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EXHIBIT 10.6
REGISTRATION RIGHTS AGREEMENT
4,000,000 PREFERRED SECURITIES
CAREMARK RX CAPITAL TRUST I
7% SHARED PREFERENCE REDEEMABLE SECURITIES ("SPURS(SM)")
(LIQUIDATION PREFERENCE $50 PER PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED BY
AND CONVERTIBLE INTO THE COMMON STOCK OF
CAREMARK RX, INC.
September 29, 0000
XXXXXXX DILLON READ LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
This Registration Rights Agreement is made and entered into as
of the date first above written (the "Closing Date") by and among CAREMARK RX
CAPITAL TRUST I, a statutory business trust organized under the laws of the
State of Delaware (the "Trust"), CAREMARK RX, INC., a Delaware corporation
(formerly MedPartners, Inc.) (the "Company" and, together with the Trust, the
"Offerors"), and WARBURG DILLON READ LLC (the "Initial Purchaser"). The Trust
has agreed to issue and sell to the Initial Purchaser, upon the terms set forth
in a purchase agreement dated as of September 24, 1999, by and among the
Company, the Trust and the Initial Purchaser (the "Purchase Agreement"),
4,000,000 of its 7% Shared Preference Redeemable Securities (SPuRS(SM)),
liquidation preference $50 per security (the "Preferred Securities").
The Preferred Securities are convertible into shares of common
stock of the Company, par value $.001 per share (the "Common Stock"). The
Preferred Securities will be guaranteed by the Company on a subordinated basis
with respect to distributions and payments upon liquidation, redemption or
otherwise (the "Preferred Securities Guarantee") pursuant to the Preferred
Securities Guarantee Agreement dated as of September 29, 1999 between the
Company and The Wilmington Trust Company, as trustee. The Preferred Securities
will be issued pursuant to the terms of a trust agreement, dated as of September
10, 1999, as amended and restated as of September 29, 1999 (the "Trust
Agreement"), among the Company, as sponsor, The Wilmington Trust Company, as
property trustee and Delaware Trustee (the "Property Trustee"), the
administrative trustees named therein (the "Administrative Trustees") and the
holders from time to time of undivided beneficial interests in the assets of the
Trust.
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As an inducement to the Initial Purchaser to enter into the
Purchase Agreement, the Company and the Trust jointly and severally agree with
the Initial Purchaser, (i) for its benefit as Initial Purchaser and (ii) for the
benefit of the beneficial owners from time to time of the Preferred Securities
(including, without limitation, the Initial Purchaser) and the beneficial owners
from time to time of the underlying Common Stock (the "Shares") issuable upon
conversion of the Preferred Securities and the Company's 7% Convertible
Subordinated Debentures due 2029 (the "Convertible Subordinated Debentures")
(collectively, the "Securityholders"), as follows:
1. Shelf Registration.
(a) The Offerors shall prepare and file with the
Securities and Exchange Commission (the "Commission") within 90 days after the
Closing Date a registration statement (the "Shelf Registration Statement") on
Form S-1 or Form S-3, if the use of such form is then available, to cover
resales of Transfer Restricted Securities (as defined herein) by the Holders (as
defined herein). The Offerors shall use their reasonable best efforts to cause
the Shelf Registration Statement to be declared effective by the Commission on
or prior to 180 days from the Closing Date. "Transfer Restricted Securities"
means the Preferred Securities (or, if Convertible Subordinated Debentures are
distributed to holders of Preferred Securities, Convertible Subordinated
Debentures) and the Shares until the earlier of (x) the date on which such
security or securities have been effectively registered under the Securities Act
of 1933, as amended (the "Securities Act"), and disposed of in accordance with
the Shelf Registration Statement, or (y) the date on which such security or
securities are distributed to the public pursuant to Rule 144 under the
Securities Act or may be distributed to the public pursuant to Rule 144(k) under
the Securities Act (or any similar provisions then in force).
(b) The Offerors shall use their reasonable best efforts
to cause the Shelf Registration Statement to be effective for a period of two
years (or for such longer period if extended pursuant to Section 2(i) below)
from the effective date thereof or such shorter period that will terminate when
each Transfer Restricted Security covered by the Shelf Registration Statement
ceases to be a Transfer Restricted Security (in either case, such period is
referred to as the "Shelf Registration Period"). The Offerors shall be deemed
not to have used their reasonable best efforts to keep the Shelf Registration
Statement effective during the requisite period if the Company or the Trust
voluntarily takes any action that would result in Holders of Transfer Restricted
Securities covered thereby not being able to offer and sell such Transfer
Restricted Securities during that period, unless such action is required by
applicable law or otherwise permitted hereunder, including, without limitation,
by Section 2(i) hereof.
(c) Notwithstanding any other provisions of this
Agreement to the contrary, the Offerors shall cause the Shelf Registration
Statement and the related prospectus, and any amendment or supplement thereto,
as of the effective date of the Shelf Registration Statement, amendment or
supplement, (i) to comply in all material respects with the applicable
requirements of the Securities Act and the rules and regulations of the
Commission and (ii) not to contain any untrue statement of a material
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fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading.
2. Registration Procedures. In connection with the
proposed offer and sale of the Transfer Restricted Securities in accordance with
the methods of distribution set forth in the Shelf Registration Statement (the
"Shelf Registration"), the following provisions apply:
(a) The Offerors shall prepare and mail to each
Securityholder identified by the Initial Purchaser a questionnaire
substantially in the form attached as Annex A to the Offering
Memorandum dated September __, 1999 relating to the Preferred
Securities and requesting such information regarding such
Securityholder and the distribution of Transfer Restricted Securities
as the Offerors may reasonably require for inclusion in the Shelf
Registration Statement and asking each such Securityholder to confirm
that it will comply with applicable securities laws, including the
Securities Act. The Offerors will include in the Shelf Registration
Statement as a selling security holder each Securityholder that returns
its questionnaire by the date specified therein (which shall be no
earlier than fifteen days after the date of mailing) and will use their
reasonable best efforts to include in the Shelf Registration Statement
any Securityholder which fails to provide the Offerors with a completed
questionnaire by the date specified therein but otherwise provides the
requested information and confirmation prior to the commencement of the
Shelf Registration Period. The Offerors shall have no obligation to
include in the Shelf Registration Statement (whether by post-effective
amendment, by prospectus supplement or otherwise) a Securityholder
which fails to provide the Company with a completed questionnaire prior
to the commencement of the Shelf Registration Period. "Holder" means
each Securityholder who (i) is so identified by the Initial Purchaser
pursuant to a written request by the Offerors and (ii) delivers to the
Offerors a completed questionnaire containing the required information
and confirmation by the date specified therein or is otherwise included
as a selling security holder in the Shelf Registration Statement.
(b) The Offerors shall (i) furnish to the Initial
Purchaser, prior to the filing thereof with the Commission, a copy of
the Shelf Registration Statement and each amendment thereof and each
supplement, if any, to the prospectus included therein and, in the
event that the Initial Purchaser (with respect to any portion of an
unsold allotment from the original offering) is participating in the
Shelf Registration, the Offerors shall use their best efforts to
reflect in each such document, when so filed with the Commission, such
comments as the Initial Purchaser reasonably may propose; and (ii)
include in such Shelf Registration Statement (or amendment or
supplements) the names of the Holders who propose to sell Transfer
Restricted Securities pursuant to the Shelf Registration Statement as
selling securityholders.
(c) The Offerors shall give written notice to the Initial
Purchaser and Holders of the Transfer Restricted Securities (which
notice pursuant to clauses (ii)
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through (v) hereof shall be accompanied by an instruction to suspend
the use of the prospectus and any sales pursuant to such prospectus
until the requisite changes have been made):
(i) when the Shelf Registration Statement or any
amendment thereto has been filed with the Commission and when
the Shelf Registration Statement or any post-effective
amendment thereto has become effective;
(ii) of any request by the Commission for
amendments or supplements to the Shelf Registration Statement
or the prospectus included therein or for additional
information;
(iii) of the issuance by the Commission of any
stop order suspending the effectiveness of the Shelf
Registration Statement or the initiation of any proceedings
for that purpose;
(iv) of the receipt by either of the Offerors or
their legal counsel of any notification with respect to the
suspension of the qualification of the Transfer Restricted
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(v) of the happening during the Shelf
Registration Period of any event that requires the Offerors to
make changes in the prospectus which forms a part of the Shelf
Registration Statement in order that the prospectus does not
contain an untrue statement of a material fact nor omits to
state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(d) The Offerors shall make every reasonable effort to
obtain the withdrawal at the earliest possible time, of any order
suspending the effectiveness of the Shelf Registration Statement.
(e) The Offerors shall furnish to each Holder of Transfer
Restricted Securities included within the coverage of the Shelf
Registration, without charge, at least one copy of the Shelf
Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, and, if the Holder so
requests in writing, all exhibits thereto (including those, if any,
incorporated by reference).
(f) The Offerors shall, during the Shelf Registration
Period, deliver to each Holder of Transfer Restricted Securities
included within the coverage of the Shelf Registration, without charge,
as many copies of the prospectus (including each preliminary
prospectus) included in the Shelf Registration Statement and any
amendment or supplement thereto as such person may reasonably request.
The Offerors consent, subject to the provisions of this Agreement, to
the use of the
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prospectus or any amendment or supplement thereto by each of the
selling Holders of the Transfer Restricted Securities in connection
with the offering and sale of the Transfer Restricted Securities
covered by the prospectus, or any amendment or supplement thereto,
included in the Shelf Registration Statement.
(g) Prior to any public offering of the Transfer
Restricted Securities pursuant to any Shelf Registration Statement, the
Offerors shall register or qualify or cooperate with the Holders of the
Transfer Restricted Securities included therein and their respective
counsel in connection with the registration or qualification of the
Transfer Restricted Securities for offer and sale under the securities
or "blue sky" laws of such states of the United States as any Holder of
the Transfer Restricted Securities reasonably requests in writing and
do any and all other acts or things necessary or advisable to enable
the offer and sale in such states of the Transfer Restricted Securities
covered by such Shelf Registration Statement; provided, however, that
neither of the Offerors shall be required to (i) qualify generally to
do business in any jurisdiction where it is not then so qualified or
(ii) take any action which would subject it to general service of
process or to taxation in any jurisdiction where it is not then so
subject.
(h) The Offerors shall cooperate with the Holders of the
Transfer Restricted Securities to facilitate the timely preparation and
delivery of certificates representing the Transfer Restricted
Securities to be sold pursuant to any Shelf Registration Statement free
of any restrictive legends and in such denominations and registered in
such names as the Holders may request a reasonable period of time prior
to sales of the Transfer Restricted Securities pursuant to such Shelf
Registration Statement and prior to settlement of such sales.
(i) Upon the occurrence of any event contemplated by
paragraphs (ii) through (v) of Section 2(c) above during the Shelf
Registration Period, the Offerors shall promptly prepare and file a
post-effective amendment to the Shelf Registration Statement or a
supplement to the related prospectus and any other required document so
that, as thereafter delivered to Holders of the Transfer Restricted
Securities or purchasers of Transfer Restricted Securities, the
prospectus will not contain an untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however, that the
Offerors may delay preparing, filing and distributing any such
supplement or amendment (such period of delay, a "Suspension Period")
if the Company determines that compliance with the disclosure
obligations necessary to maintain the effectiveness of the Shelf
Registration Statement at such time could reasonably be expected to
have an adverse effect on the Company or a pending corporate
transaction involving the Company or any of its subsidiaries; provided,
further, that such delay shall not extend for a period of more than 60
days in any twelve-month period. If the Offerors notify the Initial
Purchaser and the Holders of the Transfer Restricted Securities in
accordance with paragraphs (ii) through (v) of Section 2(c) above to
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suspend the use of the prospectus and any sales pursuant to such
prospectus until the requisite changes to the prospectus have been
made, then the Initial Purchaser and the Holders of the Transfer
Restricted Securities shall suspend use of such prospectus and any
sales pursuant to such prospectus, and the period of effectiveness of
the Shelf Registration Statement provided for in Section 1(b) above
shall be extended by the number of days from and including the date of
the giving of such notice to and including the date when the Initial
Purchaser and the Holders of the Transfer Restricted Securities shall
have received such amended or supplemented prospectus pursuant to this
Section 2(i).
(j) Not later than the effective date of the Shelf
Registration Statement, the Offerors will provide CUSIP numbers for the
Transfer Restricted Securities registered under the Shelf Registration
Statement and provide the Property Trustee with a certificate for the
Transfer Restricted Securities, in a form eligible for deposit with The
Depository Trust Company.
(k) The Offerors will comply with all rules and
regulations of the Commission to the extent and so long as they are
applicable to the Shelf Registration and will make generally available
to their security holders (or otherwise provide in accordance with
Section 11(a) of the Securities Act) an earnings statement satisfying
the provisions of Section 11(a) of the Securities Act, no later than 45
days after the end of a 12-month period (or 90 days, if such period is
a fiscal year) beginning with the first month of the Company's first
fiscal quarter commencing after the effective date of the Shelf
Registration Statement, which statement shall cover such 12-month
period.
(l) The Offerors shall cause the Trust Agreement, the
Preferred Securities Guarantee and the Indenture to be qualified under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), in a timely manner and containing such changes, if any, as shall
be necessary for such qualification. In the event that such
qualification would require the appointment of a new trustee under any
of such documents, the Offerors shall appoint a new trustee thereunder
pursuant to the applicable provisions of the relevant document.
(m) The Offerors may require each Holder of Transfer
Restricted Securities to be sold pursuant to the Shelf Registration
Statement to furnish to the Offerors such information regarding the
Holder and the distribution of the Transfer Restricted Securities as
the Offerors may from time to time reasonably require for inclusion in
the Shelf Registration Statement, and the Offerors may exclude from
such registration the Transfer Restricted Securities of any Holder that
fails to furnish such information within a reasonable time after
receiving such request.
(n) The Offerors shall enter into such customary
agreements (including, if requested, an underwriting agreement in
customary form) and take all such other action, if any, as any Holder
which, together with its "affiliates" (as defined in the Securities
Act), holds $40 million or greater in aggregate liquidation amount (or,
if applicable, principal amount) of the Transfer Restricted Securities
and which, together with its affiliates, intends to sell at least $40
million in aggregate
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liquidation amount (or, if applicable, principal amount) of Transfer
Restricted Securities in an underwritten offering (with holders of
Common Stock constituting Transfer Restricted Securities being deemed
to be Holders of the aggregate liquidation amount of Preferred
Securities (or, if applicable, principal amount of Convertible
Subordinated Debentures) converted into Common Stock for such
calculation), shall reasonably request in order to facilitate the
disposition of the Transfer Restricted Securities pursuant to any Shelf
Registration; provided, that in no event shall the Offerors be required
to cause any of their representatives to attend any informational or
roadshow presentations or pay any expenses related thereto.
(o) The Offerors shall (i) make reasonably available for
inspection by the Holders, any underwriter participating in any
disposition pursuant to the Shelf Registration Statement and any
attorney, accountant or other agent retained by the Holders or any such
underwriter all relevant financial and other records, pertinent
corporate documents and properties of the Offerors and (ii) cause the
Company's officers, directors, employees, accountants and auditors and
the Trust's Administrative Trustees to supply all relevant information
reasonably requested by the Holders or any such underwriter, attorney,
accountant or agent in connection with the Shelf Registration
Statement, in each case, as shall be reasonably necessary to enable
such persons, to conduct a reasonable investigation within the meaning
of Section 11 of the Securities Act; provided, however, that the
foregoing inspection and information gathering shall be coordinated on
behalf of the Initial Purchaser and the other parties, by one firm of
counsel, which firm shall be Xxxxx Xxxxxxxxxx LLP until another firm
shall be designated as described in Section 3 hereof.
(p) In connection with any underwritten offering pursuant
to paragraph (n) of this Section, each of the Offerors shall (i) make
such representations and warranties, subject to the Offerors' ability
to do so, to the Holders of such Registrable Securities and the
managing underwriters with respect to the business of the Trust and of
the Company and its subsidiaries, the Registration Statement, the
prospectus and documents incorporated by reference or deemed
incorporated by reference, if any, in each case, in form, substance and
scope as are customarily made by issuers to underwriters in
underwritten offerings (provided that the scope and substance shall not
be materially different than those contained in the Purchase Agreement)
and confirm the same if and when requested; (ii) use their reasonable
best efforts to obtain opinions of counsel to the Trust and the Company
and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing
underwriters and the Holders of a majority of the Registrable
Securities being sold) addressed to each of the underwriters covering
the matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by the
managing underwriters; (iii) use their reasonable best efforts to
obtain "cold comfort" letters and updates thereof from the independent
certified
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public accountants of the Company (and, if necessary, any other
certified public accountants of any business acquired or to be acquired
by the Company for which financial statements and financial data are,
or are required to be, included in the Registration Statement),
addressed to the managing underwriters, such letters to be in customary
form and covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings; and (iv)
deliver such documents and certificates as may be reasonably requested
by the Holders of a majority of the Registrable Securities being sold
and the managing underwriters, to evidence the continued validity of
the representations and warranties of the Trust and the Company made
pursuant to clause (i) above and to evidence compliance with any
customary conditions contained in the underwriting agreement or other
agreement entered into by the Trust and the Company.
(q) In the event that any broker-dealer registered under
the Exchange Act shall underwrite any Transfer Restricted Securities or
participate as a member of an underwriting syndicate or selling group
or "assist in the distribution" (within the meaning of the Conduct
Rules (the "Rules") of the National Association of Securities Dealers,
Inc.) thereof, whether as a Holder of such Transfer Restricted
Securities or as an underwriter, a placement or sales agent or a broker
or dealer in respect thereof, or otherwise, the Offerors, if requested
by such broker-dealer, will assist such broker-dealer in complying with
the requirements of such Rules, including, without limitation, by (i)
if such Rules, including Rule 2720, shall so require, engaging a
"qualified independent underwriter" (as defined in Rule 2720) to
participate in the preparation of the Shelf Registration Statement
relating to such Transfer Restricted Securities, to exercise usual
standards of due diligence in respect thereto and, if any portion of
the offering contemplated by such Shelf Registration Statement is an
underwritten offering or is made through a placement or sales agent, to
recommend the price of such Transfer Restricted Securities, (ii)
indemnifying any such qualified independent underwriter to the extent
of the indemnification of underwriters provided in Section 4 hereof and
(iii) providing such information to such broker-dealer as may be
required in order for such broker-dealer to comply with the
requirements of the Rules.
(r) The Offerors shall use their reasonable best efforts
to take all other steps necessary to effect the registration of the
Transfer Restricted Securities covered by the Shelf Registration
Statement contemplated hereby.
3. Registration Expenses. The Offerors shall jointly and
severally bear all fees and expenses incurred in connection with the performance
of their obligations under Sections 1 and 2 hereof whether or not a Shelf
Registration is filed or becomes effective, shall bear or reimburse the Holders
of the Transfer Restricted Securities covered thereby for the reasonable fees
(which fees shall not exceed $50,000 without the written consent of the Company,
which consent shall not be unreasonably withheld) and disbursements of one firm
of counsel, which firm shall be Xxxxx Xxxxxxxxxx LLP until another firm shall be
designated by the Holders of a majority in principal amount of the Preferred
Securities covered thereby to act as counsel for the Holders in connection
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therewith. The Holders shall be responsible for all other fees and expenses,
such as brokerage fees and commissions.
4. Indemnification.
(a) To the extent permitted by law, the Company and the
Trust jointly and severally agree to indemnify and hold harmless each Holder of
the Transfer Restricted Securities and each person, if any, who controls such
Holder within the meaning of the Securities Act or the Exchange Act (each Holder
and such controlling persons are referred to collectively as the "Indemnified
Parties") from and against any losses, claims, damages or liabilities, joint or
several, or any actions in respect thereof (including, but not limited to, any
losses, claims, damages, liabilities or actions relating to purchases and sales
of the Transfer Restricted Securities) to which each Indemnified Party may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages, liabilities or actions arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Shelf Registration Statement or prospectus or in any amendment
or supplement thereto or in any preliminary prospectus relating to the Shelf
Registration, or arise out of, or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse, as
incurred, the Indemnified Parties for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action in respect thereof; provided, however, that
(i) the Offerors shall not be liable in any such case to any Holder of Transfer
Restricted Securities, or any person controlling such Holder, to the extent that
such loss, claim, damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
the Shelf Registration Statement or prospectus or in any amendment or supplement
thereto or in any preliminary prospectus relating to the Shelf Registration in
reliance upon and in conformity with written information furnished to the
Offerors by or on behalf of such Holder specifically for inclusion therein and
(ii) with respect to any untrue statement or omission or alleged untrue
statement or omission made in any preliminary prospectus relating to the Shelf
Registration Statement, the indemnity agreement contained in this subsection (a)
shall not inure to the benefit of any Holder from whom the person asserting any
such losses, claims, damages or liabilities purchased the Transfer Restricted
Securities concerned, to the extent that a prospectus relating to such Transfer
Restricted Securities was required to be delivered by such Holder under the
Securities Act in connection with such purchase and any such loss, claim, damage
or liability of such Holder results from the fact that there was not sent or
given to such person, at or prior to the written confirmation of the sale of
such Transfer Restricted Securities to such person, a copy of the final
prospectus if the Offerors had previously furnished copies thereof to such
Holder; provided further, however, that this indemnity agreement will be in
addition to any liability which the Offerors may otherwise have to such
Indemnified Party. The Offerors shall also indemnify underwriters, their
officers and directors and each person who controls such underwriters within the
meaning of the Securities Act or the Exchange Act to the same extent as provided
above with respect to the indemnification of the Holders of the Transfer
Restricted Securities if requested by such Holders.
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(b) To the extent permitted by law, each Holder of the
Transfer Restricted Securities, severally and not jointly, will indemnify and
hold harmless the Offerors and each person, if any, who controls either of the
Offerors within the meaning of the Securities Act or the Exchange Act from and
against any losses, claims, damages or liabilities or any actions in respect
thereof, to which the Offerors or any such controlling person may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages, liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Shelf Registration Statement or prospectus or in any amendment or supplement
thereto or in any preliminary prospectus relating to the Shelf Registration, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact necessary to make the statements therein not misleading, but in
each case only to the extent that the untrue statement or omission or alleged
untrue statement or omission was made in reliance upon and in conformity with
written information furnished to the Offerors by or on behalf of such Holder
specifically for inclusion therein; and, subject to the limitation set forth
immediately preceding this clause, shall reimburse, as incurred, the Offerors
for any legal or other expenses reasonably incurred by the Offerors or any such
controlling person in connection with investigating or defending any loss,
claim, damage, liability or action in respect thereof. This indemnity agreement
will be in addition to any liability which such Holder may otherwise have to the
Offerors or any of their controlling persons.
(c) Promptly after receipt by an indemnified party under
this Section 4 of notice of the commencement of any action or proceeding
(including a governmental investigation), such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 4, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof the
indemnifying party will not be liable to such indemnified party under this
Section 4 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action. An indemnifying party will not be liable for any settlement of
any action or claim effected without its written consent; provided, however,
that such consent will not be reasonably withheld.
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(d) If the indemnification provided for in this Section 4
is unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in
subsection (a) or (b) above (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties on the one
hand and the indemnified party on the other from the sale of the Transfer
Restricted Securities, pursuant to the Shelf Registration, or (ii) if the
allocation provided by the foregoing clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
indemnifying party or parties on the one hand and the indemnified party on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions in respect thereof) as well
as any other relevant equitable considerations. The relative fault of the
parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Offerors on the one hand or such Holder or such other indemnified party, as the
case may be, on the other, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this subsection (d)
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any action
or claim which is the subject of this subsection (d). Notwithstanding any other
provision of this Section 4(d), the Holders of the Transfer Restricted
Securities shall not be required to contribute any amount in excess of the
amount by which the net proceeds received by such Holders from the sale of the
Transfer Restricted Securities pursuant to a Shelf Registration Statement
exceeds the amount of damages which such Holders have otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this paragraph (d), each person, if any, who controls an indemnified party
within the meaning of the Securities Act or the Exchange Act shall have the same
rights to contribution as such indemnified party and each person, if any, who
controls the Company or the Trust within the meaning of the Securities Act or
the Exchange Act shall have the same rights to contribution as the Company or
the Trust, as the case may be.
(e) The agreements contained in this Section 4 shall
survive the sale of the Transfer Restricted Securities pursuant to the Shelf
Registration Statement and shall remain in full force and effect, regardless of
any termination or cancellation of this Agreement or any investigation made by
or on behalf of any indemnified party.
5. Liquidated Damages Under Certain Circumstances.
(a) If (i) the Shelf Registration Statement is not filed
with the Commission on or prior to 90 days after the Closing Date, (ii) the
Shelf Registration
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Statement has not been declared effective by the Commission within 180 days
after the Closing Date or (iii) the Shelf Registration Statement is filed and
declared effective but shall thereafter during the Shelf Registration Period
cease to be effective (without being succeeded immediately by an additional
registration statement filed and declared effective) or usable for the offer and
sale of Transfer Restricted Securities for a period of time (excluding any
Suspension Period) which shall exceed 60 days in the aggregate in any 12-month
period (each such event referred to in clauses (i) through (iii), a
"Registration Default"), the Offerors will pay liquidated damages to each Holder
of Transfer Restricted Securities. The amount of liquidated damages payable
during any period during which a Registration Default shall have occurred and be
continuing shall be that amount which is equal to one-quarter of one percent (25
basis points) per annum per $50 liquidation preference of Preferred Securities
or $1,000 principal amount of Convertible Subordinated Debentures or $.125 per
annum per 6.7125 shares of Common Stock (subject to adjustment in the event of
stock splits, stock recombinations, stock dividends and the like) constituting
Transfer Restricted Securities for the first 90 days during which one or more
Registration Defaults exist and one-half of one percent (50 basis points) per
annum per $50 liquidation preference of Preferred Securities or $1,000 principal
amount of Convertible Subordinated Debentures or $.25 per annum per 6.7125
shares (subject to adjustment as set forth above) of Common Stock constituting
Transfer Restricted Securities for all additional days during which a
Registration Default has occurred and is continuing. The Company shall notify
the Trustee and the Initial Purchaser within three business days after each and
every date on which a Registration Default occurs. All accrued liquidated
damages shall be paid to Holders of record on the regular payment date for
distributions on Preferred Securities and interest on Convertible Subordinated
Debentures in the same manner as payments of distributions on Preferred
Securities and interest on Convertible Subordinated Debentures are made.
Following the cure of all Registration Defaults or, if earlier, the termination
of the Shelf Registration Period, liquidated damages will cease to accrue with
respect to such Registration Default.
All of the Offerors obligations in respect of the payment of
liquidated damages set forth in the preceding paragraph which are outstanding
with respect to any Transfer Restricted Security at the time such security
ceases to be a Transfer Restricted Security shall survive until such time as all
such liquidated damages with respect to such security shall have been paid in
full.
The parties hereto agree that the liquidated damages provided
in this Section 5 constitute a reasonable estimate of the damages that will be
incurred by Holders of Transfer Restricted Securities by reason of the failure
of the Shelf Registration Statement to be filed, declared effective or to remain
effective, as the case may be.
6. Rules 144 and 144A. Each of the Company and the Trust
shall use its reasonable best efforts to file any reports required to be filed
by it under the Securities Act and the Exchange Act in a timely manner and, if
at any time the Company is not required to file such reports, it will, upon the
request of any Holder of Preferred Securities (or Convertible Subordinated
Debentures, if Convertible Subordinated Debentures are distributed to holders of
Preferred Securities), make publicly available other information so long as
necessary to permit sales of such securities pursuant to
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Rules 144 and 144A. The Offerors covenant that they will take such further
action as any Holder of Preferred Securities (or Convertible Subordinated
Debentures, if Convertible Subordinated Debentures are distributed to holders of
Preferred Securities) may reasonably request, all to the extent required from
time to time to enable such Holder to sell Preferred Securities (or, if
applicable, Convertible Subordinated Debentures) without registration under the
Securities Act within the limitation of the exemptions provided by Rules 144 and
144A (including the requirements of Rule 144A(d)(4)). The Offerors will provide
a copy of this Agreement to prospective purchasers of Preferred Securities (or,
if applicable, Convertible Subordinated Debentures) identified to the Offerors
by the Initial Purchaser upon request. Upon the request of any Holder of
Preferred Securities (or, if applicable, Convertible Subordinated Debentures)
the Offerors shall deliver to such Holder a written statement as to whether they
have complied with such requirements. Notwithstanding the foregoing, nothing in
this Section 6 shall be deemed to require the Offerors to register any of their
securities pursuant to the Exchange Act.
7. Underwritten Registrations. If any of the Transfer
Restricted Securities covered by any Shelf Registration are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering ("Managing Underwriters") will be
selected by the Offerors; provided, that such selection is consented to by the
Holders of a majority in aggregate principal amount of Transfer Restricted
Securities to be included in such offering, which consent shall not be
unreasonably withheld or delayed.
No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such person's Transfer
Restricted Securities on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
8. Miscellaneous.
(a) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, except by the written
agreement of the Company, the Trust and the Holders of a majority in liquidation
amount (or, if applicable, principal amount) of the Transfer Restricted
Securities affected by such amendment, modification, supplement, waiver or
consents (with holders of Common Stock constituting Transfer Restricted
Securities being deemed to be Holders of the aggregate liquidation amount of
Preferred Securities (or, if applicable, principal amount of Convertible
Subordinated Debentures) converted into Common Stock for such calculation).
(b) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand delivery,
first-class mail, facsimile transmission, or overnight air courier:
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(1) if to a Holder of the Transfer Restricted Securities,
at the most current address given by such Holder to the Offerors.
(2) if to the Initial Purchaser:
Warburg Dillon Read LLC
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Syndicate Department
with a copy to:
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxxxx X. Xxxxxx
(3) if to the Company, at the address as follows:
Caremark Rx, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
with a copy to:
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx
(4) if to the Trust, at the address as follows:
Caremark Rx Capital Trust I
c/o Caremark Rx, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
All such notices and communications shall be deemed
to have been duly given: at the time delivered by hand, if personally delivered;
three business days after being deposited in the mail, postage prepaid, if
mailed; when receipt is acknowledged by recipient's facsimile machine operator,
if sent by facsimile transmission; and on the day delivered, if sent by
overnight air courier.
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(c) No Inconsistent Agreements. The Offerors have not, as
of the date hereof, entered into, nor shall they, on or after the date hereof,
enter into, any agreement with respect to its securities that is inconsistent
with the rights granted to the Holders herein or otherwise conflicts with the
provisions hereof.
(d) Successors and Assigns. This Agreement shall be
binding upon the Offerors and their successors and assigns.
(e) Counterparts. This Agreement may be executed in any
number of counterparts and by the 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 one and the same agreement.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
(h) Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(i) Transfer Restricted Securities Held by the Trust or
the Company. Whenever the consent or approval of Holders of a specified
percentage of principal amount of Transfer Restricted Securities is required
hereunder, Transfer Restricted Securities held by the Trust or the Company or
their affiliates (other than subsequent Holders of Transfer Restricted
Securities if such subsequent Holders are deemed to be affiliates solely by
reason of their holdings of such Transfer Restricted Securities) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
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If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Trust and the Company a counterpart
hereof, whereupon this instrument, along with all counterparts, will become a
binding agreement on the Initial Purchaser and the Trust and the Company in
accordance with its terms.
Very truly yours,
CAREMARK RX, INC.
By: /s/ Xxxxx X. Xxxxxxxxx, Xx.
-------------------------------
Name: Xxxxx X. Xxxxxxxxx, Xx.
Title: Executive Vice President and
Chief Financial Officer
CAREMARK RX CAPITAL TRUST I
By: /s/ Xxxxx X. Xxxxxxxxx, Xx.
-------------------------------
Name: Xxxxx X. Xxxxxxxxx, Xx.
As Administrative Trustee
By: /s/ Xxxxxx X. XxXxxx
-------------------------------
Name: Xxxxxx X. XxXxxx
As Administrative Trustee
Accepted and agreed to as
of the date first above written
WARBURG DILLON READ LLC
By: /a/ Xxxxxxx X. XxXxxxx
-----------------------------
Name:
Title:
By: /s/
-----------------------------
Name:
Title:
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