AMENDED AND RESTATED COMMON STOCK PURCHASE AGREEMENT
THIS AMENDED AND RESTATED COMMON STOCK PURCHASE AGREEMENT
(this "Agreement"), made this 20th day of December, 1996, effective as
of August 26, 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 an
amended and restated trust agreement between the Seller and the Trustee
dated December 20, 1996 effective as of August 26, 1996 (the "Trust
Agreement").
W I T N E S S E T H:
WHEREAS, this Agreement was originally effective as of
August 26, 1996; and
WHEREAS, pursuant to this Agreement, as contemplated by
the Trust Agreement, the Purchaser purchased from the Seller, and the
Seller sold to the Purchaser, 20,000,000 shares of the Seller s common
stock, $0.01 par value (the Common Stock ) on August 26, 1996, all as
more specifically described herein (the Original Transaction ); and
WHEREAS, as payment for such Common Stock, the Purchaser
paid to the Seller $200,000 and issued a promissory note, in favor of
the Seller, in the principal amount of $284,800,000; and
WHEREAS, following the consummation of such transaction,
it was determined that, pursuant to the listing rules of the New York
Stock Exchange (the NYSE Listing Rules ), the number of shares of
Common Stock sold by the Seller to the Purchaser exceeded the maximum
number of shares that may be issued without the approval of the
shareholders of the Seller; and
WHEREAS, in order in order to comply with such NYSE
Listing Rules, the Seller and the Purchaser have agreed to amend and
restate this Agreement to provide that (i) the Purchaser will return to
the Seller 10,870,000 shares of Common Stock, (ii) the promissory note
issued by the Purchaser in favor of the Seller in connection with the
Original Transaction will be canceled, and (iii) a replacement
promissory note will be issued by the Purchaser in favor of the Seller,
in the principal amount of $129,902,500.
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, representing 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 "Original
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
RETURN OF SHARES
2.1 RETURN OF SHARES. Subject to terms and
conditions set forth herein, the Purchaser shall deliver to the Seller,
at the Rescission Closing (as hereinafter defined) 10,870,000 shares of
Common Stock (the Returned Common Shares ). In order to accomplish
such delivery, the Seller shall reflect the transfer of 10,870,000
shares of Common Stock from the Purchaser to the Seller by book entry
and the Seller and the Purchaser shall execute a cross-receipt in the
form of Schedule 2.1 to this Agreement. The Seller will pay all stamp
and other transfer taxes, if any, which may be payable in respect of the
transfer of the Returned Common Shares. The actions described in this
Section 2.1 are referred to in this Agreement, collectively, as the
Rescission.
2.2 CANCELLATION OF NOTE; ISSUANCE OF REPLACEMENT NOTE.
At the Rescission Closing, the Seller shall deliver the Note to the
Purchaser, and the Note shall be marked canceled. Simultaneous
therewith, the Purchaser shall deliver to the Seller a replacement note
in the form of Schedule 2.2 to this Agreement in the principal amount
of $129,902,500 (the Replacement Note ).
2.3 RESCISSION CLOSING. The closing of the
Rescission hereunder (the Rescission Closing ) will be held at the
offices of the Seller on December 20, 1996 or at such other time, date
and place as agreed to by the parties.
2.4 REPRESENTATIONS. The Seller hereby represents
and warrants to the Purchaser that (i) the Committee (as such term is
defined in the Trust Agreement) has approved the Rescission, (ii) the
Rescission has no federal income or other tax consequences to the
Seller, the Trustee or otherwise, and (iii) the Purchaser has properly
performed all of its duties under this Agreement with respect to the
Returned Shares from the Closing Date through the date of the Rescission
Closing.
2.5 RETIREMENT OF SHARES. As of the date of the
Rescission Closing, the Seller shall cause the Returned Shares to be
retired so that the total number of issued and outstanding shares of the
Seller is reduced by the number of Returned Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Purchaser as
follows:
3.1 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.
3.2 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.
3.3 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.
3.4 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.
3.5 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).
3.6 RESCISSION. Neither the Rescission nor any
transaction related to the Rescission, including the holding of
9,130,000 shares of Common Stock by the Purchaser immediately following
such Rescission, violates any federal or state law or any rule of the
New York Stock Exchange. After giving effect to the Rescission, the
purchase and sale of the Common Shares will not violate any rule of the
New York Stock Exchange applicable to companies whose stock is listed
thereon.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the
Seller as follows:
4.1 AUTHORITY; VALIDITY. The Purchaser has full
power and authority to execute and deliver this Agreement and the
Replacement Note as Trustee and to consummate the transactions
contemplated hereby. The Replacement 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 Replacement 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 V
RESTRICTIONS ON DISPOSITION OF THE COMMON SHARES
5.1 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 (other
than in the Rescission) except that the Trustee will, from time to time,
convey a portion of the Common Shares to the participants in the Plans
(as such 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.
5.2 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 or 2.1, 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 VI
CONDITIONS TO CLOSING
6.1 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 III 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.
6.2 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 IV 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 VII
MISCELLANEOUS
7.1 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.
7.2 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 and the
Rescission Closing.
7.3 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:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Executive Vice
President and General Counsel
Mid Atlantic Medical Services, Inc.
▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(b) To the Purchaser:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇, AVP
Relationship Manager
The Bank of New York
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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.
7.4 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.
7.5 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.
7.6 GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the laws of the state of
New York.
7.7 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.
7.8 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.
7.9 COUNTERPARTS. This Agreement may be executed
in any number of counterparts with the same effect as if the signatures
thereto were upon one instrument.
7.10 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 the Trustee by reason of any of the covenants,
statements or representations contained in this Agreement. With respect
to all action or inaction taken or not taken by the Trustee prior to the
Rescission Closing, the rights of the Trustee shall be determined in
accordance with the terms and provisions of this amended and restated
Agreement.
7.11 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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: Executive VP, General
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Counsel & Secretary
Attest: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Title: Asst. Secretary
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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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Vice President
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Attest: By: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇
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Title: Asst. Vice President
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