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EXHIBIT 4.8
ADVANCE PARADIGM, INC.
WARRANT AGREEMENT
This Warrant Agreement (this "Agreement") dated as of February 25,
1999 is entered into by and between Advance Paradigm, Inc., a Delaware
corporation (the "Company") and Arkansas Blue Cross Blue Shield, a mutual
insurance company ("Client").
TERMS OF AGREEMENT
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and Client hereby agree as follows:
Section 1. SERVICES AGREEMENT. Reference is made to that certain First
Amendment dated as of the date hereof (the "First Amendment") to the Managed
Pharmacy Benefit Services Agreement dated as of the date hereof entered into by
and between the Company and Client (as amended, the "Services Agreement").
Capitalized terms not otherwise defined herein shall have the meanings given to
them in the Services Agreement.
Section 2. GRANT OF THE RIGHT TO PURCHASE COMMON STOCK. The Company
hereby grants to Client the right, and Client shall be entitled, subject to the
terms and conditions hereinafter set forth, to purchase from the Company 16,430
shares of its common stock, par value $0.01 per share (the "Common
Stock")(which number is referred to herein as the "Total Exercise Number") at a
per share exercise price equal to $35.125 (the "Exercise Price"). The right to
purchase such shares shall be evidenced by five (5) warrant certificates each
in the form of Exhibit A hereto (collectively, the "Warrant Certificates" and
each a "Warrant Certificate"). Subject to Section 3 hereof, each Warrant
Certificate shall be delivered to the Client following the Vesting Date (as
defined below) thereof. The Total Exercise Number and Exercise Price of such
shares are subject to adjustment as provided in Section 4 hereof.
Section 3. EXERCISE OF WARRANT CERTIFICATES. The purchase rights
granted hereunder will be exercisable as to twenty percent (20%) of the Total
Exercise Number as of the first anniversary of the effective date of the First
Amendment, and the right to exercise with respect to an additional twenty
percent (20%) of the Total Exercise Number will accrue on each of the next four
anniversaries of the effective date of the First Amendment (each a "Vesting
Date") and will be cumulative; provided, however, that if on any vesting date
the number of lives for which the Company is providing integrated pharmacy
benefit management services under the Services Agreement is less 260,000, then
the scheduled vesting for such date will be forfeited. The Warrant Certificates
may be exercised only so long as the Company is the exclusive vendor of
integrated pharmacy benefit management services for Client. Except as otherwise
provided for
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herein, the term of the Warrant Certificates and the right to purchase Common
Stock as described therein shall commence on the Vesting Date of such Warrant
Certificate and will end on the earlier of April 1, 2005 or three months
following the termination date of the Services Agreement (the "Exercise
Period"). Shares of Common Stock purchased upon exercise of each Warrant
Certificate shall at the time of purchase be paid for in full. To the extent
that the right to purchase shares has accrued hereunder, the Warrant
Certificates may be exercised by written notice to the Company in the form
attached to the Warrant Certificates, which specifies an exercise date (the
"Date of Exercise"), accompanied by full payment for the shares by wire
transfer or certified or official bank check or the equivalent thereof
acceptable to Company. Upon the initial exercise of a Warrant Certificate,
Client and the Company shall execute and enter into the Stockholders Agreement
attached hereto as Exhibit B (the "Stockholders Agreement").
At the time of delivery, the Company shall, without stock transfer tax
to the holder of the Warrant Certificate ("Holder"), deliver to the Holder (or
to such other person as the Holder directs) at the principal office of the
Company, or such other place as shall be mutually agreed upon, a certificate or
certificates for such shares, provided, however, that the time of delivery may
be postponed by the Company for such period as may be required for it with
reasonable diligence to comply with any requirements of law. The Company at the
time of exercise will require in addition that the registered owner of the
shares deliver an executed copy of the Stockholder Agreement, an investment
representation in form acceptable to the Company, and the Company will place a
legend on the certificate for such Common Stock restricting the transfer of
same. At no time shall the Company have any obligation or duty to register
under the Securities Act of 1933 (the "1933 Act") the Common Stock issuable
upon exercise of a Warrant Certificate.
Section 4. ADJUSTMENTS TO EXERCISE PRICE AND NUMBER OF SHARES. The
Exercise Price and number of shares of Common Stock purchasable pursuant to the
exercise of the Warrant Certificates shall be subject to adjustment from time
to time as follows:
(a) Adjustment for Combinations or Consolidations of Common Stock. In
the event the Company, at any time or from time to time after the date hereof,
effects a subdivision or capital reorganization of its outstanding Common Stock
for a greater or lesser number of shares, then and in each such event the Total
Exercise Number and the Exercise Price shall be adjusted proportionately such
that Client is entitled to purchase the same percentage of all shares of the
Company's outstanding capital stock then issued and issuable for the same
aggregate consideration as such Holder was entitled to purchase immediately
prior to such event.
(b) Adjustment for Certain Dividends and Distributions. In the event
the Company at any time or from time to time after the date hereof shall pay a
dividend payable in Common Stock of the Company, or otherwise make a
distribution of Common Stock to its stockholders, then the Exercise Price shall
be adjusted, from and after the record date of such dividend or the date of
such distribution, to that price determined by multiplying the Exercise Price
by a fraction,
(i) the numerator of which shall be the total number of shares of
capital stock issued and outstanding or deemed to be issued and
outstanding immediately prior to the time of such issuance or the
close of business on such record date; and
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(ii) the denominator of which shall be the number of shares of
capital stock issued and outstanding or deemed to be issued and
outstanding immediately prior to the time of such issuance or the
close of business on such record date plus the number of shares of
capital stock to be issued;
provided, however, that if such record date shall have been fixed and
such dividend is not fully paid or if such distribution is not fully made on
the date fixed therefor, the Exercise Price shall be recomputed accordingly as
of the close of business on such record date and thereafter the Exercise Price
shall be adjusted pursuant to this Section 4(b) as of the time of actual
payment of such dividend or distribution. Client shall thereafter be entitled
to purchase, at the Exercise Price resulting from such adjustment, the number
of shares of Common Stock (calculated to the nearest whole share) obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment
by the number of shares of Common Stock issuable upon the exercise hereof
immediately prior to such adjustment and dividing the product thereof by the
Exercise Price resulting from such adjustment.
(c) Number of Shares. Upon any adjustment of the Exercise Price
pursuant to Section 4(b) hereof, Client shall thereafter (until another such
adjustment) be entitled to purchase, at the new Exercise Price, the number of
shares, calculated to the nearest full share, obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
shares purchasable pursuant hereto immediately prior to such adjustment and
dividing the product thereof by the new Exercise Price resulting from such
adjustment.
Section 5. RESERVATION AND AUTHORIZATION OF COMMON STOCK. The Company
shall at all times reserve and keep available, free from preemptive rights, out
of its authorized but unissued Common Stock, solely for the purposes of
effecting the exercise of all outstanding Warrant Certificates, the full number
of shares of Common Stock issuable upon the exercise of all outstanding Warrant
Certificates. For the purpose of this Section 5, the full number of shares of
Common Stock issuable upon the exercise of all outstanding Warrant Certificates
shall be computed as if at the time of computation of such number of shares of
Common Stock all outstanding Warrant Certificates were held by a single holder.
The Company shall from time to time, in accordance with applicable law,
increase the authorized amount of its Common Stock if at any time the
authorized amount of its Common Stock remaining unissued shall not be
sufficient to permit the exercise of all Warrant Certificates at the time
outstanding.
Section 6. TRANSFERABILITY.
(a) The Warrant Certificates are not transferable by Client except to
the Company or affiliates of Client. Any permitted transfer of a Warrant
Certificate shall be recorded on the books of the Company upon receipt by the
Company of a notice of transfer in the form attached hereto as Exhibit B, at
its principal offices and the payment to the Company of all transfer taxes and
other governmental charges imposed on such transfer. The shares of Common Stock
purchased by Client are not transferable except as provided in the Stockholders
Agreement.
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(b) Unless and until otherwise permitted by this Section and the
Stockholders Agreement, each certificate representing Common Stock initially
issued upon the exercise of each Warrant Certificate (a "Stock Certificate"),
and each certificate for Common Stock issued to any subsequent transferee of
any such certificate, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY BE REOFFERED
AND SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS
SET FORTH IN A STOCKHOLDERS AGREEMENT BETWEEN THE COMPANY AND
ARKANSAS BLUE CROSS BLUE SHIELD, A MUTUAL INSURANCE COMPANY, DATED
AS OF ______________, A COPY OF WHICH MAY BE OBTAINED BY THE
HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT
CHARGE."
Prior to any permitted transfer of a Warrant Certificate or any
Stock Certificate, the holder thereof shall furnish, at the expense of such
holder, to the Company an opinion of counsel, reasonably satisfactory in form
and substance to the Company, to the effect that such transfer is exempt from
registration under the Securities Act. Upon any exercise of any Warrant
Certificate for shares of Common Stock to be registered in the name of a person
other than Client, Client shall furnish, at the expense of Client, to the
Company an opinion of the General Counsel of Client, reasonably satisfactory in
form and substance to the Company, to the effect that the issuance of the
shares of Common Stock to such other person upon exercise of the Warrant is
exempt from registration under the Securities Act.
Section 7. FRACTIONAL SHARES. The Company shall not be required to
issue a fractional share of stock upon any exercise of a Warrant Certificate.
As to any final fraction of a share that Client would otherwise be entitled to
purchase upon exercise of a Warrant Certificate, the Company shall, if it does
not issue a fractional share, pay a cash adjustment in respect of such final
fraction in an amount equal to the same fraction of the Exercise Price per
share of Common Stock.
Section 8. EXCHANGE AND REPLACEMENT OF WARRANT CERTIFICATES. In the
event of loss, theft or destruction of a Warrant Certificate, the Company will
make and deliver a new Warrant Certificate of like tenor, in lieu of such
Warrant Certificate, upon receipt by the Company of evidence reasonably
satisfactory to it of such loss, theft, or destruction and indemnity or
security reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expense incidental thereto. In the case of mutilation of a Warrant
Certificate and upon surrender and cancellation of such Warrant Certificate,
the Company will make and deliver a new Warrant Certificate of like tenor, in
lieu of such Warrant Certificate.
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Section 9. RIGHTS PRIOR TO EXERCISE OF WARRANT CERTIFICATES. Prior to
the exercise of a Warrant Certificate, Client shall not be entitled to any
rights of a stockholder of the Company with respect to the Common Stock for
which such Warrant Certificate may then be exercisable, including without
limitation the right to vote, to receive dividends or other distributions or to
exercise any preemptive rights and shall not be entitled to receive any notice
of any proceedings of the Company except as provided herein.
Section 10. AUTHORIZATION AND ISSUANCE. The Company represents and
warrants to Client that it has the corporate power and authority to issue the
Warrant Certificates; this Warrant Agreement has been duly authorized, executed
and delivered and the Warrant Certificates, when delivered, will be duly and
validly issued, fully paid and nonassessable; the issuance of the Warrant
Certificates, and the shares of Common Stock issuable upon their exercise, are
not prohibited or restricted by the Certificate of Incorporation or Bylaws of
the Company or any material agreement to which the Company is a party; except
for those agreements for which the Company has received the requisite consents
or waivers; and the shares of Common Stock issuable upon exercise of the
Warrant Certificates, when issued upon exercise of the Warrant Certificates
pursuant to the terms hereof, will be duly and validly issued, fully paid and
nonassessable.
Section 11. REPRESENTATIONS AND COVENANTS OF CLIENT. This Warrant
Agreement has been entered into by the Company in reliance upon the following
representations and covenants of Client:
(a) Investment Purpose. The right to acquire the Common Stock issuable
upon exercise of Client's rights contained herein will be acquired for
investment and not with a view to the sale or distribution of any part thereof,
and Client has no present intention of selling or engaging in any public
distribution of the same except pursuant to a registration or exemption.
(b) Private Issue. Client understands (i) that the Common Stock
issuable upon exercise of the Warrant Certificates is not registered under the
1933 Act or qualified under applicable state securities laws on the ground that
the issuance contemplated by this Warrant Agreement will be exempt from the
registration and qualifications requirements thereof, and (ii) that the
Company's reliance on such exemption is predicated on the representations set
forth in this Section 11.
(c) Financial Risk. Client has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of its investment, and has the ability to bear the economic risks of its
investment.
(d) Risk of No Registration. Client understands that if the Company
does not register with the Securities and Exchange Commission pursuant to
Section 11 of the 1933 Act, or file reports pursuant to Section 15(d) of the
Securities Exchange Act of 1934 (the "1934 Act"), or if a registration
statement covering the securities under the 1933 Act is not in effect when it
desires to sell the Common Stock issuable upon exercise of the right to
purchase, it may be required to hold such securities for an indefinite period.
Client also understands that any sale of its rights to
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purchase Common Stock which might be made by it in reliance upon Rule 144 under
the 1933 Act may be made only in accordance with the terms and conditions of
that Rule.
(e) Stockholders Agreement. Prior to the exercise of any Warrant
Certificate, Client agrees to, and to cause any permitted transferee to, enter
into, execute and perform the Stockholders Agreement.
Section 12. GENERAL.
(a) Expenses. Each party shall bear and pay all costs and expenses
incurred by them respecting the transactions contemplated herein and all
investigations and proceedings in connection therewith, including, without
limitation, fees, commissions or expenses of their respective counsel,
accountants and financial advisors.
(b) Notice. Any notice required to be given pursuant to the terms and
provisions of this Agreement shall be in writing and shall be sent by certified
mail, return receipt requested, or by overnight delivery service, or facsimile
transmission confirmed by telephone and followed by overnight delivery to the
parties at the addresses below or such other address as shall be specified by
the parties by like notice
to the Company at:
Advance Paradigm, Inc.
Attn: General Counsel
000 X. Xxxx Xxxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Fax No.: 972/000-0000
and to Client at:
Arkansas Blue Cross and Blue Shield, a mutual insurance company
Attn: General Counsel
000 X. Xxxxxx Xx.
Xxxxxx Xxxx, XX 00000
Fax No: 501/000-0000
Notice so given shall, in the case of notice so given by mail, be
deemed to be given and received on the fourth calendar day after posting, in
the case of notice so given by express delivery service, on the date of actual
delivery and, in the case of notice so given by facsimile transmission or
personal delivery, on the date of actual transmission or personal delivery, as
the case may be.
(c) Binding Nature and Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their successors and
assigns. Neither party may assign this Agreement without the prior written
consent of the other; provided, however, that either party may transfer or
assign its rights and obligations under this Agreement, to any affiliate, and
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provided further that no such assignment shall have the effect of releasing
such party from any of its obligations under this Agreement.
(d) Headings and Interpretation. The headings of the various sections
of this Agreement are inserted for convenience only and do not, expressly or by
implication, limit, define or extend the specific terms of the section so
designated.
(e) Governing Law. The validity, enforceability, and interpretation of
this Agreement shall be determined and governed by the internal laws of the
State of Texas (and not the law of conflicts).
(f) Entire Agreement. This Agreement contains all the terms and
conditions agreed upon by the parties, and supersedes all prior understandings,
writings, proposals, representations, or communications, oral or written, of
the parties hereto.
(g) Authority. Company and Client warrant that each has full power and
authority to enter into and perform this Agreement, and the person signing this
Agreement on behalf of each party certifies that such person has been properly
authorized and empowered to enter into this Agreement on behalf of such party.
(h) Non-Waiver. The failure of either party to insist, in any one or
more instances, upon performance of any of the terms, covenants or conditions
of this Agreement shall not be construed as a waiver or a relinquishment of any
right or claim granted or arising hereunder or of the future performance of any
such term, covenant, or condition, and such failure shall in no way affect the
validity of this Agreement or the rights and obligations of the parties
hereunder.
(i) Survival. Should any part, term or condition of this Agreement be
declared illegal or unenforceable or in conflict with any other laws, the
remaining provisions shall be valid and not affected thereby.
(j) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one and the same instrument.
(k) Further Assurances. From time to time upon request and without
further consideration, the parties hereto shall, and shall cause their
subsidiaries and affiliates, to execute, deliver or acknowledge such documents
and do such further acts as the other party hereto may reasonably require to
effectuate its obligations contemplated by this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their proper and duly authorized officers on the date
first above written. By executing the Agreement, the undersigned individuals
hereby warrant and represent that they have read this Agreement in its entirety
and agree to all its terms.
ADVANCE PARADIGM, INC.
By: /s/ XXXXX X. XXXXXXX
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Xxxxx X. Xxxxxxx
Chairman of the Board and Chief
Executive Officer
ARKANSAS BLUE CROSS AND BLUE SHIELD,
A MUTUAL INSURANCE COMPANY
By: /s/ XXXXX X. XXXXXX
-------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President of Marketing,
Underwriting And Product Development
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EXHIBITS
Exhibit A Warrant Certificate
Exhibit B Stockholders Agreement
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EXHIBIT A
THIS WARRANT AND THE UNDERLYING SHARES HEREOF HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR TRANSFERRED UNLESS THERE IS
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES OR
THE COMPANY RECEIVES AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL FOR THE
COMPANY) STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
XXXXXXX XX. 0
Xxx Xxxxxxxx of Shares of Common Stock
of
ADVANCE PARADIGM, INC.
APRIL 1, 2000
THIS CERTIFIES THAT Arkansas Blue Cross Blue Shield, a mutual
insurance company ("Client"), or registered transferees or assigns, is
entitled, subject to the terms and conditions set forth in this Warrant, to
purchase from Advance Paradigm, Inc., a Delaware corporation (the "Company"),
3,286 (the "Exercise Number") fully paid and nonassessable shares of Common
Stock, $0.01 par value per share, of the Company (the "Common Stock"), at any
time during the Exercise Period upon payment in full of the Exercise Price. The
Total Exercise Number and Exercise Price shall be subject to adjustment as set
forth in the Warrant Agreement referred to below. This Warrant is issued
pursuant to a Warrant Agreement between Client and the Company dated as of
February 25, 1999 (the "Warrant Agreement"), and is subject to all the terms
thereof, including the limitations on transferability set forth therein.
Capitalized terms used herein as defined terms but not otherwise defined shall
have the meaning assigned to such term in the Warrant Agreement.
This Warrant may be exercised, by the holder hereof, for all shares of
Common Stock covered hereby, by the presentation and surrender of this Warrant
together with the duly executed Election to Purchase in the form attached as
hereto, at the principal office of the Company (or at such other address as the
Company may designate by notice in writing to the holder hereof at the address
of such holder appearing on the books of the Company), and upon payment to the
Company of the Exercise Price and execution of the Stockholders Agreement as
set forth in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed and delivered by its duly authorized officer as an instrument under
seal as of the date of first above written.
ADVANCE PARADIGM, INC.
By:
-------------------------------------
Xxxxx X. Xxxxxxx
Chairman of the Board and
Chief Executive Officer
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ELECTION TO PURCHASE
TO: ADVANCE PARADIGM, INC. (the "Company")
The undersigned, owner of the accompanying Warrant hereby irrevocably
exercises the option to purchase ____ shares of Common Stock in accordance with
the terms of such Warrant, directs that the shares issuable and deliverable
upon such purchase (together with any check for a fractional interest) be
issued in the name of and delivered to the undersigned, and makes payment in
full therefor at the Exercise Price provided or referenced in such Warrant.
COMPLETE FOR REGISTRATION OF SHARES OF COMMON STOCK ON THE STOCK TRANSFER
RECORDS MAINTAINED BY THE COMPANY:
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Name of Warrant Holder
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Address
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Federal ID Tax Number or Social Security Number
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Date of Exercise (must be at least fifteen days after the date of this Notice)
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Signature
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Title
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Date
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EXHIBIT B
STOCKHOLDER AGREEMENT
This Stockholder Agreement dated as of ___________, by and among
Arkansas Blue Cross Blue Shield, a mutual insurance company (the
"STOCKHOLDER"), and Advance Paradigm, Inc., a Delaware corporation (the
"COMPANY").
PRELIMINARY STATEMENTS
Pursuant to the terms and conditions of the Warrant
Agreement, dated as of February 25, 1999, by and between the Company and
Stockholder, the Company agreed to issue a warrant to acquire shares of the
Company's common stock, par value $.01 per share (the "COMMON STOCK"). Pursuant
to the terms of the Warrant Agreement, the Stockholder agreed to execute and
enter into this Agreement prior to the issuance of any shares of Common Stock
thereunder.
NOW THEREFORE, in consideration of the premises and the mutual
agreements contained herein and for other good, valuable and binding
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto, intending to be legally bound, hereby agree as follows:
STATEMENT OF AGREEMENT
1. Restricted Stock. The terms and conditions of this Agreement shall apply to
all shares of Common Stock issued to Stockholder pursuant to the Warrant
Agreement and any shares of Common Stock otherwise acquired by Stockholder
(collectively the "STOCK").
2. Restrictions on Transfers.
2.1 Transfers to Affiliate.
(a) Transfers to Affiliates. Stockholder shall be entitled to transfer the
Stock held by it to entities that directly or indirectly control, are
controlled by, or are under common control with Stockholder (each, an
"AFFILIATE"), provided that any such Affiliates first deliver to the Company
their written acknowledgment of, and agreement to be bound by, the terms and
provisions contained in this Agreement; and the Stockholder delivers to the
Company an opinion of counsel, reasonably acceptable in form and substance to
the Company and its counsel, that registration under the Securities Act is not
required in connection with such transfer. The foregoing notwithstanding,
Stockholder shall not, without the prior written consent of the Company which
consent will not be unreasonably withheld, transfer any shares of Stock to any
Affiliate, nor any officer, director, employee or holder of debt or equity in
any Affiliate that is primarily engaged in the business of pharmacy benefit
management services, pharmacy network management, pharmacy claims adjudication,
mail service pharmacy, pharmacy clinical services,
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and/or pharmacy outcomes management, or the manufacture of drugs, biotech
products or biologicals.
(b) Affiliates' Proxy. In the event that Stockholder transfers less
than all of its Stock pursuant to Section 2.1(a), Stockholder shall exercise
all of the rights inuring under this Agreement with respect to such transferred
Stock and the transferees shall grant Stockholder proxies to exercise such
rights. In the event that Stockholder transfers all of its Stock pursuant to
Section 2.1(a), one such transferee reasonably acceptable to the Company shall
be designated by Stockholder to exercise all rights inuring under this
Agreement with respect to such Stock and the other transferees shall grant such
designated transferee proxies to exercise such rights.
2.2 Restrictions on Third Party Transfers of the Stock.
(a) General. During the first two years following the date the Stock
is issued the ("ISSUANCE DATE"), Stockholder agrees that it will not sell,
pledge or otherwise transfer any interest in any shares of the Stock in a
private sale without the prior written consent of the Company. At any time
after the second anniversary of the Issuance Date, the Stockholder may sell,
pledge or otherwise transfer shares of the Stock to any third party. ("THIRD
PARTY TRANSFER"); provided that such transfer is in accordance with this
Section 2.2, and provided further that the transferring Stockholder delivers to
the Company an opinion of counsel, reasonably acceptable in form and substance
to the Company and its counsel, that registration under the Securities Act is
not required in connection with such transfer. The foregoing notwithstanding,
Stockholder agrees that it shall not transfer any shares of Stock to any person
or entity, nor any officer, director, employee or holder of debt or equity in
any entity that is engaged in the business, or has an affiliate engaged in the
business of pharmacy benefit management services, pharmacy network management,
pharmacy claims adjudication, mail service pharmacy, pharmacy clinical
services, and/or pharmacy outcomes management, or the manufacture of drugs,
biotech products or biologicals.
(b) Sale Notice. At least 30 days prior to making any Third Party
Transfer under Section 2.2(a), the transferring Stockholder will deliver a
written notice (the "SALE NOTICE") to the Company. The Sale Notice will
disclose in reasonable detail the identity of the prospective transferee(s) and
the terms and conditions of the proposed transfer. Stockholder agrees not to
consummate any such transfer until 30 days after the Sale Notice has been
delivered to the Company.
(c) First Refusal Rights. The Company may elect to purchase some or
all of the Stock to be transferred upon the same terms and conditions as those
set forth in the Sale Notice by delivering a written notice of such election to
Stockholder within 30 days after the receipt of the Sale Notice by the Company.
If the Company elects to purchase any shares of Stock, the Company shall
consummate such purchase within 45 days of delivery of notice of intent to
purchase. If the Company has not elected to purchase all of the Stock specified
in the Sale Notice, Stockholder may transfer the Stock specified in the Sale
Notice at a price and on terms no more favorable to the transferee(s) thereof
than specified in the Sale Notice during the 60-day period immediately
following notice of the Company's election not to purchase such shares. Any
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shares of Stock not transferred within such 60-day period will be subject to
the provisions of this Section 2.2(c) upon subsequent transfer.
(d) Non-Cash Consideration. In the event the consideration for the
Stock as disclosed in the Sale Notice is other than cash, a promissory note or
a combination thereof, the price for the Stock shall be the value of that
consideration as agreed to by the transferring Stockholder and the Company, or,
if no agreement can be reached as to the valuation of such consideration, the
fair market value of such consideration as determined by two appraisers (one
appointed by the Stockholder and one appointed by the Company). In the event
the two appraisers are unable to agree on a fair market value within 20 days
after they are appointed, the fair market value of the consideration shall be
the average of the appraised values of the two appraisers; provided, however,
that if the appraised values of the two appraisers differ by more than five
percent (5%) of the higher of the two appraised values, the two respective
appointed appraisers shall select a third appraiser who shall independently,
within 20 days after this appointment, make a determination of the value of the
consideration and the average of the appraised values of the three appraisers
shall be the purchase price and shall be binding on the parties hereto. The
transferring Stockholder and the Company shall each bear the cost of their
respective appraisers and shall share the cost equally of the third appraiser,
if any. Notwithstanding anything herein to the contrary, if an appraisal is
used to determine the value of the consideration pursuant to this Section
2.2(d), the time periods provided for in Sections 2.2(b) and 2.2(c) shall be
tolled from the time of the initial appointment of the two appraisers until a
final appraised value is determined pursuant to this Section 2.2(d).
(e) Public Sale. Notwithstanding the foregoing, at any time after the
first anniversary of the Issuance Date, the Stockholder may sell, pledge or
otherwise transfer shares of the Stock to the public in a market transaction
without complying with the restrictions set forth in Section 2.2(b), (c) and
(d); provided that the transferring Stockholder delivers to the Company an
opinion of counsel, reasonably acceptable in form and substance to the Company
and its counsel, that registration under the Securities Act is not required in
connection with such transfer.
2.3 Legend. The certificates representing the Stock will bear the
following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY BE REOFFERED
AND SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS
SET FORTH IN A STOCKHOLDER AGREEMENT BETWEEN THE COMPANY AND
ARKANSAS BLUE CROSS BLUE SHIELD, A MUTUAL INSURANCE COMPANY, DATED
AS OF ______________, A COPY OF WHICH MAY BE OBTAINED BY THE
HOLDER HEREOF AT THE
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COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE."
Any legend endorsed on a certificate pursuant to Section 2.3 hereof
and the stop transfer instructions and record notations with respect thereto
shall be removed and the Company shall issue a certificate without such legend
to the holder thereof at such time as the securities evidenced thereby cease to
be restricted securities
2.4 Extraordinary Transaction. In the event of a merger of the Company
with a third party where the Company is not the surviving entity, sale of a
majority of the capital stock of the Company, or the sale of all or
substantially all of its assets ("EXTRAORDINARY TRANSACTION"), the Stock shall
be entitled to receive the same benefits as the holders of the Common Stock
will receive in the Extraordinary Transaction. The Stockholder agrees to
consent to and execute all required documents in connection with the
Extraordinary Transaction.
2.5 Limitation on Stock Holdings. The Stockholder agrees that in no
event, shall it, either independently or together with its Affiliates, own
Common Stock or rights to acquire Common Stock, that represent, or if converted
to Common Stock would represent, more than ten percent (10%) of the Company's
issued and outstanding Common Stock, without the Company's prior written
consent.
3. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if delivered personally, mailed by
certified mail (return receipt requested) or sent by express delivery service,
or facsimile transmission (confirmed by telephone conversation and followed by
overnight delivery) to the parties at the following addresses or at such other
addresses as shall be specified by the parties by like notice:
if to the Company:
Advance Paradigm, Inc.
Attn: General Counsel
000 X. Xxxx Xxxxxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Fax No.: (000) 000-0000
if to Stockholder:
Arkansas Blue Cross Blue Shield, a mutual insurance company
Attn: General Counsel
----------------------
----------------------
Fax No.:
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Notice so given shall, in the case of notice so given by mail, be
deemed to be given and received on the fourth calendar day after posting, in
the case of notice so given by express delivery service, on the date of actual
delivery and, in the case of notice so given by facsimile transmission or
personal delivery, on the date of actual transmission or personal delivery, as
the case may be.
4. Severability.
If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable under any applicable law, then such contravention or
invalidity shall not invalidate the entire Agreement. Such provision shall be
deemed to be modified to the extent necessary to render it legal, valid and
enforceable, and if no such modification shall render it legal, valid and
enforceable, then this Agreement shall be construed as if not containing the
provision held to be invalid, and the rights and obligations of the parties
shall be construed and enforced accordingly.
5. Complete Agreement.
This Agreement and those documents expressly referred to herein and of
even date herewith, embody the complete agreement and understanding among the
parties and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.
6. Counterparts.
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, with the same effect as if
all parties had signed the same document. All such counterparts shall be deemed
an original, shall be construed together and shall constitute one and the same
instrument.
7. Successors and Assigns.
This Agreement is intended to bind and inure to the benefit of and be
enforceable by and against the Stockholder and the Company, and their
respective heirs, successors and assigns. Stockholder hereby agrees not to
transfer or assign, directly or indirectly, any of the Stock unless such
transferee or assignee agrees in writing (i) to be bound by the provisions of
this Agreement and (ii) not to make subsequent assignments or transfers other
than in accordance with this Agreement. Notwithstanding the foregoing, any
holder of the Stock (other than a holder who purchases the stock through a
market sale) shall be bound by the provisions of this Agreement even if such
holder is not a party hereto or otherwise agreed in writing to be bound by the
provisions hereof.
8. CHOICE OF LAW.
THE INTERNAL LAW OF THE STATE OF TEXAS (AND NOT THE LAW OF CONFLICTS)
WILL GOVERN THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT.
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9. Remedies.
Each of the parties to this Agreement will be entitled to enforce its
rights under this Agreement specifically, to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights
existing in its favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any party may in its sole discretion apply to any court of
law or equity of competent jurisdiction for specific performance and/or
injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement. In the event a party hereto brings an action
under this agreement, the prevailing party in such dispute shall be entitled to
recover from the losing party all fees, costs and expenses of enforcing any
right of such prevailing party under or with respect to this Agreement,
including without limitation such reasonable fees and expenses of attorneys and
accountants, which shall include, without limitation, all fees, costs and
expenses of appeals.
10. Amendments and Waivers.
Any provision of this Agreement may be amended or waived only with the
prior written consent of each of the parties hereto.
11. Confidentiality.
Each of the parties hereto agrees to hold in the strictest confidence
the existence of this Agreement and the terms and conditions hereof.
Specifically, but without limiting the generality of the foregoing, each of the
parties hereto agrees not to disclose the existence of this Agreement or any of
its terms to any third party without the prior written consent of every other
party hereto (unless such disclosure is required by law).
[Signature page follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first above written.
ADVANCE PARADIGM, INC.
By:
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Name:
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Title:
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ARKANSAS BLUE CROSS BLUE SHIELD,
A MUTUAL INSURANCE COMPANY
By:
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Name:
-----------------------------------
Title:
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