such holder's IBAH Preferred
Shares. Within ten days after the Effective Time of the Merger, IBAH must
provide notice of the Effective Time of the Merger to all of its holders of IBAH
Preferred Shares who have complied with Section 262 and have not voted for
approval of the Merger.
Within 120 days after the Effective Time of the Merger, any holder of IBAH
Preferred Shares who has satisfied the requirements of Section 262 will be
entitled, upon written request, to receive from IBAH a statement setting forth
the aggregate number of IBAH Preferred Shares not voted in favor of the Merger
and with respect to which demands for appraisal have been received and the
aggregate number of holders of such IBAH Preferred Shares.
Within 120 days after the Effective Time of the Merger (but not thereafter),
either IBAH or any holder of IBAH Preferred Shares who has complied with the
required conditions of Section 262 may file a petition in the Court demanding a
determination of the fair value of the Dissenting Shares.
Upon the filing of any petition by a holder of IBAH Preferred Shares in
accordance with Section 262, service of a copy must be made upon IBAH, which
must, within 20 days after service, file in the office of the Register of
Chancery in which the petition was filed, a duly verified list containing the
names and addresses of all holders of IBAH Preferred Shares who have demanded
payment for their shares and with whom agreements as to the value of their
shares have not been reached by IBAH. If a petition is filed by IBAH, the
petition must be accompanied by the verified list. The Register of Chancery, if
so ordered by the Court, will give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to IBAH and to the
holders of IBAH Preferred Shares shown on the list at the addresses therein
stated, and notice will also be given by publishing a notice at least one week
before the day of the hearing in a newspaper of general circulation published in
the City of Wilmington, Delaware, or such publication as the Court deems
advisable. The forms of notices by mail and by publication must be approved by
the Court, and the costs thereof shall be borne by IBAH.
If a petition for an appraisal is timely filed, after a hearing on such
petition, the Court will determine which holders of IBAH Preferred Shares are
entitled to appraisal rights and thereafter will appraise the stock owned by
such holders of IBAH Preferred Shares, determining the fair value of such stock,
exclusive of any element of value arising from the accomplishment or expectation
of the Merger, together with a fair rate of interest to be paid, if any, upon
the amount determined to be the fair value. In determining fair value, the Court
is to take into account all relevant factors.
Holders of IBAH Preferred Shares considering seeking appraisal should bear
in mind that the fair value of their stock determined under Section 262 could be
more than, the same as, or less than the applicable consideration they are
entitled to receive pursuant to the Merger Agreement if they do not seek
appraisal of their stock. The cost of the appraisal proceeding may be determined
by the Court and taxed upon the parties as the Court deems equitable in the
circumstances. Upon application of a holder of IBAH
51
<PAGE>
Preferred Shares seeking appraisal rights, the Court may order that all or a
portion of the expenses incurred by such holder of IBAH Preferred Shares in
connection with the appraisal proceeding including, without limitation,
reasonable attorneys' fees and the fees and expenses of experts, be charged pro
rata against the value of all IBAH Preferred Shares entitled to appraisal. In
the absence of such a determination or assessment, each party bears its own
expenses.
Any holder of IBAH Preferred Shares who has duly demanded an appraisal in
compliance with Section 262 will not, after the Effective Time of the Merger, be
entitled to vote the IBAH Preferred Shares subject to such demand for any
purpose or be entitled to the payment of dividends or other distributions on
those IBAH Preferred Shares (except dividends or other distributions, if any,
payable to holders of IBAH Preferred Shares of record at a date prior to the
Effective Time of the Merger).
At any time within 60 days after the Effective Time of the Merger, any
holder of IBAH Preferred Shares shall have the right to withdraw such holder's
demand for appraisal and to accept the terms offered in the Merger Agreement.
After this period, a holder of IBAH Preferred Shares may withdraw such holder's
demand for appraisal only with the consent of IBAH. If no petition for appraisal
is filed with the Court within 120 days after the Effective Time of the Merger,
holders' of IBAH Preferred Shares rights to appraisal (if available) shall cease
and all holders of IBAH Preferred Shares shall be entitled to receive the
consideration as provided for in the Merger Agreement. Inasmuch as IBAH has no
obligation to file such a petition, and has no present intention to do so, any
holder of IBAH Preferred Shares who desires such a petition to be filed is
advised to file it on a timely basis. However, no petition timely filed in the
Court demanding appraisal shall be dismissed as to any holder of IBAH Preferred
Shares without the approval of the Court, and such approval may be conditioned
upon such terms as the Court deems just.
52
<PAGE>
IBAH SPECIAL MEETING
DATE, TIME AND PLACE
The Special Meeting of IBAH stockholders will be held on June 29, 1998, at
10:00 a.m. local time, at the Sheraton Valley Forge Hotel located at 1160 First
Avenue, King of Prussia, Pennsylvania.
MATTERS TO BE CONSIDERED
The purpose of the Special Meeting is to consider and vote upon the approval
and adoption of the Merger Agreement and to transact such other business as may
properly come before the Special Meeting or any adjournments or postponements
thereof.
RECORD DATE
Record holders of IBAH Shares at the close of business on May 21, 1998, will
be entitled to vote at the Special Meeting. On the Record Date, there were
approximately 23,981,156 IBAH Common Shares issued and outstanding and
approximately 749,665 IBAH Preferred Shares issued and outstanding. Each issued
and outstanding IBAH Common Share is entitled to one vote per share with respect
to the Merger. Each issued and outstanding IBAH Preferred Share is entitled to
three votes per share with respect to the Merger.
QUORUM
The presence, in person or by proxy, of the holders of a majority of the
outstanding IBAH Shares entitled to vote shall constitute a quorum. If a meeting
cannot be organized because of the absence of a quorum, those present may,
except as otherwise provided by law, adjourn the meeting to such time and place
as they may determine.
REQUIRED VOTE
The approval of a majority of the outstanding voting power of IBAH Shares is
required to approve and adopt the Merger Agreement.
As of the Record Date, directors and executive officers of IBAH and their
affiliates were beneficial owners of approximately 25.4% of the outstanding
voting power of the IBAH Shares. Each of the directors and executive officers
has indicated an intention to vote for the proposal to approve and adopt the
Merger Agreement. The Securityholders, who collectively hold approximately 23.9%
of the outstanding voting power of the IBAH Shares (which percentage of
outstanding shares is included within the 25.4% held by IBAH's directors and
executive officers and their affiliates), have entered into the Voting Agreement
pursuant to which each of the Securityholders has agreed, among other things, to
vote the IBAH Shares owned by such Securityholder in favor of the Merger. In
addition, holders of IBAH Preferred Shares have agreed that they will not
consent to or otherwise facilitate any transaction that is inconsistent with the
Merger. See "THE MERGER AGREEMENT AND RELATED AGREEMENTS--Voting Agreement" and
"--Consent of Holders of IBAH Preferred Shares and IBAH Warrants." Attached as
Appendix C is the full text of the Voting Agreement.
PROXIES AND REVOCATION
All IBAH Shares represented by properly executed proxies received prior to
or at the Special Meeting, and not revoked, will be voted in accordance with the
instructions indicated in such proxies. If no instructions are indicated, such
proxies will be voted for the Merger. Shares of an IBAH stockholder who abstains
from voting or whose shares are not voted by reason of a broker non-vote (where
a nominee holding shares for a beneficial owner has not received voting
instructions from the beneficial owner with respect to a particular matter and
such nominee does not possess or choose to exercise discretionary
53
<PAGE>
authority with respect thereto) will be counted for purposes of determining
whether a quorum is present at the meeting so long as the stockholder is present
in person or represented by a proxy. An abstention from voting or a broker
non-vote on the Merger by a IBAH stockholder present in person or represented by
proxy at the meeting has the same legal effect as a vote "against" the Merger.
If any other business is properly brought before the Special Meeting for
consideration, the persons named in the enclosed proxy and acting thereunder
will have discretion to vote on such business in accordance with their best
judgment. IBAH will not use its discretionary authority to adjourn the meeting
to solicit stockholders if the IBAH stockholders vote against or abstain from
voting for the Merger.
A holder of IBAH Shares who executes and returns the enclosed proxy may
revoke his or her proxy at any time prior to its use by (i) delivering to the
Secretary of IBAH a signed notice of revocation or a later dated signed proxy
prior to the Special Meeting, (ii) attending the Special Meeting and voting in
person, or (iii) giving notice of revocation of the proxy at the Special
Meeting. Attendance at the Special Meeting will not in itself constitute the
revocation of a proxy. Prior to the Special Meeting, any written notice of
revocation or subsequent proxy should be sent in a manner to be received by IBAH
at or before the taking of the vote at the Special Meeting at: Four Valley
Square, 512 Township Line Road, Blue Bell, Pennsylvania 19422, Attention:
Secretary, or hand delivered to the Secretary of IBAH at such address.
SOLICITATION OF PROXIES
The expenses of this solicitation will be borne by IBAH.In addition to
solicitation by mail, arrangements will be made with brokers and other
custodians, nominees and fiduciaries to send proxy materials to their principals
and IBAH will, upon request, reimburse them for reasonable expenses of so doing.
Solicitation of proxies from some stockholders may be made by IBAH's officers
and regular employees by telephone, facsimile or in person after the initial
solicitation. In addition, D.F. King & Co., Inc. ("D.F. King") has been retained
to assist in the solicitation of proxies. D.F. King may contact holders of IBAH
Shares by mail, telephone, facsimile, telegraph and personal interviews and may
request brokers, dealers and other nominee stockholders to forward materials to
beneficial owners of IBAH Shares. D.F. King will receive reasonable and
customary compensation for its services (estimated at $3,700), will be
reimbursed for certain reasonable out-of-pocket expenses and will be indemnified
against certain liabilities and expenses in connection therewith, including
certain liabilities under the federal securities laws.
IBAH STOCKHOLDERS SHOULD NOT FORWARD STOCK CERTIFICATES TO THE EXCHANGE
AGENT UNTIL THEY HAVE RECEIVED TRANSMITTAL LETTERS. IBAH STOCKHOLDERS SHOULD NOT
RETURN STOCK CERTIFICATES WITH THE ENCLOSED PROXY.
INDEPENDENT ACCOUNTANTS
One or more representatives of Arthur Andersen LLP, independent public
accountants for IBAH, are expected to be present at the Special Meeting and will
have an opportunity to make a statement if they desire to do so and will be
available to respond to questions.
54
<PAGE>
DESCRIPTION OF OMNICARE CAPITAL STOCK
GENERAL
The authorized capital stock of Omnicare consists of 200,000,000 Omnicare
Shares, par value $1.00 per share, and 1,000,000 shares of preferred stock,
without par value. At March 31, 1998, 82,886,214 Omnicare Shares were issued and
outstanding. The Omnicare Board, without further action by the Omnicare
stockholders, is authorized to issue preferred stock in one or more series and
to designate as to any such series the dividend rate, redemption prices,
preferences on liquidation or dissolution, sinking fund terms, conversion,
voting rights and any other preferences or special rights and qualifications. As
of March 31, 1998, there was no preferred stock issued or outstanding, and the
Omnicare Board has not authorized the issuance of any preferred stock.
COMMON STOCK
The Omnicare Shares have no preemptive rights and no redemption, sinking
fund or conversion provisions. All Omnicare Shares have one vote per share on
any matter submitted to the vote of stockholders. The Omnicare Shares do not
have cumulative voting rights. Upon any liquidation of Omnicare, the holders of
Omnicare Shares are entitled to receive, on a pro rata basis, all assets then
legally available for distribution after payment of debts and liabilities and
preferences on preferred stock, if any. Holders of Omnicare Shares are entitled
to receive dividends when and as declared by the Omnicare Board out of funds
legally available therefor (subject to the prior rights of preferred stock, if
any). All outstanding Omnicare Shares are fully paid and nonassessable.
CERTAIN ANTITAKEOVER PROVISIONS
With certain exceptions, in the event a person or entity owns 10% or more of
Omnicare's stock entitled to vote, a majority of the shares not so owned is
required to authorize (1) any merger of Omnicare with such person or entity, (2)
any sale, lease or other disposition of all or substantially all of Omnicare's
assets to such person or entity or (3) certain issuances and transfers of
securities of Omnicare to such person or entity. Directors may be removed
without cause only by the affirmative vote of the holders of two-thirds of
Omnicare's capital stock entitled to vote on the election of directors. The
sections of the Omnicare Certificate described above may not be altered, amended
or repealed without approval of two-thirds of the outstanding shares of each
class entitled to vote thereon as a class. In addition, the Omnicare Board, when
evaluating any offer of another person to make a tender or exchange offer, merge
or purchase or otherwise acquire all or substantially all of the assets of
Omnicare, shall, in connection with the exercise of its judgment in determining
what is in the best interests of Omnicare and its stockholders, give due
consideration to all relevant factors, including the social and economic effects
on employees, customers, suppliers and other constituents of Omnicare and on the
communities in which Omnicare operates or is located. See "COMPARISON OF
STOCKHOLDER RIGHTS."
TRANSFER AGENT
Omnicare's transfer agent for the Omnicare Shares is Chase Mellon
Stockholder Services, LLC, Ridgefield Park, New Jersey.
55
<PAGE>
COMPARISON OF STOCKHOLDER RIGHTS
Omnicare and IBAH are each incorporated under the laws of the State of
Delaware. The holders of IBAH Common Shares whose rights as stockholders are
currently governed by Delaware law, the IBAH Certificate, and the Amended Bylaws
of IBAH (the "IBAH Bylaws"), will, upon the exchange of their shares pursuant to
the Merger, become holders of Omnicare Shares, and their rights as such will be
governed by Delaware law, the Omnicare Certificate and the Amended Bylaws of
Omnicare ("Omnicare Bylaws"). The material differences between the rights of
holders of IBAH Shares and the rights of holders of Omnicare Shares, which
result from differences in their governing corporate documents, are summarized
below.
The following summary is not intended to be complete and is qualified in its
entirety by reference to the DGCL, the IBAH Certificate, the IBAH Bylaws, the
Omnicare Certificate and the Omnicare Bylaws, as appropriate. The identification
of specific differences is not meant to indicate that other equally or more
significant differences do not exist. Copies of the IBAH Certificate, the IBAH
Bylaws, the Omnicare Certificate and the Omnicare Bylaws are incorporated by
reference herein and will be sent to holders of IBAH Shares upon request. See
"INCORPORATION OF DOCUMENTS BY REFERENCE" and "AVAILABLE INFORMATION."
AUTHORIZED CAPITAL
The IBAH Certificate provides for authorized stock consisting of 50,000,000
IBAH Common Shares, $.01 par value, and 2,000,000 shares of preferred stock,
$.01 par value, of which 999,554 shares have been designated Series A
Convertible Preferred Stock.
The Omnicare Certificate provides for authorized stock consisting of
200,000,000 shares of Omnicare Common Stock, $1.00 par value, and 1,000,000
shares of Omnicare Preferred Stock, without par value.
ELECTION AND SIZE OF BOARD OF DIRECTORS
Under Delaware law, directors, unless their terms are staggered, are elected
at each annual stockholder meeting. Vacancies on the board of directors may be
filled by the stockholders or directors, unless the certificate of incorporation
or a bylaw provides otherwise. The certificate of incorporation may authorize
the election of certain directors by one or more classes or series of shares,
and the certificate of incorporation, an initial bylaw or a bylaw adopted by a
vote of the stockholders may provide for staggered terms for the directors. The
certificate of incorporation or the bylaws also may allow the stockholders or
the board of directors to fix or change the number of directors, but a
corporation must have at least one director. Under Delaware law, stockholders do
not have cumulative voting rights unless the certificate of incorporation so
provides.
The IBAH Certificate and IBAH Bylaws provide for a classified board of
directors, whereby directors, other than those elected by holders of any series
of preferred stock voting as a single class, are divided into three classes,
serving staggered three year terms. Those directors elected by holders of any
series of preferred stock voting as a single class are elected at the annual
meeting of stockholders for a term of office to expire at the following annual
meeting of stockholders.
The IBAH Bylaws fix the number of directors at not less than five nor more
than eleven directors. Currently, there are 9 directors. The IBAH Bylaws provide
that the number of directors are to be fixed by resolution of the IBAH Board.
The Omnicare Bylaws provide that directors are elected by a vote of a
majority of the directors then in office (whether or not sufficient in number to
constitute a quorum), or by a sole remaining director, or by a plurality of the
votes cast at the meeting of stockholders held for that purpose.
56
<PAGE>
The Omnicare Bylaws provide for a non-staggered board of directors to
consist of not less than 3 nor more than 30 directors, each serving one year
terms and until such director's successor is elected and qualified. The exact
number shall be fixed by resolution of the Omnicare Board. The Omnicare Board is
currently comprised of 15 directors each serving until the next annual meeting
of stockholders and until their respective successors are elected or appointed.
The Omnicare Bylaws provide that the size of the Omnicare Board may be increased
by the vote of a majority of directors then in office or by the affirmative vote
of the holders of a majority of the outstanding shares of all classes of stock
entitled to vote thereon.
REMOVAL OF DIRECTORS
Under the DGCL, a director of a corporation that does not have a classified
board of directors or cumulative voting may be removed (with or without cause)
with the approval of a majority of the outstanding shares entitled to vote.
The IBAH Certificate provides that any director, other than those elected by
the holders of any series of preferred stock voting as a single class, may be
removed, but only for cause and only by the affirmative vote of 75 percent of
the shares then entitled to vote at the election of directors. Any director
elected by the holders of any series of preferred stock voting as a single class
may be removed (with or without cause) by the holders of a majority of the
shares of such series of preferred stock.
The Omnicare Certificate provides that a director may be removed without
cause only by the holders of two-thirds of the shares then entitled to vote at
the election of directors. The term "cause" means (a) negligence or misconduct
in the director's performance if such director did not act in good faith and in
a manner which such director reasonably believed to be in the best interests of
Omnicare, or (b) the commission of an unlawful act which such director had
reasonable cause to believe was unlawful.
VACANCIES ON THE BOARD OF DIRECTORS
Under Delaware law, the board of directors of a corporation may fill any
vacancy on the board, including vacancies resulting from an increase in the
number of directors.
The IBAH Certificate and IBAH Bylaws provide that any vacancies on the IBAH
Board may be filled by the affirmative vote of a majority of the remaining
directors, though less than a quorum, and directors so chosen will hold office
for a term expiring at the annual meeting of stockholders at which the term of
office of the class to which they have been elected expires. If a director
elected by the holders of any series of preferred stock entitled to vote
separately as a single class is removed by such holders, and if the holders fail
to elect anyone to fill the vacancy, such position will remain vacant until the
holders of such series of preferred stock elect a director to fill the position.
The position will not be filled by resolution of the IBAH Board nor by IBAH's
other stockholders.
The Omnicare Bylaws provide that any vacancy, whether caused by resignation,
removal, death or any other reason, and newly created directorships resulting
from any increase in the authorized number of directors, may be filled either by
a majority vote of the directors then remaining in office (whether or not
sufficient in number to constitute a quorum), or by a sole remaining director,
or by a plurality of the votes cast at the meeting of stockholders held for that
purpose. In the event that one or more directors shall resign from the Omnicare
Board, effective at a future date, a majority of the directors then in office,
including those who have so resigned effective at a future date, shall have
power to fill the vacancy or vacancies which will result when such resignation
or resignations become effective, the vote thereon to take effect when such
resignation or resignations become effective.
57
<PAGE>
AMENDMENTS TO CHARTER
Under Delaware law, unless a higher vote is required in the certificate of
incorporation, an amendment to the certificate of incorporation of a corporation
may be approved by a majority of the outstanding shares entitled to vote upon
the proposed amendment.
The IBAH Certificate may be amended, altered or repealed in any manner
provided by law, except that the approval of 75 percent of the voting power of
all of the then outstanding shares entitled to vote generally in the election of
directors, voting together as a single class, is required to amend or repeal the
provisions of the IBAH Certificate relating to (a) the election and term of
directors, (b) newly created directorships and vacancies, (c) removal of
directors and (d) the amendment, repeal or alteration of any of the foregoing.
The Omnicare Certificate provides that the provisions of the Omnicare
Certificate may be amended or repealed in the manner provided by law, except
that the approval of two-thirds of each class entitled to vote thereon is
required to amend or repeal the provisions of the Omnicare Certificate relating
to (a) the power of the Omnicare Board to amend or repeal the Omnicare Bylaws,
(b) business combinations with interested stockholders described in "Vote on
Extraordinary Corporate Transactions; Business Combination Restrictions" below,
(c) removal of directors without cause, (d) directors' liability, and (e)
indemnification of directors, officers and employees.
DIVIDENDS
Subject to any restrictions contained in a corporation's certificate of
incorporation, Delaware law generally provides that a corporation may declare
and pay dividends out of "surplus" (defined as the excess, if any, of net assets
(total assets less total liabilities) over capital) or, when no surplus exists,
out of net profits for the fiscal year in which the dividend is declared and/or
the preceding fiscal year, except that dividends may not be paid out of net
profits if the capital of the corporation is less than the amount of capital
represented by the issued and outstanding stock of all classes having a
preference upon the distribution of assets. In accordance with the DGCL,
"capital" is determined by the board of directors and shall not be less than the
aggregate par value of the outstanding capital stock of the corporation having
par value.
The IBAH Bylaws provide that the IBAH Board may declare dividends at any
regular or special meeting, pursuant to law. Dividends may be paid in cash,
property or its own shares pursuant to law and subject to the provisions of the
IBAH Certificate.
The Omnicare Certificate and Omnicare Bylaws are silent as to the
declaration and payment of dividends.
VOTE ON EXTRAORDINARY CORPORATE TRANSACTIONS; BUSINESS COMBINATION RESTRICTIONS
The DGCL generally provides that, unless otherwise specified in a
corporation's certificate of incorporation or unless the provisions of the DGCL
relating to business combinations indicated herein are applicable, a sale or
other disposition of all or substantially all of the corporation's assets, a
merger or consolidation of the corporation with another corporation or a
dissolution of the corporation requires the affirmative vote of the board of
directors plus the affirmative vote of a majority of the outstanding stock
entitled to vote thereon.
Pursuant to the Omnicare Certificate, a merger or consolidation of Omnicare
with, a disposition of a substantial part of Omnicare's assets to or with, the
transfer of Omnicare securities in exchange for assets or securities with a fair
market value of $5 million or more to, or the transfer of Omnicare securities
for cash to, a person or entity beneficially owning 10% or more of the
outstanding shares of Omnicare capital stock entitled to vote in the election of
directors, requires the approval of the holders of a majority of the outstanding
shares of Omnicare capital stock not beneficially owned by such person or
entity. No such
58
<PAGE>
approval is required for a transaction: (a) with another corporation of which
Omnicare is the majority stockholder, (b) with another person or entity, if the
Omnicare Board approved a memorandum of understanding with such person or entity
before such person or entity became a 10% stockholder of Omnicare, or (c)
approved unanimously by the Omnicare Board prior to the consummation thereof.
Neither the IBAH Certificate nor the IBAH Bylaws address the issue of
extraordinary business transactions or business combinations.
59
<PAGE>
RECENT DEVELOPMENTS
On February 23, 1998, Omnicare and CompScript entered into an Agreement and
Plan of Merger (the "CompScript Merger Agreement"). The CompScript Merger
Agreement provides for a stock-for-stock merger, whereby each outstanding share
of CompScript common stock (a "CompScript Share") is converted into the right to
receive such number of Omnicare Shares equal to $4.50 divided by the Omnicare
Market Value (the "CompScript Conversion Number"), provided, however, that (i)
if the Omnicare Market Value is less than $29.325, the Omnicare Market Value
shall be deemed to be $29.325 and (ii) if the Omnicare Market Value is more than
$39.675, the Omnicare Market Value shall be deemed to be $39.675. "Omnicare
Market Value" means the average of the closing prices of the Omnicare Shares on
the NYSE for the 10 trading days immediately preceding the fifth trading day
prior to the closing date contemplated by the CompScript Merger Agreement. In
the event of any change in the CompScript Shares or the Omnicare Shares by
reason of any stock split, readjustment, stock dividend, exchange of shares,
reclassification, recapitalization or similar event, the amounts set forth in
clauses (i) and (ii) above shall be appropriately adjusted. Notwithstanding the
foregoing, in the event the Omnicare Market Value is less than $24.15 or more
than $44.85, Omnicare and CompScript will seek to renegotiate a new acceptable
CompScript Conversion Number which will then replace the CompScript Conversion
Number described above. In the event that Omnicare and CompScript are unable to
establish a mutually acceptable CompScript Conversion Number within two business
days after the scheduled closing date of the CompScript Merger, then if the
Omnicare Market Value is (i) less than $24.15, CompScript shall have the right
to terminate the CompScript Merger Agreement or (ii) more than $44.85, Omnicare
shall have the right to terminate the CompScript Merger Agreement. Any such
termination shall be deemed a termination by mutual consent in accordance with
termination provisions of the CompScript Merger Agreement.
CompScript has represented to Omnicare that as of February 23, 1998, its
issued and outstanding stock consisted of 14,072,063 CompScript Shares and no
shares of preferred stock. As of such date, options to purchase 1,548,262
CompScript Shares were outstanding.
The CompScript Merger is structured as a "pooling of interests" and a
reorganization. CompScript is a comprehensive provider of pharmacy services
equipped to both lower costs and improve the quality of care to its customers.
CompScript offers a broad range of pharmacy, infusion therapy, consulting and
mail order pharmacy services to managed care networks and their patients,
long-term and subacute care facilities and home health patients. CompScript's
proprietary pharmacy management capabilities combine sophisticated clinical
tools with the latest technologies in databases and drug profiles. Reports,
proxy statements and other information filed by CompScript can be inspected at
the Commission and at The Nasdaq SmallCap Market. See "AVAILABLE INFORMATION."
60
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined financial information combines
the historical consolidated statements of income of (i) Omnicare and IBAH after
giving effect to the Merger, as if the Merger had occurred on January 1, 1995,
and the historical balance sheet of Omnicare and IBAH as if the Merger had
occurred on March 31, 1998, in each case using the "pooling of interests" method
of accounting; and (ii) Omnicare, IBAH and CompScript after giving effect to the
Merger and assuming the consummation of the CompScript Merger, also based on the
"pooling of interests" method of accounting. There can be no assurances that the
CompScript Merger will be consummated. The information shown below should be
read in conjunction with the historical financial statements of Omnicare, IBAH
and CompScript. See "AVAILABLE INFORMATION" and "INCORPORATION OF DOCUMENTS BY
REFERENCE." See "RECENT DEVELOPMENTS" for information concerning CompScript and
the CompScript Merger.
The pro forma amounts below are presented for informational purposes only
and are not necessarily indicative of the results of operations of the combined
company that would have actually occurred had the Merger and the CompScript
Merger been consummated as of January 1, 1995 or of the financial condition of
the combined company had the Merger and the CompScript Merger been consummated
as of March 31, 1998 or of the future results of operations or financial
condition of the combined company. The pro forma information does not reflect
any synergies anticipated as a result of (i) the Merger and the CompScript
Merger, and in particular the elimination of costs associated with IBAH's and
CompScript's status as public companies and other administrative savings, and
(ii) the CompScript Merger, and in particular improvements in gross margins
attributable to Omnicare's purchasing leverage associated with purchases of
pharmaceuticals and other products. There can be no assurances that such
synergies will be realized. In addition, (a) the pro forma income statement
information does not reflect investment banking, legal and miscellaneous
transaction costs related to the Merger and the CompScript Merger and (b) the
pro forma income statement and balance sheet information does not reflect costs
associated with the combining of the companies, which costs Omnicare and IBAH
cannot presently estimate. See "RISK FACTORS."
61
<PAGE>
UNAUDITED PRO FORMA INCOME STATEMENT
QUARTER ENDED MARCH 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMBINED COMBINED
IBAH OMNICARE COMPSCRIPT OMNICARE,
OMNICARE, IBAH, AS PRO FORMA AND COMPSCRIPT, PRO FORMA IBAH AND
AS REPORTED REPORTED ADJUSTMENTS IBAH AS REPORTED ADJUSTMENTS COMPSCRIPT
----------- ----------- --------------- ----------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales and service
revenues.................. $ 299,752 $ 26,657 $ 326,409 $ 13,849 $ -- $ 340,258
Cost of sales and
services.................. 212,734 15,260 227,994 8,033 2,909(a) 238,936
----------- ----------- ----------- ------------- ------ -----------
Gross profit................ 87,018 11,397 98,415 5,816 (2,909) 101,322
Selling, general and
administrative expenses... 51,347 9,922 61,269 5,176 (2,909)(a) 63,536
Acquisition expenses,
"pooling of interests".... 491 -- 491 -- -- 491
----------- ----------- ----------- ------------- ------ -----------
Operating income............ 35,180 1,475 36,655 640 -- 37,295
Investment income........... 1,444 -- 1,444 2 -- 1,446
Interest expense............ (4,534) (71) (4,605) (166) -- (4,771)
----------- ----------- ----------- ------------- ------ -----------
Income before income
taxes..................... 32,090 1,404 33,494 476 -- 33,970
Income taxes................ 12,741 645 13,386 178 -- 13,564
----------- ----------- ----------- ------------- ------ -----------
Income from continuing
operations................ $ 19,349 $ 759 $ 20,108 $ 298 $ -- $ 20,406
----------- ----------- ----------- ------------- ------ -----------
----------- ----------- ----------- ------------- ------ -----------
Earnings per share from
continuing operations:
Basic..................... $ .23 $ .23 $ .23
----------- ----------- -----------
----------- ----------- -----------
Diluted................... $ .23 $ .23 $ .23
----------- ----------- -----------
----------- ----------- -----------
Weighted average number of
common shares outstanding:
Basic..................... 82,439 3,806(b) 86,245 1,788(c) 88,033
----------- ----- ----------- ------ -----------
----------- ----- ----------- ------ -----------
Diluted................... 82,695 4,512(b) 87,207 1,788(c) 88,995
----------- ----- ----------- ------ -----------
----------- ----- ----------- ------ -----------
</TABLE>
- ------------------------
(a) Represents reclassification to conform CompScript's cost of sales to
Omnicare's accounting policies.
(b) Represents the IBAH weighted average shares outstanding for the period
adjusted for the implied Conversion Number of 0.1618, assuming an Omnicare
Average Market Price of $35.5333.
(c) Represents the CompScript weighted average shares outstanding for the period
adjusted for the implied CompScript Conversion Number of 0.1271, assuming an
Omnicare Market Value of $35.4125.
62
<PAGE>
UNAUDITED PRO FORMA INCOME STATEMENT
QUARTER ENDED MARCH 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMBINED COMBINED
IBAH OMNICARE COMPSCRIPT OMNICARE,
OMNICARE, IBAH, AS PRO FORMA AND COMPSCRIPT, PRO FORMA IBAH AND
AS REPORTED REPORTED ADJUSTMENTS IBAH AS REPORTED ADJUSTMENTS COMPSCRIPT
----------- ----------- --------------- ----------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales and service
revenues.................. $ 181,608 $ 19,317 $ 200,925 $ 11,499 $ -- $ 212,424
Cost of sales and
services.................. 128,903 10,659 139,562 6,795 2,771(a) 149,128
----------- ----------- ----------- ------------- ------ -----------
Gross profit................ 52,705 8,658 61,363 4,704 (2,771) 63,296
Selling, general and
administrative expenses... 30,570 8,129 38,699 4,818 (2,771)(a) 40,746
Acquisition expenses,
"pooling of interests".... 978 -- 978 613 -- 1,591
----------- ----------- ----------- ------------- ------ -----------
Operating income............ 21,157 529 21,686 (727) -- 20,959
Investment income........... 1,802 152 1,954 11 -- 1,965
Interest expense............ (290) -- (290) (100) -- (390)
Other expense............... -- -- -- (800) -- (800)
----------- ----------- ----------- ------------- ------ -----------
Income before income
taxes..................... 22,669 681 23,350 (1,616) -- 21,734
Income taxes................ 9,226 236 9,462 -- -- 9,462
----------- ----------- ----------- ------------- ------ -----------
Income from continuing
operations................ $ 13,443 $ 445 $ 13,888 $ (1,616) $ -- $ 12,272
----------- ----------- ----------- ------------- ------ -----------
----------- ----------- ----------- ------------- ------ -----------
Earnings per share from
continuing operations:
Basic..................... $ .17 $ .17 $ .15
----------- ----------- -----------
----------- ----------- -----------
Diluted................... $ .17 $ .17 $ .15
----------- ----------- -----------
----------- ----------- -----------
Weighted average number of
common shares outstanding:
Basic..................... 78,065 3,633(b) 81,698 1,724(c) 83,422
----------- ----- ----------- ------ -----------
----------- ----- ----------- ------ -----------
Diluted................... 78,218 4,617(b) 82,835 1,724(c) 84,559
----------- ----- ----------- ------ -----------
----------- ----- ----------- ------ -----------
</TABLE>
- ------------------------
(a) Represents reclassification to conform CompScript's cost of sales to
Omnicare's accounting policies.
(b) Represents the IBAH weighted average shares outstanding for the period
adjusted for the implied Conversion Number of 0.1618, assuming an Omnicare
Average Market Price of $35.5333.
(c) Represents the CompScript weighted average shares outstanding for the period
adjusted for the implied CompScript Conversion Number of 0.1271, assuming an
Omnicare Market Value of $35.4125.
63
<PAGE>
UNAUDITED PRO FORMA INCOME STATEMENT
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMBINED COMBINED
IBAH OMNICARE COMPSCRIPT OMNICARE,
OMNICARE, IBAH, AS PRO FORMA AND COMPSCRIPT, PRO FORMA IBAH AND
AS REPORTED REPORTED ADJUSTMENTS IBAH AS REPORTED ADJUSTMENTS COMPSCRIPT
----------- ---------- ------------- ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales and service
revenues................ $ 895,702 $ 88,051 $ 983,753 $ 50,631 $ -- $ 1,034,384
Cost of sales and
services................ 636,577 48,106 684,683 29,944 11,296(b) 725,923
----------- ---------- ---------- ----------- ----------- ------------
Gross profit.............. 259,125 39,945 299,070 20,687 (11,296) 308,461
Selling, general and
administrative
expenses................ 152,061 37,020 189,081 21,265 (11,296)(b) 199,050
Acquisition expenses,
"pooling of
interests".............. 3,456 176 3,632 689 -- 4,321
Nonrecurring expenses..... 6,313 1,208 7,521 -- -- 7,521
----------- ---------- ---------- ----------- ----------- ------------
Operating income.......... 97,295 1,541 98,836 (1,267) -- 97,569
Investment income......... 5,059 616 5,675 45 -- 5,720
Interest expense.......... (5,564) (417) (5,981) (575) -- (6,556)
Other expense............. -- -- -- (800) -- (800)
----------- ---------- ---------- ----------- ----------- ------------
Income before income
taxes................... 96,790 1,740 98,530 (2,597) -- 95,933
Income taxes.............. 41,085 983 42,068 (240) -- 41,828
----------- ---------- ---------- ----------- ----------- ------------
Income/(loss) from
continuing operations... $ 55,705 $ 757 $ 56,462 $ (2,357) $ -- $ 54,105
----------- ---------- ---------- ----------- ----------- ------------
----------- ---------- ---------- ----------- ----------- ------------
Earnings per share from
continuing operations:
Basic................... $ .70 $ .67 $ .63
----------- ---------- ------------
----------- ---------- ------------
Diluted................. $ .69 $ .67 $ .62
----------- ---------- ------------
----------- ---------- ------------
Weighted average number of
common shares
outstanding:
Basic................... 80,144 3,714(a) 83,858 1,755(c) 85,613
----------- ----- ---------- ----------- ------------
----------- ----- ---------- ----------- ------------
Diluted................. 80,303 4,563(a) 84,866 1,755(c) 86,621
----------- ----- ---------- ----------- ------------
----------- ----- ---------- ----------- ------------
</TABLE>
- ------------------------
(a) Represents the IBAH weighted average shares outstanding for the year
adjusted for the implied Conversion Number of 0.1618, assuming an Omnicare
Average Market Price of $35.5333.
(b) Represents reclassification to conform CompScript's cost of sales to
Omnicare's accounting policies.
(c) Represents the CompScript weighted average shares outstanding for the year
adjusted for the implied CompScript Conversion Number of 0.1271, assuming an
Omnicare Market Value of $35.4125.
64
<PAGE>
UNAUDITED PRO FORMA INCOME STATEMENT
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
IBAH COMBINED COMPSCRIPT
OMNICARE, IBAH, PRO FORMA OMNICARE AND COMPSCRIPT, PRO FORMA
AS REPORTED AS REPORTED ADJUSTMENTS IBAH AS REPORTED ADJUSTMENTS
----------- ----------- --------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sales and service revenues..... $ 536,604 $ 62,120 $ 598,724 $ 42,716 $ --
Cost of sales and services..... 381,768 30,786 412,554 25,691 9,996(b)
----------- ----------- ------------- ----------- -------------
Gross profit................... 154,836 31,334 186,170 17,025 (9,996)
Selling, general and
administrative expenses...... 89,636 29,870 119,506 17,086 (9,996)(b)
Acquisition expenses, "pooling
of interests"................ 690 -- 690 934 --
Nonrecurring expenses.......... -- 510 510 -- --
----------- ----------- ------------- ----------- -------------
Operating income............... 64,510 954 65,464 (995) --
Investment income.............. 11,285 796 12,081 58 --
Interest expense............... (3,652) (321) (3,973) (359) --
----------- ----------- ------------- ----------- -------------
Income before income taxes..... 72,143 1,429 73,572 (1,296) --
Income taxes................... 28,693 60 28,753 (140) --
----------- ----------- ------------- ----------- -------------
Income/(loss) from continuing
operations................... $ 43,450 $ 1,369 $ 44,819 $ (1,156) $ --
----------- ----------- ------------- ----------- -------------
----------- ----------- ------------- ----------- -------------
Earnings per share from
continuing operations:
Basic...................... $ .67 $ .66
----------- -------------
----------- -------------
Diluted.................... $ .61 $ .59
----------- -------------
----------- -------------
Weighted average number of
common shares outstanding:
Basic...................... 65,298 2,936(a) 68,234 1,584(c)
----------- ----- ------------- -------------
----------- ----- ------------- -------------
Diluted.................... 75,322 4,046(a) 79,368 1,640(c)
----------- ----- ------------- -------------
----------- ----- ------------- -------------
<CAPTION>
COMBINED
OMNICARE, IBAH
AND COMPSCRIPT
---------------
<S> <C>
Sales and service revenues..... $ 641,440
Cost of sales and services..... 448,241
---------------
Gross profit................... 193,199
Selling, general and
administrative expenses...... 126,596
Acquisition expenses, "pooling
of interests"................ 1,624
Nonrecurring expenses.......... 510
---------------
Operating income............... 64,469
Investment income.............. 12,139
Interest expense............... (4,332)
---------------
Income before income taxes..... 72,276
Income taxes................... 28,613
---------------
Income/(loss) from continuing
operations................... $ 43,663
---------------
---------------
Earnings per share from
continuing operations:
Basic...................... $ .63
---------------
---------------
Diluted.................... $ .57
---------------
---------------
Weighted average number of
common shares outstanding:
Basic...................... 69,818
---------------
---------------
Diluted.................... 81,008
---------------
---------------
</TABLE>
- ------------------------
(a) Represents the IBAH weighted average shares outstanding for the year
adjusted for the implied Conversion Number of 0.1618, assuming an Omnicare
Average Market Price of $35.5333.
(b) Represents reclassification to conform CompScript's cost of sales to
Omnicare's accounting policies.
(c) Represents the CompScript weighted average shares outstanding for the year
adjusted for the implied CompScript Conversion Number of 0.1271, assuming an
Omnicare Market Value of $35.4125.
65
<PAGE>
UNAUDITED PRO FORMA INCOME STATEMENT
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMBINED
IBAH COMBINED COMPSCRIPT OMNICARE,
OMNICARE, IBAH, AS PRO FORMA OMNICARE COMPSCRIPT, PRO FORMA IBAH AND
AS REPORTED REPORTED ADJUSTMENTS AND IBAH AS REPORTED ADJUSTMENTS COMPSCRIPT
----------- ----------- ------------- ----------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales and service revenues... $ 399,636 $ 42,866 $ 442,502 $ 34,857 $ -- $ 477,359
Cost of sales and services... 287,715 23,847 311,562 19,960 8,157(b) 339,679
----------- ----------- ----------- ------------- ------------- -----------
Gross profit................. 111,921 19,019 130,940 14,897 (8,157) 137,680
Selling, general and
administrative expenses.... 66,970 21,921 88,891 14,633 (8,157)(b) 95,367
Acquisition expenses,
"pooling of interests"..... 1,292 -- 1,292 -- -- 1,292
Nonrecurring expenses........ -- -- -- 4,000 -- 4,000
----------- ----------- ----------- ------------- ------------- -----------
Operating income............. 43,659 (2,902) 40,757 (3,736) -- 37,021
Investment income............ 3,475 234 3,709 75 -- 3,784
Interest expense............. (5,954) (345) (6,299) (313) -- (6,612)
----------- ----------- ----------- ------------- ------------- -----------
Income before income taxes... 41,180 (3,013) 38,167 (3,974) -- 34,193
Income taxes................. 16,420 -- 16,420 252 -- 16,672
----------- ----------- ----------- ------------- ------------- -----------
Income/(loss) from continuing
operations................. 24,760 (3,013) 21,747 (4,226) -- 17,521
Deemed dividend on preferred
stock...................... -- (2,712) (2,712) -- -- (2,712)
----------- ----------- ----------- ------------- ------------- -----------
Income/(loss) from continuing
operations available to
common stockholders........ $ 24,760 $ (5,725) $ 19,035 $ (4,226) $ -- $ 14,809
----------- ----------- ----------- ------------- ------------- -----------
----------- ----------- ----------- ------------- ------------- -----------
Earnings per share from
continuing operations
available to common
stockholders:
Basic...................... $ .47 $ .35 $ .26
----------- ----------- -----------
----------- ----------- -----------
Diluted.................... $ .43 $ .33 $ .26
----------- ----------- -----------
----------- ----------- -----------
Weighted average number of
common shares outstanding:
Basic...................... 52,396 2,310(a) 54,706 1,454(c) 56,160
----------- ------------- ----------- ------------- -----------
----------- ------------- ----------- ------------- -----------
Diluted.................... 65,074 2,816(a) 67,890 1,454(c) 69,344
----------- ------------- ----------- ------------- -----------
----------- ------------- ----------- ------------- -----------
</TABLE>
- ------------------------
(a) Represents the IBAH weighted average shares outstanding for the year
adjusted for the implied Conversion Number of 0.1618, assuming an Omnicare
Average Market Price of $35.5333.
(b) Represents reclassification to conform CompScript's cost of sales to
Omnicare's accounting policies.
(c) Represents the CompScript weighted average shares outstanding for the year
adjusted for the implied CompScript Conversion Number of 0.1271, assuming an
Omnicare Market Value of $35.4125.
66
<PAGE>
UNAUDITED PRO FORMA BALANCE SHEET
MARCH 31, 1998
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
IBAH COMBINED COMPSCRIPT
OMNICARE, IBAH, AS PRO FORMA OMNICARE COMPSCRIPT, PRO FORMA
AS REPORTED REPORTED ADJUSTMENTS AND IBAH AS REPORTED ADJUSTMENTS
----------- --------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................... $ 119,882 $ 10,010 $ -- $ 129,892 $ 1,213 $ --
Short-term investments.......................... -- 2,102 -- 2,102 -- --
Accounts receivable, less allowances............ 238,659 33,352 -- 272,011 10,169 --
Inventories..................................... 98,018 -- -- 98,018 3,298 --
Deferred income tax benefits.................... 15,267 -- -- 15,267 260 --
Other current assets............................ 18,935 1,956 -- 20,891 1,680 --
----------- --------- ----------- ----------- ----------- ------
Total current assets.......................... 490,761 47,420 -- 538,181 16,620 --
Properties & equipment, at cost less accumulated
depreciation.................................... 86,885 14,226 -- 101,111 3,823 --
Goodwill, less accumulated amortization........... 720,270 33,140 -- 753,410 92 --
Other assets...................................... 40,318 1,177 -- 41,495 332 --
----------- --------- ----------- ----------- ----------- ------
Total assets...................................... $ 1,338,234 $ 95,963 $ -- $ 1,434,197 $ 20,867 $ --
----------- --------- ----------- ----------- ----------- ------
----------- --------- ----------- ----------- ----------- ------
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................ $ 60,432 $ 2,389 $ -- $ 62,821 $ 5,694 $ --
Amounts payable pursuant to acquisition
agreements.................................... 6,000 -- -- 6,000 -- --
Current portion of long-term debt............... 2,810 2,964 -- 5,774 7,451 --
Income taxes payable............................ 8,676 -- -- 8,676 -- --
Accrued employee compensation................... 19,974 -- -- 19,974 349 --
Deferred revenue................................ -- 17,060 -- 17,060 -- --
Other current liabilities....................... 39,503 16,513 5,223(c) 61,239 185 4,934(c)
----------- --------- ----------- ----------- ----------- ------
Total current liabilities......................... 137,395 38,926 5,223 181,544 13,679 4,934
----------- --------- ----------- ----------- ----------- ------
Long-term debt.................................... 350,468 5,242 -- 355,710 718 --
Deferred income taxes............................. 9,168 -- -- 9,168 215 --
Amounts payable pursuant to acquisition
agreements...................................... 10,769 -- -- 10,769 -- --
Other noncurrent liabilities...................... 19,096 514 -- 19,610 223 --
----------- --------- ----------- ----------- ----------- ------
Total liabilities................................. 526,896 44,682 5,223 576,801 14,835 4,934
Stockholders' equity:
Preferred stock................................... -- 7 (7)(a) -- -- --
Common stock...................................... 82,919 235 3,939(a) 87,093 1 1,787(b)
Paid-in-capital................................... 542,045 76,368 (3,932)(a) 614,481 12,364 (1,787)(b)
Retained earnings (deficit)....................... 202,432 (25,302) (5,223)(c) 171,907 (6,333) (4,934)(c)
Treasury stock, at cost........................... (1,223) -- -- (1,223) -- --
Deferred compensation............................. (14,421) -- -- (14,421) -- --
Unallocated stock of ESOP......................... (414) -- -- (414) -- --
Cumulative translation adjustment................. -- (27) -- (27) -- --
----------- --------- ----------- ----------- ----------- ------
Total stockholders' equity.................... 811,338 51,281 (5,223) 857,396 6,032 (4,934)
----------- --------- ----------- ----------- ----------- ------
Contingencies
Total liabilities and stockholders' equity.... $ 1,338,234 $ 95,963 $ -- $ 1,434,197 $ 20,867 $ --
----------- --------- ----------- ----------- ----------- ------
----------- --------- ----------- ----------- ----------- ------
<CAPTION>
COMBINED
OMNICARE,
IBAH AND
COMPSCRIPT
---------------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents....................... $ 131,105
Short-term investments.......................... 2,102
Accounts receivable, less allowances............ 282,180
Inventories..................................... 101,316
Deferred income tax benefits.................... 15,527
Other current assets............................ 22,571
---------------
Total current assets.......................... 554,801
Properties & equipment, at cost less accumulated
depreciation.................................... 104,934
Goodwill, less accumulated amortization........... 753,502
Other assets...................................... 41,827
---------------
Total assets...................................... $ 1,455,064
---------------
---------------
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................ $ 68,515
Amounts payable pursuant to acquisition
agreements.................................... 6,000
Current portion of long-term debt............... 13,225
Income taxes payable............................ 8,676
Accrued employee compensation................... 20,323
Deferred revenue................................ 17,060
Other current liabilities....................... 66,358
---------------
Total current liabilities......................... 200,157
---------------
Long-term debt.................................... 356,428
Deferred income taxes............................. 9,383
Amounts payable pursuant to acquisition
agreements...................................... 10,769
Other noncurrent liabilities...................... 19,833
---------------
Total liabilities................................. 596,570
Stockholders' equity:
Preferred stock................................... --
Common stock...................................... 88,881
Paid-in-capital................................... 625,058
Retained earnings (deficit)....................... 160,640
Treasury stock, at cost........................... (1,223)
Deferred compensation............................. (14,421)
Unallocated stock of ESOP......................... (414)
Cumulative translation adjustment................. (27)
---------------
Total stockholders' equity.................... 858,494
---------------
Contingencies
Total liabilities and stockholders' equity.... $ 1,455,064
---------------
---------------
</TABLE>
- ------------------------
(a) Represents the actual IBAH shares outstanding at March 31, 1998 adjusted for
the implied Conversion Number of 0.1618, assuming an Omnicare Average Market
Price of $35.5333 and the elimination of the IBAH common and preferred
stock.
(b) Represents the actual CompScript shares outstanding at March 31, 1998
adjusted for the implied CompScript Conversion Number of 0.1271, assuming an
Omnicare Market Value of $35.4125 and the elimination of the CompScript
common stock.
(c) To record accrued liabilities associated with the mergers relating to the
estimated merger and transaction costs. The pro forma information does not
reflect other costs associated with combining of the companies, which
Omnicare, IBAH and CompScript cannot currently estimate.
67
<PAGE>
EXPERTS
The consolidated audited financial statements of IBAH incorporated by
reference in this Proxy Statement/Prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are included herein in reliance upon the authority of said
firm as experts in giving said reports.
The consolidated financial statements of Omnicare incorporated in this Proxy
Statement/Prospectus by reference to the Annual Report on Form 10-K of Omnicare
for the year ended December 31, 1997 have been so incorporated in reliance on
the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
LEGAL OPINIONS
The validity of the Omnicare Shares to be issued by Omnicare in connection
with the Merger will be passed upon by Dewey Ballantine LLP, New York, New York.
Certain tax matters relating to the Merger will be passed upon (i) for IBAH
by Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania and (ii) for Omnicare
by Dewey Ballantine LLP, New York, New York. Thomas J. Sharbaugh, a partner of
Morgan, Lewis & Bockius LLP, is the trustee of a trust which is a stockholder of
IBAH, which stockholder is a party to the Voting Agreement.
STOCKHOLDER PROPOSALS FOR NEXT
IBAH ANNUAL MEETING
The deadline has passed for stockholder proposals intended to be considered
for inclusion in IBAH's proxy statement for presentation at the 1998 annual
meeting of the stockholders of IBAH. Such stockholder proposals must have been
received by IBAH by January 2, 1998. If the Merger is consummated, no 1998
annual meeting will be held.
68
<PAGE>
GLOSSARY
The following terms used in this Proxy Statement/Prospectus have the
meanings set forth below:
<TABLE>
<CAPTION>
TERM DEFINITION OR SECTION IN WHICH DEFINED
- ------------------------------------- --------------------------------------------------------------------------
<S> <C>
Acquisition Proposal Has the meaning set forth in "THE MERGER AGREEMENT AND RELATED
AGREEMENTS--Exclusivity."
Acquisition Transaction Has the meaning set forth in "THE MERGER AGREEMENT AND RELATED
AGREEMENTS--Stock Option Agreement."
Affiliate Letter Has the meaning set forth in "THE MERGER AGREEMENT AND RELATED
AGREEMENTS--Resales of Omnicare Shares."
Alternative Transactions Has the meaning set forth in "THE MERGER AGREEMENT AND RELATED
AGREEMENTS--Voting Agreement."
Antitrust Division The Antitrust Division of the Department of Justice.
Assumed Option Each Existing Option existing immediately after the Effective Time.
Cash Payment Has the meaning set forth in "THE MERGER AGREEMENT AND RELATED
AGREEMENTS--Stock Option Agreement."
Certificate Certificate representing IBAH Shares.
Closing The closing of the Merger.
Closing Date The date the Merger closes.
Code The Internal Revenue Code of 1986, as amended.
Commission The Securities and Exchange Commission.
CompScript CompScript, Inc., a Florida corporation.
CompScript Conversion Number Has the meaning set forth in "RECENT DEVELOPMENTS."
CompScript Merger Has the meaning set forth in "SELECTED UNAUDITED PRO FORMA COMBINED
FINANCIAL DATA."
Conversion Number The number of Omnicare Shares exchanged for each IBAH Common Share.
D.F. King D.F. King & Co., Inc.
DGCL The Delaware General Corporation Law.
Dissenting Shares Has the meaning set forth in "APPRAISAL RIGHTS AVAILABLE TO HOLDERS OF
IBAH PREFERRED SHARES."
Effective Time The date and time when the Merger shall become effective.
Exchange Act The Securities Exchange Act of 1934.
Exchange Agent A bank or trust company designated by Omnicare to act as exchange agent.
Existing Option Each IBAH Option that is outstanding immediately prior to the Effective
Time.
</TABLE>
69
<PAGE>
<TABLE>
<CAPTION>
TERM DEFINITION OR SECTION IN WHICH DEFINED
- ------------------------------------- --------------------------------------------------------------------------
<S> <C>
Frustrating Transactions Has the meaning set forth in "THE MERGER AGREEMENT AND RELATED
AGREEMENTS--Voting Agreement."
FTC Federal Trade Commission.
HSR Act The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
IBAH IBAH, Inc., a Delaware corporation.
IBAH Board The Board of Directors of IBAH.
IBAH Bylaws The Amended Bylaws of IBAH.
IBAH Certificate The IBAH Certificate of Incorporation, as amended.
IBAH Common Shares Shares of IBAH common stock, par value $.01 per share.
IBAH Option Each option to acquire IBAH Common Shares.
IBAH Preferred Shares Shares of IBAH series A convertible preferred stock, par value $.01 per
share.
IBAH Shares IBAH Common Shares and IBAH Preferred Shares.
IBAH Warrants Warrants to purchase IBAH Common Shares.
IRS The Internal Revenue Service.
Merger The merger of Sub with and into IBAH.
Merger Agreement The Agreement and Plan of Merger, dated March 30, 1998, by and among
Omnicare, Sub and IBAH.
Merger Consideration The aggregate consideration for the Merger.
Notional Total Profit Has the meaning set forth in "THE MERGER AGREEMENT AND RELATED
AGREEMENTS--Stock Option Agreement."
NYSE New York Stock Exchange.
Omnicare Omnicare, Inc., a Delaware corporation.
Omnicare Average Market Price Has the meaning set forth in "QUESTIONS AND ANSWERS ABOUT THE MERGER."
Omnicare Board The Board of Directors of Omnicare.
Omnicare Bylaws The Amended Bylaws of Omnicare.
Omnicare Certificate The Omnicare Restated Certificate of Incorporation.
Omnicare Shares Shares of Omnicare common stock, par value $1.00 per share.
Omnicare Warrants Warrants to purchase Omnicare Common Shares.
Option Has the meaning set forth under "SUMMARY--Stock Option Agreement."
Option Price A cash price equal to $5.75 per share.
Option Shares Has the meaning set forth under "SUMMARY--Stock Option Agreement."
</TABLE>
70
<PAGE>
<TABLE>
<CAPTION>
TERM DEFINITION OR SECTION IN WHICH DEFINED
- ------------------------------------- --------------------------------------------------------------------------
<S> <C>
Option Termination Date Has the meaning set forth under "SUMMARY--Termination Fees; Expenses of
the Merger."
Party Representative Has the meaning set forth in "THE MERGER AGREEMENT AND RELATED
AGREEMENTS--Exclusivity."
Record Date May 21, 1998.
Registration Statement Registration Statement on Form S-4, together with any amendments thereto.
Salomon Smith Barney Has the meaning set forth in "SUMMARY--Opinion of IBAH's Financial
Advisor."
SEC The Securities and Exchange Commission.
Securities Act The Securities Act of 1933.
Securityholders Has the meaning set forth under "SUMMARY--Required Vote."
Special Meeting The special meeting of stockholders of IBAH at which the Merger will be
considered.
Stock Option Agreement The Stock Option Agreement, dated March 30, 1998, between IBAH and
Omnicare.
Sub Impala Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of Omnicare.
Surviving Corporation IBAH, the corporation surviving the Merger.
Termination Fee Has the meaning set forth in "SUMMARY--Termination Fees; Expenses of the
Merger."
Total Profit Has the meaning set forth in "THE MERGER AGREEMENT AND RELATED
AGREEMENTS--Stock Option Agreement."
Triggering Conditions Has the meaning set forth in "THE MERGER AGREEMENT AND RELATED
AGREEMENTS--Stock Option Agreement."
Voting Agreement Has the meaning set forth in "SUMMARY--Required Vote."
</TABLE>
71
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
among
OMNICARE, INC.
(a Delaware corporation),
IMPALA ACQUISITION CORP.
(a Delaware corporation)
and
IBAH, INC.
(a Delaware corporation)
MARCH 30, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ---------------------------------------------------------------------------------------------------------- ---------
<S> <C>
ARTICLE I DEFINITIONS..................................................................................... A-1
ARTICLE II THE PLAN OF MERGER............................................................................. A-7
Section 2.1. The Merger................................................................................. A-7
Section 2.2. Effective Time............................................................................. A-7
Section 2.3. Effects of the Merger...................................................................... A-7
Section 2.4. Certificate of Incorporation and Bylaws.................................................... A-7
Section 2.5. Directors and Officers..................................................................... A-7
Section 2.6. Conversion or Cancellation of IBAH Shares.................................................. A-7
Section 2.7. Exchange of IBAH Shares.................................................................... A-8
Section 2.8. Options and Warrants....................................................................... A-9
Section 2.9. Adjustments................................................................................ A-10
Section 2.10. Merger Subsidiary Capital Stock........................................................... A-10
Section 2.11. No Further Transfer of Shares............................................................. A-10
Section 2.12. Dissenting Shares......................................................................... A-10
ARTICLE III THE CLOSING................................................................................... A-11
Section 3.1. Location, Date............................................................................. A-11
Section 3.2. Deliveries................................................................................. A-11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF IBAH......................................................... A-11
Section 4.1. Corporate.................................................................................. A-11
Section 4.2. Authorization.............................................................................. A-11
Section 4.3. Validity of Contemplated Transactions...................................................... A-11
Section 4.4. Capitalization and Stock Ownership......................................................... A-12
Section 4.5. Board Recommendation....................................................................... A-12
Section 4.6. Proxy Statement............................................................................ A-12
Section 4.7. IBAH Disclosure Documents; Financial Statements............................................ A-13
Section 4.8. Absence of Undisclosed Liabilities......................................................... A-13
Section 4.9. Taxes...................................................................................... A-13
Section 4.10. Title to Assets and Related Matters....................................................... A-14
Section 4.11. Real Property............................................................................. A-14
Section 4.12. Subsidiaries.............................................................................. A-15
Section 4.13. Legal Proceedings; Compliance with Law; Governmental Permits.............................. A-15
Section 4.14. Contracts and Commitments................................................................. A-15
Section 4.15. Employee Relations........................................................................ A-16
Section 4.16. ERISA..................................................................................... A-16
Section 4.17. Patents, Trademarks, etc.................................................................. A-17
Section 4.18. Absence of Certain Changes................................................................ A-17
Section 4.19. Corporate Records......................................................................... A-18
Section 4.20. Finder's Fees............................................................................. A-18
Section 4.21. Compliance with Healthcare Laws........................................................... A-18
Section 4.22. Board Approval............................................................................ A-19
Section 4.23. Pooling of Interests; Reorganization...................................................... A-19
Section 4.24. Insurance................................................................................. A-19
ARTICLE V REPRESENTATIONS AND WARRANTIES OF OMNICARE...................................................... A-20
Section 5.1. Corporate.................................................................................. A-20
Section 5.2. Authorization.............................................................................. A-20
</TABLE>
A-i
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
- ---------------------------------------------------------------------------------------------------------- ---------
<S> <C>
Section 5.3. Validity of Contemplated Transactions...................................................... A-20
Section 5.4. Capitalization and Stock Ownership......................................................... A-20
Section 5.5. Board Recommendation....................................................................... A-21
Section 5.6. Proxy Statement............................................................................ A-21
Section 5.7. Omnicare Disclosure Documents; Financial Statements........................................ A-21
Section 5.8. Absence of Undisclosed Liabilities......................................................... A-21
Section 5.9. Absence of Certain Changes................................................................. A-21
Section 5.10. Pooling of Interests; Reorganization...................................................... A-21
Section 5.11. Ownership of Merger Subsidiary; No prior Activities....................................... A-22
Section 5.12. Compliance With Healthcare Laws........................................................... A-22
ARTICLE VI COVENANTS OF THE OMNICARE PARTIES AND IBAH..................................................... A-22
Section 6.1. Proxy/Registration Statement............................................................... A-22
Section 6.2. HSR Act Filings............................................................................ A-23
Section 6.3. No Solicitation............................................................................ A-23
Section 6.4. Notification of Certain Matters............................................................ A-24
Section 6.5. Access to Information...................................................................... A-24
Section 6.6. Public Announcements....................................................................... A-24
Section 6.7. Cooperation................................................................................ A-25
Section 6.8. Reorganization; Pooling.................................................................... A-25
ARTICLE VII COVENANTS OF IBAH............................................................................. A-25
Section 7.1. Operation of the Business.................................................................. A-25
Section 7.2. IBAH Stockholder Meeting................................................................... A-26
Section 7.3. Maintenance of the Assets.................................................................. A-26
Section 7.4. Employees and Business Relations........................................................... A-26
Section 7.5. Rule 145 Affiliates........................................................................ A-26
Section 7.6. Expenses................................................................................... A-27
Section 7.7. Certain Tax Matters........................................................................ A-27
Section 7.8. Employment Arrangements.................................................................... A-27
Section 7.9. State Anti-Takeover Law.................................................................... A-27
Section 7.10. Preferred and Warrant Consent............................................................. A-27
ARTICLE VIII COVENANTS OF OMNICARE........................................................................ A-28
Section 8.1. Appointment to the Board of Directors of Omnicare.......................................... A-28
Section 8.2. Expenses................................................................................... A-28
Section 8.3. Indemnification, Directors' and Officers' Insurance........................................ A-28
Section 8.4. Stock Exchange Listing..................................................................... A-28
Section 8.5. Interim Financial Report................................................................... A-28
Section 8.6. Registration............................................................................... A-28
Section 8.7. Employee Benefit Plans..................................................................... A-28
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF ALL PARTIES............................................. A-29
Section 9.1. Legality................................................................................... A-29
Section 9.2. Registration Statement..................................................................... A-29
Section 9.3. New York Stock Exchange.................................................................... A-29
Section 9.4. Pooling.................................................................................... A-29
Section 9.5. Approval by IBAH Stockholders.............................................................. A-29
Section 9.6. Tax Opinions............................................................................... A-29
ARTICLE X CONDITIONS PRECEDENT TO OBLIGATIONS OF IBAH..................................................... A-29
</TABLE>
A-ii
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
- ---------------------------------------------------------------------------------------------------------- ---------
<S> <C>
Section 10.1. Representations and Warranties............................................................ A-29
Section 10.2. Agreements, Conditions and Covenants...................................................... A-30
Section 10.3. Certificates.............................................................................. A-30
Section 10.4. Material Adverse Effect................................................................... A-30
Section 10.5. Ancillary Documents....................................................................... A-30
ARTICLE XI CONDITIONS PRECEDENT TO OBLIGATIONS OF THE OMNICARE PARTIES.................................... A-30
Section 11.1. Representations and Warranties............................................................ A-30
Section 11.2. Agreements, Conditions and Covenants...................................................... A-30
Section 11.3. Certificates.............................................................................. A-30
Section 11.4. Required Consents......................................................................... A-30
Section 11.5. Material Adverse Effect................................................................... A-30
Section 11.6. Ancillary Documents....................................................................... A-30
Section 11.7. Consent of Holders of IBAH Preferred Shares and IBAH Warrants............................. A-30
Section 11.8. Employment Agreements..................................................................... A-30
ARTICLE XII TERMINATION................................................................................... A-31
Section 12.1. Grounds for Termination................................................................... A-31
Section 12.2. Effect of Termination..................................................................... A-32
ARTICLE XIII GENERAL MATTERS.............................................................................. A-33
Section 13.1. Survival of Representations and Warranties................................................ A-33
Section 13.2. Contents of Agreement..................................................................... A-33
Section 13.3. Amendment, Parties in Interest, Assignment, Etc........................................... A-33
Section 13.4. Interpretation............................................................................ A-33
Section 13.5. Notices................................................................................... A-33
Section 13.6. Governing Law............................................................................. A-34
Section 13.7. Counterparts.............................................................................. A-34
Section 13.8. Waivers................................................................................... A-34
Section 13.9. Modification.............................................................................. A-34
Section 13.10. Enforcement of Agreement................................................................. A-34
Section 13.11. Waiver of Jury Trial..................................................................... A-34
Section 13.12. Severability............................................................................. A-35
</TABLE>
A-iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made as of March 30, 1998 by and among
Omnicare, Inc., a Delaware corporation ("Omnicare"), IBAH Acquisition Corp., a
Delaware corporation (the "Merger Subsidiary," and together with Omnicare, the
"Omnicare Parties"), and IBAH, Inc., a Delaware corporation ("IBAH," and
together with the Omnicare Parties, the "Parties"). Certain other terms are used
herein as defined below in Article I or elsewhere in this Agreement.
BACKGROUND
This Agreement sets forth the terms and conditions under which the Merger
Subsidiary, which is a Wholly-Owned Subsidiary of Omnicare, will merge with and
into IBAH (the "Merger"). The Parties intend that (a) upon completion of the
Merger, IBAH will be a Wholly-Owned Subsidiary of Omnicare, (b) for federal
income tax purposes, the Merger will qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, and
(c) for accounting purposes, the Merger will be accounted for as a pooling of
interests under United States generally accepted accounting principles ("GAAP").
Concurrently with the execution of this Agreement, and as an inducement to
Omnicare to enter into this Agreement, (i) certain stockholders of IBAH have
entered into a Voting Agreement, dated as of the date hereof (the "Voting
Agreement"), between IBAH and the respective stockholders named therein
providing, among other things, that such stockholders will vote in favor of the
Merger and (ii) IBAH and Omnicare have entered into the Option Agreement, dated
as of the date hereof (the "Stock Option Agreement"), pursuant to which IBAH has
granted Omnicare an option to purchase IBAH Common Shares under certain
circumstances.
Merger Subsidiary is a Wholly-Owned Subsidiary of Omnicare and has been
formed solely to facilitate the Merger and has conducted and will conduct no
business or activity other than in connection with the Merger.
WITNESSETH
NOW, THEREFORE, in consideration of the respective covenants contained
herein and intending to be legally bound hereby, the Parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
For convenience, certain terms used in more than one part of this Agreement
are listed in alphabetical order and defined or referred to below (such terms as
well as any other terms defined elsewhere in this Agreement shall be equally
applicable to both the singular and plural forms of the terms defined).
"Acquisition Proposal" is defined in Section 6.3.
"Affiliates" means, with respect to a particular Party, persons or entities
controlling, controlled by or under common control with that Party, as well as
any executive officers, directors and majority-owned entities of that Party and
of its other Affiliates.
"Agreement" means this Agreement and the Exhibits and Disclosure Schedules
hereto.
"Assets" means, with respect to Omnicare or IBAH, as shown by the context in
which used, all of the assets, properties, goodwill and rights of every kind and
description, real and personal, tangible and intangible, wherever situated and
whether or not reflected in such Party's most recent financial statements, that
are owned or possessed by such Party and its Subsidiaries, taken as a whole.
"Assumed Option" is defined in Section 2.8(a).
A-1
<PAGE>
"Benefit Plan" means all employee benefit, health, welfare, supplemental
unemployment benefit, bonus, pension, profit sharing, deferred compensation,
severance, incentive, stock compensation, stock purchase, retirement,
hospitalization insurance, medical, dental, legal, disability, fringe benefit
and similar plans, programs, arrangements or practices, including, without
limitation, each "employee benefit plan" as defined in Section 3(3) of ERISA.
"Business" means with respect to Omnicare or IBAH, as shown by the context
in which used, the entire business and operations of such Party and its
Subsidiaries, taken as a whole.
"Certificate of Merger" is defined in Section 2.2.
"Certificates" is defined in Section 2.7(a).
"Charter Documents" means an entity's certificate or articles of
incorporation, certificate defining the rights and preferences of securities,
articles of organization, general or limited partnership agreement, certificate
of limited partnership, joint venture agreement or similar document governing
the entity.
"Closing" is defined in Section 3.1.
"Closing Date" is defined in Section 3.1.
"Code" is defined in Section 4.9(a).
"Confidentiality Agreement" is defined in Section 6.5(b).
"Contract" means any written or oral contract, agreement, letter of intent,
agreement in principle, lease, instrument or other commitment that is binding on
any Person or its property under applicable Law.
"Conversion Number" is defined in Section 2.6(b).
"Copyrights" means registered copyrights, copyright applications and
unregistered copyrights.
"Court Order" means any judgment, decree, injunction, order or ruling of any
federal, state, local or foreign court or governmental or regulatory body or
authority, or any arbitrator that is binding on any Person or its property under
applicable Law.
"Default" means (i) a breach, default or violation, (ii) the occurrence of
an event that with or without the passage of time or the giving of notice, or
both, would constitute a breach, default or violation or (iii) with respect to
any Contract, the occurrence of an event that with or without the passage of
time or the giving of notice, or both, would give rise to a right of
termination, renegotiation or acceleration or a right to receive damages or a
payment of penalties.
"DGCL" means the Delaware General Corporation Law, as amended.
"Disclosure Schedules" means the IBAH Disclosure Schedule.
"Effective Time" is defined in Section 2.2.
"Encumbrances" means any lien, mortgage, security interest, pledge,
restriction on transferability, defect of title or other claim, charge or
encumbrance of any nature whatsoever on any property or property interest.
"Environmental Condition" means any condition or circumstance, including the
presence of Hazardous Substances, whether created by any IBAH Company or by any
third party, which does or would (i) require assessment, investigation,
abatement, correction, removal or remediation under any Environmental Law, (ii)
give rise to any civil or criminal Liability under any Environmental Law, (iii)
create or constitute a public or private nuisance or (iv) constitute a violation
of or non-compliance with any Environmental Law.
A-2
<PAGE>
"Environmental Law" means all Laws, Court Orders, principles of common law,
and permits, licenses, registrations, approvals or other authorizations of any
Governmental Authority relating to Hazardous Substances, pollution, protection
of the environment or human health.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Agent" is defined in Section 2.7(a).
"Existing Option" is defined in Section 2.8(a).
"GAAP" is defined above in the Background.
"Governmental Authority" means any federal, state, local, municipal or
foreign or other government or governmental agency or body.
"Governmental Permit" is defined in Section 4.13(c).
"Hazardous Substances" means any material, waste or substance (including,
without limitation, any product) that may or could pose a hazard to the
environment or human health or safety including, without limitation, (i) any
"hazardous substances" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. SectionSection 9601 ET SEQ. and its
implementing regulations, (ii) any "extremely hazardous substance," "hazardous
chemical" or "toxic chemical" as those terms are defined by the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. SectionSection 11001 ET SEQ.
and its implementing regulations, (iii) any "hazardous waste," as defined under
the Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act, 42 U.S.C. SectionSection 6901 ET SEQ. and its implementing
regulations (iv) any "pollutant," as defined under the Water Pollution Control
Act, 33 U.S.C. SectionSection 1251 ET SEQ. and its implementing regulations as
any of such Laws in clauses (i) through (iv) may be amended from time to time,
and (v) any material, substance or waste regulated under any Laws or Court
Orders that currently exist or that may be enacted, promulgated or issued in the
future by any Governmental Authority concerning protection of the environment,
pollution, health or safety or the public welfare.
"Holder" means a recordholder, as of the Effective Time, of an outstanding
certificate or certificates that immediately prior to the Effective Time
represented IBAH Shares.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
"IBAH" is defined above in the Preamble.
"IBAH Assets" means the Assets of IBAH.
"IBAH Balance Sheet" is defined in Section 4.7.
"IBAH Balance Sheet Date" is defined in Section 4.7.
"IBAH Benefit Plan" is defined in Section 4.16(a).
"IBAH Business" means the Business of IBAH.
"IBAH Common Shares" is defined in Section 2.6(a).
"IBAH Common Stock" means the common stock, par value $0.01 per share, of
IBAH.
"IBAH Companies" means IBAH and any IBAH Subsidiaries.
"IBAH Convertible Preferred Stock" is defined in Section 4.4.
"IBAH Disclosure Documents" is defined in Section 4.7.
A-3
<PAGE>
"IBAH Disclosure Schedule" means the Disclosure Schedule containing
information relating to IBAH pursuant to Article IV and other provisions hereof
that has been provided to the other Parties on the date hereof.
"IBAH's knowledge" or "knowledge of IBAH" with reference to any item means
that which an executive officer or director of IBAH actually knows or should
have known given such person's office and industry standards.
"IBAH Personnel" is defined in Section 4.21(a).
"IBAH Preferred Shares" is defined in Section 2.6(a).
"IBAH Required Consents" is defined in Section 4.3.
"IBAH Shares" is defined in Section 2.6(a).
"IBAH Stockholder Meeting" is defined in Section 7.2.
"IBAH Subsidiary" means any Subsidiary of IBAH.
"IBAH 10-K" is defined in Section 4.10.
"IBAH Warrants" means any warrants to purchase IBAH Common Stock that are
outstanding immediately prior to the Closing.
"IBAH Welfare Plan" is defined in Section 4.16(f).
"Intellectual Property" means any Copyrights, Patents, Trademarks,
technology, licenses, trade secrets, computer software and other intellectual
property.
"Law" means any statute, law, ordinance, regulation, order, rule, common law
principles or consent agreements of any Governmental Authority, including,
without limitation, those covering environmental, energy, safety, health,
transportation, bribery, recordkeeping, zoning, antidiscrimination, antitrust,
wage and hour, and price and wage control matters.
"Liability" means any direct or indirect liability, indebtedness,
obligation, expense, claim, loss, damage, deficiency, guaranty or endorsement of
or by any Person.
"Litigation" means any lawsuit, action, arbitration, administrative or other
proceeding, criminal prosecution or governmental investigation or inquiry.
"Material Adverse Effect" means a fact or event which has had or is
reasonably likely to have a material adverse effect on the Assets, Business,
financial condition or results of operations of Omnicare and its Subsidiaries
taken as a whole or IBAH and its Subsidiaries taken as a whole, as indicated by
the context in which used, and when used with respect to representations,
warranties, conditions, covenants or other provisions hereof means the
individual effect of the situation to which it relates and also the aggregate
effect of all similar situations unless the context indicates otherwise.
"Merger" is defined above in the Background.
"Merger Consideration" is defined in Section 2.6(g).
"Merger Subsidiary" is defined above in the Preamble.
"NYSE" means the New York Stock Exchange.
"Omnicare" is defined above in the Preamble.
"Omnicare Assets" means the Assets of Omnicare.
"Omnicare Balance Sheet" is defined in Section 5.7.
A-4
<PAGE>
"Omnicare Balance Sheet Date" is defined in Section 5.7.
"Omnicare Business" means the Business of Omnicare.
"Omnicare Common Stock" means the common stock, par value $1.00 per share,
of Omnicare.
"Omnicare Companies" mean Omnicare and any Omnicare Subsidiaries.
"Omnicare Disclosure Documents" is defined in Section 5.7.
"Omnicare's knowledge" or "knowledge of Omnicare" with reference to any item
means that which an executive officer or director of Omnicare actually knows or
should have known given such person's office and industry standards.
"Omnicare Market Value" is defined in Section 2.6(f).
"Omnicare Parties" is defined above in the Preamble.
"Omnicare Shares" means shares of Omnicare Common Stock.
"Omnicare Sub Common Stock" is defined in Section 5.4.
"Omnicare Subsidiary" means any Subsidiary of Omnicare.
"Omnicare Warrants" means warrants to purchase Omnicare Common Stock.
"Ordinary course" or "ordinary course of business" means the ordinary course
of business.
"Parties" is defined above in the Preamble.
"Party Representatives" is defined in Section 6.5(b).
"Patents" means patents, patent applications, reissue patents, patents of
addition, divisions, renewals, continuations, continuations-in-part,
substitutions, additions and extensions of any of the foregoing.
"Person" means any natural person, corporation, partnership, limited
liability company, proprietorship, association, trust or other legal entity.
"Post-Signing Returns" is defined in Section 7.7.
"Proxy/Registration Statement" is defined in Section 6.1(a).
"Proxy Statement" is defined in Section 6.1(a).
"Registration Statement" is defined in Section 6.1(a).
"Regulation" means any federal, state, local or foreign rule or regulation.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Act Affiliates" is defined in Section 7.5.
"Smith Barney" means Salomon Smith Barney Inc.
"Stock Option Agreement" is defined in the Background section above.
"Subsidiary" means any corporation or other legal entity of which Omnicare
or IBAH, as the case may be (either above or through or together with any other
Subsidiary) owns, directly or indirectly, more than 50% of the stock or other
equity interests the holders of which are generally entitled to vote for the
election of directors or other governing body of such corporation or other
entity.
"Surviving Corporation" is defined in Section 2.1.
A-5
<PAGE>
"Taxes" is defined in Section 4.9(a).
"Tax Return" is defined in Section 4.9(a).
"Termination Date" means October 31, 1998.
"Trademarks" means registered trademarks, registered service marks,
trademark and service mark applications and unregistered trademarks and service
marks.
"Transaction Documents" means this Agreement, the Employment Agreements, the
Voting Agreement and the Stock Option Agreement.
"Transactions" means the Merger, the exchange of IBAH Shares for Omnicare
Shares, the assumption by Omnicare of the Existing Options, the exchange of IBAH
Warrants for Omnicare Warrants, and the other transactions contemplated by the
Transaction Documents.
"Voting Agreement" is defined above in the Background.
"Wholly-Owned Subsidiary" means any Subsidiary in which all of the stock or
other equity interests is owned, directly or indirectly, by Omnicare or IBAH, as
the case may be.
A-6
<PAGE>
ARTICLE II
THE PLAN OF MERGER
Section 2.1. THE MERGER. Upon the terms and subject to the conditions
hereof, and in accordance with the relevant provisions of the DGCL, the Merger
Subsidiary shall be merged with and into IBAH. Following the Merger, IBAH shall
continue as the surviving corporation (the "Surviving Corporation") and shall
continue its existence under the Laws of the State of Delaware, and the separate
corporate existence of the Merger Subsidiary shall cease.
Section 2.2. EFFECTIVE TIME. As soon as practicable, but in any event
within one business day after the satisfaction or waiver of all conditions to
the Merger, IBAH and the Merger Subsidiary shall file with the Secretary of
State of the State of Delaware a certificate of merger (the "Certificate of
Merger") in such form as is required by the DGCL. The Merger shall become
effective at such time as the Certificate of Merger is so filed (the "Effective
Time").
Section 2.3. EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in Section 259 of the DGCL.
Section 2.4. CERTIFICATE OF INCORPORATION AND BYLAWS. The Certificate of
Incorporation of the Merger Subsidiary as in effect immediately prior to the
Effective Time shall be the initial Certificate of Incorporation of the
Surviving Corporation. The bylaws of the Merger Subsidiary as in effect
immediately prior to the Effective Time shall be the initial bylaws of the
Surviving Corporation.
Section 2.5. DIRECTORS AND OFFICERS. The directors of Merger Subsidiary as
in office as of immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation. The officers of IBAH as in office as of
immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation. Such persons shall hold such positions as directors and
officers until their successors are elected or appointed in accordance with the
Certificate of Incorporation and the bylaws of the Surviving Corporation.
Section 2.6. CONVERSION OR CANCELLATION OF IBAH SHARES.
(a) Each share of IBAH Common Stock (an "IBAH Common Share") and each share
of IBAH Convertible Preferred Stock (an "IBAH Preferred Share," and together
with an IBAH Common Share, an "IBAH Share") that, immediately prior to the
Effective Time, is held by IBAH as treasury stock shall be canceled, and no
consideration shall be delivered with respect thereto.
(b) Each IBAH Common Share outstanding immediately prior to the Effective
Time shall by virtue of the Merger and without any action on the part of the
Holder thereof, be converted into the right to receive a number (the "Conversion
Number") of Omnicare Shares as set forth below, except as otherwise provided in
Sections 2.6(a), 2.6(e) or 2.7:
(1) If the Omnicare Market Value is greater than $43.83, then the
Conversion Number is equal to $6.50 divided by the Omnicare Market Value;
(2) If the Omnicare Market Value is greater than $38.77 and less than or
equal to $43.83, then the Conversion Number is equal to 0.1483;
(3) If the Omnicare Market Value is greater than $34.85 and less than or
equal to $38.77, then the Conversion Number is equal to $5.75 divided by the
Omnicare Market Value;
(4) If the Omnicare Market Value is greater than or equal to $30.30 and
less than or equal to $34.85, then the Conversion Number is equal to 0.1650;
(5) If the Omnicare Market Value is less than $30.30, then, subject to
Section 2.6(c) below, the Conversion Number is equal to $5.00 divided by the
Omnicare Market Value.
A-7
<PAGE>
(c) If the Omnicare Market Value is less than $30.30, then Omnicare shall
have the right, by written notice to IBAH prior to the Effective Time, to adjust
the Conversion Number to 0.1650; provided, however, that upon the receipt of
such notice of adjustment, IBAH shall have the right, by written notice to
Omnicare (the "Termination Notice"), to elect to abandon the Merger and
terminate this Agreement by action of its Board of Directors, which termination
shall occur at 5:00 p.m., Cincinnati, Ohio time, two business days after the
Termination Notice.
(d) Each IBAH Preferred Share outstanding immediately prior to the Effective
Time shall by virtue of the Merger and without any action on the part of the
Holder thereof, be converted into the right to receive a number of Omnicare
Shares equal to three times the Conversion Number, except as otherwise provided
in Sections 2.6(a), 2.6(e), 2.7 or 2.12.
(e) No fractional Omnicare Shares shall be issued in the Merger. Each Holder
who would otherwise be entitled to receive a fractional share shall be entitled
to receive, in lieu thereof, an amount in cash determined by multiplying the
Omnicare Market Value by the fraction of an Omnicare Share to which such Holder
would otherwise have been entitled.
(f) For purposes of this Section 2.6, the term "Omnicare Market Value" shall
mean the average of the closing prices of the Omnicare Shares on the New York
Stock Exchange, as reported in The Wall Street Journal, for the 15 trading days
immediately preceding the second trading day preceding the Closing Date.
(g) The consideration to be received by the Holders in respect of each IBAH
Share pursuant to this Section 2.6 is hereinafter referred to as the "Merger
Consideration."
Section 2.7. EXCHANGE OF IBAH SHARES.
(a) Prior to the Effective Time, Omnicare shall appoint an agent (the
"Exchange Agent") for the purpose of exchanging certificates that immediately
prior to the Effective Time represented IBAH Shares (the "Certificates") for the
Merger Consideration. Promptly after the Effective Time, Omnicare will send, or
will cause the Exchange Agent to send, to each Holder (other than IBAH and any
Subsidiary of IBAH) a letter of transmittal for use in such exchange. Omnicare
will make available to the Exchange Agent, as needed, the aggregate Merger
Consideration to be paid in respect of the IBAH Shares.
(b) Each Holder, upon surrender to the Exchange Agent of a Certificate or
Certificates together with a properly completed letter of transmittal covering
such Certificates, will be entitled to receive the Merger Consideration payable
in respect of the IBAH Shares formerly represented thereby, after giving effect
to any required withholding Tax. Until so surrendered, each Certificate shall,
after the Effective Time, represent for all purposes, only the right to receive
such Merger Consideration. In no event will a Holder be entitled to interest on
the Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid to a Person
other than the registered holder of the IBAH Shares formerly represented by the
Certificate or Certificates surrendered in exchange for the Merger
Consideration, it shall be a condition to such payment that the Certificate or
Certificates so surrendered shall be properly endorsed or otherwise be in proper
form for transfer and that the Person requesting such payment shall pay to the
Exchange Agent any transfer or other Taxes required as a result of such payment
to a Person other than the registered holder of such IBAH Shares or establish to
the satisfaction of the Exchange Agent that such Tax has been paid or is not
payable.
(d) Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to this Section 2.7 that remains unclaimed by the Holders six
months after the Effective Time shall be returned to Omnicare, upon demand, and
any such Person who has not exchanged his Certificate or Certificates for the
Merger Consideration in accordance with this Article II prior to that time shall
thereafter look only to Omnicare for payment of the Merger Consideration.
Notwithstanding the foregoing, Omnicare shall not be liable to any Person for
any amount paid to a public official pursuant to applicable abandoned property
Laws. Any amounts remaining unclaimed under this Article II two years after the
Effective Time (or such
A-8
<PAGE>
earlier date immediately prior to such time as such amounts would otherwise
escheat to or become property of any governmental entity) shall, to the extent
permitted by applicable Law, become the property of Omnicare free and clear of
any claims or interest of any Person previously entitled thereto.
(e) No dividends or other distributions with respect to securities of
Omnicare constituting part of the Merger Consideration shall be paid to the
Holder of any unsurrendered Certificates until such Certificates are surrendered
as provided in this Article II. Upon such surrender, there shall be paid,
without interest, to the Person in whose name the Certificates representing the
securities of Omnicare into which such IBAH Shares were converted are
registered, all dividends and other distributions payable in respect of such
securities on a date subsequent to, and in respect of a record date after, the
Effective Time, less the amount of withholding Taxes which may be required
thereon.
(f) 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 Omnicare, the posting by such
person of a bond in such reasonable amount as Omnicare may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent shall issue in exchange for such lost, stolen or destroyed
Certificate the consideration provided for, and in accordance with the
procedures set forth, in this Article II and, if applicable, any unpaid
dividends and distributions with respect to securities of Omnicare constituting
part of the Merger Consideration deliverable with respect thereof and any cash
in lieu of fractional shares, in each case pursuant to this Agreement.
Section 2.8. OPTIONS AND WARRANTS.
(a) At the Effective Time, Omnicare shall assume IBAH's rights and
obligations under each of the outstanding stock options previously granted by
IBAH to certain of its employees, directors and consultants that are outstanding
immediately prior to the Effective Time (each such stock option existing
immediately prior to the Effective Time is referred to herein as an "Existing
Option" and each such assumed stock option existing immediately after the
Effective Time is referred to herein as an "Assumed Option"). Under each Assumed
Option, the optionee shall have the right to receive from Omnicare, in
accordance with the terms and subject to the conditions of the Existing Option,
the Merger Consideration that such optionee would have been entitled to receive
had the optionee exercised his or her Existing Option immediately prior to the
Effective Time, but only in accordance with the terms and conditions of the
Existing Option (including payment of the aggregate exercise price thereof).
Except as provided in this Section 2.8(a), the Assumed Option shall not give the
optionee any additional benefits that the holder thereof did not have under the
Existing Option; provided, however, that the terms of such Existing Options
shall govern the vesting thereof, including, if applicable, any vesting of
Existing Options as a result of the Merger. Each Assumed Option shall constitute
a continuation of the Existing Option, substituting Omnicare for IBAH and, in
the case of employees, employment by an Omnicare Company for employment by an
IBAH Company. Notwithstanding the foregoing, the terms of any Assumed Option
shall be such that the substitution of the Assumed Option for the Existing
Option would not constitute a modification of the Existing Option within the
meaning of Section 424(h)(3) of the Code and the Regulations promulgated
thereunder.
(b) If and to the extent required by the terms of the plans governing the
Existing Options or pursuant to the terms of any Existing Option granted
thereunder, IBAH shall use reasonable efforts to obtain the consent of each
holder of outstanding Existing Options to the treatment of the Existing Options
provided in Section 2.8(a).
(c) Each IBAH Warrant that is outstanding immediately prior to the Effective
Time and that does not expire at the Effective Time by the terms thereof shall,
by virtue of the Merger and pursuant to the terms of the IBAH Warrant or with
the consent of the majority of the holders thereof, be converted into and
exchanged for a Omnicare Warrant exercisable for the Conversion Number of
Omnicare Shares for each share of IBAH Common Stock for which the IBAH Warrant
is exercisable immediately prior to the
A-9
<PAGE>
Effective Time, at an exercise price per Omnicare Share that has been adjusted
in accordance with the terms of the IBAH Warrant converted hereunder as a result
of the Merger. Except as provided in this Section 2.8(c), the Omnicare Warrants
shall have the terms and conditions of the IBAH Warrants converted hereunder. At
the Effective Time, the Omnicare Parties shall make available to any holders of
IBAH Warrants converted hereunder a new warrant evidencing the Omnicare Warrant.
Section 2.9. ADJUSTMENTS. If at any time during the period between the
date of this Agreement and the Effective Time, any change in the outstanding
shares of capital stock of IBAH or Omnicare shall occur by reason of any
reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, or any stock dividend thereon with a record date during
such period or any similar event, this Article II shall be appropriately
adjusted.
Section 2.10. MERGER SUBSIDIARY CAPITAL STOCK. Each share of capital stock
of the Merger Subsidiary issued and outstanding immediately prior to the
Effective Time shall be converted, by virtue of the Merger, into one share of
common stock of the Surviving Corporation.
Section 2.11. NO FURTHER TRANSFER OF SHARES. After the Effective Time,
there shall be no transfers of IBAH Shares that were outstanding immediately
prior to the Effective Time on the stock transfer books of the Surviving
Corporation. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for transfer, they shall be canceled and exchanged for the
respective Merger Consideration as provided in this Article II. At the Effective
Time, the stock ledger of IBAH shall be closed.
Section 2.12. DISSENTING SHARES. Notwithstanding Section 2.6, the IBAH
Preferred Shares that are issued and outstanding immediately prior to the
Effective Time and that are held by Holders who did not vote in favor of the
Merger and who comply with all of the relevant provisions of Section 262 of the
DGCL (the "Dissenting Shares") shall not be converted into the right to receive
the Merger Consideration, unless and until such Holders shall have waived in
writing or failed to perfect or shall have effectively withdrawn or lost their
rights to appraisal under the DGCL; and any such Holder shall have only such
rights in respect of the Dissenting Shares owned by them as are provided by
Section 262 of the DGCL. If any such Holder shall have waived in writing or
failed to perfect or shall have effectively withdrawn or lost such right, such
Holder's Dissenting Shares shall thereupon be deemed to have been converted into
and to have become exchangeable, as of the Effective Time, for the right to
receive the Merger Consideration without any interest thereon, pursuant to the
terms of Section 2.6. Prior to the Effective Time, IBAH will not, except with
the prior written consent of Omnicare, voluntarily make any payment with respect
to, or settle or offer to settle, any claim made by the stockholders owning the
Dissenting Shares.
A-10
<PAGE>
ARTICLE III
THE CLOSING
Section 3.1. LOCATION, DATE. The closing for the Transactions (the
"Closing") shall be held at the offices of Dewey Ballantine LLP in New York, New
York at 9:00 a.m. (local time) as promptly as practicable (and in any event
within one business day) after satisfaction or waiver of the conditions to the
consummation of the Transactions set forth in Articles IX, X and XI. The date on
which the Closing occurs is referred to herein as the "Closing Date."
Section 3.2. DELIVERIES. At the Closing,
(a) the Merger Subsidiary and IBAH shall deliver or cause to be delivered to
the Secretary of State of the State of Delaware a duly executed Certificate of
Merger as required under Section 263 of DGCL and the Parties shall take all such
other and further actions as may be required by the DGCL and any other
applicable Law to make the Merger effective upon the terms and subject to the
conditions hereof; and
(b) the Parties shall also deliver to each other the respective agreements
and other documents and instruments specified with respect to them in Articles
IX, X and XI.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF IBAH
IBAH hereby represents and warrants to the Omnicare Parties as follows,
except as otherwise set forth in the IBAH DISCLOSURE SCHEDULE (items disclosed
in one Section of such Schedule shall apply to all other Sections unless the
context indicates otherwise):
Section 4.1. CORPORATE. Each IBAH Company is a corporation duly organized,
validly existing and in good standing under the Laws under which it was
incorporated. Each IBAH Company is qualified to do business as a foreign
corporation in any jurisdiction where it is required to be so qualified, except
where the failure to so qualify would not have a Material Adverse Effect. The
Charter Documents and bylaws of each IBAH Company (all of which have been
delivered or made available to Omnicare) have been duly adopted and are current,
correct and complete. Each IBAH Company has all necessary corporate power and
authority to own, lease and operate its part of the IBAH Assets and to carry on
its part of the IBAH Business as it is now being conducted.
Section 4.2. AUTHORIZATION. IBAH has the requisite corporate power and
authority to execute and deliver the Transaction Documents to which it is a
party and to perform the Transactions to be performed by it. Such execution,
delivery and performance by IBAH have been duly authorized by all necessary
corporate action, other than that the consummation of the Merger is subject to
the approval of the holders of a majority of the outstanding IBAH Shares, voting
as a single class and the consent of the holders of a majority of the
outstanding IBAH Preferred Shares to the conversion of the IBAH Preferred Shares
into the right to receive Omnicare Shares as contemplated by Article II hereof,
which are the only consents or approvals of holders of IBAH Shares required for
the consummation of the Transactions. IBAH has received such consents from the
holders of all outstanding IBAH Preferred Shares. IBAH has received all
necessary consents from holders of IBAH Warrants to effect the transactions
contemplated by Section 2.8(c) hereof (together with the consent contemplated by
the prior sentence, the "Preferred and Warrant Consent"). IBAH has delivered to
Omnicare a true and complete copy of the Preferred and Warrant Consent. Each
Transaction Document executed and delivered by IBAH as of the date hereof has
been duly executed and delivered by IBAH and constitutes a valid and binding
obligation of IBAH, enforceable against IBAH in accordance with its terms. Any
Transaction Document executed and delivered by IBAH after the date hereof will
be duly executed and delivered by IBAH and will constitute a valid and binding
obligation of IBAH, enforceable against IBAH in accordance with its terms.
Section 4.3. VALIDITY OF CONTEMPLATED TRANSACTIONS. Except for compliance
with (i) the HSR Act, (ii) the Securities Act and the Exchange Act and (iii) the
filing of the Certificate of Merger with the
A-11
<PAGE>
Secretary of State of the State of Delaware and for any items specified in the
IBAH DISCLOSURE SCHEDULE (the "IBAH Required Consents"), neither the execution
and delivery by IBAH of the respective Transaction Documents to which it is or
will be a party, nor the performance of the Transactions to be performed by it,
will require any filing, consent or approval under or constitute a Default, or
result in a loss of material benefit under, (a) any Law or Court Order to which
any IBAH Company is subject, (b) the Charter Documents or bylaws of any IBAH
Company, (c) any customer Contract (other than letters of intent and agreements
in principle) or any other Contract involving an amount in excess of $2,500,000
to which any IBAH Company is a party or by which any of the IBAH Assets may be
subject or (d) any other Contracts to which any IBAH Company is a party or by
which any of the IBAH Assets may be subject, except in the case of (b) and (d)
for Defaults which would not have a Material Adverse Effect.
Section 4.4. CAPITALIZATION AND STOCK OWNERSHIP. The total authorized
capital stock of IBAH consists of (a) 50,000,000 shares of IBAH Common Stock,
and (b) 2,000,000 shares of Preferred Stock, par value $0.01 per share, of which
999,554 shares have been designated Series A Convertible Preferred Stock (the
"IBAH Convertible Preferred Stock"). Of such authorized capital stock, the only
issued and outstanding shares on the date hereof are 23,544,312 IBAH Common
Shares and 749,665 IBAH Preferred Shares. Except as listed in the IBAH
DISCLOSURE SCHEDULE, there are no existing options, warrants, calls, commitments
or other rights of any character (including conversion or preemptive rights)
relating to the acquisition of any issued or unissued capital stock or other
securities of IBAH. The IBAH DISCLOSURE SCHEDULE sets forth, as of the date
hereof, as to each option or warrant, the holder, date of grant, exercise price
and number of shares subject thereto. All of the issued and outstanding IBAH
Shares are validly issued, fully paid and non-assessable. Following the
Effective Time, no options, warrants, calls, commitments or other rights of any
character (including conversion or preemptive rights) will entitle any Person to
acquire any securities of the Surviving Corporation or any subsidiary thereof,
except with respect to Wholly-Owned Subsidiaries of IBAH that have preemptive
rights.
Section 4.5. BOARD RECOMMENDATION. By a vote of the directors present at a
meeting of IBAH's Board of Directors (which meeting was duly called and held and
at which a quorum was present), the Board of Directors of IBAH unanimously (a)
approved and adopted this Agreement, including the Merger and the other
Transactions, and determined that the Merger is fair to the stockholders of
IBAH, and (b) resolved to recommend approval and adoption of this Agreement,
including the Merger and the other Transactions, by the stockholders of IBAH.
Smith Barney has delivered to IBAH's Board of Directors its opinion dated the
date of this Agreement to the effect that on such date the Merger Consideration
is fair to the holders of IBAH Common Shares from a financial point of view. A
complete and correct copy of such opinion has been delivered to Omnicare.
Section 4.6. PROXY STATEMENT. None of the information supplied or to be
supplied by or on behalf of any IBAH Company specifically for inclusion or
incorporation by reference in the Registration Statement will (except to the
extent revised or superseded by amendments or supplements contemplated hereby),
at the time the Registration Statement becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
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. None of the information supplied or to be supplied by or on behalf
of any IBAH Company specifically for inclusion or incorporation by reference in
the Proxy Statement will (except to the extent revised or superseded by
amendments or supplements contemplated hereby), at the date it (or any such
amendment or supplement) is mailed to the stockholders of IBAH and at the time
of the IBAH Stockholder Meeting, 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. The Registration Statement and the Proxy
Statement (except for information relating solely to any Omnicare Company) will
comply in all material respects with the requirements of the Securities Act and
the Exchange Act and the Regulations promulgated thereunder.
A-12
<PAGE>
Section 4.7. IBAH DISCLOSURE DOCUMENTS; FINANCIAL STATEMENTS. IBAH has
filed all required forms, reports, statements, schedules and other documents
with the SEC since January 1, 1995, including its (a) Annual Reports on Form
10-K for the fiscal years ended December 31, 1996 and 1997, (b) all proxy
statements relating to IBAH's meetings of stockholders (whether annual or
special) held since January 1, 1995, and (c) all other reports or registration
statements filed by IBAH with the SEC since January 1, 1995 (collectively, the
"IBAH Disclosure Documents"). Each of such IBAH Disclosure Documents, at the
time it was filed, complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act, and with the forms and
Regulations of the SEC promulgated thereunder, and did not contain at the time
filed 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. The financial statements, including all related notes and schedules,
contained in the IBAH Disclosure Documents (or incorporated by reference
therein) fairly present the consolidated financial position of IBAH as at the
respective dates thereof and the consolidated results of operations and cash
flows of IBAH for the periods indicated in accordance with GAAP applied on a
consistent basis throughout the periods involved (except for changes in
accounting principles disclosed in the notes thereto) and subject in the case of
interim financial statements to normal year-end adjustments and the absence of
notes. For purposes of this Agreement, the balance sheet of IBAH as of December
31, 1997 is referred to as the "IBAH Balance Sheet" and the date thereof is
referred to as the "IBAH Balance Sheet Date."
Section 4.8. ABSENCE OF UNDISCLOSED LIABILITIES. None of the IBAH
Companies has any Liabilities except (a) to the extent reflected in the IBAH
Balance Sheet, (b) those Liabilities described in this Agreement or set forth on
Section 4.8 of the IBAH DISCLOSURE SCHEDULE, (c) those Liabilities incurred in
the ordinary course of business since the IBAH Balance Sheet Date which would
not have a Material Adverse Effect and (d) those Liabilities not required under
GAAP to be reflected in the IBAH Balance Sheet which would not have a Material
Adverse Effect.
Section 4.9. TAXES.
(a) Definitions:
"CODE" means the Internal Revenue Code of 1986, as amended. All citations to
provisions of the Code, or to the Treasury Regulations promulgated thereunder,
shall include any amendments thereto and any substitute or successor provisions
thereto.
"TAXES" means any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions, levies and
liabilities, including, without limitation, taxes based upon or measured by
gross receipts, income, profits, sales, use and occupation, and value added, ad
valorem, transfer, gains, franchise, withholding, payroll, recapture,
employment, excise, unemployment, insurance, social security, business license,
occupation, business organization, stamp, environmental and property taxes,
together with all interest, penalties and additions imposed with respect to such
amounts. For purposes of this Agreement, "Taxes" also includes any obligations
under any agreements or arrangements with any Person with respect to the
liability for, or sharing of, Taxes (including pursuant to Treas. Reg. Section
1.1502-6 or comparable provisions of state, local or foreign Tax Law) and
including any liability for Taxes as a transferee or successor, by Contract or
otherwise.
"TAX RETURN" means any report, return, election, notice, estimate,
declaration, information statement and other forms and documents (including all
schedules, exhibits and other attachments thereto) relating to and filed or
required to be filed with a taxing authority in connection with any Taxes
(including, without limitation, estimated Taxes).
(b) Except as set forth in the IBAH DISCLOSURE SCHEDULE, IBAH and each of
its Subsidiaries (i) have timely filed (or, in the case of Tax Returns not yet
due, will timely file) with the appropriate governmental agencies all material
Tax Returns required to be filed on or before the Effective Time and all such
Tax
A-13
<PAGE>
Returns filed were true, correct and complete in all material respects, and (ii)
have paid (or, in the case of Taxes not yet due, will pay), all Taxes shown on
such Tax Returns.
(c) Except as set forth in the IBAH DISCLOSURE SCHEDULE, each IBAH Company
has (i) timely paid or caused to be paid all material Taxes and all Taxes shown
on Tax Returns that are or were due, except to the extent that a sufficient
reserve for Taxes has been reflected on the IBAH Balance Sheet and (ii) provided
a sufficient reserve on the IBAH Balance Sheet for the payment of all Taxes not
yet due and payable.
(d) Except as set forth in the IBAH DISCLOSURE SCHEDULE, no deficiency in
respect of any Taxes which has been assessed against an IBAH Company remains
unpaid, except for Taxes being contested in good faith, and IBAH has no
knowledge of any unassessed Tax deficiencies or of any audits or investigations
pending or threatened against an IBAH Company with respect to any Taxes.
(e) Except as set forth in the IBAH DISCLOSURE SCHEDULE, no IBAH Company has
extended or waived the application of any applicable statute of limitations of
any jurisdiction regarding the assessment or collection of any Tax or any Tax
Return.
(f) Except as set forth in the IBAH DISCLOSURE SCHEDULE, there are no liens
for Taxes upon any assets of any IBAH Company except for liens for current Taxes
not yet due.
(g) Except as set forth in the IBAH DISCLOSURE SCHEDULE, each IBAH Company
has (i) complied with all material provisions of the Code relating to the
withholding and payment of Taxes and (ii) has timely made all deposits required
by applicable Law to be made with respect to employees' withholding and other
payroll, employment or other withholding or related Taxes.
(h) Except as set forth in the IBAH DISCLOSURE SCHEDULE, no IBAH Company is
a party to any contract, agreement, plan or arrangement that, individually or in
the aggregate, or when taken together with any payment that may be made under
this Agreement or any agreements contemplated hereby, could give rise to the
payment of any "excess parachute payment" within the meaning of Section 280G of
the Code. IBAH is not, and has not been within the past five years, a "United
States real property holding corporation" within the meaning of Section
897(c)(2) of the Code.
(i) Except as set forth in the IBAH DISCLOSURE SCHEDULE, no IBAH Company is
a party to any agreement relating to the allocating or sharing of the payment
of, or liability for, Taxes for any period (or portion thereof).
(j) To IBAH's knowledge, except for the group of which IBAH is presently the
ultimate parent, no IBAH Company has ever been a member of an affiliated group
of corporations (within the meaning of Section 1504 of the Code).
(k) No IBAH Company has distributed the stock of any corporation in a
transaction satisfying the requirements of Section 355 of the Code since April
16, 1997.
Section 4.10. TITLE TO ASSETS AND RELATED MATTERS. Each IBAH Company has
good and marketable title to its part of the IBAH Assets, free from any
Encumbrances except (a) those Encumbrances specified on Section 4.10 of the IBAH
DISCLOSURE SCHEDULE or any Encumbrance in favor of any IBAH Company, (b) items
described in any notes to the consolidated financial statements of IBAH
contained in IBAH's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 (the "IBAH 10-K") included in the IBAH Disclosure Documents,
(c) minor matters that would not have a Material Adverse Effect, (d)
constitutional and statutory liens arising from the obligation to pay for the
provision of materials or services not yet in Default and Taxes not yet due and
(e) IBAH Assets transferred among the IBAH Companies.
Section 4.11. REAL PROPERTY. Section 4.11 of the IBAH DISCLOSURE SCHEDULE
describes all material real estate leased by any IBAH Company as of the date
hereof and used in the operation of the IBAH Business as well as any other
material real estate that is in the possession of or leased by any IBAH Company
(as
A-14
<PAGE>
tenant or landlord) as of the date hereof. As of the date hereof, none of the
IBAH Companies owns any real property.
Section 4.12. SUBSIDIARIES. Except as set forth on Section 4.12 of the
IBAH DISCLOSURE SCHEDULE and except for its subsidiaries set forth on exhibit
21.1 of the IBAH 10-K, as of the date hereof none of the IBAH Companies owns,
directly or indirectly, any interest or investment (whether equity or debt) in
any corporation, partnership, limited liability company, business trust, joint
venture or other legal entity. IBAH (or another IBAH Company) owns all of the
issued and outstanding shares of capital stock of each IBAH Subsidiary, free and
clear of any Encumbrances, other than as set forth in Section 4.12 of the IBAH
DISCLOSURE SCHEDULE or Encumbrances in favor of any IBAH Company. Except with
respect to Wholly-Owned Subsidiaries of IBAH that have preemptive rights, there
are no existing options, warrants, calls, commitments or other rights of any
character (including conversion or preemptive rights) relating to the
acquisition or voting of any issued or unissued capital stock or other
securities of any IBAH Subsidiary. All of the shares of capital stock of each
IBAH Subsidiary are duly and validly authorized and issued, fully paid and
non-assessable.
Section 4.13. LEGAL PROCEEDINGS; COMPLIANCE WITH LAW; GOVERNMENTAL PERMITS.
(a) Except as set forth on Section 4.13 of the IBAH DISCLOSURE SCHEDULE or
in the IBAH 10-K, there is no Litigation that is pending or, to IBAH's
knowledge, threatened against any IBAH Company that would have a Material
Adverse Effect. IBAH is and has been in compliance with all applicable Laws,
except where the failure to be in compliance would not have a Material Adverse
Effect. There has been no Default under any Laws applicable to any IBAH Company,
including Environmental Laws, except for any Defaults that would not have a
Material Adverse Effect. There has been no Default with respect to any Court
Order applicable to any IBAH Company. Except as set forth on Section 4.13 of the
IBAH DISCLOSURE SCHEDULE, no IBAH Company has received any written notice and,
to the knowledge of any IBAH Company, no other communication has been received
to the effect that it is not in compliance with any applicable Laws, and IBAH
has no reason to believe that any presently existing circumstances are likely to
result in violations of any applicable Laws, except to the extent that such
failures to comply or violations would not have a Material Adverse Effect.
(b) Without limiting the generality of Section 4.13(a), there is no
Environmental Condition at any property presently or formerly owned or leased by
an IBAH Company which is reasonably likely to have a Material Adverse Effect.
(c) The IBAH Companies have all material consents, permits, franchises,
licenses, concessions, registrations, certificates of occupancy, approvals and
other authorizations of Governmental Authorities (collectively, the
"Governmental Permits") required in connection with the operation of their
respective businesses as now being conducted, all of which are in full force and
effect, except where the failure to obtain any such Governmental Permit or of
any such Governmental Permit to be in full force and effect, would not have a
Material Adverse Effect. Each IBAH Company has complied, in all material
respects, with all of its Governmental Permits, except where the failure to so
comply would not have a Material Adverse Effect.
Section 4.14. CONTRACTS AND COMMITMENTS. Section 4.14 of the IBAH
DISCLOSURE SCHEDULE sets forth a complete and accurate list of:
(a) To IBAH's knowledge, customer Contracts (excluding letters of intent and
agreements in principle) involving any IBAH Company in amounts in excess of
$2,500,000; provided that the cumulative effect of all such Contracts over $2.5
million not disclosed will not have a Material Adverse Effect.
(b) Other than Contracts listed as Exhibits to the IBAH 10-K, (i) all
employment, consulting (other than physician investigators), management,
severance or agency Contracts (y) with any executive officers or directors of
IBAH, or (z) allowing the other party to terminate and receive payment based on
the execution of this Agreement and consummation of the Transactions, and (ii)
any employment agreements
A-15
<PAGE>
with any Person in the United States to whom any IBAH Company makes annual
salary payments in excess of $150,000 and all employee country managers outside
the United States.
(c) All Contracts limiting the freedom of any IBAH Company to compete in any
line of business, or with any Person, or in any geographic area or market.
Each Contract to which any IBAH Company is a party (i) is legal, valid,
binding and enforceable against IBAH or the applicable Subsidiary, and to IBAH's
knowledge, against each other party thereto, and is in full force and effect and
(ii) neither IBAH nor the applicable Subsidiary, nor to IBAH's knowledge, any
other party, is in Default under any such Contract, other than in the case of
(i) and (ii) above where the failure to be so would not have a Material Adverse
Effect.
Section 4.15. EMPLOYEE RELATIONS. No IBAH Company is (a) a party to,
involved in or, to IBAH's knowledge, threatened by, any labor dispute or unfair
labor practice charge, or (b) currently negotiating any collective bargaining
agreement, and no IBAH Company has experienced any work stoppage during the last
three years.
Section 4.16. ERISA.
(a) The IBAH DISCLOSURE SCHEDULE contains a complete list of all Benefit
Plans sponsored or maintained by any IBAH Company or under which any IBAH
Company may be obligated for its employees, directors or independent contractors
("IBAH Benefit Plans"). IBAH has delivered or made available to Omnicare (i)
accurate and complete copies of all IBAH Benefit Plan documents and of any
summary plan descriptions, summary annual reports and insurance contracts
relating thereto, (ii) accurate and complete detailed summaries of all unwritten
IBAH Benefit Plans, (iii) accurate and complete copies of the most recent
financial statements and actuarial reports with respect to all IBAH Benefit
Plans for which financial statements or actuarial reports are required or have
been prepared and (iv) accurate and complete copies of all annual reports for
all IBAH Benefit Plans (for which annual reports are required) prepared within
the last two years.
(b) All IBAH Benefit Plans conform in all material respects to, and are
being administered and operated in material compliance with, the requirements of
ERISA, the Code and all other applicable Laws, including applicable Laws of
foreign jurisdictions. There have not been any "prohibited transactions," as
such term is defined in Section 4975 of the Code or Section 406 of ERISA
involving any of the IBAH Benefit Plans, that could subject any IBAH Company to
any material penalty or tax imposed under the Code or ERISA.
(c) Except as set forth on Section 4.16(c) of the IBAH DISCLOSURE SCHEDULE,
any IBAH Benefit Plan that is intended to be qualified under Section 401(a) of
the Code and exempt from tax under Section 501(a) of the Code has been
determined by the Internal Revenue Service to be so qualified, and such
determination remains in effect and has not been revoked. Nothing has occurred
since the date of any such determination that is reasonably likely to affect
adversely such qualification or exemption, or result in the imposition of excise
taxes or income taxes on unrelated business income under the Code or ERISA with
respect to any IBAH Benefit Plan.
(d) Except as set forth on Section 4.16(d) of the IBAH DISCLOSURE SCHEDULE,
(i) no IBAH Company has a current or contingent obligation to contribute to any
multiemployer plan (as defined in Section 3(37) of ERISA) and (ii) no IBAH
Company, nor any entity that has been treated as a single employer with any IBAH
Company under Sections 414(b), (c), (m) or (o) of the Code, has any liability,
contingent or otherwise, under Title IV of ERISA or Section 412 of the Code.
(e) There are no pending or, to the knowledge of IBAH, threatened claims by
or on behalf of any IBAH Benefit Plans, or by or on behalf of any individual
participants or beneficiaries of any IBAH Benefit Plans, alleging any breach of
fiduciary duty on the part of any IBAH Company or any of the officers, directors
or employees of any IBAH Company under ERISA or any other applicable
Regulations, or
A-16
<PAGE>
claiming benefit payments other than those made in the ordinary operation of
such plans, or alleging any violation of any other applicable Laws. To IBAH's
knowledge, the IBAH Benefit Plans are not the subject of any investigation,
audit or action by the Internal Revenue Service, the Department of Labor or the
Pension Benefit Guaranty Corporation ("PBGC"). Each IBAH Company has made all
required contributions under the IBAH Benefit Plans including the payment of any
premiums payable to the PBGC and other insurance premiums.
(f) With respect to any IBAH Benefit Plan that is an employee welfare
benefit plan (within the meaning of Section 3(1) of ERISA) (an "IBAH Welfare
Plan"), (i) each IBAH Welfare Plan for which contributions are claimed as
deductions under any provision of the Code is in material compliance with all
applicable requirements pertaining to such deduction, (ii) with respect to any
welfare benefit fund (within the meaning of Section 419 of the Code) related to
an IBAH Welfare Plan, there is no disqualified benefit (within the meaning of
Section 4976(b) of the Code) that would result in the imposition of a tax under
Section 4976(a) of the Code, and (iii) any IBAH Benefit Plan that is a group
health plan (within the meaning of Section 4980B(g)(2) of the Code) complies,
and in each and every case has complied, with all of the material requirements
of Section 4980B of the Code, ERISA, Title XXII of the Public Health Service Act
and the applicable provisions of the Social Security Act.
(g) Except as set forth on the IBAH DISCLOSURE SCHEDULE or for any IBAH
Benefit Plan listed as an exhibit to the IBAH 10-K, the execution of this
Agreement and the performance of the Transactions will not (either alone or in
combination with the occurrence of any additional or subsequent events)
constitute an event under any IBAH Benefit Plan that will or may result in any
payment (whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any current or former employee, director or consultant
of any IBAH Company.
Section 4.17. PATENTS, TRADEMARKS, ETC. None of the IBAH Companies uses in
the operation of the IBAH Business any material registered Patents, Trademarks
or Copyrights, except for those described in Section 4.17 of the IBAH DISCLOSURE
SCHEDULE or Trademarks which are names of IBAH Companies. To IBAH's knowledge,
no IBAH Company infringes upon or unlawfully or wrongfully uses any Intellectual
Property (other than computer software) owned or claimed by another Person and
no Person infringes on or wrongfully uses any Intellectual Property (other than
computer software) owned or claimed by IBAH, except for those situations that
would not have a Material Adverse Effect. The IBAH Companies own or have valid
rights to use all Intellectual Property used in the conduct of their business
except where the failure to have valid rights to use such Intellectual Property
will not have a Material Adverse Effect, free and clear of all Encumbrances,
other than Encumbrances which would not have a Material Adverse Effect.
Section 4.18. ABSENCE OF CERTAIN CHANGES. Since the IBAH Balance Sheet
Date, the IBAH Companies have conducted the IBAH Business in the ordinary
course, and except as described in the IBAH DISCLOSURE SCHEDULE, as of the date
hereof, there has not been:
(a) any Material Adverse Effect on the IBAH Business or in the aggregate
Liabilities of the IBAH Companies;
(b) any distribution or payment declared or made in respect of IBAH's
capital stock by way of dividends, purchase or redemption of shares or
otherwise, except redemptions pursuant to the IBAH Employee Stock Purchase Plan
pursuant to the terms thereof;
(c) any increase in the compensation payable or to become payable to any
current director, officer or employee of any IBAH Company, except for merit and
seniority increases for employees made in the ordinary course of business, nor
any material change in any existing employment, severance, consulting
arrangements or any IBAH Benefit Plan;
A-17
<PAGE>
(d) any sale, assignment or transfer of any IBAH Assets, or any additions to
or transactions involving any IBAH Assets, other than those made in the ordinary
course of business or those solely involving the IBAH Companies;
(e) other than in the ordinary course of business, any waiver or release of
any material claim or right or cancellation of any material debt held by any
IBAH Company;
(f) any change in practice with respect to Taxes, or any election, change of
any election, or revocation of any election with respect to Taxes, or any
settlement or compromise of any dispute involving a Tax liability;
(g) (i) any creation, assumption or maintenance of any long-term debt or any
short-term debt for borrowed money other than under existing notes payable,
lines of credit or other credit facility or in the ordinary course of business
or with respect to its Wholly-Owned Subsidiaries; (ii) any assumption, granting
of guarantees, endorsements or otherwise becoming liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other Person
except its Wholly-Owned Subsidiaries; or (iii) any loans, advances or capital
contributions to, or investments in, any other Person except its Wholly-Owned
Subsidiaries;
(h) any material agreement, commitment or contract, except agreements,
commitments or contracts for the purchase, sale or lease of goods or services in
the ordinary course of business;
(i) other than in the ordinary course of business, any authorization,
recommendation, proposal or announcement of an intention to authorize, recommend
or propose, or enter into any Contract with respect to, any (i) plan of
liquidation or dissolution, (ii) acquisition of a material amount of assets or
securities, (iii) disposition or Encumbrance of a material amount of assets or
securities, (iv) merger or consolidation or (v) material change in its
capitalization;
(j) any change in accounting or Tax procedure or practice; or
(k) any compromise, settlement or modification to any material claim or
litigation.
Section 4.19. CORPORATE RECORDS. The minute books of IBAH contain
accurate, complete and current copies of all Charter Documents and of all
minutes of meetings, resolutions and other proceedings of its Board of Directors
and stockholders. The stock record books of IBAH are also complete, correct and
current.
Section 4.20. FINDER'S FEES. Except for Smith Barney, the arrangements
with which have been disclosed to Omnicare, no Person is or will be entitled to
any commission, finder's or other payment in connection with the Transactions
based on arrangements made by or on behalf of IBAH. A true and complete copy of
each document reflecting such arrangements with Smith Barney has been delivered
to Omnicare.
Section 4.21. COMPLIANCE WITH HEALTHCARE LAWS
(a) As used herein, "IBAH Healthcare Laws" shall mean any Laws to which any
IBAH Company is subject with respect to drug or medical device investigation or
development regulation or other applicable healthcare regulatory matters,
including, without limitation, the Federal Food, Drug and Cosmetic Act, 21
U.S.C. Section301 et seq.; the Controlled Substances Act, 21 U.S.C. Section801
et seq.; 18 U.S.C. Section287 (commonly referred to as the "Civil False Claims
Act"), and implementing regulations related thereto. To IBAH's knowledge, there
are no presently existing circumstances which could be reasonably likely to
result in violations of any such IBAH Healthcare Laws, except where such
violations would not have a Material Adverse Effect. To the knowledge of IBAH,
no IBAH Company has been materially sanctioned as not being in compliance with
any IBAH Healthcare Laws except where such sanctions would not have a Material
Adverse Effect. No IBAH Company has received any written notice and, to the
knowledge of any IBAH Company, no other communication has been received to the
effect that it or any activity conducted
A-18
<PAGE>
by it is not in compliance with any applicable IBAH Healthcare Laws except where
the failure to comply would not have a Material Adverse Effect. As used herein,
"IBAH Personnel" shall mean the respective officers, directors and employees of
the IBAH Companies.
(b) No IBAH Company receives or to IBAH's knowledge has received payment
either directly or indirectly from Medicare, Medicaid, the Civilian Health and
Medical Program of the Uniformed Services or the Federal Employees Health
Benefits Act.
(c) No IBAH Company has made, and, to the knowledge of any IBAH Company, no
IBAH Personnel have made, directly or indirectly, any bribes, kickbacks, or
other illegal payments or illegal political contributions, illegal payments from
corporate funds to governmental officials in their individual capacities, or
illegal payments from corporate funds to obtain or retain business either within
the United States or abroad.
(d) No IBAH Company nor, to IBAH's knowledge, any of their IBAH Personnel
have been debarred by the U.S. Food and Drug Administration (the "FDA") or by an
analogous foreign governmental entity pursuant to the Generic Drug Enforcement
Act ("Drug Enforcement Act") or an analogous foreign law or regulation; and to
IBAH's knowledge, no IBAH Company or any of its IBAH Personnel are under
investigation by the FDA or by an analogous foreign governmental entity for a
debarment action pursuant to the Drug Enforcement Act or an analogous foreign
law or regulation.
(e) No IBAH Personnel of any IBAH Company are engaged as practicing
physicians, nurses or pharmacists (billing patients for professional services
directly and not through any IBAH Company) on behalf of any IBAH Company.
Section 4.22. BOARD APPROVAL. The IBAH Board of Directors has approved
this Agreement and the Transactions and such approval constitutes approval of
the Merger and the other Transactions contemplated hereby, including approval of
the Voting Agreement, the Stock Option Agreement and the other Transaction
Documents, by the IBAH Board of Directors as contemplated by the DGCL.
Section 4.23. POOLING OF INTERESTS; REORGANIZATION. No IBAH Company has
or, as of the Closing Date, will have (a) taken any action or failed to take any
action which action or failure would jeopardize the treatment of the Merger as a
pooling of interests for accounting purposes or (b) taken any action or failed
to take any action which action or failure would result in the failure of the
Merger to qualify as a reorganization within the meaning of Code Section 368(a).
IBAH has no knowledge of any fact or circumstance that is reasonably likely to
prevent the Merger from qualifying as a pooling of interests for accounting
purposes or a reorganization within the meaning of Code Section 368(a).
Section 4.24. INSURANCE. IBAH carries insurance covering it and its
Subsidiaries' assets, business, operations, employees, officers and directors of
the type and in the amounts listed in Section 4.24 of the IBAH DISCLOSURE
SCHEDULES. All such insurance policies are in full force and effect and all
premiums have been paid to the extent they are due. To IBAH's knowledge, no
claims have been made by any Person alleging liability in respect of drug trials
on human beings by any IBAH Company.
A-19
<PAGE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF OMNICARE
Omnicare hereby represents and warrants to IBAH as follows:
Section 5.1. CORPORATE. Each Omnicare Company is a corporation duly
organized, validly existing and in good standing under the Laws under which it
was incorporated. Each Omnicare Company is qualified to do business as a foreign
corporation in any jurisdiction where it is required to be so qualified, except
where the failure to so qualify would not have a Material Adverse Effect. The
Charter Documents and bylaws of Omnicare (which have been delivered to IBAH) and
of each Omnicare Company (which have been delivered or made available upon
request to IBAH) have been duly adopted and are current, correct and complete.
Each Omnicare Company has all necessary corporate power and authority to own,
lease and operate its part of the Omnicare Assets and to carry on its part of
the Omnicare Business as it is now being conducted.
Section 5.2. AUTHORIZATION. Each Omnicare Party has the requisite
corporate power and authority to execute and deliver the Transaction Documents
to which it is a party and to perform the Transactions to be performed by it.
Such execution, delivery and performance by each Omnicare Party have been duly
authorized by all necessary corporate action. Each Transaction Document executed
and delivered by any Omnicare Party as of the date hereof has been duly executed
and delivered by such Omnicare Party and constitutes a valid and binding
obligation of each Omnicare Party, enforceable against each Omnicare Party in
accordance with its terms. Any Transaction Document executed and delivered by
any Omnicare Party after the date hereof will be duly executed and delivered by
such Omnicare Party and will constitute a valid and binding obligation of such
Omnicare Party, enforceable against such Omnicare Party in accordance with its
terms.
Section 5.3. VALIDITY OF CONTEMPLATED TRANSACTIONS. Except for compliance
with the (i) HSR Act, (ii) the Securities Act and the Exchange Act and (iii) the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware, neither the execution and delivery by any Omnicare Party of the
respective Transaction Documents to which it is or will be a party, nor the
performance of the Transactions to be performed by it, will require any filing,
consent or approval under or constitute a Default, or result in a loss of
material benefit under, (a) any Law or Court Order to which any Omnicare Company
is subject, (b) the Charter Documents or bylaws of any Omnicare Company or (c)
any Contract or other document to which any Omnicare Company is a party or by
which any of the Omnicare Assets may be subject, except in the case of (b) and
(c) for Defaults which would not have a Material Adverse Effect.
Section 5.4. CAPITALIZATION AND STOCK OWNERSHIP. The total authorized
capital stock of Omnicare consists of (a) 110,000,000 shares of Omnicare Common
Stock, and (b) 1,000,000 shares of Omnicare preferred stock, no par value. Of
such authorized capital stock, the only issued and outstanding shares as of
March 27, 1998 are 82,730,691 shares of Omnicare Common Stock. As of March 27,
1998, there are no existing options, warrants, calls, commitments or other
rights of any character (including conversion or preemptive rights) relating to
the acquisition of any issued or unissued capital stock or other securities of
Omnicare, other than options, warrants and other rights to purchase an aggregate
of 11,628,603 shares of Omnicare Common Stock. All of the issued and outstanding
Omnicare Shares are validly issued, fully paid and non-assessable. The total
authorized capital stock of the Merger Subsidiary consists of 1,000 shares of
common stock, par value $.01 per share (the "Omnicare Sub Common Stock"). Of
such authorized capital stock, the only issued and outstanding shares on the
date hereof are held by Omnicare. All of the issued and outstanding shares of
Omnicare Sub Common Stock are validly issued, fully paid and non-assessable. The
shares of Omnicare Common Stock to be issued in connection with the Merger and
this Agreement, when issued in accordance with the terms of this Agreement, will
be validly issued, fully paid and nonassessable.
A-20
<PAGE>
Section 5.5. BOARD RECOMMENDATION. By a vote of the directors present at a
meeting of Omnicare's Board of Directors (which meeting was duly called and held
and at which a quorum was present), the Board of Directors of Omnicare
unanimously approved and adopted this Agreement, including the Merger and the
other Transactions, and determined that the Merger is fair to Omnicare.
Section 5.6. PROXY STATEMENT. None of the information supplied or to be
supplied by or on behalf of any Omnicare Company specifically for inclusion or
incorporation by reference in the Registration Statement will (except to the
extent revised or superseded by amendments or supplements contemplated hereby),
at the time the Registration Statement becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
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. None of the information supplied or to be supplied by or on behalf
of any Omnicare Company specifically for inclusion or incorporation by reference
in the Proxy Statement will (except to the extent revised or superseded by
amendments or supplements contemplated hereby), at the date it (or any such
amendment of supplement) is mailed to the stockholders of IBAH and at the time
of the IBAH Stockholder Meeting, 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. The Registration Statement and the Proxy
Statement (except for information relating solely to any IBAH Company) will
comply in all material respects with the requirements of the Securities Act and
the Exchange Act and the Regulations promulgated thereunder.
Section 5.7. OMNICARE DISCLOSURE DOCUMENTS; FINANCIAL STATEMENTS. Omnicare
has filed all required forms, reports, statements, schedules and other documents
with the SEC since January 1, 1995 (collectively, the "Omnicare Disclosure
Documents"). Each of such Omnicare Disclosure Documents, at the time it was
filed, complied in all material respects with all applicable requirements of the
Securities Act and the Exchange Act, and with the forms and Regulations of the
SEC promulgated thereunder, and did not contain at the time filed 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. The financial
statements, including all related notes and schedules, contained in the Omnicare
Disclosure Documents (or incorporated by reference therein) fairly present the
consolidated financial position of Omnicare as at the respective dates thereof
and the consolidated results of operations and cash flows of Omnicare for the
periods indicated in accordance with GAAP applied on a consistent basis
throughout the periods involved (except for changes in accounting principles
disclosed in the notes thereto) and subject in the case of interim financial
statements to normal year-end adjustments and the absence of notes. For purposes
of this Agreement, the balance sheet of Omnicare as of December 31, 1997 is
referred to as the "Omnicare Balance Sheet" and the date thereof is referred to
as the "Omnicare Balance Sheet Date."
Section 5.8. ABSENCE OF UNDISCLOSED LIABILITIES. None of the Omnicare
Companies has any Liabilities except (a) to the extent reflected in the Omnicare
Balance Sheet, (b) those Liabilities described in this Agreement, (c) those
Liabilities incurred in the ordinary course of business since the Omnicare
Balance Sheet Date which would not have a Material Adverse Effect and (d) those
Liabilities not required under GAAP to be reflected in the Omnicare Balance
Sheet which would not have a Material Adverse Effect.
Section 5.9. ABSENCE OF CERTAIN CHANGES. Since the Omnicare Balance Sheet
Date, there has not been any Material Adverse Effect on the Omnicare Business.
Section 5.10. POOLING OF INTERESTS; REORGANIZATION. No Omnicare Company
has or, as of the Closing Date, will have (a) taken any action or failed to take
any action which action or failure would jeopardize the treatment of the Merger
as a pooling of interests for accounting purposes or (b) taken any action or
failed to take any action which action or failure would result in the failure of
the Merger to qualify as a reorganization within the meaning of Code Section
368(a). Omnicare has no knowledge of any fact or
A-21
<PAGE>
circumstance that is reasonably likely to prevent the Merger from qualifying as
a pooling of interests for accounting purposes or a reorganization within the
meaning of Code Section 368(a).
Section 5.11. OWNERSHIP OF MERGER SUBSIDIARY; NO PRIOR ACTIVITIES. The
Merger Subsidiary is a Wholly-Owned Subsidiary of Omnicare created solely for
the purpose of effecting the Merger. As of the date hereof and the Effective
Time, except for Liabilities incurred in connection with its incorporation or
organization and the Transactions and except for this Agreement and the other
Transaction Documents, the Merger Subsidiary has not and will not have incurred,
directly or indirectly, through any Subsidiary or Affiliate of Omnicare, any
material Liabilities, engaged in any material business activities of any type or
kind whatsoever or entered into any agreements or arrangements with any Person.
Section 5.12. COMPLIANCE WITH HEALTHCARE LAWS.
(a) As used herein, "Omnicare Healthcare Laws" shall mean any Laws to which
any Omnicare Company is subject with respect to drug or medical device
investigation or development regulation or other applicable healthcare
regulatory matters, including, without limitation, the Controlled Substances
Act, 21 U.S.C. Section801 et seq.; 18 U.S.C. Section287 (commonly referred to as
the "Civil False Claims Act"); Section1128Bb(b) of the Social Security Act and
42 U.S.C. Section 1320a-7b(b) (commonly referred to as the "Federal
Anti-Kickback Statute"); Section1877 of the Social Security Act and 42 U.S.C.
Section1395nn (commonly referred to as the "Stark Statute"); the Animal Welfare
Act, 7 U.S.C. Section2131 et. seq., and implementing regulations related
thereto. To Omnicare's knowledge, there are no presently existing circumstances
which could be reasonably likely to result in violations of any such Omnicare
Healthcare Laws, except where such violations would not have a Material Adverse
Effect. To the knowledge of Omnicare, no Omnicare Company has been sanctioned as
not being in compliance with any Omnicare Healthcare Laws except where such
sanctions would not have a Material Adverse Effect. Except as disclosed in
Omnicare's Annual Report on Form 10-K for the year ended December 31, 1997, no
Omnicare Company has received any written notice and, to the knowledge of any
Omnicare Company, no other communication has been received to the effect that it
or any activity conducted by it is not in compliance with any applicable
Omnicare Healthcare Laws except where the failure to comply would not have a
Material Adverse Effect.
(b) Except as disclosed in Omnicare's Annual Report on Form 10-K for the
year ended December 31, 1997, to Omnicare's knowledge, no Omnicare Company is
presently the subject of an investigation by a Governmental Authority for a
violation of any applicable Omnicare Healthcare Laws, except for such violations
that would not have a Material Adverse Effect.
ARTICLE VI
COVENANTS OF THE OMNICARE PARTIES AND IBAH
Section 6.1. PROXY/REGISTRATION STATEMENT. Omnicare and IBAH will prepare
and file with the SEC as soon as reasonably practicable after the date hereof a
proxy statement to be filed under the Exchange Act by IBAH and to be distributed
by IBAH in connection with the IBAH Stockholder Meeting (the "Proxy Statement"
and, together with the Registration Statement, the "Proxy/Registration
Statement"). Such filing will be a confidential filing unless Omnicare shall
specify otherwise. No later than promptly following the clearance by the SEC of
the Proxy Statement, Omnicare will file a Registration Statement on Form S-4
under the Securities Act in connection with the Merger for purposes of
registering the Omnicare Shares and the Omnicare Warrants (and the shares of
Omnicare Common Stock issuable upon exercise of the Omnicare Warrants) to be
issued in the Merger pursuant to Article II hereof (the "Registration
Statement") and IBAH shall cooperate with Omnicare to cause the Registration
Statement to be declared effective under the Securities Act as promptly as
practicable after such filing. Omnicare and IBAH shall also take such action as
may be reasonably required to cause the Omnicare Shares and the Omnicare
Warrants issuable pursuant to the Merger (and the shares of Omnicare Common
Stock issuable upon exercise of the Omnicare Warrants) to be registered or to
obtain an exemption from registration under applicable state "blue sky" or
securities Laws. Each Party will furnish to the other Party all information
A-22
<PAGE>
concerning itself and its Subsidiaries as the other Party or its counsel may
reasonably request and that is required or customary for inclusion in the
Proxy/Registration Statement.
Section 6.2. HSR ACT FILINGS. Each Party shall prepare and cause to be
filed with appropriate governmental authorities, as soon as reasonably
practicable after the date hereof, any required Notification and Report Form for
Certain Mergers and Acquisitions or responses thereto as required by the HSR Act
and any necessary supplements and amendments thereto. Each Party shall use
commercially reasonably efforts to cooperate in promptly preparing and filing
such Notification and Report Form and seeking the prompt expiration of the
applicable waiting period.
Section 6.3. NO SOLICITATION. From and after the date hereof, IBAH,
without the prior written consent of Omnicare, will not, and will not authorize
or permit any of its Subsidiaries or its Party Representatives to, directly or
indirectly, solicit, initiate or encourage (including by way of furnishing
information) or take any other action to facilitate knowingly any inquiries or
the making of any proposal which constitutes or may reasonably be expected to
lead to an Acquisition Proposal (as defined below) from any Person, or engage in
any discussion or negotiations relating thereto or accept any Acquisition
Proposal; provided, however, that notwithstanding any other provision hereof,
IBAH may (a) at any time prior to the time IBAH's stockholders shall have voted
to approve this Agreement, engage in discussions or negotiations with a third
party who (without any solicitation, initiation, encouragement, discussion or
negotiation, directly or indirectly, by or with any IBAH Company or its Party
Representatives after the date hereof) seeks to initiate such discussions or
negotiations and may furnish such third party information concerning IBAH and
its Business and Assets if, and only to the extent that, (i)(x) the third party
has first made an Acquisition Proposal that is (as determined in good faith by
the IBAH Board of Directors after consultation with its financial advisor)
financially superior to the Transactions and has demonstrated that the funds
necessary for the Acquisition Proposal are reasonably likely to be available and
the Acquisition Proposal is reasonably capable of consummation in accordance
with its terms (as determined in good faith in each case by IBAH's Board of
Directors after consultation with its financial advisors) and (y) IBAH's Board
of Directors shall conclude in good faith, after considering applicable
provisions of applicable Law, on the basis of advice of its counsel, that such
action is necessary for the Board of Directors to act in a manner consistent
with its fiduciary duties under applicable Law and (ii) prior to furnishing such
information to or entering into discussions or negotiations with such Person,
IBAH (x) provides prompt notice to Omnicare to the effect that it is furnishing
information to or entering into discussions or negotiations with such Person and
(y) receives from such Person an executed confidentiality agreement in
reasonably customary form on terms not in the aggregate materially more
favorable to such Person than the terms contained in the Confidentiality
Agreement, (b) comply with Rule 14e-2 promulgated under the Exchange Act with
regard to a tender or exchange offer, and/or (c) provided IBAH terminates this
Agreement pursuant to Section 12.1(g), accept an Acquisition Proposal from a
third party. IBAH shall immediately cease and terminate any existing
solicitation, initiation, encouragement, activity, discussion or negotiation
with any Persons conducted heretofore by IBAH or its Party Representatives with
respect to the foregoing. IBAH shall not release any third party from, or waive
any provision of, any standstill agreement to which it is a party or any
confidentiality agreement between it and another Person who has made an
Acquisition Proposal, unless such Person has made an Acquisition Proposal
meeting the criteria set forth in clause (a)(i)(x) above and IBAH's Board of
Directors shall conclude in good faith, after considering applicable provisions
of applicable Law, on the basis of advice of its counsel, that such action is
necessary for the Board of Directors to act in a manner consistent with its
fiduciary duties under applicable Law. IBAH shall immediately notify Omnicare
orally (with a prompt written confirmation) of any such inquiries, offers or
proposals (including the terms and conditions of any such proposal and the
identity of the Person making it and shall provide copies of any such written
inquiries, offers or proposals), shall keep Omnicare informed of the status and
details of any such inquiry, offer or proposal (and agrees that any material
modification of the terms of an inquiry or proposal shall constitute a new
inquiry or proposal) , and shall give Omnicare five days' advance notice of any
agreement to be entered into with, or any information to be supplied to, any
Person making such inquiry, offer or proposal (no such agreement,
A-23
<PAGE>
other than a confidentiality agreement as set forth in this Section, to be
executed or agreed prior to the termination of this Agreement in accordance with
its terms). As used herein, "Acquisition Proposal" shall mean a bona fide
proposal or offer (other than by Omnicare) for a tender or exchange offer,
merger, consolidation or other business combination involving IBAH or any
Subsidiary thereof, or any proposal to acquire in any manner a substantial
equity interest in, or a substantial amount of the assets of, IBAH or any such
Subsidiary.
Section 6.4. NOTIFICATION OF CERTAIN MATTERS. Each of Omnicare and IBAH
shall give prompt notice to the other of the following:
(a) the occurrence or nonoccurrence of any event whose occurrence or
nonoccurrence would be likely to cause either (i) any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
at any time from the date hereof to the Effective Time, or (ii) directly or
indirectly, any Material Adverse Effect;
(b) any material failure of such Party, or any officer, director, employee
or agent of any thereof, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; and
(c) any facts relating to such Party which would make it necessary or
advisable to amend the Proxy Statement or the Registration Statement in order to
make the statements therein not misleading or to comply with applicable Law;
provided, however, that the delivery of any notice pursuant to this Section 6.4
shall not limit or otherwise affect the remedies available hereunder to the
Party receiving such notice.
Section 6.5. ACCESS TO INFORMATION.
(a) From the date hereof to the Effective Time, Omnicare and IBAH shall, and
shall cause its respective Subsidiaries, and its and their officers, directors,
employees, auditors, counsel and agents to afford the officers, employees,
auditors, counsel, financial advisors and agents of the other Party complete
access at all reasonable times to such Party's and its Subsidiaries' officers,
employees, auditors, counsel, agents, properties, offices and other facilities
and to all of their respective books and records, and shall furnish the other
with all financial, operating and other data and information as such other Party
may reasonably request.
(b) All information so received from the other Party shall be deemed
received pursuant to the confidentiality agreement, dated as of December 17,
1997, heretofore executed and delivered by Omnicare and IBAH (the
"Confidentiality Agreement"), and each such Party shall, and shall cause its
Subsidiaries and each of its and their respective officers, directors,
employees, auditors, counsel, financial advisors and agents ("Party
Representatives"), to comply with the provisions of the Confidentiality
Agreement with respect to such information. The provisions of the
Confidentiality Agreement are hereby incorporated herein by reference with the
same effect as if fully set forth herein.
Section 6.6. PUBLIC ANNOUNCEMENTS. Omnicare and IBAH (a) shall use all
reasonable efforts to develop a joint communications plan and each Party shall
use all reasonable efforts to ensure that all press releases and other public
statements with respect to the Transactions shall be consistent with such joint
communications plan or, to the extent inconsistent therewith, shall have
received the prior written approval of the other and (b) before issuing any
press release or otherwise making any public statements with respect to the
Transactions, will consult with each other as to its form and substance and
shall not issue any such press release or make any such public statement prior
to such consultation, except for each of (a) and (b) above as may be required by
Law (it being agreed that the Parties hereto are entitled to disclose all
requisite information concerning the Transactions in any filings required with
the SEC or pursuant to the HSR Act) or the rules and regulations of the Nasdaq
National Market promulgated by the National Association of Securities Dealers,
Inc. or the NYSE, as applicable.
A-24
<PAGE>
Section 6.7. COOPERATION. Upon the terms and subject to the conditions
hereof, each of the Parties shall use its commercially reasonable efforts to
take or cause to be taken all actions and to do or cause to be done all things
necessary, proper or advisable to consummate as promptly as practicable the
Transactions and shall use its commercially reasonable efforts to obtain all
IBAH Required Consents, and to effect all necessary filings, under the
Securities Act, the Exchange Act and the HSR Act. Without limiting the
generality of the foregoing, each Party shall use all commercially reasonable
efforts to take, or cause to be taken, all other actions and to do, or cause to
be done, all other things necessary, proper or advisable to fulfill the
conditions under Articles IX, X and XI to the extent that the fulfillment
thereof is within a Party's control.
Section 6.8. REORGANIZATION; POOLING. From and after the date hereof and
until the Effective Time, neither Omnicare nor IBAH nor any of their respective
Subsidiaries shall knowingly take any action, or knowingly fail to take any
action, that would jeopardize qualification of the Merger as a reorganization
within the meaning of Section 368(a) of the Code or as a pooling of interests
under applicable accounting standards.
ARTICLE VII
COVENANTS OF IBAH
Section 7.1. OPERATION OF THE BUSINESS. Except as set forth on Section 7.1
of the IBAH DISCLOSURE SCHEDULE, as contemplated by this Agreement or as
expressly agreed to in writing by Omnicare, during the period from the date of
this Agreement to the Effective Time, IBAH and its Subsidiaries will conduct
their operations only in the ordinary course of business consistent with sound
financial, operational and regulatory practice (as used in Section 4.18 and 7.1,
the "ordinary course of business"), and will take no action which would
materially adversely affect their ability to consummate the Transactions.
Without limiting the generality of the foregoing, except as otherwise expressly
provided in this Agreement or except as disclosed in the IBAH DISCLOSURE
SCHEDULE, prior to the Effective Time, neither IBAH nor any of its Subsidiaries
will, without the prior written consent of Omnicare:
(a) amend its Charter Documents or bylaws (or similar organizational
documents);
(b) authorize for issuance, issue, sell, deliver, grant any options for, or
otherwise agree or commit to issue, sell or deliver any shares of its capital
stock or any other securities, other than pursuant to and in accordance with the
terms of the IBAH Employee Stock Purchase Plan in the ordinary course of
business, the Stock Option Agreement, any Existing Options, or outstanding IBAH
Preferred Shares or IBAH Warrants listed on the IBAH DISCLOSURE SCHEDULE;
(c) recapitalize, split, combine or reclassify any shares of its capital
stock; declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock; or purchase, redeem or otherwise acquire any of its or its Subsidiaries'
securities or modify any of the terms of any such securities;
(d) (i) create, incur, assume, maintain or permit to exist any long-term
debt or any short-term debt for borrowed money other than under existing notes
payable, lines of credit or other credit facilities or in the ordinary course of
business, or with respect to its Wholly-Owned Subsidiaries in the ordinary
course of business; (ii) assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise) for the obligations
of any other Person except its Wholly-Owned Subsidiaries in the ordinary course
of business or as otherwise may be contractually required and disclosed in the
IBAH DISCLOSURE SCHEDULE; or (iii) make any loans, advances or capital
contributions to, or investments in, any other Person except its Wholly-Owned
Subsidiaries;
(e) (i) amend any IBAH Benefit Plan or (ii) except in the ordinary course of
business consistent with usual practice or established policy (a) increase in
any manner the rate of compensation of any of its directors, officers or other
employees everywhere, except for increases that do not exceed 15%of the base
A-25
<PAGE>
salary or in the ordinary course of business; (b) pay or agree to pay any bonus,
pension, retirement allowance, severance or other employee benefit except as
required under currently existing IBAH Benefit Plans disclosed in the IBAH
DISCLOSURE SCHEDULE; or (c) amend, terminate or enter into any employment,
consulting, severance, change in control or similar agreements or arrangements
with any of its directors, officers or other employees;
(f) enter into any material agreement, commitment or contract, except
agreements, commitments or contracts for the purchase, sale or lease of goods or
services in the ordinary course of business;
(g) other than in the ordinary course of business, authorize, recommend,
propose or announce an intention to authorize, recommend or propose, or enter
into any Contract with respect to, any (i) plan of liquidation or dissolution,
(ii) acquisition of a material amount of assets or securities, (iii) disposition
or Encumbrance of a material amount of assets or securities, (iv) merger or
consolidation or (v) material change in its capitalization;
(h) change any material accounting or Tax procedure or practice;
(i) take any action the taking of which, or omit to take any action the
omission of which, would cause any of the representations and warranties herein
to fail to be true and correct in all material respects as of the date of such
action or omission as though made at and as of the date of such action or
omission;
(j) compromise, settle or otherwise modify any material claim or litigation
not identified in the IBAH DISCLOSURE SCHEDULE; or
(k) commit or agree to do any of the foregoing.
Section 7.2. IBAH STOCKHOLDER MEETING. IBAH shall cause a meeting of its
stockholders (the "IBAH Stockholder Meeting") to be duly called and held as soon
as reasonably practicable for the purpose of voting on the adoption of this
Agreement and the Merger as required by the DGCL. Subject to their fiduciary
duties, the directors of IBAH shall recommend such adoption of this Agreement
and the Merger by IBAH's stockholders. In connection with such meeting, IBAH (a)
will mail to its stockholders as promptly as practicable the Proxy Statement and
all other proxy materials for such meeting, (b) will use all reasonable efforts
to obtain the necessary approvals by its stockholders of this Agreement and the
Transactions, and (c) will otherwise comply with all legal requirements
applicable to such meeting.
Section 7.3. MAINTENANCE OF THE ASSETS. IBAH shall, and shall cause each
other IBAH Company to, continue to maintain and service the IBAH Assets
consistent with past practice. IBAH shall not, and shall cause each other IBAH
Company not to, directly or indirectly, sell or encumber all or any part of the
IBAH Assets, other than sales in the ordinary course of business or sales to or
Encumbrances in favor of any other IBAH Company, or initiate or participate in
any discussions or negotiations or enter into any agreement to do any of the
foregoing.
Section 7.4. EMPLOYEES AND BUSINESS RELATIONS. IBAH shall, and shall cause
each other IBAH Company to, use commercially reasonable efforts to keep
available the services of its current employees and agents and to maintain its
relations and goodwill with its suppliers, customers, distributors and any
others having business relations with it.
Section 7.5. RULE 145 AFFILIATES. No later than 45 days prior to the
Effective Time, IBAH shall identify in a letter to Omnicare all Persons who
might, at the time of the IBAH Stockholder Meeting, be deemed to be "affiliates"
of Omnicare for the purposes of Rule 145 under the Securities Act or applicable
pooling standards (the "Securities Act Affiliates"). IBAH shall use commercially
reasonable efforts to cause each Person who is identified as a possible
Securities Act Affiliate to enter into at least 30 days prior to the Effective
Time an agreement in the form of Exhibit A hereto.
A-26
<PAGE>
Section 7.6. EXPENSES. Subject to Section 8.2, IBAH shall pay all of the
legal, accounting and other expenses incurred by any IBAH Company in connection
with the Transactions, including any amounts payable to Smith Barney.
Section 7.7. CERTAIN TAX MATTERS. From the date hereof until the Effective
Time, (a) IBAH and each of its Subsidiaries will prepare and file, in the manner
required by applicable Law, all Tax Returns (the "Post-Signing Returns")
required to be filed under applicable Law; (b) IBAH and each of its Subsidiaries
will timely pay all Taxes shown as due and payable on such Post-Signing Returns
that are so filed; (c) IBAH and each of its Subsidiaries will make provision for
all Taxes payable by IBAH and/or any such Subsidiary under applicable Law for
which no Post-Signing Return is due prior to the Effective Time; and (d) IBAH
will promptly notify Omnicare in writing of any action, suit, proceeding, claim
or audit pending against or with respect to IBAH or any of its Subsidiaries in
respect of any Tax that is not disclosed on the IBAH Disclosure Schedule.
Section 7.8. EMPLOYMENT ARRANGEMENTS. IBAH will use commercially
reasonable efforts to cause the Persons listed in Section 7.8 of the IBAH
DISCLOSURE SCHEDULE to enter into employment agreements in substantially the
form set forth in Exhibit B hereto, containing the terms set forth opposite such
Person's name in such Section 7.8 of the IBAH Disclosure Schedule.
Section 7.9. STATE ANTI-TAKEOVER LAW. If any "business combination,"
"moratorium," "control share," "fair price," "interested shareholder,"
"affiliated transaction" or other anti-takeover statute or regulation (including
Section 203 of the DGCL) (i) prohibits or restricts IBAH's ability to perform
its obligations under this Agreement (or any party's ability to perform its
obligations under the Voting Agreement or Stock Option Agreement) or any party's
ability to consummate the Merger or the other transactions contemplated hereby
or thereby, or (ii) would have the effect of invalidating or voiding this
Agreement, the Voting Agreement, Stock Option Agreement or any provision hereof
or thereof, then IBAH shall use its best efforts to obtain any necessary
consents or approvals so that the foregoing shall not apply.
Section 7.10. PREFERRED AND WARRANT CONSENT. At Omnicare's request, IBAH
will enforce the Preferred and Warrant Consent against the parties thereto. IBAH
will not waive any provisions of such consent. Omnicare may enforce such
consents against the parties thereto to the extent IBAH fails to do so.
A-27
<PAGE>
ARTICLE VIII
COVENANTS OF OMNICARE
Section 8.1. APPOINTMENT TO THE BOARD OF DIRECTORS OF OMNICARE. At the
Effective Time, Omnicare shall include Geraldine A. Henwood in its program under
which certain nominations for membership on the Omnicare Board of Directors are
on occasion rotated among senior operating executives of the Omnicare Companies.
Subject to the prior consummation of the Merger, Omnicare shall nominate
Geraldine A. Henwood for election as a director at its 1999 Annual Meeting of
shareholders.
Section 8.2. EXPENSES. Omnicare shall pay all of the legal, accounting and
other expenses incurred by any Omnicare Company in connection with the
Transactions, including any amounts payable to Morgan Stanley, fees of
Omnicare's transfer agent, fees of the Exchange Agent and fees related to
listing the Omnicare Shares on securities exchanges. The following shall be paid
50% by IBAH and 50% by Omnicare: SEC filing fees and printing and mailing costs
payable with respect to the Proxy/Registration Statement.
Section 8.3. INDEMNIFICATION, DIRECTORS' AND OFFICERS' INSURANCE. For a
period of six years after the Effective Time, Omnicare shall cause the Surviving
Corporation to (a) maintain in effect the current provisions regarding
indemnification of officers and directors contained in the Charter Documents and
bylaws of IBAH and in any indemnification agreements of IBAH and (b) indemnify
the directors and officers of IBAH to the fullest extent to which IBAH is
permitted to indemnify such officers and directors under its Charter Documents
and bylaws and applicable Law. For a period of six years after the Effective
Time, Omnicare shall cause the Surviving Corporation to maintain in effect the
current policies of directors' and officers' liability insurance and fiduciary
liability insurance maintained by IBAH (provided that the Surviving Corporation
may substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are, in the aggregate, no less
advantageous to the insured in any material respect) with respect to claims
arising from facts or events which occurred on or before the Effective Time,
provided that in no event shall Surviving Corporation be required to pay more
than 150% of the current annual premium (which IBAH represents is no more than
$125,000).
Section 8.4. STOCK EXCHANGE LISTING. Omnicare shall use commercially
reasonable efforts to obtain, prior to the Effective Time, the approval for
listing on the NYSE, effective upon official notice of issuance, of the Omnicare
Shares into which the IBAH Shares will be converted pursuant to Article II
hereof and of the Omnicare Shares which will be issuable upon exercise of the
Assumed Options and the Omnicare Warrants to be outstanding at the Effective
Time in accordance with Section 2.8 hereof.
Section 8.5. INTERIM FINANCIAL REPORT. Omnicare shall provide within 20
days after the end of the first full monthly period following the Closing a
financial report regarding the combined operation of Omnicare and IBAH that
satisfies the requirements of Financial Reporting Release No. 1, ASR 135.
Section 8.6. REGISTRATION. Omnicare shall take any actions required to be
taken by it following the Effective Time pursuant to the registration rights
provisions contained in the Preferred Stock and Warrant Purchase Agreement dated
August 10, 1995. Within 20 days of the date hereof, IBAH shall deliver to
Omnicare a true and complete list of all agreements which may require Omnicare
to register any securities of IBAH or any Omnicare securities issued in respect
thereof.
Section 8.7. EMPLOYEE BENEFIT PLANS. Omnicare presently intends to cause
the IBAH Companies to provide employee benefit plans which are, in the
aggregate, no less favorable to the employees than current plans.
A-28
<PAGE>
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF ALL PARTIES
The respective obligations of each Party to consummate the Merger and the
other Transactions shall be subject to the fulfillment at or prior to the
Effective Time of the following conditions:
Section 9.1. LEGALITY. All required governmental approvals shall have been
obtained and any applicable waiting periods, including those under the HSR Act,
shall have expired. No Law or Court Order shall have been enacted, entered,
promulgated or enforced by any court or governmental entity that is in effect
and that has the effect of making the Merger illegal or otherwise prohibiting
the consummation of the Merger and no legal action shall be pending or
threatened which is reasonably likely to have a Material Adverse Effect on
either Party.
Section 9.2. REGISTRATION STATEMENT. The Registration Statement shall have
become effective under the Securities Act, no stop order suspending the
effectiveness of the Registration Statement shall have been issued, and no
proceedings for that purpose shall have been instituted.
Section 9.3. NEW YORK STOCK EXCHANGE. The Omnicare Shares issuable in
connection with the Transactions shall have been duly approved for listing on
the NYSE, subject to official notice of issuance.
Section 9.4. POOLING. IBAH shall receive a poolability letter from Arthur
Andersen LLP dated as of the Closing Date to the effect that IBAH qualifies as a
combining company, as the term is used in Accounting Principles Board Opinion
No. 16 ("APB 16") to describe the criteria necessary for the use of the pooling
of interest method of accounting. Omnicare shall receive a pooling letter from
Price Waterhouse LLP dated as of the Closing Date to the effect that Omnicare
and the Transactions qualify for pooling of interest accounting treatment as
defined in APB 16.
Section 9.5. APPROVAL BY IBAH STOCKHOLDERS. This Agreement shall have been
approved and adopted by the stockholders of IBAH in accordance with the DGCL and
its Charter Documents.
Section 9.6. TAX OPINIONS. Omnicare shall have received an opinion of
Omnicare's counsel, in form and substance reasonably satisfactory to Omnicare,
and IBAH shall have received an opinion of IBAH's counsel, in form and substance
reasonably satisfactory to IBAH, each dated as of the Closing Date, to the
effect that the Merger will constitute a reorganization within the meaning of
Code Section 368(a) and that Omnicare, Merger Subsidiary and IBAH shall each be
a party to that reorganization within the meaning of Code Section 368(b). In
rendering such tax opinions, such counsel may require and rely upon reasonably
requested representations contained in certificates of Omnicare, IBAH and Merger
Subsidiary.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF IBAH
The obligations of IBAH to consummate the Merger and the Transactions shall
be subject to the satisfaction or waiver, on or before the Effective Time, of
each of the following conditions:
Section 10.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Omnicare Parties contained in this Agreement shall be true and
correct on the date hereof and (except to the extent such representations and
warranties speak as of an earlier date) shall also be true and correct on and as
of the Closing Date, except for changes contemplated by this Agreement, with the
same force and effect as if made on and as of the Closing Date; provided,
however, that for purposes of this Section 10.1 only, such representations and
warranties shall be deemed to be true and correct unless the failure or failures
of such representations and warranties to be so true and correct (without regard
to materiality qualifiers contained therein), individually or in the aggregate,
results or would reasonably be expected to result in a Material Adverse Effect
on Omnicare.
A-29
<PAGE>
Section 10.2. AGREEMENTS, CONDITIONS AND COVENANTS. The Omnicare Parties
shall have performed or complied in all material respects with all agreements,
conditions and covenants required by this Agreement to be performed or complied
with by them on or before the Effective Time.
Section 10.3. CERTIFICATES. IBAH shall have received a certificate of an
executive officer of Omnicare to the effect set forth in Sections 10.1 and 10.2.
Section 10.4. MATERIAL ADVERSE EFFECT. There shall have been no Material
Adverse Effect on the Omnicare Companies taken as a whole.
Section 10.5. ANCILLARY DOCUMENTS. Each Omnicare Party shall have tendered
executed copies of the respective Transaction Documents to which it is intended
to be a party, including the Employment Agreements, Voting Agreements and the
Stock Option Agreement
ARTICLE XI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE OMNICARE PARTIES
The obligations of the Omnicare Parties to consummate the Merger and the
Transactions shall be subject to the satisfaction or waiver, on or before the
Effective Time, of each of the following conditions:
Section 11.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of IBAH contained in this Agreement shall be true and correct on the
date hereof and (except to the extent such representations and warranties speak
as of an earlier date) shall also be true and correct on and as of the Closing
Date, except for changes contemplated by this Agreement, with the same force and
effect as if made on and as of the Closing Date; provided, however, that for
purposes of this Section 11.1 only, such representations and warranties shall be
deemed to be true and correct unless the failure or failures of such
representations and warranties to be so true and correct (without regard to
materiality qualifiers contained therein), individually or in the aggregate,
results or would reasonably be expected to result in a Material Adverse Effect
on IBAH.
Section 11.2. AGREEMENTS, CONDITIONS AND COVENANTS. IBAH shall have
performed or complied in all material respects with all agreements, conditions
and covenants required by this Agreement to be performed or complied with by it
on or before the Effective Time.
Section 11.3. CERTIFICATES. Omnicare shall have received a certificate of
an executive officer of IBAH to the effect set forth in Sections 11.1 and 11.2.
Section 11.4. REQUIRED CONSENTS. IBAH shall have obtained all consents
from third parties listed in Section 4.3 of the IBAH Disclosure Schedule and all
other consents the absence of which would result in a Material Adverse Effect.
Section 11.5. MATERIAL ADVERSE EFFECT. There shall have been no Material
Adverse Effect on the IBAH Companies taken as a whole.
Section 11.6. ANCILLARY DOCUMENTS. IBAH shall have tendered executed
copies of the Transaction Documents to which it is intended to be a party.
Section 11.7. CONSENT OF HOLDERS OF IBAH PREFERRED SHARES AND IBAH
WARRANTS. The consents of the Holders of IBAH Preferred Shares and IBAH
Warrants described in Sections 2.8 and 4.2 shall have been received by IBAH
prior to the Effective Time, or if such consents have not been received at or
prior to the Effective Time, all such Holders shall have approved the
Transactions.
Section 11.8. EMPLOYMENT AGREEMENTS. Each Person listed in Section 7.8 of
the IBAH Disclosure Schedule shall have entered into an Employment Agreement as
contemplated by Section 7.8.
A-30
<PAGE>
ARTICLE XII
TERMINATION
Section 12.1. GROUNDS FOR TERMINATION. This Agreement may be terminated at
any time before the Effective Time, in each case as authorized by the respective
Boards of Directors of Omnicare and IBAH:
(a) By mutual written consent of each of Omnicare and IBAH;
(b) By either Omnicare or IBAH if the Merger shall not have been consummated
on or before the Termination Date; provided, however, that the right to
terminate this Agreement under this Section 12.1(b) shall not be available to
any Party whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of the Effective Time to occur on or
before the Termination Date;
(c) By either Omnicare or IBAH if a court of competent jurisdiction or
governmental, regulatory or administrative agency or commission shall have
issued a Court Order (which Court Order the Parties shall use commercially
reasonable efforts to lift) that permanently restrains, enjoins or otherwise
prohibits the Transactions, and such Court Order shall have become final and
nonappealable;
(d) By Omnicare if IBAH shall have breached, or failed to comply with, in
any material respect, any of its obligations under this Agreement or any
representation or warranty made by IBAH shall have been incorrect in any
material respect when made, and such breach, failure or misrepresentation is not
cured within 20 days after notice thereof, and in either case, any such
breaches, failures or misrepresentations, individually or in the aggregate,
results or would reasonably be expected to result in a failure to satisfy a
condition to IBAH's obligations to consummate the transactions contemplated
hereby;
(e) By IBAH if any Omnicare Party shall have breached, or failed to comply
with, in any material respect, any of its obligations under this Agreement or
any representation or warranty made by it shall have been incorrect in any
material respect when made, and such breach, failure or misrepresentation is not
cured within 20 days after notice thereof, and in either case, any such
breaches, failures or misrepresentations, individually or in the aggregate,
results or would reasonably be expected to result in a failure to satisfy a
condition to Omnicare's obligations to consummate the transactions contemplated
hereby;
(f) By IBAH if at the IBAH Stockholder Meeting (including any adjournment
thereof) this Agreement and the Merger shall fail to be approved and adopted by
the affirmative vote of the stockholders of IBAH as required under the DGCL;
(g) By IBAH, prior to the approval of this Agreement by the stockholders of
IBAH, upon five days notice to Omnicare, if, as a result of an Acquisition
Proposal received by IBAH from a Person other than a Party to this Agreement or
any of its Affiliates, the Board of Directors of IBAH determines in good faith
that its fiduciary obligations under applicable Law require that such
Acquisition Proposal be accepted; provided, however, that (i) immediately
following such termination IBAH executes with such third party a definitive
agreement to implement such Acquisition Proposal, (ii) the Board of Directors of
IBAH shall have concluded in good faith, after considering applicable provisions
of applicable Law and after giving effect to all concessions which may be
offered by Omnicare pursuant to clause (iii) below, on the basis of advice of
counsel, that such action is necessary for the Board of Directors to act in a
manner consistent with its fiduciary duties under applicable Law, (iii) prior to
any such termination, (x) IBAH shall have provided Omnicare with five days'
notice of the terms of the proposal and otherwise complied with Section 6.3
hereof (including making the finding contemplated by Section 6.3(i)(x) hereof)
and (y) IBAH shall, and shall cause its financial and legal advisors to,
negotiate with Omnicare to make such adjustments in the terms and conditions of
this Agreement as would enable IBAH to proceed with the Transactions and (iv)
IBAH shall have paid Omnicare the Termination Fee; or
(h) By Omnicare if the Board of Directors of IBAH shall withdraw, modify or
change its recommendation of this Agreement or the Merger or shall have failed
to reaffirm its recommendation within five
A-31
<PAGE>
business days of Omnicare's request that it do so or shall have recommended or
issued a neutral recommendation (or taken no position) with respect to any
Acquisition Proposal.
(i) By IBAH, pursuant to Section 2.6(c) hereof.
Section 12.2. EFFECT OF TERMINATION.
(a) If this Agreement is terminated pursuant to Section 12.1, this Agreement
shall forthwith become void and there shall be no liability on the part of any
of the Parties; notwithstanding the foregoing, nothing herein shall relieve any
Party from liability for any willful breach hereof; provided that the provisions
of Sections 6.3, 6.5(b), 7.6, 7.10, 8.2 and this Section 12.2 shall survive the
termination hereof.
(b) If following an Acquisition Proposal, this Agreement is terminated by
either Omnicare or IBAH pursuant to Section 12.1(b), and within 12 months after
such termination IBAH executes with a third party a definitive agreement to
implement an Acquisition Proposal, then IBAH shall pay to Omnicare a Termination
Fee within two business days after the execution of such agreement.
(c) If this Agreement is terminated by Omnicare pursuant to Section 12.1(d),
then IBAH shall reimburse Omnicare for its reasonable out-of-pocket expenses in
connection with the Transactions, including, without limitation, attorneys',
accountants' and investment bankers' fees and expenses ("Transaction Fees") up
to an aggregate of $1,500,000. If within 12 months after such termination IBAH
executes with a third party a definitive agreement to implement an Acquisition
Proposal, then IBAH shall pay to Omnicare a Termination Fee (less any
Transaction Fees previously paid to Omnicare) within two business days after the
execution of such agreement.
(d) If this Agreement is terminated by IBAH pursuant to Section 12.1(e),
then Omnicare shall reimburse IBAH for its Transaction Fees up to an aggregate
of $1,500,000.
(e) If following an Acquisition Proposal, this Agreement is terminated by
either Omnicare or IBAH pursuant to Section 12.1(f), and within 12 months after
such termination IBAH executes with a third party a definitive agreement to
implement an Acquisition Proposal, then IBAH shall pay to Omnicare a Termination
Fee within two business days after the execution of such agreement.
(f) If this Agreement is terminated by IBAH pursuant to Section 12.1(g),
then IBAH shall pay to Omnicare a Termination Fee prior to such termination.
(g) If this Agreement is terminated by Omnicare pursuant to Section 12.1(h),
then IBAH shall pay to Omnicare a Termination Fee within two business days after
the execution of such agreement.
(h) For purposes of this Section 12.2(b), "Termination Fee" shall mean $5
million for the period from the termination of the Agreement until the Option
Termination Date (as defined in the Stock Option Agreement) and $8.366 million
for the period, if any, after the Option Termination Date until 12 months after
the termination of the Agreement.
IBAH acknowledges that the agreements contained in this Section 12.2 are an
integral part of the Transactions, and that, without these agreements, Omnicare
would not enter into this Agreement; accordingly, if IBAH fails to promptly pay
the amount due pursuant to this Section 12.2, and, in order to obtain such
payment, Omnicare commences a suit which results in a judgment against IBAH for
the fee set forth in this Section 12.2, IBAH shall pay to Omnicare its costs and
expenses (including reasonable attorneys' fees) in connection with such suit,
together with interest on the amount of the fee at a rate equal to the prime
rate of First Chicago NBD at the time of payment from the date such fee was
required to be paid.
A-32
<PAGE>
ARTICLE XIII
GENERAL MATTERS
Section 13.1. Survival of Representations and Warranties. The
representations and warranties in this Agreement shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to Section
12.1.
Section 13.2. CONTENTS OF AGREEMENT. This Agreement and the
Confidentiality Agreement, together with the other Transaction Documents, set
forth the entire understanding of the Parties hereto with respect to the
Transactions and supersede all prior agreements or understandings among the
Parties regarding those matters.
Section 13.3. AMENDMENT, PARTIES IN INTEREST, ASSIGNMENT, ETC. This
Agreement may be amended, modified or supplemented only by a written instrument
duly executed by each of the Parties hereto. If any provision of this Agreement
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision hereof, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective heirs, legal representatives, successors and
permitted assigns of the Parties hereto. No Party hereto shall assign this
Agreement or any right, benefit or obligation hereunder. Any term or provision
of this Agreement may be waived at any time by the Party entitled to the benefit
thereof by a written instrument duly executed by such Party. The Parties hereto
shall execute and deliver any and all documents and take any and all other
actions that may be deemed reasonably necessary by their respective counsel to
complete the Transactions. Nothing in this Agreement is intended or will be
construed to confer on any Person other than the Parties hereto any rights or
benefits hereunder.
Section 13.4. INTERPRETATION. Unless the context of this Agreement clearly
requires otherwise, (a) references to the plural include the singular, the
singular the plural, the part the whole, (b) references to any gender include
all genders, (c) "or" has the inclusive meaning frequently identified with the
phrase "and/or," (d) "including," "includes" or similar words has the inclusive
meaning frequently identified with the phrase "but not limited to" and (e)
references to "hereunder" or "herein" relate to this Agreement. The section and
other headings contained in this Agreement are for reference purposes only and
shall not control or affect the construction of this Agreement or the
interpretation thereof in any respect. Section, subsection, Disclosure Schedule
and Exhibit references are to this Agreement unless otherwise specified. The
Exhibits and Schedules referred to in this Agreement will be deemed to be a part
of this Agreement. Each accounting term used herein that is not specifically
defined herein shall have the meaning given to it under GAAP.
Section 13.5. NOTICES. All notices that are required or permitted
hereunder shall be in writing and shall be sufficient if personally delivered or
sent by mail, facsimile message or Federal Express or other delivery service.
Any notices shall be deemed given upon receipt at the address or fax number set
forth below, unless such address or fax number is changed by notice to the other
Party hereto:
If to Omnicare or Merger Subsidiary:
Omnicare, Inc.
2800 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45203
FAX: 513-762-6678
Attention: Cheryl D. Hodges
A-33
<PAGE>
with a required copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
FAX: 212-259-6333
Attention: Morton A. Pierce and Richard D. Pritz
If to IBAH:
IBAH, Inc.
Four Valley Square
512 Township Line Road
Blue Bell, PA 19422
FAX: 215-542-2726
Attention: Jane Hollingsworth
with a required copy to:
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103-6993
FAX: 215-963-5299
Attention: Thomas J. Sharbaugh, Esquire
Section 13.6. GOVERNING LAW. This Agreement shall be construed and
interpreted in accordance with the Laws of the State of Delaware without regard
to its provisions concerning conflict of laws.
Section 13.7. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be binding as of the date first written above,
and all of which shall constitute one and the same instrument. Each such copy
shall be deemed an original, and it shall not be necessary in making proof of
this Agreement to produce or account for more than one such counterpart.
Section 13.8. WAIVERS. Compliance with the provisions of this Agreement
may be waived only by a written instrument specifically referring to this
Agreement and signed by the Party waiving compliance. No course of dealing, nor
any failure or delay in exercising any right, will be construed as a waiver, and
no single or partial exercise of a right will preclude any other or further
exercise of that or any other right.
Section 13.9. MODIFICATION. No supplement, modification or amendment of
this Agreement will be binding unless made in a written instrument that is
signed by all of the Parties hereto and that specifically refers to this
Agreement.
Section 13.10. ENFORCEMENT OF AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any Delaware Chancery Court,
this being in addition to any other remedy to which they are entitled at law or
equity. Notwithstanding the foregoing, if jurisdiction does not properly lie in
the Delaware Chancery Court, the parties shall submit to the jurisdiction of
Delaware federal courts. The parties agree that such courts shall have exclusive
jurisdiction to consider any claims hereunder or relating hereto.
Section 13.11. WAIVER OF JURY TRIAL. Each party acknowledges and agrees
that any controversy which may arise under this Agreement is likely to involve
complicated and difficult issues, and therefore each such party hereby
irrevocably and unconditionally waives any right such party may have to a trial
by jury in respect of any litigation directly or indirectly arising out of or
relating to this Agreement, or the
A-34
<PAGE>
Transactions contemplated by this Agreement. Each party certifies and
acknowledges that (i) no representative, agent or attorney of any other party
has represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver, (ii) each party
understands and has considered the implications of this waiver, (iii) each party
makes this waiver voluntarily, and (iv) each party has been induced to enter
into this Agreement by, among other things, the mutual waivers and
certifications in this Section 13.11.
Section 13.12. 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. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable Law in an acceptable manner to the end that the
Transactions are fulfilled to the extent possible.
IN WITNESS WHEREOF, this Agreement has been executed by the Parties hereto
as of the day and year first written above.
OMNICARE, INC.
By: /s/ Joel F. Gemunder
----------------------------------
Name: Joel F. Gemunder
Title: President
IMPALA ACQUISITION CORP.
By: /s/ L. Tracy Finn
----------------------------------
Name: L. Tracy Finn
Title: President
IBAH, INC.
By: /s/ Geraldine A. Henwood
----------------------------------
Name: Geraldine A. Henwood
Title: Chief Executive Officer
A-35
<PAGE>
APPENDIX B
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
B-1
<PAGE>
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 existing 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 Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") 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 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.
B-2
<PAGE>
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 Dewey Ballantine
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 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 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
B-3
<PAGE>
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 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
B-4
<PAGE>
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; 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 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:
Omnicare, Inc.
2800 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202-4728
Attn: Cheryl D. Hodges
Telecopy: (513) 762-6678
With a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Attn: Morton A. Pierce and Richard D. Pritz
Telecopy: (212) 259-6333
If to Grantor:
IBAH, Inc.
Four Valley Square
512 Township Line Road
Blue Bell, PA 19422
Attn: Jane Hollingsworth
Telecopy: (215) 542-2726
B-5
<PAGE>
With a copy to:
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, Pennsylvania 19103
Attn: Thomas J. Sharbaugh
Telecopy: (215) 963-5299
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, 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.
B-6
<PAGE>
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 (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.
B-7
<PAGE>
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/ Joel F. Gemunder
----------------------------------
Name: Joel F. Gemunder
Title: President
IBAH, INC.
By: /s/ Geraldine A. Henwood
----------------------------------
Name: Geraldine A. Henwood
Title: Chief Executive Officer
B-8
<PAGE>
APPENDIX C
VOTING AGREEMENT
VOTING AGREEMENT, dated as of March 30, 1998, between Omnicare, Inc. a
Delaware corporation ("Omnicare"), and the persons listed on Schedule A hereto
(collectively, the "Securityholders").
WHEREAS, Omnicare and IBAH, Inc., a Delaware corporation (the "Company"),
propose to enter into an Agreement and Plan of Merger, dated the date hereof (as
the same may be amended or supplemented, the "Merger Agreement") providing for
the merger of a subsidiary of Omnicare with the Company (the "Merger");
WHEREAS, each Securityholder is the record and beneficial owner of the
number of (i) shares of common stock, par value $.01 per share, of the Company
(the "Common Shares"), (ii) shares of preferred stock, par value $.01 per share,
of the Company (the "Preferred Shares") or (iii) warrants to purchase Common
Shares (the "Warrants") set forth opposite such Securityholder's name on
Schedule A hereto; such securities, as they may be adjusted by stock dividend,
stock split, recapitalization, combination or exchange of shares, merger,
consolidation, reorganization or other change or transaction of or by the
Company, together with securities that may be acquired after the date hereof by
such Securityholder, including Common Shares issuable upon the exercise of
options to purchase Common Shares (as the same may be adjusted as aforesaid),
being collectively referred to herein as the "Securities"; and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Omnicare has requested that the Securityholders enter into this
Agreement (capitalized terms not otherwise defined herein shall have the
meanings set forth in the Merger Agreement);
NOW, THEREFORE, to induce Omnicare to enter into, and in consideration of it
entering into, the Merger Agreement, and in consideration of the premises and
the representations, warranties and agreements contained herein, the parties
agree as follows:
1. COVENANTS OF THE SECURITYHOLDERS. Each Securityholder, severally and
not jointly, agrees as follows:
(a) The Securityholder shall not, except as contemplated by the terms of
this Agreement, (i) sell, transfer, pledge, assign or otherwise dispose of, or
enter into any Contract (as defined below), option or other arrangement
(including any profit sharing arrangement) or understanding with respect to the
sale, transfer, pledge, assignment or other disposition of, the Securities to
any person other than Omnicare or Omnicare's designee, (ii) enter into any
voting arrangement, whether by proxy, voting agreement, voting trust,
power-of-attorney or otherwise, with respect to the Securities or (iii) take any
other action that would in any way restrict, limit or interfere with the
performance of its obligations hereunder or the transactions contemplated
hereby; provided, however, that any Securityholder that is an individual may
transfer all or any part of his or her Securities to any sibling or any other
member of his or her immediate family, any of his or her lineal descendants or
any trust for the benefit of any of them, if the recipient of the Securities
agrees in advance in writing delivered to Omnicare to be bound by this
Agreement; provided, further, however that Vector Later-Stage Equity Fund, L.P.
may exercise any of its Warrants and sell the underlying Common Stock at any
time prior to 30 days preceding the Effective Date of the Merger (as such term
is defined in the Merger Agreement).
(b) Until the Merger is consummated or the Merger Agreement is terminated,
the Securityholder shall not, nor shall the Securityholder permit any investment
banker, financial adviser, attorney, accountant or other representative or agent
of the Securityholder to, directly or indirectly (i) solicit, initiate or
encourage (including by way of furnishing information), or take any other action
designed or reasonably likely to facilitate, any inquiries or the making of any
proposal which constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal (as defined in the Merger Agreement) or (ii) participate in
any discussions or negotiations regarding any Acquisition Proposal. Without
limiting the foregoing, it is
C-1
<PAGE>
understood that any violation of the restrictions set forth in the preceding
sentence by an investment banker, financial advisor, attorney, accountant or
other representative or agent of the Securityholder shall be deemed to be a
violation of this Section 1(b) by the Securityholder.
(c) At any meeting of Securityholders of the Company called to vote upon the
Merger and the Merger Agreement or at any adjournment thereof or in any other
circumstances upon which a vote, consent or other approval (including by written
consent) with respect to the Merger and the Merger Agreement is sought, each
Securityholder shall, including by initiating a written consent solicitation if
requested by Omnicare, vote (or cause to be voted) such Securityholder's
Securities in favor of the Merger, the adoption of the Merger Agreement and the
approval of the other transactions contemplated by the Merger Agreement. At any
meeting of Securityholders of the Company or at any adjournment thereof or in
any other circumstances upon which the Securityholder's vote, consent or other
approval is sought, such Securityholder shall vote (or cause to be voted) such
Securityholder's Securities 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 other Acquisition Proposal
(collectively, "Alternative Transactions") or (ii) any amendment of the
Company's Certificate of Incorporation 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 Agreement or any of the other transactions
contemplated by the Merger Agreement including any consent to the treatment of
any Securities in or in connection with such transaction (collectively,
"Frustrating Transactions"). The Securityholder hereby consents to the
transactions contemplated by Section 2.8 of the Merger Agreement.
2. GRANT OF IRREVOCABLE PROXY COUPLED WITH AN INTEREST; APPOINTMENT OF
PROXY.
(a) Each Securityholder hereby irrevocably grants to, and appoints, any
individual who shall be designated by Omnicare, and each of them, such
Securityholder's proxy and attorney-in-fact (with full power of substitution),
for and in the name, place and stead of such Securityholder, to vote such
Securityholder's Securities, or grant a consent or approval in respect of such
Securities, at any meeting of Securityholders of the Company or at any
adjournment thereof or in any other circumstances upon which their vote, consent
or other approval is sought, (i) in favor of the Merger, the adoption by the
Company of the Merger Agreement and the approval of the other transactions
contemplated by the Merger Agreement, and (ii) against any Alternative
Transaction or Frustrating Transaction.
(b) Each Securityholder represents that any proxies heretofore given in
respect of such Securityholder's Securities are not irrevocable, and that any
such proxies are hereby revoked.
(c) EACH SECURITYHOLDER HEREBY AFFIRMS THAT THE PROXY SET FORTH IN THIS
SECTION 2 IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE UNTIL SUCH TIME AS THIS
AGREEMENT TERMINATES IN ACCORDANCE WITH ITS TERMS. Such Securityholder hereby
further affirms that the irrevocable proxy is given in connection with the
execution of the Merger Agreement, and that such irrevocable proxy is given to
secure the performance of the duties of such Securityholder under this
Agreement. Such Securityholder hereby ratifies and confirms all that such
irrevocable proxy may lawfully do or cause to be done by virtue hereof. Such
irrevocable proxy is executed and intended to be irrevocable in accordance with
the provisions of Section 212 of the DGCL. Such irrevocable proxy shall be valid
until the later to occur of (i) one year from the date hereof or (ii) the
termination of this Agreement in accordance with its terms.
3. REPRESENTATIONS AND WARRANTIES OF THE SECURITYHOLDERS. Each
Securityholder hereby, severally and not jointly, represents and warrants to
Omnicare as follows:
(a) AUTHORITY. The Securityholder has all requisite power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by the Securityholder. This Agreement has been duly executed and
delivered by the
C-2
<PAGE>
Securityholder and, assuming this Agreement constitutes a valid and binding
obligation of Omnicare, constitutes a valid and binding obligation of the
Securityholders enforceable against the Securityholder in accordance with its
terms. Except for the informational filings with the Securities and Exchange
Commission, neither the execution, delivery or performance of this Agreement by
the Securityholder nor the consummation by the Securityholder of the
transactions contemplated hereby will (i) require any filing with, or permit,
authorization, consent or approval of, any federal, state, local or municipal
foreign or other government or subdivision, branch, department or agency thereof
or any governmental or quasi-governmental authority of any nature, including any
court or other tribunal, (a "Governmental Entity"), (ii) result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default under, or give rise to any right of termination, amendment,
cancellation or acceleration under, or result in the creation of any Lien upon
any of the properties or assets of the Securityholder under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
permit, concession, franchise, contract, agreement or other instrument or
obligation (a "Contract") to which the Securityholder is a party or by which the
Securityholder or any of the Securityholder's properties or assets, including
the Securityholder's Securities, may be bound or (iii) violate any judgment,
order, writ, preliminary or permanent injunction or decree (an "Order") or any
statute, law, ordinance, rule or regulation of any Governmental Entity (a "Law")
applicable to the Securityholder or any of the Securityholder's properties or
assets, including the Securityholder's Securities.
(b) THE SECURITIES. The Securityholder's Securities and the certificates
representing such Securities are now, and at all times during the term hereof
will be, held by such Securityholder, or by a nominee or custodian for the
benefit of such Securityholder, and the Securityholder has good and marketable
title to such Securities, free and clear of any Liens, proxies, voting trusts or
agreements, understandings or arrangements, except for any such Liens or proxies
arising hereunder. The Securityholder owns of record or beneficially no
securities of the Company, or any options, warrants or rights exercisable for
securities of the Company, other than such Securityholder's Securities and
shares of Company Common Stock issuable upon the exercise of Existing Options
(as defined in the Merger Agreement), in each case as set forth on Schedule A
hereto.
(c) BROKERS. No broker, investment banker, financial advisor or other
person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of such
Securityholder.
(d) MERGER AGREEMENT. The Securityholder understands and acknowledges that
Omnicare is entering into, the Merger Agreement in reliance upon the
Securityholder's execution and delivery of this Agreement.
4. BOARD APPROVAL. The Board of Directors of the Company has duly and
validly authorized and approved by all necessary corporate action, this
Agreement, the Merger Agreement and the transactions contemplated hereby and
thereby, so that by the execution and delivery hereof no restrictive provision
of any "fair price," "moratorium," "control-share acquisition," "interested
shareholders" or other similar anti-takeover statute or regulation (including,
without limitation, Section 203 of the DGCL) or restrictive provision of any
applicable anti-takeover provision in the Articles of Incorporation or by-laws
of the Company is, or at the closing of the transactions contemplated hereby
will be, applicable to the Company, Omnicare, the Securities, the Merger or any
other transaction contemplated by this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF OMNICARE. Omnicare hereby represents
and warrants to the Securityholders as follows:
(a) AUTHORITY. Omnicare has the requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by Omnicare and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Omnicare.
This Agreement has been duly executed and delivered by Omnicare and, assuming
this Agreement constitutes a
C-3
<PAGE>
valid and binding obligation of the Securityholders, constitutes a valid and
binding obligation of Omnicare enforceable in accordance with its terms.
(b) SECURITIES ACT. The Securities will be acquired in compliance with,
and Omnicare will not offer to sell or otherwise dispose of any Securities so
acquired by it in violation of any of, the Securities Exchange Act of 1934, or
the registration requirements of the Securities Act of 1933.
6. FURTHER ASSURANCES. Each Securityholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
Omnicare may reasonably request for the purpose of effectively carrying out the
transactions contemplated by this Agreement and to vest the power to vote such
Securityholder's Securities as contemplated by Section 2. Omnicare agrees to use
reasonable efforts to take, or cause to be taken, all actions necessary to
comply promptly with all legal requirements that may be imposed with respect to
the transactions contemplated by this Agreement.
7. ASSIGNMENT; BINDING EFFECT. 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. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by,
the parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
8. TERMINATION. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate upon the first anniversary of the date of any
termination of the Merger Agreement in accordance with its terms. Nothing in
this Section 8 shall relieve any party from liability for willful breach of this
Agreement.
9. STOP TRANSFER. The Company agrees with, and covenants to, Omnicare that
the Company shall not register the transfer of any certificate representing any
Securityholder's Securities unless such transfer is made in accordance with the
terms of this Agreement.
10. GENERAL PROVISIONS.
(a) EXPENSES. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense.
(b) AMENDMENTS. This Agreement may not be amended except by an instrument
in writing signed by each of the parties hereto.
(c) NOTICE. All notices and other communications hereunder shall be in
writing and shall be deemed given upon receipt to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(i) if to Omnicare, to
Cheryl D. Hodges
Omnicare, Inc.
2800 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202-4728
Facsimile: (513) 762-6678
C-4
<PAGE>
with a copy to:
Morton A. Pierce and Richard D. Pritz
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Facsimile: (212) 259-6333
and
(ii) if to a Securityholder, to the address set forth under the name of such
Securityholder on Schedule A hereto
with a copy to:
Thomas J. Sharbaugh
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, Pennsylvania 19103
Facsimile: (215) 963-5299
(d) INTERPRETATION. 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 headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Wherever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
(e) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
(f) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement
(including the documents and instruments referred to herein) (i) 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
and (ii) is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
(g) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law.
(h) PUBLICITY. Except as otherwise required by law, court process or the
rules of a national securities exchange or the Nasdaq National Market or as
contemplated or provided in the Merger Agreement, for so long as this Agreement
is in effect, neither any Securityholder nor Omnicare shall issue or cause the
publication of any press release or other public announcement with respect to
the transactions contemplated by this Agreement or the Merger Agreement without
the consent of the other parties, which consent shall not be unreasonably
withheld.
11. SECURITYHOLDER CAPACITY. No person executing this Agreement who is or
becomes during the term hereof a director or officer of the Company makes any
agreement or understanding herein in his or her capacity as such director or
officer. Each Securityholder signs solely in his or her capacity as the record
holder and beneficial owner of, or the trustee of a trust whose beneficiaries
are the beneficial owners of, such Securityholder's Securities and nothing
herein shall limit or affect any actions taken by a Securityholder in its
capacity as an officer or director of the Company to the extent specifically
permitted by the Merger Agreement.
C-5
<PAGE>
12. ENFORCEMENT. The parties 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 of this Agreement in a court of the United States. This
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, 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.
EACH SECURITYHOLDER 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. EACH SECURITYHOLDER HEREBY APPOINTS THE
SECRETARY OF THE COMPANY AS ITS AGENT FOR SERVICE OF PROCESS FOR PURPOSES OF THE
FOREGOING SENTENCE ONLY. EACH PARTY HERETO WAIVES ANY RIGHT TO JURY TRIAL IN
CONNECTION WITH ANY SUCH SUIT OR PROCEEDING.
IN WITNESS WHEREOF, Omnicare has caused this Agreement to be signed by its
officer thereunto duly authorized and each Securityholder has signed this
Agreement, all as of the date first written above.
<TABLE>
<S> <C> <C>
OMNICARE, INC.
By: /s/ DAVID W. FROESEL, JR.
------------------------------------------
Name: David W. Froesel, Jr.
Title: Senior Vice President and
Chief Financial Officer
SECURITYHOLDER
By: /s/ WINSTON J. CHURCHILL
------------------------------------------
Name: Winston J. Churchill,
Individual
Churchill Foundation
CIP Capital, L.P.
SECURITYHOLDER
By: /s/ SIDNEY JEVONS, PH.D.
------------------------------------------
Name: Sidney Jevons, Ph.D.
SECURITYHOLDER
By: /s/ SANDRA PANEM, PH.D.
------------------------------------------
Name: Sandra Panem, Ph.D.,
Individual
Vector Later-Stage Equity
Fund, L.P.
</TABLE>
C-6
<PAGE>
<TABLE>
<S> <C> <C>
SECURITYHOLDER
By: /s/ THOMAS F. HENWOOD
------------------------------------------
Name: Thomas F. Henwood
SECURITYHOLDER
By: /s/ RICHARD L. SHERMAN
------------------------------------------
Name: CIP Capital, L.P.
SECURITYHOLDER
By: /s/ THOMAS J. SHARBAUGH
------------------------------------------
Name: Thomas J. Sharbaugh, Trustee
for the Son of Winston J. Churchill
SECURITYHOLDER
By: /s/ GERALDINE A. HENWOOD
------------------------------------------
Name: Geraldine A. Henwood
</TABLE>
C-7
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
COMMON PREFERRED
NAME AND ADDRESS SHARES SHARES WARRANTS OPTIONS
- ------------------------------------------------------------------ ---------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Winston J. Churchill(1)........................................... 1,277,917 106,000
Trust for Son of Winston J. Churchill............................. 159,750
Churchill Foundation.............................................. 171,000
Geraldine A. Henwood.............................................. 2,670,058 92,500
Thomas F. Henwood................................................. 378,055
Vector Later-Stage Equity Fund.................................... 356,984 1,070,952
Sandra Panem, Ph.D................................................ 20,000
Sidney Jevons, Ph.D............................................... 540,399 23,760
</TABLE>
- ------------------------
(1) Includes 673,371 Common Shares owned by CIP Capital, L.P.
C-8
<PAGE>
APPENDIX D
DELAWARE GENERAL CORPORATION LAW
SECTION 262. APPRAISAL RIGHTS
(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this section
with respect to such shares, who continuously holds such shares through the
effective date of the merger or consolidation, who has otherwise complied with
subsection (d) of this section and who has neither voted in favor of the merger
or consolidation nor consented thereto in writing pursuant to Section228 of this
title shall be entitled to an appraisal by the Court of Chancery of the fair
value of the stockholder's shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation, and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to SectionSection 251 (other than a merger effected pursuant
to Section251(g) of this title), 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) 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 (ii) held
of record by more than 2,000 holders; and further provided that no appraisal
rights shall be 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 subsection (f) of Section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be 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 pursuant to
SectionSection 251, 252, 254, 257, 258, 263 and 264 of this title to accept
for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository 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 stockholders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this paragraph.
D-1
<PAGE>
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section 253 of this title is not owned by
the parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are available
pursuant to subsections (b) or (c) hereof that appraisal rights are
available for any or all of the shares of the constituent corporations, and
shall include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of his shares shall deliver to the
corporation, before the taking of the vote on the merger or consolidation, a
written demand for appraisal of his shares. Such demand will be sufficient
if it reasonably informs the corporation of the identity of the stockholder
and that the stockholder intends thereby to demand the appraisal of his
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must do
so by a separate written demand as herein provided. Within 10 days after the
effective date of such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent corporation
who has complied with this subsection and has not voted in favor of or
consented to the merger or consolidation of the date that the merger or
consolidation has become effective; or
(2) If the merger of consolidation was approved pursuant to Section228
or Section253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days thereafter,
shall notify each of the holders of any class or series of stock of such
constituent corporation who are entitled to appraisal rights of the approval
of the merger or consolidation and that appraisal rights are available for
any or all shares of such class or series of stock of such constituent
corporation, and shall include in such notice a copy of this section;
provided that, if the notice is given on or after the effective date of the
merger or consolidation, such notice shall be given by the surviving or
resulting corporation to all such holders of any class or series of stock of
a constituent corporation that are entitled to appraisal rights. Such notice
may, and, if given on or after the effective date of the merger or
consolidation, shall, also notify such stockholders of the effective date of
the merger or consolidation. Any stockholder entitled to appraisal rights
may, within 20 days after the date of mailing of such notice, demand in
writing from the surviving or resulting corporation the appraisal of such
holder's shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such holder's shares. If such
notice did not notify stockholders of the effective date of the merger or
consolidation, either (i) each such constituent corporation shall send a
second notice before the effective date of the merger or consolidation
notifying each of the holders of any class or series of stock of such
constituent corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the surviving or
resulting corporation shall send such a second notice to all such holders on
or within 10 days after such effective date; provided, however, that if such
second notice is sent more than 20 days following the sending of the first
notice, such second notice need only be sent to each stockholder who is
entitled to appraisal rights and who has demanded appraisal of such holder's
shares in accordance with this subsection. An affidavit of the secretary or
D-2
<PAGE>
assistant secretary or of the transfer agent of the corporation that is
required to give either notice that such notice has been given shall, in the
absence of fraud, be prima facie evidence of the facts stated therein. For
purposes of determining the stockholders entitled to receive either notice,
each constituent corporation may fix, in advance, a record date that shall
be not more than 10 days prior to the date the notice is given, provided,
that if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the day
on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw his demand for
appraisal and to accept the terms offered upon the merger or consolidation.
Within 120 days after the effective date of the merger or consolidation, any
stockholder who has complied with the requirements of subsections (a) and (d)
hereof, upon written request, shall be entitled to receive from the corporation
surviving the merger or resulting from the consolidation a statement setting
forth the aggregate number of shares not voted in favor of the merger or
consolidation and with respect to which demands for appraisal have been received
and the aggregate number of holders of such shares. Such written statement shall
be mailed to the stockholder within 10 days after his written request for such a
statement is received by the surviving or resulting corporation or within 10
days after expiration of the period for delivery of demands for appraisal under
subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in Chancery
in which the petition was filed a duly verified list containing the names and
addresses of all stockholders who have demanded payment for their shares and
with whom agreements as to the value of their shares have not been reached by
the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a
duly verified list. The Register in Chancery, if so ordered by the Court, shall
give notice of the time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting corporation and to
the stockholders shown on the list at the addresses therein stated. Such notice
shall also be given by one or more publications at least one week before the day
of the hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by publication shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion,
D-3
<PAGE>
permit discovery or other pretrial proceedings and may proceed to trial upon the
appraisal prior to the final determination of the stockholder entitled to an
appraisal. Any stockholder whose name appears on the list filed by the surviving
or resulting corporation pursuant to subsection (f) of this section and who has
submitted his certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that he is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.
D-4
<PAGE>
APPENDIX E
March 30, 1998
The Board of Directors
IBAH, Inc.
Four Valley Square
512 Township Line Road
Blue Bell, Pennsylvania 19422
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of the common stock, par value $.01 per share ("IBAH Common
Stock"), of IBAH, Inc. ("IBAH"), of the consideration to be received by such
holders pursuant to the terms of and subject to the conditions set forth in the
Agreement and Plan of Merger, dated as of March 30, 1998 (the "Merger
Agreement"), by and among Omnicare, Inc. ("Omnicare"), a wholly owned subsidiary
of Omnicare ("Merger Sub"), and IBAH. As more fully described in the Merger
Agreement, (A) Merger Sub will be merged with and into IBAH (the "Merger") and
(B) each then outstanding share of IBAH Common Stock will be converted into the
right to receive the number of shares of common stock, par value $1.00 per
share, of Omnicare ("Omnicare Common Stock"), calculated, as set forth below,
based on the average closing price of Omnicare Common Stock for the 15 trading
days immediately preceding the second trading day before the closing date of the
Merger (the "Omnicare Market Value") (such number of shares of Omnicare Common
Stock, the "Merger Consideration"). The Merger Agreement provides that the
Merger Consideration will be calculated as follows: (1) if the Omnicare Market
Value is greater than $43.83, the number of shares of Omnicare Common Stock will
equal $6.50 divided by the Omnicare Market Value; (2) if the Omnicare Market
Value is greater than $38.77 and less than or equal to $43.83, such number will
equal 0.1483; (3) if the Omnicare Market Value is greater than $34.85 and less
than or equal to $38.77, such number will equal $5.75 divided by the Omnicare
Market Value; (4) if the Omnicare Market Value is greater than or equal to
$30.30 and less than or equal to $34.85, such number will equal 0.1650; and (5)
if the Omnicare Market Value is less than $30.30, such number will equal $5.00
divided by the Omnicare Market Value unless Omnicare exercises its right to
adjust such consideration to 0.1650.
In arriving at our opinion, we reviewed the Merger Agreement and held
discussions with certain senior officers, directors and other representatives
and advisors of IBAH and certain senior officers and other representatives and
advisors of Omnicare concerning the businesses, operations and prospects of IBAH
and Omnicare. We examined certain publicly available business and financial
information relating to IBAH and Omnicare as well as certain financial forecasts
for IBAH and other information and data for IBAH and Omnicare which were
provided to or otherwise discussed with us by the respective managements of IBAH
and Omnicare, including information relating to certain strategic implications
and operational benefits anticipated to result from the Merger. We reviewed the
financial terms of the Merger as set forth in the Merger Agreement in relation
to, among other things: current and historical market prices and trading volumes
of the IBAH Common Stock and the Omnicare Common Stock; the historical and
projected earnings and other operating data of IBAH and Omnicare; and the
capitalization and financial condition of IBAH and Omnicare. We considered, to
the extent publicly available, the financial terms of certain other transactions
recently effected which we considered relevant in evaluating the Merger and
analyzed certain financial, stock market and other publicly available
information relating to the businesses of other companies whose operations we
considered relevant in evaluating those of IBAH and Omnicare. We also evaluated
the potential pro forma financial impact of the Merger on Omnicare. In addition
to the foregoing, we conducted such other analyses and examinations and
considered such other financial, economic and market criteria as we deemed
appropriate in arriving at our opinion.
E-1
<PAGE>
In rendering our opinion, we have assumed and relied, without independent
verification, upon the accuracy and completeness of all financial and other
information and data publicly available or furnished to or otherwise reviewed by
or discussed with us. We have also assumed with your consent, that the final
terms of the Merger Agreement reviewed by us in draft form will not vary
materially from the draft reviewed by us. With respect to financial forecasts
and other information and data provided to or otherwise reviewed by or discussed
with us, we have been advised by the management of IBAH that such forecasts and
other information and data were reasonably prepared on bases reflecting the best
currently available estimates and judgments of the managements of IBAH and
Omnicare as to the future financial performance of IBAH and Omnicare and the
strategic implications and operational benefits anticipated to result from the
Merger. We have assumed with your consent that the Merger will qualify as a
tax-free reorganization for federal income tax purposes and will be accounted
for as a "pooling of interests" for financial accounting purposes. Our opinion,
as set forth herein, relates to the relative values of IBAH and Omnicare. We are
not expressing any opinion as to what the value of the Omnicare Common Stock
actually will be when issued pursuant to the Merger or the price at which the
Omnicare Common Stock will trade subsequent to the Merger. We have not made or
been provided with an independent evaluation or appraisal of the assets or
liabilities (contingent or otherwise) of IBAH or Omnicare nor have we made any
physical inspection of the properties or assets of IBAH or Omnicare. Our opinion
is necessarily based upon information available to us, and financial, stock
market and other conditions and circumstances existing and disclosed to us, as
of the date hereof.
Smith Barney Inc. and Salomon Brothers Inc, collectively doing business as
Salomon Smith Barney, have acted as financial advisors to IBAH in connection
with the proposed Merger and will receive a fee for such services, a significant
portion of which is contingent upon the consummation of the Merger. We also will
receive a fee in connection with the delivery of this opinion. We have in the
past provided investment banking services to Omnicare, for which services we
have received compensation. In the ordinary course of our business, we and our
affiliates may actively trade or hold the securities of IBAH and Omnicare for
our own account or for the account of our customers and, accordingly, may at any
time hold a long or short position in such securities. In addition, we and our
affiliates (including Travelers Group Inc. and its affiliates) may maintain
relationships with IBAH and Omnicare.
Our advisory services and the opinion expressed herein are provided for the
information of the Board of Directors of IBAH in its evaluation of the proposed
Merger, and our opinion is not intended to be and does not constitute a
recommendation to any stockholder as to how such stockholder should vote on the
proposed Merger. Our opinion may not be published or otherwise used or referred
to, nor shall any public reference to Salomon Smith Barney be made, without our
prior written consent.
Based upon and subject to the foregoing, our experience as investment
bankers, our work as described above and other factors we deemed relevant, we
are of the opinion that, as of the date hereof, the Merger Consideration is
fair, from a financial point of view, to the holders of IBAH Common Stock.
Very truly yours,
SALOMON SMITH BARNEY
E-2
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Omnicare Certificate provides that a director of Omnicare will not be
liable to Omnicare or its stockholders for monetary damages for breach of
fiduciary duty as a director, to the full extent permitted by the Delaware
General Corporation Law (the "DGCL"), as amended or interpreted from time to
time.
In addition, the Omnicare Certificate states that Omnicare shall, to the
full extent permitted by the DGCL, as amended or interpreted from time to time,
indemnify all directors, officers and employees whom it may indemnify pursuant
thereto and in addition, Omnicare may, to the extent permitted by the DGCL,
indemnify agents of Omnicare or other persons.
Section 145 of the DGCL permits indemnification against expenses, fines,
judgments and settlements incurred by any director, officer or employee of a
company in the event of pending or threatened civil, criminal, administrative or
investigative proceedings, if such person was, or was threatened to be made, a
party by reason of the fact that he or she is or was a director, officer, or
employee of the company. Section 145 also provides that the indemnification
provided for therein shall not be deemed exclusive of any other rights to which
those seeking indemnification may otherwise be entitled. In addition, Omnicare
maintains a directors' and officers' liability insurance policy.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS
See Exhibit Index.
(B) FINANCIAL STATEMENTS SCHEDULES
All financial statement schedules of the Registrant which are required
to be included herein are incorporated herein by reference to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1997.
(C) OPINIONS
The opinion of Salomon Smith Barney is included as Appendix E to the
Proxy Statement/ Prospectus.
ITEM 22. UNDERTAKINGS.
1. The undersigned registrant hereby undertakes:
(a) 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 of 1933;
(ii) To reflect in the 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 value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum 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
II-1
<PAGE>
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;
(b) That, for the purpose of determining any liability under the Securities
Act of 1933, 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.
(c) 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.
2. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
3. The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
4. The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (3) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Securities Act of 1933 and is used
in connection with an offering of securities subject to Rule 415, will be filed
as a part of an amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, 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.
5. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
6. 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 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.
II-2
<PAGE>
7. The undersigned registrant hereby undertakes to supply by means of
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-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Cincinnati, State of
Ohio, on this 27th day of May, 1998.
<TABLE>
<S> <C> <C>
May 27, 1998. OMNICARE, INC.
/s/ JOEL F. GEMUNDER
-----------------------------------------
Joel F. Gemunder
PRESIDENT
</TABLE>
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby severally constitutes and appoints Edward L. Hutton, Joel F.
Gemunder and Cheryl D. Hodges, 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 any and all amendments (including post-effective amendments)
to the Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that each said
attorneys-in-fact and agents or any of them or their or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------- -------------------------- ------------------
<S> <C> <C>
/s/ EDWARD L. HUTTON Chairman and Director
- ------------------------- (Principal Executive May 27, 1998
Edward L. Hutton Director)
/s/ JOEL F. GEMUNDER President and Director
- ------------------------- (Principal Executive May 27, 1998
Joel F. Gemunder Officer)
Senior Vice President and
/s/ DAVID W. FROESEL, Chief Financial Officer
JR. (Principal Financial
- ------------------------- Officer and May 27, 1998
David W. Froesel, Jr. Principal Accounting
Officer)
/s/ RONALD K. BAUR Director
- ------------------------- May 27, 1998
Ronald K. Baur
/s/ KENNETH W. Director
CHESTERMAN
- ------------------------- May 27, 1998
Kenneth W. Chesterman
/s/ CHARLES H. ERHART, Director
JR.
- ------------------------- May 27, 1998
Charles H. Erhart, Jr.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------- -------------------------- ------------------
/s/ MARY LOU FOX Director
- ------------------------- May 27, 1998
Mary Lou Fox
<S> <C> <C>
/s/ CHERYL D. HODGES Director
- ------------------------- May 27, 1998
Cheryl D. Hodges
/s/ THOMAS C. HUTTON Director
- ------------------------- May 27, 1998
Thomas C. Hutton
/s/ PATRICK E. KEEFE Director
- ------------------------- May 27, 1998
Patrick E. Keefe
/s/ SANDRA E. LANEY Director
- ------------------------- May 27, 1998
Sandra E. Laney
/s/ ANDREA R. LINDELL Director
- ------------------------- May 27, 1998
Andrea R. Lindell
/s/ SHELDON MARGEN, Director
M.D.
- ------------------------- May 27, 1998
Sheldon Margen, M.D.
/s/ KEVIN J. MCNAMARA Director
- ------------------------- May 27, 1998
Kevin J. Mcnamara
/s/ JOHN M. MOUNT Director
- ------------------------- May 27, 1998
John M. Mount
/s/ D. WALTER ROBBINS, Director
JR.
- ------------------------- May 27, 1998
D. Walter Robbins, Jr.
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
2.1 -- Agreement and Plan of Merger, dated as of March 30, 1998, by and among Omnicare, Impala Acquisition
Corp. and IBAH (attached as Appendix A to the Proxy Statement/ Prospectus included in this
Registration Statement).
3.1 -- Restated Certificate of Incorporation of Omnicare (incorporated herein by reference to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1996).
3.2 -- Certificate of Amendment of Registrant's Restated Certificate of Incorporation (incorporated herein
by reference to Registrant's Registration Statement on Form S-4, dated May 27, 1998).
3.3 -- Amended Bylaws of Omnicare (incorporated herein by reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1992).
4.1 -- Credit Agreement among Omnicare, The First National Bank of Chicago, agent, and certain banks, dated
as of October 22, 1996 (incorporated herein by reference to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1996).
4.2 -- Indenture, dated as of December 10, 1997, between Omnicare and The First National Bank of Chicago,
as trustee (incorporated herein by reference to Registrant's Registration Statement on Form S-3,
dated February 6, 1998).
5.1 -- Opinion of Dewey Ballantine LLP.*
8.1 -- Opinion of Morgan, Lewis & Bockius LLP as to certain federal income tax matters.*
10.1 -- Executive Salary Protection Plan, as amended, dated May 22, 1981 (incorporated herein by reference
to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1995).
10.2 -- 1981 Stock Incentive Plan, as amended (incorporated herein by reference to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1987).
10.3 -- 1989 Stock Incentive Plan (incorporated herein by reference to Registrant's Proxy Statement dated
April 10, 1989 for Registrant's 1989 Annual Meeting of Stockholders).
10.4 -- 1992 Long-Term Stock Incentive Plan (incorporated herein by reference to Registrant's Proxy
Statement dated March 31, 1997 for Registrant's 1997 Annual Meeting of Stockholders).
10.5 -- 1995 Premium-Priced Stock Option Plan (incorporated herein by reference to Registrant's Proxy
Statement dated April 10, 1995 for Registrant's 1995 Annual Meeting of Stockholders).
10.6 -- Excess Benefits Plan (incorporated herein by reference to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1987).
10.7 -- Form of Indemnification Agreement with Directors and Officers (incorporated herein by reference to
Registrant's Proxy Statement dated April 14, 1987 for Registrant's 1987 Annual Meeting of
Stockholders).
10.8 -- Employment Agreements with J.F. Gemunder and C.D. Hodges, dated August 4, 1988 (incorporated herein
by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1988).
10.9 -- Amendment to Employment Agreements with J.F. Gemunder and C.D. Hodges, dated May 17, 1993
(incorporated herein by reference to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1993).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- ----------------------------------------------------------------------------------------------------
10.10 -- Employment Agreement with T.R. Marsh dated August 4, 1988 and Amendment, dated May 17, 1993
(incorporated herein by reference to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1993).
<S> <C> <C>
10.11 -- Employment Agreement with P.E. Keefe, dated March 4, 1993 (incorporated herein by reference to
Registrant's Annual Report on Form 10-K for the year ended December 31, 1993).
10.12 -- Amendment to Employment Agreements with J.F. Gemunder, P.E. Keefe, C.D. Hodges and T.R. Marsh, dated
May 16, 1994 (incorporated herein by reference to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1994).
10.13 -- Amendment to Employment Agreements with J.F. Gemunder, P.E. Keefe and C.D. Hodges, dated May 15,
1995 (incorporated herein by reference to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1995).
10.14 -- Split Dollar Agreement with E.L. Hutton, dated June 1, 1995 (Agreement in the same form exists with
J.F. Gemunder) (incorporated herein by reference to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995).
10.15 -- Split Dollar Agreement, dated June 1, 1995 (Agreements in the same form exists with the following
Executive Officers: C.D. Hodges, P.E. Keefe and T.E. Bien) (incorporated herein by reference to
Registrant's Annual Report on Form 10-K for the year ended December 31, 1995).
10.16 -- Annual Incentive Plan for Senior Executive Officers (incorporated herein by reference to
Registrant's Proxy Statement dated May 20, 1996 for Registrant's 1996 Annual Meeting of
Stockholders).
10.17 -- Employment Agreement with T.E. Bien, dated January 1, 1994 (incorporated herein by reference to
Registrant's Annual Report on Form 10-K for the year ended December 31, 1996).
10.18 -- Employment Agreement with D.W. Froesel, dated February 17, 1996 (incorporated herein by reference to
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1996).
10.19 -- Employment Agreement with M.L. Fox, dated April 4, 1996 (incorporated herein by reference to
Registrant's Annual Report on Form 10-K for the year ended December 31, 1996).
10.20 -- Consulting Agreement with MLF Co., dated April 4, 1996 (incorporated herein by reference to
Registrant's Annual Report on Form 10-K for the year ended December 31, 1996).
10.21 -- Amendment to Employment Agreement with J.F. Gemunder, dated May 20, 1996 (Amendments in the same
form exist with the following Executive Officers: P.E. Keefe and C.D. Hodges) (incorporated herein
by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1996).
10.22 -- Amendment to Employment Agreement with J.F. Gemunder, dated May 19, 1997 (Amendments in the same
form exist with the following Executive Officers: P.E. Keefe and C.D. Hodges) (incorporated herein
by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1997).
11.1 -- Statement of Computation of Earnings per common shares of Omnicare (incorporated herein by reference
to Registrant's Annual Report on Form 10-K for the year ended December 31, 1997).
12.1 -- Statement of Computation of Ratio of Earnings to Fixed Charges (incorporated herein by reference to
Registrant's Annual Report on Form 10-K for the year ended December 31, 1997).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- ----------------------------------------------------------------------------------------------------
21.1 -- Subsidiaries of Omnicare (incorporated herein by reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1997).
<S> <C> <C>
23.1 -- Consent of Dewey Ballantine LLP (included as part of its opinion filed as Exhibit 5.1 hereto).
23.2 -- Consent of Morgan, Lewis & Bockius LLP (included as part of its opinion filed as Exhibit 8.1
hereto).
23.3 -- Consent of Arthur Anderson LLP.*
23.4 -- Consent of Price Waterhouse LLP.*
24.1 -- Power of Attorney, included as part of the Signature page in this Registration Statement.
99.1 -- Form of Proxy for holders of IBAH Shares.*
99.2 -- Fairness Opinion of Salomon Smith Barney (attached as Appendix E to the Proxy Statement/Prospectus
included in this Registration Statement).
99.3 -- Consent of Salomon Smith Barney.*
</TABLE>
- ------------------------
* Filed herewith
<PAGE>
Exhibit 5.1
[Letterhead of Dewey Ballantine LLP]
May 27, 1998
Omnicare, Inc.
50 East RiverCenter Blvd., Suite 1530
Covington, Kentucky 41011
Ladies and Gentlemen:
We have acted as special counsel to Omnicare, Inc., a Delaware
corporation (the "Company"), in connection with the Registration Statement on
Form S-4 (the "Registration Statement") filed by the Company under the
Securities Act of 1933 (the "Act"), for the purpose of registering under the
Act (i) up to 5,336,338 shares (the "Initial Shares") of the Company's common
stock, par value $1.00 per share (the "Common Stock"), including 430,696
shares (the "Warrant Shares"), issuable upon exercise of the Warrants, as
defined below and (ii) warrants to purchase up to 430,696 shares of Common
Stock (the "Warrants"), in each case proposed to be issued in connection with
the merger (or in the case of the Warrant Shares, issuable upon exercise of
the Warrants) between IBAH, Inc., a Delaware corporation ("IBAH"), and Impala
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
the Company ("Merger Sub"), contemplated by the Agreement and Plan of Merger,
dated as of March 30, 1998 (the "Merger Agreement"), among IBAH, the Company
and Merger Sub.
In connection with this opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of such
certificates and other documents as we deemed necessary or advisable for the
purpose of expressing the opinion contained herein, including, without
limitation, the following: the Restated Certificate of Incorporation, as
amended, of the Company, the Amended Bylaws of the Company, the Registration
Statement and resolutions adopted by the Board of Directors of the Company.
With respect to all of the documents reviewed, we have assumed, without
investigation, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity to originals of all
documents submitted to us as certified or reproduced copies.
We are admitted to the Bar of the State of New York and express no
opinion as to the laws of any other jurisdiction other than the General
Corporation Law of the State of Delaware.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Initial Shares, when issued in accordance with the terms and
conditions of the Merger Agreement, will be validly issued, fully paid and
nonassessable.
2. The Warrants, when issued in accordance with the terms and conditions
of the Merger Agreement, will be valid and binding obligations of the
Company, subject to applicable bankruptcy, insolvency, fraudulent conveyance
or similar laws affecting creditors' rights generally and general principles
of equity.
3. Assuming that the Warrants are issued in accordance with the terms and
conditions of the Merger Agreement, the Warrant Shares, if issued in
accordance with the terms and conditions of the Warrants, will be validly
issued, fully paid and nonassessable.
<PAGE>
This opinion is rendered solely to you in connection with the above
matter, and may not be relied upon by you for any other purpose or relied
upon by or furnished to any other person without our prior written consent.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this Firm under the captions "The
Merger - Certain Federal Income Tax Consequences of the Merger" and "Legal
Opinions" in the Proxy Statement/Prospectus constituting a part of the
Registration Statement. In giving this consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Act or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ Dewey Ballantine LLP
<PAGE>
Exhibit 8.1
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103-6993
May 27, 1998
IBAH, Inc.
Four Valley Square
512 Township Line Rd.
Blue Bell, PA 19422
Re: IBAH MERGER
Ladies and Gentlemen:
You have requested our opinion regarding certain federal income tax
aspects of the merger of a wholly-owned subsidiary of Omnicare, Inc. with and
into IBAH, Inc. as described in the Registration Statement on Form S-4 (the
"Merger"), filed with the Securities and Exchange Commission on the date hereof
(the "Registration Statement"). This opinion is based upon our review of the
Registration Statement and our assumption that the Merger will take place in
accordance with the description included in the Registration Statement.
OPINION
Based on the foregoing and on the Internal Revenue Code of 1986, as
amended, the regulations promulgated thereunder, and judicial and administrative
interpretations thereof, all as in effect on the date of this letter, it is our
opinion that the statements of law and conclusions of law included in the
Registration Statement under the heading "Certain Federal Income Tax
Consequences of the Merger" are, in all material respects, true, correct and
complete. No opinion is expressed regarding any statements, assumptions or
opinions regarding factual matters contained in the Registration Statement.
Should any of the facts, assumptions or understandings referred to
above prove incorrect, please let us know so that we may consider the effect, if
any, on our opinion. No assurances can be given that any of the foregoing
authorities will not be modified, revoked, supplemented, revised, reversed or
overruled or that any such modification, revocation,
<PAGE>
IBAH, Inc.
May 27, 1998
Page 2
supplementation, revision, reversal or overruling will not adversely affect the
opinion set forth above.
We consent to the filing of this opinion in connection with and as a
part of the Registration Statement on Form S-4 and any amendments thereto. We
also hereby consent to the reference to our firm under the caption "Legal
Opinions" in the Registration Statement. In giving such consents, however, we
do not thereby admit that we are acting within the category of persons whose
consent is required under Section 7 of the Securities Act of 1933, as amended,
and the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
MORGAN, LEWIS & BOCKIUS LLP
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-4 Registration Statement of our report dated
February 5, 1998 (except with respect to the matter discussed in Note 20 as to
which the date is March 30, 1998) included in IBAH Inc.'s Form 10-K/A-2 for
the year ended December 31, 1997 and to all references to our Firm included
in this Form S-4 Registration Statement.
Arthur Andersen LLP
Philadelphia, Pa.,
May 26, 1998
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of our report
dated January 30, 1998 appearing on page 34 of Omnicare, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 1997. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
Price Waterhouse LLP
Price Waterhouse LLP
Cincinnati, Ohio
May 26, 1998
<PAGE>
FOR USE BY HOLDERS OF COMMON STOCK AND PREFERRED STOCK OF IBAH, INC.
IBAH, Inc.
Four Valley Square
512 Township Line Road
Blue Bell, Pennsylvania 19422
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF IBAH, INC.
The undersigned hereby appoints Geraldine A. Henwood and Jane H.
Hollingsworth as Proxies, each with the power to appoint a substitute, and
hereby authorizes each of them to represent and to vote, as designated below,
all the shares of (i) the Common Stock, par value $.01 per share ("IBAH Common
Shares"), and (ii) the Series A Convertible Preferred Stock, par value $.01 per
share ("IBAH Preferred Shares"), of IBAH, Inc. ("IBAH") held of record by the
undersigned on May 21, 1998, at the special meeting of stockholders of IBAH to
be held on June 29, 1998 and any adjournment or postponement thereof (the
"Special Meeting").
The Board of Directors of IBAH has unanimously approved the Merger Agreement
and the Merger (each as defined in the accompanying Proxy Statement/Prospectus)
and recommends that holders of IBAH Common Shares and IBAH Preferred Shares vote
FOR approval and adoption of the Merger Agreement and the Merger.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is given, this proxy will
be voted for proposal 1.
Please mark, sign, date and promptly return this proxy card using the
enclosed envelope. If your address is incorrectly shown, please print changes.
<PAGE>
IBAH, INC.
PLEASE MARK VOTE IN BOX IN THE FOLLOWING MANNER USING DARK INK ONLY
1. Approval of the Agreement and Plan of Merger among IBAH, Inc., Omnicare,
Inc. and Impala Acquisition Corp., and the Merger contemplated thereby, as
described in the accompanying Proxy Statement/Prospectus.
/ / FOR / / AGAINST / / ABSTAIN
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Special Meeting and any
adjournments or postponements thereof.
All other proxies heretofore given by the undersigned to vote IBAH Common
Shares or IBAH Preferred Shares which the undersigned would be entitled to vote
if personally present at the Special Meeting, are hereby expressly revoked.
<TABLE>
<S> <C>
Dated: ---------------------------------------------, 1998 ----------------------------------------------------------
Signature(s)
----------------------------------------------------------
Signature(s)
Please date this proxy and sign it exactly as your name or
name(s) appear above. When shares are held jointly, both
must sign. When signing as an attorney, executor,
administrator, trustee or guardian, please give full title
as such. If shares are held by a corporation, please sign
in full corporate name by the President or other authorized
officer. If shares are held by a partnership, please sign
in partnership name by an authorized person.
</TABLE>
<PAGE>
Exhibit 99.3
[logo]
The Board of Directors
IBAH, Inc.
Four Valley Square
512 Township Line Road
Blue Bell, PA
Members of the Board:
We hereby consent to the (i) inclusion of our opinion letter to the Board of
Directors of IBAH, Inc. ("IBAH"), dated March 30, 1998, as Appendix E to the
Proxy Statement/Prospectus of IBAH and Omnicare, Inc. ("Omnicare"), dated
May 27, 1998, relating to the proposed merger transaction involving IBAH and
Omnicare and (ii) reference made to our firm and such opinion in such Proxy
Statement/Prospectus under the captions entitled "Summary-Opinion of IBAH's
Financial Advisor", "The Merger-Background of the Merger", "--Reasons for the
Merger" and "-Opinion of IBAH's Financial Advisor." In giving such consent,
we do not admit that we come within the category of persons whose consent is
required under, and we do not admit that we are "experts" for purposes of,
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
By: /s/ Salomon Smith Barney
------------------------
SALOMON SMITH BARNEY
New York, New York
May 27, 1998
