UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1 )*
UNITED PAYORS & UNITED PROVIDERS, INC.
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
911 319-10-1
(CUSIP Number)
Michael D. Roughton, Esq.
The Principal Financial Group
711 High Street
Des Moines, Iowa 50392
(515) 248-3842
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
February 25, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d- 1(f) or 13s-1(g), check the
following box [ ]
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedules, including all exhibits. See Rule 13d-7(b) for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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SCHEDULE 13D
CUSIP No. 911 319-10-1
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Principal Health Care, Inc. 52-1503069
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)
(b)
3 SEC USE ONLY
4 SOURCE OF FUNDS
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2 (d) OR 2
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Iowa
NUMBER OF 7 SOLE VOTING POWER 2,100,000
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER 2,100,000
REPORTING
PERSON 10 SHARED DISPOSITIVE POWER
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,100,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.9 %
14 TYPE OF REPORTING PERSON
CO
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This Amendment No. 1 amends and supplements the statement on Schedule
13D dated July 8, 1996 filed by Principal Health Care Inc. ("PHC") relating to
the common stock, $.01 par value per share (the "Common Stock"), of United
Payors & United Providers, Inc., a Delaware corporation (the "Company"). All
capitalized terms not defined herein are used as defined in the Schedule 13D.
Item 2. Identity and Background
Item 2 is supplemented as follows:
Principal Mutual Life Insurance Company has reorganized from a mutual
life insurance company to a stock life insurance company and in that connection
has changed its name to Principal Life Insurance Company ("PL") and has become
an indirect, wholly-owned subsidiary of Principal Mutual Holding Company
("PMHC"), a mutual insurance holding company which is an Iowa corporation. The
intermediate holding companies are Principal Financial Group, Inc. ("PFG") and
Principal Financial Securities, Inc. ("PFS"), both Iowa corporations. The
address of the principal business and principal office of each of the entities
named in this paragraph is 711 High Street, Des Moines, Iowa 50392.
Amended information concerning the directors and executive officers of
PMHC and PHC is set forth in Appendices A and B.
During the last five years, except as set forth below, none of PHC,
PH, PL, PFS, PFG or PMHC, or the Directors or Executive Officers of PHC or PMHC,
has been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors).
During the last five years, except as set forth below, none of PHC,
PH, PL, PFS, PFG or PMHC, or the Directors or Executive Officers of PHC or PMHC,
has been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, or finding any violation with respect to,
federal or state securities law.
Except as set forth below, the Directors and Executive Officers of PHC
and PMHC are United States citizens. Victor H. Loewenstein and Elizabeth E.
Tallett are British citizens.
Item 5. Interest in Securities of the Issuer
Item 5 is amended to read as follows:
(a) PHC has sold an aggregate of 4,500,00 shares of Common Stock (the
"Trust Shares") pursuant to the terms of a Divestment and Common Stock Sale
Agreement dated as of February 25,
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1999 between PHC and Independent Divestment Trust, a Delaware business trust
formed for the purpose of acquiring the shares (the "Trust"), and an Amended and
Restated Trust Agreement dated as of February 25, 1999 (the "Trust Agreement")
between PHC and Wilmington Trust Company, as trustee of the Trust. PHC continues
to own beneficially 2,100,000 shares of Common Stock (the "Retained Shares"),
representing 11.9% of the outstanding shares.
(b) PHC has sole power to vote and to dispose of the Retained Shares.
The Trust Agreement prescribes the manner in which the Trust Shares are to be
voted (see Item 6 below) and provides for their sale by the Trust (see Item 5(c)
and Item 6 below). PHC disclaims beneficial ownership of any of the Trust
Shares.
(c) During the past sixty days, PHC effected the following purchases
and sales of shares of Common Stock:
On February 25, 1999, PHC sold the Trust Shares to the Trust which paid
$13,225,000 and issued Trust Certificates to PHC. The Trust Certificates, all of
which are held by PHC, entitle the holder to the net proceeds from the sale of
the Trust Shares by the Trust. The Trust and Thomas L. Blair, Chairman of the
Board and Chief Executive Officer of the Company, have entered into a Securities
Purchase Agreement dated as of February 25, 1999 (the "Securities Purchase
Agreement") which provided for the Trust to receive $13,225,000 from Mr. Blair
and for Mr. Blair to purchase the Trust Shares from the Trust on or before
February 25, 2003. The purchase price to be paid by Mr. Blair for the Trust
Shares is a maximum of $27.60 per share (less $2.94 per share representing the
allocable per share portion of the $13,225,000 already paid), subject to
possible adjustment, as set forth in the Securities Purchase Agreement. In the
event Mr. Blair defaults in his obligation to purchase the Trust Shares, the
Trust is required to sell the shares.
(d) Any dividends on the Trust Shares received by the Trust become part
of the funds that are to be distributed to the holder of the Trust Certificates
and will reduce the price to be paid for the Trust Shares under the Securities
Purchase Agreement.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
Item 6 is amended to read as follows:
Except as previously described in this statement or set forth below,
there are no contracts, arrangements, understandings or relationships (legal or
otherwise) among the persons named in Item 2 and between such persons and any
person with respect to any securities of the issuer, including but not limited
to transfer or voting of any of the securities, finder's fees, joint ventures,
loan or option arrangements, put or calls, guarantees of profits, division of
profits or loss, or the giving or withholding of proxies.
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Under the terms of the Trust Agreement, the Trust is required to vote
the Trust Shares in the same proportion as all other shares of Common Stock
voted by the Company's other stockholders on any matter submitted to a vote of
stockholders, except that the Trust is directed to vote the Trust Shares for
certain amendments to the Company's Certificate of Incorporation submitted by
the Board of Directors for approval by stockholders at the next Annual Meeting
of Stockholders. These amendments would (i) delete the prohibition on
stockholder action by written consent, the "Business Combination" section which
imposes significant impediments to business combination type transactions
involving greater than 10% stockholders, which are not approved by the Board of
Directors, and the provision which allows the Board of Directors to consider
non-stockholder constituencies in evaluating certain transactions; and (ii)
reduce from 80% to 66 2/3% the stockholder vote required to remove directors for
cause and make certain amendments to the Certificate of Incorporation and
Bylaws. The Trust Agreement and the Securities Purchase Agreement govern the
disposition of the Trust Shares. See Item 5. For more detailed information
regarding these agreements, see the exhibits filed with this statement. The
discussion of those agreements in this statement is qualified in its entirety by
reference to the forms of the agreements filed as exhibits.
PHC proposes to sell 1,250,000 shares of Common Stock in a registered,
firm commitment underwritten offering for which the Company filed a registration
statement under the Securities Act of 1933 on March 15, 1999. If this sale is
not completed, PHC intends to sell the 1,250,000 shares to the Trust, and
expects Mr. Blair to purchase the shares from the Trust, under arrangements
similar to those that apply to the Trust Shares.
Item 7. Material to Be Filed as Exhibits
Exhibit No. Exhibit
99.2 Amended and Restated Trust Agreement, dated as of
February 25, 1999 between Wilmington Trust Company,
as the Trustee, and Principal Health Care, Inc., as
the Transferor and the Initial Holder.
99.3 Divestment and Common Stock Sale Agreement, dated as
of February 25,1999, between Principal Health Care,
Inc. and Independent Divestment Trust.
99.4 Securities Purchase Agreement dated February 25,
1999 between Independent Divestment Trust and
Thomas L. Blair.
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Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
PRINCIPAL HEALTH CARE, INC.
Dated: March 18, 1999 By: /s/ J. N. Hoffman
--------------------------
J. N. Hoffman
Vice President and Corporate Secretary
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APPENDIX A
PMHC's directors and executive officers are identified below.
Directors:
Betsy J. Bernard, Director
Executive Vice President - Retail Markets, U.S. WEST, a tele-
communication Company, 1801 California Street, 52nd Floor,
Denver, CO 80202
Jocelyn Carter-Miner, Director
Vice President, CLQC, Consumer Solutions Group, Personal
Communications Sector, Motorola, an integrated communications
company, 1000 Corporate Drive, Suite 700, Ft. Lauderdale,
FL 33334
Dr. Ruth M. Davis, Director
President and Chief Operating Officer, The Pymatuning Group, Inc., a
technology management and industrial modernization services company, Suite
570, 4900 Seminary Road, Alexandria, VA 22311
D.J. Drury, Director
Chairman and Chief Executive Officer, Principal Life
Insurance Company, 711 High Street, Des Moines, IA 50392
C. Daniel Gelatt, Jr. Director
President, NMT Corporation, a computer graphics services and software
company, 2004 Kramer Street, La Crosse, WI 54603
J. Barry Griswell, Director
President, Principal Life Insurance Company
711 High Street, Des Moines, IA 50392
G. David Hurd, Director
Retired, 711 High Street, Des Moines, IA 50392
Charles S. Johnson, Director
Chairman, President and Chief Executive Officer, Pioneer Hi-Bred
International, Inc., an agricultural products development, production and
marketing company, 400 Locust, Suite 700
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Capital Square, Des Moines, IA 50309
William T. Kerr, Director
Chairman and Chief Executive Officer, Meredith Corporation,
a media and marketing company, 1716 Locust, Suite 700 Capital
Square, Des Moines, IA 50309
Lee Liu, Director
Chairman of the Board, Alliant Energy, a public utilities company,
P.O. Box 351, Cedar Rapids, IA 52406
Victor H. Loewenstein, Director
Managing Partner, Egon Zehnder International, an international
management consulting company, 350 Park Avenue, New York,
NY 10022
Ronald D. Pearson, Director
Chairman, President and Chief Executive Officer
Hy-Vee, Inc., an operator of retail stores, 5820 Westown
Parkway, West Des Moines, IA 50266
John R. Price, Director
Managing Director, The Chase Manhattan Corporation, a bank
holding company, 270 Park Avenue, 44th Floor, New York, NY
10017
Dr. Donald M. Stewart, Director
President, The College Board, a non-profit provider of educational
transition services, 45 Columbus Avenue, New York, NY 10023
Elizabeth E. Tallett, Director
ioscor inc., a biotechnology company, 48 Federal Twist Road,
Stockton, NJ 08559
Dean D. Thornton, Director
Retired, 1602 34 Court West, Seattle, WA 98199
F.W. Weitz, Director
President and Chief Executive Officer,
Essex Meadows, Inc., a retirement homes company, 800 Second Avenue, Des
Moines, IA 50309
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Executive Officers who are not Directors (all of whom are principally employed
by PL as set forth below and have, as their principal business address, 711 High
Street, Des Moines, Iowa
50392):
J.E. Aschenbrenner, Senior Vice President
P.F. Bognanno, Senior Vice President
C.R. Duncan, Senior Vice President
D.P. Francis, Senior Vice President
T.J. Gaard, Senior Vice President
M.H. Gersie, Senior Vice President
T.J. Graf, Senior Vice President
R.B. Hill, Senior Vice President
G.R. Narber, Senior Vice President and General Counsel
M.A. O'Keefe, Senior Vice President
B.L. Preif, Senior Vice President
R.A. Slepicka, Senior Vice President
N.R. Sorensen, Senior Vice President
C.C. Williams, Senior Vice President and Chief Information Officer
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APPENDIX B
PHC's Directors and Executive Officers are identified below.
Directors:
T.J. Graf, Chairman
D.J. Drury
M.H. Gersie
L.M. Graves
M.S. Movic
Executive Officers:
T.J. Graf, President
J.N. Hoffman, Vice President and Corporate Secretary
L.M. Graves, Vice President
M.S. Movic, Vice President
Business address for all Directors and Executive Officers:
711 High Street
Des Moines, Iowa 50392
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EXECUTION COPY
--------------
================================================================================
INDEPENDENT DIVESTMENT TRUST
AMENDED AND RESTATED TRUST AGREEMENT,
dated as of February 25, 1999
between
WILMINGTON TRUST COMPANY,
as the Trustee,
and
PRINCIPAL HEALTH CARE, INC.,
as the Transferor and the initial Holder
================================================================================
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TABLE OF CONTENTS
-----------------
Pages (s)
Article 1 Definitions..................................................... 1
Article 2 Creation of Trust............................................... 2
Section 2.1 Creation of Trust, Appointment of the Trustee and
Related Matters.................................. 2
Section 2.2 Transfer of Securities to the Trust................. 2
Section 2.3 Acceptance by the Trustee........................... 3
Section 2.4 Title to Trust Assets............................... 3
Section 2.5 Situs of Trust...................................... 3
Section 2.6 Purpose and Powers.................................. 3
Section 2.7 Tax Reporting....................................... 4
Section 2.8 No Filing........................................... 5
Section 2.9 Document Authorization.............................. 5
Article 3 Closing Conditions; Sale of Securities; Substitutions........... 6
Section 3.1 Closing Conditions.................................. 6
3.1.1 Basic Documents..................................... 6
3.1.2 Accounts............................................ 6
3.1.3 Legal Opinions...................................... 6
Article 4 REPRESENTATIONS AND WARRANTIES.................................. 6
Section 4.1 Representations and Warranties of the Transferor.... 6
4.1.1 Organization; Powers................................ 6
4.1.2 Due Authorization and Binding Obligation............ 7
4.1.3 No Conflicts........................................ 7
4.1.4 No Proceedings...................................... 7
4.1.5 Access; Accredited Investor......................... 7
4.1.6 No Distribution..................................... 8
4.1.7 Regulation of the Trust............................. 8
Section 4.2 Representations and Warranties of WTC............... 8
4.2.1 Organization and Good Standing...................... 8
4.2.2 Corporate Power..................................... 8
4.2.3 Consents and Approvals.............................. 9
4.2.4 Execution and Delivery; Binding Obligation.......... 9
Article 5 Voting of the Securities........................................ 9
Section 5.1 Authority to Vote the Securities.................... 9
Section 5.2 Tender Offers....................................... 10
Section 5.3 Mergers and other Transactions...................... 10
Article 6 Certificates.................................................... 10
Section 6.1 The Certificates.................................... 10
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Section 6.2 Authorized Denominations............................ 11
Article 7 Registration; Transfer of Certificates, Etc.;
Restrictions on Transfer.............................. 11
Section 7.1 Registration of Transfer and
Exchange of Certificates.............................. 11
Section 7.2 Restrictions on Transfer of Certificates............ 13
Section 7.3 Mutilated, Destroyed, Lost or Stolen Certificates... 15
Section 7.4 Persons Deemed Owners............................... 16
Section 7.5 Appointment of Paying Agent......................... 16
Section 7.6 Access to List of Holders' Names and Addresses...... 16
Article 8 The Administrator............................................... 17
Section 8.1 Appointment of Transferor........................... 17
Section 8.2 Duties of Administrator............................. 17
Section 8.3 Administrator Exculpation........................... 17
Article 9 Accounts, Accountings, Distributions; Custodian and Releases... 17
Section 9.1 Collection of Money................................. 17
Section 9.2 Accounts............................................ 18
Section 9.3 Procedures Relating to Securities................... 18
Section 9.4 Reports by the Trustee; Regulatory Reporting........ 19
Section 9.5 Accountings......................................... 19
9.5.1 Preparation of Accounting........................... 19
9.5.2 Payment Date Accounting and Trust Report............ 19
9.5.3 Regulation T, U, X Information...................... 20
Section 9.6 Reports by Independent Accountants.................. 20
Section 9.7 Statement as to Compliance.......................... 21
Article 10 [RESERVED]..................................................... 21
Article 11 SPA Mechanics.................................................. 21
Section 11.1 Settlement of the SPA; Sale of Securities........... 21
Article 12 Actions After SPA Purchase..................................... 22
Section 12.1 Applications of SPA Proceeds........................ 22
Section 12.2 Purchase of Reinvestment Securities................. 22
Article 13 Application of Monies.......................................... 23
Section 13.1 Payment Dates; Sales of Assets; and Distributions
of Monies from Custody Account............................. 23
Section 13.2 Distributions of Monies from Custody Account........ 24
Section 13.3 Taxes............................................... 24
Article 14 Redemption Events.............................................. 25
Section 14.1 Partial Redemption.................................. 25
Article 15 The Trustee ................................................... 25
Section 15.1 Duties of the Trustee............................... 25
Section 15.2 Certain Rights of the Trustee....................... 27
Section 15.3 The Trustee Not Responsible for the Certificates.... 29
ii
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Section 15.4 The Trustee May Own Certificates, etc............. 29
Section 15.5 Eligibility Requirements for the Trustee.......... 30
Section 15.6 Resignation or Removal of the Trustee............. 30
Section 15.7 The Successor Trustee............................. 31
Section 15.8 Merger or Consolidation of the Trustee............ 31
Section 15.9 The Trustee May Enforce Claims Without
Possession of Certificates...................... 31
Section 15.10 Rights of Holders to Direct the Trustee........... 32
Section 15.11 Maintenance of Office or Agency................... 32
Section 15.12 The Trustee as Paying Agent and Registrar......... 32
Section 15.13 Activities as Tax Matters Partner................. 32
Section 15.14 Compensation and Reimbursement.................... 33
Section 15.15 No Longer Deemed Trust Assets..................... 33
Section 15.16 Trustee Servicing in Other Capacities............. 33
Article 16 Amendments and Termination.................................... 34
Section 16.1 Amendment......................................... 34
Section 16.2 Dissolution and Termination....................... 35
Section 16.3 Final Payment to Holders.......................... 36
Article 17 Miscellaneous Provisions...................................... 37
Section 17.1 [RESERVED]........................................ 37
Section 17.2 Inspection Rights................................. 37
Section 17.3 Limitation on Rights of Holders................... 37
Section 17.4 Liability of Holders.............................. 38
Section 17.5 Governing Law..................................... 38
Section 17.6 Notices........................................... 38
Section 17.7 Severability of Provisions........................ 39
Section 17.8 Certificates Nonassessable and Fully Paid......... 39
Section 17.9 No Waiver; Cumulative Remedies.................... 39
Section 17.10 Counterparts...................................... 39
Section 17.11 Third-Party Beneficiaries......................... 39
Section 17.12 Actions by Holders................................ 39
Section 17.13 Merger and Integration............................ 40
Section 17.14 Effect of Headings and Table of Contents.......... 40
APPENDIX AND EXHIBITS
Appendix A Definitions
Exhibit 6.1 Form of Certificate
iii
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Exhibit 7.2.4-A Form of Transferee Certificate (Rule 144A)
Exhibit 7.2.4-B Form of Transferee Certificate (Regulation S)
Exhibit 7.2.5-A Form of Transferor Certificate (Rule 144A)
Exhibit 7.2.5-B Form of Transferor Certificate (Regulation S)
Exhibit 9.5.2 Form of Trust Report
iv
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AMENDED AND RESTATED TRUST AGREEMENT
This AMENDED AND RESTATED TRUST AGREEMENT (this "Agreement") is entered
into as of February 25, 1999 (the "Closing Date") by and between PRINCIPAL
HEALTH CARE, INC., an Iowa corporation (the "Transferor"), as the Transferor and
the initial Holder, and WILMINGTON TRUST COMPANY, a Delaware banking corporation
(the "Trustee"), as the Trustee, with reference to the following facts:
PRELIMINARY STATEMENT
A. The parties hereto have previously entered into a certain Trust
Agreement dated as of January 8, 1999 (the "Original Agreement"), which the
parties hereto wish to amend and restate in its entirety.
B. On the Closing Date, subject to the terms of this Agreement, the Trust
shall purchase and accept the Securities from the Transferor in exchange for (i)
the Certificates and (ii) the Cash Amount.
C. On the Closing Date, the Trust will enter into the SPA pursuant to which
the Trust shall be obligated to sell and the SPA Purchaser shall be obligated to
buy the Securities.
In consideration of the mutual agreements herein contained, each party
agrees that the Original Agreement be amended and restated in its entirety to
read as follows:
Article
Definitions
Except as otherwise specified herein or as the context may otherwise
require, terms used in this Agreement shall have the respective meanings set
forth in Appendix A annexed hereto for all purposes of this Agreement. 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; and Article, Section, Schedule and Exhibit
references contained in this Agreement are references to Articles, Sections,
Schedules and Exhibits in or to this Agreement unless otherwise specified.
Article
Creation of Trust
Section 2. Creation of Trust, Appointment of the Trustee and Related
Matters.
2.1. The parties hereby ratify the creation of the Independent
Divestment Trust
1
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and the filing of the Certificate of Trust pursuant to the Original Agreement.
At the direction of the Transferor, the Trustee is authorized to make, execute
and file in Delaware such certificates of amendment with respect to the
Certificate of Trust as may be necessary or desirable to comply with Section
3810 of the Business Trust Statute, including any amendment required to correct
the effective date of the Trust, to correct clerical errors and to make such
ministerial changes as may be required and not inconsistent with this Agreement.
2.1. The Transferor hereby ratifies its appointment of the Trustee
as trustee of the Trust, to have all the rights, powers and duties set forth
herein. The Trustee hereby accepts such appointment and declares that it will
hold the Trust Assets held by it upon the trusts set forth herein and for the
use and benefit of the Holders.
2.1. Effective as of the date hereof, the Trustee shall have all the
rights, powers and duties set forth herein and, to the extent not inconsistent
herewith, in the Business Trust Statute with respect to accomplishing the
purposes of the Trust.
2.1. It is the intention of the parties hereto that the trust
created by this Agreement constitute a business trust under the Business Trust
Statute and that this Agreement constitute the governing instrument of such
business trust. It is the intention of the parties that the Holders shall not
have any interest in the property of the Trust other than an undivided
beneficial interest as provided in Section 3805(a) of the Business Trust
Statute. It is intended that, solely for Federal income tax purposes, () during
any period in which there is a single Holder, the Trust will be disregarded and
not treated as an entity separate from such Holder, and () during any period in
which there are two or more Holders, the Trust will be treated as a partnership
between or among such Holders. This Agreement is not intended to create an
association taxable as a corporation. The provisions hereof shall be interpreted
accordingly, each party hereto agrees to treat the Trust for Federal income tax
purposes consistent with such intention, and no party hereto shall take a
contrary position for Federal income tax purposes. For each period during which
there is more than one Holder, all items of income, gain, loss, deduction and
credit shall be allocated among the Holders in proportion to the Aggregate
Certificate Principal Amount of the Certificates held by a particular Holder as
a percentage of the Aggregate Certificate Principal Amount of all Outstanding
Certificates.
Section 2. Transfer of Securities to the Trust. On the Closing Date, the
Transferor shall transfer all of its right, title and interest in and to the
Securities to the Trust and, in consideration therefor, the Trust shall (a)
issue and deliver to the Transferor one or more Certificates representing 100.0%
of the Certificates to be issued by the Trust in an amount equal to the Initial
Aggregate Certificate Principal Amount and (b) pay the Cash Amount to the
Transferor by wire or interbank transfer according to instructions received from
the Transferor on or before the Closing Date.
Section 2. Acceptance by the Trustee. The Trustee hereby acknowledges its
2
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acceptance on behalf of the Trust of all right, title and interest in and to the
Securities transferred by the Transferor pursuant to Section 2.2 and declares
that, subject to the terms and conditions hereof, it shall maintain the
Securities and all other Trust Assets for the benefit of the Holders in
accordance with their interests as set forth herein.
Section 2. Title to Trust Assets. Title to all of the Trust Assets shall be
vested in the Trust until this Agreement terminates pursuant to Article 16;
provided, however, that if the Laws of any jurisdiction require that title to
any part of the Trust Assets be vested in a trustee of the Trust, then title to
that part of the Trust Assets shall be deemed to be vested in the Trustee.
Section 2. Situs of Trust. The principal office of the Trust shall be at
the Corporate Trust Office of the Trustee within the State of Delaware. Nothing
in this Section 2.5 shall limit the authority of the Trustee to conduct its
activities as the Trustee from offices within or without the State of Delaware.
3
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Section 2. Purpose and Powers.
2.6. The purpose of the Trust is to engage in the following
activities: () to execute, deliver and perform the Divestment and Common Stock
Sale Agreement, the SPA, the Custody Agreement, and the other Basic Documents to
which the Trust (or the Trustee, on behalf of the Trust) is a party; () to
acquire the Securities () to purchase, acquire, own, sell, hold, endorse,
finance, invest in, transfer, convey, assign, grant, mortgage, pledge, exchange,
advance and collect funds pursuant to and otherwise deal with and exercise or
acquire all rights, powers, privileges and all other incidents of ownership or
possession with respect to the Securities, Eligible Investments and other Trust
Assets to the extent permitted by this Agreement or the other Basic Documents;
() to assign, grant, transfer and convey the Trust Assets (including the
Eligible Investments purchased by the Trust) pursuant to this Agreement and the
SPA and to hold, manage and distribute to the Holders and the SPA Purchasers,
pursuant to the terms of this Agreement and the SPA, any Trust Assets; () to
authorize, execute, authenticate, issue, sell and deliver the Certificates; (f)
to open, maintain and close bank, money market and other accounts, including the
power to draw checks or other orders for the payment of moneys, and to invest
such funds temporarily; (g) to open, maintain and close accounts with brokers,
and to pay the fees and charges applicable to transactions related thereto; (h)
to bring or defend actions and Proceedings at law or in equity or before any
Governmental Authority related to the activities of the Trust; (i) to
participate, to the extent permitted by Law and otherwise by this Agreement, in
the corporate governance of Persons whose obligations or securities or interests
therein have been acquired by the Trust; (j) to employ such Persons (including
accountants, attorneys, investment advisors, trust administrators or managers
and appraisers) or appoint an advisory board or otherwise retain outside
consultants as the Trust deems advisable for the conduct of its business, on
such terms and for such reasonable compensation as the Trustee may determine;
(k) to perform the obligations of the Trust under this Agreement and to enter
into and perform its obligations under the other Basic Documents to which it is
a party; (l) to register and operate itself as a savings and loan holding
company under the Home Owners' Loan Act, as amended, (m) to engage in those
activities, including entering into agreements that are necessary, suitable or
convenient to accomplish the foregoing or are incidental thereto or connected
therewith; (n) subject to compliance with the Basic Documents, to engage in such
other activities as may be required in connection with the conservation of the
Trust Assets and the making of distributions to the Holders; (o) to incur, have
outstanding or guarantee obligations as provided under this Agreement; and (p)
to enter into, make and perform all contracts, to engage in any activity and to
exercise any powers permitted to Delaware business trusts under any Laws of the
State of Delaware which are incidental to, or connected with, the foregoing an
which are necessary, suitable or convenient to accomplish the foregoing.
2.6. The Trust is authorized to engage in the activities referred to
in Section 2.6.1. The Trust shall not engage in any other activity other than in
connection with the foregoing or other than as is required or authorized by the
terms of this Agreement or the other Basic
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Documents. The authority granted to the Trustee hereunder to bind the Trust
shall be limited to actions necessary or convenient to this business.
Section 2. Tax Reporting. The Trustee will provide each Holder with such
information as it may reasonably request in connection with the preparation and
filing of any Federal, state, local or foreign income or franchise tax return of
the Holder, or any audit or contest relating thereto. For any period during
which there are two or more Holders, the Trustee shall cause to be prepared and
timely file, on behalf of the Trust, Internal Revenue Service Form 1065 (and
comparable state or local income or franchise tax forms, if any, required to be
filed by the Trust) in accordance with the provisions of Section 2.1.4, and
shall timely provide each such Holder with a Form K-1 reflecting such Holder's
allocable share of the income, gain, loss, deduction and credits reported on
such Form 1065. For any period during which there are two or more Holders, the
Holder with the largest Percentage Interest in the Trust shall be considered the
"Tax Matters Partner" for Federal income tax purposes; provided, however, that
all duties and obligations of the Tax Matters Partner shall be, and hereby are,
irrevocably delegated to the Trustee, who shall be responsible for executing any
agreement or other documents with respect to or affecting tax matters including
extending the statute of limitations for assessment of tax deficiencies and
adjusting the Federal, state or local income of the Trust. The Tax Matters
Partner shall execute such powers of attorney or other forms as may be required
to implement the foregoing provisions of this Section 2.7.
Section 2. No Filing. TO THE FULLEST EXTENT PERMITTED BY LAW, WITHOUT THE
AFFIRMATIVE VOTE OF UNANIMOUS HOLDERS AND THE EXPRESS WRITTEN CONSENT OF THE
TRUSTEE, NEITHER THE TRUST NOR THE TRUSTEE SHALL HAVE THE RIGHT, POWER, OR
AUTHORITY TO INSTITUTE OR CONSENT TO THE INSTITUTION OF PROCEEDINGS FOR THE
TRUSTEE (IN SUCH CAPACITY) OR THE TRUST TO BE ADJUDICATED BANKRUPT OR INSOLVENT
OR SUBJECT TO RECEIVERSHIP OR ANY SIMILAR PROCEEDING, OR FILE A PETITION
SEEKING, OR CONSENT TO, REORGANIZATION OR RELIEF UNDER ANY FEDERAL OR STATE LAW
RELATING TO BANKRUPTCY, INSOLVENCY, RECEIVERSHIP, OR LIQUIDATION, OR CONSENT TO
THE APPOINTMENT OF A RECEIVER, LIQUIDATOR, ASSIGNEE, TRUSTEE, SEQUESTRATOR (OR
OTHER SIMILAR OFFICIAL) OF THE TRUSTEE (IN SUCH CAPACITY), THE TRUST OR A
SUBSTANTIAL PART OF ITS PROPERTY, OR MAKE ANY ASSIGNMENT FOR THE BENEFIT OF
CREDITORS, OR ADMIT IN WRITING THE TRUSTEE'S (IN SUCH CAPACITY) OR THE TRUST'S
INABILITY TO PAY ITS DEBTS GENERALLY AS THEY BECOME DUE, OR TAKE ACTION IN
FURTHERANCE OF ANY SUCH ACTION; PROVIDED, HOWEVER, NO PROVISION OF THIS
AGREEMENT OR ANY TRUST CERTIFICATE OR ANY OTHER AGREEMENT, DOCUMENT OR
INSTRUMENT RELATING TO THE TRUST IS INTENDED TO, NOR SHALL ANY
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SUCH PROVISION, RESTRICT OR OTHERWISE AFFECT IN ANY WAY ANY RIGHT, POWER,
AUTHORITY OR AUTHORIZATION OF THE TRUSTEE UNDER DELAWARE LAW. BY ITS ACCEPTANCE
OF ITS TRUST CERTIFICATE, THE TRANSFEROR AND EACH HOLDER IS DEEMED TO
IRREVOCABLY WAIVE ANY RIGHT OR INTEREST IT MAY HAVE UNDER THIS AGREEMENT, BY
OPERATION OF LAW OR EQUITY, TO DIRECT OR OTHERWISE REQUIRE THE TRUSTEE TO
INITIATE OR CONSENT TO ANY BANKRUPTCY, INSOLVENCY OR RECEIVERSHIP PROCEEDINGS OR
SIMILAR ACTIONS AS DESCRIBED ABOVE, IT BEING EXPRESSLY UNDERSTOOD THAT ANY SUCH
ACTION BY THE TRUSTEE SHALL BE UNDERTAKEN OR REFRAINED FROM, IN THE TRUSTEE'S
SOLE AND ABSOLUTE DISCRETION, WITHOUT REGARD TO ANY RIGHTS OR INTERESTS THE
HOLDERS OR ANY OTHER PERSONS MAY HAVE.
Section 2. Document Authorization. Notwithstanding anything in this
Agreement to the contrary, () the Trustee is hereby authorized and directed to
execute and deliver on behalf of the Trust, and the Trust is hereby authorized
to perform its obligations under, the Divestment and Common Stock Sale
Agreement, the SPA and the other Basic Documents to which the Trust (or the
Trustee on behalf of the Trust) is a party, () the Trustee is hereby authorized
and directed to execute on behalf of the Trust, and the Trust is hereby
authorized to issue, sell and perform its obligations under, the Certificates to
be issued on the Closing Date to the Transferor, and () such execution,
delivery, performance, issuance and sale does not and shall be deemed not to
violate any terms or provisions of this Agreement.
Article
Closing Conditions; Sale of Securities; Substitutions
Section 3. Closing Conditions. On the Closing Date, the Certificates to be
issued to the Transferor (or its designated nominee) shall be executed and
authenticated by the Trustee on behalf of the Trust, issued by the Trust and
delivered by the Trustee to the Transferor, upon satisfaction of the following
conditions:
3.1. Basic Documents. The Trustee shall have received counterparts of this
Agreement executed by the Trustee and the Transferor and each of the other Basic
Documents, executed by the parties thereto, and all conditions to the
effectiveness of the Divestment and Common Stock Sale Agreement and the SPA
shall have been satisfied.
3.1. Accounts. The Trust shall have established the Custody Account. 3.1.
Legal Opinions. The Trustee and the Transferor shall have received opinions of
Counsel of Clint Woods, Esq., Counsel to the Principal Financial Group,
Richards, Layton & Finger, P.A. and Muldoon, Murphy & Faucette, LLP, counsel to
the SPA Purchaser,
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each dated as of the Closing Date and in form and substance reasonably
acceptable to the parties hereto and the SPA Purchaser.
3.1. The Trustee and the Transferor shall have received such other
documents as the they may reasonably require.
Article
REPRESENTATIONS AND WARRANTIES
Section 4. Representations and Warranties of the Transferor. The Transferor
hereby represents and warrants, as of the Closing Date that:
4.1. Organization; Powers. The Transferor is a corporation duly
organized and validly existing under the Laws of its jurisdiction of
incorporation. The Transferor has all requisite power and authority to enter
into the Basic Documents to which it is a party and to carry out the
transactions contemplated therein, including the legal right to execute, deliver
and perform its obligations under this Agreement, transfer the Securities to the
Trust and acquire and hold the Certificates.
4.1. Due Authorization and Binding Obligation. The execution, delivery
and performance by the Transferor of this Agreement has been duly authorized by
all necessary corporate action on the part of the Transferor. This Agreement has
been duly executed and delivered by the Transferor and constitutes the legally
valid and binding obligation of the Transferor, enforceable against the
Transferor in accordance with its terms, except as may be limited by bankruptcy,
insolvency, receivership, conservatorship, liquidation, reorganization,
moratorium or similar Laws relating to or affecting creditors' rights generally
and by general principles of equity.
4.1. No Conflicts. The execution, delivery and performance by the
Transferor of this Agreement and the other Basic Documents to which the
Transferor is a party, and the consummation of the transactions contemplated in
this Agreement and the other Basic Documents, do not and will not () violate any
provision of any Law applicable to the Transferor, the articles of incorporation
or bylaws of the Transferor or any order, judgment or decree of any court or
other agency of government binding on the Transferor, except for such violations
as individually or collectively will not have a Material Adverse Effect on the
Transferor or result in any Lien on the Securities, () conflict with, result in
a breach of or constitute (with due notice or lapse of time or both) a default
under any material contractual obligation of the Transferor, except for such
conflicts or defaults as individually or collectively will not have a Material
Adverse Effect on the Transferor or result in any Lien on the Securities, or ()
require any approval or consent of any Person under any contractual obligation
of the Transferor, except for such approvals or consents (x) that have been
obtained as of the Closing Date, or (y) the absence of
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which will not individually or collectively have a Material Adverse Effect on
the Transferor or result in any Lien on the Securities.
4.1. No Proceedings. There is no Proceeding, or governmental
investigation (whether or not purportedly on behalf of the Transferor) at law or
in equity or before or by any Governmental Authority, whether domestic or
foreign, pending or, to the Actual Knowledge of the Transferor, threatened
against or affecting the Transferor or any property of the Transferor which, ()
if adversely determined, could reasonably be expected to have a Material Adverse
Effect on the Transferor or result in a Lien on the Securities, () is asserting
the invalidity of this Agreement, the Certificates or any of the other Basic
Documents, or () is seeking to prevent the issuance or sale of the Certificates.
Except for such exceptions as will not individually or collectively result in a
Material Adverse Effect on the Transferor or result in any Lien on the
Securities, the Transferor is not () in violation of any requirements of Law or
() subject to or in default with respect to any final judgment, writ,
injunction, decree, rule or regulation of any court or other Governmental
Authority, whether domestic or foreign.
4.1. Access; Accredited Investor. The Transferor has received all
information that it has requested concerning the Certificates, the Trust and the
Trust Assets and any other matters relevant to its decision to acquire the
Certificates. The Transferor () is an Accredited Investor, () constitutes a
Qualified Purchaser, and () has sufficient knowledge and experience in financial
and business matters to be capable of evaluating the merits and risks of
investing in, and is able and prepared to bear the economic risk of investing in
and holding, the Certificates.
4.1. No Distribution. The Transferor is purchasing the Certificates
for its own account, for investment purposes only and not with a view to
distribution, but nevertheless subject to the understanding that the disposition
of its property shall at all times be and remain within its control.
4.1. Regulation of the Trust. On consummation of the transfer of the
Securities to the Trust, the issuance of the Certificates, and entry by the
Trust into the Basic Documents to which it is a party, to the Actual Knowledge
of the Transferor, the Trust is not an "investment company" or "controlled" by
an "investment company" within the meaning of the Investment Company Act.
Notwithstanding the foregoing, any representation or warranty made by the
Transferor in regard to the compliance by the Transferor and the transactions
contemplated herein with the Investment Company Act and the Securities Act is
subject to the assumption that all representations and warranties of the SPA
Purchaser contained in Section 5 of the SPA are true and correct. The
representations and warranties set forth in this Section 4.1 are made as of the
Closing Date, but shall survive the transfer of the Securities to the Trust and
the receipt of the Certificates by the Transferor.
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Section 4. Representations and Warranties of WTC. WTC hereby represents and
warrants as of the Closing Date that:
4.2. Organization and Good Standing. WTC is a banking corporation
organized under the Laws of the jurisdiction of its incorporation, validly
existing and in good standing under the Laws of the State of its incorporation
and has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required under Federal Law governing its
banking or trust powers and the Laws of the State of Delaware to carry on its
trust business as now conducted.
4.2. Corporate Power. The execution, delivery and performance by WTC,
in its individual capacity and in its capacity as the Trustee, of this
Agreement, and the execution on behalf of the Trust of the Certificates, the
Divestment and Common Stock Sale Agreement, the SPA and the other Basic
Documents to which the Trustee, on behalf of the Trust, is party, in each case
by WTC, as Trustee pursuant to this Agreement, are within the corporate power of
WTC, have been duly authorized by all necessary corporate action on the part of
WTC (no action by its shareholders being required) and do not and will not ()
violate or contravene any judgment, injunction, order or decree binding on WTC
or () violate, contravene or constitute a default under any provision of the
charter or by-laws of WTC or of any material agreement, contract, mortgage or
other instrument binding on WTC or () result in the creation or imposition of
any lien on any Trust Assets which is attributable to WTC and is not related to
the administration of the Trust or the transactions pursuant to this Agreement
or contemplated in this Agreement.
4.2. Consents and Approvals. Other than such filing of the Certificate
of Trust as has been made, the filing of any necessary amendment to the
Certificate of Trust, and the filing of a certificate of cancellation as
described in Section 16.2, no other consent, approval, authorization or order
of, or filing with, any Governmental Authority is required by or with respect to
WTC under the Laws of the State of Delaware in connection with the execution,
delivery and performance by WTC, in its individual capacity and in its capacity
as the Trustee, of this Agreement or the execution on behalf of the Trust of the
Certificates by WTC, as the Trustee, pursuant to this Agreement or the
consummation by WTC, as the Trustee, of the transactions contemplated herein or
therein (except as may be required by Delaware securities and insurance Laws).
4.2. Execution and Delivery; Binding Obligation. This Agreement has
been duly executed and delivered by WTC and constitutes the legally valid and
binding obligation of WTC, enforceable against WTC in accordance with its terms,
except as may be limited by the bankruptcy, insolvency, reorganization,
moratorium and other similar Laws and equitable principles relating to or
limiting creditors' rights generally and by general principles of equity. The
representations and warranties set forth in this Section 4.2 are made as of the
Closing Date, but shall survive the transfer of the Securities to the Trust and
the receipt of the Certificates by
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the Transferor.
ARTICLE
VOTING OF THE SECURITIES
Section 5. Authority to Vote the Securities. On or before the date on which
the Securities are sold by the Trust in accordance with this Agreement, the
Trustee shall have the exclusive right to vote the Securities in any matter on
which the holders of the common stock of the Issuer are entitled to vote. The
Holders shall have no ability to direct the Trustee to vote the Securities in
any manner. Rather, in connection with each separate matter on which the holders
of the Securities are entitled to vote (it being agreed that the Trustee shall
not initiate any proxy solicitation), the Trustee shall vote the Securities as
described below:
5.1. The Trustee is directed to vote, directly or through a proxy, in
favor of a proposal submitted to the stockholders of the Issuer at its 1999
Annual Meeting of Stockholders, by or on behalf of the Board of Directors of the
Issuer which would (i) delete from the Issuer's Certificate of Incorporation
Article Fifth, Section C (which prohibits stockholder action by written
consent), Article Eighth (which imposes restrictions on transactions with
"Interested Stockholders"), and Article Ninth (which allows the Board of
Directors to consider non-stockholder constituencies in evaluating certain
business transactions) and (ii) amend Article Sixth, Section D (which specifies
the conditions for removal of Directors), Article Seventh (which specifies the
methods for amending the Issuer's bylaws), and Article Twelfth (which specifies
the methods for amending the Issuer's Certificate of Incorporation) to require
in each case a 66-2/3% stockholder vote rather than the 80% stockholder vote
presently specified therein; and
5.1. On all matters submitted to stockholders for their vote, other
than those specified in Section 5.1.1 above, the Trustee shall give a proxy to
the Secretary of the Issuer, directing such Secretary to vote the Securities
then held by the Trust in the same proportion as the votes received from the
other holders of common stock of the Issuer entitled to vote on such matter.
Section 5. Tender Offers. In the event that a Person other than the SPA
Purchaser makes an offer to the holders of the Issuer's common stock to purchase
such common stock (a "Tender Offer"), the Trustee shall follow the SPA
Purchaser=s directions as to whether to tender the Securities so long as the SPA
remains in effect and the SPA Purchaser is not in default thereunder. Otherwise,
the Trustee shall tender the Securities in response to any Tender Offer so long
as the Board of Directors of the Issuer has not recommended against such tender.
If the SPA Purchaser or any of his Affiliates makes a Tender Offer, the Trustee
shall tender the Securities only if the cash component of the offer price
exceeds the maximum potential price payable for the Securities under the SPA.
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Section 5. Mergers and other Transactions. In the event that the Issuer
becomes the subject of a merger or other corporate transaction of a type
contemplated in the SPA, the Trustee shall comply with the requirements set
forth for such event in the SPA so long as the SPA is still in effect at the
time and the SPA Purchaser is not in default thereunder. If the SPA is no longer
in effect or the SPA Purchaser is in default thereunder, the provisions of
Section 5.1 or Section 5.2, as applicable, shall govern.
ARTICLE
CERTIFICATES
Section 6. The Certificates. The Certificates shall be substantially in the
form of Exhibit 6.1. Each Certificate shall be executed on behalf of the Trust
by manual or facsimile signature of a Responsible Officer of the Trustee.
Certificates bearing the signature of the individual who was, at the time when
such signature was affixed, authorized to sign on behalf of the Trustee shall
not be rendered invalid, notwithstanding that such individual has ceased to be
so authorized before the authentication and delivery of such Certificates or
does not hold such office at the date of such Certificates. No Certificate shall
be entitled to any benefit under this Agreement, or be valid for any purpose,
unless there appears on such Certificate a certificate of authentication
substantially in the form provided for herein, executed by or on behalf of the
Trustee by the manual signature of a duly authorized signatory, and such
executed certificate of authentication upon any Certificate shall be conclusive
evidence, and the only evidence required, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication. THE TRUST CERTIFICATES SHALL BE SECURITIES GOVERNED BY
THE PROVISIONS OF ARTICLE 8 OF THE UCC.
Section 6. Authorized Denominations. The Certificates shall be issued in
minimum denominations of $5,000,000 and integral multiples of $500,000 in excess
thereof; provided, that one Certificate (each such Certificate, the "Odd Lot
Certificate") may be issued in a different amount, greater than the minimum
denomination, so that the sum of the denominations of all outstanding
Certificates shall equal the Initial Aggregate Certificate Principal Amount on
the Closing Date.
ARTICLE
REGISTRATION; TRANSFER OF CERTIFICATES, ETC.;
RESTRICTIONS ON TRANSFER
Section 7. Registration of Transfer and Exchange of Certificates.
7.1. The Trust shall cause there to be a transfer agent and registrar (the
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"Registrar") with respect to the Certificates. The Registrar shall maintain, at
its office in the State of Delaware, a register (the "Register") in which,
subject to such reasonable regulations as it may prescribe and the terms of this
Agreement, it shall provide for the registration of Transfers and exchanges of
the Certificates.
7.1. The Trustee is hereby initially appointed Registrar. The Trustee
shall be permitted to resign as Registrar upon 30 days' written notice to the
Holders; provided, however, that such resignation shall not be effective and the
Trustee shall continue to perform its duties as Registrar until the Trustee has
appointed a successor Registrar having an office in the State of Delaware
acceptable to the Majority Holders.
7.1. If a Person other than the Trustee is appointed by the Trust as
Registrar, the Trust shall give the Holders prompt written notice of the
appointment of such Person as Registrar and of the location, and any change in
the location, of the Register. The Trustee shall have the right to inspect the
Register at all reasonable times and to obtain copies thereof, and shall have
the right to rely upon a certificate executed on behalf of the Registrar by a
Responsible Officer thereof as to the names and addresses of the Holders, and
the principal amounts and numbers of their Certificates.
7.1. Subject to the restrictions on transfer and exchange set forth in
Section 7.2 and any relevant legend on the Certificates, the holder of any
Certificate may Transfer or exchange the same in whole or in part by
surrendering such Certificate at any office or agency of the Registrar
maintained for that purpose (or, if the Registrar is the Trustee, at its
Corporate Trust Office).
7.1. Every Certificate presented or surrendered for registration of
Transfer shall be accompanied by a written instrument of transfer in a form
reasonably satisfactory to the Trustee and the Registrar, duly executed by the
Holder thereof or its attorney duly authorized in writing.
7.1. Following a proper request for Transfer or exchange, including
compliance with the requirements of Section 7.2, the Registrar shall, within
five Business Days of such request made at an appropriate place, cause the Trust
to execute, the Trustee to authenticate and the Registrar to deliver at the
Corporate Trust Office, to the transferee (in the case of Transfer) or Holder
(in the case of exchange) or send by first-class mail at the risk of the
transferee (in the case of Transfer) or Holder (in the case of exchange) to such
address as the transferee or Holder, as applicable, may request, a Certificate
or Certificates for a like Aggregate Certificate Principal Amount, and in such
authorized denomination or denominations as may be requested; provided, if an
Odd Lot Certificate has been tendered for Transfer or exchange, one such
Certificate may be issued in a different amount, greater than the minimum
denomination (reduced by any distributions which have reduced the Certificate
Principal Amount of such Certificate), such that
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the sum of the amounts of the Certificates issued are in like amount to
those tendered for Transfer or exchange.
7.1. No service charge shall be made for any registration of Transfer
or exchange of any Certificate, but the Registrar may require payment of a sum
sufficient to cover any Tax reasonably likely to be imposed in connection with
any such Transfer or exchange or any expenses incurred in connection therewith.
7.1. The Trust reserves the right with respect to any Certificate that
has been Transferred, if it reasonably believes (after consultation with a
Holder and based on an Opinion of Counsel) that, because the Holder is or was
not a Qualified Purchaser, the ownership of any such Certificate may result in
the Trust being held in violation of the Investment Company Act to () withdraw
any such Certificate from the Register, () withhold payments due on any such
Certificate, () decline to register the Transfer of any such Certificate, or ()
require the sale of any such Certificate. The Registrar shall take any such
action directed by the Trustee in writing.
7.1. All Certificates surrendered for registration of Transfer or
exchange shall be cancelled by the Registrar and disposed of in a manner
satisfactory to the Trustee or retained by the Trustee, in accordance with its
standard retention policy.
7.1. All Certificates issued upon any registration of Transfer or
exchange of Certificates shall be the valid issuances of the Trust evidencing
the same interests, and entitled to the same benefits under this Agreement, as
the Certificates surrendered upon such registration of Transfer or exchange.
Section 7. Restrictions on Transfer of Certificates.
7.2. None of the Certificates have been or will be registered or
qualified under the Securities Act or any applicable state securities Laws and
are being offered only in a transaction not involving any public offering within
the meaning of the Securities Act. Transfers of the Certificates will be subject
to the restrictions set forth in this Section 7.2, and the Certificates will
bear appropriate legends (the "Securities Legend") to the above effect. The
Trustee will refuse to register a Transfer of any Certificates not made in
accordance with the provisions of Regulation S, pursuant to registration under
the Securities Act, or pursuant to an available exemption from registration.
7.2. By acceptance of a Certificate, whether upon original issuance or
later Transfer, each Holder thereof acknowledges the restrictions on the
Transfer of such Certificate set forth in the Securities Legend and in this
Section 7.2, and agrees that it will Transfer such Certificate only as provided
therein and herein.
7.2. No Transfer of any Certificate or any interest therein shall be
permitted to
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any transferee which is not a Qualified Purchaser.
7.2. No Transfer of any Certificate or any interest therein shall be
made unless such Transfer is made in accordance with the provisions of
Regulation S under the Securities Act, pursuant to registration under the
Securities Act, or pursuant to an available exemption from registration, and
provided such Transfer does not require registration under or qualification
under applicable state securities Laws. The Trustee and the Registrar shall
require, before allowing the registration of Transfer by the Registrar, the
proposed transferee to deliver to the Trustee an Officer's Certificate (the
"Transferee Certificate") of the transferee reasonably satisfactory to the
Trustee certifying that such Transfer is being made pursuant to an exemption
from registration under the Securities Act and applicable state securities Laws
and that such transferee is a Qualified Purchaser. The Transferee Certificate
shall be substantially in the form of either Exhibit 7.2.4-A or 7.2.4-B. Any
such Transferee Certificate shall be obtained at the expense of the prospective
transferor or transferee, and not at the expense of the Trustee, and shall be
delivered to the Trustee before or contemporaneously with any such Transfer.
7.2. In addition to complying with the provisions of Section 7.2.4, if
the Transfer is made to a "Qualified Institutional Buyer," the Trustee and
Registrar shall require, before allowing the registration of any Transfer of a
Certificate, that the Holder deliver to the Trustee a certificate relating to
such Transfer substantially in the form of Exhibit 7.2.5-A, or if the Transfer
is made pursuant to Regulation S under the Securities Act, that the Holder
deliver to the Trustee a certificate relating to such Transfer substantially in
the form of Exhibit 7.2.5-B (in either case, the "Transferor Certificate"). The
Transferee Certificates and the Transferor Certificates furnished pursuant to
Section 7.2.4 and this Section 7.2.5 may be relied on conclusively by the
Trustee in determining whether the provisions of Section 7.2.4 and this Section
7.2.5 have been complied with. None of the Trustee or any other person shall be
required or obligated to register any Transfer of Certificates in contravention
of any provision of the Securities Act or any state securities Laws.
7.2. No Certificate may be sold or Transferred by any Holder unless
(a) the prospective transferee represents in the Transferee Certificate that the
funds being used to pay the purchase price for the Certificates, as applicable,
to be purchased by it are solely from one or more of the sources set forth in
the section of such Transferee Certificate entitled "ERISA Sources" and
referring to this Section 7.2.6, and (b) the Trustee shall have reasonably
determined based upon the following procedures that such sale or Transfer would
not be in violation of, or result in a prohibited transaction under, ERISA. If
the Source used by a proposed transferee to acquire a Certificate is identified
pursuant to paragraph (1), (2), (3), (4), (5) or (6) of such "ERISA Sources" and
no plans are identified in paragraph (8) of such "ERISA Sources", the Trustee
shall be entitled to assume the sale or Transfer does not constitute a
"prohibited transaction" and shall permit the sale or Transfer of such
Certificate unless the Trustee determines that the Transfer would otherwise
violate ERISA. If the Source of funds used by a proposed
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transferee to acquire a Certificate is identified pursuant to paragraph (7) of
such "ERISA Sources" or any Plans are identified in paragraph (8) of such "ERISA
Sources", the Trustee shall not permit the sale or Transfer of such Certificate
unless the proposed transferee has delivered to the Trustee an Opinion of
Counsel, in form and substance reasonably satisfactory to the Trustee, provided
at the proposed transferee's own expense and before such Transfer stating that
such Transfer or sale would not constitute a non-exempt "prohibited transaction"
under Section 406 of ERISA or Section 4975 of the Code.
7.2. In addition to the restrictions contained in Section 7.2.6 and
elsewhere in this Agreement, no Certificate may be sold or transferred
(including by pledge or hypothecation) to a proposed transferee if such proposed
transferee has represented in the Transferee Certificate delivered pursuant to
Section 7.2.4 that it is a Benefit Plan Investor or a Controlling Person unless
such transferee provides, at its expense and before such transfer, () an Opinion
of Counsel to the effect that, after giving effect to such proposed Transfer,
Benefit Plan Investors would own less than 25% of the Certificates, as
applicable (determined in accordance with the Plan Asset Regulation), excluding
the Certificates held by Controlling Persons, or () an Opinion of Counsel to the
effect that such sale or Transfer would not make the Trust Assets "plan assets"
as defined in the Plan Asset Regulation. The Trustee shall not permit the sale
or Transfer of a Certificate if it determines, based on such Opinion of Counsel,
that such sale or Transfer would result in the violation of the foregoing
restrictions. The Trustee may rely on any facts set forth in the Transferee
Certificate and in any other certificate furnished by the prospective transferee
in determining whether the provisions of Section 7.2.6 and this Section 7.2.7
have been satisfied, and shall be fully protected in acting or refraining from
acting in good faith in accordance therewith and in reliance on any Opinion of
Counsel unless it shall be proven that the Trustee was grossly negligent in
ascertaining the pertinent facts.
7.2. Notwithstanding any terms herein to the contrary, the Trustee
shall not be responsible for ascertaining whether any Transfer complies with, or
otherwise to monitor or determine compliance with, the requirements or terms of
the Securities Act, applicable state securities Laws, ERISA, the Code or the
Investment Company Act; except that if a certificate is specifically required by
the terms of this Section 7.2 to be provided to the Trustee by a prospective
transferee or transferor, the Trustee shall be under a duty to receive and
examine the same to determine whether it conforms on its face to the applicable
requirements of this Section 7.2.
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Section 7. Mutilated, Destroyed, Lost or Stolen Certificates.
7.3. If () any mutilated Certificate is surrendered to the Registrar,
or the Registrar receives evidence to its reasonable satisfaction of the
destruction, loss or theft of such Certificate, and () there is delivered to the
Registrar and the Trust such security or indemnity as may be required by them to
save each of them harmless (an unsecured indemnity agreement of an Institutional
Investor organized under the Laws of the United States or any State in the
United States with a net worth at least equal to $100,000,000 being deemed
sufficient to satisfy such security or indemnity requirement), then, in the
absence of Actual Knowledge on the part of the Trustee that such Certificate has
been acquired by a protected purchaser or a holder in due course, the Trust
shall execute, and the Trustee shall authenticate and deliver, on behalf of the
Trust in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and denomination, bearing a
number not contemporaneously outstanding.
7.3. In connection with the issuance of any new Certificate under this
Section 7.3, the Trustee or the Registrar may require the payment by the Holder
of a sum sufficient to cover any Taxes, fees or expenses (including the
reasonable fees and expenses of the Trustee or the Registrar) connected
therewith.
7.3. Except as provided in Section 7.3.5, every duplicate Certificate
issued pursuant to this Section 7.3 in lieu of any mutilated, destroyed, lost or
stolen Certificate shall constitute an original additional contractual
obligation of, or beneficial interest in, the Trust, as applicable, whether or
not the destroyed, lost or stolen Certificate shall be at any time enforceable
by anyone, and shall be entitled to all the benefits of this Agreement equally
and proportionately with any and all other Certificates duly issued hereunder.
7.3. The provisions of this Section 7.3 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Certificates.
7.3. If, after the delivery of such new Certificate, a protected
purchaser or holder in due course of the original Certificate in lieu of which
such new Certificate was issued presents such original Certificate for Transfer
or payment, the Trustee shall be entitled to recover such new Certificate from
the Person to whom it was delivered or any Person taking title therefrom, except
a protected purchaser or holder in due course, and shall be entitled to recover
upon the security or indemnity provided therefor to the extent of any Loss
incurred by the Registrar or the Trust.
Section 7. Persons Deemed Owners. The Trustee, the Paying Agent, the
Registrar and any agent of any of them may treat the Person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving payments or distributions pursuant to Sections 13.2 or 16.3 and for
all other purposes whatsoever, and neither the Trustee, the Paying Agent, the
Registrar nor any agent of any of them shall be affected by any notice to the
contrary.
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Section 7. Appointment of Paying Agent. The Paying Agent shall be the
Trustee or, after acceptance of its appointment and so long as it shall serve,
any Eligible Depository Institution appointed by the Trustee. The Paying Agent
shall make distributions to the Holders from the Custody Account as contemplated
by Section 13.2. Any Paying Agent shall have the revocable power to withdraw
funds from the Custody Account for the purpose of making distributions referred
to above. The Trustee may revoke such power and remove any Paying Agent if the
Trustee determines in its sole discretion that the Paying Agent shall have
failed to perform its obligations under this Agreement in any material respect.
The Paying Agent shall be permitted to resign as Paying Agent upon 30 days=
written notice to the Trustee and the Holders; provided, however, that such
resignation shall not be effective and the Paying Agent shall continue to
perform its duties until the Trustee has appointed, and such appointment has
been accepted by, a successor Paying Agent. The Trustee shall cause the
resigning Paying Agent and each successor Paying Agent to execute and deliver to
the Trustee an instrument in which such resigning or successor Paying Agent or
additional Paying Agent shall agree with the Trustee that, as Paying Agent, such
resigning or successor Paying Agent or additional Paying Agent will hold all
sums, if any, held by it for payment to the Holders in trust for the benefit of
the Holders entitled thereto until such sums shall be paid to such Holders. The
Paying Agent shall return all unclaimed funds to the Trustee and upon removal
shall also return all funds in its possession to the Trustee.
Section 7. Access to List of Holders' Names and Addresses. The Registrar
shall furnish to the Paying Agent, within five Business Days after receipt of a
request therefor from the Paying Agent, in writing, a list in such form as the
Paying Agent may reasonably require, of the names and addresses of the Holders.
Article
The Administrator
Section 8. Appointment of Transferor. The Transferor hereby reaffirms its
appointment of Ms. Bette B. Anderson, as set forth in the Original Agreement, to
serve as the Administrator of the Trust. The Administrator shall possess and
exercise only the authority and powers expressly granted in this Trust Agreement
and any amendments hereto. In the event the Administrator is removed from such
position, resigns or is otherwise unable to continue to serve in such position,
then the Transferor shall appoint a successor that is mutually agreed upon by
the Transferor and the Issuer to serve as administrator. The Administrator can
be removed from serving in such position only upon the mutual agreement of the
Transferor and the Issuer. The Administrator may resign upon thirty days prior
notice to the Transferor and the Issuer. If no successor has been appointed
within such thirty day period, the Administrator may, at the expense of the
Trust, petition a court of competent jurisdiction to appoint a successor
Administrator.
Section 8. Duties of Administrator. The Administrator is hereby authorized
and
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directed to (a) prepare, execute and deliver any appropriate application(s) with
the Office of Thrift Supervision ("OTS"), requesting approval from the OTS for
the Trust to become a unitary savings and loan holding company by acquiring up
to 5,750,000 shares of the Issuer (the "Holding Company Application"), (b)
execute and deliver any other document or instrument necessary or incidental
thereto, and (c) take any other actions necessary or incidental thereto,
including the submission of any required application fees. The Transferor shall
be responsible for all fees required in connection with filing the Holding
Company Application to the extent not paid by the Issuer or by the SPA
Purchaser.
Section 8. Administrator Exculpation. In accepting and performing her
duties hereby created, the Administrator shall act solely in such capacity
hereunder and not in her individual capacity, and all persons having any claim
against the Administrator by reason of the transactions contemplated by this
Trust Agreement shall look only to the Trust's property for payment or
satisfaction thereof. Furthermore, all exculpatory provisions set forth in this
Agreement for the benefit of the Trustee also shall apply for the benefit of the
Administrator mutatis mutandis.
Article
Accounts, Accountings, Distributions;
Custodian and Releases
Section 9. Collection of Money. Except as otherwise expressly provided
herein, the Trustee may demand payment or delivery of, and shall receive and
collect, all money and other property payable to or receivable by the Trust or
the Trustee pursuant to this Agreement. The Trustee shall segregate and hold all
such money and property received by it in trust and shall apply it as provided
in this Agreement.
Section 9. Accounts.
9.2. Initially, the "Custodian" shall be the Trustee, in which case
this Agreement shall be considered the Custody Agreement, and the Trustee shall
administer its duties as the Custodian in accordance with the provisions of this
Agreement, and shall receive the full protections of this Agreement applicable
to the Trustee. The Trustee may appoint a successor Custodian by entering into a
Custody Agreement with such Person. Any successor Custodian shall be an Eligible
Institution which has capital and surplus of at least $100,000,000.
9.2. The Trustee shall, on the Closing Date establish a Securities
Account (such account, the "Custody Account") in the name of the Trust. The
Trustee shall promptly deposit or transfer all Collections into the Custody
Account. Other than as expressly provided for in this Agreement, all Collections
deposited shall be held without interest, and the Trustee shall be under no
liability for interest on any money received by it hereunder.
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9.2. Except as provided with respect to Reinvestment Securities, the
Trustee shall use reasonable efforts to invest and reinvest, at the risk and
expense of the Trust, funds in the Custody Account for the credit of the Custody
Account in Eligible Investments maturing on or immediately before the expected
Payment Dates. Notwithstanding any other provision of this Agreement, the
Trustee shall have no liability for the results of, or for losses on, any
investment or reinvestment made if in accordance with this Agreement.
9.2. All disbursements to be made by the Trustee in accordance with
the provisions of Article 13 shall be made out of the funds in the Custody
Account.
9.2. Each Security or other item of Investment Property acquired or
held by the Trust shall be transferred for credit to the Custody Account to be
held for the Trust. Any securities or other Investment Property acquired and
held in certificated form, or registered in the name of the Trust, shall be
delivered (together with appropriate transfer documents) to the Corporate Trust
Office of, or otherwise transferred to, the Custodian for credit to the Custody
Account.
Section 9. Procedures Relating to Securities. Without limiting the
foregoing, the Trust shall cause the Custodian to take such different or
additional action as may be reasonably required to maintain the Trust's rights
in the Trust Assets in the event of any change in Law, including Articles 8 and
9 of the UCC or the regulations of the Department of the Treasury governing
transfers of interests in Treasury Securities.
Section 9. Reports by the Trustee; Regulatory Reporting.
9.4. The Trustee shall supply in a timely fashion upon written request
to any Holder copies of any other information that any Holder may reasonably
request from time to time that is in the possession of the Trustee by reason of
its acting as the Trustee hereunder. Nothing in this Section 9.4 shall be
construed to prevent the Trustee from undertaking to provide any additional
service upon such terms as it and the Majority Holders may agree. Nothing herein
shall be construed to obligate the Trustee to disclose any information
concerning its business or its operations which it reasonably considers
confidential in nature.
9.4. The Issuer is hereby appointed as servicer to the Trust, and in
such capacity shall be solely responsible for all filings by the Trust under,
and all other compliance by the Trust with, all federal and state bank
regulatory and securities laws other than the filing of the Holding Company
Application and related documents and instruments to the extent allocated to the
Administrator pursuant to Article 8. The Issuer agrees that it shall not have
the ability to resign as servicer. The Trustee, however, may remove the Issuer
as servicer if, in the opinion of the Trustee or its counsel, the Issuer has not
fulfilled any of its duties as servicer. If the Trustee removes the Issuer as
servicer, the Unanimous Holders shall appoint a replacement servicer whose fees
and expenses shall be Administrative Expenses hereunder.
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Section 9. Accountings.
9.5. Preparation of Accounting. The Trustee shall use reasonable
efforts to cause any accounting provided for in this Section 9.5 to be made by
the applicable Payment Date. Notwithstanding the foregoing, the Trustee shall
have no liability for any failure or delay on its part in making payment on any
Payment Date due to its failure or inability to complete the accounting required
hereunder in good form on or before the date when due below except for any such
failure or delay due to the Trustee's gross negligence or willful misconduct as
determined by a final judgment of a court of competent jurisdiction.
9.5. Payment Date Accounting and Trust Report. With respect to each
Calculation Date, the Trustee shall render an accounting and shall prepare a
report in substantially the form of Exhibit 9.5.2 (the "Trust Report"),
determined as of such Calculation Date, but taking into account cash flows
expected to be received by the Trust on or before the related Payment Date, to
be delivered to the Holders not later than the Business Day immediately
preceding the related Payment Date. The Trust Report shall contain the following
information and instructions:
9.5.2.1 The Aggregate Certificate Principal Amount of the
Certificates as of the Calculation Date and such amount expressed as a
percentage of the Initial Aggregate Certificate Principal Amount, the
amount of principal payments, if any, to be made on the Certificates
on the Payment Date relating to such Calculation Date and the
Aggregate Certificate Principal Amount of the Certificates after
giving effect to such principal payments and such amount expressed as
a percentage of the Initial Aggregate Certificate Principal Amount.
9.5.2.2 Any Trustee Administrative Expenses or Administrative
Expenses payable on the Payment Date relating to such Calculation Date
on an itemized basis.
9.5.2.3 For the Custody Account:
9.5.2.3.1 the Value in the Custody Account as of such
Calculation Date;
9.5.2.3.2 the amounts payable from the Custody Account
pursuant to Section 13.2 on the Payment Date relating to such
Calculation Date (in the aggregate and under each priority provision
included in such subsection); the Trustee shall make such distribution
from the available funds in the Custody Account in the manner
specified, and in accordance with the priorities established, in
Article 13;
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9.5.2.4.3 the Value remaining in the Custody Account
immediately after giving effect to all payments to be made on the
Payment Date relating to such Calculation Date; and
9.5.2.5 the nature, source and amount of any Collections in the
Custody Account.
9.5. Regulation T, U, X Information. Upon request of any Holder, the
Trust shall supply such Holder with such information as such Holder may
reasonably request in order for such Holder to comply with Regulation T, U or X
of the Board of Governors of the Federal Reserve System.
Section 9. Reports by Independent Accountants.
9.6. On the Closing Date the Trustee on behalf of the Trust shall
execute and deliver an appointment of PricewaterhouseCoopers LLP as the firm of
Independent certified public accountants to prepare and deliver the reports or
certificates of such Independent certified public accountants required by this
Agreement. Upon any resignation by such firm, the Trustee on behalf of the Trust
shall promptly appoint by a notice in writing, delivered to the Holders, a
successor thereto that shall also be a firm of Independent certified public
accountants of recognized national reputation. The fees of the Accountants and
any successor shall be payable by the Trust.
9.6. On or before April 1 in each year commencing April 1, 2000, the
Trustee shall cause to be delivered to the Holders and the SPA Purchasers ()
financial statements prepared in accordance with GAAP and audited by the
Accountants, and () a statement addressed to the Trust from the Accountants
indicating () that such firm has reviewed any Trust Report delivered hereunder
for the fiscal year or period, and () that the calculations within such Trust
Report have been performed in accordance with the applicable provisions of this
Agreement and with GAAP.
Section 9. Statement as to Compliance. On or before April 1 in each
calendar year, commencing April 1, 2000, the Trustee shall deliver to the
Holders an Officer's Certificate of a Responsible Officer of the Trustee stating
that:
9.7. a review of the activities of the Trust during such year and of
the Trust's performance under this Agreement has been made under his/her
supervision; and
9.7. to her/his Actual Knowledge, based on such review, the Trust has
fulfilled all of its obligations in all material respects under this Agreement
throughout such year, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default and the nature and status thereof.
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ARTICLE
[RESERVED]
ARTICLE
SPA MECHANICS
Section 11. Settlement of the SPA; Sale of Securities.
11.1. Effective on each Early Closing Date, the Event Closing Date or
the Maturity Closing Date (as such terms are defined in the SPA), if the
conditions precedent to sale of the Securities have been satisfied, the Trustee
shall sell the portion of the Securities to be sold on such date to the SPA
Purchaser in the manner described in the SPA. To the extent that the SPA
Purchaser defaults in respect of any of its obligations under the SPA to
purchase Securities on the Event Closing Date or the Maturity Closing Date the
Trust shall sell the Securities as promptly as is reasonably practicable in
accordance with the advice of a financial advisor to be chosen in the manner set
forth below (such advisor being herein called the "DEALER-ADVISOR"). In
connection therewith, the Trust shall solicit bids to act as a dealer-advisor to
the Trust from three nationally recognized securities dealers or investment
banks and shall engage the dealer offering the lowest bid to be the Dealer-
Advisor. The Trust shall pay the Dealer-Advisor, from the Trust Assets, the fees
set forth in the Dealer-Advisor's bid accepted as described above. In connection
with the sale of the Securities the Trust shall have the authority to pay any
reasonable fees, commissions or spreads imposed by any intermediaries involved
in such sale, including (if chosen) WTC or any of its Affiliates.
11.1. The Trustee shall not be liable for any action taken or omitted
to be taken by it in good faith and in accordance with direction of the Dealer-
Advisor in connection with the sale or disposition of any Securities.
ARTICLE
ACTIONS AFTER SPA PURCHASE
Section 12. Applications of SPA Proceeds. Any monies and other property
paid to the Trust by the SPA Purchaser and the proceeds of the sale of
Securities pursuant to Section 11.1.1 shall be applied or distributed by the
Trust first to the payment of the fees of the Dealer-Agent and any fees,
commissions or spreads imposed or incurred in connection with the disposition of
the Securities pursuant to Section 11.1.1 and the balance in accordance with
Section 13.2 unless the Unanimous Holders have asked the Trustee in writing to
purchase Reinvestment Securities with such amounts.
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Section 12. Purchase of Reinvestment Securities.
12.2. Upon request from the Unanimous Holders, the Trustee shall
apply the remaining proceeds under Section 12.1 to acquire Treasury Securities
(for credit to the Custody Account) as provided in this Section 12.2. In
connection therewith, the Trustee shall identify, based on offers obtained from
each of three Primary Dealers, () the issues of Treasury Notes or Treasury Bonds
that have an offer price plus accrued interest, expressed as a percentage of par
(such amount, the "NOTE PRICE") closest to par of all issues of Treasury Notes
and Treasury Bonds that mature closest to, but not after, the Scheduled Maturity
Date (such issues being the "TARGET NOTES"); and () the issues of STRIPS
(whether of interest or principal) that have the highest yield to maturity of
all issues of STRIPS that mature closest to, but not after, the Scheduled
Maturity Date (such issues being the "TARGET STRIPS").
12.2. If the Note Price of the Target Notes is less than or equal to
par, the Trustee will purchase Target Notes with an aggregate face amount equal
to the remaining proceeds under Section 12.1, rounded down to the nearest
minimum denomination (such rounded amount being the "TARGET FACE AMOUNT"),
multiplied by the applicable Note Price based on the offers obtained from three
Primary Dealers.
12.2. If the Note Price of the Target Notes exceeds par, the Trustee
instead will purchase Target Notes and Target STRIPS according to the following
formula: FIRST, the Trustee will purchase Target STRIPS in a face amount rounded
up to the next minimum denomination for Target STRIPS, equal to (a) (i) the
product of the Target Face Amount and the Note Price minus (ii) the remaining
proceeds available under Section 12.1 divided by (b) the Note Price minus the
offer price for the Target STRIPS, expressed as a percentage of par; SECOND, the
Trustee will purchase Target Notes with an aggregate face amount equal to the
maximum aggregate face amount of Target Notes that can be purchased with the
proceeds available under Section 12.1 remaining after purchase of the Target
STRIPS pursuant to clause First above. Any cash remaining after purchasing
Target Notes and Target STRIPS pursuant to this Section 12.2 will be distributed
to the Holders of the Certificates as proceeds of a Partial Redemption in
accordance with Section 13.2.
12.2. Any securities acquired pursuant to this Section 12.2 shall be
the "REINVESTMENT SECURITIES". Notwithstanding any provision herein to the
contrary, such Reinvestment Securities shall constitute Eligible Investments.
ARTICLE
APPLICATION OF MONIES
Section 13. Payment Dates; Sales of Assets; and Distributions of Monies
from Custody Account.
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13.1. If a Partial Redemption Payment Date has been set as provided in
Section 14.1, the Trustee is authorized to, and shall (to the extent necessary
to make the relevant redemption payment), as close as practicable to the Partial
Redemption Payment Date, sell or otherwise dispose of (a) any and all
investments (other than Reinvestment Securities) and (b) a pro rata portion of
the Reinvestment Securities equal to the Certificate Principal Amount specified
in the Notice of Partial Redemption.
13.1. The Trustee is authorized to, and to the extent any investment
held in the Custody Account will not mature on or before the Final Payment Date
shall, sell or redeem for settlement on or before the Final Payment Date all
Trust Assets (including any Reinvestment Securities) which do not mature on or
before such date, and exercise any rights of redemption in respect of any Trust
Assets.
13.1. Any sale of investments other than the Reinvestment Securities
required or permitted hereunder may be made by the Trustee in such manner and on
such terms as it shall reasonably determine. If any sale or other disposition of
the Reinvestment Securities before maturity is required hereunder, the Trustee
shall sell or dispose of such Reinvestment Securities at the highest prices
available based upon quotations obtained by the Trust from three Primary
Dealers.
13.1. Forthwith and in any event before the close of business on the
Business Day on which the Trustee receives any interest payments or investment
income from, Proceeds on payment of, or from the sale or disposition of Trust
Assets, the Trustee shall credit or deposit such amounts to the Custody Account.
Section 13. Distributions of Monies from Custody Account. On each
Partial Redemption Payment Date, each Investment Return Payment Date and the
Final Payment Date, the Trustee shall withdraw or debit and pay or apply (i)
with respect to each Investment Return Payment Date, the amounts resulting from
interest payments received with respect to the Reinvestment Securities, all
monies received with respect to Reinvestment Securities maturing on or before
such Investment Return Payment Date, and any other funds in the Custody Account,
(ii) on a Partial Redemption Payment Date, the amounts paid pursuant to the SPA
or the cash dividends or other cash distributions received by the Trust, as the
case may be, but not yet distributed to Holders or used to purchase Reinvestment
Securities, and (iii) on the Final Payment Date, the proceeds of the sales of
all remaining Trust Assets, and any other Collections, in the following order of
priority:
FIRST: To payment of Taxes, if any, referred to in Section 13.3 in
accordance therewith;
SECOND: To the payment to the Trustee for the payment in full of the
Trustee Administrative Expenses then due and owing, to the extent not paid
by the SPA Purchaser pursuant to the SPA;
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THIRD: To the payment of all other amounts due to creditors of the Trust,
including any Administrative Expenses then due and owing, to the extent not
paid by the SPA Purchaser pursuant to the SPA; and
FOURTH: To the payment of the remainder, if any, to the Holders ratably in
accordance with the Certificate Principal Amount of the Certificates held
by them (any such payment to be made on the final Payment Date to be made
to each Holder against surrender of such Holders Certificates). Amounts
otherwise payable pursuant to this clause Fourth shall continue to be
payable notwithstanding any reduction of the Aggregate Certificate
Principal Amount to zero.
Section 13. Taxes. If any Tax shall become payable by the Trust, including
any Tax required to be withheld from any payment made by the Trustee under the
provisions of any Law with respect to any Trust Assets, any Basic Document, or
the Certificates, such Tax shall be paid by the Trustee from available amounts
and shall, subject to the terms of the applicable Basic Document, be withheld by
the Trustee from the applicable payment (and, if such Tax does not apply to all
the recipients of such payment on an equal basis, such withholding shall be
effected by the Trustee in proportion to the extent to which the respective
payees are affected by such Tax). The Trustee shall have the right to refuse the
surrender or exchange of any Certificate with respect to which such Tax shall be
payable until such payment shall have been satisfied by the applicable Holder or
the SPA Purchaser to the extent specified in the SPA.
ARTICLE
REDEMPTION EVENTS
Section 14. Partial Redemption.
14.1. Each Certificate is subject to a mandatory partial redemption
for cash (a "PARTIAL REDEMPTION") as hereinafter provided if, at any time after
any payment (other than a payment at the Scheduled Maturity Date) is made by the
SPA Purchaser under the SPA or any cash dividend or other cash distribution is
received by the Trust in respect of the Securities which is not required to be
paid to the SPA Purchaser pursuant to the SPA, the Majority Holders give notice
to the Trustee (such notice, the "NOTICE OF PARTIAL REDEMPTION") of their
election () to cause a Partial Redemption, and () the Certificate Principal
Amount to be redeemed in connection with such Partial Redemption.
14.1. By 3:00 p.m., New York time, on the second Business Day (the
"PARTIAL REDEMPTION NOTICE DATE") after the Trustee receives notice of a Partial
Redemption, the Trustee shall notify each Holder of () its receipt the Notice of
Partial Redemption, () the amount of any Taxes required to be withheld by the
Trustee pursuant to Section 13.3, () the Partial Redemption Payment Date, which
shall not be more than five Business Days after the Partial Redemption
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Notice Date, and () the amount of funds estimated to be distributed on the
Partial Redemption Payment Date.
Article
The Trustee
Section 15. Duties of the Trustee.
15.1. Except during the continuance of a default by the SPA Purchaser
under the SPA of which the Trustee has Actual Knowledge:
15.1.1.1 the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement to be performed by the
Trustee, and no implied covenants or obligations shall be read into this
Agreement against the Trustee; and
15.1.1.2 in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or Opinions of Counsel furnished
to the Trustee and conforming on their face to the requirements of this
Agreement; provided, however, that in the case of any such certificates or
opinions which by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform on their face to the requirements of this
Agreement and shall promptly notify the party delivering the same if such
certificate or opinion does not so conform.
15.1. In case a default by the SPA Purchaser under the SPA of which
the Trustee has Actual Knowledge has occurred and is continuing, the Trustee
shall, before the receipt of directions, if any, from the Unanimous Holders,
exercise such of the rights and powers vested in it by this Agreement.
15.1. The Trustee shall not have any liability to Holders except for
its own gross negligence or willful misconduct in carrying out its duties under
this Agreement, except that:
15.1.3.1 this Section shall not be construed to limit the effect of
Section 15.1.1;
15.1.3.2 the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proven that
the Trustee was grossly negligent in ascertaining the pertinent facts;
15.1.3.3 the Trustee shall not be liable with respect to any action
taken or
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omitted to be taken by it in good faith in accordance with the direction of
the Unanimous Holders relating to the time, method and place of conducting
any Proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Agreement;
15.1.3.4 no provision of this Agreement shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers, if it shall believe in good faith that repayment
of such funds or adequate indemnity against such risk or liability is not
assured to it (provided that the unsecured agreement of any Holder that is
an Institutional Investor organized under the Laws of the United States, or
any State in the United States, shall constitute adequate assurance with
respect to repayment and indemnity if the aggregate net worth of such
Institutional Investor is not less than $100,000,000); provided, however,
that the reasonable costs of performing its ordinary services under this
Agreement shall not be deemed a "financial liability" for purposes hereof;
15.1.3.5 the Trustee shall not be liable to the Holders for any action
taken or omitted by it at the direction of any Holders under circumstances
in which such direction is required or permitted by the terms of this
Agreement; and
15.1.3.6 the right of the Trustee to take actions enumerated in (but
not required by) this Agreement, including any rights to make further
inquiries, shall not be construed as a duty and the Trustee shall not be
answerable, and shall incur no liability, for its failure to take any such
permitted actions or exercise any such rights.
15.1. Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
Sections 15.1, 15.2 and 15.3.
15.1. The Trustee, promptly after receipt thereof by a Responsible
Officer of the Trustee, shall transmit by mail to all Holders, as their names
and addresses appear on the Register, all written communications that are
required under this Agreement to be delivered to the Trustee and are received
from the SPA Purchaser (excluding information provided by the Trustee to the
Holders on request pursuant to Section 9.4).
15.1. Except for actions expressly authorized by this Agreement, the
Trustee shall take no action which a Responsible Officer thereof has Actual
Knowledge is reasonably likely to materially impair the interests of the Trust
in any part of the Trust Assets now existing or hereafter created or to impair
materially the value of any part of the Trust Assets now existing or hereafter
created.
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15.1. If, to the Actual Knowledge of the Trustee, the Paying Agent or
the Registrar shall fail to perform any obligation, duty or agreement in the
manner or on the day required to be performed by the Paying Agent or the
Registrar, as the case may be, under this Agreement, the Trustee shall be
obligated as soon as possible after obtaining Actual Knowledge thereof and
receiving appropriate Records, if any, to give notice of such failure to the
Holders and (so long as the SPA remains in effect and the SPA Purchaser is not
in default thereunder) the SPA Purchaser.
15.1. The Trustee is responsible only for undertaking to perform or
for observing the covenants and obligations expressly set forth herein with
respect to the SPA Purchasers and the SPA Purchaser, and neither this Agreement
nor any of the other Basic Documents shall be construed or interpreted to
include any implied covenants or obligations on the part of the Trustee to the
SPA Purchaser. The Trustee shall not be deemed to owe any fiduciary duty to the
SPA Purchaser, in such capacities, and shall not be liable for any failure of
the Trust to perform its obligations to such Person other than as a result of
the gross negligence or willful misconduct of the Trustee in the performance of
its express obligations under this Agreement.
15.1. Notwithstanding anything in this Agreement to the contrary, the
Trustee shall not have any obligation or duty, fiduciary or otherwise (and no
such obligation or duty shall be read into this Agreement or implied with
respect to or against the Trustee), to initiate or otherwise participate in, or
consent to, any bankruptcy, insolvency or other Proceeding or adjudication of
the Trust described in Section 2.8.
Section 15. Certain Rights of the Trustee. Except as otherwise specifically
provided in Section 15.1:
15.2. the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document reasonably believed by it to be genuine and to have been
signed or presented by the proper party or parties, and the Trustee may accept a
certified copy of a resolution of the board of directors or other governing body
of any corporate party as conclusive evidence that such resolution has been duly
adopted by such body and that the same is in full force and effect;
15.2. whenever in the administration of this Agreement the Trustee
shall deem it desirable that a matter be proved or established before taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate, and such Officer's Certificate shall
constitute full protection to the Trustee for any action taken or omitted to be
taken by it in good faith reliance thereon;
15.2. as a condition to the taking or omitting of any action by it
hereunder, the
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Trustee may consult with counsel; may take or omit any action in reliance on any
Opinion of Counsel; and the Trustee shall be fully protected in acting or
refraining from acting in good faith in accordance with any Opinion of Counsel
or in reliance thereon;
15.2. the Trustee shall not be under any obligation to exercise or
enforce any of the rights or powers vested in it by this Agreement, including to
honor the request or direction of any of the Holders, to institute any suit, to
take any remedial proceeding under this Agreement, or to enter any appearance or
in any way defend in any suit in which it may be made defendant, in each case
pursuant to this Agreement, unless such Holders shall have offered to the
Trustee reasonable security or indemnity against all costs, expenses and
liabilities which might reasonably be incurred by it in compliance with such
request or direction (an unsecured indemnity agreement or guaranty of an
Institutional Investor organized under the Laws of the United States or any
state in the United States shall be deemed sufficient if the aggregate net worth
of the Institutional Investors providing such unsecured agreements shall not be
less than $100,000,000 and if such Institutional Investors agree to be jointly
and severally liable for such security or indemnity);
15.2. the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
note or other paper or documents, but the Trustee, in its discretion, may and,
upon written direction, and at the expense of the Unanimous Holders, shall make
such further inquiry or investigation into such facts or matters as it may see
fit or as it shall be directed, and the Trustee and any Holder shall be entitled
on reasonable prior request (which request shall include a statement of the
purpose therefor) made in advance to the Trustee to examine the Records of the
Trust, or the Trustee, personally or by agent or attorney during the Trustee's,
or such other Person's normal business hours; provided that the Trustee or any
such Holder shall, and shall cause its agents to, hold in confidence all such
information, except () to the extent disclosure may be required by Law, by any
regulatory authority, by any judicial or governmental order of a court or
governing body of competent jurisdiction or by the National Association of
Insurance Commissioners, () a Holder may disclose such information to any of its
Affiliates, to any prospective transferee and to such Holder's, Affiliates' and
transferee's accountants, consultants, attorneys and similar agents; provided
that all such persons agree in writing to hold such information as confidential,
() to the extent disclosure is necessary to the prosecution or defense of any
claim of liability under this Agreement brought by or against it and () to the
extent that the Trustee, in its sole judgment, may determine that such
disclosure is consistent with its obligations hereunder (including appropriate
disclosure to its own legal counsel and other advisers);
15.2. the Trustee may perform any of its duties hereunder either
directly or by or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence of any agent, or attorney,
appointed in good faith, by it under this Agreement. In addition, in the
exercise of any of its rights to remove any Persons under this Agreement,
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including any Registrar, Paying Agent, Custodian or the Issuer (as servicer),
the Trustee shall incur no liability for its exercise of such removal rights or
its removal in the absence of its gross negligence or willful misconduct in
connection therewith;
15.2. in no event whatsoever shall the Trustee be liable for any
representation, warranty, covenant, agreement, indebtedness or other obligation
of the Trust; and
15.2. the Trustee shall incur no liability if, by reason of any
provision of any present or future law or regulation thereunder, or by any force
majeure event, including but not limited to natural disaster, war or other
circumstances beyond its control, the Trustee shall be prevented or forbidden
from doing or performing any act or thing which the terms of this Agreement
provide shall or may be done or performed.
Section 15. The Trustee Not Responsible for the Certificates. The Trustee
assumes no responsibility for the correctness of the Certificates (other than
the certificate of authentication on the Certificates). The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the
Certificates or any of the other Basic Documents (other than the enforceability
of its obligations hereunder and under the other Basic Documents, and the
execution by the Trustee on behalf of the Trust of the Certificates and the
certificate of authentication on the Certificates). Notwithstanding any
provision of this Agreement to the contrary, except with respect to a claim by a
Person based on the Trustee's willful misconduct, bad faith or gross negligence,
no recourse shall be had against the Trustee in its individual capacity for any
claim based on any provision of the Agreement, the SPA or the Certificates or
any other Basic Document, instrument or agreement.
Section 15. The Trustee May Own Certificates, etc. The Trustee, in its
individual or any other capacity, may become the owner or pledgee of
Certificates with the same rights as it would have if it were not the Trustee;
provided that any Certificates so held shall not be entitled to participate in
any decisions made or instructions given to the Trustee by the Holders. The
Trustee may deal with the Trust and the Transferor in banking and trustee
transactions with the same rights as it would have if it were not the Trustee.
Section 15. Eligibility Requirements for the Trustee. The Trustee hereunder
shall at all times be an Eligible Institution which meets the requirements of
the definition of "Trustee". The Trustee must have a combined capital and
surplus of at least $100,000,000. If such Eligible Institution publishes reports
of condition at least annually, pursuant to Law, then for the purpose of this
Section 15.5, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section 15.5, the Trustee
shall resign immediately in the manner and with the effect specified in Section
15.6.
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Section 15. Resignation or Removal of the Trustee.
15.6. Subject to Section 15.6.3, the Trustee may at any time resign
and be discharged from the trust hereby created by giving written notice thereof
to the Holders and shall resign and be discharged from the trust hereby created
upon written request of Unanimous Holders. Upon receiving a Trustee notice of
resignation, or upon requesting a Trustee resignation, the Unanimous Holders
(with the consent of the SPA Purchaser, if the SPA is still in effect at the
time and the SPA Purchaser is not in default thereunder) shall promptly appoint
a successor trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and have
accepted appointment within 45 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee and from the date of
such petition until a successor Trustee is appointed, the Trustee shall not be
required to take any action, and shall incur no liability for not taking any
action.
15.6. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 15.5 or shall fail to resign after
written request to do so by Unanimous Holders as described in Section 15.6.1, or
if at any time the Trustee shall be legally unable to act, or shall be adjudged
a bankrupt or insolvent, or if a receiver of the Trustee or of its property
shall be appointed, or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then, Unanimous Holders may remove the Trustee.
15.6. Any resignation or removal of the Trustee pursuant to any of the
provisions of this Section 15.6 shall not become effective until acceptance of
appointment by the successor trustee as provided in Section 15.7. In the event
the Trustee is removed for any reason or resigns, the Trustee shall be under no
obligation to indemnify any successor trustee.
Section 15. The Successor Trustee.
15.7. Any successor trustee appointed as provided in Section 15.6
shall execute, acknowledge and deliver to the predecessor Trustee an instrument
accepting such appointment hereunder, and thereupon the resignation or removal
of the predecessor Trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor hereunder with
like effect as if originally named as the Trustee herein. The predecessor
Trustee, upon receiving payment of all amounts to which it is entitled pursuant
to this Agreement, shall deliver to the successor trustee all documents or
copies thereof and statements held by it hereunder, and shall execute and
deliver such instruments and do such other things as may reasonably be required
for fully and certainly vesting and confirming in the successor trustee all such
rights, powers, duties and obligations.
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15.7. No successor trustee shall accept appointment as provided in
this Section 15.7 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 15.5.
15.7. Upon acceptance of appointment by a successor trustee as
provided in this Section 15.7, such successor trustee shall mail notice of such
succession hereunder to all Holders at their addresses as shown in the Register.
Section 15. Merger or Consolidation of the Trustee. Any Person into which
the Trustee may be merged or converted or with which it may be consolidated, or
any Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any Person succeeding to all or substantially all
of the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the Person resulting from such merger,
conversion or consolidation, or succeeding to such corporate trust business,
shall satisfy the eligibility requirements under Section 15.5.
Section 15. The Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trust without the possession
of any of the Certificates or the production thereof in any Proceeding relating
thereto, and any such Proceeding instituted by the Trustee may be brought in the
name of the Trust or in its own name. Any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses and
disbursements of the Trustee, its agents and counsel, be for the ratable benefit
of the Holders in respect of which such judgment has been obtained.
Section 15. Rights of Holders to Direct the Trustee. Except as otherwise
expressly set forth in this Agreement, Unanimous Holders shall have the right to
direct the time, method and place at or by which the Trust or the Trustee
conducts any Proceeding for any remedy available to it, or exercises any trust
or power conferred upon the Trust or the Trustee; provided, however, that the
Trustee shall have the right to decline to follow any such direction if the
Trustee being advised by counsel determines that the action so directed may not
lawfully be taken or may involve the Trustee in personal liability for which the
Trustee has not been indemnified as provided herein; and provided further that
nothing in this Agreement shall impair the right of the Trustee to take any
action deemed proper by the Trustee and which is not inconsistent with such
direction of the Holders, as applicable.
Section 15. Maintenance of Office or Agency. The Trustee will maintain at
its expense an office or offices or agency or agencies where notices and demands
to or upon the Trustee in respect of the Certificates or this Agreement may be
served. The Trustee initially designates its Corporate Trust Office as its
office for such purposes. The Trustee will give prompt written notice to the
Holders of any change in the location of any such office or agency.
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Section 15. The Trustee as Paying Agent and Registrar. So long as the
Trustee shall be the Paying Agent and the Registrar, neither the Holders nor any
other Person may remove any of the Paying Agent, the Registrar or the Trustee
without simultaneously removing each of the other.
Section 15. Activities as Tax Matters Partner. Notwithstanding any other
provision of this Agreement, in connection with the performance of its duties as
Tax Matters Partner under Section 2.7, the Trustee may, at the expense of the
Trust, consult with, and delegate responsibility to perform its duties in such
capacities to, such accountants or attorneys as it may select in its reasonable
judgment. The advice of such accountants or counsel to the Trustee as Tax
Matters Partner shall be full and complete protection in respect of any action
taken or omitted by it as Tax Matters Partner in good faith and in reliance
thereon, unless it shall be proven that the Trustee was grossly negligent in
ascertaining the pertinent facts. Any delegation by the Trustee accepted in
writing by the delegee accountant or counsel shall discharge the Trustee from
responsibility for the performance or nonperformance of the duties so delegated,
and the Trustee shall have no liability for any default or misconduct by such
delegee in such performance or nonperformance unless it shall be proven that the
Trustee was grossly negligent in its failure to take appropriate action to
supervise or remove such delegee after acquiring Actual Knowledge of any
material default or misconduct of such delegee with respect to the performance
of such duties.
Section 15. Compensation and Reimbursement. The Trust and the Transferor
agree:
15.14. to pay, to the extent not paid reasonably promptly by the SPA
Purchaser pursuant to the SPA, the reasonable fees and expenses of the Trustee,
the Custodian and the Dealer Advisor incurred in accordance with this Agreement,
all as set forth in and subject to the limitations of that certain fee schedule
(which compensation shall not be limited by any provision of Law in regard to
the compensation of a trustee) dated as of the Closing Date between the Trustee,
the Transferor and the Trust (the "TRUSTEE'S FEE LETTER"), and the Trustee is
hereby authorized and directed to execute the Trustee's Fee Letter on behalf of
the Trust. If the Transferor or the Trust pays such fees as a result of the SPA
Purchaser's breach of its obligations under the SPA, the Trustee shall take
steps to enforce its rights under the SPA and reimburse the Transferor or the
Trust from the net amount it recovers from the SPA Purchaser;
15.14. to indemnify, to the fullest extent permitted by law, the
Trustee (in its individual capacity and as Trustee), its directors, officers,
employees and agents for, and to hold it harmless against, any Loss arising out
of or in connection with the transactions contemplated herein or the acceptance
or administration of the Trust, including the reasonable costs and expenses of
defense against any claim or liability asserted at any time against such Persons
in connection herewith, to the extent that any such Loss is not paid or
reimbursed reasonably promptly by the SPA Purchaser pursuant to the SPA;
provided, however, that the Trust shall not be required to indemnify any such
Person to the extent such Loss resulted from such Person's
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gross negligence, willful misconduct or bad faith; and
15.14. that the obligations of the Trust to the Trustee under this
Section 15.14 shall survive the resignation or removal of the Trustee, as
applicable. The Trustee shall have a claim and lien against the Trust Assets for
any compensation, expense or indemnification owing to it, which claim shall be
prior to the rights of the Holders.
Section 15. No Longer Deemed Trust Assets. Any amounts paid to the Trustee
pursuant to Section 15.14 or Article 13 shall cease to be and shall be deemed
not to be Trust Assets immediately upon such payment.
Section 15. Trustee Serving in Other Capacities. The provisions of this
Article 15 apply to, and are intended for the benefit of, the Trustee,
regardless of the capacity in which the Trustee is serving, including acting as
the Registrar or the Paying Agent.
Article
Amendments and Termination
Section 16. Amendment.
16.1. No amendment, waiver, modification or supplement to, or
termination of, this Agreement or to any other Basic Document to which the Trust
is a party shall be effective without the written consent of the Trustee;
provided, however, that the Trustee shall not consent to any such amendment,
waiver, modification or supplement (including any termination) except () to make
changes to ensure that the Trust will not be treated as an association taxable
as a corporation for Federal income tax purposes or an investment company
required to be registered under the Investment Company Act; or () to make such
changes as may be necessary or desirable to cure any ambiguity or inconsistency
or to make changes that will not be inconsistent with this Agreement, to satisfy
any requirements, conditions or guidelines contained in any opinion, directive,
order, ruling or regulation of any Law; provided, further, however, that no
amendment shall be made that would adversely affect the
SPA Purchaser (so long as the SPA remains in effect and the SPA Purchaser is not
in default thereunder), the Issuer, the Administrator, or the Holders unless
such affected Person has consented in writing to such amendment. The Trustee
shall conclusively deem consent to be given by the SPA Purchaser, the Issuer or
the Administrator if such Person does not respond in writing to any request for
consent within five Business Days after such Person has received notice from the
Trustee of the proposed amendment and the request for consent thereto. Before
entering into any amendment pursuant to this paragraph that is not requested
jointly by the Transferor and the SPA Purchaser as described in the penultimate
sentence of this paragraph, the Trust shall notify the SPA Purchaser (so long as
the SPA remains in effect and the SPA Purchaser is not in default thereunder)
and the Holders in writing of the material terms of such amendment. In addition,
the Trustee may reflect in its Records changes
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made in the composition of the Holders and their respective interests, in
accordance with the provisions of this Agreement, without the consent of the
Holders. Notwithstanding the foregoing, the Trustee, prior to the consummation
of the Issuer's acquisition of a financial institution as contemplated by the
Holding Company Application, shall make or agree to any amendment, waiver,
modification or supplement of or to this Agreement that is mutually agreed in
writing by the Transferor and the SPA Purchaser and as directed by the
Transferor (so long as such amendment, waiver, modification or supplement does
not adversely affect the Trustee, the Issuer or the Administrator), and the
Trustee will incur no liability for making or agreeing to such amendment,
waiver, modification or supplement of or to this Agreement in accordance with,
and in good faith reliance on, such direction. Except as set forth above, the
Holders shall have no right to amend or modify this Agreement.
16.1. Not later than 15 Business Days before the execution of any
proposed amendment or supplemental agreement pursuant to this Section 16.1, the
Trustee shall mail to the Holders and, so long as the SPA remains in effect and
the SPA Purchaser is not in default thereunder, the SPA Purchaser, a copy of
such proposed amendment or supplemental agreement and a written notice reciting
in narrative form the amendments to be effected by such amendment or
supplemental agreement.
16.1. Promptly after the execution of any amendment or supplemental
agreement or waiver in respect of this Agreement or any other Basic Document to
which the Trust is a party, the Trustee shall furnish a copy of such amendment,
supplemental agreement or waiver to each Holder and, so long as the SPA remains
in effect and the SPA Purchaser is not in default thereunder, the SPA Purchaser.
16.1. The manner of obtaining consents and of evidencing the
authorization of the execution thereof by the Persons required to consent under
Section 16.1 shall be subject to such reasonable requirements as the Trustee may
prescribe.
Section 16. Dissolution and Termination. The Trust established hereunder
shall dissolve and the obligations and responsibilities of the Trustee created
hereby (other than the obligation of the Trustee to make payments to the Holders
as hereinafter set forth) shall terminate upon the earliest of the following
days: () the day that falls 20 years after the date of the death of the last
survivor of the descendants of George Herbert Walker Bush, former President of
the United States, living on the date of effectiveness of this Agreement and the
date of issuance of the Certificates; () the day that falls ten years following
the Scheduled Maturity Date; and (c) the day that falls ten Business Days after
the date on which the Trust shall have sold all of the Securities and
distributed the net proceeds thereof to the Holders in accordance with this
Agreement.
16.2. If, on any date of dissolution of the Trust, any amounts payable
hereunder shall not have been paid in full, the Trustee shall pay such amounts
out of the Trust Assets in
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accordance with the terms hereof upon such dissolution. Notwithstanding anything
to the contrary in this Agreement, the application of Proceeds of the Trust
Assets in accordance with this Section 16.2.1 shall fully discharge and satisfy
the obligations of the Trust payable upon dissolution of the Trust, and none of
the Trust, the Trustee or the Transferor shall be liable for any deficiency in
the amount otherwise payable hereunder.
16.2. If any Certificates shall not be surrendered for payment upon
dissolution of the Trust, the Trustee shall not perform any further acts under
this Agreement with respect thereto other than as set forth in Section 16.3,
except that the Trustee, as custodian, shall hold the Trust Assets and any
Proceeds thereof for the two years following the dissolution of the Trust,
without liability for interest, for the benefit of the Holders of Certificates
which have not theretofore been surrendered for payment and as to which such
Proceeds are payable upon any such surrender during such period. Any property
and Proceeds remaining as Trust Assets and unclaimed shall be dealt with by the
Trustee in accordance with applicable Law. Upon the disposition of the Trust
Assets and Proceeds in accordance with this Section 16.2, the Transferor shall
be discharged from all obligations under this Agreement, except as provided
under Section 15.14.
16.2. Upon the completion of winding up of the Trust following its
dissolution, the Trustee shall cause the Certificate of Trust of the Trust to be
canceled by filing a certificate of cancellation with the Delaware Secretary of
State in accordance with the provisions of Section 3810 of the Business Trust
Statute. Such certificate may be signed by the Trustee and shall not require the
signature of any other Person. The Trust shall dissolve and this Agreement shall
terminate upon the filing of such certificate of cancellation and other actions
required by the Business Trust Statute.
Section 16. Final Payment to Holders.
16.3. Written notice of any dissolution (other than the dissolution
related to the Final Payment Date), specifying the date upon which the Holders
may surrender their Certificates for payment of the final distribution and
cancellation, shall be given by the Trustee to the Holders mailed not later than
the tenth Business Day after the Trustee obtains Actual Knowledge of such
dissolution specifying () the date upon which final payment of the Certificates
will be made upon presentation and surrender of Certificates at the office or
offices therein designated, and () the amount or the Trust Assets distributable
in respect of any such final payment, distribution, payments or distributions
being made only upon presentation and surrender of the Certificates at the
office or offices therein specified.
16.3. Notwithstanding the dissolution of the Trust pursuant to this
Agreement, all funds then on deposit in the Custody Account and all Trust Assets
shall continue to be held in trust for the benefit of the applicable Holders,
and the Paying Agent or the Trustee shall pay such funds, or deliver such assets
to the applicable Holders upon surrender of their Certificates.
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In the event that all of the Holders do not surrender their Certificates for
cancellation within two months after the date specified in the above-mentioned
written notice, the Trustee shall give a second written notice to the remaining
Holders, upon receipt of the appropriate records from the Registrar, to
surrender their Certificates for cancellation and receive the final distribution
with respect thereto. If within one year after the second notice all
Certificates shall not have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Holders concerning surrender of their Certificates, and
the cost thereof shall be paid out of the funds in the Custody Account or the
Trust Assets held for the benefit of such Holders, and shall otherwise deal with
any unclaimed amounts in accordance with applicable Law.
16.3. All Certificates surrendered for payment of the final
distribution with respect to such Certificates and cancellation, shall be
cancelled by the Registrar and be disposed of in a manner satisfactory to the
Trustee.
Article
Miscellaneous Provisions
Section 17. [RESERVED]
Section 17. Inspection Rights. The Trustee shall permit each Holder, the
SPA Purchaser (if the SPA is still in effect and the SPA Purchaser is not in
default thereunder) and their respective representatives, upon reasonable prior
written notice to the Trustee, to visit the Corporate Trust Office or principal
office of the Trustee and any other office at which the Trustee maintains any
Records pertaining to the Trust Assets, to discuss their respective affairs,
finances and accounts with their officers, employees, members and the
Accountants (and by this provision the Trust hereby authorizes the Accountants
to discuss with such representatives such affairs, finances and accounts), to
inspect, examine and make copies of their respective Records relating to the
Trust Assets and all other information relating to the Trust Assets at any
reasonable time during normal business hours as often as may be reasonably
requested. Both the Holder and the SPA Purchaser shall pay its own costs and
expenses in connection with any such visit, inspection, examination and copying.
Section 17. Limitation on Rights of Holders.
17.3. The bankruptcy, insolvency, death or incapacity of any Holder
shall not operate to terminate this Agreement or the Trust except as expressly
provided herein, nor shall such bankruptcy, insolvency, death or incapacity
entitle such Holder legal representatives or heirs to claim an accounting or to
take any action or commence any Proceeding in any court for a partition or
winding up of the Trust, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them except as expressly provided
hereby.
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17.3. No Holder shall have any right to vote (except as specifically
provided herein, including Sections 9.4.1, 12.1, 15.1.2, 15.1.3.3, 15.2.5, 15.6
and 17.3.3) or in any manner otherwise control or participate in the operation
and management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth, or contained in the terms of the Certificates, be
construed so as to constitute the Holders from time to time as partners or
members of an association; nor shall any Holder be under any liability to any
third person by reason of any action taken by the parties to this Agreement
pursuant to any provision hereof. Notwithstanding anything herein to the
contrary, the Unanimous Holders may instruct the Trustee to take action as
specifically provided in Sections 9.4.1, 12.1, 15.1.2, 15.1.3.3, 15.2.5, 15.6
and 17.3.3.
17.3. No Holder shall have any right by virtue of any provisions of
this Agreement to institute any suit, action or Proceeding in equity or at Law
upon or under or with respect to this Agreement, unless Unanimous Holders shall
have made written request upon the Trustee to institute such action, suit or
Proceeding in the name of the Trust, and shall have offered to the Trustee and
the Trust such reasonable indemnity as it may reasonably require against the
costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee, for 30 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
Proceeding; it being understood and intended, and being expressly covenanted by
each Holder with every other Holder, the Trust and the Trustee, that no one or
more Holders shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of this Agreement to affect,
disturb or prejudice the rights of the Holders of any other of the Certificates,
or to obtain or seek to obtain priority over or preference to any other such
Holder, or to enforce any right under this Agreement, except in the manner
herein provided and for the equal, ratable and common benefit of all Holders.
For the protection and enforcement of the provisions of this Section 17.3, each
and every Holder, the Trust and the Trustee shall be entitled to such relief as
can be given either at law or in equity.
Section 17. Liability of Holders. Except as otherwise specifically provided
in this Agreement, the liability of the Holders shall be limited to the full
extent provided by Section 3803 of the Business Trust Statute. Without limiting
the generality of the foregoing, no recourse may be taken, directly or
indirectly, against () any past, present or future Holder or () any principal,
partner, shareholder, officer, director, grantor, depositor, trustee, nominee,
beneficiary, attorney-in-fact, agent or employee of any Holder or any elected or
appointed official of any of them, or against the assets of any of them, whether
by virtue of any constitution, statute or rule of Law, or by the enforcement or
assessment of any penalty or otherwise, for any claim under or based on any
agreement, certificate, document or instrument referred to herein or delivered
pursuant hereto, or for any liabilities, obligations, fees, expenses, Taxes or
indemnity payments of the Trust.
Section 17. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
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AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE (WITHOUT
REGARD TO ANY CONFLICTS OF LAW RULES), AND ALL LAWS OR RULES OF CONSTRUCTION OF
SUCH STATE SHALL GOVERN THE RIGHTS OF THE PARTIES TO THIS AGREEMENT AND THE
INTERPRETATION OF THE PROVISIONS OF THIS AGREEMENT.
Section 17. Notices. All demands, notices, instructions and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered, if sent by facsimile transmission or five days after
mailing by certified or registered mail, return receipt requested, (a) in the
case of the Trustee, to its Corporate Trust Office, or such other address as
shall be specified in writing to all parties hereto and all Holders, (b) in the
case of any Holder, at the address of such Holder as shown in the Register, and
(c) in the case of the SPA Purchaser, to 2275 Research Boulevard, 6th Floor,
Rockville, Maryland 20850, or such other address as shall be specified in
writing to all parties hereto and all Holders. Within two Business Days of
receipt by the Trustee of any notices or reports or any other documents,
instruments or information in respect of or relating to the Trust Assets, the
Trustee shall forward to each Holder such notice, report, document, instrument
or information.
Section 17. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement, the Certificates or
rights of the Holders thereof.
Section 17. Certificates Nonassessable and Fully Paid. It is the intention
of the parties to this Agreement that the Holders shall not be personally liable
for obligations of the Trust, that the interests in the Trust represented by the
Certificates shall be nonassessable for any Losses of the Trust or for any
reason whatsoever, and that, upon the transfer of the Securities to the Trust,
the Certificates issued in exchange therefor are and shall be deemed fully paid.
Section 17. No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Holders or any party hereto, any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exhaustive of any rights,
remedies, powers and privileges provided by Law.
Section 17. Counterparts. This Agreement may be executed in any number of
counterparts (and by the different parties on separate counterparts), each of
which so executed shall be deemed to be an original, but all of which together
shall constitute but one and the same
39
<PAGE>
instrument.
Section 17. Third-Party Beneficiaries. This Agreement will inure to the
benefit of and be binding upon the parties hereto, and, in addition, shall inure
to the benefit of each Holder, the SPA Purchaser (so long as the SPA remains in
effect and the SPA Purchaser is not in default thereunder), the Administrator
and the Issuer and their respective successors and permitted assigns. No other
Person will have any right or obligation hereunder except as expressly set forth
in Section 15.14.
Section 17. Actions by Holders.
17.12. Any written request, demand, authorization, direction, notice,
consent, waiver or other act by any Holder shall bind such Holder and every
later holder of the Certificate as applicable, issued upon the registration of
Transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done or omitted to be done by the Trustee in reliance thereon, whether
or not notation of such action is made upon such Certificate.
17.12. Any request, demand, authorization, direction, notice, consent,
waiver or other action specifically provided by this Agreement to be given or
taken by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Agreement
and conclusive in favor of the Trustee if made in the manner provided in this
Section 17.12.
17.12. The fact and date of the execution by any Holder of any such
instrument or writing may be proved in any reasonable manner which the Trustee
deems sufficient.
17.12. The Trustee may require such additional proof of any matter referred
to in this Section 17.12 as it shall deem necessary.
Section 17. Merger and Integration. Except as specifically stated otherwise
herein and in the other Basic Documents, this Agreement sets forth the entire
understanding of the parties relating to the subject matter hereof, and all
prior understandings, written or oral, are superseded by this Agreement. This
Agreement may not be modified, amended, waived or supplemented except as
provided herein.
Section 17. Effect of Headings and Table of Contents. The Article and
Section headings and the Table of Contents herein are for purposes of reference
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.
40
<PAGE>
(SIGNATURE PAGES FOLLOW)
41
<PAGE>
IN WITNESS WHEREOF, the Transferor and the Trustee have caused this
Agreement to be duly executed and delivered by their respective officers as of
the day and year first above written.
WILMINGTON TRUST COMPANY, as the Trustee, and not
in its individual capacity
By:
------------------------------------
Name:
Title:
PRINCIPAL HEALTH CARE, INC., as the Transferor By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
The undersigned agrees, as of the date first above written, to comply with the
requirements for the Issuer, including as servicer, set forth in the foregoing
Amended and Restated Trust Agreement, without charge to the Trust.
UNITED PAYORS & UNITED PROVIDERS, INC.
By:
-------------------------------
Title:
-------------------------------
The undersigned agrees, as of the date first above written, to comply with the
requirements for the Administrator set forth in the foregoing Amended and
Restated Trust Agreement, without charge to the Trust.
- ---------------------------------------
Bette B. Anderson
42
<PAGE>
================================================================================
DIVESTMENT AND COMMON STOCK SALE AGREEMENT
Dated as of February 25, 1999
PRINCIPAL HEALTH CARE, INC.,
as the Transferor,
and
INDEPENDENT DIVESTMENT TRUST,
as the Trust
================================================================================
M1:441582.06M1:441582.06M1:441582.06
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS.....................................................1
ARTICLE 2 AGREEMENT TO CONVEY SECURITIES..................................1
Section 2.1 Delivery and Issuance..................................1
Section 2.2 Protection of Right, Title and Interest in and to
the Securities........................................2
ARTICLE 3 REPRESENTATIONS, WARRANTIES AND COVENANTS.......................2
Section 3.1 Representations and Warranties of the Transferor.......2
Section 3.2 Representations and Warranties of the Transferor
as to the Securities..................................3
Section 3.3 Covenants of the Transferor............................3
Section 4.1 Conveyance of the Securities..............................5
Section 4.1 Conveyance of the Securities...........................5
Section 4.2 Without Recourse.......................................5
ARTICLE 5 INDEMNIFICATION.................................................5
Section 5.1 Indemnities by the Transferor..........................5
ARTICLE 6 MISCELLANEOUS PROVISIONS........................................6
Section 6.1 Amendment..............................................6
Section 6.2 Notices................................................6
Section 6.3 Severability of Provisions.............................7
Section 6.4 Assignment................................................7
Section 6.5 Further Assurances.....................................7
Section 6.6 No Waiver; Cumulative Remedies.........................7
Section 6.7 Counterparts...........................................7
Section 6.8 Successors and Assigns....................................7
Section 6.9 Merger and Integration.................................7
Section 6.10 Effect of Headings and Table of Contents...............8
Section 6.11 Costs, Expenses and Taxes..............................8
Section 6.12 Trustee................................................8
Section 6.13 Governing Law..........................................8
Section 6.14 Consent to Jurisdiction and Service of Process.........8
Section 6.15 Waiver of Jury Trial...................................9
<PAGE>
DIVESTMENT AND COMMON STOCK SALE AGREEMENT
This DIVESTMENT AND COMMON STOCK SALE AGREEMENT (this "Agreement") is
entered into as of February 25, 1999 ("Closing Date"), by and between Principal
Health Care, Inc., an Iowa corporation (the "Transferor"), and Independent
Divestment Trust, a Delaware business trust (the "Trust").
In consideration of the mutual agreements and subject to the terms and
conditions herein contained, each party agrees as follows:
ARTICLE 1
DEFINITIONS
Except as otherwise specified herein or as the context may otherwise
require, capitalized terms used in this Agreement shall have the respective
meanings set forth in Appendix A hereto for all purposes of this Agreement. 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; Article, Section, subsection and
Schedule references contained in this Agreement are references to Articles,
Sections, subsections and Schedules in or to this Agreement, unless otherwise
specified.
ARTICLE 2
AGREEMENT TO CONVEY SECURITIES
Section 2.1......Delivery and Issuance.
2.1.1....Subject to the terms and conditions hereof, on the
Closing Date (a) the Trust agrees that it will issue and deliver to the
Transferor, and the Transferor agrees to accept from the Trust, (i) 100% of the
Trust Certificates of the Trust in an amount equal to the Initial Aggregate
Certificate Principal Amount and (ii) by wire or intrabank transfer according to
instructions given by the Transferor on or before the Closing Date, the Cash
Amount (or, if not received by the Trust from the SPA Purchaser by 11:00 o'clock
a.m. on such date, the Business Day after such date), and (b) in consideration
therefor, the Transferor agrees to sell and contribute to the Trust for delivery
no later than the Closing Date, and the Trust agrees to purchase and accept from
the Transferor, without recourse except as provided herein, all of the
Transferor's right, title and interest in and to 4,500,000 shares of the common
stock of United Payors & United Providers, Inc., a Delaware corporation (such
4,500,000 shares are collectively referred to as the "Securities") and all
money, instruments, rights and other property relating to the foregoing that are
subject to the Trust Agreement, including all Proceeds of the foregoing.
2.1.2....In connection with the conveyance of the Securities,
the Transferor agrees, at its own expense, on the Closing Date, to transfer all
the Securities to or upon the order of the Trust.
2.1.3....The Transferor and the Trust intend that the
conveyances contemplated herein constitute true sales and absolute contributions
of all Securities from the Transferor to the Trust, and not a financing secured
thereby, and that the Transferor will not retain any right, title or interest in
or to any of the Securities. The foregoing transfer does not constitute and is
not intended to result in any assumption by the Trust or any other Person of any
obligation of the Transferor to any Person in connection with the Securities, or
any agreement or instrument relating to any of them.
Section 2.2......Protection of Right, Title and Interest in and to the
Securities.
In connection with the conveyance of the Securities, the
Transferor agrees at its expense to take such actions required to be taken with
respect to the Securities pursuant to and in accordance with applicable Law in
all jurisdictions in which such actions are necessary to perfect the transfer
and assignment of the Securities.
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.1......Representations and Warranties of the Transferor.
The Transferor hereby makes the following representations and warranties to
the Trust as of the Closing Date.
3.1.1....Organization; Powers. The Transferor is a corporation
duly organized and validly existing under the Laws of the jurisdiction of its
incorporation. The Transferor has all requisite power and authority to enter
into the Basic Documents to which it is a party and to carry out the
transactions contemplated therein.
3.1.2....Authorization. The execution, delivery and
performance by the Transferor of the Basic Documents to which the Transferor is
a party have been duly authorized by all necessary corporate action on the part
of the Transferor.
3.1.3....No Conflicts. The execution, delivery and performance
by the Transferor of the Basic Documents to which the Transferor is a party, and
the consummation of the transactions contemplated in the Basic Documents, do not
and will not (i) violate any provision of any Law applicable to the Transferor,
the Articles of Incorporation or bylaws of the Transferor or any order, judgment
or decree of any court or other agency of government binding on the Transferor,
(ii) conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any material contractual obligation of
the Transferor, except for such breaches or defaults as individually or
collectively will not have a Material Adverse Effect on the Transferor or result
in any Lien on the Securities, or (iii) require any approval or consent of any
Person under any contractual obligation of the Transferor, except the absence of
which will not individually or collectively have a Material Adverse Effect on
the Transferor or result in any Lien on the Securities.
3.1.4....Enforceability; Etc. Each of the Basic Documents to
which the Transferor is a party has been duly executed and delivered by the
Transferor and constitutes the legally valid and binding obligation of the
Transferor, enforceable against the Transferor in accordance with its terms,
except as may be limited by bankruptcy, insolvency, receivership,
conservatorship, liquidation, reorganization, moratorium or similar Laws
relating to or affecting creditors' rights generally (including, without
limitation, fraudulent conveyance Laws) and by general principles of equity.
3.1.5....Certain Regulation of the Transferor. The Transferor
is not an "investment company" or "controlled" by an "investment company" within
the meaning of the Investment Company Act.
Section 3.2......Representations and Warranties of the Transferor as
to the Securities. The Transferor hereby makes the following representations and
warranties to the Trust with respect to the Securities transferred and conveyed
to the Trust pursuant hereto as of the Closing Date.
3.2.1....Immediately before the Closing Date, the Transferor
will own the Securities. None of the Securities have been sold, transferred,
assigned or pledged by the Transferor except pursuant hereto; at the time of the
conveyance of the Securities pursuant hereto, the Transferor had good and
marketable title thereto, free of any Adverse Claim.
3.2.2....No effective financing statement or other instrument
similar in effect that covers all or part of the Securities, any interest
therein or any other asset with respect thereto is on file in any recording
office.
3.2.3....The transfer by the Transferor to the Trust of the
Securities pursuant hereto constitutes a valid sale, transfer and assignment of
all of the Transferor's right, title and interest in, to and under the
Securities, which sale, transfer and assignment is perfected and of first
priority under the UCC and otherwise, enforceable against creditors of, and
purchasers from, the Transferor.
Section 3.3......Covenants of the Transferor. The Transferor hereby
covenants that:
3.3.1....Security Interests. Except for the conveyances
hereunder, the Transferor shall not sell, pledge, assign or transfer to any
other Person, or grant, create, incur, assume or suffer to exist any Lien or
Adverse Claim on any of the Securities or any interest therein.
3.3.2....Separate Legal Existence of the Trust. The Transferor
hereby acknowledges that the parties to the Basic Documents are entering into
the transactions contemplated thereby in reliance upon the Trust's identity as a
legal entity separate from the Transferor and from all other Persons. Therefore,
the Transferor shall take such actions as shall be reasonable and within its
power to ensure that:
3.3.2.1 Except as contemplated in the indemnities
contained in the Basic Documents, neither the Transferor nor any
Affiliate of the Transferor shall pay the Trust's operating expenses
and liabilities, recognizing, however, that certain organizational
expenses of the Trust and expenses relating to creation of the Trust
and the initial implementation of transactions contemplated by the
Basic Documents to occur on the Closing Date have been or shall be paid
by the Transferor;
3.3.2.2 The Transferor and its Affiliates shall
conduct their respective businesses at offices segregated from the
offices of the Trust;
3.3.2.3 The Transferor and each of its Affiliates
shall maintain corporate records and books of account separate from
those of the Trust and stationery and other business forms that are
separate and distinct from those of the Trust;
3.3.2.4 Financial statements of the Transferor and
its Affiliates shall not be consolidated to include the Trust or, if
such statements are ever required to be consolidated, they shall
clearly reflect, whether by disclosure in footnotes or otherwise, that
the Trust is a separate entity from the Transferor;
3.3.2.5 Except as otherwise provided herein, neither
the Transferor nor the Trust is under any obligation at any time to
make any capital contribution to the other. General overhead and
administrative expenses of the Transferor shall not be charged or
otherwise allocated to the Trust and such expenses of the Trust shall
not be charged or otherwise allocated to the Transferor, except in each
case on arm's-length terms for services rendered;
3.3.2.6 The assets of the Transferor and its
Affiliates shall be maintained in a manner that facilitates their
identification and segregation from the Trust Assets;
3.3.2.7 The Transferor and each of its Affiliates
shall strictly observe corporate and all other formalities in its
dealings with the Trust, and funds or other assets of the Trust shall
not be commingled with those of the Transferor or any of its
Affiliates. Neither the Transferor nor any of its Affiliates shall
maintain joint bank accounts with the Trust or other depository
accounts with the Trust to which the Transferor or any of its
Affiliates has independent access;
3.3.2.8 Neither the Transferor nor any of its
Affiliates shall, directly or indirectly, name the Trust or enter into
any agreement to name the Trust as a direct or contingent beneficiary
or loss payee on any insurance policy with respect to any loss relating
to the property of the Transferor or any of its Affiliates; and
3.3.2.9 Except as contemplated in the indemnities
contained in the Basic Documents, neither the Transferor nor any of its
Affiliates shall hold itself out, or permit itself to be held out, as
having agreed to pay or be liable for the debts of the Trust.
ARTICLE 4
CONVEYANCE OF THE SECURITIES
Section 4.1......Conveyance of the Securities. In consideration of the
Trust's delivery to, or upon the order of, the Transferor on the Closing Date
all of the Trust Certificates and the Cash Amount, the Transferor hereby sells,
transfers, assigns and otherwise conveys to the Trust, as of the Closing Date
without recourse, representation or warranty except for those representations
and warranties set forth in Section 3.2, all of the Transferors right, title and
interest in and to the following, whether now or hereafter existing or in which
the Transferor now has or hereafter acquires an interest (the "Assets"):
4.1.1....all right, title and interest of the Transferor in
the Securities;
4.1.2....all right, title and interest of the Transferor
to receive any payment or other distribution of funds on any of the
Securities; and
4.1.3....all Proceeds, products, rents, profits or any
other distribution of, from or in respect of any and all of the foregoing
Assets.
Section 4.2......Without Recourse. The representations and warranties
contained herein shall not be construed as a warranty or guaranty by the
Transferor as to the present value of, or the future payments under, or market
performance of, the Securities. The sale of the Securities pursuant hereto shall
be without recourse, representation or warranty, except for the express
representations, warranties and covenants made by the Transferor herein.
ARTICLE 5
INDEMNIFICATION
Section 5.1......Indemnities by the Transferor. Without limiting any
other rights that the Trust may have hereunder or under any Law, the Transferor
hereby agrees to indemnify the Trust from and against any and all Losses (all
the foregoing being collectively referred to as "Indemnified Losses") arising
out of or resulting from the default by the Transferor in respect of any of its
obligations under or in respect hereof or of any other Basic Document to which
it is party or in respect of any of the Securities or otherwise arising out of
or resulting from the events or circumstances set forth below in this Section
5.1. Without limiting or being limited by the foregoing, the Transferor shall
pay on demand to the Trust any and all amounts reasonably necessary to indemnify
the Trust from and against any and all Indemnified Losses relating to or
resulting from:
5.1.1....the creation of a Lien on any of the Securities by
or through the Transferor (other than Liens created in favor of the Trust);
5.1.2....the failure to vest and maintain in the Trust, or to
transfer to the Trust, legal and equitable title to, and ownership of, the
Securities transferred and sold by the Transferor hereunder, free and clear of
any Lien (other than Liens in favor of the Trust);
5.1.3....reliance on any representation or warranty or
statement made by the Transferor (or any of its Officers) under or in connection
with this Agreement, any Basic Document to which it is party or in any
certificate or report delivered pursuant hereto or thereto which, in either
case, shall have been false or incorrect in any material respect when made;
5.1.4....the failure by the Transferor to comply with
any Law with respect to any of the Securities;
5.1.5....any failure of the Transferor to perform its duties
or obligations hereunder; and
5.1.6....the Transferor's failure to pay when due any Taxes
payable in connection with the Securities, but excluding any income, franchise
or similar taxes imposed or similar tax on the Trust.
If and to the extent that the foregoing undertaking may be unenforceable for any
reason, the Transferor hereby agrees to make the maximum contribution to the
payment of Indemnified Losses which is permissible under applicable Law.
Notwithstanding anything herein to the contrary, this Section 5.1 shall not be
applicable to any Indemnified Loss based upon or arising out of or otherwise
attributable to the gross negligence or willful misconduct of the Trust or the
Trustee.
ARTICLE 6
MISCELLANEOUS PROVISIONS
Section 6.1......Amendment. This Agreement may be amended from
time to time by the written agreement of the Trust and the Transferor.
Section 6.2......Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered if sent by facsimile transmission or five days after
mailing by certified or registered mail, return receipt requested, to (a) in the
case of the Transferor, to [___________], Facsimile No. [_____________],
Attention: [_______________]; and (b) in the case of the Trust, to the Corporate
Trust Office or, as to any of such Persons, at such other address as shall be
designated by such Person in a written notice to the other Persons.
Section 6.3......Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms hereof shall for any reason
whatsoever be held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
and terms hereof and shall in no way affect the validity or unenforceability of
the other provisions of this Agreement.
Section 6.4......Assignment. Neither this Agreement nor the rights
or obligations of either of the parties hereto may be assigned or delegated.
Section 6.5......Further Assurances. The Transferor and the Trust
agree to do and perform, from time to time, any and all acts and to execute any
and all further instruments necessary or reasonably required by the other party
hereto or by the Trustee more fully to effect the purposes hereof. Without
limiting the generality of the foregoing, the Transferor shall take all action
that may be necessary or reasonably required in order to protect transfer made
or purported to be made hereby or to enable the Trust to exercise and enforce
its remedies hereunder with respect to the Securities.
Section 6.6......No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Trust, the Trustee or
the Transferor, any right, remedy, power or privilege hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any right,
remedied power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges herein provided are cumulative with and
not exhaustive of any rights, remedies, powers and privileges provided by any
Law.
Section 6.7......Counterparts. This Agreement may be executed in any
number of counterparts (and by different parties on separate counterparts), each
of which so executed shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
Section 6.8......Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and assigns. Except as otherwise provided in the preceding sentence,
no other Person shall have any right or obligation hereunder.
Section 6.9......Merger and Integration. Except as specifically stated
otherwise herein, this Agreement and the other Basic Documents set forth the
entire understanding of the parties relating to the subject matter hereof, and
all prior understandings, written or oral, are superseded by this Agreement.
Section 6.10.....Effect of Headings and Table of Contents. The Article
and Section headings and Table of Contents herein are for purposes of reference
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.
Section 6.11.....Costs, Expenses and Taxes. The Transferor agrees to
pay any and all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording hereof
or of the other documents to be delivered hereunder, and agrees to hold the
Trust harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omitting to pay such taxes and fees.
Section 6.12.....Trustee. It is expressly understood and agreed by the
parties hereto that (a) this Agreement is executed and delivered by the Trustee,
not individually or personally but solely as trustee of the Trust, in the
exercise of the powers and authority conferred and vested in it under the Trust
Agreement, (b) each of the representations, undertakings and agreements herein
made on the part of the Trust is made and intended not as personal
representations, undertakings and agreements by Wilmington Trust Company but is
made and intended for the purpose of binding only the Trust and (c) under no
circumstances shall the Trustee be personally liable for the payment of any
indebtedness or expenses of the Trust or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
Trust under this Agreement.
Section 6.13.....Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED THEREIN WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES.
Section 6.14.....Consent to Jurisdiction and Service of Process. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY HERETO ARISING OUT OF OR RELATING
HERETO OR ANY OTHER BASIC DOCUMENT, OR TO ANY OBLIGATIONS HEREUNDER OR
THEREUNDER MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF DELAWARE. BY EXECUTING AND DELIVERING THIS
AGREEMENT, EACH OF THE DEPOSITOR AND THE SECURITIZATION TRUST, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY:
6.14.1...ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;
6.14.2...WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
6.14.3...AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO SUCH PERSON AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH
SECTION 6.2; AND
6.14.4...AGREES THAT SERVICE AS PROVIDED IN SECTION 6.14.3
ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH PARTY IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING
SERVICE IN EVERY RESPECT.
Section 6.15.....Waiver of Jury Trial. EACH OF THE PARTIES HERETO
HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER
BASIC DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF
THIS TRANSACTION OR THE RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of
this waiver is intended to be all-encompassing of any and all disputes that may
be filed in any court and that relate to the subject matter of this transaction,
including contract claims, tort claims, breach of duty claims and all other
common law and statutory claims. Each party hereto acknowledges that this waiver
is a material inducement to enter into a business relationship, that each has
already relied on this waiver in entering into this Agreement, and that each
shall continue to rely on this waiver in their related future dealings. Each
party hereto further warrants and represents that it has reviewed this waiver
with its legal counsel and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION
6.15 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR TO
ANY OF THE OTHER BASIC DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING HERETO OR THERETO. In the event of litigation, this Agreement may be
filed as a written consent to a trial by the court.
(SIGNATURE PAGE FOLLOWS)
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers as of the day and year
first above written.
PRINCIPAL HEALTH CARE, INC., as the Transferor
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
INDEPENDENT DIVESTMENT TRUST
By: Wilmington Trust Company, solely as
Trustee, and not in its individual capacity
By: ____________________________________
Name:
Title:
--------------------------------------------------------------------------
SECURITIES PURCHASE AGREEMENT
Dated as of February 25, 1999
INDEPENDENT DIVESTMENT TRUST,
as the Seller
and
THOMAS L. BLAIR,
as the Buyer
--------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
1. Purchase and Sale of Shares............................................1
2. Purchase Price.........................................................1
(a) Share Purchase Price.................................................1
(b) Fair Market Value....................................................1
(c) Adjustments..........................................................2
(d) Merger Adjustments...................................................2
3. Closings; Payment of Purchase Price; Put Right of the Seller...........3
(a) Maturity Closing.....................................................3
(b) Early Closings.......................................................3
(c) Certain Events.......................................................3
(d) Deliveries...........................................................4
4. Representations and Warranties of the Seller...........................4
(a) The Shares...........................................................4
(b) Authorization, Execution and Delivery................................5
(c) No Conflicts.........................................................5
(d) Governmental Approvals; Other Consents...............................5
(e) Enforceability; Etc..................................................5
5. Representations and Warranties of the Buyer............................5
(a) Residence............................................................5
(b) Claims and Proceedings...............................................5
(c) Authorization........................................................6
(d) No Conflicts.........................................................6
(e) Governmental Approvals; Other Consents...............................6
(f) Enforceability; Etc..................................................6
(g) Investment Intent....................................................6
(h) Restricted Stock.....................................................6
(i) Status; Investigation................................................7
6. Covenants of the Buyer.................................................7
(a) Reporting............................................................7
(b) Transfers............................................................7
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(c) Compensation and Reimbursement......................... 7
7. Conditions Precedent to Obligations of the Seller...... 8
(a) Representations and Warranties of the Buyer Correct.... 8
(b) Compliance with Covenants and Conditions............... 8
(c) Delivery of Certificate................................ 8
(d) Opinion of Counsel..................................... 8
(e) Proceedings............................................ 8
(f) Approvals and Consents................................. 8
(g) Claims and Proceedings................................. 8
8. Conditions Precedent to Obligations of the Buyer......... 9
(a) Representations and Warranties of the Seller........... 9
(b) Compliance with Covenants and Conditions............... 9
(c) Delivery of Certificates............................... 9
(d) Proceedings............................................ 9
(e) Approvals and Consents................................. 9
(f) Claims and Proceedings................................. 9
9. Termination of Agreement................................. 9
(a) Mutual Consent......................................... 9
(b) Condition Failure by the Buyer......................... 9
(c) Condition Failure by the Seller........................10
10. Brokers..................................................10
11. Expenses.................................................10
12. Survival of Representations, Warranties and Covenants....10
13. Successors and Assigns...................................10
14. Notices..................................................11
15. Complete Agreement.......................................12
16. Amendments; Waivers......................................12
17. Governing Law............................................12
18. Invalid Provisions.......................................12
19. Further Assurances.......................................12
20. Trustee..................................................13
21. Counterparts.............................................13
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this Agreement") is made and entered
into as of the 25th day of February, 1999, by and between Independent Divestment
Trust (the "Seller") and Thomas L. Blair (the "Buyer").
WHEREAS, the Seller owns beneficially and of record 4,500,000 shares (the
"Shares") of the outstanding shares of common stock, par value $.01 per share
(the "Common Stock"), of United Payors & United Providers, Inc., a Delaware
corporation (the "Company"); and
WHEREAS, subject to and on the terms and conditions contained herein, the
Seller desires to sell to the Buyer and the Buyer desires to purchase from the
Seller all of the Shares.
NOW THEREFORE, in consideration of the premises, the mutual covenants and
agreements of the parties contained herein, and of other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
each of the parties (including the non-refundable payment by the Buyer of
$13,225,000 to the Seller by wire transfer on the date hereof), the parties do
hereby represent, warrant, covenant and agree as follows:
1. Purchase and Sale of Shares. Subject to and on the terms and conditions
contained herein, and in reliance on the representations and warranties
contained herein, the Buyer agrees to purchase from the Seller, and the Seller
agrees to sell to the Buyer, the Shares at the purchase price and at the time(s)
specified in Sections 2 and 3 of this Agreement.
2. Purchase Price.
(a) Share Purchase Price. The purchase price per Share at any Closing
(as defined in Section 3(b)) shall be an amount equal to (i) the Fair Market
Value of the Common Stock (as determined in Section 2(b) below) less (ii) $2.94
(equal to $13,225,000 / 4,500,000); subject to adjustment as provided in Section
2(c) or 2(d) below (the "Share Purchase Price").
--------------------
(b) Fair Market Value. "Fair Market Value" for purposes of any
Closing shall mean:
(i) the average of the per-share closing sale prices of the
Company's Common Stock for the 10 trading days immediately preceding a
Closing Date (as defined in Section 3 of this Agreement) on the principal
United States securities exchange registered under the Exchange Act of
1934, as amended on which the Common Stock is listed, or if the shares are
not listed on any such exchange, on the NASDAQ National Market, or
<PAGE>
(ii) if clause (i) above is inapplicable, then $27.60;
provided, however, that in no event shall Fair Market Value be less than $23.00
or greater than $27.60.
(c) Adjustments. The Share Purchase Price shall be adjusted to reflect
fully the effect of any stock split, reverse split, stock dividend,
reorganization, recapitalization or other like change with respect to a share of
Common Stock occurring after the date hereof and prior to termination of this
Agreement. In addition, each cash dividend (or other cash distribution) received
by the Seller with respect to a Share shall (i) cause a reduction in the Share
Purchase Price in an amount equal to the cash dividend (or other cash
distribution) received per Share, and (ii) after taking into account such Share
Purchase Price reduction, be deemed the property of the Seller (and the Buyer
shall have no rights with respect thereto). Furthermore, each distribution of
property or other assets other than a cash distribution or a distribution of
shares of Common Stock with respect to a Share shall be included along with such
Share upon its purchase by the Buyer.
(d) Merger Adjustments. In case of any consolidation or merger of the
Company with or into another corporation or other entity (other than a
consolidation or merger in which the Company is the continuing corporation and
which does not result in any reclassification, capital reorganization or other
change of outstanding shares of Common Stock of the Company), or in case of any
sale or conveyance to another corporation or other entity of the property of the
Company as, or substantially as, an entirety, then the Buyer shall be entitled
to purchase, at the Share Purchase Price determined as of the time of such
consolidation, merger, sale or conveyance (as adjusted in accordance with this
Section 2(d)) and consistent with the terms of this Agreement, the kind and
number of shares of stock or other securities or property (excluding cash)
received by the Seller per Share upon such consolidation, merger, sale or
conveyance. For purposes of this Section 2(d), the Share Purchase Price shall be
reduced by the amount of cash received by the Seller per Share in connection
with any such consolidation, merger, sale or conveyance, and, after taking into
account such Share Purchase Price reduction, such cash shall be deemed the
property of the Seller (and the Buyer shall have no rights with respect
thereto); provided, however, if the amount of such cash per Share exceeds the
then-applicable Share Purchase Price, then all amounts in excess of the then-
applicable Share Purchase Price (together with the Shares or other stock or
property received with respect to such Shares) shall be distributed by the
Seller to the Buyer and this Agreement shall be deemed immediately terminated
upon such distribution. If the property received by the Seller in connection
with any such consolidation, merger, sale or conveyance consists totally of
cash, and the amount of such cash per Share is less than $23.00, then the
obligation of the Buyer at Closing shall be solely to pay to the Seller an
amount equal to the difference between the cash received per Share and $23.00.
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3. Closings; Payment of Purchase Price; Put Right of the Seller.
(a)Maturity Closing. Subject to the terms and conditions contained in this
Agreement, the closing of the sale to, and purchase by, the Buyer of the Shares
shall occur at the offices of the Wilmington Trust Company, Wilmington,
Delaware, at 10:00 a.m., Wilmington time (the "Maturity Closing"), on February
25, 2003, or such other place and time mutually agreed to by the Seller and the
Buyer (the "Maturity Closing Date").
(b) Early Closings. Notwithstanding Section 3(a) above, subject to the
terms and conditions contained in the Agreement, the Buyer may purchase some or
all of the Shares prior to the Maturity Closing Date on one or more Early
Closing Dates (as defined below in this Section 3(b)) by providing the Seller
with one or more written notices specifying the number of Shares to be purchased
on such Early Closing Date. The closing(s) of the sale to, and purchase by, the
Buyer of any Shares under this Section 3(b) shall occur at the offices of the
Wilmington Trust Company, Wilmington, Delaware, or such other place mutually
agreed to by the Seller and the Buyer, at 10:00 a.m., Wilmington time (each an
"Early Closing" and, collectively with the Maturity Closing and an Event Closing
(as defined in Section 3(c) below), sometimes referred to herein as a
"Closing"), on the date that is three business days following the date of the
written notice(s) of the Buyer to the Seller triggering such purchase and sale,
or such other time or place as the parties shall mutually agree upon. The date
on which an Early Closing shall be held is referred to in this Agreement as an
"Early Closing Date" and, collectively with the Maturity Closing Date and an
Event Closing Date (as defined in Section 3(c) below), sometimes referred to in
this Agreement as a "Closing Date").
(c) Certain Events Upon the occurrence of any Certain Event (as
defined below), the Seller may accelerate the purchase obligations of the Buyer
hereunder to a date not less than 30 days nor more than 60 days after the Seller
receives notice of the occurrence of a Certain Event (the "Occurrence Date").
The option of the Seller under this Section 3(c) shall
be exercised by the Seller delivering written notice thereof to the Buyer with
15 days after the Occurrence Date. In such notice, the Seller shall designate
the time and place of such accelerated closing (an "Event Closing"). The date of
such Event Closing is referred to in this Agreement as an "Event
Closing Date". At any such Event Closing, the Buyer shall be obligated to
purchase and the Seller shall be obligated to sell all Shares held by the Seller
at the time of the Event Closing.
For purposes of this Agreement, a "Certain Event" shall mean any one or
more of the following:
(i) the death of Thomas L. Blair ("Mr. Blair");
---------
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(ii) an assignment by Mr. Blair for the benefit of creditors or a
petition or application by Mr. Blair to any tribunal for the
appointment of a custodian, receiver or trustee;
(iii) the commencement by Mr. Blair of any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt
or liquidation law or statute of any jurisdiction, whether now
or hereafter in effect;
(iv) the commencement of any proceeding set forth in (iii) above
against Mr. Blair in which an order for relief is entered;
(v) Mr. Blair, whether by any act or intentional and purposeful
omission, consents to, approves of or acquiesces in any
petition, application, proceeding, order for relief or the
appointment of a custodian, receiver or trustee with respect to
any proceeding set forth in (iii) or (iv) above;
(vi) the continuation of any custodianship, receivership, or
trusteeship established under any proceeding set forth in (ii),
(iii) or (iv) above, undischarged, for a period of 60 days or
more; or
(vii) the default by Mr. Blair in the timely payment of any
indebtedness or obligation for borrowed money, which in the
aggregate exceeds $1,000,000, and the continuation of such
default beyond any cure period provided with respect thereto
except for challenges made in good faith.
(d) Deliveries. At each Closing, (i) the Seller shall deliver to the
Buyer certificates representing the Shares being purchased by the Buyer at such
Closing, endorsed in blank or accompanied by duly executed assignment documents,
against payment of the aggregate amount of the Share Purchase Prices for such
Shares, payable in accordance with Section 2 of this Agreement by wire transfer
of immediately available funds to an account designated in writing by the Seller
and (b) the parties shall make the other deliveries provided in Section 7 and 8
of this Agreement, as applicable. The parties agree that they will cooperate
with the Company to obtain certificates in the appropriate denominations to
satisfy the Seller's delivery obligations at any Closing.
4. Representations and Warranties of the Seller. The Seller represents and
warrants to the Buyer as follows:
(a) The Shares. All of the Shares are owned by and registered in the
name of the Seller, free and clear of any liens, charges, pledges, encumbrances,
defects, restrictions or rights of third parties. As of each Closing (as a
result of the sale of the Shares by Seller to the
4
<PAGE>
Buyer pursuant to this Agreement), the Buyer will receive title to the Shares
purchased at such Closing free and clear of any liens, charges, pledges,
encumbrances, defects, restrictions or rights of third parties.
(b) Authorization, Execution and Delivery. The Seller has all
requisite power and authority to enter into this Agreement and to carry out the
transactions contemplated herein. The execution, delivery and performance by the
Seller of this Agreement have been duly authorized by all necessary action on
the part of the Seller.
(c) No Conflicts. The execution, delivery and performance by the
Seller of this Agreement, and the consummation of the transactions contemplated
in this Agreement, do not and will not (i) violate any provision of any law
(foreign, Federal, state or local), treaties, statutes, ordinances, decrees,
injunctions, writes, orders, rules or regulations of any governmental authority
(collectively, "Law") applicable to the Seller or its property, the Amended and
--- Restated Trust Agreement dated as of February 25, 1999 with
respect to the Independent Divestment Trust or any order, judgment or decree of
any court or other agency of government binding on the Seller, (ii) conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any contractual obligation of the Seller, or (iii) require
any approval or consent of any Person under any contractual obligation of the
Seller.
(d) Governmental Approvals; Other Consents. No authorization, approval
or consent of, or filing with, any governmental authority or other person or
entity (other than those required under the Antitrust Improvements Act of 1976
(the "HSR Act")) is required in connection with the execution, delivery and
performance by the Seller of this Agreement.
(e) Enforceability; Etc. This Agreement has been duly executed and
delivered by the Seller and constitutes the legally valid and binding obligation
of the Seller, enforceable against the Seller in accordance with its terms,
except as may be limited by bankruptcy, insolvency, receivership,
conservatorship, liquidation, reorganization, moratorium or similar Laws
relating to or affecting creditors' rights generally (including, without
limitation, fraudulent conveyance Laws) and by general principles of equity.
5. Representations and Warranties of the Buyer. The Buyer represents and
warrants to the Seller as follows:
(a) Residence. The Buyer is a resident of the State of Maryland.
(b) Claims and Proceedings. There is no legal action, arbitration, or
governmental proceeding or investigation pending or threatened against or
affecting the Buyer that could adversely affect or prevent the purchase and sale
of the Shares.
5
<PAGE>
(c) Authorization. The Buyer has all requisite power and authority to
execute, deliver and perform this Agreement and to carry out the transactions
contemplated herein.
(d) No Conflicts. The execution, delivery and performance by the Buyer
of this Agreement, and the consummation of the transactions contemplated in this
Agreement, do not and will not (i) violate any provision of any Law applicable
to the Buyer or any order, judgment or decree of any court or other agency of
government binding on the Buyer or his property, (ii) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any contractual obligation of the Buyer, or (iii) require any approval or
consent of any Person under any contractual obligation of the Buyer.
(e) Governmental Approvals; Other Consents. No authorization, approval
or consent of, or filing with, any governmental authority or other person or
entity (other than those required under or by the HSR Act) is required in
connection with the execution, delivery and performance by the Buyer of this
Agreement.
(f) Enforceability; Etc. This Agreement has been duly executed and
delivered by the Buyer and constitutes the legally valid and binding obligation
of the Buyer, enforceable against the Buyer in accordance with its terms, except
as may be limited by bankruptcy, insolvency, receivership, conservatorship,
liquidation, reorganization, moratorium or similar Laws relating to or affecting
creditors' rights generally (including, without limitation, fraudulent
conveyance Laws) and by general principles of equity.
(g) Investment Intent. The Buyer is entering into this Agreement
and is acquiring the Shares for his own account for investment and not with a
view to any resale or distribution thereof such as would require
registration under Section 5 of the Securities Act of 1933, as
amended (the "Act").
---
(h) Restricted Stock. The Buyer understands that based upon the
representations of the Buyer contained in this Agreement, the rights evidenced
by this Agreement and the Shares have not been registered under the Act or
applicable state securities laws in reliance on exemptions from registration
under the Act and applicable state securities laws. The Buyer is fully informed
and aware of the circumstances under which such rights and the Shares must be
held and the restrictions upon the transfer or resale of such rights and the
Shares under the Act and any applicable state securities laws. In this
connection, the Buyer understands that the rights evidenced by this Agreement
and the Shares may not be transferred or resold unless they are registered under
the Act and any applicable state securities laws or unless an exemption from
such registration is available.
(i) Status; Investigation. The Buyer is the Chairman of the Board
and Chief
6
<PAGE>
Executive Officer of the Company. The Buyer has such knowledge and experience in
financial and business matters that the Buyer is capable of evaluating the
merits and risks of the investment to be made by the Buyer under this Agreement.
The Buyer has and has had access to all of the Company's material books and
records and access to the Company's executive officers has been provided to the
Buyer or to the Buyer's qualified agents.
6. Covenants of the Buyer. The Buyer covenants and agrees with the Seller
as follows:
(a) Reporting. The Buyer shall provide a statement of net worth report
to the Seller on an annual basis. Such reports shall be certified by the Buyer
and delivered to the Seller within 30 days after the end of each year-end during
the term of this Agreement. In addition, the Buyer shall provide a statement of
net worth for any interim quarterly period as the Seller may reasonably request.
(b) Transfers. During the term of this Agreement, the Buyer shall not
(i) transfer or attempt to transfer any of the Buyer's rights under this
Agreement, except in accordance with Section 13 of this Agreement or (ii)
create, incur, assume or suffer to exist any lien, security interest, charge or
other encumbrance upon the Buyer's rights under this Agreement.
(c) Compensation and Reimbursement. The Buyer agrees:
(i) to pay the reasonable fees and expenses of the Trustee, the Registrar,
the Paying Agent, the Custodian and the Dealer Advisor incurred in accordance
with the Trust Agreement, all as set forth in and subject to the limitations of
that certain fee schedule dated as of the Closing Date between the Trustee and
the Trust;
(ii) to indemnify the Seller (in its individual capacity and as Trustee of
the Trust), its directors, officers, employees and agents for, and to hold it
harmless against, any Loss arising out of or in connection with the transactions
contemplated herein or in the Trust Agreement or the Basic Documents referenced
therein or the acceptance or administration of the Trust, including the
reasonable costs and expenses of defense against any claim or liability asserted
at any time against such Persons in connection herewith; provided, however, that
the Buyer shall not be required to indemnify any such Person to the extent such
Loss resulted from such Person's gross negligence, willful misconduct or bad
faith; and
(iii) that the obligations of the Buyer to the Seller under this Section
6(c) shall survive the resignation or removal of the Seller as Trustee of the
Trust.
7. Conditions Precedent to Obligations of the Seller. The obligations of
the Seller
7
<PAGE>
to perform and observe the covenants, agreements and conditions hereof to be
performed and observed by it with respect to any Closing shall be subject to the
satisfaction at or before the time of such Closing of the following conditions,
any one or more of which may be waived by the Seller (except for (f) below,
which may not be waived):
(a) Representations and Warranties of the Buyer Correct. The
representations and warranties of the Buyer contained in Section 5 of this
Agreement shall be true and correct in all material respects as of the time of
the Closing as though such representations and warranties had been made on and
as of the applicable Closing Date; provided, however, if any interest in this
Agreement has been transferred in accordance with Section 13 of this Agreement,
and such transferee is acting as a "Buyer" hereunder, then such transferee
shall, as of the time of the Closing, make representations and warranties to the
Seller substantially similar, in scope and effect, to those set forth in Section
5 of this Agreement.
(b) Compliance with Covenants and Conditions. The Buyer shall have
performed and observed, or caused to be performed and observed in all material
respects, all covenants, agreements and conditions hereof to be preformed or
observed by him or it at or before the time of the Closing.
(c) Delivery of Certificate. The Seller shall have received a
favorable certificate, dated as of the applicable Closing Date, signed by the
Buyer, as to the matters set forth in Sections 7(a) and 7(b) of this Agreement.
(d) Opinion of Counsel. The Seller shall have received a favorable
opinion of counsel to the Buyer, Muldoon, Murphy & Faucette LLP or such other
counsel reasonably satisfactory to the Seller, dated as of the applicable
Closing Date, covering the matters set forth in Exhibit A hereto.
(e) Proceedings. All proceedings and related actions taken by the
Buyer in connection with the transactions contemplated by this Agreement shall
have been reasonably satisfactory to the Seller.
(f) Approvals and Consents. All applicable waiting periods under the
HSR Act shall have expired.
(g) Claims and Proceedings. No person, firm, corporation or
governmental agency shall have instituted an action or proceeding seeking to
restrain, enjoin or prohibit the consummation of the transactions contemplated
by this Agreement.
8. Conditions Precedent to Obligations of the Buyer. The obligations of the
Buyer
8
<PAGE>
to perform and observe the covenants, agreements and conditions hereof to be
performed and observed by it with respect to any Closing shall be subject to the
satisfaction at or before the time of such Closing of the following conditions,
any one or more of which may be waived by the Buyer (except for (f) below, which
may not be waived):
(a) Representations and Warranties of the Seller. The representations
and warranties of the Seller contained in Section 4 of this Agreement shall be
true and correct in all material respects as of the time of the Closing, as
though such representations and warranties had been made on and as of the
applicable Closing Date.
(b) Compliance with Covenants and Conditions. The Seller shall have
performed and observed, or caused to be performed or observed in all material
respects, all covenants, agreements and conditions hereof to be performed or
observed by the Seller at or before the time of the Closing.
(c) Delivery of Certificates. The Buyer shall have received favorable
certificates, dated as of the Closing Date, signed by an authorized officer of
the Seller, as to the matters set forth in Sections 8(a) and 8(b) of this
Agreement.
(d) Proceedings. All proceedings and related actions taken by the
Seller in connection with the transactions contemplated by this Agreement shall
have been reasonably satisfactory to counsel for the Buyer.
(e) Approvals and Consents. All applicable waiting periods under the
HSR Act shall have expired.
(f) Claims and Proceedings. No person, firm, corporation or
governmental agency shall have instituted an action or proceeding seeking to
restrain, enjoin or prohibit the consummation of the transactions contemplated
by this Agreement.
9. Termination of Agreement.
(a) Mutual Consent. This Agreement may be terminated by mutual
consent of the Seller and the Buyer.
(b) Condition Failure by the Buyer. This Agreement may be terminated
by the Seller if any of the conditions set forth in Section 8 of this Agreement
shall become impossible to fulfill other than for reasons within the control of
the Seller, and such conditions shall not have been waived by the Seller.
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<PAGE>
(c) Condition Failure by the Seller. This Agreement may be terminated
by the Buyer if any of the conditions set forth in Section 7 of this Agreement
shall become impossible to fulfill other than for reasons within the control of
the Buyer, and such conditions shall not have been waived by the Buyer.
In the event of termination of this Agreement under Sections 9(a), (b) or
(c), written notice thereof shall be given to the other party and this Agreement
shall terminate. The termination of this Agreement pursuant to this Section 9
shall not terminate, limit or otherwise effect the right of a party hereto to
recover damages or exercise any other remedies against the other party hereto
based upon breach by such party of any representations and warranties contained
in this Agreement or any covenant or agreement of such other party under this
Agreement.
10. Brokers. The parties represent to each other that they have not engaged
any broker or finder in connection with this Agreement, and each party will hold
the other harmless from any claim, demand or liability for any broker's,
finder's or similar fees alleged to have been incurred by such party or any of
its officers, directors, agents or employees in connection with this Agreement
or the transactions contemplated hereby.
11. Expenses. All expenses incurred or to be incurred by the Buyer in
connection with any Closing under this Agreement shall be borne by the Buyer,
and all expenses incurred or to be incurred by the Seller in connection with any
Closing under this Agreement shall be borne by the Seller.
12. Survival of Representations, Warranties and Covenants. The
representations and warranties contained in Sections 4 and 5 of this Agreement
shall survive the execution of this Agreement or any termination of this
Agreement or consummation of the transactions contemplated hereby. Covenants
contained herein shall survive execution of this Agreement or any termination of
the Agreement or consummation of the transactions contemplated hereby in
accordance with their specific terms.
13. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs,
representatives, successors and permitted assigns, but shall not be assignable
by either party hereto without the prior written consent of the other party.
Notwithstanding the foregoing, this Agreement or any interest herein may be
transferred and assigned by the Buyer without the consent of the Seller if the
Buyer shall deliver to the Seller an opinion of counsel, satisfactory to the
Seller, that (i) such transfer and assignment does not require registration
under the Act or under all applicable state securities laws, (ii) does not
impair the exceptions from such registration requirements relied upon by the
Buyer in connection with this Agreement or any sale of Shares hereunder and
(iii) the proposed transferee
10
<PAGE>
is not an "investment company" or "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended. In addition, any
transfer or assignment in accordance with the prior sentence shall be
conditioned upon receipt by the Seller of an acknowledgement by the proposed
transferee to the effect that such transferee understands and agrees that he,
she or it shall be subject to all of the obligations, terms and conditions of
this Agreement (including without limitation those imposed by Section 3 of this
Agreement) with respect to such transferred interest. Any such permitted
transferee or assignee shall be deemed a "Buyer" for purposes of this Agreement.
Thomas L. Blair hereby agrees that he shall remain personally liable for all
obligations of any and all "Buyers" hereunder, notwithstanding any permitted
assignment or transfer. In the event of a default or breach by any permitted
transferee or assignee under this Agreement, the Seller may proceed directly
against Mr. Blair without the necessity of exhausting remedies against such
transferee or assignee.
14. Notices. Any notice or other communication provided for in, or given
under, this Agreement shall be in writing and shall be deemed to be received
when delivered in person or when sent by facsimile transmission or five days
after mailing by registered or certified mail, return receipt requested,
addressed as follows:
If to the Buyer:
Thomas L. Blair
11610 Highland Farm Road
Potomac, MD 20854
with a copy to:
Edward S. Civera
United Payors & United Providers, Inc.
2275 Research Boulevard
Sixth Floor
Rockville, MD 20850
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<PAGE>
If to the Seller:
Wilmington Trust Company, as Trustee
for Independent Divestment Trust
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
with a copy to:
Richards, Layton & Finger, P.A.
c/o Martin I. Lubaroff
One Rodney Square
10th and King Street
Wilmington, DE 19801
or to such other address with respect to any party as such party shall notify
the others in writing as above provided.
15. Complete Agreement. This Agreement contains the complete agreement
among the parties hereto with respect to the transaction contemplated by this
Agreement and supersedes all prior agreements and understandings among the
parties with respect thereto.
16. Amendments; Waivers. Except as otherwise specifically stated herein,
any provision of this Agreement may be amended by, and only by, a written
instrument executed by the parties. Either party may extend the time for or
waive the performance of any obligation of the other party, waive any
inaccuracies in the representations or warranties by the other party, or waive
compliance by the other party with any of the terms and conditions contained in
this Agreement. Any such extension or waiver shall be in writing and executed by
the party granting such extension or waiver.
17. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware (without regard to principles
of conflict of laws).
18. Invalid Provisions. If any provision hereof is held to be illegal,
invalid or unenforceable under present or future laws effective during the term
of this Agreement, such provision shall be fully severable. This Agreement shall
be construed and enforced as if such illegal, invalid or unenforceable provision
had never compromised a part hereof, and the
12
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remaining provisions hereof shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom. In lieu of such illegal, invalid or unenforceable provision
there shall be added automatically to this Agreement a provision as similar in
terms and economic effect to such illegal, invalid or unenforceable provision as
may be possible and be legal, valid and enforceable.
19. Further Assurances. The Buyer and the Seller agree to do and perform,
from time to time, any and all acts and to execute any and all further
instruments necessary or reasonably required by the other party hereto to effect
the purposes hereof.
20. Trustee. It is expressly understood and agreed by the parties hereto
that (a) this Agreement is executed and delivered by Wilmington Trust Company
(the "Trustee"), not individually or personally but solely as trustee of the
Seller in the exercise of the powers and authority conferred and vested in it
under the Amended and Restated Trust Agreement dated as of February 25, 1999
between the Trustee, as the Trustee of the Seller and Principal Health Care,
Inc., as the Transferor and the Initial Holder, (b) each of the representations,
undertakings and agreements herein made on the part of the Trust is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company but is made and intended for the purpose of binding
only the Seller and (c) under no circumstances shall the Trustee be personally
liable for the payment of any indebtedness or expenses of the Trust or be liable
for the breach or failure of any obligation, representations, warranty or
covenant made or undertaken by the Seller under this Agreement. Notwithstanding
the foregoing, the parties hereto agree that the Trustee is a third party
beneficiary of the provisions of Section 6(c) of this Agreement.
21. Counterparts. This Agreement may be executed in two counterparts and by
the different parties on separate counterparts, each of which shall be deemed an
original but both of which together shall constitute but one instrument.
(SIGNATURE PAGES TO FOLLOW)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
BUYER
-----------------------------------
Thomas L. Blair
INDEPENDENT DIVESTMENT TRUST
By: Wilmington Trust Company, solely as Trustee,
and not in its individual capacity
By: _______________________________
Name:
Title:
(SIGNATURE PAGE 1 OF 1 TO THE SECURITY PURCHASE AGREEMENT)
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