EXHIBIT 99.1
FORM OF EXCHANGE AGREEMENTS
EXCHANGE AGREEMENT (the "Agreement"), dated as of __________, 2002,
between Merck & Co., Inc., a New Jersey corporation ("Merck"), and [Xxxxxxx,
Xxxxx & Co., a New York limited partnership] [X.X. Xxxxxx Securities Inc., a
Delaware corporation] ("Investment Bank"), and, solely with respect to Sections
2, 7, 8, 9, 10 and 11 hereof, Medco Health Solutions Inc., a Delaware
corporation ("Medco").
WHEREAS, Merck desires to exchange shares of common stock, $.01 par
value, of Medco ("Medco Common Stock") with Investment Bank for certain debt
obligations of Merck held by Investment Bank;
WHEREAS, Investment Bank desires to exchange such debt obligations
of Merck for Medco Common Stock; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, Merck and [X.X. Xxxxxx Securities Inc.] [Xxxxxxx, Sachs & Co.] (the
"Parallel Investment Bank"), and, solely with respect to certain sections,
Medco, are entering into an exchange agreement (the "Parallel Exchange
Agreement"), pursuant to which Merck will exchange shares of Medco Common Stock
with Parallel Investment Bank for certain debt obligations of Merck held by
Parallel Investment Bank, subject to the same terms and conditions as set forth
in this Agreement.
NOW THEREFORE, in consideration of the representations, warranties
and agreements contained in this Agreement, the parties agree as follows:
1. Exchange of Shares for Debt Obligations. Subject to the terms
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and conditions and in reliance upon the representations and warranties in this
Agreement:
(a) (i) Merck will transfer and deliver to Investment Bank, and
Investment Bank will accept, the number of shares of Medco Common Stock set
forth on Schedule I (the "Shares"), and (ii) Investment Bank will transfer to
Merck, and Merck will accept, Merck's debt obligations set forth on Schedule I
(the "Debt Obligations").
(b) The Shares to be transferred to Investment Bank hereunder, in
definitive form and in such authorized denominations and registered in such
names as Investment Bank may request upon at least forty-eight hours' prior
notice to Merck, shall be delivered by or on behalf of Merck to Investment Bank
through the facilities of the Depository Trust Company ("DTC"), for the account
of Investment Bank, against receipt by or on behalf of Merck of the Debt
Obligations. Merck will cause the certificates representing the Shares to be
made available for checking and packaging at least twenty-four hours prior to
the Closing (as defined below) at the office of DTC or its designated custodian
(the "Designated Office"). Such delivery and payment shall be made on the same
date and at the same place as, but occur immediately prior to, the First Time of
Delivery of the Medco common stock contemplated by the Underwriting Agreement
among Investment Bank and Parallel Investment Bank (together, the "Investment
Banks"), as selling stockholders, the underwriters named in Schedule I thereto
(the "Underwriters"), Medco, Merck and Xxxxxxx Xxxxx Xxxxxx Inc. as the
qualified independent underwriter, dated the date hereof (the "Underwriting
Agreement"). Such time and date for delivery of the Shares is herein called the
"Closing".
(c) The documents to be delivered at the Closing by or on behalf
of the parties hereto pursuant to Section 4 hereof will be delivered at the
offices of Xxxxxxxx & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000 (the
"Closing Location"), and the Shares will be delivered at the Designated Office,
all at the time of the Closing. A meeting will be held at the Closing Location
at ...... p.m., New York City time, on the New York Business Day next preceding
the Closing, at which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the parties
hereto. "New York Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in New York are
generally authorized or obligated by law or executive order to close.
2. Registration of Shares, Etc. Medco has filed with the
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Securities and Exchange Commission (the "Commission") a registration statement
(No. 333-86392) on Form S-1, including a prospectus relating to the Shares to be
acquired by Investment Bank under this Agreement and sold by Investment Bank as
a principal for its own account in a public offering (the "Public Offering").
(a) Medco agrees that if the Closing occurs but Investment Bank
does not sell all of the Shares it acquires pursuant to Section 1 in the Public
Offering, Medco (and, for purposes of clause (v) below, Merck) shall enter into
a registration rights agreement with Investment Bank, which agreement shall
contain the following provisions:
(i) Upon written request by Investment Bank, Medco shall use its
reasonable efforts to file as promptly as practicable (but in no event
more than 90 days after so required or requested pursuant to this Section
2) with the Commission, and thereafter shall use its reasonable efforts to
cause to be declared effective, a registration statement on an appropriate
form under the Securities Act of 1933, as amended (the "Securities Act"),
relating to the resale of the Shares and the shares acquired under the
Parallel Exchange Agreement, if any (collectively, "Registrable Shares"),
by Investment Bank (the "Registration Statement").
(ii) Subject to the last sentence of this clause (ii): (A)
Investment Bank shall have the right to submit a total of one written
request to file a Registration Statement during the period from 45 days
following the date of this Agreement until the one-year anniversary of the
date of this Agreement; and (B) Investment Bank shall have the right to
submit a written request to file a total of one additional Registration
Statement during the period from the one-year anniversary of this
Agreement until the earlier of (1) the date that is two years from the
date of the Closing or (2) the first date as of which all the Registrable
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Shares held by Investment Bank have been sold. No request for registration
may be made by Investment Bank unless the number of shares sought to be
included exceeds the Threshold Number (as defined below). The foregoing
notwithstanding, Investment Bank's right to request that a Registration
Statement be filed shall terminate on the earlier of (X) the first date on
which the Registrable Shares held by Investment Bank become eligible for
resale without volume restrictions pursuant to Rule 144 under the
Securities Act or (Y) the number of Registrable Shares held by Investment
Bank at such time is less than the Threshold Number. The "Threshold
Number" is the lesser of (1) [_______] and (2) the number of shares that
could be resold by Investment Bank at the relevant time in accordance with
Rule 144 under the Securities Act.
(iii) Investment Bank agrees that Medco may refuse to file a
Registration Statement for a period not to exceed 60 days in any
three-month period or for three periods not to exceed an aggregate of 120
days in any twelve-month period (each, a "Suspension Period") for valid
business reasons, to be determined by Medco in its sole reasonable
judgment (not including avoidance of Medco's obligations hereunder),
including, without limitation, the acquisition or divestiture of assets,
public filings with the Commission, pending corporate developments and
similar events. Medco shall provide notice to Investment Bank of a
Suspension Period.
(iv) Medco shall use its reasonable efforts to cause (A) a
Registration Statement and any amendment thereto and any prospectus
forming part thereof and any supplement thereto to comply in all material
respects with the Securities Act and the rules and regulations of the
Commission thereunder, (B) a Registration Statement and any amendment
thereto (in either case, other than with respect to information included
therein in reliance upon or in conformity with written information
furnished to Medco by or on behalf of Investment Bank specifically for use
therein ("Investment Bank's Information")) not to contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, and (C) any prospectus forming part of any Registration
Statement, and any supplement to such prospectus (in either case, other
than with respect to Investment Bank's Information), not to include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(v) In connection with a Registration Statement, Merck and Medco
shall enter into an indemnification agreement with Investment Bank in
which Merck and Medco will provide the same indemnification and
contribution to Investment Bank for the information contained in the
Registration Statement as Merck and Medco provided to the Underwriters in
the Underwriting Agreement, and Investment Bank will provide the same
indemnification and contribution to
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Merck and Medco for Investment Bank's Information as Investment Bank
provided in its capacity as underwriter in the Underwriting Agreement.
3. Representations and Warranties. (a) Merck hereby represents
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and warrants to Investment Bank that all of the representations and warranties
of Merck contained in Section 1(b) of the Underwriting Agreement are true and
correct.
(b) Investment Bank hereby represents and warrants to Merck that:
(i) Investment Bank is a [limited partnership][corporation] duly
organized, validly existing and in good standing under the laws of the
State of [New York] [Delaware]. Investment Bank has all requisite
corporate power and authority to enter into this Agreement and to perform
its obligations hereunder. This Agreement has been duly executed and
delivered by Investment Bank and constitutes a legal, valid and binding
obligation of Investment Bank, enforceable against Investment Bank in
accordance with its terms.
(ii) No consent, approval, license, permit, order or authorization
of, or registration, declaration or filing with, any Federal, state, local
or foreign government or any court of competent jurisdiction,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign ("Governmental Entity") or
nongovernmental third party is required to be obtained or made by or with
respect to Investment Bank in connection with the execution, delivery and
performance of this Agreement except as have been previously obtained or
made.
(iii) Neither the exchange of the Debt Obligations nor the
consummation of any other of the transactions herein contemplated nor the
fulfillment of the terms hereof will result in a breach of any of the
terms and provisions of, or constitute a default under, any indenture,
mortgage, deed of trust or other agreement or instrument to which
Investment Bank is a party or by which it is bound, or Investment Bank's
charter or other organizational documents, or, to the best of its
knowledge, any order, rule or regulation applicable to Investment Bank of
any court, federal or state regulatory body, administrative agency or
other governmental body having jurisdiction over Investment Bank or its
properties.
(iv) Investment Bank has good and valid title to the Debt
Obligations, free and clear of any liens, claims, equities, encumbrances,
security interests, options, charges or restrictions of any kind
(collectively, "Liens"). Upon delivery to Merck at the Closing of the Debt
Obligations to be exchanged, for transfer to Merck through the facilities
of DTC, and upon Investment Bank's exchange for the Shares, good and valid
title to the Debt Obligations will pass to Merck, free and clear of any
Liens, other than those arising from acts of Merck (other than those
arising as a result of this Agreement or the Underwriting Agreement or
acts of Merck contemplated by the Registration Statement). To the best
knowledge of Investment Bank, other than this Agreement, the Debt
Obligations are not subject
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to any contract, agreement, arrangement, commitment or understanding,
including any such agreement, arrangement, commitment or understanding
restricting or otherwise relating to the disposition of the Debt
Obligations.
(v) Investment Bank has made its own independent inquiry as to the
legal, tax and accounting aspects of the transactions contemplated by this
Agreement and any related transactions, and Investment Bank has not relied
on Merck, Merck's legal counsel or Merck's accounting advisors for legal,
tax or accounting advice in connection with the transactions contemplated
by this Agreement or any related transactions.
4. Conditions to the Closing.
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(a) The obligations of Investment Bank to exchange the Debt
Obligations for the Shares at the Closing shall be subject to the satisfaction
of the following conditions:
(i) Merck shall have furnished to Investment Bank an opinion of
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, dated the date of the Closing,
to the effect set forth in Exhibit 1 hereto.
(ii) No statute, rule, regulation, executive order, decree,
temporary restraining order, preliminary or permanent injunction or other
order enacted, entered, promulgated, enforced or issued by any
Governmental Entity or other legal restraint or prohibition shall be in
effect preventing the consummation of the transactions contemplated
hereunder.
(iii) The representations and warranties of Merck in this Agreement
shall be true and correct in all material respects on and as of the date
of the Closing, with the same effect as if made on such date, and Merck
shall have complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the
date of the Closing, and Merck shall have furnished to Investment Bank a
certificate of Merck, in form reasonably satisfactory to the Investment
Bank signed by an officer of Merck, dated the date of the Closing, to the
foregoing effects.
(iv) All of the conditions to the obligations of the Underwriters
to purchase and pay for the Shares to be delivered at the Closing as set
forth in Section 8 of the Underwriting Agreement shall have been
satisfied.
In case any of such conditions shall not have been fulfilled, this Agreement may
be terminated by Investment Bank by delivering written notice of termination to
Merck and Medco.
(b) The obligations of Merck to exchange the Shares for the Debt
Obligations at the Closing shall be subject to the satisfaction of the following
conditions:
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(i) The representations and warranties of Investment Bank in this
Agreement shall be true and correct in all material respects on and as of
the date of the Closing, with the same effect as if made on the date of
the Closing, and Investment Bank shall have complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to the date of the Closing.
(ii) All of the conditions to the obligations of the Selling
Stockholders (as defined in the Underwriting Agreement) to deliver the
Shares and the shares acquired under the Parallel Exchange Agreement to be
delivered at the Closing upon payment therefor set forth in Section 9 of
the Underwriting Agreement shall have been satisfied.
In case any of such conditions shall not have been fulfilled, this
Agreement may be terminated by Merck by delivering written notice of termination
to Investment Bank, the Parallel Investment Bank and Medco. Any such termination
shall be without liability of any party to any other party except to the extent
provided in Sections 7 and 10 of the Underwriting Agreement.
5. Postponement or Termination of Agreement.
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(a) This Agreement may be terminated by Investment Bank by
delivering written notice of termination to Merck and Medco at any time prior to
the Closing, if after the signing of this Agreement, one or more of the
following events occurs: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange or on the NASDAQ National
Market System; (ii) a suspension or material limitation in trading in Medco's
securities on the New York Stock Exchange; (iii) a general moratorium on
commercial banking activities declared by either Federal or New York State
authorities or a material disruption in commercial banking or securities
settlement or clearance services in the United States; (iv) the outbreak or
escalation of hostilities involving the United States or the declaration by the
United States of a national emergency or war; or (v) the occurrence of any other
calamity or crisis or any change in financial, political or economic conditions
in the United States or elsewhere, if the effect of any such event specified in
clause (iv) or (v) in the judgment of the Investment Bank makes it impracticable
or inadvisable to proceed with the public offering or the delivery of the Shares
on the terms and in the manner contemplated in the Prospectus (as defined in the
Underwriting Agreement). A termination of this Agreement pursuant to this
Section 5(a) shall be without liability of any party to any other party except
to the extent provided in Sections 7 and 10 of the Underwriting Agreement.
(b) If prior to the Closing Investment Bank or Parallel Investment
Bank shall have notified Merck that it has reason to believe in good faith that
one or more Underwriters are likely to default on its or their obligation to
purchase the Firm Shares, as defined in the Underwriting Agreement, which it has
agreed to purchase under the Underwriting Agreement at the First Time of
Delivery, then the Closing shall not occur
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on such scheduled date. In such event, if pursuant to the Underwriting Agreement
the representatives of the Underwriters (the "Representatives") either agree to
purchase or arrange for another party or other parties to purchase the Firm
Shares which such defaulting Underwriter agreed but failed to purchase (the
"Defaulted Shares") on the terms contained therein within thirty-six hours after
the First Time of Delivery was originally scheduled to occur, Investment Bank
shall so notify Merck. If pursuant to the Underwriting Agreement the
Representatives neither agree to purchase nor arrange for another party or other
parties to purchase all of the Defaulted Shares on the terms contained therein
within thirty-six hours after the First Time of Delivery was originally
scheduled to occur, then pursuant to the Underwriting Agreement Medco shall be
entitled to a further period of thirty-six hours within which to procure another
party or other parties satisfactory to Investment Bank and Parallel Investment
Bank to purchase all of the Defaulted Shares on such terms. In the event that,
within the respective prescribed periods, the Representatives notify Merck that
they have so arranged for the purchase of the Firm Shares or that Medco has so
arranged for the purchase of the Firm Shares, Investment Bank or Merck shall
have the right to postpone the Closing for a period of not more than seven days,
in order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus (as such terms are defined in the
Underwriting Agreement), or in any other documents or arrangements; provided,
however, that if Parallel Investment Bank shall postpone the Closing under the
Parallel Exchange Agreement with Merck, Merck and Investment Bank shall postpone
the Closing hereunder to the same date and time.
(c) If, after giving effect to any arrangements for the purchase of
the Firm Shares of a defaulting Underwriter or Underwriters by the
Representatives and Medco as provided in the Underwriting Agreement, the
aggregate number of such Firm Shares which remains unpurchased under the
Underwriting Agreement would not exceed one-eleventh of the aggregate number of
all the Firm Shares to be purchased thereunder at the First Time of Delivery,
then Merck shall have the right to require Investment Bank to purchase the
Shares that Investment Bank agreed to purchase hereunder at the Closing,
provided, however, that Merck shall at the same time require Parallel Investment
Bank to purchase the Shares which Parallel Investment Bank agreed to purchase
under the Parallel Exchange Agreement at the Closing.
(d) If, after giving effect to any arrangements for the purchase of
the Firm Shares of a defaulting Underwriter or Underwriters by the
Representatives and Medco as provided in the Underwriting Agreement, the
aggregate number of such Firm Shares which remains unpurchased exceeds
one-eleventh of the aggregate number of all of the Firm Shares to be purchased
thereunder at the First Time of Delivery, or if Merck shall not exercise the
right described in subsection (c) above to require Investment Bank to purchase
the Shares, then this Agreement shall thereupon terminate, without liability of
any party to any other party except to the extent provided in Sections 7 and 10
of the Underwriting Agreement.
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6. Relationship of Parties. All acquisitions of Debt Obligations by
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Investment Bank, all exchanges of Debt Obligations for Shares by Investment Bank
pursuant to this Agreement, all distributions by Investment Bank of the Shares
and all other acts or omissions of Investment Bank in connection with this
Agreement, are for Investment Bank's own account and not for the account of
Merck. No principal-agent relationship is, or is intended to be created between
Merck and Investment Bank, by any of the provisions of this Agreement.
7. Survival of Provisions. The respective agreements,
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representations, warranties and other statements of Merck or its officers and of
Investment Bank or its officers and agreements of Medco or its officers set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of Investment Bank,
Merck, Medco or any of their respective officers and will survive the exchange
of the Debt Obligations for the Shares.
8. Notices. All notices or other communications under this
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Agreement shall be in writing and shall be deemed to be duly given as of the
date delivered, mailed or transmitted, and shall be effective upon receipt, if
delivered personally, mailed by registered or certified mail (postage prepaid,
return receipt requested) or delivered by a nationally recognized courier
service to the parties at the following address or sent by electronic
transmission to the telecopier numbers specified below:
If to Investment Bank, to:
[Xxxxxxx, Sachs & Co. [X.X. Xxxxxx Securities Inc.
00 Xxxxx Xxxxxx, 00xx Xxxxx 000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Registration Department Attention:
Telecopier: (000) 000-0000] Telecopier: (000) 000-0000]
If to Merck, to:
Merck & Co., Inc.
Xxx Xxxxx Xxxxx
XX Xxx 000
Xxxxxxxxxx Xxxxxxx, XX 00000-0000
Attn:
Telecopier:
If to Medco, to:
Medcohealth Solutions, Inc.
000 Xxxxxxx Xxxx Xxxxx
0
Xxxxxxxx Xxxxx, XX 00000
Attn:
Telecopier:
9. Successors. This Agreement will inure to the benefit of and be
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binding upon the parties hereto and their respective successors and no other
person will have any right or obligation hereunder.
10. Applicable Law. This Agreement shall be governed by and
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construed in accordance with the laws of the State of New York.
11. Counterparts. This Agreement may be executed by any one or more
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parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and the
same instrument.
12. Disclosure Authorized. Merck and the Investment Bank are
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authorized, subject to applicable law, to disclose any and all aspects of this
potential transaction that are necessary to support any U.S. federal income tax
benefits expected to be claimed with respect to such transaction.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the date first written above.
MERCK & CO., INC.
By
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Name:
Title:
[XXXXXXX, SACHS & CO.,]
[X.X. XXXXXX SECURITIES INC.]
By
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Name:
Title:
As to Sections 2, 7, 8, 9, 10 and 11 only:
MEDCO HEALTH SOLUTIONS, INC.
By
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Name:
Title:
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SCHEDULE I
Shares to be delivered by Merck
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23,350,000 shares of Medco Common Stock.
Debt Obligations to be delivered by Investment Bank
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Debt Obligation(s) Face Amount
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Total
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