COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (this "Agreement"), made
this 20th day of August, 1999 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, as most recently
amended and restated as of August 20, 1999 (the "Trust Agreement").
W I T N E S S E T H:
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), one million five
hundred thousand (1,500,000) shares of Common Stock at $9.1875 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 $15,000,
representing the par value of the Common Stock, and an allonge to the
Replacement Promissory Note dated December 20, 1996, as amended by Allonge dated
January 11, 1999, previously delivered by the Purchaser to the Seller in the
principal amount of $127,284,696.75 (the "Note") in the form of Exhibit A
attached hereto.
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 20, 1999 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 to
the 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 (as that term is defined in the Trust Agreement) to
satisfy the obligations of the Seller 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; and
(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.
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 Xxxxxx, Executive Vice
President and General Counsel
Mid Atlantic Medical Services, Inc.
0 Xxxx Xxxxx
Xxxxxxxxx, XX 00000
(b) To the Purchaser:
Xxxxxxx X. Xxxxx
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.
/s/ Xxxxxx X. Xxxxxx
By:__________________________________
Executive Vice President
Title:_________________________________
The Bank of New York in its capacity as trustee of
the Mid Atlantic Medical Services, Inc. Stock Compensation
Trust
/s/ Xxxxxxx Xxxxx
By__________________________________
Xxxxxxx X. Xxxxx Vice President
Title:________________________________
EXHIBIT A
Allonge
