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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
MAY 13, 1996
------------------------------------------------
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
CAREMARK INTERNATIONAL INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 1-11328 36-3838069
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(STATE OR OTHER (COMMISSION (IRS EMPLOYER
JURISDICTION FILE NUMBER) IDENTIFICATION NO.)
OF INCORPORATION)
2215 SANDERS ROAD, NORTHBROOK, ILLINOIS 60062
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (847) 559-4700
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ITEM 5. OTHER EVENTS
On May 13, 1996, Caremark International Inc., a Delaware corporation
(the "Company"), entered into a Plan and Agreement of Merger (the "Merger
Agreement") with MedPartners/Mullikin, Inc., a Delaware corporation
("MedPartners"), and PPM Merger Corporation, a Delaware corporation ("Merger
Sub"), pursuant to which, among other things, Merger Sub will merge with and
into the Company (the "Merger"). As a result of the Merger, each outstanding
share of the Company's common stock, $1.00 par value per share, will be
converted into the right to receive 1.21 shares of Common Stock, par value $.001
per share of MedPartners. The Merger is conditioned upon, among other things,
approval by stockholders of the Company and by stockholders of MedPartners, and
upon certain regulatory approvals. The Merger Agreement is attached as Exhibit 1
hereto and its terms are hereby incorporated herein by reference.
A copy of the Press Release, dated May 14, 1996, issued by the Company
and MedPartners relating to the Merger is attached as Exhibit 2 hereto and is
hereby incorporated herein by reference.
Effective May 13, 1996, the Company amended its Rights Agreement,
dated as of November 30, 1992 by and between the Company and First Chicago Trust
Company of New York (as Rights Agent) (the "Rights Agreement"), with the effect
of exempting the Merger, the Merger Agreement and the events and the
transactions contemplated thereby from the Rights Agreement. The amendment to
the Rights Agreement is attached hereto as Exhibit 3 and is hereby incorporated
herein by reference.
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Item 7. Financial Statements and Exhibits.
1. Plan and Agreement of Merger dated as of May 13, 1996, by and
among the Company, MedPartners and PPM Merger Corporation.
2. Press Release, dated May 14, 1996, relating to transactions
between the Company and MedPartners.
3. Amendment, dated as of May 13, 1996, to the Company's Rights
Agreement, dated as of November 30, 1992 by and between the
Company and First Chicago Trust Company of New York (as
Rights Agent).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAREMARK INTERNATIONAL INC.
By: /s/ Thomas W. Hodson
---------------------------------
Name: Thomas W. Hodson
Title: Senior Vice President and
Chief Financial Officer
Date: May 14, 1996
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EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
1. Plan and Agreement of Merger dated as of May 13, 1996, by and among the
Company, MedPartners and PPM Merger Corporation.
2. Press Release, dated May 14, 1996, relating to transactions between the
Company and MedPartners.
3. Amendment, dated as of May 13, 1996, to the Company's Rights Agreement,
dated as of November 30, 1992 by and between the Company and First
Chicago Trust Company of New York (as Rights Agent).
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===============================================================================
PLAN AND AGREEMENT OF MERGER
DATED AS OF MAY 13, 1996
BY AND AMONG
MEDPARTNERS/MULLIKIN, INC.,
PPM MERGER CORPORATION
AND
CAREMARK INTERNATIONAL INC.
===============================================================================
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TABLE OF CONTENTS
PLAN AND AGREEMENT OF MERGER
BY AND AMONG
MEDPARTNERS/MULLIKIN, INC.,
PPM MERGER CORPORATION
AND
CAREMARK INTERNATIONAL INC.
Page
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Parties..........................................................1
Recitals.........................................................1
Section 1. THE MERGER............................................2
1.1 The Merger............................................2
1.2 The Closing...........................................2
1.3 Effective Time........................................2
1.4 Effect of the Merger..................................2
Section 2. EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES....2
2.1 Effect on Capital Stock...............................2
2.2 Exchange of Certificates..............................4
2.3 Corporate Name Change.................................8
2.4 Certificate of Incorporation of Surviving Corporation.8
2.5 By-laws of the Surviving Corporation..................8
2.6 Directors and Officers................................8
2.7 Assets, Liabilities, Reserves and Accounts............8
2.8 Corporate Acts of the Subsidiary......................8
Section 3. REPRESENTATIONS AND WARRANTIES OF CAREMARK............9
3.1 Organization, Existence and Good Standing.............9
3.2 Caremark Capital Stock................................9
3.3 Subsidiaries or Affiliated Entities...................9
3.4 Organization, Existence and Good Standing of Caremark
Subsidiaries and Other Caremark Entities..............10
3.5 Foreign Qualifications................................11
3.6 Power and Authority...................................11
3.7 Caremark Public Information...........................12
3.8 Contracts, etc........................................13
3.9 Properties and Assets.................................13
3.10 Legal Proceedings.....................................14
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3.11 Subsequent Events..............................................14
3.12 Accounts Receivable............................................15
3.13 Tax Returns....................................................16
3.14 Employee Benefit Plans; Employment Matters.....................16
3.15 Compliance with Laws...........................................17
3.16 Regulatory Approvals...........................................18
3.17 Commissions and Fees...........................................18
3.18 Vote Required..................................................18
3.19 No Untrue Representations......................................19
3.20 Accounting Matters.............................................19
Section 4. REPRESENTATIONS AND WARRANTIES OF MEDPARTNERS/
MULLIKIN AND THE SUBSIDIARY RELATED TO THE
SUBSIDIARY................................................... 19
4.1 Organization, Existence, Good Standing and Capital Stock.......19
4.2 Power and Authority............................................19
4.3 Commissions and Fees...........................................20
4.4 No Subsidiaries................................................20
4.5 Legal Proceedings..............................................20
4.6 No Contracts or Liabilities....................................20
Section 5. REPRESENTATIONS AND WARRANTIES OF MEDPARTNERS/MULLIKIN.........20
5.1 Organization, Existence and Good Standing......................20
5.2 MedPartners/Mullikin Capital Stock.............................21
5.3 MedPartners/Mullikin Common Stock..............................21
5.4 Subsidiaries and Affiliated Entities...........................21
5.5 Organization, Existence and Good Standing of MedPartners/
Mullikin Subsidiaries and Other MedPartners/Mullikin Entities..22
5.6 Foreign Qualifications.........................................23
5.7 Power and Authority............................................23
5.8 MedPartners/Mullikin Public Information........................24
5.9 Contracts, etc.................................................24
5.10 Properties and Assets..........................................25
5.11 Legal Proceedings..............................................25
5.12 Subsequent Events..............................................26
5.13 Accounts Receivable............................................27
5.14 Tax Returns....................................................27
5.15 Employee Benefit Plans; Employment Matters.....................28
5.16 Compliance with Laws...........................................29
5.17 Regulatory Approvals...........................................29
5.18 Investment Intent..............................................30
5.19 Commissions and Fees...........................................30
5.20 Vote Required..................................................30
5.21 Accounting Matters.............................................30
5.22 No Untrue Representations......................................30
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5.23 Payor Settlements..............................................31
Section 6. ACCESS TO INFORMATION AND DOCUMENTS............................31
6.1 Access to Information..........................................31
6.2 Return of Records..............................................32
6.3 Effect of Access...............................................32
Section 7. COVENANTS......................................................32
7.1 Preservation of Business.......................................32
7.2 Material Transactions..........................................32
7.3 Meetings of Stockholders.......................................34
7.4 Registration Statement.........................................34
7.5 Exemption from State Takeover Laws.............................37
7.6 HSR Act Compliance.............................................37
7.7 Public Disclosures.............................................37
7.8 Transition Planning/Reorganization.............................37
7.9 No Solicitations...............................................38
7.10 Other Actions..................................................39
7.11 Accounting Methods.............................................39
7.12 Pooling and Tax-Free Reorganization Treatment..................40
7.13 Affiliate and Pooling Agreements...............................40
7.14 Cooperation....................................................40
7.15 Caremark Stock Options.........................................41
7.16 Publication of Combined Results................................42
7.17 Tax Opinions...................................................42
7.18 Consents; Amendments, Etc......................................42
7.19 Change in Control..............................................43
7.20 Employee Retention.............................................43
7.21 Litigation Cooperation.........................................43
7.22 Consulting Agreements..........................................43
Section 8. TERMINATION, AMENDMENT AND WAIVER..............................44
8.1 Termination....................................................44
8.2 Effect of Termination..........................................45
8.3 Amendment......................................................45
8.4 Extension; Waiver..............................................45
8.5 Procedure for Termination, Amendment, Extension or Waiver......46
8.6 Expenses; Breakup Fees.........................................46
Section 9. CONDITIONS TO CLOSING..........................................48
9.1 Mutual Conditions..............................................48
9.2 Conditions to Obligations of MedPartners/Mullikin..............49
9.3 Conditions to Obligations of Caremark..........................50
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Section 10. MISCELLANEOUS...................................................51
10.1 Nonsurvival of Representations and Warranties...................51
10.2 Notices.........................................................51
10.3 Further Assurances..............................................52
10.4 Insurance; Indemnification; Benefits............................52
10.5 Governing Law...................................................54
10.6 "Including".....................................................54
10.7 "Knowledge".....................................................54
10.8 "Material adverse change" or "material adverse effect"..........55
10.10 Environmental Laws..............................................55
10.11 Captions........................................................56
10.12 Integration of Exhibits.........................................56
10.13 Entire Agreement................................................56
10.14 Counterparts....................................................56
10.15 Binding Effect..................................................56
10.16 No Rule of Construction.........................................56
Testimonium...................................................................57
Signatures....................................................................57
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PLAN AND AGREEMENT OF MERGER
PLAN AND AGREEMENT OF MERGER ("Plan of Merger"), made and entered into
as of the 13th day of May, 1996, by and among MEDPARTNERS/MULLIKIN, INC., a
Delaware corporation ("MedPartners/Mullikin"), PPM MERGER CORPORATION, a
Delaware corporation (the "Subsidiary"), and CAREMARK INTERNATIONAL INC., a
Delaware corporation ("Caremark").
W I T N E S S E T H:
-------------------
WHEREAS, the respective Boards of Directors of MedPartners/Mullikin,
the Subsidiary and Caremark have approved the merger of the Subsidiary with and
into Caremark (the "Merger"), upon the terms and conditions set forth in this
Plan of Merger, whereby each share of Common Stock, par value $1.00 per share,
of Caremark (the "Caremark Common Stock"), not owned directly or indirectly by
Caremark, will be converted into the right to receive the merger consideration
provided for herein (the Caremark Common Stock may be sometimes hereinafter
referred to as the "Caremark Shares");
WHEREAS, each of MedPartners/Mullikin, the Subsidiary and Caremark
desire to make certain representations, warranties, covenants and agreements in
connection with the Merger and also to prescribe various conditions to the
Merger;
WHEREAS, for federal income tax purposes, it is intended that the
Merger (as defined herein) shall qualify as a reorganization under the
provisions of Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code"); and
WHEREAS, for accounting purposes, it is intended that the Merger shall
be accounted for as a "pooling of interests".
NOW, THEREFORE, in consideration of the premises, and the mutual
covenants and agreements contained herein, the parties hereto do hereby agree as
follows:
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Section 1. THE MERGER.
1.1 The Merger. Upon the terms and conditions set forth in this Plan
of Merger, and in accordance with the General Corporation Law of the State of
Delaware (the "DGCL"), the Subsidiary shall be merged with and into Caremark at
the Effective Time (as defined in Section 1.3). Following the Effective Time,
the separate corporate existence of the Subsidiary shall cease and Caremark
shall continue as the surviving corporation (the "Surviving Corporation") as a
business corporation incorporated under the laws of the State of Delaware under
the name "Caremark International Inc." and shall succeed to and assume all the
rights and obligations of the Subsidiary in accordance with the DGCL.
1.2 The Closing. The closing of the Merger (the "Closing") will take
place at 10:00 a.m. Eastern Time on a date to be specified by the parties (the
"Closing Date"), which shall be no later than the second business day after the
satisfaction or waiver of the conditions set forth in Sections 9.1, 9.2 and 9.3,
at the offices of Wachtell, Lipton, Rosen & Katz, New York, New York, unless
another date or place is agreed to in writing by the parties hereto.
1.3 Effective Time. Subject to the provisions of this Plan of
Merger, Caremark and the Subsidiary shall file a Certificate of Merger (the
"Certificate of Merger") executed in accordance with the relevant provisions of
the DGCL and shall make all other filings or recordings required under the DGCL
to effect the Merger as soon as practicable on or after the Closing Date. The
Merger shall become effective at such time as the Certificate of Merger is duly
filed with the Secretary of State of the State of Delaware, or at such other
time as MedPartners/Mullikin, the Subsidiary and Caremark shall agree should be
specified in the Certificate of Merger (the "Effective Time").
1.4 Effect of the Merger. The Merger shall have the effects set
forth in the DGCL.
Section 2. EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES.
2.1 Effect on Capital Stock. As of the Effective Time, by virtue of
the Merger and without any action on the part of any holder of Caremark Shares:
(a) Cancellation of Treasury Stock. Each share of Caremark Common
Stock that is owned by Caremark, MedPartners/Mullikin or by any subsidiary of
Caremark or
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MedPartners/Mullikin shall automatically be cancelled and retired and shall
cease to exist, and none of the Common Stock, par value $.001 per share, of
MedPartners/Mullikin("MedPartners/Mullikin Common Stock"), cash or other
consideration shall be delivered in exchange therefor.
(b) Subsidiary Common Stock. Each share of Common Stock, par value
$1.00 per share, of the Subsidiary issued and outstanding immediately prior to
the Effective Time shall be converted into one share of Common Stock of the
Surviving Corporation.
(c) Conversion of Caremark Shares. Each Caremark Share (other than
Caremark Shares to be cancelled in accordance with Section 2.1(a)) issued and
outstanding immediately prior to the Effective Time shall be converted into the
right to receive 1.21 shares of MedPartners/Mullikin Common Stock (the "Exchange
Ratio"). All such shares of MedPartners/Mullikin Common Stock shall be fully
paid and nonassessable and are hereinafter sometimes referred to as the
"MedPartners/Mullikin Shares". Upon such conversion, all such Caremark Shares
shall be cancelled and cease to exist, and each holder thereof shall cease to
have any rights with respect thereto other than the right to receive
MedPartners/Mullikin Shares issued in exchange therefor and cash in lieu of
fractional MedPartners/Mullikin Shares in accordance with the terms provided
herein.
(d) Stock Options. At the Effective Time, all rights with respect to
Caremark Common Stock pursuant to any Caremark stock options which are
outstanding at the Effective Time, whether or not then vested or exercisable,
shall be converted into and become rights with respect to MedPartners/Mullikin
Common Stock, and MedPartners/Mullikin shall assume each Caremark stock option
in accordance with the terms of any stock option plan under which it was issued
and any stock option agreement by which it is evidenced. It is intended that
the foregoing provisions shall be undertaken in a manner that will not
constitute a "modification" as defined in Section 425 of the Code, as to any
stock option which is an "incentive stock option". Each Caremark Stock option
so assumed shall be exercisable for that number of shares of MedPartners/
Mullikin Common Stock equal to the number of Caremark Shares subject thereto
multiplied by the Exchange Ratio, and shall have an exercise price per share
equal to the Caremark exercise price divided by the Exchange Ratio. All options
issued pursuant to Caremark's 1992 Incentive Compensation Plan and 1992 Stock
Option Plan for Non-Employee Directors shall be fully vested at the Effective
Time to the extent permitted under such Plans.
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(e) Anti-Dilution Provisions. If after the date hereof and prior to
the Effective Time MedPartners/Mullikin shall have declared a stock split
(including a reverse split) of MedPartners/Mullikin Common Stock or a dividend
payable in MedPartners/Mullikin Common Stock, or any other distribution of
securities or dividend (in cash or otherwise) to holders of MedPartners/Mullikin
Common Stock with respect to their MedPartners/Mullikin Common Stock (including
without limitation such a distribution or dividend made in connection with a
recapitalization, reclassification, merger, consolidation, reorganization or
similar transaction) then the Exchange Ratio shall be appropriately adjusted to
reflect such stock split, dividend or other distribution of securities.
2.2 Exchange of Certificates.
(a) Exchange Agent. Prior to the Effective Time, MedPartners/Mullikin
shall enter into an agreement with Chemical Mellon Shareholder Services, L.L.C.
(the "Exchange Agent"), which provides that MedPartners/Mullikin shall deposit
with the Exchange Agent as of the Effective Time, for the benefit of the holders
of Caremark Shares, for exchange in accordance with this Section 2.2, through
the Exchange Agent, (i) certificates representing the shares of MedPartners/
Mullikin Common Stock issuable pursuant to Section 2.1(b) and (ii) cash in an
amount equal to the aggregate amount required to be paid in lieu of fractional
interests of MedPartners/Mullikin Common Stock pursuant to Section 2.2(e) (such
shares of MedPartners/Mullikin Common Stock, together with any dividends or
distributions with respect thereto with a record date after the Effective Time,
and together with the cash referred to in clause (ii) of this Section 2.2(a),
being hereinafter referred to as the "Exchange Fund") in exchange for
outstanding Caremark Shares.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Caremark Shares (the "Certificates") whose shares were
converted into the right to receive the merger consideration provided for in
Section 2.1, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in
such form and have such other provisions as MedPartners/Mullikin may reasonably
specify) and (ii) instructions for use in effecting the
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surrender of the Certificates in exchange for certificates representing shares
of MedPartners/Mullikin Common Stock. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by MedPartners/Mullikin, together with such letter of transmittal,
duly executed, and such other documents as may reasonably be required by the
Exchange Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole shares of
MedPartners/MullikinCommon Stock and cash which such holder has the right to
receive pursuant to the provisions of Sections 2.1 and 2.2, and the Certificate
so surrendered shall forthwith be cancelled. If any cash or any certificate
representing MedPartners/Mullikin Shares is to be paid to or issued in a name
other than that in which the Certificate surrendered in exchange therefor is
registered, a certificate representing the proper number of shares of
MedPartners/Mullikin Common Stock may be issued to a person other than the
person in whose name the Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay to the Exchange Agent
any transfer or other taxes required by reason of the issuance of shares of
MedPartners/Mullikin Common Stock to a person other than the registered holder
of such Certificate or establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not applicable. Until surrendered as contemplated
by this Section 2.2, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
certificate representing shares of MedPartners/Mullikin Common Stock and cash in
lieu of any fractional shares of MedPartners/Mullikin Common Stock as
contemplated by this Section 2.2. No interest will be paid or will accrue on any
cash payable in lieu of any fractional shares of MedPartners/Mullikin Common
Stock. To the extent permitted by law, former stockholders of record of Caremark
shall be entitled to vote after the Effective Time at any meeting of
MedPartners/Mullikin's stockholders the number of whole shares of
MedPartners/Mullikin Common Stock into which their respective Caremark Shares
are converted, regardless of whether such holders have exchanged their
Certificates for certificates representing MedPartners/MullikinCommon Stock in
accordance with this Section 2.2.
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with respect to MedPartners/Mullikin Common Stock with a
record date after the
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Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of MedPartners/Mullikin Common Stock represented thereby
and no cash payment in lieu of fractional shares shall be paid to any such
holder pursuant to Section 2.2(e) until the surrender of such Certificate in
accordance with this Section 2.2. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid to the holder
of the certificates representing whole shares of MedPartners/Mullikin Common
Stock issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of any cash payable in lieu of a fractional share of
MedPartners/Mullikin Common Stock to which such holder is entitled pursuant to
Section 2.2(e) and the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such whole shares
of MedPartners/Mullikin Common Stock, and (ii) at the appropriate payment date,
the amount of dividends or other distributions with a record date after the
Effective Time but prior to such surrender and with a payment date subsequent to
such surrender payable with respect to such whole shares of MedPartners/Mullikin
Common Stock. If any holder of converted Caremark Shares shall be unable to
surrender such holder's Certificates because such Certificates shall have been
lost or destroyed, such holder may deliver in lieu thereof an affidavit and
indemnity bond in form and substance and with surety reasonably satisfactory to
MedPartners/Mullikin.
(d) No Further Ownership Rights in Caremark Shares. All shares of
MedPartners/Mullikin Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms of this Section 2 (including any cash
paid pursuant to Section 2.2(c) or 2.2(e)) shall be deemed to have been issued
(and paid) in full satisfaction of all rights pertaining to the Caremark Shares
theretofore represented by such Certificates. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Exchange Agent
for any reason, they shall be cancelled and exchanged as provided in this
Section 2, except as otherwise provided by law.
(e) No Fractional Shares. No certificates or scrip representing
fractional shares of MedPartners/Mullikin Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests will
not entitle the owner thereof to vote or to any rights of a stockholder of
MedPartners/Mullikin. Notwithstanding any other provision of this Plan of
Merger, each holder of Caremark Shares exchanged pursuant to the Merger who
would
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otherwise have been entitled to receive a fraction of a share of
MedPartners/Mullikin Common Stock (after taking into account all Certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of
MedPartners/Mullikin Common Stock multiplied by the per share closing price on
the New York Stock Exchange Composite Tape of MedPartners/Mullikin Common Stock
on the date of the Effective Time (or, if shares of MedPartners/Mullikin Common
Stock do not trade on the New York Stock Exchange, Inc. (the "NYSE") on such
date, the first date of trading of MedPartners/Mullikin Common Stock on the NYSE
after the Effective Time).
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of the Certificates for six months
after the Effective Time shall be delivered to MedPartners/Mullikin, upon
demand, and any holders of the Certificates who have not theretofore complied
with this Section 2 shall thereafter look only to MedPartners/Mullikin for
payment of MedPartners/Mullikin Common Stock, any cash in lieu of fractional
shares of MedPartners/Mullikin Common Stock and any dividends or distributions
with respect to MedPartners/Mullikin Common Stock.
(g) No Liability. None of MedPartners/Mullikin, Caremark or the
Exchange Agent shall be liable to any person in respect of any shares of
MedPartners/Mullikin Common Stock (or dividends or distributions with respect
thereto) or cash from the Exchange Fund delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law. If any
Certificates shall not have been surrendered prior to the end of the applicable
period after the Effective Time under escheat laws (or immediately prior to such
earlier date on which any shares of MedPartners/Mullikin Common Stock, any cash
in lieu of fractional shares of MedPartners/Mullikin Common Stock or any
dividends or distributions with respect to MedPartners/Mullikin Common Stock in
respect of such Certificates would otherwise escheat to or become the property
of any governmental entity), any such shares, cash, dividends or distributions
in respect of such Certificates shall, to the extent permitted by applicable
law, become the property of the Surviving Corporation, free and clear of all
claims or interest of any person previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund, as directed by MedPartners/Mullikin, on a
daily basis. Any interest and other income resulting from such investments shall
be paid to MedPartners/Mullikin.
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2.3 Corporate Name Change. At the Effective Time, the corporate name
of MedPartners/Mullikin shall be changed to "MedPartners, Inc."
2.4 Certificate of Incorporation of Surviving Corporation. The
Certificate of Incorporation of the Subsidiary, effective immediately following
the Effective Time, shall become the Certificate of Incorporation of the
Surviving Corporation from and after the Effective Time and until thereafter
amended as provided by law.
2.5 By-laws of the Surviving Corporation. The By-laws of the
Subsidiary shall be the By-laws of the Surviving Corporation from and after the
Effective Time and until thereafter altered, amended or repealed in accordance
with the DGCL, the Certificate of Incorporation of the Surviving Corporation and
the said By-laws.
2.6 Directors and Officers.
(a) The directors and officers of the Subsidiary immediately prior to
the Effective Time shall be the directors and officers of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation.
(b) The directors and officers of MedPartners/Mullikin, at the
Effective Time, shall be the directors and officers of MedPartners/Mullikin
consistent with Section 7.8 of this Plan of Merger, each to hold office in
accordance with the Certificate of Incorporation and By-laws and other corporate
proceedings and documentation.
2.7 Assets, Liabilities, Reserves and Accounts. At the Effective Time,
the assets, liabilities, reserves and accounts of each of the Subsidiary and
Caremark shall be taken up on the books of the Surviving Corporation at the
amounts at which they respectively shall be carried on the books of said
corporations immediately prior to the Effective Time, except as otherwise set
forth in this Plan of Merger and subject to such adjustments, or elimination of
intercompany items, as may be appropriate in giving effect to the Merger in
accordance with generally accepted accounting principles.
2.8 Corporate Acts of the Subsidiary. All corporate acts, plans,
policies, approvals and authorizations of the Subsidiary, its sole stockholder,
its Board of Directors, committees elected or appointed by the Board of
Directors, and all officers and agents, valid immediately prior to the Effective
Time, shall be those of the Surviving Corporation and shall be as effective and
binding thereon as they were with respect to the Subsidiary.
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Section 3. REPRESENTATIONS AND WARRANTIES OF CAREMARK.
Caremark hereby represents and warrants to MedPartners/Mullikin and
the Subsidiary as follows:
3.1 Organization, Existence and Good Standing. Caremark is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Caremark has all necessary corporate power and
authority to own its properties and assets and to carry on its business as
presently conducted. Caremark is not, and has not been within the two years
immediately preceding the date of this Plan of Merger, a subsidiary or division
of another corporation, nor has Caremark within such time owned, directly or
indirectly, any shares of MedPartners/Mullikin Common Stock.
3.2 Caremark Capital Stock. Caremark's authorized capital consists of
200,000,000 shares of Common Stock, par value $1.00 per share, of which
81,998,104 shares are issued and outstanding as of April 30, 1996 (includes
7,700,000 shares held by Flexitrust), 7,029 shares of which are held in
treasury, and 20,000,000 shares of Preferred Stock, par value $.01 per share
(2,000,000 shares of which have been designated as Series A Junior Participating
Preferred Stock), none of which shares is issued and outstanding as of the date
of this Plan of Merger. All of the issued and outstanding Caremark Shares are
duly and validly issued, fully paid and nonassessable. Except as disclosed in
the Caremark Documents (as herein defined), and except as set forth in Exhibit
3.2 to the Disclosure Schedule delivered to MedPartners/Mullikin by Caremark at
the time of the execution and delivery of this Plan of Merger (the "Caremark
Disclosure Schedule"), there are no options, warrants, or similar rights granted
by Caremark, or outstanding securities convertible into Caremark Common Stock,
or any other agreements to which Caremark is a party providing for the issuance
or sale by it of any additional securities which would remain in effect after
the Effective Time. There is no liability for dividends declared or accumulated
but unpaid with respect to any of the Caremark Shares.
3.3 Subsidiaries or Affiliated Entities.
(a) Attached as Exhibit 3.3 to the Caremark Disclosure Schedule is a
list of all subsidiaries of Caremark (individually, a "Caremark Subsidiary", and
collectively, the "Caremark Subsidiaries") and their states of incorporation and
all professional corporations or professional associations of which Caremark has
the right to control the voting securities and their states of
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incorporation. Except as set forth in Exhibit 3.3 to the Caremark Disclosure
Schedule, Caremark does not own stock in and does not control, directly or
indirectly, any other corporation, association, partnership or business
organization other than the Caremark Subsidiaries and the Other Caremark
Entities (as defined below).
(b) Also disclosed in Exhibit 3.3 to the Caremark Disclosure Schedule
is a list of all general or limited partnerships in which a general partner is
Caremark, a Caremark Subsidiary or another partnership directly or indirectly
controlled by Caremark (individually, a "Caremark Partnership" and collectively,
the "Caremark Partnerships"), and all limited liability companies in which
Caremark, a Caremark Subsidiary or a Caremark Partnership is a member
(individually, a "Caremark LLC" and collectively, the "Caremark LLCs") (the
Caremark Partnerships and the Caremark LLCs being collectively called the "Other
Caremark Entities"), and their states of organization.
(c) Except as set forth in Exhibit 3.3 to the Caremark Disclosure
Schedule, neither Caremark nor any Caremark Subsidiary owns an equity interest
in, nor does such entity control, directly or indirectly, any other joint
venture or partnership.
(d) Although the financial results of the medical groups affiliated
with Caremark's physician practice management business are consolidated for
accounting purposes on the Caremark Balance Sheet, the terms "Caremark
Subsidiary" and "Other Caremark Entity" do not include any affiliated medical
groups.
3.4 Organization, Existence and Good Standing of Caremark Subsidiaries
and Other Caremark Entities.
(a) Each Caremark Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its respective state of
incorporation. Each Caremark Subsidiary has all necessary corporate power to own
its properties and assets and to carry on its business as presently conducted.
(b) Each Caremark Partnership that is a limited partnership is validly
formed, each Caremark Partnership that is a general partnership has been duly
organized, and each Caremark Partnership is in good standing under the laws of
its respective state of organization. Each Caremark Partnership has all
necessary power to own its property and assets and to carry on its business as
presently conducted.
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(c) Each Caremark LLC is a limited liability company validly formed
and in good standing under the laws of its respective state of organization.
Each Caremark LLC has all necessary power to own its property and assets to
carry on its business as presently conducted.
3.5 Foreign Qualifications. Caremark, each Caremark Subsidiary and
each Other Caremark Entity that is not a general partnership is qualified to do
business as a foreign corporation, foreign limited partnership or foreign
limited liability company, as the case may be, and is in good standing in each
jurisdiction where the nature or character of the property owned, leased or
operated by it or the nature of the business transacted by it makes such
qualification necessary, except where the failure to so qualify would not have a
material adverse effect on Caremark.
3.6 Power and Authority. Subject to the satisfaction of the conditions
precedent set forth herein, Caremark has the corporate power to execute, deliver
and perform this Plan of Merger and all agreements and other documents executed
and delivered or to be executed and delivered by it pursuant to this Plan of
Merger, and, subject to the satisfaction of the conditions precedent set forth
herein has taken all action required by its Certificate of Incorporation, By-
laws or otherwise, to authorize the execution, delivery and performance of this
Plan of Merger and such related documents. Except as set forth in Exhibit 3.6 to
the Caremark Disclosure Schedule, the execution and delivery of this Plan of
Merger does not and, subject to the receipt of required stockholder and
regulatory approvals and any other required third-party consents or approvals,
the consummation of the Merger will not, violate any provisions of the
Certificate of Incorporation or By-laws of Caremark or any provisions of, or
result in the acceleration of any obligation under, any mortgage, lien, lease,
agreement, instrument, order, arbitration award, judgment or decree, to which
Caremark, any Caremark Subsidiary or any Other Caremark Entity is a party, or by
which it is bound, or violate any restrictions of any kind to which it is
subject which, if violated or accelerated would have a material adverse effect
on Caremark, provided, however, nothing contained herein is intended to
constitute a representation or warranty with respect to any conflict or
violation or other impact upon the Certificate of Incorporation, By-laws,
mortgage, lien, lease, agreement, instrument, order, arbitration award, judgment
or decree to which MedPartners/Mullikin or any of its subsidiaries is a party or
to which any such parties
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are bound. The execution and delivery of this Plan of Merger has been approved
by the Board of Directors of Caremark.
3.7 Caremark Public Information. Caremark has heretofore made
available to MedPartners/Mullikin a true and complete copy of each report,
schedule, registration statement and definitive proxy statement filed by it with
the Securities and Exchange Commission (the "SEC") (as any such documents have
since the time of their original filing been amended, the "Caremark Documents")
since January 1, 1994, which are all the documents (other than preliminary
material) that it was required to file with the SEC since such date. As of their
respective dates, the Caremark Documents did not contain any untrue statements
of material facts or omit to state material facts required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. As of their respective dates, the Caremark
Documents complied in all material respects with the applicable requirements of
the Securities Act of 1933, as amended (the "Securities Act"), and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated under such statutes. The financial statements
contained in the Caremark Documents, together with the notes thereto, have been
prepared in accordance with generally accepted accounting principles
consistently followed throughout the periods indicated (except as may be
indicated in the notes thereto, or, in the case of the unaudited financial
statements, as permitted by Form 10-Q), reflect all known liabilities of
Caremark and its consolidated subsidiaries, fixed or contingent, required to be
stated therein, and present fairly the financial condition of Caremark and its
consolidated subsidiaries at said dates and the consolidated results of
operations and cash flows of Caremark and its consolidated subsidiaries for the
periods then ended. The consolidated balance sheet of Caremark at December 31,
1995, included in the Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 of Caremark is herein sometimes referred to as the "Caremark
Balance Sheet".
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3.8 Contracts, etc.
(a) All material contracts, leases, agreements and arrangements to
which Caremark or any of the Caremark Subsidiaries or Other Caremark Entities is
a party are legally valid and binding in accordance with their terms and in full
force and effect. Except as disclosed in Exhibits 3.8 and 3.10 to the Caremark
Disclosure Schedule, to the knowledge of Caremark, all parties to such
contracts, leases, agreements and arrangements have complied with the provisions
of such contracts, leases, agreements and arrangements, and to the knowledge of
Caremark, no party is in default thereunder, and no event has occurred which,
but for the passage of time or the giving of notice or both, would constitute a
default thereunder, except, in each case, where the invalidity of the lease,
contract, agreement or arrangement or the default or breach thereunder or
thereof would not, individually or in the aggregate, have a material adverse
effect on Caremark.
(b) Except as set forth in Exhibit 3.8 to the Caremark Disclosure
Schedule, no material contract or agreement to which Caremark or any Caremark
Subsidiary is a party will, by its terms, terminate as a result of the
transactions contemplated hereby or require any consent from any obligor thereto
in order to remain in full force and effect immediately after the Effective
Time, except for contracts or agreements which, if terminated, would not have a
material adverse effect on Caremark.
(c) Except as set forth in Exhibit 3.8 to the Caremark Disclosure
Schedule, none of Caremark or any Caremark Subsidiary has granted any right of
first refusal or similar right in favor of any third party with respect to any
material portion of its properties or assets (excluding liens described in
Section 3.9) or entered into any non-competition agreement or similar agreement
restricting its ability to engage in any business in any location.
3.9 Properties and Assets. Caremark (including, as applicable, the
Caremark Subsidiaries or Other Caremark Entities) owns all of the real and
personal property included in the Caremark Balance Sheet (except assets recorded
under capital lease obligations and such property as has been disposed of during
the ordinary course of Caremark's business since the date of the Caremark
Balance Sheet), free and clear of any liens, claims, charges, exceptions or
encumbrances, except for those (i) if any, which in the aggregate are not
material and which do
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not materially affect continued use of such property, or (ii) which are set
forth in Exhibit 3.9 to the Caremark Disclosure Schedule or in the Caremark
Documents.
3.10 Legal Proceedings. Except as disclosed in the Caremark Documents
or as listed in Exhibit 3.10 to the Caremark Disclosure Schedule, there are no
actions, suits or proceedings pending or, to the knowledge of Caremark,
threatened against Caremark, at law or in equity, relating to or affecting
Caremark, any Caremark Subsidiary or any Other Caremark Entity, including the
Merger, which individually or in the aggregate, could reasonably be expected to
have a material effect on Caremark or a material adverse effect on the ability
of Caremark to consummate the transactions contemplated hereby. Except as
disclosed in the Caremark Documents or as listed in Exhibit 3.10 to the Caremark
Disclosure Schedule, Caremark does not know or have any reasonable grounds to
believe that any such action, suit or proceeding has merit. In connection with
the execution and delivery of this Plan of Merger, Caremark has made available
to MedPartners/Mullikin and its representatives all material documents (except
those which may be privileged, subject to protective orders or confidentiality
agreements) related to the legal proceedings described in the Caremark Documents
which would be required to enable MedPartners/Mullikin and its representatives
to understand the nature and scope of such litigation and its possible affect on
Caremark, the Caremark Subsidiaries and the Other Caremark Entities.
3.11 Subsequent Events. Except as disclosed in the Caremark Documents
or as set forth in Exhibit 3.11 to the Caremark Disclosure Schedule, Caremark
has not, since the date of the Caremark Balance Sheet:
(a) Incurred any material adverse change.
(b) Discharged or satisfied any material lien or encumbrance, or paid
or satisfied any material obligation or liability (absolute, accrued,
contingent or otherwise) which discharge or satisfaction would have a
material adverse effect on Caremark, other than (i) liabilities shown or
reflected on the Caremark Balance Sheet or (ii) liabilities incurred since
the date of the Caremark Balance Sheet in the ordinary course of business.
(c) Incurred any funded indebtedness or increased or established any
reserve for taxes or any other liability on its books or otherwise provided
therefor which would have a material adverse effect on Caremark, except as
may have
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been required due to income or operations of Caremark since the date of the
Caremark Balance Sheet.
(d) Mortgaged, pledged or subjected to any lien, charge or other
encumbrance any of the assets, tangible or intangible, which assets are
material to the consolidated business or financial condition of Caremark.
(e) Sold or transferred any of the assets material to the consolidated
business of Caremark International, cancelled any material debts or claims
or waived any material rights, except in the ordinary course of business.
(f) Granted any general or uniform increase in the rates of pay of
employees or any material increase in salary payable or to become payable
by Caremark to any officer or employee, consultant or agent (other than
normal merit increases), or by means of any bonus or pension plan, contract
or other commitment, increased in a material respect the compensation of
any officer, employee, consultant or agent.
(g) Except for this Plan of Merger and any other agreement executed
and delivered pursuant to this Plan of Merger, entered into any material
transaction other than in the ordinary course of business or permitted
under this Plan of Merger.
(h) Issued any stock, bonds or other securities or any options or
rights to purchase any of its securities (other than stock issued upon the
exercise of outstanding options under Caremark's stock option plans or
stock purchase plans).
3.12 Accounts Receivable.
(a) Since the date of the Caremark Balance Sheet, Caremark has not
changed any principle or practice with respect to the recordation of accounts
receivable or the calculation of reserves therefor, or any material collection,
discount or write-off policy or procedure. Caremark (including the Caremark
Subsidiaries and Other Caremark Entities) is in compliance with the terms and
conditions of all third-party payor arrangements relating to its accounts
receivable, except to the extent that such noncompliance would not have a
material adverse effect on Caremark.
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(b) Without limiting the generality of the foregoing, Caremark and
each Caremark Subsidiary is in compliance with all Medicare and Medicaid
provider agreements to which it is a party, except to the extent that such
noncompliance would not have a material adverse effect on Caremark.
3.13 Tax Returns. Caremark has filed all tax returns required to be
filed by it or requests for extensions to file such returns or reports have been
timely filed and granted and have not expired, except to the extent that such
failures to file, taken together, do not have a material adverse effect on
Caremark. Caremark has made all payments shown as due on such returns. Except as
reflected in Exhibit 3.13 to the Caremark Disclosure Schedule, Caremark has not
been notified that any tax returns of Caremark are currently under audit by the
Internal Revenue Service or any state or local tax agency. No agreements have
been made by Caremark for the extension of time or the waiver of the statute of
limitations for the assessment or payment of any federal, state or local taxes.
3.14 Employee Benefit Plans; Employment Matters.
(a) Except as disclosed in the Caremark Documents or as set forth in
Exhibit 3.14(a) to the Caremark Disclosure Schedule, Caremark has neither
established nor maintains nor is obligated to make contributions to or under or
otherwise participate in (i) any bonus or other type of incentive compensation
plan, program, agreement, policy, commitment, contract or arrangement (whether
or not set forth in a written document), (ii) any pension, profit-sharing,
retirement or other plan, program or arrangement, or (iii) any other employee
benefit plan, fund or program, including, but not limited to, those described in
Section 3(3) of ERISA. All such plans disclosed in the Caremark Documents or
listed in Exhibit 3.14(a) (individually, a "Caremark Plan" and collectively, the
"Caremark Plans") have to the knowledge of Caremark during the Relevant Period,
and except as set forth in Exhibit 3.14(a) been operated and administered in all
material respects in accordance with, as applicable, ERISA, the Code, Title VII
of the Civil Rights Act of 1964, as amended, the Equal Pay Act of 1967, as
amended, the Age Discrimination in Employment Act of 1967, as amended, and the
related rules and regulations adopted by those federal agencies responsible for
the administration of such laws. No act or failure to act by Caremark has
resulted in a "prohibited transaction" (as defined in ERISA) with respect to the
Caremark Plans during the Relevant Period that is not subject to a
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statutory or regulatory exception. No "reportable event" (as defined in ERISA)
has occurred with respect to any of the Caremark Plans which is subject to Title
IV of ERISA during the Relevant Period except as set forth in Exhibit 3.14(a).
Caremark has not previously made, is not currently making, and is not obligated
in any way to make, any contributions to any multi-employer plan within the
meaning of the Multi-Employer Pension Plan Amendments Act of 1980. For purposes
of this Section 3.14, the term "Relevant Period" shall mean November 30, 1992
with regard to Caremark and the affiliation date with regard to Caremark's
management relations with affiliated medical group practices.
(b) Except as disclosed in the Caremark Documents or as set forth in
Exhibit 3.14(b) to the Caremark Disclosure Schedule, Caremark is not a party to
any oral or written (i) union, guild or collective bargaining agreement which
agreement covers employees in the United States (nor is it aware of any union
organizing activity currently being conducted in respect to any of its
employees), (ii) agreement with any executive officer or other key employee the
benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction of the nature contemplated by this Plan of
Merger and which provides for the payment of in excess of $25,000, or (iii)
agreement or plan, including any stock option plan, stock appreciation rights
plan, restricted stock plan or stock purchase plan, any of the benefits of which
will be increased, or the vesting the benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Plan of Merger or
the value of any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Plan of Merger.
3.15 Compliance with Laws. Except as disclosed in the Caremark
Documents or as set forth in Exhibit 3.15 to the Caremark Disclosure Schedule,
Caremark has not received any notices of material violations of any federal,
state and local laws, regulations and ordinances relating to its business and
operations, including, without limitation, the Occupational Safety and Health
Act, the Americans with Disabilities Act, the applicable Medicare or Medicaid
statutes and regulations and any Environmental Laws, and no notice of any
pending inspection or violation of any such law, regulation or ordinance has
been received by Caremark which, if it were determined that a violation had
occurred, would have a material adverse effect on Caremark.
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3.16 Regulatory Approvals. Except as disclosed in the Caremark
Documents or in Exhibit 3.16 to the Caremark Disclosure Schedule, Caremark and
each Caremark Subsidiary or Other Caremark Entity, as applicable, holds all
licenses, certificates of need and other regulatory approvals required or
necessary to be applied for or obtained in connection with its business as
presently conducted or as proposed to be conducted, except where the failure to
obtain such license, certificate of need or regulatory approval would not have a
material adverse effect on Caremark. All such licenses, certificates of need and
other regulatory approvals relating to the business, operations and facilities
of Caremark and each Caremark Subsidiary or Other Caremark Entity are in full
force and effect, except where any failure of such license, certificate of need
or regulatory approval to be in full force and effect would not have a material
adverse effect on Caremark. Any and all past litigation concerning such
licenses, certificates of need and regulatory approvals, and all claims and
causes of action raised therein, has been finally adjudicated. No such license,
certificate of need or regulatory approval has been revoked, conditioned (except
as may be customary) or restricted, and no action (equitable, legal or
administrative), arbitration or other process is pending, or to the best
knowledge of Caremark, threatened, which in any way challenges the validity of,
or seeks to revoke, condition or restrict any such license, certificate of need,
or regulatory approval. Subject to compliance with applicable securities laws
and the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR
Act"), the consummation of the Merger will not violate any law or restriction to
which Caremark is subject which, if violated, would have a material adverse
effect on Caremark.
3.17 Commissions and Fees. Except for fees payable to CS First Boston
pursuant to the engagement letter, dated March 19, 1996, there are no valid
claims for brokerage commissions or finder's or similar fees in connection with
the transactions contemplated by this Plan of Merger which may be now or
hereafter asserted against MedPartners/Mullikin or Caremarkor any subsidiary or
other controlled entity of MedPartners/Mullikin or Caremark resulting from any
action taken by Caremark or its officers, directors or agents, or any of them.
3.18 Vote Required. The affirmative vote of the holders of a majority
of the outstanding Caremark Shares entitled to vote thereon is the only vote of
the holders of any class or series
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of Caremark capital stock necessary to approve this Plan of Merger, the Merger
and the transactions contemplated hereby.
3.19 No Untrue Representations. No representation or warranty by
Caremark in this Plan of Merger, and no Exhibit or certificate issued by
Caremark and furnished or to be furnished to MedPartners/Mullikin pursuant
hereto, or in connection with the transactions contemplated hereby, contains or
will contain any untrue statement of a material fact, or omits or will omit to
state a material fact necessary to make the statements or facts contained
therein not misleading in light of all of the circumstances then prevailing.
3.20 Accounting Matters. To the best knowledge of Caremark, neither
Caremark nor any of its affiliates has taken or agreed to take any action that
(without giving effect to any actions taken or agreed to be taken by
MedPartners/Mullikin or any of its affiliates) would prevent
MedPartners/Mullikin from accounting for the business combination to be effected
by the Merger as a pooling-of-interests for financial reporting purposes.
Section 4. REPRESENTATIONS AND WARRANTIES OF MEDPARTNERS/MULLIKIN AND THE
SUBSIDIARY RELATED TO THE SUBSIDIARY.
The Subsidiary and MedPartners/Mullikin, jointly and severally, hereby
represent and warrant to Caremark as follows:
4.1 Organization, Existence, Good Standing and Capital Stock. The
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Subsidiary's authorized
capital consists of 1,000 shares of Common Stock, par value $1.00 per share, all
of which shares are issued and registered in the name of MedPartners/Mullikin.
The Subsidiary has not, within the two years immediately preceding the date of
this Plan of Merger, owned, directly or indirectly, any Caremark Shares.
4.2 Power and Authority. The Subsidiary has the corporate power to
execute, deliver and perform this Plan of Merger and all agreements and other
documents executed and delivered, or to be executed and delivered, by it
pursuant to this Plan of Merger, and, subject to the satisfaction of the
conditions precedent set forth herein, has taken all actions required by law,
its Certificate of Incorporation, its By-laws or otherwise, to authorize the
execution and delivery of this Plan of Merger and such related documents. The
execution and delivery of this Plan of
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Merger does not and, subject to the receipt of required regulatory approvals and
any other required third-party consents or approvals, the consummation of the
Merger contemplated hereby will not, violate any provisions of the Certificate
of Incorporation or By-laws of the Subsidiary, or any agreement, instrument,
order, judgment or decree to which the Subsidiary is a party or by which it is
bound, violate any restrictions of any kind to which the Subsidiary is subject,
or result in the creation of any lien, charge or encumbrance upon any of the
property or assets of the Subsidiary.
4.3 Commissions and Fees. There are no claims for brokerage
commissions, investment bankers' fees or finder's fees in connection with the
transaction contemplated by this Plan of Merger resulting from any action taken
by the Subsidiary or any of its officers, directors or agents.
4.4 No Subsidiaries. The Subsidiary does not own stock in, and does
not control directly or indirectly, any other corporation, association or
business organization. The Subsidiary is not a party to any joint venture or
partnership.
4.5 Legal Proceedings. There are no actions, suits or proceedings
pending or threatened against the Subsidiary, at law or in equity, relating to
or affecting the Subsidiary, including the Merger. The Subsidiary does not know
or have any reasonable grounds to know of any justification for any such action,
suit or proceeding.
4.6 No Contracts or Liabilities. Other than the obligations created
under this Plan of Merger, the Subsidiary has no obligations or liabilities
(contingent or otherwise) under any contracts, claims, leases, loans or
otherwise.
Section 5. REPRESENTATIONS AND WARRANTIES OF MEDPARTNERS/MULLIKIN.
MedPartners/Mullikin hereby represents and warrants to Caremark as follows:
5.1 Organization, Existence and Good Standing. MedPartners/Mullikin is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. MedPartners/Mullikin has all necessary corporate
power to own its properties and assets and to carry on its business as presently
conducted. MedPartners/Mullikin is not, and has not been within the two years
immediately preceding the date of this Plan of Merger, a subsidiary
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or division of another corporation, nor has MedPartners/Mullikin within such
time owned, directly or indirectly, any Caremark Shares.
5.2 MedPartners/Mullikin Capital Stock. MedPartners/Mullikin's
authorized capital consists of 9,500,000 shares of Preferred Stock, par value
$.001 per share, of which no shares are issued and outstanding, and no shares
are held in treasury, 500,000 shares of Series C Junior Participating Preferred
Stock, par value $.001 per share, of which no shares are issued and outstanding
and no shares are held on treasury and 200,000,000 shares of Common Stock, par
value $.001 per share, of which 50,786,775 shares were issued and outstanding at
May 1, 1996, and no shares are held in treasury. All of the issued and
outstanding shares of MedPartners/Mullikin Common Stock have been duly and
validly issued and are fully paid and nonassessable. Except as disclosed in the
MedPartners/Mullikin Documents (as herein defined), and except as described in
Exhibit 5.2 to the MedPartners/Mullikin Disclosure Schedule delivered to
Caremark by MedPartners/Mullikin at the time of the execution and delivery of
this Plan of Merger (the "MedPartners/Mullikin Disclosure Schedule"), there are
no options, warrants or similar rights granted by MedPartners/Mullikin or any
other agreements to which MedPartners/Mullikin is a party providing for the
issuance or sale by it of any additional securities. There is no liability for
dividends declared or accumulated but unpaid with respect to any shares of
MedPartners/Mullikin Common Stock.
5.3 MedPartners/Mullikin Common Stock. On the Closing Date,
MedPartners/Mullikin will have a sufficient number of authorized but unissued
and/or treasury shares of its Common Stock available for issuance to the holders
of Caremark Shares in accordance with the provisions of this Plan of Merger. The
MedPartners/Mullikin Common Stock to be issued pursuant to this Plan of Merger
will, when so delivered, be (i) duly and validly issued, fully paid and
nonassessable, and (ii) listed on the NYSE, upon official notice of issuance.
5.4 Subsidiaries and Affiliated Entities.
(a) Attached as Exhibit 5.4 to the MedPartners/Mullikin Disclosure
Schedule is a list of all subsidiaries of MedPartners/Mullikin (individually, a
"MedPartners/Mullikin Subsidiary", and collectively, the "MedPartners/Mullikin
Subsidiaries") and their states of incorporation and all professional
corporations or professional associations of which MedPartners/Mullikin has
control and their states of incorporation. Except as set forth in Exhibit 5.4 to
the MedPartners/
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Mullikin Disclosure Schedule, MedPartners/Mullikin does not own stock in and
does not control, directly or indirectly, any other corporation, association,
partnership or business organization.
(b) Also disclosed in Exhibit 5.4 to the Medpartners/Mullikin
Disclosure Schedule is a list of all general or limited partnerships in which a
general partner is MedPartners/Mullikin, a MedPartners/Mullikin Subsidiary or
another partnership controlled by MedPartners/Mullikin (individually a
"MedPartners/Mullikin Partnership" and collectively, the "MedPartners/Mullikin
Partnerships"), and all limited liability companies in which
MedPartners/Mullikin, a MedPartners/Mullikin Subsidiary is a member
(individually, a "MedPartners/Mullikin LLC", the MedPartners/Mullikin
Professional Corporations and the MedPartners/Mullikin LLCs being collectively
called the "Other MedPartners/Mullikin Entities"), and their states of
organization. Except as set forth in Exhibit 5.4 to the MedPartners/Mullikin
Disclosure Schedule, neither MedPartners/Mullikin nor any MedPartners/Mullikin
Subsidiary owns an equity interest in, nor does such entity control, directly or
indirectly, any other joint venture, limited liability company or partnership.
(c) Except as set forth in Exhibit 5.4, neither MedPartners/Mullikin
nor any MedPartners/Mullikin Subsidiary owns an equity interest in, nor does
such entity control, directly or indirectly, any other joint venture or
partnership.
(d) Although the financial results of the medical groups affiliated
with MedPartners/Mullikin physician practice management business are
consolidated for accounting purposes on the MedPartners/Mullikin Balance Sheet,
the terms "MedPartners/Mullikin Subsidiary" and "Other MedPartners/Mullikin
Entity" do not include any affiliated medical groups.
5.5 Organization, Existence and Good Standing of MedPartners/Mullikin
Subsidiaries and Other MedPartners/Mullikin Entities.
(a) Each MedPartners/Mullikin Subsidiary and each MedPartners/Mullikin
Entity is a corporation duly organized, validly existing and in good standing
under the laws of its respective state of incorporation. Each
MedPartners/Mullikin Subsidiary and each MedPartners/Mullikin Professional
Corporation has all necessary corporate power to own its properties and assets
and to carry on its business as presently conducted.
(b) Each MedPartners/Mullikin Partnership that is a limited
partnership is validly formed, each MedPartners/Mullikin Partnership that is a
general partnership has been duly
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organized, and each MedPartners/Mullikin Partnership is in good standing under
the laws of its respective state of organization. Each MedPartners/Mullikin
Partnership has all necessary power to own its property and assets and to carry
on its business as presently conducted.
(c) Each MedPartners/Mullikin LLC that is a limited company validly
formed and in good standing under the laws of its respective state of
organization. Each MedPartners/Mullikin LLC has all necessary power to own its
property and assets and to carry on its business as presently conducted.
5.6 Foreign Qualifications. MedPartners/Mullikin, each
MedPartners/Mullikin Subsidiary and each Other MedPartners/Mullikin Entity that
is not a general partnership is qualified to do business as a foreign
corporation, foreign limited partnership or foreign limited liability company,
as the case may be, and is in good standing in each jurisdiction where the
nature or character of the property owned, leased or operated by it or the
nature of the business transacted by it makes such qualification necessary,
except where the failure to so qualify would not have a material adverse effect
on MedPartners/Mullikin.
5.7 Power and Authority. Subject to the satisfaction of the conditions
precedent set forth herein, MedPartners/Mullikin has corporate power to execute,
deliver and perform this Plan of Merger and all agreements and other documents
executed and delivered, or to be executed and delivered, by it pursuant to this
Plan of Merger, and, subject to the satisfaction of the conditions precedent set
forth herein has taken all actions required by law, its Certificate of
Incorporation, its By-laws or otherwise, to authorize the execution and delivery
of this Plan of Merger and such related documents. The execution and delivery of
this Plan of Merger does not and, subject to the receipt of required stockholder
and regulatory approvals and any other required third-party consents or
approvals, the consummation of the Merger contemplated hereby will not, violate
any provisions of the Certificate of Incorporation or By-laws of
MedPartners/Mullikin, or any provision of, or result in the acceleration of any
obligation under, any mortgage, lien, lease, agreement, instrument, order,
arbitration award, judgment or decree to which MedPartners/Mullikin is a party
or by which it is bound, or violate any restrictions of any kind to which
MedPartners/Mullikin is subject which, if violated or accelerated, would have a
material adverse effect on MedPartners/Mullikin. The execution and delivery of
this Plan of Merger has been approved by the Board of Directors of
MedPartners/Mullikin.
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5.8 MedPartners/Mullikin Public Information. MedPartners/Mullikin has
heretofore made available to Caremark a true and complete copy of each report,
schedule, registration statement and definitive proxy statement filed by it or
its predecessor, MedPartners, Inc., with the SEC (as any such documents have
since the time of their original filing been amended, the "MedPartners/Mullikin
Documents") since February 21, 1995, which are all the documents (other than
preliminary material) that it was required to file with the SEC since such date.
As of their respective dates, the MedPartners/Mullikin Documents did not contain
any untrue statements of material facts or omit to state material facts required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective dates, the MedPartners/Mullikin Documents complied in all material
respects with the applicable requirements of the Securities Act and the Exchange
Act, and the rules and regulations promulgated under such statutes. The
financial statements contained in the MedPartners/Mullikin Documents, together
with the notes thereto, have been prepared in accordance with generally accepted
accounting principles consistently followed throughout the periods indicated
(except as may be indicated in the notes thereto, or, in the case of the
unaudited financial statements, as permitted by Form 10-Q), reflect all known
liabilities of MedPartners/Mullikin, fixed or contingent, required to be stated
therein, and present fairly the financial condition of MedPartners/Mullikin at
said dates and the consolidated results of operations and cash flows of
MedPartners/Mullikin for the periods then ended. The consolidated balance sheet
of MedPartners/Mullikin at December 31, 1995, included in the Annual Report on
Form 10-K for the fiscal year ended December 31, 1995 of MedPartners/Mullikin is
herein sometimes referred to as the "MedPartners/Mullikin Balance Sheet".
5.9 Contracts, etc.
(a) All material contracts, leases, agreements and arrangements to
which MedPartners/Mullikin or any of the MedPartners/Mullikin Subsidiaries is a
party are legally valid and binding in accordance with their terms and in full
force and effect. To the knowledge of MedPartners/Mullikin, all parties to such
contracts, leases, agreements and arrangements have complied with the provisions
of such contracts, leases, agreements and arrangements, and to the knowledge of
MedPartners/Mullikin, no party is in default thereunder, and no event has
occurred which, but for the passage of time or the giving of notice or both,
would constitute a default thereunder,
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except, in each case, where the invalidity of the lease, contract, agreement or
arrangement or the default or breach thereunder or thereof would not,
individually or in the aggregate, have a material adverse effect on
MedPartners/Mullikin.
(b) Except as set forth in Exhibit 5.9 to the MedPartners/Mullikin
Disclosure Schedule, no contract or agreement to which MedPartners/Mullikin or
any MedPartners/Mullikin Subsidiary is a party will, by its terms, terminate as
a result of the transactions contemplated hereby or require any consent from any
obligor thereto in order to remain in full force and effect immediately after
the Effective Time, except for contracts or agreements which, if terminated,
would not have a material adverse effect on MedPartners/Mullikin.
(c) Except as set forth in Exhibit 5.9 to the MedPartners/Mullikin
Disclosure Schedule, none of MedPartners/Mullikin, or any MedPartners/Mullikin
Subsidiary has granted any right of first refusal or similar right in favor of
any third party with respect to any material portion of its properties or assets
(excluding liens described in Section 5.10) or entered into any non-competition
agreement or similar agreement restricting its ability to engage in any business
in any location.
5.10 Properties and Assets. MedPartners/Mullikin (including, as
applicable, the MedPartners/Mullikin Subsidiaries) owns all of the real and
personal property included in the MedPartners/Mullikin Balance Sheet (except
assets recorded under capital lease obligations and such property as has been
disposed of during the ordinary course of MedPartners/Mullikin's business since
the date of the MedPartners/Mullikin Balance Sheet), free and clear of any
liens, claims, charges, exceptions or encumbrances, except for those (i) if any,
which in the aggregate are not material and which do not materially affect
continued use of such property, or (ii) which are set forth in Exhibit 5.10 to
the MedPartners/Mullikin Disclosure Schedule or in the MedPartners/Mullikin
Documents.
5.11 Legal Proceedings. Except as listed in Exhibit 5.11 to the
MedPartners/Mullikin Disclosure Schedule, there are no actions, suits or
proceedings pending or, to the knowledge of MedPartners/Mullikin, threatened
against MedPartners/Mullikin, at law or in equity, relating to or affecting
MedPartners/Mullikin or any MedPartners/Mullikin Subsidiary, including the
Merger, which individually or in the aggregate, could reasonably be expected to
have a material effect on MedPartners/Mullikin, or a material adverse effect on
the ability of MedPartners/
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Mullikin to consummate the transactions contemplated hereby. Except as listed in
Exhibit 5.11 to the MedPartners/Mullikin Disclosure Schedule,
MedPartners/Mullikin does not know or have any reasonable grounds to believe
that any such action, suit or proceeding has merit.
5.12 Subsequent Events. Except as set forth on Exhibit 5.12 to the
MedPartners/Mullikin Disclosure Schedule, MedPartners/Mullikin has not, since
the date of the MedPartners/Mullikin Balance Sheet:
(a) Incurred any material adverse change.
(b) Discharged or satisfied any material lien or encumbrance, or
paid or satisfied any material obligation or liability (absolute,
accrued, contingent or otherwise) which discharge or satisfaction
would have a material adverse effect on MedPartners/Mullikin, other
than (i) liabilities shown or reflected on the MedPartners/Mullikin
Balance Sheet or (ii) liabilities incurred since the date of the
MedPartners/Mullikin Balance Sheet in the ordinary course of business.
(c) Incurred any funded Indebtedness or increased or established
any reserve for taxes or any other liability on its books or otherwise
provided therefor which would have a material adverse effect on
MedPartners/Mullikin, except as may have been required due to income
or operations of MedPartners/Mullikin since the date of the
MedPartners/Mullikin Balance Sheet.
(d) Mortgaged, pledged or subjected to any lien, charge or other
encumbrance any of the assets, tangible or intangible, which assets
are material to the consolidated business or financial condition of
MedPartners/Mullikin.
(e) Sold or transferred any of the assets material to the
consolidated business of MedPartners/Mullikin, cancelled any material
debts or claims or waived any material rights, except in the ordinary
course of business.
(f) Granted any general or uniform increase in the rates of pay
of employees or any material increase in salary payable or to become
payable by MedPartners/Mullikin to any officer or employee, consultant
or agent (other than normal merit increases), or by means of any bonus
or pension plan, contract or other commitment, increased in a material
respect the compensation of any officer, employee, consultant or
agent.
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(g) Except for this Plan of Merger and any other agreement
executed and delivered pursuant to this Plan of Merger, entered into
any material transaction other than in the ordinary course of business
or permitted under other Sections of this Plan of Merger.
(h) Issued any stock, bonds or other securities or any options or
rights to purchase any of its securities (other than stock issued upon
the exercise of outstanding options under MedPartners/Mullikin's stock
option plans.
5.13 Accounts Receivable.
(a) Since the date of the MedPartners/Mullikin Balance Sheet,
MedPartners/Mullikin has not changed any principle or practice with respect to
the recordation of accounts receivable or the calculation of reserves therefor,
or any material collection, discount or write-off policy or procedure.
MedPartners/Mullikin (including the MedPartners/Mullikin Subsidiaries and Other
MedPartners/Mullikin Entities) is in compliance with the terms and conditions of
all third-party payor arrangements relating to its accounts receivable, except
to the extent that such noncompliance would not have a material adverse effect
on MedPartners/Mullikin.
(b) Without limiting the generality of the foregoing,
MedPartners/Mullikin and each MedPartners/Mullikin Subsidiary is in compliance
with all Medicare and Medicaid provider agreements to which it is a party,
except to the extent that such noncompliance would not have a material adverse
effect on MedPartners/Mullikin.
5.14 Tax Returns. MedPartners/Mullikin has filed all tax returns
required to be filed by it or requests for extensions to file such returns or
reports have been timely filed and granted and have not expired, except to the
extent that such failures to file, taken together, do not have a material
adverse effect on MedPartners/Mullikin. MedPartners/Mullikin has made all
payments shown as due on such returns. MedPartners/Mullikin has not been
notified that any tax returns of MedPartners/Mullikin are currently under audit
by the Internal Revenue Service or any state or local tax agency. No agreements
have been made by MedPartners/Mullikin for the extension of time or the waiver
of the statute of limitations for the assessment or payment of any federal,
state or local taxes.
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5.15 Employee Benefit Plans; Employment Matters.
(a) Except as disclosed in the MedPartners/Mullikin Documents or as
set forth in Exhibit 5.15(a) to the MedPartners/Mullikin Disclosure Schedule,
MedPartners/Mullikin has neither established nor maintains nor is obligated to
make contributions to or under or otherwise participate in (i) any bonus or
other type of incentive compensation plan, program, agreement, policy,
commitment, contract or arrangement (whether or not set forth in a written
document), (ii) any pension, profit-sharing, retirement or other plan, program
or arrangement, or (iii) any other employee benefit plan, fund or program,
including, but not limited to, those described in Section 3(3) of ERISA. All
such plans listed in Exhibit 5.15(a) (individually, a "MedPartners/Mullikin
Plan" and collectively, the "MedPartners/Mullikin Plans") have been operated and
administered in all material respects in accordance with, as applicable, ERISA,
the Code, Title VII of the Civil Rights Act of 1964, as amended, the Equal Pay
Act of 1967, as amended, the Age Discrimination in Employment Act of 1967, as
amended, and the related rules and regulations adopted by those federal agencies
responsible for the administration of such laws. No act or failure to act by
MedPartners/Mullikin has resulted in a "prohibited transaction" (as defined in
ERISA) with respect to the MedPartners/Mullikin Plans that is not subject to a
statutory or regulatory exception. No "reportable event" (as defined in ERISA)
has occurred with respect to any of the MedPartners/Mullikin Plans which is
subject to Title IV of ERISA. MedPartners/Mullikin has not previously made, is
not currently making, and is not obligated in any way to make, any contributions
to any multi-employer plan within the meaning of the Multi-Employer Pension Plan
Amendments Act of 1980.
(b) Except as disclosed in the MedPartners/Mullikin Documents or as
set forth in Exhibit 5.15(b) to the MedPartners/Mullikin Disclosure Schedule,
MedPartners/Mullikin is not a party to any oral or written (i) union, guild or
collective bargaining agreement which agreement covers employees in the United
States (nor is it aware of any union organizing activity currently being
conducted in respect to any of its employees), (ii) agreement with any executive
officer or other key employee the benefits of which are contingent, or the terms
of which are materially altered, upon the occurrence of a transaction of the
nature contemplated by this Plan of Merger and which provides for the payment of
in excess of $25,000, or (iii) agreement or plan, including any stock option
plan, stock appreciation rights plan, restricted stock plan or stock purchase
plan,
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any of the benefits of which will be increased, or the vesting the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Plan of Merger or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by this
Plan of Merger.
5.16 Compliance with Laws. Except as disclosed in the
MedPartners/Mullikin Documents or as set forth in Exhibit 5.16 to the
MedPartners/Mullikin Disclosure Schedule, MedPartners/Mullikin has not received
any notices of material violations of any federal, state and local laws,
regulations and ordinances relating to its business and operations, including,
without limitation, the Occupational Safety and Health Act, the Americans with
Disabilities Act, the Medicare or applicable Medicaid statutes and regulations
and any Environmental Laws, and no notice of any pending inspection or violation
of any such law, regulation or ordinance has been received by
MedPartners/Mullikin which, if it were determined that a violation had occurred,
would have a material adverse effect on MedPartners/Mullikin.
5.17 Regulatory Approvals. Except as disclosed in the
MedPartners/Mullikin Documents or in Exhibit 5.17 to the MedPartners/Mullikin
Disclosure Schedule, MedPartners/Mullikin and each MedPartners/Mullikin
Subsidiary or Other MedPartners/Mullikin Entity, as applicable, holds all
licenses, certificates of need and other regulatory approvals required or
necessary to be applied for or obtained in connection with its business as
presently conducted or as proposed to be conducted, except where the failure to
obtain such license, certificate of need or regulatory approval would not have a
material adverse effect on MedPartners/Mullikin. All such licenses, certificates
of need and other regulatory approvals relating to the business, operations and
facilities of MedPartners/Mullikin and each MedPartners/Mullikin Subsidiary or
Other MedPartners/Mullikin Entity are in full force and effect, except where any
failure of such license, certificate of need or regulatory approval to be in
full force and effect would not have a material adverse effect on
MedPartners/Mullikin. Any and all past litigation concerning such licenses,
certificates of need and regulatory approvals, and all claims and causes of
action raised therein, has been finally adjudicated. No such license,
certificate of need or regulatory approval has been revoked, conditioned (except
as may be customary) or restricted, and no action (equitable, legal or
administrative), arbitration or other process is pending, or to the best
knowledge of MedPartners/Mullikin, threatened, which in any way challenges the
validity of,
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or seeks to revoke, condition or restrict any such license, certificate of need,
or regulatory approval. Subject to compliance with applicable securities laws
and the HSR Act, the consummation of the Merger will not violate any law or
restriction to which MedPartners/Mullikin is subject which, if violated, would
have a material adverse effect on MedPartners/Mullikin.
5.18 Investment Intent. MedPartners/Mullikin is acquiring the Caremark
Shares hereunder for its own account and not with a view to the distribution or
sale thereof, and MedPartners/Mullikin has no understanding, agreement or
arrangement to sell, distribute, partition or otherwise transfer or assign all
or any part of the Caremark Shares to any other person, firm or corporation.
5.19 Commissions and Fees. Except for the fee payable to Smith Barney
Inc., pursuant to the engagement letter, dated March 15, 1996, there are no
valid claims for brokerage commissions, finder's fees or similar fees in
connection with the transactions contemplated by this Plan of Merger which may
be now or hereafter asserted against MedPartners/Mullikin or Caremark or any
subsidiary or other controlled entity of MedPartners/Mullikin or Caremark
resulting from any action taken by MedPartners/Mullikin or any of its officers,
directors or agents or any of them.
5.20 Vote Required. The affirmative vote of the holders of a majority
of the outstanding MedPartners/Mullikin Shares entitled to vote thereon is the
only vote of the holders of any class or series of MedPartners/Mullikin capital
stock necessary to approve this Plan of Merger, the Merger and the transactions
contemplated hereby.
5.21 Accounting Matters. To the best knowledge of
MedPartners/Mullikin, neither MedPartners/Mullikin nor any of its affiliates has
taken or agreed to taken any action that (without giving effect to any actions
taken or agreed to be taken by Caremark or any of its affiliates) would prevent
Caremark from accounting for the business combination to be effected by the
Merger as a pooling-of-interests for financial reporting purposes.
5.22 No Untrue Representations. No representation or warranty by
MedPartners/Mullikin in this Plan of Merger, and no Exhibit or certificate
issued by MedPartners/Mullikin and furnished or to be furnished to
MedPartners/Mullikin pursuant hereto, or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a material
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fact or omits or will omit to state a material fact necessary to make the
statements or facts contained therein not misleading in light of all of the
circumstances then prevailing.
5.23 Payor Settlements. MedPartners/Mullikin acknowledges that it is
aware of Caremark's obligations pursuant to that certain settlement agreement
between Caremark and certain insurance companies, dated March 17, 1996 and that
following the Effective Time, MedPartners/Mullikin will make sufficient funds
available to the Surviving Corporation to pay this obligation.
Section 6. ACCESS TO INFORMATION AND DOCUMENTS.
6.1 Access to Information.
(a) Between the date hereof and the Closing Date, each of Caremark and
MedPartners/Mullikin will give to the other party and its counsel, accountants
and other representatives full access to all the properties, documents,
contracts, personnel files and other records of such party and shall furnish the
other party with copies of such documents and with such information with respect
to the affairs of such party as the other party may from time to time reasonably
request. Each party will disclose and make available to the other party and its
representatives all books, contracts, accounts, personnel records, letters of
intent, papers, records, communications with regulatory authorities and other
documents relating to the business and operations of such party. In addition,
Caremark shall make available to MedPartners/Mullikin all such banking,
investment and financial information as shall be necessary to allow for the
efficient integration of Caremark's banking, investment and financial
arrangements with those of MedPartners/Mullikin at the Effective Time.
(b) In connection with the obtaining of the MedPartners/Mullikin's
Required Lenders (as defined in the Revolving Credit and Reimbursement
Agreement, dated as of November 21, 1995, among MedPartners/Mullikin and
NationsBank of Georgia, N.A.) consent to the Merger, Caremark hereby agrees that
it shall provide, and use its reasonable efforts to cause and to provide
MedPartners/Mullikin with such information and documentation as
MedPartners/Mullikin's Required Lenders or MedPartners/Mullikin shall request in
order to obtain such consent.
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6.2 Return of Records. If the transactions contemplated hereby are not
consummated and this Plan of Merger terminates, each party agrees to promptly
return all documents, contracts, records or properties of the other party and
all copies thereof furnished pursuant to this Section 6 or otherwise. All
information disclosed by any party or any affiliate or representative of any
party shall be deemed to be "Evaluation Material" under the terms of the
respective Confidentiality Agreements, dated March 1, 1996, and March 20, 1996,
respectively, between Caremark and MedPartners/Mullikin (together, the
"Confidentiality Agreement").
6.3 Effect of Access.
(a) Nothing contained in this Section 6 shall be deemed to create any
duty or responsibility on the part of either party to investigate or evaluate
the value, validity or enforceability of any contract, lease or other asset
included in the assets of the other party.
(b) With respect to matters as to which any party has made express
representations or warranties herein, the parties shall be entitled to rely upon
such express representations and warranties irrespective of any investigations
made by such parties, except to the extent that such investigations result in
actual knowledge of the inaccuracy or falsehood of particular representations
and warranties.
Section 7. COVENANTS.
7.1 Preservation of Business. Except as contemplated by this Plan of
Merger, each of Caremark and MedPartners/Mullikin will use its reasonable best
efforts to preserve its business organization intact, to keep available to
MedPartners/Mullikin and the Surviving Corporation the services of their present
employees, and to preserve for MedPartners/Mullikin and the Surviving
Corporation the goodwill of the suppliers, customers and others having business
relations with them and their respective subsidiaries.
7.2 Material Transactions. Except as contemplated by this Plan of
Merger, prior to the Effective Time, neither Caremark nor any Caremark
Subsidiary or Other Caremark Entity will (other than as required pursuant to the
terms of this Plan of Merger and the related documents, and other than with
respect to transactions for which binding commitments have been entered into
prior to the date hereof and transactions described in Exhibit 7.2 to the
Caremark
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Disclosure Schedule which do not vary materially from the terms set forth on
such Exhibit 7.2), without first obtaining the written consent of
MedPartners/Mullikin:
(a) Encumber any asset or enter into any transaction or make any
contract or commitment relating to the properties, assets and business
of Caremark or the Caremark Subsidiaries or Other Caremark Entities,
other than in the ordinary course of business or as otherwise
disclosed herein.
(b) Enter into any employment contract or similar agreement, in
which the cash compensation is in excess of $150,000, or the term is
greater than one year, which is not terminable upon notice of 30 days
or less, at will, and without penalty to Caremark or such Caremark
Subsidiary or Other Caremark Entity, except as provided herein.
(c) Enter into any contract or agreement (i) which cannot be
performed within three months or less, or (ii) which involves the
expenditure of over $5,000,000, other than in the ordinary course of
business.
(d) Issue or sell, or agree to issue or sell, any shares of
capital stock or other securities of Caremark or such Caremark
Subsidiary or Other Caremark Entity, except upon exercise of currently
outstanding stock options or pursuant to stock purchase plans.
(e) Make any payment or distribution to the trustee under any
bonus, pension, profit-sharing or retirement plan or incur any
obligation to make any such payment or contribution which is not in
accordance with Caremark's usual past practice, or make any payment or
contributions or incur any obligation pursuant to or in respect of any
other plan or contract or arrangement providing for bonuses, executive
incentive compensation, pensions, deferred compensation, retirement
payments, profit-sharing or the like, establish or enter into any such
plan, contract or arrangement, or terminate any plan.
(f) Extend credit to anyone, except in the ordinary course of
business consistent with prior practices.
(g) Guarantee the obligation of any person, firm or corporation,
except in the ordinary course of business consistent with prior
practices.
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(h) Amend its Certificate or Articles of Incorporation or By-
laws.
(i) Take any action of a character described in Section 3.11(a)
to 3.11(h), inclusive.
7.3 Meetings of Stockholders. Each of MedPartners/Mullikin and
Caremark will take all steps necessary in accordance with their respective
Certificates of Incorporation and By-laws to call, give notice of, convene and
hold meetings of their respective stockholders (the "Stockholder Meetings") as
soon as practicable after the effectiveness of the Registration Statement (as
defined in Section 7.4 hereof), for the purpose of approving and adopting this
Plan of Merger and the transactions contemplated hereby and for such other
purposes as may be necessary. Unless this Plan of Merger shall have been validly
terminated as provided herein, the Boards of Directors of MedPartners/Mullikin
and Caremark will (i) recommend to their respective stockholders the approval
and adoption of this Plan of Merger, the transactions contemplated hereby and
any other matters to be submitted to the stockholders in connection therewith,
to the extent that such approval is required by applicable law in order to
consummate the Merger, and (ii) use their respective reasonable, good faith
efforts to obtain the approval by their respective stockholders of this Plan of
Merger and the transactions contemplated hereby.
7.4 Registration Statement.
(a) MedPartners/Mullikin shall prepare and file with the SEC and any
other applicable regulatory bodies, as soon as reasonably practicable, a
Registration Statement on Form S-4 with respect to the shares of
MedPartners/Mullikin Common Stock to be issued in the Merger (the "Registration
Statement"), and will otherwise proceed promptly to satisfy the requirements of
the Securities Act, including Rule 145 thereunder. Such Registration Statement
shall contain a joint proxy statement of MedPartners/Mullikin and Caremark
containing the information required by the Exchange Act (the "Proxy Statement").
MedPartners/Mullikin shall take all reasonable steps to cause the Registration
Statement to be declared effective and to maintain such effectiveness until all
of the shares of MedPartners/Mullikin Common Stock covered thereby have been
distributed. MedPartners/Mullikin shall promptly amend or supplement the
Registration Statement to the extent necessary in order to make the statements
therein not misleading or to correct any misstatements which have become false
or misleading. MedPartners/Mullikin shall use its reasonable, good faith efforts
to have the Proxy Statement approved by the SEC under
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the provisions of the Exchange Act. MedPartners/Mullikin shall provide Caremark
with copies of all filings made pursuant to this Section 7.4 and shall consult
with Caremark on responses to any comments made by the Staff of the SEC with
respect thereto.
(b) The information specifically designated as being supplied by
Caremark for inclusion in the Registration Statement shall not, at the time the
Registration Statement is declared effective, at the time the Proxy Statement is
first mailed to holders of Caremark Common Stock and holders of
MedPartners/Mullikin Common Stock, at the time of the Stockholder Meetings and
at the Effective Time, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, not misleading. The information specifically
designated as being supplied by Caremark for inclusion in the Proxy Statement
shall not, at the date the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to holders of Caremark Common Stock and
holders of MedPartners/Mullikin Common Stock, at the time of the Stockholder
Meetings and at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. If at any time prior to
the Effective Time, any event or circumstance relating to Caremark, or its
officers or directors, should be discovered by Caremark which should be set
forth in an amendment to the Registration Statement or a supplement to the Proxy
Statement, Caremark shall promptly inform MedPartners/Mullikin. All documents,
if any, that Caremark is responsible for filing with the SEC in connection with
the transactions contemplated hereby will comply as to form and substance in all
material respects with the applicable requirements of the Securities Act and the
rules and regulations thereunder and the Exchange Act and the rules and
regulations thereunder.
(c) The information specifically designated as being supplied by
MedPartners/Mullikin for inclusion in the Registration Statement shall not, at
the time the Registration Statement is declared effective, at the time the Proxy
Statement is first mailed to holders of Caremark Common Stock and holders of
MedPartners/Mullikin Common Stock, at the time of the Stockholder Meetings and
at the Effective Time, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, not misleading. The information specifically
designated as being supplied by
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MedPartners/Mullikin for inclusion in the Proxy Statement in connection with the
Stockholder Meetings shall not, at the date the Proxy Statement (or any
amendment thereof or supplement thereto) is first mailed to holders of Caremark
Common Stock and holders of MedPartners/Mullikin Common Stock, at the time of
the Stockholder Meetings or at the Effective Time, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, not misleading. If
at any time prior to the Effective Time any event or circumstance relating to
MedPartners/Mullikin or its officers or Directors, should be discovered by
MedPartners/Mullikin which should be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statement,
MedPartners/Mullikin shall promptly inform Caremark and shall promptly file such
amendment to the Registration Statement. All documents that MedPartners/Mullikin
is responsible for filing with the SEC in connection with the transactions
contemplated herein will comply as to form and substance in all material
respects with the applicable requirements of the Securities Act and the rules
and regulations thereunder and the Exchange Act and the rules and regulations
thereunder.
(d) Prior to the Closing Date, MedPartners/Mullikin shall use its
reasonable, good faith efforts to cause the shares of MedPartners/Mullikin
Common Stock to be issued pursuant to the Merger to be registered or qualified
under all applicable securities or Blue Sky laws of each of the states and
territories of the United States, and to take any other actions which may be
necessary to enable the Common Stock to be issued pursuant to the Merger to be
distributed in each such jurisdiction.
(e) Prior to the Closing Date, MedPartners/Mullikin shall file a
Subsequent Listing Application with the NYSE relating to the shares of
MedPartners/Mullikin Common Stock to be issued in connection with the Merger,
and shall cause such shares of MedPartners/Mullikin Common Stock to be listed on
the NYSE, upon official notice of issuance, prior to the Closing Date.
(f) Caremark shall furnish all information to MedPartners/Mullikin
with respect to Caremark and the Caremark Subsidiaries as MedPartners/Mullikin
may reasonably request for inclusion in the Registration Statement, the Proxy
Statement and shall otherwise cooperate with MedPartners/Mullikin in the
preparation and filing of such documents.
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7.5 Exemption from State Takeover Laws. Caremark shall take all
reasonable steps necessary to exempt the Merger from the requirements of any
state takeover statute or other similar state law which would prevent or impede
the consummation of the transactions contemplated hereby, by action of
Caremark's Board of Directors or otherwise.
7.6 HSR Act Compliance. MedPartners/Mullikin and Caremark shall
promptly make their respective filings, and shall thereafter use their
reasonable best efforts to promptly make any required submissions, under the HSR
Act with respect to the Merger and the transactions contemplated hereby.
MedPartners/Mullikin and Caremark will use their respective reasonable best
efforts to obtain all other permits, authorizations, consents and approvals from
third parties and governmental authorities necessary to consummate the Merger
and the transactions contemplated hereby.
7.7 Public Disclosures. MedPartners/Mullikin and Caremark will consult
with each other before issuing any press release or otherwise making any public
statement with respect to the transactions contemplated by this Plan of Merger,
and shall not issue any such press release or make any such public statement
prior to such consultation except as may be required by applicable law or
requirements of the NYSE. The parties shall issue a joint press release,
mutually acceptable to MedPartners/Mullikin and Caremark, promptly upon
execution and delivery of this Plan of Merger.
7.8 Transition Planning/Reorganization.
(a) C.A. Lance Piccolo and Larry R. House, as Chairmen of Caremark and
MedPartners/Mullikin, respectively, jointly shall be responsible for
coordinating all aspects of transition planning and implementation relating to
the Merger contemplated hereby. If either such person ceases to be a Chairman of
his respective company for any reason, such person's successor as Chairman shall
assume his predecessor's responsibilities under this Section 7.8
(b) Immediately prior to the Effective Time, MedPartners/Mullikin
shall take all necessary action to (i) cause Larry R. House to be appointed as
the Chairman, President and Chief Executive Officer of MedPartners/Mullikin and
C.A. Lance Piccolo to be appointed as the Vice Chairman of the Board of
Directors of MedPartners/Mullikin and (ii) cause the Board of Directors of
MedPartners/Mullikin to consist of 13 members, 9 of which shall be designated by
MedPartners/Mullikin, and 4 of which shall be designated by Caremark (the "New
Board"), such
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that each class of Directors of the New Board contains a number of directors
designated by Caremark as nearly equal in number as if reasonably possible. Each
committee of the New Board shall contain at least one member that is a Caremark
designated director. If at any time prior to the third anniversary of the
Effective Time, the number of directors designated by Caremark serving, or that
would be serving following the next stockholders' meeting at which directors are
to be elected, as directors of MedPartners/Mullikin or as members of any
committee of the New Board, would not be in proportion to the initial
designation of the New Board as set forth above, then the New Board shall
nominate for election at the next MedPartners/Mullikin stockholders' meeting at
which directors are to be elected, such person or persons as may be requested by
the remaining directors designated by Caremark to ensure that there shall be a
number of directors designated by Caremark (or the remaining directors
designated by Caremark) in proportion to the initial designation of the New
Board as set forth above.
(c) Immediately prior to the Effective Time, MedPartners/Mullikin
shall and shall cause the Surviving Corporation to elect as officers of
MedPartners/Mullikin or the Surviving Corporation, as applicable, each of the
persons specified in the letter dated May 13, 1996 from Larry R. House to C.A.
Lance Piccolo (the "Letter") to the offices and positions specified in the
Letter; provided, however, that no person so named in the Letter shall be
required to accept the office or position so specified.
(d) MedPartners/Mullikin shall take such action as shall be necessary
to give effect to the provisions set forth in this section, including but not
limited to incorporating such provisions in the Certificate of Incorporation or
By-laws of MedPartners/Mullikin in effect immediately prior to and after the
Effective Time.
7.9 No Solicitations. Either MedPartners/Mullikin or Caremark may,
directly or indirectly, furnish information and access, in response to
unsolicited requests therefor, to the same extent permitted by Section 6.1, to
any corporation, partnership, person or other entity or group, pursuant to
appropriate confidentiality agreements, and may participate in discussions and
negotiate with such corporation, partnership, person or other entity or group
concerning any proposal to acquire such party upon a merger, purchase of assets,
purchase of or tender offer for shares of its Common Stock or similar
transaction (an "Acquisition Transaction"), if the Board of Directors of
MedPartners/Mullikin or Caremark, as the case may be, determines in its good
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faith judgment in the exercise of its fiduciary duties or the exercise of its
duties under Rule 14e-2 under the Exchange Act, after consultation with legal
counsel and its financial advisors, that such action is appropriate in
furtherance of the best interest of its stockholders. Except as set forth above,
MedPartners/Mullikin or Caremark shall not, and will direct each officer,
director, employee, representative and agent of such party not to, directly or
indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with or provide any information to any corporation, partnership,
person or other entity or group (other than MedPartners/Mullikin or an affiliate
or associate or agent of MedPartners/Mullikin) concerning any merger, sale of
assets, sale of or tender offer for its shares or similar transactions involving
such party. Such party shall promptly notify the other party if it shall, on or
after the date hereof, have entered into a confidentiality agreement with any
third party in response to any unsolicited request for information and access in
connection with a possible Acquisition Transaction involving such party, such
notification to include the identity of such third party and the proposed terms
of such possible Acquisition Transaction.
7.10 Other Actions. None of Caremark, MedPartners/Mullikin and the
Subsidiary shall knowingly or intentionally take any action, or omit to take any
action, if such action or omission would, or reasonably might be expected to,
result in any of its representations and warranties set forth herein being or
becoming untrue in any material respect, or in any of the conditions to the
Merger set forth in this Plan of Merger not being satisfied, or (unless such
action is required by applicable law) which would materially adversely affect
the ability of Caremark or MedPartners/Mullikin to obtain any consents or
approvals required for the consummation of the Merger without imposition of a
condition or restriction which would have a material adverse effect on the
Surviving Corporation or which would otherwise materially impair the ability of
Caremark or MedPartners/Mullikin to consummate the Merger in accordance with the
terms of this Plan of Merger or materially delay such consummation.
7.11 Accounting Methods. Neither MedPartners/Mullikin nor Caremark
shall change, in any material respect, its methods of accounting in effect at
its most recent fiscal year end, except as required by changes in generally
accepted accounting principles as concurred by such parties' independent
accountants.
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7.12 Pooling and Tax-Free Reorganization Treatment. Neither
MedPartners/Mullikin nor Caremark shall intentionally take or cause to be taken
any action, whether on or before the Effective Time, which would disqualify the
Merger as a "pooling of interests" for accounting purposes or as a
"reorganization" within the meaning of Section 368(a) of the Code.
7.13 Affiliate and Pooling Agreements. MedPartners/Mullikin and
Caremark will each use their respective reasonable best efforts to cause each of
their respective directors and executive officers and each of their respective
"affiliates" (within the meaning of Rule 145 under the Securities Act) to
execute and deliver to MedPartners/Mullikin as soon as practicable an agreement
in the form attached hereto as Exhibit 7.13 relating to the disposition of
shares of Caremark Common Stock and shares of MedPartners/Mullikin Common Stock
held by such person and the shares of MedPartners/Mullikin Common Stock issuable
pursuant to this Plan of Merger.
7.14 Cooperation.
(a) MedPartners/Mullikin and Caremark shall together, or pursuant to
an allocation of responsibility agreed to between them, (i) cooperate with one
another in determining whether any filings required to be made or consents
required to be obtained in any jurisdiction prior to the Effective Time in
connection with the consummation of the transactions contemplated hereby and
cooperate in making any such filings promptly and in seeking to obtain timely
any such consents, (ii) use their respective best efforts to cause to be lifted
any injunction prohibiting the Merger, or any part thereof, or the other
transactions contemplated hereby, and (iii) furnish to one another and to one
another's counsel all such information as may be required to effect the
foregoing actions.
(b) Subject to the terms and conditions herein provided, and unless
this Plan of Merger shall have been validly terminated as provided herein, each
of MedPartners/Mullikin and Caremark shall use all reasonable efforts (i) to
take, or cause to be taken, all actions necessary to comply promptly with all
legal requirements which may be imposed on such party (or any subsidiaries or
affiliates of such party) with respect to the Plan of Merger and to consummate
the transactions contemplated hereby, subject to the votes of its stockholders
described above, and (ii) to obtain (and to cooperate with the other party to
obtain) any consent, authorization, order or approval of, or any exemption by,
any governmental entity and/or any other public or private
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third party which is required to be obtained or made by such party or any of its
subsidiaries or affiliates in connection with this Plan of Merger and the
transactions contemplated hereby. Each of MedPartners/Mullikin and Caremark will
promptly cooperate with and furnish information to the other in connection with
any such burden suffered by, or requirement imposed upon, either of them or any
of their subsidiaries or affiliates in connection with the foregoing.
7.15 Caremark Stock Options.
(a) As soon as reasonably practicable after the Effective Time,
MedPartners/Mullikinshall deliver to the holders of Caremark stock options
appropriate notices setting forth such holders' rights pursuant to any stock
option plans under which such Caremark stock options were issued and any stock
option agreements evidencing such options which shall continue in full force and
effect on the same terms and conditions (subject to the adjustments required by
Section 2.1(d) or this Section 7.15 after giving effect to the Merger and the
assumption of such options by MedPartners/Mullikin as set forth herein) as in
effect immediately prior to the Effective Time. MedPartners/Mullikin shall
comply with the terms of the stock option plans, and the stock option agreements
as so adjusted, and shall use its reasonable best efforts to ensure, to the
extent required by, and subject to the provisions of, such plans or agreements,
that the Caremark stock options which qualified as incentive stock options prior
to the Effective Time shall continue to qualify as incentive stock options after
the Effective Time.
(b) MedPartners/Mullikin shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of MedPartners/Mullikin
Common Stock for delivery upon exercise of the Caremark stock options assumed by
MedPartners/Mullikin in accordance with Section 2.1(d). As soon as practicable
after the Effective Time, MedPartners/Mullikin shall file with the SEC a
registration statement on Form S-8 with respect to shares of
MedPartners/Mullikin Common Stock subject to such assumed Caremark stock options
and shall use its best efforts to maintain the effectiveness of a registration
statement or registration statements covering such options (and maintain the
current status of the prospectus or prospectuses contained therein) for so long
as such Caremark stock options remain outstanding. MedPartners/Mullikin shall
administer the plans assumed pursuant to Section 2.1(d) hereof in a manner that
complies with Rule 16b-3 promulgated under the Exchange Act to the extent the
applicable plan complied with such rule prior to the Merger.
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(c) Except to the extent otherwise agreed to by the parties, all
restrictions or limitations on transfer and vesting with respect to the Caremark
stock options awarded under any plan, program, or arrangement of Caremark or any
of its subsidiaries, to the extent that such restrictions or limitations shall
not have already lapsed, shall remain in full force and effect with respect to
such options after giving effect to the Merger and the assumption by
MedPartners/Mullikin as set forth above.
7.16 Publication of Combined Results. MedPartners/Mullikin agrees that
after the end of the first full calendar month after the Effective Time,
MedPartners/Mullikin shall cause publication of the combined results of
operations of MedPartners/Mullikin and Caremark in the First Quarterly Report on
Form 10-Q which shall be filed after such period. For purposes of this Section
7.16, the term "publication" shall have the meaning provided in SEC Accounting
Series Release No. 135.
7.17 Tax Opinions. Counsel for each of MedPartners/Mullikin and
Caremark shall render opinions as to the federal income tax consequences of the
Merger, which opinions shall be filed as Exhibits to the Registration Statement.
Each of MedPartners/Mullikin and Caremark agrees that it shall provide
certificates containing reasonable representations to such counsel in connection
with the rendering of such opinions.
7.18 Consents; Amendments, Etc.
(a) MedPartners/Mullikin, the Subsidiary and Caremark shall use their
best efforts to obtain all material consents, approvals and authorizations of
third parties with respect to all material agreements to which such parties are
parties, which consents, approvals and authorizations are required of such third
parties by such documents, in form and substance acceptable to
MedPartners/Mullikin or Caremark, as the case may be, except where the failure
to obtain such consent, approval or authorization would not have a material
effect on the business of the Surviving Corporation.
(b) MedPartners/Mullikin, the Subsidiary and Caremark shall use their
best efforts to obtain, or obtain the transfer of, any licenses and other
regulatory approvals necessary to allow the Surviving Corporation to operate
Caremark's business, unless the failure to obtain such transfer or approval
would not have a material adverse effect on Caremark.
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7.19 Change in Control. MedPartners/Mullikin acknowledges and agrees
that the consummation of the Merger shall constitute a "Change in Control" or
"Change of Control" of Caremark for all purposes within the meaning of all
Caremark Plans and compensation plans or compensation agreements of Caremark.
7.20 Employee Retention. MedPartners/Mullikin and Caremark acknowledge
that retaining the services and loyalty of Caremark employees is important to
the success of the Surviving Corporation. MedPartners/Mullikin agrees that
Caremark may expend up to a total of $2,000,000 in incentive payments to retain
the services and ensure the loyalty of key employees of Caremark for the six-
month period immediately subsequent to the Effective Time.
7.21 Litigation Cooperation. Caremark shall use its best efforts to
obtain the agreement of all persons with whom Caremark has severance or
employment agreements, and Caremark will obtain the agreement in the future of
any person with whom Caremark enters into a severance or employment agreement to
cooperate with Caremark in defending its litigation to substantially the
following effect:
"I understand that following the termination of my
employment with Caremark, I may be contacted by Caremark or
its legal counsel concerning various lawsuits or other
legal matters about which I may have knowledge. I agree to
cooperate with all reasonable requests for assistance from
Caremark in this regard. I further agree to notify Caremark
if I am served with a subpoena or other legal process, or
otherwise contacted by or asked to provide information to,
any other party (including government agencies) concerning
investigations, lawsuits or other legal proceedings
involving Caremark. Caremark agrees to reimburse me for all
reasonable expenses incurred by me in fulfilling these
obligations. These obligations are subject to any and all
personal rights and privileges that I may have concerning
any of these matters."
7.22 Consulting Agreements. MedPartners/Mullikin and Caremark shall
offer consulting agreements to each of C. A. Lance Piccolo, Diane Munson and Tom
Hodson, respectively, as of the Effective Time which contain terms and
conditions substantially similar to those agreed to by the parties at the
signing of this Plan of Merger.
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Section 8. TERMINATION, AMENDMENT AND WAIVER.
8.1 Termination. This Plan of Merger may be terminated at any time
prior to the Effective Time, whether before or after approval of matters
presented in connection with the Merger by the holders of Caremark Common Stock
and the holders of MedPartners/Mullikin Common Stock:
(a) by mutual written consent of MedPartners/Mullikin, the
Subsidiary and Caremark;
(b) by either MedPartners/Mullikin or Caremark;
(i) if, upon a vote at a duly held meeting of stockholders
or any adjournment thereof, any required approval of the holders
of Caremark Common Stock or the holders of MedPartners/Mullikin
Common Stock shall not have been obtained;
(ii) if the Merger shall not have been consummated on or
before December 31, 1996, unless the failure to consummate the
Merger is the result of a willful and material breach of this
Plan of Merger by the party seeking to terminate this Plan of
Merger; provided, however, that the passage of such period shall
be tolled for any part thereof (but not exceeding 60 days in the
aggregate) during which any party shall be subject to a nonfinal
order, decree, ruling or action restraining, enjoining or
otherwise prohibiting the consummation of the Merger or the
calling or holding of a meeting of stockholders;
(iii) if any court of competent jurisdiction or other
governmental entity shall have issued an order, decree or ruling
or taken any other action permanently enjoining, restraining or
otherwise prohibiting the Merger and such order, decree, ruling
or other action shall have become final and nonappealable; or
(iv) in the event of a material breach by the other party
of any representation, warranty, covenant or other agreement
contained in this Plan of Merger which (A) would give rise to the
failure of a condition set forth in Section 9.2(a) or (b) or
Section 9.3(a) or (b), as applicable,
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and (B) cannot be or has not been cured within 30 days after the
occurrence or discovery of such breach by the breaching party,
whichever is later (a "Material Breach") (provided that the
terminating party is not then in Material Breach of any
representation, warranty, covenant or other agreement contained
in this Plan of Merger);
(c) by either MedPartners/Mullikin or Caremark in the event that
(i) all of the conditions to the obligation of such party to effect
the Merger set forth in Section 9.1 shall have been satisfied and (ii)
any condition to the obligation of such party to effect the Merger set
forth in Section 9.2 (in the case of MedPartners/Mullikin) or Section
9.3 (in the case of Caremark) is not capable of being satisfied prior
to the end of the period referred to in Section 8.1(b)(ii);
8.2 Effect of Termination. In the event of termination of this Plan of
Merger as provided in Section 8.1, this Plan of Merger shall forthwith become
void and have no effect, without any liability or obligation on the part of any
party, other than the provisions of Sections 6.2, 8.2 and 8.6, and except to the
extent that such termination results from the willful and material breach by a
party of any of its representations, warranties, covenants or other agreements
set forth in this Plan of Merger.
8.3 Amendment. This Plan of Merger may be amended by the parties at
any time before or after any required approval of matters presented in
connection with the Merger by the holders of Caremark Shares or holders of
shares of MedPartners/Mullikin Common Stock; provided, however, that after any
such approval, there shall be made no amendment that pursuant to Section 251(d)
of the DGCL requires further approval by such stockholders. This Plan of Merger
may not be amended except by an instrument in writing signed on behalf of each
of the parties.
8.4 Extension; Waiver. At any time prior to the Effective Time, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained in this Plan of Merger or in any
document delivered pursuant to this Plan of Merger or (c) subject to the proviso
of Section 8.3, waive compliance with any of the agreements or conditions
contained in this Plan of Merger. Any agreement on the part of a party to any
such extension or waiver shall be valid
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only if set forth in an instrument in writing signed on behalf of such party.
The failure of any party to this Plan of Merger to assert any of its rights
under this Plan of Merger or otherwise shall not constitute a waiver of such
rights.
8.5 Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Plan of Merger pursuant to Section 8.1, an amendment of this
Plan of Merger pursuant to Section 8.3, or an extension or waiver pursuant to
Section 8.4 shall, in order to be effective, require in the case of each of
MedPartners/Mullikin, the Subsidiary and Caremark, action by its Board of
Directors or the duly authorized designee of the Board of Directors.
8.6 Expenses; Breakup Fees.
(a) All costs and expenses incurred in connection with this Plan of
Merger and the transactions contemplated hereby shall be paid by the party
incurring such expense, except that expenses (other than legal, accounting and
investment banking costs, which shall be paid by the party incurring such
expenses) incurred in connection with preparing, filing, printing and mailing
the Proxy Statements and the Registration Statement shall be shared equally by
MedPartners/Mullikin and Caremark.
(b) (i) If this Plan of Merger is terminated pursuant to Section
8.1(b) and within one year after the effective date of such termination such
terminating party is the subject of a Third Party Acquisition Event with any
Person (as defined in Sections 3(a)(9) and 13(d)(3) of the Exchange Act) (other
than a party hereto), then at the time of consummation of such a Third Party
Acquisition Event, such terminating party shall pay to the non-terminating party
a break-up fee of $100,000,000 in immediately available funds, which fee
represents the parties' best estimates of the out-of-pocket costs incurred by
each of the parties and the value of management time, overhead, opportunity
costs and other unallocated cots incurred by or on behalf of each party in
connection with this Plan of Merger. Neither party shall enter into any
agreement with respect to any Third Party Acquisition Event which does not, as a
condition precedent to the consummation of such Third Party Acquisition Event,
require such break-up fee to be paid to the non-terminating party upon such
consummation.
(ii) As used herein, the term "Third Party Acquisition Event"
shall mean either of the following:
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(A) either Caremark or MedPartners/Mullikin, as the case may be,
shall agree to, consummate, or announce its intention to enter into
any Acquisition Transaction (as defined in Section 7.9); or
(B) any person (other than a party hereto or its affiliates)
shall have acquired beneficial ownership (as such term is defined in
Rule 13d-3 under the Exchange Act) or the right to acquire beneficial
ownership of, or a new group has been formed which beneficially owns
or has the right to acquire beneficial ownership of, 10% or more of
the outstanding Caremark Common Stock or MedPartners/Mullikin Common
Stock or purchase, lease or otherwise acquire 10% of the assets of
Caremark or MedPartners/Mullikin, as the case may be.
(c) Each of MedPartners/Mullikin and Caremark acknowledges that the
provisions for the payment of breakup fees and allocation of expenses contained
in this Section 8.6 are an integral part of the transactions contemplated by
this Plan of Merger and that, without these provisions, MedPartners/Mullikin and
Caremark and the other constituent entities would not have entered into the Plan
of Merger. Accordingly, if a breakup fee shall become due and payable by either
party, and such party shall fail to pay such amount when due pursuant to this
Section, and, in order to obtain such payment, suit is commenced which results
in a judgment against such party therefor, the terminating party shall pay the
non-terminating party's reasonable costs and expenses (including reasonable
attorneys' fees) in connection with such suit, together with interest computed
or any amounts determined to be due pursuant to this Section (computed from the
date upon which such amounts were due and payable pursuant to this Section) and
such costs (computed from the dates incurred) at the prime rate of interest
announced from time to time by NationsBank of Georgia, National Association. The
obligations of MedPartners/Mullikin and Caremark under this Section 8.6 shall
survive any termination of this Plan of Merger.
In the event of an event which shall give rise to the payment of the
breakup fee pursuant to this Section 8.6 of this Plan of Merger, the payment of
any such breakup fee shall be the sole and exclusive remedy of the party
receiving such fee.
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Section 9. CONDITIONS TO CLOSING.
9.1 Mutual Conditions. The respective obligations of each party to
effect the Merger shall be subject to the satisfaction, at or prior to the
Closing Date, of the following conditions (any of which may be waived in writing
by MedPartners/Mullikin, the Subsidiary and Caremark):
(a) None of MedPartners/Mullikin, the Subsidiary or Caremark nor any
of their respective subsidiaries shall be subject to any order, decree or
injunction by a court of competent jurisdiction which (i) prevents the
consummation of the Merger or (ii) would impose any material limitation on the
ability of MedPartners/Mullikin effectively to exercise full rights of ownership
of the Common Stock of the Surviving Corporation or any material portion of the
assets or business of Caremark and the Caremark Subsidiaries and Other Caremark
Entities, taken as a whole.
(b) No statute, rule or regulation shall have been enacted by the
government (or any governmental agency) of the United States or any state,
municipality or other political subdivision thereof that makes the consummation
of the Merger and any other transaction contemplated hereby illegal.
(c) Any waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated.
(d) The holders of shares of Caremark Common Stock and the holders of
shares of MedPartners/Mullikin Common Stock shall have approved the adoption of
this Plan of Merger and any other matters submitted to them for the purpose of
approving the transactions contemplated hereby.
(e) The shares of MedPartners/Mullikin Common Stock to be issued in
connection with the Merger shall have been listed on the NYSE, upon official
notice of issuance, and shall have been issued in transactions qualified or
exempt from registration under applicable securities or Blue Sky laws of such
states and territories of the United States as may be required.
(f) The Merger shall qualify for "pooling of interests" accounting
treatment, and MedPartners/Mullikin and Caremark shall each have received a
letter, dated the Closing Date, from Ernst & Young, LLP to that effect if the
Merger is consummated in accordance with the terms and provisions of this Plan
of Merger.
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(g) The Registration Statement shall have been declared effective and
no stop order with respect to the Registration Statement shall be in effect.
9.2 Conditions to Obligations of MedPartners/Mullikin. The obligations
of MedPartners/Mullikin to consummate the Merger and the other transactions
contemplated hereby shall be subject to the satisfaction, at or prior to the
Closing Date, of the following conditions (any of which may be waived by
MedPartners/Mullikin):
(a) Each of the agreements of Caremark to be performed at or prior to
the Closing Date pursuant to the terms hereof shall have been duly performed in
all material respects, and Caremark shall have performed, in all material
respects, all of the acts required to be performed by it at or prior to the
Closing Date by the terms hereof.
(b) The representations and warranties of Caremark set forth in
Section 3.11(a) shall be true and correct as of the date of this Plan of Merger
and as of the Closing Date as described in the next sentence. The
representations and warranties of Caremark set forth in this Plan of Merger that
are qualified as to materiality shall be true and correct, and those that are
not so qualified shall be true and correct in all material respects, as of the
date of this Plan of Merger and as of the Closing as though made at and as of
such time, except to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations and warranties
that are qualified as to materiality shall be true and correct, and those that
are not so qualified shall be true and correct in all material respects, as of
such earlier date); provided, however, that Caremark shall not be deemed to be
in breach of any such representations or warranties by taking any action
permitted (or approved by MedPartners/Mullikin) under this Agreement.
MedPartners/Mullikin and the Subsidiary shall have been furnished with a
certificate, executed by a duly authorized officer of Caremark, dated the
Closing Date, certifying as to the fulfillment of the foregoing conditions.
(c) MedPartners/Mullikin shall have received an opinion from Haskell
Slaughter & Young, L.L.C., to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code, which opinion
may be based upon reasonable representations of fact provided by officers of
MedPartners/Mullikin, Caremark and the Subsidiary.
(d) MedPartners/Mullikin shall have received an opinion from Wachtell,
Lipton, Rosen & Katz substantially to the effect set forth in Exhibit 9.2(d)
hereto.
49
<PAGE>
(e) All consents, authorizations, orders and approvals of (or filings
or registrations with) any governmental commission, board or other regulatory
body required to execute, deliver and perform this Plan of Merger shall have
been obtained or made, except for filings in connection with the Merger and any
other documents required to be filed after the Effective Time.
9.3 Conditions to Obligations of Caremark. The obligations of Caremark
to consummate the Merger and the other transactions contemplated hereby shall be
subject to the satisfaction, at or prior to the Closing Date, of the following
conditions (any of which may be waived by Caremark):
(a) Each of the agreements of MedPartners/Mullikin and the Subsidiary
to be performed at or prior to the Closing Date pursuant to the terms hereof
shall have been duly performed, in all material respects, and
MedPartners/Mullikin and the Subsidiaries shall have performed, in all material
respects, all of the acts required to be performed by them at or prior to the
Closing Date by the terms hereof.
(b) The representations and warranties of MedPartners/Mullikin set
forth in Section 5.13(a) shall be true and correct as of the date of the Plan of
Merger and as of the Closing Date as described in the next sentence. The
representations and warranties of MedPartners/Mullikin and the Subsidiary set
forth in this Plan of Merger that are qualified as to materiality shall be true
and correct, and those that are not so qualified shall be true and correct in
all material respects, as of the date of this Plan of Merger and as of the
Closing as though made at and as of such time, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case such representations and warranties that are qualified as to materiality
shall be true and correct, and those that are not so qualified shall be true and
correct in all material respects, as of such earlier date). Caremark shall have
been furnished with a certificate, executed by duly authorized officers of
MedPartners/Mullikin and the Subsidiary, dated the Closing Date, certifying in
such detail as Caremark may reasonably request as to the fulfillment of the
foregoing conditions.
(c) Caremark shall have received an opinion from Wachtell, Lipton,
Rosen & Katz to the effect that the Merger will constitute a reorganization with
the meaning of Section 368(a)
50
<PAGE>
of the Code which opinion may be based upon reasonable representations of fact
provided by officers of MedPartners/Mullikin, Caremark and the Subsidiary.
(d) Caremark shall have received an opinion from Haskell Slaughter &
Young, L.L.C., substantially to the effect set forth in Exhibit 9.3(d) hereto.
(e) All consents, authorizations, orders and approvals of (or filings
or registrations with) any governmental commission, board or other regulatory
body required in connection with the execution, delivery and performance of this
Plan of Merger shall have been obtained or made, except for filings in
connection with the Merger and any other documents required to be filed after
the Effective Time.
Section 10. MISCELLANEOUS.
10.1 Nonsurvival of Representations and Warranties. Unless expressly
provided otherwise, none of the representations and warranties in this Plan of
Merger or in any instrument delivered pursuant to this Plan of Merger shall
survive the Effective Time.
10.2 Notices. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand delivery
or by facsimile and overnight courier to the parties hereto at the following
addresses, or at such other address as either party may advise the other in
writing from time to time:
If to MedPartners/Mullikin:
MedPartners/Mullikin, Inc.
3000 Galleria Tower, Suite 1000
Birmingham, Alabama 35244
Facsimile: (205) 733-9780
Attn: J. Brooke Johnston, Jr.
Senior Vice President and General Counsel
51
<PAGE>
with a copy to:
F. Hampton McFadden, Jr., Esq.
Haskell, Slaughter & Young, L.L.C.
1200 AmSouth/Harbert Plaza
1901 Sixth Avenue North
Birmingham, Alabama 35203
Facsimile: (205) 324-1133
If to Caremark:
Caremark International Inc.
2211 Sanders Road
Northbrook, Illinois 60062
Facsimile: (847) 559-4790
Attn: General Counsel
with a copy to:
Edward D. Herlihy
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Facsimile: (212) 403-2000
All such communications shall be deemed to have been delivered on the date of
hand delivery or on the next business day following the deposit of such
communications with the overnight courier.
10.3 Further Assurances. Each party hereby agrees to perform any
further acts and to execute and deliver any documents which may be reasonably
necessary to carry out the provisions of this Plan of Merger.
10.4 Insurance; Indemnification; Benefits.
(a) MedPartners/Mullikin shall cause the Surviving Corporation to
maintain in effect for not less than three years after the Effective Time the
current policies of directors' and officers' liability insurance maintained by
Caremark with respect to matters occurring prior to the Effective Time;
provided, however, that (i) MedPartners/Mullikin may substitute therefor
policies of at least the same coverage containing terms and conditions which are
no less advantageous to the covered officers and directors and (ii)
MedPartners/Mullikin shall not be
52
<PAGE>
required to pay an annual premium for such insurance in excess of two times the
last annual premium paid prior to the date hereof, but in such case shall
purchase as much coverage as possible for such amount.
(b) From and after the Effective Time, MedPartners/Mullikin shall
cause the Surviving Corporation to indemnify and hold harmless to the fullest
extent permitted under applicable law each person who is now, or has been at any
time prior to the date hereof, an officer, director, employee, trustee or agent
of bear (or any Caremark Subsidiary or Other Caremark Entity), including,
without limitation, each person controlling any of the foregoing persons
(together with such person's heirs and representatives, individually, an
"Indemnified Party" and collectively, the "Indemnified Parties"), against all
losses, claims, damages, liabilities, costs or expenses (including attorneys'
fees), judgments, fines, penalties and amounts paid in settlement in connection
with any claim, action, suit, proceeding or investigation arising out of or
pertaining to acts or omissions, or alleged acts or omissions, by them in their
capacities as such, whether commenced, asserted or claimed before or after the
Effective Time and including, without limitation, liabilities arising under the
Securities Act, the Exchange Act and state corporation laws, in connection with
the Merger. MedPartners/Mullikin shall cause the Surviving Corporation to keep
in effect Caremark's current provisions in its certificate of incorporation and
by-laws providing for exculpation of director and officer liability and
indemnification of the Indemnified Parties to the fullest extent permitted under
the DGCL, which provisions shall not be amended except as required by applicable
law or except to make changes permitted by law that would enlarge the
Indemnified Parties' right of indemnification. In the event of any actual or
threatened claim, action, suit, proceeding or investigation in respect of such
acts or omissions, (i) MedPartners/Mullikin shall cause the Surviving
Corporation to pay the reasonable fees and expenses of counsel selected by the
Indemnified Party in advance of the final disposition of any such action to the
full extent permitted by applicable law, upon receipt of any undertaking
required by applicable law, and (ii) MedPartners/Mullikin shall cause the
Surviving Corporation to cooperate in the defense of any such matter.
(c) MedPartners/Mullikin covenants and agrees that, following the
Effective Time, (i) it will, or it will cause the Surviving Corporation to,
provide for the benefit of employees of Caremark who become employees of the
Surviving Corporation, an effective and complete
53
<PAGE>
employee benefit program which is competitive in the industries in which it
competes, which benefits shall be no less advantageous than those benefits
offered to similarly situated MedPartners/Mullikin employees, (ii) it will, or
it will cause the Surviving Corporation to, (A) honor in accordance with their
terms all benefits accrued or vested under the Caremark Plans as of the
Effective Time, (B) honor in accordance with their terms all contracts,
arrangements, commitments, or understandings described in Exhibit 3.14(b) to the
Caremark Disclosure Schedule, (C) vest the benefits of any employee terminated
within 12 months of the Closing Date under the 401 CARE Retirement Savings Plan
and Caremark International Inc. Pension Plan, and (D) maintain and honor in
accordance with its terms, Caremark's Severance Pay and Benefits Plan for 6
months from and after the Effective Time.
(d) The provisions of this Section 10.4 and Sections 7.8, 7.15 and
7.19 shall survive the Merger, and are intended to be for the benefit of, and
shall be enforceable by, any officer, director, employee, trustee or agent of
Caremark (or any Caremark Subsidiary or Other Caremark Entity), and such
person's heirs or representatives, that is the subject of such Section as the
case may be (the expenses, including reasonable attorneys' fees, that may be
incurred thereby in enforcing such provisions to be paid by
MedPartners/Mullikin).
10.5 Governing Law. This Plan of Merger shall be interpreted,
construed and enforced in accordance with the laws of the State of Delaware,
applied without giving effect to any conflicts-of-law principles.
10.6 "Including". The word "including", when following any general
statement, term or matter, shall not be construed to limit such statement, term
or matter to the specific terms or matters as provided immediately following the
word "including" or to similar items or matters, whether or not non-limiting
language (such as "without limitation", "but not limited to", or words of
similar import) is used with reference to the word "including" or the similar
items or matters, but rather shall be deemed to refer to all other items or
matters that could reasonably fall within the broadest possible scope of the
general statement, term or matter.
10.7 "Knowledge". "To the knowledge", "to the best knowledge,
information and belief", or any similar phrase shall be deemed to refer to the
knowledge of the Chairman of the Board, Chief Executive Officer or Chief
Financial Officer of a party and to include the assurance
54
<PAGE>
that such knowledge is based upon a reasonable investigation, unless otherwise
expressly provided.
10.8 "Material adverse change" or "material adverse effect". "Material
adverse change" or "material adverse effect" means, when used in connection with
Caremark or MedPartners/Mullikin, any change, effect, event or occurrence that
has, or is reasonably likely to have, individually or in the aggregate, a
material adverse impact on the business or financial position of such party and
its subsidiaries and other controlled entities identified herein or in any
Exhibit or Disclosure Schedule delivered pursuant to this Plan of Merger,
including the subsidiaries and other entities, taken as a whole; provided,
however, that "material adverse change" and "material adverse effect" shall be
deemed to exclude the impact of (i) changes in generally accepted accounting
principles, (ii) changes in applicable law, and (iii) any changes resulting from
any restructuring or other similar charges or write-offs taken by Caremark with
the consent of MedPartners/Mullikin; provided, however, that no such charges or
write-offs will be taken if such would adversely affect pooling-of-interests
accounting treatment for the Merger.
10.9 "Hazardous Materials". The term "Hazardous Materials" means any
material which has been determined by any applicable governmental authority to
be harmful to the health or safety of human or animal life or vegetation,
regardless of whether such material is found on or below the surface of the
ground, in any surface or underground water, airborne in ambient air or in the
air inside any structure built or located upon or below the surface of the
ground or in building materials or in improvements of any structures, or in any
personal property located or used in any such structure, including, but not
limited to, all hazardous substances, imminently hazardous substances, hazardous
wastes, toxic substances, infectious wastes, pollutants and contaminants from
time to time defined, listed, identified, designated or classified as such under
any Environmental Laws (as defined in Section 10.10) regardless of the quantity
of any such material.
10.10 Environmental Laws. The term "Environmental Laws" means any
federal, state or local statute, regulation, rule or ordinance, and any judicial
or administrative interpretation thereof, regulating the use, generation,
handling, storage, transportation, discharge, emission, spillage or other
release of Hazardous Materials or relating to the protection of the environment.
55
<PAGE>
10.11 Captions. The captions or headings in this Plan of Merger are
made for convenience and general reference only and shall not be construed to
describe, define or limit the scope or intent of the provisions of this Plan of
Merger.
10.12 Integration of Exhibits. All Exhibits and Appendices attached to
this Plan of Merger are integral parts of this Plan of Merger as if fully set
forth herein.
10.13 Entire Agreement. This instrument, including all Exhibits and
Appendices attached hereto and the Confidentiality Agreement contain the entire
agreement of the parties and supersedes any and all prior or contemporaneous
agreements between the parties, written or oral, with respect to the
transactions contemplated hereby. Such agreement may not be changed or
terminated orally, but may only be changed by an agreement in writing signed by
the party or parties against whom enforcement of any waiver, change,
modification, extension, discharge or termination is sought.
10.14 Counterparts. This Plan of Merger may be executed in several
counterparts, each of which, when so executed, shall be deemed to be an
original, and such counterparts shall, together, constitute and be one and the
same instrument.
10.15 Binding Effect. This Plan of Merger shall be binding on, and
shall inure to the benefit of, the parties hereto, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Plan of Merger. No party may assign any right or
obligation hereunder without the prior written consent of the other parties.
10.16 No Rule of Construction. The parties acknowledge that this Plan
of Merger was initially prepared by MedPartners/Mullikin, and that all parties
have read and negotiated the language used in this Plan of Merger. The parties
agree that, because all parties participated in negotiating and drafting this
Plan of Merger, no rule of construction shall apply to this Plan of Merger which
construes ambiguous language in favor of or against any party by reason of that
party's role in drafting this Plan of Merger.
* * * * *
56
<PAGE>
IN WITNESS WHEREOF, MedPartners/Mullikin, the Subsidiary and Caremark
have caused this Plan and Agreement of Merger to be executed by their respective
duly authorized officers, all as of the day and year first above written.
MEDPARTNERS/MULLIKIN, INC.
By /s/ Larry R. House
------------------------------------
Larry R. House,
Chairman of the Board, President
and MedPartners/Mullikin Executive Officer
PPM MERGER CORPORATION
By /s/ Larry R. House
------------------------------------
Larry R. House
President
CAREMARK INTERNATIONAL INC.
By /s/ C.A. Lance Piccolo
------------------------------------
C.A. Lance Piccolo
Chairman of the Board
57
<PAGE>
Exhibit 2
MEDPARTNERS
MULLIKIN
NEWS RELEASE
Phone: (205) 733-8996 Fax: (205) 733-4154
________________________________________________________________________________
FOR IMMEDIATE RELEASE
MEDPARTNERS/MULLIKIN AND CAREMARK MERGER TO CREATE $4.4
BILLION REVENUE PHYSICIAN PRACTICE MANAGEMENT COMPANY
BIRMINGHAM, AL and NORTHBROOK, IL, May 14, 1996 -- MedPartners/Mullikin, Inc.
(NYSE: MDM) and Caremark International Inc. (NYSE: CK), the nation's two
largest physician practice management (PPM) companies, today announced that they
have agreed to merge in a transaction valued at $2.5 billion. The combined
enterprise has annualized first quarter revenues of $4.4 billion and
approximately 7,250 affiliated physicians providing care to patients nationwide,
including almost 1.5 million prepaid enrollees. Combined with Caremark's
prescription benefit management (PBM) and disease management businesses, the new
enterprise will offer HMOs and other payors comprehensive healthcare solutions.
Under the terms of the agreement, which has been approved by the Boards of
Directors of both companies, each Caremark share will be converted into
MedPartners/Mullikin common stock at a fixed ratio of 1.21 shares of
MedPartners/Mullikin per Caremark share. The agreement contains no provisions
for termination based on fluctuations in either company's stock price. The
merger is expected to close in the third quarter of 1996 and is subject to
regulatory and shareholder approval. The transaction, which will be tax-free to
shareholders and accounted for as a pooling of interests, is expected to be
accretive to MedPartners/Mullikin's earnings per share in 1996 and 1997.
The combined enterprise, which will be known as MedPartners, Inc., will be led
by Larry R. House, who will be Chairman, President and Chief Executive Officer.
C.A. Lance Piccolo, Caremark's Chairman and Chief Executive Officer, will join
the Board of Directors and serve as Vice Chairman. The new Board will be
comprised of nine existing MedPartners/Mullikin directors, Mr. Piccolo and three
additional Caremark directors.
Mr. House said: "This merger further enhances our leadership role in the
provision of physician-directed and patient-centered healthcare nationwide. We
have now formed the premier physician practice management company in the
country, with unparalleled depth and breadth of management and expertise in fee-
for-service as well as prepaid markets nationwide. As a combined company, we
have outstanding internal and external growth opportunities which will have an
immediate positive financial impact for our shareholders."
Mr. Piccolo added: "The merger is a preemptive strategic move to build an
organization that is ideally positioned to deliver quality patient care that is
affordable. Our mutual commitment to
- more-
<PAGE>
physician-led, patient-centered care is enhanced by the depth of clinical data
collected over more than a decade in our PBM and disease management businesses.
Combined, we will be better able to provide physicians with the support they
need to provide medical care and to shape the future of healthcare in the United
States and around the world."
Caremark is a leading provider of healthcare services in the United States and
overseas. Its affiliated physician organizations are large, multi-specialty
group practices located in six major metropolitan markets. These networks,
which are affiliated with 1,604 physicians, provide care to more than one
million people, 663,000 of whom are in prepaid health plans. In addition to its
PPM business, the Northbrook, Illinois company helps care for millions of people
through its pharmaceutical services, disease management and international
services, using clinical expertise and advanced technology to improve patient
care and manage healthcare costs. Caremark was recently named one of America's
most admired healthcare companies by Fortune Magazine. Caremark had 1995
revenues of $2.4 billion from continuing operations.
MedPartners/Mullikin is a leading physician practice management company that
develops, consolidates and manages integrated healthcare delivery systems.
Through the company's network of affiliated group and IPA physicians,
MedPartners/Mullikin provides primary and specialty healthcare services to
prepaid managed care enrollees and fee-for-service patients. The company
operates in 23 states and is affiliated with 5,645 physicians, including 1,457
in group practices, 3,731 through IPA relationships and 457 hospital-based
physicians. MedPartners/Mullikin physicians provide prepaid healthcare to over
800,000 enrollees through 45 HMO relationships.
When the merger is complete, the combined healthcare operations will be managed
as one organization, with a management team drawn from both companies. "On a
combined basis, MedPartners will have a management team unmatched by any other
company in the industry today. We will integrate the PPM organizations and
continue to rely on Caremark's divisional management to run the PBM, the disease
management and the international businesses. Together, we will collectively
possess the knowledge, skill and expertise to successfully grow the business
going forward," said Mr. House. "We have had enormous success in integrating
the operations of Mullikin and Pacific Physician Services and in recognizing the
synergies of complementary service markets. The addition of Caremark will add
great value to all of our existing payor, hospital and provider relationships."
The new company expects to realize significant financial benefits from
synergies, including enhanced revenues through additional prepaid enrollees and
new opportunities between the PPM, PBM and disease management businesses, plus
reductions in operating expenses. "We expect to be able to deliver substantial
growth in earnings per share in 1997 and beyond as we take full advantage of the
potential synergies," said Mr. House.
Smith Barney Inc. and CS First Boston acted as financial advisors to
MedPartners/Mullikin and Caremark, respectively.
- table follows -
<PAGE>
<TABLE>
<CAPTION>
SELECTED PRO FORMA STATISTICAL DATA
MedPartners/ Caremark Combined
Mullikin(1)
----------------------------------------
<S> <C> <C> <C>
Revenues(2) $1,330 MM $3,056 MM $4,386 MM
Physicians:
Group 1,457 979 2,436
IPA 3,731 625 4,356
Hospital-Based 457 -- 457
Total 5,645 1,604 7,249
PPM States 23 6 25
PPM Prepaid Membership 800,000 663,000 1,463,000
PBM 1995 Members -- 15 MM 15 MM
PBM 1995 Prescriptions -- 41 MM 41 MM
(1) Includes pending CHS acquisition.
(2) 3/31/96 annualized.
</TABLE>
###
Editor's note: For additional information on MedPartners/Mullikin and
Caremark, call (212) 696-4455 ext. 329 to receive company fact sheets and
management biographies via facsimile. This information, as well as
management photos, is also available on the World Wide Web at:
http://www.noonanrusso. com
CONTACTS:
---------
Noonan/Russo Communications, Inc.
(212) 696-4455
Investors: Susan Noonan (ext. 203)
Media: Mari Hope (ext. 210) or Michele Helm (ext. 225)
MedPartners/Mullikin, Inc.
Birmingham: (205) 733-8996
Investors: Randy Pittman or Pete Clemens
Media: Pam Huff
Los Angeles: (310) 497-4076
Mark Wagar
Caremark International Inc.
Investors: Tamra Sweeney (847) 559-4635 or Lisa Henige (847) 559-4696
Media: Sally Benjamin Young (847) 559-4892
<PAGE>
Exhibit 3
AMENDMENT TO RIGHTS AGREEMENT
-----------------------------
AMENDMENT, dated as of May 13, 1996, to the Rights Agreement, dated as
of November 30, 1992 by and between Caremark International Inc. (the "Company")
and First Chicago Trust Company of New York (as Rights Agent) (the "Rights
Agreement").
WHEREAS, the Company and the Rights Agent have heretofore executed and
entered into the Rights Agreement; and
WHEREAS, pursuant to Section 27 of the Rights Agreement, the Company
may from time to time supplement or amend the Rights Agreement in accordance
with the provisions of Section 27 thereof; and
WHEREAS, it is proposed that the Company enter into a Plan and
Agreement of Merger (as it may be amended or supplemented from time to time, the
"Merger Agreement"), substantially in the form set forth in Exhibit A to this
Amendment, between the Company, PPM Merger Corporation and MedPartners/Mullikin,
Inc. ("MedPartners"), as the same may be amended from time to time (all
capitalized terms used in this Amendment and not otherwise defined herein shall
have the meaning ascribed thereto in the Merger Agreement); and
WHEREAS, the Board of Directors has determined that the Merger and the
other transactions contemplated by the Merger Agreement are fair to and in the
best interests of the Company and its stockholders; and
WHEREAS, the Board of Directors has determined that it is in the best
interest of the Company and its stockholders to amend the Rights Agreement to
exempt the Merger Agreement and the transactions contemplated thereby from the
application of the Rights Agreement.
NOW, THEREFORE, the Company hereby amends the Rights Agreement as
follows:
1. Section 1(a) of the Rights Agreement is hereby modified and
amended by adding the following sentence at the end thereof:
"Neither MedPartners/Mullikin, Inc., a Delaware corporation
("MedPartners"), PPM Merger Corporation ("Merger Corporation"), nor
any other Person, shall be deemed to be an Acquiring Person by virtue
of the Plan and Agreement of Merger (as it may be amended or
supplemented from time to time, the "Merger Agreement") to be entered
into as of May 13, 1996, between the Company, Merger Corporation and
MedPartners or by virtue of any of the transactions contemplated
thereby."
2. Section 1(m) of the Rights Agreement is hereby modified and
amended by adding the following sentence at the end thereof:
<PAGE>
"Neither the execution and delivery of the Merger Agreement nor
consummation of the transactions contemplated by the Merger Agreement,
shall be deemed to be a Triggering Event."
3. Section 1.5 of the Rights Agreement is hereby modified and amended
to add the following sentence at the end thereof:
"Nothing in this Agreement shall be construed to give any holder of
Rights or any other Person any legal or equitable rights, remedy or
claim under this Agreement in connection with any transactions
contemplated by the Merger Agreement."
IN WITNESS WHEREOF, this Amendment has been duly executed by the
Company and the Rights Agent as of the day and year first written above.
CAREMARK INTERNATIONAL INC.
By: /s/ Dennis Owczarski
_____________________________
Name: Dennis Owczarski
Title: Vice President and Treasurer
FIRST CHICAGO TRUST COMPANY
OF NEW YORK (as Rights Agent)
By: /s/ John C. Bambach
_____________________________
Name: John C. Bambach
Title: Vice President
<PAGE>
Exhibit A hereto is identical to Exhibit 1 to the 8-K.
