FORM 8-A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOHP, INC.
(Exact name of registrant as specified in its charter)
New Jersey 22-3314813
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(State of incorporation (I.R.S. Employer
or organization) Identification No.)
3501 State Highway 66, Neptune, New Jersey 07753
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
None
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Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock
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(Title of class)
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(Title of class)
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Item 1. Description of Registrant's Securities to be Registered
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The information required herein is incorporated by reference to the
definitive Proxy Statement (the "Proxy Statement") filed by FOHP, Inc. (the
"Registrant") with the Securities and Exchange Commission (the "SEC") on March
19, 1997 in connection with the Registrant's 1996 Annual Meeting of Shareholders
which was held on April 16, 1997. Such information appears on pages 52 through
57 of the Proxy Statement under the caption "Description of Securities."
Item 2. Exhibits
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The following exhibits are required to be filed as part of this
Registration Statement on Form 8-A.
Exhibit No. Description
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2.1 Amended and Restated Certificate of Incorporation of the
Registrant, as filed with the Secretary of State of
the State of New Jersey on April 17, 1997.
2.2 By-Laws of the Registrant, as amended and restated as of
April 16, 1997.
4. Specimen certificate representing the Registrant's Common
Stock.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this Registration Statement on Form
8-A to be signed on its behalf by the undersigned, thereto duly authorized.
FOHP, Inc. (Registrant)
Date: June 27, 1997 By: /s/ Donald Parisi
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Donald Parisi, Senior Vice
President, Secretary and
General Counsel
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EXHIBIT INDEX
TO
FOHP, INC.
REGISTRATION STATEMENT
ON
FORM 8-A
Exhibit No. Description
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2.1 Amended and Restated Certificate of Incorporation
of the Registrant, as filed with the Secretary of
State of the State of New Jersey on April 17, 1997.
2.2 By-laws of the Registrant, as amended and restated
as of April 16, 1997.
4. Specimen certificate representing the Registrant's
Common Stock.
EXHIBIT 2.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
FOHP, INC.
FOHP, Inc. (the "Corporation"), a corporation organized under the laws
of the State of New Jersey on May 24, 1994, has, since its formation, amended
its Certificate of Incorporation by an Amended and Restated Certificate of
Incorporation filed on June 8, 1995 and an Amended and Restated Certificate of
Incorporation filed on December 7, 1995.
Pursuant to N.J. Stat. Ann. 14A:9-5, the Corporation hereby (i) restates
its Certificate of Incorporation, to embody in one document its original
certificate and the subsequent amendments thereto, and (ii) further amends its
Certificate of Incorporation as set forth herein.
The Corporation hereby certifies the following which (i) sets forth in full
its Certificate of Incorporation, as of this date, and (ii) supercedes and
replaces its original Certificate of Incorporation and all amendments filed
prior to the date hereof:
ARTICLE I
CORPORATE NAME
The name of the Corporation is FOHP, Inc.
ARTICLE II
PURPOSE OF CORPORATION
The purpose of the Corporation is to engage in any activity within the
purposes for which corporations may be organized under the New Jersey Business
Corporation Act.
ARTICLE III
CAPITAL STOCK
A. Authorized Capital Stock. The total number of shares of capital
stock which the Corporation shall have authority to issue is one hundred ten
million (110,000,000) shares. Of these shares, one hundred million (100,000,000)
shares are classified as Common Stock, par value $.01 per share ("Common
Stock"), and ten million (10,000,000) shares are classified as Preferred Stock,
par value $1.00 per share ("Preferred Stock").
B. Preferred Stock. The Board of Directors of the Corporation is hereby
authorized to issue, from time to time, shares of Preferred Stock in series and
to fix the number of shares in each series; the designations, powers,
preferences and
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relative, participating, optional or other special rights thereof and the
qualifications, limitations, or restrictions thereon; including, subject to any
limitation hereinafter set forth but otherwise without limitation, any of the
following: (1) provisions relating to voting rights of each share in such
series, including multiple or fractional votes per share; (2) provisions
relating to the call or redemption thereof, including, without limitation, the
times and prices for such calls or redemptions and provisions relating to
sinking funds therefor and the retirement thereof, if any; (3) provisions
relating to the right to receive dividends, including, without limitation, the
rate of such dividends, whether such dividends shall be cumulative or
non-cumulative and, if cumulative, the conditions on which such dividends shall
be accrued and paid, and any preferential rights thereto or rights in relation
to dividends payable on any other classes or series of stock of the Corporation;
(4) the rights thereof upon the dissolution of, or upon any distribution of the
assets of, the Corporation; and (5) except as otherwise explicitly prohibited by
this Certificate of Incorporation, provisions relating to the conversion thereof
into, or the exchange thereof for, shares of any class or any other series of
the same class of stock of the Corporation or exchange for any other security of
the Corporation or any other company.
C. Preemptive Rights. A holder of any share of Common Stock of the
Corporation shall have preemptive rights to subscribe for or purchase any
capital stock proposed to be issued by the Corporation, other than the shares of
the Corporation's capital stock (referred to herein as "FHS Conversion Shares")
issuable upon the exercise of any option or the conversion of any convertible
debenture granted or issued by the Corporation to Foundation Health Systems,
Inc. ("FHS"). Any holder of shares of the Corporation's capital stock issued
upon the exercise of any option or conversion of any convertible debenture by
FHS shall have the preemptive rights afforded by this Paragraph C. Prior to any
proposed issuance of capital stock by the Corporation (other than an issuance of
FHS Conversion Shares), the Corporation shall provide to each holder of Common
Stock written notice ("Notice of Issuance of Shares") of the opportunity to
subscribe for or purchase the shares of capital stock being issued on a pro rata
basis in relation to their then current ownership, on a fully-diluted basis, of
Common Stock of the Corporation (assuming, among other things, the exercise of
all the then outstanding options and warrants exercisable for Common Stock and
the conversion of all other securities convertible into Common Stock). Within
the time period provided in the Notice of Issuance of Shares and/or offering
materials furnished therewith, a shareholder may exercise his, her or its
preemptive rights to purchase all or part of the shares of capital stock being
offered by the Corporation to him, her or it by delivering to the Corporation a
notice of such shareholder's intent to exercise his, her or its preemptive
rights to purchase the shares of
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capital stock being offered ("Notice of Exercise"). The Corporation shall issue
the appropriate number of shares of capital stock to each shareholder who
provides timely Notice of Exercise and pays the consideration necessary to
purchase the shares. FHS shall have the right to purchase any shares of capital
stock proposed to be issued by the Corporation which have not been subscribed
for or purchased by the other holders of Common Stock.
D. Restrictions on Issuance.
1. Unless the affirmative vote of not less than seventy-five
(75%) percent of the issued and outstanding shares of Common
Stock is received, no share of capital stock, regardless of
class, shall be permitted to be issued by the Corporation or
subscribed for, except to:
(a) a hospital or acute care institution which has
entered into a provider agreement with an Operating
Subsidiary (as defined below) and which is duly
licensed by the appropriate authorities in the state
where it is located (referred to herein as an "Acute
Care Institution"), or to an affiliate of an Acute
Care Institution which (i) solely controls, (ii) is
solely controlled by, or (iii) is under common
control with the Acute Care Institution (referred to
herein as an "Eligible Affiliate") (Acute Care
Institutions and Eligible Affiliates which own shares
of Common Stock are sometimes collectively referred
to herein as "Institutional Shareholders" and
individually referred to herein as an "Institutional
Shareholder");
(b) (i) a member of the medical staff of an Acute
Care Institution, or (ii) a physician designated by
an Acute Care Institution, who is licensed to
practice medicine by the appropriate state
authorities and who has entered into a provider
agreement with an Operating Subsidiary (referred to
herein as a "Practitioner") (Practitioners who own
shares of Common Stock are sometimes collectively
referred to herein as "Practitioner Shareholders" and
individually referred to herein as a "Practitioner
Shareholder");
(c) a dentist who is licensed to practice dentistry
by the appropriate state authorities and who has
entered into a provider agreement with an Operating
Subsidiary (referred to herein as a "Dentist")
(Dentists who own shares of Common
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Stock are sometimes collectively referred to herein
as "Dentist Shareholders" and individually referred
to herein as a "Dentist Shareholder");
(d) a health care provider or professional, licensed,
certificated or authorized to operate or practice in
a state where an Operating Subsidiary has been
formed, other than a Practitioner, Acute Care
Institution, Dentist or Organizational Provider (as
defined below), provided, such provider or
professional has entered into a provider agreement
with an Operating Subsidiary (referred to herein as
an "Other Provider") (Other Providers who own shares
of Common Stock are sometimes collectively referred
to herein as "Other Shareholders" and individually
referred to herein as an "Other Shareholder");
(e) an Individual Practice Association ("IPA") or
Physician Hospital Organization ("PHO") which has
entered into a provider agreement with an Operating
Subsidiary (referred to herein as an "Organizational
Provider"), provided that no shares of Common Stock
shall be offered or sold to an IPA or PHO unless (i)
any such offer or sale is in full compliance with
applicable federal and state securities laws, (ii)
the IPA or PHO purchasing shares of Common Stock is
in full compliance with any federal or state
securities laws applicable to such organization, and
(iii) the purchasing IPA or PHO agrees to indemnify
the Corporation and any of its subsidiaries or
affiliates, and the officers, directors, employees
and agents of the Corporation or any of its
subsidiaries or affiliates, from any and all damages
suffered and expenses incurred by any such person or
entity as a result of the purchasing IPA or PHO
failing to comply or remain in compliance with any
applicable federal or state securities laws
(Organizational Providers which own shares of Common
Stock are sometimes collectively referred to herein
as "Organizational Shareholders" and individually
referred to herein as an "Organizational
Shareholder"); or
(f) FHS, or any successor of FHS.
2. The provisions set forth in Article III, Paragraph D.1. may
only be amended or modified upon the affirmative vote of not
less than seventy-five (75%) percent of the issued and
outstanding shares of Common Stock of the Corporation in
addition to any other vote required herein or by law.
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3. The term "Operating Subsidiary" shall mean any of First
Option Health Plan of New Jersey, Inc. ("FOHP-NJ"), a New
Jersey corporation which operates as a health maintenance
organization in New Jersey, First Option Health Plan of New
York, Inc. ("FOHP-NY"), a corporation formed in New York to
operate as a health maintenance organization in that state,
First Option Health Plan of Pennsylvania, Inc. ("FOHP-PA"), a
corporation formed in Pennsylvania to operate as a health
maintenance organization in that state, First Option Health
Plan of Delaware, Inc. ("FOHP-DE"), a corporation formed in
Delaware to operate as a health maintenance organization in
that state, First Option Health Plan of Maryland, Inc.
("FOHP-MD"), a corporation formed in Maryland to operate as a
health maintenance organization in that state, and any other
subsidiary of the Corporation formed to operate as a health
maintenance organization whether or not currently existing.
FOHP-NJ, FOHP-NY, FOHP-PA, FOHP-DE, FOHP-MD and any other
subsidiary of the Corporation formed to operate as a health
maintenance organization are sometimes collectively referred
to herein as "Operating Subsidiaries." In addition, Acute Care
Institutions, Practitioners, Dentists, Other Providers and
Organizational Providers are sometimes collectively referred
to herein as "Providers" and individually referred to herein
as a "Provider." Further, Institutional Shareholders,
Practitioner Shareholders, Dentist Shareholders, Other
Shareholders and Organizational Shareholders are sometimes
collectively referred to herein as "Provider Shareholders" and
individually referred to herein as a "Provider Shareholder."
E. Restrictions on Transfer.
1. Shares of Common Stock of the Corporation shall not be
sold, pledged, hypothecated or otherwise transferred by a
Provider Shareholder or FHS, except that shares of Common
Stock may be sold or transferred:
(a) by a Provider Shareholder to:
(i) any Provider regardless of whether such
person or entity owns shares of Common Stock
at the time of the transfer or sale,
(ii) FHS, provided that FHS is not
prohibited from purchasing any such shares
pursuant to a contractual agreement with the
Corporation, or
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(iii) the Corporation;
(b) by FHS to:
(i) any Provider regardless of whether such
person or entity owns shares of Common Stock
at the time of transfer or sale,
(ii) any subsidiary of FHS, successor of FHS
or subsidiary of a successor of FHS,
(iii) the Corporation, or
(iv) any other person approved by a majority
of the directors on the Board who were not
designated by FHS; and
(c) by any holder thereof in connection with any
Business Combination (as defined in Article IV
hereof).
2. Subsequent to the earlier of the conclusion of any Exchange
Offer (as defined in Subparagraph 5. below) or the conversion
into Common Stock of any portion of the convertible debentures
issued to FHS by the Corporation, FHS shall hold a right of
first refusal to purchase any and all shares of Common Stock,
or any other class of capital stock proposed to be sold by a
selling shareholder to any party which has offered to purchase
such shares, for the price to be paid by a bona fide proposed
purchaser of the shares offered. Any selling shareholder shall
cause any offer from a bona fide proposed purchaser to be
reduced to writing and shall deliver notice to FHS and the
Corporation of such written offer ("Notice of Offer"). The
Notice of Offer shall contain a copy of the written offer from
the bona fide proposed purchaser and an offer to sell the
shares being offered by the selling shareholder to FHS under
the same terms and same price per share specified in the
written offer from the bona fide proposed purchaser to the
selling shareholder. FHS shall have thirty (30) calendar days
to respond to the Notice of Offer ("Response to Notice"), and
shall indicate in such Response to Notice whether or not FHS
intends to purchase all, but not less than all, the shares
offered under the Notice of Offer. If FHS does not provide a
Response to Notice to purchase all the shares being offered by
the selling shareholder within thirty (30) calendar days, the
Corporation shall have fifteen (15) calendar days from the
date of expiration of FHS's right to purchase all of the
shares being offered by the selling shareholder under the same
terms and same price per share specified in the written offer
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by the bona fide proposed purchaser to the selling
shareholder. If the Corporation does not purchase all the
shares being offered by the selling shareholder within fifteen
(15) calendar days after the expiration of FHS's right of
first refusal under this Subparagraph 2., the selling
shareholder may sell such number of shares as was offered in
the Notice of Offer to such bona fide proposed purchaser.
3. For purposes of this Paragraph D., "Notice of Offer" and
"Response to Notice" means a written notice sent by overnight
courier service or certified mail, return receipt requested.
4. Notwithstanding anything to the contrary in this Article
III, Paragraph D., captioned "Restrictions on Transfer:"
(a) In the event that a Practitioner Shareholder
relocates his or her practice outside the geographic
service area covered by the Operating Subsidiaries or
ceases to practice medicine for whatever reason
including retirement or death, the Practitioner
Shareholder or his or her personal representative or
beneficiary shall be permitted to offer for sale the
shares of Common Stock held by the Practitioner
Shareholder to a Provider, subject to FHS's right of
first refusal provided herein, or directly to FHS
after the earlier of the conclusion of any Exchange
Offer or the conversion into Common Stock of any
portion of the convertible debentures issued to FHS
by the Corporation. If any shares are not sold within
forty-five (45) days from the date the Practitioner
Shareholder relocates or ceases to practice, as
reasonably determined by the Corporation, the
Corporation may, but is not required to, purchase
such shares at a purchase price per share equal to
the greater of Book Value or Alternate Value (as such
terms are defined in Section 5 below). Such purchase
price shall be payable in cash within ninety (90)
days following the date the Practitioner Shareholder
relocates or ceases to practice, or, in the
discretion of the Corporation, over a period of two
(2) years in equal annual installments commencing one
(1) year from the date of purchase with interest at a
rate of seven (7%) percent per annum, accrued and
payable annually.
(b) In the event that a Dentist Shareholder relocates
his or her practice outside the geographic service
area covered by the Operating
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Subsidiaries or ceases to practice dentistry for
whatever reason including retirement or death, the
Dentist Shareholder or his or her personal
representative or beneficiary shall be permitted to
offer the shares of Common Stock held by the Dentist
Shareholder for sale to a Provider, subject to FHS's
right of first refusal provided herein, or directly
to FHS after the earlier of the conclusion of any
Exchange Offer or the conversion into Common Stock of
any portion of the convertible debentures issued to
FHS by the Corporation. If any shares are not sold
within forty-five (45) days from the date the Dentist
Shareholder relocates or ceases to practice, as
reasonably determined by the Corporation, the
Corporation may, but is not required to, purchase
such shares at a purchase price per share equal to
the greater of Book Value or Alternate Value. Such
purchase price shall be payable in cash within ninety
(90) days following the date the Dentist Shareholder
relocates or ceases to practice, or, in the
discretion of the Corporation, over a period of two
(2) years in equal annual installments commencing one
(1) year from the date of purchase with interest at a
rate of seven (7%) percent per annum, accrued and
payable annually.
(c) The Corporation may, but is not required to,
purchase the shares of Common Stock held, either
directly or through an Eligible Affiliate, by an
Acute Care Institution, if (i) the Acute Care
Institution's provider agreement with an Operating
Subsidiary terminates for any reason, (ii) the Acute
Care Institution does not meet the membership
enrollment requirements provided in any agreement
between the Operating Subsidiary and the Acute Care
Institution, (iii) the Acute Care Institution's
license pursuant to applicable state health care laws
is suspended or revoked or curtailed, (iv) the Acute
Care Institution's accreditation as a hospital is
suspended or revoked or curtailed, or (v) the Acute
Care Institution is dissolved (whether voluntarily or
involuntarily), liquidated or becomes insolvent. The
Corporation may purchase such shares at a purchase
price per share equal to the lesser of Book Value or
Alternate Value for purposes of Subparagraph 5.(c)(i)
hereof, provided, however, that if the Alternate
Value is zero the purchase price per share to be paid
by the Corporation shall be fifty (50%) percent of
Book Value, and the lesser of Book Value or the
purchase price
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paid for such shares for the purposes of
Subparagraphs 5.(c)(ii), (iii), (iv) and (v) hereof.
Such purchase price shall be payable in cash within
ninety (90) days following the date of the event
allowing for such repurchase, or in the discretion of
the Corporation, over a period of three (3) years in
equal annual installments commencing one (1) year
from the date of purchase with interest at a rate of
seven (7%) percent per annum, accrued and payable
annually.
(d) The shares of Common Stock held by any
Practitioner Shareholder, Dentist Shareholder or
Other Shareholder whose provider agreement with the
Corporation terminates for any reason may be
purchased by the Corporation. The Corporation may
purchase such shares at a purchase price per share
equal to the lesser of Book Value or Alternate Value;
provided, however, that if the Alternate Value is
zero the purchase price per share to be paid by the
Corporation shall be fifty (50%) percent of Book
Value. Such purchase price shall be payable in cash
within ninety (90) days following the date the
provider agreement terminated, or in the discretion
of the Corporation, over a period of three (3) years
in equal annual installments commencing one (1) year
from the date of purchase with interest at a rate of
seven (7%) percent per annum, accrued and payable
annually.
(e) The Corporation may, but is not required to,
purchase the shares of Common Stock held by an
Organizational Shareholder if (i) the Organizational
Shareholder's provider agreement with an Operating
Subsidiary terminates for any reason, (ii) the
Organizational Shareholder breaches or fails to
comply with any federal or state securities law
applicable to the Organizational Shareholder, or
(iii) the Organizational Shareholder is dissolved
(whether voluntarily or involuntarily), liquidated or
becomes insolvent. The Corporation may purchase such
shares at a purchase price per share equal to the
lesser of Book Value or Alternate Value for purposes
of Subparagraph 5.(e)(i) hereof, provided, however,
that if the Alternate Value is zero the purchase
price per share to be paid by the Corporation shall
be fifty (50%) percent of Book Value, and the lesser
of Book Value or the purchase price paid for such
shares for the purposes of Subparagraphs 5.(e)(ii)
and (iii) hereof. Such purchase price shall be
payable in
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cash within ninety (90) days following the date of
the event allowing for such repurchase, or in the
discretion of the Corporation, over a period of three
(3) years in equal annual installments commencing one
(1) year from the date of purchase with interest at
the rate of seven (7%) percent per annum, accrued and
payable annually.
(f) In the event of (i) a merger involving an Acute
Care Institution or Organizational Shareholder
(except if the merger is between Acute Care
Institutions or Organizational Shareholders which are
both providers to the Corporation) or (ii) the sale
of a majority of the stock or assets of, or a change
of majority control of, or change in the majority of
membership in an Acute Care Institution or
Organizational Shareholder, the Corporation may, but
it is not required to, purchase the shares of Common
Stock held by such Organizational Shareholder or
Acute Care Institution or its Eligible Affiliate for
an amount equal to the lesser of Book Value or
Alternate Value. Any election by the Corporation to
repurchase shares from an Organizational Shareholder
or Acute Care Institution or its Eligible Affiliate
in accordance with this provision must be made within
ninety (90) days following the receipt by the
Corporation of written notice of the event allowing
for such repurchase. In addition, the purchase price
shall be payable in cash within ninety (90) days
following the date of the event allowing for such
repurchase, or in the discretion of the Corporation,
over a period of three (3) years in equal annual
installments commencing one (1) year from the date of
purchase with interest at the rate of seven (7%)
percent per annum, accrued and payable annually. In
the event the Corporation elects not to purchase the
shares of Common Stock held by an Acute Care
Institution, either directly or through an Eligible
Affiliate, or an Organizational Shareholder, the
affected Organizational Shareholder or Acute Care
Institution, or successor thereto, shall be permitted
to retain the shares of Common Stock held by it and
remain a provider to the Operating Subsidiary with
which it is or its predecessor was affiliated;
provided, however, if any successor to an
Organizational Shareholder or Acute Care Institution
chooses to remain a provider to an Operating
Subsidiary, it must agree to be subject to the terms
and conditions of the provider
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agreement entered into by its predecessor and the
Operating Subsidiary with which its predecessor was
affiliated.
(g) The transfer by an Acute Care Institution of
shares of Common Stock to an Eligible Affiliate or
the transfer by an Eligible Affiliate of shares of
Common Stock to the Acute Care Institution with which
it is affiliated, or to another Eligible Affiliate of
such Acute Care Institution, shall not trigger any of
the repurchase provisions set forth above, shall not
be subject to FHS's right of first refusal, nor shall
be prohibited by this Certificate of Incorporation.
5. As used in this Certificate of Incorporation, (a) "Book
Value" shall mean the shareholder equity reflected on the
Corporation's balance sheet, excluding any convertible
debentures issued to FHS, prepared in accordance with
generally accepted accounting principles for the most recently
completed fiscal year as audited by the Corporation's
independent accountants divided by the number of outstanding
shares of Common Stock determined on a fully diluted basis;
(b) "Alternate Value" shall mean six (6) times the average net
income per share before taxes determined in accordance with
generally accepted accounting principles on a fully diluted
basis ("Average Net Income") for the prior three (3) completed
fiscal years of the Corporation (or such lesser number of
completed fiscal years if the Corporation has not yet
completed three fiscal years) with 1995 considered a fiscal
year for the purposes of this calculation (Average Net Income
shall be determined excluding the effects of any extraordinary
items or change in accounting principles as those terms are
defined in generally accepted accounting principles); and (c)
"Exchange Offer" shall mean an offer initiated by FHS whereby
all the Provider Shareholders of the Corporation may, but will
not be obligated to, tender their shares of Common Stock for
cash or FHS stock.
6. The sale of any shares of Common Stock by a shareholder to
the Corporation pursuant to Subparagraph 4. above shall not be
subject to FHS's right of first refusal.
ARTICLE IV
BUSINESS COMBINATIONS
In addition to any affirmative vote required by law, the approval of a
Business Combination requires (A) the affirmative vote, at a duly called meeting
where a quorum is present, of not
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less than sixty-six and two-thirds (66-2/3%) percent of the votes cast by the
holders of shares of the Corporation's capital stock entitled to be voted in
respect of the proposed Business Combination, with all such holders voting
together without regard to class, or (B) the consent of the holders of shares of
the Corporation's capital stock representing at least sixty-six and two-thirds
(66-2/3%) percent of all the votes which could be cast on the proposed Business
Combination by the holders of the Corporation's capital stock. The number of
votes which each share of the Corporation's capital stock shall be entitled to
cast shall be determined by this Certificate of Incorporation, or, if not
determined herein, as determined in the Corporation's By-laws.
The term "Business Combination" shall mean (1) any merger or
consolidation of the Corporation with or into any other corporation except any
merger or consolidation not requiring prior shareholder approval under the New
Jersey Business Corporation Act; (2) any merger of any other corporation with or
into the Corporation except any merger not requiring prior shareholder approval
under the New Jersey Business Corporation Act; (3) the sale, lease, exchange, or
other disposition of all, or substantially all, of the assets of the Corporation
if not in the usual and regular course of business as conducted by the
Corporation; (4) the acquisition, in exchange for shares, obligations or other
securities of the Corporation, of some or all of the outstanding shares of
another corporation, or of some or all of the assets of a corporation, a
business trust, a business proprietorship or a business partnership if such
acquisition requires prior shareholder approval under the New Jersey Business
Corporation Act; (5) the adoption of any plan or proposal for liquidation or
dissolution of the Corporation; and (6) the adoption of any agreement, contract
or other arrangement providing for any one or more of the actions specified in
the foregoing clauses (1) through (5).
A majority of the members of the Board of Directors shall have the
power and duty to determine for purposes of this Article IV, on the basis of
information known to them after reasonable inquiry, all questions arising under
this Article IV, including, without limitation, whether the assets that are the
subject of any Business Combination constitute substantially all of the assets
of the Corporation or whether any sale, lease, exchange or other disposition of
the assets of the Corporation is in the usual and regular course of business as
conducted by the Corporation. Any such determination made in good faith shall be
binding and conclusive on all shareholders.
A provision inconsistent with this Article IV of the Certificate of
Incorporation of the Corporation may be adopted only upon (A) the affirmative
vote, at a duly called meeting where a quorum is present, of not less than
sixty-six and two thirds (66-2/3%) percent of the votes cast by the holders of
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shares of the Corporation's capital stock entitled to be voted in respect of a
proposed Business Combination, with all such holders voting together without
regard to class, or (B) the consent of the holders of the shares of the
Corporation's capital stock representing sixty-six and two-thirds (66-2/3%)
percent of all the votes which could be cast on the proposed Business
Combination by the holders of the Corporation's capital stock. The number of
votes which each share of the Corporation's capital stock shall be entitled to
cast shall be determined by this Certificate of Incorporation, or, if not
determined herein, as determined in the Corporation's By-laws.
ARTICLE V
COVENANTS OF NJ INSTITUTIONAL SHAREHOLDERS
A. Covenants of NJ Institutional Shareholders.
1. For so long as any NJ Institutional Shareholder (as defined
in Paragraph C. below) holds shares of the Corporation's
Common Stock, it agrees and covenants to effect the following:
(a) if the only existing health benefits plan of the
NJ Institutional Shareholder is self-insured or, if
the NJ Institutional Shareholder is not a NJ Acute
Care Institution (as defined in Paragraph C. below),
the only existing health benefits plan of its
affiliated NJ Acute Care Institution is self-insured,
the NJ Institutional Shareholder or its affiliated NJ
Acute Care Institution, as the case may be, shall
offer a FOHP-NJ plan to its employees as its
exclusive plan in accordance with a timetable
determined by FOHP-NJ to be feasible, but in no event
later than January 1, 1996;
(b) if the NJ Institutional Shareholder or, if the NJ
Institutional Shareholder is not a NJ Acute Care
Institution, its affiliated NJ Acute Care
Institution, offers multiple non-union health plans,
in addition to one or more self-insured plans, to its
employees, the NJ Institutional Shareholder or its
affiliated NJ Acute Care Institution, as the case may
be, is obliged to offer a FOHP-NJ plan to its
employees and fifty (50%) percent of such employees
are required to be covered by a FOHP-NJ plan by
January 1, 1996, and seventy-five (75%) percent of
such employees are required to be covered by a
FOHP-NJ plan by January 1, 1997; or
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(c) if the NJ Institutional Shareholder or, if the NJ
Institutional Shareholder is not a NJ Acute Care
Institution, its affiliated NJ Acute Care
Institution, offers a plan to its employees pursuant
to a collective bargaining agreement as well as other
existing plans, the NJ Institutional Shareholder or
its affiliated NJ Acute Care Institution, as the case
may be, must (i) use its best efforts to offer a
FOHP-NJ plan to its non-union employees on a
non-exclusive basis, (ii) use its best efforts to
qualify a FOHP-NJ plan as the union designated plan,
and (iii) pay reasonable deductibles or other costs
to qualify a FOHP-NJ plan as the union designated
plan.
2. The provisions of Subparagraph 1. above shall terminate
with respect to an individual NJ Institutional Shareholder on
December 31, 1999; provided, however, that prior to an NJ
Institutional Shareholder or its affiliated NJ Acute Care
Institution offering to its employees any health benefits plan
similar to a health benefits plan offered by FOHP-NJ,
(a) such NJ Institutional Shareholder shall provide
prior written notice to FOHP-NJ of the material terms
of any "Bona Fide Offer" offered by such other health
benefits plan, and, in the event FOHP-NJ offers to
provide to the employees of such NJ Institutional
Shareholder or, if the NJ Institutional Shareholder
is not a NJ Acute Care Institution, to the employees
of its affiliated NJ Acute Care Institution, a
FOHP-NJ plan containing terms at least as favorable
in all material respects to the employees of the NJ
Institutional Shareholder or its affiliated NJ Acute
Care Institution, such NJ Institutional Shareholder
or its affiliated NJ Acute Care Institution shall
offer such FOHP-NJ plan to its employees on the same
basis as it would be obligated under Subparagraph 1.
above, and, provided further that,
(b) a "Bona Fide Offer" is an offer of a health
benefits plan which is prepared with the objective of
covering the offeror's (i) health care costs and
administrative expenses in the case of risk products,
and (ii) costs of performing administrative services
and any risk assumed (e.g. reinsurance) in the case
of self-funded products. An offer by any health
benefits plan below the offeror's costs for the
purpose of achieving market share increases shall not
constitute a Bona Fide Offer.
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3. To the extent that an employee of a NJ Institutional
Shareholder or, if the NJ Institutional Shareholder is not a
NJ Acute Care Institution, an employee of its affiliated NJ
Acute Care Institution, resides outside New Jersey, such
employee shall be counted in calculating the percentage of
employees covered by a FOHP-NJ plan only to the extent that
such employee is eligible for coverage by a FOHP-NJ plan.
B. Corporation's Right to Repurchase. Notwithstanding anything
contained herein to the contrary, in the event that either (i) an NJ
Institutional Shareholder or its affiliated NJ Acute Care Institution, if any,
fails to perform its obligations pursuant to Paragraph A. above, or (ii) during
the period ending December 31, 1999, an NJ Institutional Shareholder or its
affiliated NJ Acute Care Institution, if any, should fail to provide
reimbursement rates (a) for in-patient visits at the lower of (1) the lowest
rate of reimbursement received by such provider from nongovernmental payors for
each line of business, or (2) the rate of reimbursement reflecting a reduction
(compared to calendar 1996 rates) of five (5%) percent in in-patient costs,
provided that such reduction is solely as a result of rate reductions and not
through utilization or medical management efforts, and (b) for out-patient
visits at the lower of (1) the lowest rate of reimbursement received by such
providers from nongovernmental payors for each line of business, or (2) the rate
of reimbursement reflecting a reduction (compared to calendar 1996 rates) of ten
(10%) percent in out-patient costs, provided that such reduction is solely as a
result of rate reductions and not through utilization or medical management
efforts, then the Corporation shall have the right to purchase (but shall not be
obligated to purchase), and the NJ Institutional Shareholder shall be obligated
to sell to the Corporation at the Corporation's option, all or a portion of the
Corporation's Common Stock held by the NJ Institutional Shareholder at a
purchase price equal to the lowest of (i) the Book Value, (ii) the lowest
shareholder equity reflected on the Corporation's quarter-end balance sheets
during the period of noncompliance giving rise to the repurchase right,
excluding any convertible debentures issued to FHS, prepared in accordance with
generaly accepted accounting principles, divided by the number of outstanding
shares of the Corporation's Common Stock on a fully diluted basis or (iii) the
original purchse price paid by such NJ Institutional Shareholder for such shares
of the Corporation's Common Stock. The Corporation shall have full discretion
with respect to its election to exercise or not to exercise the foregoing rights
of repurchase with respect to any given shareholder, taking into account any
factors the Corporation deems appropriate relating to such shareholder's
relationships with the Corporation or the Corporation's business or otherwise,
and the Corporation's election to make or not to make a repurchase from one
shareholder shall have no effect on the Corporation's election to make or not to
make a repurchase from
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any other shareholder. Any amounts payable pursuant to this Paragraph B. shall
be paid in cash within ninety (90) days from the date of purchase or, in the
discretion of the Corporation, over a period of three (3) years in equal annual
installments commencing one (1) year from the date of purchase with interest at
the rate of seven (7%) percent per annum, accrued and payable annually.
C. Definitions. For the purposes of this Article V: "NJ Acute Care
Institution" shall mean a hospital or acute care institution, licensed by the
New Jersey Department of Health, which has entered into a provider agreement
with FOHP-NJ to provide health care services to the members of FOHP-NJ's health
care benefits plans; and (4) "NJ Institutional Shareholder" shall mean any NJ
Acute Care Institution or its affiliate which owns shares of the Corporation's
Common Stock.
ARTICLE VI
SHAREHOLDER MEETINGS
A. General. Meetings of shareholders may be held outside the State of
New Jersey, if the Corporation's By-laws so provide. The books of the
Corporation may be kept (subject to any provisions contained in applicable law)
outside the State of New Jersey at such place or places as may be designated
from time to time by the Board of Directors or in the By-laws of the
Corporation.
B. Elections of Directors. Elections of directors need not be by ballot
unless the By-laws of the Corporation shall so provide. Each shareholder of the
Corporation entitled to vote at any election of directors of the Corporation
shall have the right to cumulate votes and allocate to one candidate for such
election a number of votes equal to the number of directors to be so elected
multiplied by the number of votes to which the shares held by such shareholder
are normally entitled, or to distribute such number of votes on the same
principle among as many candidates for such election as the shareholder shall
desire; provided, however, that no shareholder shall be entitled to cumulate
votes with respect to any named candidate or candidates for director unless such
candidate's name or candidates' names have been placed in nomination for such
election in accordance with the Corporation's By-laws and such cumulation of
votes complies with the terms of any agreement between the shareholder and the
Corporation.
ARTICLE VII
AMENDMENTS
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by
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<PAGE>
statute, this Certificate of Incorporation or the By-laws of the Corporation,
and all rights conferred upon shareholders herein are granted subject to this
reservation.
ARTICLE VIII
BOARD OF DIRECTORS
The current Board of Directors of this Corporation consists of ten (10)
directors and the names and addresses of the directors are:
Mr. Roger W. Birnbaum 1460 Route 9 North
Woodbridge, NJ 07095
Dr. John F. Bonamo 94 Northfield Avenue
West Orange, NJ 07052
Sister Jane Frances Brady St. Joseph's Hospital and
Medical Center
703 Main Street
Paterson, NJ 07503
Mr. Bruce G. Coe 41 Lambert Lane
Lambertville, NJ 08530
Mr. Christopher M. Dadlez Monmouth Medical Center
300 Second Avenue
Long Branch, NJ 07740
Dr. Mark Engel 733 North Beers Street
Holmdel, NJ 07733
Dr. Thomas J. Feneran 53 Nautilus Drive
Manahawkin, NJ 08050
Mr. John Gantner Robert Wood Johnson University Hospital
One Robert Wood Johnson Place
New Brunswick, NJ 08903
Mr. Laurence M. Merlis Riverview Medical Center
One Riverview Plaza
Red Bank, NJ 07701
Dr. Om P. Sawhney 1550 Park Avenue
South Plainfield, NJ 07080
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ARTICLE IX
REGISTERED OFFICE AND AGENT
The address of the Corporation's registered office in the State of New
Jersey is 820 Bear Tavern Road, 3rd Floor, West Trenton, New Jersey 08628, and
the registered agent at such address is The Corporation Trust Company.
ARTICLE X
LIMITATION ON LIABILITY OF DIRECTORS AND OFFICERS
To the fullest extent permitted by the laws of the State of New Jersey,
as they exist or may hereafter be amended, the directors and officers of the
Corporation shall not be personally liable to the Corporation or its
shareholders for damages for breach of any duty owed to the Corporation or its
shareholders, except that the provisions of this Article X shall not relieve a
director or officer from liability for any breach of duty based upon an act or
omission (a) in breach of such person's duty of loyalty to the Corporation or
its shareholders, (b) not in good faith or involving a knowing violation of law,
or (c) resulting in receipt by such person of an improper personal benefit.
ARTICLE XI
COMPLIANCE WITH LAWS
Notwithstanding anything to the contrary contained herein or in the
Corporation's By-laws, the Corporation shall at all times comply with the laws
of the State of New Jersey applicable to the Corporation and its business.
ARTICLE XII
DISSENTERS' RIGHTS
In the event FHS elects to effect a merger involving the Corporation,
as contemplated in Section 6.4(b) of the Amended and Restated Securities
Purchase Agreement dated February 10, 1997, among the Corporation, FOHP-NJ and
FHS, each and every shareholder of the Corporation shall be afforded the
dissenters' rights provided under Chapter 11 of the New Jersey Business
Corporation Act, regardless of whether such shareholders would otherwise have
been entitled to such rights under the New Jersey Business Corporation Act.
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IN WITNESS WHEREOF, FOHP, Inc. has caused this Amended and Restated
Certificate of Incorporation to be executed on the 17th day of April, 1997, by a
duly authorized officer.
FOHP, INC.
By: /s/ Donald Parisi
---------------------------------
Name: Donald Parisi
Title: Acting President and
Chief Executive Officer
Filed By:
PAUL T. COLELLA, ESQ.
Giordano, Halleran & Ciesla, P.C.
125 Half Mile Road
Lincroft, New Jersey 07738
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EXHIBIT 2.2
BY-LAWS
OF
FOHP, INC.
ARTICLE I
OFFICES
Section 1. Principal Office. The principal office of FOHP, Inc. (the
"Corporation") shall be located at 2 Bridge Avenue, Building 6, Red Bank, New
Jersey 07701-1106 or at such other place as is determined by the Corporation's
Board of Directors (the "Board" or "Board of Directors").
Section 2. Other Offices. The Corporation may also have offices at such
other places, both within and without the State of New Jersey, as the Board of
Directors may from time to time determine or as the business of the Corporation
may require.
ARTICLE II
SHAREHOLDERS
Section 1. Place of Meeting. All meetings of the shareholders for the
election of directors and for any other purpose may be held at such time and
place, within or without the State of New Jersey, as shall be stated in the
notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meeting. Annual meetings of shareholders shall be
held in the month of April or May on such day as the Board of Directors shall
designate at which the shareholders shall elect a Board of Directors and
transact such other business as may properly be brought before the meeting.
Section 3. Notice of Annual Meeting. Notice of the annual meeting shall
be given by mailing, not more than sixty (60) days nor less than ten (10) days
prior to the date of the annual meeting, a written notice stating the date, time
and place thereof, directed to each shareholder of record entitled to vote at
the meeting at his, her or its address as the same appears upon the records of
the Corporation.
Section 4. List of Shareholders. Prior to each annual or special
meeting of the shareholders, the officer who has charge of the stock ledger of
the Corporation shall prepare and make a complete list of the shareholders
entitled to vote at said
<PAGE>
meeting, which shall be arranged in alphabetical order and include the address
of and the number of shares registered in the name of each shareholder. The list
shall be produced and kept at the place of the meeting during the whole time
thereof and may be inspected by any shareholder who may be present.
Section 5. Special Meetings. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
Corporation's Certificate of Incorporation (the "Certificate of Incorporation"),
may be called by the President, and shall be called by the President or
Secretary at the request in writing of a majority of the directors then in
office. Such request shall state the purpose or purposes of the proposed
meeting.
Section 6. Notice of Special Meeting. Written or telegraphic notice of
a special meeting of shareholders, stating the date, time, place and purpose
thereof, shall be given to each shareholder entitled to vote thereat, not more
than sixty (60) days nor less than ten (10) days before the date fixed for the
meeting.
Section 7. Business Transacted at a Special Meeting. Business
transacted at any special meeting of shareholders shall be limited to the
purpose or purposes stated in the notice.
Section 8. Quorum. Except as otherwise provided in the Certificate of
Incorporation, the holders of issued and outstanding shares of Corporation
capital stock entitled to cast a majority of the votes at a meeting of
shareholders, present in person or by proxy, shall constitute a quorum for the
transaction of business at any meeting of the shareholders; provided, that when
a specified matter is required to be voted on by a class or series of capital
stock, voting as a separate class, the holders of issued and outstanding shares
of such series or class entitled to cast a majority of the votes at a meeting of
the holders of shares of such series or class, present in person or by proxy,
shall constitute a quorum for the transaction of business with respect to such
matter.
Section 9. Method of Voting. Except as otherwise provided in the
Certificate of Incorporation, each shareholder shall, at every meeting of the
shareholders, be entitled to one vote for each share of capital stock held by
such shareholder.
Every shareholder entitled to vote at a meeting of shareholders or to
express consent without a meeting may authorize another person or persons to act
for him, her or it by proxy. Every proxy shall be executed in writing by the
shareholder or his, her or its agent, except that a proxy may be given by a
shareholder or his, her or its agent by telegram or cable or its equivalent. No
proxy shall be valid for more than eleven (11) months, unless a longer time is
expressly provided
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therein. Unless it is coupled with an interest, a proxy shall be revocable at
will. A proxy shall not be revoked by the death or incapacity of a shareholder
but such proxy shall continue in force until revoked by the personal
representative or guardian of the shareholder. The presence at any meeting of
any shareholder who has given a proxy shall not revoke such proxy unless the
shareholder shall file written notice of such revocation with the secretary of
the meeting prior to the voting of such proxy.
A person named in a proxy as the attorney or agent of a shareholder
may, if the proxy so provides, substitute another person to act in his, her or
its place, including any other person named as an attorney or agent in the same
proxy. The substitution shall not be effective until an instrument effecting it
is filed with the Secretary of the Corporation.
Section 10. Action by Shareholders Without a Meeting. Whenever the vote
of shareholders at a meeting thereof is required or permitted to be taken in
connection with any corporate action by any provision of the New Jersey Business
Corporation Act or provision of the Certificate of Incorporation, the meeting
and the vote of shareholders may be dispensed with if all the shareholders who
would have been entitled to vote upon the action if such meeting were held shall
consent in writing to such corporate action being taken, and in the case of any
action to be taken pursuant to Chapter 10 of Title 14A of the Revised Statutes
of the State of New Jersey, the Corporation provides to all other shareholders
the advance notification required by N.J.S.A. 14A:5-6(2)(b).
Subject to the provisions of N.J.S.A. 14A:5-6(2), whenever the vote of
shareholders at a meeting thereof is required or permitted to be taken in
connection with any corporate action by any provision of the New Jersey Business
Corporation Act or provision of the Certificate of Incorporation, other than the
election of directors, the meeting and vote of shareholders may be dispensed
with and the action may be taken without a meeting upon the written consent of
shareholders who would have been entitled to cast the minimum number of votes
which would be necessary to authorize such action at a meeting at which all
shareholders entitled to vote thereon were present and voting; provided,
however, that for so long as FHS (as defined in Section 1 of Article III) owns
either shares of the Corporation's common stock or convertible debentures which
were issued by the Corporation and are convertible into shares of the
Corporation's common stock, the Corporation shall provide FHS notice of any
action to be approved by the shareholders by written consent at least ten (10)
days prior to delivering such written consents to the shareholders.
Section 11. Conduct at Meetings. At each meeting of shareholders, the
Chairman of the Board of Directors or in his or her absence the President of the
Corporation or in his or her
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absence any Vice President of the Corporation or in his or her absence a
chairman chosen by the vote of a majority in interest of the shareholders
present in person or represented by proxy and entitled to vote thereat, shall
act as chairman. The Secretary or in his or her absence an Assistant Secretary
or in the absence of the Secretary and all Assistant Secretaries a person whom
the chairman of the meeting shall appoint shall act as secretary of the meeting
and keep a record of the proceedings thereof. The Board of Directors shall be
entitled to make such rules or regulations for the conduct of meetings of
shareholders as it shall deem necessary, appropriate or convenient. Subject to
such rules and regulations, the chairman shall have the authority to prescribe
such rules, regulations and procedures and to do all such acts as, in the
judgement of such chairman, are necessary, appropriate or convenient for the
proper conduct of the meeting, including, without limitation, establishing an
agenda or order of business for the meeting, rules and procedures for
maintaining order at the meeting and the safety of those present, limitations on
participation in such meeting to shareholders of record of the Corporation and
their duly authorized and constituted proxies, and such other persons as the
chairman shall permit, restrictions on entry at the meeting after the time fixed
for the commencement thereof, limitations on the time allotted to questions or
comments by participants and regulations with respect to the opening and closing
of the polls for balloting on matters which are to be voted on by ballot. The
chairman shall have absolute authority over matters of procedure and there shall
be no appeal from the ruling of the chairman. The chairman may rule that a
resolution, nomination or motion not be submitted to the shareholders for a vote
unless seconded by a shareholder or a proxy for a shareholder. The chairman may
require that any person who is neither a bona fide shareholder nor a proxy for a
bona fide sharehlder leave the meeting, and upon the refusal of a shareholder to
comply with a procedural ruling of the chairman which the chairman deems
necessary for the proper conduct of the meeting, may require that such
shareholder leave the meeting. The chairman may, on his or her own motion,
summarily adjourn any meeting for any period he or she deems necessary if he or
she rules that orderly procedures cannot be maintained at the meeting. Unless,
and to the extent, determined by the Board of Directors or the chairman of the
meeting, meetings of shareholders shall not be required to be held in accordance
with rules of parliamentary procedure.
Section 12. Procedure Necessary to Bring Business Before an Annual
Meeting. To be properly brought before an annual meeting of shareholders,
business must be either (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors, (b)
properly brought before the meeting by or at the direction of the Board, or (c)
properly brought before the meeting by a shareholder. In addition to any other
applicable requirements, for business to be properly brought before an annual
meeting by a shareholder, the
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shareholder must have given timely notice thereof in writing, either by personal
delivery or by United States mail, postage prepaid, to the Secretary of the
Corporation not less than one hundred twenty (120) days in advance of the date
of the Corporation's proxy statement released to shareholders in connection with
the previous year's annual meeting of shareholders; provided, however, that if
the Corporation did not release a proxy statement in connection with the
previous year's annual meeting then the shareholder must give such notice not
later than one hundred twenty (120) days prior to the anniversary date of the
immediately preceding annual meeting. A shareholder's notice to the Secretary
shall set forth as to each matter the shareholder proposes to bring before the
annual meeting (i) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, (ii) the name and record address of the shareholder proposing
such business, (iii) the class and number of shares of the Corporation which are
beneficially owned by the shareholder, and (iv) any material interest of the
shareholder in such business.
Notwithstanding anything in the By-laws to the contrary, no business
shall be conducted at the annual meeting except in accordance with the
procedures set forth in this Section 12 of Article II and any other applicable
requirements; provided, however, that nothing in this Section 12 of Article II
shall be deemed to preclude discussion by any shareholder of any business
properly brought before the annual meeting.
The chairman of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Section 12 of
Article II or any other applicable requirements, which determination shall be
conclusive, and, as a result, any such business shall not be transacted.
ARTICLE III
DIRECTORS
Section 1. Number and Election of Directors. The number of directors
which shall constitute the entire Board shall be not less than six (6) nor more
than fifty (50) directors. The exact number of directors which shall constitute
the whole Board prior to the election to the Board of any person designated by
Foundation Health Systems, Inc., a Delaware corporation formerly known as Health
Systems International, Inc. ("FHS"), shall be ten (10) directors. The number of
directors which shall constitute the whole Board shall be increased to
accommodate the number of designations to which FHS is so entitled. After the
Board includes any FHS designees, the number of directors which shall constitute
the whole Board may be increased or decreased for whatever reason by a
resolution of the Board; provided, that such
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increase or decrease is approved by the FHS designee or designees to the Board.
The directors shall be elected at the annual meeting of shareholders, or at a
special meeting of shareholders called for such purpose, and each director
elected shall hold office until his or her successor is elected and qualified.
For so long as FHS shall hold shares of the Corporation's common stock,
FHS shall have the right to designate such number of directors on the Board as
equals at least the same percentage of all directors on the Board as is
represented by the percentage ownership by FHS of all then outstanding shares of
common stock of the Corporation. In addition, for so long as FHS holds
convertible debentures issued by the Corporation, FHS shall be entitled to
designate not less than fifteen (15%) percent of the directors serving on the
Board. The Board shall, from time to time, immediately upon the receipt of a
request by FHS, increase the number of directors on the Board to accommodate the
number of designations to which FHS is so entitled. The directors serving on the
Board who are not FHS designees shall be constituted as follows: so long as
First Option Health Plan of New Jersey, Inc. ("FOHP-NJ") is a subsidiary of the
Corporation, at least two-thirds (2/3) of the directors serving on the Board who
are not FHS designees shall be NJ Practitioners (as defined below) and
representatives of NJ Acute Care Institutions (as defined below). In addition,
at all times, the number of NJ Practitioners serving on the Board and the number
of representatives of NJ Acute Care Institutions serving on the Board shall be
equal; provided, however that at no time shall the Board be comprised of (a) two
or more representatives of a single NJ Acute Care Institution or of an
affiliated group of NJ Acute Care Institutions, or (b) two or more NJ
Practitioners who are affiliated to the same NJ Acute Care Institution or the
same affiliated group of NJ Acute Care Institutions. Whether a person is
affiliated with either a NJ Practitioner or NJ Acute Care Institution or whether
two or more NJ Acute Care Institutions are affiliated for purposes of the
aforedescribed restrictions shall be determined by the Board, and any such
determination shall be binding on the shareholders of the Corporation. In the
event FOHP-NJ is no longer a subsidiary of theCorporation, the composition of
the Board shall not be subject to the aforedescribed restrictions.
Notwithstanding anything herein to the contrary, for so long as any
shares of the Corporation's common stock is held by any NJ Practitioner, NJ
Acute Care Institution, affiliate to an NJ Acute Care Institution, or other
health care provider to FOHP-NJ, the Board shall include as directors not less
than three (3) persons who are not FHS designees, one (1) of whom shall be a NJ
Practitioner and another a representative of a NJ Acute Care Institution.
For purposes of these By-laws: (a) "NJ Acute Care Institution" shall
mean a hospital or acute care institution, licensed by the New Jersey Department
of Health and Senior
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Services, or other health care entity, licensed, certificated or authorized to
operate in the State of New Jersey, which has entered into a provider agreement
with FOHP-NJ to provide health care related services to the members of FOHP-NJ's
health care benefits plans; and (b) "NJ Practitioner" shall mean a member of the
medical staff of a NJ Acute Care Institution, or a physician designated by a NJ
Acute Care Institution, who (i) is licensed to practice medicine or osteopathy
in the State of New Jersey, and (ii) has entered into a provider agreement with
FOHP-NJ to provide health care services to the members of FOHP-NJ's health care
benefits plans.
Section 2. Nominations.
(a) General. Nominations for the election of directors may be made by
the Board of Directors or a committee appointed by the Board of Directors or by
a shareholder entitled to vote in the election of directors generally; provided,
however, that for so long as any of the shares of the Corporation's common stock
is held by any NJ Practitioner, NJ Acute Care Institution, affiliate to an NJ
Acute Care Institution, or other health care provider to FOHP-NJ, any nominating
committee shall include not less than three (3) persons who are not FHS
designees, one (1) of whom shall be a NJ Practitioner and another a
representative of a NJ Acute Care Institution.
(b) Shareholder Nominations. Any shareholder entitled to vote in the
election of directors generally may nominate one or more persons for election as
directors at a meeting only if written notice of such shareholder's intent to
make such nomination or nominations has been given either by personal delivery
or by United States mail, postage prepaid, to the Secretary of the Corporation
not less than (i) with respect to an election to be held at an annual meeting of
shareholders, one hundred twenty (120) days in advance of the date of the
Corporation's proxy statement released to shareholders in connection with the
previous year's annual meeting of shareholders; provided, however, that if the
Corporation did not release a proxy statement in connection with the previous
year's annual meeting then the shareholder must give such notice not later than
one hundred twenty (120) days prior to the anniversary date of the immediately
preceding annual meeting; and (ii) with respect to an election to be held at a
special meeting of shareholders for the election of directors, the close of
business on the tenth day following the date on which notice of such meeting is
first given to shareholders. Each such notice shall set forth: (A) the name and
address of the shareholder who intends to make the nomination and of the person
or persons to be nominated; (B) a representation that the shareholder is a
holder of record of stock of the Corporation entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice; (C) a description of all arrangements
or understandings between the
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shareholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the shareholder; (D) such other information regarding each nominee proposed by
such shareholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission; and (E)
the signed consent of each nominee to serve as a director of the Corporation if
so elected. The Corporation may require any proposed nominee or shareholder
proposing a nominee to furnish such other information as may reasonably be
required by the Corporation to determine the eligibility of such proposed
nominee to serve as a director of the Corporation or to properly complete any
proxy or information statements used for the solicitation of proxies in
connection with the meeting at which directors are to be elected. The presiding
officer of the meeting may refuse to acknowledge the nomination of any person
not made in compliance with the foregoing procedure.
(c) Required Nominees. The nominees for directors designated by the
Board or a committee appointed by the Board shall include such number of
designees of FHS as FHS shall have the right to designate under Section 1 of
this Article III, and if practicable, (i) one NJ Practitioner who practices in
the southern part of New Jersey, one NJ Practitioner who practices in the
central part of New Jersey, and one NJ Practitioner who practices in the
northern part of New Jersey; and (ii) one representative of a NJ Acute Care
Institution which is located in the southern part of New Jersey, one
representative of a NJ Acute Care Institution which is located in the central
part of New Jersey, and one representative of a NJ Acute Care Institution
located in the northern part of New Jersey. In addition, the members of the
Board or the nominating committee who were not designated by FHS shall select,
by majority vote, the non-FHS nominees to the Board.
Section 3. Vacancies; Newly Created Directorship. Vacancies and newly
created directorships resulting from any increase in the authorized number of
directors may be filled by a majority of the directors then in office, or by a
sole remaining director, and the directors so chosen shall hold office until
their successors are duly elected and shall qualify, unless sooner displaced. If
there are no directors in office, then an election of directors may be held in
the manner provided by statute. In filling any vacancy in the Board, the Board
must ensure that (a) so long as FHS holds any convertible debentures issued by
the Corporation, at least fifteen (15%) percent of the directors serving on the
Board shall be designees of FHS, (b) in the event FHS holds shares of common
stock of the Corporation exceeding fifteen (15%) percent of all the then
outstanding shares of the common stock of the Corporation, FHS designees to the
Board shall constitute not less than such number of directors on the Board as
equals at least the same percentage of all directors on the Board as is
represented by the percentage
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ownership by FHS of all then outstanding shares of common stock of the
Corporation, and (c) so long as FOHP-NJ is a subsidiary of the Corporation,
two-thirds (2/3) of the directors serving on the Board who were not designated
by FHS shall be NJ Practitioners and representatives of NJ Acute Care
Institutions, provided that the number of NJ Practitioners and the number of
representatives of NJ Acute Care Institutions serving on the Board remains
equal.
Section 4. Governance.
(a) General Business. The business of the Corporation shall be governed
by the Board. The Board of Directors may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by statute or by
the Certificate of Incorporation directed or required to be exercised or done by
the shareholders.
(b) Board Approval Requirements.
(i) Actions Requiring Super-Majority Board Approval. The
Board may not approve any of the following corporate transactions or actions
without the approval of at least eighty (80%) percent of the directors on the
Board; provided, however, that subsequent to the conversion of all the
convertible debentures issued by the Corporation to FHS pursuant to the Amended
and Restated Securities Purchase Agreement dated February 10, 1997, among the
Corporation, FHS and FOHP-NJ, as amended by the amendment thereto dated as of
March 13, 1997 (referred to herein, as so amended, as the "Purchase Agreement"),
the corporate transactions and actions set forth in subparagraphs B, G, H, J, K
and L will no longer require the approval of at least eighty (80%) percent of
the directors on the Board.
A) any amendment to the Certificate of Incorporation or
these By-laws;
B) any capital expenditures by the Corporation which,
together with capital expenditures of its subsidiaries,
exceed, in the aggregate, $1,000,000 during any calendar
year;
C) any material change in the scope of the business of the
Corporation;
D) any merger, consolidation or sale, mortgage, lease,
transfer or other disposition of all or substantially
all of the assets of the Corporation, provided,
however, that the Board approval requirement in this
Section 4(b)(i)D of these By-laws shall not apply to
any merger of the Corporation with FHS as is
contemplated in Section 6.4 of the Purchase
Agreement;
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E) any filing for receivership, dissolution or bankruptcy by
the Corporation;
F) the declaration or payment of any dividend or other
distribution to shareholders of the Corporation on a
non-ratable basis;
G) the issuance or sale of any shares of capital stock,
or warrants, convertible instruments or other rights
to acquire authorized and unissued shares of capital
stock of the Corporation, other than the issuance of
the options and debentures contemplated in the
Purchase Agreement (as defined below) and the shares
of capital stock issuable upon the exercise of such
options and conversion of such debentures;
H) the borrowing by the Corporation, other than borrowing in
the ordinary course of business, of amounts which,
together with amounts borrowed by subsidiaries of the
Corporation, exceed, in the aggregate, $1,000,000 during
any calendar year;
I) the creation of any security interest or lien on all or
substantially all of the assets of the Corporation;
J) any acquisition by the Corporation of equity
securities (other than pursuant to a buyback or
repurchase of equity securities issued by the
Corporation) or assets of any person or entity involving
amounts which, together with amounts involved in
acquisitions of equity by subsidiaries of the
Corporation, exceed, in the aggregate, $1,000,000 during
any calendar year, except for the transactions
contemplated by the Purchase Agreement;
K) a decision to file a registration statement for the
public sale of securities of the Corporation under the
Securities Act of 1933, as amended;
L) any loan of money to, or guarantee of any obligation of,
any officer, director or employee of the Corporation or
any subsidiary thereof; or
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M) entering into, assuming or becoming bound by any
agreement to do any of the foregoing or otherwise attempt
to do any of the foregoing.
(ii) Non-FHS Directors. In addition to the approval
requirements set forth in paragraph (i) of this Section 4(b), the Board may not
approve any of the following corporate transactions or actions without the
approval of a majority of the directors not designated by or affiliated with
FHS:
A) any transaction by the Corporation involving a
contractual or other arrangement with FHS or any
subsidiary or affiliate thereof or successor thereto, or
any subsidiary or affiliate of any successor to FHS,
which is new or modified from the then-existing
contractual arrangements between the Corporation and FHS;
B) the issuance to FHS or any subsidiary or affiliate
thereof or successor thereto, or any subsidiary or
affiliate of any successor to FHS, of any additional
shares of the Corporation's capital stock, or options,
stock appreciation rights, warrants or other rights to
acquire the capital stock of the Corporation; or
C) any intentional act by FHS to cause the transfer of the
members of the health plans offered by FOHP-NJ or any
other subsidiary of the Corporation, to FHS or any
subsidiary or affiliate thereof or successor thereto, or
any subsidiary or affiliate of any successor to FHS;
provided, however, that no such approval shall be required in the case of any of
clause A., clause B. or clause C. of this Section 4(b)(ii) with respect to any
transaction contemplated by the Purchase Agreement or any of the agreements
entered into in connection with the Purchase Agreement (including the exhibits
to the Purchase Agreement), including (1) any issuance of securities by the
Corporation to FHS contemplated therein, and (2) the business transactions
contemplated in Section 6.4 of the Purchase Agreement.
Section 5. Removal. Any director or directors may be removed from
office either with or without cause by the shareholders pursuant to Section
14A:6-6 of the New Jersey Business Corporation Act.
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Section 6. Meetings. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the State of New
Jersey. The first meeting of each newly elected Board of Directors shall be held
at such time and place as shall be fixed by the vote of the shareholders at the
annual meeting, and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided a quorum
shall be present. In the event of the failure of the shareholders to fix the
time or place of such first meeting of the newly elected Board of Directors, or
in the event such meeting is not held at the time and place so fixed by the
shareholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
Board of Directors, or as shall be specified in a written waiver signed by all
of the directors, or upon the conclusion of the shareholders' meeting at which
time they were elected, without further notice. At such meeting the Board of
Directors shall elect from their own number a Chairman of the Board for the
ensuing year and until his or her successor is elected and qualifies, and
transact such other business as may come before the meeting.
Section 7. Regular Meetings. Regular meetings of the Board may be held
on five (5) days written notice, at such time as shall be from time to time
determined by the Board. Written notice for any such meeting shall state the
place, date and time of the meeting and shall be delivered either personally or
by first class mail, facsimile or overnight courier service.
Section 8. Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board or the President, and shall be called
by the President or Secretary at the request in writing of at least one-third
(1/3) of the directors then in office. Written notice of any special meeting
shall be given, either personally or by first class mail, facsimile or overnight
courier service, to each director at least two (2) days prior to the date
thereof.
Section 9. Place of Meeting; Waiver of Notice. Meetings of the Board of
Directors shall be held at such place as shall be designated in the notice of
meeting if notice is required. Notice of any meeting, if required, need not be
given to any director who signs a waiver of notice before or after the meeting.
The attendance of any director at any meeting without the director protesting
prior to the conclusion of such meeting the lack of notice thereof shall
constitute a waiver of notice by such director.
Section 10. Adjournment. Any meeting of the Board of Directors shall be
adjourned upon the request of a majority of the directors on the Board
designated by FHS who are present at the meeting, for a period of not more than
ten (10) days. Also, any
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meeting of a committee of the Board or any other committee established by the
Corporation shall be adjourned upon the request of a majority of the persons on
the committee designated by FHS who are present at the meeting, for a period of
not more than ten (10) days.
Section 11. Quorum. Except as otherwise provided in the Certificate
of Incorporation, a majority of the directors then in office shall constitute a
quorum for the transaction of business at any meeting of the Board of Directors.
Section 12. Manner of Acting. Except as otherwise provided in the
Certificate of Incorporation or herein, the act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
Section 13. Action Without a Meeting. Any action required or permitted
to be taken by the Board of Directors or by a committee thereof may be taken
without a meeting if, prior to such action, all of the members of the Board or
committee consent in writing to a resolution authorizing the action. Such
written consents may be executed in counterparts, and shall be filed with the
minutes of the Corporation.
Section 14. Telephonic Attendance at Meeting. Any or all directors may
participate in a meeting of the Board of Directors or a committee of the Board
by means of conference telephone or any means of communication by which all
persons participating in the meeting are able to hear each other.
Section 15. Committees Established Pursuant to the By-laws.
(a) Audit Committee. The Corporation shall have an audit
committee (the "Audit Committee"). The Audit Committee shall be comprised solely
of directors. In addition, the composition of the Audit Committee shall meet the
requirements of any governmental department or agency which has the authority to
regulate the business of the Corporation or its subsidiaries. The Audit
Committee shall, among other things, identify, interview and recommend to the
Board of Directors the auditors to be engaged as the Corporation's independent
certified public accountants, review the proposed plan and scope for the annual
audit and the results of such audit when completed, review the services rendered
by the auditors and the fees charged for such services, determine the effect, if
any, on the independent certified public accountants' independence in the
performance of any non-audit services, and review the plan, scope and results of
the Corporation's internal audit operations.
(b) Other Committees. The Board of Directors may, by one or
more resolutions passed by a majority of the directors then in office, establish
such other committees as it shall determine necessary for the operations of the
Corporation; provided,
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however, FHS shall have the right to designate to any committee, other than the
Audit Committee, that number of committee members as is commensurate with its
representation on the Board. Such committee or committees shall have such name
or names as may be determined from time to time by a resolution adopted by the
Board. Moreover, upon a resolution passed by a majority of the directors then in
office, the Board may designate one or more committees, comprised solely of
directors of the Corporation, to exercise the power of the Board in the
management of the business and affairs of the Corporation; provided, however,
that for so long as any shares of the Corporation's common stock is held by any
NJ Practitioner, NJ Acute Care Institution, affiliates to a NJ Acute Care
Institution, or other health care provider to FOHP-NJ, any such committee of the
Board shall include as members not less than three (3) persons who are not FHS
designees to the Board, one (1) of whom shall be a NJ Practitioner and another a
representative of a NJ Acute Care Institution. Only committees whose membership
is exclusively reserved for directors may be vested with the powers of the
Board. All other committees shall have and may exercise such authority as the
Board establishes by resolution or these By-laws permit, subject to any
limitation imposed by law. The filling of vacancies in a committee, the
abolishing of a committee and the removal of persons serving on a committee
shall be as set forth in a resolution adopted by the Board unless otherwise set
forth in the provisions of these By-laws applicable to such committee. Each
committee shall keep regular minutes of its meetings and report same to the
Board of Directors when required. Except as may otherwise be provided in a
resolution adopted by the Board, committee members and chairpersons shall serve
one (1) year terms.
(c) Restrictions on Committee Members. Members of any
committee of the Corporation who are affiliated with or represent an entity,
including its officers, directors, employees and agents, that provides health
care services on behalf of the Corporation or any subsidiary or affiliate
thereof pursuant to an agreement with the Corporation or any subsidiary or
affiliate thereof are prohibited from using their participation as a committee
member of the Corporation to obtain or exchange competitive information
pertaining to other providers that provide similar health care services on
behalf of the Corporation or any subsidiary or affiliate thereof pursuant to an
agreement with the Corporation or any subsidiary or affiliate thereof.
Competitive information includes, but is not limited to, information related to
an individual provider's rates, discounts, costs, prices, salaries, terms of
participation in other health plans, or strategic or marketing plans.
(d) Quorum. A majority of the members of a committee or
subcommittee shall constitute a quorum for the transaction of business at any
meeting of such committee or subcommittee.
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(e) Required Vote. The act of a majority of the members
present at a meeting at which a quorum is present shall be the act of the
committee or subcommittee.
Section 16. Compensation of Directors. The directors may be paid their
expenses, if any, relating to their attendance at meetings of the Board of
Directors, and directors who are not full-time employees of the Corporation may
be paid a fixed sum for attendance at meetings of the Board of Directors or a
stated salary as a director. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
ARTICLE IV
OFFICERS
Section 1. Officers. The officers of the Corporation shall be chosen by
the Board of Directors and shall be a Chairman of the Board, a President, one or
more Vice-Presidents, a Treasurer and a Secretary. The Board of Directors may
also choose one or more Assistant Secretaries or Assistant Treasurers, and may
designate one or more vice-presidents to be executive or senior vice-presidents.
One person may hold two (2) or more offices, but the person serving as President
may not serve simultaneously as Secretary.
Section 2. Term; Removal. The officers of the Corporation shall hold
office until their successors are chosen and qualify. Any officer elected or
appointed by the Board of Directors may be removed or suspended at any time by
the affirmative vote of a majority of the directors at any meeting of the Board
at which there is a quorum, without the necessity of specifying any cause
therefor and without any prior notice of such action to the officer so removed
or suspended. All officers, employees and agents, other than officers elected or
appointed by the Board of Directors, may be suspended or removed by the
committee of the Board of Directors or officer appointing them.
Section 3. Chairman of the Board. The Chairman of the Board shall
preside at all meetings of the shareholders and the Board of Directors. He or
she shall, in the absence or the disability of the President, perform the duties
and exercise the powers of the President, and shall perform such other duties as
may be delegated to him or her by the Board of Directors.
Section 4. President. The President, who shall be the Chief Executive
Officer of the Corporation, shall in general, subject to the control of the
Board of Directors, supervise and control all of the business and affairs of the
Corporation. All other
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officers shall be subject to the authority and supervision of the President. The
President may enter into and execute in the name of the Corporation contracts or
other instruments in the regular course of business or contracts or other
instruments not in the regular course of business which are authorized, either
generally or specifically, by the Board of Directors. The President shall have
the general powers and duties of management usually vested in the office of
president of a corporation.
Section 5. Vice Presidents. The Board of Directors may appoint one or
more Vice Presidents who shall perform such duties and possess such powers as
shall be assigned him or her by the President or the Board.
Section 6. Treasurer and Assistant Treasurer. The Treasurer shall have
charge and custody of, and be responsible for, all funds and securities of the
Corporation, shall keep or cause to be kept regular books of account for the
Corporation and shall perform such other duties and possess such other powers as
are incident to the office of treasurer or as shall be assigned to the Treasurer
by the President or the Board. The Assistant Treasurer, or if there shall be
more than one, the Assistant Treasurers, in the order determined by the Board,
shall, in the absence or disability of the Treasurer, perform the duties and
exercise the powers of the Treasurer set forth herein and as the President or
the Board from time to time may prescribe.
Section 7. Secretary and Assistant Secretary. The Secretary shall cause
notices of all meetings to be served as prescribed in these By-laws or by
statute, shall keep or cause to be kept the minutes of all meetings of the
shareholders and of the Board of Directors, shall have charge of the corporate
records and seal of the Corporation and shall keep a register of the post-office
address of each shareholder which shall be furnished to the Secretary by such
shareholder. The Secretary shall perform such other duties and possess such
other powers as are incident to the office of the secretary or as are assigned
by the President or the Board. The Assistant Secretary, or if there shall be
more than one, the Assistant Secretaries, in the order determined by the Board,
shall, in the absence or disability of the Secretary, perform the duties and
exercise the powers of the Secretary set forth herein and as the President or
the Board from time to time may prescribe.
Section 8. Subordinate Officers and Agents. The Board may appoint such
other officers and agents as it shall deem necessary or desirable, who shall
hold their offices for such terms and shall exercise such powers and perform
such duties as shall be determined from time to time by the President or the
Board.
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ARTICLE V
EXECUTION OF DOCUMENTS
Section 1. Commercial Paper and Contracts. All checks, notes, drafts
and other commercial paper of the Corporation shall be signed by the President
or the Treasurer of the Corporation or by such other person or persons as the
Board of Directors may from time to time designate.
Section 2. Other Instruments. All contracts, deeds, mortgages and other
instruments shall be executed by the President or any Vice President, and, if
necessary or required by law, by the Secretary or any Assistant Secretary, or
such other person or persons as the Board of Directors may from time to time
designate.
ARTICLE VI
FISCAL YEAR
The fiscal year of the Corporation shall be the calendar year.
ARTICLE VII
CERTIFICATES REPRESENTING SHARES
Certificates representing shares of capital stock of the Corporation
shall be in such form as shall be determined by the Board of Directors and shall
be executed by the President or any Vice President and by the Secretary or the
Treasurer, unless the Board of Directors shall direct otherwise.
ARTICLE VIII
RECORD DATE
For the purpose of determining the shareholders entitled to notice of
or to vote at any meeting of shareholders or any adjournment thereof, or to
express consent to or dissent from any proposal without any meeting or for the
purpose of determining shareholders entitled to receive payment of any dividend
or allotment of any right, or in order to make a determination of shareholders
for any other purpose, the Board of Directors shall fix, in advance, a date as
the record date for any such determination of shareholders. Such date shall not
be more than sixty (60) days nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action or event to
which it relates. When a determination of shareholders of record for a
shareholders' meeting has been made as provided in this Article VIII, such
determination shall apply to any adjournment thereof, unless the Board of
Directors fixes a new record date for the adjourned meeting.
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ARTICLE IX
DIVIDENDS
The Board of Directors may from time to time declare, and the
Corporation may pay, dividends or make other distributions on its outstanding
shares of capital stock in the manner and upon the terms and conditions provided
by the Certificate of Incorporation and by statute.
ARTICLE X
AMENDMENT
These By-laws may be altered, amended or repealed, or new by-laws may
be adopted by the Board of Directors, at any regular meeting of the Board of
Directors or of any special meeting of the Board of Directors in accordance with
the vote required in Article III hereof; provided, however, that (i) any
alteration, amendment or repeal of Sections 1, 2(a) and (c), 3, 4(b)(ii) and/or
15(b) of Article III of these By-laws must be approved by the shareholders of
the Corporation, excluding FHS or any subsidiary or affiliate thereof or
successor thereto, for so long as any shares of the Corporation's common stock
are held by any NJ Practitioner, NJ Acute Care Institution, affiliate to a NJ
Acute Care Institution or other health care provider to FOHP-NJ, and (ii) any
new by-laws which may be adopted by the Board, without shareholder approval,
must contain the provisions found in Sections 1, 2(a) and (c), 3, 4(b)(ii) and
15(b) of Article III of these By-laws for so long as any shares of the
Corporation's common stock are held by any NJ Practitioner, NJ Acute Care
Institution, affiliate to a NJ Acute Care Institution or other health care
provider to FOHP-NJ. These By-laws, or any new by-laws adopted by the Board, may
also be altered, amended or repealed, or new by-laws may be adopted, by the
shareholders, at any annual or special meeting of shareholders if notice of such
alteration, amendment, repeal or adoption of new by-laws is contained in the
notice of such meeting; provided, however, that (i) any alteration, amendment or
repeal of Sections 1, 2(a) and (c), 3, 4(b)(ii) and/or 15(b) of Article III of
these By-laws must be approved by the shareholders of the Corporation, excluding
FHS or any subsidiary or affiliate thereof or successor thereto, for so long as
any shares of the Corporation's common stock are held by any NJ Practitioner, NJ
Acute Care Institution, affiliate to a NJ Acute Care Institution or other health
care provider to FOHP-NJ, and (ii) any new by-laws which may be adopted by the
shareholders must contain te provisions found in Sections 1, 2(a) and (c), 3,
4(b)(ii) and 15(b) of Article III of these By-laws for so long as any shares of
the Corporation's common stock are held by any NJ Practitioner, NJ Acute Care
Institution, affiliate to a NJ Acute Care Institution or other health care
provider to FOHP-NJ.
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ARTICLE XI
INDEMNIFICATION
Section 1. The Corporation shall indemnify a Corporate Agent (as
defined in Section 8 of this Article) against his or her expenses and
liabilities actually and reasonably incurred in connection with the defense of
any proceeding involving the Corporate Agent by reason of his or her being or
having been such a Corporate Agent, other than a proceeding by or in the right
of the Corporation, if (a) such Corporate Agent acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the Corporation and (b) with respect to any criminal proceeding,
such Corporate Agent had no reasonable cause to believe his or her conduct was
unlawful. The termination of any proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall not of
itself create a presumption that such Corporate Agent did not meet the
applicable standards of conduct set forth in subparagraphs (a) and (b) herein.
Section 2. The Corporation shall indemnify a Corporate Agent against
his or her liabilities and expenses, actually or reasonably incurred by him or
her in connection with the defense, in any proceeding, by or in the right of the
Corporation to procure a judgment in its favor which involves the Corporate
Agent by reason of his or her being or having been such Corporate Agent, if he
or she acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the Corporation. However, in such
proceeding no indemnification shall be provided in respect of any claim, issue
or matter as to which such Corporate Agent shall have been adjudged liable to
the Corporation unless and only to the extent that the New Jersey Superior Court
or the court in which such proceeding was brought shall determine upon
application that despite the adjudication of liability, but in view of all
circumstances of the case, such Corporate Agent is fairly and reasonably
entitled to indemnity for such expenses or liabilities as the New Jersey
Superior Court or such other court shall deem proper.
Section 3. The Corporation shall indemnify a Corporate Agent against
expenses (including attorneys fees) to the extent that such Corporate Agent has
been successful on the merits or otherwise in any proceeding referred to in
Sections 1 and 2 of this Article or in defense of any claim, issue or matter
therein.
Section 4. Any indemnification under Section 1 of this Article and,
unless ordered by a court, under Section 2 of this Article, may be made by the
Corporation only as authorized in a specific case upon a determination that
indemnification is proper in the circumstances because the Corporate Agent met
the applicable standard of conduct set forth in Sections 1 or 2 of
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this Article. Such determination shall be made: (a) by the Board of Directors by
a majority vote of a quorum consisting of directors who were not parties to or
otherwise involved in the proceeding; (b) if such a quorum is not obtainable,
or, even if obtainable and such quorum of the Board of Directors by a majority
vote of the disinterested directors so directs, by independent legal counsel in
a written opinion, such counsel to be designated by the Board of Directors; or
(c) by the shareholders.
Section 5. Expenses incurred by a Corporate Agent in connection with a
proceeding may be paid by the Corporation in advance of the final disposition of
the proceeding, as authorized by the Board of Directors, upon receipt of an
undertaking by or on behalf of the Corporate Agent to repay such amount unless
it shall ultimately be determined that he or she is entitled to be indemnified
as provided in this Article XI.
Section 6. The indemnification and advancement of expenses provided by
or granted pursuant to the other sections of this Article shall not exclude any
other rights to which a Corporate Agent may be entitled under the Corporation's
Certificate of Incorporation, a By-law, agreement, vote of shareholders, or
otherwise; provided, that no indemnification shall be made to or on behalf of a
Corporate Agent if a judgment or other final adjudication adverse to the
Corporate Agent establishes that his or her acts or omissions (a) were in breach
of his or her duty of loyalty to the Corporation or its shareholders, (b) were
not in good faith or involved a knowing violation of law, or (c) resulted in
receipt by the Corporate Agent of an improper personal benefit.
Section 7. The Corporation shall have the power to purchase and
maintain insurance on behalf of any Corporate Agent against any expenses
incurred in any proceeding and any liabilities asserted against him or her by
reason of his or her being or having been a Corporate Agent, whether or not the
Corporation would have the power to indemnify him or her against such expenses
and liabilities under the provisions of this section. The Corporation may
purchase such insurance from, or such insurance may be reinsured in whole or in
part by, an insurer owned by or otherwise affiliated with the Corporation,
whether or not such insurer does business with other insureds.
Section 8. For purposes of this Article XI the following definitions,
as well as all other definitions set forth in N.J.S.A. 14A:3-5 shall apply:
(a) "Corporate Agent" shall mean any person who is or was a
director, officer, employee or agent of the indemnifying corporation or of any
constituent corporation absorbed by the indemnifying corporation in
consolidation or merger and any person who is or was a director, officer,
trustee, employee or agent of
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any Other Enterprise, serving as such at the request of the indemnifying
corporation, or of any such constituent corporation, or the legal representative
of any such director, officer, trustee, employee or agent. Furthermore, any
Corporate Agent also serving as a "fiduciary" of an employee benefit plan
governed by the Act of Congress entitled "Employee Retirement Income Security
Act of 1974" (ERISA) as amended from time to time, shall serve in such capacity
as a Corporate Agent, if the corporation shall have requested any such person to
serve. Additionally, the corporation shall be deemed to have requested such
person to serve as a fiduciary of an employee benefit plan, only where the
performance by such person of his or her duties to the corporation also imposes
duties on, or otherwise involves services by, such person to the plan or
participants or beneficiaries of the plan.
(b) "Other Enterprise" shall mean any domestic or foreign
corporation other than the indemnifying corporation, and any partnership, joint
venture, sole proprietorship, trust or other enterprise (including employee
benefit plans governed by ERISA), whether or not for profit, served by a
Corporate Agent.
ARTICLE XII
INCONSISTENCY WITH CERTIFICATE OF INCORPORATION
In the event that any of the provisions of these By-laws is
inconsistent with any provision of the Corporation's Certificate of
Incorporation, the provision of the Certificate of Incorporation shall apply.
As Amended and Restated: April 16, 1997.
-21-
EXHIBIT 4
FIRST [LOGO] OPTION
HEALTH PLAN
NUMBER SHARES
FO
FOHP, INC.
100,000,000 SHARES OF COMMON STOCK
INCORPORATED UNDER THE LAWS SEE REVERSE FOR
OF THE STATE OF NEW JERSEY CERTAIN DEFINITIONS
THIS IS TO CERTIFY THAT
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK,
PAR VALUE $.01 PER SHARE, OF
FOHP, INC.
transferable only on the books of the Corporation by the holder hereof in person
or by duly authorized Attorney upon surrender of this Certificate properly
endorsed. This Certificate is not valid unless countersigned and registered by
the Transfer Agent and Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated:
COUNTERSIGNED AND REGISTERED:
AMERICAN STOCK TRANSFER AND TRUST COMPANY
BY TRANSFER AGENT AND REGISTRAR
AUTHORIZED SIGNATURE
- ---------------------------------- ---------------------------------
SECRETARY PRESIDENT
[FOHP, INC. SEAL]
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The shares of capital stock represented by this certificate are issued and
held subject to the restrictions on transfer, voting provisions and other
covenants and restrictions contained in the Certificate of Incorporation of
FOHP, Inc. (the "Corporation), as such is amended or may be amended from time to
time. The Corporation will furnish a copy of such Certificate of Incorporation
within five (5) days to each shareholder who so requests. Further, the
Corporation shall furnish, at the request of any shareholder and without charge,
a full statement of (1) the designations, relative rights, preferences and
limitations of the shares of each class and series of capital stock authorized
to be issued by the Corporation and (2) the authority of the Board of Directors
of the Corporation to divide such shares into classes or series and to determine
and change the relative rights, preferences and limitations of any class or
series of the Corporation's capital stock.
EXPLANATION OF ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT -- _____________ Custodian___________
(Cust) (Minor)
under Uniform Gifts to Minors
Act ____________________
(State)
Additional abbreviations may also be used though not in the above list.
For value received, ___________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY NUMBER
OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
- -------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- ------------------------------------------------------------------------ shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint --------------------------------------------
- ------------------------------------------------ Attorney to transfer the said
stock on the books of the within named Corporation with full power of
substitution in the premises.
Dated
-----------------------------
----------------------------------------------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
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