VOTING AND NON-DISPOSITION AGREEMENT
THIS VOTING AND NON-DISPOSITION AGREEMENT, ("Agreement") is made and
entered into as of August 4, 1996, between FHP INTERNATIONAL CORP., a
Delaware corporation ("FHP"), and the undersigned stockholder ("Stockholder")
of PACIFICARE HEALTH SYSTEMS, INC., a Delaware Corporation ("PacifiCare").
RECITALS
A. Concurrently with the execution of this Agreement, PacifiCare, FHP,
N-T Holdings, Inc., a Delaware corporation and a wholly-owned subsidiary of
PacifiCare ("Holdings"), Tree Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of Holdings ("FHP Sub"), and Neptune Merger Corp., a
Delaware corporation and wholly owned subsidiary of Holdings ("PacifiCare
Sub"), have entered into an Agreement and Plan of Reorganization (the
"Reorganization Agreement") which provides for the mergers of FHP Sub into
FHP and PacifiCare Sub into PacifiCare (the "Merger"). Pursuant to the
Merger, shares of Common Stock and Series A Cumulative Convertible Preferred
Stock of FHP will be converted into cash and Class A and Class B common stock
and Series A Convertible Preferred stock of Holdings and shares of Pacificare
Class A and Class B common stock shall be converted into Class A and Class B
common stock of Holdings (collectively, "Holdings Stock") in each case in the
manner set forth in the Reorganization Agreement.
B. Stockholder is the record holder and beneficial owner (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of such number of shares of the outstanding Class A Common
Stock of PacifiCare as is indicated on the final page of this Agreement (the
"Shares").
C. FHP desires Stockholder to agree, and in order to induce FHP to enter
into the Reorganization Agreement and agree to the Merger, Stockholder is
willing to agree, not to transfer or otherwise dispose of any of the Shares,
or any other shares of capital stock of PacifiCare acquired hereafter and
prior to the Expiration Date (as defined in Section 1.1 below) in accordance
with the terms hereof, and to vote the Shares and any other such shares of
capital stock of PacifiCare so as to facilitate consummation of the Merger.
NOW, THEREFORE, in consideration of the foregoing the parties agree as
follows:
1. AGREEMENT TO RETAIN SHARES.
1. TRANSFER AND ENCUMBRANCE. Stockholder agrees not to transfer,
sell, exchange, or otherwise dispose of any of the Shares, or any New Shares
(as defined in Section 1.2 below), or to make any offer or agreement relating
thereto, at any time prior to the Expiration Date. As used herein the term
"Expiration Date" shall mean the earlier to occur of (i) such date and time
as the Merger shall become effective in accordance with the terms and
provisions of the Reorganization Agreement or the Reorganization Agreement
shall earlier terminate and (ii) April 30, 1997.
1.2 ADDITIONAL PURCHASES. Stockholder agrees that any shares of
Class A common stock of PacifiCare that Stockholder purchases of with respect
to which Stockholder otherwise acquires beneficial ownership after the date
of this Agreement and prior to the Expiration Date ("New Shares") shall be
subject to the terms and conditions of this Agreement to the same extent as
if they constituted Shares.
2. AGREEMENT TO VOTE SHARES. At every meeting of the stockholders of
PacifiCare called with respect to any of the following, and at every
adjournment thereof, and on every action or approval by written consent of
the stockholders of PacifiCare with respect to any of the following,
Stockholder shall vote the Shares and any New Shares in favor of the adoption
and approval of the Reorganization Agreement and the Merger and any matter
that could reasonably be expected to facilitate the consummation of the
Merger not inconsistent with the terms of Reorganization Agreement, PROVIDED
that the terms of the Reorganization Agreement in effect on the date hereof
have not been amended or modified without the prior written consent of the
undersigned, if the effect of such amendment or modification is to (i)
increase the consideration paid to any holder of the capital stock of FHP (or
any holder of an option or right to purchase any such capital stock)
(collectively, a "FHP Holder"), (ii) increase the maximum number of shares of
Class A Common Stock which can be issued to FHP stockholders pursuant to the
Reorganization Agreement; or (iii) change any other term thereof in a manner
that would materially and adversely affect Stockholder (the Reorganization
Agreement, as it may be amended in accordance with its terms and the
foregoing, the Merger and all related matters being the "Merger Proposal").
Notwithstanding the foregoing, the Stockholder shall not be required to
comply with this section if: (a) during the period ending on the date the
Xxxx-Xxxxx-Xxxxxx antitrust review period is terminated or expires, pursuant
to a pending or promulgated order, decree, ruling or other binding
determination of a court or regulatory agency (an "Order"), the Stockholder
would be required to take any action or be forbidden from taking any action
as a result of the Merger, the effect of which could reasonably be expected
to materially and adversely affect the business operations of the
Stockholders by changing its tax-exempt status as a non-profit corporation
(provided that, the Stockholder has first used reasonable efforts to oppose
such Order or to accommodate such order in a manner that could not reasonably
be expected to have such material and adverse effect on its tax status) or
(b) the Stockholder's voting of such Shares or New Shares or delivering of
such written consent is forbidden by an Order or other applicable law. The
Stockholder is not aware of any presently pending or threatened Orders.
Stockholder agrees not to take any actions contrary to Stockholder's
obligations under this Agreement.
3. IRREVOCABLE PROXY. Stockholder hereby irrevocably (to the extent
provided in Section 212 of the Delaware General Corporation Law) appoints the
President, Chief Operating Officer, Secretary and the Chief Financial Officer
of FHP, and each of them, the attorneys and proxies of the undersigned, with
full power of substitution and resubstitution, to the full extent of the
undersigned's voting rights with respect to the Shares and any New Shares.
Upon the execution hereof, all prior proxies given by the undersigned with
respect to the Shares are hereby revoked and no subsequent proxies will be
given with respect to the Shares or the New Shares. This proxy is irrevocable
(to the extent provided in Section 212 of the Delaware General Corporation
Law) and is granted in consideration of FHP entering into the Reorganization
Agreement. The attorneys and proxies named above are empowered at any time
prior to the Expiration Date to exercise all voting and other related rights
(including, without
limitation, the power to execute and deliver written consents with respect to
the Shares) of the undersigned at every annual, special or adjourned meeting
of PacifiCare's stockholders, and in every written consent in lieu of such a
meeting, or otherwise, in favor of approval of the Merger Proposal.
Stockholder retains the right to vote on all matters other than the Merger
Proposal.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF STOCKHOLDER.
Stockholder hereby represents, warrants and covenants to FHP that Stockholder
(i) is the beneficial owner of the Shares, which at the date hereof and,
except as permitted under Section 1.1 at all times up until the Expiration
Date will be free and clear of any liens, claims, options, charges or other
encumbrances; (ii) does not beneficially own any shares of voting stock of
PacifiCare other than the Shares (excluding shares as to which Stockholder
currently disclaims beneficial ownership in accordance with applicable law);
and (iii) has full power and authority to make, enter into and carry out the
terms of this Agreement.
5. ADDITIONAL DOCUMENTS. Stockholder and FHP hereby covenant and agree
to execute and deliver any additional documents necessary or desirable, in
the reasonable opinion of FHP or Stockholder, as the case may be, to carry
out the intent of this Agreement.
6. TERMINATION. This Agreement shall terminate and shall have no
further force or effect as of the Expiration Date.
7. MISCELLANEOUS.
7.1 SEVERABILITY. If any provision of this Agreement or any part of
any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (i) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to
the fullest possible extent, (ii) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (iii)
such invalidity or enforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or
the validity or enforceability of any other provision of this Agreement. Each
provision of this Agreement is separable from every other provision of this
Agreement, and each part of each provision of this Agreement is separable
from every other part of such provision.
7.2 BINDING EFFECT AND ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but,
except as otherwise specifically provided herein, neither this Agreement nor
any of the rights, interests or obligations of the parties hereto may be
assigned by either of the parties without prior written consent of the other.
7.3 AMENDMENTS AND MODIFICATION. This Agreement may not be
modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto.
7.4 SPECIFIC PERFORMANCE; INJUNCTIVE RELIEF. The parties hereto
acknowledge that FHP will be irreparably harmed and that there will be no
adequate remedy at law for a violation of any of the covenants or agreement
of Stockholder set forth herein. Therefore, it is agreed that, in addition to
any other remedies that may be available to FHP upon any such violation, FHP
shall have the right to enforce such covenants and agreements by specific
performance, injunctive relief or by any other means available to FHP at law
or in equity.
7.5 NOTICES. All notices and other communications pursuant to this
Agreement shall be in writing and shall be deemed to be sufficient if
contained in a written instrument and shall be deemed given in delivered
personally, telecopied, sent by nationally-recognized, overnight courier or
mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
To PacifiCare:
PacifiCare Health Systems, Inc.
0000 Xxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: President
Telephone (000) 000-0000
Fax: (000) 000-0000
with copies to:
Konowiecki & Rank
First Interstate World Center
000 Xxxx 0xx Xxxxxx
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxxxx Xxxxxxxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
and
Xxxxxx Godward Xxxxxx Xxxxxxxxx & Xxxxx
Five Palo Alto Square
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
To Stockholder:
UniHealth
0000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
O'Melveny & Xxxxxx LLP
000 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxxxx X. XxXxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
To FHP:
FHP International Corp.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx Xxxxxx, XX 00000-0000
Attention: President
Telephone: (000) 000-0000
Fax: (000) 000-0000
All such notices and other communications shall be deemed to have been
received (i) in the case of personal delivery, on the date of such delivery,
(ii) in the case of a telecopy, when the party receiving such telecopy shall
have confirmed receipt of the communication, (iii) in the case of delivery by
nationally-recognized, overnight courier, on the business day following
dispatch and (iv) in the case of mailing, on the fifth business day following
such mailing.
7.6 APPLICABLE LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware,
as applied to contracts entered into and to be performed entirely within
Delaware.
7.7 ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties in respect of the subject matter hereof, and
supersedes all prior negotiations and understandings between the parties with
respect to such subject matter.
7.8 COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, and all
of which shall constitute one and the same instrument.
7.9 TITLES. The titles of the Sections of this Agreement are
included for convenience of reference only and shall have no effect on the
construction of meaning of this Agreement.
7.10. ATTORNEYS' FEES. In any action at law or suit in equity to
enforce this Agreement or the rights of any of the parties hereunder, the
prevailing party in such action or suit shall be entitled to receive a
reasonable sum for its attorneys' fees and all other reasonable costs and
expenses incurred in such action or suit.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the date and year first above written.
FHP INTERNATIONAL CORP.
By: /s/ Xxxxxxxx X. Xxxxx
Name: Xxxxxxxx W. Price, III
Its: President and Chief Executive Officer
STOCKHOLDER:
UNIHEALTH
By: /s/ Xxxxx Xxxx
Xxxxx Xxxx
Its: Chairman of the Special Committee
Shares beneficially owned:
5,909,500 shares of Class A Common Stock
