EXHIBIT C AMENDMENT TO
AMENDED AND RESTATED
SECURITIES PURCHASE AGREEMENT
This Amendment to Amended and Restated Securities Purchase Agreement (this
"Amendment"), dated as of March 13, 1997, is executed by and among FOHP, Inc., a
New Jersey corporation (the "Company"), First Option Health Plan of New Jersey,
Inc., a New Jersey corporation ("FOHP-NJ"), and Health Systems International,
Inc., a Delaware corporation (the "Purchaser"), and amends the Amended and
Restated Securities Purchase Agreement (the "Amended Agreement"), dated
February 10, 1997, by and among the Company, FOHP-NJ and the Purchaser, and this
Amendment shall be effective as of the effective date of the Amended Agreement
(as described in Section 12.11 of the Amended Agreement).
W I T N E S S E T H:
WHEREAS, the Company, FOHP-NJ and the Purchaser are parties to the Amended
Agreement, pursuant to which, among other things, the Purchaser will purchase
from the Company approximately $50,000,000 in convertible debentures, and the
Company and FOHP-NJ will make certain amendments to their certificates of
incorporation and by-laws; and
WHEREAS, the Purchaser has requested certain amendments to the Amended
Agreement and the Certificate of Incorporation of the Company annexed as
Exhibit E to the Amended Agreement, and the Company and FOHP-NJ are willing to
amend the Amended Agreement and Exhibit E to the Amended Agreement in the manner
and on the terms and conditions provided for herein;
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the adequacy and receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Amendments.
(a) Section 6.3 of the Amended Agreement is hereby amended and
restated in its entirety as follows:
6.3 New York Subsidiary. The Purchaser shall have the
option, exercisable in its sole discretion at any time
within five years after the date of Closing, to cause FOHP
to transfer to the Purchaser or one of the Purchaser's
affiliates all or a portion of the capital stock or assets
of FOHP-NY, or to cause FOHP-NJ to merge with or into the
Purchaser or one of the Purchaser's affiliates, all for no
additional payment or consideration by the Purchaser or any
of the Purchaser's affiliates.
(b) Paragraph B. of Article V of the Certificate of Incorporation of
the Company annexed as Exhibit E to the Amended Agreement is hereby amended and
restated in its entirety as follows:
B. Corporation's Right to Repurchase. Notwithstanding
anything contained herein to the contrary, in the event that
either (i) an NJ Institutional Shareholder or its affiliated
NJ Acute Care Institution, if any, fails to perform its
obligations pursuant to Paragraph A. above, or (ii) during
the period ending December 31, 1999, an NJ Institutional
Shareholder or its affiliated NJ Acute Care Institution, if
any, should fail to provide reimbursement rates (a) for in-
patient visits at the lower of (1) the lowest rate of
reimbursement received by such provider from nongovernmental
payors for each line of business, or (2) the rate of
reimbursement reflecting a reduction (compared to calendar
1996 rates) of five (5%) percent in in-patient costs,
provided that such reduction is solely as a result of rate
reductions and not through utilization or medical management
efforts, and (b) for out-patient visits at the lower of
(1) the lowest rate of reimbursement received by such
providers from nongovernmental payors for each line of
business, or (2) the rate of reimbursement reflecting a
reduction (compared to calendar 1996 rates) of ten (10%)
percent in out-patient costs, provided that such reduction
is solely as a result of rate reductions and not through
utilization or medical management efforts, then the
Corporation shall have the right to purchase (but shall not
be obligated to purchase), and the NJ Institutional
Shareholder shall be obligated to sell to the Corporation at
the Corporation's option, all or a portion of the
Corporation's Common Stock held by the NJ Institutional
Shareholder at a purchase price equal to the lowest of
(i) the Book Value, (ii) the lowest shareholder equity
reflected on the Corporation's quarter-end balance sheets
during the period of noncompliance giving rise to the
repurchase right, excluding any convertible debentures
issued to HSI, prepared in accordance with generally
accepted accounting principles, divided by the number of
outstanding shares of the Corporation's Common Stock on a
fully diluted basis or (iii) the original purchase price
paid by such NJ Institutional Shareholder for such shares of
the Corporation's Common Stock. The Corporation shall have
full discretion with respect to its election to exercise or
not to exercise the foregoing rights of repurchase with
respect to any given shareholder, taking into account any
factors the Corporation deems appropriate relating to such
shareholder's relationships with the Corporation or the
Corporation's business or otherwise, and the Corporation's
election to make or not to make a repurchase from any other
shareholder. Any amounts payable pursuant to this
Paragraph B. shall be paid in cash within ninety (90) days
from the date of purchase or, in the discretion of the
Corporation, over a period of three (3) years in equal
annual installments commencing one (1) year from the date of
purchase with interest at the rate of seven (7%) percent per
annum, accrued and payable annually.
2. Continuing Effect of the Amended Agreement. This Amendment shall not
constitute an amendment or waiver of any provision of the Amended Agreement not
expressly referred to herein. Except as expressly amended or modified hereby,
the provisions of the Amended Agreement are and shall remain in full force and
effect and are hereby ratified and confirmed.
3. Applicable Law. This Amendment and the rights and obligations of the
parties hereunder are to be governed and construed in accordance with the laws
of the State of New Jersey, except for the conflicts of law principles thereof.
4. Counterparts. This Amendment may be executed in counterparts, each of
which shall be deemed an original, and all of which together shall constitute a
single agreement.
IN WITNESS WHEREOF, the parties hereto, intending to be bound hereby, have
executed this Amendment to Amended and Restated Securities Purchase Agreement as
of the date first above written.
FOHP, INC.
By:
Xxxxxx Xxxxxx
Acting President and Chief Executive
Officer
FIRST OPTION HEALTH PLAN OF
NEW JERSEY, INC.
By:
Xxxxxx Xxxxxx
Acting President and Chief Executive
Officer
HEALTH SYSTEMS INTERNATIONAL,
INC.
By:
Xxxxxxx X. Xxxxxx, Esq.
Vice President
