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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of Earliest Event Reported): April 27, 2004 (April 26,
2004)
UNITEDHEALTH GROUP INCORPORATED
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(Exact Name of Registrant as Specified in its Charter)
MINNESOTA
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(State or Other Jurisdiction of Incorporation)
1-10864 41-1321939
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(Commission File Number) (I.R.S. Employer Identification No.)
UNITEDHEALTH GROUP CENTER
9900 BREN ROAD EAST
MINNETONKA, MINNESOTA 55343
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(Address of Principal Executive Offices) (Zip Code)
(952) 936-1300
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(Registrant's Telephone Number, Including Area Code)
N/A
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS AND REQUIRED FD DISCLOSURE.
On April 26, 2004, UnitedHealth Group Incorporated, a Minnesota
corporation ("UnitedHealth Group"), announced that it had entered into an
Agreement and Plan of Merger, dated as of April 26, 2004 (the "Merger
Agreement"), with Oxford Health Plans, Inc., a Delaware corporation
("Oxford"), pursuant to which Oxford will merge with and into a wholly owned
subsidiary of UnitedHealth Group.
A copy of UnitedHealth Group's press release announcing this
transaction and the Merger Agreement are attached as exhibits hereto and are
incorporated herein by reference. The foregoing description is qualified in
its entirety by reference to the exhibits attached hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit No. Exhibit
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2.1 Agreement and Plan of Merger, dated as of
April 26, 2004, by and among UnitedHealth
Group Incorporated, Ruby Acquisition LLC and
Oxford Health Plans, Inc.
99.1 Press Release, dated April 26, 2004
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Date: April 27, 2004
UNITEDHEALTH GROUP INCORPORATED
By: /s/ David J. Lubben
--------------------------------
David J. Lubben
General Counsel & Secretary
EXHIBIT INDEX
Exhibit No. Description
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2.1 Agreement and Plan of Merger, dated as of
April 26, 2004, by and among UnitedHealth
Group Incorporated, Ruby Acquisition LLC and
Oxford Health Plans, Inc.
99.1 Press Release, dated April 26, 2004
Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
DATED AS OF APRIL 26, 2004
BY AND AMONG
UNITEDHEALTH GROUP INCORPORATED,
RUBY ACQUISITION LLC
AND
OXFORD HEALTH PLANS, INC.
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TABLE OF CONTENTS
PAGE
----
ARTICLE I The Merger
Section 1.01 The Merger.................................................
Section 1.02 Closing....................................................
Section 1.03 Effective Time.............................................
Section 1.04 Effects of the Merger......................................
Section 1.05 Certificate of Formation; Operating Agreement..............
Section 1.06 Managers...................................................
Section 1.07 Officers...................................................
ARTICLE II Effect of the Merger on the Capital Stock of the Constituent
Entities; Exchange of Certificates; Company Stock Options
Section 2.01 Effect on Capital Stock.....................................
Section 2.02 Exchange of Certificates....................................
Section 2.03 Company Equity Awards.......................................
ARTICLE III Representations and Warranties of the Company
Section 3.01 Organization, Standing and Corporate Power..................
Section 3.02 Subsidiaries................................................
Section 3.03 Capital Structure...........................................
Section 3.04 Authority; Noncontravention.................................
Section 3.05 Governmental Approvals......................................
Section 3.06 Company SEC Documents; No Undisclosed Liabilities...........
Section 3.07 Information Supplied........................................
Section 3.08 Absence of Certain Changes or Events........................
Section 3.09 Litigation..................................................
Section 3.10 Contracts...................................................
Section 3.11 Compliance with Laws........................................
Section 3.12 Employee Benefit Plans......................................
Section 3.13 Taxes23
Section 3.14 Intellectual Property; Software.............................
Section 3.15 Properties and Assets.......................................
Section 3.16 Environmental Matters.......................................
Section 3.17 Transactions with Related Parties...........................
Section 3.18 Brokers and Other Advisors..................................
Section 3.19 Opinion of Financial Advisor................................
Section 3.20 Statutory Financial Statements..............................
Section 3.21 Reserves....................................................
ARTICLE IV Representations and Warranties of Parent and Merger Sub
Section 4.01 Organization, Standing and Corporate Power..................
Section 4.02 Capital Structure...........................................
Section 4.03 Authority; Noncontravention.................................
Section 4.04 Governmental Approvals......................................
Section 4.05 Parent SEC Documents........................................
Section 4.06 Information Supplied........................................
Section 4.07 Absence of Certain Changes or Events........................
Section 4.08 Litigation..................................................
Section 4.09 Compliance with Laws........................................
Section 4.10 No Business Activities......................................
Section 4.11 No Parent Vote Required.....................................
Section 4.12 Taxes36
ARTICLE V Covenants Relating to Conduct of Business
Section 5.01 Conduct of Business.........................................
Section 5.02 No Solicitation by the Company..............................
ARTICLE VI Additional Agreements
Section 6.01 Preparation of the Form S-4 and the Proxy Statement;
Stockholder Meetings........................................
Section 6.02 Access to Information; Confidentiality......................
Section 6.03 Reasonable Best Efforts.....................................
Section 6.04 Indemnification, Exculpation and Insurance..................
Section 6.05 Fees and Expenses...........................................
Section 6.06 Public Announcements........................................
Section 6.07 Affiliates..................................................
Section 6.08 Stock Exchange Listing......................................
Section 6.09 Tax-Free Reorganization Treatment...........................
Section 6.10 Stockholder Litigation......................................
Section 6.11 Employee Matters............................................
Section 6.12 Employment Agreements.......................................
Section 6.13 Standstill Agreements, Confidentiality Agreements,
Anti-takeover Provisions....................................
Section 6.14 Cooperation.................................................
Section 6.15 Letters of the Accountants..................................
ARTICLE VII Conditions Precedent
Section 7.01 Conditions to Each Party's Obligation to Effect the Merger..
Section 7.02 Conditions to Obligations of Parent and Merger Sub..........
Section 7.03 Conditions to Obligation of the Company.....................
Section 7.04 Frustration of Closing Conditions...........................
ARTICLE VIII Termination, Amendment and Waiver
Section 8.01 Termination.................................................
Section 8.02 Termination Fee.............................................
Section 8.03 Effect of Termination.......................................
Section 8.04 Amendment...................................................
Section 8.05 Extension; Waiver...........................................
Section 8.06 Procedure for Termination or Amendment......................
ARTICLE IX General Provisions
Section 9.01 Nonsurvival of Representations and Warranties...............
Section 9.02 Notices.....................................................
Section 9.03 Definitions.................................................
Section 9.04 Interpretation..............................................
Section 9.05 Counterparts................................................
Section 9.06 Entire Agreement; No Third-Party Beneficiaries..............
Section 9.07 Governing Law...............................................
Section 9.08 Assignment..................................................
Section 9.09 Specific Enforcement; Consent to Jurisdiction...............
Section 9.10 Severability................................................
EXHIBITS
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Exhibits A-1 and A-2 - Forms of New Employment Agreements
Exhibit B - Form of Affiliate Letter
Exhibit C - Form of Company Tax Representation Letter
Exhibit D - Form of Parent Tax Representation Letter
Exhibit E - Closing Consents
TABLE OF DEFINED TERMS
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PAGE
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Adverse Recommendation Notice...........................................................................
Affected Employees......................................................................................
Affiliate...............................................................................................
Agreement...............................................................................................
Authorized Control Level................................................................................
Cash Consideration......................................................................................
Certificate.............................................................................................
Certificate of Merger...................................................................................
Closing.................................................................................................
Closing Date............................................................................................
COBRA...................................................................................................
Code....................................................................................................
Company.................................................................................................
Company Adverse Recommendation Change...................................................................
Company Board...........................................................................................
Company By-laws.........................................................................................
Company Certificate.....................................................................................
Company Common Stock....................................................................................
Company Disclosure Letter...............................................................................
Company DSUs............................................................................................
Company Equity Awards...................................................................................
Company Insiders........................................................................................
Company Intellectual Property...........................................................................
Company Material Adverse Effect.........................................................................
Company Plans...........................................................................................
Company Preferred Stock.................................................................................
Company RSUs............................................................................................
Company SEC Documents...................................................................................
Company Stock Options...................................................................................
Company Stock Plans.....................................................................................
Company Stockholder Approval............................................................................
Company Stockholders Meeting............................................................................
Company Superior Proposal...............................................................................
Company Takeover Proposal...............................................................................
Confidentiality Agreement...............................................................................
Contract................................................................................................
Copyrights..............................................................................................
Covered Employees.......................................................................................
Delaware Law............................................................................................
DGCL....................................................................................................
Dissenting Shares.......................................................................................
Effective Time..........................................................................................
Employees...............................................................................................
Environmental Laws......................................................................................
Environmental Liabilities...............................................................................
ERISA...................................................................................................
Exchange Act............................................................................................
Exchange Agent..........................................................................................
Exchange Fund...........................................................................................
Exchange Ratio..........................................................................................
Filed Company SEC Documents.............................................................................
Form S-4................................................................................................
GAAP....................................................................................................
Governmental Authority..................................................................................
Hazardous Material......................................................................................
HSR Act.................................................................................................
Indemnified Parties.....................................................................................
Intellectual Property...................................................................................
IP Licenses.............................................................................................
IRS.....................................................................................................
Knowledge...............................................................................................
Laws....................................................................................................
Leased Real Property....................................................................................
Liens...................................................................................................
Merger..................................................................................................
Merger Consideration....................................................................................
Merger Sub..............................................................................................
Merger Sub Interests....................................................................................
Necessary Consents......................................................................................
New Employment Agreements...............................................................................
NYSE....................................................................................................
Option Exchange Ratio...................................................................................
Parent..................................................................................................
Parent Articles.........................................................................................
Parent Board............................................................................................
Parent By-laws..........................................................................................
Parent Common Stock.....................................................................................
Parent Disclosure Letter................................................................................
Parent Material Adverse Effect..........................................................................
Parent Preferred Stock..................................................................................
Parent SEC Documents....................................................................................
Parent Services.........................................................................................
Parent Trading Price....................................................................................
Patents.................................................................................................
Permits.................................................................................................
Permitted Liens.........................................................................................
person..................................................................................................
Proprietary Software....................................................................................
Providers...............................................................................................
Proxy Statement.........................................................................................
Regulated Subsidiaries..................................................................................
Release.................................................................................................
Representatives.........................................................................................
Restraints..............................................................................................
Sarbanes-Oxley..........................................................................................
SEC.....................................................................................................
Securities Act..........................................................................................
Software................................................................................................
State Regulatory Filings................................................................................
Stock Consideration.....................................................................................
Subsidiary..............................................................................................
Substitute DSU..........................................................................................
Substitute Equity Awards................................................................................
Substitute RSU..........................................................................................
Substitute Stock Option.................................................................................
Surviving Entity........................................................................................
tax returns.............................................................................................
taxes...................................................................................................
Termination Date........................................................................................
Termination Fee.........................................................................................
Trade Secrets...........................................................................................
Trademarks..............................................................................................
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated
as of April 26, 2004, is by and among UnitedHealth Group Incorporated, a
Minnesota corporation ("Parent"), Ruby Acquisition LLC, a limited liability
company organized under the laws of the State of Delaware and a direct wholly
owned subsidiary of Parent ("Merger Sub"), and Oxford Health Plans, Inc., a
Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent and
the Company and the Managing Member of Merger Sub have approved and declared
advisable this Agreement and the merger of the Company with and into Merger
Sub (the "Merger"), upon the terms and subject to the conditions set forth in
this Agreement;
WHEREAS, for United States Federal income tax purposes, it
is intended that the Merger shall qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), and the rules and regulations promulgated thereunder, and that
this Agreement constitutes, and hereby is adopted as, a plan of
reorganization;
WHEREAS, Parent, Merger Sub and the Company desire to make
certain representations, warranties, covenants and agreements in connection
with the Merger and also to prescribe various conditions to the Merger; and
WHEREAS, concurrently with the execution of this Agreement,
Parent and United HealthCare Services, Inc., a Delaware corporation ("Parent
Services"), are entering into (A) an employment agreement in the form attached
as Exhibit A-1 hereto with the individual set forth on such Exhibit A-1 and
(B) employment agreements in the form attached as Exhibit A-2 hereto with the
individuals set forth on such Exhibit A-2 (such employment agreements referred
to in clauses (A) and (B), collectively, the "New Employment Agreements," and
such individuals set forth on Exhibit A-1 and A-2 hereto, the "Covered
Employees") in order to provide for the continued service and employment of
such persons;
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement, the parties
hereto agree as follows:
ARTICLE I
The Merger
Section 1.01 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement and in accordance with the General
Corporation Law (the "DGCL") and the Limited Liability Company Act of the
State of Delaware (collectively, "Delaware Law"), the Company shall be merged
with and into Merger Sub at the Effective Time. Following the Effective Time,
the separate corporate existence of the Company shall cease, and Merger Sub
shall continue as the surviving entity in the Merger (the "Surviving Entity")
and shall succeed to and assume all the rights and obligations of the Company
in accordance with Delaware Law.
Section 1.02 Closing. The closing of the Merger (the
"Closing") will take place at 10:00 a.m. on a date to be specified by the
parties (the "Closing Date"), which shall be no later than the second business
day after satisfaction or waiver of the conditions set forth in Article VII
(other than those conditions that by their terms are to be satisfied at the
Closing, but subject to the satisfaction or waiver of those conditions at such
time), at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times
Square, New York, NY 10036, unless another date or place is agreed to in
writing by the parties hereto.
Section 1.03 Effective Time. Subject to the provisions of
this Agreement, as soon as practicable on the Closing Date, the parties shall
file a certificate of merger (the "Certificate of Merger") executed in
accordance with the relevant provisions of Delaware Law and, as soon as
practicable on or after the Closing Date, shall make all other filings or
recordings required under Delaware Law. The Merger shall become effective at
such time as the Certificate of Merger is duly filed with the Secretary of
State of the State of Delaware, or at such other time as Parent and the
Company shall agree and shall specify in the Certificate of Merger (the time
the Merger becomes effective being the "Effective Time").
Section 1.04 Effects of the Merger. The Merger shall have
the effects set forth in Delaware Law.
Section 1.05 Certificate of Formation; Operating Agreement.
(a) The Certificate of Formation of Merger Sub, as
in effect immediately prior to the Effective Time, shall be the Certificate of
Formation of the Surviving Entity until thereafter changed or amended as
provided therein or by Delaware Law or other applicable Law.
(b) The Operating Agreement of Merger Sub, as in
effect immediately prior to the Effective Time, shall be the Operating
Agreement of the Surviving Entity until thereafter changed or amended as
provided therein or by applicable Law; provided, however, that the Operating
Agreement of the Surviving Entity shall be amended as necessary to comply with
the obligations of the Surviving Entity set forth in Section 6.04 hereof.
Section 1.06 Managers. The managers of Merger Sub
immediately prior to the Effective Time shall be the managers of the Surviving
Entity until the earlier of their resignation or removal or until their
respective successors are duly designated, as the case may be.
Section 1.07 Officers. The officers of Merger Sub
immediately prior to the Effective Time shall be the officers of the Surviving
Entity until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
ARTICLE II
Effect of the Merger on the Capital Stock of the Constituent Entities;
Exchange of Certificates; Company Stock Options
Section 2.01 Effect on Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holder
of any shares of common stock, par value $0.01 per share, of the Company
("Company Common Stock") or any membership interests of Merger Sub:
(a) Membership Interests of Merger Sub. The issued
and outstanding membership interests of Merger Sub shall remain outstanding
and shall constitute the only issued and outstanding equity interests of the
Surviving Entity.
(b) Cancellation of Treasury Stock. Each share of
Company Common Stock that is owned by the Company (as treasury stock or
otherwise), automatically shall be canceled and retired and shall cease to
exist, and no shares of Parent Common Stock, cash or other consideration shall
be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject to
Section 2.02(e), each issued and outstanding share of Company Common Stock
(other than shares to be canceled in accordance with Section 2.01(b), and
other than as provided in Section 2.02(k) with respect to shares as for which
appraisal rights have been perfected) shall be converted into the right to
receive:
(i) .6357 (the "Exchange Ratio") validly issued,
fully paid and nonassessable shares of common stock, par value $0.01
per share, of Parent ("Parent Common Stock") (the "Stock
Consideration"); and
(ii) $16.17 in cash (the "Cash Consideration,"
and together with the Stock Consideration, the "Merger
Consideration").
As of the Effective Time, all such shares of Company Common
Stock shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate which
immediately prior to the Effective Time represented any such shares of Company
Common Stock (each, a "Certificate") shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration, any
dividends or other distributions to which such holder is entitled pursuant to
Section 2.02(c) and cash in lieu of any fractional share of Parent Common
Stock to which such holder is entitled pursuant to Section 2.02(e), in each
case to be issued or paid in consideration therefor upon surrender of such
Certificate in accordance with Section 2.02(b), without interest.
Notwithstanding the foregoing, if between the date of this Agreement and the
Effective Time, the outstanding shares of Parent Common Stock or Company
Common Stock shall have been changed into a different number of shares or a
different class, by reason of the occurrence or record date of any stock
dividend, subdivision, reclassification, recapitalization, split, combination,
exchange of shares or similar transaction, the Merger Consideration shall be
appropriately adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination, exchange of shares or
similar transaction.
Section 2.02 Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time,
Parent shall deposit with Wells Fargo Bank, N.A. or such other bank or trust
company as may be designated by Parent, with the Company's prior written
consent, which shall not be unreasonably withheld or delayed (the "Exchange
Agent"), for exchange in accordance with this Article II, through the Exchange
Agent, (i) certificates representing the shares of Parent Common Stock
issuable pursuant to Section 2.01(c) in exchange for outstanding shares of
Company Common Stock, (ii) cash sufficient to pay the Cash Consideration and
(iii) from time to time as needed, additional cash sufficient to pay cash in
lieu of fractional shares pursuant to Section 2.02(e) hereof and any dividends
and other distributions pursuant to Section 2.02(c) hereof (such shares of
Parent Common Stock and Cash Consideration, together with any dividends or
other distributions with respect thereto with a record date after the
Effective Time and any cash payments in lieu of any fractional shares of
Parent Common Stock, being hereinafter referred to as the "Exchange Fund").
(b) Exchange Procedures. As promptly as practicable
after the Effective Time, Parent shall cause the Exchange Agent to mail to
each holder of record of a Certificate whose shares of Company Common Stock
were converted into the right to receive the Merger Consideration pursuant to
Section 2.01(c), (i) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent and
which shall be in customary form and shall have such other provisions as
Parent may reasonably specify) and (ii) instructions for use in surrendering
the Certificates in exchange for certificates representing the Stock
Consideration portion of the Merger Consideration and cash representing the
Cash Consideration portion of the Merger Consideration, any dividends or other
distributions to which holders of Certificates are entitled pursuant to
Section 2.02(c) and cash in lieu of any fractional shares of Parent Common
Stock to which such holders are entitled pursuant to Section 2.02(e). Upon
surrender of a Certificate for cancellation to the Exchange Agent, together
with such letter of transmittal, duly completed and validly executed, and such
other documents as may be reasonably required by the Exchange Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor
(A) a certificate representing that number of whole shares of Parent Common
Stock that such holder has the right to receive pursuant to the provisions of
this Article II after taking into account all the shares of Company Common
Stock then held by such holder under all such Certificates so surrendered and
(B) a check for the cash that such holder is entitled to receive pursuant to
the provisions of this Article II, including for the Cash Consideration
portion of the Merger Consideration, any dividends or other distributions to
which such holder is entitled pursuant to Section 2.02(c) and cash in lieu of
any fractional shares of Parent Common Stock to which such holder is entitled
pursuant to Section 2.02(e), and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of shares of
Company Common Stock that is not registered in the transfer records of the
Company, (w) a certificate representing the proper number of shares of Parent
Common Stock, (x) a check for the Cash Consideration portion of the Merger
Consideration, (y) any dividends or other distributions to which such holder
is entitled pursuant to Section 2.02(c) and (z) cash in lieu of any fractional
shares of Parent Common Stock to which such holder is entitled pursuant to
Section 2.02(e), may be issued to a person other than the person in whose name
the Certificate so surrendered is registered, if, upon presentation to the
Exchange Agent, such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such issuance shall pay any
transfer or other taxes required by reason of the issuance of shares of Parent
Common Stock to a person other than the registered holder of such Certificate
or establish to the reasonable satisfaction of the Exchange Agent that such
tax has been paid or is not applicable. Until surrendered as contemplated by
this Section 2.02(b), each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
Merger Consideration, any dividends or other distributions to which the holder
of such Certificate is entitled pursuant to Section 2.02(c) and cash in lieu
of any fractional share of Parent Common Stock to which such holder is
entitled pursuant to Section 2.02(e). No interest will be paid or will accrue
on the Merger Consideration or on any cash payable to holders of Certificates
pursuant to Section 2.02(c) or (e).
(c) Distributions with Respect to Unexchanged
Shares. No dividends or other distributions with respect to Parent Common
Stock with a record date after the Effective Time shall be paid to the holder
of any unsurrendered Certificate with respect to the share of Parent Common
Stock that the holder thereof has the right to receive upon the surrender
thereof, and no cash payment in lieu of any fractional shares of Parent Common
Stock shall be paid to any such holder pursuant to Section 2.02(e), in each
case until the holder of such Certificate shall surrender such Certificate in
accordance with this Article II. Following surrender of any Certificate, there
shall be paid to the holder thereof (i) at the time of such surrender, the
amount of cash payable in lieu of any fractional share of Parent Common Stock
to which such holder is entitled pursuant to Section 2.02(e) and the amount of
dividends or other distributions payable with respect to such whole shares of
Parent Common Stock with a record date after the Effective Time and paid with
respect to Parent Common Stock prior to such surrender and (ii) at the
appropriate payment date, the amount of dividends or other distributions with
a record date after the Effective Time but prior to such surrender and a
payment date subsequent to such surrender payable with respect to such whole
shares of Parent Common Stock.
(d) No Further Ownership Rights in Company Common
Stock. All shares of Parent Common Stock issued and cash paid upon the
surrender for exchange of Certificates in accordance with the terms of this
Article II (including any dividends or other distributions paid pursuant to
Section 2.02(c) and cash paid in lieu of any fractional shares pursuant to
Section 2.02(e)) shall be deemed to have been issued (and paid) in full
satisfaction of all rights pertaining to the shares of Company Common Stock
previously represented by such Certificates, and at the close of business on
the day on which the Effective Time occurs, the stock transfer books of the
Company shall be closed and there shall be no further registration of
transfers on the stock transfer books of the Surviving Entity of the shares of
Company Common Stock that were outstanding immediately prior to the Effective
Time. Subject to the last sentence of Section 2.02(f), if, at any time after
the Effective Time, Certificates are presented to the Surviving Entity or the
Exchange Agent for any reason, they shall be canceled and exchanged as
provided in this Article II.
(e) No Fractional Shares.
(i) No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, no dividends or other
distributions of Parent shall relate to such fractional share
interests and such fractional share interests will not entitle the
owner thereof to vote or to any rights of a stockholder of Parent.
(ii) In lieu of such fractional share interests,
Parent shall pay to each former holder of shares of Company Common
Stock an amount in cash equal to the product obtained by multiplying
(A) the fractional share interest to which such former holder (after
taking into account all shares of Company Common Stock held at the
Effective Time by such holder) would otherwise be entitled by (B) the
per share closing price of Parent Common Stock on the Closing Date
(or, if such date is not a trading day, the trading day immediately
preceding the Closing Date) on the New York Stock Exchange, Inc. (the
"NYSE") Composite Transactions Tape (or, if not reported thereby, as
reported by any other authoritative source). As promptly as
practicable after the determination of the amount of cash, if any, to
be paid to holders of fractional interests, the Exchange Agent shall
so notify Parent and Parent shall cause the Surviving Entity to
deposit such amount with the Exchange Agent and shall cause the
Exchange Agent to forward payments to such holders of fractional
interests subject to and in accordance with the terms hereof.
(f) Termination of Exchange Fund. Any portion of
the Exchange Fund that remains undistributed to the holders of the
Certificates for nine months after the Effective Time shall be delivered to
Parent, upon demand, and any holders of Certificates who have not theretofore
complied with this Article II shall thereafter look only to Parent for payment
of their claim for the Merger Consideration, any dividends or other
distributions with respect to shares of Parent Common Stock and cash in lieu
of any fractional shares of Parent Common Stock in accordance with this
Article II. If any Certificate shall not have been surrendered immediately
prior to the date on which any Merger Consideration (and all dividends or
other distributions payable pursuant to Section 2.02(c) and all cash payable
in lieu of fractional shares pursuant to Section 2.02(e)) would otherwise
escheat to or become the property of any Governmental Authority (as defined
below), any such Merger Consideration (and all dividends or other
distributions payable pursuant to Section 2.02(c) and all cash payable in lieu
of fractional shares pursuant to Section 2.02(e)) in respect thereof shall, to
the extent permitted by applicable Law, become the property of Parent, free
and clear of all claims or interest of any person previously entitled thereto.
(g) No Liability. None of Parent, Merger Sub, the
Company or the Exchange Agent shall be liable to any person in respect of any
shares of Parent Common Stock (or dividends or other distributions with
respect thereto) or cash in lieu of any fractional shares of Parent Common
Stock or cash from the Exchange Fund, in each case delivered to a public
official pursuant to any applicable abandoned property, escheat or similar
Law.
(h) Investment of Exchange Fund. The Exchange Agent
shall invest any cash included in the Exchange Fund, as directed by Parent, on
a daily basis. Any interest and other income resulting from such investments
shall be the property of, and shall be paid to, Parent. Any losses resulting
from such investments shall not in any way diminish Parent's and Merger Sub's
obligation to pay the full amount of the Merger Consideration.
(i) Lost Certificates. If any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or destroyed
and, if required by Parent, the posting by such person of a bond in such
reasonable amount as Parent may direct as indemnity against any claim that may
be made against it with respect to such Certificate, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration, any dividends or other distributions to which the holder of
such Certificate would be entitled pursuant to Section 2.02(c) and cash in
lieu of any fractional share of Parent Common Stock to which such holder would
be entitled pursuant to Section 2.02(e), in each case in accordance with the
terms of this Agreement.
(j) Withholding Rights. The Exchange Agent shall be
entitled to deduct and withhold from the consideration otherwise payable to
any holder of shares of Company Common Stock pursuant to this Agreement such
amounts as may be required to be deducted and withheld with respect to the
making of such payment under the Code and the rules and regulations
promulgated thereunder, or under any provision of state or foreign tax Law. To
the extent that amounts are so withheld and paid over to the appropriate
taxing authority, such withheld amounts shall be treated for the purposes of
this Agreement as having been paid to the former holder of the shares of
Company Common Stock. Any such withholding shall be applied first against the
Cash Consideration to the full extent thereof and then against the Stock
Consideration. If withholding is required from shares of Parent Common Stock,
the Exchange Agent shall sell in the open market such shares of Parent Common
Stock on behalf of the former holder of Company Common Stock as is necessary
to satisfy such withholding obligation and shall pay such cash proceeds to the
appropriate taxing authority.
(k) Dissenting Shares. Notwithstanding Section
2.01(c), any shares of Company Common Stock outstanding immediately prior to
the Effective Time and held by a person who has not voted in favor of the
Merger or consented thereto in writing and who has demanded appraisal for such
shares in accordance with Delaware Law (the "Dissenting Shares") shall not be
converted into a right to receive the Merger Consideration, unless such holder
fails to perfect or withdraws or otherwise loses its rights to appraisal or it
is determined that such holder does not have appraisal rights in accordance
with Delaware Law. If, after the Effective Time, such holder fails to perfect
or withdraws or loses its right to appraisal, or if it is determined that such
holder does not have appraisal rights, such shares shall be treated as if they
had been converted as of the Effective Time into the right to receive the
Merger Consideration. The Company shall give Parent and Merger Sub prompt
notice of any demands received by the Company for appraisal of shares, and
Parent and Merger Sub shall have the right to participate in all negotiations
and proceedings with respect to such demands except as required by applicable
Law. The Company shall not, except with prior written consent of Parent, make
any payment with respect to, or settle or offer to settle, any such demands,
unless and to the extent required to do so under applicable Law.
Section 2.03 Company Equity Awards.
(a) All stock options (the "Company Stock
Options"), restricted stock units ("Company RSUs") and deferred stock units
("Company DSUs" and, collectively, with Company Stock Options and Company
RSUs, "Company Equity Awards") outstanding, whether or not exercisable and
whether or not vested, at the Effective Time granted under the Company's 1991
Stock Option Plan, 1997 Independent Contractors Stock Option Plan, 2002 Equity
Incentive Compensation Plan, 2002 Non-Employee Director Stock Option Plan,
Non-Employee Directors Stock Option Plan and the Deferred Compensation Plan
(collectively, the "Company Stock Plans"), shall remain outstanding following
the Effective Time. The definition of Company Stock Options shall also include
stock options granted pursuant to the stock option agreements identified in
Section 3.12(a) of the Company Disclosure Letter. At the Effective Time, all
of the Company Equity Awards shall, by virtue of the Merger and without any
further action on the part of the Company or the holder thereof, be assumed in
full by Parent, which shall have assumed the Company Stock Plans as of the
Effective Time by virtue of this Agreement and without any further action by
Parent. From and after the Effective Time, all references to the Company in
the Company Stock Plans and in any agreement granting Company Equity Awards
shall be deemed to refer to Parent. Each Company Stock Option assumed by
Parent (each, a "Substitute Stock Option") shall be converted automatically
into options to purchase shares of Parent Common Stock upon the same terms and
conditions as are in effect immediately prior to the Effective Time with
respect to such Company Stock Option, except that (i) each such Substitute
Stock Option shall represent the right to acquire, that whole number of shares
of Parent Common Stock (rounded down to the next whole share) equal to the
number of shares of Company Common Stock subject to such Company Stock Option
multiplied by the Option Exchange Ratio and (ii) the option price per share of
Parent Common Stock under each Substitute Stock Option shall be an amount
equal to the option price per share of Company Common Stock subject to the
related Company Stock Option in effect immediately prior to the Effective Time
divided by the Option Exchange Ratio (the option price per share, as so
determined, being rounded up to the next full cent). Each Substitute Stock
Option shall otherwise have the same terms and conditions (including with
respect to vesting, exercisability and cashless exercise), as such Company
Stock Option. For purposes of this Agreement, the "Option Exchange Ratio"
shall be the sum of (x) plus (y), where (x) is the Exchange Ratio and (y) is
the number equal to the quotient of the Cash Consideration divided by the
Parent Trading Price. The "Parent Trading Price" means the average of the per
share closing trading prices of Parent Common Stock on the NYSE Composite
Transactions Tape (or, if not reported thereby, as reported by any other
authoritative source), for the ten trading days ending on the trading day
immediately prior to the Closing Date. Each Company RSU assumed by Parent
(each, a "Substitute RSU") and each Company DSU assumed by Parent (each a
"Substitute DSU" and, collectively, with Substitute Stock Options and
Substitute RSUs, "Substitute Equity Awards") shall be converted automatically
into the right to acquire or receive (as the case may be) shares of Parent
Common Stock upon the same terms and conditions as are in effect immediately
prior to the Effective Time with respect to such Company RSU or Company DSU,
except that each such Substitute RSU or Substitute DSU shall represent the
right to acquire or receive that whole number of shares of Parent Common Stock
(rounded down to the next whole share) equal to the number of shares of
Company Common Stock subject to such Company RSU or Company DSU multiplied by
the Option Exchange Ratio. Each Substitute RSU or Substitute DSU shall
otherwise have the same terms and conditions (including with respect to
vesting), as such Company RSU or Company DSU.
(b) As soon as reasonably practicable after the
Effective Time, Parent shall deliver, or cause to be delivered, to each holder
of a Substitute Equity Award a notice setting forth such holder's rights
pursuant thereto. Except as provided herein, Parent shall comply with the
terms of all such Substitute Equity Awards and ensure that the conversion and
assumption provided in this Section 2.03 with respect to any Company Stock
Option that qualifies as an "incentive stock option" (as defined in section
422 of the Code) shall be effected in a manner consistent with the
requirements of section 424(a) of the Code. Parent shall take all actions with
respect to the Company Stock Plans, and the Company Equity Awards that are
necessary to implement the provisions of this Section 2.03, including all
corporate action necessary to reserve for issuance a sufficient number of
shares of Parent Common Stock for delivery upon exercise of Substitute Equity
Awards pursuant to the terms set forth in this Section 2.03. As soon as
reasonably practicable after the Effective Time, Parent shall register the
shares of Parent Common Stock subject to Substitute Equity Awards by filing a
registration statement on Form S-8 (or any successor form) or another
appropriate form, with the United States Securities and Exchange Commission
(the "SEC") and Parent shall use commercially reasonable efforts to maintain
the effectiveness of such registration statement or registration statements
with respect thereto for so long as Substitute Equity Awards remain
outstanding.
(c) Parent and the Company agree that, in order to
most effectively compensate and retain Company Insiders in connection with the
Merger, both prior to and after the Effective Time, it is desirable that
Company Insiders not be subject to a risk of liability under Section 16(b) of
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act"), to the fullest extent permitted
by applicable Law in connection with the conversion of shares of Company
Common Stock and Company Equity Awards into shares of Parent Common Stock and
Substitute Equity Awards in the Merger, and for that compensatory and
retentive purpose agree to the provisions of this Section 2.03(d). The Board
of Directors of the Company (the "Company Board"), or a committee of
Non-Employee Directors (as such term is defined for purposes of Rule 16b-3(d)
under the Exchange Act) thereof, shall adopt a resolution providing that the
disposition by Company Insiders of Company Common Stock in exchange for shares
of Parent Common Stock and Company Equity Awards upon conversion into
Substitute Equity Awards, in each case pursuant to the transactions
contemplated by this Agreement, are intended to be exempt from liability
pursuant to Section 16(b) under the Exchange Act. "Company Insiders" shall
mean those officers and directors of Company who are subject to the reporting
requirements of Section 16(a) of the Exchange Act. Actions described in this
Section 2.03(c) shall be taken in accordance with the interpretative letter,
dated January 12, 1999, issued by the SEC to Skadden, Arps, Slate, Meagher &
Flom LLP.
(d) Except as set forth in Section 2.03(d) of the
Company Disclosure Letter, since January 1, 2003, the Company, including the
Company Board and any committee acting on behalf of the Company Board, has
not, and will not hereafter, except for the Company Stockholder Approval and
the Merger, take any action to accelerate the vesting or exercisability, or
otherwise amend, modify or change the terms, of any Company Equity Award or
other equity or equity-based awards.
ARTICLE III
Representations and Warranties of the Company
Except as set forth in the disclosure letter (with specific
reference to the Section or Subsection of this Agreement to which the
information stated in such disclosure relates; provided that any fact or
condition disclosed in any section of such disclosure letter in such a way as
to make its relevance to a representation or representations made elsewhere in
this Agreement or information called for by another section of such disclosure
letter reasonably apparent shall be deemed to be an exception to such
representation or representations or to be disclosed on such other section of
such disclosure letter notwithstanding the omission of a reference or cross
reference thereto) delivered by the Company to Parent prior to the execution
of this Agreement (the "Company Disclosure Letter"), the Company represents
and warrants to Parent and Merger Sub as follows:
Section 3.01 Organization, Standing and Corporate Power. The
Company and each of its Subsidiaries is an entity duly organized, validly
existing and in good standing under the Laws of the jurisdiction in which it
is formed and has all requisite power and authority to carry on its business
as now being conducted. The Company and each of its Subsidiaries is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership, leasing or
operation of its properties makes such qualification or licensing necessary,
other than in such jurisdictions where the failure to be so qualified or
licensed individually or in the aggregate has not resulted in, and would not
reasonably be expected to result in, material direct or indirect costs or
liabilities to the Company and its Subsidiaries, taken as a whole. The Company
has made available to Parent complete and correct copies of its Certificate of
Incorporation (the "Company Certificate") and By-laws (the "Company By-laws")
and the certificate of incorporation and by-laws (or comparable organizational
documents) of each of its Subsidiaries, in each case as amended to the date of
this Agreement. The Company has made available to Parent and its
representatives correct and complete copies of the minutes of all meetings of
stockholders, the Company Board and each committee of the Company Board and
the board of directors of each of its Subsidiaries held since December 31,
2000.
Section 3.02 Subsidiaries. Section 3.02 of the Company
Disclosure Letter lists all the Subsidiaries of the Company and, for each such
Subsidiary, the state of formation and each jurisdiction in which such
Subsidiary is qualified or licensed to do business. All the outstanding shares
of capital stock of, or other equity interests in, each such Subsidiary have
been validly issued and are fully paid and nonassessable and are owned
directly or indirectly by the Company free and clear of all pledges, claims,
liens, charges, encumbrances or security interests of any kind or nature
whatsoever (collectively, "Liens"), and free of any restriction on the right
to vote, sell or otherwise dispose of such capital stock or other equity
interests. Except for the capital stock or other equity or voting interests of
its Subsidiaries and publicly traded securities held for investment which do
not exceed 5% of the outstanding securities of any entity, the Company does
not own, directly or indirectly, any capital stock or other equity or voting
interests in any person.
Section 3.03 Capital Structure.
(a) The authorized capital stock of the Company
consists of 400,000,000 shares of Company Common Stock and 2,000,000 shares of
preferred stock, par value $0.01 per share ("Company Preferred Stock"). At the
close of business on April 23, 2004, (i) 106,865,785 shares of Company Common
Stock were issued and 81,522,679 shares of Company Common Stock were
outstanding, (ii) 25,343,106 shares of Company Common Stock were held by the
Company in its treasury, (iii) 17,768,514 shares of Company Common Stock were
reserved for issuance pursuant to the Company Stock Plans (of which 8,849,293
shares of Company Common Stock were subject to outstanding Company Stock
Options, 344,301 shares of Company Common Stock were subject to outstanding
Company RSUs and no shares of Company Common Stock were subject to outstanding
Company DSUs) and (iv) no shares of Company Preferred Stock were issued or
outstanding.
(b) The Company has delivered to Parent a correct
and complete list, as of April 23, 2004, of all outstanding Company Stock
Options, Company RSUs, Company DSUs and other rights to purchase or receive
shares of Company Common Stock granted under the Company Stock Plans or
otherwise, the number of shares of Company Common Stock subject thereto,
whether or not a stock option is an incentive stock option, expiration dates
and exercise prices thereof, in each case broken down as to each plan,
agreement or other arrangement and as to each individual holder. Except as set
forth above in this Section 3.03, at the close of business on April 23, 2004,
no shares of capital stock or other voting securities of the Company were
issued, reserved for issuance or outstanding. Except as set forth above in
this Section 3.03, there are no outstanding stock appreciation rights, rights
to receive shares of Company Common Stock on a deferred basis or other rights
that are linked to the value of Company Common Stock granted under the Company
Stock Plans or otherwise. All outstanding shares of capital stock of the
Company are, and all shares which may be issued pursuant to the Company Stock
Plans will be, when issued in accordance with the terms thereof, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights.
(c) Except as set forth above in this Section 3.03,
there are no bonds, debentures, notes or other indebtedness of the Company
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which stockholders of the Company
may vote. Except as set forth above in this Section 3.03, (i) there are not
issued, reserved for issuance or outstanding (A) any securities of the Company
or any of its Subsidiaries convertible into or exchangeable or exercisable for
shares of capital stock or voting securities of the Company or any of its
Subsidiaries or (B) any warrants, calls, options or other rights to acquire
from the Company or any of its Subsidiaries, or any obligation of the Company
or any of its Subsidiaries to issue, any capital stock, voting securities or
securities convertible into or exchangeable or exercisable for capital stock
or voting securities of the Company or any of its Subsidiaries and (ii) there
are not any outstanding obligations of the Company or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any such securities or to issue,
deliver or sell, or cause to be issued, delivered or sold, any such
securities. Neither the Company nor any of its Subsidiaries is a party to any
voting agreement with respect to the voting of any such securities.
Section 3.04 Authority; Noncontravention.
(a) The Company has all requisite corporate power
and authority to enter into this Agreement and, subject to the adoption of
this Agreement and the Merger by the affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock (the "Company
Stockholder Approval"), to consummate the Merger and the other transactions
contemplated by this Agreement. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the Merger and the other
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of the Company, and no other corporate
proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby, subject, in
the case of the Merger, to receipt of the Company Stockholder Approval. This
Agreement has been duly executed and delivered by the Company and, assuming
the due authorization, execution and delivery by each of the other parties
hereto, constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms (subject to
applicable bankruptcy, solvency, fraudulent transfer, reorganization,
moratorium and other Laws affecting creditors' rights generally from time to
time in effect and by general principles of equity). As of the date hereof,
the Company Board, at a meeting duly called and held at which all the
directors of the Company were present in person or by telephone, duly and
unanimously adopted resolutions (i) declaring that this Agreement, the Merger
and the other transactions contemplated by this Agreement are advisable and in
the best interests of the Company and the Company's stockholders, (ii)
approving and adopting this Agreement, the Merger and the other transactions
contemplated by this Agreement, (iii) directing that the adoption of this
Agreement be submitted to a vote at a meeting of the stockholders of the
Company and (iv) recommending that the stockholders of the Company adopt this
Agreement. The Company Board has taken all action necessary to render the
provisions of Section 203 of the DGCL inapplicable to this Agreement, the
Merger and the other transactions contemplated by this Agreement. No "fair
price", "merger moratorium", "control share acquisition" or other
anti-takeover or similar statute or regulation applies or purports to apply to
this Agreement, the Merger or the other transactions contemplated by this
Agreement.
(b) The execution and delivery of this Agreement do
not, and the consummation of the Merger and the other transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation or breach 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 obligation or
to the loss of a benefit under, or result in the creation of any Lien in or
upon any of the properties or other assets of the Company or any of its
Subsidiaries under, (i) the Company Certificate or the Company By-laws or the
comparable organizational documents of any of its Subsidiaries, (ii) any loan
or credit agreement, bond, debenture, note, mortgage, indenture, lease or
other contract, agreement, obligation, commitment, arrangement, understanding,
instrument, permit or license (each, a "Contract"), to which the Company or
any of its Subsidiaries is a party or any of their respective properties or
other assets is subject or (iii) subject to the governmental filings and other
matters referred to in Section 3.05, any Law applicable to the Company or any
of its Subsidiaries or their respective properties or other assets, other
than, in the case of clauses (ii) and (iii), any such conflicts, violations,
breaches, defaults, rights, losses or Liens that individually or in the
aggregate (A) have not had and would not reasonably be expected to have a
Company Material Adverse Effect, (B) would not reasonably be expected to
impair in any material respect the ability of the Company to perform its
obligations hereunder and (C) would not reasonably be expected to prevent or
materially delay the consummation of any of the transactions contemplated by
this Agreement.
(c) For purposes of this Agreement, "Company
Material Adverse Effect" shall mean any change, effect, event, circumstance,
occurrence or state of facts that is materially adverse to the business,
financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole, other than any change, effect, event,
circumstance, occurrence or state of facts relating to (a) the economy or the
financial markets in general, (b) the industry in which the Company and its
Subsidiaries operate in general, (c) the announcement of this Agreement or the
transactions contemplated hereby (provided that the exclusion set forth in
this clause (c) shall not apply to Section 3.04(b) hereof), (d) changes in
applicable Laws or regulations after the date hereof or (e) changes in GAAP or
regulatory accounting principles after the date hereof; provided that with
respect to clauses (a), (b), (d) and (e), such change, effect, event,
circumstance, occurrence or state of facts (i) does not specifically relate to
(or have the effect of specifically relating to) the Company and its
Subsidiaries and (ii) is not more adverse to the Company and its Subsidiaries
than to other companies operating in the industry in which the Company and its
Subsidiaries operate.
Section 3.05 Governmental Approvals. No consent, approval,
order or authorization of, action by or in respect of, or registration,
declaration or filing with, any Federal, state, local or foreign government,
any court, administrative, regulatory or other governmental agency, commission
or authority or any non-governmental self-regulatory agency, commission or
authority (each, a "Governmental Authority") is required by or with respect to
the Company or any of its Subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company
of the Merger or the other transactions contemplated by this Agreement, except
for those required under or in relation to (a) the premerger notification and
report form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (b) the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (the "Securities Act"), (c) the
Exchange Act, (d) the Certificate of Merger to be filed with the Secretary of
State of the State of Delaware and appropriate documents to be filed with the
relevant authorities of other states in which the Company is qualified to do
business, (e) any appropriate filings with and approvals of the NYSE, (f) the
state insurance and department of health filings and/or approvals set forth in
Section 3.05(f) of the Company Disclosure Letter, (g) state securities or
"blue sky" laws and (h) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which
to be obtained or made individually or in the aggregate would not reasonably
be expected to (x) have a Company Material Adverse Effect, (y) impair in any
material respect the ability of the Company to perform its obligations
hereunder or (z) prevent or materially delay the consummation of any of the
transactions contemplated by this Agreement. The consents, approvals, orders,
authorizations, registrations, declarations and filings set forth in (a)
through (g) above or listed in Section 3.05 of the Company Disclosure Letter
are referred to herein as "Necessary Consents."
Section 3.06 Company SEC Documents; No Undisclosed
Liabilities.
(a) The Company has filed all reports, schedules,
forms, statements and other documents (including exhibits and other
information incorporated therein) with the SEC required to be filed by the
Company since December 31, 2000 (such documents, the "Company SEC Documents").
No Subsidiary of the Company is required to file, or files, any form, report
or other document with the SEC. As of their respective dates, the Company SEC
Documents complied in all material respects with the requirements of the
Securities Act, or the Exchange Act, as the case may be, applicable to such
Company SEC Documents, and none of the Company SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, unless such information contained in any Company SEC Document has
been corrected by a later-filed Company SEC Document. The financial statements
of the Company included in the Company SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles ("GAAP") (except, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present in all material respects
the financial position of the Company and its consolidated Subsidiaries as of
the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case of unaudited
statements, to the absence of footnote disclosure and to normal and recurring
year-end audit adjustments).
(b) Except (i) as set forth in the financial
statements included in the Company's Annual Report on Form 10-K filed prior to
the date hereof for the year ended December 31, 2003 or (ii) as incurred in
the ordinary course of business since December 31, 2003, neither the Company
nor any of its Subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) that individually or in
the aggregate have had or would reasonably be expected to have a Company
Material Adverse Effect. Section 3.06(b) of the Company Disclosure Letter sets
forth a description of the aggregate indebtedness (including guarantees of
indebtedness of any other person) of the Company and its Subsidiaries
outstanding as of the date hereof.
Section 3.07 Information Supplied. None of the information
supplied or to be supplied by the Company specifically for inclusion or
incorporation by reference in (a) the registration statement on Form S-4 to be
filed with the SEC by Parent in connection with the issuance of shares of
Parent Common Stock in the Merger (as amended or supplemented from time to
time, the "Form S-4") will, at the time the Form S-4 is filed with the SEC, at
any time it is amended or supplemented and at the time it becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
are made, not misleading or (b) the proxy statement relating to the Company
Stockholders Meeting (together with any amendments thereof or supplements
thereto, in each case in the form or forms mailed to the Company's
stockholders, the "Proxy Statement") will, at the date the Proxy Statement is
first mailed to the stockholders of the Company and at the time of the Company
Stockholders Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading. The Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act. Notwithstanding
the foregoing, no representation or warranty is made by the Company with
respect to statements made or incorporated by reference in the Form S-4 or the
Proxy Statement based on information supplied by Parent or Merger Sub
specifically for inclusion or incorporation by reference in the Form S-4 or
the Proxy Statement.
Section 3.08 Absence of Certain Changes or Events. Since the
date of the most recent audited financial statements included in the Company
SEC Documents filed by the Company and publicly available prior to the date of
this Agreement (the "Filed Company SEC Documents"), except (a) for liabilities
incurred in connection with this Agreement or the transactions contemplated
hereby to Parent, Merger Sub and the Company's financial and legal advisors or
(b) as disclosed in the Filed Company SEC Documents there has not been any
change, effect, event, circumstance, occurrence or state of facts that
individually or in the aggregate has had or would reasonably be expected to
have a Company Material Adverse Effect.
Section 3.09 Litigation. There is no suit, action, claim,
proceeding or investigation pending or, to the Knowledge of the Company,
threatened against the Company or any of its Subsidiaries that individually or
in the aggregate has had or would reasonably be expected to have a Company
Material Adverse Effect or prevent or materially delay the consummation of any
of the transactions contemplated by this Agreement, nor is there any judgment,
decree, injunction, rule or order of any Governmental Authority or arbitrator
outstanding against, or, to the Knowledge of the Company, investigation by any
Governmental Authority involving, the Company or any of its Subsidiaries that
individually or in the aggregate has had or would reasonably be expected to
have a Company Material Adverse Effect or prevent or materially delay the
consummation of any of the transactions contemplated by this Agreement.
Section 3.10 Contracts.
(a) Neither the Company nor any of its Subsidiaries
is a party to, and none of their respective properties or other assets is
subject to, any Contract that is of a nature required to be filed as an
exhibit to a report or filing under the Securities Act or the Exchange Act,
other than any Contract that is filed as an exhibit to the Filed Company SEC
Documents.
(b) Except for Contracts filed in unredacted form
as exhibits to the Filed Company SEC Documents, Section 3.10(b) of the Company
Disclosure Letter sets forth a correct and complete list as of the date of
this Agreement, and the Company has made available to Parent correct and
complete copies (including all amendments, modifications, extensions,
renewals, guaranties or other Contracts with respect thereto, but excluding
all names, terms and conditions that have been redacted in compliance with
applicable Laws governing the sharing of information), of:
(i) all Contracts (other than Contracts of the
category required to be disclosed in either clause (xiv) or clause
(xv) of this Section 3.10(b), regardless of value) of the Company or
any of its Subsidiaries having an aggregate value per Contract, or
involving payments by or to the Company or any of its Subsidiaries,
of more than $500,000 on an annual basis;
(ii) all Contracts to which the Company or any
of its Subsidiaries is a party, or by which the Company, any of its
Subsidiaries or any of its Affiliates is bound, that contain a
covenant restricting the ability of the Company or any of its
Subsidiaries (or which, following the consummation of the Merger,
would restrict the ability of Parent or any of its Subsidiaries,
including the Surviving Entity and its Subsidiaries) to compete in
any business or with any person or in any geographic area;
(iii) all Contracts of the Company or any of its
Subsidiaries with any Affiliate of the Company (other than any of its
Subsidiaries);
(iv) any (A) Contract to which the Company or
any of its Subsidiaries is a party granting any license to
Intellectual Property, and (B) other license (other than real estate)
having an aggregate value per license, or involving payments by the
Company or any of its Subsidiaries, of more than $500,000 on an
annual basis;
(v) all confidentiality agreements (other than
in the ordinary course of business), agreements by the Company not to
acquire assets or securities of a third party or agreements by a
third party not to acquire assets or securities of the Company;
(vi) any Contract having an aggregate value per
Contract, or involving payments by or to the Company or any of its
Subsidiaries, of more than $500,000 on an annual basis that requires
consent of or notice to a third party in the event of or with respect
to the Merger, including in order to avoid a breach or termination of
or loss of benefit under any such Contract;
(vii) all joint venture, partnership or other
similar agreements involving co-investment with a third party to
which the Company or any of its Subsidiaries is a party;
(viii) any Contract with a Governmental
Authority (other than ordinary course Contracts with Governmental
Authorities as a customer) which imposes any material obligation or
restriction on the Company or its Subsidiaries;
(ix) all leases, subleases, licenses or other
Contracts pursuant to which the Company or any of its Subsidiaries
use or hold any material property involving payments by or to the
Company or any of its Subsidiaries of more than $500,000 on an annual
basis;
(x) all material outsourcing Contracts;
(xi) all Contracts with investment bankers,
financial advisors, attorneys, accountants or other advisors retained
by the Company or any of its Subsidiaries involving payments by or to
the Company or any of its Subsidiaries of more than $500,000 on an
annual basis;
(xii) all Contracts providing for the
indemnification by the Company or any of its Subsidiaries of any
person, except for any such Contract that (i) is not material to the
Company or any of its Subsidiaries and (ii) was entered into in the
ordinary course of business;
(xiii) all Contracts pursuant to which any
indebtedness of the Company or any of its Subsidiaries is outstanding
or may be incurred and all guarantees of or by the Company or any of
its Subsidiaries of any indebtedness of any other person (other than
the Company or any of its Subsidiaries) (except for such indebtedness
or guarantees the aggregate principal amount of which does not exceed
$500,000 on an annual basis and excluding trade payables arising in
the ordinary course of business);
(xiv) (A) the Contracts with hospitals that, in
the aggregate, represent at least 50% of the total projected 2004
payments by the Company and its Subsidiaries to hospitals and (B) the
Contracts with physician groups that, in the aggregate, represent at
least 50% of the claims paid by the Company and its Subsidiaries to
physician groups during the period from October 1, 2002 to September
30, 2003;
(xv) any customer Contract (other than a
Contract with a Provider) that involves (1) annual premiums or
payments of greater than $500,000 or annual administrative services
fees or similar payments of greater than $500,000 and (2) by its
terms, does not terminate on or before one year after the date of
such Contract and is not cancelable during such period without
penalty or without payment (other than customer agreements that are
not terminable within one year solely as a result of the Health
Insurance Portability and Accountability Act and the regulations
promulgated thereunder (including 45 C.F.R. parts 160, 162, and 164)
or other statutory or regulatory requirements); and
(xvi) any Contract with respect to any risk
sharing or risk transfer arrangement or that provides for a
retroactive premium or similar adjustment or withholding arrangement;
and
(xvii) any Contract, agreement or policy for
reinsurance.
(c) (i) None of the Company or any of its
Subsidiaries (x) is, or has received written notice or has Knowledge that any
other party to any of its Contracts is, in violation or breach of or default
(with or without notice or lapse of time or both) under, or (y) has waived or
failed to enforce any rights or benefits under, any Contract to which it is a
party or any of its properties or other assets is subject, and (ii) to the
Knowledge of the Company, there has occurred no event giving to others any
right of termination, amendment or cancellation of (with or without notice or
lapse of time or both) any such Contract except for violations, breaches,
defaults, waivers or failures to enforce rights or benefits covered by clauses
(i) or (ii) above that individually or in the aggregate have not had and would
not reasonably be expected to have a Company Material Adverse Effect.
Section 3.11 Compliance with Laws.
(a) The Company and each of its Subsidiaries has
been since December 31, 2001 and is in compliance with all statutes, laws,
ordinances, rules, regulations, judgments, orders and decrees of any
Governmental Authority (collectively, "Laws") applicable to it, its properties
or other assets or its business or operations, except where any failures to be
in compliance have not had and would not reasonably be expected to have
individually or in the aggregate a Company Material Adverse Effect. None of
the Company or any of its Subsidiaries has received, since December 31, 2001,
a notice or other communication alleging or relating to a possible material
violation of any Laws applicable to its businesses or operations. The Company
and its Subsidiaries have in effect all material permits, licenses, variances,
exemptions, authorizations, operating certificates, franchises, orders and
approvals of all Governmental Authorities (collectively, "Permits") necessary
to carry on their businesses as now conducted, and there has occurred no
material violation of, default (with or without notice or lapse of time or
both) under, or event giving to others any right of termination, amendment or
cancellation of, with or without notice or lapse of time or both, any Permit.
There is no event which has occurred that, to the Knowledge of the Company,
would reasonably be expected to result in the revocation, cancellation,
non-renewal or adverse modification of any such Permit that individually or in
the aggregate would reasonably be expected to have a Company Material Adverse
Effect. Assuming all Closing Consents (as defined below) are made or obtained,
the Merger, in and of itself, would not cause the revocation or cancellation
of any such Permit.
(b) Since December 31, 2001, (i) neither the
Company nor any of its Subsidiaries nor, to the Knowledge of the Company, any
third party service provider acting on behalf of the Company or any of its
Subsidiaries, has received, nor otherwise has any Knowledge of, any written
notice from any Governmental Authority that (x) alleges any material
noncompliance (or that the Company or any of its Subsidiaries or any such
third party service provider is under investigation or the subject of an
inquiry by any such Governmental Authority for such alleged material
noncompliance) with any applicable material Law, (y) asserts any risk-based
capital deficiency or (z) would be reasonably likely to result in a material
fine, assessment or cease and desist order, or the suspension, revocation or
material limitation or restriction of any Permit; and (ii) neither the Company
nor any of its Subsidiaries has entered into any agreement or settlement with
any Governmental Authority with respect to its non-compliance with, or
violation of, any applicable Law.
(c) Since December 31, 2001, the Company and each
of its Subsidiaries has timely filed all material regulatory reports,
schedules, statements, documents, filings, submissions, forms, registrations
and other documents, together with any amendments required to be made with
respect thereto, that each was required to file with any Governmental
Authority, including state health and insurance regulatory authorities and any
applicable Federal regulatory authorities, and have timely paid all Taxes,
fees and assessments due and payable in connection therewith, except where the
failure to make such payments would not be material to the Company or any of
its Subsidiaries.
(d) All premium rates, rating plans and policy
terms established or used by the Company's Subsidiaries that are required to
be filed with and/or approved by Governmental Authorities have been so filed
and/or approved, the premiums charged conform in all material respects to the
premiums so filed and/or approved and comply with the insurance Laws
applicable thereto, and to the Company's Knowledge, no such premiums are
subject to any investigation by any Governmental Authority.
(e) The Company and its Subsidiaries have
implemented policies, procedures and/or programs designed to assure that its
agents and employees are in material compliance with all applicable Laws,
including laws, regulations, directives and opinions of Governmental
Authorities relating to advertising, licensing and sales practices. Each of
the Company and its Subsidiaries and, to the Knowledge of the Company, each
agent or third party service provider acting on behalf of the Company or any
of its Subsidiaries, has marketed, administered, sold and issued insurance and
healthcare products in compliance in all material respects with all applicable
insurance Laws.
(f) The Company and each of its officers and
directors are in compliance with, and have complied, in all material respects
with (i) the applicable provisions of the Sarbanes-Oxley Act of 2002 and the
related rules and regulations promulgated under such act or the Exchange Act
("Sarbanes-Oxley") and (ii) the applicable listing and corporate governance
rules and regulations of the NYSE. The Company has previously disclosed to
Parent all of the information required to be disclosed by the Company and its
officers and employees, including the Company's chief executive officer and
chief financial officer, to the Company Board or any committee thereof
pursuant to the certification requirements relating to Annual Reports on Form
10-K and Quarterly Reports on Form 10-Q. The Company and each of its
Subsidiaries maintains a system of internal accounting controls sufficient to
comply with all legal and accounting requirements applicable to the Company
and such Subsidiary and has previously disclosed to Parent its work plan,
budget and timetable for compliance with the SEC rules promulgated under
Section 404 of Sarbanes-Oxley.
Section 3.12 Employee Benefit Plans.
(a) Section 3.12(a) of the Company Disclosure
Letter sets forth a correct and complete list of: all "employee benefit plans"
(as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), and all other employee benefit plans, programs,
agreements, policies, arrangements or payroll practices, including bonus
plans, employment, consulting or other compensation agreements, collective
bargaining agreements, Company Stock Plans, individual stock option agreements
to which the Company is a party granting stock options to acquire Company
Common Stock that have not been granted under a Company Stock Plan, incentive
and other equity or equity-based compensation, or deferred compensation
arrangements, change in control, termination or severance plans or
arrangements, stock purchase, severance pay, sick leave, vacation pay, salary
continuation for disability, hospitalization, medical insurance, life
insurance and scholarship plans and programs maintained by the Company or any
of its Subsidiaries or to which the Company or any of its Subsidiaries
contributed or is obligated to contribute thereunder for current or former
employees of the Company or any of its Subsidiaries (the "Employees")
(collectively, the "Company Plans").
(b) Correct and complete copies of the following
documents, with respect to each of the Company Plans (other than a
Multiemployer Plan), have been delivered or made available to Parent by the
Company, to the extent applicable: (i) any plans, all amendments and
attachments thereto and related trust documents, insurance contracts or other
funding arrangements, and amendments thereto; (ii) the most recent Forms 5500
and all schedules thereto and the most recent actuarial report, if any; (iii)
the most recent IRS determination letter; (iv) summary plan descriptions; and
(v) material written communications to employees generally.
(c) The Company Plans have been maintained in
accordance with their terms and with all provisions of ERISA, the Code and
other applicable Laws, and neither the Company (or any of its Subsidiaries)
nor any "party in interest" or "disqualified person" with respect to the
Company Plans has engaged in a non-exempt "prohibited transaction" within the
meaning of Section 4975 of the Code or Section 406 of ERISA, except as
individually or in the aggregate have not had and would not reasonably be
expected to have a Company Material Adverse Effect. No fiduciary has any
liability for breach of fiduciary duty or any other failure to act or comply
in connection with the administration or investment of the assets of any
Company Plan, except as individually or in the aggregate have not had and
would not reasonably be expected to have a Company Material Adverse Effect.
(d) The Company Plans intended to qualify under
Section 401 of the Code are so qualified and any trusts intended to be exempt
from Federal income taxation under Section 501 of the Code are so exempt,
except as individually or in the aggregate have not had and would not
reasonably be expected to have a Company Material Adverse Effect.
(e) None of the Company, its Subsidiaries or any
trade or business (whether or not incorporated) that is treated as a single
employer, with any of them under Section 414(b), (c), (m) or (o) of the Code
has any current or contingent liability with respect to (i) a plan subject to
Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code or (ii)
any "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA). Each
Company Plan that is intended to meet the requirements for tax-favored
treatment under Subchapter B of Chapter 1 of Subtitle A of the Code meets such
requirements, with such exceptions that individually or in the aggregate have
not had and would not reasonably be expected to have a Company Material
Adverse Effect.
(f) All contributions (including all employer
contributions and employee salary reduction contributions) required to have
been made under any of the Company Plans (including workers compensation) or
by Law (without regard to any waivers granted under Section 412 of the Code),
to any funds or trusts established thereunder or in connection therewith have
been made by the due date thereof (including any valid extension).
(g) There are no pending actions, claims or
lawsuits that have been asserted or instituted against the Company Plans, the
assets of any of the trusts under the Company Plans or the sponsor or
administrator of any of the Company Plans, or against any fiduciary of the
Company Plans with respect to the operation of any of the Company Plans (other
than routine benefit claims), nor does the Company have any Knowledge of facts
that could form the basis for any such action, claim or lawsuit, other than
such actions, claims or lawsuits that individually or in the aggregate have
not had and would not reasonably be expected to have a Company Material
Adverse Effect.
(h) None of the Company Plans provides for
post-employment life or health insurance, benefits or coverage for any
participant or any beneficiary of a participant, except as may be required
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"), or applicable state law, and at the expense of the participant or
the participant's beneficiary. Each of the Company and any ERISA Affiliate
which maintains a "group health plan" within the meaning Section 5000(b)(1) of
the Code has complied with the notice and continuation requirements of Section
4980B of the Code, COBRA, Part 6 of Subtitle B of Title I of ERISA and the
regulations thereunder, except where the failure to comply individually or in
the aggregate has not had and would not reasonably be expected to have a
Company Material Adverse Effect.
(i) Except as set forth in Section 3.12(i) of the
Company Disclosure Letter (to the extent applicable, in each case broken down
as to each item, and the individual and amount involved), neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby, including the Company Stockholder Approval
or the Merger, will (i) result in any payment becoming due to any Employee,
(ii) increase any benefits otherwise payable under any Company Plan, (iii)
result in the acceleration of the time of payment or vesting of any such
benefits under any Company Plan or (iv) result in any obligation to fund any
trust or other arrangement with respect to compensation or benefits under a
Company Plan. Except as set forth in Section 3.12(i) of the Company Disclosure
Letter, since January 1, 2004, the Company, including the Company Board, any
committee thereof and any officer of the Company, has not taken any action to
increase the compensation or benefits payable after the date hereof to any
officer having the title of senior vice president or higher of the Company.
(j) Neither the Company nor any of its Subsidiaries
has a contract, plan or commitment, whether legally binding or not, to create
any additional Company Plan or to modify any existing Company Plan, except as
required by applicable Law or tax qualification requirement.
(k) Any individual who performs services for the
Company or any of its Subsidiaries (other than through a contract with an
organization other than such individual) and who is not treated as an employee
of the Company or any of its Subsidiaries for Federal income tax purposes by
the Company or any of its Subsidiaries is not an employee for such purposes,
except as individually or in the aggregate, together with any breach or
breaches of Section 3.12(c) hereof (without regard to any materiality or
Company Material Adverse Effect qualifiers therein), has not had and would not
reasonably be expected to have a Company Material Adverse Effect.
(l) Neither the Company nor any of its Subsidiaries
is a party to any contract, agreement or other arrangement providing for the
payment of any amount which would not be deductible by reason of Section
162(m) or Section 280G of the Code.
Section 3.13 Taxes.
(a) The Company and each of its Subsidiaries has
timely filed, or has caused to be timely filed on its behalf (taking into
account any extension of time within which to file), all material tax returns
required to be filed by it, and all such filed tax returns are correct and
complete in all material respects. All taxes shown to be due on such tax
returns, and all material taxes otherwise required to be paid by the Company
or any of its Subsidiaries, have been timely paid.
(b) All taxes due and payable by the Company and
its Subsidiaries have been adequately provided for in the financial statements
of the Company and its Subsidiaries for all periods ending through the date
hereof. No material deficiency with respect to taxes has been proposed,
asserted or assessed against the Company or any of its Subsidiaries that has
not been paid in full or fully resolved in favor of the taxpayer. No
reductions have been made to the December 31, 2003 current tax reserve and
valuation allowance previously reported to Parent.
(c) The income tax returns of the Company and each
of its Subsidiaries have been examined by and settled with (or received a "no
change" letter from) the Internal Revenue Service (the "IRS") (or, to the
Knowledge of the Company, the applicable statute of limitations has expired)
for all years through 2000. All material assessments for taxes due with
respect to such completed and settled examinations or any concluded litigation
have been fully paid.
(d) Neither the Company nor any of its Subsidiaries
has any obligation under any agreement (either with any person or any taxing
authority) with respect to material taxes.
(e) Neither the Company nor any of its Subsidiaries
has constituted either a "distributing corporation" or a "controlled
corporation" (within the meaning of Section 355(a)(1)(A) of the Code) in a
distribution of stock qualifying for tax-free treatment under Section 355 of
the Code since the effective date of Section 355(e) of the Code.
(f) Neither the Company nor any of its Subsidiaries
has (i) been a member of an affiliated group of corporations within the
meaning of Section 1504 of the Code, other than the affiliated group of which
the Company is the common parent or (ii) any material liability for the taxes
of any other person (other than the Company or any of its Subsidiaries) under
any state, local or foreign law, as a transferee or successor, by contract, or
otherwise.
(g) No audit or other administrative or court
proceedings are pending with any taxing authority with respect to any Federal,
state or local income or other material taxes of the Company or any of its
Subsidiaries, and no written notice thereof has been received by the Company
or any of its Subsidiaries. No issue has been raised by any taxing authority
in any presently pending tax audit that could be material and adverse to the
Company or any of its Subsidiaries for any period after the Effective Time.
Neither the Company nor any of its Subsidiaries has any outstanding
agreements, waivers or arrangements extending the statutory period of
limitations applicable to any claim for, or the period for the collection or
assessment of, any Federal, state or local income or other material taxes.
(h) No written claim that could give rise to
material taxes has been made within the previous five years by a taxing
authority in a jurisdiction where the Company or any of its Subsidiaries does
not file tax returns that the Company or any of its Subsidiaries is or may be
subject to taxation in that jurisdiction.
(i) The Company has made available to Parent
correct and complete copies of (i) all income and franchise tax returns of the
Company and its Subsidiaries for the preceding three taxable years and (ii)
any audit report issued within the last three years (or otherwise with respect
to any audit or proceeding in progress) relating to income or franchise taxes
of the Company or any of its Subsidiaries.
(j) No Liens for taxes exist with respect to any
properties or other assets of the Company or any of its Subsidiaries, except
for Liens for taxes not yet due.
(k) All material taxes required to be withheld by
the Company or any of its Subsidiaries have been withheld and have been or
will be duly and timely paid to the proper taxing authority.
(l) Neither the Company nor any of its Subsidiaries
has taken any action, has failed to take any action or has any Knowledge of
any fact or circumstance that would reasonably be likely to prevent the Merger
from qualifying as a reorganization under Section 368 of the Code.
(m) For purposes of this Agreement, (i) "taxes"
shall mean taxes of any kind (including those measured by or referred to as
income, franchise, gross receipts, sales, use, ad valorem, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation,
premium, value added, property, windfall profits, customs, duties or similar
fees, assessments or charges of any kind whatsoever) together with any
interest and any penalties, additions to tax or additional amounts imposed by
any taxing authority with respect thereto, domestic or foreign and shall
include any transferee or successor liability in respect of taxes (whether by
contract or otherwise) and any several liability in respect of any tax as a
result of being a member of any affiliated, consolidated, combined, unitary or
similar group and (ii) "tax returns" shall mean any return, report, claim for
refund, estimate, information return or statement or other similar document
relating to or required to be filed with any taxing authority with respect to
taxes, including any schedule or attachment thereto, and including any
amendment thereof.
Section 3.14 Intellectual Property; Software.
(a) As used herein: (i) "Intellectual Property"
means all U.S. and foreign (a) trademarks, service marks, trade names,
Internet domain names, designs, logos, slogans and other distinctive indicia
of origin, together with goodwill, registrations and applications relating to
the foregoing ("Trademarks"); (b) patents and pending patent applications,
invention disclosure statements, and any and all divisions, continuations,
continuations-in-part, reissues, reexaminations, and any extensions thereof,
any counterparts claiming priority therefrom and like statutory rights
("Patents"); (c) registered and unregistered copyrights (including those in
Software), rights of publicity and all registrations and applications to
register the same ("Copyrights"); and (d) confidential technology, know-how,
inventions, processes, formulae, algorithms, models and methodologies ("Trade
Secrets"); (ii) "IP Licenses" means all Contracts (excluding "click-wrap" or
"shrink-wrap" agreements or agreements contained in "off-the-shelf" Software
or the terms of use or service for any Web site) pursuant to which the Company
and its Subsidiaries have acquired rights in (including usage rights) to any
Intellectual Property, or licenses and agreements pursuant to which the
Company and its Subsidiaries have licensed or transferred the right to use any
Intellectual Property, including license agreements, settlement agreements and
covenants not to sue; (iii) "Software" means all computer programs, including
any and all software implementations of algorithms, models and methodologies
whether in source code or object code form, databases and compilations,
including any and all electronic data and electronic collections of data, all
documentation, including user manuals and training materials, related to any
of the foregoing and the content and information contained on any Web site;
and (iv) "Company Intellectual Property" means the Intellectual Property and
Software held for use or used in the business of the Company or its
Subsidiaries as presently conducted.
(b) Section 3.14(b) of the Company Disclosure
Letter sets forth, for the Intellectual Property owned by the Company and its
Subsidiaries, a complete and accurate list of all U.S., state and foreign: (i)
Patents issued or pending; (ii) Trademark registrations and applications for
registration (including Internet domain name registrations) and material
unregistered trademarks and service marks; and (iii) material Copyrights.
(c) Section 3.14(c) of the Company Disclosure
Letter lists all (i) material Software that is owned by the Company or its
Subsidiaries and (ii) material IP Licenses.
(d) The Company, or one of its Subsidiaries, owns
or possesses all licenses or other legal rights to use, sell or license all
material Company Intellectual Property, free and clear of all Liens, except as
would not reasonably be expected to result in, in the aggregate, material
direct or indirect costs or liabilities to, or other material direct or
indirect negative impact on, the Company and its Subsidiaries, taken as a
whole.
(e) All Trademark registrations and applications
for registration, Patents issued or pending and Copyright registrations and
applications for registration owned by the Company and its Subsidiaries are
valid and subsisting, in full force and effect and have not lapsed, expired or
been abandoned, and, to the Knowledge of the Company or its Subsidiaries, are
not the subject of any opposition filed with the United States Patent and
Trademark Office or any other intellectual property registry.
(f) The Company Intellectual Property constitutes
all the Intellectual Property and Software necessary for the continuing
conduct and operation of the Company's business as currently conducted and
operated by the Company, except as would not reasonably be expected to result
in, in the aggregate, material direct or indirect costs or liabilities to, or
other material direct or indirect negative impact on, the Company and its
Subsidiaries, taken as a whole.
(g) Except as set forth in Section 3.14(g) of the
Company Disclosure Letter:
(i) no unresolved claims, or to the Knowledge of
the Company, threat of claims within the three (3) years prior to the
date of this Agreement, have been asserted in writing by any third
party against the Company or any of its Subsidiaries related to the
use in the conduct of the businesses of the Company and its
Subsidiaries that the Company Intellectual Property or the conduct of
the business of the Company infringes, misappropriates, dilutes or
otherwise violates any Intellectual Property rights of any third
party;
(ii) the conduct of the businesses of the
Company and its Subsidiaries does not infringe, misappropriate,
dilute or otherwise violate any Intellectual Property rights of any
third party, except as would not reasonably be expected to result in,
in the aggregate, material direct or indirect costs or liabilities
to, or other material direct or indirect negative impact on, the
Company and its Subsidiaries, taken as a whole;
(iii) to the Knowledge of the Company, no third
party is infringing, misappropriating, diluting or violating any
Company Intellectual Property, except as would not reasonably be
expected to result in, in the aggregate, material direct or indirect
costs or liabilities to, or other material direct or indirect
negative impact on, the Company and its Subsidiaries, taken as a
whole;
(iv) no settlement agreements, consents,
judgments, orders, forbearances to sue or similar obligations limit
or restrict the Company's or any Subsidiary's rights in and to any
Company Intellectual Property, except as would not reasonably be
expected to result in, in the aggregate, material direct or indirect
costs or liabilities to, or other material direct or indirect
negative impact on, the Company and its Subsidiaries, taken as a
whole;
(v) the Company and its Subsidiaries have not
licensed or sublicensed their rights in any Company Intellectual
Property, or received or been granted any such rights (except
pursuant to "click-wrap" or "shrink-wrap" agreements or agreements
contained in "off-the-shelf" Software or the terms of use or service
for any Web site), other than pursuant to the IP Licenses;
(vi) there is no default under any of the IP
Licenses by the Company or any of its Subsidiaries or, to the
Knowledge of the Company, by the other party thereto, except as would
not reasonably be expected to result in, in the aggregate, material
direct or indirect costs or liabilities to, or other material direct
or indirect negative impact on, the Company and its Subsidiaries,
taken as a whole;
(vii) the Company and its Subsidiaries have
taken reasonable measures to protect the confidentiality of their
Trade Secrets; and
(viii) the consummation of the transactions
contemplated hereby will not result in the loss or impairment of the
Company's and its Subsidiaries' rights to own or use any of the
Company Intellectual Property or obligate them to pay any royalties
or other amounts to any third party in excess of the amounts payable
by them prior to the Closing, nor will such consummation require the
consent of any third party in respect of any Company Intellectual
Property, except as would not reasonably be expected to result in, in
the aggregate, material direct or indirect costs or liabilities to,
or other material direct or indirect negative impact on, the Company
and its Subsidiaries, taken as a whole.
(h) The Company and each of its Subsidiaries has at
all times (i) disclosed its personal data collection and use policy on its
websites and (ii) complied in all material respects with such policy. Neither
this Agreement nor the consummation of the transactions contemplated hereby
will violate in any material respect any such personal data policy or any
other applicable privacy or personal data Laws.
(i) The Company maintains possession over the
Software and the documentation (including user guides) reasonably necessary to
use the Software, and the Company maintains possession and control over the
source code and/or such other documentation (including user guides and
specifications) for all Software set forth in Section 3.14(c) of the Company
Disclosure Letter which is listed as owned by the Company or any of its
Subsidiaries (the "Proprietary Software") reasonably necessary to use,
maintain, and modify the Proprietary Software. The Proprietary Software, and,
to the Knowledge of the Company, the Software included in the Company
Intellectual Property which it or its Subsidiaries license or otherwise use
(i) functions in compliance in all respects with its related documentation and
specifications, and functions properly in all respects to achieve its intended
purposes and (ii) is free of any computer instructions, devices or techniques
that are designed to infect, disrupt, damage, disable or alter such Software
or its processing environment (including other programs, equipment and data),
except in the case of clauses (i) and (ii) above, as would not reasonably be
expected to result in, in the aggregate, material direct or indirect costs or
liabilities to, or other material direct or indirect negative impact on, the
Company and its Subsidiaries, taken as a whole.
Section 3.15 Properties and Assets. Neither the Company nor
its Subsidiaries owns any real property. Section 3.15 of the Company
Disclosure Letter sets forth the address of each parcel of all leasehold or
subleasehold estates and other rights to use or occupy any land, buildings,
structures, improvements, fixture or other interest in real property held by
or for the Company or its Subsidiaries (the "Leased Real Property"). Section
3.15 of the Company Disclosure Letter sets forth all sublicenses, licenses and
other grants by the Company or any of its Subsidiaries to any person of the
right to use or occupy such Leased Real Property or any portion thereof
involving, in any such case, payments of more than $100,000 annually. The
Company and each of its Subsidiaries has such good and valid title to, or such
valid rights by lease, license, other agreement or otherwise to use, all
assets and properties (in each case, tangible and intangible) necessary to
enable the Company and its Subsidiaries to conduct their business as currently
conducted, except for defects in title, easements, restrictive covenants and
similar encumbrances that, individually or in the aggregate, would not
reasonably be expected to materially interfere with its ability to conduct its
business as presently conducted.
Section 3.16 Environmental Matters. Except as would not
reasonably be expected to have a Company Material Adverse Effect in the case
of clauses (b), (c) and (d) below (it being agreed that clause (a) below shall
not be qualified by a Company Material Adverse Effect), (a) no material
written notice, notification, demand, request for information, citation,
summons, complaint or order has been received by, and no material action,
claim, suit, proceeding or review or investigation is pending or, to the
Knowledge of the Company or any of its Subsidiaries, threatened by any person
against, the Company, any of its Subsidiaries or any person whose liability
the Company or any of its Subsidiaries has or may have retained or assumed
either contractually or by operation of law with respect to any matters
relating to or arising out of any Environmental Law; (b) the Company and its
Subsidiaries have been and are in compliance with all Environmental Laws,
including possessing all permits, authorizations, licenses, exemptions and
other governmental authorizations required for its operations under applicable
Environmental Laws; (c) the Company and its Subsidiaries do not have any
Environmental Liabilities and, to the Knowledge of the Company or any of its
Subsidiaries, no facts, circumstances or conditions relating to, arising from,
associated with or attributable to (i) any real property currently or formerly
owned, operated or leased by the Company or its Subsidiaries or operations
thereon or (ii) any person whose liability the Company or any of its
Subsidiaries has or may have retained or assumed either contractually or by
operation of law would reasonably be expected to result in Environmental
Liabilities; and (d) to the Knowledge of the Company or any of its
Subsidiaries, with respect to any real property currently or formerly owned or
leased, as the case may be, by the Company or its Subsidiaries, there have
been no Releases of Hazardous Materials that have or are reasonably likely to
result in a claim against the Company or its Subsidiaries.
As used in this Agreement, the term "Environmental Laws"
means Federal, state, local and foreign statutes, Laws, judicial decisions,
regulations, ordinances, rules, judgments, orders, codes, injunctions, permits
and governmental agreements relating to the protection of human health as it
relates to Hazardous Materials exposure or the environment, including
Hazardous Materials.
As used in this Agreement, the term "Environmental
Liabilities" with respect to any Person means any and all liabilities of or
relating to such Person or any of its Subsidiaries (including any entity which
is, in whole or in part, a predecessor of such Person or any of such
Subsidiaries), whether vested or unvested, contingent or fixed, including
contractual, which (i) arise under applicable Environmental Laws or with
respect to Hazardous Materials and (ii) relate to actions occurring or
conditions existing on or prior to the Closing Date.
As used in this Agreement, the term "Hazardous Material"
means all substances or materials regulated as hazardous, toxic, explosive,
dangerous, flammable or radioactive under any Environmental Law including (i)
petroleum, asbestos or polychlorinated biphenyls and (ii) in the United
States, all substances defined as Hazardous Substances, Oils, Pollutants or
Contaminants in the National Oil and Hazardous Substances Pollution
Contingency Plan, 40 C.F.R. Section 300.5.
As used in this Agreement, the term "Release" means any
release, spill, emission, discharge, leaking, pumping, injection, deposit,
disposal, dispersal, leaching or migration into the indoor or outdoor
environment (including ambient air, surface water, groundwater, and surface or
subsurface strata) or into or out of any property, including the movement of
Hazardous Materials through or in the air, soil, surface water, groundwater or
property.
Section 3.17 Transactions with Related Parties. Since March
31, 2003, there has been no transaction, or series of similar transactions,
agreements, arrangements or understandings, nor are there any currently
proposed transactions, or series of similar transactions, agreements,
arrangements or understandings to which the Company or any of its Subsidiaries
was or is to be a party, that would be required to be disclosed under Item 404
of Regulation S-K promulgated under the Securities Act.
Section 3.18 Brokers and Other Advisors. No broker,
investment banker, financial advisor or other person, other than Goldman,
Sachs & Co., the fees and expenses of which will be paid by the Company in
accordance with the Company's agreements with such firm (a complete copy of
which has heretofore been made available to Parent), is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission, or
the reimbursement of expenses, in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company or its Subsidiaries.
Section 3.19 Opinion of Financial Advisor. The Company has
received the opinion of Goldman, Sachs & Co. dated the date hereof to the
effect that, as of such date, the Merger Consideration is fair from a
financial point of view to the holders of shares of Company Common Stock, a
complete copy of which opinion will be made available to Parent as soon as
practicable after the date of this Agreement.
Section 3.20 Statutory Financial Statements.
(a) Section 3.20(a) of the Company Disclosure
Letter sets forth a list of all annual statements and quarterly statements of
the Company's Subsidiaries filed with Governmental Authorities for the years
ended December 31, 2002 and December 31, 2003, and for each quarterly period
ending after December 31, 2003 (together with all such filings hereafter made
for annual and quarterly periods prior to the Closing, the "State Regulatory
Filings"). Except as otherwise set forth in such State Regulatory Filings when
made, all such State Regulatory Filings and the statutory balance sheets and
income statements included therein (i) were prepared or will be prepared from
the books and records of the Company's Subsidiaries, (ii) fairly present or
will fairly present in all material respects the statutory financial condition
and results of operations of the Company's Subsidiaries, as applicable, as of
the date and for the periods indicated therein and (iii) have been prepared or
will be prepared in accordance with applicable statutory accounting principles
consistently applied throughout the periods indicated, except as may be
reflected in the notes thereto and subject to the absence of notes required by
statutory accounting principles and to normal year-end adjustments.
(b) The Company has provided Parent with true and
correct copies of all actuarial reports prepared by independent or internal
actuaries since January 1, 2001 (other than actuarial reports prepared by
internal actuaries that are not material to the aggregate reserves of the
Company or any of its Subsidiaries) and all attachments, addenda, supplements
and modifications thereto.
Section 3.21 Reserves. The loss reserves (including reserves
for medical costs and for payment disputes with Providers) and other actuarial
amounts of the Company and each of its Subsidiaries recorded in their
respective financial statements contained in the Company's SEC Documents and
the State Regulatory Filings (i) are determined in all material respects in
accordance with generally accepted actuarial standards consistently applied
(except as otherwise noted in such financial statements), (ii) are fairly
stated in all material respects in accordance with sound actuarial principles,
(iii) satisfy all applicable Laws in all material respects and have been
computed on the basis of methodologies consistent in all material respects
with those used in computing the corresponding reserves in the prior fiscal
years and (iv) include provisions for all actuarial reserves and related items
which ought to be established in accordance with applicable Laws. To the
Knowledge of the Company, there are no facts or circumstances which would
necessitate, in the good faith application of prudent reserving practices and
policies, any material adverse change in the statutorily required reserves or
reserves above those reflected in the most recent balance sheet (other than
increases consistent with past experience resulting from increases in
enrollment with respect to services provided by the Company or its
Subsidiaries). As of December 31, 2003, each of the Company's Subsidiaries for
which there are statutory net worth and other deposit or capital requirements
(the "Regulated Subsidiaries") met or exceeded said statutory net worth,
deposit or other capital requirements. As of December 31, 2003, each of the
Regulated Subsidiaries had statutory net worth in excess of 200% of the
authorized control level, as such term is defined in the NAIC Risk-Based
Capital guidelines ("Authorized Control Level"). Each of these subsidiaries
will, as of the date of any subsequent State Regulatory Filing prior to the
Closing, have statutory net worth which is a percentage of the Authorized
Control Level that is at least equal to the percentage of the Authorized
Control Level that the statutory net worth was as of December 31, 2003, except
for the effect of any dividends paid by a Regulated Subsidiary to the Company.
ARTICLE IV
Representations and Warranties of Parent and Merger Sub
Except as set forth in the disclosure letter (with specific
reference to the Section or Subsection of this Agreement to which the
information stated in such disclosure relates; provided that, any fact or
condition disclosed in any section of such disclosure letter in such a way as
to make its relevance to a representation or representations made elsewhere in
this Agreement or information called for by another section of such disclosure
letter reasonably apparent shall be deemed to be an exception to such
representation or representations or to be disclosed on such other section of
such disclosure letter notwithstanding the omission of a reference or cross
reference thereto) delivered by Parent to the Company prior to the execution
of this Agreement (the "Parent Disclosure Letter"), Parent and Merger Sub
represent and warrant to the Company as follows:
Section 4.01 Organization, Standing and Corporate Power.
Each of Parent, its Subsidiaries and Merger Sub is an entity duly organized,
validly existing and in good standing under the Laws of the jurisdiction in
which it is formed and has all requisite power and authority to carry on its
business as now being conducted. Parent, its Subsidiaries and Merger Sub is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership, leasing or
operation of its properties makes such qualification or licensing necessary,
other than in such jurisdictions where the failure to be so qualified or
licensed individually or in the aggregate has not resulted in, and would not
reasonably be expected to result in, material direct or indirect costs or
liabilities to Parent and its Subsidiaries. Parent has made available to the
Company complete and correct copies of its Articles of Incorporation (the
"Parent Articles") and By-laws (the "Parent By-laws") and the articles of
incorporation and by-laws or comparable organizational documents) of each of
its Subsidiaries and Merger Sub, in each case as amended to the date of this
Agreement.
Section 4.02 Capital Structure.
(a) The authorized capital stock of Parent consists
of 1,500,000,000 shares of Parent Common Stock and 10,000,000 shares of
preferred stock, par value $0.001 per share ("Parent Preferred Stock"). At the
close of business on April 14, 2004, (i) 619,575,505 shares of Parent Common
Stock were issued and outstanding, (ii) no shares of Parent Common Stock were
held by Parent in its treasury, (iii) 136,985,594 shares of Parent Common
Stock were reserved for issuance (including shares underlying outstanding
stock options and shares available for future grant) pursuant to the 2002
Stock Incentive Plan, as amended, the 1987 Supplemental Stock Option Plan, the
1993 Qualified Employee Stock Purchase Plan, as amended, and stock options
assumed in connection with prior acquisitions (of which 83,967,614 shares of
Parent Common Stock were subject to outstanding stock options) and (iv) no
shares of Parent Preferred Stock were issued or outstanding. Except as set
forth above in this Section 4.02(a), at the close of business on April 14,
2004, no shares of capital stock or other voting securities of Parent were
issued, reserved for issuance or outstanding. All outstanding shares of
capital stock of Parent are, and all shares which may be issued (including
shares of Parent Common Stock to be issued in accordance with this Agreement)
will be, when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. Except as set forth above
in this Section 4.02(a), there are no bonds, debentures, notes or other
indebtedness of Parent having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of Parent may vote.
(b) The authorized equity interests of Merger Sub
consists of 100 membership interests ("Merger Sub Interests"). All of the
issued and outstanding Merger Sub Interests are owned by Parent. Merger Sub
does not have issued or outstanding any options, warrants, subscriptions,
calls, rights, convertible securities or other agreements or commitments
obligating Merger Sub to issue, transfer or sell any Merger Sub Interests to
any person, other than Parent.
Section 4.03 Authority; Noncontravention.
(a) Each of Parent and Merger Sub has all requisite
organizational power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate or other organizational action on the part of Parent and Merger Sub
and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Parent and Merger Sub and, assuming the due authorization, execution and
delivery by the other party hereto, constitutes a legal, valid and binding
obligation of Parent and Merger Sub, enforceable against Parent and Merger Sub
in accordance with its terms (subject to applicable bankruptcy, solvency,
fraudulent transfer, reorganization, moratorium and other Laws affecting
creditors' rights generally from time to time in effect and by general
principles of equity). As of the date hereof, the board of directors of Parent
(the "Parent Board"), at a meeting duly called and held, duly adopted
resolutions, approving this Agreement, the Merger and the other transactions
contemplated by this Agreement.
(b) The execution and delivery of this Agreement do
not, and the consummation of the Merger and the other transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation or breach 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 obligation or
to the loss of a benefit under, or result in the creation of any Lien in or
upon any of the properties or other assets of Parent, any of its Subsidiaries
or Merger Sub under (i) the Parent Articles or Parent By-laws or the
comparable organizational documents of any of its Subsidiaries or Merger Sub,
(ii) any Contract to which Parent, any of its Subsidiaries or Merger Sub is a
party or any of their respective properties or other assets is subject or
(iii) subject to the governmental filings and other matters referred to in
Section 4.04 hereof, any Law applicable to Parent, any of its Subsidiaries or
Merger Sub or their respective properties or other assets, other than, in the
case of clauses (ii) and (iii), any such conflicts, violations, breaches,
defaults, rights, losses or Liens that individually or in the aggregate (A)
have not had and would not reasonably be expected to have a Parent Material
Adverse Effect, (B) would not reasonably be expected to impair in any material
respect the ability of Parent or Merger Sub to perform its obligations under
this Agreement and (C) would not reasonably be expected to prevent or
materially delay the consummation of any of the transactions contemplated by
this Agreement.
(c) For purposes of this Agreement, "Parent
Material Adverse Effect" shall mean any change, effect, event, circumstance,
occurrence or state of facts that is materially adverse to the business,
financial condition, or results of operations of Parent and its Subsidiaries,
taken as a whole, other than any change, effect, event, circumstance,
occurrence or state of facts relating to (a) the economy or the financial
markets in general, (b) the industry in which Parent and its Subsidiaries
operate in general, (c) the announcement of this Agreement or the transactions
contemplated hereby (provided that the exclusion set forth in this clause (c)
shall not apply to Section 4.03(b) hereof), (d) changes in applicable Laws or
regulations after the date hereof or (e) changes in GAAP or regulatory
accounting principles after the date hereof; provided that with respect to
clauses (a), (b), (d) and (e), such change, effect, event, circumstance,
occurrence or state of facts (i) does not specifically relate to (or have the
effect of specifically relating to) to Parent and its Subsidiaries and (ii) is
not more adverse to Parent and its Subsidiaries than to other companies
operating in the industry in which Parent and its Subsidiaries operate.
Section 4.04 Governmental Approvals. No consent, approval,
order or authorization of, action by or in respect of, or registration,
declaration or filing with, any Governmental Authority is required by or with
respect to Parent, any of its Subsidiaries or Merger Sub in connection with
the execution and delivery of this Agreement by Parent and Merger Sub or the
consummation by Parent and Merger Sub of the Merger or the other transactions
contemplated by this Agreement, except for (a) Necessary Consents and (b) such
other consents, approvals, orders, authorizations, registrations, declarations
and filings the failure of which to be obtained or made individually or in the
aggregate would not reasonably be expected to (x) have a Parent Material
Adverse Effect, (y) impair in any material respect the ability of Parent or
Merger Sub to perform its obligations under this Agreement or (z) prevent or
materially delay the consummation of any of the transactions contemplated by
this Agreement.
Section 4.05 Parent SEC Documents.
(a) Parent has filed all reports, schedules, forms,
statements and other documents (including exhibits and other information
incorporated therein) with the SEC required to be filed by Parent since
December 31, 2000 (such documents, the "Parent SEC Documents"). No Subsidiary
of Parent is required to file, or files, any form, report or other document
with the SEC. As of their respective dates, the Parent SEC Documents complied
in all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, applicable to such Parent SEC Documents, and
none of the Parent SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, unless such
information contained in any Parent SEC Document has been corrected by a
later-filed Parent SEC Document. The financial statements of Parent included
in the Parent SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited statements, as permitted by Form 10-Q of the
SEC) applied on a consistent basis during the periods involved (except as may
be indicated in the notes thereto) and fairly present in all material respects
the financial position of Parent and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
the absence of footnote disclosure and to normal and recurring year-end audit
adjustments).
(b) Except (i) as set forth in the financial
statements included in Parent's Annual Report on Form 10-K filed prior to the
date hereof for the year ended December 31, 2003 or (ii) as incurred in the
ordinary course of business since December 31, 2003, neither Parent nor any of
its Subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that individually or in the
aggregate have had or would reasonably be expected to have a Parent Material
Adverse Effect.
Section 4.06 Information Supplied. None of the information
supplied or to be supplied by Parent or Merger Sub specifically for inclusion
or incorporation by reference in (a) the Form S-4 will, at the time the Form
S-4 is filed with the SEC, at any time it is amended or supplemented and at
the time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading or (b) the Proxy
Statement will, at the date it is first mailed to the stockholders of the
Company and at the time of the Company Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Form S-4 will comply as to form in all material respects with
the requirements of the Securities Act and the Exchange Act, as applicable.
Notwithstanding the foregoing, no representation or warranty is made by Parent
or Merger Sub with respect to statements made or incorporated by reference in
the Form S-4 or the Proxy Statement based on information supplied by the
Company specifically for inclusion or incorporation by reference in the Form
S-4 or the Proxy Statement.
Section 4.07 Absence of Certain Changes or Events. (a) Since
the date of the most recent audited financial statements included in the
Parent SEC Documents filed by Parent and publicly available prior to the date
of this Agreement, except (a) for liabilities incurred in connection with this
Agreement or the transactions contemplated hereby to the Company or (b) as
disclosed in the Parent SEC Documents filed by Parent and publicly available
prior to the date of this Agreement, there has not been any change, effect,
event, circumstance, occurrence or state of facts that individually or in the
aggregate has had or would reasonably be expected to have a Parent Material
Adverse Effect.
Section 4.08 Litigation. There is no suit, action, claim,
proceeding or investigation pending or, to the Knowledge of Parent, threatened
against Parent or any of its Subsidiaries that individually or in the
aggregate has had or would reasonably be expected to have a Parent Material
Adverse Effect or prevent or materially delay the consummation of any of the
transactions contemplated by this Agreement, nor is there any judgment,
decree, injunction, rule or order of any Governmental Authority or arbitrator
outstanding against, or, to the Knowledge of Parent, investigation by any
Governmental Authority involving, Parent or any of its Subsidiaries that
individually or in the aggregate has had or would reasonably be expected to
have a Parent Material Adverse Effect or prevent or materially delay the
consummation of any of the transactions contemplated by this Agreement.
Section 4.09 Compliance with Laws.
(a) Parent and each of its Subsidiaries has been
since December 31, 2001 and is in compliance with all Laws applicable to it,
its properties or other assets or its business or operations, except where any
failures to be in compliance have not had or would not reasonably be expected
to have individually or in the aggregate a Parent Material Adverse Effect.
None of Parent or any of its Subsidiaries has received, since December 31,
2001, a notice or other communication alleging or relating to a possible
material violation of any Laws applicable to its businesses or operations.
Parent and its Subsidiaries have in effect all material Permits necessary to
carry on their businesses as now conducted, and there has occurred no material
violation of, default (with or without notice or lapse of time or both) under,
or event giving to others any right of termination, amendment or cancellation
of, with or without notice or lapse of time or both, any such Permit. There is
no event which has occurred that, to the Knowledge of Parent, would reasonably
be expected to result in the revocation, cancellation, non-renewal or adverse
modification of any such Permit that individually or in the aggregate would
reasonably be expected to cause a Parent Material Adverse Effect. Assuming all
Closing Consents are made or obtained, the Merger, in and of itself, would not
cause the revocation or cancellation of any such Permit.
(b) Parent and each of its officers and directors
are in compliance with, and have complied, in all material respects with (i)
the applicable provisions of Sarbanes-Oxley and (ii) the applicable listing
and corporate governance rules and regulations of the NYSE. Parent has
previously disclosed to the Company all of the information required to be
disclosed by Parent and its officers and employees, including Parent's chief
executive officer and chief financial officer, to the Parent Board or any
committee thereof pursuant to the certification requirements relating to
Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Parent and
each of its Subsidiaries maintains a system of internal accounting controls
sufficient to comply with all legal and accounting requirements applicable to
Parent and such Subsidiary.
Section 4.10 No Business Activities. Merger Sub has not
conducted any activities other than in connection with the organization of
Merger Sub, the negotiation and execution of this Agreement and the
consummation of the transactions contemplated hereby.
Section 4.11 No Parent Vote Required. No vote or other
action of the stockholders of Parent is required by Law, the Parent Articles
or the Parent By-laws or otherwise in order for Parent and Merger Sub to
consummate the Merger and the transactions contemplated hereby.
Section 4.12 Taxes.
(a) Neither Parent nor any of its Subsidiaries has
taken any action, has failed to take any action or has Knowledge of any fact
or circumstance that would reasonably be likely to prevent the Merger from
qualifying as a reorganization under Section 368 of the Code.
(b) Merger Sub is a Delaware limited liability
company all of the membership interests of which are owned by Parent and as to
which Parent has not elected to treat as a corporation for United States
Federal income tax purposes.
ARTICLE V
Covenants Relating to Conduct of Business
Section 5.01 Conduct of Business.
(a) Conduct of Business by the Company. During the
period from the date of this Agreement to the Effective Time, the Company
shall, and shall cause each of its Subsidiaries to, carry on its business in
the ordinary course consistent with past practice and comply with all
applicable Laws in all material respects, and, to the extent consistent
therewith, use its reasonable efforts to preserve intact its current business
organizations, keep available the services of its current officers, employees
and consultants and preserve its relationships with customers, suppliers,
licensors, licensees, distributors and others having business dealings with it
with the intention that its goodwill and ongoing business shall not be
materially impaired at the Effective Time. Without limiting the generality of
the foregoing, during the period from the date of this Agreement to the
Effective Time, except as provided in Section 5.01(a) of the Company
Disclosure Letter and except as expressly contemplated by this Agreement, the
Company shall not, and shall not permit any of its Subsidiaries to, without
Parent's prior written consent, which shall not be unreasonably withheld or
delayed:
(i) (A) declare, set aside or pay any dividends
on, or make any other distributions (whether in cash, stock or
property) in respect of, any of its capital stock, other than
dividends or distributions by a direct or indirect wholly owned
Subsidiary of the Company to its parent, (B) split, combine or
reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (C) purchase, redeem
or otherwise acquire any shares of its capital stock or any other
securities thereof or any rights, warrants or options to acquire any
such shares or other securities;
(ii) issue, deliver, sell, grant, pledge or
otherwise encumber or subject to any Lien any shares of its capital
stock, any other voting securities or any securities convertible
into, or any rights, warrants or options to acquire, any such shares,
voting securities or convertible securities, or any "phantom" stock,
"phantom" stock rights, stock appreciation rights or stock based
performance units (other than (A) the issuance of shares of Company
Common Stock upon the exercise of Company Stock Options outstanding
on the date hereof or granted after the date hereof in accordance
with clause (B) below, in either case in accordance with their terms
on the date hereof (or on the date of grant, if later), and (B) the
grant of options to employees hired within one year prior to, or
anytime after, the date hereof to acquire shares of Company Common
Stock in accordance with the Company's ordinary course of business
consistent with past practice);
(iii) amend the Company Certificate or the
Company By-laws or the comparable charter or organizational documents
of any of its Subsidiaries or adopt a stockholders' rights plan
(i.e., "poison pill");
(iv) directly or indirectly acquire (A) by
merging or consolidating with, or by purchasing all of or a
substantial equity interest in, or by any other manner, any division,
business or equity interest of any person or (B) any assets forming
part of such a division or business that have a purchase price in
excess of $1,000,000 individually or $2,000,000 in the aggregate;
(v) sell, lease, license, mortgage, sell and
leaseback or otherwise encumber or subject to any Lien or otherwise
dispose of any of its properties or other assets with a fair market
value in excess of $2,000,000 individually or $5,000,000 in the
aggregate to a third party (except (A) by incurring Permitted Liens,
(B) with respect to properties or other assets no longer used in the
operation of the Company's business and/or (C) in the ordinary course
of business);
(vi) with respect to the Company's 2004 fiscal
year, make any capital expenditure or expenditures not budgeted for
in the Company's 2004 fiscal year capital expenditure plan, a correct
and complete copy of which shall have been provided to Parent prior
to the date of this Agreement, which (1) involves the purchase of any
real property or (2) is in excess of $2,000,000 individually, or
$5,000,000 in the aggregate;
(vii) (A) repurchase or prepay any indebtedness
for borrowed money except as required by the terms of such
indebtedness, (B) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person or issue or sell
any debt securities or options, warrants, calls or other rights to
acquire any debt securities of the Company or any of its
Subsidiaries, guarantee any debt securities of another person, enter
into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement
having the economic effect of any of the foregoing or (C) make any
loans, advances or capital contributions to, or investments in, any
other person in excess of $250,000 in the aggregate, other than in
the Company or in or to any direct or indirect wholly-owned
Subsidiary of the Company, other than any loan or advance to any
physician or physicians group up to $150,000, individually, or
$500,000 in the aggregate for all such physicians and physicians
groups;
(viii) (A) pay, discharge, settle or satisfy any
claims (including claims of stockholders), liabilities or obligations
(whether absolute, accrued, asserted or unasserted, contingent or
otherwise) (1) in excess of $2,000,000 individually and $5,000,000 in
the aggregate, other than in the ordinary course of business
consistent with past practice or (2) involving any material
limitation on the conduct of the business of the Company or its
Subsidiaries or (B) waive or release any right of the Company or any
of its Subsidiaries with a value in excess of $250,000;
(ix) enter into, modify, amend or terminate (A)
any Contract which if so entered into, modified, amended or
terminated would reasonably be expected to (1) have a Company
Material Adverse Effect, (2) impair in any material respect the
ability of the Company to perform its obligations under this
Agreement or (3) prevent or materially delay the consummation of any
of the transactions contemplated by this Agreement, (B) any other
Contract that involves the Company or any of its Subsidiaries
incurring a liability in excess of $2,000,000 individually or
$5,000,000 in the aggregate and that is not terminable by the Company
without penalty with one year or less notice (excluding contracts or
amendments entered into or made in the ordinary course of business
with customers or Providers of the Company or its Subsidiaries), (C)
any Contract by which the Company or any of its Subsidiaries grants
any license to Company Intellectual Property or (D) any Contract that
contains a covenant restricting the ability of the Company or any of
its Subsidiaries (or which, following the consummation of the Merger,
would restrict the ability of Parent or any of its Subsidiaries,
including the Surviving Entity and its Subsidiaries) to compete in
any business or with any person or in any geographic area;
(x) enter into any Contract which if in effect
as of the date hereof would be required to be disclosed pursuant to
Section 3.10(b) hereof (other than Contracts required to be disclosed
pursuant to Section 3.10(b)(v)) to the extent consummation of the
transactions contemplated by this Agreement or compliance by the
Company with the provisions of this Agreement would reasonably be
expected to conflict with, or result in a violation or breach of, or
default (with or without notice or lapse of time or both) under, or
give rise to a right of, or result in, termination, cancellation or
acceleration of any obligation or to a loss of a benefit under, or
result in the creation of any Lien in or upon any of the properties
or other assets of the Company or any of its Subsidiaries under, or
give rise to any increased, additional, accelerated or guaranteed
right or entitlement of any third party under, or result in any
material alteration of, any provision of such Contract;
(xi) except as required to comply with
applicable Law or any Contract disclosed in Section 3.12 of the
Company Disclosure Letter, (A) increase in any manner the
compensation or fringe benefits of, or pay any bonus (other than the
bonus payments described in Section 6.11(a) of the Company Disclosure
Letter) to, any current or former director, officer, employee or
consultant of the Company or any of its Subsidiaries, (B) pay to any
current or former director, officer, employee or consultant of the
Company or any of its Subsidiaries any benefit not provided for under
any Contract or Company Plan other than the payment of cash
compensation in the ordinary course of business consistent with past
practice, (C) grant any awards under any Company Plan (including the
grant of stock options, stock appreciation rights, stock based or
stock related awards, performance units, Company RSUs, Company DSUs,
or restricted stock or the removal of existing restrictions in any
Contract or Company Plan or awards made thereunder), (D) take any
action to fund or in any other way secure the payment of compensation
or benefits under any Contract or Company Plan, (E) exercise any
discretion to accelerate the vesting or payment of any compensation
or benefit under any Contract or Company Plan, (F) materially change
any actuarial or other assumption used to calculate funding
obligations with respect to any Company Plan or change the manner in
which contributions to any Company Plan are made or the basis on
which such contributions are determined or (G) adopt any new employee
benefit plan or arrangement or amend, modify or terminate any
existing Company Plan, in each case for the benefit of any current or
former director, officer, employee or consultant of the Company or
any of its Subsidiaries, other than required by applicable Law or tax
qualification requirement;
(xii) adopt or enter into any collective
bargaining agreement or other labor union contract applicable to the
employees of the Company or any of its Subsidiaries;
(xiii) fail to use reasonable efforts to
maintain existing insurance policies or comparable replacement
policies to the extent available for a reasonable cost;
(xiv) change its fiscal year, revalue any of its
material assets, or make any changes in financial, actuarial,
reserving, statutory or tax accounting methods, principles or
practices, except in each case as required by GAAP or applicable Law;
(xv) make any material tax election or settle or
compromise any material tax liability, or agree to an extension of a
statute of limitations with respect to material taxes;
(xvi) make any material change in the
investment, reserving, hedging, underwriting or claims administration
policies, practices or principles, except as may be appropriate to
conform to changes in applicable Law or GAAP;
(xvii) terminate, amend or otherwise modify any
agreement entered into by the Company, at the request of Parent after
the date hereof, with any individual party to a New Employment
Agreement; or
(xviii) authorize any of, or commit, propose or
agree to take any of, the foregoing actions.
(b) Conduct of Business by Parent. During the
period from the date of this Agreement to the Effective Time, Parent shall not
(i) amend the Parent Articles or the Parent By-laws in a manner materially
adverse to the Company's stockholders or (ii) declare, set aside or pay any
dividends on, or make any other distributions (whether in cash, stock or
property) in respect of, any of its capital stock, other than (A) dividends or
distributions by a direct or indirect wholly owned Subsidiary of Parent to its
parent or (B) regular cash dividends paid in the ordinary course of business
consistent with past practice.
(c) Other Actions. Except as otherwise contemplated
or permitted by this Agreement, the Company and Parent shall not, and shall
not permit any of their respective Subsidiaries to, take any action that would
reasonably be expected to result in (i) any of the representations and
warranties of such party set forth in this Agreement that are qualified by
materiality, Company Material Adverse Effect or Parent Material Adverse
Effect, as the case may be, becoming untrue, (ii) any of such representations
and warranties that are not so qualified becoming untrue in any material
respect or (iii) any of the conditions to the Merger set forth in Article VII
not being satisfied.
(d) Advice of Changes; Filings. Each of the Company
and Parent shall as promptly as practicable advise the other party orally and
in writing upon obtaining Knowledge of (i) any representation or warranty made
by it (and, in the case of Parent, made by Merger Sub) contained in this
Agreement that is qualified as to materiality, Company Material Adverse Effect
or Parent Material Adverse Effect, as the case may be, becoming untrue or
inaccurate in any respect or any representation or warranty that is not so
qualified becoming untrue or inaccurate in any material respect or (ii) the
failure of it (and, in the case of Parent, of Merger Sub) to comply with or
satisfy in any respect any covenant, condition or agreement to be complied
with or satisfied by it under this Agreement; provided, however that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties (or remedies with respect thereto) or the conditions
to the obligations of the parties under this Agreement. The Company and Parent
shall promptly provide the other copies of all filings made by such party with
any Governmental Authority in connection with this Agreement and the
transactions contemplated hereby.
Section 5.02 No Solicitation by the Company.
(a) The Company shall not, nor shall it authorize
or permit any of its Subsidiaries, any of its or their respective directors,
officers, employees or any investment banker, financial advisor, attorney,
accountant or other advisor, agent or representative retained by the Company
or any Subsidiary in connection with the transactions contemplated by this
Agreement (collectively, "Representatives") to, directly or indirectly through
another person, (i) solicit, initiate, cause, knowingly encourage, or
knowingly facilitate, any inquiries or the making of any proposal that
constitutes or is reasonably likely to lead to a Company Takeover Proposal or
(ii) participate in any discussions or negotiations regarding any Company
Takeover Proposal, or furnish to any person any information in connection with
or in furtherance of any Company Takeover Proposal. Without limiting the
foregoing, it is agreed that any violation of the restrictions set forth in
the preceding sentence by any Representative of the Company or any of its
Subsidiaries shall be a breach of this Section 5.02(a) by the Company. The
Company shall, and shall cause its Subsidiaries and instruct its
Representatives to, immediately cease and cause to be terminated all existing
discussions or negotiations with any person conducted heretofore with respect
to any Company Takeover Proposal and request the prompt return or destruction
of all confidential information previously furnished. Notwithstanding the
foregoing, at any time prior to obtaining the Company Stockholder Approval
(and in no event after obtaining such Company Stockholder Approval), in
response to an unsolicited bona fide written Company Takeover Proposal made
after the date hereof that the Company Board determines in good faith (after
receiving advice of a financial advisor of nationally recognized reputation
and of its outside counsel) constitutes or is reasonably likely to constitute
a Company Superior Proposal, the Company may, if the Company Board determines
in good faith (after receiving advice of its outside counsel) that it is
necessary to do so in order to comply with its fiduciary duties to the
stockholders of the Company under applicable Law, and subject to compliance
with Section 5.02(c) and after giving Parent two business days written notice
of such determination, (A) furnish information with respect to the Company and
its Subsidiaries to the person making such Company Takeover Proposal (and its
Representatives) pursuant to a customary confidentiality agreement not less
restrictive of such person than the Confidentiality Agreement, provided that
all such information (to the extent that such information has not been
previously provided or made available to Parent) is provided or made available
to Parent, as the case may be, prior to or substantially concurrent with the
time it is provided or made available to such person, as the case may be, and
(B) participate in discussions or negotiations with the person making such
Company Takeover Proposal (and its Representatives) regarding such Company
Takeover Proposal.
For purposes of this Agreement, "Company Takeover Proposal"
shall mean any inquiry, proposal or offer, whether or not conditional and
whether or not withdrawn, (a) for a merger, consolidation, dissolution,
recapitalization or other business combination involving the Company, (b) for
the issuance of 20% or more of the equity securities of the Company as
consideration for the assets or securities of another person or (c) to acquire
in any manner, directly or indirectly, 20% or more of the equity securities of
the Company or assets (including equity securities of any Subsidiary of the
Company) that represent 20% or more of the total consolidated assets of the
Company, other than the transactions contemplated by this Agreement.
For purposes of this Agreement, "Company Superior Proposal"
shall mean any bona fide written offer made by a third party, that if
consummated would result in such person (or its stockholders) owning, directly
or indirectly, greater than 50% of the shares of Company Common Stock then
outstanding (or of the surviving entity in a merger or the direct or indirect
parent of the surviving entity in a merger) or all or substantially all of the
total consolidated assets of the Company (i) on terms which the Company Board
determines in good faith (after receiving advice of a financial advisor of
nationally recognized reputation and of its outside counsel and in light of
all relevant circumstances, including, without limitation, all the terms and
conditions of such proposal and this Agreement) to be more favorable to the
stockholders of the Company from a financial point of view than the
transactions contemplated by this Agreement and (ii) which is reasonably
likely to be completed, taking into account any financing and approval
requirements and all other financial, legal, regulatory and other aspects of
such proposal.
(b) Neither the Company Board nor any committee
thereof shall (i) (A) withdraw (or modify in a manner adverse to Parent), or
propose to withdraw (or modify in a manner adverse to Parent), the approval,
recommendation or declaration of advisability by such Company Board or any
such committee thereof of this Agreement or the Merger (it being understood
that taking a neutral position or no position with respect to a Company
Takeover Proposal shall be considered an adverse modification) or (B)
recommend, adopt or approve, or propose publicly to recommend, adopt or
approve, any Company Takeover Proposal (any action described in this clause
(i) being referred to as a "Company Adverse Recommendation Change") or (ii)
approve or recommend, or propose to approve or recommend, or allow the Company
or any of its Subsidiaries to execute or enter into, any letter of intent,
memorandum of understanding, agreement in principle, merger agreement,
acquisition agreement, option agreement, joint venture agreement, partnership
agreement or other similar agreement constituting or related to, any Company
Takeover Proposal (other than a confidentiality agreement pursuant to Section
5.02(a)). Notwithstanding the foregoing, the Company Board may make a Company
Adverse Recommendation Change if such Company Board determines in good faith
(after receiving advice of its outside counsel) that it is necessary to do so
in order to comply with its fiduciary duties to the stockholders of the
Company under applicable Law; provided, however, that no Company Adverse
Recommendation Change may be made in response to a Company Takeover Proposal
until after the fifth business day following Parent's receipt of written
notice from the Company (an "Adverse Recommendation Notice") advising Parent
that the Company Board has determined that such Company Takeover Proposal is a
Company Superior Proposal, that the Company Board intends to make such Company
Adverse Recommendation Change and containing all information required by
Section 5.02(c), together with copies of any written offer or proposal in
respect of such Company Superior Proposal (it being understood and agreed that
any amendment to the financial terms or other material terms of such Company
Superior Proposal shall require a new Adverse Recommendation Notice and a new
five (5) business day period). In determining whether to make a Company
Adverse Recommendation Change in response to a Company Superior Proposal, the
Company Board shall take into account any changes to the terms of this
Agreement proposed by Parent (in response to an Adverse Recommendation Notice
or otherwise) in determining whether such third party Company Takeover
Proposal still constitutes a Company Superior Proposal.
(c) In addition to the obligations of the Company
set forth in paragraphs (a) and (b) of this Section 5.02, the Company shall
promptly advise Parent orally and in writing of any request for information or
other inquiry that the Company reasonably believes could lead to any Company
Takeover Proposal, the terms and conditions of any such request, Company
Takeover Proposal or inquiry (including any changes thereto) and the identity
of the person making any such request, Company Takeover Proposal or inquiry.
The Company shall promptly keep Parent fully informed of the status and
details (including any change to the terms thereof) of any such request,
Company Takeover Proposal or inquiry.
(d) Nothing contained in this Section 5.02 shall
prohibit the Company from (i) taking and disclosing to its stockholders a
position contemplated by Rule 14e-2(a) or Item 1012(a) of Regulation M-A
promulgated under the Exchange Act or (ii) making any required disclosure to
the stockholders of the Company if, in the good faith judgment of the Company
Board (after receiving advice of its outside counsel), failure to so disclose
would be inconsistent with its obligations under applicable Law.
ARTICLE VI
Additional Agreements
Section 6.01 Preparation of the Form S-4 and the Proxy
Statement; Stockholder Meetings.
(a) As soon as practicable following the date of
this Agreement, the Company shall prepare and file with the SEC the Proxy
Statement and Parent shall prepare and Parent shall file with the SEC the Form
S-4, in which the Proxy Statement will be included as a prospectus. Each of
the Company and Parent will respond promptly to any comments from the SEC or
the staff of the SEC on the Proxy Statement or the Form S-4. Each of the
Company and Parent shall use its reasonable efforts to have the Form S-4
declared effective under the Securities Act as promptly as practicable after
such filing and keep the Form S-4 effective for so long as necessary to
consummate the Merger. The Company shall use its reasonable efforts to cause
the Proxy Statement to be mailed to the stockholders of the Company as
promptly as practicable after the Form S-4 is declared effective under the
Securities Act (but in no event later than three business days after the date
the Form S-4 is declared effective). Parent shall also take any action
required to be taken under any applicable state securities Laws in connection
with the issuance of shares of Parent Common Stock in the Merger, and the
Company shall furnish all information concerning the Company and the holders
of shares of Company Common Stock as may be reasonably requested by Parent in
connection with any such action. No filing of, or amendment or supplement to,
the Form S-4 will be made by Parent, and no filing of, or amendment or
supplement to the Proxy Statement will made by the Company, without providing
the other party and its counsel a reasonable opportunity to review and comment
thereon. If at any time prior to the Effective Time any information relating
to the Company or Parent, or any of their respective Affiliates, directors or
officers, should be discovered by the Company or Parent which should be set
forth in an amendment or supplement to either the Form S-4 or the Proxy
Statement, so that either such document would not include any misstatement of
a material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, the party which discovers such information shall promptly
notify the other parties hereto and an appropriate amendment or supplement
describing such information shall be promptly filed with the SEC and, to the
extent required by Law, disseminated to the stockholders of the Company. The
parties shall notify each other promptly of the receipt of any comments from
the SEC or the staff of the SEC and of any request by the SEC or the staff of
the SEC for amendments or supplements to the Proxy Statement or the Form S-4
or for additional information and shall supply each other with copies of (i)
all correspondence between it or any of its Representatives, on the one hand,
and the SEC or the staff of the SEC, on the other hand, with respect to the
Proxy Statement, the Form S-4 or the Merger and (ii) all orders of the SEC
relating to the Form S-4.
(b) The Company shall, as soon as practicable
following the date of this Agreement, establish a record date for and promptly
take any and all actions in connection therewith, and as soon as practicable
after the Form S-4 is declared effective, duly call, give notice of, convene
and hold, a meeting of its stockholders (the "Company Stockholders Meeting")
solely for the purpose of obtaining the Company Stockholder Approval. Subject
to Section 5.02(b), the Company shall, through the Company Board, recommend to
its stockholders adoption of this Agreement, the Merger and the other
transactions contemplated by this Agreement. Without limiting the generality
of the foregoing, the Company's obligations pursuant to the first sentence of
this Section 6.01(b) shall not be affected by (i) the commencement, public
proposal, public disclosure or communication to the Company of any Company
Takeover Proposal or (ii) any Company Adverse Recommendation Change.
Section 6.02 Access to Information; Confidentiality.
(a) Each party shall afford to the other parties
hereto, and the other parties' Representatives, reasonable access during
normal business hours during the period prior to the Effective Time or the
termination of this Agreement to all its and its Subsidiaries' properties,
books, contracts, commitments, personnel and records and, during such period,
each party shall furnish promptly to the others (a) a copy of each report,
schedule, registration statement and other document filed by such party during
such period pursuant to the requirements of Federal or state securities Laws
and (b) consistent with its legal obligations all other information concerning
such party and its Subsidiaries' business, properties and personnel as the
other party may reasonably request; provided, however, that either party may
restrict the foregoing access to the extent that any law, treaty, rule or
regulation of any Governmental Authority applicable to such party requires
such party or its Subsidiaries to restrict access to any properties or
information. Except for disclosures expressly permitted by the terms of the
confidentiality agreement, dated as of March 17, 2004, between Parent and the
Company (as it may be amended from time to time, the "Confidentiality
Agreement"), each party shall hold, and shall cause its Representatives to
hold, all information received from the other party, directly or indirectly,
in confidence in accordance with the Confidentiality Agreement. No
investigation pursuant to this Section 6.02 or information provided, made
available or received by any party hereto pursuant to this Agreement will
affect any of the representations or warranties of the parties hereto
contained in this Agreement or the conditions hereunder to the obligations of
the parties hereto.
(b) In addition to and without limiting the
foregoing, from the date hereof until the Effective Time, the Company shall
furnish to Parent, within fifteen (15) business days after the end of each
month, the standard monthly reporting package set forth in Section 6.02(b) of
the Company Disclosure Letter.
Section 6.03 Reasonable Best Efforts. Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties
agrees to use its reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
Merger and the other transactions contemplated by this Agreement, including
using reasonable best efforts to accomplish the following: (a) the taking of
all acts necessary to cause the conditions to Closing to be satisfied as
promptly as practicable, (b) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Authorities and
the making of all necessary registrations and filings (including filings with
Governmental Authorities, if any) and the taking of all steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by any Governmental Authority, (c) the obtaining of all necessary
consents, approvals or waivers from third parties and (d) the execution and
delivery of any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement. In connection with and without limiting the first sentence of this
Section 6.03, each of the Company and the Company Board and Parent and the
Parent Board shall (i) take all action reasonably necessary to ensure that no
state takeover statute or similar statute or regulation is or becomes
applicable to this Agreement, the Merger or any of the other transactions
contemplated by this Agreement and (ii) if any state takeover statute or
similar statute becomes applicable to this Agreement, the Merger or any of the
other transactions contemplated by this Agreement, take all action reasonably
necessary to ensure that the Merger and the other transactions contemplated by
this Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of such
statute or regulation on this Agreement, the Merger and the other transactions
contemplated by this Agreement. Notwithstanding the foregoing or anything else
to the contrary in this Agreement, nothing shall be deemed to require Parent
to (A) agree to, or proffer to, divest or hold separate any assets or any
portion of any business of Parent or any of its Subsidiaries or, assuming the
consummation of the Merger, the Company or any of its Subsidiaries, (B) not
compete in any geographic area or line of business, (C) restrict the manner in
which, or whether, Parent, the Company, the Surviving Entity or any of their
respective Affiliates may carry on business in any part of the world or (D)
agree to any terms or conditions that would impose any obligations on Parent
or any of its Subsidiaries or, assuming the consummation of the Merger, the
Company or any of its Subsidiaries, to maintain facilities, operations, places
of business, employment levels, products or businesses, which, in the case of
any of clauses (A) through (D), (i) would have, or would be reasonably likely
to have, individually or in the aggregate, a material adverse effect on the
Company and its Subsidiaries, taken as a whole, or on Parent and its
Subsidiaries, taken as a whole (it being agreed that in the case of measuring
the effect on Parent and its Subsidiaries in this clause (i), (A)
"Subsidiaries" shall not include the Company or its Subsidiaries, (B)
"material adverse effect" shall be the level of, and shall be measured as to,
what would have, or would be reasonably likely to have, a "material adverse
effect" on the Company and its Subsidiaries, taken as a whole, and not the
level or measure of what would have, or would be reasonably likely to have, a
"material adverse effect" on Parent and its Subsidiaries, taken as a whole,
and (C) the effect shall be with respect to Parent and its Subsidiaries) or
(ii) would, or would be reasonably likely to, materially impair the benefits
sought to be derived by Parent from the transactions contemplated by this
Agreement, including the Merger.
Section 6.04 Indemnification, Exculpation and Insurance.
(a) All rights to indemnification and exculpation
from liabilities for acts or omissions occurring at or prior to the Effective
Time now existing in favor of the current or former directors, officers and
employees of the Company and its Subsidiaries (the "Indemnified Parties") as
provided in the Company Certificate or the Company By-laws (in each case, as
in effect on the date hereof) shall be assumed by the Surviving Entity in the
Merger, without further action, as of the Effective Time and shall survive the
Merger and shall continue in full force and effect in accordance with their
terms. Parent shall indemnify and hold harmless, and provide advancement of
expenses to the Indemnified Parties to the same extent such persons are
indemnified or have the right to advancement of expenses as of the date hereof
by the Company pursuant to the Company Certificate and the Company By-laws.
(b) For six years after the Effective Time, Parent
shall maintain in effect the Company's current directors' and officers'
liability insurance in respect of acts or omissions occurring at or prior to
the Effective Time, (including for acts or omissions occurring in connection
with the approval of this Agreement and the consummation of the transactions
contemplated hereby) covering the Indemnified Parties currently covered by the
Company's directors' and officers' liability insurance policy (a correct and
complete copy of which has been heretofore made available to Parent), on terms
with respect to such coverage and amount no less favorable than those of such
policy in effect on the date hereof; provided, however, that Parent may
substitute therefor policies of Parent containing terms with respect to
coverage and amount no less favorable to such Indemnified Parties; provided,
further, however, that in satisfying its obligation under this Section 6.04(b)
Parent shall not be obligated to pay aggregate premiums in excess of 300% of
the amount paid by the Company in its last full fiscal year (which premiums
are hereby represented and warranted by the Company to be approximately
$7,210,000), it being understood and agreed that Parent shall nevertheless be
obligated to provide such coverage as may be obtained for such 300% amount.
(c) The covenants contained in this Section 6.04
are intended to be for the benefit of, and shall be enforceable by, each of
the Indemnified Parties and their respective heirs and legal representatives,
and shall not be deemed exclusive of any other rights to which an Indemnified
Party is entitled, whether pursuant to Law, contract or otherwise.
Section 6.05 Fees and Expenses. All fees and expenses
incurred in connection with this Agreement, the Merger and the other
transactions contemplated by this Agreement shall be paid by the party
incurring such fees or expenses, whether or not the Merger is consummated,
except that each of the Company and Parent shall bear and pay one-half of (a)
the costs and expenses incurred in connection with filing, printing and
mailing the Form S-4 and (b) the filing fees for the premerger notification
and report forms under the HSR Act.
Section 6.06 Public Announcements. Parent and the Company
shall consult with each other before issuing, and give each other the
opportunity to review and comment upon, any press release or other public
statements with respect to the transactions contemplated by this Agreement,
including the Merger, and shall not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
applicable Law, court process or by obligations pursuant to any listing
agreement with any national securities exchange or national securities
quotation system. The parties agree that the initial press release to be
issued with respect to the transactions contemplated by this Agreement shall
be in the form heretofore agreed to by the parties.
Section 6.07 Affiliates. Prior to the Effective Time the
Company shall deliver to Parent a letter identifying all persons who will be
at the time this Agreement is submitted for adoption by the stockholders of
the Company, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act and applicable SEC rules and regulations. The Company shall use
its reasonable efforts to cause each such person to deliver to Parent at least
10 days prior to the Closing Date a written agreement substantially in the
form attached as Exhibit B.
Section 6.08 Stock Exchange Listing. Parent shall use its
reasonable efforts to cause the shares of Parent Common Stock to be issued in
the Merger to be approved for listing on the NYSE, subject to official notice
of issuance, prior to the Closing Date.
Section 6.09 Tax-Free Reorganization Treatment. The Company,
Parent and Merger Sub shall execute and deliver to each of Sullivan & Cromwell
LLP, special counsel to the Company, and Skadden, Arps, Slate, Meagher & Flom
LLP, special counsel to Parent and Merger Sub, customary representation
letters, substantially in the forms attached hereto as Exhibits C and D, at
such time or times as reasonably requested by each such law firm in connection
with its delivery of the opinion referred to in Section 7.02(e) or Section
7.03(c), as the case may be. Prior to the Effective Time, none of the Company,
Parent or Merger Sub shall take or cause to be taken any action which would
cause to be untrue any of the representations in such representation letters.
The parties intend the Merger to qualify as a reorganization under Section
368(a) of the Code and each party shall, and shall cause each of its
respective Subsidiaries to, use reasonable efforts to cause the Merger to so
qualify.
Section 6.10 Stockholder Litigation. The Company shall
promptly advise Parent orally and in writing of any stockholder litigation
against the Company and/or its directors relating to this Agreement, the
Merger and/or the transactions contemplated by this Agreement and shall keep
Parent fully informed regarding any such stockholder litigation. The Company
shall give Parent the opportunity to consult with the Company regarding the
defense or settlement of any such stockholder litigation, shall give due
consideration to Parent's advice with respect to such stockholder litigation
and shall not settle any such litigation prior to such consultation and
consideration; provided, however, that the Company further will not, without
Parent's prior written consent, settle any stockholder litigation (a) for an
amount greater than $2,000,000, individually, and $5,000,000 in the aggregate
or (b) that involves or has the effect of imposing any remedy or restriction
upon the Company or any of its Subsidiaries other than monetary damages.
Section 6.11 Employee Matters.
(a) Parent agrees to honor, or cause the Surviving
Entity to honor, from and after the Effective Time any bonus payments for the
Company's 2004 fiscal year (or any portion thereof) under the bonus plans set
forth in Section 6.11 of the Company Disclosure Letter in accordance with
their terms as in effect immediately before the Effective Time and as set
forth in Section 6.11 of the Company Disclosure Letter, and the other bonus
payments set forth in Section 6.11 of the Company Disclosure Letter.
(b) Following the Effective Time, Parent shall
cause to be provided to individuals who are employed by the Company and its
Subsidiaries immediately prior to the Effective Time and who remain employed
with the Surviving Entity or any of Parent's Subsidiaries (the "Affected
Employees"), compensation and employee benefits no less favorable in the
aggregate than, at Parent's election from time to time, those provided (i)
pursuant to the Company's and its Subsidiaries' compensation and employee
benefit policies, plans and programs immediately prior to the Effective Time
or (ii) to similarly situated employees of Parent and its Subsidiaries.
(c) For all purposes, with respect to any benefit
plan, program, arrangement (including any "employee benefit plan" (as defined
in Section 3(3) of ERISA) and any vacation program), other than under Parent's
retiree medical benefit plan and Parent's 2002 Stock Incentive Plan (or any
successor plan thereto), Parent shall, and shall cause the Surviving Entity
to, recognize the service with the Company and its Subsidiaries prior to the
Effective Time of the Affected Employees for purposes of such plan, program or
arrangement; provided, however, that such recognition shall not result in a
duplication of benefits. Parent agrees to honor, or cause the Surviving Entity
to honor, all vacation and sick leave accrued by Affected Employees as of the
Effective Time.
(d) With respect to any welfare plan in which
employees of the Company and its Subsidiaries are eligible to participate
after the Effective Time, Parent shall, and shall cause the Surviving Entity
to, (i) waive all limitations as to preexisting conditions, exclusions and
waiting periods with respect to participation and coverage requirements
applicable to such employees to the extent such conditions were satisfied
under the welfare plans of the Company and its Subsidiaries prior to the
Effective Time, and (ii) provide each such employee with credit for any
co-payments and deductibles paid prior to the Effective Time in satisfying any
analogous deductible or out-of-pocket requirements to the extent applicable
under any such plan.
(e) Prior to the Effective Time, the Company shall,
if requested to do so by Parent, terminate one or both of its defined
contribution 401(k) plans. Parent shall provide, or cause the Surviving Entity
to provide, that the Affected Employees are eligible to participate in a
defined contribution 401(k) plan immediately following the Effective Time and
that such defined contribution plan shall accept "eligible rollover
distributions" for Affected Employees from a terminated Company defined
contribution 401(k) plan.
Section 6.12 Employment Agreements. Notwithstanding anything
to the contrary in this Agreement, the Company shall use its reasonable best
efforts to cause each of the Covered Employees not to repudiate or otherwise
breach the New Employment Agreement to which such Covered Employee is a party.
If at any time after June 15, 2004, Parent requests that the Company enter
into an agreement substantially in the form of Annex A to the New Employment
Agreements with any Covered Employee who is a party to a New Employment
Agreement, the Company shall promptly (but in no event later than three (3)
business days after such request) enter into and become a party to such
agreement (assuming that such Covered Employee also executes the agreement).
Section 6.13 Standstill Agreements, Confidentiality
Agreements, Anti-takeover Provisions. During the period from the date of this
Agreement through the Effective Time, the Company will not terminate, amend,
modify or waive any provision of any agreement required to be disclosed
pursuant to Section 3.10(b)(v) hereof to which it or any of its Subsidiaries
is a party, other than the Confidentiality Agreement pursuant to its terms or
by written agreement of the parties thereto. During such period, the Company
shall enforce, to the fullest extent permitted under applicable Law, the
provisions of any such agreement, including by obtaining injunctions to
prevent any material breaches of such agreements and to enforce specifically
the material terms and provisions thereof in any court of the United States of
America or of any state having jurisdiction. In addition, the Company will not
approve a Company Takeover Proposal or Company Superior Proposal for purposes
of Section 203 of the DGCL.
Section 6.14 Cooperation. Each of the Company and its
Subsidiaries will, and will cause each of its Representatives to, use its
reasonable efforts, subject to applicable Laws, to cooperate with and assist
Parent and Merger Sub in connection with planning the integration of the
Company and its Subsidiaries and their respective employees with the business
operations of Parent and its Subsidiaries.
Section 6.15 Letters of the Accountants.
(a) The Company shall use its reasonable efforts to
cause to be delivered to Parent a letter from the Company's independent
accountants dated a date on or prior to (but no more than two (2) business
days prior to) the date on which the Form S-4 shall become effective addressed
to Parent and the Company, in form and substance reasonably satisfactory to
Parent and customary in scope and substance for comfort letters delivered by
independent public accountants in connection with registration statements
similar to the Form S-4; provided that the failure of such a letter to be
delivered by the Company's independent accountants shall not result in a
failure of a condition to Closing (including Section 7.02(b) hereof).
(b) Parent shall use its reasonable efforts to
cause to be delivered to the Company a letter from Parent's independent
accountants dated a date on or prior to (but no more than two (2) business
days prior to) the date on which the Form S-4 shall become effective addressed
to the Company and Parent, in form and substance reasonably satisfactory to
the Company and customary in scope and substance for comfort letters delivered
by independent public accountants in connection with registration statements
similar to the Form S-4; provided that the failure of such a letter to be
delivered by Parent's independent accounts shall not result in a failure of a
condition to Closing (including Section 7.03(b) hereof).
ARTICLE VII
Conditions Precedent
Section 7.01 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Stockholder Approval. The Company Stockholder
Approval shall have been obtained.
(b) Stock Exchange Listing. The shares of Parent
Common Stock issuable to the stockholders of the Company as contemplated by
this Agreement shall have been approved for listing on the NYSE, subject to
official notice of issuance.
(c) Antitrust. The waiting period (and any
extension thereof) applicable to the Merger under the HSR Act or any other
applicable competition, merger control, antitrust or similar Law shall have
been terminated or shall have expired.
(d) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other judgment,
order or decree issued by any court of competent jurisdiction or other
statute, law, rule, legal restraint or prohibition (collectively,
"Restraints") shall be in effect preventing the consummation of the Merger.
(e) Form S-4. The Form S-4 shall have become
effective under the Securities Act and shall not be the subject of any stop
order or proceedings seeking a stop order.
(f) Closing Consents. The consents, authorizations,
orders, permits and approvals listed on Exhibit E hereto shall have been
obtained and shall be in full force and effect.
Section 7.02 Conditions to Obligations of Parent and Merger
Sub. The obligations of Parent and Merger Sub to effect the Merger are further
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Representations and Warranties. The
representations and warranties of the Company contained in this Agreement
(other than the representations and warranties of the Company set forth in
Section 3.03) shall be true and correct as of the date of this Agreement and
as of the Closing Date as though made on the Closing Date (without regard to
materiality or Company Material Adverse Effect qualifiers contained therein),
except to the extent such representations and warranties expressly relate to
an earlier date, in which case as of such earlier date, except where the
failure of the representations and warranties to be true and correct
individually or in the aggregate, has not had and would not reasonably be
expected to have a Company Material Adverse Effect. The representations and
warranties of the Company set forth in Section 3.03 shall be true and correct
in all respects (subject to de minimis exceptions for breaches involving
discrepancies of no more than 15,000 shares of Company Common Stock, stock
options in the aggregate covering no more than 5,000 shares of Company Common
Stock, 0 Company RSUs or 0 Company DSUs, respectively) as of the date of this
Agreement and as of the Closing Date as though made on the Closing Date.
Parent shall have received a certificate signed on behalf of the Company by
the chief executive officer and the chief financial officer of the Company to
the effect of the foregoing two sentences.
(b) Performance of Obligations of the Company. The
Company shall have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the Closing Date,
and Parent shall have received a certificate signed on behalf of the Company
by the chief executive officer and the chief financial officer of the Company
to such effect.
(c) No Litigation. There shall not be pending or
threatened any suit, action or proceeding by any Governmental Authority (i)
challenging the acquisition by Parent or Merger Sub of any shares of Company
Common Stock, seeking to restrain or prohibit the consummation of the Merger,
seeking to place limitations on the ownership of shares of Company Common
Stock (or shares of capital stock of the Surviving Entity) by Parent or Merger
Sub, (ii) seeking to (A) prohibit or limit the ownership or operation by the
Company or any of its Subsidiaries or by Parent or any of its Subsidiaries of
any portion of any business or of any assets of the Company and its
Subsidiaries or Parent and its Subsidiaries, (B) compel the Company or any of
its Subsidiaries or Parent or any of its Subsidiaries to divest or hold
separate any portion of any business or of any assets of the Company and its
Subsidiaries or Parent and its Subsidiaries, as a result of the Merger or (C)
impose any obligations on Parent or any of its Subsidiaries or the Company or
any of its Subsidiaries to maintain facilities, operations, places of
business, employment levels, products or businesses or (iii) seeking to obtain
from the Company, Parent or Merger Sub any damages, which in the case of
clauses (ii) and (iii) above (x) would have, or would be reasonably likely to
have, individually or in the aggregate, a material adverse effect on the
Company and its Subsidiaries, taken as a whole, or on Parent and its
Subsidiaries, taken as a whole (it being agreed that in the case of measuring
the effect on Parent and its Subsidiaries in this clause (x), (A)
"Subsidiaries" shall not include the Company or its Subsidiaries, (B)
"material adverse effect" shall be the level of, and shall be measured as to,
what would have, or would be reasonably likely to have, a "material adverse
effect" on the Company and its Subsidiaries, taken as a whole, and not the
level or measure of what would have, or would be reasonably likely to have, a
"material adverse effect" on Parent and its Subsidiaries, taken as a whole,
and (C) the effect shall be with respect to Parent and its Subsidiaries) or
(y) would, or would be reasonably likely to, materially impair the benefits
sought to be derived by Parent from the transactions contemplated by this
Agreement, including the Merger.
(d) Restraint. No Restraint that would reasonably
be expected to result, directly or indirectly, in any of the effects referred
to in Section 7.02(c) shall be in effect.
(e) Tax Opinion. Parent shall have received from
Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to Parent, on the
Closing Date, an opinion in form and substance reasonably satisfactory to
Parent and dated as of the Closing Date, to the effect that the Merger will
qualify for United States Federal income tax purposes as a "reorganization"
within the meaning of Section 368(a) of the Code. The issuance of such opinion
shall be conditioned upon the receipt by Skadden, Arps, Slate, Meagher & Flom
LLP of customary representation letters from each of Parent, Merger Sub, and
the Company, in each case, in form and substance reasonably satisfactory to
such counsel. Each such representation letter shall be dated on or before the
date of such opinion and shall not have been withdrawn or modified in any
material respect. The opinion condition referred to in this Section 7.02(e)
shall not be waivable after receipt of the Company Stockholder Approval,
unless further stockholder approval of the Company's stockholders is obtained
with appropriate disclosure.
(f) Closing Consents. The consents, authorizations,
orders, permits and approvals listed on Exhibit E hereto shall have been
obtained and shall be in full force and effect, without any conditions,
restrictions, requirements or change of regulation or any other action taken,
which (if implemented), (i) would have, or would be reasonably likely to have,
individually or in the aggregate, a material adverse effect on the Company and
its Subsidiaries, taken as a whole, or on Parent and its Subsidiaries, taken
as a whole (it being agreed that in the case of measuring the effect on Parent
and its Subsidiaries in this clause (i), (A) "Subsidiaries" shall not include
the Company or its Subsidiaries, (B) "material adverse effect" shall be the
level of, and shall be measured as to, what would have, or would be reasonably
likely to have, a "material adverse effect" on the Company and its
Subsidiaries, taken as a whole, and not the level or measure of what would
have, or would be reasonably likely to have, a "material adverse effect" on
Parent and its Subsidiaries, taken as a whole, and (C) the effect shall be
with respect to Parent and its Subsidiaries) or (ii) would, or would be
reasonably likely to, materially impair the benefits sought to be derived by
Parent from the transactions contemplated by this Agreement, including the
Merger.
Section 7.03 Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is further subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The
representations and warranties of Parent and Merger Sub contained in this
Agreement shall be true and correct as of the date of this Agreement and as of
the Closing Date as though made on the Closing Date (without regard to
materiality or Parent Material Adverse Effect qualifiers contained therein),
except to the extent such representations and warranties expressly relate to
an earlier date, in which case as of such earlier date, except where the
failure of the representations and warranties to be true and correct
individually or in the aggregate, has not had and would not reasonably be
expected to have a Parent Material Adverse Effect. The Company shall have
received a certificate signed on behalf of Parent by an executive officer of
Parent to such effect.
(b) Performance of Obligations of Parent and Merger
Sub. Parent and Merger Sub shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or prior
to the Closing Date, and the Company shall have received a certificate signed
on behalf of Parent by an executive officer of Parent to such effect.
(c) Tax Opinion. The Company shall have received
from Sullivan & Cromwell LLP, special counsel to the Company, on the Closing
Date, an opinion in form and substance reasonably satisfactory to the Company
and dated as of the Closing Date, to the effect that the Merger will qualify
for United States Federal income tax purposes as a "reorganization" within the
meaning of Section 368(a) of the Code. The issuance of such opinion shall be
conditioned upon the receipt by Sullivan and Cromwell LLP of customary
representation letters from each of Parent, Merger Sub, and the Company, in
each case, in form and substance reasonably satisfactory to such counsel. Each
such representation letter shall be dated on or before the date of such
opinion and shall not have been withdrawn or modified in any material respect.
The opinion condition referred to in this Section 7.03(c) shall not be
waivable after receipt of the Company Stockholder Approval, unless further
stockholder approval of the Company's stockholders is obtained with
appropriate disclosure.
Section 7.04 Frustration of Closing Conditions. None of the
Company, Parent or Merger Sub may rely on the failure of any condition set
forth in Sections 7.01, 7.02 or 7.03, as the case may be, to be satisfied if
such failure was caused by such party's failure to use its reasonable best
efforts to consummate the Merger and the other transactions contemplated by
this Agreement, as required by and subject to Section 6.03.
ARTICLE VIII
Termination, Amendment and Waiver
Section 8.01 Termination. This Agreement may be terminated
at any time prior to the Effective Time, whether before or after receipt of
the Company Stockholder Approval:
(a) by mutual written consent of Parent and the
Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been
consummated on or before December 31, 2004 (the "Termination Date");
provided, however, that if on December 31, 2004 the condition to
Closing set forth in Sections 7.01(c) or 7.02(c) shall not have been
satisfied because of action by a Governmental Authority seeking to
restrain, enjoin or prohibit the Merger but all other conditions to
Closing shall have been satisfied (or in the case of conditions that
by their terms are to be satisfied at the Closing, shall be capable
of being satisfied on December 31, 2004), then the Termination Date
shall be extended to February 28, 2005 if either of the Company or
Parent notifies the other party in writing on or prior to December
31, 2004 of its election to extend the Termination Date to February
28, 2005; provided, further, that the right to terminate this
Agreement under this Section 8.01(b)(i) shall not be available to any
party whose action or failure to act has been a principal cause of or
resulted in the failure of the Merger to be consummated on or before
such date;
(ii) if any Restraint having the effect of
permanently restraining, enjoining, or otherwise prohibiting the
Merger and the transactions contemplated by this Agreement shall be
in effect and shall have become final and nonappealable;
(iii) if the Company Stockholder Approval shall
not have been obtained at the Company Stockholders Meeting duly
convened therefor or at any adjournment or postponement thereof;
(c) by Parent, if the Company shall have breached
or failed to perform any of its representations, warranties, covenants or
agreements set forth in this Agreement, which breach or failure to perform (A)
would give rise to the failure of a condition set forth in Section 7.02(a) or
(b) and (B) is incapable of being cured, or is not cured, by the Company
within 30 calendar days following receipt of written notice from Parent of
such breach or failure to perform;
(d) by the Company, if Parent shall have breached
or failed to perform any of its representations, warranties, covenants or
agreements set forth in this Agreement, which breach or failure to perform (i)
would give rise to the failure of a condition set forth in Section 7.03(a) or
(b) and (ii) is incapable of being cured, or is not cured, by Parent within 30
calendar days following receipt of written notice from the Company of such
breach or failure to perform; or
(e) by Parent, within 45 days of the date on which
(i) a Company Adverse Recommendation Change shall have occurred or (ii) the
Company Board or any committee thereof shall have failed to publicly confirm
its recommendation and declaration of advisability of this Agreement and the
Merger within three (3) business days after a written request by Parent that
it do so.
Section 8.02 Termination Fee.
(a) In the event that:
(i) this Agreement is terminated by either
Parent or the Company pursuant to Section 8.01(b)(i), and (A) a vote
to obtain the Company Stockholder Approval has not been held, (B)
after the date of this Agreement a Company Takeover Proposal shall
have been made or communicated to the Company or shall have been made
directly to the stockholders of the Company generally (and at least
one such Company Takeover Proposal shall not have been withdrawn
prior to the event giving rise to the right of termination under
Section 8.01(b)(i)) and (C) within twelve (12) months after such
termination the Company shall have reached a definitive agreement to
consummate, or shall have consummated, a Company Takeover Proposal;
(ii) this Agreement is terminated by either
Parent or the Company pursuant to Section 8.01(b)(iii) and (A) after
the date of this Agreement a Company Takeover Proposal shall have
been made or communicated to the Company or shall have been made
directly to the stockholders of the Company generally (and at least
one such Company Takeover Proposal shall not have been withdrawn
prior to the event giving rise to the right of termination under
Section 8.01(b)(iii)) and (B) within twelve (12) months after such
termination the Company shall have reached a definitive agreement to
consummate, or shall have consummated, a Company Takeover Proposal;
(iii) this Agreement is terminated by Parent
pursuant to Section 8.01(c) and (A) the Company's breach or failure
triggering such termination shall have been willful, (B) after the
date of this Agreement a Company Takeover Proposal shall have been
made or communicated to the Company or shall have been made directly
to the stockholders of the Company generally and (C) within twelve
(12) months after such termination the Company shall have reached a
definitive agreement to consummate, or shall have consummated, a
Company Takeover Proposal; or
(iv) this Agreement is terminated by Parent
pursuant to Section 8.01(e),
then the Company shall (1) in the case of a Termination Fee payable pursuant
to clauses (i), (ii) or (iii) of this Section 8.02(a), upon the earlier of the
date of such definitive agreement and such consummation of a Company Takeover
Proposal or (2) in the case of a Termination Fee payable pursuant to clause
(iv) of this Section 8.02(a), on the date of such termination, pay Parent a
fee equal to $212,500,000 (the "Termination Fee") by wire transfer of same-day
funds. Notwithstanding the foregoing sentence, in the event that the Company
proposes to terminate this Agreement at a time when the Termination Fee is
payable, the Company shall pay Parent the Termination Fee as described above
prior to such termination by the Company. Notwithstanding the foregoing in
Section 8.02(a)(i) or Section 8.02(a)(ii), if a Termination Fee would have
been payable under Section 8.02(a)(i) or Section 8.02(a)(ii) but for the fact
that the person (or any of its Affiliates) with whom the Company shall have
reached a definitive agreement to consummate, or shall have consummated, a
Company Takeover Proposal within twelve (12) months after termination of this
Agreement withdrew a Company Takeover Proposal prior to the event giving rise
to the right of termination of this Agreement under Section 8.01(b)(i) or
Section 8.01(b)(iii), then the Company shall upon the earlier of such
definitive agreement and such consummation of a Company Takeover Proposal pay
Parent the Termination Fee by wire transfer of same-day funds. In the case of
a Termination Fee payable pursuant to clause (iii) of this Section 8.02(a),
the parties hereby agree that the Termination Fee (including the right to
receive such fee or the payment of such fee) shall not limit in any respect
any rights or remedies available to Parent and Merger Sub relating to any
willful breach or failure to perform any representation, warranty, covenant or
agreement set forth in this Agreement resulting, directly or indirectly, in
the right to receive the Termination Fee.
(b) The Company acknowledges and agrees that the
agreements contained in Section 8.02(a) are an integral part of the
transactions contemplated by this Agreement, and that, without these
agreements, Parent would not enter into this Agreement. If the Company fails
promptly to pay the amount due pursuant to Section 8.02(a), and, in order to
obtain such payment, Parent commences a suit that results in a judgment
against the Company for the Termination Fee, the Company shall pay to Parent
its reasonable costs and expenses (including reasonable attorneys' fees and
expenses) incurred in connection with such suit, together with interest on the
amount of the Termination Fee from the date such payment was required to be
made until the date of payment at the prime rate of Citibank, N.A. in effect
on the date such payment was required to be made.
Section 8.03 Effect of Termination. In the event of
termination of this Agreement by either the Company or Parent as provided in
Section 8.01, this Agreement shall forthwith become void and have no effect,
without any liability or obligation on the part of Parent, Merger Sub or the
Company, other than the provisions of the penultimate sentence of Section
6.02(a), Sections 6.05 and 8.02, this Section 8.03 and Article IX, which
provisions shall survive such termination; provided that nothing herein shall
relieve any party from any liability for any willful breach hereof.
Section 8.04 Amendment. This Agreement may be amended by the
parties hereto at any time before or after receipt of the Company Stockholder
Approval; provided, however, that after such approval has been obtained, there
shall be made no amendment that by Law requires further approval by the
stockholders of the Company without such approval having been obtained. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
Section 8.05 Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of any
of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto or (c) subject to the proviso to the first
sentence of Section 8.04, waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights.
Section 8.06 Procedure for Termination or Amendment. A
termination of this Agreement pursuant to Section 8.01 or an amendment of this
Agreement pursuant to Section 8.04 shall, in order to be effective, require,
in the case of Parent or the Company, action by the Parent Board or the
Company Board, as applicable, or, with respect to any amendment of this
Agreement pursuant to Section 8.04, the Parent Board or the Company Board, as
applicable, or the duly authorized committee or other designee of the Parent
Board or the Company Board, as applicable, to the extent permitted by Law.
ARTICLE IX
General Provisions
Section 9.01 Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 9.01 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time.
Section 9.02 Notices. Except for notices that are
specifically required by the terms of this Agreement to be delivered orally,
all notices, requests, claims, demands and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
facsimiled (which is confirmed) or sent by overnight courier (providing proof
of delivery) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
if to Parent or Merger Sub, to:
UnitedHealth Group Incorporated
UnitedHealth Group Center
9900 Bren Road East
Minnetonka, Minnesota 55343
Facsimile No.: (952) 936-0044
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Facsimile No.: (212) 735-2000
Attention: Paul T. Schnell
Neil P. Stronski
if to the Company, to:
Oxford Health Plans, Inc.
48 Monroe Turnpike
Trumbull, Connecticut 06611
Facsimile No.: (203) 459-7171
Attention: General Counsel
with a copy to:
Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004
Facsimile No.: (212) 558-3588
Attention: Keith A. Pagnani
Section 9.03 Definitions. For purposes of this Agreement:
(a) an "Affiliate" of any person means another
person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such first
person;
(b) "Knowledge" of any person that is not an
individual means, (i) with respect to the Company regarding any matter in
question, the actual knowledge of the employees of the Company and its
Subsidiaries listed in Section 9.03(b) of the Company Disclosure Letter and
(ii) with respect to Parent regarding any matter in question, the actual
knowledge of the employees of Parent and its Subsidiaries listed in Section
9.03(b) of the Parent Disclosure Letter;
(c) "person" means an individual, corporation,
partnership, limited liability company, joint venture, association, trust,
unincorporated organization or other entity;
(d) "Permitted Liens" means (i) any liens for taxes
not yet due or which are being contested in good faith by appropriate
proceedings, (ii) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other similar liens, (iii) pledges or deposits in connection
with workers' compensation, unemployment insurance and other social security
legislation and (iv) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business that, in the
aggregate, are not material in amount and that do not, in any case, materially
detract from the value of the property subject thereto;
(e) "Providers" means all providers of health care,
including all hospitals, physicians, physician groups, facilities and
ancillary providers; and
(f) a "Subsidiary" of any person means another
person, an amount of the voting securities, other voting rights or voting
partnership interests of which is sufficient to elect at least a majority of
its board of directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests of which) is owned
directly or indirectly by such first person.
Section 9.04 Interpretation. When a reference is made in
this Agreement to an Article, a Section, Exhibit or Schedule, such reference
shall be to an Article of, a Section of, or an Exhibit or Schedule to, this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without limitation". The
words "hereof", "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. All terms defined in this Agreement
shall have the defined meanings when used in any certificate or other document
made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is
referred to herein means such agreement, instrument or statute as from time to
time amended, modified or supplemented, including (in the case of agreements
or instruments) by waiver or consent and (in the case of statutes) by
succession of comparable successor statutes and references to all attachments
thereto and instruments incorporated therein. References to a person are also
to its permitted successors and assigns. The parties have participated jointly
in the negotiating and drafting of this Agreement. In the event of an
ambiguity or a question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
Section 9.05 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 parties.
Section 9.06 Entire Agreement; No Third-Party Beneficiaries.
This Agreement, including the Company Disclosure Letter and the Parent
Disclosure Letter, the Exhibits hereto and the Confidentiality Agreement (a)
constitute the entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement and the Confidentiality Agreement and (b)
except for the provisions of Section 6.04, are not intended to confer upon any
person other than the parties any rights, benefits or remedies.
Section 9.07 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the Laws of the State of Delaware,
regardless of the Laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
Section 9.08 Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned, in whole or
in part, by operation of Law or otherwise by any of the parties without the
prior written consent of the other parties and any attempt to make any such
assignment without such consent shall be null and void, except that Merger Sub
may assign, in its sole discretion (and, if so requested by the Company, will
assign to a wholly owned corporate subsidiary of Parent) any of or all its
rights, interests and obligations under this Agreement to any direct, wholly
owned Subsidiary of Parent, but no such assignment shall relieve Merger Sub of
any of its obligations hereunder (except in the case of any such request).
Subject to the preceding sentence, this Agreement will be binding upon, inure
to the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
Section 9.09 Specific Enforcement; Consent to Jurisdiction.
The parties agree that irreparable damage would occur and that the parties
would not have any adequate remedy at law in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and provisions of this
Agreement in any Federal court located in the State of Delaware or in any
state court in the State of Delaware, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of
the parties hereto (a) consents to submit itself to the personal jurisdiction
of any Federal court located in the State of Delaware or of any state court
located in the State of Delaware in the event any dispute arises out of this
Agreement or the transactions contemplated by this Agreement, (b) agrees that
it will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or the transactions contemplated
by this Agreement in any court other than a Federal court located in the State
of Delaware or a state court located in the State of Delaware.
Section 9.10 Severability. 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 an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to
the extent possible.
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
UNITEDHEALTH GROUP INCORPORATED
By: /s/ William W. McGuire, M.D.
------------------------------------
Name: William W. McGuire, M.D.
Title: Chairman and CEO
RUBY ACQUISITION LLC
By: /s/ William A. Munsell
------------------------------------
Name: William A. Munsell
Title: Treasurer
OXFORD HEALTH PLANS, INC.
By: /s/ Charles G. Berg
------------------------------------
Name: Charles G. Berg
Title: President & CEO
Exhibit 99.1
N E W S R E L E A S E
[United Health Group Logo]
Contact: John Penshorn
Director of Capital Markets
Communications & Strategy
952-936-7214
Mark Lindsay
Director of Public
Communications & Strategy
952-992-4297
(For Immediate Release)
UNITEDHEALTH GROUP SIGNS DEFINITIVE AGREEMENT TO ACQUIRE
OXFORD HEALTH PLANS, INC.
o Expands and Enhances Customer Products and
Services
o Strengthens Position in Significant Growth
Markets
o Improves Affordability Through Cost Efficiencies
and Technology
o Transaction Immediately Additive to 2005
Earnings Per Share
Minneapolis, Minnesota (April 26, 2004) - UnitedHealth Group (NYSE: UNH) and
Oxford Health Plans, Inc. (Oxford) (NYSE: OHP) announced today that they have
signed a definitive agreement under which UnitedHealthcare, a wholly owned
subsidiary, will merge with Oxford. Oxford serves and provides health care and
benefit services for approximately 1.5 million people, principally in New York
City, northern New Jersey and southern Connecticut.
Completion of the acquisition, subject to regulatory approvals, approval by
Oxford shareholders and other customary conditions, is expected during the
fourth quarter of 2004. Under the terms of the agreement, Oxford shareholders
will receive UnitedHealth Group stock at a fixed exchange ratio of 0.6357
shares for each Oxford share, plus $16.17 in cash per Oxford share. The total
consideration for the transaction is a combination of approximately 54.7
million shares and $1.4 billion in cash, not including the effective benefit
of Oxford's cash of approximately $200 million in excess of debt and capital
requirements. This mix of equity and cash preserves the current balanced
capital structure of UnitedHealth Group.
UnitedHealth Group Chairman and CEO William W. McGuire, MD, commented that
"this business combination provides the basis for significantly advancing the
breadth and quality of health care services available to people in the
tri-state region, and seeks to enhance our ability to work effectively and
efficiently with key physicians and care providers within this large and
diverse community. Those advances should produce greater access and
affordability." McGuire added that "this merger with Oxford brings together
their exceptionally focused local capabilities and UnitedHealth Group's
national access, specialized centers of excellence Premium Networks,
market-leading technologies and data sources, diverse specialized products and
services, and unique offerings to seniors. The combined companies will have
the scale and resources to more fully advance services on behalf of the broad
client base within the tri-state area, as well as their related business
affiliates across the country."
"This merger will enhance our capabilities, strengthen our product offerings
and build on the leadership of the Oxford brand in the tri-state region, said
Charles Berg, president and CEO of Oxford. "The joining together of our two
highly complementary organizations will provide important benefits to the
people and communities we serve and allow us to leverage important new
business opportunities. The combination will diversify our customer portfolio
and enable us to better address the needs of consumers, our care providers and
other key constituencies by offering enhanced flexibility, efficiencies and
service. The key to Oxford's success has always been our exceptional people
and relationships, and we are excited about expanding our ability to deliver
quality and affordable health care in the tri-state area."
Robert Sheehy, UnitedHealthcare CEO, stated, "Oxford's brand and reputation
will significantly expand our presence in the northeastern markets. We will
retain the Oxford brand and operations, and the combined tri-state business
will continue under the leadership of Chuck Berg. We have immense respect for
Oxford management and employees, the company they have become, and the quality
of services they provide to this important marketplace. All of us look toward
a future built around growth through superior products, high quality services
and greater affordability."
Tracy Bahl, CEO of Uniprise, UnitedHealth Group's business dedicated to
serving large, multisite employers, added that "we look forward to bringing
the unique health system access that Oxford offers to the 43 large, multisite,
employers based in the tri-state area that we currently serve, as well as the
opportunity to present our joint capabilities to the nearly 50 Fortune 500
employers headquartered in the region and with whom we have no current
relationship. In addition, we are excited about presenting our combined
resources and capabilities to the many large employers that are headquartered
elsewhere and have significant employment bases in the tri-state area."
UnitedHealth Group anticipates the acquisition will be immediately accretive
to earnings per share upon closing, adding earnings at an annual rate of $0.16
per share, excluding first year operational synergies of at least $80 million
to $100 million. The earnings from accretion and operational synergy will be
additive to the UnitedHealth Group current expectation of 15 percent or
greater growth in earnings per share in 2005 and will be included in the
Company's forward financial projections after the transaction is closed.
Conference Call
---------------
Dr. McGuire, Charles Berg, and members of senior management from both
companies will further discuss the strategic and financial aspects of this
combination in a public conference call this afternoon. Details are as
follows:
Time: 5:00 p.m. Eastern Daylight Time
Domestic Dial-in: 800-515-2563
International Dial-in: 706-679-5262
Pass Code: None
The conference call meeting will be broadcast live on UnitedHealth Group's Web
site at www.unitedhealthgroup.com. A replay will be available beginning at
8:00 pm Eastern Daylight Time on April 26 until 12:00 am Eastern Daylight Time
on April 28. The replay can be accessed by dialing 800-642-1687 (domestic) or
706-645-9291 (international) and using pass code 7109024.
About UnitedHealth Group
------------------------
UnitedHealth Group (www.unitedhealthgroup.com) is a diversified Fortune 100
company that provides a broad spectrum of resources and services to help
people achieve improved health and well-being through all stages of life.
UnitedHealth Group offers products and services through six operating
businesses: UnitedHealthcare, Ovations, AmeriChoice, Uniprise, Specialized
Care Services and Ingenix. Through its family of businesses, UnitedHealth
Group serves more than 55 million individuals nationwide.
About Oxford Health Plans, Inc.
-------------------------------
Founded in 1984, Oxford Health Plans, Inc. provides health plans to employers
and individuals primarily in New York, New Jersey and Connecticut, through its
direct sales force, independent insurance agents and brokers. Oxford's
commercial insured products and services include traditional health
maintenance organizations, preferred and exclusive provider organizations,
point-of-service plans and consumer-directed health plans. The Company also
offers Medicare plans and third-party administration of employer-funded
benefits plans. More information about Oxford Health Plans, Inc. is available
at www.oxfordhealth.com.
Important Merger Information
----------------------------
In connection with the proposed transactions, UnitedHealth Group and Oxford
intend to file relevant materials with the Securities and Exchange Commission
(SEC), including one or more registration statement(s) that contain a
prospectus and proxy statement. Because those documents will contain important
information, holders of Oxford common stock are urged to read them, if and
when they become available. When filed with the SEC, they will be available
for free (along with any other documents and reports filed by UnitedHealth
Group and Oxford with the SEC) at the SEC's Web site, www.sec.gov, and Oxford
stockholders will receive information at an appropriate time on how to obtain
transaction-related documents for free from Oxford. Such documents are not
currently available.
UnitedHealth Group and its directors and executive officers may be deemed to
be participants in the solicitation of proxies from the holders of Oxford
common stock in connection with the proposed transactions. Information about
the directors and executive officers of UnitedHealth Group is set forth in the
proxy statement for UnitedHealth Group's 2004 Annual Meeting of Stockholders,
which was filed with the SEC on April 9, 2004. Investors may obtain additional
information regarding the interest of such participants by reading the
prospectus and proxy solicitation statement if and when it becomes available.
Oxford and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from the holders of Oxford common
stock in connection with the proposed transactions. Information about the
directors and executive officers of Oxford and their ownership of Oxford
common stock is set forth in the proxy statement for Oxford's 2003 Annual
Meeting of Stockholders, which was filed with the SEC on April 2, 2003.
Investors may obtain additional information regarding the interests of such
participants by reading the prospectus and proxy solicitation statement if and
when it becomes available.
This communication shall not constitute an offer to sell or the solicitation
of an offer to buy any securities, nor shall there be any sale of securities
in any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such jurisdiction. No offering of securities shall be made except by means
of a prospectus meeting the requirements of Section 10 of the Securities Act
of 1933, as amended.
Forward-Looking Statements
--------------------------
This news release may contain statements, estimates or projections that
constitute "forward-looking" statements as defined under U.S. federal
securities laws. Generally the words "believe," "expect," "intend,"
"estimate," "anticipate," "project," "will" and similar expressions identify
forward-looking statements, which generally are not historical in nature. By
their nature, forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from our
historical experience and our present expectations or projections. A list and
description of some of the risks and uncertainties can be found in our reports
filed with the Securities and Exchange Commission from time to time, including
our annual reports on Form 10-K, quarterly reports on Form 10-Q and current
reports on Form 8-K. You should not place undue reliance on forward-looking
statements, which speak only as of the date they are made. Except to the
extent otherwise required by federal securities laws, we do not undertake to
publicly update or revise any forward-looking statements.
###