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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 21, 1999
REGISTRATION STATEMENT NO. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
OXFORD HEALTH PLANS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 06-1118515
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
800 CONNECTICUT AVENUE
NORWALK, CONNECTICUT 06854
(Address of Principal Executive Offices)
OXFORD HEALTH PLANS, INC. 1991 STOCK OPTION PLAN
NORMAN C. PAYSON, M.D. EMPLOYMENT AGREEMENT
NORMAN C. PAYSON, M.D. STOCK OPTION AGREEMENT
MARVIN P. RICH STOCK OPTION AGREEMENT
(Full Title of the Plans)
JEFFERY H. BOYD, ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
OXFORD HEALTH PLANS, INC.
800 CONNECTICUT AVENUE
NORWALK, CONNECTICUT 06854
(Name and address of Agent for Service)
(203) 852-1442
(Telephone Number, Including Area Code, of Agent for Service)
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============================================================================================
CALCULATION OF REGISTRATION FEE
============================================================================================
Title of shares Amount to be Proposed maximum Proposed maximum Amount of
to be registered registered offering price aggregate registration
(1)(2) per share offering price fee(3)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par
value $.01 per share 7,444,330 shares $ 19.21875(4) $ 143,070,717.19(4) $ 39,773.66
============================================================================================
</TABLE>
(1) Represents (i) 4,000,000 shares issuable upon the exercise of options
granted or to be granted under the Oxford Health Plans, Inc. 1991 Stock
Option Plan, (ii) 2,000,000 shares issuable upon the exercise of options
granted under the Norman C. Payson, M.D. Stock Option Agreement, (iii)
800,000 shares issuable upon the exercise of options granted under the
Marvin P. Rich Stock Option Agreement, (iv) 644,330 shares that have been
issued to Norman C. Payson, M.D. pursuant to the Norman C. Payson, M.D.
Employment Agreement, plus, pursuant to Rule 416(a) of the Securities Act
of 1933, as amended, such indeterminate number of shares as may be issued
to prevent dilution resulting from stock splits, stock dividends, or
similar transactions.
(2) This Registration Statement includes (a) up to 28,732,000 shares of Common
Stock that may be reoffered and resold by certain persons who may be
deemed "affiliates" of Oxford Health Plans, Inc. for purposes of the
requirements of the Securities Act of 1933, as amended and (b) up to
644,330 shares of Common Stock that constitute "restricted securities"
under Rule 144 of the Securities Act of 1933, as amended, that may be
reoffered and resold by Norman C. Payson, M.D.
(3) $7,200.54 was paid with Registration Statement No. 33-49738 relating to
1,315,338 shares of Common Stock, $17,343.75 was paid with Registration
Statement No. 33-70908 relating to 750,000 shares of Common Stock,
$55,116.00 was paid with Registration Statement No. 333-988 relating to
2,354,678 shares of Common Stock and $88,720 was paid with Registration
Statement No. 333-28109 relating to 4,500,000 shares of Common Stock,
which shares are being carried forward in the reoffer prospectus being
filed herewith (to the extent that they are or may be control securities).
Pursuant to Rule 429 under the Securities Act of 1933, as amended, the
prospectus filed together with this Registration Statement shall be deemed
to be a combined prospectus which shall also relate to the Registrant's
Registration Statements Nos. 33-49738, 33-70908, 333-988 and 333-28109
each on Form S-8.
(4) Estimated solely for the purpose of determining the amount of the
registration fee and pursuant to Rules 457(c) and 457(h) of the Securities
Act of 1933, as amended, based upon the average of the high and low prices
of the Common Stock reported by the National Association of Securities
Dealers, Inc. on May 17, 1999.
<PAGE> 2
Explanatory Note
The Board of Directors of Oxford Health Plans, Inc., a Delaware
corporation (the "Company"), has adopted the Oxford Health Plans, Inc.1991 Stock
Option Plan (the "1991 Plan"), the Norman C. Payson, M.D. Employment Agreement
(the "Payson Employment Agreement"), the Norman C. Payson, M.D. Stock Option
Agreement (the "Payson Option Agreement") and the Marvin P. Rich Stock Option
Agreement (the "Rich Option Agreement").
An aggregate of 22,732,060 shares of the common stock of the Company, $.01
par value per share (the "Common Stock"), after giving effect to stock splits,
stock dividends or similar transactions, reserved for issuance upon exercise of
options awarded pursuant to the 1991 Plan, have been registered under the
Securities Act of 1933, as amended (the "1933 Act"). The contents of the
Registration Statement Nos. 33-49738, 33-70908, 333-988 and 333-28109 on Form
S-8 of the Company are incorporated herein by reference, provided, however, that
the reoffer prospectus contained therein shall be deleted and the following
revised reoffer prospectus, filed as part of this Registration Statement, shall
be substituted therefor. On August 28, 1998, the stockholders of the Company
approved an amendment to the 1991 Plan to increase the number of shares of
Common Stock available under the 1991 Plan by an additional 4,000,000 shares.
This Registration Statement is intended to register the issuance by the Company
of an additional 4,000,000 shares of Common Stock upon the exercise of options
awarded under the 1991 Plan.
This Registration Statement is also intended to register 644,330 shares of
Common Stock issued to Norman C. Payson, M.D. pursuant to the Payson Employment
Agreement and the issuance by the Company of 2,000,000 and 800,000 shares of
Common Stock upon the exercise of options awarded under the Payson Option
Agreement and the Rich Option Agreement, respectively.
The reoffer prospectus included herein is intended to register for reoffer
and/or resale shares of Common Stock that may be or have been issued upon
exercise of options that may be or have been awarded under the 1991 Plan and the
Payson Option Agreement by persons who may be considered affiliates of the
Company as defined by Rule 405 under the Act. Such shares of Common Stock
constitute "control securities". The reoffer prospectus is also intended to
register for reoffer and/or resale 644,330 shares of Common Stock issued to
Norman C. Payson, M.D. pursuant to the Payson Employment Agreement that
constitute "restricted securities". The materials constituting the reoffer
prospectus have been prepared pursuant to Part I of Form S-3, in accordance with
general Instruction C to Form S-8.
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PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION.*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.*
- ----------
* Information required by Part I to be contained in the Section 10(a)
Prospectus is omitted from the Registration Statement in accordance with
Rule 428 under the Securities Act and the Note to Part I of Form S-8.
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REOFFER PROSPECTUS
OXFORD HEALTH PLANS, INC.
Up to 29,372,060 shares of Common Stock (par value $.01 per share)
under
Oxford Health Plans, Inc. 1991 Stock Option Plan, Norman C. Payson, M.D.
Stock Option Agreement and Norman C. Payson, M.D. Employment Agreement
This prospectus relates to an aggregate of 28,727,730 shares of our common
stock that may be reoffered or resold by the selling security holders who may be
deemed "affiliates" for purposes of the registration requirements of the
Securities Act of 1933 and who have acquired or may acquire shares of our common
stock issued upon exercise of stock options that we have granted or may grant to
them pursuant to the Oxford Health Plans, Inc. 1991 Stock Option Plan or the
Norman C. Payson, M.D. Option Agreement.
This prospectus also relates to 644,330 shares of common stock that
have been acquired by Norman C. Payson, M.D. pursuant to the Norman C.
Payson, M.D. Employment Agreement. These shares of common stock constitute
"restricted securities" and may be reoffered or resold by Dr. Payson, a
selling security holder pursuant to this prospectus.
The selling security holders may sell shares from time to time: (i)
through the Nasdaq National Market System, in the over-the-counter market, in
privately negotiated transactions or otherwise, or in a combination of such
methods of sale; (ii) directly to purchasers or through agents, brokers, dealers
or underwriters; and (iii) at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, or at negotiated prices.
Our common stock is traded on the Nasdaq National Market under the
symbol "OXHP."
YOUR SHOULD CONSIDER THE RISK FACTORS BEGINNING ON PAGE 4 OF THIS
PROSPECTUS BEFORE INVESTING IN THE COMMON STOCK.
No dealer, salesperson, or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell or to buy only the shares offered by this prospectus, but only
under circumstances and in jurisdictions where it is lawful to do so. The
information contained in this prospectus is current only as of the date below.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this prospectus is May 21, 1999
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TABLE OF CONTENTS
<TABLE>
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PAGE NO.
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<S> <C>
Oxford Health Plans, Inc. 4
Risk Factors 4
Use of Proceeds 9
Selling Security Holders 10
Plan of Distribution 11
Experts 11
Where You Can Find More Information 12
Annex I-Selling Security Holders 14
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OXFORD HEALTH PLANS, INC.
Oxford Health Plans, Inc., was incorporated under the laws of the State of
Delaware on September 17, 1984. We are a health care company currently providing
health benefit plans primarily in New York, New Jersey and Connecticut. Our
product line includes point-of-service plans, the Freedom Plan and the Liberty
Plan, traditional health maintenance organizations, preferred provider
organization plans, Medicare plans, health care benefit plans for individuals
and third-party administration of self-funded health plans. Our principal
executive offices are located at 800 Connecticut Avenue, Norwalk, Connecticut
06854, and our main telephone number is (203) 852-1442.
We offer our products primarily through our health maintenance organization
subsidiaries, Oxford Health Plans (NY), Inc., Oxford Health Plans (NJ), Inc.
and Oxford Health Plans (CT), Inc., and through Oxford Health Insurance, Inc.,
our health insurance subsidiary.
RISK FACTORS
AN INVESTMENT IN OUR COMMON STOCK INVOLVES A NUMBER OF RISKS, SOME OR ALL
OF WHICH COULD BE SUBSTANTIAL AND ARE INHERENT IN OUR BUSINESS. WE URGE YOU TO
CONSIDER CAREFULLY THE FOLLOWING INFORMATION ABOUT THESE RISKS, TOGETHER WITH
THE OTHER INFORMATION IN THIS PROSPECTUS IN EVALUATING OXFORD AND ITS BUSINESS
AND IN EVALUATING AN INVESTMENT IN OUR COMMON STOCK:
WE INCURRED NET LOSSES IN 1997 AND 1998, INCLUDING LOSSES IN CONNECTION WITH
RESTRUCTURING AND UNUSUAL CHARGES.
We incurred net losses attributable to common stock of $291 million in 1997
and $624 million in 1998 and may incur additional losses in 1999, the extent of
which we cannot predict at this time. As a result of losses at certain of our
HMO and insurance subsidiaries in 1997 and 1998, we have had to make capital
contributions to these subsidiaries and we expect that we will be required to
make additional capital contributions in 1999. We have also made significant
additions to our reserves for medical claims, and we have experienced
significant levels of retroactive member and group terminations as well as
difficulties with collection of premium receivables.
A significant portion of the loss incurred in 1998 was associated with
restructuring and unusual charges relating to our "Turnaround Plan."
The Turnaround Plan includes:
- focusing on our core commercial and Medicare markets in the New York
tri-state area,
- disposing of or restructuring noncore businesses,
- reducing administrative costs,
- reducing payments to physicians and other providers,
- completing and operationalizing risk transfer agreements and other
provider agreements,
- reducing unnecessary utilization of hospital and other services,
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- strengthening commercial underwriting;
- increasing commercial group premiums, and
- improving service levels and strengthening operations.
These restructuring and unusual charges are based on estimates of our
anticipated costs of taking the actions contemplated by the Turnaround Plan,
including disposition of certain businesses and assets. We cannot assure that
these estimates correctly reflect the ultimate costs that we will incur in
implementing the Turnaround Plan.
Our ability to control net losses depends, to a large extent, on the success
of our Turnaround Plan. We cannot assure that the Turnaround Plan will be
implemented in the manner described herein, or that it will be successful or
that our other efforts to control net losses will be successful. Furthermore,
despite our efforts to the contrary, implementation of the Turnaround Plan could
adversely affect members and employer groups, or physicians, hospitals and other
health care providers and ultimately sales and renewals of our health plans.
Moreover, we cannot predict the impact of adverse publicity, legal and
regulatory proceedings or other future events on our membership, operations and
financial results, including ongoing financial losses.
WE ARE INVOLVED IN SIGNIFICANT LITIGATION AND GOVERNMENTAL PROCEEDINGS THAT MAY
ADVERSELY AFFECT OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
We are a defendant in a large number of purported securities class action
lawsuits and shareholder derivative lawsuits which were filed after the
substantial decline in the price of our common stock in October 1997. The costs
incurred as a result of, and management's time commitments involved in, the
defense of these lawsuits, as well as the ultimate result of these lawsuits, may
adversely affect our results of operations and financial condition. We are also
the subject of examinations, investigations and inquiries by several
governmental agencies including the New York State Insurance Department, the
federal Health Care Financing Administration, other state departments of
insurance and health, the New York State Attorney General and the Securities and
Exchange Commission. The results of these governmental inquiries could adversely
affect our results of operations, financial condition, membership growth and
ability to retain members through the imposition of sanctions, required changes
in operations and potential limitations on enrollment. In addition, evidence
obtained in governmental proceedings could be used adversely against us in civil
proceedings. We cannot predict the outcomes of these lawsuits, governmental
examinations, investigations and inquiries.
OUR INABILITY TO CONTROL, AND THE UNPREDICTABILITY OF, HEALTH CARE COSTS MAY
ADVERSELY AFFECT FUTURE RESULTS OF OPERATIONS.
We use a large portion of our revenue to pay the costs of health care
services and supplies delivered to our members. Our total health care costs are
affected by the number of individual services rendered and the cost of each
service. Much of our premium revenue is priced before services are delivered and
the related costs are incurred, usually on a prospective annual basis. Although
we try to calculate the premiums that we charge based, in part, on our estimate
of future health care costs over the fixed premium period, factors such as
competition, regulations and other circumstances may limit our ability to base
our calculation of premiums on estimated costs.
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In addition, many factors may and often do cause actual health care costs
to exceed what we estimated and reflected in premiums. These factors include:
new technologies and health care practices, hospital costs, changes in
demographics and trends, selection biases, increases in unit costs paid to
providers, major epidemics, catastrophes, inability to establish acceptable
compensation arrangements with providers, operational and regulatory issues
which could delay, prevent or impede those arrangements, and higher utilization
of medical services, including higher out-of-network utilization under point of
service plans. We cannot assure that we will be successful in mitigating the
effect of any or all of the above-listed or other factors.
The results of operations that we report for any particular quarter
include reserves for estimates of the cost incurred for covered services
received by our enrollees during that period for which claims have not been
received or processed. These estimates are based on historical data, patterns of
claim payment and receipt, expected medical cost inflation, seasonality patterns
and changes in membership. However, our ability to rely on historical data is
affected by our prior rapid growth, delays in paying claims, erroneous payment
or denial of claims, and the changing speed of payment of claims. Because these
reserves are based on estimates, our results of operations may be adjusted in a
later period to reflect actual costs. Any adjustments to such estimates made in
the later period could significantly change our results of operations for that
period.
HIGH ADMINISTRATIVE COSTS MAY HAVE AN ADVERSE EFFECT ON OUR RESULTS.
In 1999, we expect that results will continue to be adversely affected by
high administrative costs associated with our efforts to strengthen our
operations and service levels and address systems issues, including those
related to Year 2000 readiness. Although a key element of our Turnaround Plan is
a reduction in administrative expenses, we cannot assure that we will not
continue to experience significant service and systems infrastructure problems
in 1999 and beyond which could have a significant impact on administrative
costs. Further, we have been adversely affected by high administrative costs in
connection with increased levels of employee attrition over the last several
quarters, and we may continue to experience such attrition in 1999.
CHANGES IN LAWS AND REGULATIONS COULD ADVERSELY AFFECT OUR OPERATIONS, FINANCIAL
CONDITION AND PROSPECTS.
Our business is heavily regulated on federal, state and local levels. The
laws and rules governing our business and interpretations of those laws and
rules are subject to frequent change. The agencies administering those
regulations have broad latitude to enforce them. Such regulations relate to,
among other things, cash reserves, minimum net worth, licensing requirements,
approval of policy language and benefits, mandatory products and benefits,
provider compensation arrangements, member disclosure, premium rates and
periodic examinations by state and federal agencies. Existing or future laws and
rules could force us to change how we do business, restrict revenue and
enrollment growth, increase our health care and administrative costs and capital
requirements, and increase our liability for medical malpractice or other
actions.
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We must obtain and maintain regulatory approvals to market many of our
products. In addition, state and federal regulations limit our ability to adjust
rates for and benefits provided under our products. Delays in obtaining or
failures to obtain or maintain these approvals and the effect of state and
federal regulations could adversely affect our revenue, number of members and
costs. We also must obtain regulatory approvals if we or any of our HMO or
insurance subsidiaries undergo a change in control.
A significant portion of our revenues relate to the federal Medicare
program. The laws regulating this program generally are subject to frequent
change, including changes that may reduce the number of persons enrolled or
eligible, reduce the amount of reimbursement or payment levels, or reduce or
increase our administrative or health care costs under this program. Such
changes have adversely affected our results and willingness to participate in
this program in the past and may also do so in the future.
We are also subject to various governmental reviews, audits and
investigations. Such oversight could result in the loss of licensure or of the
right to participate in certain programs, or in the imposition of fines,
penalties and other sanctions. In addition, disclosure of any adverse
investigation or audit results or sanctions could damage our reputation and make
it more difficult for us to sell our products and services.
OUR RAPID GROWTH HAS CAUSED SERVICE AND SYSTEMS INFRASTRUCTURE PROBLEMS.
We experienced rapid growth in our business and in our staff in the period
from 1986, when we began operations, through 1997. We have been affected, and
will continue to be affected, by our ability to manage such growth effectively,
including our ability to continue to develop processes and systems to support
our operations. In September 1996, we converted a significant part of our
business operations to a new computer operating system. Unanticipated software
and hardware problems that arose in connection with the conversion resulted in
significant delays in our claims payments and group and individual billing and
adversely affected claims payment and billing. We do not intend to promote
significant membership or revenue growth in 1999 because our priority in 1999
will continue to be to attempt to strengthen our service and systems
infrastructure, reduce medical and administrative spending and increase premium
rates. In 1999 and beyond, we may continue to experience significant service and
systems infrastructure problems, high levels of medical and administrative
spending and difficulties in obtaining premium rate increases. In addition, we
have experienced attrition of our Medicare and commercial business in 1998, and
we cannot assure that we will be successful in the future in promoting
membership growth or that we will not continue to experience membership
attrition.
A DISRUPTION IN OUR HEALTH CARE PROVIDER NETWORK COULD HAVE AN ADVERSE EFFECT ON
OUR ABILITY TO MARKET OUR PRODUCTS AND SERVICE OUR MEMBERSHIP.
We are subject to the risk of disruption in our health care provider
network. The network physicians, hospitals and other health care providers could
terminate their contracts with us, demand higher payments or take other actions
which could have a material adverse effect on our ability to market our products
and service our membership. Furthermore, the effect of mergers and
consolidations of health care providers in our service areas could enhance the
combined
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entity's bargaining power with respect to demands for higher reimbursement
levels and changes to our utilization review and administrative procedures.
ABILITY TO MANAGE PROBLEMS IN INFORMATION SYSTEMS MAY AFFECT OUR OPERATIONS
We cannot assure that we will be successful in mitigating the existing
system problems that have resulted in payment delays and claims processing
errors, in developing processes and systems to support our operations and in
improving our service levels. Moreover, operating and other issues can lead to
data problems that affect performance of important functions, including, but not
limited to, claims payment and group and individual billing. In the future, the
process of improving existing systems, developing processes and systems to
support our operations and improving service levels may be delayed and
additional systems issues may arise.
YEAR 2000 PROBLEMS MAY DISRUPT OUR OPERATIONS
Year 2000 issues involve the inability of certain computerized systems and
technologies to recognize and/or correctly process certain dates, including
January 1, 2000. A failure to timely resolve our own Year 2000 issues or the
failure of our external vendors to resolve their Year 2000 issues could have a
material adverse effect on our results of operations, liquidity or financial
condition. Further, our estimates for the future costs and timely and successful
completion of our Year 2000 program are subject to uncertainties that could
cause actual results to differ from those currently projected by us. Our plan to
identify and address Year 2000 issues is described in our Annual Report on Form
10-K/A for the fiscal year ended December 31, 1998 and in our quarterly report
on Form 10-Q for the period ended March 31, 1999.
RECENT EVENTS AND RELATED PUBLICITY MAY ADVERSELY AFFECT OUR PROVIDER NETWORK,
EMPLOYER RENEWAL PROCESS OR FUTURE ENROLLMENT
Events at Oxford over the course of the last two years have resulted in
adverse publicity. Such events and related publicity may adversely affect our
provider network, the employer renewal process and future enrollment in our
health benefit plans.
In addition, the managed care industry, in general, receives significant
negative publicity. This publicity has led to increased legislation, regulation
and review of industry practices. These factors may adversely affect our ability
to market our products or services or require us to change our products and
services and may increase the regulatory burdens under which we operate, further
increasing the costs of doing business and adversely affecting our results of
operations.
COLLECTIBILITY OF ADVANCES MAY AFFECT ADVERSELY THE CAPITAL OF OUR REGULATED
SUBSIDIARIES.
As part of our attempts to reduce delays in processing claims for payment
in 1997, we advanced approximately $276 million to providers pending our
disposition of claims for payment. As of March 31, 1999, approximately $130.2
million, net of allowances, remained outstanding. The New York State Insurance
Department is requiring us to obtain written acknowledgments of such advances
from recipients of advances, and the New Jersey Department of Banking and
Insurance is requiring us to provide collateral for repayment of the advances by
setting aside in trust at the parent company funds equal to the admitted
portions of the advances on the New Jersey subsidiary's statutory financial
statements. If we are unable to receive written
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acknowledgments or we fail to provide such collateral, we cannot assure that the
insurance regulators will continue to recognize such advances as admissible
assets for regulatory purposes. If the insurance regulators do not recognize
such advances as admissible assets, the capital of some of our regulated
subsidiaries could be impaired. We may be required to make additional capital
contributions to compensate for any impairment. Although we believe that the
advances will be repaid, we cannot assure that this will occur.
CONCENTRATION OF BUSINESS IN CERTAIN STATES MAY HAVE AN ADVERSE EFFECT ON US.
Our commercial and Medicare business is concentrated in New York, New
Jersey and Connecticut, with more than 80% of our tri-state premium revenues
received from our New York business. As a result, changes in regulatory, market
or health care provider conditions in any of these states, particularly New
York, could have a material adverse effect on our business, financial condition
or results of operations. In addition, our revenue under our Medicare contracts
with the Health Care Financing Administration represented 21.9% of our premium
revenue earned during 1998.
HIGH LEVEL OF COMPETITION MAY ADVERSELY AFFECT OUR ABILITY TO OBTAIN AND RETAIN
EMPLOYER GROUPS.
HMOs and health insurance companies operate in a highly competitive
environment. We have numerous competitors, including for-profit and
not-for-profit HMOs, preferred provider organizations and indemnity insurance
carriers, some of which have substantially larger enrollments and greater
financial resources than we do. We also compete with HMOs and managed care plans
sponsored by large health insurance companies. Additional competitors may enter
our markets in the future. The cost of providing benefits is in many instances
the controlling factor in obtaining and retaining employer groups, and some of
our competitors have set premium rates at levels below our rates for comparable
products. We anticipate that premium pricing will continue to be highly
competitive.
USE OF PROCEEDS
The shares of common stock covered by this prospectus are being offered by
certain selling security holders and not by us. Consequently, we will not
receive any proceeds from the sale of these shares. However, we may receive the
proceeds from the exercise of certain stock options, as described below.
The shares that may be sold under this prospectus include shares that the
selling security holders may acquire in the future pursuant to stock options
that we have granted to them. In order for a selling security holder to acquire
any such shares, the selling security holder will be required to pay to us the
exercise price specified in the relevant option. We intend to use any proceeds
that we receive from the exercise of such options for working capital and
general corporate purposes.
SELLING SECURITY HOLDERS
This prospectus relates to shares of common stock that are being
registered for reoffers
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and resale by selling security holders who have acquired or may acquire shares
of common stock pursuant to the Oxford Health Plans, Inc. 1991 Stock Option
Plan, the Norman C. Payson, M.D. Stock Option Agreement and the Norman C.
Payson, M.D. Employment Agreement. The selling security holders may resell any
or all of the shares of common stock at any time they choose while this
prospectus is effective.
Executive officers, directors and others who are considered to be
"affiliates" of Oxford who acquire common stock under the 1991 Stock Option
Plan, the Norman C. Payson, M.D. Stock Option Agreement or the Norman C. Payson,
M.D. Employment Agreement may be added to the list of selling security holders,
and their number of shares to be sold may be increased or decreased, by use of a
prospectus supplement filed with the Securities and Exchange Commission. An
"affiliate" is defined in Rule 405 under Securities Act of 1933 as a "person
that directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with" Oxford. The table attached as
Annex I hereto sets forth, as of the date of this prospectus or a subsequent
date if amended or supplemented, the following information:
- the name of each selling security holder and his or her relationship to
Oxford during the past three years;
- the number of shares of common stock that each selling security holder
beneficially owns (assuming that all options to acquire shares are
exercisable within 60 days, although certain options actually vest over
time);
- the number of shares of common stock offered pursuant to this
prospectus by each selling security holder;
- the amount of the common stock outstanding to be held by such selling
security holder after giving effect to this offering;
- the percentage of the common stock outstanding to be held by such
selling security holder after giving effect to this offering.
The information contained in Annex I may be amended or supplemented from
time to time.
No selling security holders have informed us of an intent to sell any of
their shares. The inclusion of the share of common stock in the table in Annex I
does not constitute a commitment to sell any shares.
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PLAN OF DISTRIBUTION
The selling security holders may sell shares from time to time:
- through the Nasdaq National Market System, in the over-the-counter
market, in privately negotiated transactions or otherwise, or in a
combination of such methods of sale;
- directly to purchasers or through agents, brokers, dealers or
underwriters; and
- at market prices prevailing at the time of sale, at prices related to
such prevailing market prices, or at negotiated prices.
The selling security holders may enter into short sales and use the common
stock to cover such short positions.
The selling security holders will act independently of Oxford in making
decisions with respect to the timing, manner and size of each sale.
The selling security holders and any persons who participate in the
distribution of the common stock may be deemed to be underwriters within the
meaning of the Securities Act of 1933, and any discounts, commissions or
concessions received by them and any discounts, commissions or concessions
provided pursuant to the sale of common stock by them might be deemed to be
underwriting discounts and commissions under the Securities Act of 1933. In
addition, any shares of common stock covered by this prospectus which qualify
for resale pursuant to Rule 144 promulgated under the Securities Act of 1933 may
be resold pursuant to Rule 144 rather than pursuant to this prospectus. There is
no assurance that any of the selling security holders will offer for sale or
sell any or all of the shares of common stock covered by this prospectus. To the
extent required, we will use our best efforts to file one or more supplements to
this prospectus to describe any material information with respect to the plan of
distribution not previously disclosed in this prospectus or any material change
to such information.
EXPERTS
The consolidated financial statements of Oxford Health Plans, Inc. at
December 31, 1998 and for the year then ended, included in Oxford Health Plans,
Inc.'s Annual Report on Form 10-K/A for the year ended December 31, 1998, which
is incorporated herein by reference, have been audited by Ernst & Young LLP,
independent auditors, and at December 31, 1997, and for each of the years in the
two-year period ended December 31, 1997, by KPMG LLP, independent auditors, as
set forth in their respective reports thereon included therein and incorporated
herein by reference. Such consolidated financial statements are incorporated
herein by reference in reliance upon such reports given on the authority of such
firms as experts in accounting and auditing.
With respect to the unaudited condensed consolidated interim financial
information for the three-month period ended March 31, 1999 incorporated by
reference in this Registration Statement, Ernst & Young LLP has reported that
it has applied limited procedures in accordance with professional standards
for a review of such information. Ernst & Young LLP's separate report, included
in
11
<PAGE> 14
Oxford Health Plans, Inc.'s Quarterly Report on Form 10-Q for the quarter ended
March 31, 1999, and incorporated herein by reference, states that it did not
audit and it does not express an opinion on that interim financial information.
Accordingly, the degree of reliance on its report on such information should be
restricted considering the limited nature of the review procedures applied. The
independent auditors are not subject to the liability provisions of Section 11
of the Securities Act of 1933 for its report on the unaudited interim financial
information because that report is not a "report" or a "part" of the
registration statement prepared or certified by the auditors within the meaning
of Sections 7 and 11 of the Securities Act of 1933.
-----------------------
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. We have also filed with the SEC a registration
statement on Form S-8 to register the issued and outstanding common stock and
the common stock to be issued upon exercise of the options. This prospectus,
which forms part of the registration statement, does not contain all of the
information included in that registration statement. For further information
about us and the securities offered in this prospectus, you should refer to the
registration statement and its exhibits.
You may read and copy any document we file with the SEC at the SEC's
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please
call the SEC at 1-800-SEC-0330 for further information on the operation of the
Public Reference Room. We file our SEC materials electronically with the SEC, so
you can also review our filings by accessing the web site maintained by the SEC
at http://www.sec.gov. This site contains reports, proxy and information
statements and other information regarding issuers that file electronically with
the SEC.
Our principal executive offices are located at 800 Connecticut Avenue,
Norwalk, Connecticut 06854, and our main telephone number is (203) 852-1442.
The SEC allows us to "incorporate by reference" the information we file
with them, which means we can disclose important information to you by referring
you to those documents. The information included in the following documents is
incorporated by reference and is considered to be a part of this prospectus. The
most recent information that we file with the SEC automatically updates and
supersedes more dated information. We have previously filed the following
documents with the SEC and are incorporating them by reference into this
prospectus:
- Our Annual Report on Form 10-K/A for the fiscal year ended December 31,
1998, initially filed on March 19, 1999 and amended on March 26, 1999;
- Our Quarterly Report on Form 10-Q for the period ended March 31, 1999;
- Our Current Reports on Form 8-K filed on January 8, 1999, January 29,
1999, February 25, 1999, March 19, 1999, April 29, 1999 and May 13,
1999; and
- The description of our common stock contained in the Registration
Statement on
12
<PAGE> 15
Form 8-A dated August 1, 1991, filed pursuant to Section 12 of the
Securities Exchange Act of 1934.
We are also incorporating into this prospectus all documents subsequently
filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 prior to the filing of a post-effective amendment that
indicates all the shares of common stock offered have been sold, or that
deregisters all shares of common stock then remaining unsold.
We will provide without charge to each person, including any person having
a control relationship with that person, to whom a prospectus is delivered, a
copy of any or all of the information that has been incorporated by reference in
this prospectus but not delivered with this prospectus. If you would like to
obtain this information from us, please direct your request, either in writing
or by telephone, to:
Investor Relations
Oxford Health Plans, Inc.
800 Connecticut Avenue
Norwalk, Connecticut 06854
(203) 852-1442
13
<PAGE> 16
ANNEX I
SELLING SECURITY HOLDERS
The inclusion of the selling security holders in this Annex I is not an
admission by any of the selling security holders that he is an affiliate of
Oxford or that he has a present intent to sell the securities. The information
contained in this Annex I may be amended or supplemented from time to time.
<TABLE>
<CAPTION>
# of Shares of
Common Stock Owned
After Offering(2)
--------------------
Name of Beneficial Relationship to # of Shares # of Number Percentage
Owner Oxford of Common Shares of of Total
Stock Owned Common Shares
Prior to Stock Outstanding
Offering(1) Offered(2)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Norman C. Payson, Chief Executive
M.D. Officer and 6,044,330(3) 4,044,330 2,000,000 2.47%*
Director since
May, 1998,
Chairman since May
13, 1999
William M. Sullivan President
1998-present,
Chief Executive 1,266,417(4) 1,266,417 0 0
Officer 1997 -
1998,
Chief Operating
Officer 1996-1997
Stephen F. Wiggins Director
1998-present 2,705,840(5) 2,705,840 0 0
Chairman, Chief
Executive Officer
1984-1998
- ----------
* Based on total shares of common stock outstanding as of May 18, 1999
</TABLE>
(1) Includes all shares of common stock beneficially owned and all options to
acquire shares of common stock as of May 18, 1999 although certain options
actually vest over time.
(2) Assumes that all shares offered are sold, that no additional shares will
be purchased and that no additional shares will be sold.
(3) The number of shares of common stock offered pursuant to this prospectus
includes 644,330 shares of common stock that constitute "restricted
securities" which were purchased by Dr. Payson in an unregistered offering
pursuant to the Payson Employment Agreement, 2,000,000 shares of common
stock issuable upon exercise of stock options granted pursuant to the
Payson Option Agreement and 1,400,000 shares of common stock issuable upon
exercise of stock options granted under the 1991 Plan. Dr. Payson
currently holds unvested options to purchase 1,183,336 shares of common
stock.
(4) Includes 1,078,632 shares of common stock issuable upon exercise of stock
options and 6,450 shares of common stock held by the Sullivan Foundation,
Inc. Mr. Sullivan disclaims beneficial ownership of the shares of common
stock held by the Sullivan Foundation, Inc. Mr. Sullivan currently holds
unvested options to purchase 598,750 shares of common stock.
(5) Includes 1,298,608 shares of common stock issuable upon exercise of stock
options. All of such options are currently vested.
14
<PAGE> 17
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The SEC allows us to "incorporate by reference" the information we file
with them, which means we can disclose important information to you by referring
you to those documents. The information included in the following documents is
incorporated by reference and is considered to be a part of this prospectus. The
most recent information that we file with the SEC automatically updates and
supersedes more dated information. We have previously filed the following
documents with the SEC and are incorporating them by reference into this
prospectus:
- Our Annual Report on Form 10-K/A for the fiscal year ended December 31,
1998, initially filed on March 19, 1999 and amended on March 26, 1999;
- Our Quarterly Report on Form 10-Q for the period ended March 31, 1999;
- Our Current Reports on Form 8-K filed on January 8, 1999, January 29,
1999, February 25, 1999, March 19, 1999, April 29, 1999 and May 13,
1999; and
- The description of our common stock contained in the Registration
Statement on Form 8-A dated August 1, 1991, filed pursuant to Section
12 of the Securities Exchange Act of 1934.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, prior to
filing a post-effective amendment that indicates all the shares of common stock
offered have been sold, or that deregisters all shares of common stock then
remaining unsold, shall be deemed to be incorporated by reference into, and to
be a part of, this Registration Statement from the date of filing of those
documents. The information contained in any such documents will automatically
update and supercede any information previously incorporated by reference into
this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law permits
indemnification against expenses, fines, judgments and settlements incurred by
any director, officer or employee of the Company in the event of pending or
threatened civil, criminal, administrative or investigative proceedings, if such
person was, or was threatened to be made, a party by reason of the fact that
15
<PAGE> 18
he is or was a director, officer or employee of the Company. Section 145 also
provides that the indemnification provided for therein shall not be deemed
exclusive of any other rights to which those seeking indemnification may
otherwise be entitled.
Article Eighth of the Second Amended and Restated Certificate of
Incorporation, as amended, of the Company provides that the Company shall
indemnify its officers and directors to the fullest extent permitted by law.
Article Ninth of the Second Amended and Restated Certification of Incorporation,
as amended, of the Company provides that to the fullest extent permitted by the
Delaware General Corporation Law as the same exists or may hereafter be amended,
a director of the Company shall not be liable to the Company or its stockholders
for monetary damages for breach of fiduciary duty as a director.
Section 6.4 of the Amended and Restated By-laws of the Company states:
Section 6.4. Indemnification of Directors, Officers and Employees. The
Corporation shall indemnify to the fullest extent permitted by law any person
made or threatened to be made a party to any action, suit or proceeding, whether
criminal, civil, administrative or investigative, including any action
instituted by or on behalf of the Corporation, by reason of the fact that such
person or such person's testator or intestate is or was a director or officer of
the Corporation or serves or served at the request of the Corporation any other
enterprise as a director or officer. Expenses incurred by any such person in
defending any such actions, suit or proceeding shall be paid or reimbursed by
the Corporation promptly upon receipt by it of an undertaking of such person to
repay such expense if it shall ultimately be determined that such person is not
entitled to be indemnified by the Corporation. The rights provided to any person
by this by-law shall be enforceable against the Corporation by such person who
shall be presumed to have relied upon it in serving or continuing to serve as a
director or officer as provided above. No amendment of this by-law shall impair
the rights of any person arising at any time with respect to events occurring
prior to such amendment. To the extent permitted by Delaware law, the Board may
cause the Corporation to indemnify and reimburse other employees of the
Corporation as it deems appropriate. For purposes of this by-law, the term
"Corporation" shall include any predecessor of the Corporation and any
constituent corporation (including any constituent of a constituent) absorbed by
the Corporation in a consolidation or merger; the term "other enterprise" shall
include any corporation, partnership, joint venture, trust or employee benefit
plan; service "at the request of the Corporation" shall include service as a
director or officer of the Corporation, which imposes duties on, or involves
services by, such director or officer with respect to any other enterprise or
any employee benefit plan, its participants or beneficiaries; any excise taxes
assessed on a person with respect to an employee benefit plan, shall be deemed
to be indemnifiable expenses; and action by a person with respect to any
employee benefit plan which such person reasonably believes to be in the
interest of the participants and beneficiaries of such plan shall be deemed to
be action not opposed to the best interests of the Corporation.
Section 145 of the Delaware General Corporation Law permits the
indemnification provided for by the above by-law provision. The statute further
permits the Company to insure itself for such indemnification.
The Company maintains insurance coverage for its directors and officers
with respect to certain liabilities incurred in their capacities as such and for
the Company with respect to any
16
<PAGE> 19
payments which it becomes obligated to make to such persons under the foregoing
by-law and statutory provisions.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
The 644,330 shares of Common Stock to be reoffered and/or resold by Norman
C. Payson, M.D. pursuant to this Registration Statement were issued without
registration under the Securities Act of 1933 in reliance of Section 4(2) of the
Securities Act, which provides an exemption for transactions not involving a
public offering. In determining that such exemption was available, the Company
relied on the fact that, as an offering was made only to Dr. Payson, Chief
Executive Officer of the Company, the shares were being issued through direct
communication only to one investor having both knowledge and access to the most
relevant information regarding the Company and that the certificate evidencing
such shares bears a legend restricting transfer in non-registered transactions.
ITEM 8. EXHIBITS.
4.1 Second Amended and Restated Certificate of Incorporation, as amended,
of the Company, incorporated by reference to Exhibit 3(a) of the
Company's Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1998 (File No. 0-19442)
4.2 Amended and Restated By-laws of the Company, incorporated by reference
to the Company's Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 1998 (File No. 0-19442)
4.3 Form of Stock Certificate, incorporated by reference to Exhibit 4 of
the Company's Registration Statement on Form S-1 (File No. 33-40539)
4.4 1991 Stock Option Plan, as amended, incorporated by reference to
Exhibit 10(h) of the Company's Annual Report on Form 10-K/A for the
fiscal year ended December 31, 1998 (File No. 0-19442)
4.5 Employment Agreement, dated as of February 23, 1998, between the
Company and Norman C. Payson, M.D., incorporated by reference to
Exhibit 10(t) of the Company's Annual Report on Form 10-K/A for the
fiscal year ended December 31, 1997 (File No. 0-19442)
4.6 Amendment Number 1 to Employment Agreement, dated as of December 9,
1998, by and between the Company and Norman C. Payson, M.D.,
incorporated by reference to Exhibit 10(v) of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998 (File
No. 0-19442)
4.7 Amendment Number 2 to Employment Agreement, dated as of December 9,
1998, by and between the Company and Norman C. Payson, M.D.,
incorporated by reference to Exhibit 10(a) of the Company's Annual
Report on Form 10-Q for the quarterly period ended March 31, 1999 (File
No. 0-19442)
17
<PAGE> 20
4.8 Oxford Health Plans, Inc. Stock Option Agreement, dated February 23,
1998, by and between Norman C. Payson, M.D. and the Company,
incorporated by reference to Exhibit 10(u) of the Company's Annual
Report on Form 10-K/A for the fiscal year ended December 31, 1997 (File
No. 0-19442)
4.9 Oxford Health Plans, Inc. Stock Option Agreement, dated as of March 30,
1998, by and between the Company and Marvin P. Rich (filed herewith)
5 Opinion of Sullivan & Cromwell regarding legality (filed herewith)
15 Letter of Ernst & Young LLP re Unaudited Condensed Consolidated Interim
Financial Information (filed herewith)
23(a) Consent of KPMG Peat Marwick LLP (filed herewith)
23(b) Consent of Ernst & Young LLP (filed herewith)
23(c) Consent of Sullivan & Cromwell (contained in Exhibit 5)
ITEM 9. UNDERTAKINGS.
(a) 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 of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this 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 and 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 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(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;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the registration statement is on Form S-3, form S-8 or form F-3, and
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or
18
<PAGE> 21
furnished to the Commission by the registrant pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) 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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1993 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the Delaware General Corporation
Law, the Company's certificate of incorporation or the Company's by-laws,
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 of 1933 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 whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of
such issue.
19
<PAGE> 22
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-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Norwalk, State of Connecticut, on this 21st day of
May 1999.
OXFORD HEALTH PLANS, INC.
By: /s/ NORMAN C. PAYSON, M.D.
------------------------------
Norman C. Payson, M.D.
Chief Executive Officer
20
<PAGE> 23
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on May 21, 1999
in the capacities indicated.
Signature Title
- --------- -----
/s/ NORMAN C. PAYSON, M.D. Principal Executive Officer,
- ------------------------------- and Chairman of the Board
Norman C. Payson, M.D.
/s/ YON Y. JORDEN Principal Financial Officer
- -------------------------------
Yon Y. Jorden
/s/ KURT B. THOMPSON Principal Accounting Officer
- -------------------------------
Kurt B. Thompson
Director
- -------------------------------
Fred F. Nazem
/s/ DAVID BONDERMAN Director
- -------------------------------
David Bonderman
/s/ JONATHAN J. COSLET Director
- -------------------------------
Jonathan J. Coslet
/s/ JAMES G. COULTER Director
- -------------------------------
James G. Coulter
Director
- -------------------------------
Robert B. Milligan, Jr.
/s/ MARCIA J. RADOSEVICH, PH.D Director
- -------------------------------
Marcia J. Radosevich, Ph.D.
/s/ BENJAMIN H. SAFIRSTEIN, M.D. Director
- -------------------------------
Benjamin H. Safirstein, M.D.
/s/ THOMAS A. SCULLY Director
- -------------------------------
Thomas A. Scully
/s/ KENT J. THIRY Director
- -------------------------------
Kent J. Thiry
/s/ STEPHEN F. WIGGINS Director
- -------------------------------
Stephen F. Wiggins
21
<PAGE> 24
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT PAGE NO.
- ----------- ------- --------
<S> <C> <C>
4.9 Oxford Health Plans, Inc. Stock Option
Agreement dated as of March 30, 1998
by and between the Company and
Marvin P. Rich 23
5 Opinion of Sullivan & Cromwell regarding
legality 28
15 Letter of Ernst & Young LLP re Unaudited
Condensed Consolidated Interim Financial
Information 30
23(a) Consent of KPMG LLP 31
23(b) Consent of Ernst & Young LLP 32
23(c) Consent of Sullivan & Cromwell Contained in
Exhibit 5 on
Page 28
</TABLE>
22
<PAGE> 1
EXHIBIT 4.9
OXFORD HEALTH PLANS, INC. STOCK OPTION AGREEMENT
THIS AGREEMENT, made this 30th day of March, 1998 (the "Effective Date"),
by and between Oxford Health Plans, Inc., a Delaware corporation (the
"Corporation"), and Marvin P. Rich (the "Executive").
W I T N E S S E T H:
WHEREAS, the Corporation and the Executive have entered into an employment
agreement dated as of the date hereof (the "Employment Agreement") pursuant to
which the Executive will serve as the Chief Administrative Officer of the
Corporation; and
WHEREAS, the Board of Directors of the Corporation (the "Board") has
determined that it is in the best interests of the Corporation to enter into
this Agreement.
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto hereby agree as follows:
1. GRANT OF OPTION. The Corporation hereby grants to the Executive the
right and option (an "Option") to purchase, subject to the vesting provisions of
Section 3, all or any part of an aggregate of 800,000 shares (the "Option
Shares") of the Corporation's common stock, par value $.01 per share ("Common
Stock"), subject to adjustment as provided in the Oxford Health Plans, Inc. 1991
Stock Option Plan (the "Plan"), at a purchase price per share of $15.375 (the
"Option Price"). Except as expressly provided for herein, the Option shall be
governed by the provisions of the Plan, a copy of which is attached hereto;
provided, however, that the Option Shares shall not be granted under the Plan
and shall be separately registered with the Securities and Exchange Commission
pursuant to Section 11 below.
2. TERM OF OPTION. Subject to earlier termination as provided in Section
4, the Option shall expire and cease to be exercisable on March 30, 2003 (the
"Termination Date").
3. VESTING AND EXERCISABILITY.
(a) Regular Vesting Schedule. Except as otherwise provided herein,
the Option Shares shall vest and become exercisable in four equal installments
over the four years from the Effective Date as follows:
<TABLE>
<CAPTION>
Number of Option Shares Vesting Date
----------------------- ------------
<S> <C>
200,000 March 30, 1999
200,000 March 30, 2000
200,000 March 30, 2001
200,000 March 30, 2002
</TABLE>
Any partial exercise of the Option is limited to the purchase of whole shares of
Common Stock.
23
<PAGE> 2
(b) Acceleration of Vesting. In event of a Change of Control (as
defined in the Plan) and as otherwise provided in the Employment Agreement, the
Options shall become immediately vested and fully exercisable.
4. TERMINATION OF EMPLOYMENT. Unless otherwise determined by the
Compensation Committee, if the Executive's employment with the Corporation or
with a subsidiary of the Corporation is terminated, the term of any then
outstanding option held by the Executive shall extend for a period ending on the
earlier of the date on which such option would otherwise expire or three months
after such termination, and such option shall be exercisable to the extent it
was exercisable as of such last date of the Executive's employment with the
Corporation.
5. METHOD OF EXERCISING OPTION. Full payment for the shares purchased
shall be made at the time of any exercise of this Agreement. The purchase price
shall be payable to the Corporation either (i) in United States dollars in cash
or by check, bank draft, or postal or express money order, or (ii) through the
delivery of shares of Stock of the Corporation owned by the Executive for at
least six months prior to the date of exercise having a Fair Market Value on the
date of exercise equal to the full purchase price, or (iii) by a combination of
(i) and (ii) above.
6. ISSUANCE OF SHARES. As promptly as practical after receipt of such
written notification of exercise and full payment of the Option Price and any
required income tax withholding, the Corporation shall issue or transfer to the
Executive the number of Option Shares with respect to which such Option has been
exercised (less shares withheld in satisfaction of tax withholding obligations,
if any), and, unless otherwise directed by the Executive, shall deliver to the
Executive a certificate or certificates therefor, registered in the Executive's
name. The Corporation may postpone such delivery until it receives satisfactory
proof that the issuance or transfer of such Option Shares will not violate any
of the provisions of the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, any rules or regulations of the Securities and
Exchange Commission promulgated thereunder, or the requirements of applicable
state law relating to authorization, issuance or sale of securities, or until
there has been compliance with the provisions of such acts or rules.
7. CORPORATION; EXECUTIVE. (a) The term "Corporation" as used in this
Agreement with reference to employment shall include the Corporation and its
subsidiaries, as appropriate.
(b) Whenever the word "Executive" is used in any provision of this
Agreement under circumstances where the provision should logically be construed
to apply to the beneficiaries, the executors, the administrators, or the person
or persons to whom the Option may be transferred by will or by the laws of
descent and distribution, the word "Executive" shall be deemed to include such
person or persons.
8. NON-TRANSFERABILITY. Except as otherwise provided herein, an option and
the rights and privileges conferred hereby may not be transferred, assigned,
pledged or hypothecated in any way, other than by will or the laws of descent
and distribution, and an option shall be exercisable during the Executive's
lifetime only by the Executive or his conservator.
24
<PAGE> 3
9. RIGHTS AS SHAREHOLDER. Neither the Executive nor any transferee of the
Option shall have any of the rights of a shareholder with respect to any Option
Shares except to the extent that certificate(s) for such Option Shares shall
have been issued upon the exercise of the Option as provided herein, and no
adjustment shall be made for cash distributions in respect of such Option Shares
for which the record date is prior to the date upon which such Executive or
transferee shall become the holder of record thereof.
10. COMPLIANCE WITH LAW. The Corporation will use its best efforts to
obtain all required approvals in connection with the ownership or
transferability of the Option Shares acquired upon exercise of the Option.
Notwithstanding any of the provisions hereof, the Executive hereby agrees that
such Executive shall not exercise the Options, and that the Corporation shall
not be obligated to issue or transfer any shares to the Executive hereunder, if
the exercise hereof or the issuance or transfer of such shares shall constitute
a violation by the Executive or the Corporation of any provisions of any law or
regulation of any governmental authority. Any determination in this connection
by the Corporation shall be final, binding and conclusive.
11. PURCHASE FOR PURPOSE OF INVESTMENT. The Executive hereby represents
and warrants that any Option Shares acquired pursuant to the exercise of the
Option are acquired for his own account solely for the purpose of investment and
not with a view to, or for sale in connection with, any distribution thereof in
violation of the Securities Act of 1933, as amended (the "Securities Act"). The
Executive hereby acknowledges that the Option Shares have not been registered
under the Securities Act and may be sold or disposed of in the absence of such
registration only pursuant to an exemption from the registration requirements of
the Securities Act. The Corporation agrees to cause the Option Shares to be
registered under the Securities Act as specified in the Employment Agreement. To
the extent the Executive is entitled to exercise all or any portion of the
Option prior to the date on which the Corporation has agreed to register the
securities pursuant to the Employment Agreement, the Executive agrees to the
placement on certificates representing any Option Shares acquired pursuant to
the exercise of all or any portion of such Option of the following legend (the
"Legend"):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT."
Upon the registration under the Securities Act of the Option Shares acquired
pursuant to the exercise of all or any portion of the Option which has become
exercisable as described above, or the delivery by the Executive to the
Corporation of an opinion of counsel reasonably satisfactory to the Corporation
that the Legend is no longer required under the Securities Act, the Corporation
shall immediately issue, in exchange for the certificates containing the Legend,
new certificates representing the Option Shares containing only the Additional
Legend. The Corporation hereby represents and warrants that the Option Shares,
when issued pursuant to the exercise of the
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Option, will be duly and validly issued, fully paid and non-assessable, and the
Executive will have good, valid and marketable title to such Option Shares, free
and clear of all liens, security interests, pledges, charges, claims or other
encumbrances, whether consensual, statutory or otherwise.
13. NOTICES. For purposes of this Agreement, all communications provided
for in this Agreement shall be in writing and shall be deemed to be duly given
when delivered or (unless otherwise specified) mailed by United States
If, to the Executive:
Marvin P. Rich
1323 Ponus Ridge Road
New Canaan, CT 06840
If, to the Corporation:
Oxford Health Plans, Inc.
800 Connecticut Avenue,
Norwalk, Connecticut 06854
or to such other address as any party may have furnished to the other in writing
in accordance herewith.
14. BINDING EFFECT. Subject to Section 8 hereof, this Agreement
shall be binding upon the heirs, executors, administrators and successors of the
parties hereto.
15. NO RIGHT TO PERFORM SERVICES. Neither the granting of this
Option, nor the exercise thereof, shall be construed as granting Executive any
right to perform services for the Corporation or its subsidiaries. Subject to
the terms of the Employment Agreement, the right of the Corporation and its
subsidiaries to terminate Executive's services at any time and for any reason,
is specifically reserved.
16. GOVERNING LAW. This Agreement shall be construed and interpreted
in accordance with the laws of the State of Delaware.
17. ENTIRE AGREEMENT. This Agreement, and the relevant provisions of
the Employment Agreement and the Plan, comprise the whole agreement between the
parties hereto with respect to the subject matter hereof, and may not be
modified or terminated orally.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
OXFORD HEALTH PLANS, INC.
By: /s/ FRED NAZEM
-------------------------------
Name: Fred Nazem
Title: Chairman
/s/ MARVIN P. RICH
-----------------------------------
Marvin P. Rich
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EXHIBIT 5
May 21, 1999
Oxford Health Plans, Inc.,
800 Connecticut Avenue,
Norwalk, Connecticut 06854.
Dear Sirs:
In connection with the registration under the Securities Act of 1933 (the
"Act") of 644,330 shares (the "Payson Securities") of Common Stock, par value
$.01 per share, of Oxford Health Plans, Inc., a Delaware corporation (the
"Company"), issued to Norman C. Payson, M.D. on May 13, 1998 pursuant to the
Employment Agreement, dated as of February 23, 1998, as amended (the "Payson
Employment Agreement"), between the Company and Norman C. Payson, M.D., and the
registration under the Act of 6,800,000 shares (the "Plan Securities" and,
together with the Payson Securities, the "Securities") of Common Stock par value
$.01 per share, of the Company to be issued by the Company under the Oxford
Health Plans, Inc. 1991 Stock Option Plan (the "1991 Plan"), the Payson
Employment Agreement, the Oxford Health Plans, Inc. Stock Option Agreement,
dated February 23, 1998 (the "Payson Stock Option Agreement"), by and between
Norman C. Payson, M.D. and the Company, and the Oxford Health Plans, Inc. Stock
Option Agreement, dated as of March 30, 1998 (the "Rich Plan" and, together with
the 1991 Plan, the Payson Employment Agreement and the Payson Stock Option
Agreement, the "Plans"), by and between the Company and Marvin P. Rich, we, as
your counsel, have examined such corporate records, certificates and other
documents, and such questions of law, as we have considered necessary or
appropriate for the purposes of this opinion. Upon the basis of such
examination, we advise you that, in our opinion:
(1) the Payson Securities have been validly issued and are fully paid and
nonassessable, and
(2) when the registration statement relating to the Securities (the
"Registration Statement") has become effective under the Act, the terms of the
sale of the Plan Securities have been duly established in conformity with the
Company's certificate of incorporation so as not to violate any applicable law
or result in a default under or breach of any agreement or instrument binding on
the Company and so as to comply with any requirement or restriction imposed by
any court or governmental body having jurisdiction over the Company, and the
Plan Securities have been duly issued and sold upon valid exercise of the
options granted under the Plans as contemplated by the Registration Statement,
the Plan Securities will be validly issued, fully paid and nonassessable.
The foregoing opinion is limited to the Federal laws of the United States
and the General Corporation Law of the State of Delaware, and we are expressing
no opinion as to the effect of the laws of any other jurisdiction.
We have relied as to certain matters on information obtained from public
officials,
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officers of the Company and other sources believed by us to be responsible.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Act.
Very truly yours,
/s/ SULLIVAN & CROMWELL
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EXHIBIT 15
Letter of Ernst & Young LLP
re Unaudited Condensed Consolidated Interim Financial Information
To Oxford Health Plans, Inc.
We are aware of the incorporation by reference in the Registration Statement on
Form S-8 of Oxford Health Plans, Inc. for the registration of 7,444,330 shares
of its common stock of our report dated May 14, 1999 relating to the unaudited
condensed consolidated interim financial statements of Oxford Health Plans, Inc.
that are included in its Form 10-Q for the quarter ended March 31, 1999.
/s/ Ernst & Young LLP
Stamford, Connecticut
May 21, 1999
<PAGE> 1
EXHIBIT 23(a)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement on
Form S-8 of Oxford Health Plans, Inc. of our reports dated February 23, 1998,
relating to the consolidated balance sheet of Oxford Health Plans, Inc. and
subsidiaries as of December 31, 1997, and the related statements of operations,
shareholders' equity (deficit) and comprehensive earnings (loss), and cash flows
for each of the years in the two-year period ended December 31, 1997, and the
related consolidated financial statement schedules, which reports appear in the
December 31, 1998 annual report on Form 10-K/A of Oxford Health Plans, Inc. and
subsidiaries.
We also consent to the reference to our firm under the heading "Experts" in the
prospectus.
/s/ KPMG LLP
Stamford, Connecticut
May 21, 1999
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EXHIBIT 23(b)
CONSENT OF ERNST & YOUNG LLP
We consent to reference to our firm under the caption "Experts" in the
Registration Statement on Form S-8 and related Reoffer Prospectus of Oxford
Health Plans, Inc. for the registration of up to 7,444,330 shares of Oxford
Health Plans, Inc. common stock and to the incorporation by reference therein to
our report dated March 9, 1999, with respect to the consolidated financial
statements and schedules of Oxford Health Plans, Inc. included in its Annual
Report on Form 10-K/A for the year ended December 31, 1998, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Stamford, Connecticut
May 21, 1999
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