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Exhibit 3.6
STOCK RESTRICTION AND REGISTRATION RIGHTS AGREEMENT
THIS STOCK RESTRICTION AND REGISTRATION RIGHTS AGREEMENT (the
"Agreement") is dated May 31, 1999, by and between AMERIGROUP Corporation, a
Delaware corporation (the "Company"), and Prudential Health Care Plan, Inc., a
Texas corporation ("Prudential"). (The Company and Prudential are sometimes
hereinafter referred to collectively as the "Parties" and each individually as a
"Party".)
RECITALS
A. Prudential and the Company are parties to an Asset Purchase
Agreement dated December 23, 1998, as amended (the "MD Purchase Agreement"), and
an Asset Purchase Agreement dated February 11, 1999, as amended (the "DC
Purchase Agreement" and, together with the MD Purchase Agreement, the Purchase
Agreements) pursuant to which the Company's wholly-owned subsidiary, AMERIGROUP
Maryland, Inc., a Managed Care Organization ("AMERIGROUP Sub") is purchasing
from Prudential, contemporaneously with the execution and delivery of this
Agreement, Prudential's Maryland Medicaid Business (as defined in the MD
Purchase Agreement) and Prudential's District of Columbia Medicaid Business (as
defined in the DC Purchase Agreement).
B. In consideration for the purchase and sale, AMERIGROUP Sub is
delivering to Prudential, subject to adjustment, certain shares of stock in the
Company defined as the "Purchase Shares" in the MD Purchase Agreement.
C. It is an express condition to each Party's obligation to consummate
the transactions contemplated by the Purchase Agreement that the Parties enter
into this Agreement to delineate certain rights, privileges, restrictions and
limitations with respect to the Purchase Shares and the Adjustment Shares (as
each is defined in the MD Purchase Agreement) issuable to Prudential under the
MD Purchase Agreement and any other shares of the Company's capital stock
issuable to Prudential under the DC Purchase Agreement (collectively, the
"Shares").
NOW, THEREFORE, in consideration of the premises, and the mutual
promises set forth in this Agreement and in the MD Purchase Agreement and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
1. GENERAL
1.1 ADDITIONAL DEFINITIONS. As used in this Agreement the following
terms shall have the following respective meanings:
"AFFILIATE" means any entity that directly or indirectly, through one
or more intermediaries, controls, or is controlled by, or is under common
control with, Prudential.
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"COMPETING BUSINESS" means a business that at the time of the transfer
or disposition has members in Medicaid health plans that compete with any of the
managed Medicaid health plans then operated or managed by the Company or its
subsidiaries, provided, the members in the competing plans of such transferee
constitute not less than thirty percent (30%) of the aggregate number of members
in all of the transferee's managed health care plans.
"INITIAL PUBLIC OFFERING" means the effective date of an S-1
registration statement (or any comparable successor form) with respect to the
firm underwriting of a public offering of equity securities of the Company
registered under Securities Act resulting in at least $30,000,000 in net
proceeds to the Company.
"PERMITTED TRANSFEREE" means any Affiliate of Prudential or any other
person that (i) at the time of the transfer does not own, operate, manage or
control a Competing Business and (ii) assumes all of Prudential's obligations
under the Purchase Agreements. For purposes of this definition, "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person (including corporations,
partnerships and similar entities), whether through ownership of voting
securities, or otherwise.
"REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement or document.
"REGISTRABLE SECURITIES" means (i) Common Stock of the Company issued
or issuable upon conversion, exchange or exercise, as applicable, of the Shares;
and (ii) any Common Stock of the Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, or in exchange for or in
replacement of, such above-described securities. Notwithstanding the foregoing,
Registrable Securities shall not include any securities (i) sold by a person to
the public either pursuant to a registration statement or Rule 144, or (ii) sold
in a private transaction in which the transferor's rights under Article 0 of
this Agreement are not assigned.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the Company
in complying with Section 0 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, reasonable fees and disbursements of a single special
counsel to all holders of registration rights participating in the applicable
offering (provided that such expenses do not exceed $30,000 without the consent
of the Company), blue sky fees and expenses and the expense of any special
audits incident to or required by any such registration (but excluding the
compensation of regular employees of the Company which shall be paid in any
event by the Company).
"SECOND RESTATED INVESTOR RIGHTS AGREEMENT" means that certain Second
Restated Investor Rights Agreement dated July 28, 1998 among the Company and
certain of its shareholders, as may be amended from time to time.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
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"SELLING EXPENSES" shall mean all underwriting discounts, selling
commissions and stock transfer taxes, if any, applicable to the sale.
"SEC" or "COMMISSION" means the Securities and Exchange Commission.
"SUPERIOR REGISTRABLE SECURITIES" means the "Registrable Securities" as
defined in the Second Restated Investors Rights Agreement.
2. REGISTRATION; RESTRICTIONS ON TRANSFER; RIGHT OF FIRST OFFER
2.1 RESTRICTIONS ON TRANSFER.
2.1.1 Until the later of (1) the termination of that certain
Escrow Agreement of even date herewith among the Company, AMERIGROUP Maryland,
Inc., Prudential, The Prudential Insurance Company of America, and Crestar Bank,
and (2) the consummation of the Company's Initial Public Offering, Prudential
agrees not to make any disposition of all or any portion of its Shares or
Registrable Securities unless (a) such disposition is a disposition of all, but
not less than all, of such Shares or Registrable Securities to a Permitted
Transferee (which includes The Prudential Insurance Company of America) that has
agreed in writing for the benefit of the Company to be bound by this Agreement
(and references herein to "Prudential" shall be interpreted in the alternative
to mean such transferee), and (b) in the case of transfers to Permitted
Transferees that are not Affiliates, Prudential shall have complied with Section
2.1.5 below. After the later of (1) and (2) in the preceding sentence,
Prudential may dispose of all or any part of its Shares or Registrable
Securities to any person. Prudential acknowledges that at all times,
notwithstanding anything to the contrary set forth herein, it shall not make a
disposition of all or any portion of its Shares or Registrable Securities
unless:
(i) There is then in effect a registration statement
under the Securities Act covering such proposed disposition and such disposition
is made in accordance with such registration statement; or
(ii) (A) Prudential shall have notified the Company
of the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (B)
obtained the advice of its counsel that such disposition will not require
registration of such shares under the Securities Act.
2.1.2 Each certificate representing Shares or Registrable
Securities shall (unless otherwise permitted by the provisions of this
Agreement) be stamped or otherwise imprinted with a legend substantially similar
to the following (in addition to any legend required under applicable state
securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE
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OF REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH
ACT.
In addition, until the consummation of the Company's Initial
Public Offering, each certificate representing Shares or Registrable Securities
be stamped or otherwise imprinted with the following legend:
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE
TERMS OF A STOCK RESTRICTION AND REGISTRATION RIGHTS
AGREEMENT DATED MAY ___, 1999 BETWEEN THE REGISTERED
HOLDER AND THE COMPANY AND MAY NOT BE OFFERED, SOLD,
OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED EXCEPT IN STRICT COMPLIANCE WITH THE
TERMS OF SUCH AGREEMENT.
2.1.3 After the Company's Initial Public Offering, the Company
shall be obligated to reissue promptly unlegended certificates at the request of
any holder thereof if the holder shall have obtained an opinion of counsel
(which counsel may be counsel to the Company) reasonably acceptable to the
Company to the effect that the securities proposed to be disposed of may
lawfully be so disposed of without registration, qualification or legend.
2.1.4 After the Company's Initial Public Offering, any legend
endorsed on an instrument pursuant to applicable state securities laws and the
stop-transfer instructions with respect to such securities shall be removed upon
receipt by the Company of an order of the appropriate blue sky authority
authorizing such removal.
2.1.5 In the event Prudential determines to make a disposition
of all or any part of its Shares or Registrable Securities to a Permitted
Transferee that is not an Affiliate, Prudential will prior to making any offers
of sale give notice in writing of such intent to the Company (the "First Offer
Notice") together with a list of any potential purchasers, if any, and a written
offer containing the price and terms upon which Prudential will sell its Shares
or Registrable Securities, as applicable, to the Company. The Company shall have
the right (which right the Company may assign), exercisable within thirty (30)
days from receipt of the First Offer Notice, to accept Prudential's terms in
which case the transaction shall be closed on the terms set forth in the First
Offer Notice within thirty (30) days, subject to applicable regulatory
requirements, of acceptance. In the event the Company does not accept
Prudential's offer, Prudential may sell the subject Shares or Registrable
Securities for a period of six (6) months after such rejection, provided the
sale is (a) consummated on terms no less advantageous to Prudential than those
contained in the First Offer Notice and (b) to a Permitted Transferee. In the
event Prudential does not sell its Shares or Registrable Securities prior to the
expiration of the six-month period, the foregoing procedure shall be repeated
prior to any disposition by Prudential to a Permitted Transferee that is not an
Affiliate.
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2.2 PIGGYBACK REGISTRATIONS. The Company shall notify Prudential in
writing at least fifteen (15) days prior to the filing of any registration
statement under the Securities Act for purposes of a public offering of
securities of the Company (including, but not limited to registration statements
relating to secondary offerings of the Securities of the Company, but excluding
registration statements relating to employee benefit plans, business
acquisitions, and corporate reorganizations) and will afford Prudential an
opportunity to include in such registration statement all or part of such
Registrable Securities held by Prudential. If desiring to include in any such
registration statement all or any part of its Registrable Securities, Prudential
shall, within ten (10) days after the above-described notice from the Company,
so notify the Company in writing. Such notice shall state the intended method of
disposition of the Registrable Securities by Prudential. If Prudential decides
not to include all of its Registrable Securities in any registration statement
thereafter filed by the Company, Prudential shall nevertheless continue to have
the right to include any Registrable Securities in any subsequent registration
statement or registration statements as may be filed by the Company with respect
to offerings of its securities, all upon the terms and conditions set forth
herein.
2.2.1 UNDERWRITING. If the registration statement under which
the Company gives notice under this Section 0 is for an underwritten offering,
the Company shall so advise Prudential. In such event, Prudential's right to be
included in a registration pursuant to this Section 0 shall be conditioned upon
Prudential's participation in such underwriting and the inclusion of
Prudential's Registrable Securities in the underwriting to the extent provided
herein. If proposing to distribute its Registrable Securities through such
underwriting, Prudential shall enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting.
Notwithstanding any other provision of the Agreement, if the underwriter
determines in good faith that marketing factors make advisable a limitation of
the number of shares to be underwritten, the number of shares that may be
included in the underwriting shall be allocated, first, to the Company; second,
to the holders of any registrable securities entitled to registration rights
pursuant to the Second Restated Investor Rights Agreement; and third, to
Prudential and any shareholder of the Company holding similar registration
rights on a pro rata basis; and fourth, to any other shareholder of the Company
on a pro rata basis. No such reduction shall reduce the securities being offered
by the Company for its own account to be included in the registration and
underwriting.
2.2.2 RIGHT TO TERMINATE REGISTRATION. The Company shall have
the right to terminate or withdraw any registration initiated by it under this
Section 0 prior to the effectiveness of such registration whether or not
Prudential has elected to include securities in such registration.
2.3 EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Section 0 shall be borne by the Company. All Selling Expenses incurred in
connection with any registrations hereunder, shall be borne by the holders of
the securities so registered pro rata on the basis of the number of shares so
registered.
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2.4 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities, the Company shall use its best
efforts, as expeditiously as reasonably possible, to:
2.4.1 Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
holders of a majority of the Superior Registrable Securities registered
thereunder (or in the event no holder of Superior Registrable Securities
participates in such registration, at Prudential's request if at least 1,000,000
of its Registrable Securities are being included in the registration), keep such
registration statement effective for up to one hundred eighty (180) days or, if
earlier, until the holder or holders of such Superior Registrable Securities
have completed the distribution related thereto.
2.4.2 Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
2.4.3 Furnish to Prudential such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
2.4.4 Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
holders of the Superior Registrable Securities (or in the event no holder of
Superior Registrable Securities participates in such registration, at
Prudential's request if at least 1,000,000 of its Registrable Securities are
being included in the registration) provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions.
2.4.5 In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. If
participating in such underwriting, Prudential shall also enter into and perform
its obligations under such an agreement.
2.4.6 Notify Prudential at any time when a prospectus relating
to the registration of the Registrable Securities is required to be delivered
under the Securities Act of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
2.4.7 Furnish, at the request of a majority of the holders of
the Superior Registrable Securities participating in the registration (or in the
event no holder of Superior
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Registrable Securities participates in such registration, at Prudential's
request if at least 1,000,000 of its Registrable Securities are being included
in the registration), on the date that the registrable securities are delivered
to the underwriters for sale, if such securities are being sold through
underwriters, or, if such securities are not being sold through underwriters, on
the date that the registration statement with respect to such securities becomes
effective, (i) an opinion, dated as of such date, of the counsel representing
the Company for the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public offering and
reasonably satisfactory to a majority in interest of the holders of the Superior
Registrable Securities requesting registration (or in the event no holder of
Superior Registrable Securities participates in such registration, reasonably
satisfactory to Prudential if at least 1,000,000 of its Registrable Securities
are being included in the registration), addressed to the underwriters, if any,
and to the holders of the Superior Registrable Securities and Prudential
requesting registration of the registrable securities and (ii) a letter dated as
of such date, from the independent certified public accountants of the Company,
in form and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering and reasonably
satisfactory to a majority in interest of the holders of the Superior
Registrable Securities requesting registration (or in the event no holder of
Superior Registrable Securities participates in such registration, reasonably
satisfactory to Prudential if at least 1,000,000 of its Registrable Securities
are being included in the registration), addressed to the underwriters, if any,
and if permitted by applicable accounting standards, to the holders (including
Prudential) requesting registration of registrable securities.
2.5 TERMINATION OF REGISTRATION RIGHTS. All registration rights granted
under this Article 0 shall terminate and be of no further force and effect five
(5) years after the closing of the Company's Initial Public Offering.
2.6 DELAY OF REGISTRATION; FURNISHING INFORMATION.
2.6.1 Prudential shall not have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as the result
of any controversy that might arise with respect to the interpretation or
implementation of this Article 0.
2.6.2 It shall be a condition precedent to the obligations of
the Company to take any action pursuant to Section 0 that Prudential shall
furnish to the Company such information regarding itself, the Registrable
Securities it holds, and the intended method of disposition of such securities
as shall be required to effect the registration of the Registrable Securities.
2.7 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Sections 0:
2.7.1 To the extent permitted by law, the Company will
indemnify and hold harmless Prudential, each of its directors, each of its
officers, any underwriter (as defined in the Securities Act) for Prudential and
each person, if any, who controls Prudential or such underwriter within the
meaning of the Securities Act or the Securities Exchange Act of 1934, as amended
(the "1934 Act"), against any losses, claims, damages or liabilities (joint or
several) to which they may become subject under the Securities Act, the 1934 Act
or other federal or state
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law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation") by the Company: (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the 1934 Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the 1934 Act or any state securities law in connection
with the offering covered by such registration statement; and the Company will
reimburse Prudential, its partners, officers or directors, underwriter or
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided however, that the indemnity agreement contained in
this Section 0 shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished for use in connection with such registration by Prudential
or its partners, officers, directors, underwriter or controlling person.
2.7.2 To the extent permitted by law, Prudential will
indemnify and hold harmless the Company, each of its directors, each of its
officers, each person, if any, who controls the Company within the meaning of
the Securities Act, any underwriter and any other shareholder selling securities
under such registration statement or any of such other shareholder's partners,
directors or officers or any person who controls such shareholder, against any
losses, claims, damages or liabilities (joint or several) to which the Company
or any such director, officer, controlling person, underwriter or other
shareholder, or partner, director, officer or controlling person of such other
shareholder may become subject under the Securities Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by Prudential
under an instrument duly executed by Prudential for use in connection with such
registration; and Prudential will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, controlling
person, underwriter or other shareholder, or partner, officer, director or
controlling person of such other shareholder in connection with investigating or
defending any such loss, claim, damage, liability or action if it is judicially
determined that there was such a Violation; provided, however, that the
indemnity agreement contained in this Section 0 shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of Prudential (which consent shall
not be unreasonably withheld or delayed); provided further, that in no event
shall any indemnity under this Section 0 exceed the gross proceeds from the
offering received by Prudential.
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2.7.3 Promptly after receipt by an indemnified party under
this Section 0 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 0, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 0, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 0.
2.7.4 If the indemnification provided for in this Section 0 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any losses, claims, damages or liabilities referred to
herein, the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the Violation(s) that resulted in such
loss, claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided, that in no event shall any contribution by
Prudential hereunder exceed the proceeds from the offering received by
Prudential.
2.7.5 The foregoing indemnity agreements of the Company and
Prudential are subject to the condition that, insofar as they relate to any
Violation made in a preliminary prospectus but eliminated or remedied in the
amended prospectus on file with the SEC at the time the registration statement
in question becomes effective or the amended prospectus filed with the SEC
pursuant to SEC Rule 424(b) (the "Final Prospectus"), such indemnity agreement
shall not inure to the benefit of any person if a copy of the Final Prospectus
was furnished to the indemnified party and was not furnished to the person
asserting the loss, liability, claim or damage at or prior to the time such
action is required by the Securities Act.
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2.7.6 The obligations of the Company and Holders under this
Section 0 shall survive the completion of any offering of Registrable Securities
pursuant to a registration statement or otherwise.
2.8 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company
to register Registrable Securities pursuant to this Article 0 may be assigned by
Prudential (a) before an Initial Public Offering, to a Permitted Transferee, or
(b) after an Initial Public Offering, to any person that acquires at least
1,000,000 (as adjusted for splits, combinations, etc.) of Prudential's Shares;
provided, in each case the assignee agrees in writing to be subject to all
restrictions set forth in this Agreement and the Company is notified of the name
and address of the assignee (references to "Prudential" herein shall be
interpreted in the alternative to include such permitted assignees).
2.9 "MARKET STAND-OFF" AGREEMENT. If requested by the Company or a
representative of the underwriters of Common Stock (or other securities) of the
Company, Prudential shall not, except to the extent otherwise required by the
applicable insurance laws of the State of New Jersey, sell or otherwise transfer
or dispose of any Common Stock (or other securities) of the Company held by
Prudential (other than those included in the registration) for a period
specified by the representative of the underwriters, not to exceed one hundred
eighty (180) days following the effective date of a registration statement of
the Company filed under the Securities Act (the "Effective Date"), provided that
such agreement shall apply only to the Company's Initial Offering (as defined in
the Second Restated Investors Rights Agreement, as amended). The obligations
described in this Section 2.9 shall not apply to a registration relating solely
to employee benefit plans on Form S-1 or Form S-8 or similar forms that may be
promulgated in the future, or a registration relating solely to a Commission
Rule 145 transaction on Form S-4 or similar forms that may be promulgated in the
future. The Company may impose stop-transfer instructions with respect to the
shares of Common Stock (or other securities) subject to the foregoing
restriction until the end of said one hundred eighty (180) day period.
2.10 RULE 144 REPORTING. With a view to making available to Prudential
the benefits of certain rules and regulations of the SEC which may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use its best efforts to:
2.10.1 Make and keep public information available, as those
terms are understood and defined in SEC Rule 144 or any similar or analogous
rule promulgated under the Securities Act, at all times after the effective date
of the Initial Public Offering;
2.10.2 File with the SEC, in a timely manner, all reports and
other documents required of the Company under the Securities Act and the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
2.10.3 So long as Prudential owns a Registrable Securities,
furnish to Prudential forthwith upon request: a written statement by the Company
as to its compliance with the reporting requirements of said Rule 144 of the
Securities Act, and of the Exchange Act (at any time after it has become subject
to such reporting requirements); a copy of the most recent annual or quarterly
report of the Company; and such other reports and documents as Prudential may
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reasonably request in availing itself of any rule or regulation of the SEC
allowing it to sell any such securities without registration.
3. COVENANTS OF THE COMPANY
3.1 BASIC FINANCIAL INFORMATION AND REPORTING.
3.1.1 Each year, the Company will furnish Prudential a
consolidated balance sheet of the Company, as at the end of the preceding fiscal
year, and a consolidated statement of income and a consolidated statement of
cash flows of the Company, for such preceding year, all prepared in accordance
with generally accepted accounting principles consistently applied and setting
forth in each case in comparative form the figures for the previous fiscal year,
all in reasonable detail. Such financial statements shall be accompanied by a
report and opinion thereon by independent public accountants of national
standing selected by the Company's Board of Directors.
3.1.2 Each month, the Company will furnish Prudential an
unaudited consolidated balance sheet of the Company as of the end of the
preceding month, and an unaudited consolidated statement of income and an
unaudited consolidated statement of cash flows of the Company for such preceding
month.
3.1.3 The statements required referenced in this Section 0
shall be transmitted to Prudential contemporaneously with their transmission to
any of the Company's other shareholders who are entitled to receive such
statements. The foregoing notwithstanding, if the Company's Board of Directors
determines in good faith (or, in the case of a Restricted Transferee, defined
below, determines in its sole and absolute discretion) that the Company is in
competition with Prudential (or the Restricted Transferee, as applicable) and
that the dissemination of information to Prudential (or the Restricted
Transferee) pursuant to this Section 0 could be detrimental to the Company, the
Company shall not be obligated to deliver such information to Prudential (or the
Restricted Transferee, as applicable). Prudential acknowledges that the
unaudited statements may not be prepared in accordance with generally accepted
accounting principles, GAAP, or contain all footnotes required by GAAP.
3.1.4 The rights of Prudential under this Section 0 may be
assigned to a Permitted Transferee.
3.2 CONFIDENTIALITY OF RECORDS.
3.2.1 Prudential agrees not to use Confidential Information
(as hereinafter defined) of the Company for any purpose except to evaluate and
monitor its equity investment in the Company. Except as permitted under
subsection 0 below, Prudential shall undertake to treat such Confidential
Information in a manner consistent with the treatment of its own information of
such proprietary nature and agrees that it shall protect the confidentiality of
the Confidential Information in the same manner which it protects its own
confidential information. Each transferee of Prudential who received
Confidential Information shall agree to be bound by such provisions. For
purposes of this Section, "Confidential Information": means any information,
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technical data, or know-how, including, but not limited to, the Company's
research, products, software, services, development, inventions, processes,
designs, drawings, engineering, marketing, or finances, disclosed by the Company
to Prudential in writing or disclosed orally with a prompt written confirmation
that such information is Confidential Information.
3.2.2 Confidential Information does not include information,
technical data or know-how which (i) is in Prudential's possession at the time
of disclosure as shown by Prudential's files and records immediately prior to
the time of disclosure; (ii) before or after it has been disclosed to
Prudential, it is part of the public knowledge or literature, not as a result of
any action or inaction of Prudential; (iii) is disclosed to Prudential on a
non-confidential basis by a third party having a legal right to make such
disclosure; or (iv) is approved for release by written authorization of the
Company. The provisions of this Section shall not apply (i) to the extent that
Prudential is required to disclose Confidential Information pursuant to any law,
statute, rule or regulation or any order of any court or jurisdiction process or
(with written notice to the Company) pursuant to any direction, request or
requirement (whether or not having the force of law but if not having the force
of law being of a type with which institutional investors in the relevant
jurisdiction are accustomed to comply) of any self-regulating organization or
any governmental, fiscal, monetary or other authority; (ii) to the disclosure of
Confidential Information to Prudential's employees, counsel, accountants or
other professional advisors to the extent necessary for the performance of their
duties; (iv) to the extent that Prudential needs to disclose Confidential
Information for the protection of any of Prudential's rights or interest against
the Company, whether under this Agreement or otherwise; or (v) to the disclosure
of Confidential Information to a Permitted Transferee.
3.3 TERMINATION OF COVENANTS. All covenants of the Company contained in
Article 0 of this Agreement (except for those set forth in Section 0) shall
expire and terminate upon the earlier of (i) the Company's Initial Public
Offering or (ii) the date the Company first becomes subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended.
4. LIMITATIONS ON RIGHTS HELD BY CERTAIN PERMITTED TRANSFEREES.
Notwithstanding anything to the contrary set forth herein, in the event
Prudential transfers its Shares or Registrable Securities to a Permitted
Transferee that, but for the member threshold set forth in the definition of a
Competing Business, would have a Competing Business (such Permitted Transferee,
a "Restricted Transferee"), Prudential agrees (and, upon accepting the transfer
of the Shares or Registrable Securities, the Restricted Transferee shall be
deemed to agree) that immediately prior to effecting the transfer, Prudential
shall enter into a voting agreement in favor of the Company, containing an
irrevocable proxy coupled with an interest, which agreement shall provide that
if, prior to the Initial Public Offering, the holder of the Shares or
Registrable Securities acquires any additional voting securities from a
shareholder other than Prudential (the "After-Acquired Securities"), the Company
shall have the holder's proxy to vote, in its discretion, the Shares or
Registrable Securities which equal, on a voting power basis, the After-Acquired
Shares.
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5. MISCELLANEOUS.
5.1 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Delaware as applied to agreements among Delaware
residents entered into and to be performed entirely within Delaware.
5.2 SURVIVAL. All statements as to factual matters contained in any
certificate or other instrument delivered by or on behalf of the Company
pursuant hereto in connection with the transactions contemplated hereby shall be
deemed to be representations and warranties by the Company hereunder solely as
of the date of such certificate or instrument.
5.3 SUCCESSORS AND ASSIGNS; INTERPRETATION. Except as otherwise
expressly provided herein, the provisions hereof shall inure to the benefit of,
and be binding upon, the successors and assigns of the parties hereto and shall
inure to the benefit of and be enforceable by each Permitted Transferee and such
transferee shall be deemed "Prudential" for purposes of interpreting this
Agreement except, in the case of a Restricted Transferee, where the context
requires interpreting the terms hereof with respect to a Restricted Transferee.
5.4 SEPARABILITY. In case any provision of the Agreement shall be
invalid, illegal, or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
5.5 AMENDMENT AND WAIVER. Except as otherwise expressly provided, this
Agreement may be amended or modified only upon the written consent of the
Company and Prudential.
5.6 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to Prudential, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right, power or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of any
similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent or approval of any kind or character on
Prudential's part of any breach, default or noncompliance under the Agreement or
any waiver on Prudential's part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not
alternative.
5.7 NOTICES. Unless otherwise specified herein, all notices, requests
and other communications to any Party shall be in writing (including telexes,
telecopies, facsimile transmissions, and similar writings) and shall be given to
such Party at its address or telecopier number set forth below or such other
address or telecopier number as such Party may hereafter specify for that
purpose by notice to the other Parties.
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If to Prudential:
Prudential Health Care Plan, Inc.
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, CEO
Telecopier: (000) 000-0000
With a Copy to:
Xxxxx Xxxxx, Esquire
The Prudential Insurance Company of America
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Telecopier: (000) 000-0000
If to the Company:
AMERIGROUP Corporation
Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. XxXxxxxx, CEO
Xxxxxxx X. Xxxxxxx, Esquire,
Senior Vice President
and General Counsel
Telecopier: (000) 000-0000
With a Copy to:
Xxxxxx X. Xxxxxxx, Esquire
Xxxxxxx & Savage, P.C.
NationsBank Center
Xxxxxxx, Xxxxxxxx 00000
Telecopier: (000) 000-0000
Each such notice, request or other communication shall be effective (a)
if given by telecopier, when such telecommunication is transmitted and
confirmation of receipt obtained, (b) if given by mail, upon receipt, or (c) if
given by any other means, when delivered at the address specified in this
Section.
5.8 ATTORNEYS' FEES. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party its reasonable fees and
expenses of attorneys and accountants in connection therewith.
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5.9 TITLES AND SUBTITLES. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
5.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Stock
Restriction and Registration Rights Agreement as of the date set forth in the
first paragraph hereof.
AMERIGROUP CORPORATION
By:
Name:
Title:
PRUDENTIAL HEALTH CARE PLAN, INC.
By:
Name:
Title:
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