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DIVESTMENT AND COMMON STOCK SALE AGREEMENT
Dated as of February 25, 1999
PRINCIPAL HEALTH CARE, INC.,
as the Transferor,
and
INDEPENDENT DIVESTMENT TRUST,
as the Trust
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M1:441582.06M1:441582.06M1:441582.06
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS.....................................................1
ARTICLE 2 AGREEMENT TO CONVEY SECURITIES..................................1
Section 2.1 Delivery and Issuance..................................1
Section 2.2 Protection of Right, Title and Interest in and to
the Securities........................................2
ARTICLE 3 REPRESENTATIONS, WARRANTIES AND COVENANTS.......................2
Section 3.1 Representations and Warranties of the Transferor.......2
Section 3.2 Representations and Warranties of the Transferor
as to the Securities..................................3
Section 3.3 Covenants of the Transferor............................3
Section 4.1 Conveyance of the Securities..............................5
Section 4.1 Conveyance of the Securities...........................5
Section 4.2 Without Recourse.......................................5
ARTICLE 5 INDEMNIFICATION.................................................5
Section 5.1 Indemnities by the Transferor..........................5
ARTICLE 6 MISCELLANEOUS PROVISIONS........................................6
Section 6.1 Amendment..............................................6
Section 6.2 Notices................................................6
Section 6.3 Severability of Provisions.............................7
Section 6.4 Assignment................................................7
Section 6.5 Further Assurances.....................................7
Section 6.6 No Waiver; Cumulative Remedies.........................7
Section 6.7 Counterparts...........................................7
Section 6.8 Successors and Assigns....................................7
Section 6.9 Merger and Integration.................................7
Section 6.10 Effect of Headings and Table of Contents...............8
Section 6.11 Costs, Expenses and Taxes..............................8
Section 6.12 Trustee................................................8
Section 6.13 Governing Law..........................................8
Section 6.14 Consent to Jurisdiction and Service of Process.........8
Section 6.15 Waiver of Jury Trial...................................9
DIVESTMENT AND COMMON STOCK SALE AGREEMENT
This DIVESTMENT AND COMMON STOCK SALE AGREEMENT (this "Agreement") is
entered into as of February 25, 1999 ("Closing Date"), by and between Principal
Health Care, Inc., an Iowa corporation (the "Transferor"), and Independent
Divestment Trust, a Delaware business trust (the "Trust").
In consideration of the mutual agreements and subject to the terms and
conditions herein contained, each party agrees as follows:
ARTICLE 1
DEFINITIONS
Except as otherwise specified herein or as the context may otherwise
require, capitalized terms used in this Agreement shall have the respective
meanings set forth in Appendix A hereto for all purposes of this Agreement. The
words "hereof", "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement; Article, Section, subsection and
Schedule references contained in this Agreement are references to Articles,
Sections, subsections and Schedules in or to this Agreement, unless otherwise
specified.
ARTICLE 2
AGREEMENT TO CONVEY SECURITIES
Section 2.1......Delivery and Issuance.
2.1.1....Subject to the terms and conditions hereof, on the
Closing Date (a) the Trust agrees that it will issue and deliver to the
Transferor, and the Transferor agrees to accept from the Trust, (i) 100% of the
Trust Certificates of the Trust in an amount equal to the Initial Aggregate
Certificate Principal Amount and (ii) by wire or intrabank transfer according to
instructions given by the Transferor on or before the Closing Date, the Cash
Amount (or, if not received by the Trust from the SPA Purchaser by 11:00 o'clock
a.m. on such date, the Business Day after such date), and (b) in consideration
therefor, the Transferor agrees to sell and contribute to the Trust for delivery
no later than the Closing Date, and the Trust agrees to purchase and accept from
the Transferor, without recourse except as provided herein, all of the
Transferor's right, title and interest in and to 4,500,000 shares of the common
stock of United Payors & United Providers, Inc., a Delaware corporation (such
4,500,000 shares are collectively referred to as the "Securities") and all
money, instruments, rights and other property relating to the foregoing that are
subject to the Trust Agreement, including all Proceeds of the foregoing.
2.1.2....In connection with the conveyance of the Securities,
the Transferor agrees, at its own expense, on the Closing Date, to transfer all
the Securities to or upon the order of the Trust.
2.1.3....The Transferor and the Trust intend that the
conveyances contemplated herein constitute true sales and absolute contributions
of all Securities from the Transferor to the Trust, and not a financing secured
thereby, and that the Transferor will not retain any right, title or interest in
or to any of the Securities. The foregoing transfer does not constitute and is
not intended to result in any assumption by the Trust or any other Person of any
obligation of the Transferor to any Person in connection with the Securities, or
any agreement or instrument relating to any of them.
Section 2.2......Protection of Right, Title and Interest in and to the
Securities.
In connection with the conveyance of the Securities, the
Transferor agrees at its expense to take such actions required to be taken with
respect to the Securities pursuant to and in accordance with applicable Law in
all jurisdictions in which such actions are necessary to perfect the transfer
and assignment of the Securities.
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.1......Representations and Warranties of the Transferor.
The Transferor hereby makes the following representations and warranties to
the Trust as of the Closing Date.
3.1.1....Organization; Powers. The Transferor is a corporation
duly organized and validly existing under the Laws of the jurisdiction of its
incorporation. The Transferor has all requisite power and authority to enter
into the Basic Documents to which it is a party and to carry out the
transactions contemplated therein.
3.1.2....Authorization. The execution, delivery and
performance by the Transferor of the Basic Documents to which the Transferor is
a party have been duly authorized by all necessary corporate action on the part
of the Transferor.
3.1.3....No Conflicts. The execution, delivery and performance
by the Transferor of the Basic Documents to which the Transferor is a party, and
the consummation of the transactions contemplated in the Basic Documents, do not
and will not (i) violate any provision of any Law applicable to the Transferor,
the Articles of Incorporation or bylaws of the Transferor or any order, judgment
or decree of any court or other agency of government binding on the Transferor,
(ii) conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any material contractual obligation of
the Transferor, except for such breaches or defaults as individually or
collectively will not have a Material Adverse Effect on the Transferor or result
in any Lien on the Securities, or (iii) require any approval or consent of any
Person under any contractual obligation of the Transferor, except the absence of
which will not individually or collectively have a Material Adverse Effect on
the Transferor or result in any Lien on the Securities.
3.1.4....Enforceability; Etc. Each of the Basic Documents to
which the Transferor is a party has been duly executed and delivered by the
Transferor and constitutes the legally valid and binding obligation of the
Transferor, enforceable against the Transferor in accordance with its terms,
except as may be limited by bankruptcy, insolvency, receivership,
conservatorship, liquidation, reorganization, moratorium or similar Laws
relating to or affecting creditors' rights generally (including, without
limitation, fraudulent conveyance Laws) and by general principles of equity.
3.1.5....Certain Regulation of the Transferor. The Transferor
is not an "investment company" or "controlled" by an "investment company" within
the meaning of the Investment Company Act.
Section 3.2......Representations and Warranties of the Transferor as
to the Securities. The Transferor hereby makes the following representations and
warranties to the Trust with respect to the Securities transferred and conveyed
to the Trust pursuant hereto as of the Closing Date.
3.2.1....Immediately before the Closing Date, the Transferor
will own the Securities. None of the Securities have been sold, transferred,
assigned or pledged by the Transferor except pursuant hereto; at the time of the
conveyance of the Securities pursuant hereto, the Transferor had good and
marketable title thereto, free of any Adverse Claim.
3.2.2....No effective financing statement or other instrument
similar in effect that covers all or part of the Securities, any interest
therein or any other asset with respect thereto is on file in any recording
office.
3.2.3....The transfer by the Transferor to the Trust of the
Securities pursuant hereto constitutes a valid sale, transfer and assignment of
all of the Transferor's right, title and interest in, to and under the
Securities, which sale, transfer and assignment is perfected and of first
priority under the UCC and otherwise, enforceable against creditors of, and
purchasers from, the Transferor.
Section 3.3......Covenants of the Transferor. The Transferor hereby
covenants that:
3.3.1....Security Interests. Except for the conveyances
hereunder, the Transferor shall not sell, pledge, assign or transfer to any
other Person, or grant, create, incur, assume or suffer to exist any Lien or
Adverse Claim on any of the Securities or any interest therein.
3.3.2....Separate Legal Existence of the Trust. The Transferor
hereby acknowledges that the parties to the Basic Documents are entering into
the transactions contemplated thereby in reliance upon the Trust's identity as a
legal entity separate from the Transferor and from all other Persons. Therefore,
the Transferor shall take such actions as shall be reasonable and within its
power to ensure that:
3.3.2.1 Except as contemplated in the indemnities
contained in the Basic Documents, neither the Transferor nor any
Affiliate of the Transferor shall pay the Trust's operating expenses
and liabilities, recognizing, however, that certain organizational
expenses of the Trust and expenses relating to creation of the Trust
and the initial implementation of transactions contemplated by the
Basic Documents to occur on the Closing Date have been or shall be paid
by the Transferor;
3.3.2.2 The Transferor and its Affiliates shall
conduct their respective businesses at offices segregated from the
offices of the Trust;
3.3.2.3 The Transferor and each of its Affiliates
shall maintain corporate records and books of account separate from
those of the Trust and stationery and other business forms that are
separate and distinct from those of the Trust;
3.3.2.4 Financial statements of the Transferor and
its Affiliates shall not be consolidated to include the Trust or, if
such statements are ever required to be consolidated, they shall
clearly reflect, whether by disclosure in footnotes or otherwise, that
the Trust is a separate entity from the Transferor;
3.3.2.5 Except as otherwise provided herein, neither
the Transferor nor the Trust is under any obligation at any time to
make any capital contribution to the other. General overhead and
administrative expenses of the Transferor shall not be charged or
otherwise allocated to the Trust and such expenses of the Trust shall
not be charged or otherwise allocated to the Transferor, except in each
case on arm's-length terms for services rendered;
3.3.2.6 The assets of the Transferor and its
Affiliates shall be maintained in a manner that facilitates their
identification and segregation from the Trust Assets;
3.3.2.7 The Transferor and each of its Affiliates
shall strictly observe corporate and all other formalities in its
dealings with the Trust, and funds or other assets of the Trust shall
not be commingled with those of the Transferor or any of its
Affiliates. Neither the Transferor nor any of its Affiliates shall
maintain joint bank accounts with the Trust or other depository
accounts with the Trust to which the Transferor or any of its
Affiliates has independent access;
3.3.2.8 Neither the Transferor nor any of its
Affiliates shall, directly or indirectly, name the Trust or enter into
any agreement to name the Trust as a direct or contingent beneficiary
or loss payee on any insurance policy with respect to any loss relating
to the property of the Transferor or any of its Affiliates; and
3.3.2.9 Except as contemplated in the indemnities
contained in the Basic Documents, neither the Transferor nor any of its
Affiliates shall hold itself out, or permit itself to be held out, as
having agreed to pay or be liable for the debts of the Trust.
ARTICLE 4
CONVEYANCE OF THE SECURITIES
Section 4.1......Conveyance of the Securities. In consideration of the
Trust's delivery to, or upon the order of, the Transferor on the Closing Date
all of the Trust Certificates and the Cash Amount, the Transferor hereby sells,
transfers, assigns and otherwise conveys to the Trust, as of the Closing Date
without recourse, representation or warranty except for those representations
and warranties set forth in Section 3.2, all of the Transferors right, title and
interest in and to the following, whether now or hereafter existing or in which
the Transferor now has or hereafter acquires an interest (the "Assets"):
4.1.1....all right, title and interest of the Transferor in
the Securities;
4.1.2....all right, title and interest of the Transferor
to receive any payment or other distribution of funds on any of the
Securities; and
4.1.3....all Proceeds, products, rents, profits or any
other distribution of, from or in respect of any and all of the foregoing
Assets.
Section 4.2......Without Recourse. The representations and warranties
contained herein shall not be construed as a warranty or guaranty by the
Transferor as to the present value of, or the future payments under, or market
performance of, the Securities. The sale of the Securities pursuant hereto shall
be without recourse, representation or warranty, except for the express
representations, warranties and covenants made by the Transferor herein.
ARTICLE 5
INDEMNIFICATION
Section 5.1......Indemnities by the Transferor. Without limiting any
other rights that the Trust may have hereunder or under any Law, the Transferor
hereby agrees to indemnify the Trust from and against any and all Losses (all
the foregoing being collectively referred to as "Indemnified Losses") arising
out of or resulting from the default by the Transferor in respect of any of its
obligations under or in respect hereof or of any other Basic Document to which
it is party or in respect of any of the Securities or otherwise arising out of
or resulting from the events or circumstances set forth below in this Section
5.1. Without limiting or being limited by the foregoing, the Transferor shall
pay on demand to the Trust any and all amounts reasonably necessary to indemnify
the Trust from and against any and all Indemnified Losses relating to or
resulting from:
5.1.1....the creation of a Lien on any of the Securities by
or through the Transferor (other than Liens created in favor of the Trust);
5.1.2....the failure to vest and maintain in the Trust, or to
transfer to the Trust, legal and equitable title to, and ownership of, the
Securities transferred and sold by the Transferor hereunder, free and clear of
any Lien (other than Liens in favor of the Trust);
5.1.3....reliance on any representation or warranty or
statement made by the Transferor (or any of its Officers) under or in connection
with this Agreement, any Basic Document to which it is party or in any
certificate or report delivered pursuant hereto or thereto which, in either
case, shall have been false or incorrect in any material respect when made;
5.1.4....the failure by the Transferor to comply with
any Law with respect to any of the Securities;
5.1.5....any failure of the Transferor to perform its duties
or obligations hereunder; and
5.1.6....the Transferor's failure to pay when due any Taxes
payable in connection with the Securities, but excluding any income, franchise
or similar taxes imposed or similar tax on the Trust.
If and to the extent that the foregoing undertaking may be unenforceable for any
reason, the Transferor hereby agrees to make the maximum contribution to the
payment of Indemnified Losses which is permissible under applicable Law.
Notwithstanding anything herein to the contrary, this Section 5.1 shall not be
applicable to any Indemnified Loss based upon or arising out of or otherwise
attributable to the gross negligence or willful misconduct of the Trust or the
Trustee.
ARTICLE 6
MISCELLANEOUS PROVISIONS
Section 6.1......Amendment. This Agreement may be amended from
time to time by the written agreement of the Trust and the Transferor.
Section 6.2......Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered if sent by facsimile transmission or five days after
mailing by certified or registered mail, return receipt requested, to (a) in the
case of the Transferor, to [___________], Facsimile No. [_____________],
Attention: [_______________]; and (b) in the case of the Trust, to the Corporate
Trust Office or, as to any of such Persons, at such other address as shall be
designated by such Person in a written notice to the other Persons.
Section 6.3......Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms hereof shall for any reason
whatsoever be held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
and terms hereof and shall in no way affect the validity or unenforceability of
the other provisions of this Agreement.
Section 6.4......Assignment. Neither this Agreement nor the rights
or obligations of either of the parties hereto may be assigned or delegated.
Section 6.5......Further Assurances. The Transferor and the Trust
agree to do and perform, from time to time, any and all acts and to execute any
and all further instruments necessary or reasonably required by the other party
hereto or by the Trustee more fully to effect the purposes hereof. Without
limiting the generality of the foregoing, the Transferor shall take all action
that may be necessary or reasonably required in order to protect transfer made
or purported to be made hereby or to enable the Trust to exercise and enforce
its remedies hereunder with respect to the Securities.
Section 6.6......No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Trust, the Trustee or
the Transferor, any right, remedy, power or privilege hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any right,
remedied power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges herein provided are cumulative with and
not exhaustive of any rights, remedies, powers and privileges provided by any
Law.
Section 6.7......Counterparts. This Agreement may be executed in any
number of counterparts (and by different parties on separate counterparts), each
of which so executed shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
Section 6.8......Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and assigns. Except as otherwise provided in the preceding sentence,
no other Person shall have any right or obligation hereunder.
Section 6.9......Merger and Integration. Except as specifically stated
otherwise herein, this Agreement and the other Basic Documents set forth the
entire understanding of the parties relating to the subject matter hereof, and
all prior understandings, written or oral, are superseded by this Agreement.
Section 6.10.....Effect of Headings and Table of Contents. The Article
and Section headings and Table of Contents herein are for purposes of reference
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.
Section 6.11.....Costs, Expenses and Taxes. The Transferor agrees to
pay any and all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording hereof
or of the other documents to be delivered hereunder, and agrees to hold the
Trust harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omitting to pay such taxes and fees.
Section 6.12.....Trustee. It is expressly understood and agreed by the
parties hereto that (a) this Agreement is executed and delivered by the Trustee,
not individually or personally but solely as trustee of the Trust, in the
exercise of the powers and authority conferred and vested in it under the Trust
Agreement, (b) each of the representations, undertakings and agreements herein
made on the part of the Trust is made and intended not as personal
representations, undertakings and agreements by Wilmington Trust Company but is
made and intended for the purpose of binding only the Trust and (c) under no
circumstances shall the Trustee be personally liable for the payment of any
indebtedness or expenses of the Trust or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
Trust under this Agreement.
Section 6.13.....Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED THEREIN WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES.
Section 6.14.....Consent to Jurisdiction and Service of Process. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY HERETO ARISING OUT OF OR RELATING
HERETO OR ANY OTHER BASIC DOCUMENT, OR TO ANY OBLIGATIONS HEREUNDER OR
THEREUNDER MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF DELAWARE. BY EXECUTING AND DELIVERING THIS
AGREEMENT, EACH OF THE DEPOSITOR AND THE SECURITIZATION TRUST, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY:
6.14.1...ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;
6.14.2...WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
6.14.3...AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO SUCH PERSON AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH
SECTION 6.2; AND
6.14.4...AGREES THAT SERVICE AS PROVIDED IN SECTION 6.14.3
ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH PARTY IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING
SERVICE IN EVERY RESPECT.
Section 6.15.....Waiver of Jury Trial. EACH OF THE PARTIES HERETO
HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER
BASIC DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF
THIS TRANSACTION OR THE RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of
this waiver is intended to be all-encompassing of any and all disputes that may
be filed in any court and that relate to the subject matter of this transaction,
including contract claims, tort claims, breach of duty claims and all other
common law and statutory claims. Each party hereto acknowledges that this waiver
is a material inducement to enter into a business relationship, that each has
already relied on this waiver in entering into this Agreement, and that each
shall continue to rely on this waiver in their related future dealings. Each
party hereto further warrants and represents that it has reviewed this waiver
with its legal counsel and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION
6.15 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR TO
ANY OF THE OTHER BASIC DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING HERETO OR THERETO. In the event of litigation, this Agreement may be
filed as a written consent to a trial by the court.
(SIGNATURE PAGE FOLLOWS)
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers as of the day and year
first above written.
PRINCIPAL HEALTH CARE, INC., as the Transferor
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
INDEPENDENT DIVESTMENT TRUST
By: Wilmington Trust Company, solely as
Trustee, and not in its individual capacity
By: ____________________________________
Name:
Title:
