[Execution Copy]
STOCKHOLDERS' AGREEMENT dated as of
November 13, 1998, among
XXXXXXXXXX.XXX, INC., a Pennsylvania
corporation (the "Corporation"), and
the stockholders of the Corporation
identified on Schedule I hereto
(collectively, the "Stockholders").
The Corporation is a corporation duly organized and existing
under the laws of the State of Pennsylvania with an authorized capitalization of
40,000,000 shares of common stock, $.10 par value per share (the "Common
Stock"), and 5,000,000 shares of Preferred Stock, $1.00 par value per share (the
"Preferred Stock"), of which 943,980 shares have been designated as Series A
Convertible Preferred Stock (the "Series A Preferred Stock") and 625,529 shares
have been designated as Series B Convertible Preferred Stock (the "Series B
Preferred Stock"). It is deemed to be in the best interests of the Corporation
and the Stockholders that provision be made for the continuity and stability of
the business and policies of the Corporation and, to that end, the Corporation
and the Stockholders hereby set forth their agreement with respect to the shares
of Stock (as hereinafter defined) owned by the Stockholders.
NOW, THEREFORE, in consideration of the premises and of the
mutual consents and obligations hereinafter set forth, the parties hereto hereby
agree as follows:
Section 1. Definitions. As used herein, the following terms shall have
the following respective meanings:
(a) "Affiliate", with respect to any Stockholder, shall mean
any individual, partnership, corporation, group or trust that directly or
indirectly controls, is controlled by or is under common control with such
Stockholder, with "control" being the power to direct or cause the direction of
management and policies, whether through ownership of voting securities, by
contract or otherwise.
(b) "Designated Public Offering" shall mean a firm commitment
underwritten public offering of shares of Common Stock of the Corporation under
the Securities Act of 1933, as amended, at a net offering price per share that
represents a pre-offering market capitalization of no less than $150,000,000 and
which results in aggregate net cash proceeds of not less than $25,000,000 to the
Corporation.
(c) "Group" shall mean:
(1) in the case of any Stockholder who is an individual,
(A) such Stockholder, (B) the spouse and lineal descendants of such Stockholder
and (C) a trust for the benefit of any of the foregoing;
(2) in the case of any Stockholder that is a partnership,
(A) such partnership and any of its limited or general partners, (B) any
corporation or other business organization to which such partnership shall sell
all or substantially all of its assets or with which it shall be merged and (C)
any Affiliate of such partnership; and
(3) in the case of any Stockholder that is a corporation,
(A) such corporation, (B) any corporation or other business organization to
which such corporation shall sell or transfer all or substantially all of its
assets or with which it shall be merged and (C) any Affiliate of such
corporation.
(d) "Investor" shall mean America Online, Inc., a Delaware
corporation ("AOL") and shall include any successor to, or assignee of, the
Investor who or which agree in writing to be treated as an Investor and to be
bound by the terms and comply with the provisions hereof.
(e) "Management Stockholders" shall mean Xxxxxxx Xxxxxx, Xxxxx
X. Xxxxxxx and any executive officer that holds equity or rights to such capital
stock in the Corporation.
(f) "Proportionate Percentage" shall mean the pro rata
percentage of Stock being offered by a Selling Group Stockholder pursuant to
Section 3 hereof that the Investor shall be entitled to purchase; such pro rata
percentage shall be the percentage figure that expresses the ratio, based upon
Common Stock equivalents, between (x) the number of shares of Stock owned by the
Investor and (y) the aggregate number of shares held by the Investor and the
Selling Group Stockholder that is proposing to Sell.
(g) "Provident" shall mean Provident American Corporation, a
Pennsylvania corporation.
(h) "Purchase Agreement" shall mean the Stock Purchase
Agreement dated as of the date hereof, among the Corporation, Provident and the
Investor.
(i) "Sell", as to any Stock, shall mean to sell, or in any
other way directly or indirectly transfer, assign, distribute, encumber or
otherwise dispose of, either voluntarily or involuntarily.
(j) "Selling Group Stockholders" shall mean each Management
Stockholder, Provident, Health Plan Services, Inc. or Provident Indemnity Life
Insurance Company or any member of the Group of any of the above proposing to
Sell its Stock, or who has delivered a notice of intention to Sell, pursuant to
Section 3 and 4 hereof.
(k) "Stock" shall mean (i) the presently issued and
outstanding shares of capital stock of the Corporation and any stock options or
stock subscription warrants exercisable therefor (which options and warrants
shall be deemed to be that number of outstanding shares of Stock for which they
are exercisable), (ii) any additional shares of capital stock hereafter issued
and outstanding and (iii) any shares of capital stock of the Corporation into
which such shares may be converted or for which they may be exchanged or
exercised.
(l) "Stockholders" shall mean those persons identified on
Schedule I attached hereto as the holders of Stock and shall include any other
person who agrees in writing with the parties hereto to be bound by and to
comply with all applicable provisions of this Agreement.
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Section 2. Limitations on Sales of Stock by Stockholders. Anything
contained in this Agreement to the contrary notwithstanding, each Selling Group
Stockholder hereby agrees that she, he or it shall not at any time during the
term of this Agreement Sell any Stock except:
(a) by sale in accordance with Sections 3 or 4 hereof, as
applicable; or
(b) by transfer to another member of the Group to which such
Selling Group Stockholder belongs; provided that the recipient of such Stock
shall agree in writing with the parties hereto to be bound by and to comply with
all applicable provisions of this Agreement and to be deemed a member of such
Group.
Section 3. Procedures on Sale of Stock to Third Parties by Selling
Group Stockholders. Except as otherwise expressly provided herein, each Selling
Group Stockholder, and each member of the Group of any of the above hereby
agrees that she, he or it shall not Sell any Stock, except in accordance with
the following procedures:
(a) Each Selling Group Stockholder shall first deliver to the
Investor, a written notice (the "Section 3 Offer Notice"), which Section 3 Offer
Notice shall (i) specifically identify the party or parties to whom or which
such Selling Group proposes to sell Stock (such party or parties being
hereinafter referred to as the ("Identified Parties"), pursuant to a bona fide
written offer from such Identified Parties ("Third Party Offer"), (ii) include a
copy of the Third Party Offer and (iii) be irrevocable for a period of 30 days
after delivery thereof, offering (the "Section 3 Offer") to the Investor all of
the Stock proposed to be sold by such Selling Group Stockholder to such
Identified Parties at the purchase price and on the terms specified therein. The
Investor shall have the right and option, for a period of 30 days after the
delivery of the Section 3 Offer Notice to accept up to its Proportionate
Percentage of the Stock so offered at the purchase price and on the terms stated
in the Section 3 Offer Notice.
(b) Sales of Stock under the terms of Section 3(a) above shall
be made at the offices of the Corporation on a mutually satisfactory business
day within 30 days after the expiration of the applicable period. Delivery of
certificates or other instruments evidencing such Stock duly endorsed for
transfer shall be made on such date against payment of the purchase price
therefor.
(c) If effective acceptance shall not be received pursuant to
Section 3(a) above with respect to all Stock offered for sale pursuant to the
Section 3 Offer Notice, then the Selling Group Stockholder shall not be
obligated to Sell such Stock to the Investor pursuant to Section 3(a) above and
may Sell to the Identified Parties all, but not less than all, of the Stock so
offered for sale at a price not less than the price, and on terms not more
favorable to the purchaser thereof than the terms, stated in the Section 3 Offer
Notice at any time within 90 days after the expiration of the offer required by
Section 3(a) above. In the event that the Stock is not sold by the Selling Group
during such 90-day period, the right of the Selling Group Stockholder to Sell
such Stock shall expire and the obligations of this Section 3 shall be
reinstated; provided, however, that in the event that Selling Group Stockholder
determines, at any time during such 90-day period, that the sale of all or any
part of the remaining Stock on the terms set forth in the Section 3 Offer Notice
is impractical, the Selling Group Stockholder can terminate the offer and
reinstate the procedure provided in this Section 3 without waiting for the
expiration of such 90-day period.
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(d) Any acceptance received pursuant to Section 3(a) hereof
shall be deemed conditioned upon (i) receipt of written notices of acceptance
with respect to all Stock mentioned in such Section 3 Offer Notice and/or (ii)
the sale of the remaining Stock, if any, pursuant to Section 3(c) above.
(e) Anything contained herein to the contrary notwithstanding,
any purchaser of Stock pursuant to Section 3 who is not a Stockholder shall
agree in writing in advance with the parties hereto to be bound by and comply
with all applicable provisions of this Agreement and shall be deemed to be a
Stockholder for all purposes of this Agreement.
(f) Anything contained herein to the contrary notwithstanding,
the Selling Group Stockholder shall, in addition to complying with the
provisions of this Section 3 in the event of a proposed sale of Stock, comply
with the provisions of Section 4 hereof.
Section 4. Right of Co-Sale.
(a) In the event that any Selling Group Stockholder (being
hereinafter collectively referred to as the "Section 4 Offeree") receives a bona
fide offer (the "Section 4 Offer") from a third party (the "Section 4 Offeror")
to purchase any shares of Stock from such Section 4 Offeree, for a specified
price payable in cash or otherwise and on specified terms and conditions, such
Section 4 Offeree shall promptly forward a notice (the "Section 4 Notice")
complying with Section 4(b) to the Investor. Subject to Section 4(c), the
Section 4 Offeree shall not Sell any Stock to the Section 4 Offeror unless (i)
the terms of the Section 4 Offer are extended to the Investor and (ii) the
Section 4 Offeror offers to purchase from the Investor, on the same terms as the
Section 4 Offer, the same proportion of the Investor's stock as the Section 4
Offeror proposes to purchase from the Section 4 Offeree.
(b) The Section 4 Notice shall set forth (i) the number of
shares of Stock (based on Common Stock equivalents) to which the Section 4 Offer
relates and the name of the Section 4 Offeree, (ii) the name and address of the
Section 4 Offeror, (iii) the proposed amount and type of consideration
(including, if the consideration consists in whole or in part of non-cash
consideration, such information available to the Section 4 Offeree as may be
reasonably necessary for the Investor to properly analyze the economic value and
investment risk of such non-cash consideration) and the terms and conditions of
payment offered by the Section 4 Offeror and (iv) that the Section 4 Offeror has
been informed of the co-sale rights provided for in this Section 4 and has
agreed to purchase Stock in accordance with the terms of this Section 4.
(c) Anything contained herein to the contrary notwithstanding,
the Section 4 Offeree shall, in addition to complying with the provisions of
this Section 4, comply with the provisions of Section 3 (it being understood
that the Section 3 Offer Notice contemplated by Section 3(a) and the Section 4
Notice may be included in a single notice).
(d) Anything contained herein to the contrary notwithstanding,
any purchaser of Stock pursuant to this Section 4 which is not a Stockholder
shall agree in writing to be bound by all applicable provisions of this
Agreement and shall be deemed to be a Stockholder for all purposes of this
Agreement.
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Section 5. Provident Co-Sale.
(a) In the event that Provident or any member of Provident's
Group that directly or indirectly holds Stock in the Corporation (a "Provident
Group Holder") proposes to engage in a Change-of-Control Transaction (as
hereinafter defined), it or he shall first deliver not less than thirty (30)
days prior written notice (the "Sale Notice") thereof to the Investor
specifically identifying the party or parties (the "Acquirors") with whom or
which such Change-of-Control Transaction is proposed to be effected and all
other material terms of such proposed Change-in-Control Transaction. Neither
Provident nor a Provident Group Holder shall consummate such proposed
Change-of-Control Transaction unless the Acquirors shall concurrently acquire
from the Investor all of the Stock held by the Investor at a cash purchase price
per share (on a Common Stock equivalents basis) equal to the Stipulated Price
Per Share (as hereinafter defined). Within ten (10) days of delivery of the Sale
Notice, if Investor desires to participate in such transaction in accordance
with this Section 5, it shall notify in writing (the "Participation Notice")
Provident of its or his intention to so participate. Within five (5) days of
delivery of a Participation Notice, Provident on the one hand and the Investor
on the other hand shall designate a mutually acceptable nationally recognized
investment banking firm (or, if such designation cannot be made, each shall
select a nationally recognized independent investment banking firm and such two
investment banking firms shall designate a third nationally recognized
independent investment banking firm to act hereunder) (the "Appraiser"). Prior
to the consummation of the Change-in-Control Transaction, the Appraiser shall
determine the value of the consideration proposed to be paid by the Acquirors in
the Change-of-Control Transaction (reflecting, in the case of any non-cash
consideration, the net present value thereof) which is reasonably allocable to
the Stock of the Corporation proposed to be sold directly or indirectly as part
of such Change-of-Control Transaction (and in making such determination the
Appraiser shall assume that the Corporation is being sold as a going concern,
without any discount for lack of liquidity or minority status (i.e., that the
Acquirors will acquire, directly or indirectly, 100% of the outstanding Stock of
the Corporation)) and shall derive therefrom the consideration reasonably
allocable to each share of Stock of the Corporation proposed to be sold directly
or indirectly to the Acquirors in such transaction (the "Stipulated Price Per
Share").
(b) For purposes hereof, a "Change-of-Control Transaction"
shall mean (a) the consummation of a reorganization, merger or consolidation or
other disposition of all or substantially all of the assets of Provident or a
Provident Group Holder (as the case may be); or (b) the acquisition by any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1933, as amended) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under such Act) of more than 50%
of either (i) the then outstanding shares of common stock of Provident or any
Provident Group Holder (as the case may be); or (ii) the combined voting power
of the then outstanding voting securities entitled to vote generally in the
election of directors of Provident or a Provident Group Holder (as the case may
be); provided, however, that any transaction with respect to any of the
respective Affiliates of Provident or any Provident Group Holder shall not
constitute a Change of Control so long as such Affiliate does not then, directly
or indirectly, own Stock in the Corporation.
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Section 6. Legend on Stock Certificates. Each certificate representing
shares of Stock shall bear a legend containing the following words:
"THE SALE, TRANSFER, ASSIGNMENT, PLEDGE, OR ENCUMBRANCE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE AND/OR THE RIGHTS OF
THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IN
RESPECT OF THE ELECTION OF DIRECTORS ARE SUBJECT TO THE TERMS
AND CONDITIONS OF A STOCKHOLDERS' AGREEMENT DATED AS OF
NOVEMBER 13, 1998, AMONG XXXXXXXXXX.XXX, INC. AND CERTAIN
HOLDERS OF THE OUTSTANDING CAPITAL STOCK OF SUCH CORPORATION.
COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF XXXXXXXXXX.XXX, INC.
Section 7. Additional Shares of Stock; Etc. In the event additional
shares of Stock are issued by the Corporation to a Selling Group Stockholder at
any time during the term of this Agreement, either directly or upon the exercise
or exchange of securities of the Corporation exercisable for or exchangeable
into shares of Stock, such additional shares of Stock shall, as a condition to
such issuance, become subject to the terms and provisions of this Agreement.
Section 8. Duration of Agreement. The rights and obligations of each
Stockholder under this Agreement shall terminate as to such Selling Group
Stockholder upon the earlier to occur of (a) the transfer of all Stock owned by
such Stockholder and (b) the occurrence of a Designated Public Offering.
Section 9. Severability; Governing Law. If any provisions of this
Agreement shall be determined to be illegal and unenforceable by any court of
law, the remaining provisions shall be severable and enforceable in accordance
with their terms. This Agreement shall be governed by, and construed in
accordance with, (a) the laws of the Commonwealth of Virginia applicable to
contracts made and to be performed wholly therein (without reference to
principles of conflict of laws) and (b) the laws of the State of Pennsylvania
with respect to corporations organized thereunder.
Section 10. Successors and Assigns. This Agreement shall bind and inure
to the benefit of the parties and their respective successors and assigns, legal
representatives and heirs.
Section 11. Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or by telecopy or sent by
nationally-recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or at such other address as may hereafter be designated
in writing by such party to the other parties:
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(i) if to the Corporation, to it at:
XxxxxxXxxx.Xxx, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Telecopier: 000-000-0000
with a copy to:
(ii) if to the Investor, to it at;
America Online, Inc.
00000 XXX Xxx
Xxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxx, Senior Vice President,
Business Affairs
Telecopier: 000-000-0000
e-mail: XXXXXXXXX@xxx.xxx
With a copy to:
America Online, Inc.
00000 XXX Xxx
Xxxxxx, XX 00000
Attention: General Counsel
Telecopier: 000-000-0000
with a copy to:
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP,
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
(iii) if to a Stockholder, to it at the address set forth
on Schedule I attached hereto.
All such notices, requests, consents and other communications shall be deemed to
have been delivered (a) in the case of personal delivery or delivery by
telecopier, on the date of such delivery, (b) in the case of dispatch by
nationally-recognized overnight courier, on the next business day following such
dispatch and (c) in the case of mailing, on the third business day after the
posting thereof.
Section 12. Modification. Except as otherwise provided herein, neither
this Agreement nor any provisions hereof can be modified, changed, discharged or
terminated except by an instrument in writing signed by the party against whom
the enforcement of any modification, change, discharge or termination is sought
or by the written consent of the Investor.
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Section 13. Headings. The headings of the sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be a part of this Agreement.
Section 14. Nouns and Pronouns. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of names and pronouns shall include the
plural and vice-versa.
Section 15. Entire Agreement. This Agreement, the Purchase Agreement
and the other writings referred to therein or delivered pursuant thereto contain
the entire agreement among the parties hereto with respect to the subject matter
hereof and supersede all prior and contemporaneous agreements and understandings
with respect thereto.
Section 16. Counterparts. This Agreement may be executed in any number
of counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
XXXXXXXXXX.XXX, INC.
By:_______________________________________
Name:
Title:
AMERICA ONLINE
By:_______________________________________
Name:
Title:
PROVIDENT AMERICAN CORPORATION
By:_______________________________________
Name:
Title:
PROVIDENT INDEMNITY LIFE INSURANCE COMPANY
By:_______________________________________
Name:
Title:
HEALTHPLAN SERVICES, INC.
By:_______________________________________
Name:
Title:
[COUNTERPART SIGNATURE PAGE TO THE STOCKHOLDERS' AGREEMENT]
MANAGEMENT SHAREHOLDERS:
---------------------------
Xxxxxxx Xxxxxx
---------------------------
Xxxxx X. Xxxxxxx
SCHEDULE I
STOCKHOLDERS
Name and Mailing Address of Stockholder
---------------------------------------
America Online, Inc.
00000 XXX Xxx
Xxxxxx, XX 00000-0000
HealthPlan Services, Inc.
000 Xxxxxxxx Xxxx
Xxxxx, XX 00000
Provident American Corporation
0000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Provident Indemnity Life Insurance Company
0000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Xxxxxxx Xxxxxx
XxxxxxXxxx.Xxx, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Xxxxx X. Xxxxxxx
Provident American Corporation
0000 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000-0000
