Walgreens 2015 Annual Report Download - page 32

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indemnification or other provisions of the Purchase and Option Agreement or the Company Shareholders
Agreement. Potential conflicts of interest could also arise in connection with any current or future arrangements
between the Company and Sprint Acquisitions or any of their respective affiliates. While our contractual
arrangements place restrictions on the parties’ conduct in certain situations, and related party transactions are
subject to independent review and approval in accordance with our related party transaction approval procedures
and applicable law, the potential for a conflict of interest exists and such persons may have conflicts of interest,
or the appearance of conflicts of interest, with respect to matters involving or affecting both companies.
Our certificate of incorporation and bylaws, Delaware law and/or our agreements with certain
stockholders may impede the ability of our stockholders to make changes to our Board or impede a
takeover.
Certain provisions of our certificate of incorporation and bylaws, as well as provisions of the Delaware General
Corporation Law (the “DGCL”), could make it difficult for stockholders to change the composition of the Board
or discourage, delay, or prevent a merger, consolidation, or acquisitions that stockholders may otherwise consider
favorable. These provisions include the authorization of the issuance of “blank check” preferred stock that could
be issued by the Board, limitations on the ability of stockholders to call special meetings, and advance notice
requirements for nomination for election to the Board or for proposing matters that can be acted upon by
stockholders at stockholder meetings. We are also subject to the provisions of Section 203 of the DGCL, which
prohibits us, except under specified circumstances, from engaging in any mergers, significant sales of stock or
assets, or business combinations with any stockholder or group of stockholders who own 15% or more of our
common stock.
Under the Company Shareholders Agreement, each of the SP Investors and the KKR Investors, respectively, is
entitled to designate one nominee to the Board (currently Stefano Pessina for the SP Investors and Dominic
Murphy for the KKR Investors) for so long as the SP Investors and the KKR Investors, respectively, continue to
meet certain beneficial ownership thresholds and subject to certain other conditions. Pursuant to the Company
Shareholders Agreement, the SP Investors and the KKR Investors have agreed that, for so long as each has the
right to designate a nominee to the Board, they will vote all of their shares of common stock in accordance with
the Board’s recommendation on matters submitted to a vote of our stockholders (including with respect to the
election of directors).
In addition, pursuant to an agreement (the “Nomination and Support Agreement”) with JANA Partners LLC
(“JANA”) whereby, among other things, Barry Rosenstein of JANA was appointed to the Board, JANA and its
affiliates and controlled associates are subject to certain standstill restrictions until the date that is 15 days after
Mr. Rosenstein is no longer a member of the Board (subject to certain conditions and limitations). These
standstill restrictions include, among other things, that JANA and its affiliates and controlled associates will vote
their shares in favor of all incumbent directors nominated by the Board and in accordance with the
recommendations of the Board on other matters, other than certain matters specified in the Nomination and
Support Agreement.
While these provisions do not make us immune from takeovers or changes in the composition of the Board, and
are intended to protect our stockholders from, among other things, coercive or otherwise unfair tactics, these
provisions could have the effect of making it difficult for stockholders to change the composition of the Board or
discouraging, delaying, or preventing a merger, consolidation, or acquisitions that stockholders may otherwise
consider favorable. See also the risk factor captioned “Certain stockholders may have significant voting influence
over matters requiring stockholder approval” above.
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