EXHIBIT 1
PURCHASE AGREEMENT
May 5, 2000
Warburg, Xxxxxx Equity Partners, X.X.
Xxxxxxx, Xxxxxx Netherlands Equity Partners I, X.X.
Xxxxxxx, Xxxxxx Netherlands Equity Partners II, X.X.
Xxxxxxx, Xxxxxx Netherlands Equity Partners III, C.V.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
Principal Health Care, Inc., an Iowa corporation (the "Seller"), hereby
agrees with Warburg, Xxxxxx Equity Partners, L.P., a Delaware limited
partnership, Warburg, Xxxxxx Netherlands Equity Partners I, C.V., a Netherlands
limited partnership, Warburg, Xxxxxx Netherlands Equity Partners II, C.V., a
Netherlands limited partnership, and Warburg, Xxxxxx Netherlands Equity Partners
III, C.V., a Netherlands limited partnership (collectively, the "Purchasers"),
as follows:
1. PURCHASE AND SALE OF SECURITIES.
(a) Subject to the terms and conditions hereof, on the Closing Date, as
defined herein, the Seller shall sell to the Purchasers and the Purchasers shall
purchase from the Seller, the equity securities (the "Securities") listed hereto
on Schedule I hereto of Coventry Health Care, Inc., a Delaware corporation (the
"Company"), for the aggregate amount in cash set forth on Schedule I hereto (the
"Purchase Price"). The Purchase Price is a joint and several obligation of the
Purchasers.
(b) Such sales and purchases shall be effected by the Seller delivering to
the Purchasers duly executed certificates or other instruments evidencing the
Securities to be purchased, in each case with appropriate instruments of
transfer attached (duly endorsed or otherwise in form sufficient for transfer),
against delivery by the Purchasers to the Seller of the Purchase Price. The
Purchase Price shall be paid by wire transfer of immediately available funds to
such account or accounts as the Seller shall designate in writing.
(c) The closing of the purchases and sales referred to above hereto shall
take place on the third business day after the satisfaction or waiver of the
conditions set forth in Sections 5 and 6 hereof (the "Closing Date"), at the
offices of Xxxxxxx Xxxx & Xxxxxxxxx, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, at 10:00 a.m., New York time, or on such other date, and at such other
place and time as the parties hereto shall mutually agree.
2. WARRANTIES AND REPRESENTATIONS OF THE SELLER.
The Seller represents and warrants to each of the Purchasers that:
(a) The Seller is a corporation duly organized and validly existing under
the laws of the State of Iowa.
(b) The Seller has authorized the execution, delivery and performance of
this Agreement, and each of the transactions contemplated hereby. No other
action is necessary to authorize such execution, delivery and performance, and
upon such execution and delivery, this Agreement shall constitute a valid and
binding obligation of the Seller, enforceable against the Seller in accordance
with its terms.
(c) No consent, approval, authorization or order of any court, governmental
agency or body or arbitrator having jurisdiction over the Seller is required for
the execution, delivery or performance by the Seller of its obligations
hereunder, including without limitation the sale of the Securities.
(d) Neither the sale of the Securities nor the performance of the Seller's
obligations hereunder will violate, conflict with, result in a breach of, or
constitute a default (or an event that, with the giving of notice or the lapse
of time, or both, would constitute a default) under (i) the certificate of
incorporation, bylaws or other organizational documents of the Seller, (ii) any
decree, judgment, order, law, treaty, rule, regulation or determination of any
court, governmental agency or body or arbitrator having jurisdiction over the
Seller, as applicable, or any of its assets or properties or (iii) the terms of
any material agreement to which the Seller is a party or to which any of the
Seller's properties are subject.
(e) The Seller has good and marketable title to the Securities. The
Securities are owned by the Seller free and clear of any security interest,
lien, claim or other encumbrance or any restriction on transfer, other than
those imposed by the Securities Act and will be transferred to the Purchasers
free of any Encumbrances.
(f) The sale of the Securities by the Seller is not part of a plan or
scheme to evade the registration requirements of the Securities Act. Neither the
Seller nor any person acting on behalf of the Seller has offered or sold any of
the Securities by any form of general solicitation or general advertising.
3. PURCHASERS REPRESENTATIONS.
Each Purchaser represents and warrants to the Seller that:
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(a) Offering Exemption. Each Purchaser understands that the Securities have
not been registered under the Securities Act, nor qualified under any state
securities laws, and that they are being offered and sold pursuant to an
exemption from such registration and qualification based in part upon the
representations of the Purchasers contained herein.
(b) Knowledge of Offer. Each Purchaser is familiar with the business and
operations of the Company and has been given the opportunity to obtain from the
Company all information that it has requested regarding its business plans and
prospects. Each Purchaser has had full access to all information relating to the
Company including without limitation access to the deliberations of the Board of
Directors of the Company through its affiliate Warburg, Xxxxxx Ventures, L.P., a
Delaware limited partnership. The Seller has no obligation to provide further
information about the Company to the Purchasers in connection with the
transactions contemplated hereby.
(c) Knowledge and Experience; Ability to Bear Economic Risks. Each
Purchaser is an "accredited investor" as such term is defined in Rule 501(a) of
the Securities Act and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the
investment contemplated by this Agreement; each Purchaser is able to bear the
economic risk of its investment in the Company (including a complete loss of its
investment).
(d) Limitations on Disposition. Each Purchaser understands that it must
bear the economic risk of this investment indefinitely unless its Securities are
registered pursuant to the Securities Act or an exemption from such registration
is available, and unless the disposition of such securities is qualified under
applicable state securities laws or an exemption from such qualification is
available. Each Purchaser further understands that there is no assurance that
any exemption from the Securities Act will be available, or, if available, that
such exemption will allow such Purchaser to Transfer any or all of the
Securities, in the amounts, or at the time such Purchaser might propose.
(e) Investment Purpose. Each Purchaser is acquiring the Securities solely
for its own account for investment and not with a view toward the resale,
Transfer, or distribution thereof, nor with any present intention of
distributing the Securities. No other person has any right with respect to or
interest in the Securities to be purchased by each Purchaser, nor has any
Purchaser agreed to give any person any such interest or right in the future.
(f) Capacity. Each Purchaser has full power and legal right to execute and
deliver this Agreement and to perform its obligations hereunder. Each Purchaser
has authorized the execution, delivery and performance of this Agreement, and
each of the transactions contemplated hereby. No other action is necessary to
authorize such execution, delivery and performance, and upon such execution and
delivery, this Agreement shall constitute a valid and
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binding obligation of each Purchaser, on a joint and several basis, enforceable
against such Purchaser in accordance with its terms.
4. COVENANTS OF THE PARTIES.
(a) Securities Act Restrictions. Each Purchaser acknowledges that the
certificates evidencing the Securities will bear a legend reflecting the
restrictions on the transfer of such securities under the Securities Act.
(b) Further Assurances. From and after the Closing Date, the Seller shall
execute all certificates, instruments, documents or agreements and shall take
any other action which it is reasonably requested to execute or take to further
effectuate the transactions contemplated hereby.
(c) Best Efforts. Each of the parties hereto will use commercially
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 consistent with
applicable law to consummate and make effective in the most expeditious manner
practicable the transactions contemplated hereby, including without limitation,
making all required regulatory filings as promptly as practicable after the date
hereof.
5. PURCHASERS' CONDITIONS TO CLOSING.
The obligation of the Purchasers to purchase and pay for the Securities on
the Closing Date shall be subject to the satisfaction or waiver (to the extent
permitted by law), prior thereto or concurrently therewith, of the following
conditions:
(a) Representations and Warranties. The representations and warranties of
the Seller contained in this Agreement shall be true and correct in all material
respects on and as of the Closing Date as though such warranties and
representations were made at and as of such date, except as otherwise affected
by the transactions contemplated hereby.
(b) Compliance with Agreement. The Seller shall have performed and complied
with all agreements, covenants and conditions contained in this Agreement which
are required to be performed or complied with by the Seller prior to or on the
Closing Date.
(c) Injunction. There shall be no effective injunction, writ, preliminary
restraining order or any order of any nature issued by a court of competent
jurisdiction directing that the transactions provided for herein or any of them
not be consummated as herein provided.
(d) Regulatory Approvals and Consents. All applicable waiting periods (and
any extensions thereof) under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, shall have expired or otherwise been terminated without
objection of any of the
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relevant federal authorities and all governmental consents, permits,
authorizations, approvals and waivers which are required to consummate the
transactions contemplated hereby shall have been obtained, including without
limitation all consents or approvals required of any insurance regulator having
jurisdiction over the business or assets of the Company or any of its
subsidiaries.
6. SELLER'S CONDITIONS TO CLOSING.
The obligation of the Seller to sell the Securities to the Purchasers on
the Closing Date shall be subject to the satisfaction or waiver (to the extent
permitted by law), prior thereto or concurrently therewith, of the following
conditions:
(a) Representations and Warranties. The representations and warranties of
each of the Purchasers contained in this Agreement shall be true and correct in
all material respects on and as of the Closing Date as though such warranties
and representations were made at and as of such date, except as otherwise
affected by the transactions contemplated hereby.
(b) Compliance with Agreement. The Purchasers shall have performed and
complied with all agreements, covenants and conditions contained in this
Agreement which are required to be performed or complied with by the Purchasers
prior to or on the Closing Date.
(c) Injunction. There shall be no effective injunction, writ, preliminary
restraining order or any order of any nature issued by a court of competent
jurisdiction directing that the transactions provided for herein or any of them
not be consummated as herein provided.
7. TERMINATION AND ABANDONMENT.
This Agreement may be terminated and the transactions contemplated hereby
may be abandoned at any time before the Closing Date:
(a) by the mutual written consent of the Seller and the Purchasers;
(b) by the Seller or the Purchasers if the other party or parties hereto
fail to comply in any material respect with any of its or their covenants or
agreements contained herein, or breaches its or their representations and
warranties in any material way and such failure or breach, if capable of being
cured, is not cured within 30 days of the receipt of written notice of such
failure or breach from the terminating party;
(c) by the Seller or the Purchasers if a court of competent jurisdiction or
governmental, regulatory or administrative agency or commission shall have
issued an order, decree or ruling or taken any other action (which order, decree
or ruling the parties hereto shall use their best efforts to lift), which
permanently restrains, enjoins or otherwise prohibits the transactions
contemplated by this Agreement; or
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(d) by the Seller or the Purchasers at any time after September 30, 2000;
provided however, that if the Closing Date has not occurred on or before
September 30, 2000 as a result of a material breach of this Agreement, the
breaching party shall not be entitled to terminate this Agreement pursuant to
this Section 7(d).
In the event of termination and abandonment of this Agreement pursuant to
this Section 7, written notice thereof shall forthwith be given to the other
party or parties and this Agreement shall terminate and the transactions
contemplated hereby shall be abandoned, without further action by the Seller or
the Purchasers; provided, that no party shall be relieved of any liability it
may have to any other party as a result of any breach of its obligations
hereunder.
8. INDEMNIFICATION.
(a) The Seller agrees to indemnify and hold harmless each of the
Purchasers, each person, if any, who controls any of the Purchasers within the
meaning of Section 15 of the Securities Act and each officer, director, employee
and agent of each Purchaser and of any such controlling person against any and
all losses, liabilities, claims, damages or expenses whatsoever, as incurred,
arising out of or resulting from any breach or alleged breach or other violation
or alleged violation of any representation, warranty, covenant or undertaking by
the Seller contained in this Agreement, and the Seller will reimburse each
Purchaser for its reasonable legal and other expenses (including the cost of any
investigation and preparation, and including the reasonable fees and expenses of
counsel) incurred in connection therewith.
(b) Each Purchaser jointly and severally agrees to indemnify and hold
harmless the Seller, each person, if any, who controls the Seller within the
meaning of Section 15 of the Securities Act and each officer, director, employee
and agent of the Seller and of any such controlling person against any and all
losses, liabilities, claims, damages or expenses whatsoever, as incurred,
arising out of or resulting from any breach or alleged breach or other violation
or alleged violation of any representation, warranty, covenant or undertaking by
the Purchasers contained in this Agreement, and each Purchaser will reimburse
the Seller for its reasonable legal and other expenses (including the cost of
any investigation and preparation, and including the reasonable fees and
expenses of counsel) incurred in connection therewith.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective agreements,
representations, warranties, indemnities and other statements made by or on
behalf each party hereto pursuant to this Agreement shall remain in full force
and effect, regardless of any investigation made by or on behalf of any party,
and shall survive delivery of any payment for the Securities.
10. INTERPRETATION OF THIS AGREEMENT.
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(a) Terms Defined. As used in this Agreement, the following terms have the
respective meaning set forth below:
person: an individual, partnership, joint-stock company, corporation, trust
or unincorporated organization, and a government or agency or political
subdivision thereof.
Securities Act: the Securities Act of 1933, as amended.
Transfer: any sale, assignment, pledge, hypothecation, or other disposition
or encumbrance.
(b) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such State.
(c) Section Headings. The headings of the sections and subsections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof.
(d) Notices.
(i) All communications under this Agreement shall be in writing and
shall be delivered by hand or facsimile or mailed by overnight courier or
by registered or certified mail, postage prepaid:
(1) if to any of the Purchasers, at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Xxxx Xxxxxxxx (facsimile: (000) 000-0000), or at
such other address or facsimile number as any of the Purchasers may have
furnished the Seller in writing;
(2) if to the Seller, at 000 Xxxx Xxxxxx, Xxx Xxxxxx, Xxxx 00000,
Attention: Xxxxx Xxxxx (facsimile: (000) 000-0000), or at such other
address or facsimile number as they may have furnished in writing to the
Purchasers.
(ii) Any notice so addressed shall be deemed to be given: if delivered
by hand or facsimile, on the date of such delivery; if mailed by courier,
on the first business day following the date of such mailing; and if mailed
by registered or certified mail, on the third business day after the date
of such mailing.
(e) Expenses and Taxes. The Seller will pay, and save the Purchasers
harmless from any and all liabilities (including interest and penalties) with
respect to, or resulting from any delay or failure in paying, stamp and other
taxes (other than income taxes), if any,
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which may be payable or determined to be payable on the execution and delivery
of this Agreement.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties.
(g) Entire Agreement; Amendment and Waiver. This Agreement constitutes the
entire understanding of the parties hereto and supersede all prior understanding
among such parties. This Agreement may be amended, and the observance of any
term of this Agreement may be waived, with (and only with) the written consent
of the Seller and the Purchasers.
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(h) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
Very truly yours,
PRINCIPAL HEALTH CARE, INC.
By: /s/ Xxxxx Xxxxxx
------------------------------
ACCEPTED & AGREED:
WARBURG, XXXXXX EQUITY PARTNERS, L.P.
By: Warburg, Xxxxxx & Co.,
General Partner
By: /s/ Xxxxxxx Xxxxxxx
------------------------------
WARBURG, XXXXXX NETHERLANDS EQUITY PARTNERS I, C.V.
By: Warburg, Xxxxxx & Co.,
General Partner
By: /s/ Xxxxxxx Xxxxxxx
------------------------------
WARBURG, XXXXXX NETHERLANDS EQUITY PARTNERS II, C.V.
By: Warburg, Xxxxxx & Co.,
General Partner
By: /s/ Xxxxxxx Xxxxxxx
------------------------------
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WARBURG, XXXXXX NETHERLANDS EQUITY PARTNERS III, C.V.
By: Warburg, Xxxxxx & Co.,
General Partner
By: /s/ Xxxxxxx Xxxxxxx
------------------------------
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SCHEDULE I
----------------------------------------- --------------------------- -----------------
Name of Purchasers Number of Shares of Purchase Price
Company Common Stock
----------------------------------------- --------------------------- -----------------
Warburg, Xxxxxx Equity 9,450,000 $94,500,000.00
Partners, L.P.
----------------------------------------- ---------------------------------------------
Warburg, Xxxxxx Netherlands 300,000 3,000,000
Equity Partners I, C.V.
----------------------------------------- ---------------------------------------------
Warburg, Xxxxxx Netherlands 200,000 2,000,000
Equity Partners II, C.V.
----------------------------------------- ---------------------------------------------
Warburg, Xxxxxx Netherlands 50,000 500,000
Equity Partners III, C.V.
----------------------------------------- ---------------------------------------------
Total 10,000,000 $100,000,000.00
----------------------------------------- ---------------------------------- ----------
