AMENDMENT XX. 0 XXX XXXXXX
XXXXXXXXX XX. 0 XXX XXXXXX ("Amendment No. 3") dated as of October 7, 1999
to the Credit Agreement dated as of April 1, 1999 (the "Credit Agreement"),
among Express Scripts, Inc.; each of the Subsidiary Guarantors party thereto;
each of the Lenders party thereto; Credit Suisse First Boston, as Lead Arranger,
Administrative Agent and Collateral Agent; Bankers Trust Company, as Syndication
Agent; The First National Bank of Chicago, as Co-Documentation agent; and
Mercantile Bank, N.A., as Co-Documentation agent (capitalized terms not
otherwise defined in this Amendment No. 3 have the same meaning assigned to such
terms in the Credit Agreement).
W I T N E S S E T H :
WHEREAS, Company has informed Lenders that it intends to enter into a
series of transactions pursuant to which, among other things, (i)
xxxxXxxxxxxx.xxx, Inc. ("xxxxXxxxxxxx.xxx") would transfer certain specified
assets to XxxxxxXx.xxx, Inc. ("PlanetRx") in exchange for common stock in
PlanetRx, and (ii) Company and PlanetRx would enter into an agreement (the
"Internet Pharmacy Agreement") detailing the ongoing relationships among the
parties, all as more further described on Annex I hereto;
WHEREAS, pursuant to Section 10.6 of the Credit Agreement, the Requisite
Lenders hereby agree to amend or waive certain provisions of the Credit
Agreement as set forth herein;
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION ONE - Amendments. (a) The definition of "Asset Sale "in Section 1.1
of the Credit Agreement shall be deleted in its entirety and replaced with the
following:
"Asset Sale" means the sale by Company or any of its Subsidiaries to any
Person other than Company or any of its Wholly Owned Subsidiaries of (i) any of
the stock of any of Company's Subsidiaries, (ii) substantially all of the assets
of any division or line of business of Company or any of its Subsidiaries (other
than the sale of assets contemplated in the PlanetRx Transactions), or (iii) any
other assets (whether tangible or intangible) of Company or any of its
Subsidiaries (other than (a) inventory sold in the ordinary course of business
(b) the Exempt PlanetRx Stock and (c) any such other assets to the extent that
the aggregate value of such assets sold in any single transaction or related
series of transactions is equal to $500,000 or less); provided, that, with
respect to any sale that would be otherwise deemed an Asset Sale pursuant to the
foregoing, if Company shall deliver an Officers' Certificate to Administrative
Agent at or prior to receipt of proceeds of such sale setting forth Company's
intent to use such proceeds to replace Plant Assets that are the subject of such
sale with other Plant Assets necessary or desirable for the conduct of its
business, or to exchange Plant Assets for other Plant Assets used in the conduct
of its business, within 180 days of such receipt and no Event of Default or
Potential Event of Default shall have occurred and shall be continuing at such
time, such sale shall not be deemed to constitute an Asset Sale, except to the
extent such Plant Assets or proceeds thereof are not so used within such 180-day
period, after which time such sale, to such extent, shall be deemed an Asset
Sale.
(b) The definition of "Permitted Acquisitions" in Section 1.1 of the Credit
Agreement shall be deleted in its entirety and replaced with the following:
"Permitted Acquisitions" means the acquisition of stock or other assets for
consideration (with non-cash consideration being valued at fair market value)
that results in acquired assets being owned by Company or a Wholly Owned
Subsidiary and (other than with respect to the acquisition of the PlanetRx Stock
in the PlanetRx Transactions), if such assets are equity interests in a Person,
such Person being a Wholly Owned Subsidiary, provided, however, that, on a pro
forma basis, after giving effect to any such acquisition or acquisitions for
aggregate consideration exceeding $5,000,000 in any Fiscal Year, the
Consolidated Leverage Ratio is less than 3.0 to 1.0.
(c) The definition of "Consolidated Net Income" in Section 1.1 of the
Credit Agreement shall be deleted in its entirety and replaced with the
following:
"Consolidated Net Income" means, for any period, the net income (or loss)
of Company and its Subsidiaries on a consolidated basis for such period taken as
a single accounting period determined in conformity with GAAP; provided that
there shall be excluded (i) the income (or loss) of any Person (other than a
Subsidiary of Company) in which any other Person (other than Company or any of
its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Company or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Company or is merged
into or consolidated with Company or any of its Subsidiaries or that Person's
assets are acquired by Company or any of its Subsidiaries, (iii) the income of
any Subsidiary of Company to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, (iv) any after-tax gains or losses attributable
to Asset Sales or returned surplus assets of any Pension Plan, (v) for any
period that includes Fiscal Quarters ending on or prior to March 31, 2000, up to
$8.0 million in cash charges directly relating to the consolidation of
facilities in connection with the Acquisition, (vi) any after-tax gains or
losses, expenses and non-cash charges attributable to the PlanetRx Transactions
(including any non-cash charges relating to the issuance of equity to employees
of xxxxXxxxxxxx.xxx, Inc.) as determined in conformity with GAAP, and (vii) any
after-tax gains in excess of related expenses attributable to transfers of the
Exempt PlanetRx Stock.
(d) Section 1.1 of the Credit Agreement shall be amended by adding the
following definitions, each in the appropriate alphabetical order of the
existing defined terms:
"Exempt PlanetRx Stock" means the 16 2/3% of the PlanetRx Stock which is
not subject to the Company Pledge Agreement.
"PlanetRx" means XxxxxxXx.xxx, Inc. a corporation organized under the laws
of Delaware.
"PlanetRx Transactions" means the transactions contemplated by, and
substantially in the form of, Annex I to Amendment No. 3 and Waiver to this
Agreement, dated as of October 7, 1999.
"PlanetRx Stock" means the number of shares of common stock of PlanetRx,
par value $.01 per share, to be acquired by Company pursuant to the PlanetRx
Transactions, and all dividends, cash, warrants, rights, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the PlanetRx Stock.
"Pledged PlanetRx Stock" means the 83 1/3% of the PlanetRx Stock pledged as
collateral pursuant to the Company Pledge Agreement.
SECTION TWO - Waiver. Notwithstanding any other provision of the Credit
Agreement, the Lenders waive the application of Section 7.12 of the Credit
Agreement with respect to any of the PlanetRx Transaction Documents (as defined
below); provided that any amendment, supplement or waiver to any PlanetRx
Transaction Documents shall not be subject to the waiver contemplated by this
Section Two. "PlanetRx Transaction Documents" means the Internet Pharmacy
Agreement together with all exhibits, schedules and annexes thereto, or any
other agreements executed in connection therewith, as all such documents,
exhibits, schedules and annexes are in existence on the date the initial shares
of PlanetRx Stock (as defined in Section 1(c) hereof) are acquired by Company.
SECTION THREE - Conditions to Effectiveness. (a) This Amendment No. 3 shall
become effective as of the date first above written when, and only when:
Agents shall have received evidence satisfactory to them that Company shall
have taken or caused to be taken all such actions, executed and delivered or
caused to be executed and delivered all such agreements, documents and
instruments, and made or caused to be made all such filings, if any, that may be
necessary or, in the reasonable opinion of Agents, desirable in order to create
in favor of Agents, for the benefit of Lenders, a valid and perfected First
Priority Lien in the Pledged PlanetRx Stock (as defined in Section 1(d) hereof).
Such actions shall include the following: (a) Schedules to Collateral Documents.
Delivery to Agents of an accurate and complete amended schedule to the Company
Pledge Agreement;
(b) Stock Certificates. Delivery to Collateral Agent of certificates (which
certificates shall be accompanied by irrevocable undated stock powers, duly
endorsed in blank and otherwise satisfactory in form and substance to Collateral
Agent) representing such PlanetRx Stock;
the PlanetRx Transactions shall have been or shall simultaneously be
consummated in accordance with the terms hereof and of Annex I attached hereto
(without the waiver or amendment of any material condition); and
the Administrative Agent shall have received counterparts of this Amendment
No. 3 executed by the Company, the Subsidiary Guarantors and the Requisite
Lenders or, as to any of the Lenders, advice satisfactory to the Administrative
Agent that such Lender has executed this Amendment No. 3. (b) The effectiveness
of this Amendment No. 3 (other than Sections Four and Eight hereof) is
conditioned upon the accuracy of the representations and warranties set forth in
Section Four hereof.
SECTION FOUR - Representations and Warranties. In order to induce the
Lenders and the Agents to enter into this Amendment No. 3, the Company
represents and warrants to each of the Lenders and the Agents that after giving
effect to this Amendment No. 3, (i) no Default or Event of Default has occurred
and is continuing; and (ii) all of the representations and warranties in the
Credit Agreement, after giving effect to this Amendment No. 3, are true and
complete in all material respects on and as of the date hereof as if made on the
date hereof (or, if any such representation or warranty is expressly stated to
have been made as of a specific date, as of such specific date).
SECTION FIVE - Reference to and Effect on the Credit Agreement and the
Notes. On and after the effectiveness of this Amendment No. 3, each reference in
the Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like
import referring to the Credit Agreement and each reference in each of the other
Credit Documents to the "Credit Agreement", "thereunder", "thereof" or words of
like import referring to the Credit Agreement, shall mean and be a reference to
the Credit Agreement, as amended by this Amendment No. 3. The Credit Agreement,
the Notes and each of the other Credit Documents, as specifically amended by
this Amendment No. 3, are and shall continue to be in full force and effect and
are hereby in all respects ratified and confirmed.
SECTION SIX - Costs, Expenses and Taxes. The Company agrees to pay all
reasonable costs and expenses of the Agents in connection with the preparation,
execution and delivery of this Amendment No. 3 and the other instruments and
documents to be delivered hereunder, if any (including, without limitation, the
reasonable fees and expenses of Xxxxxx Xxxxxx & Xxxxxxx) in accordance with the
terms of Section 10.2 of the Credit Agreement. In addition, the Company shall
pay or reimburse any and all stamp and other taxes payable or determined to be
payable in connection with the execution and delivery of this Amendment No. 3
and the other instruments and documents to be delivered hereunder, if any, and
agrees to save each Agent and each Lender harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes.
SECTION SEVEN - Execution in Counterparts. This Amendment No. 3 may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment No. 3 by telecopier shall be effective as delivery of a manually
executed counterpart of this Amendment No. 3.
SECTION EIGHT - Governing Law. This Amendment No. 3 shall be governed by,
and construed and enforced in accordance with, the internal laws of the State of
New York (including Section 5-1401 of the General Obligations Law of the State
of New York), without giving effect to any provisions thereof relating to
conflicts of law.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 3 to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
EXPRESS SCRIPTS, INC.
By: /s/ Xxxxxx Xxx
By: Xxxxxx Xxx
Title: Senior Vice President and Chief Financial Officer
SUBSIDIARY GUARANTORS:
DIVERSIFIED PHARMACEUTICAL SERVICES, INC.
ESI/VRX SALES DEVELOPMENT CO.
EXPRESS SCRIPTS VISION CORP.
HEALTH CARE SERVICES, INC.
IVTX, INC.
MANAGED PRESCRIPTION NETWORK, INC.
MHI, INC.
VALUE HEALTH, INC.
VALUERX, INC.
VALUERX PHARMACY PROGRAM, INC.
By: /s/ Xxxxxx Xxx
Name: Xxxxxx Xxx
Title: Senior Vice President and Chief Financial Officer
as one of the Requisite Lenders
(please type)
as one of the Requisite Lenders
(please type)
ABN Amro Bank, N.V.
By: /s/ Xxxxxx X. Comfort
Name: Xxxxxx X. Comfort
Title: Vice President
By: /s/ Xxxx X. Honda
Name: Xxxx X. Honda
Title: Vice President
Bankboston, N.A.
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Vice President
Bankers Trust Company
By: /s/ Xxxx Xx Xxxxx
Name: Xxxx Xx Xxxxx
Title: Assistant Vice President
Bank Leumi USA
By: /s/ Xxxxx Xxx Hong
Name: Xxxxx Xxx Hong
Title: Vice President
Bank of America, N.A. (formerly known as NationsBank, N.A.)
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Vice President
Bank of Hawaii
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Vice President
Bank of Monteal
By: /s/ Xxxxxxx X. XxXxxxxx
Name: Xxxxxxx X. XxXxxxxx
Title: Director
The Bank of New York
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Vice President
Banque Nationale de Paris
By: /s/ Xxxxxx Xxxxxx du Xxxxxx
Name: Xxxxxx Xxxxxx du Bocage
Title: Executive Vice President and General Manager
Chicago Branch
Bayerische Hypo-Und Vereinsbank AG, New York Branch
By: /s/ Xxxxx Xxxxx xxx Xxxxxxxxxx
Name: Xxxxx Xxxxx xxx Xxxxxxxxxx
Title: Managing Director
By: /s/ Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: Associate Director
City National Bank
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
Credit Agricole Indosuez
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: Vice President
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Senior Relationship Manager
Credit Suisse First Boston
by: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Director
By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: Associate
Erste Bank
By: /s/ Xxxx Xxxxxxxxxx
Name: Xxxx Xxxxxxxxxx
Title: Vice President
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: First Vice President
The First National Bank of Chicago
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: First Vice President
Fleet National Bank
By: /s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: Senior Vice President
The Fuji Bank, Limited
By: /s/ Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President and Group Head
Xxxxxx Financial, Inc.
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Vice President
Mellon Bank, N.A.
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Vice President
Mercantile Bank N.A.
By: /s/ Xxxx Xxx Xxxxxxx
Name: Xxxx Xxx Xxxxxxx
Title: Vice President
Michigan National Bank
By: /s/ Xxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx
Title: Commercial Relationship Manager
National City Bank
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
Paribas
By: /s/ Xxxxxxx Xxxxxxxxx
Name: Xxxxxxx Xxxxxxxxx
Title: Director
By: /s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
Title: Director
Senior Debt Portfolio
By: Boston Management and Research as Investment Advisor
By: /s/ Xxxxxxx Xxxxxxxx
Name: Xxxxxxx Xxxxxxxx
Title: Vice President
Textron Financial Corporation
By: /s/ R. Xxxxxx Xxxxxx
Name: R. Xxxxxx Xxxxxx
Title: Vice President
UBS AG, Stamford Branch
By: /s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
Title: Director
By: /s/ Xxxxxxx Saint
Name: Xxxxxxx Saint
Title: Associate Director
Union Bank of California, N.A.
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Vice President
Annex 1
Description of the PlanetRx Transactions
XXXXXXXX.XXX, INC.
and
EXPRESS SCRIPTS, INC.
Summary Outline of Equity Terms
Parties:
XxxxxxXx.xxx, Inc. ("PlanetRx I"), a newly formed entity
which changes its name to XxxxxxXx.xxx, Inc. ("PlanetRx II")
after completion of the Section 351 transaction described below,
Express Scripts, Inc. ("ESI") and its subsidiary,
XxxxXxxxxxxx.xxx, Inc. ("YPC")
Transactions:
(i) YPC, ESI, PlanetRx I and PlanetRx II engage in a
transaction governed by Section 351 of the Internal Revenue Code
of 1986, as amended, whereby ESI contributes selected assets and
liabilities (schedule of assets and liabilities to be developed
by ESI and subject to approval of PlanetRx I) to PlanetRx II and
PlanetRx I merges into PlanetRx II (with PlanetRx II being the
survivor), or other similar structure such that the transaction
is tax deferred for ESI. ESI would receive common stock in
PlanetRx II equal to 19.9% (post-transaction and post-initial
public offering ("IPO")) of the fully diluted equity interests in
PlanetRx II. The former YPC assets that would be retained by ESI
would be (a) all rights to the names "xxxxXxxxxxxx.xxx" and
XxxxXxxxxx.xxx, including all derivations thereof, (b) all rights
to the YPC website and the XxxxXxxxxx.xxx website, including the
URLs, and (c) all rights to develop, alter, etc. such sites and
all YPC and DrugDigest technology; provided the YPC site will be
linked to the PlanetRx website and all customers who wish to
place an order will be transferred to the PlanetRx website.
(ii) PlanetRx II shall employ and grant options to selected
former YPC employees at closing under its employee stock option
plan.
Registration
Rights:
ESI would have two demand registrations and unlimited "piggy
back" registrations; provided that the registration rights would
be no less than that given to the Series A, B and C Preferred
shareholders.
Consummation of
Transaction:
The transactions shall be consummated simultaneously with
the consummation of PlanetRx II's IPO. If said IPO is not
consummated within 4 months of the execution of definitive
transaction documentation, all agreements between the parties
with respect to the subject matter hereof shall, at ESI's option,
be rendered null and void, provided PlanetRx I shall pay ESI a
termination fee equal to $10,000,000.
Board Representation: So long as ESI owns, directly or
indirectly, more than 5% of the outstanding common equity
interests in PlanetRx II, ESI shall be entitled to have one Board
seat on the PlanetRx II Board.
Regulatory
Approvals:
The transaction is conditioned upon receipt of any necessary
regulatory approvals, including clearance under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, if
necessary.
Boardand Other
Approvals:
Notwithstanding anything to the contrary contained herein,
all terms and conditions of the transactions described herein are
expressly subject to the receipt of approval by the respective
Boards of Directors of ESI, YPC and PlanetRx I, in their sole
discretion, and in the case of ESI/YPC, to satisfactory tax and
accounting review of the proposed transactions contemplated
hereby, and, in the case of PlanetRx I, approval of the Series A,
B and C Preferred Shareholders, if necessary. All terms and
conditions are also subject to the approval of ESI's lenders and
release by ESI's lenders of YPC as a guarantor of ESI's
indebtedness, and review and receipt of a satisfactory
recommendation by ESI's investment banking representative, in
ESI's sole discretion.
XXXXXXXX.XXX, INC.
and
EXPRESS SCRIPTS, INC.
Summary Outline of Agreement Terms
Parties:
XxxxxxXx.xxx, Inc. ("PlanetRx") and Express Scripts, Inc. ("ESI")
Transaction:
(i) ESI and PlanetRx enter into a 5 year extendible agreement
(the "Agreement") pursuant to which ESI grants PlanetRx the right to
be the exclusive "internet pharmacy" in its networks in the U.S.
(ii) ESI will not, directly or indirectly, own or operate an
internet pharmacy and will not co-market with another internet
pharmacy, or traditional pharmacy provider which utilizes internet
capabilities for order/reorder and mail delivery during the term of
the Agreement, except for its ownership interest in PlanetRx and
activities described in the Agreement.
(iii) Other terms of the Agreement shall be as set forth on
Attachment I hereto.
Compensation/Fees:
(i) Membership Fee to ESI. PlanetRx shall pay ESI a base fee and
an incremental fee (collectively, the "Membership Fee"), in quarterly
installments, based on the schedule attached hereto as Attachment II.
(ii)Order Fee to PlanetRx. ESI shall continue to fill all 90 day
prescriptions for its members, and shall pay PlanetRx an Order Fee, as
a result of the savings achieved by ESI due to (i) the on-line
ordering process, and (ii) economies of scale realized by ESI. The
Order Fee shall be based on volume and the level of ESI formulary
compliance and shall be paid for each 90 day prescription ordered by
an ESI member through PlanetRx and dispensed by ESI. PlanetRx will
remit all copayments collected to ESI.
(iii) Transfer Pricing/Reimbursement Rates to PlanetRx. The
transfer pricing/reimbursement rates (i.e., rates at which ESI shall
pay PlanetRx) for 30 day prescriptions dispensed to ESI members by
PlanetRx shall be based on a discount off of the average wholesale
price plus a nominal fee.
Effectiveness of
Agreement:
The Agreement shall take effect simultaneously with the
consummation of PlanetRx's IPO and the consummation of the
Section 351 Transaction (as defined below) between the parties.
If said IPO is not consummated within 4 months of the execution
of definitive transaction documentation, all agreements between
the parties with respect to the subject matter hereof shall, at
ESI's option, be rendered null and void.
Term:
The Agreement shall have an initial term of 5 years, and ESI
shall have the option to extend the term for an additional 5
years on the same terms and conditions provided ESI achieves
certain performance benchmarks. In addition, PlanetRx shall be
included in ESI's pharmacy network(s) for a period of ten years,
assuming consent of the plan sponsors.
ESI Internet Needs:
ESI will develop its own e-commerce functionality which may
support (i) its call center operations, (ii) account information,
(iii) the XxxxXxxxxx.xxx site, (iv) a pharmacy locator service,
(v) its disease management programs, (vi) its newsletters, (vii)
other PBM related services, and (viii) connectivity to the
PlanetRx site. PlanetRx will pay $3 million/year to ESI to fund
such activities by ESI throughout the term of the Agreement. ESI
shall establish a committee, to which PlanetRx shall be entitled
to appoint one member, which shall oversee such activities.
Co-Marketing
Effort:
ESI and PlanetRx will develop a co-marketing plan and agree
to the level of resources each will commit. The general
parameters of the plan will be as follows:
ESI will promote PlanetRx on its YPC website and link the
YPC site to the PlanetRx site, and PlanetRx will promote the YPC
website and link the PlanetRx site to the YPC site
Client/member materials will indicate that PlanetRx is ESI's
internet pharmacy provider (some plan sponsors have the right to
approve the form and content of communications to their members,
so these materials may be subject to client review and approval)
PlanetRx will market to ESI members (form and content
subject to ESI review and approval)
PlanetRx Relationship
With Other PBMs:
ESI will be PlanetRx's premier/preferred PBM partner and
will be designated as such on the PlanetRx site. PlanetRx will
have the right to contract with other PBMs. Any arrangement with
any other PBM will not adversely affect any financial arrangement
between ESI and PlanetRx. In addition, ESI shall be given "most
favored nation" financial terms compared to any other PBM, such
that the total economic package to ESI under this Agreement shall
be at least 20% better than that offered or given to any other
PBM with the same co-marketing type arrangement.
Change of Control
and Related Items:
If a "Change of Control" of either ESI or PlanetRx occurs,
then the Agreement may be terminated at the option of the party
which was not the subject of the Change of Control. If PlanetRx
is the subject of the Change of Control, ESI must exercise its
termination right prior to the consummation of the Change of
Control transaction and, if it does so exercise such right,
PlanetRx shall pay ESI a substantial termination payment. If ESI
is the subject of the Change of Control, PlanetRx must exercise
its termination right prior to the consummation of the Change of
Control transaction. Regardless of which party exercises its
termination right, the parties will have a transition period of 6
months prior to the actual termination date; provided that during
the transition period the parties co-marketing and co-branding
activities shall cease. If the agreement is not terminated, it
will continue in effect in accordance with its terms. For
purposes of the foregoing, "Change of Control" shall be defined
as the time at which a person, or two or more persons acting in
concert, acquire more than 50% of the voting power of the entity.
Events of Default
and Default:
Following is a non-exhaustive lists of events that shall be
considered "Events of Default" under the Agreement: (i) PlanetRx
shall engage in prescribing medicine or referring consumers to
physicians for prescriptions; (ii) PlanetRx shall fail to pay any
payment to ESI when due, or (iii) PlanetRx shall fail to maintain
its privacy structure in accordance with state and federal
regulatory requirements and industry standards, as may be
reflected in certification standards of organizations such as
Trustee, BBB, VIPPS, the NABP or similar organizations. Upon the
occurrence of an Event of Default, ESI shall have the option to
(along with any other rights it may have under the agreement, at
law or in equity): (a) terminate the Agreement; or (b) terminate
only the provisions of the Agreement which require ESI to name
PlanetRx as the exclusive internet pharmacy in its networks and
suspend any co-branding or co-marketing efforts. In addition,
upon the first payment default, ESI shall be entitled to
perpetual license rights in the PlanetRx software and technology
such that ESI may use, modify, etc. the software and technology
for its own purposes. If the first default remains uncured and a
subsequent payment default occurs, or if the initial default is
cured but two or more defaults occur within a twelve month
period, ESI shall have additional shares issued to it having a
value equal to two times the amount of all the defaulted
payments, and also be entitled to additional Board representation
such that it shall control a majority of the Board positions.
Pharmacy Chains:
ESI shall have the right, in cooperation with PlanetRx, to
negotiate any strategic alliance or equity participation in
PlanetRx by pharmacy chains, subject to review and approval of
PlanetRx's Board, in its sole discretion. PlanetRx shall not
grant such right to any other parties. Regulatory Approvals: The
transaction is conditioned upon receipt of any necessary
regulatory approvals.
Board and Other
Approvals:
Notwithstanding anything to the contrary contained herein,
all terms and conditions of the transactions described herein are
expressly subject to the receipt of approval by the respective
Boards of Directors of ESI and PlanetRx, in their sole
discretion, and in the case of ESI, to satisfactory tax and
accounting review of the proposed transactions contemplated
hereby, and, in the case of PlanetRx, approval of the Series A, B
and C Preferred Shareholders, if necessary.
Section 351 Transaction:
The transactions described herein are also subject to
consummation of the proposed transaction governed by Section 351
of the Internal Revenue Code of 1986, as amended, between the
parties whereby ESI contributes selected assets to a newly formed
entity ("NewCo") and PlanetRx merges into NewCo, with NewCo being
renamed "PlanetRx" immediately after the transaction (NewCo being
the entity referred to herein as "PlanetRx"), or other similar
structure such that the transaction is tax deferred for ESI, and
pursuant to which ESI receives common stock in PlanetRx equal to
19.9% (post-transaction and post-initial public offering ("IPO")
of the fully diluted equity interests.
Confidentiality:
The parties agree to seek confidential treatment for any
portions of the Agreement that are required to be filed with any
public documents.
Attachment I
(Other Terms of the Agreement)
- For ESI members, PlanetRx will co-brand the website and offline collateral
materials, such as package inserts, in a mutually agreeable format
- The co-branding will include the main XxxxxxXx.xxx site and the
XxxxxxXx.xxx disease state domain sites
- ESI reserves the right to not have co-branding on designated areas
of any of the sites
- PlanetRx shall expend up to $100,000/year at ESI's request on
marketing efforts aimed at ESI's members
- Site content, sponsorship and advertising may differ for ESI members and
non-ESI members
- PlanetRx will cooperate with ESI to develop ways to demonstrate the sites
benefits to the ESI members, such as member savings on non-Rx purchases
- ESI will use reasonable best efforts to provide PlanetRx with the
following ESI customer impressions per year, which may include collateral
materials, pharmacy cards with PlanetRx listed as an option or other media
that ESI uses in its normal client or member messaging, including a button
ona the ESI or YPC website linking to PlanetRx:
Year 1 50 million
Year 2 75 million
Year 3 100 million
Year 4 125 million
Year 5 150 million
- Both parties agree to develop appropriate technology and web interfaces
to identify and trace ESI member usage of PlanetRx in a mutually agreed upon
manner
- PlanetRx shall not take any actions to attempt to convert ESI members
using 90 day prescriptions to 30 day presscriptions
- PlanetRx will not, directly or indirectly, engage in the pharmacy benefit
management business, and shall appoint ESI as its exclusive formulary manager,
which shall include negotiating with manufacturer's for rebates and filing
for said rebates. In addition, ESI shall be entitled to all revenues from
manufacturers relating to pharma ancillary programs, such as disease
management, drug and disease education and formulary management
- PlanetRx will not contact any of ESI's clients without ESI's prior
written consent
- PlanetRx shall agree to comply with specified performance level standards
for ESI members (a copy of which has been provided by ESI)
- ESI may designate that certain shipping methods no be used for members
of certain plan sponsors
Attachment II
(Membership Fee)
A. Base Fee.
PlanetRx shall pay ESI a base fee of $11,650,000/year, payable in equal
quarterly installments.
B. Incremental Fee.
In addition to the Base Fee, PlanetRx shall pay ESI an incremental fee
each quarter calculated on an annualized basis upon the number of ESI members
making any type of purchase on the PlanetRx site during the year.
