EXHIBIT G INVESTORS AGREEMENT
INVESTORS AGREEMENT (this "Agreement"), dated April 30, 1997, by and
between FOHP, Inc., a New Jersey corporation (the "Company"), and Foundation
Health Systems, Inc., a Delaware corporation formerly known as Health Systems
International, Inc. (the "Investor").
W I T N E S S E T H:
WHEREAS, the parties hereto have entered into the Amended and Restated
Securities Purchase Agreement, dated February 10, 1997, as amended by the
amendment thereto, dated as of March 13, 1997 (as so amended, the "Amended
Purchase Agreement"), pursuant to which, among other things, the Company will
issue and sell to the Investor convertible debentures in the aggregate principal
amount of approximately $50,000,000 (the "Debentures") which are convertible
into an aggregate of up to 71 % of the common stock of the Company, calculated
on a fully-diluted basis, subject to adjustment under certain circumstances; and
WHEREAS, the parties hereto desire to enter into this Agreement for
the purposes, among other things, of establishing the mechanism for nominating
and voting for members of the Board of Directors of the Company.
NOW, THEREFORE, in consideration of the premises and the mutually
dependent covenants and agreements herein contained, and of other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto agree as follows:
1. Designation of Investor Nominees. During the term of this
Agreement, the Investor shall have the right to designate such number of
nominees for election to the Board of Directors of the Company as is provided in
Section 6.1.6 of the Debentures and Article III of the Company's By-Laws (the
"Investor Nominees").
2. Acknowledgment of Non-Investor Nominees. The Investor hereby
acknowledges that Article III of the By-Laws of the Company currently requires,
and may require in the future, that the Board of Directors of the Company
include persons who are not designated by the Investor (the "Non-Investor
Nominees"). Except as otherwise contemplated by the By-laws of the Company, the
Investor acknowledges that all such Non-Investor Nominees shall be nominated by
a majority of the directors who are then Non-Investor Nominees (the "Independent
Designated Non-Investor Nominees"). During the term of this Agreement, the
Investor further agrees that it will not and will cause its designees to the
Company's Board of Directors (in their position as members of the full Board of
Directors or committees thereof) not to, take any action to nominate any Non-
Investor Nominees who are not Independent Designated Non-Investor Nominees.
3. Voting, Removal and Increase in Number of Directors. During the
term of this Agreement, the Investor shall not vote any of its shares of common
stock of the Company, or any other voting securities of the Company over which
the Investor has voting control, for any nominees to the Company's Board of
Directors other than the Investor Nominees and the Independent Designated Non-
Investor Nominees. The number of directors may be increased in accordance with
Article III of the Company's By-Laws.
4. Compliance with Agreement. After such time as the Investor may
become a controlling person of the Company, each of the Company and the Investor
shall take, or cause to be taken, and to do, or cause to be done, all things
necessary or advisable within such party's control to consummate and make
effective the intent of this Agreement, including without limitation to call all
special and annual meetings necessary to elect directors.
5. Term of Agreement. This Agreement shall terminate at the earlier
to occur of (i) such time as the Investor shall own no common stock of the
Company, and no securities of the Company exercisable or convertible into shares
of common stock of the Company and (ii) such time as Article III of the By-Laws
has been amended to delete the requirement that directors be elected to the
Company's Board of Directors who are not designees of the Investor. Nothing
contained in this Section shall affect or impair any rights or obligations
arising after the date hereof but prior to the time of the termination of this
Agreement, or which may arise as a result of an event causing the termination of
this Agreement.
6. Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the Company and the Investor, and their respective
successors and assigns.
7. Complete Agreement. This Agreement, the Amended Purchase
Agreement, the Debentures and the Company's By-Laws contain the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersede all prior oral or written communications, negotiations, understandings
and agreements between the parties hereto. This Agreement may not be amended,
changed, waived or terminated, in whole or in part, without a written instrument
signed by the Company and the Investor.
8. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed to be an original, but both of which
shall constitute the same agreement.
9. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
10. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New Jersey.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
FOHP, INC.
By:___________________________
Xxxxxx Xxxxxx
Acting President and Chief Executive
Officer and General Counsel
FOUNDATION HEALTH SYSTEMS, INC.
By:__________________________
Name:
Title:
