COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (this "Agreement"), made this 6th day
of September, 2002, between Mid Atlantic Medical Services, Inc., a Delaware
corporation (the "Seller") and The Bank of New York, not in its individual or
corporate capacity, but solely in its capacity as trustee (the "Trustee") of the
Stock Compensation Trust (the "Trust") (the Trust is hereinafter sometimes
referred to as the "Purchaser") under a trust agreement between the Seller and
the Trustee dated August 26, 1996, as most recently amended and restated as of
August 4, 2000 (the "Trust Agreement").
W I T N E S S E T H:
WHEREAS, as contemplated by the Trust Agreement, the Purchaser is to
purchase from the Seller, and the Seller is to sell to the Purchaser, shares of
the Seller's common stock, $0.01 par value (the "Common Stock"), as more
specifically provided herein;
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
contained herein, and subject to and on the terms and conditions herein set
forth, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 Purchase and Sale. Subject to the terms and conditions set forth
herein, the Seller will sell to the Purchaser, and the Purchaser will purchase
from the Seller, at the Closing (as hereinafter defined), two million
(2,000,000) shares of Common Stock at $34.95 per share which is the Fair Market
Value (as defined in the Trust) of the Common Stock on the last full trading day
prior to the Closing. The shares of Common Stock to be purchased by the
Purchaser and sold by the Seller at the Closing are referred to in this
Agreement as the "Common Shares." In consideration for the Common Shares, the
Purchaser will deliver to the Seller cash in the amount of $20,000, representing
the par value of the Common Stock, and an allonge to the Replacement Promissory
Note dated December 20, 1996, as amended by Allonge dated January 11, 1999,
Allonge dated August 20, 1999, Allonge dated August 4, 2000, and Allonge dated
July 11, 2001 previously delivered by the Purchaser to the Seller in the
principal amount of $145,594,696.75 (the "Note") in the form of Exhibit A
attached hereto.
1.2 Closing. The closing of the sale and purchase of the Common Shares
hereunder (the "Closing"), will be held at the offices of the Seller on
September 6, 2002 or at such other time, date and place as agreed to by the
parties.
1.3 Delivery and Payment. At the Closing, the Seller will deliver to the
Purchaser a certificate representing the Common Shares, which certificate shall
be registered in the name of the Trustee, or the name of its nominee, against
payment by the Purchaser to the Seller of the aggregate purchase price therefor.
Notwithstanding the foregoing, the Seller may accomplish the transfer of shares
to the Trustee by book entry, in which event a cross receipt shall be executed
by the parties. The Seller will pay all stamp and other transfer taxes, if any,
which may be payable in respect of the sale and delivery of the Common Shares.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Purchaser as follows:
2.1 Corporate Existence and Authority. The Seller (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware; (ii) has all requisite corporate power to execute, deliver and perform
this Agreement; and (iii) has taken all necessary corporation action to
authorize the execution, delivery and performance of this Agreement.
2.2 No Conflict. The execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated hereby will not, conflict with
or constitute a default under (i) the Seller's certificate of incorporation or
by-laws, (ii) any agreement, indenture or other instrument to which the Seller
is a party or by which the Seller or its assets may be bound or (iii) any law,
regulation, order, arbitration, award, judgment or decree applicable to the
Seller.
2.3 Validity. This Agreement has been duly executed and delivered by the
Seller and is a valid and binding agreement of the Seller enforceable against
the Seller in accordance with its terms, except as the enforceability thereof
may be limited by any applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other laws affecting the enforcement of
creditors' rights generally, and by general principles of equity.
2.4 The Common Shares. The Common Shares have been duly authorized and are
(or when issued as contemplated hereby will be) validly issued and constitute
fully-paid and non-assessable shares of Common Stock, $0.01 par value, of the
Seller. No stockholder of the Seller has any preemptive or other subscription
right to acquire any shares of Common Stock. The Seller will convey to the
Purchaser, on the date of Closing, good and valid title to the Common Shares
free and clear of any liens, claims, security interests and encumbrances.
2.5 Litigation. There are no actions, suits, proceedings or arbitrations or
investigations pending, or to the Seller's best knowledge, threatened in any
court or before any governmental agency or instrumentality or arbitration panel
or otherwise against or by the Seller which seek to or could restrain, prohibit,
rescind or declare unlawful, or result in substantial damages in respect of this
Agreement or the performance hereof by the Seller (including, without
limitation, the delivery of the Common Shares).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller as follows:
3.1 Authority; Validity. The Purchaser has full power and authority to
execute and deliver this Agreement and the Note as Trustee and to consummate the
transactions contemplated hereby. The Note has been duly executed by the Trustee
on behalf of the Trust and, upon the execution and delivery by the Trustee on
behalf of the Trust, the Note will be a valid and binding agreement of the
Purchaser enforceable in accordance with its terms, except as the enforceability
thereof may be limited by any applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other laws affecting the enforcement of
creditors' rights generally, and by general principles of equity.
ARTICLE IV
RESTRICTIONS ON DISPOSITION OF THE COMMON SHARES
4.1 Restricted Securities. The Purchaser acknowledges that the Purchaser is
acquiring the Common Shares pursuant to a transaction exempt from registration
under the 1933 Act. The Purchaser represents, warrants and agrees that all
Common Shares acquired by the Purchaser pursuant to this Agreement are being
acquired for investment without any intention of making a distribution thereof,
or of making any sale or other disposition thereof which would be in violation
of the 1933 Act or any applicable state securities law, and that the Purchaser
will not dispose of any of the Common Shares except that the Trustee will, from
time to time, convey a portion of the Common Shares to the participants in the
Plans (as that term is defined in the Trust Agreement) to satisfy the
obligations of the Seller thereunder, and except upon termination of the Trust
to the extent that the Trust then holds any Common Shares, all in compliance
with all provisions of applicable federal and state law regulating the issuance,
sale and distribution of securities.
4.2 Legend. Until such time as the Common Shares are registered pursuant to
the provisions of the 1933 Act, any certificate or certificates representing the
Common Shares delivered pursuant to Section 1.3, will bear a legend in
substantially the following form:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended, and may not be sold, transferred or
otherwise disposed of unless they have first been registered under such Act or
unless an exemption from registration is available."
The Seller may place stop transfer orders against the registration or
transfer of any shares evidenced by such a certificate or certificates until
such time as the requirements of the foregoing are satisfied.
ARTICLE V
CONDITIONS TO CLOSING
5.1 Conditions to Obligations of the Purchaser. The obligation of the
Purchaser to purchase the Common Shares is subject to the satisfaction of the
following conditions on the date of Closing:
(a) The representations and warranties of the Seller set forth in
Article II hereof shall be true and correct; and if the Closing shall occur
on a date other than the date of this Agreement, the Purchaser shall have
been furnished with a certificate, dated the date of Closing, to such
effect, signed by an authorized officer of the Seller; and
(b) All permits, approvals, authorizations and consents of third
parties necessary for the consummation of the transactions herein shall
have been obtained, and no order of any court or administrative agency
shall be in effect which restrains or prohibits the transactions
contemplated by this Agreement, and no suit, action or other proceeding by
any governmental body or other person shall have been instituted which
questions the validity or legality of the transactions contemplated by this
Agreement.
5.2 Conditions to Obligations of the Seller. The obligation of the Seller
to issue, sell and deliver the Common Shares to the Purchaser is subject to the
satisfaction of the following conditions on the date of Closing:
(a) The representations and warranties of the Purchaser set forth in
Article III hereof shall be true and correct; and if the Closing shall
occur on a date other than the date of this Agreement, the Seller shall
have been furnished with a certificate dated the date of Closing, to such
effect, signed by an authorized office of the Trustee; and
(b) No order of any court or administrative agency shall be in effect
which restrains or prohibits the transactions contemplated by this
Agreement, and no suit, action or other proceeding by any governmental body
or other person shall have been instituted which questions the validity or
legality of the transactions contemplated by this Agreement.
ARTICLE VI
MISCELLANEOUS
6.1 Expenses. The Seller shall pay all of its expenses, and it shall pay
the Purchaser's expenses, in connection with the authorization, preparation,
execution and performance of this Agreement, including without limitation the
reasonable fees and expenses of the Trustee, its agents, representatives,
counsel, financial advisors and consultants.
6.2 Survival of Seller's Representations and Warranties. All
representations and warranties made by the Seller to the Purchaser in this
Agreement shall survive the Closing.
6.3 Notices. All notices, requests or other communications required or
permitted to be delivered hereunder shall be in writing, delivered by registered
or certified mail, return receipt requested, as follows:
(a) To the Seller:
Xxxxxx Xxxxxx, Associate Senior
Executive Vice President and
General Counsel
Mid Atlantic Medical Services, Inc.
0 Xxxx Xxxxx
Xxxxxxxxx, XX 00000
(b) To the Purchaser:
Xxxxxxxx Xxxxx
The Bank of New York
Xxx Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Any party hereto may from time to time, by written notice given as aforesaid,
designate any other address to which notices, requests or other communications
addressed to it shall be sent.
6.4 Specific Performance. The parties hereto acknowledge that damages would
be an inadequate remedy for any breach of the provisions of this Agreement and
agree that the obligations of the parties hereunder shall be specifically
enforceable, and neither party will take any action to impede the other from
seeking to enforce such rights of specific performance.
6.5 Successors and Assigns; Integration; Assignability. This Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
parties hereto, and their respective legal representatives, successors and
assigns. This Agreement (a) constitutes, together with the Note, the Trust
Agreement, and any other written agreements between the Purchaser and the Seller
executed and delivered on the date hereof, the entire agreement between the
parties hereto and supersedes all other prior agreements and understandings,
both written and oral, among the parties, with respect to the subject matter
hereof; (b) shall not confer upon any person other than the parties hereto any
rights or remedies hereunder; and (c) shall not be assignable by operation of
law or otherwise, except that the Trustee may assign all its rights hereunder to
any corporation or other institution exercising trust powers in connection with
any such institution assuming the duties of a trustee under the Trust.
6.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of New York.
6.7 Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement.
6.8 Amendment and Waiver. No amendment or waiver of any provision of this
Agreement or consent to departure therefrom shall be effective unless in writing
and signed by the Purchaser and the Seller.
6.9 Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if the signatures thereto were upon one
instrument.
6.10 Certain Limitations. The execution and delivery of this Agreement and
the performance by the Trustee of this Agreement and under the terms of the
Trust have been or will be, effected by the Trustee in its capacity as Trustee.
Nothing in this Agreement shall be interpreted to increase, decrease or modify
in any manner any liability of the Trustee to the Seller or to any trustee,
representative or other claimant by right of the Seller resulting from the
Trustee's performance of its duties under the constituent instruments of the
Trust, and no personal liability shall be asserted or enforceable against said
entity by reason of any of the covenants, statements or representations
contained in this Agreement.
6.11 Incorporation. The terms and conditions of the Trust Agreement
relating to the nature of the responsibilities of the Trustee and the
indemnification of the Trustee by the Seller are incorporated herein by
reference and made applicable to this Agreement.
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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement on
the date and year first above written.
MID ATLANTIC MEDICAL SERVICES, INC.
By: /s/ Xxxxxx X. Xxxx
__________________________________
Title: Senior Executive Vice President and
Chief Financial Officer
_________________________________
THE BANK OF NEW YORK in its capacity as
trustee of the Mid Atlantic Medical Services, Inc.
Stock Compensation Trust
By: /s/ Xxxxxxxx Xxxxx
__________________________________
Title: Vice President
__________________________________
EXHIBIT A
Allonge
