EXHIBIT 10.7
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SECURITIES PURCHASE AGREEMENT
among
UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
WELSH, CARSON, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VII, L.P
and
THE SEVERAL OTHER PURCHASERS NAMED IN ANNEX I HERETO
Dated as of April 30, 1998
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TABLE OF CONTENTS
PAGE
I. PURCHASE AND SALE OF SECURITIES
SECTION 1.01 Issuance, Sale and Delivery of Securities on
the Initial Closing Date......................................2
SECTION 1.02 Initial Closing Date..........................................3
SECTION 1.03 The Company's Right to Request Purchases of
Additional Securities.........................................3
SECTION 1.04 Issuance, Sale and Delivery of Additional
Securities on Subsequent Closing Dates........................5
SECTION 1.05 Subsequent Closing Dates......................................5
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 2.01 Organization, Qualifications and Corporate Power.........6
SECTION 2.02 Authorization of Agreements, Etc.........................6
SECTION 2.03 Validity.................................................7
SECTION 2.04 Authorized Capital Stock.................................7
SECTION 2.05 Governmental Approvals...................................7
SECTION 2.06 Corporate Transactions...................................8
SECTION 2.07 Events Subsequent to Date of Incorporation...............8
SECTION 2.08 Actions Pending..........................................8
SECTION 2.09 Trade Secrets............................................8
SECTION 2.10 Taxes....................................................8
SECTION 2.11 Other Agreements.........................................9
SECTION 2.12 Title to Properties......................................9
SECTION 2.13 Compliance with Laws, Etc................................9
SECTION 2.14 Affiliated Transactions..................................9
SECTION 2.15 Brokers' or Finders' Fees................................9
III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
SECTION 3.01 Authorization...........................................10
SECTION 3.02 Validity................................................10
SECTION 3.03 Investment Representations..............................10
SECTION 3.04 Governmental Approvals..................................11
SECTION 3.05 Brokers' or Finders' Fees...............................11
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PAGE
IV. CONDITIONS PRECEDENT
SECTION 4.01 Conditions Precedent to the Obligations of the
Purchasers..............................................12
SECTION 4.02 Conditions Precedent to the Obligations of the
Company.................................................14
SECTION 4.03 Conditions Precedent to the Obligations of the
Purchasers with Respect to each Subsequent Closing......14
SECTION 4.04 Conditions Precedent to the Obligations of the
Company with Respect to each Subsequent Closing.........16
V. COVENANTS
SECTION 5.01 Financial Statements, Reports, Etc......................17
SECTION 5.02 Rights of Inspection....................................18
SECTION 5.03 Notice of Certain Events................................18
SECTION 5.04 Use of Proceeds.........................................19
SECTION 5.05 Consents and Approvals..................................19
SECTION 5.06 Compliance with Laws....................................19
SECTION 5.07 Preemptive Rights.......................................19
VI. MISCELLANEOUS
SECTION 6.01 Expenses, Etc...........................................20
SECTION 6.02 Survival of Agreements..................................21
SECTION 6.03 Parties in Interest.....................................21
SECTION 6.04 Notices.................................................21
SECTION 6.05 Entire Agreement; Modifications.........................22
SECTION 6.06 Counterparts............................................22
SECTION 6.07 Assignment..............................................22
SECTION 6.08 Governing Law...........................................22
TESTIMONIUM
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INDEX TO EXHIBITS, ANNEXES AND SCHEDULES
EXHIBIT DESCRIPTION
A Form of Promissory Note
B Form of Amended and Restated Registration Rights Agreement
C Form of Amended and Restated Stockholders Agreement
D Form of Certificate of Amendment to the Certificate of
Incorporation
E Form of Stock Option Plan
F Form of Opinion of Counsel to the Company
ANNEX DESCRIPTION
I Purchasers
II Initial Shares Purchased
III Additional Shares to be Purchased
IV Subsequent Closing Representations
SCHEDULE DESCRIPTION
2.01(b) Company Ownership of Stock or Other Interests
2.04(a) Ownership of Capital Stock of Company
2.04(b) Rights, Warrants, Options, Etc.
2.05 Government Approvals
2.06 Corporate Transactions
2.07 Events Subsequent to Date of Incorporation
2.08 Actions Pending
2.12 Title to Properties.
2.14 Affiliated Transactions
2.15 Brokers' or Finders' Fee
3.03(d) Certain Purchasers
3.05 Brokers' or Finders' Fee
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SECURITIES PURCHASE AGREEMENT, dated as of April 30, 1998, among UNITED
SURGICAL PARTNERS INTERNATIONAL, INC., a Delaware corporation (the "Company"),
WELSH, CARSON, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VII, L.P., a Delaware limited partnership
("WCAS VII") and the several other purchasers named in Annex I hereto (such
purchasers and WCAS VII being hereinafter at times referred to individually as a
"Purchaser" and collectively as the "Purchasers").
WHEREAS, the Company has been formed to engage in the business of owning
and operating hospitals and/or surgical centers and acquiring additional
hospitals and/or surgical centers and other businesses related thereto
(collectively, the "Business");
WHEREAS, on the Initial Closing Date (as hereinafter defined), the Company
wishes to issue, sell and deliver (i) to WCAS VII and the several other
Purchasers listed on Annex I hereto under the heading "WCAS Purchasers"
(WCAS VII and such listed Purchasers being hereinafter collectively called the
"WCAS Purchasers") an aggregate 6,487,789 shares of Class A Common Stock, $.01
par value ("Class A Common Stock"), and (ii) to the several Purchasers listed on
Annex I hereto under the heading "Management Purchasers" (such listed Purchasers
being hereinafter collectively called the "Management Purchasers") an aggregate
1,012,211 shares of Class A Common Stock (said shares of Class A Common Stock,
together with the shares of Class A Common Stock referred to in clause (i),
being hereinafter collectively called the "Initial Shares");
WHEREAS, the Purchasers, severally and not jointly, wish to purchase the
Initial Shares, all on the terms and subject to the conditions hereinafter set
forth;
WHEREAS, from time to time during the five-year period after the Initial
Closing Date, subject to the terms and conditions hereinafter set forth, (i) the
WCAS Purchasers may wish to purchase up to an aggregate 3,118,750 shares (the
"Additional WCAS Class A Common Shares") of Class A Common Stock and, only after
the issuance, sale and delivery of the Additional WCAS Class A Common Shares and
the Additional Management Class A Common Shares (as hereinafter defined), up to
an aggregate 30,000 shares (the "WCAS Preferred Shares") of Series A Redeemable
Preferred Stock, $.01 par value ("Preferred Stock") and (ii) the Management
Purchasers may wish to purchase up to an aggregate 356,250 shares (the
"Additional Management Class A Common Shares") of Class A Common Stock, all in
order to finance the expansion of the Business through additional acquisitions
or for certain operating expenses approved by the Board of Directors of the
Company;
WHEREAS, the Company wishes to issue, sell and deliver said Additional
WCAS Class A Common Shares, WCAS Preferred Shares and Additional Management
Class A Common Shares, all on the terms and subject to the conditions
hereinafter set forth;
WHEREAS, concurrently with the purchase and sale of the Initial Shares on
the Initial Closing Date, the Company is consummating the transactions
contemplated by the Stock
Purchase Agreement, dated as of the date hereof (the "Stock Purchase
Agreement"), between the Company and ▇▇▇▇▇ International Holdings, Inc., a
Kentucky corporation (the "Seller"), pursuant to which the Company shall acquire
all of the outstanding capital stock of the Seller's wholly owned subsidiary,
Columbia International Holdings, Inc., a Delaware corporation ("Columbia
International");
WHEREAS, the issuance of the Initial Shares under this Agreement and the
transactions contemplated by the Stock Purchase Agreement shall occur
simultaneously; and
WHEREAS, the effectiveness of the issuance of the Initial Shares, on the
one hand, and the consummation of the transactions contemplated by the Stock
Purchase Agreement, on the other, shall be contingent upon the effectiveness of
the other;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF SECURITIES
SECTION 1.01 ISSUANCE, SALE AND DELIVERY OF SECURITIES ON THE INITIAL
CLOSING DATE. (a) Subject to the terms and conditions set forth herein, on the
Initial Closing Date, the Company shall issue, sell and deliver to each
Purchaser, and each Purchaser shall purchase from the Company (i) the number of
shares of Class A Common Stock set forth opposite the name of such Purchaser on
Annex II hereto under the heading "Number of Initial Class A Common Shares" at a
purchase price of $2.00 per share and (ii) the number of shares, if any, of
Preferred Stock set forth opposite the name of such Purchaser on Annex II hereto
under the heading "Number of Initial Preferred Shares" at a purchase price of
$1,000 per share. On the Initial Closing Date, the Company shall issue a
certificate or certificates in definitive form, registered in the name of each
Purchaser, evidencing the securities being purchased by each such Purchaser
hereunder.
(b) As payment in full for the shares of Class A Common Stock and the
shares, if any, of Preferred Stock being purchased by each Purchaser hereunder
on the Initial Closing Date, and against delivery thereof as aforesaid, on the
Initial Closing Date, each Purchaser shall (i) pay to the Company, by wire
transfer of immediately available funds to an account or accounts designated by
the Company, the amount set forth opposite the name of such Purchaser on
Annex II hereto under the heading "Cash Purchase Price" and (ii) deliver to the
Company a Promissory Note, substantially in the form attached hereto as
Exhibit A (each, a "Promissory Note"), in the principal amount set forth
opposite the name of such Purchaser on Annex II hereto under the heading "Note
Principal Amount".
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SECTION 1.02 INITIAL CLOSING DATE. The closing of the sale and purchase of
the Initial Shares shall take place at the offices of Nossaman, Guthner, ▇▇▇▇ &
▇▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, at 10 a.m., Los
Angeles time, on April 30, 1998, or at such other date and time as may be
mutually agreed upon among the Purchasers and the Company (such closing being
herein called the "Initial Closing" and such date and time being herein called
the "Initial Closing Date").
SECTION 1.03 THE COMPANY'S RIGHT TO REQUEST PURCHASES OF ADDITIONAL
SECURITIES. (a) In addition to the Initial Shares to be issued and sold to the
Purchasers on the Initial Closing Date, the WCAS Preferred Shares and the
Additional WCAS Class A Common Shares shall be reserved for issuance to the WCAS
Purchasers and the Additional Management Class A Common Shares shall be reserved
for issuance to the Management Purchasers (together with the WCAS Purchasers
being hereinafter collectively called the "Additional Purchasers"), all
pursuant to this Section 1.03 (such WCAS Preferred Shares, Additional
WCAS Class A Common Shares and Additional Management Class A Common Shares being
hereinafter collectively called the "Additional Shares", and together with the
Initial Shares, being hereinafter collectively called the "Securities").
(b) The maximum number of Additional Shares that may be purchased by each
Additional Purchaser on a Subsequent Closing Date (as hereinafter defined) is
set forth opposite the name of such Additional Purchaser on Annex III hereto
under the heading "Maximum Number of Additional Class A Common Shares" and/or
"Maximum Number of Additional Preferred Shares", as the case may be. The
issuance, sale and delivery of the Additional WCAS Class A Common Shares to the
WCAS Purchasers and the Additional Management Class A Common Shares to the
Management Purchasers on any Subsequent Closing Date shall be PRO RATA among the
WCAS Purchasers and the Management Purchasers in proportion to the maximum
number of shares of Class A Common Stock to be purchased by such Purchaser on
Subsequent Closing Dates as set forth on Annex III. After all of such Additional
WCAS Class A Common Shares and Additional Management Class A Common Shares have
been issued, sold and delivered (it being understood and agreed that the Company
shall first issue, sell and deliver all the available Additional WCAS Class A
Common Shares and Additional Management Class A Common Shares prior to the
issuance, sale or delivery of any WCAS Preferred Shares hereunder), the
issuance, sale and delivery of the WCAS Preferred Shares on any Subsequent
Closing Date shall be PRO RATA among the WCAS Purchasers in proportion to the
maximum number of shares of Preferred Stock to be purchased by such WCAS
Purchaser on Subsequent Closing Dates as set forth on Annex III hereto. The
aggregate number of Additional Shares available for purchase by each Additional
Purchaser on a Subsequent Closing Date shall be reduced by the aggregate number
of Additional Shares purchased by such Additional Purchaser on previous
Subsequent Closing Dates.
(c) On the date (the "Termination Date") that is the earlier to occur
of (i) the fifth anniversary of the Initial Closing Date, (ii) such time as the
Company shall have consummated an initial public offering (an "IPO") of its
common stock registered under the Securities Act of 1933,
3
as amended (the "Securities Act"), and (iii) a Change of Control, the number, if
any, of Additional Shares available for purchase hereunder, after taking into
account all reductions thereof, shall no longer be subject to any of the
provisions of this Section 1.03.
As used in this Section 1.03(c), the term "Change of Control" shall mean
(i) a consolidation or merger of the Company with or into any other corporation
(other than a merger which will not result in more than 50% of the voting
capital stock of the Company outstanding being owned of record or beneficially
by persons other than the holders of such capital stock immediately prior to
such merger in the same proportions in which such shares were held immediately
prior to such merger), (ii) a sale of all or substantially all of the properties
and assets of the Company as an entirety in a single transaction or in a series
or related transactions to any other person, or (iii) the acquisition of
"beneficial ownership" by any "person" or "group" (other than the WCAS
Purchasers or their affiliates) of voting capital stock of the Company
representing more than 50% of the voting power of all outstanding shares of such
voting stock, whether by way of merger or consolidation or otherwise. In
addition, (i) the terms "person" and "group" shall have the meanings set forth
in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), whether or not applicable, (ii) the term "beneficial owner"
shall have the meaning set forth in Rules 13d-3 and 13d-5 under the Exchange
Act, whether or not applicable, except that a person shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time or upon the occurrence of certain events, and (iii) any "person" or
"group" will be deemed to beneficially own any voting stock of the Company so
long as such person or group beneficially owns, directly or indirectly, in the
aggregate a majority of the voting stock of a registered holder of the voting
stock of the Company.
(d) At any time prior to the Termination Date, in the event that the
Company desires to finance (x) capital expenditures approved by the Board of
Directors for the expansion of the Business through additional acquisitions or
(y) operating expenses approved by the Board of Directors of the Company, the
Company may, on one or more occasions, notify the WCAS Purchasers and the
Management Purchasers that it wishes to issue and sell all or any portion of the
Additional Shares in accordance with paragraph (b) above. Such notice (a "Notice
of Financing Event") shall be in writing and shall specify (i) the applicable
capital expenditure or operating expense (including a brief description
thereof), (ii) the aggregate number of Additional Shares (collectively, the
"Call Securities") that the Company proposes to issue to the WCAS Purchasers
and, if applicable, to the Management Purchasers, (iii) that the Notice of
Financing Event has been authorized by the Board of Directors of the Company,
(iv) that the anticipated net proceeds from the sale of the Call Securities will
not be greater than is reasonably necessary for the applicable capital
expenditure or operating expense and (v) the Subsequent Closing Date for the
issuance and sale of the Call Securities; PROVIDED that no Subsequent Closing
Date shall be scheduled to occur less than 10 or more than 45 days after the
date of the Notice of Financing Event.
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(e) Within five business days after receipt of a Notice of Financing Event
pursuant to paragraph (d) above, WCAS VII (on behalf of the Additional
Purchasers) shall deliver a notice to the Company (a "Call Notice") that shall
state the number of Call Securities allocated to each Additional Purchaser and
confirm the Subsequent Closing Date specified in the Notice of Financing Event.
Upon receipt of a Call Notice, the Company shall be required to sell such Call
Securities to the Additional Purchasers in accordance with Section 1.04 below.
(f) It is understood and agreed that the Additional Purchasers, as
determined by WCAS VII in its sole discretion, shall be entitled to deliver a
Call Notice to the Company to purchase any Additional Shares not previously
purchased by the Additional Purchasers pursuant to this Section 1.03 at any time
prior to the Termination Date, whether or not the Company shall have delivered a
Notice of Financing Event.
SECTION 1.04 ISSUANCE, SALE AND DELIVERY OF ADDITIONAL SECURITIES ON
SUBSEQUENT CLOSING DATES. (a) In the event that the Additional Purchasers shall
have delivered a Call Notice to the Company as specified in Section 1.03, then,
subject to the other terms and conditions of this Agreement, on the Subsequent
Closing Date specified in such Call Notice, the Company shall issue, sell and
deliver (i) to each WCAS Purchaser, and each WCAS Purchaser shall purchase from
the Company, (x) the number of WCAS Preferred Shares, if any, specified in the
Call Notice at a purchase price equal to $1,000 per share and/or (y) the number
of Additional WCAS Class A Common Shares specified in the Call Notice at a
purchase price equal to $2.00 per share and (ii) to each Management Purchaser,
and each Management Purchaser shall purchase from the Company, the number of
Additional Management Class A Common Shares specified in the Call Notice at a
purchase price equal to $2.00 per share. On each Subsequent Closing Date, the
Company shall issue to each Additional Purchaser stock certificates in
definitive form, registered in the name of such Additional Purchaser evidencing
the Additional Shares being purchased by such Additional Purchaser hereunder.
(b) As payment in full for the Additional Shares being purchased by it
hereunder, and against delivery of the certificate or certificates therefore as
aforesaid, each Additional Purchaser shall transfer by wire transfer to the
account or accounts designated by the Company on each Subsequent Closing Date an
amount equal to the applicable purchase price per share referred to in
paragraph (a) above multiplied by the number of Additional Shares set forth in
the relevant Call Notice.
SECTION 1.05 SUBSEQUENT CLOSING DATES. Each closing of a sale and
purchase of Additional Shares shall take place at the offices of the Company,
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, at 10 a.m., Dallas time, on
such date, (which shall not be a day on which banking institutions in the State
of Texas or New York are required or authorized to close) as shall be specified
in any Call Notice (each such closing being herein called a "Subsequent Closing"
and each such date and time being herein called a "Subsequent Closing Date").
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II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers as follows:
SECTION 2.01 ORGANIZATION. QUALIFICATIONS AND CORPORATE POWER. (a) The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and is duly licensed or
qualified in each jurisdiction in which the nature of its business or the
ownership of its properties makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have a
material adverse effect on its ability to carry on its business. The Company has
the corporate power and authority to own and hold its properties, to carry on
its business as currently conducted and to execute and deliver this Agreement,
the Amended and Restated Registration Rights Agreement dated as of the date
hereof substantially in the form attached hereto as Exhibit B (the "Amended and
Restated Registration Rights Agreement") among the Company and the several other
parties named therein and the Amended and Restated Stockholders Agreement dated
as of the date hereof substantially in the form attached hereto as Exhibit C
(the "Amended and Restated Stockholders Agreement") among the Company and the
several other parties named therein, to perform its obligations under this
Agreement, the Amended and Restated Stockholders Agreement and the Amended and
Restated Registration Rights Agreement, and to issue, sell and deliver the
Securities.
(b) Except as set forth on Schedule 2.01(b) hereto, the Company does not
own of record or beneficially, directly or indirectly, (i) any shares of capital
stock or securities convertible into capital stock of any other corporation or
(ii) any participating interest in any partnership, joint venture or other
non-corporate business enterprise.
SECTION 2.02 AUTHORIZATION OF AGREEMENTS, ETC.
(a) Each of the execution and delivery by the Company of this Agreement,
the Amended and Restated Stockholders Agreement and the Amended and Restated
Registration Rights Agreement, the performance by the Company of its obligations
hereunder and thereunder, and the issuance, sale and delivery by the Company of
the Securities have been duly authorized by all requisite corporate action and
will not violate any provision of law, any order of any court or other agency of
government, the Certificate of Incorporation or By-laws of the Company, or any
provision of any indenture, agreement or other instrument to which the Company
or any of the properties or assets of the Company is bound, or conflict with,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any such indenture, agreement or other instrument, or result in
the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of the Company or any subsidiary
thereof.
(b) The Securities have been duly authorized by the Company and, when sold
and paid for in accordance with this Agreement, will be validly issued, fully
paid and non-assessable
6
shares of Class A Common Stock or Series A Redeemable Stock, as the case may be.
The issuance, sale and delivery of the Securities to the Purchasers hereunder is
not subject to any preemptive rights of stockholders of the Company or to any
right of first refusal or other similar right in favor of any person.
SECTION 2.03 VALIDITY. This Agreement has been duly executed and delivered
by the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, subject,
as to enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws from time to time in effect
affecting the enforcement of creditors' rights generally and to general equity
principles. The Amended and Restated Stockholders Agreement and the Amended and
Restated Registration Rights Agreement, when executed and delivered by the
Company as provided in this Agreement, and when executed and delivered by the
other parties hereto, will constitute the legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws from time to time in effect affecting the
enforcement of creditors' rights generally and to general equity principles.
SECTION 2.04 AUTHORIZED CAPITAL STOCK.
(a) The authorized capital stock of the Company consists of (i) 30,000,000
shares of Common Stock, $.01 par value, (ii) 20,000,000 shares of Class A Common
Stock and (iii) 31,200 shares of Preferred Stock, $.01 par value. All of the
issued and outstanding shares of capital stock of the Company are owned of
record as set forth on Schedule 2.04(a) hereto.
(b) Except as contemplated by this Agreement, the Amended and Restated
Stockholders Agreement, the Company's Certificate of Incorporation or as set
forth on Schedule 2.04(b) hereto, (i) no subscription, warrant, option,
convertible security or other right (contingent or other) to purchase or acquire
any shares of any class of capital stock of the Company is authorized or
outstanding, (ii) there is no binding commitment of the Company to issue any
shares, warrants, options or other such rights or to distribute to holders of
any class of the Company's capital stock, any evidences of indebtedness or
assets, and (iii) the Company has no obligations (contingent or other) to
purchase, redeem or otherwise acquire any shares of its capital stock or any
interest therein or to pay any dividend or make any other distribution in
respect thereof
SECTION 2.05 GOVERNMENTAL APPROVALS. Subject to the accuracy of the
representations and warranties of the Purchasers set forth in Article III
hereof, except as set forth on Schedule 2.05 hereto, no registration or filing
with, or consent or approval of, or other action by, any Federal, state or other
governmental agency or instrumentality is or will be necessary for the valid
execution and delivery of this Agreement, the Amended and Restated Stockholders
Agreement and the Amended and Restated Registration Rights Agreement, the
performance of this Agreement, the Amended and Restated Stockholders Agreement
and the Amended and
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Restated Registration Rights Agreement, or the issuance, sale and delivery of
the Securities, other than, if applicable, compliance with the requirements of
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act").
SECTION 2.06 CORPORATE TRANSACTIONS. The Company was incorporated on
February 27, 1998. Since such date of incorporation, the Company has not
conducted any business or otherwise entered into any transactions other than
(w) its organization, the adoption of its By-laws and the election of directors
and officers, (x) the authorization and execution of the Stock Purchase
Agreement, the Stockholders Agreement and the Registration Rights Agreement,
each dated as of March 2, 1998 and among the Company and the several parties
named therein, (y) the authorization of the this Agreement, the Amended and
Restated Stockholders Agreement, the Amended and Restated Registration Rights
Agreement and the transactions contemplated hereby and thereby and (z) the other
transactions set forth on Schedule 2.06 hereto.
SECTION 2.07 EVENTS SUBSEQUENT TO DATE OF INCORPORATION. Except as
contemplated by this Agreement or as set forth on Schedule 2.07 hereto, the
Company has not (a) issued any stock, bonds or other corporate securities,
(b) borrowed any amount or incurred any liabilities (absolute or contingent),
(c) discharged or satisfied any lien or incurred or paid any obligation or
liability (absolute or contingent), other than expenses incidental to the
Company's formation, (d) declared or made any payment or distribution to
stockholders or purchased or redeemed any shares of its capital stock or other
securities or (e) conducted any business of a material nature.
SECTION 2.08 ACTIONS PENDING. Except as set forth on Schedule 2.08 hereto,
there is no action, suit, investigation or proceeding pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
subsidiary or any of their respective properties or rights before any court or
by or before any governmental body or arbitration board or tribunal, the outcome
of which might reasonably be expected to result in any material adverse effect
on the properties, assets, condition (financial or other), prospects, operating
results or business of the Company and its subsidiaries taken as a whole. To the
knowledge of the Company, except as set forth on Schedule 2.08 hereto, there
does not exist any reasonable basis for any such action, suit, investigation or
proceeding.
SECTION 2.09 TRADE SECRETS. To the knowledge of the Company, (a) no third
party has claimed that any person affiliated with the Company or any subsidiary
has violated any of the terms or conditions of his employment contract with such
third party, or disclosed or utilized any trade secrets or proprietary
information or documentation of such third party , or interfered in the
employment relationship between such third party and any of its employees and
(b ) no person affiliated with the Company or any subsidiary has employed any
trade secrets or any information or documentation proprietary to any former
employer.
SECTION 2.10. TAXES. The Company and each subsidiary, as applicable, has
duly and timely filed or caused to be filed all Federal, state, local and
foreign tax returns that have been
8
required to be filed to date by it and has timely paid or caused to be timely
paid all taxes or all assessments received by it to the extent that such taxes
or assessments have become due.
SECTION 2.11 OTHER AGREEMENTS. Neither the Company nor any subsidiary is
in default in any material respect in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in any material
agreement or instrument to which it is a party.
SECTION 2.12 TITLE TO PROPERTIES. Except as set forth on Schedule 2.12
hereto, the Company and each of its subsidiaries owns its properties and assets
free and clear of mortgages, pledges, security interests, liens, charges and
other encumbrances.
SECTION 2.13 COMPLIANCE WITH LAWS. ETC. (a) Each of the Company and its
subsidiaries has all material governmental licenses, franchises and permits for
the conduct of its business as currently conducted (collectively, "Governmental
Permits").
(b) The business of the Company and each of its subsidiaries is being
conducted in compliance with all applicable laws, ordinances, rules and
regulations of all governmental authorities relating to their respective
properties or applicable to their respective businesses, including without
limitation the terms of all Governmental Permits and federal securities laws,
other than minor non-compliance that can be cured at nominal cost without
adversely affecting the business of the Company or any subsidiary as it is
currently conducted. Neither the Company nor any subsidiary has received any
notice of any alleged violation of any of the foregoing, nor is the Company
aware of any basis for any such allegation.
SECTION 2.14 AFFILIATED TRANSACTIONS. Except as contemplated by this
Agreement or as set forth on Schedule 2.14 hereto, to the knowledge of the
Company, no officer, director or stockholder of the Company or any person
related by blood or marriage to any such person or any entity in which any such
person owns any beneficial interest, is a party to any agreement, contract,
commitment or transaction with the Company or has any material interest in any
material property used by the Company.
SECTION 2.15 BROKERS' OR FINDERS' FEES. Except as set forth on Schedule
2.15, all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by the Company with the Purchasers,
without the intervention of any person on behalf of the Company in such a manner
to give rise to any claim by any person for a finders' fee, brokerage commission
or similar payment.
9
III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser represents and warrants to the Company, severally and not
jointly, as follows:
SECTION 3.01 AUTHORIZATION. The execution, delivery and performance by
such Purchaser of this Agreement, the Amended and Restated Stockholders
Agreement, the Amended and Restated Registration Rights Agreement, such
Purchaser's Promissory Note, if any, and the purchase and receipt by such
Purchaser of the Securities being purchased by it hereunder have been duly
authorized by all requisite action on the part of such Purchaser, and will not
violate any provision of law, any order of any court or other agency of
government applicable to such Purchaser, or any provision of any indenture,
agreement or other instrument by which such Purchaser or any of such Purchaser's
properties or assets are bound, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument.
SECTION 3.02 VALIDITY. This Agreement has been duly executed and delivered
by such Purchaser and constitutes the legal, valid and binding obligation of
such Purchaser, enforceable against such Purchaser in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws from time to time in effect affecting the enforcement of creditors'
rights generally and to general equity principles. The Amended and Restated
Stockholders Agreement, the Amended and Restated Registration Rights Agreement
and such Purchaser's Promissory Note, if any, when executed and delivered by
such Purchaser in accordance with this Agreement, and when executed and
delivered by the other parties thereto, will constitute the legal, valid and
binding obligation of such Purchaser, enforceable in accordance with their
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws from time to time in effect affecting the enforcement of
creditors' rights generally and to general equity principles.
SECTION 3.03 INVESTMENT REPRESENTATIONS. (a) Such Purchaser is acquiring
the Securities for its own account, for investment, and not with a view toward
the resale or distribution thereof in violation of applicable law.
(b) Such Purchaser understands that it must bear the economic risk of its
investment for an indefinite period of time because the Securities are not
registered under the Securities Act or any applicable state securities laws, and
may not be resold unless subsequently registered under the Securities Act and
such other laws or unless an exemption from such registration is available. Such
Purchaser also understands that, except as provided in the Amended and Restated
Registration Rights Agreement, it is not contemplated that any registration will
be made under the Securities Act or that the Company will take steps which will
make the provisions of Rule 144 under the Securities Act available to permit
resale of the
10
Securities. Such Purchaser will not pledge, transfer, convey or otherwise
dispose of any of the Securities, except in a transaction that is the subject of
either (x) an effective registration statement under the Securities Act and any
applicable state securities laws, or (y) an opinion of counsel to the effect
that such registration is not required (which opinion and counsel shall be
reasonably satisfactory to the Company, it being agreed that Reboul, MacMurray,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Kristol shall be satisfactory, and may be relied on by the
Company in making such determination), it being intended that the agreements
with respect to the Securities contained in this sentence shall be construed
consistently with the provisions relating to the same subject matter contained
in the Amended and Restated Registration Rights Agreement.
(c) Such Purchaser is able to fend for itself in the transactions
contemplated by this Agreement and has the ability to bear the economic risks of
its investment in the Shares being purchased by it for an indefinite period of
time. Such Purchaser has had the opportunity to ask questions of, and receive
answers from, officers of the Company with respect to the business and financial
condition of the Company and the terms and conditions of the offering of the
Shares and to obtain additional information necessary to verify such information
or can acquire it without unreasonable effort or expense.
(d) Such Purchaser has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of its
investment in the Securities. Such Purchaser (other than the Purchasers set
forth on Schedule 3.03(d) hereto) is an "accredited investor" as such term is
defined in Rule 501 of Regulation D under the Securities Act with respect to its
purchase of the Securities, and that if such Purchaser is a partnership, it has
not been formed solely for the purpose of purchasing the Securities it is
purchasing hereunder (unless each of the partners of such partnership is an
accredited investor).
SECTION 3.04 GOVERNMENTAL APPROVALS. No registration or filing with, or
consent or approval of, or other action by, any Federal, state or other
governmental agency or instrumentality is or will be necessary by such Purchaser
for the valid execution, delivery and performance of this Agreement, the Amended
and Restated Stockholders Agreement, the Amended and Restated Registration
Rights Agreement and such Purchaser's Promissory Note, other than, if
applicable, compliance with the requirements of the HSR Act.
SECTION 3.05 BROKERS' OR FINDERS' FEES. Except as set forth on Schedule
3.05, all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by the Purchasers with the Company,
without the intervention of any person on behalf of the Purchasers in such a
manner as to give rise to any claim by any person for a finders' fee, brokerage
commission or similar payment.
11
IV
CONDITIONS PRECEDENT
SECTION 4.01 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASERS.
The obligations of each Purchaser hereunder are, at its option, subject to the
satisfaction, on or before the Initial Closing Date, of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties of the Company contained in this Agreement shall
be true and correct in all material respects on the Initial Closing Date, with
the same force and effect as though such representations and warranties had been
made on and as of such date, and the Company shall have certified to such effect
to the Purchasers in writing.
(b) PERFORMANCE. The Company shall have performed and complied with all
agreements and conditions contained herein required to be performed or complied
with by it prior to or on the Initial Closing Date, and the Company shall have
certified to such effect to the Purchasers in writing.
(c) ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and other
proceedings to be taken by the Company and all waivers and consents to be
obtained by the Company in connection with the transactions contemplated hereby
shall have been taken or obtained by the Company and all documents incident
thereto shall be satisfactory in form and substance to such Purchaser and its
counsel.
(d) LEGAL ACTIONS OR PROCEEDINGS. No legal action or proceeding shall have
been instituted or threatened seeking to restrain, prohibit, invalidate or
otherwise affect the consummation of the transactions contemplated hereby.
(e) AMENDED AND RESTATED STOCKHOLDERS AGREEMENT AND AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT. The Company shall have executed and delivered the
Amended and Restated Stockholders Agreement and the Amended and Restated
Registration Rights Agreement.
(f) CERTIFICATE OF AMENDMENT. The Certificate of Amendment to the
Certificate of Incorporation of the Company substantially in the form of
Exhibit D hereto shall have been duly adopted and shall have been duly filed
with the Secretary of State of the State of Delaware and become legally
effective.
(g) STOCK OPTION PLAN. A stock option plan for the Company substantially
in the form of Exhibit E hereto (the "Stock Option Plan") shall have been
approved by the Company.
12
(h) OPINION OF COUNSEL. The Purchasers shall have received an opinion of
Nossaman, Guthner, ▇▇▇▇ & ▇▇▇▇▇▇▇, LLP, substantially in the form of Exhibit F
hereto.
(i) SUPPORTING DOCUMENTS. WCAS VII (on behalf of the Purchasers) and its
counsel shall have received copies of the following supporting documents:
(i)(x) copies of the Certificate of Incorporation of the Company, and all
amendments thereto, certified as of a recent date by the Secretary of State
of the State of Delaware, and (y) a certificate of said Secretary dated as of
a recent date as to the due incorporation and good standing of the Company
and listing all documents of the Company on file with said Secretary;
(ii) a certificate of the Secretary or an Assistant Secretary of the
Company dated the Initial Closing Date and certifying (w) that attached
thereto is a true and complete copy of the By-laws of the Company as in
effect on the date of such certification; (x) that attached thereto is a true
and complete copy of resolutions adopted by the Board of Directors of the
Company authorizing the execution, delivery and performance of this
Agreement, the Amended and Restated Registration Rights Agreement, the
Amended and Restated Stockholders Agreement and the issuance, sale and
delivery of the Securities, and that all such resolutions are still in full
force and effect and are all the resolutions adopted in connection with the
transactions contemplated hereby and thereby; (y) that the Certificate of
Incorporation of the Company has not been amended since the date of the last
amendment referred to in the certificate delivered pursuant to clause (i)(x)
above; and (z) as to the incumbency and specimen signature of each officer of
the Company executing this Agreement, the Amended and Restated Registration
Rights Agreement, the Amended and Restated Stockholders Agreement and the
stock certificates representing the Initial Shares and any certificate or
instrument furnished pursuant hereto, and a certification by another officer
of the Company as to the incumbency and signature of the officer signing the
certificate referred to in this paragraph (ii); and
(iii) such additional supporting documents and other information with
respect to the operations and affairs of the Company as the Purchasers or
their counsel may reasonably request.
All such documents shall be satisfactory in form and substance to the
Purchasers and their counsel.
(j) CONSENTS; HSR ACT WAITING PERIOD. The Company shall have obtained all
consents required to be obtained pursuant to Section 5.05 hereof. Without
limiting the generality of the foregoing, all applicable waiting periods under
the HSR Act with respect to the transactions contemplated hereby shall have
expired or been terminated.
13
(k) STOCK PURCHASE AGREEMENT. On the Initial Closing Date, the Stock
Purchase Agreement shall have been executed and delivered by each party thereto
and the transactions contemplated thereby shall have been consummated.
SECTION 4.02 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company hereunder are, at its option, subject to the
satisfaction, on or before the initial Closing Date of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties of the Purchasers contained in this Agreement
shall be true and correct in all material respects on the Initial Closing Date,
with the same effect as though such representations and warranties had been made
on and as of such date.
(b) PERFORMANCE. The Purchasers shall have performed and complied with all
agreements and conditions contained herein required to be performed or complied
with by them prior to or on the Initial Closing Date.
(c) ALL PROCEEDINGS TO BE SATISFACTORY. All proceedings to be taken by the
Purchasers and any waivers and consents to be obtained by the Purchasers in
connection with the transactions contemplated hereby shall have been taken or
obtained by the Purchasers and all documents incident thereto shall be
satisfactory in form and substance to the Company and its counsel.
(d) LEGAL ACTIONS OR PROCEEDINGS. No legal action or proceeding shall have
been instituted or threatened seeking to restrain, prohibit, invalidate or
otherwise affect the consummation of the transactions contemplated hereby.
(e) AMENDED AND RESTATED STOCKHOLDERS AGREEMENT. AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT AND PROMISSORY NOTE. Each of the Purchasers shall
have executed and delivered the Amended and Restated Stockholders Agreement, the
Amended and Restated Registration Rights Agreement and such Purchaser's
Promissory Note, if any.
SECTION 4.03 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASERS
WITH RESPECT TO EACH SUBSEQUENT CLOSING. The obligations of each Additional
Purchaser to purchase and pay for the Additional Shares being purchased by such
Additional Purchaser on each Subsequent Closing Date are, at such Additional
Purchaser's option, subject to the satisfaction, on or before such date, of the
following conditions:
(a) CONSUMMATION OF INITIAL CLOSING AND EACH PRIOR SUBSEQUENT CLOSING. On
the Initial Closing Date the Company shall have issued and sold the Initial
Shares, and on each prior Subsequent Closing Date, the Company shall have issued
and sold the Additional Shares being issued and sold on such Subsequent Closing
Date.
14
(b) PRELIMINARY DOCUMENTATION. If applicable, a Notice of Financing Event
shall have been given and shall have been delivered to the Additional Purchasers
pursuant to Section 1.03(d) hereof.
(c) OPINION OF COUNSEL. The Additional Purchasers shall have received from
Nossaman, Guthner, ▇▇▇▇ & ▇▇▇▇▇▇▇, LLP (or such other counsel satisfactory to
the Additional Purchasers) an opinion dated such Subsequent Closing Date
confirming the opinion delivered by such counsel in accordance with
Section 4.01(h) hereof, with such other changes as may be required as a result
of the transactions contemplated by this Agreement.
(d) REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties of the Company set forth herein shall be true and
correct as of such Subsequent Closing Date (except (i) as disclosed in writing
to the Additional Purchasers at least three business days prior to such
Subsequent Closing Date, which exceptions shall be acceptable to such Additional
Purchasers and (ii) that the representations contained in Sections 2.06 and 2.07
hereof shall be replaced in their entirety with the representations as to the
financial statements of the Company contained in Annex IV hereto, which
representations will be true and correct as of such Subsequent Closing Date),
and the Company shall have certified to such effect to the Additional Purchasers
in writing.
(e) PERFORMANCE. The Company shall have performed and complied in all
material respects with all agreements and conditions contained herein required
to be performed or complied with by it prior to or at such Subsequent Closing
Date, and the Company shall have certified to such effect to the Additional
Purchasers in writing.
(f) NO MATERIAL ADVERSE CHANGE. Since the Subsequent Closing Date next
preceding such Subsequent Closing Date (or in the case of the first Subsequent
Closing Date, since the Initial Closing Date), there shall have been no material
adverse change in the properties, assets, condition (financial or other),
prospects, operating results or business of the Company and its subsidiaries
taken as a whole, and the Company shall have certified to such effect to the
Additional Purchasers in writing.
(g) ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and other
proceedings to be taken by the Company and all waivers and consents to be
obtained by the Company in connection with the transactions contemplated hereby
and all documents incident thereto shall be satisfactory in form and substance
to the Additional Purchasers and their counsel, and the Additional Purchasers
and said counsel shall have received all such counterpart originals or certified
or other copies of such documents as they may reasonably request.
(h) SUPPORTING DOCUMENTS. On or prior to such Subsequent Closing Date
WCAS VII (on behalf of the Additional Purchasers) and its counsel shall have
received copies of the supporting documents referred to in Section 4.01(i) above
as if such Subsequent Closing Date were the Initial Closing Date.
15
All such documents shall be satisfactory in form and substance to the
Additional Purchasers and their counsel.
In the event that the Certificate of Incorporation and/or By-laws of the
Company shall not have been amended since the Initial Closing Date, the Company
may, in lieu of furnishing such documents, cause the certificate with respect
thereto contemplated by paragraphs 4.01(i)(i) and 4.01(i)(ii) above to be
replaced by a certificate as to the fact that such documents were previously
furnished and as to the absence of any amendments thereto.
(i) LEGAL ACTIONS OR PROCEEDINGS. No legal action or proceeding shall have
been instituted or threatened seeking to restrain, prohibit, invalidate or
otherwise affect the consummation of the transactions contemplated hereby.
(j) CONSENTS; HSR ACT WAITING PERIOD. The Company shall have obtained all
consents required to be obtained pursuant to Section 5.05 hereof. Without
limiting the generality of the foregoing, all applicable waiting periods under
the HSR Act with respect to the transactions contemplated hereby shall have
expired or been terminated.
SECTION 4.04 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY WITH
RESPECT TO EACH SUBSEQUENT CLOSING. The obligations of the Company to issue and
sell the Additional Shares on each Subsequent Closing Date are, at its option,
subject to the satisfaction, on or before such date, of the following
conditions:
(a) CONSUMMATION OF INITIAL CLOSING AND EACH PRIOR SUBSEQUENT CLOSING. On
the Initial Closing Date the Purchasers shall have purchased and paid for the
Initial Shares, and on each prior Subsequent Closing Date, the Additional
Purchasers shall have purchased and paid for the Additional Shares being issued
and sold on such Subsequent Closing Date.
(b) PRELIMINARY DOCUMENTATION. A Call Notice shall have been given
pursuant to Section 1.03(e)or 1.03(f).
(c) REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties contained in Article III hereof as made by the
Additional Purchasers shall be true and correct in all material respects on such
Subsequent Closing Date with the same effect as though such representations and
warranties had been made on and as of such date.
(d) PERFORMANCE. Each Additional Purchaser shall have performed and
complied in all material respects with all agreements and conditions contained
herein required to be performed or complied with by it prior to or at such
Subsequent Closing Date.
(e) ALL PROCEEDINGS TO BE SATISFACTION. All corporate or partnership and
other proceedings to be taken by each Purchaser and all waivers and consents to
be obtained by any
16
Purchaser in connection with the transactions contemplated hereby and all
documents incident thereto shall be satisfactory in form and substance to the
Company and its counsel.
V
COVENANTS
SECTION 5.01 FINANCIAL STATEMENTS, REPORTS, ETC.
The Company shall furnish to WCAS VII, prior to the consummation of the
Company's IPO and for so long as WCAS VII shall hold at least 10% of the
Company's outstanding shares of the Class A Common Stock, Common Stock or
Preferred Stock:
(a) within 90 days after the end of each fiscal year of the Company, a
consolidated balance sheet of the Company as of the end of such fiscal year
and the related consolidated statements of operations and retained earnings,
changes in stockholders' equity and cash flows of the Company for the fiscal
year then ended, together with supporting notes thereto, certified in
accordance with generally accepted accounting principles, without
qualification as to scope of audit, by a firm of independent public
accountants of recognized national standing selected by the Company;
(b) within 30 days after the end of each month in each fiscal year (other
than the last month in each fiscal year), a consolidated balance sheet of the
Company and the related consolidated statement of operations and retained
earnings, unaudited but certified by the principal financial officer of the
Company, such balance sheets to be as of the end of such month and such
statements of operations and retained earnings to be for such month and for
the period from the beginning of the fiscal year to the end of such month, in
each case subject to normal year-end adjustments;
(c) within 30 days prior to the beginning of each fiscal year of the
Company (and with respect to any revision thereof, promptly after such
revision has been prepared), a proposed annual operating budget for the
Company, including projected monthly income statements, cash flow statements
during such fiscal year and a projected consolidated balance sheet as of the
end of such fiscal year, and each monthly financial statement furnished
pursuant to (b) above shall reflect variances from such operating budget, as
the same may from time to time be revised; and
(d) promptly upon filing, copies of all registration statements,
prospectuses, periodic reports and other documents filed by the Company or
any subsidiary with the Securities and Exchange Commission.
17
SECTION 5.02 RIGHTS OF INSPECTION. The Company shall, and shall cause its
subsidiaries, officers, directors, employees, representatives, advisors and
agents to, afford, from the date hereof, the representatives, advisors and
agents of WCAS VII (on behalf of the Additional Purchasers) complete access at
all reasonable times during normal business hours to its officers, employees,
agents, properties, books, records and workpapers, and shall furnish WCAS VII
all financial, operating and other information and data that WCAS VII may
reasonably request through such representatives, advisors or agents. At the
request of WCAS VII, the Company shall promptly furnish to WCAS VII a copy of
all material written correspondence, filings, communications (or memoranda
setting forth the substance thereof) between the Company or any of its officers,
employees, representatives, advisors or agents and any governmental entity with
respect to the obtaining of any waivers, consent or approvals and the making of
any registrations or filings that are necessary to the transactions contemplated
by this Agreement. The Additional Purchasers agree to keep confidential any
confidential business information that may be provided to them by the Company
pursuant to this Agreement, unless disclosure is required by law as advised by
counsel.
SECTION 5.03 NOTICE OF CERTAIN EVENTS. (a) The Company shall give WCAS VII
prompt notice of (i) the occurrence, or failure to occur, of any event that the
Company believes would be likely to cause any covenant, condition or agreement
contained in this Agreement not to be complied with or satisfied in any material
respect, (ii) any failure of the Company, or any officer, director, employee or
agent thereof, to comply in any material respect with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it hereunder, (iii) any event of default under any agreement with respect to
indebtedness for borrowed money or a purchase money obligation, and any event
which, upon notice or lapse of time or both, would constitute such an event of
default, that would permit the holder of such indebtedness or obligation to
accelerate the maturity thereof and (iv) any claim, action, suit or proceeding
at law or in equity or by or before any governmental instrumentality or agency
which, if adversely determined, would materially impair the ability of the
Company to carry on its business substantially as now or then conducted.
(b) For purposes of permitting the WCAS Purchasers to purchase any of the
remaining Additional WCAS Class A Common Shares prior to the Termination Date
pursuant to Section 1.03(f) hereof, the Company shall give the WCAS Purchasers
notice of an IPO or a Change of Control Event at least 20 days prior to the
consummation of such IPO or Change of Control Event.
SECTION 5.04 USE OF PROCEEDS. The Company shall use the proceeds from the
sale of the Initial Shares hereunder for the acquisition of Columbia
International pursuant to the Stock Purchase Agreement and for general corporate
or other purposes approved by WCAS VII.
SECTION 5.05 CONSENTS AND APPROVALS. Prior to the Initial Closing Date and
each Subsequent Closing Date, the Company shall promptly apply for or otherwise
seek and use its best efforts to obtain all authorizations, consents, waivers
and approvals (whether by or from
18
any person, entity, court or governmental agency or authority) as may be
required in connection with the consummation of this Agreement and the
transactions contemplated hereby. In addition, the Company shall pay any filing
fees and expenses relating to compliance with the HSR Act in connection with any
transaction to which the Company is a party, regardless of who may be deemed to
be the "ultimate parent" of the Company (as such term is defined in the HSR
Act).
SECTION 5.06 COMPLIANCE WITH LAWS. The Company shall comply, and shall
cause each of its subsidiaries to comply, with all applicable laws, rules,
regulations and orders, the noncompliance with which could have a material
adverse effect on the properties, assets, condition (financial or other),
prospects, operating results or business of the Company and its subsidiaries
taken as a whole.
SECTION 5.07 PREEMPTIVE RIGHTS. (a) Until such time as the Company has
consummated an IPO, the Company hereby grants to each of the WCAS Purchasers and
▇▇▇▇▇▇ ▇▇▇▇▇ (collectively the "Original Investors") the right to purchase such
Original Investor's Proportionate Percentage (as hereinafter defined) of any
future Eligible Offering (as hereinafter defined). For the purposes of this
Section 5.07, the following terms shall have the meanings set forth below:
"PROPORTIONATE PERCENTAGE" means, with respect to any such Original
Investor as of any date, the result (expressed as a percentage) obtained by
dividing (i) the number of shares of Class A Common Stock and Common Stock
owned by such Original Investor as of such date, by (ii) the total number of
shares of Class A Common Stock and Common Stock outstanding as of such date.
"ELIGIBLE OFFERING" means an offer by the Company to sell to investors
(including any of the Purchasers) for cash shares of capital stock of the
Company, or any security convertible into or exchangeable for, or carrying
rights or options to purchase, capital stock of the Company, other than an
offering of securities by the Company:
(i) to its full-time employees, and/or officers and/or directors and/or
consultants and/or advisors of options to purchase shares of Common Stock
in connection with or pursuant to the Stock Option Plan as in effect from
time to time; or
(ii) in connection with any merger of, or acquisition by, the Company;
(iii) in connection with the conversion or exercise of outstanding
securities of the Company;
(iv) in connection with the issuance of any Additional Shares;
19
(v) in a public offering of shares of Common Stock registered under the
Securities Act; or
(vi) to certain investors approved by WCAS VII and the Company;
PROVIDED that (x) such securities shall consist of no more than 400,000
shares of Class A Common Stock (at a purchase price of $2.00 per share)
and 1,200 shares of Preferred Stock (at a purchase price of $1,OOO per
share) and (y) such securities are issued, sold and delivered prior to 60
days after the date hereof.
(b) The Company shall, before issuing any securities pursuant to an
Eligible Offering, give written notice thereof to each Original Investor. Such
notice shall specify the security or securities the Company proposes to issue
and the consideration that the Company intends to receive therefor. For a period
of ten (10) days following the date of such notice, each Original Investor shall
be entitled, by written notice to the Company, to elect to purchase all or any
part of such Original Investor's Proportionate Percentage of the securities
being sold in the Eligible Offering; PROVIDED, HOWEVER, that if two or more
securities shall be proposed to be sold as a "unit" in an Eligible Offering, any
such election must relate to such unit of securities. In the event that
elections pursuant to this Section 5.07 shall not be made with respect to any
securities included in an Eligible Offering within such ten (10) day period,
then the Company may issue such securities to investors, but only for a
consideration payable in cash not less than, and otherwise on no more favorable
terms to the investors than, that set forth in the Company's notice and only
within 180 days after the end of such ten (10) day period. In the event that any
such offer is accepted by a Original Investor or Original Investors, the Company
shall sell to such Original Investor or Original Investors, and such Original
Investor or Original Investors shall purchase from the Company, for the
consideration and on the terms set forth in the notice as aforesaid, the
securities that such Original Investor or Original Investors shall have elected
to purchase.
VI
MISCELLANEOUS
SECTION 6.01 EXPENSES, ETC. The Company shall pay its own expenses. All
fees and expenses of WCAS VII incident to the negotiation, preparation and
execution of this Agreement, including the fees and expenses of counsel,
accountants or other advisors (i) shall be paid by the Company in the event that
such transactions are consummated and (ii) shall be borne by the party incurring
such expense in the event such transactions are not consummated. Each party
hereto will indemnify and hold harmless the others against and in respect of any
claim for brokerage or other commissions relative to this Agreement or to the
transactions contemplated hereby, made as a result of any agreements,
arrangements or understandings made or claimed to have been made by such party
with any third party.
20
SECTION 6.02 SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the issuance, sale and delivery of the Securities
pursuant hereto and all statements contained in any certificate or other
instrument delivered by the Company hereunder shall be deemed to constitute
representations and warranties made by the Company.
SECTION 6.03 PARTIES IN INTEREST. All covenants and agreements contained
in this Agreement by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties
hereto whether so expressed or not.
SECTION 6.04 NOTICES. Any notice or other communications required or
permitted hereunder shall be deemed to be sufficient if contained in a written
instrument delivered in person or by overnight courier or duly sent by first
class certified mail, postage prepaid, or by facsimile addressed to such party
at the address or facsimile number set forth below:
if to the Company, to:
United Surgical Partners International, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
Nossaman, Guthner, ▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
if to any Purchaser, to such Purchaser at the address appearing on Annex I
hereto;
or, in any case, at such other address or addresses as shall have been furnished
in writing by such party to the other parties hereto. All such notices,
requests, consents and other communications shall be deemed to have been
received (a) in the case of personal or courier delivery, on the date of such
delivery, (b) in the case of mailing, on the fifth business day following the
date of such mailing and (c) in the case of facsimile, when received.
SECTION 6.05 ENTIRE AGREEMENT; MODIFICATIONS. This Agreement (including
the Exhibits, Annexes and Schedules hereto) constitutes the entire agreement of
the parties with
21
respect to the subject matter hereof and may not be amended or modified nor any
provisions waived except in a writing signed by the party to be charged.
SECTION 6.06 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 6.07 ASSIGNMENT. This Agreement may not be assigned by the Company
or the Purchasers without the prior written consent of the Company and each of
the Purchasers, except that (i) an Additional Purchaser who is an individual may
assign the obligation to purchase Additional Shares to an Individual Retirement
Account or trust established for such Additional Purchaser's benefit and (ii) an
Additional Purchaser may assign the obligation to purchase Additional Shares to
an affiliate (as defined in Rule 405 under the Securities Act) of such
Additional Purchaser; PROVIDED, that in any such case each assignee agrees to
become a party to and be bound by this Agreement and the Amended and Restated
Stockholders Agreement.
SECTION 6.08 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
22
IN WITNESS WHEREOF, the Company and the Purchasers have executed this
Agreement as of the day and year first above written.
UNITED SURGICAL PARTNERS
INTERNATIONAL, INC.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
Chief Executive Officer
WCAS PURCHASERS:
WELSH, CARSON, ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇ VII, L.P.
By: WCAS VII Partners, L.P.
General Partner
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
General Partner
WCAS HEALTHCARE PARTNERS, L.P.
By: WCAS HC Partners
General Partner
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Attorney-in-Fact
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Attorney-in-Fact
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ D. ▇▇▇▇▇ ▇▇▇▇▇▇▇
D. ▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
MANAGEMENT PURCHASERS:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
EXHIBIT A
FORM OF PROMISSORY NOTE
SEE TAB 2
EXECUTION COPY
▇▇▇ ▇▇▇▇▇▇▇
PROMISSORY NOTE
$250,000 Dallas, Texas
April 30, 1998
FOR VALUE RECEIVED, the undersigned, ▇▇▇ ▇▇▇▇▇▇▇ ("Payor"),
hereby promises to pay to UNITED SURGICAL PARTNERS INTERNATIONAL, INC., a
Delaware corporation ("Payee"), the principal sum of TWO HUNDRED FIFTY THOUSAND
DOLLARS ($250,000) in lawful money of the United States of America, on May 1,
2002 (the "Payment Date") and to pay interest (computed on the basis of a
365-day year for the actual number of days elapsed) from the date hereof on the
unpaid principal amount hereof at the rate of 7% per annum, payable quarterly in
arrears on the first day of each calendar quarter commencing on August 1, 1998,
until the date the outstanding principal amount hereof shall have become due and
payable, whether at maturity or otherwise, and thereafter at the rate of 9% per
annum on any overdue principal amount and (to the extent permitted by applicable
law) on any overdue interest, until paid.
Payment of principal and interest shall be made at the address
of Payee at United Surgical Partners International, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇.
Notwithstanding any provision of this Note to the contrary,
Payor may prepay the outstanding principal of this Note, without penalty or
premium, in whole or in part, at any time or from time to time, together with
accrued interest to such prepayment date.
The outstanding principal amount of this Note, plus interest
the date of payment, shall accelerate and become due and payable pursuant to the
following provisions:
(i) if at any time while any amount of this Note shall be
outstanding, (x) Payee shall merge or consolidate with or into any
other entity (other than a merger which will not result in more than
50% of the voting capital stock of Payee outstanding being owned of
record or beneficially by persons other than the holders of such
capital stock immediately prior to such merger in the same proportions
in which such stock was held immediately prior to such merger), (y)
Payee shall sell all or substantially all of its assets and properties
as an entirety in a single transaction or in a series of related
transactions to any other person or (z) a majority of the outstanding
voting capital stock of Payee shall be acquired by any person (other
than Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VII, L.P. or its affiliates) in a
single transaction or series of related transactions, whether by way of
merger, consolidation or otherwise (any transaction described in
clauses (x), (y) or (a) above being referred to herein as a "Change of
Control Event") and in connection with such Change of Control Event
Payer receives a cash payment in excess of the outing principal amount
of this Note, then the outstanding principal amount of this Note, plus
interest accrued thereon through the date of payment, shall accelerate
and become due and payable as of the seventh day after the date (if
earlier than May 1, 2002) of receipt of such cash payment by Payor;
(ii) if at any time while any amount of this Note shall be
outstanding (x) a Change of Control Event shall occur in which Payor
shall receive freely tradable securities valued at an amount in excess
of the outstanding principal amount of this Note or (y) Payee shall
complete an initial public offering ("IPO") of its Common Stock, par
value S.01, registered under the Securities Act of 1933, as amended,
then the outstanding principal amount of this Note, plus interest
accrued thereon through the date of payment, shall accelerate and
become due and payable as of the date (if earlier than May 1, 2002)
that is six months after the date of receipt of such securities by
Payor or the consummation of the IPO, as the case may be; and
(iii) if at any time while any amount of this Note shall be
outstanding Payor's employment with Payee (or any parent of subsidiary
thereof) is terminated for any reason, then the outstanding principal
amount of this Note, plus interest accrued thereon through the date of
payment, shall accelerate and become due and payable as of the date of
such termination of Payor's employment.
Payor hereby waives presentment, demand, protest, notice and
all other demands or notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note.
This Note may not be transferred or assigned by Payor without
the consent of the holder of this Note and may not be changed or altered except
by a writing duly signed by Payor arid the holder of this Note.
This Note shall be governed by and construed in accordance
with the laws of the State of Delaware.
IN WITNESS WHEREOF, Payor has caused this Note to be executed
as of the day and year first above written.
By
-------------------------------
▇▇▇ ▇▇▇▇▇▇▇
EXECUTION COPY
▇▇▇▇▇▇ ▇▇▇▇▇
PROMISSORY NOTE
$75,000 Dallas, Texas
April 30, 1998
FOR VALUE RECEIVED, the undersigned, ▇▇▇▇▇▇ ▇▇▇▇▇
("Payor"), hereby promises to pay to UNITED SURGICAL PARTNERS INTERNATIONAL,
INC., a Delaware corporation ("Payee"), the principal sum of SEVENTY FIVE
THOUSAND DOLLARS ($75,000) in lawful money of the United States of America, on
May 1, 2002 (the "Payment Date") and to pay interest (computed on the basis of a
365-day year for the actual number of days elapsed) from the date hereof on the
unpaid principal amount hereof at the rate of 7% per annum, payable quarterly in
arrears on the first day of each calendar quarter commencing on August 1, 1998,
until the date the outstanding principal amount hereof shall have become due and
payable, whether at maturity or otherwise, and thereafter at the rate of 9% per
annum on any overdue principal amount and (to the extent permitted by applicable
law) on any overdue interest, until paid.
Payment of principal and interest shall be made at the address
of Payee at United Surgical Partners International, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇.
Notwithstanding any provision of this Note to the contrary,
Payor may prepay the outstanding principal of this Note, without penalty or
premium, in whole or in part, at any time or from time to time, together with
accrued interest to such prepayment date.
The outstanding principal amount of this Note, plus interest
accrued thereon through the date of payment, shall accelerate and become due and
payable pursuant to the following provisions:
(i) if at any time while any amount of this Note shall be
outstanding, (x) Payee shall merge or consolidate with or into any
other entity (other than a merger which will not result in more than
50% of the voting capital stock of Payee outstanding being owned of
record or beneficially by persons other than the holders of such
capital stock immediately prior to such merger in the same proportions
in which such stock was held immediately prior to such merger), (y)
Payee shall sell all or substantially all of its assets and properties
as an entirety in a single transaction or in a series of related
transactions to any other person or (z) a majority of the outstanding
voting capital stock of Payee shall be acquired by any person (other
than Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VII, L.P. or its affiliates) in a
single transaction or series of related transactions, whether by way of
merger, consolidation or otherwise (any transaction described in
clauses (x), (y) or (z) above being referred to herein as a "Change of
Control Event") and in connection with such Change of Control Event
Payor receives a cash payment in excess of the outstanding
principal amount of this Note, then the outstanding principal amount
of this Note, plus interest accrued thereon through the date of
payment, shall accelerate and become due and payable as of the seventh
day after the date (if earlier than May 1, 2002) of receipt of such
cash payment by Payor;
(ii) if at any time while any amount of this Note shall be
outstanding (x) a Change of Control Event shall occur in which Payor
shall receive freely tradable securities valued at an amount in excess
of the outstanding principal amount of this Note or (y) Payee shall
complete an initial public offering ("IPO") of its Common Stock, par
value $.01, registered under the Securities Act of 1933, as amended,
then the outstanding principal amount of this Note, plus interest
accrued thereon through the date of payment, shall accelerate and
become due anti payable as of the date (if earlier than May 1, 2002,)
that is six months after the date of receipt of such securities by
Payor or the consummation of the IPO, as the case may be; and
(iii) if at any time while any amount of this Note shall be
outstanding Payor's employment with Payee (or any parent of subsidiary
thereof) is terminated for any reason, there the outstanding principal
amount of this Note, plus interest accrued thereon through the date of
payment, shall accelerate and become due and payable as of the date of
such termination of Payor's employment.
Payor hereby waives presentment, demand, protest, notice and
all other demands or notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note.
This Note may not be transferred or assigned by Payor without
the consent of the holder of this Note and may not be changed or altered except
by a writing duly signed by Payor and the holder of this Note.
This Note shall be governed by and construed in accordance
with the laws of the State of Delaware.
IN WITNESS WHEREOF, Payor has caused this Note to be executed
as of the day and year first above written.
By:
-----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
EXECUTION COPY
▇▇▇▇▇▇▇ ▇▇▇▇▇
PROMISSORY NOTE
$125,000 Dallas, Texas
April 30, 1998
FOR VALUE RECEIVED, the undersigned, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Payor"),
hereby promises to pay to UNITED SURGICAL PARTNERS INTERNATIONAL, INC., a
Delaware corporation ("Payee"), the principal sum of ONE HARED TWENTY FIVE
THOUSAND DOLLARS ($125,000) in lawful money of the United States of America, on
May 1, 2002 (the "Payment Date") and to pay interest (computed on the basis of a
365-day year for the actual number of days elapsed) from the date hereof on the
unpaid principal amount hereof at the rate of 7% per annum, payable quarterly in
arrears on the first day of each calendar quarter commencing on August 1, 1998,
until the date the outstanding principal amount hereof shall have become due and
payable, whether at maturity or otherwise, and thereafter at the rate of 9% per
annum on any overdue principal amount and (to the extent permitted by applicable
law) on any overdue interest, until paid.
Payment of principal and interest shall be made at the address
of Payee at United Surgical Partners International, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇.
Notwithstanding any provision of this Note to the contrary,
Payor may prepay the outstanding principal of this Note, without penalty or
premium, in whole or in part, at any time or from time to time, together with
accrued interest to such prepayment date.
The outstanding principal amount of this Note, plus interest
accrued thereon through the date of payment, shall accelerate and become due and
payable pursuant to the following provisions:
(i) if at any time while any amount of this Note shall be
outstanding, (x) Payee shall merge or consolidate with or into any
other entity (other than a merger which will not result in more than
50 deg. l0 of the voting capital stock of Payee outstanding being
owned of record or beneficially by persons other than the holders of
such capital stock immediately prior to such merger in the same
proportions in which such stock was held immediately prior to such
merger), (y) Payee shall sell all or substantially all of its assets
and properties as an entirety in a single transaction or in a series of
related transactions to any other person or (z) a majority of the
outstanding voting capital stock of Payee shall be acquired by any
person (other than Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VII, L.P. or its
affiliates) in a single transaction or series of related transactions,
whether by way of merger, consolidation or otherwise (any transaction
described in clauses (x), (y) or (z) above being referred to herein as
a "Change of Control Event") and in connection with such Change of
Control Event Payor receives a cash payment in excess of the
outstanding
principal amount of this Note, then the outstanding principal amount
of this Note, plus interest accrued thereon through the date of
payment, shall accelerate and become due and payable as of the seventh
day after the date (if earlier than May 1, 2002 of receipt of such cash
payment by Payor;
(ii) if at any time while any amount of this Note shall be
outstanding (x) a Change of Control Event shall occur in which Payor
shall receive freely tradable securities valued at an amount in excess
of the outstanding principal amount of this Note or (y) Payee shall
complete an initial public offering ("IPO") of its Common Stock, par
value $.01, registered under the Securities Act of 1933, as amended,
then the outstanding principal amount of this Note, plus interest
accrued thereon through the date of payment, shall accelerate and
become due and payable as of the date (if earlier than May 1, 2002)
that is six months after the date of receipt of such securities by
Payor or the consummation of the IPO, as the case may be; and
(iii) if at any time while any amount of this Note shall be
outstanding Payor's employment with Payee (or any parent of subsidiary
thereof) is terminated for any reason, then the outstanding principal
amount of this Note, plus interest accrued thereon through the date of
payment, shall accelerate and become due and payable as of the date of
such termination of Payor's employment.
Payor hereby waives presentment, demand, protest, notice and
all other demands or notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note.
This Note may not be transferred or assigned by Payor without
the consent of the holder of this Note and may not be changed or altered except
by a writing duly signed by Payor and the holder of this Note.
This Note shall be governed by and construed in accordance
with the laws of the State of Delaware.
IN WITNESS WHEREOF, Payor has caused this Note to be executed
as of the day and year first above written.
By:
------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
EXHIBIT B
FORM OF AMENDED AND RESTATED REGISTRATION RIGHTS AMENDMENT
SEE TAB 3
EXECUTION COPY
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
April 30, 1998
To the several persons listed in
Schedule I attached hereto:
Ladies and Gentlemen:
This Amended and Restated Registration Rights Agreement amends
and restates in its entirety the Registration Rights Agreement dated as of March
2, 1998 among United Surgical Partners International, Inc., a Delaware
corporation (the "Company"), and the several parties named therein. This will
confirm that in consideration of (i) the purchase on March 2, 1998 by the
several persons listed on Annex I of the Stock Purchase Agreement dated as of
March 2, 1998 (the "Stock Purchase Agreement") among the Company and the several
persons named in Annex I thereto of 500,000 shares of Class A Common Stock (the
"March 1998 Class A Common Shares"), $.01 par value ("Class A Common Stock"), of
the Company pursuant to the Stock Purchase Agreement, (ii) the purchase on the
date hereof by the several persons listed on Schedule I hereto of an aggregate
7,500,000 shares of Class A Common Stock (said shares, together with the March
1998 Class A Common Shares, being hereinafter collectively referred to as the
"Initial Class A Common Shares") pursuant to the Securities Purchase Agreement
dated as of the date hereof (the "Securities Purchase Agreement") among the
Company and the several persons listed on Annex I thereto, and as an inducement
to them to consummate the transactions contemplated by the Securities Purchase
Agreement and (iii) the purchase on Subsequent Closing Dates (as defined in the
Securities Purchase Agreement) by the purchasers listed under the headings
"Management Stockholders" and "WCAS Stockholders" on Schedule I hereto of up to
an aggregate 3,475,000 shares of Class A Common Stock (said shares, together
with the Initial Class A Common Shares being hereinafter collectively referred
to as the "Class A Common Shares") pursuant to the Securities Purchase
Agreement, and as an inducement to them to consummate the transactions
contemplated by the Securities Purchase Agreement, the Company hereby covenants
and agrees with each of you, and with each subsequent holder of Restricted Stock
and Investor Shares (as each such term is defined herein) as follows:
1. CERTAIN DEFINITIONS. As used herein, the
following terms shall have the following respective meanings:
2
"CLASS A COMMON STOCK" shall mean the Class A Common Stock,
$.01 par value, of the Company, as constituted as of the date of this Agreement,
subject to adjustment pursuant to the provisions of Section 10 hereof.
"CLASS A CONVERSION SHARES" shall mean the shares of Common
Stock issued upon conversion of the Class A Common Shares.
"COMMISSION" shall mean the Securities and Exchange
Commission, or any other federal agency at the time administering the Securities
Act.
"COMMON STOCK" shall mean the Common Stock, $.0l par value, of
the Company, as constituted as of the date of this Agreement, subject to
adjustment pursuant to the provisions of Section 10 hereof.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"INVESTOR CONVERSION SHARES" shall mean the shares of Common
Stock issuable upon conversion of the Investor Shares.
"INVESTOR SHARES" shall mean the shares of Class A Common
Stock purchased (x) on March 2, 1998 pursuant to the Stock Purchase Agreement by
▇▇▇▇▇▇ ▇▇▇▇▇ and (y) pursuant to the Securities Purchase Agreement by the
parties listed on Schedule I hereto under the heading "Management Stockholders".
Except as otherwise provided herein, each reference in this Agreement to the
term "Investor Shares" shall be deemed to include the Investor Conversion
Shares.
"REGISTRATION EXPENSES" shall mean the expenses so described
in Section 8 hereof.
"RESTRICTED STOCK" shall mean any shares of capital stock of
the Company, the certificates for which are required to bear the legend set
forth in Section 2 hereof, except such term shall not include the Investor
Shares.
"SECURITIES ACT" shall mean the Securities Act of 1933 or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"SELLING EXPENSES" shall mean the expenses so described in
Section 8 hereof.
2. RESTRICTIVE LEGEND. Each certificate representing the Class
A Common Shares and Class A Conversion Shares, and each certificate issued upon
exchange or transfer of any of such securities, as the case may be, other than
in a public sale or as otherwise permitted by the last paragraph of paragraph 3
hereof shall be stamped or otherwise imprinted with a legend substantially in
the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES
3
ACT OF 1933, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS THEY HAVE BEEN REGISTERED UNDER THAT ACT
OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE."
3. NOTICE OF PROPOSED TRANSFER. Prior to any proposed transfer
of any Restricted Stock or Investor Shares, as the case may be, (other than
under the circumstances described in Section 4, 5 or 6 hereof), the holder
thereof shall give written notice to the Company of its intention to effect such
transfer. Each such notice shall describe the manner of the proposed transfer
and, if requested by the Company, shall be accompanied by an opinion of counsel
reasonably satisfactory to the Company (it being agreed that Nossaman, Guthner,
▇▇▇▇ & ▇▇▇▇▇▇▇, LLP shall be satisfactory) to the effect that the proposed
transfer of the Restricted Stock or Investor Shares, as the case may be, may be
effected without registration under the Securities Act, whereupon the holder of
such Restricted Stock or Investor Shares, as the case may be, shall be entitled
to transfer such Restricted Stock or Investor Shares, as the case may be, in
accordance with the terms of its notice; PROVIDED, HOWEVER, that no such opinion
or other documentation shall be required if such notice shall cover a
distribution by Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VII, L.P. ('"WCAS VII") or WCAS
Healthcare Partners, L.P. to their respective partners. Each certificate for
Restricted Stock or Investor Shares, as the case may be, transferred as above
provided shall bear the legend set forth in Section 2, unless (i) such transfer
is in accordance with the provisions of Rule 144 (or any other rule permitting
public sale without registration under the Securities Act) or (ii) the opinion
of counsel referred to above is to the further effect that the transferee and
any subsequent transferee (other than an affiliate of the Company) would be
entitled to transfer such securities in a public sale without registration under
the Securities Act.
The foregoing restrictions on transferability of Restricted
Stock or Investor Shares shall terminate as to any particular shares of
Restricted Stock or Investor Shares when such shares shall have been effectively
registered under the Securities Act and sold or otherwise disposed of in
accordance with the intended method of disposition by the seller or sellers
thereof set forth in the registration statement concerning such shares. Whenever
a holder of Restricted Stock or Investor Shares is able to demonstrate to the
Company (and its counsel) that the provisions of Rule 144(k) (or other
equivalent rule) of the Securities Act are available to such holder without
limitation, such holder of Restricted Stock or Investor Shares shall be entitled
to receive from the Company, without expense, a new certificate not bearing the
restrictive legend set forth in Section 2.
4. REQUIRED REGISTRATION.
(a) At any time, WCAS VII (on behalf of the holders of
Restricted Stock) may request the Company to register under the Securities Act
all or any portion of the Restricted Stock held by such requesting holder or
holders for sale in the manner specified in such notice; PROVIDED, HOWEVER, that
the only securities which the Company shall be required to register pursuant
hereto shall be shares of Common Stock.
(b) Promptly following receipt of any notice under paragraph
4(a) above, the Company shall immediately notify any holders of Restricted Stock
from whom notice has not
4
been received and holders of Investor Shares and shall use its best efforts
to register under the Securities Act, for public sale in accordance with the
method of disposition specified in such notice from requesting holders, the
number of shares of Restricted Stock specified in such notice (and in any
notices received from other holders of Restricted Stock and holders of
Investor Shares within 20 days after their receipt of such notice from the
Company); PROVIDED, HOWEVER, that if the proposed method of disposition
specified by the requesting holders shall be an underwritten public offering,
the number of shares of Restricted Stock or Investor Shares or both, as the
case may be, to be included in such an offering may be reduced (PRO RATA
among the requesting holders of Investor Shares and Restricted Stock based on
the number of shares of Investor Shares and Restricted Stock so requested to
be registered) if and to the extent that the managing underwriter shall be of
the opinion that such inclusion would adversely affect the marketing of the
Restricted Stock and Investor Shares, as the case may be, to be sold. If such
method of disposition shall be an underwritten public offering, the selling
holders of at least two thirds of the Restricted Stock included in the
offering may designate the managing underwriter of such offering, subject to
the approval of the Company, which approval shall not be unreasonably
withheld. The Company shall be obligated to register Restricted Stock and
Investor Shares pursuant to this paragraph 4(b) on two occasions only.
Notwithstanding anything to the contrary contained herein, the obligation of
the Company under this paragraph 4(b) shall be deemed satisfied only when a
registration statement covering all shares of Restricted Stock specified in
notices received as aforesaid, for sale in accordance with the method of
disposition specified by the requesting holder, shall have become effective
and, if such method of disposition is a firm commitment underwritten public
offering, all such shares shall have been sold pursuant thereto.
(c) The Company shall be entitled to include in any
registration statement referred to in this Section 4, for sale in accordance
with the method of disposition specified by the requesting holders, shares of
Common Stock to be sold by the Company for its own account, except as and to the
extent that, in the opinion of the managing underwriter (if such method of
disposition shall be an underwritten public offering), such inclusion would
adversely affect the marketing of the Restricted Stock and Investor Shares to be
sold. Except as provided in this paragraph (c), the Company will not effect any
other registration of its Common Stock, whether for its own account or that of
other holders, from the date of receipt of a notice from requesting holders
pursuant to this Section 4 until the completion of the period of distribution of
the registration contemplated thereby.
5. FORM S-3 REGISTRATION.
(a) If the Company shall receive from any holder or holders of
Restricted Stock, a written request or requests that the Company effect a
registration on Form S-3 and any related qualification or compliance with
respect to Restricted Stock owned by such holder or holders, the Company will:
(i) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other holders of Restricted
Stock and Investor Shares; and
(ii) as soon as practicable, use its best efforts to effect
such registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualifications under
applicable blue sky or other state securities laws and appropriate
5
compliance with applicable regulations issued under the Securities Act and
any other government requirements or regulations) as may be so requested and
as would permit or facilitate the sale and distribution of all or such
portion of such holder's or holders' Restricted Stock or Investor Shares, as
the case may be, as are specified in such request, together with all or such
portion of the Restricted Stock or Investor Shares of any holder or holders
joining in such request as are specified in a written request given within
twenty (20) days after receipt of such written notice from the Company;
PROVIDED, HOWEVER, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 5 (A) more
than once in any 180-day period, or (B) if the Company is not entitled to use
Form S-3; and PROVIDED, FURTHER, HOWEVER, that the only securities which the
Company shall be required to register pursuant hereto shall be shares of
Common Stock. Subject to the foregoing, the Company shall file a registration
statement covering the Restricted Stock and Investor Shares so requested to
be registered as soon as practicable after receipt of the request or requests
of the holders of the Restricted Stock and Investor Shares, as the case may
be.
(b) Registrations effected pursuant to this Section 5 shall
not be counted as requests for registration effected pursuant to Section 4.
(c) Notwithstanding anything to the contrary contained in this
Agreement, the Board of Directors of the Company will be entitled to postpone
the filing period (or suspend the effectiveness or use) of any registration
statement relating to the Restricted Stock or Investor Shares, as the case may
be, pursuant to this Section 5 for a reasonable period of time not in excess of
90 calendar days, if the Board determines, in its reasonable business judgment,
that such registration and offering could materially interfere with bona fide
financing plans of the Company or would require disclosure of information, the
premature disclosure of which could, in the Board's reasonable business
judgment, materially and adversely affect the Company. If the Board postpones
the filing (or suspends the effectiveness or use) of a registration statement
pursuant to this Section 5, it will promptly notify, in writing, the holders of
Restricted Stock or Investor Shares, as the case may be, that requested such
registration when the events or circumstances permitting such postponement have
ended.
6. INCIDENTAL REGISTRATION. If the Company at any time (other
than pursuant to Section 4 or 5 hereof) proposes to register any of its Common
Stock under the Securities Act for sale to the public, whether for its own
account or for the account of other securityholders or both (except with respect
to registration statements on Form S-4 or S-8 or another form not available for
registering the Restricted Stock of Investor Shares for sale to the public), it
will give written notice at such time to all holders of outstanding Restricted
Stock and Investor Shares of its intention to do so. Upon the written request of
any such holder, given within twenty (20) days after receipt of any such notice
by the Company, to register any of its Restricted Stock or Investor Shares or
both, as the case may be (which request shall state the intended method of
disposition thereof), the Company will use its best efforts to cause the
Restricted Stock or Investor Shares or both, as the case may be, as to which
registration shall have been so requested, to be included in the securities to
be covered by the registration statement proposed to be filed by the Company,
all to the extent requisite to permit the sale or other disposition by the
holder (in accordance with its written request) of such Restricted Stock or
Investor Shares, as the case may be, so registered; PROVIDED, HOWEVER, that
nothing herein shall prevent the Company from abandoning or delaying such
registration at any time; PROVIDED, FURTHER, HOWEVER, that the only
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securities which the Company shall be required to register pursuant hereto
shall be shares of Common Stock. In the event that any registration pursuant
to this Section 6 shall be, in whole or in part, an underwritten public
offering of Common Stock, any request by a holder pursuant to this Section 6
to register Restricted Stock or Investor Shares, as the case may be, shall
specify that either (i) such Restricted Stock or Investor Shares, as the case
may be, is to be included in the underwriting on the same terms and
conditions as the shares of Common Stock otherwise being sold through
underwriters under such registration or (ii) such Restricted Stock or
Investor Shares, as the case may be, is to be sold in the open market without
any underwriting, on terms and conditions comparable to those normally
applicable to offerings of common stock in reasonably similar circumstances.
The number of shares of Restricted Stock or Investor Shares or both, as the
case may be, to be included in such an underwriting may be reduced (PRO RATA
among the requesting holders of Investor Shares and Restricted Stock based
upon the number of shares of Investor Shares and Restricted Stock so
requested to be registered) if and to the extent that the managing
underwriter shall be of the opinion that such inclusion would adversely
affect the marketing of the securities to be sold by the Company therein or
by holders of Restricted Stock if such securities are being sold pursuant to
Section 4 hereof; PROVIDED, HOWEVER, that such number of shares of Restricted
Stock or Investor Shares or both, as the case may be, shall not be reduced if
any shares are to be included in such underwriting for the account of any
person other than the Company or the holders of Restricted Stock and Investor
Shares.
Notwithstanding anything to the contrary contained in this
Agreement, in the event that there is a firm commitment underwritten public
offering of securities of the Company pursuant to a registration covering
Restricted Stock or Investor Shares or both, as the case may be, and a holder of
Restricted Stock or Investor Shares, as the case may be, does not elect to sell
his Restricted Stock or Investor Shares, as the case may be, to the underwriters
of the Company's securities in connection with such offering, such holder shall
refrain from selling such Restricted Stock or Investor Shares, as the case may
be, during the period of distribution of the Company's securities by such
underwriters and the period in which the underwriting syndicate participates in
the after market; PROVIDED, HOWEVER, that such holder shall, in any event, be
entitled to sell its Restricted Stock or Investor Shares, as the case may be,
commencing on the 90th day after the effective date of such registration
statement.
7. REGISTRATION PROCEDURES. If and whenever the Company is
required by the provisions of Section 4, 5 or 6 hereof to use its best efforts
to effect the registration of any of the Restricted Stock or Investor Shares or
both, as the case may be, under the Securities Act, the Company will, as
expeditiously as possible:
(a) prepare (and afford one counsel for the selling holders
reasonable opportunity to review and comment thereon) and file with the
Commission a registration statement (which, in the case of an underwritten
public offering pursuant to Section 4 hereof, shall be on Form S- I or another
form of general applicability satisfactory to the managing underwriter selected
as therein provided) with respect to such securities and use its best efforts to
cause such registration statement to become and remain effective for the period
of the distribution contemplated thereby (determined as hereinafter provided);
(b) prepare (and afford one counsel for the selling holders
reasonable opportunity to review and comment thereon) and file with the
Commission such amendments and
7
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective for the period specified in paragraph (a) above and as comply with
the provisions of the Securities Act with respect to the disposition of all
Restricted Stock or Investor Shares or both, as the case may be, covered by
such registration statement in accordance with the sellers' intended method
of disposition set forth in such registration statement for such period;
(c) furnish to each seller and to each underwriter such number
of copies of the registration statement and the prospectus included therein
(including each preliminary prospectus) as such persons may reasonably request
in order to facilitate the public sale or other disposition of the Restricted
Stock or Investor Shares or both, as the case may be, covered by such
registration statement;
(d) use its best efforts to register or qualify the Restricted
Stock or Investor Shares or both, as the case may be, covered by such
registration statement under the securities or blue sky laws of such
jurisdictions as the sellers of Restricted Stock or Investor Shares or both, as
the case may be, or, in the case of an underwritten public offering, the
managing underwriter, shall reasonably request;
(e) immediately notify each seller under such registration
statement and each underwriter, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus contained in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing;
(f) use its best efforts (if the offering is underwritten) to
furnish, at the request of any seller, on the date that Restricted Stock or
Investor Shares or both, as the case may be, is delivered to the underwriters
for sale pursuant to such registration: (i) an opinion dated such date of
counsel representing the Company for the purposes of such registration,
addressed to the underwriters and to such seller, stating that such registration
statement has become effective under the Securities Act and that (A) to the best
knowledge of such counsel, no stop order suspending the effectiveness thereof
has been issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Securities Act, (B) the registration
statement, the related prospectus, and each amendment or supplement thereof,
comply as to form in all material respects with the requirements of the
Securities Act and the applicable rules and regulations of the Commission
thereunder (except that such counsel need express no opinion as to financial
statements, the notes thereto, and the financial schedules and other financial
and statistical data contained therein) and (C) to such other effects as may
reasonably be requested by counsel for the underwriters or by such seller or its
counsel, and (ii) a letter dated such date from the independent public
accountants retained by the Company, addressed to the underwriters, stating that
they are independent public accountants within the meaning of the Securities Act
and that, in the opinion of such accountants, the financial statements of the
Company included in the registration statement or the prospectus, or any
amendment or supplement thereof, comply as to form in all material respects with
the applicable accounting requirements of the Securities Act, and such letter
shall additionally cover such other financial matters (including information as
to the period ending no more than five business days prior to the date of such
letter) with respect to
8
the registration in respect of which such letter is being given as such
underwriters or seller may reasonably request; and
(g) make available for inspection by each seller, any
underwriter participating in any distribution pursuant to such registration
statement, and any attorney, accountant or other agent retained by such seller
or underwriter, all financial and other records, pertinent corporate documents
and properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement and permit such seller, attorney, accountant or agent to participate
in the preparation of such registration statement.
For purposes of paragraphs (a) and (b) above and of Section 4(e) hereof, the
period of distribution of Restricted Stock or Investor Shares or both, as the
case may be, in a firm commitment underwritten public offering shall be deemed
to extend until each underwriter has completed the distribution of all
securities purchased by it, and the period of distribution of Restricted Stock
or Investor Shares or both, as the case may be, in any other registration shall
be deemed to extend until the earlier of the sale of all Restricted Stock or
Investor Shares or both, as the case may be, covered thereby or six months after
the effective date thereof.
In connection with each registration hereunder, the selling
holders of Restricted Stock and Investor Shares, if applicable, will furnish to
the Company in writing such information with respect to themselves and the
proposed distribution by them as shall be reasonably necessary in order to
assure compliance with federal and applicable state securities laws.
In connection with each registration pursuant to Sections 4, 5
and 6 hereof covering an underwritten public offering, the Company agrees to
enter into a written agreement with the managing underwriter selected in the
manner herein provided in such form and containing such provisions as are
customary in the securities business for such an arrangement between major
underwriters and companies of the Company's size and investment stature,
PROVIDED, HOWEVER, that such agreement shall not contain any such provision
applicable to the Company which is inconsistent with the provisions hereof and
PROVIDED, FURTHER, HOWEVER, that the time and place of the closing under said
agreement shall be as mutually agreed upon among the Company, such managing
underwriter and the selling holders of Restricted Stock and Investor Shares, if
applicable.
8. EXPENSES. All expenses incurred by the Company in complying
with Sections 4, 5 and 6 hereof, including, without limitation, all registration
and filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, fees of the National Association
of Securities Dealers, Inc. or any successor thereto, transfer taxes, fees of
transfer agents and registrars, costs of insurance and reasonable fees and
expenses of one counsel for all sellers of Restricted Stock and Investor Shares,
as the case may be, but excluding any Selling Expenses, are herein called
"Registration Expenses". All underwriting discounts and selling commissions
applicable to the sale of Restricted Stock or Investor Shares or both, as the
case may be, are herein called "Selling Expenses".
9
The Company will pay all Registration Expenses in
connection with each registration statement filed pursuant to Section 4, 5 or
6 hereof. All Selling Expenses in connection with any registration statement
filed pursuant to Section 4, 5 or 6 hereof shall be borne by the
participating sellers in proportion to the number of shares sold by each, or
by such persons other than the Company (except to the extent the Company
shall be a seller) as they may agree.
9. INDEMNIFICATION. In the event of a registration of any
of the Restricted Stock or Investor Shares or both, as the case may be, under
the Securities Act pursuant to Section 4, 5 or 6 hereof, the Company will
indemnify and hold harmless each seller of such Restricted Stock or Investor
Shares, as the case may be, thereunder and each underwriter of Restricted
Stock or Investor Shares or both, as the case may be, thereunder and each
other person, if any, who controls such seller or underwriter within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such seller or underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Restricted Stock or Investor Shares or both, as the case may
be, was registered under the Securities Act pursuant to Section 4, 5 or 6,
any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
and will reimburse each such seller, each such underwriter and each such
controlling person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
damage, liability or action; PROVIDED, HOWEVER, that the Company will not be
liable in any such case if and to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by such seller, such underwriter or
such controlling person in writing specifically for use in such registration
statement or prospectus.
In the event of a registration of any of the Restricted
Stock or Investor Shares or both, as the case may be, under the Securities
Act pursuant to Section 4, 5 or 6 hereof, each seller of such Restricted
Stock or Investor Shares, as the case may be, thereunder, severally and not
jointly, will indemnify and hold harmless the Company and each person, if
any, who controls the Company within the meaning of the Securities Act, each
officer of the Company who signs the registration statement, each director of
the Company, each underwriter and each person who controls any underwriter
within the meaning of the Securities Act, against all losses, claims, damages
or liabilities, joint or several, to which the Company or such officer or
director or underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in the registration statement under which such Restricted Stock or
Investor Shares or both, as the case may be, was registered under the
Securities Act pursuant to Section 4, 5 or 6, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereof,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse the Company and
each such officer, director, underwriter and
10
controlling person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
damage, liability or action; PROVIDED, HOWEVER, that such seller will be
liable hereunder in any such case if and only to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with information pertaining to such seller,
as such, furnished in writing to the Company by such seller specifically for
use in such registration statement or prospectus; PROVIDED, FURTHER, HOWEVER,
that the liability of each seller hereunder shall be limited to the
proportion of any such loss, claim, damage, liability or expense which is
equal to the proportion that the public offering price of shares sold by such
seller under such registration statement bears to the total public offering
price of all securities sold thereunder, but not to exceed the proceeds (net
of underwriting discounts and commissions) received by such seller from the
sale of Restricted Stock or Investor Shares, as the case may be, covered by
such registration statement.
Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party
hereunder, notify the indemnifying party in writing thereof, but the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to any indemnified party other than under this Section 9.
In case any such action shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 8 for any legal expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation and of liaison
with counsel so selected; PROVIDED, HOWEVER, that, if the defendants in any
such action include both the indemnified party and the indemnifying party and
the interests of the indemnified party reasonably may be deemed to conflict
with the interests of the indemnifying party, the indemnified party shall
have the right to select a separate counsel and to assume such legal defenses
and otherwise to participate in the defense of such action, with the expenses
and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as incurred.
Notwithstanding the foregoing, any indemnified party shall have the
right to retain its own counsel in any such action, but the fees and
disbursements of such counsel shall be at the expense of such indemnified
party unless (i) the indemnifying party shall have failed to retain counsel
for such indemnified party as aforesaid, (ii) the interests of such
indemnified party may be reasonably deemed to conflict with the interests of
the indemnifying party as aforesaid or (iii) the indemnifying party and such
indemnified party shall have mutually agreed to the retention of such
counsel. It is understood that the indemnifying party shall not, in
connection with any action or related actions in the same jurisdiction, be
liable for the fees and disbursements of more than one separate firm
qualified in such jurisdiction to act as counsel for the indemnified party
(except to the extent set forth in clause (ii) and (iii) in the prior
sentence of this paragraph). The indemnifying party shall not be liable for
any settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final
11
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
If the indemnification provided for in the first two
paragraphs of this Section 9 is unavailable or insufficient to hold harmless
an indemnified party under such paragraphs in respect of any losses, claims,
damages or liabilities or actions in respect thereof referred to therein,
then each indemnifying party shall in lieu of indemnifying such indemnified
party contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or actions in such
proportion as appropriate to reflect the relative fault of the Company, on
the one hand, and the underwriters and the sellers of such Restricted Stock
or Investor Shares, as the case may be, on the other, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or actions as well as any other relevant equitable
considerations, including the failure to give any notice under the third
paragraph of this Section 9. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact relates to information supplied by the Company,
on the one hand, or the underwriters and the sellers of such Restricted Stock
or Investor Shares, as the case may be, on the other, and to the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission. The Company and each of you agree that
it would not be just and equitable if contributions pursuant to this
paragraph were determined by PRO RATA allocation (even if all of the sellers
of such Restricted Stock or Investor Shares, as the case may be, were treated
as one entity for such purpose) or by any other method of allocation which
did not take account of the equitable considerations referred to above in
this paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or action in respect
thereof, referred to above in this paragraph, shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this paragraph, the sellers of such
Restricted Stock or Investor Shares, as the case may be shall not be required
to contribute any amount in excess of the amount, if any, by which the total
price at which the Common Stock sold by each of them was offered to the
public exceeds the amount of any damages which they would have otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission. No person guilty of fraudulent misrepresentations (within the
meaning of Section 11(f) of the Securities Act), shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation.
The indemnification of underwriters provided for in this
Section 9 shall be on such other terms and conditions as are at the time
customary and reasonably required by such underwriters. In that event the
indemnification of the sellers of Restricted Stock or Investor Shares or
both, as the case may be, in such underwriting shall at the sellers' request
be modified to conform to such terms and conditions.
10. CHANGES IN COMMON STOCK AND CLASS A COMMON STOCK. If,
and as often as, there are any changes in the Common Stock or Class A Common
Stock by way of stock split, stock dividend, combination or reclassification,
or through merger, consolidation, reorganization or recapitalization, or by
any other means, appropriate adjustment shall be made in the provisions
hereof, as may be required, so that the rights and privileges granted hereby
shall continue with respect to the Common Stock and Class A Common Stock as
so changed.
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11. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to you as follows:
(a) The execution, delivery and performance of this
Agreement by the Company have been duly authorized by all requisite corporate
action and will not violate any provision of law, any order of any court or
other agency of government, the Certificate of Incorporation or By-laws of
the Company, or any provision of any indenture, agreement or other instrument
to which it or any of its properties or assets is bound, or conflict with,
result in a breach of or constitute (with due notice or lapse of time or
both) a default under any such indenture, agreement or other instrument, or
result in the creation or imposition of any lien, charge or encumbrance of
any nature whatsoever upon any of the properties or assets of the Company.
(b) This Agreement has been duly executed and delivered by
the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, subject to considerations
of public policy in the case of the indemnification provisions hereof.
12. RULE 144 REPORTING. The Company agrees with you as
follows:
(a) The Company shall make and keep public information
available, as those terms are understood and defined in Rule 144 under the
Securities Act, at all times from and after the date it is first required to
do so.
(b) The Company shall file with the Commission in a timely
manner all reports and other documents as the Commission may prescribe under
Section 13(a) or 15(d) of the Exchange Act at any time after the Company has
become subject to such reporting requirements of the Exchange Act.
(c) The Company shall furnish to such holder of Restricted
Stock forthwith upon request (i) a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 (at any time from and
after the date it first becomes subject to such reporting requirements) and
of the Securities Act and the Exchange Act (at any time after it has become
subject to such reporting requirements), (ii) a copy of the most recent
annual or quarterly report of the Company, and (iii) such other reports and
documents so filed as a holder may reasonably request to avail itself of any
rule or regulation of the Commission allowing a holder of Restricted Stock to
sell any such securities without registration.
13. MISCELLANEOUS.
(a) All covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and inure
to the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. Without limiting the generality of the
foregoing, the registration rights conferred herein on the holders of
Restricted Stock shall inure to the benefit of any and all subsequent holders
from time to time of the Restricted Stock for so long as the certificates
representing the Restricted Stock shall be required to bear the legend
specified in Section 2 hereof.
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(b) All notices, requests, consents and other
communications hereunder shall be in writing, and shall be personally
delivered, or shall be sent by national overnight courier service or by
certified or registered mail, postage prepaid and addressed as follows:
if to the Company, to it at:
United Surgical Partners International, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
with a copy to:
Nossaman, Guthner, ▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
if to any holder of Restricted Stock, to it at the address
set forth in Schedule I hereto;
if to any holder of Investor Shares, to it at the address
set forth in Schedule I hereto;
if to any subsequent holder of Restricted Stock or Investor
Shares, to it at such address as may have been furnished to the Company in
writing by such holder;
or, in any case, at such other address or addresses as
shall have been furnished in writing to the Company (in the case of a holder
of Restricted Stock or Investor Shares) or to the holders of Restricted Stock
or Investor Shares (in the case of the Company).
(c) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
(d) This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and may not be modified or
amended except in writing signed by the Company and the holders of not less
than two thirds of the Restricted Stock and Investor Shares then outstanding;
PROVIDED that no such modification or amendment shall deprive any holder of
Restricted Stock or Investor Shares of any material right under this
Agreement without such holder's consent. The Company will not grant any
registration rights to any other person without the written consent of the
holders of at least two thirds of the Restricted Stock and Investor Shares
then outstanding if such rights could reasonably be expected to conflict
with, or be on a parity with, the rights of holders of Restricted Stock of
Investor Shares granted under this
14
Agreement; PROVIDED, HOWEVER, that notwithstanding the foregoing, any
amendment solely to grant registration rights to additional holders of the
capital stock of the Company may be effected in a writing executed solely by
the Company and such additional holders if such registration rights are no
more favorable than the registration rights granted to any holder of Investor
Shares. Any amendment to this Agreement to grant such registration rights to
the such additional holders of the capital stock of the Company shall not be
deemed to be an amendment that adversely affects the rights of any holder
hereunder.
(e) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Please indicate your acceptance of the foregoing by signing
and returning the enclosed counterpart of this letter, whereupon this letter
(herein sometimes called "this Agreement") shall be a binding agreement
between the Company and you.
Very truly yours,
UNITED SURGICAL PARTNERS
INTERNATIONAL, INC.
By:
---------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
Chief Executive Officer
15
AGREED TO AND ACCEPTED
as of the date first above written:
WCAS STOCKHOLDERS:
WELSH, CARSON, ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇ VII, L.P.
By: WCAS VII Partners, L.P.
General Partner
By:
---------------------------
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
General Partner
WCAS HEALTHCARE PARTNERS, L.P.
By: WCAS HC Partners
General Partner
By
---------------------------
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
Attorney-in-Fact
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
16
------------------------------
By ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Attorney-in-Fact
------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
D. ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
MANAGEMENT STOCKHOLDERS:
------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------
▇▇▇ ▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
17
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▇▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
18
SCHEDULE I
1. Management Stockholders
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
c/o United Surgical Partners
International, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
2. WCAS Stockholders
Welsh, Carson, ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇ VII, L.P.
WCAS Healthcare
Partners, L.P.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
D. ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
c/o Welsh, Carson, ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Reboul, MacMurray, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Kristol
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
EXHIBIT C
FORM OF AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
SEE TAB 4
EXECUTION COPY
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT dated as of April
30, 1998, by and among ▇▇▇ SURGICAL PARTNERS INTERNATIONAL, INC., a Delaware
corporation (the "Company"), WELSH, CARSON, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VII, L.P. ("WCAS")
and the several other stockholders named in Schedule I hereto (WCAS and such
other stockholders being hereinafter at times referred to individually as a
"Stockholder" and collectively as the "Stockholders").
WHEREAS, the Company and certain Stockholders (the "Original
Stockholders")are parties to a Stock Purchase Agreement dated as of March 2,
1998 (the "Stock Purchase Agreement") pursuant to which the Original
Stockholders purchased from the Company an aggregate 500,000 shares of Class A
Common Stock, $.01 par value ("Class A Common Stock"),of the Company;
WHEREAS, in connection with the closing of the transactions
contemplated by the Stock Purchase Agreement, the Company and the Original
Stockholders entered into a Stockholders Agreement dated as of March 2, 1998
(the "Stockholders Agreement") which set forth certain arrangements among the
Company and the Original Stockholders with respect to the matters described
therein;
WHEREAS, the Company and the Stockholders have entered into a
Securities Purchase Agreement dated as of the date hereof (the "Securities
Purchase Agreement") pursuant to which the Stockholders are purchasing from the
Company on the Initial Closing Date (as defined therein) an aggregate 7,500,000
shares of Class A Common Stock, all on the terms and subject to the conditions
set forth in the Securities Purchase Agreement;
WHEREAS, the Securities Purchase Agreement provides that the
certain Stockholders may purchase from the Company on Subsequent Closing Dates
(as defined therein)up to an aggregate 3,475,000 shares of Class A Common Stock
and up to an aggregate 30,000shares of Series A Redeemable Preferred Stock, $.01
par value, of the Company, all on the terms and subject to the conditions set
forth in the Securities Purchase Agreement;
WHEREAS, the Company and each of the Stockholders desire to
amend and restate the Stockholders Agreement and to make certain arrangements
among themselves with respect to the matters set forth herein;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties hereto hereby
agree that the Stockholders Agreement shall be amended and restated as follows:
SECTION 1. VOTING AGREEMENT. (a) At each annual or special
stockholders meeting called for such purpose, and whenever the stockholders of
the Company act by written consent with respect to election of directors, each
Stockholder agrees to vote or otherwise give such Stockholder's consent in
respect of all shares of capital stock of the Company (whether now or hereafter
acquired) owned by such Stockholder or as to which such Stockholder is entitled
to vote, and the Company shall take all necessary and desirable actions within
its control, in order to cause the election to the Board of Directors of the
Company of the Chief Executive Officer of the Company, which individual will
initially be ▇▇▇▇▇▇ ▇▇▇▇▇.
(b) The Board of Directors shall meet on at least a quarterly
basis unless otherwise agreed by the Board. The Company will reimburse all such
directors for travel expenses reasonably incurred in connection with attending
meetings of the Board.
SECTION 2. INVESTOR TRANSFER RESTRICTIONS. (a) Each of the
Stockholders listed on Schedule I hereto under the heading "Investors" (the
"Investors") shall be entitled at any time to transfer (x) the shares of capital
stock of the Company owned by such Investor by will or by the laws of descent
and distribution or (y) up to 10% of the shares of capital stock of the Company
owned by such Investor by gift to such Investor's spouse, lineal descendants,
parents or siblings (or to a trust for the benefit of any of the foregoing);
provided that any such transferee shall agree in writing with the Company to be
bound by, and to comply with, all applicable provisions of this Agreement and to
be deemed to be an Investor for purposes of this Agreement. Except for such
transfers by will or by the laws of descent and distribution or by gift as
described in clauses (x) and (y) above, each Investor shall not be entitled to
sell, pledge or otherwise transfer shares of capital stock of the Company unless
such Investor complies with the provisions of Sections 3 and 4 below.
SECTION 3. RIGHT OF FIRST REFUSAL. Subject to the provisions
of Section 2 above, an Investor (a "Selling Investor" for purposes of this
Section 3) may sell for cash all or any portion of the capital stock of the
Company held by him (whether now or hereafter acquired) at any time, pursuant to
a bona fide offer from a third party, subject to such Selling Investor's
compliance with the following provisions:
(a) The Selling Investor shall promptly deliver a notice of
intention to sell (a "Sale Notice") to the Company setting forth in reasonable
detail the capital stock of the Company to be sold (the "Subject Securities"),
the identity of the proposed purchaser and the proposed purchase price and terms
of sale (including a copy of any written offer or indication of interest).
(b) Upon receipt of a Sale Notice from the Selling Investor,
the Company shall have the first right and option to elect to purchase at the
price and on the terms stated in the Sale Notice, all or part of the number of
the Subject Securities. In the event that the Company shall elect to purchase
all or part of the Subject Securities, the Company shall so notify the Selling
Investor within 20 days (the "Company Option Period") after the receipt by the
Company of the Sale Notice. Any such election shall be made by written notice (a
"Company Notice of Election") to the Selling Investor.
(c) If the Company Notice of Election with respect to the
Subject Securities shall have been received as aforesaid by the Selling
Investor, the Selling Investor shall sell such
Subject Securities to the Company at the price and on the terms stated in the
Sale Notice. The closing of such sale of Subject Securities shall take place at
the offices of the Company no later than 20 days following the expiration of
the Company Option Period (or upon the expiration of such longer period if
required by law), or such other place and earlier date as may be agreed by all
parties to the transaction. At such closing the Selling Investor shall deliver
a certificate or certificates for the Subject Securities to be sold, accompanied
by stock powers with signatures guaranteed and all necessary stock transfer
stamps affixed, against receipt of the purchase price therefor by certified or
official bank check in New York Clearing House Funds or by wire transfer of
immediately available funds.
(d) Any Subject Securities not sold pursuant to the provisions
of this Section 3 may be sold (in compliance with Section 4 below) to the person
identified in the related Sale Notice for a period of 60 days following the
expiration of the Company Option Period or to any person or persons at a price
not lower than the price specified in the Sale Notice and on other terms not
materially more favorable to the purchaser than those specified in the Sale
Notice. Any Subject Securities not sold by such 60th day shall again be subject
to the restrictions contained in this Agreement.
SECTION 4. RIGHT OF CO-SALE. Any Stockholder (for purposes of
this Section 4, a "Selling Stockholder"), subject to compliance with the
provisions of Sections 2 and 3 above (if applicable), may sell all or any
portion of the Class A Common Stock held by him (whether now or hereafter
acquired), subject to such Stockholder's compliance with the following
provisions:
(a) Such Selling Stockholder shall promptly deliver a notice
of intention to sell (a "Co-Sale Notice") to the Company and to each Stockholder
setting forth the number of shares of Class A Common Stock to be sold (the
"Co-Sale Securities") and the proposed purchase price and terms of sale, except
that no Co-Sale Notice need be given by any Selling Stockholder exercising any
right to sell securities in response to a Co-Sale Notice delivered pursuant to
this paragraph (a). Upon receipt of the Co-Sale Notice, each Stockholder shall
have the right and option to elect to sell, at the price and on the terms stated
in the Co-Sale Notice, all or part of that number of shares of Class A Common
Stock which is equal to the product obtained by multiplying (i) the aggregate
number of shares of Class A Common Stock covered by the proposed sale by (ii) a
fraction, the numerator of which is the number of shares of Class A Common Stock
at the time owned by such Stockholder and the denominator of which is the number
of shares of Class A Common Stock at the time owned by all the Stockholders. Any
such election shall be made by written notice (a "Co-Sale Notice of Election")
to the Selling Stockholder and the Company within 10 business days after receipt
by such Stockholder of the Co-Sale Notice. Thereupon, the Selling Stockholder
shall not sell any of the Co-Sale Securities (i) except at the price and on the
terms stated in its Co-Sale Notice and (ii) if a Stockholder shall have
delivered a Co-Sale Notice of Election in respect thereof as aforesaid, unless
such Stockholder shall have been afforded the opportunity to sell the shares in
respect of which such Co-Sale Notice of Election shall have been delivered, at
said price and on said terms.
(b) Any Co-Sale Securities not sold pursuant to the provisions
of (a) above shall again be subject to the restrictions contained in this
Agreement and shall not thereafter be sold, except in compliance with the
applicable provisions of this Agreement.
(c) Upon electing to participate in a proposed sale pursuant
to paragraph (a) above, each Stockholder (i) shall deliver to the Company, as
its agent, for transfer to the proposed acquiror, one or more certificates, duly
endorsed for transfer or accompanied by stock transfer powers duly endorsed for
transfer, with all stock transfer taxes paid and stamps affixed, which represent
the number of shares of Class A Common Stock that such Stockholder shall have so
elected to sell and (ii) shall not be subject to Sections 2 and 3 hereof, if
applicable.
(d) The stock certificate or certificates delivered by each
Stockholder to the Company pursuant to paragraph (c) above shall be transferred
by the Company to the acquiror in consummation of the sale of the Class A Common
Stock pursuant to the terms and conditions specified in the Co-Sale Notice, and
the Company shall promptly thereafter remit to such Stockholder that portion of
the proceeds to which such Stockholder is entitled by reason of such
participation.
SECTION 5. SALE AND PURCHASE OPTIONS ON TERMINATED MANAGEMENT
STOCKHOLDER SHARES. (a) In the event that any of the Investors listed on
Schedule I hereto under the subheading "Management Stockholders" (the
"Management Stockholders") shall cease to be employed by the Company or any
subsidiary or affiliate thereof on a full-time basis prior to the third
anniversary of the date hereof, the Company shall have the right and option,
exercisable by written notice (the "Company Repurchase Notice") to such
Management Stockholder (the "Departing Management Stockholder") within 20 days
of the date such Departing Management Stockholder ceases to be so employed (the
"Termination Date"), to purchase, at a price of $2 per share, the number of
shares of Class A Common Stock held by such Departing Management Stockholder on
the Termination Date (all of such shares then held, the "Departing Management
Stockholder Shares") set forth below:
(i) in the event that such employment of the Departing
Management Stockholder has been terminated by the Company or any
subsidiary or affiliate thereof for any reason other than for Cause (as
defined below), then the Company shall have the right to purchase the
following number of shares: (w) all of the Departing Management
Stockholder Shares if the Termination Date is prior to the first
anniversary of the date hereof, (x) 66 2/3% of the Departing Management
Stockholder Shares if the Termination Date is on or after the first
anniversary of the date hereof and prior to the second anniversary of
the date hereof, (y) 33 1/3(degree)la of the Departing Management
Stockholder Shares if the Termination Date is on or after the second
anniversary of the date hereof and prior to the third anniversary of
the date hereof and (z) no Departing Management Stockholder Shares
after the third anniversary of the date hereof; and
(ii) in the event that such employment of the Departing
Management Stockholder ceases for any reason other than as set forth in
clause (i) above prior to the third anniversary of the date hereof,
then the Company shall have the right to purchase all of the Departing
Management Stockholder Shares.
(b) In the event that the employment of the Departing
Management Stockholder on a full-time basis has been terminated by the Company
or any subsidiary or affiliate thereof for any reason other than for Cause prior
to the third anniversary of the date hereof and such Departing Management
Stockholder has not received a Company Repurchase Notice from the
Company within 20 days of the Termination Date, the Departing Management
Stockholder shall have the right and option, exercisable by written notice to
the Company (the "Stockholder Repurchase Notice'") within 40 days of the
Termination Date, to sell to the Company the Departing Management Stockholder
Shares at a price of $2 per share.
For the purposes of this Section 5, a termination for Cause
shall include a termination by the Company by reason of the following actions,
failures or events by or affecting the Departing Management Stockholder: (i)
indictment for a felony, (ii) acts of dishonesty or moral turpitude that are
detrimental to the Company or its subsidiaries or affiliates, (iii) acts or
omissions which the Departing Management Stockholder knew or should have
reasonably known were likely to damage the business of the Company or its
subsidiaries or affiliates, (iv) failure by the Departing Management Stockholder
to obey the reasonable and lawful orders of the Board of Directors of the
Company or (v) gross negligence by the Departing Management Stockholder in the
performance of, or willful disregard by the Departing Management Stockholder of,
his employment duties to the Company or its subsidiaries or affiliates.
(c) The closing for any sale and purchase of the Departing
Management Stockholder Shares pursuant to the provisions of this Section 5 will
take place at the offices of the Company on the date specified in Company
Repurchase Notice or Stockholder Repurchase Notice, as the case may be, which
date shall be a business day not later than 20 days after the date of the
Company Repurchase Notice or Stockholder Repurchase Notice, as the case may be .
At such closing, the Departing Management Stockholder shall deliver the
certificates representing the Departing Management Stockholder Shares, duly
endorsed for transfer, against payment in cash by the Company of the purchase
price of $2 per share. Notwithstanding the foregoing, the Company may cancel any
amount of indebtedness of the Departing Management Stockholder to the Company in
lieu of payment of an equal amount of the cash purchase price. In the event that
the Departing Management Stockholder does not deliver the certificates
representing the Departing Management Stockholder Shares as aforesaid, then such
Management Stockholder shall thereafter cease to have any rights with respect to
the Departing Management Stockholder Shares represented thereby, except the
right to receive the purchase price with respect thereto, without interest
thereon, upon the surrender of such certificates in accordance with this Section
S.
SECTION 6. LEGEND ON STOCK CERTIFICATES. Each certificate
representing shares of capital stock purchased by any Stockholder or issued in
exchange of or upon conversion of any of the securities purchased thereby shall
conspicuously bear the following legend until such time as the shares
represented thereby are no longer subject to the provisions hereof
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE TERMS AND CONDITIONS OF A STOCKHOLDERS AGREEMENT, DATED AS
OF APRIL, 30, 1998, AMONG THE ISSUER AND THE OTHER PARTIES
THERETO. COPIES MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST
MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE COMP."
The Company covenants that it shall keep a copy of this
Agreement on file at the address listed in Section 12 for the purpose of
furnishing copies to the holders of record of shares of capital stock of the
Company.
SECTION 7. DURATION OF AGREEMENT. This Agreement shall
terminate upon the earliest to occur of (i) the tenth anniversary of the date
hereof, (ii) the consummation of an initial public offering registered under the
Securities Act of 1933, as amended, of shares of Common Stock, par value $.01,
of the Company, (iii) the consummation of any sale, transfer or other
disposition of all or substantially all the capital stock or assets of the
Company for cash, or (iv) with respect to any Stockholder, the date on which
such Stockholder no longer owns any shares of capital stock of the Company.
SECTION 8. REPRESENTATIONS AND WARRANTIES. Each
Stockholder represents and warrants to the Company and the other
Stockholders as follows:
(a) The execution, delivery and performance of this Agreement
by such Stockholder will not violate any provision of law, any order of any
court or other agency of government, or any provision of any indenture,
agreement or other instrument to which such Stockholder or any of its or his
properties or assets is bound, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the properties or assets of such Stockholder.
(b) This Agreement has been duly executed and delivered by
such Stockholder and constitutes the legal, valid and binding obligation of such
Stockholder, enforceable in accordance with its terms.
SECTION 9. HEADINGS. Headings of articles, sections and
paragraphs of this Agreement are inserted for convenience of reference only
and shall not affect the interpretation or be deemed to constitute a part
hereof.
SECTION 10. SEVERABILITY. In the event that any one or more of
the provisions contained in this Agreement or in any other instrument referred
to herein shall, for any reason, be held to be invalid, illegal or
unenforceable, such illegality, invalidity or unenforceability shall not affect
any other provisions of this Agreement.
SECTION 11. BENEFITS OF AGREEMENT. Nothing expressed by or
mentioned in this Agreement is intended or shall be construed to give any person
other than the parties hereto and their respective successors and permitted
assigns any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision herein contained, this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and
exclusive benefit of the parties hereto and their respective successors and
permitted assigns. Subject to compliance with the terms of this Agreement, each
Stockholder shall have the right to assign its interests hereunder to any
transferee of the capital stock of the Company; provided that such transferee
shall agree in writing with the parties hereto to be bound by, and to comply
with, all applicable provisions of this Agreement and to be deemed to be a
Stockholder for purposes of this Agreement.
SECTION 12. NOTICES. Any notice or other communications
required or permitted hereunder shall be deemed to be sufficient and received if
contained in a written instrument delivered in person or by courier or duly sent
by first class certified mail, postage prepaid, or by facsimile addressed to
such party at the address or facsimile number set forth below:
(1) if to the Company, to:
United Surgical Partners International, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
with a copy to:
Nossaman, Guthner, ▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
(2) if to any other Stockholder, to the address of such
Stockholder appearing in Schedule I hereto;
or, in any case, at such other address or facsimile number as shall have been
furnished in writing by such party to the other parties hereto. All such
notices, requests, consents and other communications shall be deemed to have
been received (a) in the case of personal or courier delivery, on the date of
such delivery, (b) in the case of mailing, on the fifth business day following
the date of such mailing and (c) in the case of facsimile, when received.
SECTION 13. MODIFICATION. Except as otherwise provided herein,
neither this Agreement nor any provision hereof may be modified, changed,
discharged or terminated except by an instrument in writing signed by the
Company, WCAS and the holders of the majority of the aggregate voting power of
shares of capital stock (on an as-converted basis) of the Company held by the
Management Stockholders; provided, however, that no modification or amendment
shall be effective to reduce the percentage of the shares of capital stock of
the Company the consent of the holders of which is required under this Section
12. Notwithstanding the foregoing, the Company may amend this Agreement without
the consent of the Stockholders solely to add stockholders to Schedule I hereto
(which stockholders shall be included in the definition of ,,Investors"
hereunder).
SECTION 14. COUNTERPARTS. This Agreement may be executed in
any number of counterparts, and each such counterpart hereof shall be deemed to
be an original instrument, but all such counterparts together shall constitute
but one agreement.
SECTION 15. GOVERNING LAW. This Agreement shall be
governed by, enforceable under, and construed in accordance with the laws
of the State of Delaware.
IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement as of the day and year first above written.
UNITED SURGICAL PARTNERS
INTERNATIONAL, INC.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
Chief Executive Officer
MANAGEMENT STOCKHOLDERS:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
WCAS STOCKHOLDERS:
WELSH, CARSON, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇ VII, L.P.
By: WCAS VII Partners, L.P.
General Partner
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
General Partner
WCAS HEALTHCARE
PARTNERS, L.P.
By: WCAS HC Partners
General Partner
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Attorney-in-Fact
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Attorney-in-Fact
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ D. ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
D. ▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ D. ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
D. ▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇
SCHEDULE I - STOCKHOLDERS
1 Investors
a. Management Stockholders
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
c/o United Surgical Partners
International, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
2 WCAS Stockholders
Welsh, Carson, ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇ VII, L.P.
WCAS Healthcare
Partners, L.P.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
D. ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
c/o Welsh, Carson, ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Reboul, MacMurray, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Kristol
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
EXHIBIT D
FORM OF CERTIFICATE OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION
SEE TAB 6
CERTIFICATE OF AMENDMENT
TO
THE CERTIFICATE OF INCORPORATION
OF
UNITED SURGICAL PARTNERS INTERNATIONAL, INC,
-----------------------------------------------
Pursuant to Section 242 of the
General Corporation Law of the State of Delaware
----------------------------------------------------
UNITED SURGICAL PARTNERS INTERNATIONAL, INC., a corporation
organized and existing under the laws of the State of Delaware (the
"Corporation"), hereby certifies as follows:
FIRST: that the following resolutions were duly adopted by
unanimous written consent of the Board of Directors of the Corporation, setting
forth proposed amendments to the Certificate of Incorporation of the
Corporation; determining that the capital of the Corporation will not be
decreased on account of such amendments; and declaring such amendments to be
advisable and directing that such amendments be submitted to the stockholders of
the Corporation for their approval. The resolutions are as follows:
"RESOLVED, that there is hereby adopted an amendment to the
Corporation's Certificate of Incorporation pursuant to which (i) the
authorized capital stock of the Corporation shall be changed from
45,000,000 shares, consisting of 20,000,000 shares of Class A Common
Stock, $.01 par value, and 25,000,000 shares of Common Stock, $.01 par
value, to 50,031,200 shares, consisting of 20,000,000 shares of Class A
Common Stock, $.01 par value ("Class A Common Stock"), 30,000,000
shares of Common Stock, $.01 par value ("Common Stock"), and 31,200
shares of Series A Redeemable Preferred Stock, $.01 par value
("Preferred Stock"), and (ii) the relative voting, dividend,
liquidation, redemption and other rights, and the qualifications,
limitations and restrictions thereof, in respect of said Preferred
Stock, Class A Common Stock and Common Stock shall be restated; and, in
connection with such changes, Article FOURTH of the Certificate of
Incorporation of the Corporation shall be amended to read in its
entirety as follows:
FOURTH: The total number of shares of all classes of stock
which the Corporation shall have authority to issue is 50,031,200 shares,
consisting of 31,200 shares of Series A Redeemable Preferred Stock, $.01 par
value ("Preferred Stock"), 20,000,000 shares of Class A Common Stock, $.01 par
value ('"Class A Common Stock") and 30,000,000 shares of Common Stock, $.01 par
value ("Common Stock").
All cross-references in each subdivision of this Article
FOURTH refer to other paragraphs in such subdivision unless otherwise indicated.
The following is a statement of the designations, and the
powers, preferences and rights, and the qualifications, limitations or
restrictions thereof, in respect of each class of stock of the Corporation:
I.
SERIES A REDEEMABLE PREFERRED STOCK
1. CUMULATIVE DIVIDENDS. The holders of shares of Preferred
Stock shall be entitled to receive, on April 30th of each year beginning
April 30, 2000, out of funds legally available for such purpose, cash
dividends at the rate of (x) $50.00 per share per annum on April 30, 2000 and
(y) $75.00 per share per annum thereafter, and no more, payable (as
determined from time to time by the Board of Directors) on each share of
Preferred Stock that shall then be outstanding (each annual period ended
April 30th being referred to for the purposes of this subdivision I as a
"Dividend Period"). Such dividends shall be cumulative (so that if for any
Dividend Period such dividends are not paid or declared and set apart
therefor, the deficiency shall be paid, in whole or in part (without
interest), on the next succeeding dividend payment date on which the
Corporation has any funds legally available therefor) and shall accrue from
and after the date of issue whether or not declared and whether or not there
are any funds of the Corporation legally available for the payment of
dividends. Accrued but unpaid dividends shall not bear interest. The Board of
Directors of the Corporation may fix a record date for the determination of
holders of Preferred Stock entitled to receive payment of a dividend declared
thereon, which record date shall be no more than 60 days prior to the date
fixed for the payment thereof.
As long as any shares of Preferred Stock shall remain
outstanding, in no event (without the written consent of the holders of a
majority of the outstanding Preferred Stock) shall any dividend whatsoever be
paid upon, nor any distribution be made upon, any shares of Class A Common Stock
or Common Stock, other than a dividend or distribution payable in shares of
Common Stock, nor except for the repurchase of shares (x) from participants
under any stock option plans approved by a majority of the Board of Directors of
the Corporation and (y) pursuant to the Amended and Restated Stockholders
Agreement dated on or about April 30, 1998 among the Corporation and the
stockholders named therein, shall any shares of Class A Common or Common Stock
be purchased or redeemed by the Corporation, nor shall any moneys be paid to or
made available for a sinking fund for the purchase or redemption of shares of
any Class A Common Stock or Common Stock, unless, in each such case, accrued and
unpaid dividends on all outstanding shares of Preferred Stock for all prior
Dividend Periods shall have been declared and paid in full and the full dividend
on all outstanding shares of Preferred Stock for the then-current Dividend
Period shall have been paid or declared and sufficient funds for the payment
thereof set apart, and any arrears or defaults in any redemption of shares of
Preferred Stock shall have been cured.
2. REDEMPTION. The shares of Preferred Stock shall be
redeemable as follows:
2A MANDATORY REDEMPTION. Except as and to the extent expressly
prohibited by applicable law, the Corporation shall redeem (in the manner and
with the effect provided in subparagraphs 2C through 2E below) all shares of
Preferred Stock which shall then be outstanding, on the earlier to occur of (i)
the consummation by the Corporation of an initial public offering of its Common
Stock registered under the Securities Act of 1933, as amended (an "Initial
Public Offering") or (ii) the tenth anniversary of the date on which shares of
Preferred Stock are first issued. In case of the occurrence of any of the
following (each a "Change of Control Event'"): (i) a consolidation or merger of
the Corporation with or into any other corporation (other than a merger which
will not result in more than 50% of the voting capital stock of the Corporation
outstanding immediately after the effective date of such merger being owned of
record or beneficially by persons other than the holders of such voting capital
stock immediately prior to such merger in the same proportions in which such
shares were held immediately prior to such merger), (ii) a sale of all or
substantially all of the properties and assets of the Corporation as an entirety
in a single transaction or in a series or related transactions to any other
person or (iii) the acquisition of "beneficial ownership" by any "person" or
"group" (other than Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VII, L.P. or its affiliates)
of voting stock of the Corporation representing more than 50% of the voting
power of all outstanding shares of such voting stock, whether by way of merger
or consolidation or otherwise, the Corporation shall, not later than 20 days
prior to the effective date of any such Change of Control Event, give notice
thereof to the holder or holders of shares of Preferred Stock and, in the event
that within 15 days after receipt of such notice, any holder or holders of
shares of Preferred Stock shall elect, by written notice to the Corporation, to
have any or all of its shares of Preferred Stock redeemed, the Corporation shall
redeem the same (in the manner and with the effect provided in subsections 2C
through 2E below) not later than the effective date and time of such Change of
Control Event.
As used herein, (i) the terms "person" and "group" shall have
the meaning set forth in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), whether or not applicable, (ii) the term
"beneficial owner" shall have the meaning set forth in Rules 13d-3 and lad-5
under the Exchange Act, whether or not applicable, except that a person shall be
deemed to have "beneficial ownership" of all shares that any such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time or upon the occurrence of certain events, and (iii) any
"person" or "group" will be deemed to beneficially own any voting stock of the
Corporation so long as such person or group beneficially owns, directly or
indirectly, in the aggregate a majority of the voting stock of a registered
holder of the voting stock of the Corporation.
2B OPTIONAL REDEMPTION. The Corporation may, in its sole
discretion, redeem at any time and from time to time (in the manner and with the
effect provided in subparagraphs 2C through 2E below), any whole number of
shares of Preferred Stock. Any date on which the Corporation elects to redeem
shares of Preferred Stock as provided in this subparagraph 2B and each date on
which the Corporation shall be required to redeem shares of Preferred Stock as
provided in subparagraph 2A above shall be referred to as a "Redemption Date."
2C REDEMPTION PRICE; NOTICE OF REDEMPTION. The Preferred Stock
to be redeemed on a Redemption Date shall be redeemed by paying for each share
the sum of (i) $1,000, plus (ii) an amount equal to dividends accrued and unpaid
thereon from the date of issuance of such share of Preferred Stock to such
Redemption Date, the sum of (i) and (ii) being herein sometimes
referred to as the "Redemption Price". Not less than 20 days before such
Redemption Date, written notice shall be given by mail, postage prepaid to
the holders of record of the Preferred Stock to be redeemed, such notice to
be addressed to each such stockholder at his post office address as shown by
the records of the Corporation, specifying the number of shares to be
redeemed, the paragraph or paragraphs of this Certificate of Incorporation
pursuant to which such redemption shall be made, the Redemption Price and the
place and date of such redemption, which date shall not be a day on which
banks in the City of New York are required or authorized to close. If such
notice of redemption shall have been duly given and if on or before such
Redemption Date the funds necessary for redemption shall have been set aside
so as to be and continue to be available therefor, then, notwithstanding that
any certificate for shares of Preferred Stock to be redeemed shall not have
been surrendered for cancellation, after the close of business on such
Redemption Date, the shares so called for redemption shall no longer be
deemed outstanding, the dividends thereon shall cease to accrue, and all
rights with respect to such shares shall forthwith after the close of
business on the Redemption Date, cease, except only the right of the holders
thereof to receive, upon presentation of the certificate representing shares
so called for redemption, the Redemption Price therefor, without interest
thereon.
2D REDEEMED OR OTHERWISE ACQUIRED SHARES TO BE RETIRED. Any
shares of the Preferred Stock redeemed pursuant to this paragraph Z or otherwise
acquired by the Corporation in any manner whatsoever shall be permanently
retired and shall not under any circumstances be reissued; and the Corporation
may from time to time take such appropriate corporate action as may be necessary
to reduce the number of authorized shares of Preferred Stock accordingly.
2E SHARES TO BE REDEEMED. In case of the redemption, for any
reason, of only part of the outstanding shares of Preferred Stock on a
Redemption Date, all shares of Preferred Stock to be redeemed shall be selected
pro rata, and there shall be so redeemed from each registered holder in whole
shares, as nearly as practicable to the nearest whole share, that proportion of
all the shares to be redeemed which the number of shares held of record by such
holder bears to the total number of shares of Preferred Stock at the time
outstanding. Any shares of Preferred Stock that are designated for redemption on
a Redemption Date and are not so redeemed shall be redeemed as soon thereafter
as possible and in the manner in which shares are otherwise redeemed on a
Redemption Date, and, in such event, as provided in this subdivision I,
dividends shall continue to accrue on such shares.
3. LIQUIDATION. Upon any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, the holders of the
shares of Preferred Stock shall be entitled, before any distribution or payment
is made upon any Class A Common or Common Stock, to be paid an amount equal to
$1,000 per share plus any accrued but unpaid dividends (such amounts being
sometimes referred to as the "Preferred Liquidation Payments"). If upon such
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, the assets to be distributed among the holders of the Preferred
Stock of the Corporation shall be insufficient to permit payment to such holders
of the full amount of the Preferred Liquidation Payments, then the entire assets
of the Corporation to be so distributed shall be distributed ratably per share
among the holders of Preferred Stock in proportion to the full per share amounts
to which they respectively are entitled. Upon any such liquidation, dissolution
or winding up of the Corporation, after the holders of Preferred Stock shall
have been paid in full the preferential amounts to which they shall be entitled
as provided herein, the remaining net
assets of the Corporation shall be distributed to the holders of Class A
Common Stock and Common Stock in accordance with this Certificate of
Incorporation. Written notice of such liquidation, dissolution or winding up,
stating a payment date, the amount of the Preferred Liquidation Payments to
be made pursuant hereto and the place where said Preferred Liquidation
Payments shall be payable shall be given by mail, postage prepaid, not less
than 30 days prior to the payment date stated therein to the holders of
record of the Preferred Stock, such notice to be addressed to each such
holder at his post office address as shown by the records of the Corporation;
provided, however, that failure to give notice pursuant to this sentence
shall not invalidate the action involved. A Change of Control Event shall
not, for purposes of this paragraph 3, be deemed a liquidation, dissolution
or winding up of the Corporation.
4. RESTRICTIONS. At any time when shares of Preferred Stock
are outstanding, except where the vote or written consent of the holders of a
greater number of shares of the Corporation is required by law or by this
Certificate of Incorporation, and in addition to any other vote required by law,
without the prior consent of the holders of a majority of the outstanding
Preferred Stock, given in person or by proxy, either in writing or at a special
meeting called for that purpose, at which meeting the holders of the shares of
such Preferred Stock shall vote together as a class:
(a) The Corporation will not (i) create or authorize the
creation of any additional class or series of shares unless the same ranks
junior to the Preferred Stock as to the distribution of assets upon the
liquidation, dissolution or winding up of the Corporation and as to the
distribution of dividends, (ii) increase the authorized amount of the Preferred
Stock or the authorized amount of any additional class or series of shares
unless the same ranks junior to the Preferred Stock as to the distribution of
assets upon the liquidation, dissolution or winding up of the Corporation and as
to the distribution of dividends, or (iii) create or authorize any obligation or
security convertible into shares of Preferred Stock or into shares of any other
class or series unless the same ranks junior to the Preferred Stock as to the
distribution of assets upon the liquidation, dissolution or winding up of the
Corporation and as to the distribution of dividends, in each such case whether
any such creation or authorization or increase shall be by means of amendment of
the Certificate of Incorporation, merger, consolidation or otherwise.
(b) The Corporation will not amend, alter or repeal the
Corporation's Certificate of Incorporation or By-laws in any manner, or file any
directors' resolutions pursuant to Section 151(g) of the General Corporation Law
of the State of Delaware containing any provision, in either case, which
adversely affects the respective preferences, qualifications, special or
relative rights or privileges of the Preferred Stock or which in any manner
adversely affects the Preferred Stock or the holders thereof.
(c) The Corporation will not enter into any transaction that
will result in the occurrence of a Change of Control Event.
5. VOTING. Except as otherwise required by law or this
Certificate of Incorporation, the holders of Preferred Stock shall have no vote
on any matters to be voted on by the stockholders of the Corporation.
II.
CLASS A COMMON STOCK AND COMMON STOCK
Except as otherwise expressly provided herein, all shares of
Common Stock and Class A Common Stock shall be identical and shall entitle the
holders thereof to the same rights and privileges.
1. DIVIDENDS. The holders of shares of Class A Common Stock
and Common Stock, according to the number of shares of Class A Common Stock and
Common Stock then outstanding, shall be entitled to receive such dividends as
from time to time may be declared by the Board of Directors of the Corporation
out of any funds legally available therefor, subject to the provisions of
subdivision I above with respect to the rights of holders of the Preferred
Stock.
2. LIQUIDATION. Upon any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, subject to the prior
rights of the holders of Preferred Stock, the holders of the shares of Class A
Common Stock and Common Stock, according to the number of shares of Class A
Common Stock and Common Stock then outstanding, shall be entitled to share
ratably in all assets of the Corporation available for distribution to its
stockholders; provided, however, (x) that in the event that the amount available
for distribution to the holders of Class A Common Stock is insufficient to
permit the holders of Class A Common Stock to be paid an amount equal to $2.00
per share plus any accrued but unpaid dividends (such amounts being sometimes
referred to as the "Class A Liquidation Payments"), then the holders of Class A
Common Stock shall be entitled before any distribution or payment is made upon
any Common Stock, to be paid an amount equal to the Class A Liquidation Payments
and (y) that if the assets to be distributed among the holders of the Class A
Common Stock shall be insufficient to permit payment to such holders of the full
amount of the Class A Liquidation Payments, then the entire assets of the
Corporation to be so distributed shall be distributed ratably among the holders
of Class A Common Stock. Upon any such liquidation, dissolution or winding up of
the Corporation in which the amount available for distribution to the holders of
Class A Common Stock is insufficient to permit such holders to be paid the full
amount of the Class A Liquidation Payments (as described in clauses (x) and (y)
above), after the holders of Class A Common Stock shall have been paid in full
the preferential amounts to which they shall be entitled as provided herein, all
remaining assets of the Corporation which are available for distribution to its
stockholders shall be distributed ratably among the holders of Common Stock.
Written notice of such liquidation, dissolution or winding up, stating a payment
date, the amount of the Class A Liquidation Payments and the place where said
Class A Liquidation Payments shall be payable, shall be given by mail, postage
prepaid, not less than 30 days prior to the payment date stated therein, to the
holders of record of Class A Common Stock, such notice to be addressed to each
such holder at his post office address as shown by the records of the
Corporation; provided, however, that failure to give notice pursuant to this
sentence shall not invalidate the action involved. Control Event shall not, for
purposes of this paragraph 2, be deemed a liquidation, dissolution or winding up
of the Corporation.
3. CONVERSION OF CLASS A COMMON STOCK.
3A OPTIONAL CONVERSION OF CLASS A COMMON STOCK. Subject to and
upon compliance with the provisions of this paragraph 3 and after receiving the
written consent of the holders of the majority of the outstanding shares of
Class A Common Stock ("Conversion Consent"), the holder of any share or shares
of Class A Common Stock shall have the right, at its option, to convert any such
shares of Class A Common Stock (except that upon any liquidation, dissolution or
winding up of the Corporation the right of conversion shall terminate at the
close of business on the last full business day next preceding the date fixed
for payment of the amount distributable on Class A Common Stock) into an equal
number of fully paid and non-assessable whole shares of Common Stock. Such
rights of conversion shall be exercised by the holder thereof by giving written
notice (which notice shall attach the Conversion Consent) that the holder elects
to convert a stated number of shares of Class A Common Stock into Common Stock
and by surrender of a certificate or certificates for the shares so to be
converted to the Corporation at its principal office (or such other office or
agency of the Corporation as the Corporation may designate by notice in writing
to the holder or holders of the Class A Common Stock) at any time during its
usual business hours on the date set forth in such notice, together with a
statement of the name or names (with address), subject to compliance with
applicable laws to the extent such designation shall involve a transfer, in
which the certificate or certificates for shares of Common Stock shall be
issued.
3B AUTOMATIC CONVERSION OF CLASS A COMMON STOCK.
Notwithstanding anything else herein to the contrary in this Section 3, in the
event that, at any time while any of the Class A Common Stock shall be
outstanding, (i) the Corporation shall complete a firm commitment underwritten
public offering of Common Stock registered under the Securities Act of 1933, as
amended, in which (x) the aggregate price paid for such shares by the public
shall be at least $30,000,000 and (y) the price per share paid by the public for
such shares shall be at least $4 per share (appropriately adjusted to reflect
stock splits and combinations and stock dividends) (a "Qualified Offering") or
(ii) a majority of the issued shares of Class A Common Stock shall have been
converted into Common Stock, then all outstanding shares of Class A Common Stock
shall be automatically and without further action on the part of the holders of
the Class A Common Stock converted into shares of Common Stock in accordance
with the terms of subsection 3A hereof with the same effect as if the
certificates evidencing such shares had been surrendered for conversion, such
conversion to be effective immediately prior to the closing of such Qualified
Offering or immediately prior to the conversion of Class A Common Stock
satisfying clause (ii) above, as the case may be; provided, however, that
certificates evidencing the shares of Common Stock issuable upon such conversion
shall not be issued except on surrender of the certificates for the shares of
the Class A Common Stock so converted.
3C ISSUANCE OF CERTIFICATES: TIME CONVERSION EFFECTED.
Promptly after the receipt by the Corporation of the written notice referred to
in subparagraph 3A and surrender of the certificate or certificates for the
share or shares of the Class A Common Stock to be converted, the Corporation
shall issue and deliver, or cause to be issued and delivered, to the holder,
registered in such name or names as such holder may direct, subject to
compliance with applicable laws to the extent such designation shall involve a
transfer, a certificate or certificates for the number of whole shares of ▇▇▇▇
Stock issuable upon the conversion of such share or shares of Class A Common
Stock. To the extent permitted by law, such conversion shall be deemed to have
been effected immediately prior to the close of business on the day the
certificate or certificates for such share or shares shall have been surrendered
as aforesaid, and at such time
the rights of the holder of such share or shares of Class A Common Stock
shall cease, and the person or persons in whose name or names any certificate
or certificates for shares of Common Stock shall be issuable upon such
conversion shall be deemed to have become the holder or holders of record of
the shares represented thereby.
3D FRACTIONAL SHARES: DIVIDENDS, PARTIAL CONVERSION. No
fractional shares shall be issued upon conversion of the Class A Common Stock
into Common Stock and no payment or adjustment shall be made upon any conversion
on account of any cash dividends on the Class A Common Stock so converted or the
Common Stock issued upon such conversion. In case the number of shares of Class
A Common Stock represented by the certificate or certificates surrendered
pursuant to subparagraph 3A exceeds the number of shares converted, the
Corporation shall, upon such conversion, execute and deliver to the holder
thereof, at the expense of the Corporation, a new certificate or certificates
for the number of shares of Class A Common Stock, represented by the certificate
or certificates surrendered which are not to be converted. If any fractional
interest in a share of Common Stock would, except for the provisions of the
first sentence of this subparagraph 3D, be deliverable upon any such conversion,
the Corporation, in lieu of delivering the fractional share thereof, shall pay
to the holder surrendering the Class A Common Stock for conversion an amount in
cash equal to the current fair value of such fractional interest as determined
in good faith by the Board of Directors of the Corporation.
3E SUBDIVISION OR COMBINATION OF STOCK. In case the
Corporation shall at any time subdivide its outstanding shares of Common Stock
into a greater number of shares or shall declare or pay a dividend on its
outstanding shares of Common Stock payable in shares of Common Stock, then in
each case the Class A ▇▇▇▇ Stock shall be similarly subdivided, and conversely,
in case the outstanding shares of Common Stock of the Corporation shall be
combined into a smaller number of shares, the Class A Common Stock shall be
similarly combined.
3F REORGANIZATION, RECLASSIFICATION, MERGER OF SALE. If any
capital reorganization or reclassification of the capital stock of the
Corporation shall be effected in such a way (including, without limitation, by
way of consolidation or merger) that holders of Common Stock shall be entitled
to receive stock, securities or assets with respect to or in exchange for Common
Stock, then, as a condition of such reorganization or reclassification, lawful
and adequate provision (in form satisfactory to the holders of at least a
majority of the outstanding shares of Class A Common Stock) shall be made
whereby each holder of a share or shares of Class A Common Stock shall
thereafter have the right to receive, upon the basis and upon the terms and
conditions specified herein and in lieu of the shares of Common Stock of the
Corporation immediately theretofore receivable upon the conversion of such share
or shares of Class A Common Stock, such shares of stock, securities or assets as
may be issued or payable with respect to or in exchange for a number of
outstanding shares of such Common Stock equal to the number of shares of such
stock immediately theretofore so receivable had such reorganization or
reclassification not taken place, and in any such case appropriate provision
shall be made with respect to the rights and interests of such holder to the end
that the provisions hereof shall thereafter be applicable, as nearly as may be,
in relation to any shares of stock, securities or assets thereafter deliverable
upon the exercise of such conversion rights. In the event of a merger or
consolidation of the Corporation as a result of which a greater or lesser number
of shares of common stock of the surviving corporation are issuable to holders
of Common Stock of the
Corporation outstanding immediately prior to such merger or consolidation,
the number of shares of Common Stock into which Class A Common Stock may be
converted shall be adjusted in the same manner as though there were a
subdivision or combination of the outstanding shares of Common Stock of the
Corporation. The Corporation will not effect any such consolidation or
merger, or any sale of all or substantially all its assets and properties,
unless prior to the consummation thereof the successor corporation (if other
than the Corporation) resulting from such consolidation or merger or the
corporation purchasing such assets shall assume by written instrument (in
form reasonably satisfactory to the holders of at least a majority of the
shares of Class A Common Stock at the time outstanding) executed and mailed
or delivered to each holder of shares of Class A Common Stock at the last
address of such holder appearing on the books of the Corporation, the
obligation to deliver to such holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holder may be
entitled to receive.
3G NOTICE OF ADJUSTMENT. Upon any adjustment made pursuant to
3E or 3F, then and in each such case the Corporation shall give written notice
thereof, by first class mail, postage prepaid, addressed to each holder of
shares of Class A ▇▇▇▇ Stock at the address of such holder as shown on the books
of the Corporation, which notice shall state the number of shares of Common
Stock or other securities, cash or property issuable upon conversion of the
Class A Common Stock resulting from such adjustment, setting forth in reasonable
detail the method of calculation and the facts upon which such calculation is
based.
3H STOCK TO BE RESERVED. The Corporation will at all times
reserve and keep available out of its authorized but unissued Common Stock,
solely for the purpose of issuance upon the conversion of the Class A Common
Stock as herein provided, such number of shares of Common Stock as shall then be
issuable upon the conversion of all outstanding shares of Class A Common Stock.
All shares of Common Stock which shall be so issued shall be duly and validly
issued and fully paid and non-assessable and free from all taxes, liens and
charges arising out of or by reason of the issue thereof The Corporation will
take all such action within its control as may be necessary on its part to
assure that all such shares of Common Stock may be so issued without violation
of any applicable law or regulation, or of any requirements of any national
securities exchange upon which the Common Stock of the Corporation may be
listed.
3I NO REISSUANCE OF CLASS A COMMON STOCK. Shares of Class A
Common Stock which are converted into shares of Common Stock as provided herein
shall not be reissued.
3J ISSUE TAX. The issuance of certificates for shares of
Common Stock upon conversion of the Class A Common Stock shall be made without
charge to the holders thereof for any issuance tax in respect thereof, provided
that the Corporation shall not be required to pay any tax which may be payable
in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the holder of the Class A Common Stock
which is being converted.
3K CLOSING OF BOOKS. The Corporation will at no time close its
transfer books against the transfer of any Class A Common Stock or of any shares
of Common Stock issued or issuable upon the conversion of any shares of Class A
Common Stock in any manner which interferes with the timely conversion of such
Class A Common Stock.
3L DEFINITION OF COMMON STOCK. As used in this paragraph 3,
the term ,,Common Stock" shall mean and include the Corporation's authorized
Common Stock, $.OI par value, as constituted on the date of filing of this
Certificate of Incorporation and shall also include any capital stock of any
class of the Corporation thereafter authorized which shall not be limited to a
fixed sum or percentage of par value in respect of the rights of the holders
thereof to participate in dividends or in the distribution of assets upon the
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation; provide that the shares of Common Stock receivable upon conversion
of shares of the Class A Common Stock, or in case of any reorganization or
reclassification of the outstanding shares thereof, the stock, securities or
assets provided for in subparagraphs 3E or 3F, shall include only shares
designated as Common Stock of the Corporation on the date of filing of this
Certificate of Incorporation.
4. VOTING. Except as otherwise required by law or this
Certificate of Incorporation, the holders of the Class A Common Stock and the
holders of Common Stock shall be entitled to notice of any stockholders
meeting in accordance with the Bylaws of the Corporation and to vote together
as a class upon any matter submitted to the stockholders for a vote as
follows: (x) each holder of Class A Common Stock shall be entitled to 10
votes for each share of Common Stock which would be issuable to such holder
upon the conversion of all the shares of Class A Common Stock so held on the
record date for the determination of stockholders entitled to vote and (ii)
each holder of Common Stock shall have one vote per share.""
SECOND: that the Amendment of the Certificate of Incorporation
effected by this Certificate was duly authorized by the stockholders of the
Corporation, after first having been declared advisable by the Board of
Directors of the Corporation, all in accordance with the provisions of Section
242 of the General Corporation Law of the State of Delaware.
THIRD: that the capital of the Corporation will no be reduced
under, or by reason of, the foregoing amendments to the Certificate of
Incorporation of the Corporation.
IN WITNESS WBEREOF, this Certificate of Amendment has been
executed by the Corporation by its Chief Executive Officer this 30th day of
April 1998.
UNITED SURGICAL PARTNERS
INTERNATIONAL, ITC.
By:
--------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
Chief Executive Officer
EXHIBIT E
FORM OF STOCK OPTION PLAN
SEE EXHIBIT 10.19
EXHIBIT F
FORM OF OPINION OF COUNSEL TO THE COMPANY
SEE TAB 9
LAW OFFICES
NOSSAMAN, GUTRNER, ▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
THIRTY-FIRST FLOOR
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
TELEPHONE (▇▇▇)▇▇▇-▇▇▇▇
FACSIMILE (▇▇▇)▇▇▇-▇▇▇▇
April 30, 1998
The Purchasers Under that Certain
Securities Purchase Agreement, dated as of
April 30, 1998
Re: UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
Ladies and Gentlemen:
We have acted as counsel for United Surgical Partners
International, Inc., a Delaware corporation (the "Company"), in connection with
the negotiation, execution and delivery of that certain Securities Purchase
Agreement, dated as of April 30, 1998 (the "Purchase Agreement"), among the
Company, Welsh, Carson, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ VII, L.P., a Delaware limited
partnership ("WCAS VII"), and the other Purchasers named in Annex 1 thereto.
This opinion is being delivered to you pursuant to Section 4.01 (h) of the
Purchase Agreement. All capitalized terms used and not defined herein shall have
the meanings set forth in the Purchase Agreement.
In rendering this opinion, we have examined the Purchase
Agreement; the Certificate of Incorporation, the Certificate of Amendment to the
Certificate of Incorporation and the By-laws of the Company; minutes and written
consents of the board of directors and the stockholders of the Company; the
stock certificate book and stock transfer ledger of the Company; certificates of
public officials; certificates of officers of the Company; the Amended and
Restated Stockholders Agreement; the Amended and Restated Registration Rights
Agreement; and all other documents that we deem relevant and necessary for
purposes of rendering this opinion.
In our examination, we have assumed the genuineness of all
signatures on original documents, the authenticity of all agreements,
instruments, corporate records, certificates and other documents submitted to us
as originals and the conformity to authentic originals of all agreements,
instruments, corporate records, certificates and other documents submitted to us
as certified, facsimile or photostatic copies. We have also assumed (a) the due
execution and delivery of the Purchase Agreement, the Amended and Restated
Stockholders Agreement and the Amended and Restated Registration Rights
Agreement by each of the Purchasers and (b) that WCAS VII and WCAS Healthcare
Partners, L.P. each has the requisite power and authority to enter into such
Agreements and to consummate the transactions contemplated thereby.
NOSSMAN, GUTHNER, ▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
The Purchasers Under that Certain
Securities Purchase Agreement dated as of
April 30, 1998
Page 2
Based upon the foregoing and relying upon the assumptions
stated, and subject to the qualifications set forth herein, we are of the
opinion that:
1. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and is
duly licensed or qualified in each jurisdiction in which the nature of its
business or the ownership of its properties makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not have a material adverse effect on its ability to carry on its
business. The Company has the corporate power and authority to own and hold its
properties, to carry on its business as currently conducted and to execute and
deliver the Purchase Agreement, the Amended and Restated Registration Rights
Agreement and the Amended and Restated Stockholders Agreement, to perform its
obligations thereunder and to issue, sell and deliver the Securities.
2. Each of the execution and delivery by the Company of the
Purchase Agreement, the Amended and Restated Stockholders Agreement and the
Amended and Restated Registration Rights Agreement, the performance by the
Company of its obligations thereunder, and the issuance, sale and delivery by
the Company of the Securities have been duly authorized by all requisite
corporate action and, to the best of our knowledge, will not violate any
provision of law, any order of any court or other agency of government, the
Certificate of Incorporation or By-laws of the Company or any provision of any
indenture, agreement or other instrument to which the Company or any of the
properties or assets of the Company is bound, or conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any such indenture, agreement or other instrument, or result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of the Company or any subsidiary
thereof.
3. The Securities have been duly authorized by the Company
and, when sold and paid for in accordance with the Purchase Agreement, will be
validly issued, fully paid and non-assessable shares of Class A Common Stock or
Series A Redeemable Preferred Stock, as the case may be. To the best of our
knowledge, the issuance, sale and delivery of the Securities to the Purchasers
hereunder is not subject to any preemptive rights of stockholders of the Company
or to any right of first refusal or other similar right in favor of any person.
4. The Purchase Agreement, the Amended and Restated
Stockholders Agreement and the Amended and Restated Registration Rights
Agreement have been duly executed and delivered by Company and when executed by
the other parties thereto will constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws from time to time in effect affecting the
enforcement of creditors' rights generally and to general equity principles;
provided, however, that no opinion is given as to the validity or enforceability
of the indemnification provisions set forth in Section 9 of the Amended and
Restated Registration Rights Agreement.
5. The authorized capital stock of the Company consists of
(i) 30,000,000 shares of Common Stock, $.0l par value, (ii) 20,000,000 shares
of Class A Common Stock, $.01
NOSSMAN, GUTHNER, ▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
The Purchasers Under that Certain
Securities Purchase Agreement dated as of
April 30, 1998
Page 3
par value, and (iii) 31,200 shares of Series A Redeemable Preferred Stock,
$.01 par value. To the best of our knowledge, all of the issued and
outstanding shares of capital stock of the Company are owned of record as set
forth in Schedule 2.04(a) to the Purchase Agreement.
6. To the best of our knowledge, except as contemplated by the
Purchase Agreement (including without limitation Schedule 2.04(b) attached
thereto), the Certificate of Incorporation of the Company or the Amended and
Restated Stockholders Agreement, (i) no subscription, warrant, option,
convertible security or other right (contingent or other) to purchase or acquire
any shares of any class of capital stock of the Company is authorized or
outstanding, (ii) there is no binding commitment of the Company to issue any
shares, warrants, options or other such rights, or to distribute to holders of
any class of the Company's capital stock, any evidences of indebtedness or
assets, and (iii) the Company has no obligations (contingent or other) to
purchase, redeem or otherwise acquire any shares of its capital stock or any
interest therein or to pay any dividend or to make any other distribution in
respect thereof.
7. Subject to the accuracy of the representations and
warranties of the Purchasers set forth in Article III of the Purchase Agreement,
except as set forth in Schedule 2.05 to the Purchase Agreement, no registration
or filing with, or consent or approval of, or other action by, any federal,
state or other governmental agency or instrumentality is or will be necessary
for the valid execution and delivery of the Purchase Agreement, the Amended and
Restated Stockholders Agreement and the Amended and Restated Registration Rights
Agreement, the performance of the Purchase Agreement, the Amended and Restated
Stockholders Agreement and the Amended and Restated Registration Rights
Agreement or the issuance, sale and delivery of the Securities.
8. To the best of our knowledge, except as described in
Schedule 2.08 to the Purchase Agreement, there is no action, suit, investigation
or proceeding pending or threatened against or affecting the Company or any
subsidiary or any of their respective properties or rights before any court or
by or before any governmental body or arbitration board or tribunal, the outcome
of which might reasonably be expected to result in any material adverse effect
on the properties, assets, condition (financial or other), prospects, operating
results or business of the Company and its subsidiaries taken as a whole.
The foregoing opinions are subject to and qualified by the
following:
(A) Statements herein as to the truth of certain matters "to
our knowledge" and similar statements refer to the knowledge consciously held by
the individual lawyers currently in our firm who have performed any services for
the Company. In particular, with respect to the existence of any "order of any
court or other agency of government" as referenced in paragraph 2 above, or any
"action, suit, investigation or proceeding" as referenced in paragraph 8 above,
we have not conducted any investigation of court or other governmental records
with respect to the existence of any such matters.
(B) As to the good standing of the Company, we have relied
solely upon (i) a certificate from the Secretary of State of Delaware dated as
of April 27, 1998 and (ii) a
NOSSMAN, GUTHNER, ▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
The Purchasers Under that Certain
Securities Purchase Agreement dated as of
April 30, 1998
Page 4
Certificate of Authority from the Secretary of State of the State of Texas
dated as of April 27, 1998.
(C) We express no opinion as to the laws of any jurisdiction
other than the laws of the State of Delaware and the federal laws of the United
States of America.
(D) With respect to the opinions set forth in paragraph 7
above, we have been advised and have assumed that the Purchasers are located
(within the meaning of all relevant state securities laws) only in the States of
Arizona, New York, Tennessee and Texas.
We bring to your attention the fact that our legal opinions
are an expression of professional judgment and not a guaranty of a result.
This opinion is solely for your information and use and is
provided to you in connection with the Purchase Agreement and shall not be
quoted or otherwise referred to, filed with or given to any governmental agency
or other person without our prior written consent. This opinion is given as of
the date hereof and we shall have no obligation to advise you of any changes
that may hereafter be brought to our attention.
Respectfully submitted,
/s/ Nossamon, Guthner, ▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
ANNEX I - PURCHASERS
WCAS PURCHASERS:
Welsh, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇ VII, L.P.
WCAS Healthcare Partners, L.P.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
D. ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
c/o Welsh, Carson, ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Reboul, MacMurray, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Kristol
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
ANNEX I - PURCHASERS [continued]
MANAGEMENT PURCHASERS:
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
c/o United Surgical Partners
International, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
ANNEX II - INITIAL SHARES PURCHASED
Number of Number of
Initial Class Initial Cash Note Total
A Common Preferred Purchase Principal Purchase
Shares Shares Price Amount Price
Welsh, Carson, ▇▇▇▇▇▇▇▇ Aggregate 6,487,789 -- $12,975,578 --- $12,975,578
& ▇▇▇▇▇ VII, L.P.
WCAHealthcare
Partners, L.P.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
D. ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ 599,711 --- $1,199,422 --- $1,199,422
▇▇▇ ▇▇▇▇▇▇▇ 187,500 --- $125,000 $250,000 $375'000
▇▇▇▇▇▇ ▇▇▇▇▇ 37,500 --- --- $75,000 $75,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ 75,000 --- $25,000 $125,000 $150,000
▇▇▇▇▇ ▇▇▇▇▇▇ 37,500 --- --- $75,000 $75,000
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 75,000 --- $25,000 $125,000 $150,000
Totals: 7,500,000 --- $14,350,000 $650,000 $15,000,000
ANNEX III - ADDITIONAL SHARES TO BE PURCHASED
Maximum Number of Maximum Number Maximum Aggregate
Additional Class a of Redeemable Additional
Common Shares Preferred Shares Purchase Price
------------- ---------------- ------------------
Welsh, Carson, ▇▇▇▇▇▇▇▇ Aggregate 3,118,750 Aggregate 30,000 $36,237,500
& ▇▇▇▇▇ VII, L.P.
CAHealthcare
Partners, L.P.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
D. ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ 218,'750 --- $437,500
▇▇▇ ▇▇▇▇▇▇▇ 62,500 --- $125,000
▇▇▇▇▇▇ ▇▇▇▇▇ 12,500 --- $25,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ 25,000 --- $50,000
▇▇▇▇▇ ▇▇▇▇▇▇ 12,500 --- $25,000
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 25,000 --- $50,000
Totals: 3,475,000 30,000 $36,950,000
ANNEX IV - SUBSEQUENT CLOSING REPRESENTATIONS
SECTION 2.06 FINANCIAL STATEMENTS. The most recent monthly and
annual financial statements of the Company delivered to WCAS VII pursuant to
Section 5.01 hereof have been prepared in accordance with generally accepted
accounting principles consistently applied, and fairly present the financial
position of the Company and its subsidiaries as of the date of such financial
statements and the results of its operations for the period then ended in
accordance with generally accepted accounting principles, except (in the case of
the monthly financial statements) for the absence of notes and subject to year
end adjustments which consist only of normal recurring accruals. Except as
reflected in said financial statements or as disclosed in writing to WCAS VII,
the Company had no material (individually or in the aggregate) obligations or
liabilities, absolute, accrued or contingent, as of the date of such financial
statements that would be required to be reflected on said financial statements.
SECTION 2.07 EVENTS SUBSEQUENT TO DATE OF ANNUAL FINANCIAL
STATEMENTS. Since the date of the most recent annual financial statements
delivered to WCAS VII pursuant to Section 5.01 and except as set forth on
Schedule 2.07 hereto, the Company has not (i) issued any stock, bonds or other
corporate securities, (ii) borrowed any amount or incurred any liabilities
(absolute or contingent) that would be required to be disclosed on a balance
sheet as of the date hereof prepared in accordance with generally accepted
accounting principles, except current liabilities incurred, and liabilities
under contracts entered into, in the ordinary course of business, (iii)
discharged or satisfied any lien or paid any obligation or liability (absolute
or contingent) other than current liabilities shown on such financial statements
and current liabilities incurred since that date in the ordinary course of
business, (iv) declared or made any payment or distribution to stockholders or
purchased or redeemed any shares of its capital stock or other securities, (v)
mortgaged, pledged or subjected to lien any of its assets, tangible or
intangible, other than liens of current real property taxes not yet delinquent
and payable, (vi) sold, assigned or transferred any of its material tangible
assets, except in the ordinary course of business, (vii) acquired any material
tangible assets or properties, except in the ordinary course of business, (viii)
canceled or compromised any debts or claims, except in the ordinary course of
business, (ix) sold, assigned or transferred any patents, trademarks,
tradenames, or other intangible rights (or licenses thereto) or permitted any
license, permit, or other form of authorization relating to such rights to
lapse, (x) suffered any material losses, or waived any rights of material value,
whether or not in the ordinary course of business, (xi) received notification of
cancellation, or canceled or waived any rights which, individually or in the
aggregate, are material with respect to any currently existing agreement,
contract, right or understanding, (xii) made any changes in officer
compensation, except for compensation attributed to newly hired officers and for
changes made in the ordinary course of business and consistent with past
practice or (xiii) entered into any transaction except in the ordinary course of
business.
SCHEDULE 2.01(b)
COMPANY OWNERSHIP OF STOCK OR OTHER INTEREST
None (pending completion of the acquisition of the stock of Columbia
International)
SCHEDULE 2.04(a)
OWNERSHIP OF CAPITAL STOCK OF THE COMPANY
Stockholder of Record Number of Shares
--------------------- of Class A Common Stock
-----------------------
Welsh, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VII, L.P. 415,391
WCAS Healthcare Partners, L.P. 6,208
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 5,064
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 5,064
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 5,064
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 887
▇▇▇▇▇▇ ▇. ▇▇▇▇ 887
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 2,661
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 45
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 887
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 310
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 133
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 683
D. ▇▇▇▇▇ ▇▇▇▇▇▇▇ 177
▇▇▇▇▇▇ ▇▇▇▇▇ 56,539
SCHEDULE 2.04(b)
RIGHTS. WARRANTS, OPTIONS, ETC.
1. The Company's Board of Directors has authorized the grant
of stock options covering a total of 803,300 shares of Common Stock at an option
price of $2.00 per share.
2. The letter of intent, dated January 23, 1998, between WCAS
VII and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ states that ▇▇. ▇▇▇▇▇ may be entitled to be granted
additional options if ▇▇. ▇▇▇▇▇ continues to invest in the Company on a pro rata
basis with WCAS VII and its affiliated investors after the initial proposed
investment of $50,000,000 is made by WCAS VII and its affiliates.
SCHEDULE 2.05
GOVERNMENTAL APPROVALS
1. The Company may file SEC Form D following the Initial Closing.
2. If the Purchasers exercise their rights pursuant to Section 4 of the
Amended and Restated Registration Rights Agreement to require the Company to
register any portion of their Company shares, the Company will be required to
make filings under applicable federal and state securities laws in order to
perform its obligations.
SCHEDULE 2.06
CORPORATE TRANSACTIONS
1. The Company intends to execute the Stock Purchase Agreement
and consummate the acquisition of the stock of Columbia International
concurrently with (or immediately after) the completion of the Initial Closing.
2. The Company has established a corporate office in Dallas,
Texas, has several employees and is actively investigating and negotiating
several possible acquisition and joint venture transactions, none of which
(other than the proposed acquisition of Columbia International) has resulted in
any letters of intent or formal proposals to the Board of Directors.
SCHEDULE 2.07
EVENTS SUBSEQUENT TO DATE OF INCORPORATION
See Schedules 2.01(b), 2.04(a), 2.04 (b) and 2.06, which are incorporated herein
by this reference.
SCHEDULE 2.08
ACTIONS PENDING
None
SCHEDULE 2.12
TITLE TO PROPERTY
None
SCHEDULE 2.14
AFFILIATED TRANSACTIONS
See Schedule 2.04(b), which is incorporated herein by this reference.
SCHEDULE 2.15
BROKERS' OR FINDERS' FEES
None
SCHEDULE 3.03(d)
CERTAIN PURCHASERS
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
SCHEDULE 3.05
BROKERS' OR FINDERS, FEES
None