UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
CARENETWORK, INC.
(Name of Issuer)
COMMON STOCK, $.01 PAR VALUE
(Title of Class of Securities)
141725 1
(CUSIP No.)
Arthur P. Hipwell
Senior Vice President & General Counsel
Humana Inc.
500 West Main Street
Louisville, Kentucky 40202
(502) 580-1000
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
October 2, 1994
(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(b)(3) or (4), check the
following box: ( )
Check the following box if a fee is being paid with the statement:
(X)
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. 141725 1 Page 2 of 6 Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Humana Inc.
61-0647538
2. Check the Appropriate Box if a Member of a Group
(a) ( )
(b) ( )
3. SEC Use Only
4. Source of Funds*
WC and/or BK
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
N/A
6. Citizenship or Place of Organization
Delaware - Humana Inc.
NUMBER OF 7. Sole Voting Power
SHARES
BENEFICIALLY 902,043 - See Item 5
OWNED BY
EACH 8. Shared Voting Power
REPORTING
PERSON -0- - See Item 5
WITH
9. Sole Dispositive Power
902,043 - See Item 5
10. Shared Dispositive Power
-0- - See Item 5
11. Aggregate Amount Beneficially Owned by Each Reporting Person
The Reporting Person is deemed to be the beneficial owner of an
option to purchase 902,043 shares of Common Stock of CareNetwork,
Inc. (see Item 5 and the Stock Option Agreement, filed herewith as
an Exhibit 10.1).
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares*
( )
13. Percent of Class Represented by Amount in Row (11)
16.6% (See Item 5)
14. Type of Reporting Person*
CO
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CUSIP NO. 141725 1 Page 3 of 6 Pages
Item l. Security and Issuer.
Class of Equity Securities:
$.01 Par Value Common Stock
Name and address of principal executive office of the Issuer:
CareNetwork, Inc.
111 W. Pleasant Street
Milwaukee, WI 53212
Item 2. Identity and Background.
The Reporting Person is a Corporation, and the required
information is as follows:
(a) The name of the Reporting Person is Humana Inc.
(b) The Reporting Person's business address is:
500 West Main Street, Louisville, Kentucky 40202.
(c) The Reporting Person's principal business is:
managed health care business.
(d) Neither Humana Inc. nor its executive officers and
directors (see Exhibit 99) have been convicted in a
criminal proceeding (excluding traffic violations or
similar misdemeanors) during the last five years.
(e) Neither Humana Inc. nor its executive officers and
directors have been a party to a civil proceeding of a
judicial or administrative body of competent
jurisdiction as a result of which the Reporting Person
was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state
securities laws or finding any violation with respect to
such laws during the last five years.
(f) Humana Inc. is a Delaware corporation and each of its
officers and directors is a U.S. citizen.
Item 3. Source and Amount of Funds or Other Consideration.
Humana Inc. intends to finance the aggregate amounts
(approximately $123 million) payable pursuant to Article II of
the Agreement and Plan of Merger By and Among Humana Inc.,
HWS, Inc. and CareNetwork, Inc. dated October 2, 1994 ("Merger
Agreement) filed herewith as Exhibit 10.2 and to the extent
exercised, the exercise price of Humana's options with cash on
hand and utilization of existing credit facilities as
described in Section 4.06 of the Merger Agreement.
Humana Inc.'s Credit Agreement was filed as an Exhibit to the
Company's 10-K for the year ended December 31, 1993. (See
Item 6).
Item 4. Purpose of Transaction.
The Reporting Person and the Registrant have entered into a
Merger Agreement (see Exhibit 10.2) pursuant to which the
Reporting Person will acquire all of CareNetwork's outstanding
shares of common stock for $25.25 per share aggregating
approximately $123 million after giving effect to payments
relating to outstanding options. The proposed transaction,
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CUSIP NO. 141725 1 Page 4 of 6 Pages
which has been approved by CareNetwork's board of directors,
is subject to, among other things, approval by CareNetwork's
shareholders as well as regulatory authorities. Completion of
the transaction is anticipated by the end of the year.
Item 5. Interest in Securities of Issuer.
(a) As of the close of business on October 2, 1994, the
Reporting Person may be deemed to be the beneficial
owner of an aggregate of 902,043 shares of Common Stock
of the Issuer (under Rule 13d-3(d)(1)(i) of the
Securities Exchange Act of 1934 ("Exchange Act")) as a
result of the ownership of options granted it by the
Issuer, representing 16.6% of the Issuer's outstanding
Common Stock (based on 4,532,883 shares of CareNetwork,
Inc. outstanding at October 2, 1994, adjusted to deem
outstanding the shares of Common Stock subject to such
options).
(b) The Reporting Person has the sole power to vote or
direct the vote, and to dispose or to direct the
disposition, of -0- shares of Common Stock of the
Issuer, and 902,043 shares assuming the exercise of all
options of the Reporting Person.
(c) Except as set forth herein, there have been no
transactions by Humana Inc. in the common stock of
CareNetwork, Inc. during the past 60 days.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
See Exhibit 10.2, the Merger Agreement, and Exhibit 10.1, the
Stock Option Agreement, both of which are filed herewith and
incorporated herein by reference.
Exhibit 10(x) to Humana Inc.'s Annual Report on Form 10-K is
incorporated by reference herein.
Item 7. Material to be Filed as Exhibits. The following material will
be filed as exhibits:
(1) Exhibit 10.1: Stock Option Agreement dated as of
October 2, 1994 between CareNetwork, Inc. and Humana
Inc.
(2) Exhibit 10.2: Agreement and Plan of Merger by and among
Humana Inc., HWS, Inc. and CareNetwork, Inc. dated
October 2, 1994.
(3) Exhibit 10.3: Humana Inc. $200 million Credit Agreement
dated January 12, 1994, filed as Exhibit 10(x) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1993 is incorporated by reference herein.
(4) Exhibit 99: Officer and Director List of Humana Inc.
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CUSIP NO. 141725 1 Page 5 of 6 Pages
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.
HUMANA INC.
October 7, 1994 BY: /S/ ARTHUR P. HIPWELL
ARTHUR P. HIPWELL
SENIOR VICE PRESIDENT
AND GENERAL COUNSEL
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CUSIP NO. 141725 1 Page 6 of 6 Pages
EXHIBIT INDEX
Exhibit 10.1: Stock Option Agreement dated as of October 2, 1994
between CareNetwork, Inc. and Humana Inc.
Exhibit 10.2: Agreement and Plan of Merger by and among Humana Inc.,
HWS, Inc. and CareNetwork, Inc. dated October 2, 1994.
Exhibit 10.3: Humana Inc. $200 million Credit Agreement dated January
12, 1994, filed as Exhibit 10(x) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1993
is incorporated by reference herein.
Exhibit 99: Officer and Director List of Humana Inc.
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT (the "Agreement") dated as of
October 2, 1994, by and between CARENETWORK, INC., a Wisconsin
corporation ("Issuer"), and HUMANA INC., a Delaware corporation
("Grantee").
WHEREAS, Issuer, Grantee and HWS, Inc., a Wisconsin corpora-
tion ("Sub") propose to enter into an Agreement and Plan of Merger
dated as of the date hereof (the "Merger Agreement") providing for,
among other things, Sub will merge with and into the Issuer (the
"Merger"); and
WHEREAS, as a condition and inducement to Grantee's willing-
ness to enter into the Merger Agreement, Grantee has requested that
Issuer agree, and Issuer has agreed, to grant Grantee the Option
(as defined below);
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements
set forth herein and in the Merger Agreement, Issuer and Grantee
agree as follows:
1. Grant of Option. Subject to the terms and conditions set
forth herein, Issuer hereby grants to Grantee an irrevocable option
(the "Option") to purchase up to 902,043 (as adjusted as set forth
herein) shares (the "Option Shares") of Common Stock, $.01 par
value per share ("Issuer Common Stock"), of Issuer at a purchase
price of $25.25 per Option Share (the "Purchase Price").
2. Exercise of Option. (a) If not in material breach of the
Merger Agreement, Grantee may exercise the Option, in whole or in
part, at any time and from time to time following the occurrence of
a Purchase Event (as defined below); provided that, except as
provided in the last sentence of this Section 2(a), the Option
shall terminate and be of no further force and effect upon the
earliest to occur of (i) the Effective Time, (ii) 6 months after
the first occurrence of a Purchase Event or (iii) termination of
the Merger Agreement pursuant to section 8.01(a), section 8.01(b)
or section 8.01(c) of the Merger Agreement prior to the occurrence
of a Purchase Event; and, provided further, that any purchase of
shares upon exercise of the Option shall be subject to compliance
with applicable law. Notwithstanding the termination of the
Option, Grantee shall be entitled to purchase those Option Shares
with respect to which it has exercised the Option in accordance
with the terms hereof prior to the termination of the Option.
(b) As used herein, a "Purchase Event" means any of the
following events:
(i) Any person (other than Grantee or any subsid-
iary of Grantee) shall have commenced (as such term is defined
in Rule 14d-2 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), or shall have filed a registra-
tion statement under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to, a tender offer or
exchange offer to purchase any shares of Issuer Common Stock
such that, upon consummation of such offer, such person would
own or control 25% or more of the then outstanding Issuer
Common Stock, but only if at least 25% of the then outstanding
Issuer Common Stock shall have been tendered and (A) a
condition to the takedown of Issuer Common Stock in the tender
offer or exchange offer shall be the termination of the Merger
Agreement or abandonment of the Merger, (B) the person making
the tender offer or exchange offer, whether before or after
the making of the offer, shall have publicly announced its
opposition to the Merger or an intention not to vote the
Issuer Common Stock acquired upon consummation of the offer in
favor of the Merger, or (C) the person making the tender offer
or exchange offer, whether before or after making the offer,
shall have proposed, publicly announced an intention to
propose, or entered into an agreement to effect, an Acquisi-
tion Transaction (as defined below);
(ii) Issuer or any subsidiary of Issuer, without
having received Grantee's or the Sub's prior written consent,
shall have authorized, recommended, proposed or publicly
announced an intention to authorize, recommend or propose, or
entered into, an agreement with any person (other than Grantee
or any subsidiary of Grantee) to (A) effect a merger, consoli-
dation, joint venture or similar transaction involving Issuer
or any of its subsidiaries, (B) sell, lease or otherwise
dispose of assets or earning power of Issuer or its subsidiar-
ies, in one or more transactions, representing 15% or more of
the consolidated assets or earning power of Issuer and its
subsidiaries or (C) issue, sell or otherwise dispose of
(including by way of merger, consolidation, share exchange or
any similar transaction) securities representing 25% or more
of the voting power of Issuer or any of its subsidiaries, but,
in all cases under this clause (ii), only if the transaction
is conditioned upon, or results in, the termination of the
Merger Agreement or the abandonment of the Merger (including,
without limitation, as a result of anticipated regulatory
impediments or otherwise) (any of the foregoing an "Acquisi-
tion Transaction," except that if Grantee or Sub has given its
prior written consent to any such transaction, the transaction
as to which Grantee or Sub has given its prior written consent
shall not be an "Acquisition Transaction");
(iii) Any person (other than Grantee or any subsid-
iary of Grantee, any subsidiary of Issuer in a fiduciary
capacity in the ordinary course of such subsidiary's business,
any employee benefit plan or employee stock ownership plan of
Issuer or any subsidiary of Issuer, or any person organized,
appointed or established by Issuer or any subsidiary of Issuer
for or pursuant to the terms of any such plan), alone or
together with such person's "Affiliates" (as such term is
defined in Rule 12b-2 under the Exchange Act) shall have
acquired beneficial ownership (as such term is defined in Rule
13d-3 under the Exchange Act) or the right to acquire benefi-
cial ownership of, or any "group" (as such term is defined
under the Exchange Act, other than a group of which Grantee or
any subsidiary of Grantee, any subsidiary of Issuer in a
fiduciary capacity in the ordinary course of such subsidiary's
business, any employee benefit plan or employee stock owner-
ship plan of Issuer or any subsidiary of Issuer, or any person
organized, appointed, or established by Issuer or any subsid-
iary of Issuer for or pursuant to the terms of any such plan
is a member), shall have been formed which beneficially owns
or has the right to acquire beneficial ownership of, 25% or
more of the then outstanding Issuer Common Stock, but only if
such person or group, whether before or after beneficial
ownership of Issuer Common Stock is acquired or the group is
formed, shall have (A) publicly announced its opposition to
the Merger or an intention not to vote the Issuer Common Stock
beneficially owned by the person or group in favor of the
Merger, or (B) proposed, publicly announced an intention to
propose, or entered into an agreement to effect, an Acquisi-
tion Transaction; or
(iv) The holders of Issuer Common Stock shall not
have approved the Merger Agreement at the meeting of such
shareholders held for the purpose of voting on the Merger
Agreement, such meeting shall not have been held or shall have
been cancelled (and not rescheduled) prior to termination of
the Merger Agreement, or Issuer's Board of Directors shall
have withdrawn or modified in a manner materially adverse to
Grantee the recommendation of Issuer's Board of Directors that
Issuer's shareholders vote in favor of and approve the Merger
and adopt the Merger Agreement, in each case after any person
(other than Grantee or any subsidiary of Grantee) shall have
(A) publicly announced a proposal, to engage in an Acquisition
Transaction or (B) filed an application (or given a notice),
whether in draft or in final form, with any Governmental
Entity (as defined below) for approval to engage in an
Acquisition Transaction; or
(v) Issuer terminates the Merger Agreement
pursuant to section 8.01(e) of the Merger Agreement.
As used in this Agreement, "person" shall have the meaning
specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(c) In the event Grantee wishes to exercise the Option,
it shall send to Issuer a written notice (the date of which being
herein referred to as the "Notice Date") specifying (i) the total
number of Option Shares it intends to purchase pursuant to such
exercise and (ii) a place and date not earlier than three business
days nor later than 15 business days from the Notice Date for the
closing of such purchase (the "Closing Date"); provided that if the
closing of the purchase and sale pursuant to the Option (the
"Closing") cannot be consummated by reason of any applicable
judgment, decree, order, law or regulation, the period of time that
otherwise would run pursuant to this sentence shall run instead
from the date on which such restriction on consummation has expired
or been terminated; and provided further, without limiting the
foregoing, that if prior notification to or approval of any Federal
or state court, administrative agency or commission or other
governmental authority or instrumentality (a "Governmental Entity")
is required in connection with such purchase, Grantee shall
promptly file the required notice or application for approval and
shall expeditiously process the same (and Issuer shall cooperate
with Grantee in the filing of any such notice or application and
the obtaining of any such approval), and the period of time that
otherwise would run pursuant to this sentence shall run instead
from the date on which, as the case may be, (x) any required
notification period has expired or been terminated or (y) such
approval has been obtained, and in either event, any requisite
waiting period has passed.
(d) Notwithstanding Section 2(c), in no event shall any
Closing Date be more than 18 months after the related Notice Date,
and if the Closing Date shall not have occurred within 18 months
after the related Notice Date due to the failure to obtain any such
required approval, the exercise of the Option effected on the
Notice Date shall be deemed to have expired.
3. Payment and Delivery of Certificates. (a) On each
Closing Date, Grantee shall pay to Issuer in immediately available
funds by wire transfer to a bank account designated by Issuer an
amount equal to the Purchase Price multiplied by the Option Shares
to be purchased on such Closing Date.
(b) At each Closing, simultaneously with the delivery of
immediately available funds as provided in Section 3(a), Issuer
shall deliver to Grantee a certificate or certificates representing
the Option Shares to be purchased at such Closing, which Option
Shares shall be free and clear of all liens, claims (except as set
forth in Wisconsin Statutes section 180.0622(2)(b), as interpret-
ed), charges and encumbrances of any kind whatsoever, and Grantee
shall deliver to Issuer a letter agreeing that Grantee shall not
offer to sell or otherwise dispose of such Option Shares in
violation of applicable law or the provisions of this Agreement.
If at the time of issuance of any Option Shares pursuant to an
exercise of all or part of the Option hereunder, Issuer shall have
issued any rights to acquire any preferred shares of Issuer, then
each Option Share issued pursuant to such exercise shall also
represent rights with terms substantially the same as and at least
as favorable to Grantee as are provided under any "rights agree-
ment" or any similar agreement then in effect.
(c) Certificates for the Option Shares delivered at each
Closing shall be endorsed with a restrictive legend that shall read
substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO RESTRICTIONS ARISING
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND PURSUANT TO THE TERMS OF A STOCK OPTION
AGREEMENT DATED AS OF OCTOBER 2, 1994. A COPY
OF SUCH AGREEMENT WILL BE PROVIDED TO THE
HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY
THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the above legend shall be removed
by delivery of substitute certificate(s) without such legend if
Grantee shall have delivered to Issuer a copy of a letter from the
staff of the Securities and Exchange Commission, or an opinion of
counsel in form and substance reasonably satisfactory to Issuer and
its counsel, to the effect that such legend is not required for
purposes of the Securities Act.
4. Representations and Warranties of Issuer. Issuer hereby
represents and warrants to Grantee as follows:
(a) Due Authorization. The execution and delivery of
this Agreement and the consummation of the transactions contemplat-
ed hereby have been duly authorized by all necessary corporate
action on the part of Issuer. This Agreement has been duly
executed and delivered by Issuer.
(b) Authorized Stock. Issuer has taken all necessary
corporate and other action to authorize and reserve and, subject to
obtaining the governmental and other approvals and consents
referred to herein, to permit it to issue, and, at all times from
the date hereof until the obligation to deliver Issuer Common Stock
upon the exercise of the Option terminates, will have reserved for
issuance, upon exercise of the Option, shares of Issuer Common
Stock necessary for Grantee to exercise the Option, and Issuer will
take all necessary corporate action to authorize and reserve for
issuance all additional shares of Issuer Common Stock or other
securities that may be issued pursuant to Section 6 upon exercise
of the Option. The shares of Issuer Common Stock to be issued upon
due exercise of the Option, including all additional shares of
Issuer Common Stock or other securities that may be issuable
pursuant to Section 6, upon issuance pursuant hereto, shall be duly
and validly issued, fully paid and nonassessable (except as set
forth in Wisconsin Statutes section 180.0622(2)(b) as interpreted),
and shall be delivered free and clear of all liens, claims, charges
and encumbrances of any kind or nature whatsoever, including any
preemptive rights of any shareholder of Issuer.
(c) No Conflicts. Except as disclosed pursuant to the
Merger Agreement, the execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby
will not result in any violation of any provision of the Articles
of Incorporation or Bylaws of Issuer or any subsidiary of Issuer
or, subject to obtaining any approvals or consents contemplated
hereby, result in any violation of any loan or credit agreement,
note, mortgage, indenture, lease, employee benefit plan or other
agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, applicable to Issuer or any
subsidiary of Issuer or their respective properties or assets which
such violation would have a material adverse effect on Issuer.
5. Representations and Warranties of Grantee. Grantee
hereby represents and warrants to Issuer that:
(a) Due Authorization. Grantee has all requisite
corporate power and authority to enter into this Agreement and,
subject to any approvals or consents referred to herein, to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee. This Agreement has been
duly executed and delivered by Grantee and constitutes a valid and
binding obligation of Grantee, enforceable in accordance with its
terms.
(b) No Conflicts. The execution and delivery of this
Agreement does not, and the consummation of the transactions
contemplated hereby will not, result in any violation pursuant to
any provision of the Articles of Incorporation or Bylaws of Grantee
or any subsidiary of Grantee or, subject to obtaining any approvals
or consents contemplated hereby, result in any violation of any
loan or credit agreement, note, mortgage, indenture, lease,
employee benefit plan or other agreement, obligation, instrument,
permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Grantee
or any subsidiary of Grantee or their respective properties or
assets which such violation would have a material adverse effect on
Grantee.
(c) Purchase Not for Distribution. Any Option Shares or
other securities acquired by Grantee upon exercise of the Option
will not be taken with a view to the public distribution thereof
and will not be transferred or otherwise disposed of except in a
transaction registered or exempt from registration under the
Securities Act.
6. Adjustment upon Changes in Capitalization, etc. (a) In
the event of any change in Issuer Common Stock by reason of a stock
dividend, split-up, spin-off, recapitalization, combination,
exchange of shares or similar transaction, the type and number of
shares or securities subject to the Option shall be adjusted
appropriately, and proper provision shall be made in the agreements
governing such transaction, so that Grantee shall receive upon
exercise of the Option the number and class of shares or other
securities or property that Grantee would have received in respect
of Issuer Common Stock if the Option had been exercised immediately
prior to such event, or the record date therefor, as applicable.
Whenever the number of shares of Issuer Common Stock purchasable
upon exercise of the Option is adjusted as provided in this
Section 6, the Purchase Price shall be adjusted by multiplying the
Purchase Price by a fraction, the numerator of which shall be equal
to the number of shares of Issuer Common Stock purchasable prior to
the adjustment and the denominator of which shall be equal to the
number of shares of Issuer Common Stock purchasable after the
adjustment. If any additional shares of Issuer Common Stock are
issued after the date of this Agreement (other than pursuant to an
event described in the first sentence of this Section 6(a)), the
number of shares of Issuer Common Stock subject to the Option shall
be adjusted so that, after such issuance, it equals 19.9% of the
number of shares of Issuer Common Stock then issued and outstand-
ing, without giving effect to any shares subject to or issued
pursuant to the Option; provided that the number of shares of
Issuer Common Stock subject to the Option shall only be issued to
the extent Issuer then has available authorized but unissued and
unreserved shares of Issuer Common Stock.
(b) In the event that Issuer shall enter into an
Agreement (i) to consolidate with or merge into any person, other
than Grantee or one of its subsidiaries, and shall not be the
continuing or surviving corporation of such consolidation or
merger, (ii) to permit any person, other than Grantee or one of its
subsidiaries, to merge into Issuer and Issuer shall be the
continuing or surviving corporation, but, in connection with such
merger, the then outstanding shares of Issuer Common Stock shall be
changed into or exchanged for stock or other securities of Issuer
or any other person or cash or any other property, or then
outstanding shares of Issuer Common Stock shall after the merger
represent less than 50% of the outstanding shares and share
equivalents of the merged company, or (iii) to sell, lease or
otherwise transfer assets of Issuer or any of its subsidiaries, in
one or more transactions, representing more than 50% of the
consolidated assets or earning power of Issuer and its subsidiaries
to any person (other than Grantee or one of its subsidiaries),
then, and in each such case, the agreement governing such transac-
tions shall make proper provision so that the Grantee may, in its
reasonable discretion, (x) retain the Option to purchase the Option
Shares or (y) convert the Option into the right to receive, at the
election of Grantee (either from the Acquiring Corporation as
defined in Section 6(c)) or from any person that controls the
Acquiring Corporation, the number and class of shares, other
securities, property, or cash that Grantee would have received in
respect of the Option Shares if the Option had been exercised and
the Option Shares had been issued to Grantee immediately prior to
the consummation of such transaction, the distribution of the
proceeds thereof to Issuer's shareholders, or the record date
therefor, as applicable.
(c) For purposes herein, "Acquiring Corporation" means
(i) the continuing or surviving corporation of a consolidation or
merger involving Issuer in which Issuer is not the continuing or
surviving corporation, (ii) Issuer in a merger in which Issuer is
the continuing or surviving corporation and (iii) the transferee of
more than 50% of the consolidated assets or earning power of Issuer
and its subsidiaries.
7. Replacement of Options. Upon receipt by Issuer of
evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnifica-
tion, and upon surrender and cancellation of this Agreement, if
mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date.
8. Listing; Other Action. (a) Issuer shall, at its
expense, use its reasonable best efforts to cause the Option Shares
to be approved for listing on the NASDAQ National Market System,
subject to notice of issuance, as promptly as practicable following
the date of this Agreement, and will provide prompt notice to the
NASDAQ National Market System of the issuance of each Option Share,
unless the delivery of the Option Shares can be satisfied with
shares of Issuer Common Stock held in treasury by Issuer.
(b) Issuer shall use reasonable efforts to take, or
cause to be taken, all appropriate action, and to do, or cause to
be done, all things necessary and proper under applicable laws and
regulations to consummate and make effective the transactions
contemplated hereunder, including, without limitation, using
reasonable efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and order of Governmental
Entities. Without limiting the generality of the foregoing, Issuer
shall when required in order to effect the transactions contemplat-
ed hereunder make all filings and submissions under the HSR Act and
with the Federal HMO Act and the Wisconsin Insurance Laws (as such
terms are defined in the Merger Agreement) as promptly as practica-
ble.
9. Registration. Upon the request of Grantee at any time
within two years of the first Closing, Issuer agrees (i) to effect,
as promptly as practicable, one registration under the Securities
Act covering any part or all (as may be requested by Grantee) of
the Option Shares or other securities that have been acquired by or
are issuable to Grantee upon exercise of the Stock Option, and to
use reasonable efforts to qualify such Option Shares or other
securities under any applicable state securities laws and (ii) to
include any part or all of the Option Shares or such other
securities in any registration statement for common stock filed by
Issuer under the Securities Act in which such inclusion is
permitted under applicable rules and regulations, and to use
reasonable efforts to keep such registration described in clauses
(i) and (ii) effective for a period equal to the lesser of six
months or until such shares have been sold. If the managing
underwriter of a proposed offering of securities by Issuer shall
advise Issuer in writing that, in the reasonable opinion of the
managing underwriter, the distribution of the Option Shares
requested by Grantee to be included in a registration statement
concurrently with securities being registered for sale by Issuer
would adversely affect the distribution of such securities by
Issuer, then Issuer shall either (i) include such Option Shares in
the registration statement, but Grantee shall agree to delay the
offering and sale for such period of time as the managing under-
writer may reasonably request (provided that Grantee may at any
time withdraw its request to include Option Shares in such
offering) or (ii) include such portion of the Option Shares in the
registration statement as the managing underwriter advises may be
so included for sale simultaneously with sales by Issuer. The
registrations effected under this Section 9 shall be effected at
Issuer's expense except for underwriting commissions allocable to
the Option Shares and the fees and disbursements of Grantee's
counsel. Issuer shall indemnify and hold harmless Grantee, its
affiliates and controlling persons and their respective officers,
directors, agents and representatives from and against any and all
losses, claims, damages, liabilities and expenses (including,
without limitation, all out-of-pocket expenses, investigation
expenses, expenses incurred with respect to any judgment and fees
and disbursements of counsel and accountants) arising out of or
based upon any statements contained in, or omissions or alleged
omissions from, each registration statement (and related prospec-
tus) filed pursuant to this Section 9; provided, however, that
Issuer shall not be liable in any such case to Grantee or any
affiliate or controlling person of Grantee or any of their
respective officers, directors, agents or representatives to the
extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based
upon an untrue statement or omission or alleged omission made in
such registration statement or prospectus in reliance upon, and in
conformity with, written information furnished to Issuer with
respect to it specifically for use in the preparation thereof by
Grantee, such affiliate, controlling person, officer, director,
agent or representative, as the case may be.
10. Miscellaneous. (a) Expenses. Except as otherwise
provided in Section 9, each of the parties hereto shall bear and
pay all costs and expenses incurred by it or on its behalf in
connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this
Agreement may be waived in writing at any time by the party that is
entitled to the benefits of such provision. This Agreement may not
be modified, amended, altered or supplemented except upon the
execution and delivery of a written agreement executed by the
parties hereto.
(c) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Wisconsin
without regard to any applicable conflicts of law rules.
(d) Descriptive Headings. The descriptive headings
contained herein are for convenience of reference only and shall
not affect in any way the meaning or interpretation of this
Agreement.
(e) Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if
delivered personally, by facsimile (with confirmation), sent by
overnight express or mailed, by registered or certified mail,
return receipt requested, to the parties at the following addresses
(or at such other address for a party as shall be specified by like
notice):
If to Issuer to: CareNetwork, Inc.
111 W. Pleasant Street
Milwaukee, Wisconsin 53212
Attn: Elwood I. Kleaver, Jr.
President and Chief
Executive Officer
Facsimile No.: (414) 223-0168
With a copy to: Reinhart, Boerner, Van Deuren,
Norris & Rieselbach, s.c.
1000 North Water Street
Suite 2100
Milwaukee, Wisconsin 53202
Attn: James M. Bedore
Facsimile No.: (414) 298-8097
If to Grantee to: Humana Inc.
500 W. Main Street
Louisville, Kentucky 40202
Attn: W. Roger Drury,
Senior Vice President and
Chief Financial Officer
Facsimile No.: (502) 580-1690
With a copy to: Hirn Doheny Reed & Harper
2000 Meidinger Tower
Louisville, Kentucky 40202
Attn: Robert B. Vice
Facsimile No.: (502) 585-2207
(f) Counterparts. This Agreement and any amendments
hereto may be executed in two counterparts, each of which shall be
considered one and the same agreement and shall become effective
when both counterparts have been signed by each of the parties and
delivered to the other party, it being understood that both parties
need not sign the same counterpart.
(g) Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder or under the Option
shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of
the other party, except that Grantee may assign this Agreement to
a wholly owned subsidiary of Grantee. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties and their respective
successors and assigns.
(h) Further Assurances. In the event of any exercise of
the Option by Grantee, Issuer and Grantee shall execute and deliver
all of the documents and instruments and take all other action that
may be reasonably necessary in order to consummate the transactions
provided for by such exercise.
(i) Specific Performance. The parties hereto agree that
this Agreement may be enforced by either party through specific
performance, injunctive relief and other equitable relief. Both
parties further agree to waive any requirement for the securing or
posting of any bond in connection with the obtaining of any such
equitable relief and that this provision is without prejudice to
any other rights that the parties hereto may have for any failure
to perform this Agreement.
(j) Entire Agreement; No Third-Party Beneficiary;
Severability. Except as otherwise set forth in the Merger
Agreement, this Agreement (including the Merger Agreement and the
other documents and instruments referred to herein and therein) (i)
constitutes the entire agreement between the parties and supersedes
all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and
(ii) is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder. If any term,
provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or a federal or state regulatory
agency to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. If for any reason such court or
regulatory agency determines that the Option does not permit
Grantee to acquire the full number of shares of Issuer Common Stock
as provided in Section 2 (as adjusted pursuant to Section 6), it is
the express intention of Issuer to allow Grantee to acquire or to
require Issuer to repurchase such lesser number of shares as may be
permissible without any amendment or modification hereof.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock
Option Agreement to be signed by their respective officers
thereunto duly authorized, all as of the day and year first above
written.
CARENETWORK, INC.
By: /s/ Elwood I. Kleaver
Elwood I. Kleaver, Jr., President
and Chief Executive Officer
("Issuer")
HUMANA INC.
By: /s/ Karen A. Coughlin
Karen A. Coughlin,
Senior Vice President
("Grantee")
AGREEMENT AND PLAN OF MERGER
By and Among
HUMANA INC.,
HWS, INC
and
CARENETWORK, INC.
October 2, 1994
TABLE OF CONTENTS
Page
<TABLE>
ARTICLE I
THE MERGER
<C> <S> <C>
1.01 The Merger 1
1.02 Effective Time 1
1.03 Effect of the Merger 2
1.04 Articles of Incorporation; By-Laws 2
1.05 Directors and Officers 2
1.06 Taking Necessary Action; Further Action 2
1.07 The Closing 2
ARTICLE II
CONVERSION OF SECURITIES
2.01 Conversion of Securities 3
2.02 Dissenting Shares 3
2.03 Exchange of Certificates 4
2.04 Stock Options 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.01 Organization and Qualification; Subsidiaries 7
3.02 Articles of Incorporation; By-Laws 7
3.03 Capitalization 8
3.04 Authority; Vote Required 9
3.05 No Conflict; Required Filings and Consents 10
3.06 Permits; Compliance 11
3.07 Reports; Financial Statements 11
3.08 Absence of Certain Changes or Events 12
3.09 Absence of Litigation 13
3.10 Contracts; No Default 13
3.11 Employee Benefit Plans; Labor Matters 14
3.12 Taxes 15
3.13 Intellectual Property Rights 16
3.14 Certain Business Practices and Regulations 16
3.15 Insurance 16
3.16 Brokers 17
3.17 Title to Properties 17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
AND ACQUIROR SUB
4.01 Organization and Qualification; Subsidiaries 18
4.02 Authority 18
4.03 No Conflict; Required Filings and Consents 19
4.04 Ownership of Acquiror Sub; No Prior Activities 19
4.05 Brokers 20
4.06 Financing 20
ARTICLE V
COVENANTS
5.01 Affirmative Covenants of the Company 20
5.02 Negative Covenants of the Company 21
5.03 Confidentiality Agreement 23
5.04 Acquisition Proposals 23
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 Proxy Statement 24
6.02 Meeting of Shareholders 25
6.03 Appropriate Action; Consents; Filings 26
6.04 Update Disclosure; Breaches 27
6.05 Public Announcements 27
6.06 Indemnification 28
6.07 Obligations of Acquiror Sub 29
6.08 Employee Benefits and Compensation 29
ARTICLE VII
CLOSING CONDITIONS
7.01 Conditions to Obligations of Each Party
Under This Agreement 31
7.02 Additional Conditions to Obligations
of Acquiror and Acquiror Sub 32
7.03 Additional Conditions to Obligations of the Company 35
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination 36
8.02 Effect of Termination 38
8.03 Expenses 38
ARTICLE IX
GENERAL PROVISIONS
9.01 Non-Survival of Representations and Warranties 39
9.02 Notices 40
9.03 Amendment 41
9.04 Waiver 41
9.05 Headings 41
9.06 Severability 41
9.07 Entire Agreement 42
9.08 Assignment 42
9.09 Parties in Interest 42
9.10 Governing Law 42
9.11 Counterparts 43
</TABLE>
THIS AGREEMENT AND PLAN OF MERGER dated as of
October 2, 1994 (the "Agreement"), is made and entered into among
Humana Inc., a Delaware corporation ("Acquiror"), HWS, Inc, a
Wisconsin corporation and a wholly-owned subsidiary of Acquiror
("Acquiror Sub"), and CareNetwork, Inc., a Wisconsin corporation (the
"Company").
RECITAL
The respective Boards of Directors of Acquiror, Acquiror Sub and
the Company have determined that it is advisable and in the best interests
of the respective corporations and their shareholders that Acquiror Sub be
merged with and into the Company in accordance with the Wisconsin
Business Corporation Law (the "Wisconsin Law") and the terms of this
Agreement, pursuant to which the Company will be the surviving
corporation and will become a wholly-owned subsidiary of Acquiror (the
"Merger").
AGREEMENTS
In consideration of the representations, warranties, covenants and
agreements set forth in this Agreement, the parties agree:
ARTICLE I
THE MERGER
1.01 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Wisconsin Law, at
the Effective Time, Acquiror Sub shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of
Acquiror Sub shall cease and the Company shall continue as the surviving
corporation of the Merger (the "Surviving Corporation"). Acquiror Sub
and the Company are sometimes collectively referred to in this Agreement
as the "Constituent Corporations."
1.02 Effective Time. As promptly as practicable after the
satisfaction or, if permissible, waiver of the conditions set forth in Article
VII, the parties shall cause the Merger to be consummated by filing
articles of merger (the "Articles of Merger") with the Secretary of State of
the State of Wisconsin in such form as required by, and executed in
accordance with, the relevant provisions of the Wisconsin Law and shall
take all such further actions as may be required by law to make the
Merger effective upon the issuance of a certificate of merger by the
Secretary of State of the State of Wisconsin (the date and time of such
issuance being the "Effective Time"); provided, however, that the
Effective Time shall not be earlier than December 1, 1994.
1.03 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the
Wisconsin Law. Without limiting the generality of, and subject to the
provisions of, the Wisconsin Law, at the Effective Time, except as
otherwise provided in this Agreement, all the property, interests, assets,
rights, privileges, immunities, powers and franchises of Acquiror Sub and
the Company shall vest in the Surviving Corporation, and all debts,
liabilities, duties and obligations of Acquiror Sub and the Company shall
become the debts, liabilities, duties and obligations of the Surviving
Corporation.
1.04 Articles of Incorporation; By-Laws. At the Effective Time,
the Articles of Incorporation, as amended by the amendments thereto set
forth in Exhibit 1.04 (which amendments shall become effective only at
the Effective Time), and the By-Laws of Acquiror Sub shall be the
Articles of Incorporation and the By-Laws of the Surviving Corporation.
The name of the Surviving Corporation shall be HWS, Inc.
1.05 Directors and Officers. The directors of Acquiror Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Articles
of Incorporation and By-Laws of the Surviving Corporation, and the
officers of Acquiror Sub immediately prior to the Effective Time shall be
the initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified.
1.06 Taking Necessary Action; Further Action. Acquiror,
Acquiror Sub and the Company, respectively, shall each use its reasonable
efforts to take all such action as may be necessary or appropriate to
effectuate the Merger under the Wisconsin Law at the time specified in
section 1.02. If, at any time after the Effective Time, any further action
is necessary or desirable to carry out the purposes of this Agreement and
to vest the Surviving Corporation with full right, title and possession to all
properties, interests, assets, rights, privileges, immunities, powers and
franchises of either of the Constituent Corporations, the officers of the
Surviving Corporation are fully authorized in the name of each Constituent
Corporation or otherwise to take, and shall take, all such lawful and
necessary action.
1.07 The Closing. The closing of the transactions contemplated
by this Agreement (the "Closing") will take place at the offices of
Reinhart, Boerner, Van Deuren, Norris & Rieselbach, s.c., 1000 North
Water Street, Milwaukee, Wisconsin 53202, or at such other place as the
parties hereto shall mutually agree, and will be effective at the Effective
Time.
ARTICLE II
CONVERSION OF SECURITIES
2.01 Conversion of Securities. At the Effective Time by virtue of
the Merger and without any further action on the part of Acquiror,
Acquiror Sub, the Company, the Surviving Corporation or the holders of
any of the following securities:
(a) each share of the common stock $.01 par value, of the
Company ("Company Common Stock") issued and outstanding
immediately prior to the Effective Time (other than (i) shares of Company
Common Stock owned by Acquiror, Acquiror Sub or the Company or any
direct or indirect subsidiary of Acquiror, Acquiror Sub or the Company
and (ii) any Dissenting Shares (as defined in section 2.02)) shall be
canceled and extinguished and be converted into and become a right to
receive a cash payment of $25.25 per share, without interest (the "Merger
Consideration");
(b) each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time and owned by
Acquiror, Acquiror Sub or the Company or any direct or indirect
subsidiary of Acquiror, Acquiror Sub or the Company shall be canceled
and extinguished and no payment shall be made with respect thereto; and
(c) each share of common stock, $.01 par value, of
Acquiror Sub issued and outstanding immediately prior to the Effective
Time shall be converted into one fully paid and nonassessable share of
common stock, $.01 par value, of the Surviving Corporation ("Surviving
Corporation Common Stock").
2.02 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the
contrary, if sections 180.1301 through 180.1331 of the Wisconsin Law
("Subchapter XIII") shall be applicable to the Merger, shares of Company
Common Stock that are issued and outstanding immediately prior to the
Effective Time and which are held by shareholders who have not voted
such shares in favor of the Merger, who shall have delivered, prior to any
vote on the merger, a written objection to the Merger in the manner
provided in Subchapter XIII and who as of the Effective Time, shall not
have effectively withdrawn or lost such right to dissenters' rights
("Dissenting Shares") shall not be converted into or represent a right to
receive the Merger Consideration pursuant to section 2.01, but the holders
thereof shall be entitled only to such rights as are granted by
Subchapter XIII. Each holder of Dissenting Shares who becomes entitled
to payment for such shares pursuant to Subchapter XIII shall receive
payment therefor from the Surviving Corporation in accordance with the
Subchapter XIII; provided, however, that if any such holder of Dissenting
Shares shall have effectively withdrawn such holder's demand for
appraisal of such shares or lost such holder's right to appraisal and
payment of such shares under Subchapter XIII, such holder or holders (as
the case may be) shall forfeit the right to appraisal of such shares and each
such share shall thereupon be deemed, as of the Effective Time, to have
been canceled, extinguished and converted into and represent the right to
receive payment from the Surviving Corporation of the Merger
Consideration as provided in section 2.01.
(b) The Company shall give Acquiror (i) prompt notice of
any written demand for fair value, any withdrawal of a demand for fair
value and any other instrument served pursuant to Subchapter XIII
received by the Company, and (ii) the opportunity to direct all negotiations
and proceedings with respect to demands for fair value under such
Subchapter XIII. The Company shall not, except with the prior written
consent of Acquiror, voluntarily make any payment with respect to any
demand for fair value or offer to settle or settle any such demand.
2.03 Exchange of Certificates.
(a) Prior to the Effective Time, Acquiror shall designate a
bank or trust company (the "Exchange Agent") to act as exchange agent in
effecting the exchange of the Merger Consideration for certificates
representing shares of Company Common Stock entitled to payment
pursuant to section 2.01 (the "Certificates"). Immediately prior to the
Effective Time, Acquiror shall deposit with the Exchange Agent an
amount equal to the aggregate Merger Consideration (assuming there are
no Dissenting Shares). The Exchange Agent shall hold such sums in
escrow for the purposes set forth in section 2.01(b).
(b) Promptly after the Effective Time, the Exchange
Agent shall mail to each record holder of Certificates a letter of transmittal
and instructions for use in surrendering Certificates and receiving the
applicable Merger Consideration therefor. The form of the transmittal
letter shall have been prepared by Acquiror, subject to the approval of the
Company, prior to the Effective Time. Upon the surrender of each
Certificate, together with such letter of transmittal duly executed and
completed in accordance with the instructions thereto, the holder of such
Certificate shall be entitled to receive in exchange therefor an amount
equal to the applicable Merger Consideration multiplied by the number of
shares of Company Common Stock represented by such Certificate, and
such Certificate shall be canceled. Until so surrendered and exchanged,
each such Certificate shall represent solely the right to receive an amount
equal to the Merger Consideration multiplied by the number of shares of
Company Common Stock represented by such Certificate. No interest
shall be paid or accrued on the Merger Consideration upon the surrender
of the Certificates. If any Merger Consideration is to be paid to a person
other than the person in whose name the Certificate surrendered in
exchange therefor is registered, it shall be a condition to such exchange
that the person requesting such exchange shall pay to the Exchange Agent
any transfer or other similar taxes required by reason of the payment of
such Merger Consideration to a person other than the registered holder of
the Certificate surrendered, or such person shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. Notwithstanding the foregoing, neither the Exchange Agent
nor any party hereto shall be liable to a holder of shares of Company
Common Stock for any Merger Consideration delivered to a public official
pursuant to applicable abandoned property, escheat and similar laws.
(c) Promptly following the date which is 180 days
after the Effective Time, the Exchange Agent's duties shall terminate and
any portion of the sum not disbursed pursuant to section 2.01(b) shall be
released to the Surviving Corporation. Thereafter, each holder of a
Certificate may surrender Certificates to the Surviving Corporation and
(subject to applicable abandoned property, escheat and similar laws)
receive in exchange therefor an amount equal to the Merger Consideration
multiplied by the number of shares of Company Common Stock
represented by such Certificate, without any interest thereon, but shall
have no greater rights against the Surviving Corporation than may be
accorded to general creditors of the Surviving Corporation.
(d) After the Effective Time there shall be no
transfers on the stock transfer books of the Surviving Corporation of any
shares of Company Common Stock. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Exchange
Agent, they shall be canceled and exchanged for the Merger
Consideration, as provided in this Article II, subject to applicable law in
the case of Dissenting Shares.
2.04 Stock Options. At the Effective Time, each
outstanding option to purchase shares of Company Common Stock (a
"Company Stock Option") issued pursuant to the Company's Executive
Stock Option Plan or the Company's Outside Directors' Stock Option Plan
(together, the "Company Stock Plans") shall be canceled and extinguished
and be converted into and become the right to receive a cash payment
equal in amount to the difference between (i) the Merger Consideration
and (ii) the exercise price of such Company Stock Option. At Closing,
the Surviving Corporation shall pay out such amount, without interest, on
each Company Stock Option to the extent vested at the Effective Time
(including those that vest solely as a result of the Merger).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The term "Company Material Adverse Effect" as used in this
Agreement shall mean any change or effect that, individually or when
taken together with all other such changes or effects, is materially adverse
to the condition (financial or otherwise), results of operations, businesses,
properties, assets, or liabilities of the Company and its Subsidiaries, taken
as a whole; provided, however, that the occurrence of any or all of the
changes or events described on Schedule 3.00(a) shall not, individually or
in the aggregate, constitute a "Company Material Adverse Effect."
The term "Affiliate" as used in this Agreement shall mean,
with respect to any Person, a Person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under
common control with the first mentioned Person. The term "control"
(including the terms "controlled by" and "under common control with")
means the possession, directly or indirectly or as trustee or executor, of
the power to direct or cause the direction of the management or policies of
a Person whether through the ownership of stock or as trustee or executor,
by contract or credit arrangement or otherwise.
The term "Person" as used in this Agreement shall mean an
individual, corporation, partnership, association, trust, unincorporated
organization, other entity or group (as defined in section 13(d) of the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "Exchange Act")).
The term "Subsidiary" (or its plural) as used in this
Agreement with respect to the Company, Acquiror, the Surviving
Corporation or any other person shall mean any corporation, partnership,
joint venture or other legal entity of which the Company, Acquiror, the
Surviving Corporation or such other Person, as the case may be (either
alone or through or together with any other Subsidiary), owns, directly or
indirectly, greater than 50% of the stock or other equity interests the
holders of which are generally entitled to vote for the election of the board
of directors or other governing body of such corporation or other legal
entity.
With respect to any representation, warranty or statement of
the Company in this Agreement that is qualified by or to the Company's
knowledge, such knowledge shall be deemed to exist only if, at the time
as of which such representation, warranty or statement was made, any of
the individuals listed on Schedule 3.00(b) had actual knowledge of the
matter to which such qualification applies.
Except as set forth in the disclosure schedules delivered by
the Company to Acquiror and Acquiror Sub prior to the execution of this
Agreement, the Company makes the following representations and
warranties to Acquiror and Acquiror Sub. Notwithstanding anything in
this Agreement to the contrary, any matter disclosed in any part of the
disclosure schedules shall be deemed to be disclosed in all parts of the
disclosure schedules where such matter is required to be disclosed,
regardless of whether such matter is specifically cross-referenced. The
disclosure of any matter in the disclosure schedules shall not necessarily
be deemed an indication that such matter is material or is required to be
disclosed.
3.01 Organization and Qualification; Subsidiaries. Except
as set forth on Schedule 3.01(a), each of the Company and its Subsidiaries
is a corporation duly incorporated, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, has all requisite
corporate power and authority to own, lease and operate its properties and
to carry on its business as it is now being conducted and is duly qualified
and in good standing to do business in each jurisdiction in which the
nature of the business conducted by it or the ownership or leasing of its
properties makes such qualification necessary, except such jurisdictions if
any, where the failure to be so qualified would not have a Company
Material Adverse Effect. A true and complete list of all the Company's
directly or indirectly owned Subsidiaries together with the jurisdiction of
incorporation or organization of each Subsidiary and the percentage of
each Subsidiary's outstanding capital stock or other equity interest owned
by the Company or another Subsidiary of the Company, is set forth on
Schedule 3.01(b).
3.02 Articles of Incorporation; By-Laws. The Company
has furnished to Acquiror complete and correct copies of the Articles of
Incorporation and the By-Laws, as amended or restated, of the Company
and each of its Subsidiaries. Neither the Company nor any Subsidiary is
in violation of any of the provisions of its Articles of Incorporation or
By-Laws, as amended or restated.
3.03 Capitalization.
(a) As of the date of this Agreement, the
authorized capital stock of the Company consists of 10,000,000 shares of
Company Common Stock and 2,000,000 shares of Preferred Stock, of
which 4,532,883 shares of Common Stock were issued and outstanding,
725,000 shares of Common Stock were reserved for issuance pursuant to
the Company Stock Plans and 541,000 Company Stock Options are
outstanding (excluding Company Stock Options granted in connection with
this Agreement).
(b) Information as of the date of this Agreement
relating to the amounts of the authorized and issued and outstanding
capital stock of each Subsidiary is listed on Schedule 3.03(b).
(c) Except as described in this section 3.03, no
shares of Company Common Stock are reserved for any other purpose.
Since December 31, 1993, no shares of Company Common Stock have
been issued by the Company, except pursuant to the exercise of
outstanding Company Stock Options in accordance with their terms.
Except as contemplated by this Agreement or as described on
Schedule 3.03(c), there have been no changes in the terms of any
outstanding Company Stock Options or the grant of any additional
Company Stock Options since December 31, 1993. All outstanding shares
of Company Common Stock have been duly authorized and are validly
issued, fully paid and nonassessable (except as provided in
section 180.0622(2)(b) of the Wisconsin Law, as interpreted) and are not
subject to preemptive rights under the Wisconsin Law, the Company's
Articles of Incorporation or By-Laws or any agreement to which the
Company is a party. Each of the outstanding shares of capital stock of, or
other equity interests in, each of the Company's Subsidiaries has been
duly authorized and is validly issued, fully paid and nonassessable (except
as provided in section 180.0622(2)(b) of the Wisconsin Law, as
interpreted), and such shares or other equity interests are owned by the
Company free and clear of all security interests, liens, claims, pledges,
agreements, limitations on the Company's voting rights, charges or other
encumbrances of any nature whatsoever, subject to federal and state
securities laws. Except as contemplated by this Agreement or described in
section 3.03(a) there are no options, warrants or other rights, agreements,
arrangements or commitments to which the Company or any of its
Subsidiaries is a party of any character relating to the issued or unissued
capital stock of, or other equity interests in, the Company or any of the
Subsidiaries or obligating the Company or any of the Subsidiaries to grant,
issue, sell or register for sale any shares of the capital stock of, or other
equity interests in, the Company or any of the Subsidiaries. Except as set
forth on Schedule 3.03(c), as of the date of this Agreement, there are no
obligations, contingent or otherwise, of the Company or any of its
Subsidiaries to (x) repurchase, redeem or otherwise acquire any shares of
Company Common Stock, or the capital stock of, or other equity interests
in, any Subsidiary of the Company, or (y) provide funds to, or make any
investment in (in the form of a loan, capital contribution or otherwise), or
provide any guarantee with respect to the obligations of, any Subsidiary of
the Company, except for the provision of funds to, making an investment
in (in the form of a loan, capital contribution or otherwise) or provision of
any guarantees of obligations of Subsidiaries in the ordinary course of
business.
3.04 Authority; Vote Required.
(a) The Company has the requisite corporate power
and authority to execute and deliver this Agreement, to perform its
obligations under this Agreement and to consummate the transactions
contemplated by this Agreement, subject to required shareholder approval.
The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action,
including such corporate action as may be required by section 180.1140 et
seq. of the Wisconsin Law, and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or to
consummate the transactions contemplated by this Agreement (other than
with respect to the approval of this Agreement by the holders of Company
Common Stock in accordance with the Wisconsin Law and the Company's
Articles of Incorporation and By-Laws). This Agreement has been duly
executed and delivered by the Company and constitutes the valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, receivership,
moratorium and other similar laws relating to or affecting the rights and
remedies of creditors generally and by general principles of equity
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing and the possible unavailability of specific
performance, injunctive relief or other equitable remedies, regardless of
whether enforceability is considered in a proceeding in equity or at law.
(b) The affirmative vote of the holders of at least a
majority of the outstanding shares of Company Common Stock is the only
vote of the holders of any class or series of capital stock of the Company
necessary to approve the Merger.
3.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement
by the Company do not, and the performance of this Agreement by the
Company will not: (i) violate the Articles of Incorporation or By-Laws of
the Company or any of its Subsidiaries; (ii) subject to (x) obtaining the
requisite approval of this Agreement by the holders of at least a majority
of the outstanding shares of Company Common Stock in accordance with
the Wisconsin Law and the Company's Articles of Incorporation and
By-Laws, (y) obtaining the consents, approvals, authorizations and permits
of, and making filings with or notifications to, any governmental or
regulatory authority, domestic or foreign ("Governmental Entities"),
pursuant to the applicable requirements, if any, of the Exchange Act, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the rules and regulations thereunder (the "HSR Act"), the federal Health
Maintenance Organization Act of 1973 and the rules and regulations
thereunder (the "Federal HMO Act"), the applicable provisions of
Wisconsin law and the rules and regulations thereunder relating to the
regulation of domestic insurers, third-party benefits administrators and
insurance holding companies in the State of Wisconsin (collectively, the
"Wisconsin Insurance Laws"), the requirements of the National
Association of Securities Dealers, Inc. ("NASD") or the NASDAQ
National Market System, and the filing and recordation of appropriate
merger documents as required by the Wisconsin Law, and (z) giving the
notices and obtaining the consents, approvals, authorizations or permits
described on Schedule 3.05(a), violate any laws applicable to the Company
or any of its Subsidiaries or by which any of their respective properties is
bound, other than a potential violation under any federal or state antitrust
or similar laws, rules or regulations; or (iii), except as set forth on
Schedule 3.05(a) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of the Company or any of
its Subsidiaries pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument
or obligation to which the Company or any of its Subsidiaries is a party or
by which the Company or any of its Subsidiaries or any of their respective
properties is bound except for such beaches or defaults described in clause
(iii) as would not have a Company Material Adverse Effect.
(b) The execution and delivery of this Agreement
by the Company do not, and the performance of this Agreement by the
Company shall not, require any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Entities, except for
applicable requirements, if any, of (i) the Exchange Act, the HSR Act, the
Federal HMO Act, the Wisconsin Insurance laws and the requirements of
the NASD and the NASDAQ National Market System, (ii) the consents,
approvals, authorizations or permits described on Schedule 3.05(a) and
(iii) the filing and recordation of appropriate merger documents as
required by the Wisconsin Law, except for any consent, approvals,
authorizations, permits, filings or notifications that, if not obtained, would
not have a Company Material Averse Effect.
3.06 Permits; Compliance. Except as set forth on
Schedule 3.06, each of the Company and its Subsidiaries is in possession
of all franchises, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders necessary for the
Company or any of its Subsidiaries to own, lease and operate its
properties or to carry on its business as it is now being conducted (the
"Company Permits''), except for any Company Permits the absence of
which would not have a Company Material Adverse Effect. To the
knowledge of the Company, no suspension, revocation or cancellation of
any of the Company Permits is pending or threatened. Neither the
Company nor any of its Subsidiaries is operating in default under or
violation of (i) any law applicable to the Company or any of its
Subsidiaries or by which any of their respective properties is bound or
(ii) any of the Company Permits, except for any such defaults or violations
which would not have a Company Material Adverse Effect.
3.07 Reports; Financial Statements.
(a) Since December 31, 1993, (x) the Company has
filed all forms, reports, statements and other documents required to be
filed with (i) the Securities and Exchange Commission (the "SEC")
including, without limitation, (A) all Annual Reports on Form 10-K,
(B) all Quarterly Reports on Form 10-Q, (C) all proxy statements relating
to meetings of shareholders (whether annual or special), (D) all required
Current Reports on Form 8-K, (E) all other reports or registration
statements and (F) all amendments and supplements to all such reports and
registration statements, which amendments and supplements have been, to
the knowledge of the Company, required to be filed (collectively, as
amended or supplemented, the "Company SEC Reports"), and (ii) any
applicable state securities authorities; and (y) the Company and each of its
Subsidiaries have filed all forms, reports, statements and other documents
required to be filed with any other applicable federal or state regulatory
authorities including, without limitation, state insurance and health
regulatory authorities, except as set forth on Schedule 3.07(a) or where the
failure to file such forms, reports or statements would not have a
Company Material Adverse Effect (all such forms, reports, statements and
other documents in clauses (x) and (y) of this section 3.07(a) being
collectively referred to as the "Company Reports"). Such Company SEC
Reports and Company Reports do not contain any untrue statement of a
material fact or omit any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(b) Each of the consolidated financial statements
(including, in each case, any related notes to such statements) contained in
the Company SEC Reports (i) have been prepared in all material respects
in accordance with the published rules and regulations of the SEC and
generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved (except (x) to the extent required by
changes in GAAP and (y) as may be indicated in the notes thereto) and
(ii) fairly represent the consolidated financial position of the Company and
its Subsidiaries as of the respective dates thereof and the consolidated
results of operations and cash flows for the periods indicated (subject to
normal year-end adjustments in the case of any unaudited interim financial
statements).
(c) Except as and to the extent reflected on, or
reserved against in, the consolidated balance sheet of the Company and its
Subsidiaries at June 30, 1994, including all notes thereto (the "Company
Balance Sheet"), or as set forth on Schedule 3.07(c), neither the Company
nor any of its Subsidiaries has any liabilities or obligations (whether
accrued, absolute, contingent or otherwise) that would be required to be
reflected on, or reserved against in, a balance sheet of the Company or in
the notes thereto, prepared in accordance with the published rules and
regulations of the SEC and GAAP, except for liabilities or obligations
incurred in the ordinary course of business since June 30, 1994 that,
individually or in the aggregate, would not have a Company Material
Adverse Effect.
3.08 Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Reports (or the notes thereto) or as
contemplated by this Agreement, since December 31, 1993:
(a) each of the Company and its Subsidiaries has
conducted its business in the ordinary course and consistent with the
Company's past practice;
(b) there has not been any Company Material
Adverse Effect;
(c) except as set forth on Schedule 3.08, neither the
Company nor any Subsidiary has made any material increase in
compensation to officers or key employees or any material increase in any
or created any new bonus, insurance, pension or other employee benefit
plan, payment or arrangement (including, but not limited to, the granting
of stock options) other than in the ordinary course of business and
consistent with the Company's past practice;
(d) neither the Company nor any Subsidiary has
made any loans or advances to any officer, director, shareholder or
Affiliate of the Company or of any Subsidiary (except for travel and
business expenses payments);
(e) there has not been any change in the accounting
methods or practices followed by the Company or any Subsidiary, except
as required by GAAP; and
(f) neither the Company nor any Subsidiary has
entered into any commitment or other agreement to do any of the
foregoing.
3.09 Absence of Litigation.
(a) Schedule 3.09(a) lists all claims, actions, suits,
litigations, or arbitrations or, to the knowledge of the Company,
investigations or proceedings affecting the Company or any of its
Subsidiaries, at law or in equity, which are pending or, to the knowledge
of the Company, threatened, and which has had or would reasonably be
expected to have a Company Material Adverse Effect. There is no action
pending seeking to enjoin or restrain the Merger.
(b) Except as set forth on Schedule 3.09(b), neither
the Company nor any of its Subsidiaries is subject to any continuing order
of, consent decree, settlement agreement or other similar written
agreement with or, to the knowledge of the Company, continuing
investigation by, any Governmental Entity.
3.10 Contracts; No Default.
(a) Schedule 3.10(a) sets forth as of the date of this
Agreement a list of each contract or agreement of the Company or its
Subsidiaries:
(i) concerning a partnership or joint venture
with another Person; or
(ii) which is material to the Company and its
Subsidiaries.
(b) Schedule 3.10(b) lists each contract or
agreement to which the Company or any of its Subsidiaries is a party
materially limiting the right of the Company or any of its Subsidiaries
prior to the Effective Time, or Acquiror or any of its Subsidiaries at or
after the Effective Time, to engage in, or to compete with any Person in,
any business including each contract or agreement containing exclusivity
provisions restricting the geographical area in which, or the method by
which, any business may be conducted by the Company or any of its
Subsidiaries prior to the Effective Time, or by the Acquiror or any of its
Subsidiaries after the Effective Time. For the purpose of this Agreement
"Company Contract" means the contracts and agreements listed on
Schedules 3.10(a) and 3.10(b). Correct and complete copies of all written
Company Contracts have been made available to Acquiror.
(c) Each Company Contract is in full force and
effect, each is a valid and binding contract or agreement enforceable
against the Company or the applicable Subsidiary in accordance with its
terms, except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, moratorium and
other similar laws relating to or affecting the rights and remedies of
creditors generally and by general principles of equity including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing and the possible unavailability of specific performance, injunctive
relief or other equitable remedies, regardless of whether enforceability is
considered in a proceeding in equity or at law, and there is no default by
the Company in the performance of any obligation to be performed or paid
under any such contract or agreement, except for any default that would
not have a Company Material Adverse Effect.
3.11 Employee Benefit Plans; Labor Matters.
(a) Schedule 3.11(a) lists or describes any pension,
retirement, savings, disability, medical, dental, health, life (including any
individual life insurance policy as to which the Company is the owner,
beneficiary or both), death benefit, group insurance, profit sharing,
deferred compensation, stock option, bonus incentive, vacation pay,
severance pay, "cafeteria" or "flexible benefit" plan under section 125 of
the Internal Revenue Code of 1986 as amended (the "Code"), or other
employee benefit plan, trust, arrangement, contract, agreement, policy or
commitment, under which employees of the Company or its Subsidiaries
are entitled to participate by reason of their employment with the
Company or its Subsidiaries, (i) to which the Company or a Subsidiary is
a party or a sponsor or a fiduciary thereof or (ii) with respect to which the
Company or a Subsidiary has made payments, contributions or
commitments, or has any liability (collectively, the "Employee Benefit
Plans").
(b) The Employee Benefit Plans have been operated
and administered by the Company in compliance in all material respects
with all applicable laws relating to employment or labor matters, including
without limitation, the Employee Retirement Income Security Act of 1974,
as amended (''ERISA") and the Code.
(c) Each Employee Benefit Plan that is intended to
be tax qualified under section 401(a) of the Code has received, or the
Company has applied for or will in a timely manner apply for, a favorable
determination letter from the Internal Revenue Service (the "IRS") stating
that the Plan meets the requirements of the Code and that any trust or
trusts associated with the plan are tax exempt under section 501(a) of the
Code.
(d) The Company does not maintain any defined
benefit plan covering employees of the Company or its Subsidiaries within
the meaning of section 3(35) of ERISA.
(e) Neither the Company nor any of its Subsidiaries
is a party to any collective bargaining or other labor union contract.
(f) Schedule 3.11(f) sets forth a list of all written
employment agreements, employment contracts or understandings relating
to employment (other than relating to "at-will" employment) to which the
Company or any of its Subsidiaries is a party.
3.12 Taxes. The Company has filed or caused to be filed
with the appropriate Governmental Entities, all federal, state, municipal,
and local income, franchise, excise, real and personal property, and other
tax returns and reports that are required to be filed and the Company is
not delinquent in the payment of any material taxes shown on such returns
or response or on any material assessments for any such taxes received by
it and has otherwise complied in all material respects with all legal
requirements applicable to the Company with respect to all income, sales,
use, real or personal property, excise or other taxes. The Company
Balance Sheet includes adequate reserves for the payment of all accrued
but unpaid federal, state, municipal and local taxes of the Company,
including, without limitation, interest and penalties, whether or not
disputed, for the year ended December 31, 1993 and for all fiscal years
prior thereto. Except as set forth on Schedule 3.12, the Company has not
executed or filed with the Internal Revenue Service any agreement
extending the period for assessment and collection of any federal tax. The
Company is not a party to any pending action or proceeding, nor, to the
knowledge of the Company, has any action or proceeding been threatened,
by any Governmental Entity for assessment or collection of taxes, and no
claim for assessment or collection of taxes has been asserted against the
Company.
3.13 Intellectual Property Rights. To the knowledge of the
Company, the Company and each of the Subsidiaries owns or possesses
the right to use (in the manner and the geographic areas in which they are
currently used) all patents, patents pending, trademarks, service marks,
trade names, service names, slogans, registered copyrights, trade secrets
and other intellectual property rights it currently uses, without any conflict
or alleged conflict with the rights of others, except where any such
conflict would not have a Company Material Adverse Effect.
3.14 Certain Business Practices and Regulations. Neither
the Company nor any of its Subsidiaries, nor any of its or their respective
executive officers or directors has, to the knowledge of the Company,
(i) made or agreed to make any contribution, payment or gift to any
customer, supplier, governmental official, employee or agent where either
the contribution, payment or gift or the purpose thereof was illegal under
any law, (ii) established or maintained any material unrecorded fund or
asset of the Company for any improper purpose or made any material
false entries on its books and records for any reason, (iii) made or agreed
to make any contribution, or reimbursed any political gift or contribution
made by any other Person, to any candidate for federal, state or local
public office in violation of any law, or (iv) engaged in any activity
constituting fraud or abuse under the laws relating to health care,
insurance or the regulation of professional corporations, where such action
would have a Company Material Adverse Effect.
3.15 Insurance. All policies and binders of insurance for
professional liability, directors and officers, property and casualty, fire,
liability, worker's compensation and other customary matters held by or
on behalf of the Company or its Subsidiaries (''Insurance Policies") have
been made available to Acquiror. The Insurance Policies are in full force
and effect. To the knowledge of the Company, the Company or its
Subsidiaries have not failed to give any notice of any claim under any
Insurance Policy in due and timely fashion, nor to the knowledge of the
Company, has any coverage for claims been denied, which failure or
denial has had or would have a Company Material Adverse Effect. The
business policy of the Company and its Subsidiaries is to require that each
individual or entity rendering professional health care services as a
contractor to the Company or its Subsidiaries maintain professional
liability insurance with coverage in at least such amounts as are customary
in the industry.
3.16 Brokers. No broker, finder or investment banker
other than Salomon Brothers Inc. is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated
by this Agreement based upon any arrangements made by or on behalf of
the Company.
3.17 Title to Properties.
(a) Neither the Company nor any Subsidiary owns
any real property. Leases for all of the material real property leased by
the Company or any Subsidiary are listed on Schedule 3.17 (the "Real
Property") .
(b) The Company owns the tangible properties and
tangible assets reflected in the Company SEC Reports and, to the
knowledge of the Company, the leases for the Real Property described on
Schedule 3.17 are in full force and effect and the Company holds a valid
and existing leasehold interest under each of the leases. The Company has
delivered to Acquiror complete and accurate copies of each of the leases
described on Schedule 3.17, and none of such leases has been modified in
any respect, except to the extent that such modifications are disclosed by
the copies delivered to Acquiror and except for such modifications as
would not have a Company Material Adverse Effect. Neither the
Company nor the applicable Subsidiary is in default, and to the knowledge
of the Company no circumstances exist, including the effect of the Merger
and this Agreement, which, if unremedied, would, either with or without
notice or the passage of time or both, result in the Company's or the
applicable Subsidiary's default under any of such leases, in each case,
where such default would have a Company Material Adverse Effect.
(c) Neither the Company nor any Subsidiary is in
violation of any applicable material zoning ordinance or other law,
regulation or requirement relating to the operation of any properties used
in the operation of its business, which violation has had or would have a
Company Material Adverse Effect, and neither the Company nor any
Subsidiary has received any notice of any such violation, or the existence
of any condemnation proceeding with respect to any of the Real Property.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF ACQUIROR AND ACQUIROR SUB
The term "Acquiror Material Adverse Effect" as used in this
Agreement shall mean any change or effect that, individually or when
taken together with all such other changes or effects, is materially adverse
to the condition (financial or otherwise), results of operations business,
properties, assets or liabilities of Acquiror and its Subsidiaries, taken as a
whole.
Acquiror and Acquiror Sub jointly and severally represent
and warrant to the Company that:
4.01 Organization and Qualification; Subsidiaries. Each of
Acquiror and Acquiror Sub is a corporation, duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as it is now
being conducted.
4.02 Authority. Each of Acquiror and Acquiror Sub has
the requisite corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder, and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Acquiror and Acquiror Sub, and the consummation by
Acquiror and Acquiror Sub of the transactions contemplated hereby, have
been duly authorized by all necessary corporate action and no other
corporate proceedings on the part of Acquiror or Acquiror Sub are
necessary to authorize this Agreement or to consummate the transactions
contemplated by this Agreement. This Agreement has been duly executed
and delivered by Acquiror and Acquiror Sub and constitutes a legal, valid
and binding obligation of Acquiror and Acquiror Sub enforceable against
Acquiror and Acquiror Sub in accordance with its terms, except to the
extent that enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, moratorium and other similar
laws relating to or affecting the rights and remedies of creditors generally
and by general principles of equity including, without limitation, concepts
of materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific performance, injunctive relief or other equitable
remedies, regardless of whether enforceability is considered in a
proceeding in equity or at law.
4.03 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement
by Acquiror and Acquiror Sub do not, and the performance of this
Agreement by Acquiror and Acquiror will not, (i) violate the Articles of
Incorporation or By-Laws or equivalent organizational documents of
Acquiror or Acquiror Sub, (ii) subject to obtaining the consents,
approvals, authorizations and permits of, and making filings with or
notifications to, any Governmental Entities pursuant to the applicable
requirements, if any, of any stock exchange or quotation service on which
Acquiror's securities are listed or quoted, the HSR Act, the Federal HMO
Act and the Wisconsin Insurance Laws, and the filing and recordation of
appropriate merger documents as required by the Wisconsin Law, conflict
with or violate any laws applicable to Acquiror or Acquiror Sub or by
which any of their respective properties is bound or affected, except such
as would not have an Acquiror Material Adverse Effect.
(b) The execution and delivery of this Agreement
by Acquiror and Acquiror Sub do not, and the performance of this
Agreement by Acquiror and Acquiror Sub shall not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Entities, except as described in section 4.03(a) above.
4.04 Ownership of Acquiror Sub; No Prior Activities.
(a) Acquiror Sub was formed for the purpose of
engaging in the transactions contemplated by this Agreement.
(b) As of the Effective Time, all of the outstanding
capital stock of Acquiror Sub will be owned directly by Acquiror. As of
the Effective Time, there will be no options, warrants or other rights
(including registration rights), agreements, arrangements or commitments
to which Acquiror Sub is a party of any character relating to the issued or
unissued capital stock of, or other equity interests in, Acquiror Sub or
obligating Acquiror Sub to grant, issue or sell any shares of the capital
stock of, or other equity interests in, Acquiror Sub, by sale, lease, license
or otherwise. There are no obligations, contingent or otherwise, of
Acquiror Sub to repurchase, redeem or otherwise acquire any shares of
the capital stock of Acquiror Sub.
(c) As of the date hereof and the Effective Time,
except for obligations or liabilities incurred in connection with its
incorporation or organization and the transactions contemplated by this
Agreement, Acquiror Sub has not and will not have incurred, directly or
indirectly, through any Subsidiary or Affiliate, any obligations or liabilities
or engaged in any business activities of any type or kind whatsoever or
entered into any agreement or arrangements with any Person.
4.05 Brokers. No broker, finder or investment banker
other than Morgan Stanley & Company is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on
behalf of Acquiror.
4.06 Financing. Acquiror has the ability to and intends to
finance the aggregate of the amounts payable pursuant to Article II with
cash on hand and utilization of existing credit facilities. Acquiror will use
its best efforts to ensure the continued availability of such financing and
pay such amounts in accordance with the terms of this Agreement and will
not take any action between the date hereof and the Effective Time which
would impair its ability to obtain such financing.
ARTICLE V
COVENANTS
5.01 Affirmative Covenants of the Company. The
Company covenants and agrees that prior to the Effective Time, unless
otherwise contemplated by this Agreement or consented to in writing by
Acquiror, the Company will and will cause each of its Subsidiaries to:
(a) operate its business in the ordinary course of
business and consistent with its past practice;
(b) use reasonable efforts to preserve intact its
business organization and assets, maintain its rights and franchises, retain
the services of its respective officers and key employees and maintain the
relationships with its respective key customers and suppliers;
(c) use reasonable efforts to keep in full force and
effect liability insurance and bonds comparable in amount and scope of
coverage to that currently maintained; and
(d) subject to the provisions of the Acquiror
Confidentiality Agreement (as hereinafter defined), confer with Acquiror
at its reasonable request to report operational matters of a material nature
and to report the general status of the ongoing operations of the business
of the Company and its Subsidiaries.
(e) Subject to the provisions of the Acquiror
Confidentiality Agreement, from the date hereof until the Closing Date,
the Company (i) will give, and will cause each of its Subsidiaries to give,
Acquiror, its counsel, financial advisors, auditors and other authorized
representatives reasonable access to the offices, properties, books and
records of the Company and its Subsidiaries, (ii) will furnish, and will
cause each Subsidiary to furnish, to Acquiror, its counsel, financial
advisors, auditors and other authorized representatives such financial and
operating data and other information relating to the Company and the
Subsidiaries as such persons may reasonably request, and (iii) will instruct
the employees, counsel and financial advisors of the Company and the
Subsidiaries to cooperate in all reasonable respects with Acquiror in its
investigation of the Company and the Subsidiaries; provided that no
investigation pursuant to this Subsection shall affect any representation or
warranty given by the Company hereunder. Notwithstanding the
foregoing, Acquiror shall not have access to information, analyses and
materials prepared for the Company by Salomon Brothers Inc, personnel
records, medical histories or other information which in the Company's
good faith opinion is sensitive or the disclosure of which could subject the
Company to risk of liability.
5.02 Negative Covenants of the Company. Except as
contemplated by this Agreement or consented to in writing by Acquiror,
from the date of this Agreement until the Effective Time, the Company
shall not do, and shall not permit any of its Subsidiaries to do, any of the
following:
(a) except as set forth on Schedule 5.02(a):
(i) increase the compensation payable to any director, officer or employee
of the Company or any of its Subsidiaries, except for increases in salary
or wages payable or to become payable in the ordinary course of business
and consistent with the policies currently in effect; (ii) grant any severance
or termination pay (other than pursuant to the normal severance policy of
the Company or its Subsidiaries currently in effect) to, or enter into any
severance agreement with, any director or officer; (iii) subject to
clause (i), enter into or amend any employment agreement with any
director or officer that would extend beyond the Effective Time except on
an at-will basis; or (iv) establish, adopt, enter into or amend any
Employee Benefit Plan, except as may be required to comply with
applicable law;
(b) declare or pay any dividend on, or make any
other distribution in respect of, outstanding shares of capital stock;
(c) (i) redeem, purchase or otherwise acquire any
shares of its or any of its Subsidiaries' capital stock or any securities or
obligations convertible into or exchangeable for any shares of its or its
Subsidiaries' capital stock, or any options, warrants or conversion or other
rights to acquire any shares of its or its Subsidiaries capital stock;
(ii) effect any reorganization or recapitalization; or (iii) split, combine or
reclassify any of its or its Subsidiaries' capital stock (except for the
issuance of shares upon the exercise of options or warrants in accordance
with their terms);
(d) issue, deliver, award, grant or sell, or authorize
the issuance, delivery, award, grant or sale (including the grant of any
security interests, liens, claims, pledges, limitations on voting rights,
charges or other encumbrances) of, any shares of any class of its or its
Subsidiaries' capital stock, any securities convertible into or exercisable or
exchangeable for any such shares, or any rights, warrants or options to
acquire any such shares (except for the issuance of shares upon the
exercise of options or warrants in accordance with their terms), or amend
or otherwise modify the terms of any such rights, warrants or options the
effect of which shall be to make such terms more favorable to the holders
thereof, except as contemplated by this Agreement;
(e) to the extent material, acquire or agree to
acquire, by merging or consolidating with, by purchasing an equity
interest in or a portion of the assets of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to acquire
any assets of any other Person (other than the purchase of assets from
suppliers or vendors in the ordinary course of business and consistent with
the Company's past practice);
(f) sell, lease, exchange, mortgage, pledge,
transfer or otherwise dispose of, or agree to sell, lease, exchange,
mortgage, pledge, transfer or otherwise dispose of, any material amount
of any of its or its Subsidiaries' assets, except for dispositions in the
ordinary course of business and consistent with the Company's past
practice;
(g) adopt any amendments to its Articles of
Incorporation or By-Laws;
(h) except as set forth in Schedule 5.02(h);
(A) change any of its methods of accounting in effect at December 31,
1993 or (B) make or rescind any express or deemed election relating to
taxes, settle or compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to taxes, or change
any of its methods of reporting income or deductions for federal income
tax purposes from those employed in the preparation of the federal income
tax returns for the taxable year ending December 31, 1993, except in
either case as may be required by law, the IRS, or GAAP or in the
ordinary course of business consistent with past practice;
(i) incur any obligation for borrowed money or
purchase money indebtedness, whether or not evidenced by a note, bond,
debenture or similar instrument, except as approved by Acquiror in
advance; or
(j) agree in writing or otherwise to do any of the
foregoing.
5.03 Confidentiality Agreement. The parties will, and will
cause their respective officers, employees, accountants, consultants, legal
counsel and other representatives to, comply with all of their respective
obligations under the Confidentiality Agreement entered into by the
Company and Acquiror on September 7, 1994 concerning the Company's
confidential information (the "Acquiror Confidentiality Agreement").
5.04 Acquisition Proposals. Upon execution of this
Agreement, the Company and its Subsidiaries and their respective officers,
directors, employees, agents and advisors will immediately cease any
existing discussions or negotiations with any parties conducted heretofore
with respect to any Acquisition Proposal (as hereinafter defined). The
Company may, directly or indirectly, furnish information and access, in
each case only in response to requests that were not solicited by the
Company (or any officer, director, employee, agent or advisor on its
behalf) after the date of this Agreement, to any corporation, partnership,
person or other entity or group (each, a "Potential Acquiror") pursuant to
confidentiality agreements, and may participate in discussions and
negotiate with a Potential Acquiror concerning any merger, sale of assets,
sale of shares of capital stock or similar transaction involving the
Company or any Subsidiary or division of the Company, if such Potential
Acquiror has submitted a written proposal to the Board of Directors
relating to any such transaction, and the Board of Directors determines in
good faith after consultation with independent legal counsel that the failure
to provide such information or access or to engage in such discussions or
negotiations would be inconsistent with their fiduciary duties to the
Company's shareholders under applicable law. The Company shall notify
Acquiror immediately if any such request or proposal, or any inquiry or
contact with any Person with respect thereto, is made and shall keep
Acquiror apprised of all developments that could reasonably be expected
to culminate in the Board withdrawing, modifying or amending its
recommendation of the Merger and the other transactions contemplated by
this Agreement. The Company has entered into confidentiality agreements
with other third parties substantially in the form of the Acquiror
Confidentiality Agreement. The Company agrees not to release any third
party from, or waive any provision of, any confidentiality or standstill
agreement to which the Company is a party unless, in the opinion of the
Board of Directors after consultation with independent legal counsel, the
failure to provide such release or waiver would be inconsistent with its
fiduciary duties to the Company's shareholders under applicable law. For
purposes of this section 5.04, the term "Acquisition Proposal" means any
proposal or offer for a merger, asset acquisition or other business
combination (other than the Merger contemplated by this Agreement)
involving the Company or any Subsidiary and any Potential Acquiror, or
any proposal or offer to acquire a significant equity interest in, or a
significant portion of the assets of, the Company or any Subsidiary by a
Potential Acquiror.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 Proxy Statement.
(a) As promptly as practicable after the execution
of this Agreement, the Company shall prepare and file with the SEC a
proxy statement and a form of proxy to be sent to the shareholders of the
Company in connection with the meeting of the Company's shareholders
to consider the Merger (the "Shareholders' Meeting") (such proxy
statement, together with any amendments thereof or supplements thereto,
in each case in the form or forms mailed to the Company's shareholders,
being the "Proxy Statement"). The Proxy Statement shall include the
recommendation of the Company's Board of Directors in favor of the
Merger and approval of this Agreement, unless outside legal counsel to
the Company advise the Company's Board of Directors that the directors'
fiduciary duties under applicable law require them not to do so.
(b) The information included in the Proxy
Statement shall not, at the date the Proxy Statement (or any amendment
thereof or supplement thereto) is first mailed to shareholders or at the time
of the Shareholders' Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements, therein, in light of the
circumstances under which they are made, not misleading. If at any time
prior to the Shareholders' Meeting, any event or circumstance relating to
the Company or any of its Subsidiaries, or its or their respective officers
or directors, is discovered by the Company which should be set forth in a
supplement to the Proxy Statement, the Company shall promptly inform
Acquiror. All documents that the Company is responsible for filing with
the SEC in connection with the transactions contemplated herein will
comply as to form and substance in all material respects with the
applicable requirements of the Exchange Act.
(c) Acquiror and Acquiror Sub each consents to the
use of its name and, on behalf of its Subsidiaries and Affiliates, the names
of such Subsidiaries and Affiliates and to the inclusion of business
information relating to such party and its Subsidiaries and Affiliates (in
each case, to the extent required by applicable securities laws) in the
Proxy Statement. The Company, Acquiror and Acquiror Sub each hereby
agrees to (i) use its reasonable efforts to obtain the written consent of any
Person retained by it which may be required to be named (as an expert or
otherwise) in the Proxy Statement; provided, that such party shall not be
required to make any material payment to such Person in connection with
such party's efforts to obtain any such consent, and (ii) cooperate, and
agrees to use its reasonable efforts to cause its Subsidiaries and Affiliates
to cooperate, with any legal counsel, investment banker, accountant or
other agent or representative retained by any of the parties in connection
with the preparation of any and all information required as determined
after consultation with each party's counsel, by applicable securities laws
to be disclosed in the Proxy Statement.
6.02 Meeting of Shareholders. The Company shall take all
action necessary in accordance with the Wisconsin Law and its Articles of
Incorporation and By-Laws to convene the Shareholders' Meeting, and the
Company shall consult with Acquiror in connection therewith. The
Company shall use reasonable efforts to solicit from the shareholders of
the Company proxies in favor of the Merger and shall take all other
actions necessary or advisable to secure the vote or consent of
shareholders required by the Wisconsin Law to approve this Agreement,
including the retention of proxy solicitation agents if requested by
Acquiror, unless otherwise required by the applicable fiduciary duties of
directors or officers of the Company.
6.03 Appropriate Action; Consents; Filings.
(a) Subject to the terms and conditions herein
provided, the Company, Acquiror and Acquiror Sub shall use all
reasonable efforts to (i) take, or cause to be taken, all appropriate action,
and do or cause to be done, all things necessary, proper or advisable
under applicable law or otherwise to consummate and make effective the
transactions contemplated by this Agreement as promptly as practicable,
(ii) obtain from any Governmental Entities any consents, licenses or orders
required to be obtained by Acquiror or the Company or any of their
respective Subsidiaries in connection with the authorization, execution and
delivery of this Agreement and the consummation of the transactions
contemplated by this Agreement, including, without limitation, the
Merger, and (iii) make all necessary notifications and filings and thereafter
make any other required submissions with respect to this Agreement and
the Merger required under (A) the Exchange Act and any other applicable
federal or state securities laws, (B) the HSR Act, (C) the Federal HMO
Act and the Wisconsin Insurance Laws and (D) any other applicable law;
provided that Acquiror and the Company shall cooperate with each other
in connection with the making of all such filings. The Company and
Acquiror shall furnish to each other all information required for any
application or other filing to be made pursuant to the rules and regulations
of any applicable law (including all information required to be included in
the Proxy Statement) in connection with the transactions contemplated by
this Agreement.
(b) (i) The Company and Acquiror shall give (or
cause their respective Subsidiaries to give) any notices to third parties, and
use, and cause their respective Subsidiaries to use, all reasonable efforts to
obtain any third-party consents, (A) necessary to consummate the
transactions contemplated in this Agreement, (B) disclosed or required to
be disclosed in the disclosure schedules to this Agreement, or (c) required
to prevent a Company Material Adverse Effect from occurring prior to the
Effective Time.
(ii) In the event that any party shall fail to
obtain any third-party consent described in subsection (b)(i) above, such
party shall use reasonable efforts, and shall take any such actions
reasonably requested by the Company and Acquiror to minimize any
adverse effect upon the Company, its Subsidiaries and its businesses
resulting, or which could reasonably be expected to result after the
Effective Time, from the failure to obtain such consent.
(c) From the date of this Agreement until the
Effective Time, the Company shall promptly notify Acquiror in writing of
any pending or, to the knowledge of the Company, threatened action,
proceeding or investigation by any Governmental Entity or any other
Person (i) challenging or seeking material damages in connection with the
Merger, (ii) alleging that the consent of such Governmental Entity or
Person may be required in connection with the Merger or this Agreement
or (iii) seeking to restrain or prohibit the consummation of the Merger or
otherwise limit the right of Acquiror or, to the knowledge of the
Company, its Subsidiaries, to own or operate all or any portion of the
businesses or assets of the Company or its Subsidiaries.
(d) From the date of this Agreement until the
Effective Time, Acquiror shall promptly notify the Company in writing of
any pending or, to the knowledge of Acquiror, threatened action,
proceeding or investigation by any Governmental Entity or any other
Person (i) challenging or seeking material damages in connection with the
Merger or (ii) seeking to restrain or prohibit the consummation of the
Merger or otherwise limit the right of Acquiror or its Subsidiaries to own
or operate all or any portion of the business or assets of the Company or
its Subsidiaries.
6.04 Update Disclosure; Breaches. From and after the date
of this Agreement until the Effective Time, each party shall promptly
notify the other parties hereto by written update to its disclosure schedules
("Update Schedule") of (i) the occurrence or non-occurrence of any event
the occurrence or non-occurrence of which would be reasonably likely to
cause any condition to the obligations of any party to effect the Merger
and the other transactions contemplated by this Agreement not to be
satisfied, (ii) the failure of the Company or Acquiror, as the case may be,
to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it pursuant to this Agreement which would
be reasonably likely to result in any condition to the obligations of any
party to effect the Merger and the other transactions contemplated by this
Agreement not to be satisfied, or (iii) of any changes to the information
contained in its disclosure schedule (including any change to any
representations or warranties herein as to which no schedule has been
created as of the date hereof but as to which a schedule would have been
required hereunder to have been created on or before the date hereof if
such change had existed on the date hereof); provided, however, that the
delivery of any Update Schedule pursuant to this section 6.04 shall not
cure any breach of any representation or warranty requiring disclosure of
such matter prior to the date of this Agreement or otherwise limit or affect
the remedies available to the party receiving such notice.
6.05 Public Announcements. The parties to this Agreement
shall consult in good faith with each other before issuing any press release
or otherwise making any public statements with respect to the Merger and
shall not issue any such press release or make any such public statement
without the prior written agreement of the other party, except as may be
required by law or the requirements of the New York Stock Exchange or
the NASDAQ National Market.
6.06 Indemnification.
(a) From and after the Effective Time, Acquiror
shall, and shall cause the Surviving Corporation to, indemnify, defend and
hold harmless the present and former officers, directors, employees,
agents and representatives of the Company and its Subsidiaries
(collectively, the "Indemnified Parties") against all losses, expenses,
claims, damages or liabilities arising out of actions or omissions occurring
at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement) to the full extent permitted
or required under the Wisconsin Law or other applicable state law (and
shall also advance reasonable expenses as incurred to the fullest extent
permitted under the Wisconsin Law or other applicable state law, provided
that the persons to whom expenses are advanced provides an undertaking
to repay such advances contemplated by the Wisconsin Law). Acquiror
and Acquiror Sub agree that all rights to indemnification, including
provisions relating to advances of expenses incurred in defense of any
claim, action, suit, proceeding or investigation (a "Claim") existing in
favor of the Indemnified Parties as provided in the Company's Articles of
Incorporation or By-Laws or other agreement or provisions, as in effect as
of the date hereof, with respect to matters occurring through the Effective
Time, shall survive the Merger and shall continue in full force and effect.
(b) Without limiting the foregoing, in the event any
Claim is brought against any Indemnified Party (whether arising before or
after the Effective Time) after the Effective Time (i) the Indemnified
Parties may retain counsel satisfactory to them (subject to approval by
Acquiror and the Surviving Corporation, which approval will not be
unreasonably withheld or delayed), (ii) Acquiror and the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for
the Indemnified Parties promptly as statements therefor are received
subject to the ability of Acquiror and the Surviving Corporation to receive
such information relative to the legal services provided as is customarily
provided and reasonably requested by Acquiror and the Surviving
Corporation, and (iii) Acquiror and the Surviving Corporation will use all
reasonable efforts to assist in the vigorous defense of any such matter,
provided that neither Acquiror nor the Surviving Corporation shall be
liable for any settlement of any Claim effected without its written consent,
which consent, however, shall not be unreasonably withheld or delayed.
Any Indemnified Party wishing to claim indemnification under this
section 6.06, upon learning of any such Claim, shall notify Acquiror (but
the failure so to notify Acquiror shall not relieve it from any liability
which it may have under this section 6.06 except to the extent such failure
materially prejudices Acquiror). The Indemnified Parties as a group may
retain only one law firm to represent them with respect to each such
matter unless there is, as evidenced by the written opinion of counsel
reasonably acceptable to Acquiror and the Surviving Corporation, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties.
(c) The Surviving Corporation shall use reasonable
efforts to obtain extended reporting endorsements on the fiduciary liability,
professional liability and directors and officers liability policies currently
covering the Company or any of its Subsidiaries or any of the Indemnified
Parties, and will submit to the applicable insurer a full and complete list of
any potential claims under the policy issued by such insurer. In the event
the Surviving Corporation is unable to obtain extended coverage under its
existing directors and officers liability insurance policies, Acquiror shall
use reasonable efforts to provide similar coverage for the Indemnified
Parties under policies then maintained by Acquiror; provided that such
similar coverage is available to Acquiror at a cost not substantially higher
than the Company's present coverage.
(d) This section 6.06 is intended to benefit the
Indemnified Parties and shall be binding on all successors and assigns of
Acquiror, Acquiror Sub, the Company and the Surviving Corporation.
6.07 Obligations of Acquiror Sub. Acquiror shall take all
action necessary to cause Acquiror Sub to perform its obligations under
this Agreement and to consummate the Merger on the terms and
conditions set forth in this Agreement.
6.08 Employee Benefits and Compensation.
(a) After the Effective Time, the employee benefit
plans of the Surviving Corporation shall recognize for eligibility, vesting,
accrual and all other purposes the credited service of employees of the
Company and its Subsidiaries credited as of the Effective Time under the
Company's Employee Benefit Plans on a basis that is consistent with the
manner in which the Employee Benefit Plans of the Company recognized
such employment for similar purposes.
(b) As soon as practicable after the Effective Time,
the Surviving Corporation will pay to each participant all amounts
required to be paid pursuant to the Company's Long-Term Performance
Unit Plan ("PUP"). As soon as practicable after the Effective Time,
Acquiror will also cause the Surviving Corporation to make a cash
payment to each participant in the Company's 401(k) Plan ("401(k) Plan")
who is employed by the Company or one of its Subsidiaries at the
Effective Time. Such payment shall equal 2% of each such participant's
Compensation (as defined in the 401(k) Plan) from the first day of the
calendar year in which the Merger occurs until the Effective Time.
(c) During the two-year period following the
Effective Time, any employee of the Surviving Corporation who is
(i) involuntarily terminated without "Cause" (as defined on
Schedule 6.08(c)); or (ii) who voluntarily terminates employment with the
Surviving Corporation after (A) a reduction in such employee's current
monthly salary, without giving effect to any options, bonuses, or other
incentive compensation to which such employee might otherwise be
entitled, or (B) Acquiror or the Surviving Corporation requiring the
employee (without his or her consent) to be based anywhere other than
within 25 miles of the employee's office location on the date hereof,
except for required travel on the Surviving Corporation's business to an
extent substantially consistent with the employee's present business travel
obligations, will be paid by the Surviving Corporation a severance
payment as follows: (1) for Bonus Participants (as defined on Schedule
6.08(c)) an amount equal to one months base salary per full year of total
credited service at the Effective Time and any service with Acquiror or its
Subsidiaries following the Effective Time, but not less than one months
nor more than six months base salary for any such employee, plus a lump
sum payment in an amount equal to such employee's base salary for any
period of unused accrued vacation time and (2) for all other employees, an
amount equal to one months base salary per full year of total credited
service at the Effective Time and any service with Acquiror or its
Subsidiaries following the Effective Time, but not less than two weeks nor
more than three months base salary for any such employee, plus a lump
sum payment in an amount equal to such employee's base salary for any
period of unused accrued vacation time. Acquiror will provide group
health care benefits to former employees receiving severance benefits for
the period that severance benefits are received, but not less than three
months, on the same basis then being provided to active employees of the
Company. Employees terminated for Cause shall not be entitled to such
severance pay. The parties agree that the foregoing severance policy (i) is
for the benefit only of individuals employed by the Company as of the
Effective Time and who are not otherwise entitled to severance benefits
pursuant to an existing agreement, (ii) does not obligate Acquiror or the
Surviving Corporation or any Subsidiary thereof to take any action or
make any payment with respect to time periods commencing after the
second anniversary of the Effective Time, and (iii) does not restrict in any
manner Acquiror's ability to establish new or different policies with
respect to severance for any other employees of Acquiror or the Surviving
Corporation and for any period commencing after the second anniversary
of the Effective Time.
ARTICLE VII
CLOSING CONDITIONS
7.01 Conditions to Obligations of Each Party Under This
Agreement. The respective obligations of each party to effect the Merger
and the other transactions contemplated by this Agreement shall be subject
to the satisfaction at or prior to the Effective Time of the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by applicable law:
(a) Shareholder Approval. This Agreement and the
Merger shall have been approved by the requisite vote of the shareholders
of the Company.
(b) No Action or Proceeding. There shall not have
been instituted and there shall not be pending any action or proceeding by
a Governmental Entity, and no such action or proceeding shall have been
approved by a Governmental Entity with authority to institute such an
action or proceeding, before any court of competent jurisdiction or
governmental agency or regulatory or administrative body, and no order
or decree shall have been entered in any action or proceeding before such
court, agency or body of competent jurisdiction: (i) imposing or seeking
to impose limitations on the ability of Acquiror to acquire or hold or to
exercise full rights of ownership of any securities of the Company or any
of its Subsidiaries; (ii) imposing or seeking to impose limitations on the
ability of Acquiror to combine and operate the business and assets of the
Company with any of Acquiror's Subsidiaries or other operations;
(iii) imposing or seeking to impose other sanctions, damages or liabilities
arising out of the Merger on Acquiror, Acquiror Sub, the Company or any
of their officers or directors; (iv) requiring or seeking to require
divestiture by Acquiror of all or any material portion of the business,
assets or property of the Company and its Subsidiaries; or (v) restraining,
enjoining or prohibiting or seeking to restrain, enjoin or prohibit the
consummation of the Merger, in each case, with respect to clauses (i)
through (iv) above, which would or is reasonably likely to result in a
Company Material Adverse Effect at or prior to or after the Effective
Time or, with respect to clauses (i) through (v) above, which would or is
reasonably likely to subject any of their respective officers or directors to
any penalty or criminal liability. Notwithstanding the foregoing, prior to
invoking the condition set forth in this section 7.01(b), the party seeking
to invoke it shall have used its reasonable efforts to have any pending or
approved such action or proceeding withdrawn or dismissed or such order
or decree vacated.
<PAGE>
(c) HSR Act. The applicable waiting period,
together with any extensions thereof, under the HSR Act shall have
expired or been terminated.
(d) Federal HMO Act and Wisconsin Insurance
Laws. The applicable approvals and any applicable waiting periods under
the Federal HMO Act and the Wisconsin Insurance Laws shall have been
received, waived or terminated and all notices required by such Acts
given.
(e) Other Approvals or Notices. All other
consents, waivers, approvals and authorizations required to be obtained
from, and all filings or notices required to be made with, any Government
Entity by Acquiror or the Company or any Subsidiary prior to
consummation of the transactions contemplated in this Agreement (other
than the filing and recordation of Merger documents in accordance with
the Wisconsin Law) shall have been obtained from and made with all
required Governmental Entities, except for such consents, waivers,
approvals or authorizations which the failure to obtain, or such filings or
notices which the failure to make, would not have a Company Material
Adverse Effect prior to or after the Effective Time or an Acquiror
Material Adverse Effect before or after the Effective Time or be
reasonably likely to subject the Company, Acquiror, Acquiror Sub or any
of their respective Subsidiaries or any of their respective officers,
directors, employees, agents or representatives to substantial penalty or
criminal liability.
7.02 Additional Conditions to Obligations of Acquiror and
Acquiror Sub. The obligations of Acquiror and Acquiror Sub to effect the
Merger and the other transactions contemplated in this Agreement are also
subject to the satisfaction at or prior to the Effective Time of the following
conditions, any or all of which may be waived, in whole or in part:
(a) Representations and Warranties. Each of the
representations and warranties of the Company contained in this
Agreement shall have been true and correct in all material respects when
made and the information contained therein, as updated by any Update
Schedule, taken as a whole, shall not have materially adversely changed;
each of the representations and warranties contained in this Agreement
shall be true and correct in all material respects as of the Effective Time.
Acquiror shall have received a certificate of the Chief Executive Officer
and Chief Financial Officer of the Company to that effect.
(b) Agreements and Covenants. The Company
shall have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be performed or
complied with by it on or prior to the Effective Time, except to the extent
failure to perform is caused by or is consented to by Acquiror or Acquiror
Sub. Any breach by the Company of its obligations under section 5.02(d)
shall be deemed to be material noncompliance for purposes of this
section 7.02(b). Acquiror shall have received a certificate of the Chief
Executive Officer and Chief Financial Officer of the Company to that
effect.
(c) Consents Under Agreements. The Company
shall have obtained the third-party consents described in
subsection 6.03(b)(i), except those for which the failure to obtain such
consents and approvals would not have a Company Material Adverse
Effect prior to or after the Effective Time or an Acquiror Material
Adverse Effect before or after the Effective Time, other than as
contemplated by subsection 6.03(b)(ii).
(d) Opinion of Counsel. The Acquiror and the
Acquiror Sub shall have received an opinion of Messrs. Reinhart,
Boerner, Van Deuren, Norris & Rieselbach, s.c. counsel to the Company,
addressed to Acquiror and Acquiror Sub, dated as of the Effective Time,
and satisfactory in form and substance to Acquiror, Acquiror Sub and its
counsel, to the following effect:
(i) The Company and each Subsidiary is a
corporation existing under the laws of the State of Wisconsin and, based
solely on a certificate of the Secretary of State of Wisconsin, (a) has filed
with the Secretary of State during its most recently completed report year
the required annual report; (b) is not the subject of a proceeding under
Wisconsin Statutes section 180.1421, to cause its administrative
dissolution; (c) no determination has been made by the Secretary of State
that grounds exist for such action with respect to the Company or any
Subsidiary; (d) no filing has been made with the Secretary of State of a
decree of dissolution with respect to the Company or any Subsidiary; and
(e) Articles of Dissolution of the Company or any Subsidiary have not
been filed with the Secretary of State. Immediately prior to the Effective
Time, the Company was the sole registered holder of record of the
number of shares of stock or equity interests in its Subsidiaries as is set
forth in the Agreement and the Company Disclosure Schedule with respect
to section 3.03(d). The Company and its Subsidiaries have the corporate
power to carry on their respective businesses as currently being conducted.
(ii) The Agreement and Plan of Merger (the
"Agreement") is a legal, valid and binding obligation of the Company
(a) except as the Agreement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally; and (b) subject to general
principles of equity including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability
of specific performance, injunctive relief or other equitable remedies,
regardless of whether considered in a proceeding in equity or at law.
Counsel expresses no opinion with respect to section 8.03(e) of the
Agreement. The execution, delivery and performance by the Company of
the Agreement have been duly authorized by all necessary corporation
action, including the requisite approval of the shareholders of the
Company. Under the Wisconsin Business Corporation Law and the
Company's Articles of Incorporation and By-Laws, the Company's
shareholders and Board of Directors properly approved the Merger in
accordance with the terms of the Agreement. Upon filing the Articles of
Merger as contemplated by the Agreement, the Merger shall be effective
under Wisconsin law.
(iii) The execution and delivery of the
Agreement and the performance by the Company of its terms do not
[a] contravene or conflict with any provision of the Articles of
Incorporation or By-Laws of the Company; or [b] violate any order,
judgment or decree of any Wisconsin or federal court or governmental
instrumentality to which the Company is subject and of which such
counsel has knowledge.
(iv) The authorized capital stock of the
Company consists of 12,000,000 shares of capital stock which are
comprised of 2,000,000 shares of preferred stock, par value $.01 per
share, none of which are issued and outstanding, and 10,000,000
authorized shares of Company Common Stock, par value $.01 per share,
of which 4,532,883 shares are issued and outstanding, fully paid and
nonassessable except as set forth in Wisconsin Statutes
section 180.0622(2)(b), as interpreted. To the knowledge of such counsel,
the Company does not have outstanding any stock or securities convertible
into or exchangeable for any shares of capital stock or any preemptive
rights or other rights to subscribe for or to purchase, or any options for
the purchase of, or any agreements providing for the issuance (contingent
or otherwise) of, or any calls, commitments, rights or claims of any other
character relating to the issuance of, any capital stock or any stock or
securities convertible into or exchangeable for any capital stock other than
as set forth in [a] the Articles of Incorporation and [b] the Agreement or
the Disclosure Schedules. To the knowledge of such counsel, except as
set forth in the Articles of Incorporation and as set forth in the Agreement
or the Disclosure Schedules, the Company is not subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of capital stock of the Company.
(v) There are no preemptive rights of
stockholders under the Articles of Incorporation of the Company or as a
matter of law under the Business Corporation Law of Wisconsin with
respect to the Agreement or the Merger.
(vi) To the knowledge of such counsel, there
is no action, suit, investigation or proceeding pending or threatened
against the Company or any properties or rights of the Company by or
before any court, arbitrator or administrative or governmental body which
questions the validity of the Agreement or any action which has been or is
to be taken by the Company thereunder.
7.03 Additional Conditions to Obligations of the Company.
The obligation of the Company to effect the Merger and the other
transactions contemplated in this Agreement is also subject to the
satisfaction at or prior to the Effective Time of the following conditions,
any or all of which may be waived, in whole or in part;
(a) Representations and Warranties. Each of the
representations and warranties of Acquiror contained in this Agreement:
(A) with respect to those representations and warranties that are qualified
by reference to "materiality" or "Acquiror Material Adverse Effect," shall
be true and correct in all respects as of the Effective Time, as though
made on and as of the Effective Time and (B) with respect to all other
representations and warranties, shall be true and correct in all material
respects as of the Effective Time, as though made on and as of the
Effective Time. The Company shall have received a certificate of the
Chief Executive Officer and Chief Financial Officer of Acquiror to that
effect.
(b) Agreements and Covenants. Acquiror and
Acquiror Sub shall have performed or complied in all material respects
with all agreements and covenants required by this Agreement to be
performed or complied with by each of them on or prior to the Effective
Time. The Company shall have received a certificate of the Chief
Executive Officer and Chief Financial Officer of Acquiror to that effect.
(c) Fairness Opinion. The Company shall have
received from Salomon Brothers Inc. an opinion, dated as of the date of
the Proxy Statement, to the effect that the consideration which the
Company's shareholders will receive pursuant to the Merger is fair to the
Company's shareholders from a financial point of view.
(d) Opinion of Counsel. The Company shall have
received an opinion of Messrs. Hirn Doheny Reed & Harper, counsel to
Acquiror and Acquiror Sub, addressed to the Company, dated as of the
Effective Time, and satisfactory in form and substance to the Company
and its counsel, to the following effect:
(i) Acquiror is a corporation existing in
good standing under the laws of the State of Delaware, based solely on a
certificate of the Delaware Secretary of State. Acquiror Sub is a
corporation existing in good standing under the laws of the state of
Wisconsin, based solely on a certificate of the Wisconsin Secretary of
State. Acquiror owns, directly or indirectly, all of the capital stock of
Acquiror Sub.
(ii) The execution, delivery and performance
of the Agreement and Plan of Merger (the "Agreement") has been duly
authorized by all requisite corporate action on the part of Acquiror and
Acquiror Sub. The Agreement constitutes the legally valid and binding
obligations of Acquiror and Acquiror Sub, enforceable in accordance with
its terms, subject to the following qualifications: [a] the enforceability
against Acquiror or Acquiror Sub of the Agreement in accordance with its
terms may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally; [b] the
enforceability of the Agreement is subject to the effect of general
principles of equity and the possible unavailability of specific performance
or injunctive relief regardless of whether considered in a proceeding in
equity or at law; and [c] no opinion is expressed as to any provision of the
Agreement providing for the indemnification of persons for liability under
federal or other securities laws.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after approval of
this Agreement and the Merger by the shareholders of the Company:
(a) by mutual written consent of Acquiror and the
Company;
(b) by either Acquiror or the Company in the event
the conditions to such party's (the "Nonfailing Party") obligations under
Article VII shall not have been met or waived by the Nonfailing Party on
or prior to March 31, 1995 (provided, however, that this date may be
extended by any party by written notice to the other parties for not more
than 60 days thereafter if the Merger shall not have been consummated as
a direct result of such party's (the "Failing Party") having failed (i) to
satisfy the conditions in subsection 7.01(c) or (d), (ii) to resolve any action
or proceeding as required by subsection 7.01(b) or (iii) to cure any failure
by the Failing Party to perform in all material respects any other covenant
or agreement required by this Agreement to be performed or complied
with by the Failing Party prior to the Effective Time which is capable of
being cured), but only if the party terminating has not caused the condition
giving rise to termination to be not satisfied through its own action or
inaction;
(c) by either Acquiror or the Company if any
decree, permanent injunction, judgment, order or other action by any
court of competent jurisdiction or any Governmental Entity preventing or
prohibiting consummation of the Merger shall have become final and
nonappealable;
(d) by Acquiror, if (A) the Board of Directors of
the Company withdraws, modifies or changes in a manner materially
adverse to Acquiror its recommendation of this Agreement or Merger or
shall have resolved to do any of the foregoing, or (B) the Board of
Directors of the Company shall have recommended to the shareholders of
the Company any proposed acquisition of the Company by any Person or
any "group" (as such term is defined under section 13(d) of the Exchange
Act) other than Acquiror and its Affiliates by (i) merger, consolidation,
share exchange, business combination or other similar transaction,
(ii) purchase of all or a substantial part of the assets of the Company and
its Subsidiaries, taken as a whole, or (iii) the acquisition of more than
50% of the Company's outstanding equity securities (a "Competing
Transaction") or resolved to do so, or (C) a tender offer or exchange offer
for 50% or more of the outstanding shares of capital stock of the
Company is commenced, the Board of Directors of the Company, within
10 business days after such tender offer or exchange offer is so
commenced, either fails to recommend against acceptance of such tender
offer or exchange offer by its shareholders or takes no position with
respect to the acceptance of such tender offer or exchange offer by its
shareholders;
(e) by the Company if, in the exercise of its
judgment as to its fiduciary duties to its shareholders as imposed by
applicable law and, after consultation with and receipt of advice from
outside legal counsel, the Company's Board of Directors determines that
such termination is required by reasons of any Competing Transaction
being made or proposed.
(f) by Acquiror, if any Update Schedule contains
disclosures of any fact or condition which makes untrue, or shows to have
been untrue, any representation or warranty by the Company in this
Agreement, unless concurrently with the delivery of the Update Schedule,
the Company represents and warrants that the disclosed fact or condition
can and will be corrected at the Company's expense prior to the Effective
Time; provided that the effect of the fact or condition so disclosed upon
the representation or warranty so affected constitutes a Company Material
Adverse Effect.
8.02 Effect of Termination. Subject to the remedies of the
parties set forth in section 8.03(c), in the event of the termination of this
Agreement pursuant to section 8.01, this Agreement shall forthwith
become void, and, subject to sections 8.03(c) and (d), there shall be no
liability under this Agreement on the part of Acquiror, Acquiror Sub or
the Company or any of their respective officers or directors and all rights
and obligations of each party hereto shall cease. The Acquiror's
Confidentiality Agreement shall survive any termination of this
Agreement.
8.03 Expenses.
(a) Except as provided in section 8.03(c), all
Expenses incurred by the parties shall be borne solely and entirely by the
party which has incurred the same. The Company shall pay for all
Expenses related to printing, filing and mailing the Proxy Statement and
all SEC and other regulatory filing fees incurred in connection with the
Proxy Statement.
(b) "Expenses" as used in this Agreement shall
include all reasonable out-of-pocket expenses (including, without
limitation, all fees and expenses of counsel, accountants, investment
bankers, experts and consultants to a party and its Affiliates) incurred by a
party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement,
the preparation, printing, filing and mailing of the Proxy Statement, the
solicitation of shareholder approvals and all other matters related to the
closing of the transactions contemplated by this Agreement.
(c) The Company and Acquiror each agree that
with respect to any termination of this Agreement pursuant to
section 8.01(b) as a direct result of a material intentional breach by a party
of any of its covenants or agreements contained in this Agreement, all
remedies available to the other party either in law or equity shall be
preserved and survive the termination of this Agreement.
(d) If all conditions to the obligations of a party at
Closing contained in Article VII of this Agreement have been satisfied (or
waived by the party entitled to waive such conditions), and the other party
does not proceed with the Closing, all remedies available to the other
parties, either at law or in equity, on account of such failure to close,
including, without limitation, the right to seek specific performance of this
Agreement as well as the right to pursue a claim for damages on account
of a breach of this Agreement, shall be preserved and shall survive any
termination of this Agreement.
(e) The Company agrees that if this Agreement is
terminated pursuant to section 8.01(d) or section 8.01(e), Company shall
pay to Acquiror the sum of $6,140,000. Such payment shall be made as
promptly as practicable but in no event later than the third business day
following termination of this Agreement and shall be made by wire
transfer of immediately available funds to an account designated by
Acquiror. The Company and Acquiror each agree that the payment
provided for in section 8.03(e) shall be the sole and exclusive remedy of
Acquiror upon any termination of this Agreement as described in section
8.03(e) and such remedies shall be limited to the sum stipulated in section
8.03(e) regardless of the circumstances (including willful or deliberate
conduct) giving rise to such termination; provided that the provisions of
this sentence shall in no way affect the rights of the parties under that
certain Stock Option Agreement of even date herewith.
ARTICLE IX
GENERAL PROVISIONS
9.01 Non-Survival of Representations and Warranties. The
respective representations and warranties of the parties in this Agreement
shall expire with, and be terminated and extinguished upon, consummation
of the Merger or termination of this Agreement, and thereafter neither the
Company, Acquiror nor any of their respective officers, directors or
employees shall have any liability whatsoever with respect to any such
representation or warranty. This section 9.01 shall have no effect upon
any other obligation of the parties hereto, whether to be performed before
or after consummation of the Merger.
9.02 Notices. All notices and other communications given
or made pursuant to this Agreement shall be in writing and shall be
deemed to have been duly given or made upon receipt, if delivered
personally, on the third business day following deposit in the U.S. mail if
mailed by registered or certified mail (postage prepaid, return receipt
requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like changes of address) or
when sent by electronic transmission to the telecopier number specified
below with receipt acknowledged:
(a) If to Acquiror or Acquiror Sub:
Humana Inc.
500 West Main Street
P.O. Box 1438
Louisville, KY 40201-1438
Telecopier No: 502-580-3615
Attention: W. Roger Drury
Chief Financial Officer
With a copy to:
Humana Inc.
500 West Main Street
P.O. Box 1438
Louisville, KY 40201-1438
Telecopier No: 502-580-3699
Attention: Walter E. Neely
Vice President & Associate General Counsel
(b) If to the Company:
CareNetwork, Inc.
111 West Pleasant Street
Milwaukee, WI 53212-0359
Telecopier No: 414-223-0168
Attention: Elwood Kleaver, President
<PAGE>
With a copy to:
Reinhart, Boerner, Van Deuren,
Norris & Rieselbach, s.c.
1000 North Water Street
Suite 2100
Milwaukee, WI 53202
Telecopier No: 414-298-8097
Attention: James M. Bedore, Esq.
9.03 Amendment. This Agreement may be amended by the
parties by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided, however, that
after approval of this Agreement by the shareholders of the Company, no
amendment may be made without further approval of such shareholders,
which amendment would reduce the amount or change the type of
consideration into which each share of Company Common Stock shall be
converted pursuant to this Agreement upon consummation of the Merger.
This Agreement may not be amended except by an instrument in writing
signed by each of the parties hereto.
9.04 Waiver. At any time prior to the Effective Time, any
party may (a) extend the time for the performance of any of the
obligations or other acts of any other party, (b) waive any inaccuracies in
the representations and warranties of any other party contained in this
Agreement or in any document delivered pursuant to this Agreement and
(c) waive compliance by any other party with any of the agreements or
conditions contained in this Agreement. Notwithstanding the foregoing,
no failure or delay by either party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise of any
other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided
by law. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by a party or parties to be bound thereby.
9.05 Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
9.06 Severability. If any term or other provision of this
Agreement is finally adjudicated by a court of competent jurisdiction to be
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
9.07 Entire Agreement. This Agreement (together with the
Acquiror's Confidentiality Agreement, the Stock Option Agreement, the
Exhibits, the disclosure schedules to this Agreement and the other
documents delivered pursuant hereto), constitutes the entire agreement of
the parties and supersedes all prior agreements and undertakings, both
written and oral, between the parties, or any of them, with respect to the
subject matter hereof. Except as provided in the Stock Option Agreement,
the parties hereby acknowledge that, no party shall have the right to
acquire or shall be deemed to have acquired shares of common stock of
the other party pursuant to the Merger until the consummation thereof.
9.08 Assignment. This Agreement shall not be assigned,
whether by operation of law or otherwise.
9.09 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of and be enforceable by each party
and its respective successors, and nothing in this Agreement, express or
implied, other than pursuant to section 2.04 and sections 6.06 and 6.08 or
the right to receive the consideration payable in the Merger pursuant to
Article II, is intended to or shall confer upon any other Person any right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
9.10 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Wisconsin,
regardless of the laws that might otherwise govern under applicable
principles of conflicts of law.<PAGE>
9.11 Counterparts. This Agreement may be executed by
facsimile and in one or more counterparts, and by the different parties
hereto in separate counterparts, each of which when so executed shall be
deemed to be an original but all of which taken together shall constitute
one and the same agreement.
HUMANA INC.
BY: /S/Karen A. Coughlin
Karen A. Coughlin
Senior Vice President
HWS, INC.
BY: /S/Karen A. Coughlin
Karen A. Coughlin
Senior Vice President
CARENETWORK, INC.
BY: /S/Elwood I. Kleaver, Jr.
Elwood I. Kleaver, Jr.
President and Chief Executive Officer
OFFICERS AND DIRECTORS
OF
HUMANA INC.
*David A. Jones
Chairman of the Board The Humana Building
and Chief Executive Officer 500 West Main Street
P.O. Box 1438
Louisville, KY 40201-1438
*Wayne T. Smith
President and Chief "
Operating Officer
W. Roger Drury
Chief Financial Officer "
W. Larry Cash
Senior Vice President-
Finance and Operations "
Karen A. Coughlin
Senior Vice President
-Region II "
Philip B. Garmon
Senior Vice President
-Region I "
Arthur P. Hipwell
Senior Vice President,
General Counsel "
and Assistant Secretary
Ronald S. Lankford, M.D.
Senior Vice President
-Medical Affairs "
Jose G. Abreu
Vice President
-Medicare Sales "
George G. Bauernfeind
Vice President-Taxes "
Douglas R. Carlisle
Vice President-Region I "
James W. Doucette The Humana Building
Vice President 500 West Main Street
-Investments and Treasurer P.O. Box 1438
Louisville, KY 40201-1438
Robert A. Horrar
Vice President
-Human Resources "
Gail H. Knopf
Vice President
-Information Systems "
Jerry L. McClellan
Vice President
-Financial Services "
Mary M. McKinney
Vice President
-Internal Audit "
Sheri E. Mitchell
Vice President
-Quality & Service
Excellence "
James E. Murray
Vice President
and Controller "
Walter E. Neely
Vice President,
Associate General
General Counsel and
Assistant Secretary "
Bruce D. Perkins
Vice President-
Operations Region II "
Thomas D. Stroud The Humana Building
Vice President-Sales 500 West Main Street
and Marketing P.O. Box 1438
Louisville, KY 40201-1438
David W. Wille
Vice President
and Chief Actuary "
Joan O. Kroger The Humana Building
Secretary 500 West Main Street
P.O. Box 1438
Louisville, KY 40201-1438
Darlene A. Curlee
Assistant Secretary "
Kathleen Pellegrino
Assistant Secretary "
*K. Frank Austen, M.D. Brigham and Women's Hospital
Harvard Medical School
The Seeley G. Mudd Building
Room 604, 250 Longwood Ave.
Boston, MA 02115
*Michael E. Gellert Windcrest Partners
122 E. 42nd Street-49th Fl.
New York, NY 10168-0130
*John R. Hall Ashland Oil, Inc.
P.O. Box 391
Ashland, KY 41114
*David A. Jones, Jr. Chrysalis Ventures, Inc.
400 W. Market Street, Suite 1610
Louisville, KY 40202
*Irwin Lerner IML Associates Inc.
17 East Breenbrook Road
North Caldwell, NJ 07006
*W. Ann Reynolds, Ph.D. The Chancellor
The City University of New York
535 E. 80th Street
New York, NY 10021
