CHANGE HEALTHCARE INC. Item 1.01 Entry into a Material Definitive Agreement.
Merger Agreement
On
At the effective time of the Merger (the "Effective Time"), each share of common
stock, par value
The respective boards of directors of the Company (the "Company Board") and Parent have unanimously approved the Merger Agreement and the transactions contemplated thereby, and the Company Board has recommended that its stockholders adopt the Merger Agreement at a meeting to be held for such purpose (the "Company Stockholders Meeting" and, such recommendation, the "Company Recommendation").
At the Effective Time, Company equity-based awards outstanding immediately prior to the Effective Time will generally be subject to the following treatment:
• Each option to acquire Shares (a "Company Option"), whether vested or
unvested, will be converted into an option to purchase a number of shares
of Parent common stock ("Parent Shares") based on the equity award
exchange ratio set forth in the Merger Agreement (the "Equity Award
Exchange Ratio"), with the exercise price per Share applicable to such
Company Option adjusted by the Equity Award Exchange Ratio;
• Each outstanding restricted Share subject to specified return-based
vesting conditions (a "Company Restricted Share" and the "Exit-Vesting
Conditions", respectively) that fully vests at the Effective Time
pursuant to its terms and conditions as in effect as of the date of the
Merger Agreement will be converted into the right to receive the Per
Share Merger Consideration, less any withholding taxes (provided, that
any Company Restricted Share that does not vest at the Effective Time
pursuant to the applicable terms and conditions will be cancelled and
forfeited for no consideration or payment);
• Each outstanding Company restricted stock unit award (a "Company RSU"),
whether vested or unvested, will be converted into a restricted stock
unit denominated in shares of Parent common stock (a "Parent RSU") based
on the Equity Award Exchange Ratio, with the number of Parent Shares
subject to such Parent RSU equal to the product of (i) (A) in the case of
a service-based Company RSU, the total number of Shares subject to such
Company RSU immediately prior to the Effective Time or (B) in the case of
a performance-basedCompany RSU, the number of Shares subject to such
Company RSU award based on target performance multiplied by (ii) the
Equity Award Exchange Ratio (provided, that any Company RSU subject to
the Exit-Vesting Conditions that does not fully vest at the Effective
Time pursuant to its terms and conditions as in effect as of the date of
the Merger Agreement will be cancelled and forfeited at the Effective
Time for no consideration or payment);
• Each outstanding Company stock appreciation right award (a "Company
SAR"), whether vested or unvested, will be converted into a stock
appreciation right denominated in a number of Parent Shares based on the
Equity Award Exchange Ratio, with the strike price per Share applicable
to such Company SAR adjusted by the Equity Award Exchange Ratio
(provided, that any Company SAR award subject to the Exit-Vesting
Conditions that does not fully vest at the Effective Time pursuant to its
terms and conditions as in effect as of the date of the Merger Agreement
will be cancelled and forfeited at the Effective Time for no
consideration or payment); and
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• Each Company deferred stock unit award (a "Company DSU"), whether vested
or unvested, will be converted into a deferred stock unit award
denominated in shares of Parent Common Stock (a "Parent DSU") based on
the Equity Award Exchange Ratio.
Company equity-based awards that convert into equity-based awards denominated in Parent Shares will generally be subject to the same terms and conditions (including, as applicable, vesting, exercise and settlement) as applied to such award prior to the Effective Time, except to the extent such terms and conditions are rendered inoperative by the Merger or with respect to such other changes that are necessary for the administration of the awards and that are not materially detrimental to the holder of the award.
The closing of the Merger (the "Closing") is subject to certain conditions,
including (i) the adoption of the Merger Agreement by the holders of a majority
of the outstanding Shares entitled to vote on such matter at the Company
Stockholders Meeting (such adoption, the "Requisite Company Vote"), (ii) the
expiration or termination of the required waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), without, solely as relates to Parent's obligation to consummate the
Merger, the imposition of any Burdensome Condition (as defined in the Merger
Agreement), (iii) the absence of other legal restraints, (iv) the accuracy of
the parties' respective representations and warranties contained in the Merger
Agreement (subject to customary materiality thresholds), (v) the material
performance of the parties' respective covenants contained in the Merger
Agreement, (vi) solely as relates to Parent's obligation to consummate the
Merger, the absence of any Material Adverse Effect (as defined in the Merger
Agreement) with respect to the Company and (vii) solely as relates to Parent's
obligation to consummate the Merger, the Company's receipt of an opinion of
counsel to the effect that the Merger and the transactions contemplated thereby
will not affect the intended tax-free treatment of the
The parties have made customary representations and warranties, and agreed to customary covenants, in the Merger Agreement, including customary covenants regarding (i) the conduct of the Company's business during the pre-Closing period, (ii) the Company's obligation to call and hold, and to file a proxy statement in connection with, the Company Stockholders Meeting and (iii) subject to certain qualifications as set forth in the Merger Agreement, the parties' use of their respective reasonable best efforts to effect the expiration or termination of the required waiting period under the HSR Act, obtain all other required regulatory approvals and otherwise consummate the Merger in a timely manner.
The Merger Agreement also contains customary covenants prohibiting the Company from (i) soliciting competing proposals, (ii) engaging in discussions with, or providing information to, competing bidders, (iii) entering into alternative acquisition agreements with competing bidders or (iv) withdrawing or changing the Company Recommendation. Notwithstanding the foregoing "no-shop" covenants, prior to obtaining the Requisite Company Vote, under specified circumstances the Company Board may (A) withdraw or change the Company Recommendation in response to an Intervening Event (as defined in the Merger Agreement) or a Superior Proposal (as defined in the Merger Agreement) or (B) cause the Company to terminate the Merger Agreement in order to enter into an alternative acquisition agreement with respect to a Superior Proposal and concurrently pay to Parent a termination fee (as described below).
The Merger Agreement contains certain customary termination rights for the
Company and Parent, including (i) by either party if (A) the Merger is not
consummated on or before
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in order to enter into an alternative acquisition agreement with respect to a
Superior Proposal; and (iii) by Parent (A) in the event of a material uncured
breach by the Company of any of its representations, warranties or covenants in
the Merger Agreement or (B) prior to the time the Requisite Company Vote is
obtained, if the Company Board has withdrawn or changed the Company
Recommendation or the Company has materially breached its "no-shop" covenants
described above. Upon termination of the Merger Agreement under certain
specified circumstances, the Company will be required to pay to Parent a
termination fee of
Support Agreement
Concurrently with the entry into the Merger Agreement, Parent and certain
investment funds affiliated with
TRA Letter Agreement
The Company and/or certain of its subsidiaries are obligors under certain tax
receivable agreements filed as Exhibits 10.3, 10.4 and 10.5 to the Company's
Form 10-K for the fiscal year ended
General
The foregoing descriptions of the Merger Agreement, the TRA Letter Agreement
(together with the Merger Agreement, the "Filed Agreements") and the Support
Agreement do not purport to be complete descriptions and, (i) in the case of the
description of the Merger Agreement, such description is qualified in its
entirety by reference to the full text of the Merger Agreement, which is
attached hereto as Exhibit 2.1 and is incorporated into this Item 1.01 by
reference, and (ii) in the case of the description of the TRA Letter Agreement,
such description is qualified in its entirety by reference to the full text of
the TRA Letter Agreement, which is attached hereto as Exhibit 10.1 and is
incorporated into this Item 1.01 by reference. Each Filed Agreement has been
included to provide holders of Shares with information regarding its terms. It
is not intended to provide any other factual information about the Company,
Parent or any of their respective subsidiaries or affiliates. Each Filed
Agreement contains representations, warranties and covenants by each of the
parties thereto. These representations, warranties and covenants (A) were made
solely for the benefit of the other parties to such Filed Agreement; (B) are
subject to limitations agreed upon by the parties; (C) are not intended to be
treated as categorical statements of fact, but rather as a way of allocating
contractual risk among the parties; (D) may be subject to standards of
materiality applicable to the parties that differ from what might be viewed as
material to stockholders; (E) are qualified by information in confidential
disclosure schedules provided in connection with the signing of such Filed
Agreement, which schedules contain information that modifies, qualifies and
creates exceptions to the representations, warranties and covenants set forth in
such Filed Agreement; and (F) were made only as of the date of such Filed
Agreement or such other date or dates as may be specified in such Filed
Agreement. Accordingly, investors and others should not rely on the
representations, warranties and covenants, or any descriptions thereof, as
characterizations of the actual state of facts or condition of the Company,
Parent or any of their respective subsidiaries or affiliates. Further, each
Filed Agreement should not be read alone but instead should be read in
conjunction with the other information regarding such Filed Agreement, the
Merger and the transactions contemplated by such Filed Agreement, the Company,
Parent and their respective subsidiaries and affiliates that will be contained
in, or incorporated by reference into, the proxy statement that will be filed
with the
Item 9.01 Financial Statements and Exhibits.
Exhibit No. Description
2.1 Agreement and Plan of Merger, dated as of January 5, 2021 , by
and among Change Healthcare Inc. , UnitedHealth Group Incorporated
and Cambridge Merger Sub Inc.
10.1 Certain Tax Receivable Agreements Acknowledgment and
Termination Agreement, dated as of January 5, 2021 , by and among
Change Healthcare Inc. , UnitedHealth Group Incorporated and
certain other parties thereto.
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