<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 21, 1997
REGISTRATION STATEMENT NO. 333-37517
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
MEDPARTNERS, INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
DELAWARE 63-1151076
(State or Other Jurisdiction of Incorporation or
Organization) (I.R.S. Employer Identification Number)
</TABLE>
3000 GALLERIA TOWER, SUITE 1000
BIRMINGHAM, ALABAMA 35244
(205) 733-8996
(Address, including Zip Code, and Telephone Number, including Area Code, of
Registrant's Principal Executive Offices)
------------------
J. BROOKE JOHNSTON, JR., ESQ.
SENIOR VICE PRESIDENT & GENERAL COUNSEL
MEDPARTNERS, INC.
3000 GALLERIA TOWER, SUITE 1000
BIRMINGHAM, ALABAMA 35244-2331
TEL: (205) 733-8996
FAX: (205) 982-7709
(Name, Address, including Zip Code, and Telephone Number, including Area Code,
of Agent for Service)
------------------
COPIES OF COMMUNICATIONS TO:
<TABLE>
<S> <C>
ROBERT E. LEE GARNER, ESQ.
F. HAMPTON MCFADDEN, JR., ESQ.
HASKELL SLAUGHTER & YOUNG, LLC
1200 AMSOUTH/HARBERT PLAZA
1901 SIXTH AVENUE NORTH
BIRMINGHAM, ALABAMA 35203
TEL: (205) 251-1000
FAX: (205) 324-1133
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================================
PROPOSED PROPOSED
TITLE OF EACH AMOUNT MAXIMUM MAXIMUM AMOUNT OF
CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE FEE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.001 per share
(including the Common Stock Purchase
Rights)....................................... 1,208,159 $22.375(1) $27,032,557.63(1) $8,191.68
- ------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.001 per share
(including the Common Stock Purchase
Rights)....................................... 2,338 $23.34(3) $54,568.92(3) $16.54(4)
- ------------------------------------------------------------------------------------------------------------------------------
Total........................................... 1,210,497 -- $27,087,126.55 $8,208.21
==============================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(c) based upon the average of the high and low prices of the
Registrant's Common Stock as reported on The New York Stock Exchange on
October 2, 1997.
(2) $8,191.68 was paid at the time of the original filing of the Registration
Statement.
(3) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(c) based on the average of the high and low prices of the
Registrant's Common Stock as reported on the New York Stock Exchange on
October 14, 1997.
(4) $16.54 represents the registration fee due on the additional shares
registered hereby.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE> 2
PROSPECTUS
1,210,497 SHARES
[MEDPARTNERS (TM) LOGO]
COMMON STOCK
PAR VALUE $.001 PER SHARE
In accordance with the applicable rules of the Securities and Exchange
Commission (the "Commission"), this Prospectus may be used in connection with
offerings of the Common Stock of MedPartners, Inc., a Delaware corporation
("MedPartners" or the "Company"). This Prospectus relates to the resale by the
holders thereof ("Selling Stockholders") of up to 1,210,497 shares of Common
Stock, par value $.001 per share (the "Common Stock"), of the Company issued
without registration under the Securities Act of 1933, as amended (the
"Securities Act"), in transactions not involving public offerings.
The shares of Common Stock held by the Selling Stockholders may be offered
from time to time in transactions (which may include block transactions) on The
New York Stock Exchange, Inc. ("NYSE"), in negotiated transactions or a
combination of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Selling Stockholders may
effect such transactions by selling the shares directly to purchasers or to or
through underwriters, agents or broker-dealers, and any such underwriters,
agents or broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholders and the purchasers of
the shares for which such underwriters, agents or broker-dealers may act as
agent or to whom they sell as principal, or both (which compensation as to a
particular underwriter, broker-dealer or agent might be in excess of customary
commissions). See "Selling Stockholders" and "Plan of Distribution".
None of the proceeds from the sale of the shares by the Selling
Stockholders will be received by the Company. The Company has agreed to bear all
expenses (other than underwriting discounts, selling commissions and fees and
expenses of counsel and other advisors to the Selling Stockholders) in
connection with the registration of the shares being offered by the Selling
Stockholders. The Company has agreed to indemnify the Selling Stockholders
against certain liabilities, including liabilities under the Securities Act. See
"Plan of Distribution".
SEE "RISK FACTORS" AT PAGE 2 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
------------------
THE DATE OF THIS PROSPECTUS IS OCTOBER 21, 1997
<PAGE> 3
AVAILABLE INFORMATION
The Company has filed a Registration Statement (the "Registration
Statement") on Form S-3 under the Securities Act, with the Commission with
respect to the Common Stock offered hereby. This Prospectus does not contain all
of the information set forth in the Registration Statement which the Company has
filed with the Commission, certain portions of which have been omitted pursuant
to the rules and regulations of the Commission, and to which portions reference
is hereby made for further information with respect to the Company and the
Common Stock offered hereby. Statements contained herein concerning certain
documents are not necessarily complete, and in each instance, reference is made
to the copies of such documents filed as exhibits to the Registration Statement.
Each such statement is qualified in its entirety by such reference.
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (Commission File No.
0-27276), and in accordance therewith files periodic reports, proxy statements
and other information with the Commission relating to its business, financial
statements and other matters. The Registration Statement, as well as such
reports, proxy statements and other information, may be inspected and copied at
prescribed rates at the public reference facilities maintained by the Commission
at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. and
should be available for inspection and copying at the regional offices of the
Commission located at 7 World Trade Center, Suite 1300, New York, New York 10048
and at Citicorp Center, 500 West Madison Street, Chicago, Illinois. Copies of
such material can be obtained at prescribed rates by writing to the Commission,
Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission also maintains a Web site that contains reports, proxy statements and
other information regarding registrants that file electronically with the
Commission. The address of such site is http://www.sec.gov. The Common Stock is
listed on the NYSE. The reports, proxy statements and certain other information
of the Company can be inspected at the office of the NYSE, 20 Broad Street, New
York, New York. See "Incorporation of Certain Documents by Reference".
FORWARD-LOOKING STATEMENTS
This Prospectus contains or incorporates certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995 with
respect to the financial condition, results of operations and business of the
Company. The words "estimate", "project", "intend", "expect" and similar
expressions are intended to identify forward-looking statements. These
forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ materially from those contemplated in such
forward looking-statements. For a discussion of certain of such risks and
uncertainties, see "Risk Factors". Investors are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
hereof. The Company undertakes no obligation to publicly release any revisions
to these forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information appearing elsewhere in this
Prospectus. Unless the context otherwise requires, as used herein, the term
"MedPartners" or the "Company" refers collectively to MedPartners, Inc. and its
respective subsidiaries and affiliates.
THE OFFERING
Common Stock offered by the
Selling Stockholders..... 1,210,497 shares
Common Stock outstanding
before and after the
Offering................. 194,665,107 shares(1)
New York Stock Exchange
symbol................... MDM
- ---------------
(1) As of June 30, 1997, excluding shares of Common Stock reserved for issuance
pursuant to outstanding stock options.
PLAN OF DISTRIBUTION
The Common Stock may be sold from time to time by Selling Stockholders, or
by pledgees, donees, transferees or other successors-in-interest. Such sales may
be made on one or more exchanges or in the over-the-counter market or in
negotiated transactions, at fixed prices which may be changed, at market prices
prevailing at the time of sale or at prices related to such prevailing price.
The Common Stock may be sold directly to purchasers or to or through
underwriters, agents or broker-dealers by one or more methods. Any underwriters,
broker-dealers or agents may receive compensation in form of commission,
discounts or concessions from Selling Stockholders and/or the purchasers of such
shares for which such underwriters, broker-dealers or agents may act as agents
or to whom they sell as principals, or both (which compensation as to a
particular underwriter, broker-dealer or agent will be negotiated prior to the
sale and may be in excess of customary compensation). In addition, any
securities covered by this Prospectus which qualify for sale pursuant to Rule
144 may be sold under Rule 144 rather than pursuant to this Prospectus. See
"Plan of Distribution" and "Selling Stockholders".
RISK FACTORS
See "Risk Factors" beginning on page 2 of this Prospectus for a discussion
of certain factors related to the Company and the Common Stock offered hereby.
RECENT DEVELOPMENT
On September 23, 1997, MedPartners completed a cash tender offer to
purchase all of the issued and outstanding common stock, par value $.01 per
share of Talbert Medical Management Holdings Corporation ("Talbert") at a price
of $63.00 net per share in cash or an aggregate acquisition price of
approximately $200 million. Ninety-nine percent of the shares were tendered and
purchased. Talbert is a physician practice management company representing 282
primary and specialty care physicians and operating 52 clinics in five
Southwestern states.
1
<PAGE> 5
THE COMPANY
The executive offices of MedPartners are located at 3000 Galleria Tower,
Suite 1000, Birmingham, Alabama 35244, and its telephone number is (205)
733-8996.
RISK FACTORS
In addition to the other information contained in this Prospectus,
prospective purchasers of the Common Stock should consider carefully the factors
listed below.
RISKS RELATING TO INTEGRATION IN CONNECTION WITH ACQUISITIONS
The Company has recently completed major acquisitions and is still in the
process of integrating those acquired businesses. While the business plans of
these acquired companies are similar, their histories, geographical location,
business models and cultures are different in many respects. The Company's Board
of Directors and senior management of the Company face a significant challenge
in their efforts to integrate the businesses of the Company and the acquired
companies so that the different cultures and the varying emphases on managed
care and fee-for-service can be effectively managed to continue to grow these
businesses. The dedication of management resources to such integration may
detract attention from the day-to-day business of the Company. There can be no
assurance that there will not be substantial costs associated with such
activities or that there will not be other material adverse effects as a result
of these integration efforts. Such effects could have a material adverse effect
on the financial results of the Company.
Physician Compensation. Approximately 70% of the Company's PPM revenue for
the six months ended June 30, 1997 was derived from or through contracts between
the Company and hospitals or HMOs. The balance of the Company's PPM revenue is
generated through professional corporations ("PCs") that have entered into
contracts directly with HMOs or have the right to receive payment directly from
HMOs for the provision of medical services. The Company has a controlling
financial interest in these PCs by virtue of a long-term management agreement
that also provides for physician compensation.
The most significant clinic expense, physician compensation, accounted for
39% of total expenses in the Company's PPM service area in the first six months
of 1997. Physicians that generated 7% of PPM revenue in the first six months of
1997 received a fixed-dollar amount plus a discretionary bonus based on
performance criteria goals. Physician compensation expense was 51% of this first
category of PCs' total net revenue in the first six months of 1997. Physicians
that were compensated on a fee-for-service basis produced approximately 15% of
the Company's PPM revenue in the first six months of 1997. Physician
compensation expense pursuant to such agreements represented 48% of this second
category of PCs' total net revenue in the first six months of 1997. The
remaining 8% of PPM revenues were generated by physicians who were provided a
salary, bonus and profit-sharing payment based on the PC's net income. Physician
compensation expense pursuant to such agreements represented 39% of this third
category of PCs' total net revenue in the first six months of 1997. Under each
of these arrangements, revenue is assigned to MedPartners by the PC, and
MedPartners is responsible and at risk for all clinic expenses.
While management of the Company believes that the diverse experience of
each of the combined companies will serve to strengthen the Company, there can
be no assurance that management's efforts to integrate the operations of the
Company will be successful. The profitability of the Company is largely
dependent on its ability to develop and integrate networks of physicians from
the affiliated practices, to manage and control costs and to realize economies
of scale. The Company's operating results could be adversely affected in the
event it incurs costs associated with developing networks without generating
sufficient revenues form such networks.
RISKS RELATING TO THE COMPANY'S GROWTH STRATEGY; INTEGRATION AND IDENTIFICATION
OF GROWTH OPPORTUNITIES
The Company intends to continue to pursue an aggressive growth strategy
through acquisitions and internal development for the foreseeable future. The
Company's ability to pursue new growth opportunities successfully will depend on
many factors, including, among others, the Company's ability to identify
suitable growth opportunities and successfully integrate acquired businesses and
practices. There can be no assurance
2
<PAGE> 6
that the Company will anticipate all of the changing demands that expanding
operations will impose on its management, management information systems and
physician network. Any failure by the Company to adapt its systems and
procedures to those changing demands could have a material adverse effect on the
operating results and financial condition of the Company.
Competition for Expansion Opportunities. The Company is subject to the
risk that it will be unable to identify and recruit suitable acquisition
candidates in the future. The Company competes for acquisition, affiliation and
other expansion opportunities with national, regional and local PPM companies
and other physician management entities. In addition, certain companies,
including hospital management companies, hospitals and insurers, are expanding
their presence in the PPM market. The Company's failure to compete successfully
for expansion opportunities or to attract and recruit suitable acquisition
candidates could have a material adverse effect on the operating results and
financial condition of the Company. The Company is also subject to the risk that
it will be unable to recruit and retain qualified physicians and other
healthcare professionals to serve as employees or independent contractors of the
Company and its affiliates. See "Business -- Competition" in the Company's
Annual Report on Form 10-K/A for the year ended December 31, 1996 (the
"Company's 10-K/A") incorporated herein by reference.
Integration Risks. Acquisitions of PPM companies and physician practices
entail the risk that such acquisitions will fail to perform in accordance with
expectations and that the Company will be unable to successfully integrate such
acquired businesses and physician practices into its operations. The
profitability of the Company is largely dependent on its ability to develop and
integrate networks of physicians, to manage and control costs and to realize
economies of scale from acquisitions of PPM companies and physician practices.
The histories, geographic location, business models, including emphasis on
managed care and fee-for-service, and cultures of acquired PPM businesses and
physician practices may differ from the Company's past experiences. Dedicating
management resources to the integration process may detract attention from the
day-to-day business of the Company. Moreover, the integration of the acquired
businesses and physician practices may require substantial capital and financial
investments. These, together with other risks described herein, could result in
the incurrence of substantial costs in connection with acquisitions that may
never achieve revenue and profitability levels comparable to the Company's
existing physician networks, which could have a material adverse effect on the
operating results and financial condition of the Company.
The major acquisitions carried out by the Company since January 1995 have
been structured as poolings of interests. As a result, the operating income of
the Company has been reduced by the merger expenses incurred in connection with
those acquisitions, resulting in a net loss for the year ended December 31,
1996. There can be no assurance that future merger expenses will not result in
further net losses. Nor can there be any assurance that there will not be
substantial future costs associated with integrating acquired companies; that
the Company will be successful in integrating such companies; or that the
anticipated benefits of such acquisitions will be realized fully. The
unsuccessful integration of such companies or the failure of the Company to
realize such anticipated benefits fully could have a material adverse effect on
the operating results and financial condition of the Company. See "-- Risks
Relating to Capital Requirements".
Dependence on HMO Enrollee Growth. The Company is also largely dependent
on the continued increase in the number of HMO enrollees who use its physician
networks. This growth may come from development or acquisition of other PPM
entities, affiliation with additional physicians, increased enrollment in HMOs
currently contracting with the Company through its affiliated physicians and
additional agreements with HMOs. There can be no assurance that the Company will
be successful in identifying, acquiring and integrating additional medical
groups or other PPM companies or in increasing the number of enrollees. A
decline in enrollees in HMOs could have a material adverse effect on the
operating results and financial condition of the Company. The Company is
statutorily and contractually prohibited from controlling any medical decisions
made by a healthcare provider. Accordingly, affiliated physicians may decline to
enter into HMO agreements that are negotiated for them by the Company or may
enter into contracts for the provision of medical services or make other
financial commitments that are not intended to benefit the Company and which,
accordingly, could have a material adverse effect on the operating results and
financial condition of the Company. See "Business -- Operations" in the
Company's 10-K/A incorporated herein by reference.
3
<PAGE> 7
Risks Relating to Capital Requirements. The Company's growth strategy
requires substantial capital for the acquisition of PPM businesses and assets of
physician practices, and for their effective integration, operation and
expansion. Affiliated physician practices may also require capital for
renovation, expansion and additional medical equipment and technology. The
Company believes that its existing cash resources, the use of Common Stock for
selected practice and other acquisitions, and available borrowings under the
$1.0 billion credit facility (the "Credit Facility") with NationsBank, National
Association (South), as administrative bank to a group of lenders, or any
successor credit facility, will be sufficient to meet the Company's anticipated
acquisition, expansion and working capital needs for the next twelve months. The
Company expects from time to time to raise additional capital through the
issuance of long-term or short-term indebtedness or the issuance of additional
equity securities in private or public transactions, at such times as management
deems appropriate and the market allows in order to meet the capital needs of
the Company. There can be no assurance that acceptable financing for future
acquisitions or for the integration and expansion of existing networks can be
obtained. Any of such financings could result in increased interest and
amortization expense, decreased income to fund future expansion and dilution of
existing equity positions.
Dependence on Affiliated Physicians. The Company's revenue depends on
revenues generated by the physicians with whom the Company has practice
management agreements. These agreements define the responsibilities of the
physicians and the Company and govern all terms and conditions of their
relationship. The practice management agreements have terms generally of 20 to
40 years, subject to termination for cause, which includes bankruptcy or a
material breach. Practice management agreements with certain of the affiliated
practices contain provisions giving the physician practice the option to
terminate the agreement without cause, subject to significant limitations.
Because the Company cannot control the provision of medical services by its
affiliated physicians contractually or otherwise under the laws of California
and most other states in which the Company operates, affiliated physicians may
decline to enter into HMO agreements that are negotiated for them by the Company
or may enter into contracts for the provision of medical services or make other
financial commitments which are not intended to benefit the Company and which
could have a material adverse effect on the operating results and financial
condition of the Company.
RISKS RELATING TO CAPITATED NATURE OF REVENUES; CONTROL OF HEALTHCARE COSTS
A substantial portion of the Company's revenue is derived from agreements
with HMOs that provide for the receipt of capitated fees. Under these
agreements, the Company, through its affiliated physicians, is generally
responsible for the provision of all covered outpatient benefits, regardless of
whether the affiliated physicians directly provide the medical services
associated with the covered benefits. The Company is statutorily and
contractually prohibited from controlling any medical decisions made by any
healthcare provider. To the extent that enrollees require more care than is
anticipated or require supplemental medical care that is not otherwise
reimbursed by the HMO, aggregate capitation rates may be insufficient to cover
the costs associated with the treatment of enrollees. If revenue is insufficient
to cover costs, the operating results and financial condition of the Company
could be materially adversely affected. As a result, the Company's success will
depend in large part on the effective management of healthcare costs through
various methods, including utilization management, competitive pricing for
purchased services and favorable agreements with payors. Recently, many
providers, including the Company, have experienced pricing pressures with
respect to negotiations with HMOs. In addition, employer groups are becoming
increasingly successful in negotiating reductions in the growth of premiums paid
for their employees' health insurance, which tends to depress the reimbursement
for healthcare services. At the same time, employer groups are demanding higher
accountability from payors and providers of healthcare services with respect to
measurable accessibility, quality and service. If these trends continue, the
cost of providing physician services could increase while the level of
reimbursement could grow at a lower rate or could decrease. There can be no
assurance that these pricing pressures will not have a material adverse effect
on the operating results and financial condition of the Company. In addition,
changes in healthcare practices, inflation, new technologies, major epidemics,
natural disasters and numerous other factors affecting the delivery and cost of
healthcare could have a material adverse effect on the operating results and
financial condition of the Company.
4
<PAGE> 8
The Company's financial statements include estimates of costs for covered
medical benefits incurred by HMO enrollees, but not yet reported. While these
estimates are based on information available at the time of calculation, there
can be no assurance that actual costs will approximate the estimates of such
amounts. If the actual costs significantly exceed the amounts estimated and
accrued, such additional costs could have a material adverse effect on the
operating results and financial condition of the Company.
The HMO agreements often contain shared-risk provisions under which
additional revenue can be earned or economic penalties can be incurred based
upon the utilization of hospital and non-professional services by HMO enrollees.
The Company's financial statements contain accruals for estimates of shared-risk
amounts receivable from or payable to the HMOs that contract with their
affiliated physicians. These estimates are based upon inpatient utilization and
associated costs incurred by HMO enrollees compared to budgeted costs.
Differences between actual contract settlements and amounts estimated as
receivable or payable relating to HMO risk-sharing arrangements are generally
reconciled annually. This may cause fluctuations from amounts previously
accrued. To the extent that HMO enrollees require more care than is anticipated
or require supplemental care that is not otherwise reimbursed by the HMOs,
aggregate capitation rates may be insufficient to cover the costs associated
with the treatment of enrollees. Any such insufficiency could have a material
adverse effect on the operating results and financial condition of the Company.
Physician groups that render services on a fee-for-service basis (as
opposed to a capitated plan) typically bill various third-party payors, such as
governmental programs (e.g., Medicare and Medicaid), private insurance plans and
managed care plans, for the healthcare services provided to their patients. A
significant portion of the revenue of the Company is derived from payments made
by these third-party payors. There can be no assurance that payments under
governmental programs or from other third-party payors will remain at present
levels. In addition, third-party payors can deny reimbursement if they determine
that treatment was not performed in accordance with the cost-effective treatment
methods established by such payors or was experimental or for other reasons. Any
material decrease in payments received from such third-party payors could have a
material adverse effect on the operating results and financial condition of the
Company.
RISKS RELATING TO CERTAIN CAREMARK LEGAL MATTERS
OIG Settlement and Related Claims. Caremark agreed in June 1995 to settle
with the Office of the Inspector General (the "OIG") of the United States
Department of Health and Human Services (the "DHHS"), the Department of Justice
("DOJ"), the Veteran's Administration, the Federal Employee Health Benefits
Program ("FEHBP"), the Civilian Health and Medical Program of the Uniformed
Services ("CHAMPUS") and related state investigative agencies in all 50 states
and the District of Columbia a four-year-long investigation of Caremark (the
"OIG Settlement"). Under the terms of the OIG Settlement, which covered
allegations dating back to 1986, a subsidiary of Caremark pled guilty to two
counts of mail fraud -- one each in Minnesota and Ohio -- resulting in the
payment of civil penalties and criminal fines. The basis of these guilty pleas
was Caremark's failure to provide certain information to CHAMPUS, FEHBP and
federally funded healthcare benefit programs concerning financial relationships
between Caremark and a physician in each of Minnesota and Ohio. See
"Business -- Legal Proceedings" in the Company's 10-K/A incorporated herein by
reference.
In its agreement with the OIG and DOJ, Caremark agreed to continue to
maintain certain compliance-related oversight procedures. Should these oversight
procedures reveal credible evidence of legal or regulatory violations, Caremark
is required to report such violations to the OIG and DOJ. Caremark is,
therefore, subject to increased regulatory scrutiny and, in the event it commits
legal or regulatory violations, Caremark may be subject to an increased risk of
sanctions or penalties, including disqualification as a provider of Medicare or
Medicaid services, which would have a material adverse effect on the operating
results and financial condition of the Company.
In connection with the matters described above relating to the OIG
Settlement, Caremark is a party to various non-governmental claims and may in
the future become subject to additional OIG-related claims. Caremark is a party
to, or the subject of, and may be subjected to in the future, various private
suits and claims (including stockholder derivative actions) being asserted in
connection with matters relating to the
5
<PAGE> 9
OIG Settlement by Caremark's stockholders, patients who received healthcare
services from Caremark and such patients' insurers. The Company cannot determine
at this time what costs may be incurred in connection with future disposition of
non-governmental claims or litigation. Such additional costs, if incurred, could
have a material adverse effect on the operating results and financial condition
of the Company. See "Business -- Legal Proceedings" in the Company's 10-K/A
incorporated herein by reference.
In August and September 1994, stockholders, each purporting to represent a
class, filed complaints against Caremark and certain officers and employees of
Caremark in the United States District Court for the Northern District of
Illinois, alleging violations of the Securities Act and the Exchange Act, and
fraud and negligence in connection with public disclosures by Caremark regarding
Caremark's business practices and the status of the OIG investigation discussed
above. The complaints sought unspecified damages, declaratory and equitable
relief, and attorney's fees and expenses. In June 1996, the complaint filed by
one group of stockholders alleging violations of the Exchange Act only, was
certified as a class. This action has been settled for $25 million, most of
which will be paid by Caremark's directors and officers insurance. MedPartners
will record an after tax charge of $5 million in the third quarter of 1997 in
connection with the settlement.
In May 1996, three home infusion companies, purporting to represent a class
consisting of all of Caremark's competitors in the alternate site infusion
therapy industry, filed a complaint against Caremark, a subsidiary of Caremark,
and two other corporations in the United States District Court for the District
of Hawaii alleging violations of the federal conspiracy laws, the antitrust laws
and of California's unfair business practices statute. The complaint seeks
unspecified treble damages, and attorneys' fees and expenses. The Company
intends to defend this case vigorously. Although management believes, based on
information currently available, that the ultimate resolution of this matter is
not likely to have a material adverse effect on the operating results and
financial condition of the Company, there can be no assurance, that the ultimate
resolution of this matter, if adversely determined, would not have a material
adverse effect on the operating results and financial condition of the Company.
Private Payor Settlements. In March 1996, Caremark agreed to settle all
disputes with a number of private payors. These disputes relate to businesses
that were covered by the OIG Settlement. The settlements resulted in an
after-tax charge of approximately $43.8 million. In addition, the Company paid
$24.1 million after-tax to cover the private payors' pre-settlement and
settlement-related expenses. An after-tax charge for the above amounts was
recorded in first quarter 1996 discontinued operations.
Coram Litigation. On September 11, 1995, Coram Healthcare Corporation
("Coram") filed a complaint in the San Francisco Superior Court against Caremark
and its subsidiary, Caremark Inc., and 50 unnamed individual defendants. The
complaint, which arises from Caremark's sale to Coram of Caremark's home
infusion therapy business in April 1995, for approximately $209.0 million in
cash and $100.0 million in securities, alleges breach of the Asset Sale and Note
Purchase Agreement, dated January 29, 1995, as amended April 1, 1995, between
Coram and Caremark, breach of related contracts, fraud, negligent
misrepresentation and a right to contractual indemnity. Coram's amended
complaint includes claims for specific performance, declaratory relief,
injunctive relief and requests damages of $5.2 billion. However, at a pretrial
hearing in May 1997, counsel for Coram stated to the court that, with respect to
compensatory damages, Coram was realistically seeking approximately $300
million. Caremark filed counterclaims against Coram in this lawsuit and also
filed a lawsuit in the United States District Court in Chicago claiming that
Coram committed securities fraud in its sale to Caremark of its securities in
connection with the sale of Caremark's home infusion business to Coram. The
lawsuit filed in federal court in Chicago has been dismissed, but on appeal by
Caremark the dismissal was reversed and the lawsuit was remanded. On July 1,
1997, the parties to the Coram litigation announced that a settlement had been
reached pursuant to which Caremark returned for cancellation all of the
securities issued by Coram in connection with the Acquisition and paid Coram $45
million in cash on or about September 1, 1997. The settlement agreement also
provides for the termination and resolution of all disputes and issues between
the parties and for the exchange of mutual releases. The Company recognized an
after tax charge from discontinued operation of $75.4 million in the second
quarter of 1997 related to this settlement.
6
<PAGE> 10
RISKS RELATING TO EXPOSURE TO PROFESSIONAL LIABILITY; LIABILITY INSURANCE
In recent years, physicians, hospitals and other participants in the
healthcare industry have become subject to an increasing number of lawsuits
alleging medical malpractice and related legal theories. Many of these lawsuits
involve large claims and substantial defense costs. Although the Company does
not engage in the practice of medicine or provide medical services, and does not
control the practice of medicine by its affiliated physicians or the compliance
with regulatory requirements directly applicable to the affiliated physicians
and physician groups, there can be no assurance that the Company will not become
involved in such litigation in the future. Through the ownership and operation
of U.S. Family Care Medical Center ("USFMC") and Friendly Hills Hospital
("Friendly Hills"), acute care hospitals located in Montclair and La Habra,
California, respectively, the Company could be subject to allegations of
negligence and wrongful acts by its hospital-based physicians or arising out of
providing nursing care, emergency room services, credentialing of medical staff
members and other activities incident to the operation of an acute care
hospital. In addition, through its management of clinic locations and provision
of non-physician healthcare personnel, the Company could be named in actions
involving care rendered to patients by physicians employed by or contracting
with affiliated medical organizations and physician groups.
The Company maintains professional and general liability insurance and
other coverage deemed necessary by MedPartners. Nevertheless, certain types of
risks and liabilities are not covered by insurance and there can be no assurance
that the limits of coverage will be adequate to cover losses in all instances.
In addition, the Company's practice management agreements require the affiliated
physicians to maintain professional liability and workers' compensation
insurance coverage on the practice and on each employee and agent of the
practice, and the Company generally is indemnified under each of the practice
management agreements by the affiliated physicians for liabilities resulting
from the performance of medical services. However, there can be no assurance
that a future claim or claims will not exceed the limits of these available
insurance coverages or that indemnification will be available for all such
claims. See "Business -- Corporate Liability and Insurance" in the Company's
10-K/A incorporated herein by reference.
GOVERNMENT REGULATION
Federal and state laws regulate the relationships among providers of
healthcare services, physicians and other clinicians. These laws include the
fraud and abuse provisions of the Medicare and Medicaid statutes, which prohibit
the solicitation, payment, receipt or offering of any direct or indirect
remuneration for the referral of patients covered by any federal healthcare
program, including Medicare and Medicaid, or for recommendation, leasing,
arranging, ordering or purchasing of services covered by any federal healthcare
program, as well as laws that impose significant penalties for false or improper
billings for physician services. These laws also impose restrictions on
physicians' referrals for designated health services to entities with which they
have financial relationships. Violations of these laws may result in substantial
civil or criminal penalties for individuals or entities, including large civil
monetary penalties and exclusion from participation in all federal healthcare
programs. Such exclusion and penalties, if applied to the Company's affiliated
physicians, could result in significant loss of reimbursement.
Moreover, the laws of many states, including California (from which a
significant portion of the Company's revenues are derived), prohibit physicians
from splitting fees with non-physicians and prohibit non-physician entities from
practicing medicine. These laws and their interpretations vary from state to
state and are enforced by the courts and by regulatory authorities with broad
discretion. As stated in Note 1 to the consolidated financial statements of the
Company, incorporated herein by reference, the Company believes that it has
perpetual and unilateral control over the assets and operations of the various
affiliated professional corporations. There can be no assurance that regulatory
authorities will not take the position that such control conflicts with state
laws regarding the practice of medicine or other federal restrictions. Although
the Company believes its operations as currently conducted are in material
compliance with existing applicable laws, there can be no assurance that the
existing organization of the Company and its contractual arrangements with
affiliated physicians will not be successfully challenged as constituting the
unlicensed practice of medicine or that the enforceability of the provisions of
such arrangements, including non-competition agreements, will not be limited.
There can be no assurance that review of the business of the Company and its
affiliates by courts or regulatory authorities will not result in a
determination that could
7
<PAGE> 11
adversely affect their operations or that the healthcare regulatory environment
will not change so as to restrict existing operations or expansion thereof. In
the event of action by any regulatory authority limiting or prohibiting the
Company or any affiliate from carrying on its business or from expanding the
operations of the Company and its affiliates to certain jurisdictions,
structural and organizational modifications of the Company may be required,
which could have a material adverse effect on the operating results and
financial condition of the Company.
In addition to the regulations referred to above, significant aspects of
the Company's operations are subject to state and federal statutes and
regulations governing workplace health and safety, the operation of pharmacies,
repackaging of drug products, dispensing of controlled substances and the
disposal of medical waste. The Company's operations may also be affected by
changes in ethical guidelines and operating standards of professional and trade
associations and private accreditation commissions such as the American Medical
Association and the Joint Commission on Accreditation of Healthcare
Organizations. Accordingly, changes in existing laws and regulations, adverse
judicial or administrative interpretations of such laws and regulations or
enactment of new legislation could have a material adverse effect on the
operating results and financial condition of the Company. See "-- Risks Relating
to Pharmacy Licensing and Operation".
For the six months ended June 30, 1997, approximately 12% of the revenues
of the Company's affiliated physician groups were derived from payments made by
government-sponsored healthcare programs (principally, Medicare and state
reimbursed programs). As a result, any change in reimbursement regulations,
policies, practices, interpretations or statutes could adversely affect the
operations of the Company. There are also state and federal civil and criminal
statutes imposing substantial penalties (including civil penalties and criminal
fines and imprisonment) on healthcare providers that fraudulently or wrongfully
bill governmental or other third-party payors for healthcare services. The
Company believes it is in material compliance with such laws, but there can be
no assurance that the Company's activities will not be challenged or scrutinized
by governmental authorities or that any such challenge or scrutiny would not
have a material adverse effect on the operating results and financial condition
of the Company.
Certain provisions of the Social Security Act, commonly referred to as the
"Anti-Kickback Statute", prohibit the offer, payment, solicitation, or receipt
of any form of remuneration in return for the referral of patients or patient
care opportunities, or in return for the recommendation, arrangement, purchase,
lease or order of items or services that are covered by any federal healthcare
program. Many states have adopted similar prohibitions against payments intended
to induce referrals of Medicaid and other third-party payor patients. The
Anti-Kickback Statute contains provisions prescribing civil and criminal
penalties to which individuals or providers who violate such statute may be
subjected. The criminal penalties include fines up to $25,000 per violation and
imprisonment for up to five years or both. Additionally, the DHHS has the
authority to exclude anyone, including individuals or entities, who has
committed any of the prohibited acts from participation in any federal
healthcare program. If applied to the Company or any of its subsidiaries or
affiliated physicians, such exclusion could result in a significant loss of
reimbursement for the Company, up to a maximum of the approximately 12% of the
revenues of the Company's affiliated physician groups, which could have a
material adverse effect on the operating results and financial condition of the
Company. Although the Company believes that it is not in violation of the
Anti-Kickback Statute or similar state statutes, its operations do not fit
within any of the existing or proposed federal safe harbors.
Significant prohibitions against physician referrals were enacted by the
federal Omnibus Budget Reconciliation Act of 1993. Subject to certain
exemptions, a physician or a member of his immediate family is prohibited from
referring Medicare or Medicaid patients to an entity providing "designated
health services" in which the physician has an ownership or investment interest
or with which the physician has entered into a compensation arrangement. While
the Company believes it is in compliance with such legislation, future
regulations could require the Company to modify the form of its relationships
with physician groups. Some states have also enacted similar self-referral laws,
and the Company believes it is likely that more states will follow. The Company
believes that its practices fit within exemptions contained in such statutes.
Nevertheless, expansion of the operations of the Company into certain
jurisdictions may require structural and organizational modifications of the
Company's relationships with physician groups to comply with new or revised
state statutes. Such structural and organizational modifications could have a
material adverse effect on the operating results and financial condition of the
Company.
8
<PAGE> 12
The Knox-Keene Health Care Service Plan Act of 1975 (the "Knox-Keene Act")
and the regulations promulgated thereunder subject entities which are licensed
as healthcare service plans in California to substantial regulation by the
California Department of Corporations (the "DOC"). In addition, licensees under
the Knox-Keene Act are required to file periodic financial data and other
information (which generally become available to the public), maintain
substantial tangible net equity on their balance sheets and maintain adequate
levels of medical, financial and operational personnel dedicated to fulfilling
the licensee's statutory and regulatory requirements. The DOC is empowered by
law to take enforcement actions against licensees that fail to comply with such
requirements. On March 5, 1996, the DOC issued to Pioneer Provider Network, Inc.
("PPN"), a wholly-owned subsidiary of the Company, a healthcare service plan
license (the "Restricted License"). PPN is a recently created organization
without an operating history, and there is no assurance that the DOC will view
PPN's operations to be fully in compliance with applicable laws, including the
Knox-Keene Act, and regulations. Any material non-compliance could have a
material adverse effect on the operating results and financial condition of the
Company.
RISKS RELATING TO PHARMACY LICENSING AND OPERATION
The Company is subject to federal and state laws and regulations governing
pharmacies. Federal controlled substance laws require the Company to register
its pharmacies with the United States Drug Enforcement Administration and comply
with security, record-keeping, inventory control and labeling standards in order
to dispense controlled substances. State controlled substance laws require
registration and compliance with the licensing, registration or permit standards
of the state pharmacy licensing authority. State pharmacy licensing,
registration and permit laws impose standards on the qualifications of the
applicant's personnel, the adequacy of its prescription fulfillment and
inventory control practices and the adequacy of its facilities. In general,
pharmacy licenses are renewed annually. Pharmacists must also satisfy state
licensing requirements. Any failure to satisfy such pharmacy licensing statutes
and regulations could have a material adverse effect on the operating results
and financial condition of the Company.
RISKS RELATING TO HEALTHCARE REFORM; PROPOSED LEGISLATION
As a result of the continued escalation of healthcare costs and the
inability of many individuals to obtain health insurance, numerous proposals
have been, and other proposals may be, introduced in the United States Congress
and state legislatures relating to healthcare reform. There can be no assurance
as to the ultimate content, timing or effect of any healthcare reform
legislation, nor is it possible at this time to estimate the impact of potential
legislation, which may be material, on the Company.
ANTI-TAKEOVER CONSIDERATIONS
Certain provisions of the Company's Third Restated Certificate of
Incorporation (the "Certificate of Incorporation"), the Company's Second Amended
and Restated Bylaws (the "Bylaws") and the Delaware General Corporation Law
("DGCL") could, together or separately, discourage potential acquisition
proposals, delay, or prevent a change in control of the Company. These
provisions include a classified Board of Directors and the issuance, without
further stockholder approval, of preferred stock with rights and privileges
which could be senior to the Company's Common Stock. The Company also is subject
to Section 203 of the DGCL, which, subject to certain exceptions, prohibits a
Delaware corporation from engaging in any of a broad range of business
combinations with any "interested stockholder" for a period of three years
following the date that such stockholder became an interested stockholder. In
addition, the Company Rights Plan (as defined herein), which provides for
discount purchase rights to certain stockholders of the Company upon certain
acquisitions of 10% or more of the outstanding shares of the Company's Common
Stock, may also inhibit a change in control of the Company.
9
<PAGE> 13
POSSIBLE VOLATILITY OF STOCK PRICE
There may be significant volatility in the market price for the Common
Stock. Quarterly operating results of the Company, changes in general conditions
in the economy, the financial markets or the healthcare industry, adverse
developments with respect to future acquisitions, or other developments
affecting the Company or its competitors, could cause the market price of the
Common Stock to fluctuate substantially. In addition, in recent years, the stock
market and, in particular, the healthcare industry segment, has experienced
significant price and volume fluctuations. This volatility has affected the
market prices of securities issued by many companies for reasons unrelated to
their operating performance.
10
<PAGE> 14
SELLING STOCKHOLDERS
The following table shows the names of the Selling Stockholders and the
number of shares of the Common Stock beneficially owned by them and to be sold
by them under this Prospectus as of the date of this Prospectus.
<TABLE>
<CAPTION>
NUMBER NUMBER NUMBER PERCENT OF
OF SHARES OF SHARES OF SHARES OUTSTANDING
BENEFICIALLY COVERED BY TO BE HELD SHARES AFTER
SELLING STOCKHOLDERS OWNED THIS PROSPECTUS AFTER OFFERING OFFERING
-------------------- ------------ --------------- -------------- --------------
<S> <C> <C> <C> <C>
Ballapuram Adhi(26)........................... 6,143 1,536 4,607 *
Michael Adler, M.D.(14)....................... 8,250 2,064 6,186 *
Michael Alexander, M.D........................ 3,175 3,175 0 *
Lloyd H. Alterman, M.D........................ 3,175 3,175 0 *
James Amontree(26)............................ 7,743 1,936 5,807 *
Paul B. Avondoglio, M.D....................... 3,175 3,175 0 *
Maurice Azar(26).............................. 6,143 1,536 4,607 *
David Barnes, M.D.(21)........................ 19,386 4,847 14,539 *
Issa Baroudi, M.D.(26)........................ 15,281 3,820 11,461 *
Joseph Barresi, M.D........................... 3,175 3,175 0 *
Andrew Beamer, M.D............................ 3,175 3,175 0 *
Gary O. Bean, M.D.(22)........................ 8,858 2,451 6,407 *
Phillip H. Beegle, Jr., M.D.(8)............... 63,856 14,840 49,016 *
Joseph Belladonna, M.D........................ 3,175 3,175 0 *
Kerry Bergman, M.D............................ 3,175 3,175 0 *
Richard L. Berryman, M.D.(21)................. 19,386 4,847 14,539 *
Saligrama Bhat(26)............................ 12,355 3,089 9,266 *
Tucker Bierbaum, M.D.(25)..................... 28,414 7,604 20,810 *
Kenneth Botsford, M.D.(21).................... 19,386 4,847 14,539 *
Richard W. Brenner, M.D.(27).................. 3,175 3,175 0 *
Kenneth P. Brin, M.D., Ph.D.(27).............. 3,175 3,175 0 *
Michael Brinson(26)........................... 10,420 2,605 7,815 *
Howard S. Britt, M.D.......................... 3,175 3,175 0 *
David Rick Brown, M.D.(21).................... 19,386 4,847 14,539 *
Jeffrey B. Brown, M.D.(10)(11)................ 29,907 9,969 19,938 *
Jeffrey B. Brown, M.D. & Nancy R. Brown(12)... 9,261 3,087 6,174 *
Melissa Brown, M.D............................ 3,175 3,175 0 *
Fernando D. Burstein, M.D., Ph.D.(8).......... 30,610 14,840 15,770 *
Stuart Jay Burstin, M.D....................... 3,175 3,175 0 *
Paul J. Carniol, M.D.......................... 3,175 3,175 0 *
Richard Carvolth, M.D.(25).................... 88,264 22,066 66,198 *
Ena Casanova(26).............................. 4,962 1,241 3,721 *
Luis Casanova(26)............................. 7,743 1,936 5,807 *
Agustin M. Castellanos, M.D.(10).............. 3,859 1,286 2,573 *
Thongadi Chandrahasa(26)...................... 6,143 1,536 4,607 *
Aaron Chinn, M.D.(2).......................... 28,000 7,022 20,978 *
Steven Christesen(26)......................... 6,143 1,536 4,607 *
C. Franklin Church, M.D.(22).................. 13,675 3,419 10,256 *
Thomas Civitella(26).......................... 9,098 2,275 6,823 *
Steven R. Cohen, M.D.(8)...................... 24,688 14,840 9,848 *
Augustin Collado(26).......................... 7,743 1,936 5,807 *
Peter Colucio, M.D............................ 3,175 3,175 0 *
Allard J. Conger, M.D.(14).................... 8,255 2,064 6,191 *
Terrence Connelly(26)......................... 15,281 3,820 11,461 *
David Cooper, M.D............................. 3,175 3,175 0 *
Joseph T. Corona, M.D......................... 3,175 3,175 0 *
William W. Couch, M.D.(16).................... 23,068 6,068 17,000 *
Richard L. Cox, M.D.(21)...................... 19,386 4,847 14,539 *
</TABLE>
11
<PAGE> 15
<TABLE>
<CAPTION>
NUMBER NUMBER NUMBER PERCENT OF
OF SHARES OF SHARES OF SHARES OUTSTANDING
BENEFICIALLY COVERED BY TO BE HELD SHARES AFTER
SELLING STOCKHOLDERS OWNED THIS PROSPECTUS AFTER OFFERING OFFERING
-------------------- ------------ --------------- -------------- --------------
<S> <C> <C> <C> <C>
James A. Cross, M.D.(14)...................... 8,255 2,064 6,191 *
Manuel de la Cruz, M.D.(13)................... 3,077 769 2,308 *
Charles M. Culbert, M.D....................... 3,175 3,175 0 *
Rudolph Dangelmajer, M.D...................... 3,175 3,175 0 *
David Deatkine, Jr., M.D.(21)................. 18,000 4,500 13,500 *
Arturo J. DeLeon, M.D.(22).................... 15,000 2,451 12,549 *
D. Craig Dennis, M.D.(25)..................... 151,667 37,917 113,750 *
Doctor's Essential Services, Inc.(28)......... 44,769 5,972 38,797 *
Charles Dooley, M.D........................... 3,175 3,175 0 *
L. Franklyn Elliott, M.D.(8).................. 28,237 14,840 13,397 *
Carlene W. Elsner, M.D., P.C.(15)............. 9,054 3,019 6,035 *
The Estate of Joseph E. Enright, M.D.......... 2,640 2,640 0 *
A. Robert Eschleman(26)....................... 4,962 1,241 3,721 *
Thomas Fabian(26)............................. 4,962 1,241 3,721 *
Phillip J. Fagan, M.D.(7)..................... 1,332 444 888 *
Karen L. Ferguson, M.D.(5).................... 18,024 4,506 13,518 *
Stephen D. Fillman, M.D.(16).................. 22,077 4,558 17,519 *
James O. Finney, Jr., M.D.(21)................ 19,386 4,847 14,539 *
Herschel Fischer, M.D.(30).................... 805,837 112,835 693,002 *
Denis L. Galindo, M.D.(16).................... 20,068 6,068 14,000 *
Jose Garcia(26)............................... 9,098 2,275 6,823 *
Charles M. Gelber, M.D........................ 3,175 3,175 0 *
Thomas J. Gianis, M.D......................... 3,175 3,175 0 *
Alice B. Gibbons, M.D......................... 3,175 3,175 0 *
Ramon Gil(26)................................. 7,743 1,936 5,807 *
Richard Gillespie, M.D.(25)................... 254,953 63,738 191,215 *
J. Scott Gillin, M.D.......................... 3,175 3,175 0 *
Chinnia Gnanashanmugam(26).................... 7,743 1,936 5,807 *
Robert C. Gordon, M.D.(9)..................... 38,209 12,737 25,472 *
Andrew Greene, M.D............................ 3,175 3,175 0 *
Gabriel G. Gruber, M.D........................ 3,175 3,175 0 *
Eric Gurwin, M.D.............................. 3,175 3,175 0 *
Louis Stayton Halberdier, Jr., M.D.(18)....... 12,055 3,013 9,042 *
David Bradley Hall, M.D.(21).................. 19,386 4,847 14,539 *
Alger V. Hamrick, M.D.(22).................... 7,353 2,451 4,902 *
Carl R. Hartrampf, Jr., M.D.(8)............... 44,255 14,840 29,415 *
Michael Heagney(26)........................... 4,962 1,241 3,721 *
Kathleen Heffernan............................ 3,175 3,175 0 *
Nathan B. Hirsch, M.D.(24).................... 7,352 2,338 5,014 *
William A. Holt and Anita S. Holt(26)......... 7,743 1,936 5,807 *
Linda Hsueh(27)............................... 3,175 3,175 0 *
Linda K. Hudson, M.D.(21)..................... 19,386 4,847 14,539 *
Joseph G. Hughes, M.D.(21).................... 19,386 4,847 14,539 *
C.W.S Investments, Ltd. f/k/a One Doubles
Ltd.(4)..................................... 95,382 47,690 47,692 *
Peter Hyans, M.D.............................. 3,175 3,175 0 *
Thomas V. Inglesby, M.D....................... 3,175 3,175 0 *
Mazharul Islam(26)............................ 4,962 1,241 3,721 *
Mamoon Jarrah(26)............................. 12,355 3,089 9,266 *
Deborah G. Kenward, M.D.(24).................. 7,014 2,338 4,676 *
James M. Krause, M.D.(16)..................... 19,936 6,624 13,312 *
Michael James Krebsback, M.D.(23)............. 3,711 1,237 2,474 *
John H. Krikorian, M.D........................ 3,175 3,175 0 *
Jeffery C. Lambert, M.D.(17).................. 12,055 3,013 9,042 *
Victor S. Lamberto, M.D.(27).................. 3,175 3,175 0 *
</TABLE>
12
<PAGE> 16
<TABLE>
<CAPTION>
NUMBER NUMBER NUMBER PERCENT OF
OF SHARES OF SHARES OF SHARES OUTSTANDING
BENEFICIALLY COVERED BY TO BE HELD SHARES AFTER
SELLING STOCKHOLDERS OWNED THIS PROSPECTUS AFTER OFFERING OFFERING
-------------------- ------------ --------------- -------------- --------------
<S> <C> <C> <C> <C>
Marcus Lara, M.D.(26)......................... 9,098 2,275 6,823 *
Stewart A. Lauterbach, M.D.(25)............... 23,092 5,773 17,319 *
Jeffrey Le Benger, M.D.(27)................... 3,175 3,175 0 *
Kerry Le Benger, M.D.......................... 3,175 3,175 0 *
Richard J. Lesko, M.D......................... 3,175 3,175 0 *
Deborah L. Lewis, M.D.(22).................... 9,803 2,451 7,352 *
Mario Lopez, M.D.(26)......................... 15,281 3,820 11,461 *
Jerrold S. Lozner, M.D........................ 3,175 3,175 0 *
Carlos & Maria Maas(26)....................... 10,420 2,605 7,815 *
Bruce Macdonald(26)........................... 4,962 1,241 3,721 *
Devinder K. Makker, M.D.(13).................. 5,289 1,322 3,967 *
Karl G. Mangold, M.D.(29)..................... 1,208,756 155,912 1,052,844 *
Robert P. Margie, M.D.(27).................... 3,175 3,175 0 *
Joe B. Massey, M.D., P.C.(15)................. 18,040 4,510 13,530 *
John D. Mast, M.D.(13)........................ 9,700 3,185 6,515 *
Laszlo Mate, M.D.(10)......................... 7,145 1,286 5,859 *
Jeffrey D. Maynard, M.D.(13).................. 2,063 516 1,547 *
John L. McDonald, M.D.(25).................... 88,196 22,049 66,147 *
Matthew C. McDonnell, M.D.(6)................. 9,718 1,944 7,774 *
David E. McNeill, III, M.D.(16)............... 22,590 6,068 16,522 *
Marc Melser(26)............................... 9,098 2,275 6,823 *
David P. Miller, M.D.......................... 3,175 3,175 0 *
Mahesh G. Modi, M.D.(13)...................... 9,013 2,253 6,760 *
Alan G. Moore, M.D.(20)....................... 21,732 7,233 14,499 *
George H. Moore, Jr., M.D.(22)................ 8,007 2,669 5,338 *
George Nackley, M.D.(26)...................... 6,143 1,536 4,607 *
Lawrence J. Nastro, M.D....................... 3,175 3,175 0 *
Richard O. Nelson, M.D........................ 3,175 3,175 0 *
Richard Nitzberg, M.D......................... 3,175 3,175 0 *
Gerald Paul Norris, M.D.(21).................. 15,510 4,847 10,663 *
Sonia C. Nunez, M.D.(10)...................... 5,145 1,286 3,859 *
C. Mario Oliveira, M.D.(5).................... 16,093 5,364 10,729 *
Jacinto & Dora Oliver(26)..................... 6,143 1,536 4,607 *
Venkatanarayana Padmanabhan(26)............... 7,743 1,936 5,807 *
William Guy Patterson, M.D.(21)............... 19,386 4,847 14,539 *
Mark Perrin, M.D.............................. 3,175 3,175 0 *
Lenin J. Peters, M.D.(3)...................... 77,000 19,158 57,842 *
Alejandro Pizarro(26)......................... 7,743 1,936 5,807 *
Joseph Purita, M.D.(23)....................... 7,500 2,500 5,000 *
Leo F. Quinn, M.D.(23)........................ 3,474 1,158 2,316 *
Craig J. Rich, M.D.(21)....................... 19,386 4,500 14,886 *
Joseph S. Ritter, M.D......................... 3,175 3,175 0 *
Victor Rodriguez(26).......................... 7,743 1,936 5,807 *
Robert Rosenbaum, M.D......................... 3,175 3,175 0 *
Richard N. Rudd, M.D.(2)...................... 12,700 6,393 6,307 *
Catherine Ryan, M.D........................... 3,175 3,175 0 *
R. Gregory Sachs, M.D......................... 3,175 3,175 0 *
Carl H. Sadowsky, M.D.(10)(11)................ 29,908 9,970 19,938 *
Carl H. Sadowsky, M.D. & Toni Rae
Sadowsky(12)................................ 9,261 3,087 6,174 *
Howard Saslow(26)............................. 12,355 3,089 9,266 *
Charles R. Schallop, M.D.(10)................. 5,145 1,286 3,859 *
Peter Mark Schosheim, M.D.(23)................ 6,983 1,745 5,238 *
Luis & Nelida Serentill(26)................... 9,098 2,275 6,823 *
Kathleen A. Sheerin, M.D.(1).................. 33,730 8,432 25,298 *
</TABLE>
13
<PAGE> 17
<TABLE>
<CAPTION>
NUMBER NUMBER NUMBER PERCENT OF
OF SHARES OF SHARES OF SHARES OUTSTANDING
BENEFICIALLY COVERED BY TO BE HELD SHARES AFTER
SELLING STOCKHOLDERS OWNED THIS PROSPECTUS AFTER OFFERING OFFERING
-------------------- ------------ --------------- -------------- --------------
<S> <C> <C> <C> <C>
Duane Bradley Shroyer, M.D.(21)............... 19,386 4,847 14,539 *
Howard J. Silk, M.D.(1)....................... 43,017 10,754 32,263 *
Barry Silver, M.D............................. 3,175 3,175 0 *
Robert D. Slama, M.D.......................... 3,175 3,175 0 *
Barry A. Smith, M.D.(25)...................... 41,462 10,365 31,097 *
Dennis L. Spangler, M.D.(1)................... 48,596 12,149 36,447 *
Stephen Spencer(26)........................... 18,805 4,701 14,104 *
Robert R. Springer, M.D....................... 3,175 3,175 0 *
Charles E. Stewart, M.D.(23).................. 6,000 1,660 4,340 *
Reed & Mary Stone, M.D.(10)................... 3,859 1,286 2,573 *
Geraldine M. Summa, M.D....................... 3,175 3,175 0 *
Summit Medical Group, P.A..................... 535 535 0 *
Anthony M. Taitano, M.D.(14).................. 8,255 2,064 6,191 *
Numa Tamayo, M.D.(26)......................... 6,143 1,536 4,607 *
David D. Tanner, M.D.(1)...................... 31,137 10,284 20,853 *
William Tansey, III........................... 3,175 3,175 0 *
Catherine Thomas, M.D.(21).................... 19,386 4,847 14,539 *
Andrew A. Toledo, M.D.(15).................... 2,711 904 1,807 *
Jaime & Martha Torner(26)..................... 7,743 1,936 5,807 *
William N. Toth, M.D.......................... 3,175 3,175 0 *
Jack Walden Trigg, Jr., M.D.(21).............. 19,386 4,847 14,539
Michael M. Tuchman, M.D.(10)(11).............. 30,617 9,969 20,648 *
Michael M. Tuchman, M.D. & Carol
Tuchman(12)................................. 8,553 3,087 5,466 *
Bayard Tynes, M.D.(21)........................ 18,300 4,847 13,453 *
Javier Vizoso, M.D.(24)....................... 7,014 2,338 4,676
Michael B. Wax(27)............................ 3,175 3,175 0 *
Tomasz Wazny(26).............................. 10,420 2,605 7,815 *
Kathleen A. Weisenburger, M.D.(16)............ 20,951 3,546 17,405 *
Joseph E. Welden, Jr., M.D.(21)............... 19,386 4,500 14,886 *
Edward West, M.D.(25)......................... 14,135 4,679 9,456 *
Maureen Whalen, M.D........................... 3,175 3,175 0 *
Hendricks Whitman III, M.D.................... 3,175 3,175 0 *
Joseph M. Wildman, M.D........................ 3,175 3,175 0 *
John H. Williams, D.O. (Aldine's Wom.
Clin.)(19).................................. 18,084 6,000 12,084 *
Robert R. Williams, M.D.(13).................. 5,434 1,359 4,075 *
Richard A. Wilmot, M.D........................ 3,175 3,175 0 *
Paul K. Winner, M.D.(10)...................... 3,858 1,286 2,572 *
Charles J. Wittman, Jr., M.D.................. 3,175 3,175 0 *
Burton S. Wollowick, M.D.(23)................. 3,889 1,296 2,593 *
Ralph H. Yarbrough, M.D.(21).................. 19,386 4,500 14,886 *
Nicholas Yatrakis, M.D........................ 3,175 3,175 0 *
Chemanoor V. Zachariah, M.D.(13).............. 9,807 2,452 7,355 *
Mark Zimmerman, M.D........................... 3,175 3,175 0 *
John A. Zora, M.D.(1)......................... 42,970 10,742 32,228 *
Neil Zusman(26)............................... 12,355 3,089 9,266 *
</TABLE>
- ---------------
(1) Indicates a Selling Stockholder who is or was an officer and/or director
of The Atlanta Allergy Clinic, P.A., which may be deemed to be an
affiliate of the Company under the Securities Act.
(2) Indicates a Selling Stockholder who is or was an officer and/or director
of East Bay Fertility OB-GYN Medical Group, Inc., which may be deemed to
be an affiliate of the Company under the Securities Act.
(3) Indicates a Selling Stockholder who is or was an officer and/or director
of Global Care, Inc., which may be deemed to be an affiliate of the
Company under the Securities Act.
(4) Indicates a Selling Stockholder who is or was an officer and/or director
of One Doubles, Ltd., which may be deemed to be an affiliate of the
Company under the Securities Act.
14
<PAGE> 18
(5) Indicates a Selling Stockholder who is or was an officer and/or director
of Brevard OB/GYN Specialists, P.A., which may be deemed to be an
affiliate of the Company under the Securities Act.
(6) Indicates a Selling Stockholder who is or was an officer and/or director
of Cleveland Ear, Nose, Throat and Facial Surgery Group, Inc., which may
be deemed to be an affiliate of the Company under the Securities Act.
(7) Indicates a Selling Stockholder who is or was an officer and/or director
of The Emergency Associates for Medicine, Inc., which may be deemed to be
an affiliate of the Company under the Securities Act.
(8) Indicates a Selling Stockholder who is or was an officer and/or director
of Atlanta Plastic Surgery, P.A., which may be deemed to be an affiliate
of the Company under the Securities Act.
(9) Indicates a Selling Stockholder who is or was an officer and/or director
of OB/GYN Specialists of the Palm Beaches, Inc., which may be deemed to be
an affiliate of the Company under the Securities Act.
(10) Indicates a Selling Stockholder who is or was an officer and/or director
of Martinez, Sadowsky, Zuniga, Tuchman and Brown, M.D.s, P.A., which may
be deemed to be an affiliate of the Company under the Securities Act.
(11) Indicates a Selling Stockholder who is or was an officer and/or director
of NeuroMedical Management, Inc., which may be deemed to be an affiliate
of the Company under the Securities Act.
(12) Indicates a Selling Stockholder who is or was an officer and/or director
of TBMSZ, Inc., which may be deemed to be an affiliate of the Company
under the Securities Act.
(13) Indicates a Selling Stockholder who is or was an officer and/or director
of Eaton Medical Group, which may be deemed to be an affiliate of the
Company under the Securities Act.
(14) Indicates a Selling Stockholder who is or was an officer and/or director
of Woman's Healthcare Associates, P.C., which may be deemed to be an
affiliate of the Company under the Securities Act.
(15) Indicates a Selling Stockholder who is or was an officer and/or director
of Reproductive Biology Associates, Inc., Southeastern Fertility
Institute, Southeastern Fertility Institute Surgical Associates, P.C., and
Southeastern Endocrine Labs, Inc., which may be deemed to be an affiliate
of the Company under the Securities Act.
(16) Indicates a Selling Stockholder who is or was an officer and/or director
of Northwest Diagnostic Clinic, P.A., which may be deemed to be an
affiliate of the Company under the Securities Act.
(17) Indicates a Selling Stockholder who is or was an officer and/or director
of Jeffrey C. Lambert, M.D., P.A., which may be deemed to be an affiliate
of the Company under the Securities Act.
(18) Indicates a Selling Stockholder who is or was an officer and/or director
of L. Stayton Halberdier, Jr., M.D., P.A., which may be deemed to be an
affiliate of the Company under the Securities Act.
(19) Indicates a Selling Stockholder who is or was an officer and/or director
of John H. Williams, D.O., P.A., which may be deemed to be an affiliate of
the Company under the Securities Act.
(20) Indicates a Selling Stockholder who is or was an officer and/or director
of Alan G. Moore, M.D., P.A., which may be deemed to be an affiliate of
the Company under the Securities Act.
(21) Indicates a Selling Stockholder who is or was an officer and/or director
of SOUTHVIEW Medical Group, P.C., which may be deemed to be an affiliate
of the Company under the Securities Act.
(22) Indicates a Selling Stockholder who is or was an officer and/or director
of North Carolina Medical Associates, P.A., which may be deemed to be an
affiliate of the Company under the Securities Act.
(23) Indicates a Selling Stockholder who is or was an officer and/or director
of Quinn, Wollowick, Purita, Schosheim, Krebsbach, & Stewart, Inc., which
may be deemed to be an affiliate of the Company under the Securities Act.
(24) Indicates a Selling Stockholder who is or was an officer and/or director
of Hirsch, Strassberg, Kenward & Vizoso, M.D.s, Inc., which may be deemed
to be an affiliate of the Company under the Securities Act.
(25) Indicates a Selling Stockholder who is or was an officer and/or director
of Chase Dennis Medical Group, Inc., which may be deemed to be an
affiliate of the Company under the Securities Act.
(26) Indicates a Selling Stockholder who is or was an officer and/or director
of IMHC Management Inc., which may be deemed to be an affiliate of the
Company under the Securities Act.
(27) Indicates a Selling Stockholder who is or was an officer and/or director
of Summit Medical Group, P.A., which may be deemed to be an affiliate of
the Company under the Securities Act.
(28) Indicates a Selling Stockholder who is or was an officer and/or director
of Doctor's Essential Services, Inc., which may be deemed to be an
affiliate of the Company under the Securities Act.
15
<PAGE> 19
(29) Indicates a Selling Stockholder who is or was an officer and/or director
of Karl G. Mangold, Inc., which may be deemed to be an affiliate of the
Company under the Securities Act.
(30) Indicates a Selling Stockholder who is or was an officer and/or director
of Herschel Fischer, Inc., which may be deemed to be an affiliate of the
Company under the Securities Act.
* Less than one percent.
None of the Selling Stockholders listed above, except where noted, had any
position, office or material relationship within the past three years with the
Company or any of its affiliates.
16
<PAGE> 20
PLAN OF DISTRIBUTION
The Common Stock may be sold from time to time by the Selling Stockholders,
or by pledgees, donees, transferees or other successors in interest. Such sales
may be made on one or more exchanges or in the over-the-counter market or
otherwise or in negotiated transactions, at fixed prices which may be changed,
at market prices prevailing at the time of sale or at prices related to such
prevailing market price. The Common Stock may be sold directly to purchasers or
to or through underwriters, agents or broker-dealers by one or more of the
following: (a) a block trade in which the broker-dealer so engaged will attempt
to sell the Common Stock as agent but may position and resell a portion of the
block as principal to facilitate the transaction; (b) purchases by a
broker-dealer as principal and resale by such broker-dealer for its account; (c)
an exchange distribution in accordance with the rules of such exchange; (d)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers; and (e) through the writing of options on the Common Stock. In
effecting sales, broker-dealers engaged by the Selling Stockholders may arrange
for other broker-dealers to participate in the resales.
Any underwriters, broker-dealers or agents may receive compensation in the
form of commissions, discounts or concessions from Selling Stockholders and/or
the purchasers of such shares for which such underwriters, broker-dealers or
agents may act as agents or to whom they sell as principals, or both (which
compensation as to a particular underwriter, broker-dealer or agent will be
negotiated prior to the sale and may be in excess of customary compensation).
Such underwriters, broker-dealers and agents and any other participating
underwriters, broker-dealers and agents may be deemed to be "underwriters"
within the meaning of the Securities Act. In connection with such sales, any
commission, discount or concession may be deemed to be an underwriting discount
or commission under the Securities Act. In addition, any securities covered by
this Prospectus which qualify for sale pursuant to Rule 144 may be sold under
Rule 144 rather than pursuant to this Prospectus.
All costs, expenses and fees in connection with the registration of the
Common Stock will be borne by the Company. Commissions and discounts, if any,
attributable to the sales of the Common Stock will be borne by the Selling
Stockholders. The Selling Stockholders may agree to indemnify any broker-dealer
or agent that participates in transactions involving sales of the shares against
certain liabilities, including liabilities arising under the Securities Act. The
Company and the Selling Stockholders have agreed to indemnify certain persons
including broker-dealers or agents against certain liabilities in connection
with the offering of the Common Stock, including liabilities arising under the
Securities Act.
EXPERTS
The consolidated financial statements of MedPartners, Inc. appearing in
MedPartners, Inc.'s Annual Report on Form 10-K/A and the Current Report on Form
8-K dated August 27, 1997, for the year ended December 31, 1996, each have been
audited by Ernst & Young LLP, as set forth in their reports included therein and
incorporated herein by reference. Such consolidated financial statements
referred to above are incorporated herein by reference in reliance upon such
reports given upon the authority of such firm as experts in accounting and
auditing.
LEGAL MATTERS
Certain legal matters with respect to the validity of the Common Stock
offered hereby will be passed upon by Haskell Slaughter & Young, L.L.C.,
Birmingham, Alabama.
17
<PAGE> 21
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated by reference in this Prospectus the following
documents, all of which were previously filed by the Company with the Commission
(File No. 0-27276):
1. The Company's Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1996.
2. The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1997.
3. The Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1997.
4. The Company's Current Report on Form 8-K filed August 27, 1997
(containing audited financial statements of the Company at December 31, 1996 and
for the three years then ended reflecting the combined operations of the Company
and InPhyNet Medical Management, Inc.).
5. The description of securities to be registered contained in the
Registration Statement filed with the Commission on Form 8-B under the Exchange
Act and declared effective on November 29, 1995, including any amendment or
reports filed for the purpose of updating such description.
Additionally, all documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of the offering made hereby shall be deemed to be incorporated by reference into
this Prospectus. Any statement contained in a previously filed document
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
modifies or replaces such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or replaced, to constitute
a part of this Prospectus.
The Company undertakes to provide to any person to whom a copy of this
Prospectus has been delivered, upon the written or oral request of any such
person, without charge a copy of any or all of the documents which have been or
may be incorporated by reference into this Prospectus, other than exhibits to
such documents. Written or oral requests for such copies should be directed to
the Company, 3000 Galleria Tower, Suite 1000, Birmingham, Alabama 35244
(telephone (205) 733-8996).
18
<PAGE> 22
======================================================
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OF
COMMON STOCK OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF ANY OFFER TO BUY THE SHARES OF COMMON STOCK BY ANYONE IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 1
The Company........................... 2
Risk Factors.......................... 2
Selling Stockholders.................. 11
Plan of Distribution.................. 17
Experts............................... 17
Legal Matters......................... 17
Incorporation of Certain Documents by
Reference........................... 18
</TABLE>
======================================================
======================================================
1,210,497 SHARES
[MEDPARTNERS (TM) LOGO]
COMMON STOCK
PAR VALUE $.001 PER SHARE
------------
PROSPECTUS
OCTOBER 21, 1997
------------
======================================================
<PAGE> 23
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS.
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an estimate of the fees and expenses to be incurred in
connection with the issuance and distribution of the shares of Common Stock, par
value $.001 per share (the "Common Stock"), offered hereby.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee......... $8,208.21
Legal Fees and Expenses..................................... $ 25,000
Accounting Fees............................................. $ 10,000
Printing Costs.............................................. $ 40,000
Miscellaneous Expenses...................................... $6,791.79
---------
Total............................................. $ 90,000
=========
</TABLE>
- ---------------
* Actual amount.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102(b)(7) of the General Corporation Law of Delaware ("DGCL")
grants corporations the right to limit or eliminate the personal liability of
their directors in certain circumstances in accordance with provisions therein
set forth. The Company's Third Restated Certificate of Incorporation contains a
provision eliminating or limiting director liability to the Company and its
stockholders for monetary damages arising from acts or omissions in the
director's capacity as a director. The provision does not, however, eliminate or
limit the personal liability of a director (i) for any breach of such director's
duty of loyalty to the Company or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under the Delaware statutory provision making directors personally
liable, under a negligence standard, for unlawful dividends or unlawful stock
purchases or redemptions, or (iv) for any transaction from which the director
derived an improper personal benefit. This provision offers persons who serve on
the Board of Directors of the Company protection against awards of monetary
damages resulting from breaches of their duty of care (except as indicated
above). As a result of this provision, the ability of the Company or a
stockholder thereof to successfully prosecute an action against a director for a
breach of his duty of care is limited. However, the provision does not affect
the availability of equitable remedies such as an injunction or rescission based
upon a director's breach of his duty of care. The Commission has taken the
position that the provision will have no effect on claims arising under the
federal securities laws.
Section 145 of the DGCL grants corporations the right to indemnify their
directors, officers, employees and agents in accordance with the provisions
therein set forth. The Company's Second Amended and Restated By-laws provide for
mandatory indemnification rights, subject to limited exceptions, to any
director, officer, employee, or agent of the Company who, by reason of the fact
that he or she is a director, officer, employee, or agent of the Company, is
involved in a legal proceeding of any nature. Such indemnification rights
include reimbursement for expenses incurred by such director, officer, employee,
or agent in advance of the final disposition of such proceeding in accordance
with the applicable provisions of the DGCL.
The Company has agreed to indemnify all of its directors and executive
officers against liability incurred by them by reason of their services as a
director to the fullest extent allowable under applicable law. In addition, the
Company has purchased insurance containing customary terms and conditions as
permitted by Delaware law on behalf of its directors and officers, which may
cover liabilities under the Securities Act.
II-1
<PAGE> 24
ITEM 16. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- -------- -----------
<C> <S> <C>
(4)-1 -- MedPartners, Inc. Rights Agreement, filed as Exhibit (4)-1
to the Company's Registration Statement on Form S-4
(Registration No. 33-00774), is hereby incorporated
herein by reference.
(4)-2 -- Amendment No. 1 to the Rights Plan of MedPartners, Inc.,
filed as Exhibit (4)-2 to the Company's Annual Report on
Form 10-K for the Year ended December 31, 1996, is hereby
incorporated herein by reference.
(4)-3 -- Amendment No. 2 to the Rights Agreement of MedPartners,
Inc., filed as Exhibit (4)-2 to the Company's
Registration Statement on Form S-3 (Registration No.
333-17339), is hereby incorporated herein by reference.
(5) -- Opinion of Haskell Slaughter & Young L.L.C., as to the
legality of the Common Stock of the Company.
(23)-1 -- Consent of Ernst & Young LLP. See pages immediately
following signature pages to the Registration Statement.
(23)-2 -- Consent of Haskell Slaughter & Young L.L.C. (included in the
opinion filed as Exhibit (5)).
(24) -- Powers of Attorney. See the signature pages to the original
filing of this Registration Statement.
</TABLE>
(b) Financial Statements Schedule:
None are applicable.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
(2) For the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-2
<PAGE> 25
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to Item 14 hereof, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
II-3
<PAGE> 26
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Birmingham, State of Alabama on
October 21, 1997.
MEDPARTNERS, INC.
By /s/ LARRY R. HOUSE
------------------------------------
Larry R. House
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<C> <S> <C>
/s/ LARRY R. HOUSE Chairman of the Board and October 21, 1997
- ----------------------------------------------------- Chief Executive Officer and
Larry R. House Director
* Executive Vice President and October 21, 1997
- ----------------------------------------------------- Chief Financial Officer
Harold O. Knight, Jr. (Principal Financial and
Accounting Officer)
* Director October 21, 1997
- -----------------------------------------------------
Richard M. Scrushy
* Director October 21, 1997
- -----------------------------------------------------
Larry D. Striplin, Jr.
* Director October 21, 1997
- -----------------------------------------------------
Charles W. Newhall III
* Director October 21, 1997
- -----------------------------------------------------
Ted H. McCourtney
* Director October 21, 1997
- -----------------------------------------------------
Walter T. Mullikin, M.D.
* Director October 21, 1997
- -----------------------------------------------------
John S. McDonald, J.D.
* Director October 21, 1997
- -----------------------------------------------------
Rosalio J. Lopez, M.D.
* Director October 21, 1997
- -----------------------------------------------------
C.A. Lance Piccolo
</TABLE>
II-4
<PAGE> 27
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<C> <S> <C>
* Director October 21, 1997
- -----------------------------------------------------
Roger L. Headrick
* Director October 21, 1997
- -----------------------------------------------------
Harry M. Jansen Kraemer, Jr.
* /s/ LARRY R. HOUSE
---------------------------------------------------
Larry R. House
Attorney-in-fact
</TABLE>
II-5
<PAGE> 28
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
- -------- ----------- ------------
<C> <S> <C> <C>
(4)-1 -- MedPartners, Inc. Rights Agreement, filed as Exhibit (4)-1
to the Company's Registration Statement on Form S-4
(Registration No. 333-00774), is hereby incorporated by
reference herein.
(4)-2 -- Amendment No. 1 to the Rights Plan of MedPartners, Inc.,
filed as Exhibit (4)-2 to the Company's Annual Report on
Form 10-K for the Year ended December 31, 1996, is hereby
incorporated herein by reference.
(4)-3 -- Amendment No. 2 to the Rights Agreement of MedPartners,
Inc., filed as Exhibit (4)-2 to the Company's
Registration Statement on Form S-3 (Registration No.
333-17339), is hereby incorporated herein by reference.
(5) -- Opinion of Haskell Slaughter & Young L.L.C., as to the
legality of the Common Stock of the Company
(23)-1 -- Consent of Ernst & Young LLP. See pages immediately
following signature pages to the Registration Statement.
(23)-2 -- Consent of Haskell Slaughter & Young L.L.C. (included in the
opinion filed as Exhibit (5)).
(24) -- Powers of Attorney. See the signature pages to the original
filing of this Registration Statement.
</TABLE>
<PAGE> 29
EXHIBIT (23)-1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Experts" in the
Registration Statement (Form S-3, No. 333-37517) and the related Prospectus of
MedPartners, Inc. for the registration of shares of its Common Stock and the
incorporation by reference therein of our report dated February 3, 1997, with
respect to the consolidated financial statements of MedPartners, Inc. for the
year ended December 31, 1996, included in its Annual Report on Form 10-K/A for
the year ended December 31, 1996, and our report dated August 25, 1997 with
respect to the consolidated financial statements of MedPartners, Inc. for the
year ended December 31, 1996, included in its Current Report on Form 8-K dated
August 27, 1997, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Birmingham, Alabama
October 20, 1997
<PAGE> 1
EXHIBIT(5)
[HASKELL SLAUGHTER & YOUNG, L.L.C. LETTERHEAD]
October 20, 1997
MedPartners, Inc.
3000 Galleria Tower, Suite 1000
Birmingham, Alabama 35244
RE: MEDPARTNERS, INC.-
REGISTRATION STATEMENT ON FORM S-3
(OUR FILE NO. 48367-078)
Gentlemen:
We have served as counsel for MedPartners, Inc., a Delaware corporation
(the "Company" or the Issuer"), in connection with the registration under the
Securities Act of 1933, as amended, of an aggregate of 1,210,497 shares (the
"Shares") of the Company's authorized Common Stock, par value $.001 per share
for the amount of certain selling stockholders pursuant to the Company's
Registration Statement on Form S-3 (Commission File No. 333-37517) filed under
the with the Securities and Exchange Commission on October 9, 1997 (the
"Registration Statement"). This opinion is furnished to you pursuant to the
requirements of Form S-3.
In connection with this opinion, we have examined and are familiar with
originals or copies (certified or otherwise identified to our satisfaction) of
such documents, corporate records and other instruments relating to the
incorporation of the Company and the authorization and issuance of the Shares as
we have deemed necessary and appropriate.
Based upon the foregoing, and having regard for such legal considerations
as we have deemed relevant, it is our opinion that:
1. The Shares have been duly authorized and issued; and
<PAGE> 2
MedPartners, Inc.
October 20, 1997
Page 2
2. Upon sale and delivery of the Shares as contemplated in the
Registration Statement, the Shares will be legally issued, fully paid and
nonassessable.
We do hereby consent to the reference to our Firm under the heading
"Legal Matters" in the Prospectus which forms a part of the Registration
Statement, and to the filing of this opinion as an Exhibit thereto.
Very truly yours,
HASKELL SLAUGHTER & YOUNG, L.L.C.
By /S/ Robert E. Lee Garner
--------------------------------
Robert E. Lee Garner
