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EXHIBIT 10.56
EXECUTION COPY
PUT/ CALL AGREEMENT
This Agreement, dated as of September 15, 1999, is by and between UICI,
a Delaware corporation ("UICI") and Onward and Upward, Inc., a Nevada
corporation ("Onward").
WHEREAS, in accordance with the terms of an Assumption Agreement, dated
as of September 15, 1999 (the "Assumption Date"), UICI has agreed to assume and
discharge the obligation of Special Investment Risks, Inc., a Nevada corporation
(the successor by merger to United Group Association, Inc., a Texas corporation)
to deliver to the Plan Trust established under the Agency Matching Total
Ownership Plan I (the "AMTOP-I Plan") and the Agency Matching Total Ownership
Plan II (the "AMTOP-II Plan") an aggregate of 369,174 shares of Common Stock of
UICI (the "TOP Plan Funding Obligation"), at the times and in the amounts as
provided in accordance with the AMTOP-I Plan and the AMTOP-II Plan.
WHEREAS, UICI desires to ensure that the dollar value of the TOP Plan
Funding Obligation does not exceed the amount of $10,129,212 (representing the
market value of 369,174 shares of UICI Common Stock at the Assumption Date),
plus an amount that recognizes an increase in the value of the underlying UICI
Common Stock based upon historic past performance.
WHEREAS, Onward desires to ensure that the dollar value of 369,174
shares of UICI Common Stock that Onward holds is not less than the amount of
$10,129,212 (representing the market value of 369,174 shares of UICI Common
Stock at the Assumption Date), plus an amount that recognizes an increase in the
value of the underlying UICI Common Stock based upon historic past performance.
NOW THEREFORE, for and in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. DEFINITIONS. In this Agreement, the following terms have the
meanings specified or referred to in this Section 1 and shall be equally
applicable to both the singular and plural forms:
"Agreement" shall mean this Put/Call Agreement, dated as of September
15, 1999.
"TOP Plan Funding Obligation" shall have the meaning set forth in the
Recitals hereto
"Effective Date" shall mean September 15, 1999.
"Put/Call Price" at any date of computation shall mean the
then-effective price as set forth below:
DURING THE PERIOD ENDING JULY 31, PUT/CALL PRICE
--------------------------------- --------------
2000 $28.50
2001 $30.25
2002 $32.25
2003 $34.25
2004 $36.25
2005 $38.25
2006 $40.25
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"Share Commitment" at any date shall mean a number of shares of UICI
Common Stock equal to 369,174 reduced by the number of shares of UICI Common
Stock theretofore transferred to UICI pursuant to the Call Right or the Put
Right.
"Term" shall mean the period beginning on the date hereof and ending on
the earlier of July 31, 2006 and such date as the Share Commitment shall be
reduced to zero.
2. UICI CALL RIGHT. On any date during the period commencing on July 1
and ending on July 31 of each year during the Term hereof, commencing July 1,
2000 (each such date a "Call Date"), UICI shall have the right (the "Call
Right") to purchase, and Onward shall have the irrevocable obligation to sell
(the "Call Obligation"), a number of shares of UICI Common Stock as shall be
designated in a written notice delivered to Onward within not less than 48 hours
prior to such Call Date, at a price per share equal to the then-effective
Put/Call Price at the Call Date; provided, however, that the number of shares of
UICI Common Stock that Onward shall be obligated to sell on any Call Date shall
not exceed the lesser of (i) the then-effective Share Commitment or (ii) the
number of shares corresponding to AMTOP Credits (as such term is defined in the
Assumption Agreement) that vest on January 1 of the current call period.
3. ONWARD PUT RIGHT. On any date during the period commencing on July 1
and ending on July 31 of each year during the Term hereof, commencing July 1,
2000 (each such date a "Put Date"), Onward shall have the right (the "Put
Right") to sell, and UICI shall have the irrevocable obligation to purchase (the
"Put Obligation"), a number of shares of UICI Common Stock as shall be
designated in a written notice delivered to UICI within not less than 48 hours
prior to the Put Date, at a price per share equal to the then-effective Put/Call
Price at the Put Date; provided, however, that the number of shares of UICI
Common Stock that UICI shall be obligated to purchase on any Put Date shall not
exceed the then effective Share Commitment.
4. LIENS AND ENCUMBRANCES. Each and every share of UICI Common Stock
subject to the Put Obligation and the Call Obligation shall, upon exercise of
the Put Right or the Call Right, as the case may be, be transferred to UICI by
Onward free and clear of any and all claims, liens, security interests and
charges whatsoever.
5. ESCROW. To secure performance of the Call Obligation, Onward agrees
to deliver to UICI, as escrowee (the "Escrowee"), certificates representing not
less than 369,174 shares of UICI Common Stock, with executed stock powers
attached.
6. REPRESENTATIONS AND WARRANTIES OF ONWARD. Onward hereby represents
and warrants to UICI as follows:
6.1. Onward is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada, and has
full power and authority to own, lease and operate its properties and
assets and to conduct its business as presently conducted, and to enter
into this Agreement and to carry out the transactions contemplated by
this Agreement.
6.2. The execution, delivery and performance by Onward of this
Agreement have been duly authorized by all necessary corporate action,
and this Agreement has been duly executed and delivered by Onward. This
Agreement constitutes the valid and
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binding obligation of Onward legally enforceable against Onward in
accordance with its terms.
6.3. The execution of and performance by Onward of its
obligations under this Agreement will not violate any provision of law
or governmental rule or regulation, and will not conflict with or
result in any breach of any of the terms, conditions or provisions of,
or constitute a default under (i) Onward's Certificate or Articles of
Incorporation, (ii) Onward's by-laws as currently in effect, (iii) any
judgment, decree or order to which SIR is bound or (iv) any agreement,
contract, lease, indenture or other instrument to which SIR is bound.
7. REPRESENTATIONS AND WARRANTIES OF UICI. UICI hereby represents and
warrants to Onward as follows:
7.1. UICI is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and has
full power and authority to own, lease and operate its properties and
assets and to conduct its business as presently conducted, and to enter
into this Agreement and to carry out the transactions contemplated by
this Agreement.
7.2. The execution, delivery and performance by UICI of this
Agreement have been duly authorized by all necessary corporate action,
and this Agreement has been duly executed and delivered by UICI,
subject to approval of the Board of Directors as set forth in Section 9
hereof. This Agreement constitutes the valid and binding obligation of
UICI, legally enforceable against UICI in accordance with its terms.
7.3. The execution of and performance by UICI of its
obligations under this Agreement will not violate any provision of law
or governmental rule or regulation, and will not conflict with or
result in any breach of any of the terms, conditions or provisions of,
or constitute a default under (I) UICI's Certificate of Incorporation,
(ii) UICI's by-laws as currently in effect (the "By-laws"), (iii) any
judgment, decree or order to which UICI is bound or (iv) any agreement,
contract, lease, indenture or other instrument to which UICI is bound.
8. GENERAL PROVISIONS.
8.1. Any notice, request, instruction or other document to be
given hereunder shall be in writing and: (a) delivered personally; (b)
sent by registered or certified United States mail, postage prepaid,
return receipt requested; (c) sent by Federal Express or other
similarly reputable overnight courier; or (d) transmitted by facsimile,
according to the instructions set forth below. Such notices shall be
sent to the following addresses and/or facsimile numbers and shall be
deemed given: (w) if delivered personally, at the time delivered; (x)
if sent by registered or certified United States mail, at the time
deposited in the United States mail; (y) if sent by Federal Express or
other similarly reputable overnight courier, at the time sent, or (z)
if transmitted by facsimile, at the time when receipt is confirmed by
the sending facsimile machine.
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If to Onward, to:
Onward and Upward, Inc.
0000 Xxxxxxxx Xxxx Xxxx
Xxxxx, Xxxxx 00000
Attention: Mr. Xxxx Xxxxxx
With a copy to:
Xx. Xxxxx Xxxxx
Onward and Upward, Inc.
0000 Xxxxxxxx Xxxx Xxxx
Xxxxx, Xxxxx 00000
If to UICI, to:
UICI
0000 XxXxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: Xx. Xxxxxxx X. Xxxx
or to such other address as such party may indicate by a notice
delivered to the other parties hereto in accordance with the provisions
of this Section 8.1.
8.2. This Agreement contains the entire understanding of the
parties hereto with regard to the subject matter contained herein or
therein, and supersedes all prior written or oral agreements,
understandings or letters of intent between or among any of the parties
hereto. This Agreement shall not be amended, modified or supplemented
except by a written instrument signed by an authorized representative
of each of the parties hereto. 8.3. The rights of each party under this
Agreement shall not be assignable without the written consent of each
of the other parties.
8.4 This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors and permitted
assigns. Nothing in this Agreement, expressed or implied, is intended
or shall be construed to confer upon any Person other than the parties
and successors and assigns permitted by this Section 8.4 any right,
remedy or claim under or by reason of this Agreement.
8.5. Headings to sections herein are inserted for convenience
of reference only and are not intended to be part of or to affect the
meaning or interpretation of this Agreement.
8.6. This Agreement has been mutually prepared, negotiated and
drafted by each of the parties hereto and thereto. The parties agree
that the terms of this Agreement shall be construed and interpreted
against each party in the same manner and that no such provisions shall
be construed or interpreted more strictly against one party on the
assumption that an instrument is to be construed more strictly against
the party which drafted the agreement.
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8.7. Any term or provision of this Agreement may be waived, or
the time for its performance may be extended, pursuant to a written
action by the party or parties entitled to the benefit thereof. Any
such waiver shall be validly and sufficiently authorized for purposes
of this Agreement if, as to any party, it is authorized in writing by
an authorized representative of such party. The failure of any party
hereto to enforce at any time any provision of this Agreement shall not
be construed to be a waiver of such provision, nor in any way to affect
the validity of this Agreement or any part hereof or the right of any
party thereafter to enforce each and every such provision. No waiver of
any breach of this Agreement shall be held to constitute a waiver of
any other or subsequent breach.
8.8. Regardless of whether the transactions provided for in
this Agreement are consummated, each party hereto will pay its own
costs and expenses incident to the negotiation, preparation and
performance of this Agreement, including the fees, expenses and
disbursements of its counsel, financial advisors, and accountants.
8.9. Wherever possible, each provision hereof shall be
interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained
herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such provision shall be ineffective to
the extent, but only to the extent, of such invalidity, illegality or
unenforceability without invalidating the remainder of such invalid,
illegal or unenforceable provision or provisions or any other
provisions hereof, unless such a construction would be unreasonable.
8.10. This Agreement may be executed in one or more
counterparts, each of which shall be considered an original instrument,
and shall become binding when one or more counterparts have been signed
by each of the parties hereto and delivered to each of Onward and UICI.
8.11. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Texas, without giving
effect to any choice of laws provisions which may direct the
application of the laws of another jurisdiction.
8.12. Each of the parties hereby: (a) agrees that any action
arising out of or related to this Agreement or any of the transactions
contemplated hereby or thereby shall be filed and shall proceed
exclusively in the federal and state courts located in Dallas, Texas;
(b) irrevocably consents to jurisdiction in such courts; and (c) waives
any and all objections to jurisdiction and venue in such courts that
they may have under the federal or state laws of the United States.
8.13. The provisions of this Agreement are intended for the
sole benefit of the parties hereto and shall not inure to the benefit
of any other Person, other than successors and permitted assigns of
Onward and UICI, whether as third party or otherwise.
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9. BOARD OF DIRECTOR APPROVAL; DISCLOSURE. Onward acknowledges that the
terms and conditions of this Agreement, in accordance with policies and
procedures adopted by the Board of Directors of UICI, are subject to approval of
the Board Of Directors of UICI and may be subject to disclosure in accordance
with the rules and regulations adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
UICI
By:
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Name:
------------------------------------
Title:
-----------------------------------
ONWARD AND UPWARD, INC.
By:
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Name:
------------------------------------
Title:
-----------------------------------
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July 25, 2000
VIA OVERNIGHT MAIL
Onward & Upward, Inc.
0000 Xxxxxxxx Xxxx Xxxx
Xxxxx, Xxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxx
Dear Xxxx:
Reference is made to the Put/Call Agreement, dated as of September 15,
1999 (the "Agreement"), by and between UICI and Onward & Upward, Inc.
("Onward"). Unless otherwise defined herein, capitalized terms used in this
letter shall have the respective meanings assigned to them in the Agreement.
Following up on our recent conversations, and for and in consideration
of the various accommodations being extended to UICI by and through Onward and
the Xxxxxx family, this will acknowledge the agreement of UICI, subject to the
approval of the UICI Board of Directors as set forth in the succeeding
paragraph, to extend the initial period during which Onward may exercise its Put
Right to and including August 31, 2000.
Onward and UICI acknowledge and agree that the transaction contemplated
by this Agreement constitutes a "material transaction" with a "related party"
subject to the approval of a majority of the "disinterested outside directors"
of UICI in accordance with policies and procedures adopted by the UICI Board of
Directors. Accordingly, UICI's obligations hereunder shall be expressly subject
to the approval of a majority of the "disinterested outside directors" of the
Board of Directors, which approval will be sought at a meeting of the UICI Board
of
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Onward & Upward, Inc.
July 25, 2000
Page 2
Directors to be held on August 2, 2000.
We appreciate your consideration in this matter.
Very truly yours,
UICI
By:
----------------------------------------
Xxxxx X. Xxxx
Executive Vice President
and General Counsel
GWR: gwr
Cc: Xx. Xxxxxxx X. Xxxx
Agreed and acknowledged this __ day of July, 2000
Onward & Upward, Inc.
By:
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August 15, 2000
VIA OVERNIGHT MAIL
Onward & Upward, Inc.
0000 Xxxxxxxx Xxxx Xxxx
Xxxxx, Xxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxx
Dear Xxxx:
Reference is made to the Put/Call Agreement, dated as of September 15,
1999 (the "Agreement"), by and between UICI and Onward & Upward, Inc.
("Onward"). Unless otherwise defined herein, capitalized terms used in this
letter shall have the respective meanings assigned to them in the Agreement.
In accordance with the terms of the letter, dated July 25, 2000, from
UICI to Onward (the "July Letter"), UICI conditionally agreed to extend the
initial period during which Onward may exercise its Put Right to and including
August 31, 2000. Please be advised that, as approved by the outside
disinterested directors of UICI at a meeting of the Board of Directors of UICI
held on August 2, 2000, and in consideration of the various accommodations being
extended to UICI by and through Onward and the Xxxxxx family, UICI hereby agrees
to extend the initial period during which Onward may exercise its Put Right to
and including October 31, 2000.
The terms of this letter will supercede in all respects the terms of
the July Letter.
We appreciate your consideration in this matter.
Very truly yours,
UICI
By:
-----------------------------------------
Xxxxx X. Xxxx
Executive Vice President
and General Counsel
GWR: gwr
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Onward & Upward, Inc.
August 15, 2000
Page 2
Cc: Xx. Xxxxxxx X. Xxxx
Agreed and acknowledged this __ day of August, 2000
Onward & Upward, Inc.
By:
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October 16, 2000
VIA OVERNIGHT MAIL
Onward & Upward, Inc.
0000 Xxxxxxxx Xxxx Xxxx
Xxxxx, Xxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxx
Dear Xxxx:
Reference is made to the Put/Call Agreement, dated as of September 15,
1999 (as amended, the "Agreement"), by and between UICI and Onward & Upward,
Inc. ("Onward"). Unless otherwise defined herein, capitalized terms used in this
letter shall have the respective meanings assigned to them in the Agreement.
Following up on our recent conversations, and for and in consideration
of the various accommodations being extended to UICI by and through Onward and
the Xxxxxx family, this will acknowledge the agreement of UICI, subject to the
approval of the UICI Board of Directors as set forth in the succeeding
paragraph, to extend the initial period during which Onward may exercise its Put
Right to and including December 31, 2000.
Onward and UICI acknowledge and agree that the extension contemplated
by this letter constitutes a "material transaction" with a "related party"
subject to the approval of a majority of the "disinterested outside directors"
of UICI in accordance with policies and procedures adopted by the UICI Board of
Directors. Accordingly, UICI's obligations hereunder shall be expressly subject
to the approval of a majority of the "disinterested outside directors" of the
Board of Directors, which approval will be sought at a meeting of the UICI Board
of
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Onward & Upward, Inc.
October 16, 2000
Page 2
Directors to be held on November 1, 2000.
Kindly acknowledge your receipt and agreement to the foregoing by
signing and returning to the undersigned the enclosed copy of this letter.
We appreciate your consideration in this matter.
Very truly yours,
UICI
By:
--------------------------------------------
Xxxxx X. Xxxx
Executive Vice President
and General Counsel
GWR: gwr
Cc: Xx. Xxxxxxx X. Xxxx
Agreed and acknowledged this __ day of October, 2000
Onward & Upward, Inc.
By:
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February 7, 2001
VIA OVERNIGHT MAIL
Onward & Upward, Inc.
0000 Xxxxxxxx Xxxx Xxxx
Xxxxx, Xxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxx
Dear Xxxx:
Reference is made to the Put/Call Agreement, dated as of September 15,
1999 (the "Agreement"), by and between UICI and Onward & Upward, Inc.
("Onward"). Unless otherwise defined herein, capitalized terms used in this
letter shall have the respective meanings assigned to them in the Agreement.
In accordance with the terms of the letter, dated August 15, 2000, from
UICI to Onward (the "August Letter"), UICI conditionally agreed to extend the
initial period during which Onward may exercise its Put Right to and including
October 31, 2000. Please be advised that, as approved by the outside
disinterested directors of UICI at a meeting of the Board of Directors of UICI
held on November 1, 2000, and in consideration of the various accommodations
extended to UICI by and through Onward and the Xxxxxx family, this will confirm
that UICI has agreed to further extend the initial period during which Onward
may exercise its Put Right to and including March 31, 2001.
The terms of this letter will supercede in all respects the terms of
the August Letter.
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Onward & Upward, Inc.
February 7, 2001
Page 2
I would appreciate your acknowledgement of the foregoing by signing and
returning to the undersigned the enclosed copy of this letter.
Very truly yours,
UICI
By:
--------------------------------
Xxxxx X. Xxxx
Executive Vice President
and General Counsel
GWR: gwr
Cc: Xx. Xxxxxxx X. Xxxx
Xx. Xxxxxx Xxxxxxxx
Agreed and acknowledged this day of February 2001
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Onward & Upward, Inc.
By:
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