SEPARATION AGREEMENT by and among UNIVERSAL AMERICAN CORP., ULYSSES SPIN CORP. and solely for the limited purposes specified herein, CVS CAREMARK CORPORATION Dated as of December30, 2010 TABLE OF CONTENTS

by and among

and

solely for the limited purposes specified herein,

Dated as of December 30, 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Term	Section
9/30 Financial Statements	2.05(c)
Accounting Firm	2.08(c)
Agreement	Preamble
American Pioneer Life	1.01
American Progressive	1.01
Assets	1.01
Audited Party	4.04(a)(ii)
Benefit Plans	7.03(a)
Business	1.01
Capital Stock	1.01
Closing Indebtedness Statement	2.08(a)
Commission	1.01
Company	Preamble
Company Board	Recitals
Company Spending Plans	7.03(b)
Company Variance	2.08(c)
Consolidated Adjusted EBIDTA	1.01
Consolidated Funded Indebtedness	1.01
Consolidated Leverage Ratio	1.01
Constitution Life	1.01
Consulting Firm	2.07(b)
Converted Newco Restricted Share Award	7.07(b)
Converted Newco Share Award	7.07(c)
Damages	6.01
Dispute Resolution Date	2.07(b)
Excess Amount	4.02(a)
Exchange Act	1.01
Existing Credit Agreement	1.01
Final Indebtedness Amount	2.08(e)
First Party	4.02(a)
Former Part D Employees	7.02
Group	1.01
HHSI	1.01
Inactive Part D Employee	7.01
Indebtedness	1.01
Indemnified Party	6.04
Indemnifying Party	6.04
Indemnity Payment	6.03(a)
Initiating Party	2.07(a)
Insurance Policies	1.01
Insurance Proceeds	1.01
Intercompany Accounts	1.01

 

 

SEPARATION AGREEMENT (this “Agreement”), dated as of December 30, 2010, by and among Universal American Corp., a New York corporation (the “Company”), and Ulysses Spin Corp., a Delaware corporation (“Newco” and together with the Company, the “Parties”, and each individually, a “Party”), and, solely for the limited purposes specified herein, CVS Caremark Corporation, a Delaware corporation (“Parent”).

 

 

WHEREAS, simultaneously herewith, the Company, Parent and Ulysses Merger Sub, L.L.C., a New York limited liability company and a direct or indirect wholly owned subsidiary of Parent (“Merger Sub”), are entering into an Agreement and Plan of Merger (the “Merger Agreement”), providing for the Split-Off and the Merger (each as defined in the Merger Agreement);

 

WHEREAS, Newco is a wholly owned subsidiary of the Company;

 

WHEREAS, the boards of directors of the Company (the “Company Board”) and Newco (the “Newco Board”) at meetings thereof duly called and held approved and declared advisable this Agreement pursuant to which the assets and liabilities of the Newco Business (as defined below), including the capital stock of the Company Subsidiaries that currently operate the Newco Business, will be transferred and assigned to one or more subsidiaries of Newco by the Company and certain of its subsidiaries, and the Company will receive, in exchange therefor, shares of Newco Common Stock (as defined herein) and, if applicable, shares of Newco Preferred Stock (as defined herein);

 

WHEREAS, the purpose of the Separation (as defined below) is to make possible the Split-Off and the Merger by separating the assets and liabilities of the Company and its Subsidiaries primarily related to the Medicare Part D Business (as defined in the Merger Agreement) from the other assets and liabilities of the Company and its Subsidiaries (including the Newco Business); and

 

WHEREAS, the Parties have determined that it is necessary and desirable to set forth the transactions required to effect the Separation and the Split-Off and to set forth other agreements that will govern certain other matters following the Split-Off.

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements and covenants contained in this Agreement and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

 

 

 

Section 1.01. Definitions.  Terms used but not defined in this Agreement shall have the meanings set forth in the Merger Agreement.  In addition, the following terms shall have the following meanings:

 

“American Pioneer Life” means American Pioneer Life Insurance Company, a Florida corporation.

 

“American Progressive” means American Progressive Life and Health Insurance Company of New York, a New York domiciled insurance company.

 

“Assets” means any and all assets, properties and rights, whether tangible or intangible, whether real, personal or mixed, whether fixed, contingent or otherwise, wherever located, and whether owned as of the date of this Agreement or hereafter acquired including the following (but excluding for purposes of Section 2.01 and Section 2.02 any asset to the extent that such asset (x) is subject to the agreements contemplated by Section 2.01(a)(ii) or (y) is Capital Stock of the Persons to be contributed or sold in accordance with Section 2.01(a)(v)):

 

(i) Real Property.  Real property interests (including interests in leases and subleases), land, plants, buildings, improvements and fixtures;

 

(ii) Personal Property.  Personal property and interests therein, including equipment, furniture, fixtures, furnishings, office equipment, information technology and communications equipment, vehicles, and other tangible personal property (including, rights, if any, in any of the foregoing purchased subject to any conditional sales or title retention agreement in favor of any other Person);

 

(iii) Inventory.  Inventories, work-in-process, finished goods, parts, accessories and supplies (including items in transit, on consignment or in the possession of any third party);

 

(iv) Bonds and Guarantees. Interests as beneficiary under letters of credit, advances and performance and surety bonds, guarantees;

 

(v) Securities and Investments.  Certificates of deposit, banker’s acceptances, shares of stock, equity interests in any Person, bonds, bank accounts, notes, debentures, evidences of indebtedness, certificates of interest or participation in profit-sharing agreements, collateral-trust certificates, reorganization certificates or subscriptions, transferable shares, investment contracts, voting trust certificates, puts, calls, straddles, options, swaps, collars, caps and other securities or hedging arrangements of any kind, in each case to the extent constituting an asset (and not a liability);

 

 

 

 

(vi) Books and Records.  Financial, accounting and operating data and records, including books, records, notes, emails and other electronic records, sales and sales promotional data, advertising materials, credit information, cost and pricing information, customer and supplier lists, reference catalogs, payroll and personnel records, minute books, stock ledgers, stock transfer records and other similar property, rights and information;

 

(vii) Intellectual Property.  Patents, patent applications, Trademarks, copyrights and copyright applications and registrations, commercial and technical information, including engineering, production and other designs, drawings, notebooks and other recording methods, specifications, formulae, technology, computer and electronic data processing programs and software, inventions, processes, trade secrets, know-how, confidential information and other proprietary property, rights and interests, in each case, throughout the world, together with the right to sue for past, present and future infringement, misappropriation and other violations of any and all of the foregoing and the right to collect and retain damages therefor;

 

(viii) Contracts.  Contracts, sale orders, purchase orders, open bids and other commitments and all rights therein;

 

(ix) Prepaid Expenses; Accounts Receivable.  Prepaid expenses (including lease and rental payments), deposits and receipts held by third parties and any accounts, notes and other receivables;

 

(x) Claims.  Claims (including counterclaims), condemnation proceedings, credit, defenses, causes of action, rights under express or implied warranties, rights of recovery, rights of set-off, rights of subrogation and all other rights of any kind against any third party;

 

(xi) Insurance Policies.  Insurance Policies and rights under or in connection therewith.

 

(xii) Licenses and Approvals.  Licenses, filings, notices, permits, consents, franchises, permits, authorizations and approvals; and

 

(xiii) Goodwill.  Goodwill and going concern value.

 

“Business” means the Medicare Part D Business or the Newco Business, as the context requires.

 

“Capital Stock” means:  (a) any shares, interests, participations or other equivalents (however designated) of capital stock of a corporation; (b) any ownership interests in a Person other than a corporation, including membership interests, partnership interests, joint venture interests and beneficial interests; and (c) any warrants, options, convertible or exchangeable securities, subscriptions, rights (including any preemptive or similar rights), calls or other rights to purchase or acquire any of the foregoing.

 

 

 

 

“Commission” means the Securities and Exchange Commission.

 

“Consolidated Adjusted EBIDTA” shall have the meaning set forth in the Existing Credit Agreement existing as of the date of this Agreement, substituting Newco and its Subsidiaries for the “Borrower” and its “Restricted Subsidiaries” in the definition thereof.

 

“Consolidated Funded Indebtedness” shall have the meaning set forth in the Existing Credit Agreement existing as of the date of this Agreement, substituting Newco and its Subsidiaries for the “Borrower” and its “Restricted Subsidiaries” in the definition thereof.

 

“Consolidated Leverage Ratio” means, as of any date of determination, the ratio of (a) Consolidated Funded Indebtedness as of such date to (b) Consolidated Adjusted EBIDTA for the period of four fiscal quarters most recently ended as of such date.

 

“Constitution Life” means Constitution Life Insurance Company, a Texas corporation.

 

“Exchange Act” means the U.S. Securities Exchange Act of 1934.

 

“Existing Credit Agreement” means the Credit Agreement, dated as of September 18, 2007, by and among the Company, each lender from time to time party thereto, and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, as amended by the First Amendment to Credit Agreement, dated as of November 9, 2009, and as further amended by the Second Amendment to Credit Agreement, dated as of July 27, 2010.

 

“Group” means the Part D Group or the Newco Group, as the context requires.

 

“HHSI” means Heritage Health Systems, Inc., a Delaware corporation.

 

 “Indebtedness” shall have the meaning set forth in the Existing Credit Agreement existing as of the date of this Agreement, substituting Newco and its Subsidiaries for the “Borrower” and its “Restricted Subsidiaries” in the definition thereof.

 

“Insurance Policies” means insurance policies and insurance agreements or arrangements of any kind (other than life and benefits policies, agreements or arrangements), including primary, excess and umbrella policies, comprehensive general liability policies, director and officer liability, fiduciary liability, automobile, aircraft, property and casualty, business interruption, workers’ compensation and employee dishonesty insurance policies, bonds and self-insurance company arrangements, together with the rights, benefits and privileges thereunder.

 

“Insurance Proceeds” means those monies (i) received by an insured from an unaffiliated third-party insurer, or (ii) paid by such third-party insurer on behalf of an insured, in either case net of any applicable premium adjustment, retrospectively-rated

 

“Intercompany Accounts” means any receivable, payable or loan between any member of the Part D Group, on the one hand, and any member of the Newco Group, on the other hand, that exists prior to the Effective Time and is reflected in the records, books, Contracts, instruments, computer data and other data and information in the possession of the relevant members of the Part D Group and/or the Newco Group, except for any such receivable, payable or loan that arises pursuant to this Agreement or any Split-Off Agreement.

 

“Joint Legal Action” means any current or future Legal Action with respect to which it is unclear whether Liabilities will arise primarily in connection with the Newco Business or the Medicare Part D Business.

 

“Liabilities” means any liabilities or obligations of any kind, whether accrued, contingent, known or unknown, absolute, inchoate or otherwise, and including those liabilities and obligations arising under any Law, including any Environmental Law, Legal Action or Order of any Governmental Authority or any award of any arbitrator of any kind, and those arising under any Contract.

 

“Marquette Life” means Marquette National Life Insurance Company, a Texas corporation.

 

“MemberHealth” means MemberHealth, LLC, a Delaware limited liability company.

 

“Newco Assets” means all Assets of the Newco Group as determined pursuant to Article II.

 

“Newco Business” means the business conducted by the Company and its present and former Subsidiaries, other than the Medicare Part D Business.

 

“Newco Cash” means all cash and cash equivalents held by the Company and its Subsidiaries as of immediately prior to the Effective Time other than the Part D Cash.

 

“Newco Common Stock” means the issued and outstanding shares of common stock, par value $0.01 per share, of Newco.

 

“Newco Employees” means all employees of the Company and its Subsidiaries at the Effective Time, other than the Part D Employees.

 

“Newco Group” means Newco and its Subsidiaries, including each of the Newco Transferred Subsidiaries.

 

“Newco Legal Action” means any current or future Legal Action that does not relate primarily to the Medicare Part D Business and in which any Person (which may include one or more members of the Part D Group) is a defendant or the party against

 

“Part D Assets” means all Assets of the Part D Group as determined pursuant to Article II.

 

“Part D Cash” means, an amount, which may be positive or negative, equal to all cash and cash equivalents set forth on Schedule 2.02(b)(ii).

 

“Part D Group” means the Company, Penn Life, UAC Holding and MemberHealth, LLC.

 

“Part D Legal Action” means any current or future Legal Action relating primarily to the Medicare Part D Business and in which any Person (which may include one or more members of the Newco Group) is a defendant or the party against whom any claim or investigation is directed, including any of the Legal Actions listed on Schedule 5.01(b), but excluding any Joint Action.

 

“Pyramid Life” means The Pyramid Life Insurance Company, a Kansas corporation.

 

“Quincy” means Quincy Coverage Corp., a New York corporation.

 

“Securities Act” means the U.S. Securities Act of 1933.

 

“Shared Assets” means all Assets other than the Part D Assets that inure to the material benefit of both the Newco Business and the Medicare Part D Business.

 

“Tax Matters Agreement” means the Tax Matters Agreement, in the form of Exhibit A hereto, to be entered into at or before the Effective Time between the Company and Newco.

 

“Tax” shall have the meaning given to such term in the Tax Matters Agreement.

 

“Trademarks” means all United States and foreign trademarks, service marks, corporate names, trade names, domain names, logos, slogans, designs, trade dress and other similar identifiers of source or origin, whether registered or unregistered, including all registrations and applications for registration related thereto, together with the goodwill connected with the use of and symbolized by any of the foregoing.

 

“UAC Holding” means UAC Holding Inc., a New York corporation.

 

“UAFS” means Universal American Financial Services, Inc., a Delaware corporation.

 

“Union Bankers” means Union Bankers Insurance Company, a Texas corporation.

 

“WorldNet” means WorldNet Services Corp., a Florida corporation.

 

 

 

 

 

Section 2.01. Separation.

 

(a) Separation.  On the terms and subject to the conditions set forth in this Agreement, the Parties shall take the following restructuring steps in the following order immediately prior to the Effective Time (except for the formation or acquisition of Newco Sub, pursuant to Section 2.01(a)(i), which may occur any time before the Effective Time):

 

(i) Newco shall form or acquire one or more wholly-owned Subsidiaries (collectively, “Newco Sub”) and issue to Newco Sub (x) a number of shares of Newco Common Stock that, together with the shares of Newco Common Stock owned by the Company, will constitute all of the shares of Newco Common Stock to be included in the Split-Off and (y) all issued and outstanding shares of Newco Preferred Stock, if issued as described in Section 2.01(b).

 

(ii) The Company shall effect or cause to be effected the transactions contemplated by Sections 5.18(b) and 5.18(c) of the Merger Agreement.

 

(iii) Subject to Section 2.05(d), the Parties shall settle all Intercompany Accounts and, at Newco’s option, repay Company Indebtedness with Newco Cash, in each case in accordance with Section 2.05.

 

(iv) The Parties shall consummate the conveyance of Assets and assumption of Liabilities as contemplated by Section 2.02 and 2.03.

 

(v) The Company shall sell to Newco Sub all of the Capital Stock of the following Subsidiaries of the Company: (A) WorldNet, (B) Quincy, (C) UAFS, (D) HHSI, and shall cause UAC Holding to sell to Newco Sub all of the Capital Stock of the following Subsidiaries of UAC Holding: (E) Pyramid Life, (F) Constitution Life, (G) Marquette Life, (H) American Pioneer Life, (I) American Progressive and (J) Union Bankers (the entities set forth in clauses (A) – (J) collectively, the “Newco Transferred Entities”), in e ach case, in consideration for (x) a pro rata share of all of the shares of Newco Common Stock held by Newco Sub and/or (y) a pro rata share of the shares of Newco Preferred Stock held by Newco Sub and/or (z) at the option of Newco, a pro rata share of cash proceeds from any incurrence of indebtedness by Newco Sub as described in Section 4.05.

 

(vi) The Company shall cause UAC Holding to distribute all of the shares of Newco Common Stock received by UAC Holding pursuant to Section 2.01(a)(v) to the Company.

 

(vii) Except (i) as otherwise provided in Section 2.01(b) or (ii) for the incurrence of indebtedness by Newco Sub, the proceeds of which may, at the option of Newco, be used to repay Company Indebtedness, at or prior to the

 

(viii) The restructuring steps set forth in this Section 2.01(a), including, if Newco elects to implement the Newco Preferred Stock Structure in accordance with Section 2.01(b), the Newco Preferred Stock Structure, shall be colle ctively referred to herein as the “Separation”.

 

(b) Newco Preferred Stock Structure.  In addition to the restructuring steps set forth in Section 2.01(a), prior to the Effective Time, the Company may, in its sole and absolute discretion, elect to cause the issuance by Newco of preferred stock (t he “Newco Preferred Stock”) to Newco Sub, the sale by Newco Sub of such Newco Preferred Stock to UAC Holding and/or the Company pursuant to Section 2.01(a)(v) and the subsequent sale of such Newco Preferred Stock by UAC Holding and/or the Company to one or more third parties pursuant to a binding agreement entered into before the transfe rs described in Section 2.01(a)(v) (such steps and the transfers of Newco Preferred Stock described in Section 2.01(a)(v), if applicable, the “Newco Preferred Stock Structure”). In Newco’s discretion, an amount not in excess of fifty percent (50%) of the Newco Preferred Stock may be sold to existing shareholders of the Company.  The Parties intend that the Newco Preferred Stock be treated as equity for U.S. federal income tax purposes. Consistent with the preceding sentence, Newco shall have the right to determine and modify the terms of the Newco Preferred Stock and the terms of the agreement pursuant to which Company sells the Newco Preferred Stock to one or more purchasers in its reasonable discretion; provided, that Newco (x) shall provide Parent with a reasonable opportunity to review and comment on (I) the terms of the Newco Preferred Sto ck and (II) the form and substance of the agreement pursuant to which Company sells the Newco Preferred Stock to one or more purchasers (the “Preferred Stock Purchase Agreement”) and (y) shall in good faith take into consideration any comments reasonably proposed by Parent relating thereto. Notwithstanding the foregoing provisions of this Section 2.01(b), the Parties agree that (i) Preferred Stock Purchase Agreement shall not, without Parent̵ 7;s consent, impose any indemnification obligations or other obligations on the Part D Group or any of its Affiliates from and after the Effective Time, (ii) completion of the Newco Preferred Stock Structure shall not be a condition to the consummation of, and shall in no event be permitted to delay, the Separation, the Split-Off, the Merger or the other transactions contemplated by this Agreement, (iv) if the Newco Preferred Stock Structure is not completed prior to or concurrently with the satisfaction of the conditions to the Separation set forth in Section 3.02, then the Separation shall be consummated without giving effect to the Newco Preferred Stock Structure and any reference herein to the Newco Preferred Stock or the Newco Preferred Stock Structure (other than the refere nce in Section 2.03(a)(iv)) shall be disregarded, and (v) the Newco Preferred Stock shall be preferred stock described in Section 1504(a)(4) of the Code; provided that Newco may cause the Newco Preferred Stock to be other than Section 1504(a)(4) preferred stock at its sole discretion. If Newco causes the Newco Preferred Stock to be other than Section 1504(a)(4) preferred stock and, as a result, Newco and the other members of the Newco Group cease to be members of the Company Consolidated Group (as defined in the Tax Matters Agreement) before the Effective Time, the Parties shall amend Exhibit A hereof

 

Section 2.02. Transferred Assets.  On the terms and subject to the conditions set forth in this Agreement, immediately prior to the Effective Time, and in accordance with the procedures and methodologies set forth in Section 2.05, all Assets of the Company and its Subsidiaries existi ng immediately prior to the Effective Time shall be transferred or retained, as appropriate, so that after giving effect thereto, immediately after the Effective Time, (x) all Assets that are used or held for use primarily in connection with the operation or conduct of the Medicare Part D Business as of immediately prior to the Effective Time shall be owned or held by or vest in the Part D Group and (y) all Assets that are used or held for use primarily in connection with the operation or conduct of the Newco Business as of immediately prior to the Effective Time shall be owned or held by or vest in the Newco Group.  In furtherance of the foregoing, immediately prior to the Effective Time and in accordance with the steps set forth in Section 2.01(a):

 

(a) Newco Assets.  The Company shall cause each member of the Part D Group to transfer or cause to be transferred to one or more members of the Newco Group, and cause each member of the Newco Group to retain or cause to be retained, as applicable, all Assets that are used or held for use primarily in connection with the operation or conduct of the Newco Business, including all of the Company’s or any of its Subsidiaries’ right, title and interest in and to the Assets set forth in clauses (i) to (viii) of this Section 2.02(a):

 

(i) the Capital Stock of the Company’s Subsidiaries contributed or sold in accordance with Section 2.01(a)(v);

 

(ii) except to the extent used to repay Company Indebtedness at or prior to the Effective Time, all Newco Cash;

 

(iii) the Trademarks listed on Schedule 2.02(a)(iii);

 

(iv) all Assets allocated to the Newco Group pursuant to Article VII, together with the original employment and personnel records relating to the Newco Employees;

 

(v) all Insurance Policies held by the Company and its Subsidiaries immediately prior to the Effective Time, including those Insurance Policies listed on Schedule 2.02(a)(v);

 

 

 

 

(vi) (A) all bonds held by the Company and its Subsidiaries immediately prior to the Effective Time that are allocated to the Non-Medicare Part D Business in accordance with Section 2.05(a), and (B) all bonds that have been purchased by the Newco Group from the Company or any of its Subsidiaries prior to the Effective Time in accordance with Section 5.25 of the Merger Agreement (collectively, the “Newco Bonds”);

 

(vii) all Shared Assets listed on Schedule 2.02(a)(vii); and

 

(viii) all Assets that are set forth on Schedule 2.02(a)(viii).

 

(b) Part D Assets.  The Company shall cause each member of the Newco Group to transfer or cause to be transferred to one or more members of the Part D Group, and cause each member of the Part D Group to retain or cause to be retained, as applicable, all Assets that are used or held for use primarily in connection with the operation or conduct of the Medicare Part D Business, including all of the Company’s or any of its Subsidiaries’ right, title and interest in and to the Assets set forth in clauses (i) to (x) of this Section 2.02(b):

 

(i) the Capital Stock of the Company’s Subsidiaries that currently operate the Medicare Part D Business as listed on Schedule 2.02(b)(i);

 

(ii) all Part D Cash;

 

(iii) the real property leasehold interests listed on Schedule 2.02(b)(iii);

 

(iv) the personal property and interests therein, including equipment, furniture, fixtures, furnishings, office equipment, information technology and communications equipment, vehicles, and other tangible personal property (including, rights, if any, in any of the foregoing purchased subject to any conditional sales or title retention agreement in favor of any other Person) listed on Schedule 2.02(b)(iv);

 

(v) the Trademarks listed on Schedule 2.02(b)(v);

 

(vi) the Contracts listed on Schedule 2.02(b)(vi);

 

(vii) the licenses and approvals listed on Schedule 2.02(b)(vii);

 

(viii) all Assets allocated to the Part D Group pursuant to Article VII, together with the original employment and personnel records relating to the Part D Employees;

 

(ix) all bonds held by the Company and its Subsidiaries immediately prior to the Effective Time other than the Newco Bonds; and

 

(x) all Assets that are set forth on Schedule 2.02(b)(x).

 

 

 

 

(c) Jointly Owned Software Applications. The Parties acknowledge and agree that members of the Newco Group and members of the Part D Group may each possess certain ownership rights in and to the software applications set forth on Schedule 2.02(c) (the “Jointly Owned Software Applications”).  Notwithstanding anything her ein to the contrary, immediately prior to the Effective Time, the Company shall cause (i) each member of the Part D Group to transfer or cause to be transferred to a member of the Newco Group and (ii) each member of the Newco Group to transfer or cause to be transferred to a member of the Part D Group, in each case, an equal and undivided joint ownership interest, without any duty to account to each other for the exploitation thereof, in and to all Jointly Owned Software Applications.  Immediately prior to the Effective Time, the Company shall cause one working copy of the then-current version of each Jointly Owned Software Application to be delivered to such member of the Part D Group and to such member of the Newco Group (including all source code and associated documentation related thereto).  Each member of the Part D Group and each member of the Newco Group shall be free to use, distribute, reproduce, modify, create derivative works of and otherwise exploit the Jointly Owned Software Applications for any purposes, without restriction of any kind, and without any duty to account to the other (it being understood that each Party shall use commercially reasonable efforts to maintain the confidentiality of the source code to such Jointly Owned Software Applications and only disclose such source codes to third parties on a need to know basis in the ordinary course of business).  From and following the Effective Time, such member of the Part D Group and such member of the Newco Group shall retain ownership of all modifications or derivative works made by such Party, or on such Party’s behalf, with no obligation to disclose or license such modifications or derivative works to the other Party, and such member of the Part D Group and such member of the Newco Group shall be free to transfer, assign, license or otherwise divest their respective interest in and to the Jointly Owned Software Applications without the prior consent of the other Party.

 

Section 2.03. Assumed Liabilities.

 

(a) Newco Liabilities. On the terms and subject to the conditions set forth in this Agreement and except as otherwise specifically set forth in any other Split-Off Agreement, immediately prior to the Effective Time, and in accordance with the procedures and methodologies set forth in Section 2.05, Newco shall, or shall cause a member of the N ewco Group to, unconditionally assume and undertake to pay, satisfy and discharge when due in accordance with their terms or retain and not transfer, as applicable, the following Liabilities (collectively, the “Newco Liabilities”):

 

(i) all Liabilities (whether arising before or after the Effective Time) of the Company and its Subsidiaries, except the Part D Liabilities;

 

(ii) all Liabilities described in Article VII as Newco Liabilities;

 

(iii) all Liabilities listed on Schedule 2.03(a)(iii);

 

(iv) all Liabilities arising from or relating to (A) any actions taken by the Newco Group in connection with the formation of Newco or Newco Sub or,

 

(v) all Liabilities relating to the Shared Assets;

 

(vi) all corporate overhead expenses incurred by the Company and its Subsidiaries other than the Pre-Closing Allocated Expenses; and

 

(vii) all Liabilities in respect of the fees, costs and expenses incurred (A) prior to the Effective Time by the Company or any of its Subsidiaries or (B) at any time, by any member of the Newco Group, in each case, in connection with the Separation, the Split-Off, the Merger and the transactions contemplated by the Merger Agreement, this Agreement or the other Split-Off Agreements other than Transaction Litigation Expenses.

 

(b) Part D Liabilities. On the terms and subject to the conditions set forth in this Agreement and except as otherwise specifically set forth in any other Split-Off Agreement, immediately prior to the Effective Time, and in accordance with the procedures and methodologies set forth in Section 2.05, the Company shall, or shall cause a member of the Part D Group to, unconditionally assume and undertake to pay, satisfy and d ischarge when due in accordance with their terms or retain and not transfer, as applicable, the following Liabilities (collectively, the “Part D Liabilities”):

 

(i) all Liabilities (whether arising before or after the Effective Time) of the Company and its Subsidiaries primarily relating to or arising from the Medicare Part D Business;

 

(ii) all Liabilities described in Article VII as Part D Liabilities;

 

(iii) [Reserved];

 

(iv) [Reserved]; and

 

(v) to the extent not paid by Parent pursuant to Section 5.13(b)(i) of the Merger Agreement, all Transaction Litigation Expenses.

 

Section 2.04. Conveyance of Assets and Assumption of Liabilities.  Except as otherwise expressly provided herein or in any of the other Split-Off Agreements:

 

(a) Immediately prior to the Effective Time and in accordance with Section 2.01(a), the Company shall transfer or cause to be transferred to one or more members of the Newco Group as Newco may designate all right, title and interest of the Part D Group in and to all of the Newco Assets, and the Newco Group shall assume all of the Newco Liabilities, pursuant to customary instruments of transfer, including all deeds, bills of sale, endorsements, consents, assignments, assumptions and other good and sufficient documents or instruments as are necessary to properly effect the transfer of the Newco Assets to the Newco Group.

 

 

 

 

(b) Immediately prior to the Effective Time and in accordance with Section 2.01(a), the Company shall cause each member of the Newco Group to transfer or cause to be transferred to one or more members of the Part D Group as Parent may designate all right, title and interest in and to all Assets that are Part D Assets, and the Part D Group shall assume all of the Part D Liabilities, pursuant to customary instruments of transfer that are reasonably satisfactory to Parent, including all deeds, b ills of sale, endorsements, consents, assignments, assumptions and other good and sufficient documents or instruments as are necessary to properly effect the transfer of the Part D Assets to the Part D Group.

 

Section 2.05. Allocation of Assets and Liabilities.  To facilitate the allocation pursuant to Section 2.02 and 2.03 of the Assets and Liabilities of the Company and its Subsidiaries as they shall exist immediately prior to giving effect to the transactions contemplated by this Agreement and the other Split-Off Agreements to the Medicare Part D Business and the Newco Business, respectively, the Parties hereby agree to the following procedures and methodologies:

 

(a) The Assets and Liabilities of the Company and its Subsidiaries as of immediately prior to the Effective Time shall be allocated to the Newco Business or the Medicare Part D Business in a manner consistent with the procedures and methodologies for the allocation of Assets and Liabilities set forth in Schedule 2.05(a), which illustrates the procedures and methodologies for the allocation of Assets and Liabilitie s of the Company and its Subsidiaries to the Newco Business and the Medicare Part D Business as if the Separation were consummated as of September 30, 2010.

 

(b) From January 1, 2011 until the Effective Time or the earlier termination of this Agreement, each of the Medicare Part D Business and the Newco Business shall be operated as a “closed system”, meaning that during such period the Businesses shall be operated and the accounting shall be such that all balance sheet, income statement and cash flow items attributable to a Business shall be solely for the account of such Business.

 

(c) Schedule 2.05(c) sets forth (i) a description of all corporate overhead items and other shared expenses based on the financial statements of the Medicare Part D Business set forth in Section 3.10(b) of the Company Disclosure Letter (the “9/30 Financial Statements”), illustrating the allocation of the corporate overhead and other expenses on a pro forma basis to be borne by the Medicare Part D Business under the “closed system” during the period from January 1, 2011 until the Effective Time (the “Pre-Closing Allocated Expenses”), and (ii) the methodology for allocating such expenses between the Newco Business and the Medicare Part D Business.

 

(d) Schedule 2.05(a) sets forth a description of the Intercompany Accounts based on the 9/30 Financial Statements.  All Intercompany Accounts as of the Effective Time shall be settled immediately prior to the Effective Time (irrespective of the terms of payment of such Intercompany Accounts) based on the procedures and methodologies set forth in Schedule 2.05(a).

 

 

 

 

(e) The Newco Cash and Part D Cash as of immediately prior to the Effective Time shall be allocated to the Newco Business or the Medicare Part D Business in a manner consistent with the procedures and methodologies for the allocation of cash as set forth in Schedule 2.05(a), which illustrates the procedures and methodologies for determining the allocatio n of cash between Newco Cash and Part D Cash as if the Separation were consummated as of September 30, 2010.

 

(f) Prior to the Effective Time, Newco or a member of the Newco Group may, at Newco’s option, use (i) the Newco Cash received pursuant to Section 2.02(a)(ii) or (ii) any proceeds from any incurrence of indebtedness by Newco Sub pursuant to Section 4.05 to repay all or any portion of the Company Indebtedness.

 

(g) The Parties will cooperate in the implementation of the foregoing and will have reasonable access to the books, records, personnel and work papers relating to the implementation of this Article II.

 

(h) Within thirty (30) days after the Effective Time, Newco shall deliver to the Company a balance sheet for each of the Part D Group and the Newco Group as of immediately after the Effective Time.

 

Section 2.06. Delayed Assets and Liabilities.

 

(a) Notwithstanding any other provision of this Agreement, any Newco Asset (other than any Newco Asset held by any member of the Newco Group), the assignment, transfer, conveyance or delivery of which to Newco or any other member of the Newco Group without the consent, authorization, approval or waiver of a third party would constitute a breach or other contravention of Law or the terms of such Newco Asset (a “Newco Delayed Asset”), shall not be assigned, transferred, conveyed or delivered to Newco or any other member of the Newco Group until such ti me as such consent, authorization, approval or waiver is obtained, at which time such Newco Delayed Asset shall be automatically assigned, transferred, conveyed or delivered without further action on the part of the Company or any other member of the Part D Group.  Until such time as such consent, authorization, approval or waiver is obtained, (A) each Party (and its applicable Subsidiaries) shall use reasonable best efforts to obtain the relevant consent, authorization, approval or waiver, (B) the Company and the other members of the Part D Group shall endeavor to provide Newco or the applicable members of the Newco Group with the benefits under each Newco Delayed Asset as if such Newco Delayed Asset had been assigned to Newco or such member of the Newco Group, at Newco’s expense, and (C) Newco shall be responsible for the Liabilities of the Company or its applicable Subsidiaries with respect to such Newco Delayed Asset; provided, however, that no Party shall be obligated to pay any additional consideration or undertake any additional obligations to any third party from whom any such consent, authorization, approval or waiver is requested or to surrender, release or modify any rights or remedies in order to obtain any such consent, authorization, approval or waiver (unless such Party is fully reimbursed and indemnified by the requesting Party).  Notwithstanding any other provision in this Agreement to the contrary, any Newco Delayed Asset shall be deemed a Newco Asset for purposes of determining whether any related Liability is a Newco

 

(b) Notwithstanding any other provision of this Agreement, any Part D Asset (other than any Part D Asset held by any member of the Part D Group) the assignment, transfer, conveyance or delivery of which to the Company or any other member of the Part D Group without the consent, authorization, approval or waiver of a third party would constitute a breach or other contravention of Law or the terms of such Part D Asset (a “Part D Delayed Asset”), shall not be assigned, transferred, conveyed or delivered to the Company or any member of the Part D Group u ntil such time as such consent, authorization, approval or waiver is obtained, at which time such Part D Delayed Asset shall be automatically assigned, transferred, conveyed or delivered without further action on the part of Newco or any of its Subsidiaries.  Until such time as such consent, authorization, approval or waiver is obtained, (A) each Party (and its applicable Subsidiaries) shall use reasonable best efforts to obtain the relevant consent, authorization, approval or waiver, (B) Newco (and its applicable Subsidiaries) shall endeavor to provide the Company or the applicable members of the Part D Group with the benefits under each Part D Delayed Asset as if such Part D Delayed Asset had been assigned to the Company or such member of the Part D Group, and (C) the Company shall be responsible for the Liabilities of Newco or its applicable Subsidiaries with respect to such Part D Delayed Asset; provided, however, that no Party shall be obligated to pay any additional consideration or undertake any additional obligations to any third party from whom any such consent, authorization, approval or waiver is requested or to surrender, release or modify any rights or remedies in order to obtain any such consent, authorization, approval or waiver (unless such Party is fully reimbursed and indemnified by the requesting Party).  Notwithstanding any other provision in this Agreement to the contrary, any Part D Delayed Asset shall be deemed a Part D Asset for purposes of determining whether any related Liability is a Part D Liability.  Following the assignment, transfer, conveyance and delivery of any Part D Delayed Asset, the applicable Part D Delayed Asset shall be treated for all purposes of this Agreement as a Part D Asset.

 

(c) The Parties shall use their reasonable best efforts to obtain, or to cause to be obtained, any release, consent, substitution, approval or amendment required to novate and assign all Liabilities under agreements, leases, licenses and other Liabilities of any nature whatsoever that constitute Newco Liabilities, or to obtain in writing the unconditional release of all parties to such arrangements other than Newco (or the applicable member of the Newco Group), so that, in any such case, Newco (or the applicable member of the Newco Group) will be solely responsible for such Liabilities; provided, however, that no Party shall be obligated to pay any additional consideration or undertake any additional obligations to any third party from whom any such release, consent, approval, substitution or amendment is requested or to surrender, release or modify any rights or remedies in order to obtain any such release, consent, approval, substitution or amendment (unless such Party is fully reimbursed and indemnified by the requesting Party).

 

 

 

 

(d) The Parties shall use their reasonable best efforts to obtain, or to cause to be obtained, any release, consent, substitution, approval or amendment required to novate and assign all Liabilities under agreements, leases, licenses and other Liabilities of any nature whatsoever that constitute Part D Liabilities, or to obtain in writing the unconditional release of all parties to such arrangements other than the Company (or the applicable member of the Part D Group), so that, in any such case, the Company (or the applicable member of the Part D Group) will be solely responsible for such Liabilities; provided, h owever, that no Party shall be obligated to pay any additional consideration or undertake any additional obligations to any third party from whom any such release, consent, approval, substitution or amendment is requested or to surrender, release or modify any rights or remedies in order to obtain any such release, consent, approval, substitution or amendment (unless such Party is fully reimbursed and indemnified by the requesting Party).

 

Section 2.07. Misallocated Assets or Liabilities.

 

(a) If at any time or from time to time, any Party or any member of such Party’s Group (the “Initiating Party”) reasonably determines in good faith that (x) the other Party or any member of such Party’s Group (the “Other Party”) is in possession of any Asset that should have been transferred to or retained by the Initiating Party or (y) the Initiating Party is subject to a ny Liability that should have been transferred to or retained by the Other Party, in each case pursuant to the terms of this Article II (any such Asset or Liability, a “Misallocated Asset/Liability”), the Initiating Party may provide written notice, in reasonable detail, to the Other Party informing the Other Party of such Misallocated Asset/Liability. Upon receipt of such notice, the Parties shall negotiate in good faith to reach agreement on the allocation of the Misallocated Asset/Liability so as to give effect to the provisions of this Article II.

 

(b) If the Parties are unable to reach such agreement on the allocation of the Misallocated Asset/Liability, the Parties shall within five (5) Business Days following (as applicable) any of (i) the 120th day following the Closing Date, (ii) the 240th day following the Closing Date or (iii) the one-year anniversary of the Closing Date (each such date, a “Dispute Resolution Date”) appoint Deloitte Consulting LLP (the “Consulting Firm”) to determine the allocation of all Misallocated Assets/Liabilities existing on such Dispute Resolution Date. The Consulting Firm, acting as experts and not as arbitrators, shall determine, in accordance with the provisions of this Article II, in a manner consistent with the allocations of similar Assets or Liabilities hereunder and based on the historical usage of such Asset or Liability as evidenced by the properties, books, records and working papers, and personnel of the Company and its Subsidiaries, the allocation of each such Misallocated Asset/Liability. Each Party shall provide the Consulting Firm with reasonable access to such Party’s properties, books, records and working papers and personnel (including current and, if reasonably practicable, former Representatives) for interviews, depositions, testimonies and other relevant procedures in order to determine the historic usage of such Asset or Liability.  Such decision shall be set forth in writing and shall be final and binding upon Newco and the Company.  The cost of such review and determination by the Consulting Firm shall be borne equally by the Company and Newco.

 

 

 

 

(c) The Parties shall, and shall cause their respective Subsidiaries to, cooperate and assist in transferring, and take all actions necessary to transfer, or cause to be transferred, any Misallocated Asset/Liability to the appropriate Party or the applicable member of such Party’s Group, including by making available to the extent necessary their respective books, records, work papers and personnel.  In case of any transfer of an Asset that is a Misallocated Asset/Liability, the Other Party shall be deemed to have held such Asset in trust for the Initiating Party or the applicable member of the Initiating Party’s Group during the period from the Effective Time to the date of such transfer.

 

Section 2.08. Post-Closing Adjustments.

 

(a) As promptly as practicable, but no later than 30 days, after the Effective Time, the Company will cause to be prepared and delivered to Newco the Company’s calculation of the actual amount of the Closing Date Indebtedness Amount as of the Effective Time (the “Closing Indebtedness Statement”).

 

(b) Within fifteen (15) days after Newco’s receipt of the Closing Indebtedness Statement, Newco shall deliver to the Company a written statement either accepting the Closing Indebtedness Statement or specifying any objections thereto (including therein Newco’s calculations of such amounts and Newco’s grounds for such disagreement in reasonable detail) (an “Objections Statement”).  The Objections Statement shall specify those items or amounts as to which Newco disagrees, and Newco shall be deemed to have agreed with all other items and amounts contained in the calculations delivered pursuant to Section 2.08(a).

 

(c) If Newco shall have delivered an Objections Statement , the Company and Newco shall, during the fifteen (15) days following such delivery, negotiate in good faith to reach agreement on the disputed items or amounts in order to determine, as may be required, the Closing Date Indebtedness Amount.  If the Company and Newco are unable to reach such agreement during such period, they shall promptly thereafter appoint an independent accountant of nationally recognized standing reasonably satisfactory to the Company and Newco (the “Accounting Firm”) to promptly to review this Agreement and the Merger Agreement and the disputed items or amounts for the purpose of calculating the Closing Date Indebtedness Amount.  In making such calculations, the Accounting Firm shall consider only those items or amounts in the Objections Statement.  The Accounting Firm, acting as experts and not as arbitrators, shall determine in accordance with the applicable agreements set forth in the definition of “Company Indebtedness” in the Merger Agreement, the actual amount of the Closing Date Indebtedness Amount as of the Effective Time and shall deliver to the Company and Newco a written report setting forth such calculations.  Such report shall be final and binding upon the Company and Newco.  The cost of such review and report shall be borne (i) by the Company if the aggregate amount of the difference between the Closing Date Indebtedness Amount included in the Closing Indebtedness Statement and the final amounts thereof a s determined by the Accounting Firm pursuant to this Section 2.08(c) (the “Company Variance”) is less than the aggregate amount of the difference between the Closing Date Indebtedness Amount included in the Objections Statement and the final amounts thereof as determined by the Accounting Firm pursuant to this Section 2.08(c) (the “Newco

 

(d) The Parties shall, and shall cause their respective independent accountants and Subsidiaries to, cooperate and assist in the preparation of the calculations of the Closing Date Indebtedness Amount and in the conduct of the audits and reviews referred to in this Section 2.08, including by making available to the extent necessary their respective books, records, work papers and personnel.

 

(e) Following the determination of the Closing Date Indebtedness Amount by agreement of the Parties or by the Accounting Firm (such amount, the “Final Indebtedness Amount”), (i) if the aggregate Per Share Merger Consideration paid by Parent pursuant to the Merger Agreement at the Effective Time was less than the aggregate amount thereof calculated by using the Final Indebtedness Amount, then Newco shall pay to the Company an amount equal to the excess of the Final Indebtedness Amount over the Closing Date Indebtedness Amount and (ii) if t he aggregate Per Share Merger Consideration paid by Parent pursuant to the Merger Agreement at the Effective Time exceeds the aggregate amount thereof calculated by using the Final Indebtedness Amount, then the Company shall pay to Newco the amount equal to the excess of the Closing Date Indebtedness Amount over the Final Indebtedness Amount.

 

 

Section 3.01. Cooperation Prior to the Split-Off.

 

(a) The Company and Newco shall prepare, and Newco shall file with the Commission, the Form S-4.  The Company and Newco shall use reasonable best efforts to cause the Form S-4 to become effective under the Securities Act as soon as practicable after the date of this Agreement.

 

(b) The Company shall, as the sole shareholder of Newco, approve and adopt the Transferred Benefit Plans contemplated by Article VII, and the Company and Newco shall cooperate in preparing, filing with the Commission under the Securities Act and causing to become effective not later than the Effective Time any registration statements or amendments thereto that are appropriate to reflect the establishment of or amendments to any Transferred Benefit Plan contemplated by Article VII, including a Form S-8 with respect thereto.

 

(c) The Company and Newco shall cooperate in preparing, filing with the Commission under the Exchange Act and causing to become effective not later than the Effective Time any registration statements or amendments thereto that are necessary to effect the registration of Newco Common Stock under the Exchange Act, including a Form 8-A with respect thereto.

 

(d) The Company and Newco shall take all such action as may be necessary or appropriate under the securities or blue sky Laws of states or other political

 

(e) Newco shall prepare, file, and use all reasonable efforts to cause to be approved as soon as practicable after the date of this Agreement and prior to the Effective Time, the application to permit listing of the Newco Common Stock on NASDAQ or another national securities exchange.

 

Section 3.02. Conditions Precedent to the Separation.  In no event shall the Separation occur unless the following conditions shall have been satisfied or waived by the Company and Newco:

 

(a) all of the conditions to the closing of the Merger set forth in Article VI of the Merger Agreement, other than the condition to each party’s obligation set forth in Section 6.1(g) thereof as to the consummation of the transactions contemplated by this Agreement, shall have been satisfied or waived;

 

(b) the Company shall have received solvency opinions from a nationally recognized firm, in form and substance satisfactory to Parent, regarding the solvency of each of the Company and Newco after the Split-Off (including after giving effect to any incurrence of indebtedness by Newco in connection with the Merger or the Split-Off); and

 

(c) no Governmental Authority having jurisdiction over the Assets of the Company or Newco or any of their respective Subsidiaries shall have enacted, issued, promulgated, enforced or entered any Law or Order that enjoins or otherwise prohibits consummation of the transactions contemplated by this Agreement or any other Split-Off Agreement.

 

Section 3.03. Resignations.

 

(a) On or before the Effective Time, Newco shall deliver or cause to be delivered to the Company resignations of each individual who will be a Newco Employee from and after the Effective Time and who is an officer or director of any member of the Part D Group as of immediately prior to the Effective Time.

 

(b) On or before the Effective Time, the Company shall deliver or cause to be delivered to Newco resignations of each individual who will be a Part D Employee from and after the Effective Time and who is an officer or director of any member of the Newco Group as of immediately prior to the Effective Time.

 

 

Section 4.01. Bank Accounts.

 

(a) The Parties shall take, or cause the respective members of their respective Groups to take, at the Effective Time (or such earlier time as the Parties may agree), all

 

(b) The Parties shall take, or shall cause the respective members of their respective Groups to take, at the Effective Time (or such earlier time as the Parties may agree), all actions necessary to amend all agreements or arrangements governing the Part D Accounts so that such Part D Accounts, if currently linked to a Newco Account, are de-linked from the Newco Accounts, and no current or former Newco Employee shall have any authority to access or control any such Part D Accounts.

 

(c) As between the Parties (and the members of their respective Groups) all payments and reimbursements received after the Effective Time by any Party (or member of its Group) that relate to a business, Asset or Liability of another Party (or member of its Group), shall be held by such Party in trust for the use and benefit of the Party entitled thereto (at the expense of the Party entitled thereto) and, promptly upon receipt by such Party of any such payment or reimbursement, such Party shall pay over, or shall cause the applicable member of its Group to pay over to the other Party the amount of such payment or reimbursement.

 

Section 4.02. Insurance.

 

(a) Except for any Insurance Policies acquired by Newco or the Newco Group after the Effective Time or as otherwise agreed to by the Parties, with respect to any Insurance Policy included in the Newco Assets that, from and after the Effective Time, will by its terms cover Newco or any member of the Newco Group, on the one hand, and the Company or any member of the Part D Group, on the other hand, with respect to acts, omissions and events occurring prior to the Effective Time, Newco shall use reasonable best efforts to provide the Company and an applicable member of the Part D Group access to coverage under such Insurance Policies from and after the Effective Time with respect to acts, omissions, and events occurring prior to the Effective Time (such claims, “Pre-Separation Occurrence Based Insurance Claims”).  Newco and the Company agree that any Pre-Separation Occurrence Based Insurance Claims by the Company or any member of the Part D Group under any such Insurance Policy shall receive the same priority and be subject to any deductibles and retentions with all claims by Newco or any member of the Newco Group under such Insurance Policies (whether or not such Pre-Separation Occurrence Based Insurance Claims are made before or after any claims by Newco).  Pre-Separation Occurrence Based Insurance Claims made by the Company and Newco shall be treated on a pari passu basis, and each of Newco and the Company shall be entitled to its pro rata share of the aggregate proceeds payable under each Insurance

 

(b) With respect to Pre-Separation Occurrence Based Insurance Claims, whether or not known or reported prior to the Effective Time, each Party shall report such claims directly to the applicable insurer (with a copy to the other Party) and the reporting Party shall individually, and not jointly, assume and be responsible for the reimbursement Liability (i.e., deductible or retention) and/or any retrospective premium charges associated with the claim so submitted by it, unless otherwise agreed in writing by the other Party.  Newco shall, and shall cause each member of the Newco Group to, cooperate and assist the Company with respect to such claims (at the expen se of the Company) and Newco and the Company shall take all actions reasonably necessary to cause the insurers to agree that such Liability shall be the individual Liability of the Company, which shall include, arranging for the Company to post any such collateral in respect of the reimbursement obligations as may reasonably be requested by the insurers.  If any insurer does not agree that such Liabilities are the individual Liability of the Company, the Company shall continue to reimburse Newco for all such Liability costs in the same manner as prior to the Effective Time.

 

(c) Without limiting the provisions in this Section 4.02, neither Party shall be liable to the other Party for claims, or portions of claims, not reimbursed by insurers under any Insurance Policy for any reason, including coinsurance provisions, deductibles, quota share deductibles, self-insured retentions, bankruptcy or insolvency of any insurance carrier(s), policy limitations or restrictions (including exhaustion of limits), any coverage d isputes, any failure to timely file a claim by any member of the Newco Group or any member of the Part D Group, or any defect in such claim or its processing.

 

Section 4.03. Trademarks.

 

 

 

 

(a) Except as otherwise specifically provided in any Split-Off Agreement, as soon as reasonably practicable after the Effective Time, but in any event within twelve (12) months thereafter:

 

(i) The Company shall (and cause all of the other members of the Part D Group to) use commercially reasonable efforts (A) to cease all use of the Trademarks that are Newco Assets (the “Newco Trademarks”) and (B) to cease to hold themselves out as having any affiliation, either expressly or by implication, with the Newco Group; and

 

(ii) Newco shall (and cause all of the other members of the Newco Group to) use commercially reasonable efforts (A) to cease all use of the Trademarks that are Part D Assets (the “Part D Trademarks”) and (B) to cease to hold themselves out as having any affiliation, either expressly or by implication, with the Part D Group.

 

(b) In furtherance of the foregoing, as soon as reasonably practicable, but in no event later than twelve (12) months following the Effective Time, each Party shall (and shall cause all of the other members of its Group to) use commercially reasonable efforts to remove, strike over or otherwise obliterate and cease use of all Newco Trademarks (in the case of the Part D Group) or the Part D Trademarks (in the case of the Newco Group) from all of such Party’s and its Subsidiaries’ assets and other materials, including as part of its legal name and on any vehicles, business cards, schedules, stationery, packaging materials, displays, signs, promotional materials, manuals, forms, websites, email, computer software and ot her materials and systems (it being understood that it may be commercially impracticable to remove all uses of such Trademarks on computer software and systems existing as of the Effective Time).

 

(c) Any use by the Newco Group of the Part D Trademarks and any use by the Part D Group of the Newco Trademarks during the phase-out periods provided in this Section 4.03 shall be subject to all quality control and related requirements and guidelines in effect for such Trademarks as of the Effective Time (it being understood that in no event shall the Part D Group be subject to more stringent requirements and guidelines than those to whi ch the Newco Group are subject).

 

(d) The Parties acknowledge that the provisions of this Section 4.03 shall not prohibit any Party or any member of a Party’s Group from (i) for a period of no more than eighteen (18) months after the Effective Time, stating in any advertising or any other communication that it is a former Affiliate of the Company or (ii) making use of any Trademark that would constitute “fair use ” under applicable Law if such use were made by a third party.

 

(e) Any failure by a Party or any member of such Party’s Group to effect a legal name change as required by this Section 4.03 that is caused by regulatory or other circumstances beyond such Party’s reasonable control shall not be deemed a breach of this Agreement provided that such Party or its relevant Group member continues to exercise commercially reasonable efforts to effectuate such name change as promptly as