<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
HealthPlan Services Corporation
(Name of Issuer)
Common Stock, $0.01 par value
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(Title of Class of Securities)
421959107
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(CUSIP Number)
Glenn W. Reed, Esq.
Executive Vice President and General Counsel
UICI
4001 McEwen Drive, Suite 200
Dallas, Texas 75244
(972) 392-6700
Copy to:
Robert J. Joseph, Esq.
Gardner, Carton & Douglas
321 North Clark Street, Suite 3400
Chicago, Illinois 60614
(312) 644-3000
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
October 5, 1999
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[ ].
Note. Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE> 2
SCHEDULE 13D
CUSIP No. 421959107 Page 2 of __ Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
UICI
I.R.S. Identification No. 75-2044750
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC/OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF 7 SOLE VOTING POWER
SHARES 3,941,499*
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BENEFICIALLY 8 SHARED VOTING POWER
0
OWNED BY -------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 3,941,499*
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PERSON 10 SHARED DISPOSITIVE POWER
WITH 0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,941,499*
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
28.8%
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14 TYPE OF REPORTING PERSON
CO
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* BENEFICIAL OWNERSHIP DISCLAIMED. SEE ITEM 5 BELOW.
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE,
AND THE SIGNATURE ATTESTATION.
<PAGE> 3
Item 1. Security and Issuer.
This statement relates to the common stock, par value $0.01 per share
(the "Common Stock"), of HealthPlan Services Corporation, a Delaware corporation
(the "Company"). The principal executive offices of the Company are located at
3501 Frontage Road, Tampa, Florida 33607.
Item 2. Identity and Background.
(a)-(c) and (f) This statement is being filed by UICI, a Delaware
corporation. The principal executive offices of UICI are located at 4001 McEwen
Drive, Suite 200, Dallas, Texas 75244.
UICI is a diversified financial services company which offers insurance
and financial services to niche consumer and institutional markets. UICI also
provides technology and outsourcing solutions to the insurance and health
services communities.
As to each of the executive officers and directors of UICI, the name,
business address, present principal occupation or employment and the name and
principal address of any corporation or other organization in which such
employment is indicated, are set forth on Schedule I hereto. Each of such
persons is a citizen of the United States.
(d) During the last five years, neither UICI nor, to the best of UICI's
knowledge, any of the individuals named in Schedule I hereto, has been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) During the last five years, neither UICI nor, to the best of UICI's
knowledge, any of the individuals named in Schedule I hereto, has been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Concurrently with entering into the Merger Agreement (defined in Item 4
below), UICI was granted the Option (defined in Item 4 below). None of the
triggering events permitting exercise of the Option have occurred as of the date
of this Schedule 13D. In the event that the Option becomes exercisable and UICI
wishes to purchase for cash the Company Common Stock subject thereto, UICI will
fund the exercise price from working capital or through other sources, which
could include borrowings.
Item 4. Purpose of Transaction.
The Company, UICI and UICI Acquisition Co., a Delaware corporation ("New
UICI Sub"), have entered into an Agreement and Plan of Merger, dated as of
October 5, 1999 (the "Merger Agreement"), which provides for a strategic
business combination involving UICI, UICI Acquisition Co. and the Company in a
merger transaction (the "Transaction"). The Transaction, which was unanimously
approved by the Boards of Directors of the constituent companies, is expected to
close in early 2000, shortly after all of the conditions to the consummation of
the Transaction are met or waived.
<PAGE> 4
In the Transaction, New UICI Sub will be merged into the Company, with
the Company as the surviving entity. As a result of the Transaction, UICI will
be the parent company of the Company.
The Merger Agreement is incorporated herein by reference to Exhibit 2 to
UICI's Current Report on Form 8-K dated October 5, 1999 (the "October 5, 1999
Form 8-K"), as filed with the Securities and Exchange Commission (the "SEC") on
October 7, 1999. The description of the Merger Agreement set forth herein does
not purport to be complete and is qualified in its entirety by the provisions of
the Merger Agreement.
Under the terms of the Merger Agreement, New UICI Sub will be merged
with and into the Company, with the Company being the surviving corporation. The
Company will be a wholly-owned subsidiary of UICI. Each outstanding share of
Common Stock of the Company will be canceled and converted into the right to
receive a fraction of a share of common stock, par value $.0l per share, of UICI
("UICI Common Stock"). The fraction will be determined based on an exchange
ratio that is, in turn, based on the average closing stock price of UICI Common
Stock for a period of 20 consecutive trading days ending on the third trading
day immediately prior to the effective date of the Transaction. The exchange
ratio will be calculated as follows:
<TABLE>
<CAPTION>
Price Range of UICI Common Stock (per share) Exchange Ratio
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<S> <C>
o Greater than $33.00 $9.50 / (average price of UICI Common Stock - $3.00)
o Less than or equal to $33.00 and greater than $30.00 .3167
o Less than or equal to $30.00, but greater than or $9.50 / (average price of UICI Common Stock)
equal to $28.00
o Less than $28.00, but greater than or equal to $23.00 .3393
o Less than $23.00, but greater than or equal to $21.00 $9.50 / (average price of UICI Common Stock + $5.00)
o Less than $21.00 .3654
</TABLE>
Based on the stock price of UICI on October 5, 1999, the Company's
stockholders would receive .3393 shares of UICI common stock for each share of
the Company's common stock they own. The Common Stock of the Company will then
be delisted from the New York Stock Exchange.
The Transaction is subject to customary closing conditions, including,
without limitation, the receipt of the required shareholder approval of the
Company; and the receipt of all necessary governmental approvals and the making
of all necessary governmental filings, including the filing of the requisite
notification with the Federal Trade Commission and the Department of Justice
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the expiration of the applicable waiting period thereunder. The Transaction is
also subject to receipt of opinions of counsel that the Transaction will qualify
as a tax-free reorganization and completion of the refinancing of the Company's
and UICI's bank lines of credit.
In addition, the Transaction is conditioned upon the effectiveness of a
registration statement to be filed by UICI with the SEC with respect to the UICI
Common Stock to be issued in the Transaction and the approval for listing of
such shares on the New York Stock Exchange. (See Article VII of the Merger
<PAGE> 5
Agreement.) A Company Shareholder meeting to vote upon the Transaction will be
convened as soon as practicable and is expected to be held in the fourth quarter
of 1999.
The Merger Agreement contains certain covenants of the Company regarding
the conduct of the business pending the consummation of the Transaction.
Generally, the Company must carry on its business in the ordinary course
consistent with past practice, may not pay dividends on common stock, and may
not issue any capital stock other than for the issuance of shares upon exercise
of existing stock options. The Merger Agreement also contains restrictions on,
among other things, charter and bylaw amendments, capital expenditures,
acquisitions, dispositions, incurrence of indebtedness, certain increases in
employee compensation and benefits, and affiliate transactions. (See Article VI
of the Merger Agreement.)
The Merger Agreement provides that, after the effectiveness of the
Transaction (the "Effective Time"), James K. Murray, Jr., the current Chairman
of the Board and Chief Executive Officer of the Company, will be appointed to
UICI's Board of Directors. Steven K. Arnold, presently head of UICI's student
health insurance division, will become President and Chief Executive Officer of
the Company.
The Merger Agreement may be terminated under certain circumstances,
including:
o by mutual consent of the parties;
o by either party if the merger has not become effective before
March 31, 2000;
o by either party if the Company stockholders do not approve the
merger agreement and the merger;
o by either party if any permanent injunction or action by any
governmental entity preventing the completion of the merger has
become final and non-appealable;
o by either party if there has been a breach of any representation
or warranty of the other party which, individually or in the
aggregate, would have a material adverse affect on that other
party or if there has been a breach in any material respect of
any agreement or covenant to be performed and complied with by
that other party under the merger agreement and the breach is
not curable, or if curable, is not cured within 30 days after
written notice of such breach is given to that other party by
the party not in breach;
o by UICI if the bank or financial institution under any financing
commitment fails to fund the loan to UICI because of a material
adverse change in the financial markets;
o by UICI if the Company Board (x) fails to recommend approval of
the merger agreement by the stockholders of the Company or
withdraws or amends or modifies in a manner adverse to UICI and
New UICI Sub its recommendation or approval of the merger
agreement, (y) makes any recommendation with respect to an
alternative acquisition other than a recommendation to reject
such alternative acquisition or (z) takes any action regarding
an alternative acquisition that would be prohibited by the "no
solicitation" provisions of the merger agreement; or
<PAGE> 6
o by the Company if such termination is necessary to allow the
Company to enter into an agreement with respect to a superior
proposal (subject to prior payment of the termination fee as
described below).
If the merger agreement is terminated, the merger will be deemed
abandoned and such termination will be without liability of any party under the
merger agreement except for liability for breach of the merger agreement and
except as set forth below in the following paragraph regarding termination fees.
If the merger agreement is terminated by UICI because the Company Board
fails to recommend approval of the merger (or withdraws or modifies its
recommendation), does not reject an alternative acquisition or takes any action
regarding an alternative acquisition that would be prohibited by the "no
solicitation" provisions of the merger agreement, then the Company must pay to
UICI within two business days after such termination, a fee of $5 million.
Similarly, if the Company terminates the merger agreement in order to accept a
superior proposal, then the Company must pay UICI within two business days of
such termination a fee of $5 million. If the merger agreement is terminated due
to the failure of the Company's stockholders to approve the merger agreement,
and at or prior to the time of the failure to approve the merger agreement an
alternative acquisition has been made public, and within eighteen months of such
termination an alternative acquisition with any third party is completed or an
agreement relating to an alternative acquisition is entered into by the Company,
then the Company must pay UICI a termination fee of $5 million.
Concurrently with entering into the Merger Agreement, the Company and
UICI entered into an option agreement (the "Option Agreement") granting, for no
additional consideration, an irrevocable option to purchase up to 1,500,000
shares of common stock of the Company at an exercise price of $7.375 per share
(the "Option"). The Option is exercisable under specified circumstances,
including if the Merger Agreement is terminated under circumstances giving rise
to the payment of a termination fee by the Company as described above.
The Option Agreement provides that, subsequent to the termination of the
Merger Agreement, UICI has the right to have such shares of the Company
registered under the Securities Act of 1933 for sale in a public offering.
The Option Agreement is filed as an Exhibit to this Schedule and is
incorporated herein by reference. The description of the Option Agreement set
forth herein does not purport to be complete and is qualified in its entirety by
the provisions of the Option Agreement.
Concurrently with entering into the Merger Agreement, UICI also entered
into Voting Agreements (the "Voting Agreements") with each of Automatic Data
Processing, Inc., James K. Murray, Jr., William Bennett, Richard Parker,
Shinnston Enterprises, Ltd. and Elm Grove Associates (collectively, the
"Stockholders"). Pursuant to the Voting Agreements, the Stockholders granted to
UICI irrevocable proxies to vote their shares in favor of the Transaction and
against any proposal that would compete with the Transaction. The Stockholders
also agreed not to sell, assign, pledge, transfer, or otherwise dispose of any
proxies granted pursuant to the Voting Agreements. The Voting Agreements
terminate upon the earliest to occur of the effective time of the Transaction or
the date on which the Merger Agreement is terminated in accordance with its
terms.
The Voting Agreements are incorporated herein by reference to Exhibits
99.2-7 of UICI's Current Report on Form 8-K dated October 5, 1999 (the "October
5, 1999 Form 8-K"), as filed with the
<PAGE> 7
Securities and Exchange Commission (the "SEC") on October 7, 1999. The
description of the Voting Agreements set forth herein does not purport to be
complete and is qualified in its entirety by the provisions of the Voting
Agreements.
Except as set forth in this Item 4, the Merger Agreement, the Option
Agreement or the Voting Agreements, neither UICI nor, to the best of UICI's
knowledge, any of the individuals named in Schedule I hereto, has any plans or
proposals which relate to or which would result in any of the actions specified
in clauses (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a)-(b) By reason of its execution of the Option Agreement, pursuant to
Rule 13d-3(d)(1)(i) promulgated under the Exchange Act, UICI may be deemed to
have sole voting and dispositive power with respect to the Common Stock subject
to the Option and, accordingly, may be deemed to beneficially own 1,500,000
shares of Common Stock, or approximately 10.98% of the Common Stock outstanding
on October 5, 1999 assuming exercise of the Option. However, UICI expressly
disclaims any beneficial ownership of the 1,500,000 shares of Common Stock which
are obtainable by UICI upon exercise of the Option, because the Option is
exercisable only in the circumstances set forth in Item 4, none of which has
occurred as of the date hereof.
By reason of entering into the Voting Agreements, UICI may be deemed to
have sole voting power with respect to the Common Stock subject to the Voting
Agreements and, accordingly, may be deemed to beneficially own 2,441,499 shares
of Common Stock or 17.91% of the outstanding Common Stock on October 5, 1999.
However, UICI expressly disclaims any beneficial ownership with respect to these
shares, because the voting power is limited solely to one particular matter and
does not entitle UICI to vote the shares generally.
Except as set forth above, neither UICI nor, to the best of UICI's
knowledge, any of the individuals named in Schedule I hereto, owns any Common
Stock.
(c) Except as set forth above, neither UICI nor, to the best of UICI's
knowledge, any of the individuals named in Schedule I hereto, has effected any
transaction in the Common Stock during the past 60 days.
(d) So long as UICI has not purchased the Common Stock subject to the
Option, UICI does not have the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, any of the Common
Stock.
(e) Inapplicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
The Merger Agreement contains certain customary restrictions on the
conduct of the business of the Company pending the Transaction, including
certain customary restrictions relating to the Common Stock. Except as provided
in the Merger Agreement, the Option Agreement or the Voting Agreements, or as
set forth herein, neither UICI nor, to the best of UICI's knowledge, any of the
individuals named in Schedule I hereto, has any contracts, arrangement,
understandings or relationships (legal or otherwise), with any person with
respect to any securities of the Company, including, but not limited to,
<PAGE> 8
transfer or voting of any securities, finder's fees, joint ventures, loan or
option arrangements, puts or calls, guarantees of profits, division of profits
or losses, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
UICI (Commission File No. 0-14320) hereby incorporates into this
Schedule the following exhibits by reference to the filing set forth below:
Exhibit
1. Agreement and Plan of Merger by and among UICI, UICI Acquisition Co. and
HealthPlan Services Corporation dated as of October 5, 1999 (incorporated
by reference to Exhibit 2 to UICI's October 5, 1999 Form 8-K)
2. Press release announcing that UICI has entered into a definitive merger
agreement contemplating the acquisition of HealthPlan Services Corporation
(Exhibit 99.1 to UICI's October 5, 1999 Form 8-K)
3. Voting Agreement dated October 5, 1999 between UICI and Automatic Data
Processing, Inc. (Exhibit 99.2 to UICI's October 5, 1999 Form 8-K)
4. Voting Agreement dated October 5, 1999 between UICI and James K. Murray,
Jr. (Exhibit 99.3 to UICI's October 5, 1999 Form 8-K)
5. Voting Agreement dated October 5, 1999 between UICI and Shinnston
Enterprises, Ltd. (Exhibit 99.4 to UICI's October 5, 1999 Form 8-K)
6. Voting Agreement dated October 5, 1999 between UICI and Elm Grove
Associates (Exhibit 99.5 to UICI's October 5, 1999 Form 8-K)
7. Voting Agreement dated October 5, 1999 between UICI and William Bennett
(Exhibit 99.6 to UICI's October 5, 1999 Form 8-K)
8. Voting Agreement dated October 5, 1999 between UICI and Robert Parker
(Exhibit 99.7 to UICI's October 5, 1999 Form 8-K)
The following exhibits are filed herewith:
9. Option Agreement, dated as of October 5, 1999, by and between UICI and the
Company.
<PAGE> 9
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.
UICI
Date October 14, 1999 By: /s/ GREGORY T. MUTZ
---------------------------------------
Gregory T. Mutz
President and Chief Executive Officer
<PAGE> 10
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF UICI
The name, business address, present principal occupation or employment,
and the name, principal business and address of any corporation or other
organization in which such employment is conducted, of each of the directors and
executive officers of UICI, a Delaware corporation ("UICI"), is set forth below.
If no business address is given, the director's or officer's address is UICI,
4001 McEwen Drive, Suite 200, Dallas, Texas 75244. Unless otherwise indicated,
each occupation set forth opposite an executive officer's name refers to
employment with UICI.
<TABLE>
<CAPTION>
Name Present Principal Occupation or Employment and Address
- ---- ------------------------------------------------------
<S> <C>
Ronald L. Jensen Chairman of the Board
Gregory T. Mutz President and Chief Executive Officer
Richard J. Estell Executive Vice President and Chief Operating Officer - Insurance Division
William P. Benac Executive Vice President and Chief Financial Officer
Glenn W. Reed Executive Vice President and General Counsel
William J. Gedwed Executive Vice President - Insurance Marketing and Operations
Warren B. Idsal Vice President - Strategic Planning and Mergers and Acquisitions
Vernon R. Woelke Vice President and Treasurer - Chief Accounting Officer
Charles T. Prater Vice President - Life Insurance Operations
Steven K. Arnold Vice President and Chief Executive Officer of Student Insurance and Special
Risk Groups
Richard T. Mockler Director
1444 Greathouse Road, Waxahachie, Texas 75165
Patrick J. McLaughlin Director
Managing Director of Emerald Capital Group, 100 Chetwynd Drive, Suite 202,
Rosemont, Pennsylvania 19010
Stuart D. Bilton Director
President & CEO of Chicago Trust Company, 171 North Clark Street, Chicago,
Illinois 60601
George H. Lane, III Director
Chairman and CEO of Lane Company, 5555 Glenridge Connector, Suite 700,
Atlanta, Georgia 30342
</TABLE>
<PAGE> 11
UICI
SCHEDULE 13D
EXHIBIT INDEX
Exhibit
1. Agreement and Plan of Merger by and among UICI, UICI Acquisition Co. and
HealthPlan Services Corporation dated as of October 5, 1999 (incorporated
by reference to Exhibit 2 to UICI's October 5, 1999 Form 8-K)
2. Press release announcing that UICI has entered into a definitive merger
agreement contemplating the acquisition of HealthPlan Services Corporation
(incorporated by reference to Exhibit 99.1 to UICI's October 5, 1999 Form
8-K)
3. Voting Agreement dated October 5, 1999 between UICI and Automatic Data
Processing, Inc. (incorporated by reference to Exhibit 99.2 to UICI's
October 5, 1999 Form 8-K)
4. Voting Agreement dated October 5, 1999 between UICI and James K. Murray,
Jr. (incorporated by reference to Exhibit 99.3 to UICI's October 5, 1999
Form 8-K)
5. Voting Agreement dated October 5, 1999 between UICI and Shinnston
Enterprises, Ltd. (incorporated by reference to Exhibit 99.4 to UICI's
October 5, 1999 Form 8-K)
6. Voting Agreement dated October 5, 1999 between UICI and Elm Grove
Associates (incorporated by reference to Exhibit 99.5 to UICI's October 5,
1999 Form 8-K)
7. Voting Agreement dated October 5, 1999 between UICI and William Bennett
(incorporated by reference to Exhibit 99.6 to UICI's October 5, 1999 Form
8-K)
8. Voting Agreement dated October 5, 1999 between UICI and Robert Parker
(incorporated by reference to Exhibit 99.7 to UICI's October 5, 1999 Form
8-K)
9. Option Agreement, dated as of October 5, 1999, by and between UICI and the
Company.
<PAGE> 1
OPTION AGREEMENT
OPTION AGREEMENT, dated as of October 5, 1999 by and between HealthPlan
Services Corporation, a Delaware corporation ("Grantor"), and UICI, a Delaware
corporation ("Acquiror").
WHEREAS, concurrently with the execution and delivery of this Agreement,
Grantor and Acquiror are entering into an Agreement and Plan of Merger, dated as
of the date hereof (the "Merger Agreement"), which provides, among other things,
upon the terms and subject to the conditions thereof, for the merger of Grantor
with and into a wholly-owned subsidiary of Acquiror (the "Merger"); and
WHEREAS, as a condition to Acquiror's willingness to enter into the
Merger Agreement, Acquiror has requested that Grantor agree, and Grantor has so
agreed, to grant to Acquiror an option with respect to certain shares of
Grantor's common stock, on the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, to induce Acquiror to enter into the Merger Agreement,
and in consideration of the mutual covenants and agreements set forth herein and
in the Merger Agreement, the parties hereto agree as follows:
1. Grant of Option. Grantor hereby grants Acquiror an irrevocable
option (the "Grantor Option") to purchase up to 1,500,000 shares, subject to
adjustment as provided in Section 6 hereof (such shares being referred to herein
as the "Grantor Shares") of common stock, $.01 par value, of Grantor (the
"Grantor Common Stock") in the manner set forth below at a price (the "Exercise
Price") per Grantor share of $7.38 payable in cash.
2. Exercise of Option. The Grantor option may be exercised by
Acquiror, in whole or in part, at any time or from time to time after the Merger
Agreement is terminated and a termination fee is payable under circumstances
which would entitle Acquiror to the termination fee under Section 9.2(b)(i) or
9.2(b)(ii) of the Merger Agreement.
In the event Acquiror wishes to exercise the Grantor
Option, Acquiror shall deliver to Grantor a written notice (an "Exercise
Notice") specifying the total number of Grantor Shares it wishes to purchase.
Each closing of a purchase of Grantor Shares (a "Closing") shall occur at a
place, on a date and at a time designated by Acquiror in an Exercise Notice
delivered at least two business days prior to the date of the Closing. The
Grantor Option shall terminate upon the earlier of: (i) the Effective Time; or
(ii) two years following the first event that triggers the obligation of Grantor
to pay the termination fee under Section 9.2(b)(i) or 9.2(b)(ii) of the Merger
Agreement (or if, at the expiration of such two year period the Grantor Option
cannot be exercised by reason of any applicable judgment, decree, order, law or
regulation, 10 business days after such impediment to exercise shall have been
removed or shall have become final and not subject to appeal). Notwithstanding
the foregoing, the Grantor Option may not be exercised if Acquiror is in
material breach of any of its representations or warranties, or in material
breach of any of its covenants or agreements, contained in this Agreement or in
the Merger Agreement. Upon the giving by Acquiror to Grantor of the Exercise
Notice and the tender of the applicable aggregate Exercise Price, Acquiror shall
be deemed to be the holder of record of the Grantor Shares issuable upon such
exercise, notwithstanding that the stock transfer books of Grantor shall then be
closed or that certificates representing such Grantor Shares shall not then be
actually delivered to Acquiror.
<PAGE> 2
3. Closing. At any Closing, (a) Grantor will deliver to Acquiror or
its designee a single certificate in definitive form representing the number of
Grantor Shares designated by Acquiror in its Exercise Notice, such certificate
to be registered in the name of Acquiror and to bear the legend set forth in
Section 7 and (b) Acquiror will deliver to Grantor the aggregate Exercise Price
for the Grantor Shares so designated and being purchased by wire transfer of
immediately available funds or certified check or bank check. Grantor shall pay
all expenses, and any and all United States federal, state and local taxes and
other charges that may be payable in connection with the preparation, issue and
delivery of its stock certificates under this Agreement.
4. Representations and Warranties and Covenants of Grantor. Grantor
represents and warrants to Acquiror that (a) Grantor is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder, (b) the execution and delivery of
this Agreement by Grantor and the consummation by Grantor of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Grantor and no other corporate proceedings on the part of Grantor
are necessary to authorize this Agreement or any of the transactions
contemplated hereby, (c) this Agreement has been duly executed and delivered by
Grantor, constitutes a valid and binding obligation of Grantor and, assuming
this Agreement constitutes a valid and binding obligation of Acquiror, is
enforceable against Grantor in accordance with its terms, (e) Grantor has taken
all necessary corporate action to authorize and reserve for issuance and to
permit it to issue, upon exercise of the Grantor Option in accordance with its
terms, and at all times from the date hereof through the expiration of the
Grantor Option will have reserved, 1,500,000 authorized and unissued Grantor
Shares, such amount being subject to adjustment as provided in Section 6, all of
which, upon their issuance and delivery in accordance with the terms of this
Agreement, will be validly issued, fully paid and nonassessable, (f) upon
delivery of the Grantor Shares to Acquiror upon the exercise of the Grantor
Option in accordance with its terms, Acquiror will acquire the Grantor Shares
free and clear of all claims, liens, charges, encumbrances and security
interests of any nature whatsoever, (g) the execution and delivery of this
Agreement by Grantor does not, and the consummation by Grantor of the
transactions contemplated hereby will not, violate, conflict with, or result in
a breach of any provision of, or constitute a default (with or without notice or
lapse of time, or both) under, or result in the termination of, or accelerate
the performance required by, or result in a right of termination, cancellation,
or acceleration of any obligation or the loss of a material benefit under, or
the creation of a lien, pledge, security interest or other encumbrance on assets
(any such conflict, violation, default, right of termination, cancellation or
acceleration, loss or creation, a "Violation") of Grantor pursuant to, (A) any
provision of the Certificate of Incorporation or bylaws of Grantor, (B) any
provisions of any material loan or credit agreement, note, mortgage, indenture,
lease, Grantor benefit plan or other agreement, obligation, instrument, permit,
concession, franchise, license or (C) any material judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Grantor or its
properties or assets, (h) the execution and delivery of this Agreement by
Grantor does not, and the performance of this Agreement by Grantor will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental authority, and (i) none of Grantor, any of its
affiliates or anyone acting on its or their behalf has issued, sold or offered
any security of Grantor to any person under circumstances that would cause the
issuance and sale of the Grantor Shares, as contemplated by this Agreement, to
be subject to the registration requirements of the Securities Act as in effect
on the date hereof and the issuance, sale and delivery of the Grantor Shares
hereunder would be exempt from the registration and prospectus delivery
requirements of the Securities Act, as in effect on the date hereof (and Grantor
shall not take any action which would cause the issuance, sale and delivery of
the Grantor Shares hereunder not to be exempt from such requirements). Grantor
agrees that any Grantor Shares issued to Acquiror upon the exercise of the
Grantor Option will be approved for listing on the New York Stock Exchange.
<PAGE> 3
5. Representations and Warranties of Acquiror. Acquiror represents
and warrants to Grantor that (a) Acquiror is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder, (b) the execution and delivery of this
Agreement by Acquiror and the consummation by Acquiror of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Acquiror and no other corporate proceedings on the part of
Acquiror are necessary to authorize this Agreement or any of the transactions
contemplated hereby, (c) this Agreement has been duly executed and delivered by
Acquiror and constitutes a valid and binding obligation of Acquiror, and,
assuming this Agreement constitutes a valid and binding obligation of Grantor,
is enforceable against Acquiror in accordance with its terms, and (d) Acquiror
is an Accredited Investor and any Grantor Shares acquired upon exercise of the
Grantor Option will be acquired for Acquiror's own account, for investment
purposes only and will not be, and the Grantor Option is not being, acquired by
Acquiror with a view to the public distribution thereof in violation of any
applicable provision of the Securities Act.
6. Adjustment Upon Changes in Capitalization. Without limitation to
any restriction on Grantor contained in this Agreement or in the Merger
Agreement, in the event of any change in Grantor Common Stock by reason of stock
dividends, splitups, mergers, (other than the Merger), recapitalizations,
combinations, exchange of shares or the like, the type and number of shares or
securities subject to the Grantor Option, and the purchase price per share
provided in Section 1, shall be adjusted appropriately to restore to Acquiror
its rights hereunder.
7. Restrictive Legends. Each certificate representing shares of
Grantor Common Stock issued to Acquiror hereunder, at a Closing, shall include a
legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE OPTION
AGREEMENT, DATED AS OF OCTOBER 5, 1999, A COPY OF WHICH MAY BE OBTAINED
FROM THE ISSUER UPON REQUEST.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Acquiror shall have
delivered to the other party a copy of a letter from the staff of the Securities
and Exchange Commission, or an opinion of counsel, in form and substance
satisfactory to the other party, to the effect that such legend is not required
for purposes of the Securities Act; (ii) the reference to the provisions of this
Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and in
circumstances that do not require the retention of such reference; and (iii) the
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such certificates shall
bear any other legend as may be required by law.
8. Registration Statement.
(a) If at any time or times after the Option has become
exercisable Grantor determines to file with the Securities and Exchange
Commission a registration statement covering any Grantor Common Stock (other
than Grantor Common Stock issuable to officers and employees pursuant to an
employee benefit plan registered on Form S-8), Grantor shall notify Acquiror, at
least 15 days prior to the
<PAGE> 4
filing of such proposed registration statement. If Acquiror requests Grantor in
writing, within 10 days of the receipt of notification from Grantor, to include
in such registration statement any Grantor Shares then held by Acquiror, then,
Grantor shall use its best efforts to include those Grantor Shares in the
registration statement, to have the registration declared effective and to keep
such registration current for a period of not less than 180 days. If Acquiror
decides not to (or is precluded from including) all of its Grantor Shares in any
registration statement thereafter filed by Grantor, Acquiror will nevertheless
continue to have the right under this Section 8(a) to include its Grantor Shares
in a future registration of Grantor.
(b) At any time, Acquiror may demand registration
under the Securities Act of all or part of the Grantor Shares then held by
Acquiror. Acquiror shall be limited to one demand under this Section 8(b) and
such demand shall be made by written notice to Grantor, which notice shall
specify the number of Grantor Shares requested to be registered. Upon receipt of
a written demand for registration under this Section 8(b), the Company shall use
its best efforts to register such Grantor Shares, to have the registration
statement declared effective and to keep such registration current for a period
of not less than 180 days.
(c) A registration effected under this Section 8 shall be
effected at Grantor's expense, except for underwriting discounts and commissions
and the fees and the expenses of counsel to Acquiror, and Grantor shall provide
to the underwriters such documentation (including certificates, opinions of
counsel and "comfort" letters from auditors) as are customary in connection with
underwritten public offerings as such underwriters may reasonably require. In
connection with any such registration, the parties agree (i) to indemnify each
other and the underwriters, if any, in the customary manner, (ii) if applicable,
to enter into an underwriting agreement in form and substance customary for
transactions of such type with the underwriters participating in such offering
and (iii) to take all further actions which shall be reasonably necessary to
effect such registration and sale (including, if the underwriters, if any, deem
it necessary, participating in road-show presentations).
9. Binding Effect; No Assignment; No Third Party Beneficiaries.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Except as
expressly provided for in this Agreement, neither this Agreement nor the rights
or the obligations of either party hereto are assignable, except by operation of
law, or with the written consent of the other party. Nothing contained in this
Agreement, expressed or implied, is intended to confer upon any person other
than the parties hereto and their respective permitted assigns any rights or
remedies of any nature whatsoever by reason of this Agreement.
10. Specific Performance. The parties recognize and agree that if
for any reason any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate and
irreparable harm or injury would be caused for which money damages would not be
an adequate remedy. Accordingly, each party agrees that, in addition to other
remedies, the other party shall be entitled to an injunction restraining any
violation or threatened violation of the provisions of this Agreement. In the
event that any action should be brought in equity to enforce the provisions of
the Agreement, neither party will allege, and each party hereby waives the
defense, that there is adequate remedy at law.
11. Entire Agreement. This Agreement and the Merger Agreement
(including the exhibits and schedules thereto) constitute the entire agreement
among the parties with respect to the subject matter hereof and thereof and
supersede all other prior agreements and understandings, both written and oral,
among the parties or any of them with respect to the subject matter hereof and
thereof.
<PAGE> 5
12. Further Assurances. Each party will execute and deliver all such
further documents and instruments and take all such further action as may be
necessary in order to consummate the transactions contemplated hereby.
13. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which shall remain in full force and effect. In
the event any court or other competent authority holds any provisions of this
Agreement to be null, void or unenforceable, the parties hereto shall negotiate
in good faith the execution and delivery of an amendment to this Agreement in
order, as nearly as possible, to effectuate, to the extent permitted by law, the
intent of the parties hereto with respect to such provision and the economic
effects thereof. If for any reason any such court or regulatory agency
determines that Acquiror is not permitted to acquire, the full number of shares
of Grantor Common Stock provided in Section 1 hereof (as the same may be
adjusted), it is the express intention of Grantor to allow Acquiror to acquire
or to require Grantor to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof. Each party agrees
that, should any court or other competent authority hold any provision of this
Agreement or part hereof to be null, void or unenforceable, or order any party
to take any action inconsistent herewith, or not take any action required
herein, the other party shall not be entitled to specific performance of such
provision or part hereof or to any other remedy, including but not limited to
money damages, for breach hereof or of any other provision of this Agreement or
part hereof as the result of such holding or order.
14. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if (i) delivered personally, or (ii) sent
by reputable overnight courier service, or (iii) telecopied (which is
confirmed), or (iv) five days after being 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):
A. If to Grantor, to:
HealthPlan Services Corporation
3501 Frontage Road
Tampa, Florida 33607
Attention: Phillip S. Dingle, Esq.
Telecopier No.: (813) 282-0490
and a copy to:
Fowler, White, Gillen, Boggs, Villareal & Banker, P.A.
501 East Kennedy Boulevard, Suite 1700
Tampa, Florida 33602
Attention: David C. Shobe, Esq.
Telecopier No.: (813) 228-9401
B. If to Acquirer, to:
UICI
4001 McEwen Boulevard, Suite 200
Dallas, Texas 75244
Attention: Glenn W. Reed, Esq.
Telecopier No.: (972) 392-6717
<PAGE> 6
with a copy to:
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street, Suite 3300
Chicago, Illinois 60610-4795
Attention: Charles R. Manzoni, Jr., Esq.
Telecopier No.: (312) 644-3381
15. Governing Law; Choice of Forum. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware applicable
to agreements made and to be performed entirely within such State and without
regard to its choice of law principles. Each of the parties hereto (a) consents
to submit itself to the personal jurisdiction of any federal court located in
the State of Delaware or any Delaware state court in the event any dispute
arises out of this Agreement or any of the transactions contemplated by this
Agreement, (b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and (c)
agrees that it will not bring any action relating to this Agreement or any of
the transactions contemplated by this Agreement in any court other than a
federal court sitting in the State of Delaware or a Delaware state court.
16. Interpretation. When a reference is made in this Agreement to a
Section such reference shall be to a Section of this Agreement unless otherwise
indicated. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". The descriptive headings herein are inserted for convenience of
reference only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
17. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed to be an original, but both of
which, taken together, shall constitute one and the same instrument.
18. Expenses. Except as otherwise expressly provided herein or in
the Merger Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses.
19. Amendments; Waiver. This Agreement may be amended by the parties
hereto and the terms and conditions hereof may be waived only by an instrument
in writing signed on behalf of each of the parties hereto, or, in the case of a
waiver, by an instrument signed on behalf of the party waiving compliance.
20. Replacement of Grantor Option. Upon receipt by Grantor 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 indemnification, and upon surrender and cancellation of
this Agreement, if mutilated, Grantor will execute and deliver a new Agreement
of like tenor and date.
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
HEALTHPLAN SERVICES CORPORATION
By: /s/ JAMES K. MURRAY, JR.
-----------------------------------------
Name: James K. Murray, Jr.
Title: Chairman and Chief Executive Officer
UICI
By: /s/ GREGORY T. MUTZ
-----------------------------------------
Name: Gregory T. Mutz
Title: President and Chief Executive Officer
