FORM OF STOCKHOLDER SUPPORT AGREEMENT
[Humana]
STOCKHOLDER SUPPORT AGREEMENT dated as of July 14, 1997 (this
"Agreement"), by and between the person or entity designated as Stockholder on
the signature page hereto (the "Stockholder"), in favor of MERIT BEHAVIORAL CARE
CORPORATION, a Delaware corporation (the "Parent"), MERIT MERGER CORP., a
Delaware corporation ("Merger Sub"), and CMG Health, Inc., a Maryland
corporation (the "Company"). Capitalized terms used and not otherwise defined
herein shall have the respective meanings assigned to them in the Merger
Agreement referred to below.
WHEREAS, as of the date hereof, the Stockholder owns of record
and beneficially the number of shares of common stock, par value $.00333 per
share ("Company Common Stock"), of the Company and shares of preferred stock,
par value $.00333 per share ("Company Preferred Stock"), of the Company, set
forth below its name on the signature page hereto (such shares, together with
any other voting or equity securities of the Company hereafter acquired by the
Stockholder prior to the termination of this Agreement, being referred to herein
collectively as the "Shares"); and
WHEREAS, concurrently with the execution of this Agreement,
the Company, Parent and Merger Sub, a wholly owned subsidiary of Parent, are
entering into an Agreement and Plan of Merger (as the same may be amended or
modified from time to time, in accordance with the terms thereof, the "Merger
Agreement"), pursuant to which, upon the terms and subject to the conditions
thereof, Merger Sub will be merged with and into the Company (the "Merger") and
certain capital stock of the Company outstanding immediately prior to the
Effective Time of the Merger will be converted into and represent the right to
receive cash and, subject to the fulfillment of certain conditions, Additional
Consideration Rights which include, among other things, the right to receive a
certain number of shares of Common Stock, par value $.01 per share, of Parent
("Parent Common Stock");
WHEREAS, Stockholder has reviewed and is familiar with the
terms and provisions of the Merger Agreement and all documents, instruments and
agreements ancillary thereto; and
WHEREAS, as a condition to the willingness of Parent to enter
into the Merger Agreement, Parent has requested the Stockholder agree, and in
order to induce Parent to enter into the Merger Agreement, the Stockholder is
willing to agree, among other things, to vote for the Merger and enter into
certain agreements with the Company, upon the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements contained herein, and intending to be legally
bound hereby, the parties hereby agree as follows:
Section 1. Representations and Warranties of the Stockholder. The Stockholder
represents and warrants to Merger Sub and Parent as follows:
(a) The Stockholder is the sole record and Beneficial Owner of, and has good
title to, all of the Shares, set forth below its name on the signature page
hereto, and there exist no restrictions on transfer, options, proxies, voting
agreements, voting trusts or Liens affecting the Shares, subject to the
agreement among certain stockholders disclosed in Section 4.4 of the Company
Disclosure Schedule.
(b) The Shares constitute all of the Securities of the Company beneficially
owned, directly or indirectly, by the Stockholder or its Associates or
Affiliates.
(c) Except for the Shares, the Stockholder does not, directly or indirectly,
beneficially own or has any option, warrant or other right to acquire any
Securities of the Company (presently, with the passage of time, subject to
conditions or otherwise) that are or may by their terms or law become entitled
to voting rights or any securities that are convertible or exchangeable into or
exercisable for any Securities of the Company.
(d) The execution and delivery of this Agreement by the Stockholder does not,
and the performance by the Stockholder of its obligations hereunder will not,
constitute a violation of, conflict with, result in a default (or an event
which, with notice or lapse of time or both, would result in a default) under,
or result in the creation of any Lien on any Shares under, (i) any contract,
commitment, agreement, understanding, arrangement or restriction of any kind to
which the Stockholder is a party or by which the Stockholder or its Shares are
bound, (ii) any judgment, writ, decree, order or ruling affecting the
Stockholder or its Shares, or (iii) the organizational documents of Stockholder.
(e) The Stockholder has full power and authority to execute, deliver and perform
this Agreement and to consummate the transactions contemplated hereby. This
Agreement has been duly and validly authorized by the Stockholder, and the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized and
no other actions on the part of the Stockholder are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by the Stockholder and,
assuming due authorization, execution and delivery by the Purchaser, constitutes
a valid and binding agreement of the Stockholder, enforceable against the
Stockholder in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting the enforcement of creditors'
rights generally and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(f) Neither the execution and delivery of this Agreement nor the performance by
the Stockholder of its obligations hereunder will violate any law, decree,
statute, rule or regulation applicable to the Stockholder or the Shares or
require any consent, authorization or approval of, filing with or notice to, any
court, administrative agency or other governmental body or authority.
Section 2. Voting of Shares; Proxy.
(a) The Stockholder hereby agrees that, at any meeting of the stockholders of
the Company, however called, and in any action by consent of the stockholders of
the Company in lieu of a meeting, Stockholder will vote all of the Shares (i) in
favor of adoption of the Merger Agreement and approval of the Merger and the
other transactions contemplated by the Merger Agreement, (ii) against any action
or agreement that would result in a breach of any representation, warranty,
covenant, agreement or other obligation of the Company under the Merger
Agreement or which could result in any of the conditions to the Company's
obligations under the Merger Agreement not being fulfilled and (iii) in favor of
any other matter necessary or useful to consummation of the transactions
contemplated by the Merger Agreement and considered and voted upon by the
stockholders of the Company (or any class thereof).
(b) The Stockholder hereby grants to Parent an irrevocable proxy to vote the
Shares and to exercise all other rights, powers, privileges and remedies to
which a holder of the Shares would be entitled, including, without limitation,
giving or withholding written consents of stockholders, calling special meetings
of stockholders and voting at such meetings for the purposes of voting the
Shares in accordance with clauses (i), (ii) or (iii) of Section 2(a) hereof. The
Stockholder hereby revokes all prior proxies relating to the Shares, affirms
that this proxy is irrevocable and is coupled with an interest in the Shares and
a general interest in the Company and its assets and liabilities, including the
interest of Parent arising out of the Merger Agreement, and ratifies and
confirms all that the Parent may lawfully do or cause to be done by virtue
hereof.
Section 3. No Disposition. During the term of this Agreement, except as
otherwise provided herein, Stockholder will not (a) offer to sell, sell, pledge
or otherwise dispose of or transfer (except by operation of law in a merger or
business combination of the Company with or into any other entity or entities)
any interest in or encumber with any Lien any of its Shares, (b) acquire any
Shares or other securities of the Company, (c) deposit its Shares into a voting
trust, enter into a voting agreement or arrangement with respect to its Shares
or grant any proxy or power of attorney with respect to its Shares, or (d) enter
into any contract, option or other arrangement or undertaking with respect to
the direct or indirect acquisition or sale, assignment or other disposition of
or transfer of any interest in or the voting of any Shares or any other
Securities of the Company.
Section 4. No Solicitation. From the date hereof until the Effective Time, the
Stockholder hereby covenants and agrees not to (a) solicit, encourage or
entertain inquiries or proposals or initiate, enter into or continue any
discussions, negotiations or agreements relating to the sale or other
disposition of the Company (whether through a merger, reorganization, stock
purchase or otherwise) or a material portion of its assets, properties,
businesses or operations (a "Proposed Acquisition") to or with any person or
entity other than Parent or Merger Sub or (b) provide any assistance or any
information to any person or entity other than Parent or Merger Sub relating to
any Proposed Acquisition. The Stockholder agrees that it will immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties (other than Parent or Merger Sub) heretofore conducted, or the
provision of any information to any party (other than Parent or Merger Sub) to
which information heretofore has been provided, with respect to any Proposed
Acquisition. If, after the date hereof, the Stockholder receives any such
inquiry or proposal or request for information, or offer to discuss or negotiate
any Proposed Acquisition, the Stockholder will immediately provide notice
thereof to Parent.
Section 5. Stockholder represents and warrants to the Company and Parent that
the Company is the exclusive behavioral care provider for Humana MHS in
connection with the CHAMPUS 2/5 Prime Contract and that Stockholder will cause
Humana MHS to undertake its best efforts to enter into the CHAMPUS 2/5
Subcontract on the terms substantially similar to those in the draft attached as
Exhibit 8.3 of the Merger Agreement. On or prior to the Closing Date,
Stockholder agrees to, or agrees to cause its appropriate Affiliate to,
undertake good faith best efforts negotiations to enter into the agreements
described on Exhibit 12.2(j)(2) of the Merger Agreement.
Section 6. Termination. This Agreement shall terminate upon any termination of
the Merger Agreement in accordance with the terms thereof; provided, however, no
such termination shall affect or limit the liability of the Stockholder for
willful and material breach of its representations, warranties or covenants set
forth herein.
Section 7. Waiver of Appraisal Rights. The Stockholder hereby irrevocably waives
any rights of appraisal or rights to dissent from the Merger that the
Stockholder may have pursuant to applicable law or otherwise.
Section 8. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
Section 9. Definitions.
"Adverse Interest" shall have the meaning accorded such term in Article 8 of the
Uniform Commercial Code as adopted by the State of Delaware.
"Affiliates" shall have the meaning ascribed to such term in Rule 12b-2 under
the Exchange Act.
"Associate" shall have the meaning ascribed to such term in Rule 12b-2 under the
Exchange Act.
"Beneficial Owner" and "beneficially owned" shall have the meaning ascribed to
such term in Rule 13d-3 under the Exchange Act.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Liens" means any liens, claims, security interests, pledges, charges, Adverse
Interests or other encumbrances of whatever nature.
"Securities" shall have the meaning ascribed to such term in Section 3(10) of
the Exchange Act, and shall include, without limitation, the Shares.
Section 10. Miscellaneous.
(a) This Agreement constitutes the entire agreement between the parties hereto
with respect to the subject matter hereof and supersedes all prior agreements
and understandings, both written and oral, between the parties with respect
thereto. This Agreement may not be amended, modified or rescinded except by an
instrument in writing signed by each of the parties hereto.
(b) If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest extent permitted by
applicable law in a mutually acceptable manner in order that the terms of this
Agreement remain as originally contemplated to the fullest extent possible.
(c) This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware without regard to the principles of conflicts of
law thereof.
(d) Stockholder represents and warrants that the negotiations relevant to this
Agreement have been carried on by Parent and Merger Sub, on the one hand, and
the Stockholder, on the other hand, directly with the other, and that there are
no claims for finder's fees or brokerage commissions or other like payments in
connection with this Agreement or the transactions contemplated hereby, except
as expressly provided for in the Merger Agreement. Stockholder will indemnify
and hold harmless Parent and Merger Sub from and against any and all claims or
liabilities for finder's fees or brokerage commissions or other like payments
incurred by reason of action taken by him, it or any of them, as the case may
be.
(e) All notices and other communications hereunder will be in writing and will
be given (and will be deemed to have been duly given upon receipt) by delivery
in person, by telecopy, or by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
If to a Stockholder to the address set forth beneath the Stockholder's name on
the signature page hereto.
If to Parent or Merger Sub to:
Merit Behavioral Corporation
Xxx Xxxxxxx Xxxxx
Xxxx Xxxxx, Xxx Xxxxxx 00000
Attention:Xxxxxxx X. Xxxxxxx, Esq.
Executive Vice President - Mergers and Acquisitions
and General Counsel
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx
Sears Tower, Suite 5800
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Telecopier: (000) 000-0000
(f) This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original, but all of which
together will constitute one agreement.
(g) Any suit, action or proceeding by a party hereto, with
respect to this Agreement, or any judgment entered by any court in respect of
any thereof, may be brought in any state or federal court of competent
jurisdiction in the State of Delaware, and each party hereto hereby submits to
the exclusive jurisdiction of such courts for the purpose of any such suit,
action, proceeding or judgment. By the execution and delivery of this Agreement,
each party hereto appoints The Corporation Trust Company, at its office in
Wilmington, Delaware, as its agent upon which process may be served in any such
suit, action or proceeding. Service of process upon such agent, together with
notice of such service given to a party hereto in the manner provided in Section
10(e) hereof, shall be deemed in every respect effective service of process upon
it in any suit, action or proceeding. Nothing herein shall in any way be deemed
to limit the ability of a party hereto to serve any such writs, process or
summonses in any other manner permitted by applicable law or to obtain
jurisdiction over any party hereto, in such other jurisdictions and in such
manner, as may be permitted by applicable law. Each party hereto hereby
irrevocably waives any objections which it may now or hereafter have to the
laying of the venue of any suit, action or proceeding arising out of or relating
to this Agreement brought in any state or federal court of competent
jurisdiction in the State of Delaware, and hereby further irrevocably waives any
claim that any such suit, action or proceeding brought in any such court has
been brought in any inconvenient forum. No suit, action or proceeding against a
party hereto with respect to this Agreement may be brought in any court,
domestic or foreign, or before any similar domestic or foreign authority other
than in a court of competent jurisdiction in the State of Delaware, and each
party hereto hereby irrevocably waives any right which it may otherwise have had
to bring such an action in any other court, domestic or foreign, or before any
similar domestic or foreign authority.
IN WITNESS WHEREOF, each of the parties hereto as caused this
Agreement to be duly executed as of the date first written above.
STOCKHOLDER: By: [Humana]
By:___________________________
a duly authorized signatory
Address: 000 X. Xxxx Xx.
Xxxxxxxxxx, XX 00000-0000
Number of Shares of Company Common Stock: 191,979
Number of Shares of Company Preferred Stock: 4,537,815
PARENT: MERIT BEHAVIORAL CARE
CORPORATION, a Delaware corporation
By: _________________________
a duly authorized signatory
MERGER SUB: MERIT MERGER CORP.,
a Delaware corporation
By: _________________________
a duly authorized signatory
COMPANY : CMG HEALTH, INC.,
a Maryland corporation
By: _________________________
a duly authorized signatory
