Exhibit 10.2
AMENDMENT NO. 2 TO STOCK PURCHASE AGREEMENT
This AMENDMENT No. 2 TO STOCK PURCHASE AGREEMENT, dated as of September 17,
1996 (the "Amendment"), is made by and among FHP International Corporation, a
Delaware corporation ("FHP"), Xxxxxxx Medical Management Corporation, a Delaware
corporation (the "Company"), Xxxxxxx Health Services Corporation, a Delaware
corporation ("THSC"), Xxxxxxx X. Xxxxx, Xxxxxx X. Xxxxxx, Xxxxx X. Xxxxxxxxxxxx,
Xxxxxxx X. Xxxxxx, Xxxx X. Xxxxxxxxx, Xxxxxxx X. XxXxxx, Xxxxxxx X. Xxx,
Xxxxxxxx X. Xxxxx III, Xxxxxx X. Xxxxx, Xxxxxxxx Van Meter and Xxxxxxx X.
Xxxxxxxxx. Defined terms not defined herein shall have the meanings assigned to
them in the Stock Purchase Agreement.
WHEREAS, FHP, the Company and the Management Investors are parties to that
certain Stock Purchase Agreement, dated as of March 15, 1996, as amended by that
certain Amendment No. 1 to Stock Purchase Agreement, dated as of May 31, 1996
(collectively, the "Stock Purchase Agreement"); and
WHEREAS, FHP, PacifiCare Health Systems, Inc., a Delaware corporation
("PacifiCare"), N-T Holdings, Inc., a Delaware corporation, Neptune Merger
Corp., a Delaware corporation and Tree Acquisition Corp., a Delaware
corporation, have entered into that certain Amended and Restated Agreement and
Plan of Reorganization, dated September 17, 1996 (the "Reorganization
Agreement"); and
WHEREAS, the Reorganization Agreement provides that the common and
preferred stockholders of FHP will receive transferable rights (the "Rights") to
subscribe for 92.25% of the outstanding shares of either TMMC Common Stock or
the capital stock of an affiliated entity (the "Rights Offering"); and
WHEREAS, prior to the execution of the Stock Purchase Agreement, Xxxxxxx X.
Xxxxxxxxxxxx ("Xxxxxxxxxxxx"), originally intended to be a party to the Stock
Purchase Agreement as a Management Investor, ceased to be in the employ of FHP,
and, after the execution of the Stock Purchase Agreement but prior to the
issuance of the Management Stock thereunder to the Management Investors, R. Xxxx
Xxxxxx ("Xxxxxx"), a party to the Stock Purchase Agreement as a Management
Investor, ceased to be in the employ of FHP, and, accordingly, no shares of
Management Stock were issued and sold to either Xxxxxxxxxxxx or Xxxxxx pursuant
to the Stock Purchase Agreement; and
WHEREAS, in light of the execution of the Reorganization Agreement and the
termination of the employment of Xxxxxxxxxxxx and Xxxxxx with the Company and
FHP, FHP, THSC, the Company and the Management Investors desire to amend the
Stock Purchase Agreement in certain respects as set forth below.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, the parties hereto agree
as follows:
1
1. AMENDMENTS TO STOCK PURCHASE AGREEMENT.
(a) ADJUSTMENT OF NUMBERS AND PERCENTAGES. The second sentence of
Section 2.1 of the Stock Purchase Agreement is hereby amended to read as
follows:
"The aggregate number of shares of TMMC Stock issued to the Management
Investors shall be 812,500 (the "TMMC Management Stock"), and the TMMC
Stock issued to the Management Investors, collectively, initially shall
comprise 8.125% of the total outstanding common stock of the Company (the
"TMMC Management Stock"); and the aggregate number of shares of THSC Stock
issued to the Management Investors shall be 45, and the THSC Stock issued
to the Management Investors, collectively, initially shall comprise
approximately 8.125% of the total outstanding common stock of THSC (the
"THSC Management Stock", with the TMMC Management Stock and the THSC
Management Stock collectively referred to herein as the "Management
Stock")."
(b) EXPIRATION OF CERTAIN OPTIONS. At the Effective Time (as that
term is defined in the Reorganization Agreement), the Stock Purchase Agreement
shall be amended to add the following as Section 12:
"12. EXPIRATION OF CERTAIN OPTIONS. Notwithstanding anything to the
contrary contained in this Agreement (including, without limitation, the
provisions of Sections 3.2 and 5.4, above):
12.1 TERMINATION OF FHP MANAGEMENT INVESTORS WITHOUT CAUSE. In
the event that the employment with FHP of any of the Management Investors
who are officers of FHP (the "FHP Management Investors") is terminated
without cause, any Restrictions remaining applicable to the Management
Stock owned by such FHP Management Investor shall terminate, and all
unvested Management Stock owned by such FHP Management Investor shall vest.
Such Restrictions shall be deemed to terminate, and such Management Stock
shall be deemed to vest, prior to the time FHP's repurchase option provided
for in Section 5.1, above, arises; PROVIDED, HOWEVER, that in such event,
the Management Stock owned by such FHP Management Investor shall remain
subject to the options provided by Sections 5.2 and 5.3, above, until the
first to occur of the expiration of such options pursuant to the terms of
Section 5, above, or the expiration of such options pursuant to the terms
of Section 12.2, below.
12.2 CHANGE IN CONTROL OF THE COMPANY. Both the option granted
under Section 5.1 and the Performance Purchase Option granted under
Section 5.3 shall expire as to all Management Investors upon a Change in
Control (as herein defined) of TMMC which occurs at any time after the date
of the expiration of the subscription period during which the Rights are
exercisable under the Rights Offering (the "Expiration Date"). For
purposes of this Agreement, "Change in Control" means:
(a) The acquisition by any individual entity or group
(within the meaning of Section 13(d) or 14(d)(2) of the Exchange Act)
(a "Person") of
2
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of over 50% of either (i) the then outstanding shares of
common stock of the Company (the "Outstanding Company Common Stock") or
(ii) the combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of directors
(the "Outstanding Company Voting Securities"); PROVIDED, HOWEVER, that for
purposes of this subsection (a), the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly from the
Company, (ii) any acquisition by FHP or PacifiCare, or (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or PacifiCare, or any corporation controlled by
the Company or PacifiCare; or
(b) Individuals who, as of the Expiration Date, constitute
the Board of Directors of the Company (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board of Directors of the
Company; provided, however, that any individual becoming a director
subsequent to the Expiration Date whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of
a Person other than the Board of Directors of the Company."
2. FHP PURCHASE OF STOCK. The parties hereto consent to the purchase by
FHP from, and the issuance, sale and transfer to FHP by, (i) the Company of
87,500 shares of TMMC Common Stock, for consideration in the amount of $.01 per
share, and (ii) THSC of 5 shares of THSC Common Stock, for consideration in the
amount of $2.00 per share. Such purchases by FHP shall occur as soon as
practicable after the execution of this Amendment, and pursuant to a resolution
of the Board of Directors of each of the Company and THSC adopted as of
September 17, 1996.
3. FHP CAPITALIZATION OF THE COMPANY. The parties hereto consent to any
capital contributions which have been or will be made to the Company by FHP
pursuant to Section 4.15(b) of the Reorganization Agreement.
4. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the law of the State of Delaware, without reference to its
conflicts of law rules.
5. NO OTHER AMENDMENTS. The Stock Purchase Agreement, as amended by this
Amendment, is and shall continue to be in full force and effect and is hereby in
all respects ratified and confirmed. Except as provided herein, nothing in this
Amendment shall waive or be deemed to waive or modify (except as expressly set
forth herein) any rights or obligations of any of the parties under the Stock
Purchase Agreement.
3
6. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which will be deemed to be an original but all of which
together will constitute but one instrument.
IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the
date first above mentioned.
FHP International Corporation, Xxxxxxx Health Services Corporation,
a Delaware corporation a Delaware corporation
By:_______________________________ By:_________________________________
Name:_____________________________ Name:_______________________________
Title:____________________________ Title:______________________________
Xxxxxxx Medical Management Corporation,
a Delaware corporation
By:_______________________________
Name:_____________________________ ____________________________________
Title:____________________________ Xxxxxxx X. Xxxxx
__________________________________ ____________________________________
Xxxxxx X. Xxxxxx Xxxxx X. Xxxxxxxxxxxx
__________________________________ ____________________________________
Xxxxxxx X. Xxxxxx Xxxx X. Xxxxxxxxx
__________________________________ ____________________________________
Xxxxxxx X. XxXxxx Xxxxxxx X. Xxx
__________________________________ ____________________________________
Xxxxxxxx X. Xxxxx III Xxxxxx X. Xxxxx
__________________________________ ____________________________________
Xxxxxxxx Van Meter Xxxxxxx X. Xxxxxxxxx
4
