SECURITIES PURCHASE AGREEMENT among UNIVERSAL AMERICAN FINANCIAL CORP. and THE SEVERAL INVESTORS PARTY HERETO Dated as of May 7, 2007
Exhibit
C
among
UNIVERSAL
AMERICAN FINANCIAL CORP.
and
THE
SEVERAL INVESTORS PARTY HERETO
Dated
as
of May 7, 2007
Page |
ARTICLE 1 | CERTAIN DEFINITIONS | 3 | ||||
Section | Certain Definitions | 3 | ||||
Section | Interpretive Provision | 10 | ||||
ARTICLE 2 | ISSUANCE AND PURCHASE OF CONVERTIBLE SHARES | 10 | ||||
Section | Issuance and Purchase of Convertible Shares | 10 | ||||
Section |
|
Deliveries | 10 | |||
Section | Closing | 11 | ||||
ARTICLE 3 | INVESTOR REPRESENTATIONS AND WARRANTIES | 11 | ||||
Section | Organization, Good Standing, Qualification and Power | 11 | ||||
Section | Authority; Execution and Delivery; Enforceability | 11 | ||||
Section | Non-contravention | 12 | ||||
Section | Consents | 12 | ||||
Section | [Intentionally Omitted] | 12 | ||||
Section | Brokers | 12 | ||||
Section | Acquisition for Investment | 12 | ||||
Section | Disclosure of Information | 13 | ||||
Section | Restricted Securities | 13 | ||||
ARTICLE 4 | REPRESENTATIONS AND WARRANTIES OF PARENT | 13 | ||||
Section | 4.1 | Organization, Good Standing, Qualification and Power | 13 | |||
Section | 4.2 | Authority; Execution and Delivery; Enforceability | 14 | |||
Section | 4.3 | Non-contravention | 14 | |||
Section | 4.4 | Consents | 15 |
i
TABLE
OF
CONTENTS
(continued)
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Page |
Section
|
4.5 | Capitalization of Parent; Parent Subsidiaries | 15 | |||
Section
|
|
4.6 | Parent SEC Documents | 17 | ||
Section
|
4.7 | No Undisclosed Liabilities | 18 | |||
Section
|
4.8 | Title to Tangible Personal Property | 18 | |||
Section
|
4.9 | Absence of Certain Developments | 19 | |||
Section
|
4.10 | Governmental Authorizations; Licenses; Etc | 19 | |||
Section
|
4.11 | Litigation | 19 | |||
Section
|
4.12 | Taxes | 20 | |||
Section
|
4.13 | Employee Matters | 20 | |||
Section
|
4.14 | Employee Benefit Plans | 21 | |||
Section
|
4.15 | Intellectual Property Rights | 21 | |||
Section
|
4.16 | Contracts | 21 | |||
Section
|
4.17 | Insurance | 22 | |||
Section
|
4.18 | Real Property | 22 | |||
Section
|
4.19 | Transactions With Affiliates | 22 | |||
Section
|
4.20 | Financing | 23 | |||
Section
|
4.21 | Information Supplied | 23 | |||
Section
|
4.22 | Required Parent Shareholder Approval | 24 | |||
Section
|
4.23 | Valid Issuance of Parent Shares | 24 | |||
Section
|
4.24 | Anti-Takeover Statutes | 24 | |||
Section
|
4.25 | Exemption from Registration | 24 | |||
Section
|
4.26 | Brokers | 24 | |||
Section
|
4.27 | Fairness Opinion; Acknowledgement | 25 | |||
Section
|
|
4.28 | Merger Agreement | 25 |
ii
TABLE
OF
CONTENTS
(continued)
|
||||||
Page |
ARTICLE 5 | COVENANTS AND AGREEMENTS | 25 | ||||
Section | 5.1 | Access; Documents and Information | 25 | |||
Section | 5.2 | Certificates of Designations | 26 | |||
Section | 5.3 | Conduct of Business by Parent. | 26 | |||
Section | 5.4 | Closing Documents | 29 | |||
Section | 5.5 | Exchange of Series A Preferred Stock for Series B Preferred Stock; Further Assurances; Charter Amendment | 29 | |||
Section | 5.6 | Public Announcements | 31 | |||
Section | 5.7 | Availability of Shares | 31 | |||
Section | 5.8 | Certificates | 31 | |||
Section | 5.9 | Certain Claims | 31 | |||
Section | 5.10 | Certain Tax Matters | 32 | |||
Section | 5.11 | [Intentionally Omitted] | 32 | |||
Section | 5.12 | Anti-Takeover Statutes | 32 | |||
Section | 5.13 | Nasdaq National Market Listing | 32 | |||
Section | 5.14 | Legends | 32 | |||
Section | 5.15 | Use of Proceeds | 33 | |||
ARTICLE 6 | CONDITIONS TO CLOSING | 33 | ||||
Section | 6.1 | Mutual Conditions | 33 | |||
Section | 6.2 | Conditions to the Obligations of Parent | 33 | |||
Section | 6.3 | Conditions to the Obligations of the Investors | 34 | |||
Section | 6.4 | Frustration of Closing Conditions | 35 | |||
ARTICLE 7 | TERMINATION | 35 | ||||
Section | 7.1 | Termination | 35 | |||
Section | 7.2 | Effect of Termination | 36 |
iii
TABLE
OF
CONTENTS
(continued)
|
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Page |
ARTICLE 8 | MISCELLANEOUS | 36 | ||||
Section | 8.1 | Survival | 36 | |||
Section | 8.2 | Indemnification | 36 | |||
Section | 8.3 | Notices | 38 | |||
Section | 8.4 | Exhibits and Schedules | 41 | |||
Section | 8.5 | Time of the Essence; Computation of Time | 41 | |||
Section | 8.6 | Expenses and Fees | 41 | |||
Section | 8.7 | Governing Law | 41 | |||
Section | 8.8 | Jurisdiction and Venue; Waiver of Jury Trial | 42 | |||
Section | 8.9 | Assignment; Successors and Assigns; No Third Party Rights | 42 | |||
Section | 8.10 | Counterparts | 42 | |||
Section | 8.11 | Titles and Headings | 43 | |||
Section | 8.12 | Entire Agreement | 43 | |||
Section | 8.13 | Severability | 43 | |||
Section | 8.14 | No Strict Construction | 43 | |||
Section | 8.15 | Specific Performance | 43 | |||
Section | 8.16 | Failure or Indulgence not Waiver | 43 | |||
Section | 8.17 | Amendments | 43 | |||
Section | 8.18 | Nature of Investors’ Obligations and Rights | 43 |
THIS
SECURITIES PURCHASE AGREEMENT
(this “Agreement”), dated as of May 7, 2007, is entered into by and among
Universal American Financial Corp., a New York corporation (“Parent”),
Xxx-Universal Holdings, LLC (“Xxx”), Welsh, Carson, Xxxxxxxx & Xxxxx
X, L.P. (“WCAS”), Union Square Universal Partners, L.P. (“Union
Square”), Perry Partners, L.P., Perry Partners International, Inc., Perry
Commitment Fund, L.P. and Perry Commitment Master Fund, L.P. (the afore-named
Perry entities are referred to herein collectively as
“Perry”). Xxx, WCAS, Union Square and Perry are herein
sometimes referred to each as an “Investor” and collectively as the
“Investors”.
RECITALS
WHEREAS,
concurrently with the
execution and delivery of this Agreement, Parent has entered into the Agreement
and Plan of Merger and Reorganization, dated as of the date of this Agreement,
among Parent, MHRx LLC, a Delaware limited liability company, MemberHealth,
Inc., an Ohio corporation (“MemberHealth”), and the other parties named
therein, a copy of which is attached as Exhibit A hereto (the “Merger
Agreement”);
WHEREAS,
pursuant to the Merger
Agreement, Parent has agreed to acquire, through the merger transactions
set
forth therein, 100% of the issued and outstanding shares of capital stock
and
other equity interests of and in MemberHealth on the terms, for the
consideration and subject to the conditions set forth in the Merger Agreement
(the “Merger”);
WHEREAS,
the Board of Directors of
Parent has duly authorized and approved, and created and provided for the
issuance of, (a) Series A Participating Convertible Preferred Stock, par
value
$1.00 per share, of Parent (“Series A Preferred Stock”), which Series A
Preferred Stock shall have such powers, preferences and rights as set forth
in
the Certificate of Amendment to Parent’s Certificate of Incorporation for the
Series A Preferred Stock attached hereto as Exhibit B-1 (the “Series A
Preferred Stock Certificate of Designations”) and (b) Series B Participating
Convertible Preferred Stock, par value $1.00 per share, of Parent (“Series B
Preferred Stock”), which Series B Preferred Stock shall have such powers,
preferences and rights as set forth in the Certificate of Amendment to Parent’s
Certificate of Incorporation for the Series B Preferred Stock attached hereto
as
Exhibit B-2 (the “Series B Preferred Stock Certificate of
Designations” and, together with the Series A Preferred Stock Certificate of
Designations, the “Certificates of Designations”);
WHEREAS,
concurrently with the
execution and delivery of this Agreement, Parent and the Investors are also
entering into (i) another Securities Purchase Agreement, dated as of the
date of
this Agreement, pursuant to which Parent has agreed to issue and sell to
the
Investors, and the Investors have agreed to purchase from Parent, shares
of
Series B Preferred Stock on the terms and subject to the conditions set forth
therein, a copy of which is attached as Exhibit C hereto (the “Xxxxx 0
Xxxxxxxx Xxxxxxxxx”), xxx (xx) a Registration Rights Agreement in the form
attached hereto as Exhibit D (the “Registration Rights
Agreement”);
WHEREAS,
at or prior to the closing
under the Xxxxx 0 Xxxxxxxx Xxxxxxxxx, a Shareholders Agreement substantially
in
the form attached hereto as Exhibit E (the “Shareholders
Agreement”) will be executed and delivered by the parties hereto and any
other Persons contemplated therein to be initial parties thereto;
WHEREAS,
the Board of Directors of
Parent has (a) approved this Agreement, the Xxxxx 0 Xxxxxxxx Xxxxxxxxx, the
Registration Rights Agreement and the Shareholders Agreement (collectively,
the
“Transaction Agreements”), and the Merger Agreement, and all of the
transactions contemplated hereby and thereby (collectively, the
“Transactions”), including, without limitation, (i) the issuance to the
Investors pursuant to this Agreement of an aggregate of 30,473 shares of
Series
A Preferred Stock and 19,527 shares of Series B Preferred Stock (collectively,
the “Convertible Shares”), the shares of Series B Preferred Stock for
which shares of Series A Preferred Stock may be exchanged as contemplated
by
this Agreement, and all shares of common stock, par value $.01 per share,
of
Parent (“Parent Common Stock”) issuable upon transfer or conversion, as
the case may be, of the Convertible Shares and shares of Series B Preferred
Stock for which shares of Series A Preferred Stock may be exchanged as
contemplated by this Agreement, (ii) the issuance to the Investors pursuant
to
the Xxxxx 0 Xxxxxxxx Xxxxxxxxx of an aggregate of 125,000 shares of Series
B
Preferred Stock (a portion of which may be issued to and purchased by an
Investor under the Stage 2 Purchase Agreement instead in the form of Series
A
Preferred Stock at the request of such Investor) (collectively, the “Stage 2
Shares”) and all shares of Parent Common Stock issuable upon transfer or
conversion, as the case may be, of Stage 2 Shares, and (iii) the issuance
of the
shares of Parent Common Stock contemplated to be issued as merger consideration
pursuant to the Merger Agreement as in effect on the date of this Agreement
((ii) and (iii) collectively, the “Share Issuances”); and (b) determined
that the Transaction Agreements, the Merger Agreement, and all of the
Transactions, are fair to and in the best interests of Parent and its
shareholders;
WHEREAS,
as contemplated by Rule
4350(i) of The Nasdaq Stock Market, Inc. (“Nasdaq”) Marketplace Rules,
Parent shall call a special meeting of its shareholders (the “Parent
Shareholder Meeting”) and, at such meeting, seek the affirmative vote of the
holders of a majority of the shares of Parent Common Stock voting in person
or
by proxy at such meeting in favor of the Share Issuances (such vote, together
with the Parent Charter Vote referred to below, being hereinafter referred
to as
the “Required Parent Shareholder Approval”);
WHEREAS,
at the Parent Shareholder
Meeting, Parent shall also seek the affirmative vote of the holders of a
majority of the shares of Parent Common Stock then outstanding on a proposal
to
amend the Certificate of Incorporation of Parent to authorize a new class
of
Parent non-voting common stock and increase the number of authorized shares
of
Parent capital stock on terms substantially in the form attached hereto as
Exhibit F (the “Charter Amendment”) (the “Parent Charter
Vote”);
WHEREAS,
the Board of Directors of
Parent has resolved to recommend that the shareholders of Parent vote in
favor
of and approve the Share Issuances and the Charter Amendment;
WHEREAS,
each of the Investors,
severally but not jointly, wishes to purchase from Parent, and Parent wishes
to
sell to each Investor, upon the terms and subject to the conditions set forth
in
this Agreement, the number of Convertible Shares respectively set forth by
the
name of such Investor in Section 2.1 below at a purchase price of $2,000
per Convertible Share;
WHEREAS,
Parent and the Investors are
executing and delivering this Agreement in reliance upon the exemption from
securities registration afforded by Section 4(2) of the Securities Act, and
Rule
506 of Regulation D promulgated under the Securities Act; and
WHEREAS,
concurrently with the
execution and delivery of this Agreement, certain of the Investors are also
entering into a Share Purchase Agreement in the form attached hereto as
Exhibit G pursuant to which they will respectively acquire certain
outstanding shares of Parent Common Stock (the transactions contemplated
thereby, collectively with the Transactions, the “Collective
Transactions”);
NOW,
THEREFORE, in consideration of the
mutual covenants contained herein and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, and intending
to be
legally bound, the parties hereto agree as follows:
CERTAIN
DEFINITIONS
Section
1.1 Certain Definitions. As
used in this Agreement, the following terms have the respective meanings
set
forth below.
“A/B
Preferred Exchange” has the
meaning set forth in Section 5.5(a).
“Affiliate”
means,
with respect
to any Person, any other Person who directly or indirectly, through one or
more
intermediaries, controls, is controlled by, or is under common control with,
such Person. The term “control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and
policies of a Person, whether through the ownership of voting securities,
by
contract or otherwise, and the terms “controlled” and “controlling” have
meanings correlative thereto. For purposes hereof, (i) Parent shall
not be considered an Affiliate of any Investor and (ii) the Affiliates of
an
Investor shall be deemed to include one or more funds under common management
with such Investor.
“Agreement”
has
the meaning set
forth in the preamble.
“Antitrust
Division” has the
meaning set forth in Section 5.5(b).
“Business
Day” means a day,
other than a Saturday or Sunday, on which commercial banks in New York City
and
Cleveland, Ohio are open for the general transaction of business.
“Capitalization
Date” has the
meaning set forth in Section 4.5(a).
“Closing”
has
the meaning set
forth in Section 2.3.
“Closing
Date” has the meaning
set forth in Section 2.3.
“CMS”
means
the Centers for
Medicare & Medicaid Services.
“COBRA”
means
Part 6 of Subtitle
B of Title I of ERISA, Section 4980B of the Code and any similar state
law.
“Code”
has
the meaning set forth
in the recitals.
“Consents”
has
the meaning set
forth in Section 5.5(b).
“Contracts”
means
the Parent
Contracts.
“Contractual
Obligation” means,
with respect to any Person, any contract, obligation, agreement, deed, mortgage,
lease, sublease, license or legally binding commitment, promise, undertaking
or
instrument, whether written or oral, to which or by which such Person is
a party
or otherwise bound or to which or by which any property, business, operation
or
right of such Person is bound.
"Conversion
Shares" means the
shares of Parent Common Stock issuable upon conversion of (i) the Convertible
Shares, (ii) shares of Series B Preferred Stock that may be issued in exchange
for shares of Series A Preferred Stock as contemplated by this Agreement,
(iii)
the Stage 2 Shares and (iv) the shares of Parent non-voting common stock
that
may be issued upon conversion or exchange of any of the shares referred to
in
clauses (i)-(iii).
“Debt
Commitment Letter” has the
meaning set forth in Section 4.20.
“Disclosure
Schedules” means the
Investor Disclosure Schedules and Parent Disclosure Schedules.
“Employee
Benefit Plan” means
any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA)
and any other material employee benefit plan, program or arrangement maintained,
sponsored or contributed to by a Person or any of its Subsidiaries.
“ERISA”
means
the Employee
Retirement Income Security Act of 1974, as amended.
“Exchange
Act” means the
Securities Exchange Act of 1934, as amended (together with the rules and
regulations promulgated thereunder).
“Financing”
has
the meaning set
forth in Section 4.20.
“FTC”
has
the meaning set forth
in Section 5.5(b)
“Funded
Indebtedness” means, as
of any date, without duplication, the outstanding principal amount of, accrued
and unpaid interest on and other payment obligations (including any prepayment
premiums payable as a result of the consummation of the Collective Transactions)
arising under any obligations of a Person or any of its Subsidiaries consisting
of (i) indebtedness for borrowed money, (ii) indebtedness evidenced by
any note, bond, debenture or other debt security, or (iii) obligations
under any interest rate, currency or other hedging agreements, to the extent
payable if terminated, in each case, as of such date.
“GAAP”
means
generally accepted
accounting principles as in effect in the United States on the date of this
Agreement, applied on a consistent basis.
“Governing
Documents” means the
legal document(s) by which any Person (other than an individual) establishes
its
legal existence or which govern its internal affairs. For example,
the “Governing Documents” of a corporation are its certificate of incorporation
and by-laws (or equivalent), the “Governing Documents” of a limited partnership
are its certificate of formation and its limited partnership agreement and
the
“Governing Documents” of a limited liability company are its certificate of
formation and its operating agreement.
“Government
Order” means any
order, writ, judgment, injunction, decree, stipulation, ruling, determination
or
award entered by or with any Governmental Authority.
“Governmental
Authority” means
any foreign government, or the government of the United States of America
and
any state, commonwealth, territory, possession, county, or municipality thereof,
or the government of any political subdivision of any of the foregoing, or
any
entity, authority, agency, ministry, court or other similar body exercising
executive, legislative, judicial, regulatory or administrative authority
or
functions of or pertaining to government, including any authority or other
quasi-governmental entity established to perform any of such functions and,
in
the case of Parent, Nasdaq.
“Governmental
Authorization”
means any or all licenses, permits, waivers, accreditations, approvals,
qualifications, certifications, and other authorizations granted by any
Governmental Authority, accreditation organization or Payment Program relating
to or affecting a Medicare prescription drug plan, discount drug plan or
other
drug plan or product offered or administered by Parent, the establishment,
ownership, operation, maintenance, management, regulation, development or
expansion thereof.
“HSR
Act” means the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the
rules
and regulations promulgated thereunder.
“Insurance
Laws” means the laws
and regulations of any State of the United States of America governing insurance
companies that are applicable to Parent or its Subsidiaries, including the
respective insurance laws and regulations of the States of Florida, Kansas,
New
York, Oklahoma, Pennsylvania and Texas.
“Intellectual
Property Rights”
means all intellectual property, whether owned or held for use under
license,
whether registered or unregistered, including, without limitation, such rights
in and to: (i) all patents and patent applications (collectively,
“Patents”); (ii) trademarks, trade dress, service marks, certification
marks, logos and trade names; (iii) copyrights, copyright registrations and
applications and works of authorship; (iv) Internet domain names and uniform
resource locators; (v) trade secrets (as defined in the Uniform
Trade
Secrets Act and common law) (“Trade Secrets”); and (vi) software and
information technology systems including, without limitation, data files,
source
code, object code, application programming interfaces, databases and other
software-related specifications and documentation (collectively,
“Software”).
“Investor
Disclosure Schedules”
means the disclosure schedules to this Agreement delivered by the Investors
to
Parent on or prior to the date hereof in connection with this
Agreement.
“Investor
Material Adverse
Effect” means, with respect to a particular Investor, any fact, event,
circumstance, change, occurrence, effect or condition which has had or would
reasonably be expected to have, individually or in the aggregate with all
other
facts, events, circumstances, changes, occurrences, effects or conditions,
a
material adverse effect on the ability of such Investor to consummate the
transactions contemplated by this Agreement.
“Knowledge” means, with respect to any Person, the actual knowledge of
such Person (and shall in no event encompass constructive, imputed or similar
concepts of knowledge); provided that in the case of Parent, such actual
knowledge shall be limited to the Knowledge of Xxxxxxx Xxxxxxx, Xxxxxx
Xxxxxxxxx, Xxxx Xxxxxx, Xxxxx Israel, Xxxx Xxxxxx, Xxxxxxxx Xxxxxxxxx, Xx.,
Xxxx
Xxxxxxx and Xxxxx Xxxxxx, none of whom shall have any personal liability
regarding such Knowledge.
“Latest
Parent Balance Sheet”
has the meaning set forth in Section 4.7.
“Legal
Requirement” means any
United States federal, state or local or foreign law, statute, standard,
ordinance, code, rule, regulation, binding directive, resolution or
promulgation, or any Government Order, or any license, franchise, permit
or
similar right granted under any of the foregoing, or any similar provision
having the force or effect of law and, with respect to Parent, the Nasdaq
Marketplace Rules.
“Lender”
has
the meaning set
forth in Section 4.20.
“Lien”
means
any mortgage,
pledge, security interest, encumbrance, lien or charge of any
kind. For avoidance of doubt, “Lien” shall not include any
license of Intellectual Property Rights.
“Losses”
has
the meaning set
forth in Section 8.2(a).
“Medicare
Part D” means the
Outpatient Prescription Drug Program established by the Medicare Modernization
of Act of 2003.
“Merger”
has
the meaning set
forth in the recitals.
“Multiemployer
Plan” has the
meaning set forth in Section 3(37) of ERISA.
“Nasdaq”
has
the meaning set
forth in the recitals.
“Outstanding
Parent Stock
Awards” has the meaning set forth in Section 4.5(a).
“Parent”
has
the meaning set
forth in the preamble.
“Parent
Charter Vote” has the
meaning set forth in the recitals.
“Parent
Common Stock” has the
meaning set forth in the recitals.
“Parent
Confidentiality
Agreement” means the confidentiality agreements by and between the several
Investors and Parent.
“Parent
Contracts” has the
meaning set forth in Section 4.16.
“Parent
Disclosure Schedules”
means the disclosure schedules to this Agreement delivered by Parent
and the
Investors on or prior to the date hereof in connection with this
Agreement.
“Parent
Employee Benefit Plan”
means any Employee Benefit Plan of Parent or any of its
Subsidiaries.
“Parent
ERISA Affiliate” means
any entity that is considered a single employer with Parent under Section
414 of
the Code.
“Parent
Intellectual Property
Rights” has the meaning set forth in Section 4.15.
“Parent
Material Adverse Effect”
means any fact, event, circumstance, change, occurrence, effect or condition
individually or in the aggregate which has had or would reasonably be expected
to have a material adverse effect on (A) the financial condition, business
or
results of operations of Parent and its Subsidiaries, taken as a whole, or
(B)
the ability of Parent to consummate the Transactions; provided, that any
change, event or effect arising from or related to, or in the case of matters
covered by clauses (ix) and (x) below, directly and solely resulting from:
(i)
conditions generally affecting the industries in which Parent and its
Subsidiaries operate or the United States economy generally; (ii) acts of
terrorism, acts of war or the escalation of hostilities; (iii) any disruption
of
the financial, banking or securities markets (including any decline in the
price
of any security or any market index); (iv) changes in GAAP; (v) changes in
any
Legal Requirements, except for changes in Legal Requirements or CMS written
interpretations and guidance related to Medicare Part D or related to the
business of providing health and life insurance or managed care products
and
services; (vi) any action taken or omission by Parent in accordance with
this
Agreement or at the written request of, or with the prior written consent
of,
all of the Investors; (vii) any change in or effect on the business of Parent
or
its Subsidiaries that is cured prior to the Closing; (viii) the announcement
of
the Transactions; (ix) any failure, in and of itself, by Parent or any of
its
Subsidiaries to meet any projections, forecasts or revenue or earnings
predictions for any period ending on or after the date of this Agreement;
or (x)
any change, in and of itself, in the market price or trading volume of shares
of
Parent Common Stock, shall not be taken into account in determining whether
a
“Parent Material Adverse Effect” has occurred, or would reasonably be expected
to occur, except in the case of clauses (i) and (iii),
to
the
extent that such change, event or effect referred to therein has had a
materially disproportionate impact on the financial condition, business or
results of operations of Parent and its Subsidiaries, taken as a whole, relative
to other industry participants and, except in the case of clauses (ix) and
(x),
any fact, event, circumstance, change, occurrence, effect or condition
underlying any failure to meet any projections, forecasts or revenue or earnings
predictions or affecting such market price or trading volume shall be taken
into
account in determining whether a Parent Material Adverse Effect has occurred
or
would reasonably be expected to occur, and except that clause (viii) shall
not
apply with respect to Sections 4.3 and 4.4 hereof.
“Parent
Preferred Stock” has the
meaning set forth in Section 4.5(a).
“Parent
SEC Documents” has the
meaning set forth in Section 4.6.
“Parent
Shareholder Meeting” has
the meaning set forth in the recitals.
“Parent
Significant
Subsidiaries” means, the “significant subsidiaries” of the Parent as defined
by Regulation S-X under the Exchange Act.
“Parent
Stock Plans” has the
meaning set forth in Section 4.5(a).
“Payment
Program” means
Medicare, Medicaid, commercial and private insurers, employer group health
plans
(including, without limitation a “Welfare Plan” described in Section 3(1)
of ERISA), and any other governmental, commercial, or other organization
which
maintains a health care reimbursement program or policy.
“Permitted
Liens” means (a)
mechanics, materialmen’s, carrier’s, repairer’s and other Liens arising or
incurred in the ordinary course of business or that are not yet delinquent
or
are being contested in good faith; (b) Liens for Taxes, assessments or other
governmental charges not yet delinquent or which are being contested in good
faith, provided an appropriate reserve is established therefor to the extent
required by GAAP; (c) Liens (including encumbrances and restrictions on real
property such as easements, covenants, rights of way and similar matters
affecting title) that do not, individually or in the aggregate, materially
interfere with the present uses or value of the property subject to such
Liens;
(d) Liens granted to any lender at the Closing in connection with the Debt
Financing of the transactions contemplated by the Merger Agreement; (e) with
respect to the Parent Common Stock, restrictions on transfer imposed under
applicable securities laws; and (f) with respect to Parent and its Subsidiaries,
Liens described on Schedule 1.1(b).
“Person”
means
an individual,
partnership, corporation, limited liability company, joint stock company,
unincorporated organization or association, trust, joint venture, association
or
other organization, whether or not a legal entity, or a Governmental
Authority.
“Proxy
Statement” has the
meaning set forth in Section 4.4.
“Registration
Statement” has the
meaning set forth in Section 4.4.
“Regulatory
Clearance” means,
with respect to any Person, requirements pursuant to Insurance Laws or the
HSR
Act to make a filing, await expiration or termination of a regulatory clearance
waiting period, or obtain a clearance, approval or waiver, under Insurance
Laws
or the HSR Act, before such Person may lawfully acquire shares of Parent
Common
Stock or other securities of Parent that are entitled to vote in the election
of
directors of Parent generally.
“Required
Parent Shareholder
Approval” has the meaning set forth in the recitals.
“Xxxxxxxx-Xxxxx
Act” means the
Xxxxxxxx-Xxxxx Act of 2002.
“SEC”
means
the United States
Securities and Exchange Commission.
“Securities
Act” means the
Securities Act of 1933, as amended (together with the rules and regulations
promulgated thereunder).
“Subsidiary”
of
a Person means
any and all corporations, partnerships, limited liability companies and other
entities, whether incorporated or unincorporated, with respect to which such
Person, directly or indirectly, owns securities having the power to elect
a
majority of the board of directors or similar body governing the affairs
of such
entity.
“Tax”
means
(A) any and all
federal, state, local or foreign income, gross receipts, franchise, estimated,
alternative minimum, add-on minimum, sales, use, transfer, real property
gains,
registration, value added, excise, natural resources, severance, stamp,
occupation, windfall profits, environmental (under Section 59A of the Code),
customs, duties, real property, personal property, capital stock, social
security (or similar), unemployment, disability, payroll, license, employee
or
other withholding, or other tax assessment, duty, fee, levy, or other
governmental charge, of any kind whatsoever, including any interest, penalties
or additions to tax or similar items in respect of the foregoing (whether
disputed or not) and including any obligations to indemnify or otherwise
assume
or succeed to the tax liability of any other Person and (B) any liability
for
the payment of any amount of the type described in the immediately preceding
clause (A) as a result of (1) being a “transferee” of another person, (2) being
a member of an affiliated, combined, consolidated or unitary group, or (3)
any
contractual liability.
“Tax
Return” means any return,
report, declaration, claim for refund, information return or other document
(including any related or supporting schedule, statement or information)
filed
or required to be filed in connection with the determination, assessment
or
collection of any Tax of any party or the administration of any Legal
Requirements relating to any Tax (including any amendment thereof).
“Termination
Date” has the
meaning set forth in Section 7.1(b).
“Third
Party Claim” has the
meaning set forth in Section 8.2(d).
“Transactions”
has
the meaning
set forth in the recitals.
Section
1.2 Interpretive
Provision. Unless otherwise indicated to the contrary herein by
the context or use thereof: (i) the words, “herein,” “hereto,” “hereof” and
words of similar import refer to this Agreement as a whole and not to any
particular Section or paragraph hereof; (ii) the word “including” means
“including, but not limited to”; (iii) masculine gender shall also include the
feminine and neutral genders, and vice versa; and (iv) words importing the
singular shall also include the plural, and vice versa.
ISSUANCE
AND PURCHASE OF CONVERTIBLE SHARES
Section
2.1 Issuance
and Purchase of Convertible Shares. Subject
to the
satisfaction (or waiver) of the conditions set forth in Article 6, at the
Closing:
(a) Parent
shall issue and sell to Xxx, and Xxx shall purchase from Parent, 4,033 shares
of
Series B Preferred Stock in exchange for the payment by Xxx to Parent of
an
aggregate purchase price for such shares equal to $8,066,000 (such dollar
amount, the “Xxx Aggregate Purchase Price”);
(b) Parent
shall issue and sell to WCAS, and WCAS shall purchase from Parent, 5,000
shares
of Series A Preferred Stock and 7,324 shares of Series B Preferred Stock
in
exchange for the payment by WCAS to Parent of an aggregate purchase price
for
such shares equal to $24,648,000 (such dollar amount, the “WCAS Aggregate
Purchase Price”);
(c) Parent
shall issue and sell to Union Square, and Union Square shall purchase from
Parent, 605 shares of Series A Preferred Stock and 8,170 shares of Series
B
Preferred Stock in exchange for the payment by Union Square to Parent of
an
aggregate purchase price for such shares equal to $17,550,000 (such dollar
amount, the “Union Square Aggregate Purchase Price”); and
(d) Parent
shall issue and sell to Perry, and Perry shall purchase from Parent, 24,868
shares of Series A Preferred Stock in exchange for the payment by Perry to
Parent of an aggregate purchase price for such shares equal to $49,736,000
(such
dollar amount, the “Perry Aggregate Purchase Price”) (the Convertible
Shares referred to in this clause (d) shall be allocated among the entities
comprising Perry in the following percentages: Perry Partners, L.P. 21.43%,
Perry Partners International, Inc. 54.46%, Perry Commitment Fund, L.P. 6.94%
and
Perry Commitment Master Fund, L.P. 17.17%).
Parent
shall issue and sell all such
Convertible Shares as aforesaid free and clear of any and all Liens (other
than
transfer restrictions of general applicability under the Securities
Act).
Section
2.2 Deliveries. At the
Closing (in addition to the other closing deliveries specified in Article
6):
(a) Xxx
shall pay to Parent the Xxx Aggregate Purchase Price;
(b) WCAS
shall pay to Parent the WCAS Aggregate Purchase Price;
(c) Perry
shall pay to Parent the Perry Aggregate Purchase Price;
(d) Union
Square shall pay to Parent the Union Square Aggregate Purchase Price;
and
(e) Parent
shall deliver to each Investor a certificate or certificates (in definitive
form) duly executed on behalf of Parent and registered in the name of such
Investor (or its designee) representing the number of Convertible Shares
purchased by such Investor from Parent pursuant to this Agreement.
All
payments pursuant to clauses (a)
through (d) of this paragraph shall be made by wire transfer of immediately
available funds to an account designated by Parent pursuant to wire instructions
to be provided by Parent no later than at least three Business Days prior
to the
anticipated Closing Date.
Section
2.3 Closing. Subject to
the satisfaction (or waiver) of the conditions set forth in Article 6,
the closing of the transactions contemplated hereby (the “Closing”) shall
take place at the offices of Dechert LLP, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx,
Xxx
Xxxx, at 10:00 A.M. (New York City time) on the tenth Business Day after
the
date of this Agreement, or at such other date and time as Parent and the
Investors shall mutually agree. The date of the Closing is herein
called the “Closing Date”.
ARTICLE
3
INVESTOR
REPRESENTATIONS AND
WARRANTIES
Except
as set forth in the Investor
Disclosure Schedules, each Investor, severally as to itself only, but not
jointly with any other Investor, represents and warrants to Parent as
follows:
Section
3.1 Organization, Good Standing,
Qualification and Power. Such Investor is a corporation, limited
liability company or other entity duly organized, validly existing and in
good
standing under the laws of its respective jurisdiction of incorporation,
formation or organization, as the case may be, and has the requisite corporate,
limited liability company or partnership power and authority to own or lease
its
properties and assets and to carry on its business as presently
conducted.
Section
3.2 Authority; Execution and Delivery;
Enforceability. Such Investor has the requisite power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder, all of which have been duly authorized by all requisite corporate,
limited liability company or partnership, as applicable, action on its
part. Such Investor has duly executed and delivered this Agreement
and (assuming this Agreement has been duly and validly authorized, executed
and
delivered by each other party hereto), this Agreement is a valid and binding
agreement of such Investor, enforceable against such Investor in accordance
with
its terms, except as the enforceability hereof or thereof may be limited
by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
Legal Requirements affecting the enforcement of creditors’ rights generally or
(ii) applicable equitable principles (whether considered in a proceeding
at law
or in equity).
Section
3.3 Non-contravention. Neither
the execution and delivery of this Agreement by such Investor nor the
fulfillment of and the performance by such Investor of its obligations hereunder
will (i) contravene any provision contained in the Governing Documents of
such Investor, or (ii) conflict with, violate or result in a breach (with
or without the lapse of time, the giving of notice or both) of, permit any
Person to terminate, or constitute a default (with or without the lapse of
time,
the giving of notice or both) under (A) except as set forth on Schedule
3.3, any contract, agreement, commitment, indenture, mortgage, lease,
pledge, note, bond, license, permit, or other instrument or obligation to
which
such Investor is a party or (B) assuming the completion of the actions described
in Section 3.4 and on Schedule 3.4, any Legal Requirement to
which such Investor is bound or subject, which in the case of any of clause
(ii)
above, would reasonably be expected to have an Investor Material Adverse
Effect.
Section
3.4 Consents. No notice
to, filing with, or authorization, registration, consent or approval of any
Governmental Authority or other Person is necessary for the execution, delivery
or performance of this Agreement by such Investor or the consummation of
the
transactions contemplated hereby by such Investor, except for (i) compliance
with and filings under the Exchange Act, (ii) filings and approvals required
by
state insurance departments, departments of health, and/or other Governmental
Authorities having jurisdiction over the Governmental Authorizations or any
part
of Parent’s business, or such other filings, authorizations, registrations,
consents or approvals that may be required be reason of Parent’s or
MemberHealth’s involvement in the transactions, (iii) other notices, filings,
authorizations, registrations, consents or approvals set forth on Schedule
3.4, and (iv) any other notices, filings, authorizations, registrations,
consents or approvals the failure of which to obtain or make would not
reasonably be expected to have an Investor Material Adverse Effect.
Section
3.5 [Intentionally
Omitted].
Section
3.6 Brokers. No Person
is or will be entitled to a broker’s, finder’s, investment banker’s, financial
advisor’s or similar fee from Parent in connection with this Agreement or any of
the transactions contemplated hereby based on any commitments made by such
Investor.
Section
3.7 Acquisition for
Investment. Such Investor is acquiring the shares issuable to it
under this Agreement for investment purposes and not with a view towards
any
distribution thereof in violation of applicable securities laws; provided,
however, that by making such representation and warranty, such Investor does
not
agree to hold any securities for any minimum or other specific
term. Such Investor is an “accredited investor” (as that term is
defined in Rule 501(a) of Regulation D under the Securities
Act). Such Investor acknowledges that the shares to be purchased by
such Investor under this Agreement may not be resold absent registration
under
the Securities Act or the availability of an applicable exemption from
Securities Act registration requirements. By executing this
Agreement, such Investor further represents that, except as set forth on
Schedule 3.7, such Investor does not presently have any contract,
undertaking, agreement or arrangement with any Person, other than a Permitted
Transferee (as defined in the Shareholders Agreement) of such Investor, or
any
direct or indirect shareholders, partners or members of such Investor, to
sell,
transfer or
grant
participations to such Person or to any third Person, with respect to any
of the
Convertible Shares.
Section
3.8 Disclosure of
Information. Such Investor has had an opportunity to discuss
Parent’s business, management, financial affairs and the terms and conditions of
the offering of the Convertible Shares with Parent’s management. The
foregoing, however, does not limit or modify the representations and warranties
of Parent in Article 4 of this Agreement or the right of the Investors to
rely thereon.
Section
3.9 Restricted
Securities. Such Investor understands that the issuance and sale
of the Convertible Shares have not been registered under the Securities Act
by
reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature
of
the investment intent and the accuracy of the Investor’s representations as
expressed in Section 3.7. Such Investor understands that the
Convertible Shares are “restricted securities” under applicable U.S. federal and
state securities laws and that, pursuant to these laws, the Investor must
hold
the Convertible Shares indefinitely unless they are registered with the
Securities and Exchange Commission and qualified by state authorities, or
an
exemption from such registration and qualification requirements is
available. Such Investor acknowledges that Parent has no obligation
to register or qualify the Convertible Shares, or the Parent Common Stock
into
which it may be converted, for resale except as set forth in the Registration
Rights Agreement. Such Investor further acknowledges that if an
exemption from registration or qualification is available, it may be conditioned
on various requirements including, but not limited to, the time and manner
of
sale, the holding period for the Convertible Shares, and on requirements
relating to Parent which are outside of the Investor’s control.
REPRESENTATIONS
AND WARRANTIES OF PARENT
Except
as set forth in the Parent
Disclosure Schedules, Parent hereby represents and warrants to each Investor
as
follows:
Section
4.1 Organization, Good Standing,
Qualification and Power. Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of New
York
and has the requisite corporate power and authority to own or lease its
properties and assets and to carry on its business as presently conducted.
Except as has not had and would not reasonably be expected to have a Parent
Material Adverse Effect, each of the Subsidiaries of Parent is a corporation,
limited liability company or other entity duly organized, validly existing
and
in good standing under the laws of its respective jurisdiction of incorporation,
formation or organization, as the case may be, specified on Schedule 4.1
and has the requisite corporate, limited liability company or partnership
power
and authority to own or lease its properties and assets and to carry on its
business as presently conducted. Parent and each of Parent’s
Subsidiaries is duly qualified to transact business and is in good standing
in
each jurisdiction wherein the nature of its business or the ownership of
its
assets makes such qualification necessary, except where the failure to be
so
qualified and in good standing has not had and would not reasonably be expected
to have a Parent Material Adverse
Effect. Parent
has delivered to the Investors true and complete copies of the Governing
Documents of Parent. Parent is not in material violation of or
material default under the provisions of any such Governing
Documents. None of the Parent’s Subsidiaries is in material violation
or material default under its governing documents, except as would not cause
a
Parent Material Adverse Effect.
Section
4.2 Authority; Execution and Delivery;
Enforceability. Parent has the requisite power and authority to
execute and deliver this Agreement, the other Transaction Agreements and
the
Merger Agreement and to perform its obligations hereunder, and thereunder
(subject, with respect to consummation of the transactions contemplated by
the
Xxxxx 0 Xxxxxxxx Xxxxxxxxx and the Merger Agreement, to obtaining the Required
Parent Shareholder Approval), all of which have been duly authorized (subject,
with respect to consummation of the transactions contemplated by the Xxxxx
0
Xxxxxxxx Xxxxxxxxx and the Merger Agreement, to obtaining the Required Parent
Shareholder Approval) by all requisite corporate action on its
part. Parent has duly executed and delivered this Agreement, the
Xxxxx 0 Xxxxxxxx Xxxxxxxxx, the Registration Rights Agreement and the Merger
Agreement, and each of this Agreement, the Xxxxx 0 Xxxxxxxx Xxxxxxxxx and
the
Registration Rights Agreement, and (assuming that they have been duly and
validly authorized, executed and delivered by the other parties thereto,
respectively) this Agreement, the Xxxxx 0 Xxxxxxxx Xxxxxxxxx and the
Registration Rights Agreement are, and each other Transaction Agreement will
from and after the closing under the Xxxxx 0 Xxxxxxxx Xxxxxxxxx be, a valid
and
binding agreement of Parent, enforceable against Parent in accordance with
their
respective terms, except as the enforceability hereof or thereof may be limited
by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other
similar Legal Requirements affecting the enforcement of creditors’ rights
generally or (ii) applicable equitable principles (whether considered in
a
proceeding at law or in equity).
Section
4.3 Non-contravention. Neither
the execution and delivery of this Agreement, the other Transaction Agreements
and the Merger Agreement nor the fulfillment of and the performance by Parent
of
its obligations hereunder or thereunder, nor consummation of the Collective
Transactions, will (i) contravene any provision contained in the Governing
Documents of Parent, (ii) conflict with, violate or result in a breach
(with or without the lapse of time, the giving of notice or both) of, permit
any
Person to terminate, or constitute a default (with or without the lapse of
time,
the giving of notice or both) under (A) except as set forth on Schedule
4.3, any contract, agreement, commitment, indenture, mortgage, lease,
pledge, note, bond, license, permit or other instrument or obligation to
which
Parent or any of Parent’s Subsidiaries is a party or is bound or to which any of
their respective properties or assets are subject or (B) assuming the completion
of the actions described in Section 4.4 and on Schedule 4.4, any
Legal Requirement to which Parent or any of Parent’s Subsidiaries is bound or
subject or to which any of their respective assets or properties are subject,
(iii) except as set forth on Schedule 4.3, result in the creation or
imposition of any Lien on any of the assets or properties of Parent or any
of
Parent’s Subsidiaries, or (iv) except as set forth on Schedule 4.3,
result in the acceleration of, or permit any Person to terminate, modify,
cancel, accelerate or declare due and payable prior to its stated maturity,
any
obligation of Parent or any of Parent’s Subsidiaries, which in the case of any
of clauses (ii) through (iv) above, would reasonably be expected to have
a
Parent Material Adverse Effect.
Section
4.4 Consents. No notice
to, filing with, or authorization, registration, consent or approval of any
Governmental Authority or other Person is necessary for the execution, delivery
or performance of this Agreement, the other Transaction Agreements and the
Merger Agreement or the consummation of the transactions contemplated hereby
and
thereby by Parent or consummation of the Collective Transactions, except
for (i)
compliance with and filings under the HSR Act with respect to consummation
of
the transactions contemplated by the Xxxxx 0 Xxxxxxxx Xxxxxxxxx and the Merger
Agreement, (ii) compliance with the notice and approval requirements of CMS
applicable to the Transactions, (iii) with respect to consummation of the
transactions contemplated by the Xxxxx 0 Xxxxxxxx Xxxxxxxxx and Section 5.5(f),
the filing of the Charter Amendment with the Secretary of State of the State
of
New York, and with respect to consummation of the transactions contemplated
by
the Merger Agreement, the filing of appropriate Certificates of Merger and
any
related documents with the Secretaries of State of the States of Ohio and
Delaware pursuant to the Merger Agreement, (iv) filings and approvals required
by state insurance departments and/or departments of health, each as set
forth
on Schedule 4.4, (v) with respect to consummation of the transactions
contemplated by the Xxxxx 0 Xxxxxxxx Xxxxxxxxx and the Merger Agreement,
the
filing with the SEC of (A) a joint proxy statement/prospectus for distribution
to the shareholders of MemberHealth in connection with the Merger and the
shareholders of Parent in connection with the Parent Shareholder Meeting
in
accordance with Regulation 14A promulgated under the Exchange Act (such proxy
statement as amended or supplemented from time to time being hereinafter
referred to as the “Proxy Statement”), (B) a registration statement on
Form S−4 relating to the offer and sale of shares of Parent Common Stock in
connection with the Merger pursuant to the Merger Agreement (such registration
statement as amended or supplemented from time to time being hereinafter
referred to as the “Registration Statement”), and (C) such reports under
and such other compliance with the Exchange Act and the Securities Act as
may be
required in connection with this Agreement and the Merger, (vi) compliance
with
any applicable Legal Requirements relating to state blue sky laws, securities
laws or Nasdaq filing requirements in connection with the issuance of the
Convertible Shares or the shares of Parent Common Stock issuable in the Merger,
and (vii) other notices, filings, authorizations, registrations, consents
or
approvals set forth on Schedule 4.4.
Section
4.5 Capitalization of Parent; Parent
Subsidiaries.
(a) As
of the date hereof, the authorized capital stock of Parent consists of (i)
100,000,000 shares of Parent Common Stock and (ii) 2,000,000 shares of Preferred
Stock, par value $0.01 per share (the “Parent Preferred Stock”), of which
300,000 shares of Parent Preferred Stock will be designated as Series A
Preferred Stock and 300,000 shares of Parent Preferred Stock will be designated
as Series B Preferred Stock (each having the rights, preferences and privileges
set forth in the Certificates of Designations attached as Exhibits B-1 and
B-2, respectively). Upon effectiveness of the Charter Amendment,
the authorized capital stock of Parent will consist of at least (i) 125,000,000
shares of Parent Common Stock, (ii) 30,000,000 shares of Parent
non-voting common stock and (iii) 2,000,000 shares of Parent Preferred Stock,
of
which 300,000 shares of Parent Preferred Stock will have been designated
as
Series A Preferred Stock and 300,000 shares of Parent Preferred Stock will
have
been designated as Series B Preferred Stock (each having the rights, preferences
and privileges set forth in the Certificates of Designations attached as
Exhibits B-1 and B-2,
respectively). As
of the close of business on May 7, 2007 (the “Capitalization Date”),
59,442,873 shares of Parent Common Stock were issued and outstanding; no
shares
of Parent Preferred Stock were issued and outstanding; 626,045 shares of
Parent
Common Stock were held in Parent’s treasury; and 5,227,403 shares of Parent
Common Stock were reserved for issuance pursuant to the Outstanding Parent
Stock
Awards. Schedule 4.5(a) contains a list of each stock option
plan, program or arrangement of Parent (the “Parent Stock Plans”) and
information with respect to all of the outstanding stock options, restricted
stock awards and other stock-based awards issued under the Parent Stock Plans
(“Outstanding Parent Stock Awards”), including the name of Parent Stock
Plan under which such options or awards were issued, the holders thereof,
the
number of shares subject thereto, the exercise prices and other material
terms
thereof and a description of the vesting provisions thereof. Except
as set forth above or on Schedule 4.5(a), there are no outstanding shares
of capital stock of Parent or securities, directly or indirectly, convertible
into, or exchangeable or exercisable for, shares of capital stock of Parent
or
any outstanding “phantom” stock, stock appreciation right or other stock-based
awards. Except as set forth on Schedule 4.5(a), there are no
puts, calls, rights (including preemptive rights), commitments or agreements
to
which Parent is a party or by which it is bound, in any case obligating Parent
to issue, deliver, sell, purchase, redeem or acquire, any equity securities
of
Parent or securities convertible into, or exercisable or exchangeable for
equity
securities of Parent, or obligating Parent to grant, extend or enter into
any
such option, put, warrant, call, right, commitment or agreement. All
outstanding shares of Parent Common Stock are validly issued, fully paid
and
nonassessable and are not subject to, and have not been issued in violation
of,
preemptive or other similar rights. No bonds, debentures, notes or
other indebtedness of Parent having any right to vote with the stockholders
of
Parent on matters submitted to the stockholders of Parent (or any such
indebtedness or other securities that are convertible into or exercisable
or
exchangeable for securities having such voting rights) are issued or
outstanding. No shares of capital stock of Parent and no other
securities directly or indirectly convertible into, or exchangeable or
exercisable for, capital stock of Parent have been issued since the
Capitalization Date and on or prior to the date of this Agreement, other than
shares of Parent Common Stock issued in respect of Outstanding Parent Stock
Awards.
(b) Agreements
Relating to Capital Stock. Except as set forth on Schedule
4.5(b), there are not any stockholder agreements, voting trusts or other
agreements or understandings to which Parent is a party or by which it is
bound
relating to the voting or transfer of any shares of Parent Common
Stock. All registration rights agreements, stockholders’ agreements
and voting agreements to which Parent or any of its Subsidiaries is a party
are
identified on Schedule 4.5(b).
(c) Set
forth on Schedule 4.5(c) is the number of authorized, issued and
outstanding shares of capital stock (or other ownership interests) of each
Parent Significant Subsidiary. All of the issued and outstanding
shares of capital stock (or other ownership interests) of each Parent
Significant Subsidiary are owned beneficially and of record by Parent or
another
Subsidiary of Parent as set forth on Schedule 4.5(c), have been validly
issued, and are fully paid and nonassessable and, except as set forth on
Schedule 4.5(c), are held free and clear of any preemptive rights (other
than such rights as may be held by Parent or a Subsidiary of Parent) or Liens
(other than Permitted Liens). Except as set forth on Schedule
4.5(c), (a) there are no other issued or outstanding equity securities of
any Parent Significant Subsidiary
and
(b)
there are no other issued and outstanding securities of any Parent Significant
Subsidiary convertible into or exchangeable for, at any time, equity securities
of any Parent Significant Subsidiary. Except as set forth on
Schedule 4.5(c), there are no (i) outstanding obligations of Parent
or Parent Significant Subsidiary to repurchase, redeem or otherwise acquire
any
capital stock (or other ownership interests) of any of the Parent Significant
Subsidiaries or (ii) voting trusts, proxies or other agreements with respect
to
the voting or transfer of the capital stock (or other ownership interests)
of
the Parent Significant Subsidiaries.
(d) Except
as set forth on Schedule 4.5(d), and except for the capital stock (or
other ownership interests) of the Parent Significant Subsidiaries, Parent
does
not own, directly or indirectly, (i) any shares of outstanding capital stock
or
membership interests of any other corporation or limited liability company
or
securities convertible into or exchangeable for capital stock or membership
interests of any other corporation or limited liability company (ii) any
equity
or other participating interest in the revenues or profits of any Person,
and
neither Parent nor any of the Parent Significant Subsidiaries is subject
to any
obligation to make any investment (in the form of a loan, capital contribution
or otherwise) in any Person.
Section
4.6 Parent
SEC Documents.
(a) Parent
has made available to the Investors a true and complete copy of each report,
schedule, registration statement and proxy statement filed by Parent with
the
SEC since December 31, 2004 (the “Parent SEC Documents”), which are all
the documents that Parent was required to file with the SEC since December
31,
2004. As of their respective dates, the Parent SEC Documents complied
in all material respects with the requirements of the Securities Act, the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder, and, to the extent in effect and applicable, the
Xxxxxxxx-Xxxxx Act, and none of Parent SEC Documents contains any untrue
statement of a material fact or omits to state a material fact required to
be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Parent has
made available to the Investors true and complete copies of all comment letters
received by Parent from the SEC since December 31, 2004, together with all
written responses of Parent thereto. As of the date hereof, to the
Knowledge of Parent, there are no outstanding or unresolved comments in such
comment letters and none of the Parent SEC Documents is the subject of any
ongoing review by the SEC.
(b) The
financial statements of Parent included in the Parent SEC Documents comply
as to
form in all material respects with the published rules and regulations of
the
SEC with respect thereto, were prepared in accordance with GAAP (except as
may
be indicated in the notes thereto or, in the case of unaudited statements,
as
permitted by Form 10-Q or Rule 10-01 of Regulation S-X of the SEC) and present
fairly in all material respects the consolidated financial position of Parent
and its consolidated Subsidiaries as of their respective dates and the
consolidated results of operations and the consolidated cash flows of Parent
and
its consolidated Subsidiaries for the periods presented therein (subject,
in the
case of the unaudited statements, to year-end audit adjustments, as permitted
by
Rule 10-01, and any other adjustments described therein).
(c) Parent
and its Subsidiaries have established and maintain “disclosure controls and
procedures” (as defined in Rule 13a−15(e) promulgated under the Exchange Act)
and “internal control over financial reporting” (as defined in Rule 13a-15(f)
promulgated under the Exchange Act), in each case, as required by Rule 13a-15
under the Exchange Act. Such “disclosure controls and procedures” are
designed to ensure that information required to be disclosed by Parent in
the
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the rules and
forms
of the SEC, and that such information is accumulated and communicated to
Parent’s management, including its principal executive officer and principal
financial officer, or persons performing similar functions, as appropriate
to
allow timely decisions regarding required disclosure and to make the
certifications of the principal executive officer and the principal financial
officer of Parent required by Sections 302 and 906 of the Xxxxxxxx-Xxxxx
Act
with respect to such reports. For purposes of this Agreement,
“principal executive officer” and “principal financial officer” shall have the
meanings given to such terms in the Xxxxxxxx-Xxxxx Act. Each of the
principal executive officer and the principal financial officer of Parent
(and
each former principal executive officer of Parent and each former principal
financial officer of Parent, as applicable) has made all certifications required
by Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act and the rules and regulations
promulgated thereunder with respect to the Parent SEC Documents. Such
“internal control over financial reporting” provides reasonable assurances
regarding the reliability of financial reporting and the preparation of
financial statements, including that (A) transactions are executed in accordance
with management’s general or specific authorization; and (B) transactions are
recorded as necessary (x) to permit preparation of consolidated financial
statements in conformity with GAAP and (y) to maintain accountability of
the
assets of Parent and its Subsidiaries. The management of Parent has
disclosed, based on its most recent evaluation, to Parent’s auditors and the
audit committee of Parent’s board of directors (i) all significant deficiencies
in the design or operation of internal control over financial
reporting which could adversely affect Parent’s ability to record,
process, summarize and report financial data and have identified for Parent’s
auditors any material weaknesses in internal controls and (ii) any fraud,
whether or not material, that involves management or other employees who
have a
significant role in Parent’s internal controls over financial
reporting. A summary of any such disclosure made by management to
Parent’s auditors and audit committee has been made available to the
Investors.
Section
4.7 No
Undisclosed Liabilities. Neither Parent nor any of its
Subsidiaries has any liability other than (i) liabilities reflected in
consolidated balance sheet of Parent included in the Annual Report on Form
10-K
for the fiscal year of Parent ended December 31, 2006 filed by Parent on
March
16, 2007 (including the related notes thereto) (the “Latest Parent Balance
Sheet”), (ii) liabilities arising under Contractual Obligations that are
connected with future performance under such Contractual Obligations and
not
required to be reflected on a consolidated balance sheet of Parent and its
Subsidiaries prepared in accordance with GAAP, (iii) liabilities that were
incurred in the ordinary course of business since the date of the Latest
Parent
Balance Sheet and (iv) liabilities that have not had and would not reasonably
be
expected to have a Parent Material Adverse Effect.
Section
4.8 Title to
Tangible Personal Property. Parent or a Subsidiary of Parent has
good title to all of the tangible personal property reflected as being owned
by
them on the
Latest
Parent Balance Sheet, in each case, free and clear of Liens (other than
Permitted Liens), except for any such assets which have been sold or otherwise
disposed of since the date of the Latest Parent Balance Sheet or where the
failure to have such good title has not had and would not reasonably be expected
to have a Parent Material Adverse Effect. Parent and its Subsidiaries
own or lease all tangible assets necessary for the conduct of their business
as
presently conducted except where such failure to own or lease has not had
and
would not reasonably be expected to have a Parent Material Adverse
Effect.
Section
4.9 Absence
of Certain Developments. Except as set forth on Schedule
4.9, during the period beginning on the date of the Latest Balance Sheet
and
ending on the date of this Agreement, (a) there has not been any change,
event
or effect that has had or would reasonably be expected to have a Parent Material
Adverse Effect and (b) each of Parent and its Subsidiaries has conducted
its
business in the ordinary course substantially consistent with past
practices. Without limiting the generality of the foregoing, except
as set forth on Schedule 4.9, none of Parent or any of its Subsidiaries
has taken any action that would have constituted a violation of Section 5.3(b)
of the Xxxxx 0 Xxxxxxxx Xxxxxxxxx if said Section 5.3(b) had been in effect
at
all times since the date of the Latest Parent Balance Sheet.
Section
4.10 Governmental Authorizations;
Licenses; Etc. Except as set forth on Schedule 4.10, the
business of each of Parent and its Subsidiaries is now and has been at all
times
since January 1, 2005 operated in compliance with all applicable Legal
Requirements, except where failure to so comply has not had and would not
reasonably be expected to have a Parent Material Adverse
Effect. Parent is, and has been since the effective date thereof, in
compliance in all material respects with the provisions of the Xxxxxxxx-Xxxxx
Act applicable to it. Except as set forth on
Schedule 4.10, each of Parent and its Subsidiaries has all permits,
licenses, approvals, certificates, Governmental Authorizations, and has made
all
notifications, registrations, certifications and filings with all Governmental
Authorities, necessary or advisable for the operation of its business as
currently conducted, in each case except as has not had and would not reasonably
be expected to have a Parent Material Adverse Effect. Except as set
forth on Schedule 4.10, all such permits, licenses, approvals,
certificates and Governmental Authorizations are in full force and
effect. Except as set forth on Schedule 4.10, there is no
action, audit, case, proceeding or investigation pending or, to Parent’s
Knowledge, threatened in writing by any Governmental Authority with respect
to
(i) any alleged violation by Parent or any of its Subsidiaries of any Legal
Requirement, (ii) any alleged failure by Parent or any of its Subsidiaries
to
have any permit, license, approval, certification or other authorization
required in connection with the operation of the business of Parent and its
Subsidiaries or (iii) any change or amendment to the permits, licenses,
approvals, certifications or other authorizations which would impair the
ability
of Parent and/or its Subsidiaries to operate in the normal course, in each
case
except as has not had and would not reasonably be expected to have a Parent
Material Adverse Effect. This Section 4.10 does not relate to
matters with respect to Taxes (which are the subject of Section 4.12),
Employee Matters (which are the subject of Section 4.13) or Employee
Benefit Plans (which are the subject of Section 4.14).
Section
4.11 Litigation. Except
as set forth on Schedule 4.11, there are no judgments, decrees, lawsuits,
actions, proceedings, claims, complaints, injunctions or orders by or before
any
Governmental Authority pending or, to Parent’s Knowledge, threatened in writing
or, to Parent’s Knowledge, any pending investigation by any Governmental
Authority, in any such case, against Parent or any of its Subsidiaries which
have had or would reasonably be expected to have a Parent Material Adverse
Effect.
Section
4.12 Taxes.
(a) Except
as set forth on Schedule 4.12(a), or except as has not had and would not
reasonably be expected to have a Parent Material Adverse Effect, each of
Parent
and its Subsidiaries has duly and timely filed all Tax Returns required to
be
filed by it, all such Tax Returns have been prepared in material compliance
with
all applicable Legal Requirements and are true, correct and complete in all
material respects. Except as set forth on Schedule 4.12, or
except as has not had and would not reasonably be expected to have a Parent
Material Adverse Effect, all Taxes owed by each of Parent and its Subsidiaries,
whether or not shown as due on any such Tax Return, have been timely
paid.
(b) Except
as set forth on Schedule 4.12(b), or except as has not had and would not
reasonably be expected to have a Parent Material Adverse Effect:
(i) neither
Parent nor any of its Subsidiaries is currently the subject of a Tax audit
or
examination nor is party to any claim, dispute, action or
controversy;
(ii) neither
Parent nor any of its Subsidiaries has consented to extend the time, or is
the
beneficiary of any extension of time, in which any Tax may be assessed or
collected by any taxing authority;
(iii) neither
Parent nor any of its Subsidiaries has received from any taxing authority
any
written notice of proposed adjustment, deficiency, underpayment of Taxes
or any
other such written notice which has not been satisfied by payment or been
withdrawn;
(iv) no
claim, or notice of a claim, has ever been made by an authority in a
jurisdiction where Parent or any of its Subsidiaries does not file Tax Returns
that Parent or any of its Subsidiaries is or may be subject to taxation by
that
jurisdiction;
(v) the
unpaid Taxes of Parent and its Subsidiaries did not, as of December 31, 2006,
exceed the reserve for Taxes (rather than any reserve for deferred Taxes
established to reflect timing differences between GAAP and Tax income) set
forth
on the face of the Latest Parent Balance Sheet. Parent and its
Subsidiaries have paid all estimated Taxes required to be paid for Parent's,
and
each of its Subsidiaries', current taxable year; and
(vi) neither
Parent nor any of its Subsidiaries has ever been a member of a combined,
consolidated, affiliated or unitary group for Tax purposes, other than a
group
of which Parent is or one of its Subsidiaries was the parent
corporation.
Section
4.13 Employee
Matters. Except as set forth on Schedule 4.13, (i) neither
Parent nor any of its Subsidiaries has entered into any collective bargaining
agreement with respect to its employees, (ii) there is no labor strike, labor
dispute, or work stoppage or lockout pending or, to Parent’s Knowledge,
threatened in writing against or affecting Parent
or
any of
its Subsidiaries and since January 1, 2005 there has been no such action,
(iii)
to Parent’s Knowledge, no union organization campaign is in progress with
respect to any of the employees of Parent or any of its Subsidiaries, and
(iv)
except as has not had and would not reasonably be expected to have a Parent
Material Adverse Effect, there is no unfair labor practice, charge or complaint
pending or, to Parent’s Knowledge, threatened against Parent or any of its
Subsidiaries. Neither Parent nor any of its Subsidiaries has engaged
in any plant closing or employee layoff activities since January 1, 2005
that
would violate or give rise to an obligation to provide any notice required
pursuant to the Worker Adjustment Retraining and Notification Act of 1988,
as
amended, or any similar state or local plant closing or mass layoff statute,
rule or regulation.
Section
4.14 Employee Benefit
Plans. Each Parent Employee Benefit Plan has been maintained and
administered in compliance in all material respects with the applicable
requirements of ERISA, the Code and any other applicable Legal
Requirements.
Section
4.15 Intellectual Property
Rights.
(a) Except
as set forth on Schedule 4.15(a), Parent and its Subsidiaries own all
right, title and interest in, free and clear of all Liens, or have a license
or
other right to use, all of the material Intellectual Property Rights necessary
for the conduct of the business of Parent and its Subsidiaries as currently
conducted (collectively, the “Parent Intellectual Property
Rights”).
(b) To
Parent’s Knowledge, the Parent Intellectual Property Rights are valid and
enforceable by Parent and/or its Subsidiaries. Except as has not had
and would not reasonably be expected to have a Parent Adverse Effect, there
is
not pending against Parent or any of its Subsidiaries or, to Parent’s Knowledge,
threatened against Parent or any of its Subsidiaries any claim by any third
party contesting the validity, enforceability, ownership, or Parent’s and its
Subsidiaries’ rights with respect to, any Parent Intellectual Property Rights,
and there has been no such claim pending or, to Parent’s Knowledge, threatened
in the past three (3) years. Except as has not had and would not
reasonably be expected to have a Parent Adverse Effect, to Parent’s Knowledge,
the operations of Parent and its Subsidiaries, and the provision of goods
and
services therein, do not infringe or misappropriate any material Intellectual
Property Rights of any third party. Except as has not had and would
not reasonably be expected to have a Parent Adverse Effect, there is no pending
or, to Parent’s Knowledge, threatened assertion or claim and there has been no
such assertion or claim in the last three (3) years asserting that the
operations of Parent or any of its Subsidiaries infringe upon or misappropriate
in any way the material Intellectual Property Rights of any Person.
Section
4.16 Contracts. Schedule 4.16
sets forth a list of all contracts, agreements, leases, permits or licenses
that
would be required to be filed by Parent as of the date hereof as a “material
contract” pursuant to Item 601(b)(10) of Regulation S-K under the Securities Act
(the “Parent Contracts”). Each Contractual Obligation of
Parent is a valid and binding agreement of Parent or its Subsidiary, as the
case
may be, and, to Parent’s Knowledge, of the other parties thereto, enforceable by
Parent or its Subsidiary against the other party thereto in accordance with
its
terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting generally the enforcement of creditors’ rights and
subject
to
general principles of equity). Except as has not had and would not
reasonably be expected to have a Parent Material Adverse Effect, (A) neither
Parent nor any of its Subsidiaries or, to Parent’s Knowledge, any other party to
any Contractual Obligation of Parent, is in breach or violation of, or default
under any such Contractual Obligation of Parent (and no event has occurred
which
with notice or lapse of time would constitute such breach, violation or default)
and (B) neither Parent nor any of its Subsidiaries has received written notice
of any such breach, violation or default under any such Contractual Obligation
of Parent. Parent has made available to the Investors true and
complete copies of all Parent Contracts, including all amendments
thereto.
Section
4.17 Insurance. Except
as would not, individually or in the aggregate, have or reasonably be expected
to have a Parent Material Adverse Effect, the insurance policies maintained
by
Parent and its Subsidiaries provide insurance in such amounts and against
such
risks as are customary and adequate for companies of similar size and operating
in the same industry as Parent and its Subsidiaries, and such insurance policies
are in full force and effect and were in full force and effect during the
periods of time such insurance policies are purported to be in effect and
all
premiums due with respect to all such policies have been paid.
Section
4.18 Real
Property.
(a) Each
material lease or sublease of real property to which Parent or any of its
Subsidiaries is a party or by which it is bound (each a “Parent Lease”,
and collectively the “Parent Leases”) is a valid and binding agreement of
Parent or its Subsidiary, as the case may be, and, to Parent’s Knowledge, of the
other parties thereto, enforceable in accordance with its terms (subject
to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting generally the enforcement of creditors’ rights and subject to general
principles of equity). Except as set forth on Schedule
4.18(a), (A) neither Parent nor any of its Subsidiaries or, to Parent’s
Knowledge, any other party to any Parent Lease is in material breach or material
violation of, or material default under any such Parent Lease (and no event
has
occurred which with notice or lapse of time would constitute such material
breach, violation or default) and (B) neither Parent nor any of its Subsidiaries
has received written notice of any such material breach, violation or default
under any such Parent Lease. Parent has made available to the
Investors true and complete copies of all Parent Leases, including all
amendments thereto and all material notices and correspondence, memoranda
of
lease, estoppel certificates and subordination, non-disturbance and attornment
agreements related thereto.
(b) Neither
Parent nor any of its Subsidiaries owns any real property.
Section
4.19 Transactions With
Affiliates. Except as set forth on Schedule 4.19 or
as described in Parent SEC Documents filed prior to the date hereof, and
except
pursuant to the Transactions, no director or executive officer of Parent
or of
any of its Subsidiaries (or, to Parent’s knowledge, any family member of any
such Person who is an individual or any entity in which any such Person or
any
such family member owns a material beneficial interest) or any Person owning
5%
of more of Parent Common Stock (i) is involved in any material business
arrangement or relationship with Parent or any of its Subsidiaries other
than
employment
arrangements and severance arrangements entered into in the ordinary course
of
business or (ii) owns any material property or right, tangible or intangible,
which is used by Parent or any of its Subsidiaries.
Section
4.20 Financing. Parent
has received a commitment letter, dated as of May 7, 2007 (the "Debt
Commitment Letter"), from Bank of America, N.A. (the "Lender"),
pursuant to which the Lender has committed, subject to the terms and conditions
set forth therein, to provide up to $500,000,000 in senior secured debt
financing (the "Debt Financing"). True, accurate and complete copies of
the Debt Commitment Letter, as in effect on the date of this Agreement, have
been furnished to the Investors. The proceeds to Parent from the
issuance and sale of the Stage 2 Shares to the Investors pursuant to the
Xxxxx 0
Xxxxxxxx Xxxxxxxxx together with the financing contemplated by the Debt
Commitment Letter (collectively, the “Financing”) is sufficient for
Parent to consummate the transactions contemplated by the Merger Agreement
on
the Closing Date (as defined in the Merger Agreement) and pay the initial
merger
consideration under the Merger Agreement and all related fees and
expenses. As of the date hereof, (A) the Debt Commitment Letter has
not been amended or modified, and (B) the financing commitments contained
in the
Debt Commitment Letter have not been withdrawn or rescinded in any
respect. The Debt Commitment Letter, in the form so delivered, is in
full force and effect and is a legal, valid and binding obligation of Parent
and, to the Knowledge of Parent, the other parties thereto. As of the
date hereof and assuming the accuracy of all representations and warranties
of
MemberHealth in the Merger Agreement, no event has occurred which, with or
without notice, lapse of time or both, would constitute a default or breach
on
the part of Parent under any term or condition of the Debt Commitment
Letter. As of the date hereof and assuming the accuracy of all
representations and warranties of MemberHealth in the Merger Agreement and
compliance by MemberHealth with its agreements in the Merger Agreement, Parent
has no reason to believe that it will be unable to satisfy on a timely basis
any
term or condition of closing to be satisfied by it contained in the Debt
Commitment Letter. Parent has fully paid, or caused to be fully paid,
any and all commitment and other fees required by the terms of the Debt
Commitment Letter to be paid on or before the date hereof.
Section
4.21 Information
Supplied. The information included or incorporated by reference
or to be included or incorporated by reference in the Registration Statement
(other than information supplied by the Investors in writing specifically
for
inclusion therein) shall not at the time the Registration Statement is filed
with the SEC or at any time it is supplemented or amended or at the time
it
becomes effective under the Securities Act contain any untrue statement of
a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The information
included or incorporated by reference or to be included or incorporated by
reference in the Proxy Statement (other than information supplied by the
Investors in writing and designated specifically for inclusion therein) shall
not, on the date the Proxy Statement is mailed to the shareholders of Parent
(or
of MemberHealth), or on the Parent Shareholder Meeting Date (as defined in
the
Xxxxx 0 Xxxxxxxx Xxxxxxxxx), contain any untrue statement of a material fact
or
omit to state any material fact required to be stated therein or necessary
in
order to make the statements therein, in light of the circumstances under
which
they are made, not misleading.
Section
4.22 Required Parent Shareholder
Approval. The Required Parent Shareholder Approval is the only
vote of the holders of Parent's capital stock or other securities necessary
(under applicable Legal Requirement or otherwise) to consummate the
Transactions. No vote of the holders of Parent’s capital stock or other
securities is necessary (under applicable Legal Requirement or otherwise)
to
consummate the transactions contemplated by this Agreement.
Section
4.23 Valid
Issuance of Parent Shares. The issuance, sale and delivery by
Parent of the Convertible Shares pursuant to this Agreement (and the issuance
and delivery of shares of Series B Preferred Stock issuable in exchange for
any
shares of Series A Preferred Stock) and of the Stage 2 Shares in accordance
with
the Xxxxx 0 Xxxxxxxx Xxxxxxxxx, and the issuance and delivery of the Conversion
Shares issuable upon conversion of all such Series A Preferred Stock and
Series
B Preferred Stock, have been duly authorized by all necessary corporate action
on the part of Parent (subject, with respect to the Stage 2 Shares, to obtaining
the Required Parent Shareholder Approval). The Conversion Shares have
been duly reserved for issuance. The Convertible Shares (when issued,
sold and delivered at the Closing against payment therefor in accordance
with
the provisions of this Agreement) (and all shares of Series B Preferred Stock
issuable in exchange for any shares of Series A Preferred Stock), the Stage
2
Shares, and all of the Conversion Shares (when issued upon conversion of
shares
of Series A Preferred Stock and Series B Preferred Stock), will all be duly
and
validly issued, fully paid and nonassessable, free and clear of any Liens
(other
than transfer restrictions of general applicability under the Securities
Act). No Person has any preemptive right which would be triggered by
reason of the issuance of the Convertible Shares, the shares of Series B
Preferred Stock in exchange for shares of Series A Preferred Stock, the Stage
2
Shares or the Conversion Shares.
Section
4.24 Anti-Takeover
Statutes. The Board of Directors of Parent has taken all action
necessary to ensure that any restrictions on business combinations contained
in
the provisions of Section 912 of the New York Business Corporation Law will
not
apply to the Transactions (including the Shares Issuances) and the Collective
Transactions. No other “fair price,” “moratorium,” “control share
acquisition” or other similar anti-takeover statute or regulation or any
anti-takeover provision in Parent’s Certificate of Incorporation or Bylaws is,
or at the Closing will be, applicable to Parent, the shares of Parent capital
stock, the Transactions or such other transactions contemplated by this
Agreement, the other Transaction Agreements, the Merger Agreement and the
Collective Transactions.
Section
4.25 Exemption from
Registration. Assuming the accuracy of the representations and
warranties made by the Investors in Section 3.7 of this Agreement, the
offer and issuance by Parent of the Convertible Shares under this Agreement,
and
the issuance and delivery of the Conversion Shares upon conversion of
Convertible Shares, is exempt from registration under the Securities
Act.
Section
4.26 Brokers. Except as
set forth on Schedule 4.26, no Person is or will be entitled to a
broker’s, finder’s, investment banker’s, financial advisor’s or similar fee from
Parent or any of its Subsidiaries in connection with this Agreement, the
Xxxxx 0
Xxxxxxxx Xxxxxxxxx, the Merger Agreement or the Transactions.
Section
4.27 Fairness Opinion;
Acknowledgement.
(a) The
Board of Directors of Parent has received the opinion of Credit Suisse, dated
the date of this Agreement, to the effect that, as of such date, the merger
consideration to be paid by Parent pursuant to the Merger Agreement is fair
to
Parent from a financial point of view. A correct and complete copy of
such opinion has been delivered to the Investors.
(b) Parent
acknowledges and agrees that Investors are acting solely in the capacity
of
arm’s length purchasers with respect to this Agreement and the transactions
contemplated hereby. Parent further acknowledges that (i) Investors
are not acting as advisors or fiduciaries of Parent (or in any similar capacity)
with respect to this Agreement and the transactions contemplated hereby and
(ii)
Parent’s decision to enter into this Agreement and the other Transaction
Agreements has been based solely on the independent evaluation of the
transactions contemplated hereby and thereby by Parent and its independent
representatives.
Section
4.28 Merger
Agreement. Attached hereto as Exhibit A is a correct and
complete copy of the definitive Merger Agreement executed by the parties
thereto, together with all schedules and exhibits thereto, and none of the
foregoing have been amended, supplemented or otherwise modified as of the
date
hereof.
ARTICLE
5
Section
5.1 Access;
Documents and Information.
(a) Except
for information that, if provided, would adversely affect the ability of
a
Person or any of its Subsidiaries to assert attorney-client or attorney work
product privilege or a similar privilege or as limited by applicable Legal
Requirements or the confidentiality provisions of any material agreement,
from
and after the date hereof until the earlier of the Closing or the termination
of
this Agreement in accordance with its terms, Parent shall, and shall cause
its
Subsidiaries to, afford to the officers, employees, accountants, counsel
and
other representatives and agents of each Investor (each of the foregoing,
respectively for each Investor, “Investor Representatives”), during
normal business hours and upon reasonable request, reasonable access to Parent’s
and its Subsidiaries’ books, records, leases, licenses, contracts, properties,
officers, employees, accountants, counsel and other representatives who have
material knowledge relating to Parent or any of its
Subsidiaries. Each Investor and its respective Investor
Representatives shall conduct any investigation under this Section 5.1(a)
in a manner that does not unreasonably interfere with the conduct of the
business of Parent and its Subsidiaries. An Investor shall be
responsible for any breach of this Section 5.1(a) by any of its Investor
Representatives.
(b) All
information and documents disclosed to an Investor or its Investor
Representatives, whether before or after the date hereof, pursuant to this
Agreement or in connection with the transactions contemplated by, or the
discussions and negotiations
preceding,
this Agreement shall be subject to the terms of the Parent Confidentiality
Agreement.
Section
5.2 Certificates of
Designations. Prior to the Closing, Parent shall (a) duly file
the Series A Preferred Stock Certificate of Designations and Series B Preferred
Stock Certificate of Designations, in the forms attached as Exhibits B-1 and
B-2 hereto, respectively, with the Secretary of State of the State of New
York in accordance with all applicable provisions of the Business Corporation
Law of the State of New York and (b) deliver to the Investors a correct and
complete official copy of such filing dated and stamped as accepted and filed
by
such Secretary of State.
Section
5.3 Conduct
of Business by Parent.
(a) From
and after the date hereof until the earlier of the Closing or the termination
of
this Agreement in accordance with its terms, Parent will, and will cause
its
Subsidiaries to, except as otherwise provided on Schedule 5.3(b) or as
otherwise required by this Agreement or the Merger Agreement (as in effect
on
the date hereof), by applicable Legal Requirements, or consented to in writing
by each of the Investors (which consent shall not be unreasonably withheld,
conditioned or delayed):
(i) conduct
its business in the ordinary and regular course in substantially the same
manner
as heretofore conducted (including any conduct that is reasonably related,
complementary or incidental thereto);
(ii) use
commercially reasonable efforts to maintain the insurance described on
Schedule 4.17 (or reasonable replacement policies);
(iii) preserve
intact its business organization and material relationships with third parties
with whom Parent and its Subsidiaries do business; and
(iv) consult
with the Investors prior to taking any action which would reasonably be expected
to result in a Parent Material Adverse Effect.
(b) Without
limiting the generality of the foregoing, from and after the date hereof
until
the earlier of the Closing or the termination of this Agreement in accordance
with its terms, Parent will not, and will not cause or permit any of its
Subsidiaries to, except as otherwise provided on Schedule 5.3(b), or as
otherwise required by this Agreement or by applicable Legal Requirements,
or as
otherwise consented to in writing by each of the Investors (which consent
shall
not be unreasonably withheld, conditioned or delayed):
(i) amend
its Governing Documents (except to change Parent’s authorized shares of capital
stock in the manner contemplated by this Agreement or to amend Parent’s by-laws
to increase the size of its board of directors);
(ii) authorize
or adopt a plan of liquidation or dissolution;
(iii) (A)
except with respect to Parent’s wholly owned Subsidiaries, declare or pay
dividends on, or make other distributions in respect of, any capital stock
or
other
equity interests, (B) adjust, split, combine or reclassify any capital stock
or
other equity interests; (C) issue, sell, pledge or otherwise transfer any
capital stock or other equity interests or any securities exercisable or
exchangeable for or convertible into capital stock or other equity interests,
other than (w) the issuance of Convertible Shares as contemplated by this
Agreement, (x) the issuance of the Stage 2 Shares as contemplated by the
Stage 2
Purchase Agreement (and the issuance of shares of Series B Preferred Stock
upon
exchange of shares of Series A Preferred Stock), (y) the issuance of Parent
Common Stock as Merger consideration pursuant to, and on the terms and subject
to the conditions set forth in, the Merger Agreement as in effect on the
date of
this Agreement, or the issuance of any Conversion Shares upon conversion
of any
shares of Series A Preferred Stock or Series B Preferred Stock and (z) the
issuance of Parent Common Stock issued pursuant to the terms of Outstanding
Parent Stock Awards or (D) purchase, redeem or otherwise acquire any capital
stock or other equity interests;
(iv) merge
or consolidate with, or acquire any equity interest in, any business entity,
or
acquire any line of business, division or other material assets other than
in
the ordinary course of business or pursuant to the Merger
Agreement;
(v) enter
into any new line of business;
(vi) sell,
lease, license, encumber or otherwise dispose of, or subject to any Lien
(other
than a Permitted Lien), any of its material assets other than in the ordinary
course of business;
(vii) make
any change in its customary methods of accounting or accounting practices,
other
than changes required by GAAP, industry organizations or Governmental
Authorities;
(viii) enter
into a settlement or compromise of any pending or threatened claims, litigation,
arbitrations or other proceedings if such settlement or compromise (A) involves
payments by or to Parent or any of its Subsidiaries of more than $500,000
in the
aggregate or (B) involves a consent to material non-monetary relief by Parent
or
any Subsidiary of Parent;
(ix) incur
or guarantee any Funded Indebtedness other than (A) in the ordinary course
of
business or (B) pursuant to the Debt Commitment Letter for purposes of financing
the Merger; or
(x) enter
into a contractual obligation to do any of the things referred to in this
Section 5.3(b).
(c) Promptly
after receipt by Parent of the notice of commencement thereof, Parent shall
provide the Investors with notice of (i) any audit, investigation, claim
(excluding immaterial adjustments, complaints, and corrective activity in
the
ordinary course of business), proceeding, settlement, judgment, consent order,
or corporate integrity agreement by or imposed by any Governmental Authority,
(ii) any suspension, debarment or disqualification of Parent from being a
government contractor, holder of any Governmental
Authorization
or recipient of reimbursement from any Payment Program, or (iii) any
suspension, termination, or revocation of any Governmental
Authorization.
(d) Parent
shall provide the Investors with reasonable notice of any and
all settlement discussions and/or negotiations (excluding immaterial
adjustments, complaints, and corrective activity in the ordinary course of
business) (“Settlement Discussions”) between representatives of Parent
and any Governmental Authority, including without limitation negotiations
with
respect to any claim, settlement agreement, consent order or corporate integrity
agreement between Parent and any Governmental Authority. In
connection with any such Settlement Discussions, (i) Parent shall timely
provide
the Investors with copies of any and all documents that Parent intends to
submit, or that Parent receives, in connection with any such Settlement
Discussions, and (ii) Parent shall timely advise the Investors as to the
status
of such Settlement Discussions.
(e) Parent
shall furnish the Investors, within ten (10) days of the receipt by Parent,
any
and all written notices or charges issued relating to non-compliance from
any
Governmental Authority and/or any Payment Program that Parent’s Governmental
Authorizations, Medicare or Medicaid certification, or accreditation or ranking
by any Governmental Authority or Payment Program are being, or could be,
downgraded, revoked, or suspended, that action is pending, being considered
or
being, or could be, taken to downgrade, revoke, or suspend Parent’s Governmental
Authorization or certification or to fine, penalize or impose material remedies
upon Parent, or that action is pending, being considered, or being, or could
be,
taken, to discontinue, suspend, deny, decrease or recoup any payments or
reimbursements due, made or coming due to Parent or related to the operation
of
Parent.
(f) Parent
shall furnish the Investors, within ten (10) Business Days of receipt but
at
least five (5) days prior to the earliest date on which Parent is required
to
take any action with respect thereto or would suffer any material adverse
consequence, a copy of any Payment Program or other Governmental Authority
licensing or accreditation or ranking agency or entity survey, report, warning
letter, or written notice, and any statement of deficiencies, and within
the
time period required by the particular agency for furnishing a plan of
correction also furnish or cause to be furnished to the Investors a copy
of the
plan of correction generated from such survey, report, warning letter, or
written notice for Parent and by subsequent correspondence related thereto,
and
use commercially reasonable efforts to correct or cause to be corrected any
deficiency, the curing of which is a condition of continued licensure or
of full
participation in any Payment Program by the date required for cure by such
agency or entity (plus extensions granted by such agency or
entity).
(g) Prior
to the Closing, Parent shall promptly notify the Investors if Parent obtains
Knowledge that any of the representations and warranties of Parent in this
Agreement are not true and correct in all material respects.
(h) Prior
to the Closing, Parent shall promptly provide the Investors and Investor
Representatives correct and complete copies of all notices, documents and
other
materials made available by or to Parent under the Merger
Agreement.
Section
5.4 Closing
Documents. Each Investor, severally but not jointly, hereby
agrees that it shall, prior to or on the Closing Date, execute and deliver,
or
cause to be executed and delivered to Parent, the documents or instruments
described in Section 6.2(c). Parent shall, prior to or on the
Closing Date, execute and deliver, or cause to be executed and delivered,
to the
Investors, the documents or instruments described in Section
6.3(d).
Section
5.5 Exchange
of Series A Preferred Stock for Series B Preferred Stock; Further Assurances;
Charter Amendment.
(a) Parent
hereby covenants that, at anytime after the date hereof, at an Investor’s
request and to the extent so requested, Parent shall exchange all or any
shares
of Series A Preferred Stock held by such Investor at such time for a like
number
of shares of Series B Preferred Stock (such exchange, the “A/B Preferred
Exchange”); provided that, prior to the consummation of any such A/B
Preferred Exchange, such Investor shall have either received Regulatory
Clearance, or represented to Parent that no Regulatory Clearance is required,
in
connection with such A/B Preferred Exchange.
(b) Each
Investor, severally but not jointly, and Parent, shall cooperate with each
other
and use (and shall cause their respective Affiliates to use) their respective
commercially reasonable efforts to take or cause to be taken all actions,
and to
do or cause to be done all things necessary, proper or advisable under all
applicable Contracts and Legal Requirements to obtain all Regulatory Clearance
in anticipation of effecting any A/B Preferred Exchange requested by such
Investor so as to enable such A/B Preferred Exchange to occur as expeditiously
as possible, including preparing and filing as promptly as practicable all
documentation to effect all necessary notices, reports and other filings
and to
obtain as promptly as practicable all waivers, consents, registrations,
approvals, permits and authorizations necessary or advisable to be obtained
from
CMS and/or any other Governmental Authority or other third party (hereinafter
referred to as “Consents”) and to lift any injunction or other legal bar
to such A/B Preferred Exchange in order to consummate such A/B Preferred
Exchange as promptly as practicable. All costs incurred in connection
with obtaining such Consents, including CMS consent fees and expert consultant
fees, shall be borne by Parent. HSR filing fees shall be borne by
Parent. Without limiting the foregoing, each Investor, severally but
not jointly, and Parent, undertakes and agrees to file (or cause their
respective Affiliates to file, as applicable) as soon as practicable, and
in any
event prior to fifteen (15) Business Days after the date hereof, a Notification
and Report Form under the HSR Act with the United States Federal Trade
Commission (the “FTC”) and the Antitrust Division of the United States
Department of Justice (the “Antitrust Division”). Each
Investor, severally but not jointly, and Parent, agrees to make appropriate
filings with all appropriate Governmental Authorities, including insurance
regulators, other competition authorities and CMS (or cause their respective
Affiliates to make such filings, as applicable) promptly after the date of
this
Agreement in anticipation of any A/B Preferred Exchange and shall supply
as
promptly as practicable to such Governmental Authority any additional
information and documentary material that may be requested in connection
therewith. Each Investor, severally but not jointly, and Parent,
agrees to (and to cause their respective Affiliates to) respond as promptly
as
practicable to any inquiries received from such Governmental Authority for
additional information or documentation and to all inquiries and requests
received from any other Governmental Authority in connection with
Consents.
(c) Parent
shall (and shall cause its Affiliates to) offer to take (and if such offer
is
accepted, commit to take) all reasonable steps to avoid or eliminate impediments
under any antitrust, competition, or trade regulation Legal Requirement that
may
be asserted by the FTC, the Antitrust Division or any other Governmental
Authority with respect to any A/B Preferred Exchange so as to enable such
A/B
Preferred Exchange to occur as expeditiously as possible;
provided, however, that nothing in this Agreement will
require, or be deemed to require, Parent to agree to or effect any
divestiture. In addition, nothing in this Agreement will require or
be deemed to require Parent to take any other action (including agreeing
to any
requirements or conditions to be imposed in order to obtain CMS or insurance
regulatory consents or approvals) if in the reasonable judgment of Parent
doing
so would be materially detrimental to the business conducted by Parent or
MemberHealth taken as a whole. Subject to the foregoing
sentence, Parent shall cooperate in a reasonable manner with the Investors
in
connection with Investors’ efforts to seek consents and approvals from
Governmental Authorities in connection with the Transactions (including by
keeping the Investors informed on a reasonably current basis of the status
of
such efforts and using its commercially reasonable efforts to permit the
representatives of the Investors to attend any meetings between Parent's
representatives and Governmental Authorities).
(d) In
the event any claim, action, suit, investigation or other proceeding by any
Governmental Authority or other Person is commenced which questions the validity
or legality of the transactions contemplated hereby (including any A/B Preferred
Exchange) or seeks damages in connection therewith, each Investor, severally
but
not jointly, and Parent, agree to cooperate and use commercially reasonable
efforts to defend against such claim, action, suit, investigation or other
proceeding and, if an injunction or other order is issued in any such action,
suit or other proceeding, to use commercially reasonable efforts to have
such
injunction or other order lifted, and to cooperate reasonably regarding any
other impediment to the consummation of such A/B Preferred
Exchange.
(e) Notwithstanding
the foregoing or any other provision of this Agreement, nothing in this
Section 5.5 shall require any Investor to (i) offer, accept or agree to
(A) dispose or hold separate any businesses, assets or operations, (B) restrict
the manner in which, or whether, such Investor or any of its Affiliates may
carry on business or compete in any geographic area or line of business,
and/or
(C) any limitations with respect to its or its Affiliates’ ownership or voting
of Parent capital stock, or (ii) obligate any Investor to litigate or threaten
any litigation.
(f) Parent
shall provide to the Investors copies of any application or other communication,
which references the Investors, to Governmental Authorities in connection
with
the Merger Agreement in advance of filing or submission thereof, and Parent
shall provide the Investors a reasonable opportunity to comment upon or modify
any such reference as to the Investors. Parent’s consent to accepting
such comment or modification shall not be unreasonably withheld.
(g) Parent
agrees to use its commercially reasonable efforts to obtain, at the earliest
practicable date, the Parent Charter Vote. Upon obtaining the Parent
Charter Vote, Parent shall promptly duly file the Charter Amendment with
the
Secretary of State of the State of New York in accordance with all applicable
provisions of the Business Corporation Law of
the
State
of New York, and shall, with respect to each then outstanding share of Series
A
Preferred Stock, on or after the first anniversary of the original issue
date of
such share of Series A Preferred Stock, effect an exchange of such share
of
Series A Preferred Stock for shares of a class of non-voting Parent Common
Stock
authorized to be issued by Parent under the Charter Amendment, which exchange
shall be effected in accordance with the provisions of the Series A Preferred
Stock Certificate of Designation as if such share of Series A Preferred Stock
is
being converted into Parent Common Stock (in the form of such class of
non-voting Parent Common Stock) under Section 8 of the Series A Preferred
Stock
Certificate of Designations and at the conversion rate specified therein
(without giving effect to the provisions of Section 8(a) of the Series A
Preferred Stock Certificate of Designation).
Section
5.6 Public
Announcements. The timing and content of all announcements
regarding any aspect of this Agreement to the financial community, governmental
agencies or the general public shall be mutually agreed upon in advance by
the
Investors and Parent; provided, that each party hereto may make any such
announcement which it in good faith believes, based on advice of counsel,
is
necessary in connection with any Legal Requirement, it being understood and
agreed that each party shall provide the other parties hereto with copies
of any
such announcement in advance of such issuance and the reasonable opportunity
to
comment on the same.
Section
5.7 Availability of
Shares. Parent will not issue or agree to issue any shares of
Parent Common Stock or options, rights or warrants to purchase shares of
Parent
Common Stock or securities convertible into or exchangeable for shares of
Parent
Common Stock or take any other action if, after giving effect thereto, the
number of shares of Parent Common Stock remaining unissued and duly reserved
for
issuance upon conversion of the shares of Series A Preferred Stock and Series
B
Preferred Stock shall be insufficient to permit conversion of all the then
outstanding shares of Series A Preferred Stock and Series B Preferred Stock
after giving effect to any adjustment in the number of shares of Parent Common
Stock into which such shares of Series A Preferred Stock and Series B Preferred
Stock are convertible as a result of such action. Parent shall take
all action necessary to at all times have authorized, and reserved for the
purpose of issuance, after the Closing Date, the maximum number of shares
of
Parent Common Stock issuable from time to time upon conversion of the shares
of
Series A Preferred Stock and Series B Preferred Stock.
Section
5.8 Certificates. If,
from and after the Closing, any certificate for shares of Series A Preferred
Stock or Series B Preferred Stock or Conversion Shares shall be
mutilated, lost, stolen or destroyed, Parent shall issue, in exchange and
in
substitution the mutilated certificate, or in lieu of and substitution for
the
certificate lost, stolen or destroyed, a new certificate of like tenor and
representing an equivalent amount and kind of shares. If reasonably
required by Parent in connection with replacing a share certificate as
aforesaid, the applicable record holder of such shares shall furnish Parent
with
an indemnity on customary terms for such situations, reasonably sufficient
to
protect Parent from any out-of-pocket loss which it may suffer from replacing
such certificate.
Section
5.9 Certain
Claims. Without limiting Parent’s obligations under any other
provision of this Agreement (or under any other contractual obligation, or
under
the Certificate of Incorporation or By-laws of Parent), Parent shall (a)
cooperate with the
Investors
in the defense or settlement of any claim, suit, litigation, arbitration
or
proceeding (“Claim”) against Parent and/or its directors that is brought
or asserted by any third party (whether filed in the name of a shareholder
of
Parent or other third party or derivatively in the name of Parent) in which
any
of the Investors or any of their respective Affiliates is made a party (by
subpoena or otherwise), challenging, or otherwise arising out of or relating
to,
this Agreement or the Xxxxx 0 Xxxxxxxx Xxxxxxxxx, and (b) reimburse the
Investors for reasonable attorney’s fees and expenses incurred by the Investors
or any of their respective Affiliates in connection with any Claim;
provided that (i) each Investor, severally but not jointly, hereby
agrees to cooperate reasonably with Parent in connection with the defense,
or
any proposed settlement of, any such Claim; (ii) unless in the reasonable
judgment of the Investors there exists an actual or potential conflict of
interest between Investors, this clause (b) shall apply only to one counsel
(plus local counsel in each applicable jurisdiction) for all the Investors
(it
being understood that this clause (ii) shall not limit any rights a Person
may
otherwise have to indemnification or advancement of expenses from Parent);
and
(iii) this clause (b) shall not apply to any expenses incurred in connection
with any Claim brought or asserted by any Person in such Person’s capacity as a
limited partner or other investor in any investment fund controlled or managed
by an Investor.
Section
5.10 Certain
Tax Matters. All transfer, documentary, sales, use, stamp,
registration and other such Taxes, and all conveyance fees, recording charges
and other fees and charges (including any penalties and interest) incurred
in
connection with consummation of the Transactions shall be paid by
Parent.
Section
5.11 [Intentionally
Omitted].
Section
5.12 Anti-Takeover
Statutes. Parent shall (i) take all action necessary to ensure
that no “business combination”, “fair price”, “control share acquisition” or
other similar anti-takeover statute or regulation, including Section 912
of the
New York Business Corporation Law, is or becomes applicable to the Transactions
(including the Share Issuances, any other transactions contemplated by this
Agreement or the other Transaction Agreements) or the Collective Transactions
or
to the ownership and voting of such securities deliverable in the Collective
Transactions and (ii) if any such anti-takeover statute or similar statute
or
regulation becomes applicable to any of such transactions or to the ownership
or
voting of any such securities, take all action necessary to ensure that each
of
such transactions may be consummated as promptly as practicable on the terms
contemplated by this Agreement and the other agreements referred to herein
and
otherwise to minimize the effect of such statute or regulation on such
transactions and the ownership and voting of such securities.
Section
5.13 Nasdaq
National Market Listing. Parent shall promptly prepare and file
with Nasdaq a Notification Form for Listing Additional Shares with respect
to
the Conversion Shares, and shall use its reasonable efforts to obtain, prior
to
the Closing, approval for the listing of such shares of Parent Common Stock,
subject only to official notice to Nasdaq of issuance, and each Investor,
severally but not jointly, agrees to cooperate with Parent with respect to
such
filing.
Section
5.14 Legends. Each
Investor, severally but not jointly, agrees with Parent not to transfer any
Convertible Shares or Conversion Shares unless (a) there is then in effect
a
registration
statement under the Securities Act covering such proposed transfer or (b)
such
transfer is made in accordance with Rule 144 under the Securities Act or
another
available exemption from registration under the Securities
Act. Certificates representing Convertible Shares issued pursuant to
this Agreement may be imprinted with a legend substantially as follows (in
addition to any legends required pursuant to the Shareholders
Agreement):
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE, AND
MAY NOT
BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT RELATING THERETO UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT OR SUCH LAWS.
Securities
law legends on share
certificates shall be removed by Parent (and a certificate without such legend
shall be delivered, at Parent’s expense) upon request (i) in connection with any
transfer pursuant to clause (b) of this Section if the legend is no longer
required to ensure compliance with the Securities Act, or (ii) in connection
with any transfer pursuant to clause (a) of this Section.
Section
5.15 Use of
Proceeds. Parent shall apply all of the proceeds from the
issuance and sale of Convertible Shares to the Investors pursuant to this
Agreement for general corporate purposes.
CONDITIONS
TO CLOSING
Section
6.1 Mutual
Conditions. The respective obligations of each party to
consummate the transactions contemplated by this Agreement shall be subject
to
the fulfillment or waiver at or prior to the Closing of each of the following
conditions, any and all of which may be waived, in whole or in part, by Parent,
on the one hand, and unanimous consent of the Investors, on the other hand,
to
the extent permitted by applicable law:
(a) No
Injunction. At the Closing there shall be no effective
injunction, writ or preliminary restraining order or any order of any nature
issued by a court or Governmental Authority of competent jurisdiction to
the
effect that any of the Collective Transactions contemplated by this Agreement,
the other Transaction Agreements or the Merger Agreement may not be consummated
as herein and therein provided.
Section
6.2 Conditions to the Obligations of
Parent. The obligations of Parent to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment prior
to or
at Closing of each of the following conditions, any and all of which may
be
waived, in whole or in part, by Parent, to the extent permitted by applicable
law:
(a) Representations
and Warranties of the Investors. The representations and
warranties made by the Investors in Article 3 shall be true and correct
(disregarding all qualifications relating to materiality or an Investor Material
Adverse Effect) as of the date of this Agreement and as of the Closing Date
as
though such representations and warranties were
made
as
of the Closing Date (or, in the case of any representation or warranty which
specifically relates to an earlier date, as of such date), except to the
extent
the failure of such representations and warranties to be so true and correct
as
of such dates, individually or in the aggregate, would not have an Investor
Material Adverse Effect.
(b) Performance
of Obligations. The Investors shall have duly performed or
complied with, in all material respects, all of the covenants to be performed
or
complied with by them under the terms of this Agreement prior to or at
Closing.
(c) Closing
Deliveries. Prior to or at the Closing, the Investors shall have
delivered (or caused to be delivered) a certificate of an officer of each
Investor, dated the Closing Date, to the effect that (1) the Person signing
such
certificate is familiar with this Agreement and (2) the conditions specified
in
Sections 6.2(a) and (b), to the extent relating to the
representations, warranties and covenants of such Investor, have been
satisfied.
Section
6.3 Conditions to the Obligations of
the Investors. The obligations of the Investors to consummate the
transactions contemplated by this Agreement shall be subject to the fulfillment
at or prior to the Closing of each of the following conditions, any and all
of
which may be waived in whole or in part by unanimous consent of the Investors,
to the extent permitted by applicable law:
(a) Representations
and Warranties. (i) Other than with respect to Sections
4.1, 4.2, 4.5, 4.9(a) (first sentence only),
4.21, 4.22, 4.23, 4.24, 4.25,
4.26,
4.27 and 4.28, the representations and warranties made by Parent
in Article 4 shall be true and correct (disregarding all qualifications
relating to materiality or a Parent Material Adverse Effect) as of the date
of
this Agreement and as of the Closing Date as though such representations
and
warranties were made as of the Closing Date (or, in the case of any
representation or warranty which specifically relates to an earlier date,
as of
such date), except to the extent the failure of such representations and
warranties to be so true and correct as of such dates, individually or in
the
aggregate, would not have a Parent Material Adverse Effect, (ii) the
representations and warranties made by Parent in Sections 4.1,
4.2, 4.5, 4.21, 4.22, 4.23, 4.24,
4.25, 4.26,
4.27
and 4.28 shall be true and correct
in all material respects as of the date of this Agreement and as of the Closing
Date as though such representations and warranties were made as of the Closing
Date (or, in the case of any representation or warranty which specifically
relates to an earlier date, as of such date), and (iii) the representation
contained in clause (a) of the first sentence of Section 4.9 shall be
true and correct in all respects.
(b) Performance
of Obligations. Parent shall have duly performed or complied
with, in all material respects, all of the covenants, obligations and conditions
to be performed or complied with by Parent under the terms of this Agreement
prior to or at the Closing.
(c) No
Material Adverse Change. Since the date of this Agreement there
shall not have occurred any event, development or occurrence of any condition
that has had, or would reasonably be expected to have, individually or in
the
aggregate, a Parent Material Adverse Effect.
(d) Closing
Deliveries. Prior to or at the Closing, Parent shall have
delivered to the Investors the following closing documents in the form referred
to below or otherwise in form and substance reasonably acceptable to the
Investors:
(i) certificates
of officers of Parent, dated the Closing Date, to the effect that (1) the
Person
signing such certificate is familiar with the Agreement and (2) the conditions
specified in Sections 6.3(a), (b) and (c) have been
satisfied;
(ii) certified
copies of the resolutions of the board of directors and stockholders of Parent
authorizing the execution and delivery of this Agreement and the other
Transaction Agreements and the consummation of the Transactions;
(iii) an
opinion of Dechert LLP, dated as of the Closing Date, in the form of Exhibit
6.3(d)(iii);
(iv) the
Registration Rights Agreement, executed and delivered by Parent;
(v) the
certificates (in definitive form) for the Convertible Shares pursuant to
Section 2.2 hereof, duly executed on behalf of Parent and registered in
the names of the applicable Investors (or their respective designees)
representing the number of Convertible Shares purchased pursuant to this
Agreement; and
(vi) copies
of the Certificates of Designations certified by the Secretary of State of
the
State of New York.
Section
6.4 Frustration of Closing
Conditions. No party hereto may rely on the failure of any
condition set forth in this Article 6 if such party’s failure to comply
with any provision of this Agreement was a proximate cause of such failure
of
such condition.
ARTICLE
7
Section
7.1 Termination. This
Agreement may be terminated and the transactions contemplated by this Agreement
abandoned at any time prior to the Closing:
(a) by
mutual written consent of Parent and the Investors;
(b) by
either Parent or the Investors, if the Closing shall not have been consummated
on or before June 7, 2007 (the “Termination Date”), unless extended by
written agreement of the Investors and Parent; provided, that the right
to terminate this Agreement under this paragraph shall not be available to
any
party whose failure to fulfill any obligation under this Agreement has been
the
primary cause of the failure of the Closing to occur on or prior to such
date;
or
(c) by
either the Investors or Parent, if any Governmental Authority shall have
issued
an order, decree or ruling or taken any other action restraining, enjoining
or
otherwise prohibiting the consummation of the transactions contemplated hereby
and such order, decree, ruling or other action shall have become final and
nonappealable.
Section
7.2 Effect of
Termination. If this Agreement is terminated pursuant to
Section 7.1, all rights and obligations of the parties hereunder
shall terminate and no party shall have any liability to the other party,
except
for obligations of the parties hereto in Sections 5.1(b),
5.6, 5.9 and 7.2 and Article 8 (including any
definitions set forth in Article I that are used in such sections), which
shall survive the termination of this Agreement. Notwithstanding
anything to the contrary contained herein, termination of this Agreement
pursuant to Section 7.1 shall not release any party from any liability
for any material breach by such party of the terms and provisions of this
Agreement prior to such termination.
ARTICLE
8
Section
8.1 Survival. The
representations and warranties contained in or made pursuant to this Agreement
or in any certificate delivered pursuant to this Agreement shall survive
the
execution and delivery of this Agreement and the Closing for a period beginning
on the Closing Date and ending on the twelve month anniversary of the Closing
Date; provided, that the representations and warranties set forth in
Sections 4.1 (first sentence only), 4.2, 4.5, 4.12, 4.21, 4.22, 4.23, 4.24,
4.25, 4.26, 4.27 and 4.28, and corresponding representations and warranties
in
any certificate (collectively, the “Specified Representations”) shall
survive the execution and delivery of this Agreement and the Closing
indefinitely. All covenants and agreements that contemplate
performance after the Closing contained herein shall survive the Closing
indefinitely or for any shorter period expressly specified in accordance
with
their terms. Notwithstanding the preceding sentences, if notice of an
indemnification claim shall have been delivered before the aforementioned
time
period has elapsed with respect to any breach of any such representation,
warranty, covenant or agreement, such representation, warranty, covenant
or
agreement shall survive until such claim is finally resolved.
Section
8.2 Indemnification.
(a) Indemnification
by Parent. Subject to the limitations set forth in this
Section 8.2, from and after the Closing Date, Parent shall indemnify and
hold harmless each of the Investors and each of their respective direct or
indirect Affiliates, officers, directors, members, managers, partners,
employees, agents and other representatives (collectively, the “Investor
Indemnified Persons”), from, against and in respect of any and all
liabilities, losses, damages, fines, penalties, fees, costs and expenses
(in
each case, including reasonable attorneys’ fees and expenses), whether or not
involving a third party claim (collectively, “Losses”), incurred or
suffered by such Investor Indemnified Persons as a result of:
(i) any
breach of, or inaccuracy in, any representation or warranty made by Parent
in
this Agreement or in any certificate delivered pursuant to this Agreement;
or
(ii) any
breach or violation of any covenant or agreement of Parent pursuant to this
Agreement or the other Transaction Agreements.
For
the purposes of clause (i) of this
Section 8.2(a), the representations and warranties of Parent contained in
Article 4 of this Agreement (other than the first sentence of Section
4.9), or in any certificate delivered pursuant to this Agreement, shall
be
read as if all qualifications as to materiality, including each reference
to the
terms and phrases “material”, “in all material respects” or like phrases, and
the defined term “Parent Material Adverse Effect”, were deleted therefrom in
determining whether there has been a breach of any such representation or
warranty.
(b) Limitations
on Liability.
(i) Investor
Indemnified Persons shall not be entitled to assert any claim for
indemnification under Section 8.2(a)(i) until such time as the aggregate
of all indemnifiable Losses that Investor Indemnified Persons may have under
Section 8.2(a)(i) exceed $5,000,000, and then Parent shall be responsible
for all Losses except the first $2,500,000 of such $5,000,000
threshold.
(ii) The
maximum aggregate liability of Parent for indemnification claims under
Section 8.2(a)(i) shall be limited to $15,000,000.
(iii) The
limitations set forth in Section 8.2(b)(i) and (ii) shall not be
applicable to Losses incurred or suffered by Investor Indemnified Persons
as a
result of (A) any breach of, or inaccuracy in, the Specified Representations
or
(B) fraud, intentional misrepresentation or intentional omission by
Parent.
(iv)
The
amount
of Losses for which indemnification is available under this Section 8.2
shall be calculated net of any amounts actually recovered by the Person entitled
to seek indemnification hereunder (the “Indemnified Person”) under
insurance policies with respect to such Losses.
(c) Payment
of Claims. If Parent shall be required to make an indemnification
payment to any Investor Indemnified Person pursuant to this Article 8,
Parent shall satisfy the claim of such Investor Indemnified Person through
a
payment of immediately available funds.
(d) Third
Party Claims.
(i) Notice
of Claim. If any third party notifies an Indemnified Person with
respect to any matter (a “Third Party Claim”) which may give rise to a
claim for indemnification against an Indemnifying Party, then the Indemnified
Person will promptly (and, in any event, within twenty (20) Business Days)
give
written notice thereof to the party required to provide indemnification under
this Section 8.2 (the “Indemnifying Party”);
provided,
that no delay on the part of the Indemnified Person in notifying the
Indemnifying Party will relieve the Indemnifying Person from any obligation
under this Article 8, except to the extent such delay actually and
materially prejudices the Indemnifying Party.
(ii) Assumption
of Defense, etc. The Indemnifying Party will be entitled to
participate in the defense of any Third Party Claim that is the subject of
a
notice given by the Indemnified Person pursuant to Section
8.2(d)(i). In addition, upon written notice to the Indemnified
Person, the Indemnifying Party will have the right to defend the Indemnified
Person against the Third Party Claim with counsel of its choice reasonably
satisfactory to the Indemnified Person. In such event, the
Indemnified Person may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party
Claim. Notwithstanding the foregoing, the Indemnifying Person will
not consent to the entry of any judgment or enter into any compromise or
settlement with respect to the Third Party Claim without the prior written
consent of the Indemnified Person unless such judgment, compromise or settlement
(A) provides for the payment by the Indemnifying Party of money as sole relief
for the claimant and (B) results in the full and general release of all
Indemnified Persons from all liabilities arising or relating to, or in
connection with, the Third Party Claim.
(iii) Indemnified
Party’s Control. If the Indemnifying Party does not deliver the
notice contemplated by Section 8.2(d)(ii) within twenty (20) days after
the Indemnified Party has given notice of the Third Party Claim pursuant
to
Section 8.2(d)(i), the Indemnified Party may defend, and may consent to
the entry of any judgment or enter into any compromise or settlement with
respect to, the Third Party Claim.
(e) Tax
Treatment. The parties will treat any payment received pursuant
to this Section 8.2 as an adjustment to purchase price for Tax and
financial reporting purposes, to the extent permissible under applicable
Legal
Requirements.
Section
8.3 Notices. All
notices or other communications required or permitted under this Agreement
shall
be in writing and shall be delivered personally, by facsimile or sent by
certified, registered or express air mail, postage prepaid, and shall be
deemed
given when so delivered personally, or by facsimile, or if mailed, two (2)
days
after the date of mailing, as follows:
If
to
Parent:
Universal
American Financial Corp.
0
Xxxxxxxxxxxxx Xxxxx
Xxx
Xxxxx, XX 00000-0000
Attention: Xxxx
X. Xxxxxxx, Esq.
Facsimile: (000)
000-0000
with
a
required copy (which shall not constitute notice) to:
Dechert
LLP
00
Xxxxxxxxxxx Xxxxx
Xxx
Xxxx,
XX 00000
Attention: Xxxxxx
Xxxxx, Esq.
Telephone
number: (000) 000-0000
Facsimile
number: (000) 000-0000
If
to
WCAS:
Welsh,
Carson, Xxxxxxxx & Xxxxx
000
Xxxx
Xxxxxx, Xxxxx 0000
Xxx
Xxxx,
XX 00000-0000
Telephone
number: (000) 000-0000
Facsimile
number: (000) 000-0000
Attention: Xxxx
X. Xxxxxxx
with
required copies (which shall not constitute notice) to:
Ropes
& Xxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx,
XX 00000
Telephone
number: (000) 000-0000
Facsimile
number: (000) 000-0000
Attention: Xxxxx
X. Xxxxxxx, Esq. and Xxxxxxxxxxx X. Xxxx, Esq.
-
and-
Weil,
Gotshal & Xxxxxx LLP
000
Xxxxx
Xxxxxx
Xxx
Xxxx,
XX 00000
Telephone
number: (000) 000-0000
Facsimile
number: (000) 000-0000
Attention: Xxxxxxx
Xxxxxx, Esq.
If
to
Xxx:
Xxx
Equity Partners
000
Xxxxx
Xxxxxx
Xxx
Xxxx,
XX 00000
Telephone
number: (000) 000-0000
Facsimile
number: (000) 000-0000
Attention: Xxxx
Xxxxxxx/Xxxxxxxx Xxxxxxxx
with
required copies (which shall not constitute notice) to:
Weil,
Gotshal & Xxxxxx LLP
000
Xxxxx
Xxxxxx
Xxx
Xxxx,
XX 00000
Telephone
number: (000) 000-0000
Facsimile
number: (000) 000-0000
Attention: Xxxxxxx
Xxxxxx, Esq.
If
to
Perry:
Perry
Capital
000
Xxxxx
Xxxxxx
Xxx
Xxxx,
XX 00000
Telephone
number: (000) 000-0000
Facsimile
number: (000) 000-0000
Attention: Xxxxxxx
X. Xxxx
with
required copies (which shall not constitute notice) to:
Cravath,
Swaine & Xxxxx LLP
000
Xxxxxx Xxxxxx
Xxx
Xxxx,
XX 00000-0000
Telephone
number: (000) 000-0000
Facsimile
number: (000) 000-0000
Attention: Xxxx
Xxxxxx, Esq.
-
and -
Weil,
Gotshal & Xxxxxx LLP
000
Xxxxx
Xxxxxx
Xxx
Xxxx,
XX 00000
Telephone
number: (000) 000-0000
Facsimile
number: (000) 000-0000
Attention: Xxxxxxx
Xxxxxx, Esq.
If
to
Union Square:
Union
Square Partners
000
Xxxx
Xxxxxx Xxxxx, 00xx xxxxx
Xxx
Xxxx,
XX 00000
Telephone
number: (000) 000-0000
Facsimile
number: (000) 000-0000
Attention: Xxx
Spass/Xxxx Xxxxxxxx
with
required copies (which shall not constitute notice) to:
Weil,
Gotshal & Xxxxxx LLP
000
Xxxxx
Xxxxxx
Xxx
Xxxx,
XX 00000
Telephone
number: (000) 000-0000
Facsimile
number: (000) 000-0000
Attention: Xxxxxxx
Xxxxxx, Esq.
or
to
such other address as any party hereto shall notify the other parties hereto
(as
provided above) from time to time.
Section
8.4 Exhibits and
Schedules. All exhibits and schedules hereto, or documents
expressly incorporated into this Agreement, are hereby incorporated into
this
Agreement and are hereby made a part hereof as if set out in full in this
Agreement. The inclusion of any information in the Disclosure Schedules will
not
be deemed an admission or acknowledgment, in and of itself and solely by
virtue
of the inclusion of such information in the Disclosure Schedules, that such
information is required to be listed in any Disclosure Schedule or that such
items are material to any party hereto or any of their respective
Subsidiaries. The headings, if any, of the individual sections of
each of the Disclosure Schedules are inserted for convenience only and will
not
be deemed to constitute a part thereof or a part of the
Agreement. The Disclosure Schedules are arranged in sections and
subsections that correspond to the sections and subsections of this Agreement
merely for convenience, and the disclosure of an item in one section or
subsection of the Disclosure Schedules as an exception to a particular covenant,
representation or warranty will be deemed adequately disclosed as an exception
with respect to all other covenants, representations or warranties herein
to the
extent that the relevance of such item to such other covenants, representations
or warranties is reasonably apparent on its face, notwithstanding (x) the
presence or absence in this Agreement of an appropriate reference to the
section
or subsection of the Disclosure Schedules, (y) the presence or absence in
the
Disclosure Schedules of an appropriate reference to the section or subsection
of
this Agreement to which such disclosure relates or (z) an appropriate
cross-reference thereto.
Section
8.5 Time of
the Essence; Computation of Time. Time is of the essence for each
and every provision of this Agreement. Whenever the last day for the
exercise of any privilege or the discharge or any duty hereunder shall fall
upon
a day that is not a Business Day, the party having such privilege or duty
may
exercise such privilege or discharge such duty on the next succeeding day
which
is a regular Business Day.
Section
8.6 Expenses
and Fees. Except as otherwise set forth in this Agreement, if the
transactions provided for in this Agreement are not consummated, each party
hereto shall pay its own expenses incident to this Agreement. If the
transactions provided for in this Agreement are consummated, Parent shall,
in
addition to paying all of its own expenses incident to this Agreement, also
(a)
pay the expenses of the Investors incident to this Agreement (including fees
and
expenses of financial advisors, outside legal counsel and accountants), and
in
addition (b) pay to the Investors the fees separately agreed among the Investors
and Parent.
Section
8.7 Governing
Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the schedules
and
exhibits
hereto
shall be governed by, and construed in accordance with, the laws of the State
of
New York without giving effect to any choice of law or conflict of law rules
or
provisions that would cause the application of the laws of any jurisdiction
other than the State of New York.
Section
8.8 Jurisdiction and Venue; Waiver of
Jury Trial. Each of the parties submits to the exclusive
jurisdiction of any state or federal court sitting in New York, New York,
in any
action or proceeding arising out of or relating to this Agreement, agrees
that
all claims in respect of the action or proceeding may be heard and determined
in
any such court and agrees not to bring any action or proceeding arising out
of
or relating to this Agreement in any other court. Each of the parties
waives any defense of inconvenient forum to the maintenance of any action
or
proceeding so brought and waives any bond, surety or other security that
might
be required of any other party with respect thereto. Each party
agrees that service of summons and complaint or any other process that might
be
served in any action or proceeding may be made on such party by sending or
delivering a copy of the process to the party to be served at the address
of the
party and in the manner provided for the giving of notices in Section
8.3. Nothing in this Section 8.8, however, shall affect
the right of any party to serve legal process in any other manner permitted
by
law. Each party agrees that a final, non-appealable judgment in any
action or proceeding so brought shall be conclusive and may be enforced by
suit
on the judgment or in any other manner provided by law. EACH OF THE PARTIES
HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT.
Section
8.9 Assignment; Successors and
Assigns; No Third Party Rights. Except as otherwise provided
herein, this Agreement may not, without the prior written consent of the
other
parties hereto, be assigned by any party hereto by operation of law or
otherwise, and any attempted assignment shall be null and void; provided
that, without the consent of any other parties hereto, each Investor
may assign its rights hereunder to one or more Affiliates of such
Investor. Notwithstanding the foregoing, no such assignment under the
prior sentence shall relieve the assignor Investor of any of its obligations
hereunder that shall have not been performed timely by the
assignee. Subject to the foregoing, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
heirs,
successors, permitted assigns and legal
representatives. Notwithstanding the foregoing or anything to the
contrary, WCAS shall not assign any of its rights hereunder to Welsh, Carson,
Xxxxxxxx & Xxxxx IX, L.P. Except as set forth in Section
8.2, this Agreement shall be for the sole benefit of the parties to this
Agreement and their respective heirs, successors, permitted assigns and legal
representatives and is not intended, nor shall be construed, to give any
Person,
other than the parties hereto and their respective heirs, successors, permitted
assigns and legal representatives, any legal or equitable right, remedy or
claim
hereunder. Nothing in this Agreement, expressed or implied, is
intended to or shall constitute the parties hereto partners or participants
in a
joint venture.
Section
8.10 Counterparts. This
Agreement may be executed in one or more counterparts for the convenience
of the
parties hereto, each of which shall be deemed an original and all of which
together will constitute one and the same instrument. Delivery of an
executed counterpart of a signature page to this Agreement by facsimile or
other
electronic delivery shall be effective as delivery of a mutually executed
counterpart to this Agreement.
Section
8.11 Titles
and Headings. The titles, captions and table of contents in this
Agreement are for reference purposes only, and shall not in any way define,
limit, extend or describe the scope of this Agreement or otherwise affect
the
meaning or interpretation of this Agreement.
Section
8.12 Entire
Agreement. This Agreement (including the Schedules and Exhibits
attached hereto) and the Confidentiality Agreement, constitute the entire
agreement among the parties with respect to the matters covered hereby and
supersedes all previous written, oral or implied understandings among them
with
respect to such matters.
Section
8.13 Severability. The
invalidity of any portion hereof shall not affect the validity, force or
effect
of the remaining portions hereof. If it is ever held that any
restriction hereunder is too broad to permit enforcement of such restriction
to
its fullest extent, such restriction shall be enforced to the maximum extent
permitted by law.
Section
8.14 No
Strict Construction. Each of the parties hereto acknowledges that
this Agreement has been prepared jointly by the parties hereto, and shall
not be
strictly construed against any party.
Section
8.15 Specific
Performance. Each of the parties acknowledges that the rights of
each party to consummate the transactions contemplated hereby are unique
and
recognize and affirm that in the event of a breach of this Agreement by any
party, money damages may be inadequate and the non-breaching party may have
no
adequate remedy at law. Accordingly, the parties agree that such
non-breaching party shall have the right, in addition to any other rights
and
remedies existing in their favor at law or in equity, to enforce their rights
and the other party’s obligations hereunder by an action or actions for specific
performance, injunctive and/or other equitable relief (without posting of
bond
or other security).
Section
8.16 Failure
or Indulgence not Waiver. No failure or delay on the part of any
party hereto in the exercise of any right hereunder shall impair such right
or
be construed to be waiver of, or acquiescence in, any breach of any
representation, warranty or agreement herein, nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof
or any
other right. No provision of this Agreement may be waived except by
an instrument in writing executed by the party or parties, as applicable,
against whom the waiver is to be effective.
Section
8.17 Amendments. Subject
to applicable law, this Agreement may be amended by the parties hereto at
any
time prior to the Closing. This Agreement (including the provisions
of this Section 8.17) may not be amended or modified except by an
instrument in writing signed on behalf of the parties hereto.
Section
8.18 Nature
of Investors’ Obligations and Rights.
(a) The
obligations of each Investor under this Agreement or any other Transaction
Agreement are several and not joint with the obligations of any other Investor,
and no Investor shall be responsible in any way for the performance of the
obligations of any other Investor under this Agreement or any other Transaction
Agreement. Nothing contained
herein
or
in any other Transaction Agreement, and no action taken by any Investor pursuant
hereto or thereto, shall be deemed to constitute the Investors as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by this
Agreement or the other Transaction Agreements. Each Investor confirms
that it has independently participated in the negotiation of the transactions
contemplated hereby. All rights, powers and remedies provided to the
Investors under this Agreement or otherwise available in respect hereof at
law
or in equity shall be cumulative and not alternative or exclusive, and the
exercise or beginning of the exercise of any thereof by any party shall not
preclude the simultaneous or later exercise of any other rights, powers or
remedies by such party.
(b) No
information made available or provided to an Investor pursuant to any provision
of Article 5 of this Agreement, or otherwise obtained or known to an Investor
other than on account of being expressly disclosed in the Parent Disclosure
Schedule, shall limit or otherwise affect the remedies available to the
Investors, or the representations or warranties of, or the conditions to
the
obligations of, the Investors hereunder.
(c) Notwithstanding
anything to the contrary, in no event shall any Investor’s aggregate liability
under this Agreement exceed an amount equal to the respective purchase price
such Investor may be obligated to pay pursuant to Section
2.1. In addition, notwithstanding anything to the
contrary, in no event shall any Investor be liable for consequential,
incidental, punitive or special damages, including loss of future revenue,
income or profits, diminution of value or loss of business opportunity (provided
that the limitation in this sentence shall not limit Parent’s rights to recover
contract damages from an Investor in connection with a failure by such Investor
to close on the purchase of Convertible Shares in violation of this
Agreement).
(d) This
Agreement may only be enforced against, and any claims or causes of action
that
may be based upon, arise out of or relate to this Agreement, or the negotiation,
execution or performance of this Agreement may only be made against, the
entities that are expressly identified as parties hereto and their respective
successors and assigns, and no past, present or future Affiliate, director,
officer, employee, incorporator, member, manager, partner, stockholder, agent,
attorney or representative of any party hereto shall have any liability for
any
obligations or liabilities of the parties to this Agreement or for any claim
based on, in respect of, or by reason of, the negotiation, execution or
performance of this Agreement or the transactions contemplated
hereby.
* * * * * * *
IN
WITNESS WHEREOF, the parties hereto
have caused this Securities Purchase Agreement to be duly executed as of
the day
and year first above written.
UNIVERSAL AMERICAN FINANCIAL CORP. | |||
|
By:
|
/s/ Xxxxxxx X. Xxxxxxx | |
Name: Xxxxxxx X. Xxxxxxx | |||
Title: CEO | |||
XXX-UNIVERSAL HOLDINGS, LLC | |||
|
By:
|
/s/ Xxxxxx X. Xxxxxxx | |
Name: Xxxxxx X. Xxxxxxx | |||
Title: CFO | |||
WELSH,
CARSON, XXXXXXXX & XXXXX, X, L.P.,
By:
WCAS X ASSOCIATES, LLC, its General Partner
|
|||
|
By:
|
/s/ Xxxx X. Xxxxxxx | |
Name: Xxxx X. Xxxxxxx | |||
Title: Managing Member | |||
UNION
SQUARE UNIVERSAL PARTNERS, L.P.
By:
UNION SQUARE UNIVERSAL GP, LLC, its General Partner
|
|||
|
By:
|
/s/ Xxxx Xxxxxxxx | |
Name: Xxxx Xxxxxxxx | |||
Title: Authorized Signatory | |||
PERRY
PARTNERS, L.P.,
By: PERRY
CORP., its General Partner
|
|||
|
By:
|
/s/ Xxxxxxx X. Xxxx | |
Name: Xxxxxxx X. Xxxx | |||
Title: General Counsel | |||
PERRY
PARTNERS INTERNATIONAL, INC.
By: PERRY
CORP., its Investment Manager
|
|||
|
By:
|
/s/ Xxxxxxx X. Xxxx | |
Name: Xxxxxxx X. Xxxx | |||
Title: General Counsel | |||
PERRY
COMMITMENT FUND, L.P.,
By:
PERRY COMMITMENT ASSOCIATES, LLC,
its General Partner,
By: PERRY
CORP., its Managing Member
|
|||
|
By:
|
/s/ Xxxxxxx X. Xxxx | |
Name: Xxxxxxx X. Xxxx | |||
Title: General Counsel | |||
PERRY
COMMITMENT MASTER FUND, L.P.,
By:
PERRY COMMITMENT ASSOCIATES,
LLC, its General Partner,
By: PERRY
CORP., its Managing Member
|
|||
|
By:
|
/s/ Xxxxxxx X. Xxxx | |
Name: Xxxxxxx X. Xxxx | |||
Title: General Counsel | |||
45