COMMON STOCK PURCHASE AGREEMENT
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THIS COMMON STOCK PURCHASE AGREEMENT (this "Agreement"),
made this 26rd day of August, 1996 between Mid Atlantic Medical
Services, Inc., a Delaware corporation (the "Seller") and The Bank of
New York, not in its individual or corporate capacity, but solely in its
capacity as trustee (the "Trustee") of the Stock Compensation Trust (the
"Trust") (the Trust is hereinafter sometimes referred to as the
"Purchaser") under a trust agreement between the Seller and the Trustee
dated August 26, 1996 (the "Trust Agreement").
W I T N E S S E T H:
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WHEREAS, as contemplated by the Trust Agreement, the
Purchaser is to purchase from the Seller, and the Seller is to sell to
the Purchaser, shares of the Seller's common stock, $0.01 par value (the
"Common Stock"), all as more specifically provided herein;
NOW, THEREFORE, in consideration of the mutual covenants
and undertakings contained herein, and subject to and on the terms and
conditions herein set forth, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 PURCHASE AND SALE. Subject to the terms and
conditions set forth herein, the Seller will sell to the Purchaser, and
the Purchaser will purchase from the Seller, at the Closing (as
hereinafter defined), twenty million (20,000,000) shares of Common Stock
at $14.25 per share which is the Fair Market Value (as defined in the
Trust) of the Common Stock on the last full trading day prior to the
Closing. The shares of Common Stock to be purchased by the Purchaser
and sold by the Seller at the Closing are referred to in this Agreement
as the "Common Shares." In consideration for the Common Shares, the
Purchaser will deliver to the Seller cash in the amount of $200,000,
representng the par value of the Common Stock and a note in the form of
Schedule 1.1 to this Agreement in the principal amount of $284,800,000
(the "Note").
1.2 CLOSING. The closing of the sale and purchase of the
Common Shares hereunder (the "Closing"), will be held at the offices of
the Seller on August 26, 1996 or at such other time, date and place as
agreed to by the parties.
1.3 DELIVERY AND PAYMENT. At the Closing, the Seller will
deliver to the Purchaser a certificate representing the Common Shares,
which certificate shall be registered in the name of the Trustee, or the
name of its nominee, against payment by the Purchaser to the Seller of
the aggregate purchase price therefor. Notwithstanding the foregoing,
the Seller may accomplish the transfer of shares to the Trustee by book
entry, in which event a cross receipt shall be executed by the parties.
The Seller will pay all stamp and other transfer taxes, if any, which
may be payable in respect of the sale and delivery of the Common Shares.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Purchaser as
follows:
2.1 CORPORATE EXISTENCE AND AUTHORITY. The Seller (i) is
a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware; (ii) has all requisite
corporate power to execute, deliver and perform this Agreement; and
(iii) has taken all necessary corporation action to authorize the
execution, delivery and performance of this Agreement.
2.2 NO CONFLICT. The execution and delivery of this
Agreement does not, and the consummation of the transactions
contemplated hereby will not, conflict with or constitute a default
under (i) the Seller's certificate of incorporation or by-laws, (ii) any
agreement, indenture or other instrument to which the Seller is a party
or by which the Seller or its assets may be bound or (iii) any law,
regulation, order, arbitration, award, judgment or decree applicable to
the Seller.
2.3 VALIDITY. This Agreement has been duly executed and
delivered by the Seller and is a valid and binding agreement of the
Seller enforceable against the Seller in accordance with its terms,
except as the enforceability thereof may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other laws affecting the enforcement of creditors' rights
generally, and by general principles of equity.
2.4 THE COMMON SHARES. The Common Shares have been duly
authorized and are (or when issued as contemplated hereby will be)
validly issued and constitute fully-paid and non-assessable shares of
Common Stock, $0.01 par value, of the Seller. No stockholder of the
Seller has any preemptive or other subscription right to acquire any
shares of Common Stock. The Seller will convey to the Purchaser, on the
date of Closing, good and valid title tot he Common Shares free and
clear of any liens, claims, security interests and encumbrances.
2.5 LITIGATION. There are no actions, suits, proceedings
or arbitrations or investigations pending, or to the Seller's best
knowledge, threatened in any court or before any governmental agency or
instrumentality or arbitration panel or otherwise against or by the
Seller which seek to or could restrain, prohibit, rescind or declare
unlawful, or result in substantial damages in respect of this Agreement
or the performance hereof by the Seller (including, without limitation,
the delivery of the Common Shares).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller
as follows:
3.1 AUTHORITY; VALIDITY. The Purchaser has full power and
authority to execute and deliver this Agreement and the Note as Trustee
and to consummate the transactions contemplated hereby. The Note has
been duly executed by the Trustee on behalf of the Trust and, upon the
execution and delivery by the Trustee on behalf of the Trust, the Note
will be a valid and binding agreement of the Purchaser enforceable in
accordance with its terms, except as the enforceability thereof may be
limited by any applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other laws affecting the
enforcement of creditors' rights generally, and by general principles of
equity.
ARTICLE IV
RESTRICTIONS ON DISPOSITION OF THE COMMON SHARES
4.1 RESTRICTED SECURITIES. The Purchaser acknowledges
that the Purchaser is acquiring the Common Shares pursuant to a
transaction exempt from registration under the 1933 Act. The Purchaser
represents, warrants and agrees that all Common Shares acquired by the
Purchaser pursuant to this Agreement are being acquired for investment
without any intention of making a distribution thereof, or of making any
sale or other disposition thereof which would be in violation of the
1933 Act or any applicable state securities law, and that the Purchaser
will not dispose of any of the Common Shares except that the Trustee
will, from time to time, convey a portion of the Common Shares to the
participants in the Plans to satisfy the obligations of the Company
thereunder, and except upon termination of the Trust to the extent that
the Trust then holds any Common Shares, all in compliance with all
provisions of applicable federal and state law regulating the issuance,
sale and distribution of securities.
4.2 LEGEND. Until such time as the Common Shares are
registered pursuant to the provisions of the 1933 Act, any certificate
or certificates representing the Common Shares delivered pursuant to
Section 1.3, will bear a legend in substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended,
and may not be sold, transferred or otherwise disposed
of unless they have first been registered under such Act
or unless an exemption from registration is available."
The Seller may place stop transfer orders against the registration or
transfer of any shares evidenced by such a certificate or certificates
until such time as the requirements of the foregoing are satisfied.
ARTICLE V
CONDITIONS TO CLOSING
5.1 CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The
obligation of the Purchaser to purchase the Common Shares is subject to
the satisfaction of the following conditions on the date of Closing:
(a) The representations and warranties of the Seller
set forth in Article II hereof shall be true and
correct; and if the Closing shall occur on a date
other than the date of this Agreement, the
Purchaser shall have been furnished with a
certificate, dated the date of Closing, to such
effect, signed by an authorized officer of the
Seller;
(b) All permits, approvals, authorizations and
consents of third parties necessary for the
consummation of the transactions herein shall have
been obtained, and no order of any court or
administrative agency shall be in effect which
restrains or prohibits the transactions
contemplated by this Agreement, and no suit, action or
other proceeding by any governmental body or other
person shall have been instituted which questions the
validity or legality of the transactions contemplated
by this Agreement; and
5.2 CONDITIONS TO OBLIGATIONS OF THE SELLER. The
obligation of the Seller to issue, sell and deliver the Common Shares to
the Purchaser is subject to the satisfaction of the following conditions
on the date of Closing:
(a) The representations and warranties of the
Purchaser set forth in Article III hereof shall be
true and correct; and if the Closing shall occur
on a date other than the date of this Agreement,
the Seller shall have been furnished with a
certificate dated the date of Closing, to such
effect, signed by an authorized office of the
Trustee; and
(b) No order of any court or administrative agency
shall be in effect which restrains or prohibits the
transactions contemplated by this Agreement, and no
suit, action or other proceeding by any governmental
body or other person shall have been instituted which
questions the validity or legality of the transactions
contemplated by this Agreement.
ARTICLE VI
MISCELLANEOUS
6.1 EXPENSES. The Seller shall pay all of its expenses,
and it shall pay the Purchaser's expenses, in connection with the
authorization, preparation, execution and performance of this Agreement,
including without limitation the reasonable fees and expenses of the
Trustee, its agents, representatives, counsel, financial advisors and
consultants.
6.2 SURVIVAL OF SELLER'S REPRESENTATIONS AND WARRANTIES.
All representations and warranties made by the Seller to the Purchaser
in this Agreement shall survive the Closing.
6.3 NOTICES. All notices, requests or other
communications required or permitted to be delivered hereunder shall be
in writing, delivered by registered or certified mail, return receipt
requested, as follows:
(a) To the Seller:
Xxxxxx X. Xxxxxxxxxx, Executive Vice
President and General Counsel
Mid Atlantic Medical Services, Inc.
0 Xxxx Xxxxx
Xxxxxxxxx, XX 00000
(b) To the Purchaser:
Xxxxxxxx Xxxxxx-Xxxxxx, AVP
Relationship Manager
The Bank of New York
Xxx Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Any party hereto may from time to time, by written notice given as
aforesaid, designate any other address to which notices, requests or
other communications addressed to it shall be sent.
6.4 SPECIFIC PERFORMANCE. The parties hereto acknowledge
that damages would be an inadequate remedy for any breach of the
provisions of this Agreement and agree that the obligations of the
parties hereunder shall be specifically enforceable, and neither party
will take any action to impede the other from seeking to enforce such
rights of specific performance.
6.5 SUCCESSORS AND ASSIGNS; INTEGRATION; ASSIGNABILITY.
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto, and their respective legal
representatives, successors and assigns. This Agreement (a)
constitutes, together with the Note, the Trust Agreement, and any other
written agreements between the Purchaser and the Seller executed and
delivered on the date hereof, the entire agreement between the parties
hereto and supersedes all other prior agreements and understandings,
both written and oral, among the parties, with respect to the subject
matter hereof; (b) shall not confer upon any person other than the
parties hereto any rights or remedies hereunder; and (c) shall not be
assignable by operation of law or otherwise, except that the Trustee may
assign all its rights hereunder to any corporation or other institution
exercising trust powers in connection with any such institution assuming
the duties of a trustee under the Trust.
6.6 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the state of New York.
6.7 FURTHER ASSURANCES. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
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 to
consummate and make effective the transactions contemplated by this
Agreement.
6.8 AMENDMENT AND WAIVER. No amendment or waiver of any
provision of this Agreement or consent to departure therefrom shall be
effective unless in writing and signed by the Purchaser and the Seller.
6.9 COUNTERPARTS. This Agreement may be executed in any
number of counterparts with the same effect as if the signatures thereto
were upon one instrument.
6.10 CERTAIN LIMITATIONS. The execution and delivery of
this Agreement and the performance by the Trustee of this Agreement and
under the terms of the Trust have been or will be, effected by the
Trustee in its capacity as Trustee. Nothing in this Agreement shall be
interpreted to increase, decrease or modify in any manner any liability
of the Trustee to the Seller or to any trustee, representative or other
claimant by right of the Seller resulting from the Trustee's performance
of its duties under the constituent instruments of the Trust, and no
personal liability shall be asserted or enforceable against said entity
by reason of any of the covenants, statements or representations
contained in this Agreement.
6.11 INCORPORATION. The terms and conditions of the
Trust Agreement relating to the nature of the responsibilities of the
Trustee and the indemnification of the Trustee by the Seller are
incorporated herein by reference and made applicable to this Agreement.
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement on the date and year first above written.
Mid Atlantic Medical Services, Inc.
By: /s/ Xxxxxx X. Xxxxxxxxxx
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Title: Executive Vice President
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Attest: /s/ Xxxxxx X. Xxxx
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Title: Executive Vice President
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The Bank of New York in its capacity
as trustee of the Mid Atlantic
Medical Services, Inc. Stock
Compensation Trust
By: /s/ Xxxxxxxx Xxxxxxx
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Title: Vice President
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Attest: /s/ Xxxxxxxx Xxxxxx-Xxxxxx
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Title: AVP
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Schedule 1.1
PROMISSORY NOTE
$284,800,000 August 26, 1996
FOR VALUE RECEIVED, the undersigned, The Bank of New York, not in its
individual or corporate capacity but solely in its capacity as Trustee
of the Mid Atlantic Medical Services, Inc. Stock Compensation Trust (the
"Trust") hereby promises on behalf of the Trust to pay to the order of
Mid Atlantic Medical Services, a Delaware corporation (the "Company"),
at the principal offices of the Company, the aggregate principal amount
of $284,800,000 as shown on Schedule A attached hereto as such may be
amended from time to time, with interest in arrears thereon, as
hereinafter provided.
Principal shall be paid in installments in the amounts and on the dates
set forth on the Maturity Schedule attached hereto as Schedule A, the
last such installment due on August 26, 2011 (the fifteenth anniversary
of the Closing); PROVIDED, HOWEVER, that this Note may be prepaid in
whole or in part at any time without penalty; and PROVIDED FURTHER that
the principal amount of this Note shall be forgiven in the event that
the Trust shall have been terminated in accordance with Section 8.2
thereof and the Trustee shall have complied with the requirements of
such Section. Interest on the unpaid principal balance, at an annual
interest rate (the "Interest Rate") equal to 8%, shall be paid
quarterly, in arrears, on each January 15th, April 15th, July 15th and
October 15th commencing August 26, 1996 and shall be calculated on the
basis of a 360-day year of 30-day months. Whenever any payment falls
due on a Saturday, Sunday or public holiday, such payment shall be made
on the next succeeding business day. Certain provisions of the Trust
Agreement made effective as of August 26, 1996 between the Company and
the Trustee relating to the Trust affect the Company's obligations to
make payments of principal and interest on the Note.
This Note shall be construed under the laws of the State of New York.
The undersigned represents and warrants that the indebtedness
represented by this Note was incurred for the purpose of purchasing
shares of Common Stock of the Company.
This Note may not be assigned by the Company, other than by operation of
law, without the prior express written consent of the undersigned.
The Company shall have no recourse whatsoever to any assets of the
Trustee for repayment. The Trustee is entering into this Agreement not
in its individual or corporate capacity but solely as Trustee, and no
personal or corporate liability or personal or corporate
responsibilities are assumed by, or shall at any time be asserted or
enforceable against, the Trustee in its individual or corporate capacity
under, or with respect to, this Agreement.
The Bank of New York not in its
individual or corporate capacity but
solely in its capacity as Trustee of
the Mid Atlantic Medical Services,
Inc. Stock Compensation Trust
By:
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Title:
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ATTEST:
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Title:
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SCHEDULE A
Trust Year Principal Payment
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1997 9,000,000
1998 19,000,000
1999 19,000,000
2000 19,000,000
2001 19,000,000
2002 19,000,000
2003 19,000,000
2004 19,000,000
2005 19,000,000
2006 19,000,000
2007 19,000,000
2008 19,000,000
2009 19,000,000
2010 19,000,000
2011 28,800,000
