DIPLOMAT PHARMACY, INC. : Entry into a Material Definitive Agreement, Change in Directors or Principal Officers, Other Events, Financial Statements and Exhibits (form 8-K)

Item 1.01 Entry into a Material Definitive Agreement.

On December 9, 2019, Diplomat Pharmacy, Inc., a Michigan corporation (the "Company"), entered into an Agreement and Plan of Merger (the "Merger Agreement"), by and among the Company, UnitedHealth Group Incorporated, a Delaware corporation ("Parent"), and Denali Merger Sub, Inc., a Michigan corporation and a wholly owned subsidiary of Parent ("Sub"). A copy of the Merger Agreement is filed as Exhibit 2.1 to this Current Report on Form 8-K and incorporated herein by reference. The Merger Agreement and the consummation of the transactions contemplated thereby have been unanimously approved by the Company's board of directors (the "Company Board").

Offer and Merger. Pursuant to the Merger Agreement, on the terms and subject to the conditions set forth in the Merger Agreement, as promptly as reasonably practicable (and, in any event, no later than January 8, 2020), Sub will commence a tender offer (the "Offer") to purchase (subject to the Minimum Tender Condition (as defined below)) all of the outstanding shares of common stock, no par value per share, of the Company ("Company Common Stock"), at a price per share of $4.00 (such amount, or any other amount per share paid in the Offer in accordance with the Merger Agreement, the "Offer Price"), net to the seller in cash, without interest, subject to any required tax withholding. The Merger Agreement also provides that, as soon as practicable on the same business day that Sub irrevocably accepts for payment all shares of Company Common Stock that are validly tendered (and not properly withdrawn) pursuant to the Offer and that Sub becomes obligated to purchase pursuant to the Offer (subject to the Minimum Tender Condition (as defined below)), upon the terms and subject to the conditions set forth in the Merger Agreement, Sub will be merged with and into the Company (the "Merger") pursuant to Section 703a(3) of the Michigan Business Corporation Act (the "MBCA"), with the Company continuing as the surviving corporation and a wholly owned subsidiary of Parent. No vote of shareholders of the Company will be required in connection with the Offer or the Merger.

Pursuant to the Merger Agreement, at the effective time of the Merger (the "Effective Time"), each share of Company Common Stock, including each outstanding award of shares of Company Common Stock subject to forfeiture restrictions or other restrictions, issued and outstanding immediately prior to the Effective Time (other than shares owned by the Company or held in the treasury of the Company or shares owned by Parent, Sub or any of their respective wholly owned subsidiaries, in each case, other than those held on behalf of any third party) will automatically be converted into the right to receive the Offer Price in cash, without interest, subject to any required tax withholding. Pursuant to the MBCA, no appraisal or dissenter's rights will be available to shareholders in connection with the Merger.

The transaction is expected to close in early 2020, subject to the satisfaction of the Minimum Tender Condition, the receipt of specified regulatory approvals and other customary closing conditions.

Treatment of Outstanding Equity Awards. Pursuant to the terms of the Merger Agreement, at the Effective Time all:

· outstanding Company stock options held by any former or terminated employee of

   the Company or its subsidiaries (each a "Company Non-Employee Option") will be
   cancelled by virtue of the Merger and without any action on the part of the
   holder thereof, and each holder of any such cancelled Company Non-Employee
   Option will receive a payment in cash, without interest, of an amount equal to
   the product of (i) the total number of shares of Company Common Stock subject
   to such cancelled Company Non-Employee Option, multiplied by (ii) the excess,
   if any, of the (A) the Offer Price over (B) the exercise price per share
   subject to such cancelled Company Non-Employee Option, less any applicable
   withholding taxes, except that any such Company Non-Employee Option with
   respect to which the exercise price per share of Company Common Stock subject
   thereto is equal to or greater than the Offer Price will be cancelled for no
   consideration;

· outstanding Company stock options that are not Company Non-Employee Options

   ("Company Employee Options"), whether vested or unvested, will, by virtue of
   the Merger and without any action on the part of the holder thereof, be
   converted into an option to purchase a number of shares of common stock, par
   value $0.01 per share, of Parent ("Parent Common Stock") equal to the product
   (rounded down to the nearest whole number) of (i) (A) in the case of a
   service-based Company Employee Option, the total number of shares of Company
   Common Stock subject to such Company Employee Option immediately prior to the
   Effective Time or (B) in the case of a performance-based Company Employee
   Option, the number of shares of Company Common Stock earned based on actual
   performance, if the performance period ends on or before the Effective Time, or
   the number of shares of Company Common Stock remaining subject to the award, if
   the performance period ends after the Effective Time, and (ii) the quotient
   obtained by dividing (A) the Offer Price by (B) the volume weighted average of
   the closing sale prices per share of Parent Common Stock on the New York Stock
   Exchange on each of the five (5) full consecutive trading days ending on and
   including the third business day prior to the Effective Time (the "Equity Award
   Conversion Ratio"), at an exercise price per share (rounded up to the nearest
   whole cent) equal to (1) the exercise price per share of Company Common Stock
   of such Company Employee Option immediately prior to the Effective Time divided
   by (2) the Equity Award Conversion Ratio, in each case, subject to the same
   terms and conditions, including vesting and exercisability, as applied to the
   exchanged Company Employee Option, except for performance-based vesting
   conditions for performance periods ending after the Effective Time, for any
   terms rendered inoperative as a result of the transactions contemplated by the
   Merger Agreement or for such other changes that are necessary for the
   administration of the converted Company Employee Option and not materially
   detrimental to the holder thereof;

· outstanding Company restricted stock unit awards ("RSU Awards") that by their

   respective terms automatically become fully or partially vested effective
   immediately prior to or upon the consummation of the transactions contemplated
   by the Merger Agreement (without the required occurrence of termination of
   employment or any other event) (the "accelerated RSUs") will be cancelled, and
   each holder of any such cancelled RSU Award will be entitled to receive a
   payment in cash of an amount equal to the product of (i) the Offer Price
   multiplied by (ii) the number of shares of Company Common Stock subject to such
   cancelled RSU Award, without interest, less any applicable withholding taxes;
   and

· outstanding RSUs (other than any accelerated RSUs) will, by virtue of the . . .

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Executive Severance Plan and Griffin Letter Agreement

As previously disclosed, on March 7, 2019, the Company Board approved the Diplomat Pharmacy, Inc. Executive Severance Plan (the "Plan"). The Company's Chief Executive Officer, Brian Griffin, and its Chief Financial Officer, Dan Davison, each participate in the Plan. The Plan provides certain severance benefits in the event of certain qualifying terminations of employment. In connection with the negotiation and execution of the Merger Agreement, the Company entered into consent letters, to be effective as of the closing of the Merger, with each of the participants in the Plan, including Messrs. Griffin and Davison, by which each participant consented to the exclusion from the monthly severance payment of an amount equal to the participant's target annual cash bonus for the calendar year in which the qualifying termination occurs.

Mr. Griffin's consent letter also amends the terms of the letter agreement, dated April 23, 2018, with Mr. Griffin (the "Griffin Letter Agreement") to remove the accelerated vesting of his equity awards at the 400% equity vesting level included in the Griffin Letter Agreement in connection with certain qualifying terminations of employment. As a result, any accelerated vesting of Mr. Griffin's equity awards in connection with the Merger or a qualifying termination of employment following the Merger will be determined in accordance with the Merger Agreement, as described above.

The foregoing descriptions of Messrs. Griffin and Davison's respective consent letters do not purport to be complete and each is qualified in its entirety by reference to the full text of each such consent letter, each of which are filed as Exhibit 10.1 (Griffin) and Exhibit 10.2 (Davison), respectively, to this Current Report on Form 8-K and each is incorporated herein by reference.

 Item 8.01. Other Events.

Tender and Support Agreement. Concurrently with the execution and delivery of the Merger Agreement, Mr. Philip R. Hagerman, along with certain persons and entities affiliated with Mr. Hagerman, who together own beneficially or of record approximately 23% of the outstanding shares of Company Common Stock, entered into a tender and support agreement (the "Tender Agreement") with Parent and Sub pursuant to which, among other things and subject to the terms and conditions therein, they agreed to tender all of such shares in the Offer. The Tender Agreement automatically terminates upon the termination of the Merger Agreement in accordance with its terms.

The foregoing description of the Tender Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Tender Agreement, which is filed as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.

Joint Press Release. On December 9, 2019, the Company and Parent issued a joint press release announcing the execution of the Merger Agreement. A copy of the press release is filed as Exhibit 99.2 to this Current Report on Form 8-K and incorporated herein by reference.

Important Additional Information

The tender offer for the outstanding Company Common Stock has not yet commenced. The communication materials referenced above do not constitute an offer to buy or the solicitation of an offer to sell any securities. The solicitation and the offer to buy shares of Company Common Stock will be made only pursuant to an offer to purchase and related materials that Parent and Sub intend to file with the U.S. Securities and Exchange Commission (the "SEC"). If the tender offer is commenced, Parent and Sub will file a Tender Offer Statement on Schedule TO with the SEC, and thereafter the Company will file a Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the tender offer. The Tender Offer Statement on Schedule TO (including an offer to purchase, a related letter of transmittal and other offer documents) and the Solicitation/Recommendation Statement on Schedule 14D-9 will contain important information that should be considered before any decision is made with respect to the tender offer. BEFORE MAKING ANY INVESTMENT DECISION, INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THESE MATERIALS AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. These materials will be sent free of charge to Company shareholders when available, and may also be obtained by contacting the Company's Investor Relations Department at 4100 S. Saginaw Street, Flint, Michigan 48507, [phone] or [e-mail] or by contacting D.F. King & Co., Inc., the information agent for the tender offer, at [phone] for banks and brokers or [phone] for all others, or by email at [e-mail]. In addition, all of these materials (and all other tender offer documents filed with the SEC) will be available at no charge from the SEC through its website at www.sec.gov.

Cautionary Statement Regarding Forward-Looking Statements

Forward-looking statements made herein with respect to the tender offer and related transactions, including, for example, the timing of the completion of the tender offer and the merger or the potential benefits of the tender offer and the merger, reflect the current analysis of existing information and are subject to various risks and uncertainties. As a result, caution must be exercised in relying on forward-looking statements. Due to known and unknown risks, the Company's actual results may differ materially from its expectations or projections.

The following factors, among others, could cause actual plans and results to differ materially from those described in forward-looking statements. Such factors include, but are not limited to, the effect of the announcement of the tender offer and related transactions on the Company's business relationships, operating results and business generally; the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement, and the risk that the merger agreement may be terminated in circumstances that require the Company to pay a termination fee; the outcome of any legal proceedings that may be instituted against the Company related to the transactions contemplated by the merger agreement, including the tender offer and the merger; uncertainties as to the number of shareholders of the Company who may tender their stock in the tender offer; the failure to satisfy other conditions to consummation of the tender offer or the merger, including the receipt of regulatory approvals related to the merger (and any conditions, limitations or restrictions placed on these approvals); risks that the tender offer and related transactions disrupt current plans and operations and the potential difficulties in employee retention as a result of the proposed transactions; the effects of local and national economic, credit and capital market conditions on the economy in general, and other risks and uncertainties; and those risks and uncertainties discussed from time to time in the Company's other reports and other public filings with the SEC.

Additional information concerning these and other factors that may impact the Company's expectations and projections can be found in its periodic filings with the SEC, including its Annual Report on Form 10-K for the year ended December 31, 2018. The Company's SEC filings are available publicly on the SEC's website at www.sec.gov, on the Company's website http://ir.diplomat.is/investors/default.aspx or upon request via email to [e-mail]. The Company disclaims any obligation or undertaking to update or revise the forward-looking statements contained herein, whether as a result of new information, future events or otherwise.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits



 No. Description


   2.1     Agreement and Plan of Merger*


   10.1     Consent Letter Agreement with Brian Griffin


   10.2     Consent Letter Agreement with Dan Davison


   99.1     Tender and Support Agreement


   99.2     Joint Press Release, dated December 9, 2019

104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

* The Company agrees to furnish supplementally a copy of any omitted exhibit or schedule to the Securities and Exchange Commission upon request.

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