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Share Name | Share Symbol | Market | Type |
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Universal American Corp. New (delisted) | NYSE:UAM | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 9.97 | 0 | 01:00:00 |
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
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UNIVERSAL AMERICAN CORP
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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1.
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Title of each class of securities to which transaction applies:
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Common stock, par value $0.01 per share, of Universal American Corp.
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Aggregate number of securities to which transaction applies:
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56,620,063 shares of Universal American Corp. common stock issued and outstanding as of December 15, 2016; options to purchase 4,009,733 shares of Universal American Corp. common stock issued and outstanding as of December 15, 2016 with a weighted average per share exercise price of $6.88; and 2,213,647 restricted shares outstanding as of December 15, 2016 that will vest in accordance with the terms of the merger agreement.
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
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$10.00 per share of Universal American Corp. common stock.
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4.
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Proposed maximum aggregate value of transaction:
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$600,847,466.96
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This figure is the sum of:
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56,620,063 shares of Universal American Corp. common stock multiplied by $10.00 per share,
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4,009,733 shares of Universal American Corp. common stock subject to options with exercise prices less than $10.00, multiplied by $3.12 per share (which is the excess of $10.00 over the weighted average exercise price per share of $6.88), and
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2,213,647 shares of Universal American Corp. common stock subject to restricted shares that will vest in accordance with the terms of the merger agreement, multiplied by $10.00 per share.
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5.
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Total fee paid:
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$69,638.22
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The filing fee was calculated, in accordance with Section 14(g)(1)(A) of the Securities Exchange Act of 1934, as amended, by multiplying 0.0001159
by the sum of the proposed maximum aggregate value of the transaction.
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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1.
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Amount previously paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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Sincerely,
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Richard A. Barasch
Chairman of the Board and Chief Executive Officer
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1. | To consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of November 17, 2016 (as it may be amended, the “merger agreement”), by and among WellCare Health Plans, Inc., a Delaware corporation (“WellCare”), Wind Merger Sub, Inc., a Delaware corporation and an indirect wholly owned subsidiary of WellCare (“Merger Sub”), and the Company, pursuant to which Merger Sub will merge with and into the Company (the “merger”) and certain other transactions will be effected with the Company surviving as an indirect wholly owned subsidiary of WellCare; |
2. | To consider and cast an advisory (non-binding) vote on a proposal to approve certain agreements or understandings with, and items of compensation payable to, the Company’s named executive officers that are based on or otherwise related to the merger (the “golden parachute” compensation); |
3. | To consider and vote on a proposal to adjourn or postpone the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to adopt the merger agreement; and |
4. | To consider and vote on any other matters that properly come before the special meeting or any adjournment or postponement thereof. |
By Order of the Board of Directors,
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Anthony L. Wolk Executive Vice President, General Counsel and Secretary |
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— | the adoption of the merger agreement by the affirmative vote of holders of a majority of the outstanding shares of UAM common stock; |
— | the expiration or termination of the regulatory waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (referred to herein as the “HSR Act”); |
— | the receipt of all consents or the making of all required notices with respect to the Texas Department of Insurance (referred to herein as “TDI”) and the New York Department of Financial Services (referred to herein as “NYDFS”); |
— | the absence of any order or law of any governmental entity that enjoins or otherwise prohibits the consummation of the merger; |
— | the absence of a material adverse effect on the Company since the date of the merger agreement; |
— | the Company’s, WellCare’s and Merger Sub’s performance in all material respects of their obligations under the merger agreement; and |
— | the accuracy of the representations and warranties of the Company, WellCare and Merger Sub (subject in certain cases to certain materiality, knowledge and other qualifications). |
Q: | Why am I receiving these materials and who is soliciting my proxy? |
A: | You are receiving this Proxy Statement and proxy card because you own shares of UAM common stock. The Board of Directors is providing these proxy materials to give you information to determine how to vote in connection with the special meeting. The enclosed proxy is being solicited by the Company on behalf of the Board of Directors. |
Q: | When and where is the special meeting? |
A: | The special meeting will be held on [●], 2017, at 10:00 a.m. (Eastern Time), at the offices of the Company, located at 44 South Broadway, White Plains, New York 10601. |
Q: | Upon what am I being asked to vote on at the special meeting? |
A: | You are being asked: |
1. | to consider and vote on a proposal to adopt the merger agreement, pursuant to which Merger Sub will merge with and into the Company, with the Company surviving as an indirect wholly owned subsidiary of WellCare; |
2. | to consider and cast an advisory (non-binding) vote on a proposal to approve certain agreements or understandings with, and items of compensation payable to, the Company’s named executive officers that are based on or otherwise related to the merger (the “golden parachute” compensation); and |
3. | to consider and vote on a proposal to adjourn or postpone the special meeting (if necessary or appropriate) to solicit additional proxies if there are insufficient votes at the time of the special meeting to adopt the merger agreement. |
Q: | Why is the merger being proposed? |
A: | The Company’s purpose in proposing the merger is to enable holders of UAM common stock to receive, upon completion of the merger, $10.00 per share in cash, without interest and less applicable withholding taxes. After careful consideration, the Board of Directors has unanimously (a) approved and declared advisable the merger agreement, the merger and the transactions contemplated by the merger agreement, (b) declared that it is in the best interests of the stockholders of the Company that the Company enter into the merger agreement and consummate the merger on the terms and subject to the conditions set forth in the merger agreement, (c) directed that the merger agreement be submitted to a vote at a meeting of the stockholders of the Company, and (d) recommended to the holders of UAM common stock that they adopt the merger agreement. For a more detailed discussion of the conclusions, determinations and reasons of the Board of Directors for recommending that the Company undertake the merger on the terms of the merger agreement, see “The Merger (Proposal 1)—Reasons for the Merger” beginning on page 37. |
Q: | What will happen in the merger? |
A: | Pursuant to the merger, Merger Sub will merge with and into the Company and the Company will continue as the surviving corporation and become an indirect wholly owned subsidiary of WellCare. As a result of |
Q: | What will I receive in the merger? |
A: | If the merger is completed, as a holder of UAM common stock, you will be entitled to receive $10.00 in cash, without interest and less any applicable withholding taxes, for each share of UAM common stock that you own immediately prior to the effective time of the merger. For example, if you own 100 shares of UAM common stock, you will receive $1,000.00 in cash in exchange for your shares of UAM common stock, without giving effect to any applicable withholding taxes (other than (a) shares of UAM common stock held in the treasury of the Company or owned by the Company or any of its wholly owned subsidiaries, (b) shares of UAM common stock owned by WellCare or any of its affiliates (including Merger Sub), and (c) shares of UAM common stock whose holders have not voted in favor of adopting the merger agreement and have demanded and perfected (and not withdrawn or waived) their appraisal rights in compliance with Section 262 of the General Corporation Law of the State of Delaware). You will not own any shares of the capital stock in the surviving corporation. |
Q: | What happens to my stock options if the merger is completed? |
A: | Pursuant to the terms of the merger agreement, as of the effective time of the merger, each Company Option that is outstanding immediately prior to the effective time of the merger, whether or not then exercisable or vested, will be cancelled and converted into the right to receive an amount in cash equal to the excess, if any, of the per share merger consideration over the exercise price of such Company Option multiplied by the aggregate number of shares of UAM common stock in respect of such Company Option immediately before the effective time of the merger. The right to receive the foregoing cash amounts with respect to Company Options will vest and be payable (a) with respect to Company Options that are vested as of the effective time of the merger in accordance with their terms, at the effective time of the merger and (b) with respect to Company Options that are not vested in accordance with their terms at the effective time of the merger, subject to the applicable holder’s continued employment through the applicable vesting date, on the earlier of (i) the 12-month anniversary of the date that the effective time occurs (or the next payroll date following such anniversary) and (ii) the next payroll date following the date on which such Company Option would have otherwise vested in accordance with its terms, and in all cases, without any interest for the period from the effective time of the merger until such date. In addition, if the employment with WellCare (or any of its affiliates) of a holder of Company Options is, prior to the applicable payment date, terminated by WellCare (or any of its affiliates) for any reason other than “cause” or by the holder for “good reason” (in each case, as such term is defined in the merger agreement), the payment in respect of the Company Options will be accelerated to the next practicable payroll date after the date of termination. Company Options owned by members of management and the Board of Directors will be treated the same as outstanding Company Options held by other employees, except that any unvested awards owned by members of the Board of Directors will accelerate and vest at the effective time. |
Q: | What happens to my restricted shares if the merger is completed? |
A: | Pursuant to the terms of the merger agreement, as of the effective time of the merger, each Restricted Share that is outstanding immediately prior to the effective time of the merger will be cancelled and converted into the right to receive the per share merger consideration in cash. The right to receive the foregoing cash amounts with respect to Restricted Shares will vest and be payable (a) with respect to Restricted Shares that are vested as of the effective time of the merger in accordance with their terms, at the effective time of the merger and (b) with respect to Restricted Shares that are not vested in accordance with their terms at the effective time of the merger, subject to the applicable holder’s continued employment through the applicable vesting date, on the earlier of (i) the 12-month anniversary of the date that the effective time occurs (or the next payroll date following such anniversary) and (ii) the next payroll date following the date |
Q: | How does the per share merger consideration compare to the market price of UAM common stock prior to announcement of the merger? |
A: | The $10.00 per share merger consideration represents a premium of approximately (a) 12.5% relative to the Company’s closing stock price on November 16, 2016, the last trading day before the announcement of the transaction, (b) 27.0% compared to the 30-day volume-weighted average price (referred to herein as “VWAP”) for the period ended on November 16, 2016, (c) 34.4% compared to the 60-day VWAP for the period ended on November 16, 2016, and (d) 30.2% compared to the closing stock price on October 20, 2016, the last full trading day prior to WellCare’s indication of interest. |
Q: | What happens to my preferred stock if the merger is completed? |
A: | Unless the Company has redeemed each share of UAM preferred stock, prior to the effective time, as required by the certificate of designation, WellCare will cause the surviving corporation to redeem on the business day immediately following the merger, in whole and not in part, each share of UAM preferred stock that is issued and outstanding as of the effective time in accordance with the terms of the certificate of designation. |
Q: | What is the recommendation of the Board of Directors? |
A: | Based on the factors described in “The Merger (Proposal 1)—Reasons for the Merger” beginning on page 37, and “Advisory Vote on Golden Parachute Compensation (Proposal 2)” beginning on page 90, the Board of Directors recommends that you vote: |
— | “FOR” the adoption of the merger agreement (Proposal 1); |
— | “FOR” approval of the “golden parachute” compensation (Proposal 2); and |
— | “FOR” the approval of the adjournment or postponement of the special meeting (if necessary or appropriate) to solicit additional proxies if there are insufficient votes at the time of the special meeting to adopt the merger agreement (Proposal 3). |
Q: | Who can attend and vote at the special meeting? |
A: | All holders of UAM common stock at the close of business on [●], 201[●], the record date for the special meeting, will be entitled to vote (in person or by proxy) on the merger agreement at the special meeting or any adjournments or postponements of the special meeting. |
Q: | What vote is required to adopt the merger agreement? |
A: | The merger agreement will be adopted by the affirmative vote of a majority of the shares of UAM common stock outstanding on the record date. Because the required vote is based on the number of shares of UAM common stock outstanding rather than on the number of votes cast, failure to vote your shares (including as a result of broker non-votes) and abstentions will have the same effect as voting against the adoption of the merger agreement (Proposal 1). |
Q: | How are votes counted? |
A: | Votes will be counted by the inspector of election appointed for the special meeting, who will separately count “FOR” and “AGAINST” votes, abstentions and broker non-votes, and separately count votes in respect of each proposal. |
Q: | What is a quorum? |
A: | A quorum will be present if holders of a majority of all outstanding shares of UAM common stock entitled to vote on a matter at the special meeting are present in person or represented by proxy at the special meeting. If a quorum is not present at the special meeting, the special meeting may be adjourned or postponed from time to time until a quorum is obtained. If you submit a proxy, your shares will be counted to determine whether the Company has a quorum even if you abstain or fail to provide voting instructions on any of the proposals listed on the proxy card. If your shares are held in the name of a broker, and you do not tell the broker how to vote your shares on at least one of the proposals presented in this Proxy Statement, such shares will not be counted for purposes of determining the presence or absence of a quorum for the transaction of business at the special meeting. |
Q: | How many votes do I have? |
A: | You have one vote for each share of UAM common stock that you own as of the record date. |
Q: | May I vote in person? |
A: | Yes. You may attend the special meeting and vote your shares in person whether or not you sign and return your proxy card. If your shares are held of record by a broker and you wish to vote at the special meeting, you must obtain a proxy from such holder of record. |
Q: | How do I vote my UAM common stock? What do I need to do now? |
A: | Before you vote, you should read this Proxy Statement carefully and in its entirety, including the appendices, and carefully consider how the merger affects you. You may attend the special meeting and |
— | Mail , by completing, signing, dating and mailing the proxy card or vote instruction card and returning it in the postage-paid envelope provided; |
— | Telephone , by calling the toll-free number on the proxy card until 11:59 p.m. Eastern Time on [●], 2017. You will then be prompted to enter the control number printed on your proxy card and to follow the subsequent instructions. Submitting a proxy by telephone is available 24 hours a day. If you submit a proxy by telephone, it is not necessary to return the proxy card by mail; or |
— | The Internet , by submitting a proxy via the Internet until 11:59 p.m. (Eastern Time) on [●], 2017. The website for submitting a proxy via the Internet is www.proxyvote.com , and is available 24 hours per day. Instructions on how to submit a proxy via the Internet are located on the proxy card enclosed with this Proxy Statement. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and create an electronic voting form. If you submit a proxy via the Internet, it is not necessary to return the proxy card by mail. |
Q: | What is a proxy? |
A: | A proxy is your legal designation of another person to vote your share of UAM common stock. This written document describing the matters to be considered and voted on at the special meeting is a called a proxy statement. The document used to designate a proxy to vote your shares of UAM common stock is called a proxy card. |
Q: | If a stockholder gives a proxy, how are the UAM common stock voted? |
A: | Regardless of the method you choose to submit a proxy, the individuals named on the enclosed proxy card will vote your UAM common stock in the way that you indicate. When completing the Internet or Telephone processes or the proxy card, you may specify whether your UAM common stock should be voted “FOR” or “AGAINST” or to “ABSTAIN” from voting on, all, some or none of the specific items of business to come before the special meeting. |
Q: | What happens if I do not vote? |
A: | The vote to adopt the merger agreement is based on the total number of shares of UAM common stock outstanding on the record date, and not just the shares that are voted. If you do not vote, it will have the same effect as a vote “AGAINST” the merger proposal. If the merger is completed, whether or not you vote for the merger proposal, you will be paid the merger consideration for your shares of UAM common stock upon completion of the merger, unless you properly exercise (and do not withdraw or waive) your appraisal rights. See “The Special Meeting” and “The Merger (Proposal 1)—Appraisal Rights” beginning on pages 24 and 55, respectively, and Appendix B to this Proxy Statement. |
Q: | What happens if I do not return a proxy card by mail, vote via the Internet or telephone or attend the special meeting and vote in person? |
A: | Your failure to return your proxy card by mail, vote via the Internet or telephone or attend the special meeting and vote in person, will have the same effect as a vote “AGAINST” the adoption of the merger agreement. |
Q: | May I change my vote after I have mailed my signed proxy card? |
A: | Yes. Any person giving a proxy pursuant to this solicitation has the power to revoke and change it any time before it is voted. It may be revoked and/or changed at any time before it is voted at the special meeting by: |
— | giving written notice of revocation to the Company’s corporate secretary that you would like to revoke your proxy; |
— | submitting another proper proxy via the Internet, by telephone or by a later-dated written proxy; or |
— | attending the special meeting and voting by paper ballot in person. Your attendance at the special meeting alone will not revoke your proxy. |
Q: | What if I am a beneficial owner rather than a holder of record? |
A: | If you hold your shares with a broker, you are considered to be the beneficial owner of shares held in “street name”. Your broker, who is considered to be the holder of record with respect to your shares, is forwarding these proxy materials to you. As the beneficial owner, you have the right to direct your broker how to vote by filling out the voting instruction form provided by your broker. Telephone and Internet voting options may also be available to beneficial owners. As a beneficial owner, you are also invited to attend the special meeting, but you must obtain a legal proxy from the holder of record of your shares in order to vote in person at the special meeting. |
Q: | If my shares are held in “street name” by my broker, will my broker vote my shares for me? What if I fail to instruct my broker? |
A: | Your broker will not vote your shares on your behalf unless you provide instructions to your broker on how to vote. You should follow the directions provided by your broker regarding how to instruct it to vote your shares. Without those instructions, your shares will not be voted, which will have the same effect as voting “AGAINST” the adoption of the merger agreement (Proposal 1), but will have no effect for purposes of the approval of the advisory (non-binding) vote on the “golden parachute” compensation (Proposal 2) and the proposal to adjourn or postpone the special meeting, if necessary or appropriate, or to solicit additional proxies (Proposal 3). The instructions set forth below apply to stockholders of record (also referred to herein as “registered holders”) only and not those whose shares are held in the name of a nominee. |
Q: | Will my shares held in “street name” or another form of record ownership be combined for voting purposes with shares I hold of record? |
A: | No. Because any shares you may hold in “street name” will be deemed to be held by a different stockholder than any shares you hold of record, any shares so held will not be combined for voting purposes with shares you hold of record. Similarly, if you own shares in various registered forms, such as jointly with your spouse, as trustee of a trust or as custodian for a minor, you will receive, and will need to sign and return, a |
Q: | What happens if I sell my shares of UAM common stock before the special meeting? |
A: | If you transfer your shares of UAM common stock after the record date but before the special meeting you will, unless special arrangements are made, retain your right to vote at the special meeting, but will transfer the right to receive the merger consideration to the person to whom you transfer your shares. |
Q: | What does it mean if I receive more than one set of proxy materials? |
A: | This means you own shares of UAM common stock that are registered under different names or are in more than one account. For example, you may own some shares directly as a stockholder of record and other shares through a broker or you may own shares through more than one broker. In these situations, you will receive multiple sets of proxy materials. You must vote, sign and return all of the proxy cards or follow the instructions for any alternative voting procedure on each of the proxy cards that you receive in order to vote all of the shares you own. Each proxy card you receive comes with its own prepaid return envelope. If you submit your proxy by mail, make sure you return each proxy card in the return envelope that accompanies that proxy card. |
Q: | Have any stockholders already agreed to adopt the merger? |
A: | No. |
Q: | Who will own the Company after the merger? |
A: | Immediately following the closing of the merger, the Company will be an indirect wholly owned subsidiary of WellCare, a publicly traded company. |
Q: | What are the consequences of the merger to present members of management and the Board of Directors? |
A: | Shares of UAM common stock owned by members of management and the Board of Directors will be treated the same as shares held by other holders of UAM common stock. Company Options and Restricted Shares owned by members of management and the Board of Directors will be treated the same as outstanding Company Options and Restricted Shares held by other employees, except that any unvested awards owned by members of the Board of Directors will accelerate and vest at the effective time. For other payments and benefits to the Company’s named executive officers that are tied to or based on the merger, see “Advisory Vote on Golden Parachute Compensation (Proposal 2)” beginning on page 90. |
Q: | Is the merger subject to the satisfaction of any conditions? |
A: | Yes. The completion of the merger is subject to the satisfaction or waiver of the conditions described in “The Merger Agreement—Conditions to the Completion of the Merger” beginning on page 84. These conditions include, among others: |
— | the adoption of the merger agreement by the affirmative vote of holders of a majority of the outstanding shares of UAM common stock entitled to vote; |
— | the expiration or termination of the regulatory waiting period under HSR Act; |
— | the receipt of all consents or the making of all required notices with respect to the TDI and NYDFS (such consents, referred to herein as the “required Company consents”); |
— | the absence of any order or law of any governmental entity that restrains, enjoins or otherwise prohibits the consummation of the merger; |
— | the absence of a material adverse effect on the Company since the date of the merger agreement; |
— | the Company’s, WellCare’s and Merger Sub’s performance in all material respects of their obligations under the merger agreement; and |
— | the accuracy of the Company’s, WellCare’s and Merger Sub’s representations and warranties (subject in certain cases to certain materiality, knowledge and other qualifications). |
Q: | If the merger is completed, how will I receive cash for my shares? |
A: | If the merger agreement is adopted and the merger is consummated, and if you are the holder of record of your shares of UAM common stock immediately prior to the effective time of the merger ( i.e. , you have a stock certificate), you will be sent a letter of transmittal to complete and return to a paying agent to be designated by WellCare (referred to herein as the “paying agent”). In order to receive the $10.00 per share in cash, without interest and less any applicable withholding taxes, you must send the paying agent your validly completed letter of transmittal together with your UAM common stock certificates and other required documents as instructed in the separate mailing. Once you have properly submitted a completed letter of transmittal, you will receive cash for your shares. If your shares of UAM common stock are held in “street name” by your broker, you will receive instructions after the effective time of the merger from your broker as to how to effect the surrender of your “street name” shares and receive cash for those shares. |
Q: | What are the U.S. federal income tax consequences of the merger? |
A: | The merger will be a taxable event for U.S. federal income tax purposes. Each U.S. holder (as defined below in this Proxy Statement) will recognize a taxable gain or loss in an amount equal to the difference between the consideration received in the merger (prior to reduction for any applicable withholding taxes) and the U.S. holder’s adjusted tax basis in the shares of UAM common stock surrendered. A non-U.S. holder generally will not be subject to U.S. federal income tax on the gain, if any, recognized in the merger. See “The Merger (Proposal 1)—Certain Material U.S. Federal Income Tax Consequences” beginning on page 59 for a discussion of the material U.S. federal income tax consequences of the merger to certain U.S. holders and certain non-U.S. holders. The tax consequences of the merger will depend on the facts of your own situation. You are urged to consult your tax advisor for a full understanding of the tax consequences of the merger. |
Q: | When do you expect the merger to be completed? |
A: | In order to complete the merger, the closing conditions under the merger agreement must be satisfied or waived. The parties to the merger agreement currently expect to complete the merger in the second quarter of 2017, although the Company cannot assure completion by any particular date, if at all. Because the merger is subject to a number of conditions, the exact timing of the merger cannot be determined at this time. |
Q: | What happens if the merger is not completed? |
A: | If the merger agreement is not adopted by the holders of UAM common stock or if the merger is not completed for any other reason, the stockholders of the Company will not receive any payment for their shares of UAM common stock in connection with the merger agreement. Instead, UAM will remain an independent public company, UAM common stock will continue to be listed and traded on the NYSE and registered under the Exchange Act, and the Company will continue to file periodic reports with the SEC with respect to UAM common stock. Under specified circumstances, the Company may be required to pay to WellCare a fee with respect to the termination of the merger agreement, or may be entitled to seek |
Q:
|
Why am I being asked to cast an advisory (non-binding) vote to approve “golden parachute” compensation payable to certain of the Company’s named executive officers in connection with the merger? |
A: | The SEC rules require the Company to seek an advisory (non-binding) vote with respect to certain payments that will be made to the Company’s named executive officers in connection with the merger. |
Q: | What is the “golden parachute” compensation? |
A: | The “golden parachute” compensation is certain compensation that is tied to or based on the merger and payable to certain of the Company’s named executive officers. See “Advisory Vote on Golden Parachute Compensation (Proposal 2)” beginning on page 90. |
Q: | What vote is required to approve the advisory (non-binding) proposal on “golden parachute” compensation payable to certain of the Company’s named executive officers in connection with the merger? |
A: | The affirmative vote of the majority of the shares of UAM common stock present in person or represented by proxy at the special meeting and entitled to vote thereon and thereat is required for approval of the advisory (non-binding) proposal on “golden parachute” compensation. |
Q: | What will happen if stockholders do not approve the “golden parachute” compensation at the special meeting? |
A: | Approval of the “golden parachute” compensation is not a condition to completion of the merger. The vote with respect to the “golden parachute” compensation is an advisory vote and will not be binding on the Company or WellCare. If the merger agreement is adopted by the holders of UAM common stock and completed, the “golden parachute” compensation will, subject to the terms of the applicable arrangements, be paid to the Company’s named executive officers even if holders of UAM common stock fail to approve the golden parachute compensation. |
Q: | When should I send in my stock certificates? |
A: | You should send your stock certificates together with the letter of transmittal after the merger is consummated and not now. You will receive the letter of transmittal following the consummation of the merger. |
Q: | I do not know where my stock certificate is—how will I get my cash? |
A: | The materials you are sent after the completion of the merger will include the procedures that you must follow if you cannot locate your stock certificate. This will include an affidavit that you will need to sign attesting to the loss of your stock certificate. The Company may also require that you provide a customary indemnity agreement to the Company in order to cover any potential loss. |
Q: | What rights do I have to seek a valuation of my shares? |
A: | Under Delaware law, stockholders who do not vote in favor of the merger may exercise appraisal rights, but only if they have not voted in favor of the merger or consented to it in writing and are entitled to demand and have demanded the appraisal of such shares in accordance with, and have complied in all respects with the procedures of Section 262 of the General Corporation Law of the State of Delaware, which is the appraisal statute applicable to Delaware corporations. See “The Merger (Proposal 1)— |
Q:
|
How can I contact Universal American’s Transfer Agent? |
A: | UAM’s Transfer Agent is American Stock Transfer & Trust Company. You may contact them at the following address: |
Q: | Who will bear the cost of the proxy solicitation? |
A: | The expense of soliciting proxies in the enclosed form will be borne by the Company. We have retained D.F. King & Co., Inc. (referred to herein as “D.F. King”) a proxy solicitation firm, to solicit proxies in connection with the special meeting at a cost of approximately $15,000 plus reimbursement of out-of-pocket fees and expenses. In addition, we may reimburse brokers, banks and other custodians, nominees and fiduciaries representing beneficial owners of shares for their expenses in forwarding soliciting materials to such beneficial owners. Proxies may also be solicited by certain of our directors, officers and employees, personally or by telephone, e-mail, facsimile or other means of communication. No additional compensation will be paid for such services. See “Special Meeting—Expenses of Proxy Solicitation” beginning on page 27. |
Q: | Who can help answer my questions? |
A: | If you have any questions or need assistance voting your shares, please contact the Company’s proxy solicitor for the special meeting, “D.F. King”, toll-free at (800) 252-8173. |
— | Medicare Advantage: UAM serves the growing Medicare population by providing Medicare Advantage products to approximately 114,400 members as of September 30, 2016. Approximately 32% of the Medicare population in the United States is currently enrolled in Medicare Advantage plans; a type of Medicare health plan offered by private companies that contract with the federal government to provide enrollees with health insurance. |
— | Management Services Organization (MSO): UAM believes there is a significant opportunity to address the high cost and lack of coordination of health care for the majority of the Medicare fee-for-service population and have joined with provider groups to operate Accountable Care Organizations, or ACOs, that participate in the Medicare Shared Savings Program, known as the MSSP and the Next Generation ACO model. As of September 30, 2016, UAM operated 22 MSSP ACOs and one Next Generation ACO, with approximately 236,800 assigned Medicare fee-for-service beneficiaries. |
— | the timing to consummate the merger; |
— | the outcome of any legal proceeding that may be instituted against the Company or others relating to the merger agreement; |
— | negative effects from the pendency of the merger agreement, including business uncertainty and contractual restrictions; |
— | the effect of the announcement of the merger on the relationships between the Company and its doctors, members, beneficiaries, agents and vendors; |
— | the effect of the announcement of the merger on the Company’s operating results and business generally; |
— | the risk that a condition to the closing of the merger may not be satisfied and the merger may not be consummated; |
— | the risk of the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; |
— | the risk that a regulatory approval that may be required for the merger is not obtained or is obtained subject to conditions that are not anticipated; |
— | the ability of the Company to timely receive the required approval of its stockholders; |
— | the risk that the merger does not occur for any other reason; |
— | the possibility that costs or difficulties related to the merger will be greater than expected; |
— | the risk of unforeseen material adverse changes to the Company’s business and operations; |
— | the diversion of management time on merger-related issues and other risks described in the risk factors sections included or incorporated by reference in this Proxy Statement; |
— | the risk that UAM may experience damage to its reputation; |
— | the effect of extensive government regulation on UAM; |
— | the risk of downgrades in debt ratings, or corporate credit ratings of UAM; |
— | industry performance, general business, economic, regulatory and market and financial conditions; and |
— | the risk that market, social and political conditions (such as changes in government, war, political unrest and terrorism), pandemics, cyber-attacks or breaches, natural disasters or unfavorable economic conditions could have unpredictable negative effects on the Company’s business or results of operations. |
— | Submitting a Proxy by Mail. If you choose to have your shares voted at the special meeting by submitting a proxy by mail, simply mark your proxy, date and sign it, and return it in the postage-paid envelope provided. |
— | Submitting a Proxy by Telephone. You can have your shares voted at the special meeting by submitting a proxy by telephone by calling the toll-free number on the proxy card until 11:59 p.m. Eastern Time on [●], 2017. You will then be prompted to enter the control number printed on your proxy card and to follow the subsequent instructions. Submitting a proxy by telephone is available 24 hours a day. If you submit a proxy by telephone, it is not necessary to return the proxy card by mail. |
— | Submitting a Proxy by Internet. You can also have your shares voted at the special meeting by submitting a proxy via the Internet until 11:59 p.m. (Eastern Time) on [●], 2017. The website for submitting a proxy via the Internet is www.proxyvote.com , and is available 24 hours per day. Instructions on how to submit a proxy via the Internet are located on the proxy card enclosed with this Proxy Statement. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and create an electronic voting form. If you submit a proxy via the Internet, it is not necessary to return the proxy card by mail. |
— | Voting in Person. You can also vote by appearing and voting in person at the special meeting. |
— | giving written notice of revocation to the Company’s corporate secretary that you would like to revoke your proxy; |
— | submitting another proper proxy via the Internet, by telephone or by a later-dated written proxy; or |
— | attending the special meeting and voting by paper ballot in person at the special meeting. Your attendance at the special meeting alone will not revoke your proxy. |
— | WellCare, Party C and Party D provided indications of interest for the Texas Businesses within various ranges from $350,000,000 – $425,000,000 (implying $4.12 – $5.01 per share at the time of such indications of interest); and |
— | Party B provided a verbal indication of interest for a whole company transaction at a range of $6.75 – $7.25 per share in cash at the time of such indication of interest (with formal written confirmation of such indication of interest received by UAM on February 1, 2016). |
— | Party C for a taxable Texas Businesses transaction at a value of approximately $350,000,000 (implying $4.08 per share at the time of such indication of interest), which value was at the lower end of the range originally proposed by Party C; |
— | WellCare for a non-taxable Texas Businesses transaction at a value of approximately $390,000,000 (implying $4.55 per share at the time of such indication of interest), which value was at the higher end of the range originally proposed by WellCare but included an escrow and other contingencies that could have lowered such value; and |
— | Party B for a whole company transaction at a value of approximately $567,600,000 (implying $7.00 per share at the time of such indication of interest), contingent on the consummation of the Traditional Insurance Business sale, which value was at the midpoint of the range originally proposed by Party B. |
— | the Board of Directors’ knowledge of the Company’s businesses, assets, financial condition, results of operations and prospects (as well as the risks involved in achieving those prospects), the nature of the Company’s businesses and the industries and regulatory environment in which the Company operates and competes and the market for UAM common stock; |
— | the current and historical market prices of UAM common stock and recent trading activity, including the fact that the per share merger consideration of $10.00 represents a premium of approximately (a) 12.5% relative to the Company’s closing stock price on November 16, 2016, the last trading day before the announcement of the transaction, (b) 27.0% compared to the 30-day VWAP for the period ended on November 16, 2016, (c) 34.4% compared to the 60-day VWAP for the period ended on November 16, 2016, and (d) 30.2% compared to the closing stock price on October 21, 2016, the last full trading day prior to WellCare’s initial indication of interest; |
— | that the proposed merger consideration is all cash, so that the transaction provides stockholders of the Company certainty of value and liquidity for their shares of UAM stock, especially when viewed against the Company’s competitive positioning and prospects as a standalone company, taking into account the continued costs, risks and uncertainties associated with continuing to operate independently as a public company, including: |
o | the competitive nature of the industry in which the Company operates, including the increasing competition faced by the Company from significantly larger competitors with significantly greater resources than the Company; |
o | the inherent uncertainty of attaining managements financial projections, including the fact that the Company’s actual financial results in future periods could differ materially from the projected results described in “The Merger (Proposal 1)”; |
o | the Company’s relatively small size as compared to its competitors which places the Company at a significant scale disadvantage; |
o | the Company’s ability to maintain and/or improve its Medicare Star ratings; |
o | the geographic concentration of the Company’s Medicare Advantage business and risks associated therewith; |
o | the fact that the Company’s businesses are subject to extensive government regulation, oversight and frequent audit and its ability to continue to maintain compliance with all such rules, regulations and laws; |
o | the general uncertainty about the prospects for the Company’s Accountable Care Organization business; |
o | the Company’s ability to continue to develop and maintain satisfactory relationships with doctors, hospitals and other providers of care; |
o | the current, historical and projected financial condition and results of operations of the Company on a stand-alone basis, including the risks to achieving its projections and long-term results amid greater industry consolidation and the current and prospective regulatory environment; and |
o | the potential consolidation of managed care companies and other industry participants, recent and prospective legislative and regulatory changes, and the potential impact of those industry risks and changes on the Company’s stand-alone operations and financial prospects. |
— | the results of the numerous strategic review processes that the Company had previously undertaken, including the results of the Company’s efforts to solicit acquisition proposals (for all or material portions of UAM) from numerous potential third parties, including both strategic and financial buyers, and the proposals (or lack of proposals) received in such processes, including that no other credible bid emerged which offered a value approaching the per share merger consideration, and that the Board of Directors decided against proceeding with such transaction, as further described in “The Merger (Proposal 1)—Background of the Merger”; |
— | the value and form of the merger consideration to be received by the Company’s stockholders in the merger, taking into account: |
o | the oral opinion of MTS rendered on November 16, 2016, which opinion was subsequently confirmed in a written opinion dated November 17, 2016, to the Board of Directors to the effect that, as of that date and based upon and subject to the qualifications, limitations and assumptions stated in its written opinion, the per share merger consideration of $10.00 to be offered to the holders of shares of UAM common stock in the merger was fair, from a financial point of view, to such holders, and the financial analyses related thereto and prepared by MTS and described under “The Merger (Proposal 1)—Opinion of the Company’s Financial Advisor” beginning on page 42; |
o | that the merger consideration is all cash and is not subject to any financing contingency, which will provide the Company’s stockholders certainty of value and the ability to monetize their investment in |
o | the fact that the merger consideration represents a premium of approximately 47% relative to the price the Company paid, on June 27, 2016, to repurchase shares of its common stock owned by two stockholder groups that had representatives on the Board of Directors, as further described in “The Merger (Proposal 1)—Background of the Merger”; and |
o | the risks associated with operating as a standalone company, including the potential execution risks associated with the likelihood of meeting financial projections and the potential risk associated with the possibility that even if the Company meets such financial projections, the market may not reflect such execution in the Company’s stock price; |
— | the belief that the Company was reasonably likely to receive all required regulatory approvals in connection with the merger transaction with WellCare; |
— | the fact that the holders of shares of UAM common stock who do not vote to adopt the merger agreement have the right to demand appraisal of their shares in accordance with the procedures of Section 262 of the DGCL; and |
— | the terms of the merger agreement, including: |
o | that WellCare is (a) required to take all actions necessary to obtain regulatory approvals of the transaction, including agreeing to divestitures, unless such actions would reasonably be expected to have a material adverse effect on the business of WellCare and (b) otherwise required to use its reasonable best efforts to cause the satisfaction of the conditions in the merger, as further described in “The Merger Agreement—Consents; Filings; Further Actions”; and |
o | the Company’s ability, under certain circumstances, to furnish information to and conduct negotiations with, third parties regarding unsolicited acquisition proposals made after the date of the merger agreement and prior to the time the Company’s stockholders approve the proposal to adopt the merger agreement, as further described in “The Merger Agreement—Solicitation of Takeover Proposals” beginning on page 74; |
o | the ability of the Board of Directors to change its recommendation in the event of an intervening event that was not known, or reasonably foreseeable, to the Board of Directors at or prior to the execution of the merger agreement, as further described in “The Merger Agreement—Covenants of the Company—Fiduciary Out; Superior Proposals; Intervening Events” beginning on page 75; |
o | the Board of Directors’ view that the terms of the merger agreement would be unlikely to deter third parties from making a superior proposal, including the merger agreement’s terms and conditions as they relate to the ability of the Board of Directors to change its recommendation with respect to the merger agreement and the merger, as further described in “The Merger Agreement—Covenants of the Company—Fiduciary Out; Superior Proposals; Intervening Events” beginning on page 75; |
o | the Board of Directors’ ability to terminate the merger agreement in specified circumstances relating to a superior proposal subject, in specified cases, to payment of a termination fee of $18,000,000 plus expense reimbursement of up to $2,000,000, as further described in “The Merger Agreement—Covenants of the Company—Fiduciary Out; Superior Proposals; Intervening Events” beginning on page 75; |
o | the Board of Directors’ belief that the termination fee of $18,000,000, which is approximately 3.0% of the Company’s implied equity value in the merger, together with the expense reimbursement provisions, is reasonable and does not preclude third parties from making competing acquisition |
o | the retention and employee benefit arrangements provided in the merger agreement, as further described in “The Merger Agreement—Employees; Benefit Plans”; |
o | that, except in the case of a willful and material breach of the Company’s non-solicitation covenants or actual and intentional fraud, WellCare’s sole remedy (whether at law, in equity, in contract, tort or otherwise) for the damages suffered as a result of the failure of the merger to be consummated or otherwise suffered as a result of, or in connection with, the merger agreement and the transactions contemplated thereby, is the payment of the termination fee and expense reimbursement, as further described in “The Merger Agreement—Effect of Termination; Termination Fee and Remedies”; and |
o | the fact that the affirmative vote of the holders of shares of UAM common stock in adopting the merger is a closing condition, as further described in “The Merger Agreement—Conditions to the Completion of the Merger”. |
— | that the Company’s stockholders will not participate in the future earnings or growth of the Company and will not benefit from any appreciation in value of the Company, including any appreciation in value that could be realized as a result of the acquisition of the Company by WellCare; |
— | the fact that the Company and WellCare must obtain clearance under the HSR Act, as well as other approvals from state insurance and other regulators, in order to complete the merger, which approvals may not be obtained or may be subject to conditions that WellCare is not required to comply with ; |
— | the fact that, while the merger is expected to be completed, there is no assurance that all conditions to the parties’ obligations to complete the merger will be satisfied or waived, and, as a result, it is possible that the merger might not be completed even if it is approved by the holders of shares of UAM common stock ; |
— | that the covenants, limitations and restrictions imposed in the merger agreement on the conduct by the Company of its business prior to completion of the merger could have negative effects on the Company, including: |
o | restrictions on the conduct of the Company’s business prior to the consummation of the merger, including the requirement that the Company conduct its business in the ordinary course, subject to specific limitations, which may delay or prevent the Company from undertaking business opportunities that may arise before the completion of the merger and that, absent the merger agreement, the Company might have pursued; |
o | restrictions on the ability of the Company to pursue certain acquisitions without the prior consent of WellCare, which could delay or prevent the Company from undertaking business opportunities that may arise or certain other action the Company might otherwise take with respect to the operations of the Company pending completion of the merger; and |
o | the negative impact that may result on the Company’s ability to retain and, if necessary, attract key employees, particularly while the merger agreement is pending; |
— | that certain provisions of the merger agreement could have the effect of discouraging third parties from submitting competing acquisition proposals involving the Company, including (a) the restrictions on the Company’s ability to solicit proposals for alternative transactions involving the Company and (b) |
— | the risk that the merger could be delayed or not completed due to the failure of the Company or WellCare to satisfy the conditions to the merger, including the failure of the holders of shares of UAM common stock to approve the merger; |
— | the potential adverse effect on the Company’s business and the share price of UAM common stock due to the risk that the merger may not be completed on the expected timetable, or at all; |
— | the significant costs involved in connection with entering into the merger agreement and completing the merger, and the substantial time and effort of UAM’s management required to complete the merger, which may disrupt UAM’s business operations; |
— | that, under certain circumstances, the Company may be required to pay WellCare a termination fee in an amount equal to $18,000,000 (plus reimbursable expenses up to a maximum of $2,000,000), and the effect such payments may have on a potential buyer considering a competing proposal to acquire the Company; |
— | the risks, costs and disruptions to the Company’s operations if the merger is not completed, including the diversion of management and employee attention, potential employee attrition, and the potential effect on the Company’s business and its provider, member, beneficiary agent and vendor relationships; |
— | general economic, market and political conditions, and the risk that the results of the 2016 U.S. elections, may lead to a more favorable regulatory environment for the Company; |
— | the fact that an all-cash transaction would be taxable to the Company’s stockholders that are U.S. persons for U.S. federal income tax purposes; |
— | that certain directors and executive officers of the Company have interests in the merger that are different from, or in addition to, the Company’s stockholders, as further described in “The Merger (Proposal 1)—Interests of the Company’s Directors and Executive Officers in the Merger” and “Advisory Vote on Golden Parachute Compensation (Proposal 2)”; and |
— | other risks and uncertainties in the Company’s filings with the SEC, including the risks set forth in “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 30, 2015 (filed with the SEC on March 10, 2016), referred to as the “Form 10-K.” See “Where Stockholders Can Find More Information” for further information. |
— | approving the transactions and adopting a plan of merger as contemplated under the merger agreement; |
— | declaring it advisable and in the best interests of the Company and the Company’s stockholders that the Company enter into, execute and deliver the merger agreement; and |
— | resolving that the merger agreement be submitted to the Company’s stockholders for adoption at a special meeting of the Company’s stockholders held for such purpose, and recommending to the Company’s stockholders that they vote in favor of adoption of the merger agreement and the transactions contemplated thereby at the special meeting of the Company’s stockholders. |
— | reviewed the financial terms of a draft copy of the merger agreement, dated as of November 16, 2016, which was the most recent draft available to MTS (which draft is referred to herein as the “draft merger agreement”); |
— | reviewed certain publicly available business and financial information concerning the Company and the industries in which it operates; |
— | reviewed certain publicly available financial analyses and forecasts relating to the Company prepared by equity analysts who report on the Company; |
— | reviewed certain internal financial forecasts prepared by the Company’s management and provided to MTS in connection with its engagement as financial advisor to the Board of Directors (referred to herein as the “Company financial projections”); |
— | conducted discussions with members of senior management and representatives of the Company concerning the matters described in the immediately preceding three bullets, and certain other matters MTS believed necessary or appropriate to its inquiry; |
— | compared the financial and operating performance of the Company with publicly available information concerning other publicly-traded companies and reviewed the current and historical market prices of the UAM common stock and certain publicly traded securities of such other companies, in each case, that MTS deemed relevant; |
— | reviewed and analyzed the proposed financial terms of the merger as compared to the financial terms of certain selected business combinations and the consideration paid in such transactions that MTS deemed relevant; |
— | reviewed and analyzed, based on the Company financial projections, the cash flows generated by the Company to determine the present value of the Company’s discounted cash flows; and |
— | performed such other financial studies, analyses and investigations and considered such other information as MTS deemed appropriate for the purposes of the MTS opinion. |
VWAP Over Time
|
Last
Year |
Last
6 Months |
Last
3 Months |
Last
Month
|
Last
2 Weeks |
Last Week
|
|||||||||||||
Volume Weighted Average (VWAP)
|
$7.31
|
$7.60
|
$7.39
|
$7.85
|
$7.95
|
$8.14
|
|||||||||||||
Premium
|
36.8%
|
31.6%
|
35.3%
|
27.4%
|
25.8%
|
22.9%
|
Company
|
LTM
|
2016E
|
2017E
|
|||||||||
Diversified Managed Care
|
||||||||||||
UnitedHealth Group Incorporated
|
12.9x
|
12.3x
|
11.2x
|
|||||||||
Aetna Inc.
|
11.4x
|
11.2x
|
10.9x
|
|||||||||
Anthem, Inc.
|
8.5x
|
8.5x
|
8.9x
|
|||||||||
Government Services
|
||||||||||||
Centene Corporation
|
8.7x
|
8.5x
|
7.5x
|
|||||||||
WellCare Health Plans, Inc.
|
9.0x
|
8.5x
|
8.8x
|
|||||||||
Molina Healthcare, Inc.
|
8.0x
|
7.3x
|
6.6x
|
Company
|
2016E GAAP P/E
|
2017E GAAP P/E
|
||||||||||||
Diversified Managed Care
|
||||||||||||||
UnitedHealth Group Incorporated
|
20.5x
|
17.7x
|
||||||||||||
Aetna Inc.
|
17.0x
|
15.2x
|
||||||||||||
Anthem, Inc.
|
15.0x
|
12.4x
|
||||||||||||
Government Services
|
||||||||||||||
Centene Corporation
|
17.6x
|
12.9x
|
||||||||||||
WellCare Health Plans, Inc.
|
25.9x
|
21.0x
|
||||||||||||
Molina Healthcare, Inc.
|
21.2x
|
15.2x
|
— | LTM EV/EBITDA multiples for the selected companies ranging from a low of 8.0x to a high of 12.9x; |
— | 2016E EV/EBITDA multiples ranging from a low of 7.3x to a high of 12.3x; |
— | 2017E EV/EBITDA multiples ranging from a low of 6.6x to a high of 11.2x; |
— | 2016E P/E multiples ranging from a low of 15.0x to a high of 25.9x; and |
— | 2017E P/E multiples ranging from a low of 12.4x to a high of 21.0x. |
— | the implied ranges of values of the Company’s common stock based on the derived multiples of LTM EV/EBITDA were $3.65 to $5.23 per share; |
— | the implied ranges of value of the Company’s common stock based on the derived 2016E EV/EBITDA were $4.13 to $6.24 per share; |
— | the implied ranges of value of the Company’s common stock based on the derived multiples of 2017E EV/EBITDA were: |
o | $8.05 to $12.84 per share when applied to the low case of the Company financial projections (as defined below in this Proxy Statement) for fiscal year 2017; and |
o | $8.68 to $13.89 per share when applied to the high case of the Company financial projections for fiscal year 2017; |
— | the implied ranges of values of the Company’s common stock based on the derived multiples of 2016E GAAP P/E were $0.43 to $0.75; |
— | the implied ranges of values of the Company’s common stock based on the derived multiples of 2017E GAAP P/E were: |
o | $8.14 to $13.74 per share when applied to the low case of the Company financial projections for fiscal year 2017; and |
o | $9.05 to $15.27 per share when applied to the high case of the Company financial projections for fiscal year 2017. |
Date Announced
|
Target
|
Acquiror
|
EV/LTM EBITDA
|
EV/NTM EBITDA
|
||||
07/24/15
|
Cigna Corporation
|
Anthem, Inc.
|
13.1x
|
12.9x
|
||||
07/03/15
|
Humana Inc.
|
Aetna Inc.
|
13.9x
|
11.8x
|
||||
07/02/15
|
Health Net, Inc.
|
Centene Corporation
|
14.5x
|
8.7x
|
||||
11/05/12
|
Metropolitan Health Networks, Inc.
|
Humana Inc.
|
8.2x
|
N/A
|
||||
08/20/12
|
Coventry Health Care, Inc.
|
Aetna Inc.
|
6.2x
|
7.4x
|
||||
07/09/12
|
AMERIGROUP Corporation
|
Anthem, Inc.
|
16.3x
|
11.6x
|
||||
05/21/12
|
Healthcare Partners LLC
|
DaVita Inc.
|
8.4x
|
N/A
|
||||
10/24/11
|
HealthSpring, Inc.
|
Cigna Corporation
|
7.7x
|
7.0x
|
||||
08/27/10
|
Bravo Health, Inc.
|
HealthSpring, Inc.
|
6.5x
|
N/A
|
— | LTM EBITDA multiples for the selected companies ranged from a low of 6.2x to a high of 16.3x. |
— | NTM EBITDA multiples ranged from a low of 7.0x to a high of 12.9x. |
— | $3.07 to $6.33 per share based on the derived multiples of LTM EBITDA, |
— | $8.43 to $14.64 per share per share when applied to the low case of the Company financial projections based on the derived multiples of NTM EBITDA, and |
— | $9.09 to $15.85 per share when applied to the high case of the Company financial projections based on the derived multiples of NTM EBITDA. |
($ in millions, “E” refers to estimated and “P” refers to projected)
|
Low Case
|
2016E
|
|
2017P
|
|
2018P
|
|
2019P
|
|
2020P
|
|
2021P
|
|
||||||||||||
Total Revenue
(1)
|
$
|
1,407.2
|
$
|
1,486.6
|
$
|
1,624.5
|
$
|
1,761.5
|
$
|
1,888.8
|
$
|
2,013.1
|
||||||||||||
EBITDA
(2)
|
$
|
31.4
|
$
|
78.5
|
$
|
60.5
|
$
|
72.8
|
$
|
81.6
|
$
|
89.6
|
||||||||||||
Net Income
|
$
|
2.1
|
$
|
38.9
|
$
|
19.1
|
$
|
25.8
|
$
|
30.3
|
$
|
34.4
|
($ in millions, “E” refers to estimated and “P” refers to projected)
|
High Case
|
2016E
|
|
2017P
|
|
2018P
|
|
2019P
|
|
2020P
|
|
2021P
|
|
||||||||||||
Total Revenue
(1)
|
$
|
1,407.2
|
$
|
1,486.6
|
$
|
1,627.5
|
$
|
1,768.0
|
$
|
1,898.3
|
$
|
2,026.1
|
||||||||||||
EBITDA
(2)
|
$
|
31.4
|
$
|
85.5
|
$
|
86.1
|
$
|
103.3
|
$
|
116.2
|
$
|
128.9
|
||||||||||||
Net Income
|
$
|
2.1
|
$
|
43.2
|
$
|
35.0
|
$
|
44.6
|
$
|
51.8
|
$
|
58.8
|
(1) | Total revenue includes, among other things, (a) revenue received from CMS for the Company’s Medicare Advantage business, (b) shared savings revenues received from CMS for the Company’s Medicare Accountable Care Organization business, and (c) net investment income earned on the Company’s portfolio. |
(2) | EBITDA represents earnings before interest, taxes, depreciation, and amortization. It is also inclusive of stock based compensation expense. |
Name
|
Value of shares of UAM Common Stock Owned ($)
|
Value of Vested Company Options ($)
|
Value of Unvested Company Options ($)
|
Value of Vested Restricted Shares ($)
|
Value of Unvested Restricted Shares ($)
(1)
|
Total Cash Payment with Respect to all Equity ($)
|
||||||||||||||||||
Non-Employee Directors
(2)
|
||||||||||||||||||||||||
Sally W. Crawford
|
$
|
507,320
|
$
|
193,573
|
$
|
59,655
|
-
|
$
|
260,711
|
$
|
1,021,259
|
|||||||||||||
Matthew W. Etheridge
|
$
|
507,220
|
$
|
193,573
|
$
|
59,655
|
-
|
$
|
260,711
|
$
|
1,021,159
|
|||||||||||||
Mark K. Gormley
|
$
|
687,010
|
-
|
-
|
-
|
-
|
$
|
687,010
|
||||||||||||||||
Mohit Kaushal
|
-
|
-
|
-
|
-
|
$
|
104,300
|
$
|
104,300
|
||||||||||||||||
Patrick J. McLaughlin
|
1,298,220
|
$
|
193,573
|
$
|
59,655
|
-
|
$
|
260,711
|
$
|
1,812,159
|
||||||||||||||
Employee Director/ Executive Officer
|
||||||||||||||||||||||||
Richard A. Barasch
(3)
|
$
|
28,427,770
|
$
|
2,353,745
|
$
|
1,750,150
|
-
|
$
|
4,227,395
|
$
|
36,759,060
|
|||||||||||||
All Other Executive Officers
(4)
|
||||||||||||||||||||||||
Steven H. Black
(3)
|
$
|
421,470
|
$
|
351,161
|
$
|
326,400
|
-
|
$
|
1,709,921
|
$
|
2,808,952
|
|||||||||||||
Theodore M. Carpenter, Jr.
|
$
|
3,174,170
|
$
|
439,361
|
$
|
240,544
|
-
|
$
|
615,841
|
$
|
4,469,916
|
|||||||||||||
Erin G. Page
|
$
|
501,530
|
$
|
316,886
|
$
|
355,013
|
-
|
$
|
2,361,151
|
$
|
3,534,580
|
|||||||||||||
Adam C. Thackery
|
$
|
433,470
|
$
|
202,861
|
$
|
236,427
|
-
|
$
|
1,168,923
|
$
|
2,041,681
|
|||||||||||||
Anthony L. Wolk
|
$
|
550,760
|
$
|
354,161
|
$
|
326,400
|
-
|
$
|
1,781,561
|
$
|
3,012,882
|
|||||||||||||
All Directors and Executive Officers as a Group
|
||||||||||||||||||||||||
(11 Persons)
|
$
|
36,508,940
|
$
|
4,598,894
|
$
|
3,413,899
|
-
|
$
|
12,751,225
|
$
|
57,272,958
|
(1) | Including accrued but unpaid dividends. |
(2) | Unvested equity awards will accelerate and vest upon the Merger. |
(3) | Amounts listed include shares and equity awards owned directly or indirectly by the executive officer. |
(4) | Unvested equity awards will vest and be payable on the earlier of the original vesting date and the 12-month anniversary of the effective date, subject to continued employment, or earlier upon a termination without “cause” or a resignation for “good reason” (in each case, as such term is defined in the merger agreement). |
— | an individual who is a citizen or resident of the U.S.; |
— | a corporation (or other entity taxable as a corporation) created or organized in or under the laws of the U.S., any state of the U.S. or the District of Columbia; |
— | an estate the income of which is subject to U.S. federal income tax regardless of its source; or |
— | a trust if (a) a U.S. court is able to exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust; or (b) it has a valid election in place to be treated as a U.S. domestic trust for U.S. federal income tax purposes. |
— | You will recognize a capital gain or loss upon the disposition of your shares of UAM common stock pursuant to the merger. |
— | The amount of gain or loss you recognize will be measured by the difference, if any, between the amount of cash you receive in the merger and your adjusted tax basis in the shares of UAM common stock surrendered in the merger. Gain or loss will be determined separately for each block of shares ( i.e. , shares acquired at the same cost in a single transaction). |
— | The capital gain or loss, if any, will be long-term capital gain or loss with respect to shares of UAM common stock that were held for more than one year at the time of the merger. Net long-term capital gain of certain non-corporate U.S. holders generally is subject to preferential rates of tax. The deductibility of capital losses is subject to limitations. |
· | each share of UAM common stock issued and outstanding immediately prior to the effective time (other than the excluded shares and dissenting shares, if any) will be converted into the right to receive the per share merger consideration in cash, without interest and all such shares that have been converted will be cancelled automatically and cease to exist; |
· | each share of capital stock of Merger Sub issued and outstanding immediately prior to the effective time shall be converted into and become one fully paid and non-assessable share of common stock, par value $0.01 per share, of the surviving corporation; and |
· | each share of UAM common stock held in the treasury of the Company, owned by the Company or any of its wholly owned subsidiaries, or WellCare or any of its affiliates (including Merger Sub) (such shares referred to herein, collectively, as the “excluded shares”) immediately prior to the effective time will be cancelled automatically and cease to exist, and no consideration will be paid for such shares. |
— | organization, good standing, corporate power and qualification to do business; |
— | the Company’s organizational documents; |
— | government consents, approvals or other authorizations or notifications required to complete the merger; |
— | due authority, adoption of, and declaration of advisability with respect to, the merger agreement and the merger; |
— | the absence of violations or breaches of, or conflicts with, the governing documents of the Company and its subsidiaries, applicable law and certain agreements to which the Company or its subsidiaries is a party or result in the creation of any liens upon the Company’s assets, as a result of the Company entering into and performing under the merger agreement and consummating the merger; |
— | the vote of a majority of the holders of UAM common stock being the only vote necessary to approve the merger agreement; |
— | the enforceability of the merger agreement; |
— | capitalization of the Company and its subsidiaries; |
— | SEC filings, the absence of material misstatements or omissions from such filings; |
— | the Company’s financial statements, disclosure controls and procedures and internal controls over financial reporting; |
— | the absence of a material adverse effect on the Company and the absence of certain other changes since September 30, 2016 through the date of the merger agreement; |
— | litigation; |
— | material contracts; |
— | benefit plans; |
— | labor relations; |
— | tax matters; |
— | environmental matters; |
— | intellectual property; |
— | real property and personal property; |
— | permits and compliance with applicable laws; |
— | the absence of undisclosed liabilities; |
— | compliance with specific health care laws; |
— | takeover statutes; |
— | affiliate transactions; |
— | insurance policies, reports and laws, reinsurance agreements and the absence of capital or surplus maintenance requirements; |
— | the compliance by the Company’s agents with applicable law; |
— | the opinion of the Company’s financial advisor; and |
— | the absence of brokers and brokers’ fees, except fees payable to the Company’s financial advisor. |
A. | conditions (economic, political, social, regulatory or otherwise) generally affecting the industries in which the Company and its subsidiaries operate, |
B. | the domestic U.S., foreign or regional economic, financial, political, social or geopolitical conditions or events in general in jurisdictions in which the Company or any of its subsidiaries has material operations, |
C. | changes or conditions in the financial, debt, credit or capital markets, |
D. | changes or proposed changes in law, or standards or interpretations thereof (including any adoption, implementation, promulgation, repeal, modification, amendment, authoritative interpretation, change or |
E. | changes or proposed changes in United States generally accepted accounting principles (referred to herein as “GAAP”), any insurance company or health maintenance organization conducting an insurance business, the statutory accounting practices prescribed or permitted by law or governmental authorities seated in the jurisdiction where such insurance company or health maintenance organization is domiciled and responsible for the regulation thereof (referred to herein as “SAP”), actuarial standards of practice promulgated by the Actuarial Standards Board for use by actuaries when providing professional services in the United States (referred to herein as “ASOP”) or other accounting principles or requirements, or standards or interpretations thereof, |
F. | changes in interest rates, |
G. | any actions taken, to the extent required by the merger agreement or failure to take any actions to the extent prohibited by the merger agreement, including compliance by the Company and its subsidiaries with the express terms of the merger agreement, |
H. | any decline in the market price, or change in trading volume, of UAM common stock, any decrease of the ratings or ratings outlook for the Company by any of the credit rating agencies and the consequences of any such ratings or outlook decrease, or the failure of the Company to meet any projections, forecasts, budgets, operational metrics or estimates (it being understood that the underlying causes of any such decline, change, decrease or failure may, if they are not otherwise excluded from the definition of Company Material Adverse Effect, be taken into account in determining whether a Company Material Adverse Effect has occurred), |
I. | escalation or outbreak of hostilities, acts of terrorism (including cyber-terrorism), sabotage or military conflicts, |
J. | an epidemic, plague, pandemic or other outbreak or illness (including any non-human epidemic, pandemic or other similar outbreak or illness), flood, earthquake, tornado, hurricane, cyclonic storm, windstorm, volcano, tsunami or other natural disaster or act of God, |
K. | the entry into, or any announcement or disclosure of, the merger agreement or merger, including any effects related to the identity of any of WellCare or any of its affiliates and any loss of a customer, supplier, contractor, agent, provider, physician, employee or CMS contract as a result of the identity of WellCare (provided, that this exception does not apply to references to “Company Material Adverse Effect” in the representations and warranties regarding governmental authorizations or non-contravention), or |
L. | the commencement, or threatened commencement, in and of itself of a program audit by CMS of the Company or any of its subsidiaries (but, for the avoidance of doubt, not the results of any such audit), |
— | organization, good standing and corporate power; |
— | government consents, approvals or other authorizations or notifications required to complete the merger; |
— | due authority, adoption of, and declaration of advisability with respect to, the merger agreement and the merger; |
— | the absence of violations or breaches of, or conflicts with, the governing documents of WellCare and Merger Sub, applicable law and certain agreements to which WellCare or its subsidiaries is a party, as a result of WellCare and Merger Sub entering into and performing under the merger agreement and consummating the merger; |
— | WellCare’s ownership of Merger Sub; |
— | the absence of any shares of UAM common stock, or securities that are convertible, exchangeable or exercisable into UAM common stock, owned, acquirable, or able to be voted by WellCare or Merger Sub; |
— | sufficiency of the funds to which WellCare and Merger Sub will have access to as of the effective time to pay the amounts to be paid by WellCare and Merger Sub in connection with the transactions contemplated by the merger agreement; |
— | litigation; |
— | the absence of arrangements with the Company’s management with respect to the merger or the Company’s operations after the effective time; |
— | the absence of brokers and brokers’ fees; and |
— | independent investigation and acknowledgment as to the absence of any express or implied representations or warranties other than those made by the merger agreement. |
— | amend its or its subsidiaries’ organizational documents; |
— | make, set aside, establish a record date or authorize, declare or pay any dividend or distribution on any shares of its capital stock, other than dividends and distributions by wholly owned subsidiaries of the Company, and regular quarterly dividends on the UAM preferred stock in accordance with the terms of the certificate of designation; |
— | adjust, split, combine, amend the terms of, reclassify, redeem, purchase (directly or indirectly), or extend any right or option to acquire any of its capital stock or other securities, as applicable; |
— | issue, transfer, sell, deliver, pledge or otherwise encumber any of its capital stock or other securities (other than pursuant to the exercise of Company Options, the vesting of Restricted Shares, and the conversion of any Convertible Note); |
— | enter into any contract with respect to the sale, voting, registration or repurchase of its capital stock or other securities; |
— | increase the compensation or benefits payable to any current or former employee or any directors or officers, other than cost-of-living adjustments to base salaries, made in the ordinary course of business, but in no event to exceed 2.7% in the aggregate for all employees for whom salary increases are made; |
— | grant any severance or termination pay, retention or change-in-control payments to any current or former employee, director or independent contractor other than as mandated by a pre-existing benefit plan; |
— | renew, enter into or amend any employment or severance agreement with any current or former employee or any director or independent contractor; |
— | establish, adopt, enter into, amend or terminate any benefit plan (other than amendments associated with the annual open enrollment process in the ordinary course of business consistent with past practice applicable, generally, to the employee population as a whole); |
— | enter into any collective bargaining agreement or other agreement with any labor organization, works council, trade union, labor association or other employee representative; |
— | implement any facility closings, employee layoffs or reductions in workforce that do not comply with the WARN Act, or implement any employee layoffs or reductions in workforce in violation of the WARN Act; |
— | hire any employee with an expected annual base compensation in excess of $200,000, other than as a replacement in the case of a resignation or termination, or terminate any employee with annual base compensation in excess of $200,000, other than terminations for cause; |
— | accelerate the vesting, funding or payment of any compensation or benefits to any current or former employee or any directors or officers, except, among other things, (a) to the extent required by applicable |
— | acquire, by merger, consolidation, acquisition of equity interests or assets, or otherwise, any business, any material assets or properties, or any corporation, partnership, limited liability company, joint venture or other business organization or division thereof, other than (a) personal property, assets or other tangible or intangible property (including intellectual property, but not including any equity interests or interests in a business) in the ordinary course of business or (b) any person or any equity interests, assets or business division thereof engaged in the “Medicare Advantage” business, in the case of both (a) and (b) for aggregate consideration for such acquisitions not in excess of $2,500,000; |
— | sell, lease, license, transfer, pledge, encumber, grant or dispose of any assets in excess of $2,500,000 in the aggregate, other than the disposition of obsolete assets in the ordinary course, in accordance with the expiration of intellectual property licenses or as otherwise agreed; |
— | enter into, terminate or request a material change or waive any material rights under any material contracts other than in the ordinary course of business; |
— | enter into any contracts that restrict the Company or any of its subsidiaries or their successors from competing in a line of business or geographic area in any material respect; |
— | terminate, amend or modify any certificate of authority to conduct business as an insurance company, health maintenance organization or managed-care plan or other material permits; |
— | incur, assume or guarantee debt in excess of $2,500,000, other than pursuant to outstanding indebtedness instruments or in connection with interest rate hedges on terms in the ordinary course of business; |
— | make any loans or capital contributions in excess of $1,000,000 in the aggregate, or investments, other than as between the Company and its subsidiaries or to third-party agents (in an aggregate amount not to exceed $1,000,000), in each case, in the ordinary course of business consistent with past practice; |
— | make, change, or rescind any material tax election, file any material amendment to a tax return, settle any material tax claim or assessment, surrender any right to claim a material refund of a material amount of taxes, consent to any extensions or waivers of limitations applicable to material tax claims or assessments, enter into any material closing agreement with a taxing authority, or take any other action that may have a material impact on the Company’s or any of its subsidiaries’ tax assets or liabilities; |
— | except as required by GAAP, SAP, ASOP or applicable law, make any material change in its (a) accounting policies, practices or procedures, (b) investment, hedging, underwriting or claims administration policies, practices or procedures or (c) methodologies for estimating and providing medical costs and other liabilities; |
— | waive, release, assign, settle or compromise any material legal action or any material settlement agreement or other understanding with any governmental authority with respect to any legal action, other than a waiver, release, assignment, settlement or compromise limited only to the payment of money not in excess of $750,000 individually or $3,000,000 in the aggregate, or in connection with certain shareholder litigation, as described below; |
— | enter into or amend the terms of any contract with any affiliate, director or officer of the Company that would reasonably be expected to delay or prevent the consummation of the transactions contemplated by the merger agreement or require disclosure under Item 404 of Regulation S-K of the SEC; |
— | adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or any of its subsidiaries; |
— | authorize or make any capital expenditures that exceed $2,000,000 in the aggregate; |
— | license, sell, transfer, encumber or otherwise dispose of any of material intellectual property other than in the ordinary course of business or in connection with a permitted sale or disposition, or disclose any material confidential information to third parties (other than pursuant to a written confidentiality agreement with reasonable protections or an acceptable confidentiality agreement); or |
— | agree in writing, authorize or commit to do any of the foregoing. |
— | solicit, initiate or knowingly facilitate or encourage (including by way of furnishing non-public information or providing access to its properties, books, records or personnel) any inquiries regarding, or the making of any proposal or offer that constitutes, or that could reasonably be expected to lead to, a “Takeover Proposal” (as defined below in this Proxy Statement); |
— | enter into, continue or otherwise have any discussions (other than to state that the Company is not permitted to have discussions under the merger agreement, or to clarify the terms thereof), or otherwise participate in any negotiations regarding a Takeover Proposal; |
— | execute or enter into any contract with respect to a Takeover Proposal (other than an acceptable confidentiality agreement, if the Board of Directors determines, in consultation with its legal and financial advisors, that such Takeover Proposal constitutes or would reasonably be expected to lead to a “Superior Proposal” (as defined below in this Proxy Statement) and the failure to take any such action would be inconsistent with its fiduciary duties under applicable law); |
— | take any action to make the provisions of any anti-takeover law or any restrictive provision of any applicable anti-takeover provision in the Company’s organizational documents inapplicable to any transactions contemplated by any Takeover Proposal; or |
— | authorize any of or commit to agree to do any of the foregoing, other than in connection with the actions permitted in connection with a Superior Proposal or a withdrawal, modification or amendment of the Board of Directors’ recommendation to the holders of UAM common stock in respect of the merger in a manner adverse to WellCare in light of an “Intervening Event” (as defined below in this Proxy Statement). |
— | a merger, consolidation, share exchange or business combination involving the Company or any of its subsidiaries representing 15% or more of the Company’s assets, revenues or earnings; |
— | a sale, lease, exchange, mortgage, transfer or other disposition of 15% or more of the Company’s assets, revenues or earnings; |
— | a direct or indirect acquisition, purchase, issuance or sale of shares of capital stock or other equity interest or other securities representing 15% or more of the voting power of the capital stock of the Company or any successor or parent company thereto, including by way of a merger, business combination, share exchange, tender offer or exchange offer; |
— | a reorganization, recapitalization, liquidation or dissolution of the Company or any of its subsidiaries whose business constitutes 15% or more of the net revenues, net income or assets of the Company and its subsidiaries taken as a whole; or |
— | any other transaction having a similar effect to those described in the immediately preceding four bullets, or any combination of any such transactions (other than the transactions contemplated by the merger agreement). |
— | on terms and conditions more favorable, from a financial point of view, to the stockholders than those contemplated by the merger agreement; and |
— | is reasonably likely to be consummated. |
— | was not known, or reasonably foreseeable based on facts known as at the date of the merger agreement, to the Board of Directors as of or prior to the date of the merger agreement (or, if known, the consequences of which were not known, or reasonably foreseeable based on facts known as at the date of the merger agreement, to the Board of Directors as of the date of the merger agreement); and |
— | does not relate to or involve a Takeover Proposal. |
— | such Superior Proposal did not result from a material breach of the Company’s non-solicitation obligations; |
— | the Company provides prior written notice to WellCare that it is prepared to terminate the merger agreement to enter into a contract in respect of such Superior Proposal, which notice must include a summary of the material terms and copies of all material documents relating to such Superior Proposal and the identity of the person making the Superior Proposal; |
— | during the five-business day period following such notice, the Company has negotiated in good faith (to the extent WellCare desires to negotiate) to make such adjustments in the terms and conditions of the merger agreement and any ancillary agreements with the intent of causing such Superior Proposal to no longer be a Superior Proposal; and |
— | WellCare does not make, within five business days after the receipt of such notice, a binding, written and complete proposal that the Board of Directors determines in good faith, after consultation with its legal and financial advisors, causes the Superior Proposal to no longer be a Superior Proposal (and any amendment, revision, change or supplement to the financial terms or other material terms or conditions of the Superior Proposal will require a new written notification and a new negotiation period of three business days instead of five business days). |
— | the Board of Directors has concluded in good faith, following consultation with its outside legal counsel that, in light of such Intervening Event, its failure to withdraw, modify or amend the recommendation of the Board of Directors to stockholders in respect of the merger would be reasonably likely to be inconsistent with its fiduciary duties under applicable law, and |
— | the Board of Directors has first (x) provided prior written notice to WellCare that the Board of Directors is prepared to withdraw, modify or amend its recommendation to the holders of UAM common stock in respect of the merger in a manner adverse to WellCare, which notice will include a reasonably detailed description of the facts and circumstances relating to such Intervening Event and (y) complied, as applicable, with (a) the five-business day notice requirement to negotiate with WellCare and (b) the obligation that WellCare make a binding, written and complete proposal during that period (subject to the right to require a new written notification and a new notification period of three business days instead of five business days in certain circumstances) as described above in respect of a Superior Proposal as if such requirements related to an Intervening Event instead of a Superior Proposal. |
— | WellCare will determine actual achievement of the 2017 annual bonus targets with respect to each continuing employee (such determinations by WellCare will be made reasonably and in good faith based on actual results, after giving appropriate effect to the merger and actions taken by WellCare in connection therewith that affect the surviving corporation and its subsidiaries); |
— | each continuing employee who remains employed with WellCare and its affiliates through December 31, 2017, will be paid an annual bonus for 2017 of no less than half of such continuing employee’s target 2017 bonus (such bonus referred to herein as the “minimum guaranteed 2017 annual bonus”) which amounts shall be paid at the same time or times that WellCare pays annual bonuses in respect of calendar year 2017 to its similarly situated employees; |
— | any continuing employee whose employment is terminated without “cause” or who voluntarily resigns with “good reason” (in each case, as such term is defined in the merger agreement) during the 60-day period following the merger closing date, will be entitled to receive a prorated portion of 100% of the target 2017 annual bonus applicable to such continuing employee based on the portion of the 2017 calendar year the continuing employee was employed, payable promptly following the date of such termination, but subject to such continuing employee’s timely execution and non-revocation of a release of claims (in the form set forth on the disclosure letter); and |
— | any continuing employee who is terminated without “cause” or who voluntarily resigns with “good reason” (in each case, as such term is defined in the merger agreement) after the 60-day period following the effective time of the merger, but prior to January 1, 2018, will be entitled to receive a 2017 annual bonus equal to the greater of (x) such employee’s minimum guaranteed 2017 annual bonus and (y) a prorated portion of the actual 2017 annual bonus applicable to such continuing employee based on the achievement of performance targets determined by the Company based on the portion of the 2017 calendar year the continuing employee was employed, such 2017 annual bonus to be payable promptly following the date of such termination, but subject to such employee’s timely execution and non-revocation of a release of claims (in the form set forth on the disclosure letter). |
— | confer upon any current or former employee of the Company, WellCare, the surviving corporation or any of their respective subsidiaries or affiliates (including any continuing employee), any rights or remedies including any right to employment or continued employment or any term or condition of employment for any specified period, or restrict the ability of WellCare, the surviving corporation or any of their respective subsidiaries or affiliates to terminate the employment or service of any person; |
— | be construed to establish, amend, fund or modify any benefit or compensation plan, program, agreement, contract, policy or arrangement; |
— | limit the ability of WellCare, the surviving corporation or any of their respective subsidiaries or affiliates to amend, modify or terminate any benefit plan or other benefit or compensation plan, program, agreement, contract, policy or arrangement at any time assumed, established, sponsored or maintained by any of them; or |
— | create any third-party beneficiary rights or obligations in any person (including any employee of the Company or any of its subsidiaries) other than the parties to the merger agreement. |
— | restructuring, selling, divesting or disposing of assets or businesses of WellCare or any of its subsidiaries (including, after the effective time of the merger, the surviving corporation or any of its subsidiaries), or committing to take such actions, or |
— | otherwise taking or committing to take actions that would limit WellCare’s or its subsidiaries’ (including, after the effective time of the merger, the surviving corporation’s or any of its subsidiaries’) freedom of action with respect to, or its ability to retain, one or more of their respective assets or businesses, |
— | the occurrence of any event known to it that would reasonably be expected to, individually or in the aggregate: |
o | in the case of the Company, have a Company Material Adverse Effect, or, in the case of WellCare, prevent, materially impede or materially delay the ability of WellCare or Merger Sub to consummate the transactions contemplated by the merger agreement, |
o | cause any closing condition to be unsatisfied in any material respect prior to the effective time of the merger, or |
o | cause any authorization, consent, order, declaration or approval of any governmental authority or third-party necessary for the consummation of the transactions contemplated by the merger agreement to not be obtained by termination date of the merger agreement; or |
— | any action, suit, proceeding, inquiry or investigation pending or, to the knowledge of the Company or WellCare, threatened that questions or challenges the validity of the merger agreement or the ability of any party to consummate the transactions contemplated by the merger agreement (except that the delivery of any such notice will not limit or otherwise affect the remedies available to the party receiving such notice nor will the party giving such notice be prejudiced with respect to any such matters solely by virtue of having given such notice). |
— | The Company’s representations and warranties set forth below will be true and correct, in all material respects, as of the date of the merger agreement and the closing of the merger (except to the extent any such representation and warranty expressly speaks as of a specified date, in which case as of such date): |
o | Organization and power; |
o | Corporate authorizations; |
o | Certain representations with respect to capitalization; |
o | Takeover statutes; |
o | Opinion of financial advisor; and |
o | Brokers. |
— | The Company’s representations and warranties with respect to the amount of issued and outstanding UAM common stock and UAM preferred stock, Restricted Shares, Company Options, Convertible Notes and other securities of the Company will be true and correct as of the date of the merger agreement and the closing of the merger (except to the extent any such representation and warranty expressly speaks as of a specified date, in which case as of such date), except where the failure of any such representation and warranty to be so true and correct would not individually or in the aggregate be reasonably expected to result in more than de minimi s additional cost, expense or liability to the Company, WellCare or Merger Sub. If one or more inaccuracies in or breaches of such representations and warranties would not result in aggregate additional cost, expense or liability to the Company, WellCare or Merger Sub in excess of $2,500,000, such inaccuracy or inaccuracies will be deemed “ de minimis ” and such condition will be deemed to have been satisfied. |
— | The Company’s representation and warranty that since September 30, 2016 there has not been any Company Material Adverse Effect will be true and correct as of the date of the merger agreement and as of the closing of the merger. |
— | Any representation or warranty of the Company, other than those described in the immediately preceding three bullets, will be true and correct, in each case, as of the date merger agreement and the closing of the merger (except to the extent any such representation and warranty expressly speaks as of a specified date, in which case as of such date), except where the failure of any such representations and warranties to be so true and correct (without regard to any materiality or Company Material Adverse Effect qualifications set forth in any such representation or warranty) would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. |
— | The Company will have performed in all material respects all obligations and covenants required to be performed by it. |
— | No “Company Material Adverse Effect” has occurred since the date of the merger agreement. |
— | WellCare will have received a certificate certifying as to the completion of the foregoing conditions. |
— | WellCare’s and Merger Sub’s representations and warranties with respect to authorization and ownership of UAM common stock will be true and correct in all material respects, as of the closing of the merger as though made on the date thereof (except to the extent any such representation and warranty expressly speaks as of a specified date, in which case as of such date). |
— | The remaining representations and warranties of each of WellCare and Merger Sub, other than those described in the immediately preceding bullet, will be true and correct, in each case as of the closing of the merger (except to the extent any such representation and warranty expressly speaks as of a specified date, in which case as of such date), except where the failure of any such representations and warranties to be so true and correct (without regard to any materiality or Parent Material Adverse Effect qualifications set forth in any such representation or warranty) would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect. |
— | WellCare and Merger Sub have performed in all material respects all of their other obligations under the merger agreement. |
— | The Company will have received a certificate from WellCare certifying as to the completion of the foregoing conditions. |
— | by mutual written consent of both WellCare and the Company; |
— | by either WellCare or the Company if: |
o | the merger is not consummated by June 19, 2017, except that such right to terminate the merger agreement will not be available to WellCare or the Company if a breach of the merger agreement by WellCare or the Company, respectively, was the principal cause of, or resulted in, the failure to consummate the merger by such date; provided, that such date may be extended until November 17, 2017, if on June 19, 2017 all conditions to the closing of the merger have been satisfied or waived (or, in the case of conditions that by their nature are to be satisfied at the closing of the merger, are capable of being so satisfied) other than the antitrust and regulatory approval conditions or absence of any legal restraint that enjoins or prohibits consummation of the merger relating to antitrust or regulatory approvals or arises from legal actions initiated by a governmental authority; |
o | the merger agreement has been submitted to the holders of UAM common stock for adoption at a duly convened meeting of the Company’s stockholders (or adjournment or postponement thereof) and the affirmative vote of the holders of a majority of the outstanding shares of UAM common stock entitled to vote in respect of the merger is not obtained; or |
o | any law or order permanently enjoins or otherwise prohibits consummation of the merger and (in the case of an order) such order has become final and non-appealable. |
— | by WellCare if: |
o | the Board of Directors has withdrawn, modified or amended the Board of Directors’ recommendation to the holders of UAM common stock in respect of the merger in any manner adverse to WellCare; |
o | if (a) the Board of Directors approves, endorses or recommends to the holders of UAM common stock a Superior Proposal, (b) a tender offer or exchange offer for any outstanding shares of capital stock of the Company is commenced before the affirmative vote of the holders of a majority of the outstanding shares of UAM common stock entitled to vote in respect of the merger is obtained and the Board of Directors fails to recommend in a Solicitation/Recommendation Statement on Schedule 14D-9 against acceptance of such tender offer or exchange offer by its stockholders within 10 business days, or (c) the Board of Directors fails to publicly reaffirm the Board of Directors’ recommendation or to recommend against any Takeover Proposal within 10 business days after receipt of any written request to do so from WellCare following the public announcement of any Takeover Proposal (provided, that WellCare will only make such request once with respect to any Takeover Proposal or any material amendment thereto); |
o | if there is an intentional and material breach of the Company’s non-solicitation obligations; or |
o | if the Company breaches any of its representations, warranties, covenants or agreements contained in the merger agreement, which breach would give rise to the failure of a closing condition and cannot be cured by June 19, 2017 (or November 17, 2017, if the outside date is extended, as described above), or, if curable, has not been cured by the Company within 30 business days after the Company’s receipt of written notice of such breach from WellCare; provided, that WellCare will not have the right to terminate the merger agreement for this reason if WellCare or Merger Sub is then in breach of any of their representations, warranties, covenants or agreements and such breach would result in its closing conditions not being satisfied. |
— | by the Company if: |
o | prior to the adoption of the merger agreement by the affirmative vote of holders of UAM common stock, the Company determines a Takeover Proposal to be a Superior Proposal and terminates the merger agreement to enter into a contract with respect to such Superior Proposal after complying with the non-solicitation obligations under the merger agreement (See “The Merger Agreement—Covenants of the Company—Solicitation of Takeover Proposals” beginning on page 74) and paid all amounts due to WellCare and Merger Sub under the merger agreement (See “The Merger Agreement—Effect of Termination; Termination Fee and Remedies—Fees Payable to WellCare” beginning on page 87); or |
o | a breach by WellCare or Merger Sub of a representation, warranty, covenant or agreement under the merger agreement has occurred, which breach would give rise to a failure of a condition to closing and such breach cannot be cured by June 19, 2017 (or November 17, 2017, if the outside date is extended, as described above), or if curable, is not cured by WellCare or Merger Sub within 30 business days after WellCare’s receipt of written notice of such breach from the Company; provided, that the Company will not have the right to terminate the merger agreement for this reason if the Company is then in breach of any of its representations, warranties, covenants or agreements and such breach would result in its closing conditions not being satisfied. |
— | If the merger agreement is terminated by the Company to enter into an agreement with respect to a Superior Proposal. In such case, payment is due before or concurrently with such termination. |
— | If the merger agreement is terminated by WellCare because: (a) of the withdrawal, modification or amendment of the Board of Directors’ recommendation to the holders of UAM common stock in respect of the merger in any manner adverse to WellCare; (b) (i) the Board of Directors approves, endorses or recommends to the holders of UAM common stock a Superior Proposal, (ii) a tender offer or exchange offer for any outstanding shares of capital stock of the Company is commenced before the affirmative vote of the holders of a majority of the outstanding shares of UAM common stock entitled to vote in respect of the merger is obtained and the Board of Directors fails to recommend in a Solicitation/Recommendation Statement on Schedule 14D-9 against acceptance of such tender offer or exchange offer by its stockholders within 10 business days, or (iii) the Board of Directors fails to publicly reaffirm the Board of Directors’ recommendation or to recommend against any Takeover Proposal within 10 business days after receipt of any written request to do so from WellCare following the public announcement of any Takeover Proposal (provided, that WellCare will only make such request once with respect to any Takeover Proposal or any material amendment thereto); or (c) the Board of Directors intentionally and materially breaches its obligations under the merger agreement to not, directly or indirectly (i) withdraw, modify or amend the Board of Directors’ recommendation to the holders of UAM common stock in respect of the merger in any manner adverse to WellCare, (ii) approve, endorse or recommend a Takeover Proposal, (iii) approve, recommend or allow the Company to enter into a contract relating to a Takeover Proposal (other than an acceptable confidentiality agreement), (iv) fail to include the Board of Directors’ recommendation to the holders of UAM common stock in respect of the merger in the Proxy Statement or (v) formally resolve to effect or publicly announce a determination or resolution to effect any of the foregoing. In such case, payment is due within five business days of such termination. |
— | If: |
o | the merger agreement is terminated by either WellCare or the Company because the merger was not consummated by June 19, 2017 (or November 17, 2017, if the outside date is extended, as described above); |
o | a third-party has made a Takeover Proposal (for this purpose, references to the figure “15%” in the description of “Takeover Proposal” above are replaced by “more than 50%”) after the date of the merger agreement and prior to the special meeting to vote with respect to the merger, which has not been withdrawn, terminated or expired prior to such special meeting; and |
o | within 12 months following such termination of the merger agreement, the Company or any of its subsidiaries enters into a definitive agreement for, or consummates, a Takeover Proposal |
— | The merger closed on December 15, 2016. |
— | The named executive officers who were employed by UAM at the time of the merger closing were terminated immediately after the merger on December 15, 2016, either by UAM without cause or by the executive officer for good reason. |
Name
|
Cash ($)
(1)
|
Equity ($)
(2)
|
Perquisites/
Benefits ($)
(3)
|
Tax
Reimburse-ments ($)
(4)
|
Other ($)
(5)
|
Total
Payments ($)
|
||||||||||||||||||
Richard A. Barasch
|
$
|
6,954,396
|
$
|
5,977,545
|
$
|
73,070
|
-
|
-
|
$
|
13,005,011
|
||||||||||||||
Adam C. Thackery
|
$
|
735,000
|
$
|
1,405,350
|
$
|
38,664
|
-
|
-
|
$
|
2,179,014
|
||||||||||||||
Theodore M. Carpenter, Jr.
|
$
|
1,357,958
|
$
|
856,385
|
$
|
8,187
|
-
|
-
|
$
|
2,222,530
|
||||||||||||||
Erin G. Page
|
$
|
1,285,200
|
$
|
2,716,164
|
$
|
38,664
|
-
|
$
|
459,000
|
$
|
4,499,028
|
|||||||||||||
Anthony L. Wolk
|
$
|
975,375
|
$
|
2,107,961
|
$
|
38,664
|
-
|
-
|
$
|
3,122,000
|
||||||||||||||
Robert A. Waegelein
(6)
|
0
|
0
|
0
|
-
|
0
|
0
|
(1)
|
Amounts represent the cash severance payable pursuant to the named executive officers’ employment agreements, except that the bonus payments for calendar year 2016 are assumed to be paid out at 100% of target (in lieu of pro rata amount) for each named executive officer, and are based on base salary as of December 15, 2016. These amounts are “double-trigger” payments, as they are payable only upon the occurrence of both a change in control and a termination of the named executive officer without cause or by the named executive officer for good reason. The cash severance and bonus for the named executive officers will be paid in a lump sum cash payment.
|
(2)
|
Pursuant to the terms of the merger agreement, as of the effective time of the merger, (x) each Company Option that is outstanding immediately prior to the effective time of the merger, whether or not then exercisable or vested, will be cancelled and converted into the right to receive an amount in cash equal to the excess, if any, of the per share merger consideration over the per share exercise price of such Company Option multiplied by the aggregate number of shares of UAM common stock in respect of such Company Option immediately before the effective time of the merger and (y) each Restricted Share that is outstanding immediately prior to the effective time of the merger will be cancelled and converted into the right to receive an amount in cash equal to the per share merger consideration. The right to receive the foregoing cash amounts with respect to Company Options and Restricted Shares will vest and be payable (a) with respect to Company Options or Restricted Shares that are vested as of the effective time of the merger in accordance with their terms, at the effective time of the merger and (b) with respect to Company Options or Restricted Shares that are not vested in accordance with their terms at the effective time of the merger, in each case, subject to the applicable holder’s continued employment through the applicable vesting date, on the earlier of (i) the 12-month anniversary of the date that the effective time occurs (or the next payroll date following such anniversary) and (ii) the next payroll date following the date on which such Company Option or Restricted Share, as applicable, would have otherwise vested in accordance with its terms, and in all cases, without any interest for the period from the effective time of the merger until such date; provided, that, equity awards granted in 2017 to employees (which shall be in the form of Restricted Shares) will convert into an equivalent cash award based on the value of the per share merger consideration and shall vest and be payable in accordance with the scheduled vesting terms of such awards, without any interest for the period from the effective time of the merger until such date. In addition, with respect to all Company Options and Restricted Shares (including those awards granted in 2017), if the employment with WellCare (or any of its affiliates) of a holder of Company Options or Restricted Shares is, prior to the applicable payment date, terminated by WellCare (or any of its affiliates) for any reason other than “cause” or by the holder for “good reason” (in each case, as such term is defined in the merger agreement), the payment in respect of the Company Options or Restricted Shares, as applicable, will be accelerated to the next practicable payroll date after the date of termination. Company Options and Restricted Shares owned by members of management and the Board of Directors will be treated the same as outstanding Company Options and Restricted Shares held by other employees, except that any unvested awards owned by members of the Board of Directors will accelerate and vest at the effective time.
|
Name
|
Expected payment in respect of Company Options Unvested as of the Effective Time of the Merger
($)
|
Expected payment in respect of Restricted Shares Unvested as of the Effective Time of the Merger ($)
|
||||||
Richard A. Barasch
|
$
|
1,750,150
|
$
|
4,227,395
|
||||
Adam C. Thackery
|
$
|
236,427
|
$
|
1,168,923
|
||||
Theodore M. Carpenter, Jr.
|
$
|
240,544
|
$
|
615,841
|
||||
Erin G. Page
|
$
|
355,013
|
$
|
2,361,151
|
||||
Anthony L. Wolk
|
$
|
326,400
|
$
|
1,781,561
|
||||
Robert A. Waegelein
|
0
|
0
|
(3)
|
Represents health continuation coverage for each of the executives (36 months for Mr. Barasch; 18 months for Mr. Thackery, Ms. Page and Mr. Wolk; and 12 months for Mr. Carpenter). These amounts are “double-trigger” payments as they are payable only upon the occurrence of both a change in control and a termination of the named executive officer without cause or by the named executive officer for good reason.
|
(4)
|
Only Mr. Barasch is contractually eligible for a change-in-control gross-up payment pursuant to his employment agreement.
|
(5)
|
Represents a retention bonus, payable by WellCare pursuant to a Retention Bonus Agreement entered into between Ms. Page and WellCare in connection with the merger. Such retention bonus shall be payable in two equal lump sum installments, with 50% payable on the one-year anniversary of the date on which the merger closing occurs and 50% payable on the two-year anniversary of the date on which the merger closing occurs, subject to acceleration upon a termination of the named executive officer without cause or by the named executive officer for good reason. Such payments are “single-trigger” payments as they are not payable solely as a result of the consummation of the merger, but are not otherwise conditioned on a termination without cause or for good reason (although they would be forfeited on termination for cause or a voluntary resignation without good reason).
|
(6)
|
Mr. Waegelein retired from the Company effective May 31, 2015. Upon retirement, Mr. Waegelein received a cash severance payment of $833,423 and acceleration of any unvested equity awards. Mr. Waegelein will not be entitled to receive any incremental payments or benefits in connection with the consummation of the merger, either alone or in connection with any other event.
|
Fiscal Year Ended December 25, 2013
|
High
|
Low
|
||||||
First Quarter
|
$
|
10.88
|
$
|
8.08
|
||||
Second Quarter
|
$
|
9.84
|
$
|
8.21
|
||||
Third Quarter
|
$
|
11.13
|
$
|
7.26
|
||||
Fourth Quarter
|
$
|
7.91
|
$
|
6.85
|
||||
Fiscal Year Ended December 31, 2014
|
High
|
Low
|
||||||
First Quarter
|
$
|
7.69
|
$
|
6.60
|
||||
Second Quarter
|
$
|
8.47
|
$
|
6.88
|
||||
Third Quarter
|
$
|
8.68
|
$
|
7.63
|
||||
Fourth Quarter
|
$
|
9.56
|
$
|
7.76
|
||||
Fiscal Year Ended December 30, 2015
|
High
|
Low
|
||||||
First Quarter
|
$
|
10.86
|
$
|
8.58
|
||||
Second Quarter
|
$
|
11.16
|
$
|
8.79
|
||||
Third Quarter
|
$
|
10.25
|
$
|
6.73
|
||||
Fourth Quarter
|
$
|
8.05
|
$
|
6.38
|
||||
Fiscal Year Ending December 30, 2016
|
High
|
Low
|
||||||
First Quarter
|
$
|
7.37
|
$
|
5.55
|
||||
Second Quarter
|
$
|
8.55
|
$
|
7.00
|
||||
Third Quarter
|
$
|
8.04
|
$
|
6.72
|
||||
Fourth Quarter (through December 20, 2016)
|
$
|
10.13
|
$
|
7.23
|
— | each of the Company’s directors and named executive officers; |
— | all of the Company’s current executive officers and directors as a group; and |
— | each person or “group” of persons (as defined under Section 13(d)(3) of the Exchange Act) known by the Company to own beneficially more than 5% of the outstanding shares or voting power of UAM common stock. |
Name, Address and Position
(1)
|
Amount and Nature of Beneficial Ownership
(2)
|
Percentage of Class
(3)
|
||||||
Richard A. Barasch
|
4,179,411
|
(4)
|
7.0
|
%
|
||||
Chief Executive Officer
|
||||||||
Steven H. Black
|
325,231
|
(5)
|
*
|
|||||
Chief Administrative Officer
|
||||||||
Theodore M. Carpenter, Jr.
|
550,603
|
(6)
|
*
|
|||||
Executive Vice President, Health Care Services
|
||||||||
Sally W. Crawford
|
135,857
|
(7)
|
*
|
|||||
Director
|
||||||||
Matthew W. Etheridge
|
135,847
|
(7)
|
*
|
|||||
Director
|
||||||||
Mark K. Gormley
|
68,701
|
(8)
(9)
|
*
|
|||||
Director
|
||||||||
Dr. Mohit Kaushal
|
10,430
|
(10)
|
*
|
|||||
Director
|
||||||||
Patrick J. McLaughlin
|
214,947
|
(7)
|
*
|
|||||
Director
|
||||||||
Erin G. Page
|
407,690
|
(11)
|
*
|
|||||
President, Medicare
|
||||||||
Adam C. Thackery
|
243,407
|
(12)
|
*
|
|||||
Chief Financial Officer
|
||||||||
Anthony L. Wolk
|
370,324
|
(13)
|
*
|
|||||
Executive Vice President, General Counsel and Secretary
|
||||||||
All Directors and Executive Officers as a Group
|
6,642,448
|
(14)
|
11.0
|
%
|
||||
Dimensional Fund Advisors, L.P.
|
6,489,889
|
(15)
|
11.0
|
%
|
||||
Palisades West, Building One
6300 Bee Cave Road
Austin, TX 78746
|
||||||||
Camber Capital Management, LLC
|
5,875,000
|
(16)
|
10.0
|
%
|
||||
Attn: Stephen DuBois
101 Huntington Avenue, Suite 1550
Boston, MA 02199
|
||||||||
T. Rowe Price Associates, Inc.
|
5,632,860
|
(16)
|
9.6
|
%
|
||||
PO Box 89000
Baltimore, MD 02199
|
||||||||
Diamond Hill Capital Management, Inc.
|
5,630,229
|
(17)
|
9.6
|
%
|
||||
325 John H. McConnell Boulevard, Suite 200
Columbus, OH 43215
|
||||||||
Lee Equity Partners, LLC
|
5,386,842
|
(18)
|
9.1
|
%
|
||||
650 Madison Avenue, 21
st
Floor
New York, NY 10022
|
||||||||
Deerfield Management Company
|
4,592,060
|
(16)
|
7.8
|
%
|
||||
Attn: James E. Flynn
780 Third Avenue, 37
th
Floor
New York, NY 10017
|
||||||||
The Vanguard Group, Inc.
|
3,695,426
|
(16)
|
6.3
|
%
|
||||
PO Box 2600, V26
Valley Forge, PA 19482-2600
|
(1) | Unless otherwise noted, each person’s address is: c/o Universal American Corp., 44 South Broadway, Suite 1200, White Plains, New York 10601. |
(2) | For purposes of this security ownership table, beneficial ownership includes currently exercisable options and options exercisable within 60 days after December 15, 2016. Except as otherwise noted below, all shares of UAM common stock, vested options and all restricted stock are owned beneficially by the individual listed with sole voting and investment power. |
(3) | We have calculated the percentage of the class for each shareholder by dividing: |
· | the number of shares deemed to be beneficially held by the shareholder as of December 15, 2016, as determined in accordance with Rule 13d-3 of the Exchange Act, by |
· | the sum of |
o | 58,833,710 which is the number of shares of UAM common stock outstanding as of December 15, 2016, plus |
o | the number of shares of UAM common stock issuable upon exercise of options and other derivative securities held by the shareholder which may be acquired through the exercise of stock options which are exercisable currently or within 60 days. |
(4) | Includes 933,511 shares of UAM common stock which may be acquired through the exercise of Company Options, which are exercisable currently or within 60 days after December 15, 2016 and 403,123 shares of unvested Restricted Stock. Also includes 1,268,336 shares of UAM common stock which are held directly by, or in trust for, members of Mr. Barasch’s immediate family as to which Mr. Barasch disclaims beneficial ownership. |
(5) | Includes 115,856 shares of UAM common stock which may be acquired through the exercise of stock options, which are exercisable currently or within 60 days after December 15, 2016 and 167,228 shares of unvested Restricted Stock. Also includes 106,030 shares of UAM common stock which are held directly by members of Mr. Black’s immediate family as to which Mr. Black disclaims beneficial ownership. |
(6) | Includes 175,366 shares of UAM common stock which may be acquired through the exercise of Company Options, which are exercisable currently or within 60 days after December 15, 2016 and 57,820 shares of unvested Restricted Stock. |
(7) | Includes 59,613 shares of UAM common stock which may be acquired through the exercise of Company Options, which are exercisable currently or within 60 days after December 15, 2016 and 25,512 shares of unvested Restricted Stock. |
(8) | The beneficial ownership reported for Mr. Gormley reflects his personal holdings and does not reflect any shares or other beneficial ownership arising from his service on the Board of Directors or his association with Lee Equity. Compensation for the service of Mr. Gormley in the form of cash or equity awards is paid to Lee Equity, not Mr. Gormley. |
(9) | Address is c/o Lee Equity, 650 Madison Avenue, New York, NY 10022. Mr. Gormley is a Partner of Lee Equity. Mr. Gormley disclaims beneficial ownership of all shares of UAM common stock that are beneficially owned by Lee Equity. |
(10) | Represents 10,430 shares of unvested Restricted Stock. |
(11) | Includes 125,186 shares of UAM common stock which may be acquired through the exercise of Company Options, which are exercisable currently or within 60 days after December 15, 2016 and 232,351 shares of unvested Restricted Stock. |
(12) | Includes 84,883 shares of UAM common stock which may be acquired through the exercise of Company Options, which are exercisable currently or within 60 days after December 15, 2016 and 115,177 shares of unvested Restricted Stock. |
(13) | Includes 140,856 shares of UAM common stock which may be acquired through the exercise of Company Options, which are exercisable currently or within 60 days after December 15, 2016 and 174,392 shares of unvested Restricted Stock. |
(14) | Includes 1,754,497 shares of UAM common stock which may be acquired through the exercise of Company Options, which are exercisable currently or within 60 days after December 15, 2016 and 1,237,057 shares of unvested Restricted Stock. |
(15) | Based upon information contained in a Schedule 13F-HR filed with the SEC on November 10, 2016. |
(16) | Based upon information contained in a Schedule 13F-HR filed with the SEC on November 14, 2016. |
(17) | Based upon information contained in a Schedule 13F-HR filed with the SEC on November 9, 2016. |
(18) | Includes 59,613 shares of UAM common stock which may be acquired through the exercise of Company Options, which are exercisable currently or within 60 days after December 15, 2016 and 25,512 shares of unvested Restricted Stock. |
— | annual report on Form 10-K for the year ended December 31, 2015, filed with the SEC on March 10, 2016; |
— | quarterly reports on Form 10-Q for the quarters ended March 31, 2016, June 30, 2016 and September 30, 2016, and filed with the SEC on May 10, 2016, August 4, 2016 and November 8, 2016, respectively; and |
— | current reports on Form 8-K filed with the SEC on March 3, 2016, April 19, 2016, May 10, 2016, May 25, 2016, June 22, 2016, June 27, 2016, August 1, 2016, August 4, 2016, August 8, 2016, August 22, 2016, September 14, 2016, November 8, 2016, November 17, 2016, November 18, 2016 and November 21, 2016. |
ARTICLE I
THE MERGER
|
1
|
|
Section 1.1
|
The Merger
|
1
|
Section 1.2
|
Closing
|
1
|
Section 1.3
|
Effective Time
|
2
|
Section 1.4
|
Effects of the Merger
|
2
|
Section 1.5
|
Certificate of Incorporation
|
2
|
Section 1.6
|
Bylaws
|
2
|
Section 1.7
|
Directors
|
2
|
Section 1.8
|
Officers
|
2
|
ARTICLE II
EFFECT OF THE MERGER ON CAPITAL STOCK
|
3
|
|
Section 2.1
|
Conversion of Capital Stock
|
3
|
Section 2.2
|
Redemption of Preferred Stock
|
4
|
Section 2.3
|
Surrender of Certificates and Book-Entry Shares
|
4
|
Section 2.4
|
Treatment of Equity Awards
|
7
|
Section 2.5
|
Dissenting Shares
|
9
|
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
|
9
|
|
Section 3.1
|
Organization and Power
|
10
|
Section 3.2
|
Organizational Documents
|
10
|
Section 3.3
|
Governmental Authorizations
|
10
|
Section 3.4
|
Corporate Authorization
|
11
|
Section 3.5
|
Non-Contravention
|
11
|
Section 3.6
|
Capitalization
|
12
|
Section 3.7
|
Subsidiaries
|
13
|
Section 3.8
|
Voting
|
14
|
Section 3.9
|
SEC Reports
|
14
|
Section 3.10
|
Financial Statements; Internal Controls
|
14
|
Section 3.11
|
Undisclosed Liabilities
|
15
|
Section 3.12
|
Absence of Certain Changes
|
16
|
Section 3.13
|
Litigation
|
16
|
Section 3.14
|
Material Contracts
|
16
|
Section 3.15
|
Benefit Plans
|
18
|
Section 3.16
|
Labor Relations
|
21
|
Section 3.17
|
Taxes
|
21
|
Section 3.18
|
Environmental Matters
|
23
|
Section 3.19
|
Intellectual Property
|
23
|
Section 3.20
|
Real Property; Personal Property
|
24
|
Section 3.21
|
Permits; Compliance with Law
|
25
|
Section 3.22
|
Regulatory Matters
|
26
|
Section 3.23
|
Takeover Statutes
|
29
|
Section 3.24
|
Transactions with Affiliates
|
29
|
Section 3.25
|
Insurance
|
29
|
Section 3.26
|
Insurance Reports
|
29
|
Section 3.27
|
Insurance Laws
|
30
|
Section 3.28
|
Agents
|
31
|
Section 3.29
|
Reinsurance Agreements; Fronting Arrangements
|
31
|
Section 3.30
|
Capital or Surplus Maintenance
|
31
|
Section 3.31
|
Opinion of Financial Advisor
|
32
|
Section 3.32
|
Brokers
|
32
|
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
|
32
|
|
Section 4.1
|
Organization and Power
|
32
|
Section 4.2
|
Governmental Authorizations
|
32
|
Section 4.3
|
Authorization
|
33
|
Section 4.4
|
Non-Contravention
|
33
|
Section 4.5
|
Capitalization; Interim Operations of Merger Sub; Ownership of Common Stock; Section 203 of the DGCL
|
34
|
Section 4.6
|
Sufficient Funds
|
35
|
Section 4.7
|
Litigation
|
35
|
Section 4.8
|
Reserved
|
35
|
Section 4.9
|
Absence of Arrangements with Management
|
35
|
Section 4.10
|
Brokers
|
35
|
Section 4.11
|
Independent Investigation
|
36
|
ARTICLE V
COVENANTS
|
36
|
|
Section 5.1
|
Conduct of Business of the Company
|
36
|
Section 5.2
|
Conduct of Business of Parent
|
40
|
Section 5.3
|
Access to Information; Confidentiality
|
40
|
Section 5.4
|
Solicitation
|
41
|
Section 5.5
|
Company Proxy Statement
|
44
|
Section 5.6
|
Company Stockholders Meeting
|
46
|
Section 5.7
|
Employees; Benefit Plans
|
46
|
Section 5.8
|
Directors’ and Officers’ Indemnification and Insurance
|
50
|
Section 5.9
|
Reasonable Best Efforts
|
52
|
Section 5.10
|
Consents; Filings; Further Action
|
53
|
Section 5.11
|
Public Announcements
|
55
|
Section 5.12
|
NYSE De-listing
|
56
|
Section 5.13
|
Fees and Expenses
|
56
|
Section 5.14
|
Takeover Statutes
|
56
|
Section 5.15
|
Obligations of Merger Sub
|
56
|
Section 5.16
|
Rule 16b-3
|
56
|
Section 5.17
|
Resignation of Directors
|
56
|
Section 5.18
|
Notification of Certain Matters
|
56
|
Section 5.19
|
Certain Litigation
|
57
|
Section 5.20
|
Parent Standstill
|
57
|
Section 5.21
|
Convertible Notes
|
58
|
Section 5.22
|
Transition Matters
|
59
|
ARTICLE VI
CONDITIONS
|
59
|
|
Section 6.1
|
Conditions to Each Party’s Obligation to Effect the Merger
|
59
|
Section 6.2
|
Conditions to Obligations of Parent and Merger Sub
|
59
|
Section 6.3
|
Conditions to Obligation of the Company
|
60
|
Section 6.4
|
Frustration of Closing Conditions
|
61
|
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
|
61
|
|
Section 7.1
|
Termination by Mutual Consent
|
61
|
Section 7.2
|
Termination by Either Parent or the Company
|
61
|
Section 7.3
|
Termination by Parent
|
62
|
Section 7.4
|
Termination by the Company
|
63
|
Section 7.5
|
Effect of Termination
|
63
|
Section 7.6
|
Fees and Expenses Following Termination
|
63
|
ARTICLE VIII
MISCELLANEOUS
|
65
|
|
Section 8.1
|
Certain Definitions
|
65
|
Section 8.2
|
Interpretation
|
73
|
Section 8.3
|
No Survival
|
74
|
Section 8.4
|
Governing Law
|
74
|
Section 8.5
|
Submission to Jurisdiction; Service
|
74
|
Section 8.6
|
Waiver of Jury Trial
|
75
|
Section 8.7
|
Notices
|
75
|
Section 8.8
|
Amendment
|
76
|
Section 8.9
|
Extension; Waiver
|
76
|
Section 8.10
|
Entire Agreement
|
77
|
Section 8.11
|
No Third-Party Beneficiaries
|
77
|
Section 8.12
|
Severability
|
77
|
Section 8.13
|
Rules of Construction
|
78
|
Section 8.14
|
Assignment
|
78
|
Section 8.15
|
Remedies
|
78
|
Section 8.16
|
Specific Performance
|
78
|
Section 8.17
|
Counterparts; Effectiveness
|
79
|
Exhibit A
|
Surviving Company Charter
|
Term
|
Section
|
2017 Annual Bonus Targets
|
5.7(d)
|
2017 Annual Bonuses
|
5.7(d)
|
401(k) Plan
|
5.7(i)
|
Acceptable Confidentiality Agreement
|
5.4(b)
|
Agent
|
3.28
|
Agreement
|
Preamble
|
Balance Sheet Date
|
3.11(a)
|
Book-Entry Shares
|
2.1(c)(ii)
|
Certificate of Merger
|
1.3
|
Certificates
|
2.1(c)(ii)
|
Closing
|
1.2
|
Closing Date
|
1.2
|
CMS
|
3.3(f)
|
CMS Notice Requirements
|
3.3(f)
|
Code
|
2.3(f)
|
Common Stock
|
2.1(b)
|
Company
|
Preamble
|
Company Adverse Recommendation Change
|
5.4(c)
|
Company Benefit Plan
|
3.15(a)
|
Company Board
|
Recitals
|
Company Board Recommendation
|
Recitals
|
Company Disclosure Letter
|
III
|
Company Financial Advisor
|
3.31
|
Company Intellectual Property
|
3.19(a)
|
Company Option
|
2.4(a)
|
Company Organizational Documents
|
3.2
|
Company Permits
|
3.21(a)
|
Company Proxy Statement
|
3.3(b)
|
Company Stockholders Meeting
|
3.3(b)
|
Confidentiality Agreement
|
5.3(b)
|
Continuation Period
|
5.7(a)
|
Continuing Employee
|
5.7(a)
|
Converted Restricted Share Award
|
2.4(b)
|
Convertible Notes
|
5.21(a)
|
Damages
|
8.1(j)
|
DGCL
|
1.1
|
Dissenting Shares
|
2.5(a)
|
Effective Time
|
1.3
|
Equity Linked Securities
|
3.6(b)
|
ERISA
|
3.15(a)
|
Exchange Act
|
3.3(c)
|
Excluded Shares
|
2.1(b)
|
Term
|
Section
|
Exercise Price
|
2.4(a)
|
Expense Reimbursement
|
7.6(c)
|
Expenses
|
5.13
|
GAAP
|
3.10(a)(ii)
|
Governmental Authorizations
|
3.3
|
HSR Act
|
3.3(e)
|
Indemnified Parties
|
5.8(a)
|
Indenture
|
5.21(a)
|
Insurance Entities
|
3.26
|
Insurance Laws
|
3.26
|
Insurance Policies
|
3.25
|
Internal Controls Disclosures
|
3.10(b)
|
IRS
|
3.15(b)
|
Legal Actions
|
3.13
|
Liabilities
|
3.11
|
Material Contract
|
3.14(a)
|
Maximum Premium
|
5.8(c)
|
Merger
|
Recitals
|
Merger Consideration
|
2.1(c)(i)
|
Merger Sub
|
Preamble
|
Minimum Guaranteed 2017 Annual Bonus
|
5.7(d)
|
MSSP ACOs
|
3.22(j)
|
New Plans
|
5.7(f)
|
Non-Voting Common Stock
|
2.1(b)
|
Old Plans
|
5.7(f)
|
Option Payment Date
|
2.4(a)
|
Parent
|
Preamble
|
Parent Assets
|
4.4(b)
|
Parent Contracts
|
4.4(c)
|
Parent Disclosure Letter
|
IV
|
Paying Agent
|
2.3(a)
|
Payment Fund
|
2.3(b)
|
Permits
|
3.21(a)
|
Post-Closing Period
|
5.7(d)
|
Pre-Closing Period
|
5.7(d)
|
Preferred Stock
|
3.6(a)
|
Privacy Laws
|
3.22(h)
|
Qualifying Proposal
|
7.6(b)(iii)
|
Qualifying Termination
|
5.7(d)
|
Real Property Leases
|
3.20(b)
|
Redemption Date
|
2.2
|
Redemption Notice
|
2.2
|
Restricted Share
|
2.4(b)
|
Retention Program
|
5.7(e)
|
RS Payment Date
|
2.4(b)
|
Term | Section |
SAP Statements
|
3.26
|
SEC
|
3.3(b)
|
Securities
|
3.6(b)
|
Securities Act
|
3.9
|
Series A Preferred Stock
|
3.6(a)
|
Shareholder Litigation
|
5.19(a)
|
Surviving Bylaws
|
1.6
|
Surviving Charter
|
1.5
|
Surviving Corporation
|
1.1
|
Termination Date
|
7.2(a)
|
Termination Fee
|
7.6(c)
|
Trustee
|
5.21(a)
|
Voting Common Stock
|
2.1(b)
|
WARN Act
|
3.16(b)
|
|
If to Parent or Merger Sub, to:
|
|
c/oWellCare Health Plans, Inc.
8735 Henderson Road, Renaissance One
Tampa, Florida 33634
|
||
|
Attention:
|
Anat Hakim, Senior Vice President, General
Counsel and Secretary
|
|
Facsimile:
|
(813) 206-2884
|
E-Mail: | anat.hakim@wellcare.com | |
with a copy (which shall not constitute notice) to: | ||
Kirkland & Ellis LLP
601 Lexington Avenue
New York, NY 10022
|
||
Attention: | Sarkis Jebejian, P.C. |
WELLCARE HEALTH PLANS, INC. | |||
|
By:
|
/s/ Andrew L. Asher | |
Name: Andrew L. Asher | |||
Title: Executive Vice President and
Chief Financial Officer
|
|||
WIND MERGER SUB, INC. | |||
|
By:
|
/s/ Andrew L. Asher | |
Name: Andrew L. Asher | |||
Title: President and Chief Financial
Officer
|
|||
UNIVERSAL AMERICAN CORP. | |||
|
By:
|
/s/ Richard A. Barasch | |
Name: Richard A. Barasch | |||
Title: CEO & President | |||
(i) | reviewed the financial terms of a draft copy of the Merger Agreement dated as of November 17, 2016, which was the most recent draft available to us (the “Draft Merger Agreement”); |
(ii) | reviewed certain publicly available business and financial information concerning the Company and the industries in which it operates; |
(iii) | reviewed certain publicly available financial analyses and forecasts relating to the Company prepared by equity analysts who report on the Company; |
(iv) | reviewed certain internal financial analyses and forecasts prepared by and provided to us by the management of the Company relating to its business (the “Company Projections”); |
(v) | conducted discussions with members of senior management and representatives of the Company concerning the matters described in clauses (ii)-(iv) above, and certain other matters we believed necessary or appropriate to our inquiry; |
(vi) | compared the financial and operating performance of the Company with publicly available information concerning other publicly-traded companies and reviewed the current and historical market prices of the Company Common Stock and certain publicly traded securities of such other companies, in each case, that we deemed relevant; |
(vii) | reviewed and analyzed the proposed financial terms of the Merger as compared to the financial terms of certain selected business combinations and the consideration paid in such transactions that we deemed relevant; |
(viii) | reviewed and analyzed, based on the Company Projections, the cash flows generated by the Company to determine the present value of the Company’s discounted cash flows; and |
(ix) | performed such other financial studies, analyses and investigations and considered such other information as we deemed appropriate for the purposes of this opinion. |
UNIVERSAL AMERICAN CORP.
44 SOUTH BROADWAY, SUITE 1200
WHITE PLAINS, NY 10601-4411
|
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
|
|
E15991-S53840
KEEP THIS PORTION FOR YOUR RECORDS
|
|
DETACH AND RETURN THIS PORTION ONLY
|
The Board of Directors recommends you vote FOR proposals 1, 2 and 3.
|
For
|
Against
|
Abstain
|
|||
1.
To adopt the Agreement and Plan of Merger, dated as of November 17, 2016 (as it may be amended, the “Merger Agreement”), by and among WellCare Health Plans, Inc. (“WellCare”), Wind Merger Sub, Inc. (“Merger Sub”), and Universal American Corp. (the “Company”), pursuant to which Merger Sub will merge with and into the Company (the “Merger”) and certain other transactions will be effected with the Company surviving as an indirect wholly owned subsidiary of WellCare. (“Proposal 1”)
|
☐ | ☐ | ☐ | |||
2.
To approve, on an advisory (non-binding) basis, certain agreements or un
derstandings with, and items of compensation payable to,
the Company’s named executive officers that are based on or otherwise related to the Merger. (“Proposal 2”)
|
☐ | ☐ | ☐ | |||
3.
To adjourn or postpone the special meeting (if necessary or appropriate) to solicit additional proxies if there are insufficient votes at
the time of the special meeting to adopt the Merger Agreement. (“Proposal 3”)
|
☐ | ☐ | ☐ |
|
Yes
|
No |
Please indicate if you plan to attend this meeting.
|
☐ | ☐ |
Signature [PLEASE SIGN WITHIN BOX]
|
Date
|
Signature (Joint Owners)
|
Date
|
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
UNIVERSAL AMERICAN CORP.
FOR THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON [
●
], 2017
The undersigned, revoking all prior proxies, hereby appoints Adam C. Thackery and Anthony L. Wolk, as proxies, each with the power to appoint his substitute, and hereby authorizes each of them to represent and vote, as designated on the reverse side, all shares of common stock of Universal American Corp. held of record by the undersigned on [
●
], 2017 at the Special Meeting of Shareholders to be held on [
●
], 2017 at 10:00 AM, ET, at the offices of Universal American Corp., 44 South Broadway, Suite 1200, White Plains, NY 10601, or at any adjournments or postponements thereof. The undersigned hereby directs Messers. Thackery and Wolk to vote in accordance with their best judgment on any matters which may properly come before the Special Meeting, all as indicated in the Notice of Special Meeting, receipt of which is hereby acknowledged, and to act on the matters set forth in such Notice as specified by the undersigned.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN WITH RESPECT TO A PARTICULAR PROPOSAL, THIS PROXY WILL BE VOTED “FOR” THE PROPOSALS LISTED AND, IN THE DISCRETION OF MESSRS. THACKERY AND WOLK, ON ANY OTHER ITEMS PRESENTED AT THE SPECIAL MEETING. ATTENDANCE OF THE UNDERSIGNED AT THE SPECIAL MEETING OR AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF WILL NOT BE DEEMED TO REVOKE THE PROXY UNLESS THE UNDERSIGNED REVOKES THIS PROXY IN WRITING.
At the present time, the Board of Directors knows of no other business to be presented at the Special Meeting.
Continued and to be signed on reverse
side
|
1 Year Universal American Corp. New (delisted) Chart |
1 Month Universal American Corp. New (delisted) Chart |
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