EXHIBIT 2.3
PURCHASE AGREEMENT
November 30, 2001
Coventry Health Care, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Gentlemen:
Principal Health Care, Inc., an Iowa corporation (the "Seller"), hereby
agrees with Coventry Health Care, Inc. a Delaware corporation (the "Company"),
as follows:
1. PURCHASE AND SALE OF SECURITIES.
(a) Subject to the terms and conditions hereof, on the
Closing Date, as defined herein, the Seller shall sell to the Company
and the Company shall purchase from the Seller for an aggregate
purchase price of $176,069,740 cash (the "Purchase Price") (i)
7,053,487 shares (the "Purchased Shares") of the Company's Common
Stock, par value $.01 per share ("Common Stock"), at a purchase price
of $20.00 per share, and (ii) the Common Stock Purchase Warrant of the
Company, dated March 31, 1998, as amended October 29, 1998, (the
"Warrant") for a purchase price of $35.0 million (the Purchased Shares
and the Warrant are collectively referred to herein as the "Equity
Securities").
(b) Such sale and purchase shall be effected by the
Seller delivering to the Company duly executed certificates or other
instruments evidencing the Equity Securities, in each case with
appropriate instruments of transfer attached (duly endorsed or
otherwise in form sufficient for transfer), against delivery by the
Company to the Seller of the Purchase Price. The Purchase Price shall
be paid by wire transfer of immediately available funds to such account
or accounts as the Seller shall designate in writing.
(c) The closing of the purchase and sale referred to
above shall take place immediately following the satisfaction or waiver
of the other conditions set forth in Sections 5 and 6 hereof (the
"Closing Date"), at the offices of the Company, at 10:00 a.m., Eastern
time, or on such other date, and at such other place and time, as the
parties hereto shall mutually agree.
(d) The Company filed a Registration Statement on Form
S-3 dated the date hereof ("Registration Statement") to register the
sale by the Seller of up to 8,050,000 shares of Common Stock (the
"Secondary Offering"). The Company
and Seller agree that if the overallotment option described in the
Registration Statement is not exercised in full, the Company will
purchase, and the Seller will sell, the remaining shares of Common
Stock subject to such option at a purchase price per share equal to the
"Public Offering Price" set forth on the cover page of the prospectus
contained in the Registration Statement on the third business day after
the Seller notifies the Company in writing that such option has
terminated.
(e) The Company will pay the Seller up to $200,000 to
cover Seller's expenses within 45 days of the Closing Date.
2. WARRANTIES AND REPRESENTATIONS OF THE SELLER.
The Seller represents and warrants to the Company that:
(a) The Seller is a corporation duly organized and
validly existing under the laws of the State of Iowa.
(b) The Seller has authorized the execution, delivery and
performance of this Agreement, and each of the transactions
contemplated hereby. No other action is necessary to authorize such
execution, delivery and performance, and upon such execution and
delivery, this Agreement shall constitute a valid and binding
obligation of the Seller, enforceable against the Seller in accordance
with its terms.
(c) No consent, approval, authorization or order of any
court, governmental agency or body or arbitrator having jurisdiction
over the Seller is required for the execution, delivery or performance
by the Seller of its obligations hereunder, including without
limitation the sale of the Equity Securities.
(d) Neither the sale of the Equity Securities nor the
performance of the Seller's obligations hereunder will violate,
conflict with, result in a breach of, or constitute a default (or an
event that, with the giving of notice or the lapse of time, or both,
would constitute a default) under (i) the certificate of incorporation,
bylaws or other organizational documents of the Seller, (ii) any
decree, judgment, order, law, treaty, rule, regulation or determination
of any court, governmental agency or body or arbitrator having
jurisdiction over the Seller, as applicable, or any of its assets or
properties or (iii) the terms of any material agreement to which the
Seller is a party or to which any of the Seller's properties are
subject.
(e) The Seller has good and marketable title to the
Equity Securities. The Equity Securities are owned by the Seller free
and clear of any Encumbrance and will be transferred to the Company
free of any such Encumbrances.
2
(f) The sale of the Equity Securities by the Seller is
not part of a plan or scheme to evade the registration requirements of
the Securities Act. Neither the Seller nor any person acting on behalf
of the Seller has offered or sold any of the Equity Securities by any
form of general solicitation or general advertising.
3. COMPANY REPRESENTATIONS.
The Company represents and warrants to the Seller that:
(a) The Company is a corporation duly organized and
validly existing under the laws of the State of Delaware.
(b) The Company has authorized the execution, delivery
and performance of this Agreement, and each of the transactions
contemplated hereby. No other action is necessary to authorize such
execution, delivery and performance, and upon such execution and
delivery, this Agreement shall constitute a valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms.
(c) No consent, approval, authorization or order of any
court, governmental agency or body or arbitrator having jurisdiction
over the Company is required for the execution, delivery or performance
by the Seller of its obligations hereunder, including without
limitation the purchase of the Equity Securities.
(d) Neither the purchase of the Equity Securities nor the
performance of the Company's obligations hereunder will violate,
conflict with, result in a breach of, or constitute a default (or an
event that, with the giving of notice or the lapse of time, or both,
would constitute a default) under (i) the certificate of incorporation,
bylaws or other organizational documents of the Company, (ii) any
decree, judgment, order, law, treaty, rule, regulation or determination
of any court, governmental agency or body or arbitrator having
jurisdiction over the Company, as applicable, or any of its assets or
properties or (iii) the terms of any material agreement to which the
Company is a party or to which any of the Company's properties are
subject.
4. COVENANTS OF THE PARTIES.
(a) Further Assurances. From and after the Closing Date,
the Seller shall execute all certificates, instruments, documents or
agreements and shall take any other action that it is reasonably
requested to execute or take to further effectuate the transactions
contemplated hereby.
(b) Best Efforts. Each of the parties hereto will use
commercially 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 consistent with applicable law to
3
consummate and make effective in the most expeditious manner
practicable the transactions contemplated hereby, including without
limitation, making all required regulatory filings as promptly as
practicable after the date hereof.
5. COMPANY'S CONDITIONS TO CLOSING.
The obligation of the Company to purchase and pay for the Equity
Securities on the Closing Date shall be subject to the satisfaction or waiver
(to the extent permitted by law), prior thereto or concurrently therewith, of
the following conditions:
(a) Representations and Warranties. The representations
and warranties of the Seller contained in this Agreement shall be true
and correct in all material respects on and as of the Closing Date as
though such warranties and representations were made at and as of such
date, except as otherwise affected by the transactions contemplated
hereby.
(b) Compliance with Agreement. The Seller shall have
performed and complied with all agreements, covenants and conditions
contained in this Agreement that are required to be performed or
complied with by the Seller prior to or on the Closing Date.
(c) Injunction. There shall be no effective injunction,
writ, preliminary restraining order or any order of any nature issued
by a court of competent jurisdiction directing that the transactions
provided for herein or any of them not be consummated as herein
provided.
(d) Issuance of Senior Notes. The Company shall have
issued $175,000,000 principal amount of its senior notes.
(e) Secondary Offering. The Seller shall have sold at
least 7,000,000 shares of the Company's Common Stock pursuant to the
Secondary Offering.
6. SELLER'S CONDITIONS TO CLOSING.
The obligation of the Seller to sell the Securities to the Company on
the Closing Date shall be subject to the satisfaction or waiver (to the extent
permitted by law), prior thereto or concurrently therewith, of the following
conditions:
(a) Representations and Warranties. The representations
and warranties of the Company contained in this Agreement shall be true
and correct in all material respects on and as of the Closing Date as
though such warranties and representations were made at and as of such
date, except as otherwise affected by the transactions contemplated
hereby.
(b) Compliance with Agreement. The Company shall have
performed and complied with all agreements, covenants and conditions
contained in this
4
Agreement that are required to be performed or complied with by the
Company prior to or on the Closing Date.
(c) Injunction. There shall be no effective injunction,
writ, preliminary restraining order or any order of any nature issued
by a court of competent jurisdiction directing that the transactions
provided for herein or any of them not be consummated as herein
provided.
(d) Secondary Offering. The Seller shall have sold at
least 7,000,000 shares of the Company's Common Stock pursuant to the
Secondary Offering.
7. TERMINATION AND ABANDONMENT.
This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time before the Closing Date:
(a) by the mutual written consent of the Seller and the
Company;
(b) by the Seller or the Company if the other party fails
to comply in any material respect with any of its covenants or
agreements contained herein, or breaches its representations and
warranties in any material way and such failure or breach, if capable
of being cured, is not cured within 30 days of the receipt of written
notice of such failure or breach from the terminating party;
(c) by the Seller or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or taken any
other action (which order, decree or ruling the parties hereto shall
use their best efforts to lift), that permanently restrains, enjoins or
otherwise prohibits the transactions contemplated by this Agreement; or
(d) by the Seller or the Company at any time after March
31, 2002; provided, however, that if the Closing Date has not occurred
on or before March 31, 2002 as a result of a material breach of this
Agreement, the breaching party shall not be entitled to terminate this
Agreement pursuant to this Section 7(d).
In the event of termination and abandonment of this Agreement pursuant
to this Section 7, written notice thereof shall forthwith be given to the other
party and this Agreement shall terminate and the transactions contemplated
hereby shall be abandoned, without further action by the Seller or the Company;
provided, that no party shall be relieved of any liability it may have to any
other party as a result of any breach of its obligations hereunder.
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
5
The respective agreements, representations, warranties, and other
statements made by or on behalf each party hereto pursuant to this Agreement
shall remain in full force and effect, regardless of any investigation made by
or on behalf of any party, and shall survive delivery of any payment for the
Equity Securities.
9. INTERPRETATION OF THIS AGREEMENT.
(a) Terms Defined. As used in this Agreement, the
following terms have the respective meaning set forth below:
Encumbrances: any security interest, lien, claim or other encumbrances
or any restriction on transfer, other than those imposed by the Securities Act.
Person: an individual, partnership, joint-stock company, corporation,
trust or unincorporated organization, and a government or agency or political
subdivision thereof.
Securities Act: the Securities Act of 1933, as amended.
(b) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed entirely within such
State.
(c) Section Headings. The headings of the sections and
subsections of this Agreement are inserted for convenience only and
shall not be deemed to constitute a part thereof.
(d) Notices.
(i) All communications under this Agreement
shall be in writing and shall be delivered by hand or
facsimile or mailed by overnight courier or by registered or
certified mail, postage prepaid:
(1) if to any of the Company, at ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Chief Financial Officer, or at such other
address or facsimile number as the Company may have
furnished the Seller in writing;
(2) if to the Seller, at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇.
▇▇▇▇▇ (facsimile: (▇▇▇) ▇▇▇-▇▇▇▇), or at such other
address or facsimile number as the Seller may have
furnished in writing to the Company.
(ii) Any notice so addressed shall be deemed to
be given: if delivered by hand or facsimile, on the date of
such delivery; if mailed by overnight courier, on the first
business day following the date of such
6
mailing; and if mailed by registered or certified mail, on the
third business day after the date of such mailing.
(e) Expenses and Taxes. The Seller will pay, and save the
Company harmless from, any and all liabilities (including interest and
penalties) with respect to or resulting from any delay or failure in
paying, stamp and other taxes (other than income taxes), if any, that
may be payable or determined to be payable on the execution and
delivery of this Agreement.
(f) Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of each
of the parties.
(g) Entire Agreement; Amendment and Waiver. This
Agreement constitutes the entire understanding of the parties hereto
and supersedes all prior understandings among such parties. This
Agreement may be amended, and the observance of any term of this
Agreement may be waived, with (and only with) the written consent of
the Seller and the Company.
(h) Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original and all
of which together shall be considered one and the same agreement.
Very truly yours,
PRINCIPAL HEALTH CARE, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President
and General Counsel
ACCEPTED & AGREED:
COVENTRY HEALTH CARE, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
▇▇▇▇ ▇. ▇▇▇▇