Execution Copy
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT ("Option Agreement") dated January 14,
1998, between MQ Acquisition Corporation, a Delaware corporation ("Acquiror"),
and the persons who are signatories hereto (the "Stockholders").
W I T N E S S E T H:
WHEREAS, the Board of Directors of Acquiror and the Board of
Directors of Mediq Incorporated, a Delaware corporation (the "Company"), have
approved an Agreement and Plan of Merger dated as of even date herewith (the
"Merger Agreement") providing for the merger of Acquiror with and into the
Company; and
WHEREAS, as a condition and inducement to Acquiror's
willingness to enter into the Merger Agreement, Acquiror has required that each
Stockholder agree, and each Stockholder has agreed, to grant to Acquiror the
option set forth herein to purchase all of the Common Shares and Preferred
Shares owned, directly or indirectly as set forth opposite his name on Schedule
I hereto, or hereafter acquired, directly or indirectly, by such Stockholder
(the "Shares");
NOW THEREFORE, in consideration of the premises herein
contained, the parties agree as follows:
1. Definitions.
Capitalized terms used but not defined herein shall have the
same meanings as in the Merger Agreement.
2. Grant of Option.
Subject to the terms and conditions set forth herein, each
Stockholder hereby grants to Acquiror an irrevocable option (the "Option") to
purchase all of the Shares at a price per share in cash (the "Purchase Price")
equal to $14.50 per Share as provided in Section 4 hereof.
3. Exercise of Option.
(a) Acquiror may exercise the Option, in whole or in part,
at any time or from time to time if a Purchase Event (as defined below) shall
have occurred; provided, however, that, to the extent the Option shall not have
been previously exercised, it shall terminate and be of no further force and
effect upon the earlier to occur of (i) the Effective Time of the Merger; (ii)
in the case of a termination of the Merger Agreement in accordance with Sections
8.1 (a), (b), (c) or (g), the date of such termination; provided that (x) no
Purchase Event shall have occurred prior to such termination and (y) the Company
shall not have been in breach of the Merger Agreement prior to such termination;
and (iii) in the case of any other termination of the Merger Agreement, the date
that is 6 months following such termination (such date, the "Termination Date").
(b) Notwithstanding the foregoing, if the Option cannot be
exercised before the Termination Date as a result of any injunction, order or
similar restraint issued by a court of competent jurisdiction, the Option shall
expire on (and the Termination Date shall be so extended until the earlier of)
(i) the 30th business day after such injunction, order or restraint shall have
been dissolved or (ii) when such injunction, order or restraint shall have
become permanent and no longer subject to appeal, as the case may be.
(c) As used herein, a "Purchase Event" shall mean any of
the following events:
(i) any person (other than Acquiror or any of its
subsidiaries) shall have commenced (as such term is defined in Rule 14d-2 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act")), or shall
have filed a registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to, a tender offer or exchange offer to
purchase any Common Shares or Preferred Shares such that, upon consummation of
such offer, such person would have Beneficial Ownership (as defined below) of
25% or more of the then outstanding Common Shares or Preferred Shares or more
than 25% of the total voting power of the Company;
(ii) the Company or any of its Subsidiaries shall or
shall have entered into, authorized, recommended, proposed or publicly announced
an intention to enter into, authorize, recommend, or propose, an agreement,
arrangement or understanding with any person (other than Acquiror or any of its
subsidiaries) to, or any person (other than Acquiror or any of its subsidiaries)
shall have publicly announced a bona fide intention to, (A) effect any
Acquisition Proposal with the Company, (B) purchase, lease or otherwise acquire
25% or more of the assets of the Company and its consolidated Subsidiaries or
(C) purchase or otherwise acquire (including by way of merger, consolidation,
tender or exchange offer or similar transaction) Beneficial Ownership (as
defined below) of securities representing 25% or more of the voting power of the
Company or any of its "significant subsidiaries" (as defined under Regulation
S-X);
(iii) any person (other than Acquiror or any subsidiary
or stockholder of Acquiror, and other than a Stockholder) shall have acquired
Beneficial Ownership or the right to acquire Beneficial Ownership of 25% or more
of the Common Shares, Preferred Shares or voting power of the Company or there
shall otherwise have been a Change in Control (as defined in the Merger
Agreement) of the Company;
(iv) the Company's Board of Directors (or any committee
thereof) (i) shall have withdrawn, modified or changed its recommendation
regarding the approval of the Merger or the Merger Agreement or the transactions
contemplated thereby in a manner adverse to the Acquiror, (ii) shall have
recommended to the stockholders of the Company any Acquisition Proposal; (iii)
shall have taken any action in violation of Section 4.1(a) of the Merger
Agreement, (iv) shall have failed to reaffirm publicly its recommendation
regarding the approval of the Merger or the Merger Agreement and the
transactions contemplated thereby within three business days' of receipt of
Acquiror's written request to do so; or (v) shall have resolved, or entered into
any agreement, to do any of the foregoing;
(v) if any of the Stockholders shall have breached in
any material respect any of their respective obligations under the Stockholder
Agreements, dated the date hereof, between each Stockholder and Acquiror;
(vi) if at the Special Meeting (including any
adjournment or postponement thereof) the Company Stockholder Approvals shall not
have been obtained or if the Company shall not have called and held a Special
Meeting prior to the termination of the Merger Agreement after being requested
to do so by the Acquiror as provided in the Merger Agreement;
(vii) the Merger Agreement shall have been terminated
(or Acquiror shall have the right to terminate the Merger Agreement) (x)
pursuant to Sections 8.1(b) or (c) of the Merger Agreement and the Company's
failure to perform any material covenant or obligation under, or other breach by
the Company of, the Merger Agreement has caused or resulted in the failure of
the Merger to occur on or before the date of such termination (or right to
termination), or (y) pursuant to Section 8.1(d), (e) or (f) of the Merger
Agreement; or
(viii) the Company shall have delivered a Superior
Proposal Notice.
(d) As used herein, the terms "Beneficial Ownership,"
"Beneficial Owner" and "Beneficially Own" shall have the meanings ascribed to
them in Rule 13d-3 under the Exchange Act. As used herein, "person" shall have
the meaning specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(e) In the event Acquiror wishes to exercise the Option, it
shall deliver to each Stockholder at the address set forth on Schedule I, a
written notice (the date of which being herein referred to as the "Notice Date")
specifying (i) the total number of Shares it intends to purchase pursuant to
such exercise and (ii) a place and date not earlier than two business days nor
later than 30 calendar days from the Notice Date for the closing of such
purchase (the "Closing Date"); provided that if the closing of the purchase and
sale pursuant to the Option (the "Closing") cannot be consummated by reason of
any applicable judgment, decree, order, law or regulation, the period of time
that otherwise would run pursuant to this sentence shall run instead from the
date on which such restriction on consummation has expired or been terminated;
and, provided further that, without limiting the foregoing, if prior
notification to or approval of any regulatory authority is required in
connection with such purchase, Acquiror and, if applicable, each Stockholder,
shall promptly file the required notice or application for approval and shall
expeditiously process the same (and each Stockholder shall cooperate in a
commercially reasonable manner with Acquiror in the filing of any such notice or
application and the obtaining of any such approval), and the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which, as the case may be, (i) any required notification period has expired or
been terminated or (ii) such approval has been obtained, and in either event,
any requisite waiting period has passed.
(f) The Shares to be acquired pursuant to exercise of the
Option shall be allocated pro rata as between Common Shares and Preferred Shares
and as among each Stockholder based upon the number of Shares owned by them as
set forth on Schedule I. If Acquiror exercises the Option for no more than two
million Shares in the aggregate, the Stockholders may designate among themselves
the Stockholders who shall sell Shares to Acquiror pursuant to such partial
exercise of the Option, provided that (x) the aggregate number of Common Shares
and Preferred Shares to be sold to Acquiror pursuant to such exercise shall
remain the same as if there had been no designation and (y) such designation
shall not adversely affect the accounting treatment or economic impact of
exercise of the Option to Acquiror.
(g) In the event Acquiror exercises the Option in part and
acquires Shares which represent a majority of the total voting power of the
Company's capital stock, on a fully-diluted basis, Acquiror agrees that it will
exercise the Option in respect of all the Shares set forth on Schedule I.
4. Payment and Delivery of Certificates.
(a) At the Closing, referred to in Section 3 hereof,
Acquiror shall pay to each Stockholder the aggregate Purchase Price for the
Shares purchased from such Stockholder pursuant to the exercise of the Option.
(b) At such Closing, simultaneously with the delivery as
provided in Section 4(a), each Stockholder shall transfer to Acquiror good,
valid and marketable title to, and shall deliver to Acquiror a certificate or
certificates representing, the number of Shares purchased by Acquiror,
accompanied by appropriate stock power(s) in form reasonably satisfactory to
Acquiror), which Shares shall be free and clear of all liens, claims, charges,
security interests, rights of first refusal or offer, proxies, voting trusts or
agreements, understandings or arrangements and other encumbrances of any kind
whatsoever other than any restrictions under the Securities Act or the Exchange
Act.
(c) If at the time of transfer of any Common Shares or
Preferred Shares pursuant to any exercise of the Option, the Company shall have
issued any share purchase rights or similar securities to holders of the Common
Shares or the Preferred Shares, then each such Share shall also represent rights
with terms substantially the same as and at least as favorable to Acquiror as
those issued to the Stockholders.
5. Authorizations, etc.
(a) Each Stockholder hereby represents and warrants to
Acquiror that:
(i) The Stockholder has full power and authority to
execute and deliver this Option Agreement and to consummate the transactions
contemplated hereby;
(ii) such execution, delivery and consummation have
been authorized by the Stockholder, and no other proceedings or actions by the
Stockholder are necessary therefor;
(iii) this Option Agreement has been duly and validly
executed and delivered and represents a valid and legally binding obligation of
the Stockholder, enforceable against the Stockholder in accordance with its
terms;
(iv) the Stockholder is the Beneficial Owner (in
addition to the registered owner) of, and has good, valid and marketable title
to, the Common Shares and the Preferred Shares set forth opposite his name on
Schedule I hereto, which are all of the Shares owned, directly or indirectly, by
the Stockholder, and the Stockholder does not have any right to acquire any
additional Shares; and
(v) the Stockholder has taken all necessary action, and
obtained all necessary consents and authorizations (except as may be required by
the HSR Act), to authorize and permit it to sell the Shares upon exercise of the
Option, all of which Shares, upon sale pursuant hereto, and shall be delivered
free and clear of all claims, liens, encumbrances, restrictions and security
interests, rights of first refusal or offer, and not subject to any preemptive
rights.
(b) Acquiror hereby represents and warrants to each
Stockholder that:
(i) Acquiror has full corporate power and authority to
execute and deliver this Option Agreement and to consummate the transactions
contemplated hereby;
(ii) such execution, delivery and consummation have
been authorized by all requisite corporate action by Acquiror, and no other
corporate proceedings are necessary therefor;
(iii) this Option Agreement has been duly and validly
executed and delivered and represents a valid and legally binding obligation of
Acquiror, enforceable against Acquiror in accordance with its terms; and
(iv) any Shares or other securities acquired by
Acquiror upon exercise of the Option will not be taken with a view to the public
distribution thereof and will not be transferred or otherwise disposed of except
in compliance with the Securities Act.
(v) prior to the Closing, Acquiror will have taken all
necessary action and obtained all necessary consents and authorizations (except
as may be required by the HSR Act), to authorize and permit it to purchase the
Shares upon exercise of the Option.
6. Adjustment upon Changes in Capitalization.
In the event of any change in the Common Shares or Preferred
Shares by reason of a stock dividend, split-up, recapitalization, merger,
consolidation, reorganization, combination, exchange of shares or similar
transaction, the type and number of shares or securities subject to the Option,
and the Purchase Price therefor, shall be adjusted appropriately so that
Acquiror shall receive upon exercise of the Option the same class and number of
outstanding shares or other securities or property that Acquiror would have
received in respect of the Common Shares or Preferred Shares if the Option had
been exercised immediately prior to such event, or the record date therefor, as
applicable.
7. Severability.
Any term, provision, covenant or restriction contained in this
Option Agreement held by a court or other Governmental Entity of competent
jurisdiction to be invalid, void or unenforceable, shall be ineffective to the
extent of such invalidity, voidness or unenforceability, but neither the
remaining terms, provisions, covenants or restrictions contained in this Option
Agreement, nor the validity or enforceability thereof in any other jurisdiction
shall be affected or impaired thereby. Any term, provision, covenant or
restriction contained in this Option Agreement that is so found to be so broad
as to be unenforceable shall be interpreted to be as broad as is enforceable.
8. Miscellaneous.
(a) Expenses. Each of the parties hereto shall pay all
costs and expenses incurred by it or on its behalf in connection with the
transactions contemplated hereunder, including fees and expenses of its own
financial consultants, investment bankers, accountants and counsel, except as
otherwise provided herein.
(b) Entire Agreement. This Option Agreement and the
Stockholder Agreement (including the documents and the instruments referred to
therein constitute the entire agreement among the Stockholders and Acquiror and
supersede all prior agreements and understandings, agreements or representations
by or among the parties, written and oral, with respect to the subject matter
hereof and thereof.
(c) Successors; No Third Party Beneficiaries. Acquiror may
assign the Option in whole or in part to any person; provided that no such
assignment shall relieve Acquiror of its obligations hereunder. The terms and
conditions of this Option Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Option Agreement, expressed or implied, is intended to confer
upon any party, other than the parties hereto, and their respective successors
and assigns, any rights, remedies, obligations, or liabilities under or by
reason of this Option Agreement, except as expressly provided herein.
(d) Notices. Subject to Section 8(k) hereof, all notices or
other communications which are required or permitted hereunder shall be in
writing and sufficient if delivered to Acquiror in accordance with Section 9.8
of the Merger Agreement and, in the case of the Stockholder, at the address set
forth in the Stockholder Agreement.
(e) Counterparts. This Option Agreement may be executed in
counterparts, and each such counterpart shall be deemed to be an original
instrument, but both such counterparts together shall constitute but one
agreement.
(f) Further Assurances. In the event of any exercise of the
Option by Acquiror, each Stockholder and Acquiror shall execute and deliver all
other documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.
(g) Specific Performance. The parties hereto agree that if
for any reason Acquiror or any Stockholder shall have failed to perform its
obligations under this Option Agreement, then either party hereto seeking to
enforce this Option Agreement against such non-performing party shall be
entitled to specific performance and injunctive and other equitable relief, and
the parties hereto further agree to waive any requirement for the securing or
posting of any bond in connection with the obtaining of any such injunctive or
other equitable relief. This provision is without prejudice to any other rights
that either party hereto may have against the other party hereto for any failure
to perform its obligations under this Option Agreement.
(h) Governing Law. This Option Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware applicable
to agreements made and entirely to be performed within such state. Nothing in
this Option Agreement shall be construed to require any party (or any subsidiary
or affiliate of any party) to take any action or fail to take any action in
violation of applicable law, rule or regulation.
(i) Regulatory Approvals. If, in connection with the
exercise of the Option under Section 3, prior notification to or approval of any
Governmental Entity is required, then the required notice or application for
approval shall be promptly filed and/or expeditiously processed by each
Stockholder and periods of time that otherwise would run pursuant hereto (if
any) shall run instead from the date on which any such required notification
period has expired or been terminated or such approval has been obtained, and in
either event, any requisite waiting period shall have passed.
(j) Waiver and Amendment. Any provision of this Option
Agreement may be waived at any time by the party that is entitled to the
benefits of such provision. This Option Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery of a written
agreement executed by the parties hereto.
(k) Jurisdiction. Each party hereto irrevocably and
unconditionally consents and submits to the exclusive jurisdiction of the courts
of the State of Delaware and of the United States of America located in the
State of Delaware for any actions, suits or proceedings arising out of or
relating to this agreement and the transactions contemplated hereby, and further
agrees that service of any process, summons, notice or document by U.S.
registered or certified mail to the Stockholder at Xxxxx Xxxxxx & Heckscher LLP,
Xxx Xxxxxxx Xxxxx, Xxxxxxxxxxxx, XX 00000, Attention: Xxxxxxx X. Xxxxxxxx or
Xxxxxxxxx X. Xxxxxx, or to Acquiror c/o Xxxxxxxxx, Xxxxxx & Xxxxxxxx & Co.,
Inc., 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, X.X. 00000, Attention: Xxxxx Xxxxxxxxx,
shall be effective service of process for any action, suit or proceeding brought
against such party in such court. Each party hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Option Agreement or the transactions
contemplated hereby, in the courts of the State of Delaware located in
Wilmington, Delaware or the United States of America located in Wilmington,
Delaware, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
MQ ACQUISITION CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------------
Name:
Title:
/s/ Xxxxxxx X. Xxxxx
--------------------------------------
Xxxxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxx
--------------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxxx
--------------------------------------
Xxxxxx X. Xxxxxx
T/D XXXXXXX X. XXXXX DATED
NOVEMBER 18, 1983
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
Xxxxxx X. Xxxxx, Trustee
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------
Xxxxxx X. Xxxxxx, Trustee
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------
Xxxxxxx X. Xxxxx, Trustee
By: /s/ Xxxx X. Xxxxxxx
----------------------------------
Xxxx X. Xxxxxxx, Trustee
PNC BANK, as Trustee
By:
-----------------------------
Name:
Title:
Schedule I
Name and Address of Stockholder Company Preferred Shares Company Common Shares
T/D XXXXXXX X. XXXXX DATED NOVEMBER 18, 3,570,969 3,570,969
1983, Xxxxxx X. Xxxxx, Xxxxxxx X. Xxxxx,
Xxxxxx X. Xxxxxx, Xxxx X. Xxxxxxx and PNC
Bank, Trustees
Xxxxxx X. Xxxxx 269,031 240,489
Xxxxxx X. Xxxxxx 458,757 459,007
Xxxxxxx X. Xxxxx 448,655 448,665
------- -------
4,747,412 4,719,130
========= =========
c/o Xxxx X. Xxxxxxx
Xxxxxxxx Xxxxxxxx Xxxxx & Xxxxx
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
