Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of February 12, 2004, by and between WellCare Holdings, LLC, a
Delaware limited liability company (the "LLC"), and WellCare Group, Inc., a
Delaware corporation and a wholly-owned subsidiary of the LLC ("Merger Sub").
Reference is hereby made to the Second Amended and Restated Limited Liability
Company Agreement of the LLC, dated as of September 5, 2002, as amended by that
certain First Amendment dated as of November 24, 2003 and that certain Second
Amendment dated as of February 10, 2004 (the "LLC Agreement").
WITNESSETH:
WHEREAS, as of the execution of this Agreement, the LLC's issued and
outstanding Units (as such term is defined in the LLC Agreement) ("Units")
consist solely of (i) Class A Common Units ("Class A Common Units"), (ii) Class
B Common Units ("Class B Common Units") and (iii) Class C Common Units ("Class C
Common Units"), in each case, as such terms are defined in the LLC Agreement;
WHEREAS, as of the execution of this Agreement, the LLC owns 100
shares of Merger Sub's common stock, par value $0.01 per share ("Merger Sub
Common Stock"), which represents all of Merger Sub's issued and outstanding
capital stock;
WHEREAS, Section 264 of the Delaware General Corporation Law, 8 Del.
C. Section 101, et seq. ("DGCL"), and Section 18-209 of the Delaware Limited
Liability Company Act, 6 Del. C. Section 18-101, et seq., ("DLLCA"), authorize
the merger of one or more Delaware limited liability companies with and into a
Delaware corporation;
WHEREAS, in connection with an initial public offering of Surviving
Corporation Common Stock (as defined herein) (the "IPO"), which initial public
offering shall constitute an Initial Public Offering (as such term is defined in
Section 12.16 of the LLC Agreement), the LLC and Merger Sub desire to merge (the
"Merger") with Merger Sub being the surviving entity (the "Surviving
Corporation");
WHEREAS, this Agreement and the consummation of the Merger and the
other transactions contemplated hereby have been approved, consented to and
adopted by (i) the Board of Directors of the LLC and (ii) the requisite holders
of the LLC's issued and outstanding Units, in each case, as required by
applicable law and by the LLC Agreement; and
WHEREAS, this Agreement and the consummation of the Merger and the
other transactions contemplated hereby have been approved, consented to and
adopted by (i) the Board of Directors of Merger Sub and (ii) the LLC, in its
capacity as the sole shareholder of Merger Sub, in each case, as required by
applicable law and by Merger Sub's certificate of incorporation and bylaws;
NOW, THEREFORE, in consideration of the premises and of the
agreements, covenants and provisions hereinafter contained, the LLC and Merger
Sub hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms
have the following meanings:
"Adjusted Pre-IPO Valuation" means (i) the Pre-IPO Valuation plus
(ii) the Aggregate Exercise Price.
"Aggregate Exercise Price" means the aggregate exercise price with
respect to all of the vested and unvested Outstanding Options.
"Aggregate Unpaid Yield" means the aggregate Class A Common Unpaid
Yield (as such term is defined in the LLC Agreement) that as of
immediately prior to Effective Time is attributable to all of the Class A
Common Units issued and outstanding as of immediately prior to the
Effective Time.
"Aggregate Unreturned Capital Value" means the aggregate Class A
Common Unreturned Capital Value (as such term is defined in the LLC
Agreement) that as of immediately prior to Effective Time is attributable
to all of the Class A Common Units issued and outstanding as of
immediately prior to the Effective Time.
"Class A Common Member" means each owner of record of Class A Common
Units as of immediately prior to the Effective Time, but solely in such
owner's capacity as an owner of Class A Common Units.
"Class B Common Member" means each owner of record of Class B Common
Units as of immediately prior to the Effective Time, but solely in such
owner's capacity as an owner of Class B Common Units.
"Class C Common Member" means each owner of record of Class C Common
Units as of immediately prior to the Effective Time, but solely in such
owner's capacity as an owner of Class C Common Units.
"IPO Offering Price" means the offering price per share of Surviving
Corporation Common Stock in connection with the IPO.
"Number of Class A Common Units" means the number of Class A Common
Units issued and outstanding as of immediately prior to the Effective
Time.
"Number of Class B Common Units" means the number of Class B Common
Units issued and outstanding as of immediately prior to the Effective
Time.
"Number of Class C Common Units" means the number of Class C Common
Units issued and outstanding as of immediately prior to the Effective
Time.
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"Number of Fully Diluted Common Units" means (i) the Number of Class
A Common Units plus (ii) the Number of Class B Common Units plus (iii) the
Number of Class C Common Units plus (iv) the Number of Option Units.
"Number of Option Units" means the number of Class A Common Units
issuable upon the exercise in full of all of the vested and unvested
Outstanding Options.
"Outstanding Options" means all of the options to purchase Class A
Common Units that have been granted and/or issued by the LLC and that are
unexercised and outstanding as of immediately prior to the Effective Time
(including all such options that have been issued by the LLC (i) to any
employee of the LLC or any of its subsidiaries pursuant to the WellCare
Holdings, LLC 2002 Employee Option Plan, (ii) to any director of the LLC,
or (iii) to any consultant of the LLC or any of its subsidiaries).
"Pre-IPO Valuation" means the equity value of the Surviving
Corporation immediately prior to the consummation of the IPO (and after
giving effect to the consummation of the Merger), as determined by the
Pricing Committee of the Board of Directors of Merger Sub in consultation
with the managing underwriters of the IPO. For the avoidance of doubt, the
Pre-IPO Valuation shall be determined based upon the valuation of the
Surviving Corporation used in connection with the determination of the IPO
Offering Price.
"Pro Rata Percentage" means (i) with respect to any Class A Common
Member, the number of issued and outstanding Class A Common Units owned of
record by such Class A Common Member as of immediately prior to the
Effective Time divided by the Number of Fully Diluted Common Units, (ii)
with respect to any Class B Common Member, the number of issued and
outstanding Class B Common Units owned of record by such Class B Common
Member as of immediately prior to the Effective Time divided by the Number
of Fully Diluted Common Units and (iii) with respect to any Class C Common
Member, the number of issued and outstanding Class C Common Units owned of
record by such Class C Common Member as of immediately prior to the
Effective Time divided by the Number of Fully Diluted Common Units.
"Residual Value" means (i) the Adjusted Pre-IPO Valuation minus (ii)
the Aggregate Unpaid Yield minus (iii) the Aggregate Unreturned Capital
Value.
"Surviving Corporation Common Stock" means the Surviving
Corporation's common stock, par value $0.01 per share.
"Warrant Notes" has the meaning given to such term in the LLC
Agreement.
"Warrant Units" has the meaning given to such term is the LLC
Agreement.
2. MERGER. Subject to the terms of this Agreement, at the Effective
Time (as defined herein), the LLC shall be merged with and into Merger Sub in
accordance with Sections 259 and 264 of the DGCL, Section 18-209 of the DLLCA,
and any other applicable provision of law. The separate corporate existence of
the LLC shall thereupon cease, and Merger Sub shall
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be the Surviving Corporation. As of the Effective Time, the name of the
Surviving Corporation shall be "WellCare Health Plans, Inc."
3. EFFECT OF MERGER. Upon the Effective Time, the Merger shall have
the effects provided for in Section 259 of the DGCL and Section 18-209 of the
DLLCA. For Federal (and, where applicable, state and local) income tax purposes,
the Merger represents the contribution of all of the assets of the LLC to Merger
Sub in exchange for shares of common stock of the Surviving Corporation in a
transaction governed by Section 351 of the Internal Revenue Code of 1986, as
amended, followed by the liquidation of the LLC.
4. CERTIFICATE OF INCORPORATION AND BYLAWS. From and after the
Effective Time, (i) the Amended and Restated Certificate of Incorporation of
Merger Sub attached hereto as Exhibit A (the "Certificate of Incorporation")
shall be the certificate of incorporation of the Surviving Corporation, until
thereafter changed or amended in accordance with its terms and applicable law
and (ii) the Amended and Restated Bylaws of Merger Sub attached hereto as
Exhibit B (the "Bylaws") shall be the bylaws of the Surviving Corporation, until
thereafter changed or amended in accordance with its terms and applicable law.
5. OFFICERS. The officers of Merger Sub as of immediately prior to
the Effective Time shall be the initial officers of the Surviving Corporation,
and shall hold the same offices, with the same rights and duties attendant
thereto, as existed immediately prior to the Effective Time at Merger Sub. Such
officers shall hold office from and after the Effective Time until the earlier
of their resignation or removal or until their respective successors are duly
elected or appointed and qualify in the manner provided in the Certificate of
Incorporation and Bylaws, or as otherwise provided by applicable law.
6. DIRECTORS. The directors of Merger Sub as of immediately prior to
the Effective Time shall be the initial directors of the Surviving Corporation,
with the same rights and duties attendant thereto, as existed immediately prior
to the Effective Time at Merger Sub. Such directors shall hold their positions
from and after the Effective Time until the earlier of their resignation or
removal or until their respective successors are duly elected or appointed and
qualify in the manner provided in the Certificate of Incorporation and Bylaws,
or as otherwise provided by applicable law.
7. LLC AGREEMENT. As of the Effective Time and at all times
thereafter, the LLC Agreement shall be terminated and shall be of no further
force or effect; provided, however, that the provisions of Section 12.16 of the
LLC Agreement shall survive such termination and shall remain in effect in
connection with the IPO.
8. EFFECT ON CAPITAL STOCK AND UNITS. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
Units or any shares of Merger Sub Common Stock:
(a) Conversion of Class A Common Units. With respect to each Class A
Common Member, the Class A Common Units owned, in the aggregate, by such
Class A Common Member as of immediately prior to the Effective Time shall
be converted into and become that number of shares of Surviving
Corporation Common Stock (rounded to
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the nearest whole number) equal to (A) (i) that portion of the Aggregate
Unpaid Yield attributable to the Class A Common Units then owned by such
Class A Common Member plus (ii) that portion of the Aggregate Unreturned
Capital Value attributable to the Class A Common Units then owned by such
Class A Common Member plus (iii) (x) such Class A Common Member's Pro Rata
Percentage multiplied by (y) the Residual Value divided by (B) the IPO
Offering Price. As of the Effective Time, all Class A Common Units shall
no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each Class A Common Member shall cease to
have any rights with respect thereto, except the right to receive the
shares of Surviving Corporation Common Stock into which his or its Class A
Common Units have been converted by the Merger as provided in this Section
8(a).
(b) Conversion of Class B Common Units. With respect to each Class B
Common Member, the Class B Common Units owned, in the aggregate, by such
Class B Common Member as of immediately prior to the Effective Time shall
be converted into and become that number of shares of Surviving
Corporation Common Stock (rounded to the nearest whole number) equal to
(A) (x) such Class B Common Member's Pro Rata Percentage multiplied by (y)
the Residual Value divided by (B) the IPO Offering Price. As of the
Effective Time, all Class B Common Units shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to exist,
and each Class B Common Member shall cease to have any rights with respect
thereto, except the right to receive the shares of Surviving Corporation
Common Stock into which his or its Class B Common Units have been
converted by the Merger as provided in this Section 8(b).
(c) Conversion of Class C Common Units. With respect to each Class C
Common Member, the Class C Common Units owned, in the aggregate, by such
Class C Common Member as of immediately prior to the Effective Time shall
be converted into and become that number of shares of Surviving
Corporation Common Stock (rounded to the nearest whole number) equal to
(A) (x) such Class C Common Member's Pro Rata Percentage multiplied by (y)
the Residual Value divided by (B) the IPO Offering Price. As of the
Effective Time, all Class C Common Units shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to exist,
and each Class C Common Member shall cease to have any rights with respect
thereto, except the right to receive the shares of Surviving Corporation
Common Stock into which his or its Class C Common Units have been
converted by the Merger as provided in this Section 8(c).
(d) Conversion of Merger Sub Common Stock. Each share of Merger Sub
Common Stock issued and outstanding immediately prior to the Effective
Time shall be converted into the right to receive from the Surviving
Corporation in cash $10.00 per share of Merger Sub Common Stock. As of the
Effective Time, all shares of Merger Sub Common Stock shall no longer be
outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate representing shares of
any Merger Sub Common Stock shall cease to have any rights with respect
thereto, except the right to receive the cash into which his or its shares
of Merger Sub Common Stock have been converted by the Merger as provided
in this Section 8(d).
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9. EXCHANGE PROCEDURE. As soon as reasonably practicable after the
Effective Time, (i) the Surviving Corporation shall mail or otherwise deliver to
each Class A Common Member, each Class B Common Member and each Class C Common
Member a notice (which notice shall include a copy of this Agreement) that the
Merger has been consummated and (ii) each such Class A Common Member, Class B
Common Member or Class C Common Member, as the case may be, shall, upon
compliance with such reasonable conditions as the Surviving Corporation may
impose to effect an orderly payment of the Merger Consideration (as herein
defined), be entitled to receive a certificate representing the applicable
number of shares of Surviving Corporation Common Stock as provided in Section 8
hereof (the "Merger Consideration") attributable to the Units owned by such
Class A Common Member, Class B Common Member or Class C Common Member, as the
case may be, as of immediately prior to the Effective Time. After the Effective
Time, there shall be no further transfer on the records of the LLC or the
Surviving Corporation with respect to any Units. The Merger Consideration paid
pursuant hereto shall be deemed to have been paid in full satisfaction of all
then remaining rights pertaining to the Units theretofore outstanding.
10. DISTRIBUTION OF THE WARRANT NOTES. Prior to the Effective Time,
the LLC shall distribute the Warrant Notes to the holders of the Warrant Units
pursuant to, and in the manner set forth in, the last paragraph of Section 7.2
of the LLC Agreement (such distribution, the "Distribution of the Warrant
Notes").
11. CONDITIONS TO THE MERGER. Notwithstanding anything contained
herein to the contrary, the consummation of the Merger is conditioned on (i) the
LLC's completion of the Distribution of the Warrant Notes, (ii) the expiration
or termination of any applicable waiting period under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act") relating to the
Merger, (iii) no statute, rule, regulation, executive order, decree, temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other governmental entity or other legal
restraint or prohibition preventing the consummation of the Merger being in
effect and (iv) the pricing of the IPO.
12. FURTHER ASSIGNMENT OR ASSURANCE. If at any time Merger Sub, as
the Surviving Corporation, shall consider or be advised that any further
assignment, conveyance or assurance is necessary or advisable to carry out any
of the provisions of this Agreement, the proper representatives of Surviving
Corporation shall do all things necessary or proper to do so.
13. EFFECTIVE TIME. Promptly following the satisfaction of all of
the conditions to the consummation of the Merger set forth in Section 11 hereof,
Merger Sub and the LLC shall file a certificate of merger in respect of the
Merger (the "Delaware Certificate of Merger"), substantially in the form
attached hereto as Exhibit C, with the Secretary of State of the State of
Delaware and make all other filings or recordings required by law in connection
with the Merger. The Merger shall become effective (the "Effective Time") upon
the filing of the Delaware Certificate of Merger with the Secretary of State of
the State of Delaware.
14. HSR ACT. In the event any Class A Common Member, Class B Common
Member or Class C Common Member has to make a filing under the HSR Act in
connection
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with the Merger, the filing or similar type fee for such filing shall be paid by
the LLC or one of its subsidiaries.
15. TERMINATION. Anything in this Agreement or elsewhere to the
contrary notwithstanding, this Agreement may be terminated and the Merger
contemplated hereby may be abandoned by the LLC at any time prior to the
Effective Time.
16. DESCRIPTIVE HEADINGS. The descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
17. GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the laws of the State of Delaware, without giving effect to
principles of conflicts of law.
18. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effects as if
the signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each party hereto shall have received the
counterpart hereof signed by the other party hereto.
19. ENTIRE AGREEMENT. This Agreement (including the Exhibits
attached hereto, which are hereby incorporated herein and made a part hereof for
all purposes as if fully set forth herein) constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof and supersede
all prior agreements and undertakings, both written and oral, among the parties
hereto, or any of them, with respect to the subject matter hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
and Plan of Merger to be duly executed by their respective authorized
representatives as of the day and year first above written.
WELLCARE HOLDINGS, LLC
By: /s/ Xxxx X. Xxxxx
-----------------------------------
Name: Xxxx X. Xxxxx
Title: Chief Executive Officer
WELLCARE GROUP, INC.
By: /s/ Xxxx X. Xxxxx
-----------------------------------
Name: Xxxx X. Xxxxx
Title: Chief Executive Officer
