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EXHIBIT 2.7
AMENDMENT NO. 6 TO THE AMENDED AND
RESTATED OPERATIONS AND SETTLEMENT AGREEMENT
This Amendment No. 6 ("Amendment") to the Amended and
Restated Operations and Settlement Agreement (the "Agreement") is entered into
as of December 10, 1999, among the Commissioner of the Department of
Corporations of the State of California (the "Commissioner" acting for himself
and the Department of Corporations of the State of California (collectively,
the "State")), J. Xxxx Xxxxxxxxx, as Special Monitor-Examiner, Caremark Rx,
Inc., f/k/a/ MedPartners, Inc., a Delaware corporation, and its successors and
assigns ("MedPartners") and MedPartners Provider Network, Inc., a California
corporation ("MPN"), as a debtor and debtor in possession in the Bankruptcy
Case. Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Agreement.
RECITALS
WHEREAS, the parties entered into the Agreement as of June
16, 1999;
WHEREAS, the parties entered into Amendment No. 1 to the
Agreement as of July 31, 1999;
WHEREAS, the parties entered into Amendment No. 2 to the
Agreement as of August 31, 1999;
WHEREAS, the parties entered into Amendment No. 3 to the
Agreement as of September 30, 1999;
WHEREAS, the parties entered into Amendment No. 4 to the
Agreement as of October 31, 1999;
WHEREAS, the parties entered into Amendment No. 5 to the
Agreement as of November 30, 1999; and
WHEREAS, the parties desire to clarify and amend certain
provisions of the Agreement as set forth herein.
NOW THEREFORE, in consideration of the mutual covenant and
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
AGREEMENT
1. The preamble in Section 3.5(a) is hereby deleted and
is amended in its entirety to read as follows:
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(a) MedPartners Funding Commitment. Subject to the terms
and conditions of this Agreement, MedPartners shall be
responsible for the satisfaction of (e.g., by payment, offset,
or by causing to be paid) the following Provider Claims and
Plan Preserved Claims with respect to MPN and the Managed
Physician Practices, respectively:
2. The first sentence of subsection (xiii) of Section
3.5(a) is hereby deleted and is amended in its entirety to read as follows:
(xiii) Net Cash Proceeds received by MPN and the
Managed Physician Practices, respectively, following the
Agreement Date ((xi), (xii) and (xiii) collectively, the
"Funding Sources") less Permitted Expenses (as defined below)
are, in the aggregate, inadequate to satisfy such Provider
Claims and Plan Preserved Claims, assuming that the entire
amount of the Funding Sources for MPN and the Managed
Physician Practices, respectively, is applied to the
satisfaction of such Provider Claims and Plan Preserved
Claims.
3. The last two sentences of subsection (c) of Section
3.5 are hereby deleted and are amended in their entirety to read as follows:
The funds deposited into the California Account
pursuant to this Section shall be used to pay Provider Claims
and Plan Preserved Claims as they become payable. In the
event the actual amount of applicable Provider Claims and
Plan Preserved Claims payable under the MedPartners Funding
Commitment with respect to MPN and the Managed Physician
Practices, respectively, exceeds the amount deposited
hereunder, MedPartners shall fulfill the MedPartners Funding
Commitment with respect to such Provider Claims in accordance
with Section 3.5(b) above, and with respect to Plan Preserved
Claims as provided for in Section 3.5(f) below.
4. Subsection 3.5(d)(2) of the Agreement is amended and
restated in its entirety to read as follows:
(2) In the event the MedPartners Funding
Commitment has been satisfied with respect to Provider Claims
and Plan Preserved Claims, and there are excess funds in
either of the California Accounts, any such excess shall not
be subject to withdrawal as excess funds and shall be used to
satisfy Provider Claims and Plan Preserved Claims otherwise
payable from the other California Account.
5. Subsection 3.5(d)(3)(A) of the Agreement is amended
and restated in its entirety to read as follows:
(A) as to the MPN California Account, when the
MedPartners Funding Commitment with respect to MPN Provider
Claims and Plan Preserved Claims against MPN has been fully
satisfied and there are adequate funds in the MedPartners
California Account to fulfill the MedPartners Funding
Commitment; and
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6. Subsection 3.5(d)(3)(B) of the Agreement is amended
and restated in its entirety to read as follows:
(B) as to the MedPartners California Account, when
the MedPartners Funding Commitment with respect to the
Managed Physician Practice Provider Claims and Plan Preserved
Claims against the Managed Physician Practices has been fully
satisfied.
7. Subsection 3.5(d)(4)(A) of the Agreement is amended
and restated in its entirety to read as follows:
(A) The MedPartners Funding Commitment with
respect to MPN Provider Claims and Plan Preserved Claims
against MPN shall be deemed fully satisfied when an order of
the Bankruptcy Court has been entered making such finding,
following notice and hearing; and
8. Subsection 3.5(d)(4)(B) of the Agreement is amended
and restated in its entirety to read as follows:
(B) The MedPartners Funding Commitment with
respect to the Managed Physician Practice Provider Claims and
Plan Preserved Claims against Managed Physician Practices
shall be deemed satisfied upon the expiration of five
Business Days after the Special Monitor-Examiner gives the
Creditors Committee written notice thereof.
9. The Agreement is amended and restated to include a
new Section 3.5(f), which is as follows;
(f) Timing of Payment of Plan Preserved Claims.
With respect to each Consenting Plan and pursuant to the
MedPartners Funding Commitment, MedPartners shall cause Plan
Preserved Claims and Provider Claims held by Consenting Plans
to be paid in accordance with Section 20.18 of the
Supplemental Plan Agreement.
10. The second sentence of Subsection 3.8(b) of the
Agreement is amended by deleting "December 15, 1999" and replacing it with
"February 15, 2000".
11. Section 7.2(d) of the Agreement is amended and
restated in its entirety to read as follows:
Letter of Credit. The Special Monitor-Examiner shall
use any proceeds received pursuant to an irrevocable letter
of credit solely to fund payment of finally adjudicated and
valid Managed Physician Practice Provider Claims and Allowed
MPN Provider Claims of Consenting Providers and Consenting
Plans. In the event of a draw under the Letter of Credit, the
proceeds of such draw shall be made available to holders of
such Claims in accordance with this paragraph and
subparagraph (d) of the definitions of each of the MPN
Provider Release and the MPPP Release even if the draw was
triggered by nonpayment of an arbitration
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award. All proceeds of any draw shall be allocated between
holders of MPN Provider Claims and Managed Physician Practice
Provider Claims on the basis of the Special
Monitor-Examiner's determination of the respective estimated
amount remaining under the MedPartners Funding Commitment.
The portion of the draw allocated to MPN Provider Claims
shall be deposited into the MPN California Account. If all
finally adjudicated and valid Managed Physician Practice
Provider Claims of Consenting Providers and Consenting Plans
or Allowed MPN Provider Claims of Consenting Providers and
Consenting Plans are paid in full, any funds from such draw
for such Consenting Providers and Consenting Plans shall be
reallocated to be held for the other group of Consenting
Providers and Consenting Plans. Any amounts that are drawn
under the Letter of Credit by the Special Monitor-Examiner
that are not used to make payments on account of the
MedPartners Funding Commitment shall be returned to
MedPartners after the MedPartners Funding Commitment has been
finally satisfied in full. Any funds drawn under the Letter
of Credit allocated to the Claims shall be held by the
Special Monitor-Examiner in trust until used as provided
herein.
12. Subsection 10.1(a) of the Agreement is amended and
restated in its entirety to read as follows:
(a) Except as set forth in Section 10.1(b) or
(c) below, the failure of MedPartners to perform, in any
material respect, the obligations required to be performed by
it under this Agreement; provided, however, that a
determination by the Special Monitor-Examiner under Section
3.8(d), or the initiation of any arbitration by any
Representative under Section 12, shall not constitute the
failure by MedPartners to perform its obligations hereunder,
in any material respect, but (1) MedPartners failure to pay
the amount of any arbitration award under Section 12
(including an award obtained pursuant to the procedure set
forth in Section 15.14) by reason of such determination or
arbitration within five Business Days of such award, or (2)
the nonpayment of a Final Preserved Claim in favor of a
Consenting Plan in accordance with Section 20.18 of the
Supplemental Plan Agreement within five Business Days of the
determination of such Final Preserved Claim, shall constitute
a Default hereunder.
13. Subsection 10.1(d) of the Agreement is amended and
restated in its entirety to read as follows:
(d) For purposes of this Section 10,
MedPartners shall not be deemed to have failed to make a
payment or to have satisfied any obligations, where such
failure would constitute a Default, during the period that
MedPartners or MPN, as applicable, is adjudicating in good
faith the nature or amount of the payment or obligation,
provided that MedPartners shall fulfill the MedPartners
Funding Commitment in connection with any portion of any
Provider Claim or Plan Preserved Claim that is not contested
or subject to a setoff or recoupment asserted in good faith;
provided, however, to the extent any obligation of
MedPartners under this Agreement is contingent upon
performance by any third party, including satisfaction of any
condition precedent to the effectiveness of this
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Agreement, it shall not be a Default hereunder if MedPartners
fails to complete such obligation despite good faith efforts
to do so, by reason of such third party's non-performance.
14. The condition set forth in Section 13.1(b) of the
Agreement is hereby waived.
15. Subsection 15.14(a)(3) of the Agreement is amended
and restated in its entirety to read as follows:
(3) The Plans to seek an order requiring a
party to specifically perform its obligations under this
Agreement including without limitation the payment of Plan
Preserved Claims or Provider Claims held by a Consenting
Plan; and
16. Subsection 15.14(b) of the Agreement is amended and
restated in its entirety to read as follows:
(b) Jurisdiction and Representative. Any
action under this Section 15.14 against MedPartners for
breach of this Agreement may only be brought on behalf of one
or more Beneficiaries by a representative of such Beneficiary
or group of Beneficiaries in the Los Angeles Superior Court,
or, with respect to MPN, the Bankruptcy Court; provided,
however, that in the event any Beneficiary asserts that
MedPartners or MPN has violated Section 3.5(b), its sole
remedy shall be arbitration pursuant to Section 12. The
representative in any such action can be any of the
following: (i) the Special Monitor-Examiner, (ii) one or more
MPN Provider Claim Beneficiaries as designated by the group,
(iii) one or more Managed Physician Practice Provider Claim
Beneficiaries as designated by the group, (iv) with respect
to Beneficiaries holding Managed Physician Practice Provider
Claims, a subcommittee of the Creditors Committee
representing such Beneficiaries, (v) with respect to
Beneficiaries holding MPN Provider Claims, a subcommittee of
the Creditors Committee representing such Beneficiaries, (vi)
the Creditors Committee, or (vii) a Plan acting on its own
behalf or otherwise with respect to its rights under Section
15.14(a)(3) (each, a "Representative").
17. Subsection 15.14(c) of the Agreement is amended and
restated in its entirety to read as follows:
(c) Threshold for Enforcement. An action to
enforce any right granted to a Beneficiary pursuant to this
Section may be commenced only by a Representative in the
following circumstances: (i) physician claimants who are
eligible Beneficiaries holding in aggregate not less than
$600,000 of nonadjudicated Managed Physician Practice
Provider Claims; (ii) physician claimants who are eligible
Beneficiaries holding in aggregate not less than $300,000 of
finally adjudicated Managed Physician Practice Provider
Claims; (iii) non-physician claimants who are eligible
Beneficiaries holding in aggregate not less than $5 million
in non-adjudicated Provider Claims; (iv) non-physician
claimants who are eligible Beneficiaries holding an aggregate
not less than $5 million in, with respect to the Managed
Physician Practices, finally adjudicated and
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liquidated Managed Physician Practice Provider Claims and,
with respect to MPN, MPN Provider Claims that have become
Allowed MPN Claims; or (v) any Plan with respect to its
rights under Section 15.14(a)(3). Notwithstanding the
foregoing, with respect to eligible Beneficiaries who hold
pre-petition MPN Provider Claims, no such enforcement action
may be commenced or maintained until the earlier to occur of:
(i) the effective date of a confirmed plan of reorganization
for MPN in the Bankruptcy Case, or (ii) November 30, 1999.
18. Subsection 15.14(d) of the Agreement is amended and
restated in its entirety to read as follows:
(d) Notice. Prior to bringing an action, the
Representative shall give notice of intent to xxx to
MedPartners, MPN, the Creditors Committee and the Special
Monitor-Examiner. Such notice shall provide the name of each
eligible Beneficiary within the group and the amount of each
such Beneficiary's Provider Claim or Plan Preserved Claim or
the provision of the Agreement that such Representative is
seeking to enforce. MedPartners and/or MPN, as the case may
be, shall have ten Business Days after receipt of such notice
to cause such Provider Claims or Plan Preserved Claim to be
paid or to comply with the Agreement. If payment or other cure
is not made during such cure period, the Representative may
proceed with filing the action or initiating the arbitration,
as the case may be.
19. Upon the occurrence of the SPA Effective Date (as
defined in the Supplemental Plan Agreement), the provisions of ss. 15.17 of the
Agreement shall be amended and superseded by the Supplemental Plan Agreement;
provided, however, that if the Supplemental Plan Agreement terminates pursuant
to either Section 12.4.1 or 12.6 of the Supplemental Plan Agreement, then
Section 15.17 shall be reinstated.
The Agreement remains unchanged in all other respects.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first above written.
CAREMARK RX, INC.
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx, Xx.
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Title: Executive Vice President
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MEDPARTNERS PROVIDER NETWORK, INC.,
a California corporation
By /s/ Xxx Xxxxxx
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Title Secretary
COMMISSIONER OF THE DEPARTMENT OF
CORPORATIONS
By: /s/ Xxxxxxx Xxxxxxxx
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Xxxxxxx Xxxxxxxx
Title: Acting Commissioner of the Department of
Corporations
J. XXXX XXXXXXXXX,
as Special Monitor-Examiner and not individually
By /s/ J. Xxxx Xxxxxxxxx
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Title J. Xxxx Xxxxxxxxx,
as Special Monitor-Examiner
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