VOTING AND NON-DISPOSITION AGREEMENT
THIS VOTING AND NON-DISPOSITION AGREEMENT, ("Agreement") is made and
entered into as of August 4, 1996, between PACIFICARE HEALTH SYSTEMS, INC., a
Delaware corporation ("PacifiCare"), and the undersigned stockholder
("Stockholder") of FHP INTERNATIONAL CORP., a Delaware corporation ("FHP").
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"), Neptune Merger Corp., a
Delaware corporation and wholly-owned subsidiary of Holdings ("Neptune Sub")
have entered into an Agreement and Plan of Reorganization (the "Reorganization
Agreement") which provides for the mergers of FHP Sub into FHP and Neptune 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 in
each case in the manner set forth in the Reorganization Agreement. The shares
of Class A and Class B Common Stock and Series A Preferred Stock of Holdings are
collectively referred to herein as "Holdings Stock."
B. Stockholder is the 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 common stock and Series A Cumulative
Convertible Preferred Stock of FHP as is indicated on the final page of this
Agreement. Such shares, together with shares listed on the final page of this
Agreement as to which beneficial ownership is disclaimed and voting and
investment control is exercised by others ("Others"), are herein referred to as
the "Shares".
C. PacifiCare desires Stockholder to agree, and in order to induce
PacifiCare to enter into the Reorganization Agreement and agree to the Merger,
Stockholder is willing to agree, not to (and to use his best efforts to cause
Others not to) transfer or otherwise dispose of any of the Shares, or any other
shares of capital stock of the FHP hereafter and prior to the Expiration Date
(as defined in Section 1.1 below) beneficially owned by Stockholder in
accordance with the terms hereof, and to vote (and to use his best efforts to
cause Others to vote) the Shares and any other such shares of capital stock of
FHP 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.
1.1 TRANSFER AND ENCUMBRANCE. Stockholder agrees not to (and to use
his best efforts to cause Others 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
capital stock of FHP that Stockholder purchases or 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
FHP 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 FHP with respect to any of the following, Stockholder shall vote (and use
his best efforts to cause Other to vote) the Shares and any New Shares: (i) 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 the
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 (a) decrease 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"), (b) decrease
the number of shares of Class A Common Stock issuable to any FHP Holder, (c)
change the terms of Sections 1.4(d) of the Reorganization Agreement relating to
the composition of the post-Closing Board of Directors of Holdings; or (d)
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"); and (ii) against approval of any proposal made in
opposition to or competition with consummation of the Merger and against any
merger, consolidation, sale of assets, reorganization or recapitalization with
any party other than with PacifiCare and its affiliates and against any
liquidation or winding up of FHP (each of the foregoing is hereinafter referred
to as an "Opposing Proposal"). Stockholder agrees not to take any actions
contrary to Stockholder's obligations under this Agreement. Stockholder further
agrees to use his best efforts to obtain proxies from all Others within 30 days
after the date hereof appointing PacifiCare's President, Chief Operating
Officer, Chief Financial Officer and Secretary proxies to vote any shares held
by such Other in accordance with the provisions of 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 PacifiCare, 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 PacifiCare 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 FHP's stockholders, and in every written consent in lieu of such a
meeting, or otherwise, in favor of approval of the Merger Proposal and against
any Opposing Proposal. Stockholder retains the right to vote on all matters
other than the Merger Proposal and any Opposing Proposal.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF STOCKHOLDER.
Stockholder hereby represents, warrants and covenants to PacifiCare as follows:
4.1 OWNERSHIP OF SHARES. Stockholder (i) is the beneficial owner of
the shares listed on the final page of this Agreement, which at the date hereof
and 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 capital stock of FHP other than the shares
listed on the final page of this Agreement (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.
4.2 NO PROXY SOLICITATIONS. Stockholder, in his capacity as a
stockholder of FHP and not as a director or officer of FHP will not, and will
not permit any entity under Stockholder's control to: (i) solicit proxies or
become a "participant" in a "solicitation" (as such terms are defined in
Regulation 14A under the Exchange Act) with respect to an Opposing Proposal or
otherwise encourage or assist any party in taking or planning any action that
would compete with, restrain or otherwise serve to interfere with or inhibit
the timely consummation of the Merger in accordance with the terms of the
Reorganization Agreement and the Merger Agreement; (ii) initiate a
stockholders' vote or action by consent of FHP's stockholders with respect to
an Opposing Proposal; or (iii) become a member of a "group" (as such term is
used in Section 13(d) of the Exchange Act) with respect to any voting
securities of FHP with respect to an Opposing Proposal.
5. ADDITIONAL DOCUMENTS. Stockholder and PacifiCare hereby covenant and
agree to execute and deliver any additional documents necessary or desirable,
in the reasonable opinion of PacifiCare 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 PacifiCare 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 PacifiCare upon any such violation,
PacifiCare shall have the right to enforce such covenants and agreements by
specific performance, injunctive relief or by any other means available to
PacifiCare 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 if 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, Xxxxxxxxxx 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 X. 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: to the address set forth below the Stockholder's
signature at the last page hereof.
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 or 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.
PACIFICARE
By /s/ Xxxx Xxxxx
-------------------------------------
President and Chief Executive Officer
STOCKHOLDER:
By /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Stockholder's Address for Notice:
00 Xxxxxxx Xxxxxx - Xxx 0000
-----------------------------------------
Xxxxxxx Xxxxxx, Xxx Xxxx 00000
-----------------------------------------
-----------------------------------------
(Print Address)
(000) 000-0000
-----------------------------------------
(Print Telephone Number)
516) 749-2128
-----------------------------------------
(Print Facsimile Number)
Shares beneficially owned:
SEE EXHIBIT A shares of Common Stock
Shares beneficially owned:
SEE EXHIBIT A shares of Series A
Cumulative Convertible Preferred Stock
EXHIBIT A
XXXXXXX X. XXXXXX, XX.
Beneficial Ownership of FHP Shares
CLASS OF STOCK
Common Stock Beneficially Owned 199,601
Common Stock Beneficially Owned by Others 73,030
Series A Preferred Stock Beneficially Owned 658,669
Series A Preferred Stock Beneficially Owned by Others 83,435
