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Title: |
Agreement and Plan of Merger |
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Date: |
2004 |
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$57 |
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#1036477 |
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<SEQUENCE>2
<FILENAME>nyc501243.txt
<DESCRIPTION>EX 2.1 - AGREEMENT AND PLAN OF MERGER
<TEXT>
EXECUTION VERSION
===============================================================================
AGREEMENT AND PLAN OF MERGER
DATED AS OF
SEPTEMBER 15, 2004
BY AND AMONG
AMERICAN MEDICAL SECURITY GROUP, INC.,
PACIFICARE HEALTH SYSTEMS, INC.
AND
ASHLAND ACQUISITION CORP.
===============================================================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
ARTICLE I DEFINITIONS....................................................................................1
Section 1.1 Definitions........................................................................1
ARTICLE II THE MERGER....................................................................................8
Section 2.1 The Merger; Closing................................................................8
Section 2.2 Conversion of Shares...............................................................9
Section 2.3 Surrender and Payment..............................................................9
Section 2.4 Stock Options and Other Equity Awards.............................................11
Section 2.5 Adjustments.......................................................................12
Section 2.6 Withholding Rights................................................................12
Section 2.7 Lost Certificates.................................................................12
ARTICLE III CERTAIN GOVERNANCE MATTERS..................................................................12
Section 3.1 Articles of Incorporation of the Surviving Corporation............................12
Section 3.2 Bylaws of the Surviving Corporation...............................................12
Section 3.3 Directors and Officers of the Surviving Corporation...............................13
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................13
Section 4.1 Organization and Qualification; Charter Documents.................................13
Section 4.2 Corporate Authorization; Enforceability; Board Action.............................14
Section 4.3 Consents and Approvals; No Violations.............................................15
Section 4.4 Capitalization....................................................................16
Section 4.5 SEC Filings and Financial Statements..............................................17
Section 4.6 Absence of Certain Changes........................................................19
Section 4.7 Undisclosed Liabilities...........................................................19
Section 4.8 Litigation........................................................................19
Section 4.9 Compliance with Laws..............................................................19
Section 4.10 Reserves..........................................................................21
Section 4.11 Employee Benefit Plans............................................................21
Section 4.12 Taxes.............................................................................23
Section 4.13 Contracts.........................................................................23
Section 4.14 Intellectual Property.............................................................25
Section 4.15 Properties and Assets.............................................................25
Section 4.16 Environmental Matters.............................................................26
Section 4.17 Transactions with Affiliates......................................................27
Section 4.18 Insurance Issued by the Insurance Companies.......................................27
Section 4.19 Insurance.........................................................................28
Section 4.20 Adverse Communications............................................................28
Section 4.21 Capital or Surplus Maintenance....................................................28
Section 4.22 Disclosure Documents..............................................................28
Section 4.23 Opinions of Financial Advisors....................................................29
Section 4.24 Finders' or Advisors' Fees........................................................29
Section 4.25 Rating Matter.....................................................................29
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY...............................29
Section 5.1 Organization and Qualification; Charter Documents.................................30
Section 5.2 Corporate Authorization; Enforceability; Board Action.............................30
Section 5.3 Consents and Approvals; No Violations.............................................31
Section 5.4 SEC Filings and Financial Statements..............................................32
Section 5.5 Litigation........................................................................32
Section 5.6 Compliance with Laws..............................................................33
Section 5.7 No Parent Vote Required...........................................................34
Section 5.8 Parent Ownership of Company Securities............................................34
Section 5.9 Disclosure Documents..............................................................34
Section 5.10 Finders' or Advisors' Fees........................................................34
Section 5.11 Financing.........................................................................34
Section 5.12 Ownership and Operations of Merger Subsidiary.....................................34
ARTICLE VI COVENANTS....................................................................................35
Section 6.1 Conduct of the Company's Business Pending the Merger..............................35
Section 6.2 Preparation of Proxy Statement; Shareholder Meeting...............................38
Section 6.3 Access to Information; Confidentiality............................................39
Section 6.4 No Solicitation; Unsolicited Proposals............................................40
Section 6.5 Company Board of Directors' Recommendation........................................42
Section 6.6 Regulatory Filings; Reasonable Best Efforts.......................................43
Section 6.7 Employee Benefits.................................................................45
Section 6.8 Public Announcements..............................................................48
Section 6.9 Further Assurances................................................................48
Section 6.10 Notification of Certain Matters...................................................48
Section 6.11 Indemnification; D&O Insurance....................................................49
Section 6.12 Undertakings of Parent............................................................51
Section 6.13 FIRPTA Matters....................................................................51
ARTICLE VII CONDITIONS TO THE MERGER....................................................................52
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger........................52
Section 7.2 Conditions to Obligations of Parent and Merger Subsidiary.........................52
Section 7.3 Conditions to Obligation of the Company...........................................53
Section 7.4 Frustration of Closing Conditions.................................................54
ARTICLE VIII TERMINATION AND EXPENSES...................................................................54
Section 8.1 Termination.......................................................................54
Section 8.2 Effect of Termination.............................................................55
Section 8.3 Fees and Expenses.................................................................56
ARTICLE IX MISCELLANEOUS................................................................................57
Section 9.1 Non-Survival of Representations and Warranties and Agreements.....................57
Section 9.2 Representations and Warranties....................................................57
Section 9.3 Amendments; No Waivers............................................................57
Section 9.4 Notices...........................................................................58
Section 9.5 Successors and Assigns............................................................58
Section 9.6 Governing Law.....................................................................59
Section 9.7 Consent to Jurisdiction...........................................................59
Section 9.8 Waiver of Jury Trial..............................................................59
Section 9.9 Counterparts; Effectiveness.......................................................59
Section 9.10 Entire Agreement..................................................................59
Section 9.11 Third Party Beneficiaries.........................................................59
Section 9.12 Severability......................................................................60
Section 9.13 Specific Performance..............................................................60
Section 9.14 Construction......................................................................60
</TABLE>
<PAGE>
INDEX OF DEFINED TERMS
Acquisition Proposal.........................................................42
Actual Performance Amount....................................................47
affiliate....................................................................60
Agreement.....................................................................1
Antitrust Division...........................................................44
ASO Contracts.................................................................1
Beneficially Own..............................................................2
Beneficially Owning...........................................................2
Bonus Amount.................................................................47
Bonus Eligible Employee......................................................47
Business Day..................................................................2
Certificate...................................................................9
Client Contract...............................................................2
Closing.......................................................................8
Closing Date..................................................................8
Code..........................................................................2
Company.......................................................................1
Company Affiliated Group.....................................................23
Company Bonus Plans..........................................................47
Company Change in Recommendation.............................................42
Company Common Stock..........................................................9
Company Contracts............................................................24
Company Deferred Compensation Plans...........................................2
Company Disclosure Letter....................................................13
Company Employee Plans.......................................................21
Company Employees............................................................45
Company Intellectual Property................................................25
Company Options..............................................................11
Company Organizational Documents.............................................14
Company Permit................................................................2
Company Recommendation.......................................................39
Company Regulatory Filings...................................................20
Company Requisite Regulatory Approvals.......................................53
Company Rights...............................................................16
Company Rights Agreement.....................................................16
Company SEC Documents.........................................................2
Company Shareholder Approval.................................................14
Company Shareholder Meeting..................................................39
Company State Regulatory Filings.............................................18
Company Stock Option Plans...................................................11
Company Subsidiary Organizational Documents..................................14
Confidentiality Agreement....................................................40
Contract......................................................................2
Copyrights...................................................................25
Effective Time................................................................8
End Date.....................................................................54
Environmental Laws............................................................2
ERISA........................................................................21
ERISA Affiliate..............................................................21
Exchange Act.................................................................16
FTC..........................................................................44
GAAP..........................................................................2
Governmental Authority........................................................2
Governmental Consents........................................................53
Hazardous Material............................................................3
Health Care Laws..............................................................3
Health Plan...................................................................3
Health Plan Contract..........................................................3
Health Plan Members...........................................................3
Houlihan.....................................................................29
HSR Act......................................................................15
including....................................................................60
Indemnified Parties..........................................................49
Insurance Contract............................................................3
Insurance Products............................................................3
Insured.......................................................................4
Intellectual Property........................................................25
IP Licenses...................................................................4
JPMorgan.....................................................................29
knowledge of Parent...........................................................4
knowledge of the Company......................................................4
Law...........................................................................4
Leased Real Property.........................................................26
Leases........................................................................4
Liability.....................................................................4
Lien..........................................................................4
Litigation...................................................................19
Material Adverse Effect.......................................................4
Material Company Contract.....................................................5
Maximum Premium..............................................................51
Merger........................................................................1
Merger Consideration..........................................................9
Merger Subsidiary.............................................................1
Merger Subsidiary Common Stock................................................9
Monthly Average Actual Performance Amount....................................47
Option Exchange Ratio.........................................................5
Owned Real Property..........................................................25
Paid Expenses................................................................56
Parent........................................................................1
Parent Common Stock..........................................................11
Parent Disclosure Letter.....................................................29
Parent Permit.................................................................5
Parent Requisite Regulatory Approvals........................................54
Parent SEC Documents..........................................................6
Parent Trading Price..........................................................6
parties......................................................................61
party........................................................................61
Patents......................................................................25
Paying Agent..................................................................9
Payor.........................................................................6
Payor Contract................................................................6
Permitted Liens...............................................................6
Person........................................................................6
PPO...........................................................................6
Pre-Closing Period...........................................................35
Provider Contracts............................................................6
Providers.....................................................................6
Proxy Statement..............................................................38
Regulatory Material Adverse Effect...........................................44
Release.......................................................................7
Representative................................................................7
Restraints...................................................................52
SAP...........................................................................7
Sarbanes-Oxley Act...........................................................18
SEC...........................................................................7
SEC Material Company Contract................................................23
Securities Act...............................................................16
Severance Agreements.........................................................45
Software......................................................................7
Subsidiary....................................................................7
Superior Proposal............................................................42
Surviving Corporation.........................................................8
Tax Return....................................................................7
Taxes.........................................................................7
Termination Fee..............................................................56
Third Party...................................................................8
Title IV Plan................................................................21
TPA...........................................................................8
Trademarks...................................................................25
WBCL..........................................................................1
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
September 15, 2004, is entered into by and among AMERICAN MEDICAL SECURITY
GROUP, INC., a Wisconsin corporation (the "Company"), PACIFICARE HEALTH
SYSTEMS, INC., a Delaware corporation ("Parent"), and ASHLAND ACQUISITION
CORP., a newly-formed Wisconsin corporation and a wholly-owned subsidiary of
Parent ("Merger Subsidiary").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of the Company, Parent
and Merger Subsidiary deem it advisable and in the best interests of their
respective shareholders that the parties consummate the transactions
contemplated herein, upon the terms and subject to the conditions provided for
herein;
WHEREAS, in furtherance thereof, the respective Boards of Directors
of the Company, Parent (on its own behalf and as the sole shareholder of
Merger Subsidiary), and Merger Subsidiary have approved and adopted this
Agreement and resolved that the transactions contemplated hereby are advisable
and in the best interests of their respective shareholders, including the
consummation of the merger of Merger Subsidiary with and into the Company (the
"Merger") upon the terms and subject to the conditions set forth herein and in
accordance with the provisions of the Wisconsin Business Corporation Law (the
"WBCL"); and
WHEREAS, the Board of Directors of the Company has resolved to
recommend to its shareholders approval and adoption of this Agreement and the
transactions contemplated hereby (including the Merger), upon the terms and
subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained herein, the adequacy of which is hereby
acknowledged, and intending to be legally bound hereby, the parties hereby
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. When used herein, the following terms shall
have the respective meanings set forth below (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ASO Contracts" means Contracts entered into by the Company or any
Subsidiary for the administration of health care benefits or services for
which the applicable employer or other plan sponsor remains financially
responsible on a self-insured basis, and excluding any Insurance Contracts and
Health Plan Contracts.
"Beneficially Own" or "Beneficially Owning" shall have the meaning
set forth in Rule 13d-3 promulgated under the Exchange Act.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which banks are required or authorized to be closed in Green Bay,
Wisconsin.
"Client Contract" means any ASO Contract, Health Plan Contract,
Insurance Contract, Payor Contract or any other Contract pursuant to which a
Person pays a premium, reimbursement or other amount to the Company or any of
its Subsidiaries for furnishing goods or services to or for the benefit, or on
behalf, of such Person.
"Code" means the Internal Revenue Code of 1986.
"Company Deferred Compensation Plans" shall mean the Company's
Directors Deferred Compensation Plan, effective January 1, 2000, and the
Deferred Stock Agreement, dated as of November 17, 1998, between the Company
and the Chief Executive Officer of the Company.
"Company Permit" means all licenses, registrations, franchises,
permits, certificates, approvals, accreditation or other similar
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