-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AtNMjbzpT7ebkPe38pxx3eoQzP/D857Qib5ulivKwlVUqTLXpYhAU0zcA7gdPQuP 0xD5phwBMiOROkGhGIp94g== 0000950134-99-008917.txt : 19991018 0000950134-99-008917.hdr.sgml : 19991018 ACCESSION NUMBER: 0000950134-99-008917 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19991014 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HEALTHPLAN SERVICES CORP CENTRAL INDEX KEY: 0000942319 STANDARD INDUSTRIAL CLASSIFICATION: INSURANCE AGENTS BROKERS & SERVICES [6411] IRS NUMBER: 133787901 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-46553 FILM NUMBER: 99728003 BUSINESS ADDRESS: STREET 1: 3501 FRONTAGE RD CITY: TAMPA STATE: FL ZIP: 33607 BUSINESS PHONE: 8132891000 MAIL ADDRESS: STREET 1: 3501 FRONTAGE RD CITY: TAMPA STATE: FL ZIP: 33607 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: UICI CENTRAL INDEX KEY: 0000773660 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 752044750 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 4001 MCEWEN STE 200 CITY: DALLAS STATE: TX ZIP: 75244 BUSINESS PHONE: 9723926700 MAIL ADDRESS: STREET 1: 4001 MCEWEN SUITE 200 CITY: DALLAS STATE: TX ZIP: 75244 FORMER COMPANY: FORMER CONFORMED NAME: UNITED INSURANCE COMPANIES INC DATE OF NAME CHANGE: 19920703 SC 13D 1 SCHEDULE 13D 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 HealthPlan Services Corporation (Name of Issuer) Common Stock, $0.01 par value ------------------------------------------------------------------------------ (Title of Class of Securities) 421959107 ----------------------------------------------------------------- (CUSIP Number) Glenn W. Reed, Esq. Executive Vice President and General Counsel UICI 4001 McEwen Drive, Suite 200 Dallas, Texas 75244 (972) 392-6700 Copy to: Robert J. Joseph, Esq. Gardner, Carton & Douglas 321 North Clark Street, Suite 3400 Chicago, Illinois 60614 (312) 644-3000 ------------------------------------------------------------------------------ (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) October 5, 1999 - ------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ]. Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). 2 SCHEDULE 13D CUSIP No. 421959107 Page 2 of __ Pages - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON UICI I.R.S. Identification No. 75-2044750 - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS WC/OO - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 3,941,499* ------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER 0 OWNED BY ------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 3,941,499* ------------------------------------------- PERSON 10 SHARED DISPOSITIVE POWER WITH 0 - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,941,499* - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 28.8% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - ------------------------------------------------------------------------------- * BENEFICIAL OWNERSHIP DISCLAIMED. SEE ITEM 5 BELOW. INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. 3 Item 1. Security and Issuer. This statement relates to the common stock, par value $0.01 per share (the "Common Stock"), of HealthPlan Services Corporation, a Delaware corporation (the "Company"). The principal executive offices of the Company are located at 3501 Frontage Road, Tampa, Florida 33607. Item 2. Identity and Background. (a)-(c) and (f) This statement is being filed by UICI, a Delaware corporation. The principal executive offices of UICI are located at 4001 McEwen Drive, Suite 200, Dallas, Texas 75244. UICI is a diversified financial services company which offers insurance and financial services to niche consumer and institutional markets. UICI also provides technology and outsourcing solutions to the insurance and health services communities. As to each of the executive officers and directors of UICI, the name, business address, present principal occupation or employment and the name and principal address of any corporation or other organization in which such employment is indicated, are set forth on Schedule I hereto. Each of such persons is a citizen of the United States. (d) During the last five years, neither UICI nor, to the best of UICI's knowledge, any of the individuals named in Schedule I hereto, has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) During the last five years, neither UICI nor, to the best of UICI's knowledge, any of the individuals named in Schedule I hereto, has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Item 3. Source and Amount of Funds or Other Consideration. Concurrently with entering into the Merger Agreement (defined in Item 4 below), UICI was granted the Option (defined in Item 4 below). None of the triggering events permitting exercise of the Option have occurred as of the date of this Schedule 13D. In the event that the Option becomes exercisable and UICI wishes to purchase for cash the Company Common Stock subject thereto, UICI will fund the exercise price from working capital or through other sources, which could include borrowings. Item 4. Purpose of Transaction. The Company, UICI and UICI Acquisition Co., a Delaware corporation ("New UICI Sub"), have entered into an Agreement and Plan of Merger, dated as of October 5, 1999 (the "Merger Agreement"), which provides for a strategic business combination involving UICI, UICI Acquisition Co. and the Company in a merger transaction (the "Transaction"). The Transaction, which was unanimously approved by the Boards of Directors of the constituent companies, is expected to close in early 2000, shortly after all of the conditions to the consummation of the Transaction are met or waived. 4 In the Transaction, New UICI Sub will be merged into the Company, with the Company as the surviving entity. As a result of the Transaction, UICI will be the parent company of the Company. The Merger Agreement is incorporated herein by reference to Exhibit 2 to UICI's Current Report on Form 8-K dated October 5, 1999 (the "October 5, 1999 Form 8-K"), as filed with the Securities and Exchange Commission (the "SEC") on October 7, 1999. The description of the Merger Agreement set forth herein does not purport to be complete and is qualified in its entirety by the provisions of the Merger Agreement. Under the terms of the Merger Agreement, New UICI Sub will be merged with and into the Company, with the Company being the surviving corporation. The Company will be a wholly-owned subsidiary of UICI. Each outstanding share of Common Stock of the Company will be canceled and converted into the right to receive a fraction of a share of common stock, par value $.0l per share, of UICI ("UICI Common Stock"). The fraction will be determined based on an exchange ratio that is, in turn, based on the average closing stock price of UICI Common Stock for a period of 20 consecutive trading days ending on the third trading day immediately prior to the effective date of the Transaction. The exchange ratio will be calculated as follows:
Price Range of UICI Common Stock (per share) Exchange Ratio -------------------------------------------- -------------- o Greater than $33.00 $9.50 / (average price of UICI Common Stock - $3.00) o Less than or equal to $33.00 and greater than $30.00 .3167 o Less than or equal to $30.00, but greater than or $9.50 / (average price of UICI Common Stock) equal to $28.00 o Less than $28.00, but greater than or equal to $23.00 .3393 o Less than $23.00, but greater than or equal to $21.00 $9.50 / (average price of UICI Common Stock + $5.00) o Less than $21.00 .3654
Based on the stock price of UICI on October 5, 1999, the Company's stockholders would receive .3393 shares of UICI common stock for each share of the Company's common stock they own. The Common Stock of the Company will then be delisted from the New York Stock Exchange. The Transaction is subject to customary closing conditions, including, without limitation, the receipt of the required shareholder approval of the Company; and the receipt of all necessary governmental approvals and the making of all necessary governmental filings, including the filing of the requisite notification with the Federal Trade Commission and the Department of Justice under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the expiration of the applicable waiting period thereunder. The Transaction is also subject to receipt of opinions of counsel that the Transaction will qualify as a tax-free reorganization and completion of the refinancing of the Company's and UICI's bank lines of credit. In addition, the Transaction is conditioned upon the effectiveness of a registration statement to be filed by UICI with the SEC with respect to the UICI Common Stock to be issued in the Transaction and the approval for listing of such shares on the New York Stock Exchange. (See Article VII of the Merger 5 Agreement.) A Company Shareholder meeting to vote upon the Transaction will be convened as soon as practicable and is expected to be held in the fourth quarter of 1999. The Merger Agreement contains certain covenants of the Company regarding the conduct of the business pending the consummation of the Transaction. Generally, the Company must carry on its business in the ordinary course consistent with past practice, may not pay dividends on common stock, and may not issue any capital stock other than for the issuance of shares upon exercise of existing stock options. The Merger Agreement also contains restrictions on, among other things, charter and bylaw amendments, capital expenditures, acquisitions, dispositions, incurrence of indebtedness, certain increases in employee compensation and benefits, and affiliate transactions. (See Article VI of the Merger Agreement.) The Merger Agreement provides that, after the effectiveness of the Transaction (the "Effective Time"), James K. Murray, Jr., the current Chairman of the Board and Chief Executive Officer of the Company, will be appointed to UICI's Board of Directors. Steven K. Arnold, presently head of UICI's student health insurance division, will become President and Chief Executive Officer of the Company. The Merger Agreement may be terminated under certain circumstances, including: o by mutual consent of the parties; o by either party if the merger has not become effective before March 31, 2000; o by either party if the Company stockholders do not approve the merger agreement and the merger; o by either party if any permanent injunction or action by any governmental entity preventing the completion of the merger has become final and non-appealable; o by either party if there has been a breach of any representation or warranty of the other party which, individually or in the aggregate, would have a material adverse affect on that other party or if there has been a breach in any material respect of any agreement or covenant to be performed and complied with by that other party under the merger agreement and the breach is not curable, or if curable, is not cured within 30 days after written notice of such breach is given to that other party by the party not in breach; o by UICI if the bank or financial institution under any financing commitment fails to fund the loan to UICI because of a material adverse change in the financial markets; o by UICI if the Company Board (x) fails to recommend approval of the merger agreement by the stockholders of the Company or withdraws or amends or modifies in a manner adverse to UICI and New UICI Sub its recommendation or approval of the merger agreement, (y) makes any recommendation with respect to an alternative acquisition other than a recommendation to reject such alternative acquisition or (z) takes any action regarding an alternative acquisition that would be prohibited by the "no solicitation" provisions of the merger agreement; or 6 o by the Company if such termination is necessary to allow the Company to enter into an agreement with respect to a superior proposal (subject to prior payment of the termination fee as described below). If the merger agreement is terminated, the merger will be deemed abandoned and such termination will be without liability of any party under the merger agreement except for liability for breach of the merger agreement and except as set forth below in the following paragraph regarding termination fees. If the merger agreement is terminated by UICI because the Company Board fails to recommend approval of the merger (or withdraws or modifies its recommendation), does not reject an alternative acquisition or takes any action regarding an alternative acquisition that would be prohibited by the "no solicitation" provisions of the merger agreement, then the Company must pay to UICI within two business days after such termination, a fee of $5 million. Similarly, if the Company terminates the merger agreement in order to accept a superior proposal, then the Company must pay UICI within two business days of such termination a fee of $5 million. If the merger agreement is terminated due to the failure of the Company's stockholders to approve the merger agreement, and at or prior to the time of the failure to approve the merger agreement an alternative acquisition has been made public, and within eighteen months of such termination an alternative acquisition with any third party is completed or an agreement relating to an alternative acquisition is entered into by the Company, then the Company must pay UICI a termination fee of $5 million. Concurrently with entering into the Merger Agreement, the Company and UICI entered into an option agreement (the "Option Agreement") granting, for no additional consideration, an irrevocable option to purchase up to 1,500,000 shares of common stock of the Company at an exercise price of $7.375 per share (the "Option"). The Option is exercisable under specified circumstances, including if the Merger Agreement is terminated under circumstances giving rise to the payment of a termination fee by the Company as described above. The Option Agreement provides that, subsequent to the termination of the Merger Agreement, UICI has the right to have such shares of the Company registered under the Securities Act of 1933 for sale in a public offering. The Option Agreement is filed as an Exhibit to this Schedule and is incorporated herein by reference. The description of the Option Agreement set forth herein does not purport to be complete and is qualified in its entirety by the provisions of the Option Agreement. Concurrently with entering into the Merger Agreement, UICI also entered into Voting Agreements (the "Voting Agreements") with each of Automatic Data Processing, Inc., James K. Murray, Jr., William Bennett, Richard Parker, Shinnston Enterprises, Ltd. and Elm Grove Associates (collectively, the "Stockholders"). Pursuant to the Voting Agreements, the Stockholders granted to UICI irrevocable proxies to vote their shares in favor of the Transaction and against any proposal that would compete with the Transaction. The Stockholders also agreed not to sell, assign, pledge, transfer, or otherwise dispose of any proxies granted pursuant to the Voting Agreements. The Voting Agreements terminate upon the earliest to occur of the effective time of the Transaction or the date on which the Merger Agreement is terminated in accordance with its terms. The Voting Agreements are incorporated herein by reference to Exhibits 99.2-7 of UICI's Current Report on Form 8-K dated October 5, 1999 (the "October 5, 1999 Form 8-K"), as filed with the 7 Securities and Exchange Commission (the "SEC") on October 7, 1999. The description of the Voting Agreements set forth herein does not purport to be complete and is qualified in its entirety by the provisions of the Voting Agreements. Except as set forth in this Item 4, the Merger Agreement, the Option Agreement or the Voting Agreements, neither UICI nor, to the best of UICI's knowledge, any of the individuals named in Schedule I hereto, has any plans or proposals which relate to or which would result in any of the actions specified in clauses (a) through (j) of Item 4 of Schedule 13D. Item 5. Interest in Securities of the Issuer. (a)-(b) By reason of its execution of the Option Agreement, pursuant to Rule 13d-3(d)(1)(i) promulgated under the Exchange Act, UICI may be deemed to have sole voting and dispositive power with respect to the Common Stock subject to the Option and, accordingly, may be deemed to beneficially own 1,500,000 shares of Common Stock, or approximately 10.98% of the Common Stock outstanding on October 5, 1999 assuming exercise of the Option. However, UICI expressly disclaims any beneficial ownership of the 1,500,000 shares of Common Stock which are obtainable by UICI upon exercise of the Option, because the Option is exercisable only in the circumstances set forth in Item 4, none of which has occurred as of the date hereof. By reason of entering into the Voting Agreements, UICI may be deemed to have sole voting power with respect to the Common Stock subject to the Voting Agreements and, accordingly, may be deemed to beneficially own 2,441,499 shares of Common Stock or 17.91% of the outstanding Common Stock on October 5, 1999. However, UICI expressly disclaims any beneficial ownership with respect to these shares, because the voting power is limited solely to one particular matter and does not entitle UICI to vote the shares generally. Except as set forth above, neither UICI nor, to the best of UICI's knowledge, any of the individuals named in Schedule I hereto, owns any Common Stock. (c) Except as set forth above, neither UICI nor, to the best of UICI's knowledge, any of the individuals named in Schedule I hereto, has effected any transaction in the Common Stock during the past 60 days. (d) So long as UICI has not purchased the Common Stock subject to the Option, UICI does not have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, any of the Common Stock. (e) Inapplicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. The Merger Agreement contains certain customary restrictions on the conduct of the business of the Company pending the Transaction, including certain customary restrictions relating to the Common Stock. Except as provided in the Merger Agreement, the Option Agreement or the Voting Agreements, or as set forth herein, neither UICI nor, to the best of UICI's knowledge, any of the individuals named in Schedule I hereto, has any contracts, arrangement, understandings or relationships (legal or otherwise), with any person with respect to any securities of the Company, including, but not limited to, 8 transfer or voting of any securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or losses, or the giving or withholding of proxies. Item 7. Material to be Filed as Exhibits. UICI (Commission File No. 0-14320) hereby incorporates into this Schedule the following exhibits by reference to the filing set forth below: Exhibit 1. Agreement and Plan of Merger by and among UICI, UICI Acquisition Co. and HealthPlan Services Corporation dated as of October 5, 1999 (incorporated by reference to Exhibit 2 to UICI's October 5, 1999 Form 8-K) 2. Press release announcing that UICI has entered into a definitive merger agreement contemplating the acquisition of HealthPlan Services Corporation (Exhibit 99.1 to UICI's October 5, 1999 Form 8-K) 3. Voting Agreement dated October 5, 1999 between UICI and Automatic Data Processing, Inc. (Exhibit 99.2 to UICI's October 5, 1999 Form 8-K) 4. Voting Agreement dated October 5, 1999 between UICI and James K. Murray, Jr. (Exhibit 99.3 to UICI's October 5, 1999 Form 8-K) 5. Voting Agreement dated October 5, 1999 between UICI and Shinnston Enterprises, Ltd. (Exhibit 99.4 to UICI's October 5, 1999 Form 8-K) 6. Voting Agreement dated October 5, 1999 between UICI and Elm Grove Associates (Exhibit 99.5 to UICI's October 5, 1999 Form 8-K) 7. Voting Agreement dated October 5, 1999 between UICI and William Bennett (Exhibit 99.6 to UICI's October 5, 1999 Form 8-K) 8. Voting Agreement dated October 5, 1999 between UICI and Robert Parker (Exhibit 99.7 to UICI's October 5, 1999 Form 8-K) The following exhibits are filed herewith: 9. Option Agreement, dated as of October 5, 1999, by and between UICI and the Company. 9 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. UICI Date October 14, 1999 By: /s/ GREGORY T. MUTZ --------------------------------------- Gregory T. Mutz President and Chief Executive Officer 10 SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF UICI The name, business address, present principal occupation or employment, and the name, principal business and address of any corporation or other organization in which such employment is conducted, of each of the directors and executive officers of UICI, a Delaware corporation ("UICI"), is set forth below. If no business address is given, the director's or officer's address is UICI, 4001 McEwen Drive, Suite 200, Dallas, Texas 75244. Unless otherwise indicated, each occupation set forth opposite an executive officer's name refers to employment with UICI.
Name Present Principal Occupation or Employment and Address - ---- ------------------------------------------------------ Ronald L. Jensen Chairman of the Board Gregory T. Mutz President and Chief Executive Officer Richard J. Estell Executive Vice President and Chief Operating Officer - Insurance Division William P. Benac Executive Vice President and Chief Financial Officer Glenn W. Reed Executive Vice President and General Counsel William J. Gedwed Executive Vice President - Insurance Marketing and Operations Warren B. Idsal Vice President - Strategic Planning and Mergers and Acquisitions Vernon R. Woelke Vice President and Treasurer - Chief Accounting Officer Charles T. Prater Vice President - Life Insurance Operations Steven K. Arnold Vice President and Chief Executive Officer of Student Insurance and Special Risk Groups Richard T. Mockler Director 1444 Greathouse Road, Waxahachie, Texas 75165 Patrick J. McLaughlin Director Managing Director of Emerald Capital Group, 100 Chetwynd Drive, Suite 202, Rosemont, Pennsylvania 19010 Stuart D. Bilton Director President & CEO of Chicago Trust Company, 171 North Clark Street, Chicago, Illinois 60601 George H. Lane, III Director Chairman and CEO of Lane Company, 5555 Glenridge Connector, Suite 700, Atlanta, Georgia 30342
11 UICI SCHEDULE 13D EXHIBIT INDEX Exhibit 1. Agreement and Plan of Merger by and among UICI, UICI Acquisition Co. and HealthPlan Services Corporation dated as of October 5, 1999 (incorporated by reference to Exhibit 2 to UICI's October 5, 1999 Form 8-K) 2. Press release announcing that UICI has entered into a definitive merger agreement contemplating the acquisition of HealthPlan Services Corporation (incorporated by reference to Exhibit 99.1 to UICI's October 5, 1999 Form 8-K) 3. Voting Agreement dated October 5, 1999 between UICI and Automatic Data Processing, Inc. (incorporated by reference to Exhibit 99.2 to UICI's October 5, 1999 Form 8-K) 4. Voting Agreement dated October 5, 1999 between UICI and James K. Murray, Jr. (incorporated by reference to Exhibit 99.3 to UICI's October 5, 1999 Form 8-K) 5. Voting Agreement dated October 5, 1999 between UICI and Shinnston Enterprises, Ltd. (incorporated by reference to Exhibit 99.4 to UICI's October 5, 1999 Form 8-K) 6. Voting Agreement dated October 5, 1999 between UICI and Elm Grove Associates (incorporated by reference to Exhibit 99.5 to UICI's October 5, 1999 Form 8-K) 7. Voting Agreement dated October 5, 1999 between UICI and William Bennett (incorporated by reference to Exhibit 99.6 to UICI's October 5, 1999 Form 8-K) 8. Voting Agreement dated October 5, 1999 between UICI and Robert Parker (incorporated by reference to Exhibit 99.7 to UICI's October 5, 1999 Form 8-K) 9. Option Agreement, dated as of October 5, 1999, by and between UICI and the Company. EX-99.9 2 OPTION AGREEMENT DATED OCTOBER 5, 1999 1 OPTION AGREEMENT OPTION AGREEMENT, dated as of October 5, 1999 by and between HealthPlan Services Corporation, a Delaware corporation ("Grantor"), and UICI, a Delaware corporation ("Acquiror"). WHEREAS, concurrently with the execution and delivery of this Agreement, Grantor and Acquiror are entering into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger Agreement"), which provides, among other things, upon the terms and subject to the conditions thereof, for the merger of Grantor with and into a wholly-owned subsidiary of Acquiror (the "Merger"); and WHEREAS, as a condition to Acquiror's willingness to enter into the Merger Agreement, Acquiror has requested that Grantor agree, and Grantor has so agreed, to grant to Acquiror an option with respect to certain shares of Grantor's common stock, on the terms and subject to the conditions set forth herein. NOW, THEREFORE, to induce Acquiror to enter into the Merger Agreement, and in consideration of the mutual covenants and agreements set forth herein and in the Merger Agreement, the parties hereto agree as follows: 1. Grant of Option. Grantor hereby grants Acquiror an irrevocable option (the "Grantor Option") to purchase up to 1,500,000 shares, subject to adjustment as provided in Section 6 hereof (such shares being referred to herein as the "Grantor Shares") of common stock, $.01 par value, of Grantor (the "Grantor Common Stock") in the manner set forth below at a price (the "Exercise Price") per Grantor share of $7.38 payable in cash. 2. Exercise of Option. The Grantor option may be exercised by Acquiror, in whole or in part, at any time or from time to time after the Merger Agreement is terminated and a termination fee is payable under circumstances which would entitle Acquiror to the termination fee under Section 9.2(b)(i) or 9.2(b)(ii) of the Merger Agreement. In the event Acquiror wishes to exercise the Grantor Option, Acquiror shall deliver to Grantor a written notice (an "Exercise Notice") specifying the total number of Grantor Shares it wishes to purchase. Each closing of a purchase of Grantor Shares (a "Closing") shall occur at a place, on a date and at a time designated by Acquiror in an Exercise Notice delivered at least two business days prior to the date of the Closing. The Grantor Option shall terminate upon the earlier of: (i) the Effective Time; or (ii) two years following the first event that triggers the obligation of Grantor to pay the termination fee under Section 9.2(b)(i) or 9.2(b)(ii) of the Merger Agreement (or if, at the expiration of such two year period the Grantor Option cannot be exercised by reason of any applicable judgment, decree, order, law or regulation, 10 business days after such impediment to exercise shall have been removed or shall have become final and not subject to appeal). Notwithstanding the foregoing, the Grantor Option may not be exercised if Acquiror is in material breach of any of its representations or warranties, or in material breach of any of its covenants or agreements, contained in this Agreement or in the Merger Agreement. Upon the giving by Acquiror to Grantor of the Exercise Notice and the tender of the applicable aggregate Exercise Price, Acquiror shall be deemed to be the holder of record of the Grantor Shares issuable upon such exercise, notwithstanding that the stock transfer books of Grantor shall then be closed or that certificates representing such Grantor Shares shall not then be actually delivered to Acquiror. 2 3. Closing. At any Closing, (a) Grantor will deliver to Acquiror or its designee a single certificate in definitive form representing the number of Grantor Shares designated by Acquiror in its Exercise Notice, such certificate to be registered in the name of Acquiror and to bear the legend set forth in Section 7 and (b) Acquiror will deliver to Grantor the aggregate Exercise Price for the Grantor Shares so designated and being purchased by wire transfer of immediately available funds or certified check or bank check. Grantor shall pay all expenses, and any and all United States federal, state and local taxes and other charges that may be payable in connection with the preparation, issue and delivery of its stock certificates under this Agreement. 4. Representations and Warranties and Covenants of Grantor. Grantor represents and warrants to Acquiror that (a) Grantor is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the corporate power and authority to enter into this Agreement and to carry out its obligations hereunder, (b) the execution and delivery of this Agreement by Grantor and the consummation by Grantor of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Grantor and no other corporate proceedings on the part of Grantor are necessary to authorize this Agreement or any of the transactions contemplated hereby, (c) this Agreement has been duly executed and delivered by Grantor, constitutes a valid and binding obligation of Grantor and, assuming this Agreement constitutes a valid and binding obligation of Acquiror, is enforceable against Grantor in accordance with its terms, (e) Grantor has taken all necessary corporate action to authorize and reserve for issuance and to permit it to issue, upon exercise of the Grantor Option in accordance with its terms, and at all times from the date hereof through the expiration of the Grantor Option will have reserved, 1,500,000 authorized and unissued Grantor Shares, such amount being subject to adjustment as provided in Section 6, all of which, upon their issuance and delivery in accordance with the terms of this Agreement, will be validly issued, fully paid and nonassessable, (f) upon delivery of the Grantor Shares to Acquiror upon the exercise of the Grantor Option in accordance with its terms, Acquiror will acquire the Grantor Shares free and clear of all claims, liens, charges, encumbrances and security interests of any nature whatsoever, (g) the execution and delivery of this Agreement by Grantor does not, and the consummation by Grantor of the transactions contemplated hereby will not, violate, conflict with, or result in a breach of any provision of, or constitute a default (with or without notice or lapse of time, or both) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination, cancellation, or acceleration of any obligation or the loss of a material benefit under, or the creation of a lien, pledge, security interest or other encumbrance on assets (any such conflict, violation, default, right of termination, cancellation or acceleration, loss or creation, a "Violation") of Grantor pursuant to, (A) any provision of the Certificate of Incorporation or bylaws of Grantor, (B) any provisions of any material loan or credit agreement, note, mortgage, indenture, lease, Grantor benefit plan or other agreement, obligation, instrument, permit, concession, franchise, license or (C) any material judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Grantor or its properties or assets, (h) the execution and delivery of this Agreement by Grantor does not, and the performance of this Agreement by Grantor will not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental authority, and (i) none of Grantor, any of its affiliates or anyone acting on its or their behalf has issued, sold or offered any security of Grantor to any person under circumstances that would cause the issuance and sale of the Grantor Shares, as contemplated by this Agreement, to be subject to the registration requirements of the Securities Act as in effect on the date hereof and the issuance, sale and delivery of the Grantor Shares hereunder would be exempt from the registration and prospectus delivery requirements of the Securities Act, as in effect on the date hereof (and Grantor shall not take any action which would cause the issuance, sale and delivery of the Grantor Shares hereunder not to be exempt from such requirements). Grantor agrees that any Grantor Shares issued to Acquiror upon the exercise of the Grantor Option will be approved for listing on the New York Stock Exchange. 3 5. Representations and Warranties of Acquiror. Acquiror represents and warrants to Grantor that (a) Acquiror is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the corporate power and authority to enter into this Agreement and to carry out its obligations hereunder, (b) the execution and delivery of this Agreement by Acquiror and the consummation by Acquiror of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Acquiror and no other corporate proceedings on the part of Acquiror are necessary to authorize this Agreement or any of the transactions contemplated hereby, (c) this Agreement has been duly executed and delivered by Acquiror and constitutes a valid and binding obligation of Acquiror, and, assuming this Agreement constitutes a valid and binding obligation of Grantor, is enforceable against Acquiror in accordance with its terms, and (d) Acquiror is an Accredited Investor and any Grantor Shares acquired upon exercise of the Grantor Option will be acquired for Acquiror's own account, for investment purposes only and will not be, and the Grantor Option is not being, acquired by Acquiror with a view to the public distribution thereof in violation of any applicable provision of the Securities Act. 6. Adjustment Upon Changes in Capitalization. Without limitation to any restriction on Grantor contained in this Agreement or in the Merger Agreement, in the event of any change in Grantor Common Stock by reason of stock dividends, splitups, mergers, (other than the Merger), recapitalizations, combinations, exchange of shares or the like, the type and number of shares or securities subject to the Grantor Option, and the purchase price per share provided in Section 1, shall be adjusted appropriately to restore to Acquiror its rights hereunder. 7. Restrictive Legends. Each certificate representing shares of Grantor Common Stock issued to Acquiror hereunder, at a Closing, shall include a legend in substantially the following form: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE OPTION AGREEMENT, DATED AS OF OCTOBER 5, 1999, A COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER UPON REQUEST. It is understood and agreed that: (i) the reference to the resale restrictions of the Securities Act in the above legend shall be removed by delivery of substitute certificate(s) without such reference if Acquiror shall have delivered to the other party a copy of a letter from the staff of the Securities and Exchange Commission, or an opinion of counsel, in form and substance satisfactory to the other party, to the effect that such legend is not required for purposes of the Securities Act; (ii) the reference to the provisions of this Agreement in the above legend shall be removed by delivery of substitute certificate(s) without such reference if the shares have been sold or transferred in compliance with the provisions of this Agreement and in circumstances that do not require the retention of such reference; and (iii) the legend shall be removed in its entirety if the conditions in the preceding clauses (i) and (ii) are both satisfied. In addition, such certificates shall bear any other legend as may be required by law. 8. Registration Statement. (a) If at any time or times after the Option has become exercisable Grantor determines to file with the Securities and Exchange Commission a registration statement covering any Grantor Common Stock (other than Grantor Common Stock issuable to officers and employees pursuant to an employee benefit plan registered on Form S-8), Grantor shall notify Acquiror, at least 15 days prior to the 4 filing of such proposed registration statement. If Acquiror requests Grantor in writing, within 10 days of the receipt of notification from Grantor, to include in such registration statement any Grantor Shares then held by Acquiror, then, Grantor shall use its best efforts to include those Grantor Shares in the registration statement, to have the registration declared effective and to keep such registration current for a period of not less than 180 days. If Acquiror decides not to (or is precluded from including) all of its Grantor Shares in any registration statement thereafter filed by Grantor, Acquiror will nevertheless continue to have the right under this Section 8(a) to include its Grantor Shares in a future registration of Grantor. (b) At any time, Acquiror may demand registration under the Securities Act of all or part of the Grantor Shares then held by Acquiror. Acquiror shall be limited to one demand under this Section 8(b) and such demand shall be made by written notice to Grantor, which notice shall specify the number of Grantor Shares requested to be registered. Upon receipt of a written demand for registration under this Section 8(b), the Company shall use its best efforts to register such Grantor Shares, to have the registration statement declared effective and to keep such registration current for a period of not less than 180 days. (c) A registration effected under this Section 8 shall be effected at Grantor's expense, except for underwriting discounts and commissions and the fees and the expenses of counsel to Acquiror, and Grantor shall provide to the underwriters such documentation (including certificates, opinions of counsel and "comfort" letters from auditors) as are customary in connection with underwritten public offerings as such underwriters may reasonably require. In connection with any such registration, the parties agree (i) to indemnify each other and the underwriters, if any, in the customary manner, (ii) if applicable, to enter into an underwriting agreement in form and substance customary for transactions of such type with the underwriters participating in such offering and (iii) to take all further actions which shall be reasonably necessary to effect such registration and sale (including, if the underwriters, if any, deem it necessary, participating in road-show presentations). 9. Binding Effect; No Assignment; No Third Party Beneficiaries. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Except as expressly provided for in this Agreement, neither this Agreement nor the rights or the obligations of either party hereto are assignable, except by operation of law, or with the written consent of the other party. Nothing contained in this Agreement, expressed or implied, is intended to confer upon any person other than the parties hereto and their respective permitted assigns any rights or remedies of any nature whatsoever by reason of this Agreement. 10. Specific Performance. The parties recognize and agree that if for any reason any of the provisions of this Agreement are not performed in accordance with their specific terms or are otherwise breached, immediate and irreparable harm or injury would be caused for which money damages would not be an adequate remedy. Accordingly, each party agrees that, in addition to other remedies, the other party shall be entitled to an injunction restraining any violation or threatened violation of the provisions of this Agreement. In the event that any action should be brought in equity to enforce the provisions of the Agreement, neither party will allege, and each party hereby waives the defense, that there is adequate remedy at law. 11. Entire Agreement. This Agreement and the Merger Agreement (including the exhibits and schedules thereto) constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede all other prior agreements and understandings, both written and oral, among the parties or any of them with respect to the subject matter hereof and thereof. 5 12. Further Assurances. Each party will execute and deliver all such further documents and instruments and take all such further action as may be necessary in order to consummate the transactions contemplated hereby. 13. Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of the other provisions of this Agreement, which shall remain in full force and effect. In the event any court or other competent authority holds any provisions of this Agreement to be null, void or unenforceable, the parties hereto shall negotiate in good faith the execution and delivery of an amendment to this Agreement in order, as nearly as possible, to effectuate, to the extent permitted by law, the intent of the parties hereto with respect to such provision and the economic effects thereof. If for any reason any such court or regulatory agency determines that Acquiror is not permitted to acquire, the full number of shares of Grantor Common Stock provided in Section 1 hereof (as the same may be adjusted), it is the express intention of Grantor to allow Acquiror to acquire or to require Grantor to repurchase such lesser number of shares as may be permissible, without any amendment or modification hereof. Each party agrees that, should any court or other competent authority hold any provision of this Agreement or part hereof to be null, void or unenforceable, or order any party to take any action inconsistent herewith, or not take any action required herein, the other party shall not be entitled to specific performance of such provision or part hereof or to any other remedy, including but not limited to money damages, for breach hereof or of any other provision of this Agreement or part hereof as the result of such holding or order. 14. Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if (i) delivered personally, or (ii) sent by reputable overnight courier service, or (iii) telecopied (which is confirmed), or (iv) five days after being mailed by registered or certified mail (return receipt requested) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): A. If to Grantor, to: HealthPlan Services Corporation 3501 Frontage Road Tampa, Florida 33607 Attention: Phillip S. Dingle, Esq. Telecopier No.: (813) 282-0490 and a copy to: Fowler, White, Gillen, Boggs, Villareal & Banker, P.A. 501 East Kennedy Boulevard, Suite 1700 Tampa, Florida 33602 Attention: David C. Shobe, Esq. Telecopier No.: (813) 228-9401 B. If to Acquirer, to: UICI 4001 McEwen Boulevard, Suite 200 Dallas, Texas 75244 Attention: Glenn W. Reed, Esq. Telecopier No.: (972) 392-6717 6 with a copy to: Gardner, Carton & Douglas Quaker Tower 321 North Clark Street, Suite 3300 Chicago, Illinois 60610-4795 Attention: Charles R. Manzoni, Jr., Esq. Telecopier No.: (312) 644-3381 15. Governing Law; Choice of Forum. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware applicable to agreements made and to be performed entirely within such State and without regard to its choice of law principles. Each of the parties hereto (a) consents to submit itself to the personal jurisdiction of any federal court located in the State of Delaware or any Delaware state court in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court and (c) agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than a federal court sitting in the State of Delaware or a Delaware state court. 16. Interpretation. When a reference is made in this Agreement to a Section such reference shall be to a Section of this Agreement unless otherwise indicated. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation". The descriptive headings herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. 17. Counterparts. This Agreement may be executed in two counterparts, each of which shall be deemed to be an original, but both of which, taken together, shall constitute one and the same instrument. 18. Expenses. Except as otherwise expressly provided herein or in the Merger Agreement, all costs and expenses incurred in connection with the transactions contemplated by this Agreement shall be paid by the party incurring such expenses. 19. Amendments; Waiver. This Agreement may be amended by the parties hereto and the terms and conditions hereof may be waived only by an instrument in writing signed on behalf of each of the parties hereto, or, in the case of a waiver, by an instrument signed on behalf of the party waiving compliance. 20. Replacement of Grantor Option. Upon receipt by Grantor of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Agreement, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Agreement, if mutilated, Grantor will execute and deliver a new Agreement of like tenor and date. 7 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective duly authorized officers as of the date first above written. HEALTHPLAN SERVICES CORPORATION By: /s/ JAMES K. MURRAY, JR. ----------------------------------------- Name: James K. Murray, Jr. Title: Chairman and Chief Executive Officer UICI By: /s/ GREGORY T. MUTZ ----------------------------------------- Name: Gregory T. Mutz Title: President and Chief Executive Officer -----END PRIVACY-ENHANCED MESSAGE-----