EXHIBIT 10.81
EXECUTION COPY
PURCHASE AGREEMENT
This Agreement (the "Agreement"), dated as of May 6, 2003, is by and
between UICI, a Delaware corporation, and Xxxxxxx X. Xxxx, an individual
residing at AMLI at Fossil Creek, 0000 X. Xxxxx Xxxxxx #0000, Xxxx Xxxxx, Xxxxx
00000 ("Xxxx").
WHEREAS, Xxxxxxx X. Xxxx serves as a director and president and chief
executive officer of UICI;
WHEREAS, in accordance with the Company's Executive Stock Purchase
Program (the "ESPP"), in December 1998 the Company extended a loan to Xxxx in
the amount of $3.3 million, the proceeds of which were used to purchase 200,000
shares of Common Stock of the Company.
WHEREAS, in June 1999, the Company extended an additional loan to Xxxx
pursuant to the ESPP in the amount of $429,000, the proceeds of which were used
to purchase 20,000 shares of Company Common Stock.
WHEREAS, as part of modifications to the ESPP adopted by the Company's
Board of Directors on January 2, 2001, the Company granted to Xxxx 107,104
shares of UICI common stock, discharged $1.5 million principal amount of the
ESPP loan, and paid to Xxxx a one-time cash bonus in the amount of $1.1 million
(which was calculated to reimburse Xxxx for income and other taxes payable upon
receipt of the UICI stock and discharge of the portion of the ESPP loan).
WHEREAS, at April 30, 2003, Xxxx'x loan owing to UICI under the ESPP
(the "Xxxx ESPP Loan") has an outstanding principal amount of $1,320,000, bears
interest at the rate of 5% per annum payable quarterly, is full recourse to Xxxx
and matures on January 1, 2007.
WHEREAS, the Company believes that it is desirable and in its best
interest that the Xxxx ESPP Loan be repaid in full.
WHEREAS, in order to repay the Xxxx ESPP Loan, it is necessary for Xxxx
to sell some of the UICI shares that he currently holds.
WHEREAS, to afford Xxxx the liquidity necessary to repay the Xxxx ESPP
Loan, the Company believes that it is desirable and in its best interests to
purchase from Xxxx 207,104 shares of UICI Common Stock, par value $0.01 per
share (the "UICI Shares"), in accordance with the terms and conditions of this
Agreement.
NOW THEREFORE, for and in consideration of the mutual covenants
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto do hereby
agree as follows:
1. Definitions. The following capitalized terms shall have the
respective meanings set forth below:
"Governmental Authority" means the government of the United States or
any foreign country or any state or political subdivision thereof and any
entity, body or authority exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
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"Person" means any individual, corporation, proprietorship, firm,
partnership, limited liability company, limited liability partnership, trust,
association or other entity, including a government or government department,
agency or instrumentality.
2. Purchase of UICI Shares. Subject to satisfaction of the conditions
hereinafter set forth, and for and in consideration of the payment on the
Closing Date by UICI to Xxxx of cash in the aggregate amount of $2,831,111.68,
or $13.67 per share (representing the closing price per share of UICI common
stock on the New York Stock Exchange on May 5, 2003) (the "Purchase Price"),
UICI will purchase, and Xxxx will sell, the UICI Shares. On the Closing Date
Xxxx will deliver to the Company a certificate or certificates representing the
UICI Shares, accompanied by a duly executed stock transfer power.
3. Pay-Off of Xxxx Loan. On the Closing Date, Xxxx will remit to UICI
cash in the amount of $1,326,509.59, representing principal outstanding on the
Xxxx ESPP Loan in the amount of $1,320,000 and accrued interest thereon to the
closing date in the amount of $6,509.59. Upon receipt of the payment herein
contemplated, the Xxxx ESPP Loan will be deemed paid and discharged in full, and
UICI will return the original note representing the Xxxx ESPP Loan to Xxxx
marked "paid in full."
4. Closing. The closing of the transaction contemplated hereby (the
"Closing") will take place on Tuesday, May 6, 2003, or such later date as the
Company and Xxxx shall mutually agree (the "Closing Date").
5. Representations and Warranties of the Company. The Company
represents and warrants as of the date hereof as follows:
5.1. Standing and Power. The Company is a corporation duly
organized and validly existing and in good standing under the laws of
the State of Delaware and has requisite corporate power and authority
to carry on its business as now being conducted and to execute, deliver
and perform this Agreement.
5.2. Authority. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated by this Agreement have been duly authorized by all
necessary action on the part of the Company. This Agreement has been
duly executed and delivered by the Company and constitutes a valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws relating to creditors'
rights and general principles of equity.
5.3. No Conflict. The execution and delivery of this Agreement
by the Company do not, and the consummation of the transactions
contemplated by this Agreement and compliance by the Company with the
provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any material obligation or to a loss of material
benefit under, (i) the charter or organizational documents or the
By-laws of the Company, in each case as amended or supplemented to the
date of this Agreement, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, reciprocal easement agreement, lease or other
agreement, instrument, permit, concession, franchise or license
applicable to the Company or its properties or assets or (iii) any laws
applicable to the Company or its properties or assets, other than, in
the case of clause (ii) or (iii), any such conflicts, violations,
defaults, rights or loss that individually or
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in the aggregate would not prevent or materially delay the consummation
of the transactions contemplated by this Agreement.
6. Covenants, Representations and Warranties of Xxxx. Xxxx covenants,
represents and warrants as of the date hereof as follows:
6.1. Organization, Standing and Power. Xxxx has the power to
execute, deliver and perform this Agreement.
6.2. Authority. This Agreement has been duly executed and
delivered by Xxxx and constitutes a valid and binding obligation of
Xxxx, enforceable against Xxxx in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity.
6.3. No Liens. Xxxx has full right, power and authority to
sell and deliver the UICI Shares to be delivered by him as contemplated
by this Agreement. Upon endorsement and delivery of certificates or
stock powers evidencing the UICI Shares to UICI at the Closing and
UICI's payment of the Purchase Price as contemplated herein, UICI shall
have acquired from Xxxx good and marketable title to the UICI Shares,
free and clear of all pledges, liens, security interests, claims,
charges of any kind or character, restrictions, title defects or
obligations, rights of third parties, options or encumbrances of any
nature whatsoever (collectively, "Encumbrance"), other than any
Encumbrance that may be caused or created by UICI on or after the
Closing Date.
6.4. No Conflict. The execution and delivery of this Agreement
by Xxxx does not, and the consummation of the transactions contemplated
by this Agreement and compliance by Xxxx with the provisions of this
Agreement will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancellation or acceleration of
any material obligation or to a loss of a material benefit under, (i)
any loan or credit agreement, note, bond, mortgage, indenture,
reciprocal easement agreement, lease or other agreement, instrument,
permit, concession, franchise or license applicable to Xxxx or his
properties or assets or (ii) any laws applicable to Xxxx or his
properties or assets, other than any such conflicts, violations,
defaults, rights or loss that individually or in the aggregate would
not prevent or materially delay the consummation of the transactions
contemplated by this Agreement.
7. UICI Related Party Transaction. This Agreement and the transaction
contemplated hereby constitute a "related party transaction" in accordance with
policies and procedures established by the Board of Directors of UICI, and at a
meeting of the UICI Board of Directors held on May 2, 2003, a majority of the
outside disinterested directors of UICI approved this Agreement and the
transactions contemplated hereby.
8. Closing Conditions.
8.1. The Company's Closing Conditions. The obligations of the
Company under Section 2 of this Agreement are subject to the
satisfaction or waiver by the Company of the following conditions
precedent on or before the Closing Date:
8.1.1. The representations and warranties of Xxxx
contained herein shall be accurate, true and correct in all
material respects on and as of the Closing Date with the same
force and effect as though made by Xxxx on and as of the
Closing Date.
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8.1.2. Xxxx shall have performed and complied with
all of his covenants, obligations and agreements contained in
this Agreement to be performed and complied with by it on or
prior to the Closing Date.
8.1.3. No action or proceeding by any Governmental
Authority or other Person shall have been instituted or
threatened which (a) might have a material adverse effect on
the Company's ability to consummate the transactions herein
contemplated or (b) could enjoin, restrain or prohibit, or
result in substantial damages in respect of, any provision of
this Agreement or the consummation of the transactions
contemplated hereby.
8.2. Xxxx'x Closing Conditions. The obligations of Xxxx under
Sections 2 and 3 of this Agreement are subject to the satisfaction or
waiver by Xxxx of the following conditions precedent on or before the
Closing Date:
8.2.1. The representations and warranties of the
Company contained herein shall be accurate, true and correct
in all material respects on and as of the Closing Date with
the same force and effect as though made by the Company on and
as of the Closing Date.
8.2.2. The Company shall have performed and complied
with all of its covenants, obligations and agreements
contained in this Agreement to be performed and complied with
by it on or prior to the Closing Date.
8.2.3. No action or proceeding by any Governmental
Authority or other Person shall have been instituted or
threatened which (a) might have a material adverse effect on
Xxxx'x ability to enter into this Agreement or consummate the
transactions contemplated hereby (b) could enjoin, restrain or
prohibit, or result in substantial damages in respect of, any
provision of this Agreement or the consummation of the
transactions contemplated hereby.
9. Miscellaneous.
9.1. Survival of Representations and Warranties. The
representations, warranties and covenants in this Agreement shall not
survive Closing.
9.2. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be
delivered personally, sent by overnight courier (providing proof of
delivery) to the parties or sent by telecopy (providing confirmation of
transmission) at the following addresses or telecopy numbers (or at
such other address or telecopy number as shall be specified by like
notice):
if to the Company, to:
UICI
0000 Xxxxxxxxx Xxxxxxx
0xx Xxxxx
Xxxxx Xxxxxxxx Xxxxx, XX 00000
Attn: Xx. Xxxxx X. Xxxx
(phone): (000) 000-0000
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if to Xxxx, to:
Xx. Xxxxxxx X. Xxxx
AMLI at Fossil Creek
0000 X. Xxxxx Xxxxxx
#0000
Xxxx Xxxxx, Xxxxx 00000
9.3. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other party.
9.4. Entire Agreement. This Agreement constitutes the entire
agreement and supersedes all prior agreements and understandings, both
written and oral, between the parties with respect to the subject
matter of this Agreement.
9.5. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS,
REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE
PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
9.6. Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned or
delegated, in whole or in part, by operation of law or otherwise by any
of the parties.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first above written.
UICI
By:
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Name:
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Title:
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XXXXXXX X. XXXX
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