EXHIBIT 4.1
ADVANCEPCS
WARRANT AGREEMENT
This Warrant Agreement (this "Agreement") dated as of January 1, 2001
is entered into by and between AdvancePCS, a Delaware corporation, formerly
known as Advance Paradigm, Inc., (the "Company") and Empire Blue Cross and Blue
Shield ("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. PHARMACEUTICAL SERVICE AGREEMENT. Reference is made to that
certain Pharmaceutical Service Agreement dated as of January 1, 2001 entered
into by and between the Company and Client on even date herewith (the "Service
Agreement"). Capitalized terms not otherwise defined herein shall have the
meanings given to them in the Pharmacy 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 50,000
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 $29.81 (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 on 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 Service
Agreement, 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 Service Agreement (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 pharmacy benefit
management services under the Service Agreement is less than 800,000, then the
scheduled vesting for such date will be forfeited; and provided further that if
on any Vesting Date the Company no longer serves as the exclusive vendor of
integrated pharmacy benefit management services for Client, then the scheduled
vesting for such date will be forfeited. Except as otherwise provided for
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 (i) the third month following
termination of the Service Agreement or (ii) January 1, 2008 (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").
If the Company's Common Stock is listed on a national securities
exchange or quoted on NASDAQ or any other over-the-counter market or trading
facility, the Client may also exercise the Warrant Certificates during the
Exercise Period for all or any part of the number of shares of Common Stock
purchasable thereunder, in a "cashless" or "net-issue" exercise (a "Cashless
Exercise) by delivery to the Company, (i) a written notice of the Holder's
election to exercise the Warrant Certificate, which notice shall specify the
number of shares of Common Stock to be purchased, and (ii) the Warrant
Certificate. Such notice shall be substantially in the form of the cashless
exercise form attached to Exhibit A, duly executed by the Holder or its agent or
attorney duly authorized in writing. In the event of a Cashless Exercise, the
Holder shall exchange this Warrant for the number of shares of Common Stock
determined by dividing (A) the product received by multiplying that portion of
the total number of shares of Common Stock purchasable hereunder which the
Holder elects to exercise in this Cashless Exercise by the excess of (X) the
Current Market Price as defined hereinbelow over (Y) the Exercise Price and (B)
the Current Market Price. The cashless exercise form shall set forth the
calculation upon which the Cashless Exercise is based. Current Market Price
shall mean in respect of any share of Common Stock on any date herein specified,
the average of the daily market prices for 20 consecutive business days
immediately preceding such date. The daily market price for each such business
day shall be the last reported sales price on such day (excluding any "after
hours" trading) on the principal stock exchange on which such Common Stock is
then listed or admitted to trading or if the Common Stock is not so listed or
admitted, the last reported sale price on such day (excluding any "after hours"
trading) on the National Association of Securities Dealers, Inc. Automated
Quotation National Market System ("NASDAQ") or any other over-the-counter market
or trading facility on which such Common Stock is then listed; provided,
however, that if no sale takes place on such day on any such exchange, market or
trading facility, the average of the last reported closing bid and ask prices on
such day as officially quoted on such exchange, market or trading facility shall
be the daily market price for such business day.
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.
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Section 4. ADJUSTMENTS. The number of shares of Common Stock
purchasable pursuant to the exercise of the Warrant Certificates and the price
at which such shares may be purchased upon exercise of the Warrant Certificates,
shall be subject to adjustment from time to time as set forth in this Section 4;
provided, however, that, notwithstanding anything to the contrary contained
herein, the Exercise Price shall not be less than the par value of a share of
Common Stock. The Company shall give the Client notice of any event described
below which requires an adjustment pursuant to this Section 4 as soon as
practicable following the occurrence of such event, which notice shall state the
exercise price resulting from such adjustment and/or the increase or decrease,
if any, in the number of shares of Common Stock or other stock or property
issuable upon the exercise of the Warrant Certificates setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. The adjustments required hereunder shall apply to the
Total Exercise Number and Exercise Price under the Warrant Agreement and for
each Warrant Certificate.
(a) Stock Dividends. Subdivisions and Combinations. If at any time
the Company shall:
(i) pay a dividend or make a distribution on its Common
Stock in additional shares of Common Stock (this
adjustment will be deemed to occur immediately after
the record date);
(ii) subdivide its outstanding shares of Common Stock
into a larger number of shares of Common Stock; or
(iii) combine its outstanding shares of Common Stock into
a smaller number of shares of Common Stock;
then (i) the number of shares of Common Stock for which each Warrant
Certificate is exercisable immediately after the occurrence of any
such event shall be adjusted to equal the number of shares of Common
Stock which a record client of the same number of shares of Common
Stock for which each Warrant Certificate is exercisable immediately
prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (ii) the Exercise Price
shall be adjusted to equal (A) the Exercise Price multiplied by the
number of shares of Common Stock for which each Warrant Certificate is
exercisable immediately prior to the adjustment divided by (B) the
number of shares of Common Stock for which each Warrant is exercisable
immediately after such adjustment.
(b) Liquidation: Dissolution. If the Company shall dissolve,
liquidate or wind up its affairs, the Client shall have the
right, but not the obligation, to exercise the issued Warrant
Certificate(s) effective as of the date of such dissolution,
liquidation or winding up; provided that written notice of
such intent to exercise is delivered to the Company within ten
(10) business days of the date that the Client receives
written notice of the Company's intent to dissolve, liquidate
or wind up its affairs. If any such dissolution, liquidation
or winding up results in any cash distribution to
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the Holder in excess of the Exercise Price for the shares of
Common Stock for which each Warrant Certificate is exercised,
then the Holder may, at its option, exercise each Warrant
Certificate without making payment of such Exercise Price and,
in such case, the Company shall, upon distribution to the
Holder, consider such Exercise Price to have been paid in
full, and in making such settlement to the Holder, shall
deduct an amount equal to such Exercise Price from the amount
payable to the Holder.
(c) Other Provisions Applicable to Adjustments under this Section.
The following provisions shall be applicable to the making of
adjustments of the number of shares of Common Stock for which
each Warrant Certificate is exercisable provided for in this
Section 4:
(i) When Adjustments Are Made. The adjustments required
by this Section 4 shall be made whenever and as often
as any specified event requiring an adjustment shall
occur, except that any adjustment of the number of
shares of Common Stock for which each Warrant
Certificate is exercisable or of the Exercise Price
that would otherwise be required may be postponed
(except in the case of a subdivision or combination
of shares of the Common Stock, as provided for in
Section 4(a) up to, but not beyond, the date of
exercise if such adjustment either by itself or with
other adjustments not previously made adds or
subtracts less than one percent (1%) of the shares of
Common Stock for which each Warrant Certificate is
exercisable or of the Exercise Price immediately
prior to the making of such adjustment. Any
adjustment representing a change of less than such
minimum amount (except as aforesaid) which is
postponed shall be carried forward and made as soon
as such adjustment, together with other adjustments
required by this Section 4 and not previously made,
would result in a minimum adjustment, but in no
event later than the date of exercise each
Warrant Certificate. For the purpose of any
adjustment, any specified event shall be deemed to
have occurred at the close of business on the date of
its occurrence.
(d) Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets.
In case Company shall reorganize its capital, reclassify its
capital stock, consolidate or merge with or into another
corporation (where Company is not the surviving corporation, a
merger in which the Company is the surviving entity but the
shares of the Company's Capital Stock outstanding immediately
prior to the merger are converted, by virtue of the merger,
into capital stock of the surviving entity) or sell, transfer
or otherwise dispose of all or substantially all its property,
assets or business to another corporation and, pursuant to the
terms of such reorganization, reclassification, merger,
consolidation or disposition of assets, shares of common stock
of the successor or acquiring corporation, or of the Company
(as applicable) are to be received by or distributed to the
holders of Common Stock of Company,
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then the Client shall have the right thereafter to receive,
upon exercise of such Warrant Certificate, the number of
shares of common stock of the successor or acquiring
corporation or of Company, if it is the surviving corporation,
receivable upon or as a result of such reorganization,
reclassification, merger, consolidation disposition of assets
by a client of the number of shares of Common Stock for which
each Warrant Certificate is exercisable immediately prior to
such event; provided, however, that this Section 4(d) shall
not apply to the extent any action causes an adjustment to be
made pursuant to Sections 4 (a) or (b) hereof. In case of any
such reorganization, reclassification, merger, consolidation
or disposition of assets, the successor or acquiring
corporation (if other than Company) shall expressly assume the
due and punctual observance and performance of each and every
covenant and condition of this Warrant Agreement to be
performed and observed by Company and all the obligations and
liabilities hereunder, subject to such modifications as may be
deemed appropriate (as determined by resolution of the Board
of Directors of Company) in order to provide for adjustments
of shares of Common Stock for which each Warrant Certificate
is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 4.
For purposes of this Section 4(d), "common stock of the
successor or acquiring corporation" shall include stock of
such corporation of any class which is not preferred as to
dividends or assets over any other class of stock of such
corporation and which is not subject to redemption and shall
also include any evidences of indebtedness, shares of stock or
other securities which are convertible into or exchangeable
for any such stock, either immediately or upon the arrival of
a specified date or the happening of a specified event and any
warrants or other rights to subscribe for or purchase any such
stock. The foregoing provisions of this Section 4(d) shall
similarly apply to successive reorganizations,
reclassifications, mergers, consolidations and to the stock or
securities of any other corporation that are at the time
receivable by the Client upon the exercise of each Warrant
Certificate.
(e) Reclassifications. If the Company changes any of the
securities as to which purchase rights under this Warrant
Agreement exist into the same or a different number of
securities of any other class or classes, this Warrant
Agreement shall thereafter represent the right to acquire such
number and kind of securities as would have been issuable as
the result of such change with respect to the securities that
were subject to the purchase rights under this Warrant
Agreement immediately prior to such reclassification or other
change and the Exercise Price therefore shall be appropriately
adjusted.
(f) Other Notices. In cases at any time:
(i) there shall be any capital reorganization, or
reclassification of the capital stock of the Company,
or consolidation or merger of the Company with
another corporation (other than a subsidiary of the
Company in which the Company is the surviving or
continuing corporation and no change occurs in the
Company's Common Stock), or sale of all or
substantially all of its assets to, another
corporation;
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(ii) there shall be a voluntary or involuntary
dissolution, liquidation, bankruptcy, assignment for
the benefit of creditors, or winding up of the
Company; or
(iii) the Company shall declare any non-cash dividend on
its Common Stock;
then, in any one or more of said cases, the Company shall give written
notice to the Client of the date (or, if not then known, a reasonable
approximation thereof by the Company) on which such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation, bankruptcy, assignment for the benefit of creditors,
winding up or other action or dividend, as the case may be, shall take
place. Such notice shall also specify (or, if not then known,
reasonably approximate) the date as of which the clients of Common
Stock of record shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation merger, sale, dissolution, liquidation,
bankruptcy, assignment for the benefit of creditors, winding up, or
other action, or the date of such dividend, as the case may be. Such
notice shall be mailed to the Client at least five days prior to the
record date for such action in the case of any action described in
Subsection (i) or Subsection (ii) above, and in the case of any action
described in Subsection (ii) above, at least five days prior to the
date on which the action described is to take place and at least five
days prior to the record date for determining clients of Common Stock
entitled to receive securities and/or other property in connection with
such action.
(g) No Impairment. The Company shall not, by amendment of its
charter or bylaws or through any reorganization,
recapitalization, transfer of assets, consolidation, merger,
dissolution, issuance or sale of securities or any other
voluntary action, seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by
the Company, but shall at all times in good faith assist in
the carrying out of all the provisions of this Section 4.
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.
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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.
(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 EMPIRE BLUE CROSS BLUE SHIELD, 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
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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.
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.
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(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 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:
AdvancePCS
Attn: Legal Department
0000 Xxxxx X'Xxxxxx Xxxx., Xxxxx 0000
Xxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
and to Client at:
Empire Blue Cross and Blue Shield
Attn: General Counsel
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Fax No.(000) 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
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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 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.
ADVANCEPCS
By: /s/ XXXXX X. XXXXXXX
---------------------------------
Xxxxx X. Xxxxxxx
Chairman of the Board and Chief
Executive Officer
EMPIRE BLUE CROSS AND BLUE SHIELD
By: /s/ XXXXXXX X. XXXXXXX, M.D.
---------------------------------
Name: Xxxxxxx X. Xxxxxxx, M.D.
------------------------------
Title: Chief Executive Officer
------------------------------
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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.
WARRANT NO. ___
For Purchase of Shares of Common Stock of
ADVANCEPCS
JANUARY 1, 200_
THIS CERTIFIES THAT Empire Blue Cross and Blue Shield ("Client"), or
registered transferees or assigns, is entitled, subject to the terms and
conditions set forth in this Warrant, to purchase from AdvancePCS, a Delaware
corporation (the "Company"), 10,000 (the "Exercise Number") fully paid and
nonassessable shares of Common Stock, $0.01 par value per share, of the Company
(the "Common Stock"), in whole or in part at any time during the Exercise Period
upon payment in full of the Exercise Price or pursuant to a Cashless Exercise as
provided herein below. 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 January 1, 2001 (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 either (i) the duly executed Election to Purchase or (ii) the
Cashless Exercise Form in the respective forms 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 unless the Cashless Exercise
option is elected 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.
ADVANCEPCS
By:
------------------------------
Xxxxx X. Xxxxxxx
Chairman of the Board and
Chief Executive Officer
13
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:
--------------------------------------------------------------------------------
Name of Warrant Holder
--------------------------------------------------------------------------------
Address
--------------------------------------------------------------------------------
Federal ID Tax Number or Social Security Number
--------------------------------------------------------------------------------
Date of Exercise (must be at least fifteen days after the date of this Notice)
------------------------------
Signature
------------------------------
Title
------------------------------
Date
14
CASHLESS EXERCISE FORM
[TO BE EXECUTED ONLY UPON EXERCISE OF WARRANT PURSUANT TO A
CASHLESS EXERCISE]
The undersigned owner of the accompanying Warrant ("Holder") hereby irrevocably
elects to exchange [all/part] of the Warrant for such number of shares of Common
Stock of AdvancePCS (the "Company"), set forth on the calculation attached
hereto pursuant to the Cashless Exercise provisions in the Warrant and requests
that a certificate (or ______ certificates in denominations of shares) for the
shares of Common Stock issuable thereunder (and any securities upon such
exercise) be issued in the name of the delivered to Holder and, if such shares
of Common Stock shall not include all of the shares of Common Stock issuable as
provided in the Warrant, that a new Warrant of like tenor and date for the
balance of the Share of Common Stock issuable hereunder be delivered to the
Holder.
-------------------------------------------------
Name of Warrant Holder
-------------------------------------------------
Address
-------------------------------------------------
Federal Tax ID Number or Social Security Number
-------------------------------------------------
Date of Exercise (must be at least fifteen days
after that date of this Notice)
------------------------------
Signature
------------------------------
Title
------------------------------
Date
15
CALCULATION OF CASHLESS EXERCISE
Current Market Price: "A"
Exercise Price: "B"
Number of share of Common Stock issuable "C"
FORMULA
C * A-B = ___________________ (# of shares of Common Stock on Cashless Exercise)
---
A
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EXHIBIT B
STOCKHOLDER AGREEMENT
This Stockholder Agreement dated as of ___________, by and among Empire
Blue Cross and Blue Shield, a New York not for profit corporation (the
"STOCKHOLDER"), and AdvancePCS, a Delaware corporation (the "COMPANY").
PRELIMINARY STATEMENTS
Pursuant to the terms and conditions of the Warrant Agreement,
dated as of January 1, 2001, 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,
17
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
18
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, the Stockholder may
sell, pledge or otherwise transfer shares of the Stock to the public in a market
transaction in accordance with applicable securities laws without complying with
the restrictions set forth in Section 2.2(b), (c) and (d).
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 EMPIRE BLUE CROSS AND BLUE SHIELD,
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 the Stock, the Stockholder shall
furnish, at its expense, a written opinion of counsel, reasonably satisfactory
in form and substance to the
19
Company, to the effect that such transfer is exempt from registration. Upon
receipt of such opinion, 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 Stockholder.
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. Upon the request of the Board of
Directors of the Company, the Stockholder agrees to consent to, vote in favor of
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:
AdvancePCS
Attn: Legal Department
0000 Xxxxx X'Xxxxxx Xxxx.
Xxxxx 0000
Xxxxxx, XX 00000
Fax No.: (000) 000-0000
if to Stockholder:
Empire Blue Cross and Blue Shield
Attn: General Counsel
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Fax No.(000) 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
20
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.
21
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.
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
22
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]
23
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
ADVANCEPCS
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
EMPIRE BLUE CROSS AND BLUE SHIELD
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
24
