AGREEMENT AND PLAN OF MERGER by and among CVS CAREMARK CORPORATION, ULYSSES MERGER SUB, L.L.C. and UNIVERSAL AMERICAN CORP. _________________________ Dated as of December30, 2010 TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Term	Section
Acceptable Confidentiality Agreements	5.4(b)
Actuarial Firm	5.22(a)
Agent	3.30
Agreement	Preamble
American Progressive	5.18(c)
AmPro Part D Business	5.18(c)
Authorized Control Level Amount	5.20(a)
Balance Sheet Date	3.11(a)
Bid Submission	5.22(a)
Book-Entry Shares	2.1(d)(ii)
Certificate of Merger	1.3
Certificates	2.1(d)(ii)
Closing	1.2
Closing Consideration	2.1(c)(i)
Closing Date	1.2
Closing Date Indebtedness Amount	5.20(a)
Closing Date Indebtedness Certificate	5.20(a)
CMS	3.3(g)
CMS Notice Requirements	3.3(g)
Code	2.2(f)
Common Stock	Recitals
Company	Preamble
Company Adverse Recommendation Change	5.4(c)
Company Benefit Plans	3.15(a)
Company Board	Recitals
Company Board Recommendation	Recitals
Company Disclosure Letter	III
Company Financial Advisor	3.31
Company Intellectual Property	3.19(a)
Company Option	3.6(a)
Company Organizational Documents	3.2
Company Permits	3.21(a)
Company Proxy Statement	3.3(b)
Company SEC Reports	3.9
Company Severance Plan	5.7(d)
Company Shareholders Meeting	3.3(b)
Company Termination Fee	7.6(c)
Computer Software	3.19(e)
Confidentiality Agreement	5.3(b)
Continuation Period	5.7(a)
Converted Performance Share Award	2.3(c)
Converted Restricted Share Award	2.3(b)

Covered Persons	5.24(a)
Designated Bond Exchange	5.25(b)
Designated Part D Bonds	5.25(b)
Designation Date	5.25(b)
Effective Time	1.3
ERISA	3.15(a)
Exchange Act	3.3(c)
Exchange Agent	2.2(a)
Exchange Fund	2.2(b)
Excluded Shares	2.1(b)
Exercise Price	2.3(a)
FIN 48	8.18(b)
Fractional Shares Fund	2.2(j)(ii)
GAAP	3.10(a)(ii)
GAAP Statements	3.26
Good Faith Bid	5.22(a)
Governmental Authorizations	3.3
Healthcare Information Laws	3.22(d)
HSR Act	3.3(f)
Insurance Contracts	3.28
Insurance Laws	3.26
Insurance Policies	3.25
Interim Part D Financial Statements	3.10(b)
IRS	8.18(a)
Legal Actions	3.13
Liabilities	3.11
Material Contract	3.14(a)
Maximum Divestiture Amount	5.9(e)
Merger	Recitals
Merger Sub	Preamble
NASDAQ	3.3(e)
New Plans	5.7(g)
Newco	Recitals
Newco Common Stock	Recitals
Newco Exchange Ratio	2.1(c)(i)
Newco Form S-4	3.3(b)
Non-Voting Common Stock	3.6(a)
Novation Agreement	5.18(c)
Novation Effective Date	5.18(c)
NYBCL	1.1
NYLLCA	1.1
Old Plans	5.7(g)
Parent	Preamble
Parent Assets	4.4(b)
Parent Contracts	4.4(c)

Parent Disclosure Letter	IV
Part D Employee	3.15(i)
Part D Employee Performance Share	2.3(c)
Part D Employee Restricted Share	2.3(b)
Part D Entities	III
Part D Insurance Entities	3.26
Part D Option	2.3(a)
Part D Reinsurance Agreement	5.18(c)
Part D Reinsurer	5.18(c)
PBM Agreement	5.18(b)
Performance Share	3.6(a)
Permits	3.21(a)
Post-Signing Returns	8.18(b)
Preferred Stock	3.6(a)
Pre-Split-Off Common Stock Value	2.3(a)
Real Property Leases	3.20(b)
Regulatory Material Adverse Effect	5.9(e)
Reinsurance Agreement	5.18(b)
Required Consents	3.3(h)
Requisite Experience	5.18(e)
Restricted Share	3.6(a)
Retention Pool	5.7(f)
SAP	3.26
SAP Statements	3.26
SEC	3.3(b)
Section 5.23 Matters	5.23(a)
Section 5.23 Persons	5.23(a)
Securities	3.6(b)
Securities Act	3.9
Separation Agreement	Recitals
Series A Preferred Stock	2.1(d)(i)
Series B Preferred Stock	3.6(a)
Shareholder Litigation	5.24(a)
Split-Off	Recitals
Split-Off Agreement Arbitrator	5.18(e)
Split-Off Agreement Date	5.18(e)
Split-Off Consideration	2.1(c)(i)
Split-Off Consideration Value	2.3(a)
Statutory Capital 12/31 Amount	5.20(a)
Statutory Capital Accounting Firm	5.20(d)
Statutory Capital Adjustment Certificate	5.20(a)
Statutory Capital Objections Statement	5.20(c)
Surviving Bylaws	1.6
Surviving Charter	1.5
Surviving Corporation	1.1

Tax Matters Agreement	5.18(a)
Termination Date	7.2(a)
Transition Services Agreement	5.18(d)
WARN Act	3.16(b)

 

 

 

 

AGREEMENT AND PLAN OF MERGER, dated as of December 30, 2010 (this “Agreement”), by and among CVS Caremark Corporation, a Delaware corporation (“Parent”), Ulysses Merger Sub, L.L.C., a New York limited liability company and a direct or indirect wholly owned subsidiary of Parent (“Merger Sub”), and Universal American Corp., a New York corporation (the “Company”).

 

 

WHEREAS, in addition to its other businesses, the Company, directly and through certain of its Subsidiaries (as defined below) owns and operates the Medicare Part D Business (as defined below);

 

WHEREAS, the Company and Parent desire to effect Parent’s acquisition of the Company’s Medicare Part D Business through a merger of Merger Sub with and into the Company on the terms and subject to the conditions of this Agreement (the “Merger”);

 

WHEREAS, concurrently with the execution of this Agreement, the Company and Ulysses Spin Corp., a newly-formed Subsidiary of the Company (“Newco”), are entering into a Separation Agreement (the “Separation Agreement”) pursuant to which, upon the terms and subject to the conditions set forth therein, prior to the Effective Time, (i) all of the assets of the Company and its Subsidiaries, other than the assets of the Company and its Subsidiaries primarily related to the Medicare Part D Business, will be transferred to or retained by Newco or one or more Subsidiaries of Newco and (ii)
60;Newco or one or more of Newco’s Subsidiaries will assume the Newco Liabilities (as defined in the Separation Agreement);

 

WHEREAS, after the Split-Off (as defined below), it is intended that, subject to the terms and conditions set forth in the Separation Agreement, the Company and its Subsidiaries will own only the Medicare Part D Business;

 

WHEREAS, in order to effect the foregoing, upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time, the holders of shares of common stock, par value $0.01 per share, of the Company (the “Common Stock”), will, pursuant to the Merger, be entitled to receive, in the aggregate, all of the shares of common stock, par value $0.01 per share, of Newco (“Newco Common Stock”) (the “Split-Off”);

 

WHEREAS, upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time, Merger Sub shall be merged with and into the Company and each issued and outstanding share of Common Stock, other than Excluded Shares (as defined below), will be converted into the right to receive (i) shares of Newco Common Stock and (ii) the Per Share Merger Consideration, without interest, as more fully set forth herein;

 

 

 

 

WHEREAS, the board of directors of the Company (the “Company Board”) at a meeting thereof duly called and held (a) approved and declared advisable this Agreement, the Merger, the Split-Off and the transactions contemplated by this Agreement and the Split-Off Agreements (as defined below), (b) declared that it is in the best interests of the shareholders of the Company that the Company enter into this Agreement and consummate the Merger and the Split-Off on the terms and subject to the conditions set forth in this Agreement and the Split-Off Agreements, (c) directed that the adoption of this Agreement be submitted to a vote at a meeting of the shareholders of the Company and (d) recommended to the shareholders of the Company that they adopt this Agreement (the “Company Board Recommendation”);

 

WHEREAS, as a condition to Parent’s and Merger Sub’s willingness to enter into this Agreement, concurrently with the execution of this Agreement certain stockholders of the Company are entering into Voting Agreements (the “Voting Agreements”) with Parent; and

 

WHEREAS, the board of directors of Merger Sub has unanimously approved and declared advisable, and the board of directors of Parent has approved, this Agreement, the Merger and the transactions contemplated by this Agreement, on the terms and subject to the conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement, intending to be legally bound, agree as follows:

 

ARTICLE I

 

 

Section 1.1 The Merger.  Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the New York Business Corporation Law (the “NYBCL”) and the New York Limited Liability Company Act (the “NYLLCA”), at the Effective Time, (a) Merger Sub shall be merged with and into the Company and (b) the separate existence of Merger Sub shall cease and the Company shall continue its corporate existence under the NYBCL as the surviving corporation in the Merger (the “Surviving Corporation”).

 

Section 1.2 Closing.  Subject to the satisfaction or waiver of all of the conditions to closing contained in Article VI, the closing of the Merger (the “Closing”) shall take place (a) at the offices of Paul, Weiss, Rifkind, Wharton & Garrison LLP, 1285 Avenue of the Americas, New York, New York, at 10:00 a.m. (local time) on the second Business Day after the day on which the conditions set forth in Article VI (other than any conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions) are satisfied or waived in accordance with this Agreement or (b) at such other place and time as Parent and the Company may agree in writing.  The date on which the Closing occurs is referred to as the “Closing Date.”

 

 

 

 

Section 1.3 Effective Time.  At the Closing, Parent and the Company shall cause a certificate of merger (the “Certificate of Merger”) to be executed, signed, acknowledged and filed with the Department of State of the State of New York in such form as is required by the relevant provisions of the NYBCL and the NYLLCA.  Th e Merger shall become effective when the Certificate of Merger has been duly filed with the Department of State of the State of New York or at such other subsequent date or time as Parent and the Company may agree and specify in the Certificate of Merger in accordance with the NYBCL and the NYLLCA (the “Effective Time”).

 

Section 1.4 Effects of the Merger.  The Merger shall have the effects set forth in the NYBCL, the NYLLCA, this Agreement and the Certificate of Merger.

 

Section 1.5 Certificate of Incorporation.  The certificate of incorporation of the Company, as in effect immediately before the Effective Time, shall be the certificate of incorporation of the Surviving Corporation until thereafter amended in accordance with applicable Law (the “Surviving Charter”).

 

Section 1.6 Bylaws.  The bylaws of the Company in effect immediately prior to the Effective Time shall be, from and after the Effective Time, the bylaws of the Surviving Corporation (the “Surviving Bylaws”) until amended in accordance with applicable Law.

 

Section 1.7 Directors.  The officers of Merger Sub immediately prior to the Effective Time shall be, from and after the Effective Time, the directors of the Surviving Corporation until their successors are duly elected and qualified or until their earlier death, resignation or removal in accordance with applicable Law.

 

Section 1.8 Officers.  The officers of Merger Sub immediately prior to the Effective Time shall be, from and after the Effective Time, the officers of the Surviving Corporation until their successors are duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with applicable Law.

 

ARTICLE II

 

 

Section 2.1 Conversion of Capital Stock.  At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or the holder of any shares of capital stock of the Company or of any membership interests of Merger Sub:

 

(a) Conversion of Merger Sub Membership Interests.  Each membership interest of Merger Sub issued and outstanding immediately before the Effective Time shall be converted into and become one fully paid and non-assessable share of common stock, par value $0.01 per share, of the Surviving Corporation.

 

 

 

 

(b) Cancellation of Treasury Stock and Parent-Owned Stock.  Each share of Common Stock held in the treasury of the Company, owned by the Company or any of its wholly owned Subsidiaries or by Parent or any of its Subsidiaries (including Merger Sub) immediately before the Effective Time (collectively, the “Excluded Shares”) shall be canceled automatically and shall cease to exist, and no consideration shall be paid for those Excluded Shares.

 

(c) Conversion of Common Stock.

 

(i) Each share of Common Stock issued and outstanding immediately before the Effective Time (other than Excluded Shares) shall be converted into the right to receive (A) from the Company, subject to the last sentence of Section 8.8, one (1) (the “Newco Exchange Ratio”) validly issued, fully paid and nonassessable share of Newco Common Stock (the “Split-O ff Consideration”) and (B) from Parent, the Per Share Merger Consideration in cash, without interest (clauses (A) and (B), and any cash in lieu of fractional shares of Newco Common Stock to be issued or paid in accordance with Section 2.2(j), collectively, the “Closing Consideration”).

 

(ii) All shares of Common Stock that have been converted pursuant to Section 2.1(c)(i) shall be canceled automatically and shall cease to exist, and the holders of (i) certificates which immediately before the Effective Time represented such shares or (ii) shares represented by book-entry shall cease to have any rights with respect to those shares, other than the right to receive the Closing Consideration in accordance with Section 2.2, without interest.

 

(d) Conversion of Preferred Stock.

(i) Each share of Series A Preferred Stock, par value $1.00 per share (the “Series A Preferred Stock”), issued and outstanding immediately before the Effective Time shall be converted into the right to receive an amount equal to the Closing Consideration for each share of Common Stock issuable upon conversion of such share of Series A Preferred Stock immediately before the Effective Time.

 

(ii) All shares of Series A Preferred Stock that have been converted pursuant to Section 2.1(d)(i) shall be canceled automatically and shall cease to exist, and the holders of certificates which immediately before the Effective Time represented such shares (together with the certificates which represented shares of Common Stock, the “Certificates”) or shares represented by book-entry (together with the shares of Common Stock represented by book-entry, “Book-Entry Shares”) shall cease to have any rights with respect to those shares, other than the right to receive the Closing Consideration in accordance with Section 2.2, without interest.

 

(e) Equitable Adjustment.  If at any time during the period between the date of this Agreement and the Effective Time, any change in the outstanding shares of capital stock of the Company shall occur as a result of any reclassification, recapitalization, reorganization, stock split (including a reverse stock

Section 2.2 Surrender of Certificates and Book-Entry Shares.

 

(a) Exchange Agent.  Not less than ten Business Days before the Effective Time, Parent shall (i) select a bank or trust company, satisfactory to the Company in its reasonable discretion, to act as the exchange agent in the Merger (the “Exchange Agent”) and (ii) enter into an exchange agent agreement with the Exchange Agent in form and substance reasonably satisfactory to the Company.  Parent and Newco shall be responsible for all fees and expenses of the Exchange Agen t as set forth in the Separation Agreement.

 

(b) Exchange Fund.  At or before the Effective Time, for the benefit of the holders of Common Stock and Series A Preferred Stock (i) the Company shall provide to the Exchange Agent certificates representing the shares of Newco Common Stock issuable pursuant to Section 2.1(c) and Section 2.1(d) and (ii) Parent shall provide to the Exchange Agent cash in an amount sufficient for the payment of the aggregate Per Share Merger Consideration payable under Section 2.1(c) and Section 2.1(d).  Such shares of Newco Common Stock and funds provided to the Exchange Agent are collectively referred to as the “Exchange Fund.”

 

(c) Exchange Procedures.

 

(i) Letter of Transmittal.  As promptly as practicable but in no event later than two Business Days following the Effective Time, Parent shall cause the Exchange Agent to mail to each holder of record of a share of Common Stock or Series A Preferred Stock converted pursuant to Section 2.1(c)(i) or Section 2.1(d)(i), (A) a letter of transmittal in customary form, specifying that delivery shall be effected, and risk of loss and title to such holder’s shares shall pass, only upon proper delivery of Certificates to the Exchange Agent or, in the case of Book-Entry Shares, upon adherence to the procedures set forth in the letter of transmittal and (B) instructions for surrendering such Certificates or Book-Entry Shares.

 

(ii) Surrender of Shares.  Upon surrender of a Certificate or of a Book-Entry Share for cancellation to the Exchange Agent, together with a duly executed letter of transmittal and any other documents reasonably required by the Exchange Agent, the holder of that Certificate or Book-Entry Share shall be entitled to receive, and the Exchange Agent shall deliver in exchange therefor, the Closing Consideration deliverable in respect of the number of shares formerly evidenced by that Certificate or Book-Entry Share.  Any Certificates and Book-Entry Shares so surrendered shall be canceled immediately.  No interest shall accrue or be paid on the C losing Consideration deliverable upon surrender of Certificates or Book-Entry Shares.

 

(iii) Unregistered Transferees.  If any Closing Consideration is to be delivered to a Person other than the Person in whose name the

 

(iv) No Other Rights.  Until surrendered in accordance with this Section 2.2(c), each Certificate and each Book-Entry Share shall be deemed, from and after the Effective Time, to represent only the right to receive the Closing Consideration.  Any Closing Consideration delivered upon the surrender of any Certificate or Book-Entry Share shall be deemed to have been delivered in full satisfaction of all rights pertaining to such Certificate or Book-Entry Share and the shares of Common Stock or Series A Preferred Stock, as applicable, formerly represented by it.

 

(d) Lost, Stolen or Destroyed Certificates.  If any Certificate is lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Surviving Corporation, the posting by such Person of a bond, in such reasonable amount as the Surviving Corporation may direct, as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent shall deliver, in exchange for such affidavit claiming such Certificate is lost, stolen or destroyed, the Closing Consideration to such Person in respect of the shares of Common Stock or Serie s A Preferred Stock, as applicable, represented by such Certificate.

 

(e) No Further Transfers.  At the Effective Time, the stock transfer books of the Company shall be closed and there shall be no further registration of transfers of the shares of Common Stock and Series A Preferred Stock that were outstanding immediately before the Effective Time.

 

(f) Required Withholding.  Parent, Merger Sub, the Surviving Corporation and the Exchange Agent shall be entitled to deduct and withhold from any consideration otherwise deliverable under this Agreement such amounts as may be required to be deducted or withheld therefrom under the Internal Revenue Code of 1986 (the “Code”), or any applicable state, local or foreign Tax Law.  To the extent that any amounts are so deducted and withheld and paid to the appropriate Governmental Authorities, those amounts shall be treated as having been delivered to the Person in respect of whom such deduction or withholding was made for all purposes under this Agreement.

 

(g) No Liability.  None of Parent, the Surviving Corporation, Newco or the Exchange Agent shall be liable to any holder of Certificates or Book-Entry Shares for any amount properly paid to a public official under any applicable abandoned property, escheat or similar Law.

 

(h) Investment of Exchange Fund.  The Exchange Agent shall invest the cash portion of the Exchange Fund as directed by Parent; provided, that such

 

(i) Termination of Exchange Fund.

 

(i) Any portion of the Exchange Fund that remains unclaimed by the holders of Certificates or Book-Entry Shares one year after the Effective Time shall be delivered by the Exchange Agent (A) in the case of the Fractional Shares Fund and shares of Newco Common Stock deposited in the Exchange Fund by the Company, to Newco and (B) in the case of the cash portion of the Exchange Fund (other than the Fractional Shares Fund), to Parent, in each case upon demand.

 

(ii) Thereafter, any holder of Certificates or Book-Entry Shares who has not theretofore complied with this Article II shall look only to (A) Newco for, and Newco shall remain liable for, delivery of the Split-Off Consideration and (B) Parent for, and Parent shall remain liable for, delivery of the Per Share Merger Consideration, in each case pursuant to the terms of this Article II.

 

(j) No Fractional Shares.

 

(i) No fractional shares of Newco Common Stock shall be delivered upon the surrender for exchange of Certificates or Book-Entry Shares.

 

(ii) In the event that the Company amends the Newco Exchange Ratio in accordance with Section 8.8 such that fractional shares of Newco Common Stock would be delivered to holders of Common Stock, as promptly as practicable following the Effective Time, Newco and Parent shall cause the Exchange Agent to aggregate all fractional share interests of Newco Common Stock, rounded down to the nearest whole share, and deliver such fractional shar e interests to its designated broker for sale on the open market at the then prevailing market prices, which sale or sales shall be completed as promptly as practicable following the Effective Time.  Newco and Parent shall cause the Exchange Agent to, upon receipt of the proceeds of such sale or sales from such designated broker, distribute the proceeds of such sale or sales to the holders of surrendered Certificates or Book-Entry Shares in lieu of fractional shares of Newco Common Stock.  Until the proceeds of such sale or sales have been distributed to

 

Section 2.3 Part D Options; Part D Employee Restricted Shares; and Part D Employee Performance Shares.

 

(a) The Company shall use reasonable best efforts so that, at the Effective Time, each Company Option that is outstanding immediately before the Effective Time and held by a Part D Employee or Former Part D Employee (as such term is defined in the Separation Agreement) (each, a “Part D Option”), whether or not vested and exercisable, by virtue of the Merger and without any action by Parent, Merger Sub, the Company or the holder of that Part D Option, shall be cancelled and converted at the Effective Time into the right to receive an amount from Parent in cash, without interest, that is equal to the excess, if any, of (i) the sum of (x) the Per Share Merger Consideration and (y) the value of the Split-Off Consideration (which shall be deemed for such purpose to be equal to the product of (A) the closing price of one share of Newco Common Stock on NASDAQ or the national securities exchange on which the shares of Newco Common Stock are traded on the first full day of trading after the Closing Date and (B) the Newco Exchange Ratio (the product of (A) and (B), the “Split-Off Consideration Value” and the sum of (x) and (y), the “Pre-Split-Off Common Stock Value”) over (ii) the per share exercise or purchase price of the applicable Part D Option (the “Exercise Price”), multiplied by the aggregate number of shares of Common Stock in respect of such Part D Option immediately before the Effective Time.  For the avoidance of doubt, if the Exercise Price of a Part D Option is equal to or exceeds the Pre-Split-Off Common Stock Value, such Part D Option shall be cancelled and terminated at the Effective Time without payment or consideration therefor and the holder of such Part D Option shall have no rights whatsoever with respect thereto.

 

 

 

 

(b) Each Restricted Share that is outstanding immediately prior to the Effective Time and held by a Part D Employee or Former Part D Employee (each, a “Part D Employee Restricted Share”) shall, at the Effective Time, be cancelled and converted into the right to receive an amount in cash equal to (i) the Per Share Merger Consideration plus (ii) the Split-Off Consideration Value, on the same dates and subject to the same conditions on vesting as applied to the Part D Employee Restricted Share immediately prior the Effec tive Time, without any crediting of interest for the period from the Effective Time until vesting; provided, that if the Part D Employee’s employment with Parent and its Affiliates is terminated other than for “Cause” or by the Part D Employee for “Good Reason,” as such terms are defined on Section 5.7(d) of the Company Disclosure Letter, then such vesting shall be accelerated to the date of such termination (the “Converted Restricted Share Award”).

 

(c) Each Earned Performance Share that is outstanding immediately prior to the Effective Time and held by a Part D Employee or Former Part D Employee (each, a “Part D Employee Performance Share”) shall, at the Effective Time, be cancelled and converted into the right to receive  an amount in cash equal to (i) the Per Share Merger Consideration plus (ii) the Split-Off Consideration Value, in each case of clauses (i) and (ii) on the first to occur of (x) the first anniversary of the date on wh ich the Effective Time occurs and (y) the date the Part D Employee’s employment with Parent and its Affiliates is terminated other than for “Cause” or by the Part D Employee for “Good Reason,” as such terms are defined on Section 5.7(d) of the Company Disclosure Letter, without any crediting of interest for the period from the Effective Time until vesting (the “Converted Performance Share Award”).  The Company shall use reasonable best efforts so that, at the Effective Time, each Performance Share held by a Part D Employee or a Former Par t D Employee that is not an Earned Performance Share is cancelled without consideration being due therefor.

 

(d) As of and following the Effective Time, the Company shall retain all Liabilities in respect of the Part D Employee Restricted Shares, the Part D Employee Performance Shares and the Part D Options.

 

(e) Parent and the Company shall, or shall cause their respective Affiliates to, take such action (including adopting, if appropriate, equity award plans) as is necessary or appropriate to effect the foregoing.

 

(f) Except as described in clauses (a) through (e) above, all terms of the Part D Employee Performance Shares and the Part D Employee Restricted Shares as in existence on the Effective Time, including, in the case of the Part D Employee Restricted Shares, the vesting schedule and restrictions on transfer, shall continue to apply to the Converted Performance Share Awards and the Converted Restricted Share Awards, as applicable.

 

(g) In addition to the payments made pursuant to this Section 2.3, Parent shall pay all accrued dividends and other distributions (including dividend equivalents) in respect of each Part D Employee Restricted Share and Part D Employee Performance Share with a record date prior to the Effective Time which have

 

(h) Any payments made to Part D Employees pursuant to this Section 2.3 shall be reduced by any income or employment tax withholding required under (A) the Code, (B) any applicable state, local or foreign tax Law, and (C) any other applicable Laws.  To the extent that any amounts are so withheld and paid to the appropriate Governmental Authorities, those amounts shall be treated as having been paid to the holder of the applicable award, as applicable, for all purposes under this Agreement.

 

(i) For the avoidance of doubt, the treatment of each Company Option, Restricted Share and Performance Share not held by a Part D Employee or a Former Part D Employee is set forth in Article VII of the Separation Agreement.

 

 

As used in this Agreement, the term “Part D Entities” means the Company, Penn Life, UAC Holding Inc., MemberHealth LLC, Universal American Statutory Trust II, Universal American Financial Corp. Statutory Trust III, Universal American Statutory Trust IV, Universal American Financial Corp. Statutory Trust V and Universal American Statutory Trust VI, taken as a whole, assuming for the representations and warranties set forth in this Article III, other than Section 3.22, 3.26 and 3.29 that the Part D Entities had operated the Medicare Part D Business separately from the other businesses of the Company and its Subsidiaries since formation of the Company.  Except (i) as set forth in the corresponding sections of the disclosure letter delivered by the Company to Parent before the execution of this Agreement (the “Company Disclosure Letter”), it being agreed that disclosure of any item in any section of the Company Disclosure Letter (whether or not an explicit cross reference appears) shall be deemed to be disclosure with respect to any other section to which the relevance of such item is reasonably apparent or (ii) as disclosed in the Company SEC Reports filed after December 31, 2008 and before the date of this Agreement (excluding all disclosures in any “Risk Factors” sections and any other prospective or forward-looking information), the Company represents and warrants to Parent and Merger Sub that:

 

Section 3.1 Organization and Power.  Each of the Company and its Subsidiaries is duly organized, validly existing and in good standing under the Law of its jurisdiction of organization.  The Company has the requisite power and authority to own, lease and operate its assets and properties and to carry on its business as now conducted.  Each of the Company’s Subsidiaries has the requisite power and authority to own, lease and operate its assets and properties and to carry on its business as now conducted, except where the failure to have such requis ite power or authority would not, individually or in

 

Section 3.2 Organizational Documents.  The Company has made available to Parent true and complete copies of the certificate of incorporation and bylaws of the Company as in effect on the date of this Agreement (collectively, the “Company Organizational Documents”).

 

Section 3.3 Governmental Authorizations.  The execution, delivery and performance of this Agreement and the Split-Off Agreements by the Company and the consummation by the Company of the transactions contemplated hereby and thereby do not and will not require any consent, approval or other authorization of, or filing with or notification to (collectively, “Governmental Authorizations< /font>”), any Governmental Authority, other than:

 

(a) the filing of the Certificate of Merger with the Department of State of the State of New York;

 

(b) the filing with the Securities and Exchange Commission (the “SEC”) of (i) a proxy statement (the “Company Proxy Statement”) relating to the special meeting of the shareholders of the Company to be held to consider the adoption of this Agreement (the “