EXHIBIT 10.9
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SECURITIES PURCHASE AGREEMENT
among
UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
WELSH, CARSON, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VII, L.P.
HEALTH CARE CAPITAL PARTNERS, L.P.
and
THE SEVERAL OTHER PURCHASERS NAMED IN ANNEX I HERETO
Dated as of October 26, 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.......................... 2
SECTION 1.03 The Company's Right to Request Purchases of
Additional Securities......................... 2
SECTION 1.04 Issuance, Sale and Delivery of Additional
Securities on Subsequent Closing Dates........ 4
SECTION 1.05 Subsequent Closing Dates...................... 5
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 2.01 Organization, Qualifications and
Corporate Power............................... 5
SECTION 2.02 Authorization of Agreements, Etc.............. 6
SECTION 2.03 Validity...................................... 6
SECTION 2.04 Authorized Capital Stock...................... 7
SECTION 2.05 Governmental Approvals ....................... 7
SECTION 2.06 Financial Statements ......................... 7
SECTION 2.07 Events Subsequent to Date of
Financial Statements.......................... 8
SECTION 2.08 Actions Pending............................... 8
SECTION 2.09 Trade Secrets................................. 9
SECTION 2.10 Taxes......................................... 9
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..................... 10
SECTION 2.16 Disclosure.................................... 10
III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
SECTION 3.01 Authorization................................. 10
SECTION 3.02 Validity...................................... 10
SECTION 3.03 Investment Representations.................... 11
SECTION 3.04 Governmental Approvals........................ 12
SECTION 3.05 Brokers' or Finders' Fees..................... 12
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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............................ 15
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
SECTION 5.08 Management Fee................................ 20
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 Waiver of Prior Preemptive Rights............. 22
SECTION 6.06 Entire Agreement; Modifications............... 22
SECTION 6.07 Assignment.................................... 22
SECTION 6.08 Counterparts.................................. 22
SECTION 6.09 Governing Law................................. 22
TESTIMONIUM
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INDEX TO EXHIBITS, ANNEXES AND SCHEDULES
EXHIBIT DESCRIPTION
A Form of Senior Subordinated Note
B Form of Promissory Note
C Form of Amendment No.3 to the Amended and
Restated Registration Rights Agreement
D Form of Amendment No.3 to the Amended and
Restated Stockholders Agreement
E Form of Certificate of Amendment to the
Certificate of Incorporation
ANNEX DESCRIPTION
I Purchasers
II Initial Shares Purchased
III Additional Securities 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 Financial Statements
2.07 Events Subsequent to Date of Financial
Statements
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 October 26, 1998, among UNITED
SURGICAL PARTNERS INTERNATIONAL, INC., a Delaware corporation (the "Company"),
WELSH, CARSON, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VII, L.P., a Delaware limited partnership ("WCAS
VII"), HEALTH CARE CAPITAL PARTNERS, L.P., a Delaware limited partnership,
HEALTH CARE EXECUTIVE PARTNERS, L.P., a Delaware limited partnership (together
with Health Care Capital Partners, L.P., "HC Partners") and the several other
purchasers named in Annex I hereto (such purchasers, WCAS VII and HC Partners
being hereinafter at times referred to individually as a "Purchaser" and
collectively as the "Purchasers").
WHEREAS, the Company is engaged 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, HC Partners and the several
other Purchasers listed on Annex I hereto under the heading "WCAS/HC Purchasers"
(WCAS VII and such listed Purchasers, other than HC Partners, ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇ ▇'▇▇▇▇▇▇▇▇ being hereinafter collectively
called the "WCAS Purchasers", and the WCAS Purchasers, HC Partners, ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇ ▇'▇▇▇▇▇▇▇▇ being hereinafter
collectively called the "WCAS/HC Purchasers") an aggregate 6,334,243 shares of
Class A Common Stock, $.01 par value ("Class A Common Stock") and (ii) to the
Purchasers listed on Annex I hereto under the heading "Management Purchasers"
(such listed Purchasers being hereinafter collectively called the "Management
Purchasers") an aggregate 392,638 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/HC Purchasers may wish to purchase up to an aggregate 2,288,613 shares (the
"Additional WCAS/HC Class A Common Shares") of Class A Common Stock and, only
after the issuance, sale and delivery of the Additional WCAS/HC Class A Common
Shares and the Additional Management Class A Common Shares (as hereinafter
defined), up to an aggregate principal amount of $20, 120,000 of the Company's
7% Senior Subordinated Notes substantially in the form attached hereto as
Exhibit A (such notes being hereinafter at times referred to individually as a
"Senior Subordinated Note" and collectively as "Senior Subordinated Notes") and
(ii) the Management Purchasers may wish to purchase up to an aggregate 141,862
shares (the "Additional Management Class A Common Shares") of Class A Common
Stock (such Additional Management Class A Common Shares and the Additional
WCAS/HC Class A Common Shares being hereinafter collectively called the
"Additional Shares"), 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
Shares and Senior Subordinated Notes (collectively, the "Additional
Securities"), all on the terms and subject to the conditions hereinafter set
forth;
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. (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 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 $3.50 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 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 B (each, a "Promissory Note"), in the principal
amount set forth opposite the name of such Purchaser on Annex II hereto under
the heading "Promissory Note Principal Amount."
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 October 26, 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
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Initial Closing Date, the Additional WCAS/HC Class A Common Shares shall be
reserved for issuance to the WCAS/HC Purchasers and the Additional Management
Class A Common Shares shall be reserved for issuance to the Management
Purchasers (together with the WCAS/HC Purchasers being hereinafter collectively
called the "Additional Purchasers"), all pursuant to this Section 1.03.
(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 the
maximum principal amount of Senior Subordinated Notes that may be purchased by
each Additional Purchaser (if applicable) on a Subsequent Closing Date is set
forth opposite the name of such Additional Purchaser on Annex III hereto under
the heading "Maximum Note Principal Amount." The issuance, sale and delivery of
the Additional WCAS/HC Class A Common Shares to the WCAS/HC 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/HC Purchasers and the
Management Purchasers in proportion to the number of shares of Class A Common
Stock purchased by such Purchaser on the Initial Closing Date. After all of such
Additional 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 Shares prior to the issuance, sale or delivery of any Senior
Subordinated Notes), the issuance, sale and delivery of the Senior Subordinated
Notes on any Subsequent Closing Date shall be PRO RATA among the WCAS/HC
Purchasers in proportion to the number of shares of Class A Common Stock
purchased by such WCAS/HC Purchaser on the Initial Closing Date. The aggregate
number of Additional Securities available for purchase by each Additional
Purchaser on a Subsequent Closing Date shall be reduced by the aggregate number
of Additional Shares or aggregate principal amount of Senior Subordinated Notes,
as the case may be, 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, as amended (the
"Securities Act"), and (iii) a Change of Control, the number, if any, of
Additional Securities 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
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than the WCAS Purchasers) 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/HC Purchasers and the
Management Purchasers that it wishes to issue and sell all or any portion of the
Additional Securities 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 thereto), (ii) the aggregate number of Additional Shares or
aggregate principal amount of Senior Subordinated Notes, as the case may be
(collectively, the "Call Securities") that the Company proposes to issue to the
WCAS/HC 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 12 business days or more than
45 days after the date of the Notice of Financing Event.
(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.
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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/HC Purchaser, and each WCAS/HC Purchaser shall purchase
from the Company, (x) a Senior Subordinated Note with the principal amount
specified in the Call Notice (the "Note Principal Amount") and/or (y) the number
of Additional WCAS/HC Class A Common Shares specified in the Call Notice at a
purchase price equal to $3.50 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 $3.50 per share. On each Subsequent Closing Date, the
Company shall (x) issue to each Additional Purchaser stock certificates in
definitive form, registered in the name of such Additional Purchaser evidencing
the Additional Shares and (y) deliver to such Additional Purchaser such
Additional Purchaser's Senior Subordinated Note, if applicable.
(b) As payment in full for the Additional Securities 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 (x) $3.50 multiplied by the number of Additional Shares set
forth in the relevant Call Notice and/or (y) the Note Principal Amount.
SECTION 1.05 SUBSEQUENT CLOSING DATES. Each closing of a sale and purchase
of Additional Securities 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").
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
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and hold its properties, to carry on its business as currently conducted and to
execute and deliver this Agreement, the Senior Subordinated Notes, Amendment
No.3 to the Amended and Restated Registration Rights Agreement dated as of the
date hereof substantially in the form attached hereto as Exhibit C (the
"Registration Rights Agreement Amendment") among the Company and the several
other parties named therein and Amendment No.3 to the Amended and Restated
Stockholders Agreement dated as of the date hereof substantially in the form
attached hereto as Exhibit D (the "Stockholders Agreement Amendment") among the
Company and the several other parties named therein, to perform its obligations
under this Agreement, the Senior Subordinated Notes, the Stockholders Agreement
Amendment and the Registration Rights Agreement Amendment, and to issue, sell
and deliver the Initial Shares and the Additional Securities (collectively, 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 Senior Subordinated Notes, the Stockholders Agreement Amendment and the
Registration Rights Agreement Amendment, 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 of
any corporation, partnership, joint venture or other entity in which the Company
owns, of record or beneficially, 50% or more of the voting interests of the same
(such an entity being hereinafter referred to individually as a "Subsidiary" and
collectively as "Subsidiaries").
(b) The Initial Shares and Additional Shares 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 shares of Class A Common Stock.
The issuance, sale and delivery of the Initial Shares and Additional Shares 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,
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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
Senior Subordinated Notes, the Stockholders Agreement Amendment and the
Registration Rights Agreement Amendment, when executed and delivered by the
Company as provided in this Agreement, and when executed and delivered by the
other parties hereto (if applicable), 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) 40,000,000
shares of Common Stock, $.01 par value, (ii) 30,000,000 shares of Class A Common
Stock, (iii) 31,200 shares of Series A Redeemable Preferred Stock and (iv) 2,716
shares of Series B Convertible 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 dated as of April 30, 1998 among the Company and the
several other parties named therein, as amended, 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 Stockholders Agreement Amendment
and the Registration Rights Agreement Amendment, the performance of this
Agreement, the Stockholders Agreement Amendment and the Registration Rights
Agreement Amendment, 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").
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SECTION 2.06 FINANCIAL STATEMENTS. The unaudited consolidated balance
sheet of the Company as of July 31, 1998 and the related unaudited statement
of operations for the period from February 27, 1998 (the date of incorporation
of the Company) to July 31, 1998 are attached hereto as Schedule 2.06. Such
financial statements have been prepared in accordance with generally accepted
accounting principles consistently applied, and fairly present the consolidated
financial position of the Company 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 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 and HC Partners, 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. Since July 31, 1998 there has 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.
SECTION 2.07 EVENTS SUBSEQUENT TO DATE OF FINANCIAL STATEMENTS. Since July
31, 1998, 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.
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,
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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 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.
9
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.
SECTION 2.16 DISCLOSURE. Neither this Agreement nor the Schedules and
Exhibits attached hereto contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained herein and therein, in the light of circumstances under which made,
not misleading.
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 Stockholders Agreement Amendment, the
Registration Rights Agreement Amendment and 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 Stockholders
Agreement Amendment, the Registration Rights Agreement Amendment and such
Purchaser's
10
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 dated as of April 30, 1998 among the Company and
the several other parties named therein, as amended (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 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
11
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 investors).
(e) Such Purchaser, to the extent that such Purchaser is subject to the
Connecticut Uniform Securities Act, is an institutional buyer under
ss.36b-21(b)(8) thereto.
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
Stockholders Agreement Amendment, the Registration Rights Agreement Amendment
and such Purchaser's Promissory Note, if any, 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.
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
12
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) STOCKHOLDER AGREEMENT AMENDMENT AND REGISTRATION RIGHTS AGREEMENT
AMENDMENT. The Company and the other parties thereto shall have executed and
delivered the Stockholders Agreement Amendment and the Registration Rights
Agreement Amendment.
(f) CERTIFICATE OF AMENDMENT. The Certificate of Amendment to the
Certificate of Incorporation of the Company substantially in the form of Exhibit
E 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) OPINION OF COUNSEL. The Purchasers shall have received an opinion of
Nossaman, Guthner, ▇▇▇▇ & ▇▇▇▇▇▇▇, LLP, in form and substance reasonably
satisfactory to the Purchasers and their counsel.
(h) 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 Registration Rights Agreement Amendment, the Stockholders
Agreement Amendment 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 Registration Rights Agreement Amendment, the Stockholders
Agreement Amendment and the stock certificates representing the Initial
Shares and any certificate or instrument
13
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.
(i) 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 4.02 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) STOCKHOLDERS AGREEMENT AMENDMENT, REGISTRATION RIGHTS AGREEMENT
AMENDMENT AND PROMISSORY NOTE. Each of the parties thereto (other than the
Company) shall have executed and delivered the Stockholders Agreement Amendment,
the Registration Rights Agreement Amendment and the Promissory Note, if any.
14
SECTION 4.03 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASERS
WITH RESPECT TO EACH SUBSEQUENT CLOSING. The obligations of each of the
Additional Purchasers to purchase and pay for the Additional Securities 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 Securities being issued and sold on such Subsequent
Closing Date.
(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(g) 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 Section 2.06 hereto
shall be replaced in their entirety with the representations 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.
15
(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. 0 1 (h)
above as if such Subsequent Closing Date were the Initial Closing Date.
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(h)(i) and 4.01(h)(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 Securities 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 Securities 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).
16
(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 SATISFACTORY. All corporate or partnership and
other proceedings to be taken by each Purchaser and all waivers and consents to
be obtained by any 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 REOORTS ETC.
The Company shall furnish to each of WCAS VII and HC Partners, prior to
the consummation of the Company's IPO and for so long as WCAS VII or HC
Partners, as applicable, shall hold at least 25% of the Securities (or
securities into which such Securities are converted, exchanged or reclassified)
purchased by WCAS VII or HC Partners hereunder:
(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;
17
(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.
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 the Additional
Purchasers 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
and HC Partners prompt notice of (i) the occurrence, or failure to occur, of any
event that the Company believes would be likely to (x) cause any of the
representations or warranties of the Company contained in this Agreement to be
untrue or inaccurate in any material respect at any time from the date hereof or
(y) 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, (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, and which, in the case of each
of the items set
18
forth in clauses (i) through (iv) above, would be likely to have 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.
(b) For purposes of permitting the Additional Purchasers to purchase any
of the remaining Additional Shares prior to the Termination Date pursuant to
Section 1.03(f) hereof, the Company shall give the WCAS/HC 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 certain domestic
surgical centers (or assets relating thereto) and Spanish hospital companies
or assets relating thereto) 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 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 HC Partners the right to
purchase HC Partners' 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 HC Partners 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 HC
Partners 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
19
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 Company's Stock Option Plan as
in effect from time to time;
(ii) in connection with the conversion or exercise of outstanding
securities of the Company;
(iii) in connection with any merger of, or acquisition by, the
Company;
(iv) in connection with the issuance of any Additional Shares; or
(v) in an underwritten public offering of shares of Common Stock
registered under the Securities Act.
(b) The Company shall, before issuing any securities pursuant to an
Eligible Offering, give written notice thereof to HC Partners. Such notice shall
specify the security or securities the Company proposes to issue and the
consideration that the Company intends to receive therefore. For a period of ten
(10) days following the date of such notice, HC Partners shall be entitled, by
written notice to the Company, to elect to purchase all or any part of HC
Partners' 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 HC Partners, on
a mutually agreeable date not less than ten (10) business days following such
acceptance, the Company shall sell to HC Partners and HC Partners shall purchase
from the Company, for the consideration and on the terms set forth in the notice
as aforesaid, the securities that HC Partners shall have elected to purchase.
SECTION 5.08 MANAGEMENT FEE. At no time shall WCAS VII (or its partners)
charge the Company for management or similar fees relating to its investment in
the Company.
VI
MISCELLANEOUS
20
SECTION 6.01 EXPENSES, ETC. The Company shall pay its own expenses. All
fees and expense 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.
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: 213-612- 7801
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
21
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 WAIVER OF PRIOR PREEMPTIVE RIGHTS. Each of the WCAS
Purchasers and ▇▇▇▇▇▇ ▇▇▇▇▇ hereby waive their respective rights to purchase a
proportionate percentage of the Initial Shares and Additional Shares as set
forth in Section 5.07 of the Securities Purchase Agreement dated Apri130, 1998
among the Company, WCAS VII and the several other parties named therein.
SECTION 6.06 ENTIRE AGREEMENT: MODIFICATIONS. This Agreement (including
the Exhibits, Annexes and Schedules hereto) constitutes the entire agreement of
the parties with 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 6.07 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 Securities 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 Securities 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 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 6.09 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/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Attorney-in-Fact
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ D. ▇▇▇▇▇ ▇▇▇▇▇▇▇
D. ▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇ ▇'▇▇▇▇▇▇▇▇
▇▇▇ ▇'▇▇▇▇▇▇▇▇
HEALTH CARE CAPITAL
PARTNERS, L.P.
By ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., LLC
General Partner
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Member
HEALTH CARE EXECUTIVE
PARTNERS, L.P.
By ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., LLC
General Partner
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Member
MANAGEMENT PURCHASERS
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ FBO ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
ANNEX - PURCHASERS
WCAS/HC PURCHASERS:
1. WCAS Purchasers
Welsh, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ VII, L.P.
WCAS Healthcare Partners, L.P.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
O. ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
c/o Welsh, Carson, ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Reboul, MacMurray, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Kristol
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
2. HC Partners
Health Care Capital Partners, L.P.
Health Care Executive Partners, L.P.
c/o Fewer ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
3.
▇▇▇▇▇▇ ▇▇▇▇▇▇
Shunpike at ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ Koonsmanm
▇▇▇ ▇'▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ANNEX I - PURCHASERS [continued
MANAGEMENT PURCHASERS:
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
c/o United Surgical Partners
International, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Annex II Initial Shares Purchased
Number of Initial
Class A Common Cash Purchase Promissory Note Total Purchase
Shares Price Principal Amount Price
Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VII, L
4,711,273 $16,489,455.50 -- $16,489,455.50
WCAS Healthcare Partners,
L.P. 70,415 $246,452.50 -- $246,452.50
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 57,439 $201,036.50 -- $201,036.50
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 57,439 $201,036.50 -- $201,036.50
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 57,439 $201,036.50 -- $201,036.50
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 10,060 $35,210.00 -- $35,210.00
▇▇▇▇▇▇ ▇. ▇▇▇▇ 10,060 $35,210.00 -- $35,210.00
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 30,178 $105,623.00 -- $105,623.00
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 503 $1,760.50 -- $1,760.50
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 10,060 $35,210.00 -- $35,210.00
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 3,521 $12,323.50 -- $12,323.50
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 1,509 $5,281.50 -- $5,281.50
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 7,746 $27,111.00 -- $27,111.00
D. ▇▇▇▇▇ ▇▇▇▇▇▇▇ 2,012 $7,042.00 -- $7,042.00
▇▇▇▇▇▇ ▇▇▇▇▇▇ 7,518 $26,313.00 -- $26,313.00
--
▇▇▇▇▇▇ ▇▇▇▇▇▇ 12,593 $44,075.50 -- $44,075.50
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 12,593 $44,075.50 -- $44,075.50
▇▇▇▇ ▇▇▇▇▇▇▇▇ 6,296 $22,036.00 -- $22,036.00
▇▇▇ ▇'▇▇▇▇▇▇▇▇ 6,296 $22,036.00 -- $22,036.00
Health Care Capital, Partners, --
L.P. 1,209,261 $4,232,413.50 $4,232,413.50
Health Care Executive --
Partners, L.P. 50,032 $175,112.00 $175,112.00
--
▇▇▇▇▇▇ ▇▇▇▇▇ 157,202 $550,207.00 -- $550,207.00
▇▇▇▇▇▇ ▇▇▇▇▇▇ 189,524 $263,334.00 $400,00.00 $663,334.00
▇▇▇ ▇▇▇▇▇▇▇ 7,346 $25,711.00 -- $25,711.00
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 14,692 $51,422.00 -- $51,422.00
▇▇▇▇▇▇ ▇▇▇▇▇ 3,673 $12,855.50 -- $12,855.50
▇▇▇▇▇▇▇ ▇▇▇▇▇ 11,019 $38,566.50 -- $38,566.50
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ FBO ▇▇▇▇▇ --
McDonald 5,509 $19,281.50 $19,281.50
▇▇▇▇▇ ▇▇▇▇▇▇ 3,673 $12,855.50 -- $12,855.50
Totals 6,726,881 $23,144,083.50 $400,000.00 $23,144,083.50
Annex III Additional Securities to be Purchased
Maximum Number of
Additional Class A Maximum Note Aggregate
Common Shares Class A Purchase Price Purchase Price Purchase Price
Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
VII, L. 1,702,219 $5,957,766.50 $14,960,000.00 $20,917,766.50
WCAS Healthcare Partners,
L.P. 25,442 $89,047.00 $225,000.00 $314,047.00
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 20,753 $72,635.50 $181,000.00 $253,635.50
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 20,753 $72,635.50 $181,000.00 $253,635.50
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 20,753 $72,635.50 $181,000.00 $253,635.50
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 3,635 $12,722.50 $32,000.00 $44,722.50
▇▇▇▇▇▇ ▇. ▇▇▇▇ 3,635 $ $32,000.00 $44,722.50
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 10,904 $38,164.00 $95,000.00 $133,164.00
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 182 $637.00 $6,000.00 $6.637.00
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 3,635 $12,722.50 $32,000.00 $44,722.50
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1,272 $4,452.00 $13,000.00 $17,452.00
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 545 $1,907.00 $6,000.00 $7,907.50
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 2,799 $9,796.50 $25,000.00 $34,796.50
D. ▇▇▇▇▇ ▇▇▇▇▇▇▇ 727 $2,544.50 $6,000.00 $8,544.50
▇▇▇▇▇▇ ▇▇▇▇▇▇ 2,716 $9,506.00 $25,000.00 $34,506.00
▇▇▇▇▇▇ ▇▇▇▇▇▇ 4,550 $15,925.00 $40,000.00 $55,925.00
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 4,550 $15,925.00 $40,000.00 $55,925.00
▇▇▇▇ ▇▇▇▇▇▇▇▇ 2,275 $7,962.50 $20,000.00 $27,962.50
▇▇▇ ▇'▇▇▇▇▇▇▇▇ 2,275 $7,962.50 $20,000.00 $27,962.50
Health Care Capital, Partners,
L.P. 436,916 $1,529,206.00 $3,841,000.00 $5,370,206.00
Health Care Executive
Partners, L.P. 18,077 $63,269.50 $159,000.00 $222,269.50
▇▇▇▇▇▇ ▇▇▇▇▇ 56,798 $198,793.00 -- $198,793.00
▇▇▇▇▇▇ ▇▇▇▇▇▇ 68,476 $239,666.00 -- $239,666.00
▇▇▇ ▇▇▇▇▇▇▇ 2,654 $9,289.00 -- $9,289.00
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 5,308 $18,578.00 -- $18,578.00
▇▇▇▇▇▇ ▇▇▇▇▇ 1,327 $4,644.50 -- $4,644.50
▇▇▇▇▇▇▇ ▇▇▇▇▇ 3,981 $13,933.50 -- $13,933.50
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ FBO ▇▇▇▇▇
▇▇▇▇▇▇▇▇ 1,991 $6,968.50 -- $6,968.50
▇▇▇▇▇ ▇▇▇▇▇▇ 1,327 $4,644.50 -- $4,644.50
Totals 2,430,475 $8,506,662.50 $20,120,000.00 $28,626,662.50
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 and HC Partners
pursuant to Section 5.01 hereof have been prepared in accordance with generally
accepted accounting principles consistently applied, and fairly present the
consolidated financial position of the Company 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
and HC Partners, 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.
Exhibit A
THIS NOTE HAS NOT BEEN REGISTERED HER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.
NEITHER THE SECURITIES EVIDENCED HEREBY, NOR ANY INTEREST
THEREIN, MAY BE OFFERED, SOLD, TRANSFERRED, ENCUMBERED
OR OTHERWISE DISPOSED OF UNLESS EITHER (I) THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND LAWS
RELATING THERETO OR (II) THE CORPORATION HAS RECEIVED AN
OPINION OF COUNSEL, REASONABLY SATISFACTORY IN FORM AND
SUBSTANCE TO THE CORPORATION, STATING THAT SUCH
REGISTRATION IS NOT REQUIRED.
UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
7% Senior Subordinated Note
$[ ] [ , 1998]
UNITED SURGICAL PARTNERS INTERNATIONAL, INC., a Delaware corporation
(hereinafter called the "Corporation"), for value received, hereby promises to
pay to [ ], the principal sum of [ ($[ ])] on [April , 2008] (subject to
applicable restrictions set forth in Section 12 hereof), and to pay interest
(computed on the basis of a 365-day year consisting of twelve 30-day months)
from the date hereof on the unpaid principal amount hereof at the rate of 7% per
annum, payable annually in arrears on [ I of each year (each said day being an
"Interest Payment Date"), commencing on [ ] and until the date the outstanding
principal amount hereof shall have become due and payable in full, whether at
maturity or by acceleration or otherwise. If the principal amount hereof shall
not be paid when the same shall have become due and payable in full, whether at
maturity or by acceleration or otherwise, then such overdue principal amount and
(to the extent permitted by applicable law) any overdue interest shall thereupon
bear interest at the rate of 9% per annum until paid in full.
All payments of principal and interest on this Note shall be in such
coin or currency of the United States of America as at the time of payment shall
be legal tender for payment of public and private debts, and shall be made at
the offices of the person deemed the holder hereof in accordance with Section 4
below.
1. The Note. This Note is issued pursuant to and is subject to
provisions of the Securities Purchase Agreement dated as of October 26, 1998
(the "Securities Purchase Agreement") among the Corporation, Welsh, Carson,
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ VII, L.P. ("WCAS VII"), Health Care Capital Partners, L.P.
and the several other parties named therein. As used herein, the term "Note" or
"Notes" includes all of the 7% Senior Subordinated Note or Notes due [April ,
2008] originally issued in connection with the Securities Purchase Agreement and
any 7% Senior Subordinated Note or Notes due [April , 2008] of the Corporation
subsequently issued upon exchange or transfer thereof.
2. Transfer. Etc. of Notes. The Corporation shall keep at its office
or agency maintained as provided in paragraph (a) of Section 6 a register in
which the Corporation shall provide for the registration of this Note and for
the registration of transfer and exchange of this Note. The holder of this Note
may, at its option, and either in person or by duly authorized attorney,
surrender the same for registration of transfer or exchange at the office or
agency of the Corporation maintained as provided in paragraph (a) of Section 6,
and, without expense to such holder (except for transfer taxes, if any, imposed
in connection therewith), receive in exchange therefor a Note or Notes each in
such denomination or denominations as such holder may request (which
denominations shall be $100,000 or an integral multiple thereof, except for any
balance which may be less than $100,000), dated as of the date to which interest
has been paid on the Note or Notes so surrendered for transfer or exchange, for
the same aggregate principal amount as the then unpaid principal amount of the
Note or Notes so surrendered for transfer or exchange, and registered in the
name of such person or persons as may be designated by such holder. This Note,
when presented or surrendered for registration of transfer or exchange, shall be
duly endorsed, or shall be accompanied by a written instrument of transfer,
satisfactory in form to the Corporation, duly executed by the holder of such
Note or his attorney duly authorized in writing. Every Note so made and
delivered in exchange for this Note shall in all other respects be in the same
form and have the same terms as this Note. No transfer or exchange of any Note
shall be valid unless made in the foregoing manner at such office or agency.
3. Loss, Theft, Destruction or Mutilation of Note. Upon receipt of
evidence satisfactory to the Corporation of the loss, theft, destruction or
mutilation of this Note, and, in the case of any such loss, theft or
destruction, upon receipt of an affidavit of loss and indemnity from the holder
hereof reasonably satisfactory to the Corporation, or, in the case of any such
mutilation, upon surrender and cancellation of this Note, the Corporation will
make and deliver, in lieu of this Note, a new Note of like tenor and unpaid
principal amount and dated as of the date to which interest has been paid on
this Note.
4. Persons Deemed Owners: Holders. The Corporation may deem and
treat the person in whose name this Note is registered as the owner and holder
of this Note for the purpose of receiving payment of principal of and interest
on this Note and for all other purposes whatsoever, whether or not this Note
shall be overdue. With respect to any Note at any time outstanding, the term
"holder", as used herein, shall be deemed to mean the person in whose name such
Note is registered as aforesaid at such time.
5. Prepayments. The Corporation may prepay this Note as follows:
(a) Mandatory Prepayment. Except as and to the extent expressly
prohibited by applicable law, the Corporation shall prepay the principal amount,
plus accrued and unpaid interest, of all Notes which shall then be outstanding,
upon the consummation by the Corporation of an initial public offering of its
Common Stock, $.01 par value, registered under the Securities Act of 1933, as
amended. 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 of related transactions to any other person or (iii)
the acquisition of "beneficial ownership" by any "person" or "group" (other than
CAS VII 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 (the "Change of Control Event Date"), give notice thereof to the holder or
holders of the Notes and, in the event that within 15 days after receipt of such
notice, the holders of a majority of the outstanding aggregate principal amount
of the Notes elect, by written notice to the Corporation, to have such Notes
prepaid, the Corporation shall prepay 100% of the principal amount of the Notes,
plus any accrued but unpaid interest as of the Change of Control Event Date, on
or before such date.
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 l3d-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.
(b) Optional Prepayment. Upon notice given as provided in Section
5(c), the Corporation may, at its option, prepay this Note without penalty, as a
whole at any time or in part from time to time in amounts which shall be
integral multiples of $10,000. Any date on which the Corporation elects to
prepay any of the Notes as provided in this subparagraph 5(b) and each date on
which the Corporation shall be required to prepay the Notes as provide in
subparagraph 5(a) above shall be referred to as a "Prepayment Date."
(c) Notice of Prepayment. Not less than 20 days prior to a
Prepayment Date, written notice shall be given by registered or certified mail
or by overnight courier to the holders of record of the Notes to be prepaid,
such notice to be addressed to each such holder at his post office address as
shown by the records of the Corporation, specifying the dollar amount to be
prepaid, the paragraph or paragraphs of this Note pursuant to which such
prepayment shall be made, and the date of such prepayment, which date shall not
be a day on which the banks of New York are required or authorized to be closed.
Upon notice of prepayment being given as aforesaid, the Corporation covenants
and agrees that it will prepay, on the date therein fixed for prepayment, this
Note or the portion hereof, as the case may be, so called for prepayment, at the
prepayment price determined in accordance with Section 5(a) or 5(b) hereof. A
prepayment of less than all of the outstanding principal amount of this Note
shall not relieve the Corporation of its obligation to make scheduled payments
of interest payable in respect of the principal remaining outstanding on the
Interest Payment Dates.
(d) Allocation of All Payments. In the event of any partial payment
of less than all of the interest then due on the Notes then outstanding or any
prepayment, purchase,
redemption or retirement of less than all of the outstanding principal amount of
the Notes, the Corporation will allocate the amount of interest so to be paid
and the principal amount so to be prepaid, purchased, redeemed or retired to
each Note in proportion, as nearly as may be, to the aggregate principal amount
of all Notes then outstanding.
(e) Interest After Date Fixed for Prepay. If this Note or a portion
hereof is called for prepayment as herein provided, this Note or such portion
shall cease to bear interest on and after the date fixed for such prepayment
unless, upon presentation for such purpose, the Corporation shall fail to pay
this Note or such portion, as the case may be, in which event this Note or such
portion, as the case may be, and, so far as may be lawful, any overdue
installment of interest, shall bear interest on and after the date fixed for
such prepayment and until paid at the rate per annum provided herein.
(f) Surrender of Note; Notation Thereon. Upon any prepayment of a
portion of the principal amount of this Note, the holder hereof, at its option,
may require the Corporation to execute and deliver at the expense of the
Corporation (other than for transfer taxes, if any), upon surrender of this
Note, a new Note registered in the name of such person or persons as may be
designated by such holder for the principal amount of this Note then remaining
unpaid, dated as of the date to which the interest has been paid on the
principal amount of this Note then remaining unpaid, or may present this Note to
the Corporation for notation hereon of the payment of the portion of the
principal amount of this Note so prepaid.
6. Covenants: The Corporation covenants and agrees that, so long as
this Note shall be outstanding:
(a) Maintenance of Office. The Corporation will maintain an office
or agency in such place in the United States of America as the Corporation may
designate in writing to the registered holder hereof, where this Note may be
presented for registration of transfer and exchange as herein provided, where
notices and demands to or upon the Corporation in respect of this Note may be
served and where, at the option of the holder thereof, this Note may be
presented for payment. Until the Corporation otherwise notifies the holder of
this Note, said office shall be the principal office of the Corporation at ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
(b) Corporate Existence. The Corporation will do or cause to be done
all things necessary and lawful to preserve and keep in full force and effect
its corporate existence, rights and franchises and the corporate or partnership
existence, rights and franchises of each of its subsidiaries; provided, however,
that nothing in this paragraph (b) shall prevent (i) a consolidation or merger
of, or a sale, transfer or disposition of all or any substantial part of the
property and assets of, the Corporation or (ii) the abandonment or termination
of any rights or franchises of the Corporation, or the liquidation or
dissolution of, or a sale, transfer or disposition (whether through merger,
consolidation, sale or otherwise) of all or any substantial part of the property
and assets of, any subsidiary or the abandonment or termination of the corporate
or partnership existence, rights and franchises of any subsidiary if such
abandonment, termination, liquidation, dissolution, sale, transfer or
disposition is, in the good faith business judgment of the Corporation, in the
best interests of the Corporation and is not disadvantageous in any material
respect to the holder of this Note.
(c) Notice of Default. If any one or more events which constitute,
or which with notice or lapse of time or both would constitute, an Event of
Default under Section 8 of this Note shall occur, or if any holder of the Notes
shall demand payment or take any other action permitted upon the occurrence of
any such Event of Default, the Corporation shall, immediately after it becomes
aware that any such event has occurred or that such demand has been made or that
any such action has been taken, give notice to all holders of the Notes,
specifying the nature of such event or of such demand or action, as the case may
be; provide , however, that if such event, in the good faith judgment of the
Corporation, will be cured within ten days after the Corporation has knowledge
that such event would, with or without notice or lapse of time or both,
constitute such an Event of Default, no such notice need be given if such Event
of Default shall be cured within such ten-day period.
(d) Merger or Consolidation. Without limitation of the rights of the
holder of this Note set forth in Section 5(a) hereof, if the Corporation shall
erect a merger or consolidation in which it is not the surviving entity, then
the Corporation shall take such action as may be necessary, as a condition to
consummating such transaction, to cause the surviving entity to assume all of
the Corporation's obligations under this Note, as if such entity had been the
original issuer thereof, and such entity shall acknowledge in writing its
obligation to fully and timely honor the Corporation's obligations under this
Note.
(e) Optional Prepayments of Debt. Other than with respect to Senior
Indebtedness (as hereinafter defined), the Corporation will not make any
optional prepayment of any indebtedness for borrowed money, prior to the
repayment in full of this Note.
7. Modification; Waiver. The Corporation may, with the written
consent of the holders of not less than 66 2/3% in principal amount of the Notes
then outstanding, modify the terms and provisions of the Notes or the rights of
the holders of the Notes or the obligations of the Corporation thereunder, and
the observance by the Corporation of any term or provision of the Notes may be
waived with the written consent of the holders of not less than 66 2/3% in
principal amount of the Notes then outstanding, provided, however, that no such
modification or waiver shall:
(a) change the maturity of any Note or reduce the principal amount
thereof or reduce the rate or extend the time of payment of interest thereon or
reduce the amount or change the time of payment of premium payable on any
prepayment thereof without the consent of the holder of each Note so affected;
or
(b) give any Note any preference over any other Note; or
(c) reduce the aforesaid percentage of Notes, the consent of the
holders of which is required for any such modification.
Any such modification or waiver shall apply equally to all the
holders of the Notes and shall be binding upon them, upon each future holder of
any Note and upon the Corporation, whether or not such Note shall have been
marked to indicate such modification or waiver, but any Note issued thereafter
shall bear a notation referring to any such modification or waiver. Promptly
after obtaining the written consent of the holders as herein provided, the
Corporation shall transmit a copy of such modification or waiver to all the
holders of the Notes at the time
8. Events of Default. If any one or more of the following events,
herein called Events of Default, shall occur, for any reason whatsoever, and
whether such occurrence shall, on the part of the Corporation or any subsidiary,
be voluntary or involuntary or come about or be effected by operation of law or
pursuant to or in compliance with any judgment, decree or order of a court of
competent jurisdiction or any order, rule or regulation of any administrative or
other governmental authority, and such Event of Default shall be continuing:
(a) default shall be made in the payment of the principal when and
as the same shall become due and payable, whether on demand or at a date fixed
for prepayment or by acceleration or otherwise; or
(b) default shall be made in the payment of any installment of
interest when and as the same shall become due and payable or at a date fixed
for prepayment or by acceleration or otherwise and such default shall continue
for a period of 5 days; or
(c) default shall be made in the due observance or performance of
any other covenant, condition or agreement on the part of the Corporation to be
observed or performed pursuant to the terms hereof and such default shall
continue for 30 days after written notice thereof, specifying such default and
requesting that the same be remedied, shall have been given to the Corporation
by the holders of at least 25% of the principal amount of the Notes then
outstanding (the Corporation to give forthwith to all other holders of Notes at
the time outstanding written notice of the receipt of such notice specifying the
default referred to therein); or
(d) the entry of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Corporation or any subsidiary in
an involuntary case under the federal bankruptcy laws, as now constituted or
hereafter amended, or any other applicable federal or state bankruptcy,
insolvency or other similar laws, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of the
Corporation or any subsidiary or for any substantial part of any of their
property, or ordering the winding-up or liquidation of any of their affairs and
the continuance of any such decree or order unstayed and in effect for a period
of 60 consecutive days; or
(e) the commencement by the Corporation or any subsidiary of a
voluntary case under the federal bankruptcy laws, as now constituted or
hereafter amended, or any other applicable federal or state bankruptcy,
insolvency or other similar laws, or the consent by any of them to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) of the Corporation
or any subsidiary or for any substantial part of their property, or the making
by any of them of any assignment for the benefit of creditors, or the failure of
the Corporation or any subsidiary generally to pay its debts as such debts
become due;
then, the holder or holders of at least 25% in aggregate principal amount of the
Notes at the time outstanding may, at its or their option, by notice to the
Corporation, declare all the Notes to be,
and all the Notes shall thereupon be and become, forthwith due and payable
together with interest accrued thereon without presentment, demand, protest or
further notice of any kind, all of which are expressly waived to the extent
permitted by law, provided, however, that, upon the occurrence and during the
continuance of any of the events specified in subsections (a) or (b) of this
Section 12, the holder of any Note at the time outstanding may, at its option by
notice in writing to the Corporation, declare any Note or Notes then held by it
to be, and such Note or Notes shall thereupon be and become, forthwith due and
payable together with interest accrued thereon without presentment, demand,
protest or further notice of any kind, all of which are expressly waived to the
extent permitted by law.
At any time after any declaration of acceleration has been made as
provided in this Section 12, the holders of at least 66 2/3% in principal amount
of the Notes then outstanding may, by notice to the Corporation, rescind such
declaration and its consequences, provided, however, that no such rescission
shall extend to or affect any subsequent default or Event of Default or impair
any right consequent thereon.
Without limiting the foregoing, the Corporation hereby waives any
right to trial by jury in any legal proceeding related in any way to this Note
or the Notes and agrees that any such proceeding may, if the holder so elects,
be brought and enforced in the Supreme Court of the State of New York for New
York County or the United States District Court for the Southern District of New
York and the Corporation hereby waives any objection to jurisdiction or venue in
any such proceeding commenced in such court. The Corporation further agrees that
any process required to be served on it for purposes of any such proceeding may
be served on it, with the same effect as personal service on it within the State
of New York, by registered mail addressed to it at its office or agency set
forth in subsection (a) of Section 6 for purposes of notices hereunder.
9. Suits for Enforcement. Subject to the provisions of Section 12 of
this Note, in case any one or more of the Events of Default specified in Section
8 of this Note shall occur and be continuing, the holder of this Note may
proceed to protect and enforce its rights by suit in equity, action at law
and/or by other appropriate proceeding, whether for the specific performance of
any covenant or agreement contained in this Note or in aid of the exercise of
any power granted in this Note, or may proceed to enforce the payment of this
Note or to enforce any other legal or equitable right of the holder of this
Note.
In case of any default under this Note, the Corporation will pay to
the holder thereof such amounts as shall be sufficient to cover the reasonable
costs and expenses of such holder due to said default, including, without
limitation, collection costs and reasonable attorneys' fees, to the extent
actually incurred.
10. Remedies Cumulative. No remedy herein conferred upon the holder
of this Note is intended to be exclusive of any other remedy and each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or otherwise.
11. Remedies Not Waived. No course of dealing between the
Corporation and the holder of this Note or any delay on the part of the holder
hereof in exercising any rights hereunder shall operate as a waiver of any right
of any holder of this Note.
12. Subordination. (a) Anything contained in this Note to the
contrary notwithstanding, the indebtedness evidenced by this Note shall be
subordinate and junior, to the extent set forth in the following paragraphs (A),
(B), (C) and (D), to all Senior Indebtedness of the Corporation. "Senior
Indebtedness" shall mean the principal of, premium, if any, and interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law and
including any loans made to the Corporation as a debtor in possession in any
bankruptcy proceeding by any persons who were the holders of any Senior
Indebtedness on the date such bankruptcy proceeding was commenced) on all
indebtedness to a bank or banks for borrowed money now existing or hereinafter
incurred which by its terms is not subordinated to any other indebtedness of the
Corporation.
(A) In the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceedings, or any receivership
proceedings in connection therewith, relative to the Corporation or its
creditors or its property, and in the event of any proceedings for
voluntary liquidation, dissolution or other winding up of the Corporation,
whether or not involving insolvency or bankruptcy proceedings, then all
Senior Indebtedness shall first be paid in full before any payment,
whether on account of principal, interest or otherwise, is made upon the
Notes.
(B) In any of the proceedings referred to in paragraph (A) above,
any payment or distribution of any kind or character, whether in cash,
property, stock or obligations which may be payable or deliverable in
respect of the Notes shall be paid or delivered directly to the holders of
Senior Indebtedness for application in payment thereof, unless and until
all Senior Indebtedness shall have been paid in full.
(C) No payment shall be made, directly or indirectly, on account of
the Notes (i) upon maturity of any Senior Indebtedness obligation, by
lapse of time, acceleration (unless waived), or otherwise, unless and
until all principal thereof and interest thereon and all other obligations
in respect thereof shall first be paid in full and have terminated, or
(ii) upon the happening of any default in payment of any principal of,
premium, if any, or interest on or any other amounts payable in respect of
Senior Indebtedness when the same becomes due and payable whether at
maturity or at a date fixed for prepayment or by declaration or otherwise
(a "Senior Payment Default"), unless and until such Senior Payment Default
shall have been cured or waived or shall have ceased to exist.
(D) Upon the happening of an event of default (other than described
in clause (A), (B) or (C) above) with respect to any Senior Indebtedness
permitting (after notice or lapse of time or both) one or more holders of
such Senior Indebtedness to declare such Senior Indebtedness due and
payable prior to the date on which it is otherwise due and payable (a
"Nonmonetary Default"), upon the occurrence of (i) receipt by the holder
of this Note of written notice from the holders of said Senior
Indebtedness
of a Nonmonetary Default (any such notice, a "Blockage Notice"), or (ii)
if such Nonmonetary Default results from the acceleration of this Note,
the date of such acceleration; then (x) the Corporation will not make,
directly or indirectly, to the holder of this Note any payment of any kind
of or on account of this Note; (y) the holder of this Note will not accept
from the Corporation any payment of any kind of or on account of this Note
and (z) the holder of this Note may not take, demand, receive, ▇▇▇ for,
accelerate or commence any remedial proceedings with respect to any amount
payable under this Note, unless and until in each case described in
clauses (x), (y) and (z) all such Senior Indebtedness shall have been paid
in full; provided, however, that if such Nonmonetary Default shall have
occurred and be continuing for a period (a "Blockage Period") commencing
on the earlier of the date of receipt of such Blockage Notice or the date
of the acceleration of this Note and ending 179 days thereafter (it being
understood that not more than one Blockage Period may be commenced with
respect to this Note during any period of 360 consecutive days), and
during such Blockage Period (i) such Nonmonetary Default shall not have
been cured or waived, (ii) the holder of such Senior Indebtedness shall
not have made a demand for payment and commenced an action, suit or other
proceeding against the Corporation and (iii) none of the events described
in subsection (A) above shall have occurred, then (to the extent not
otherwise prohibited by subsections (A), (B) or (C) above) the Corporation
may, not less than 10 days after receipt by the holders of such Senior
Indebtedness of written notice to such effect from the holder of this
Note, make and the holder of this Note may accept from the Corporation all
past due and current payments of any kind of or on account of this Note,
and such holder may demand, receive, retain, ▇▇▇ for or otherwise seek
enforcement or collection of all amounts payable on account of principal
of or interest on this Note.
(b) Subject to the payment in full of all Senior Indebtedness as
aforesaid, the holder of this Note shall be subrogated to the rights of the
holders of Senior Indebtedness to receive payments or distributions of any kind
or character, whether in cash, property, stock or obligations, which may be
payable or deliverable to the holders of Senior Indebtedness, until the
principal of, and interest on, this Note shall be paid in full in cash, and, as
between the Corporation, its creditors other than the holders of Senior
Indebtedness, and the holders of this Note, no such payment or distribution made
to the holders of Senior Indebtedness by virtue of this Section 12 which
otherwise would have been made to the holder of this Note shall be deemed a
payment by the Corporation on account of the Senior Indebtedness, it being
understood that the provisions of this Section 12 are and are intended solely
for the purposes of defining the relative rights of the holder of this Note, on
the one hand, and the holder of the Senior Indebtedness, on the other hand.
Subject to the rights, if any, under this Section 12 of holders of Senior
Indebtedness to receive cash, property, stock or obligations otherwise payable
or deliverable to the holder of this Note, nothing herein shall either impair,
as between the Corporation and the holder of this Note, the obligation of the
Corporation, which is unconditional and absolute, to pay to the holder thereof
the principal thereof and interest thereon in accordance with its terms or
prevent (except as otherwise specified therein) the holder of this Note from
exercising all remedies otherwise permitted by applicable law or hereunder upon
default hereunder.
(c) If any payment or distribution of any character or any security,
whether in cash, securities or other property, shall be received by any holder
of this Note in contravention of
any of the terms hereof or before all the Senior Indebtedness obligations have
been paid in full, such payment or distribution or security shall be received in
trust for the benefit of, and shall be paid over or delivered and transferred
to, the holders of the Senior Indebtedness at the time outstanding in accordance
with the priorities then existing among such holders for application to the
payment of all Senior Indebtedness remaining unpaid, to the extent necessary to
pay all such Senior Indebtedness in full in cash. In the event of the failure of
any such holder to endorse or assign any such payment, distribution or security,
each holder of any Senior Indebtedness is hereby irrevocably authorized to
endorse or assign the name.
13. Covenants Bind Successors and Assigns. All the covenants,
stipulations, promises and agreements in this Note contained by or on behalf of
the Corporation shall bind its successors and assigns, whether so expressed or
not.
14. Governing Law. This Note shall be governed and construed in
accordance with the laws of the State of Delaware.
15. Headings. The headings of the Sections and paragraphs of this
Note are k for convenience only and do not constitute a part of this Note.
IN WITNESS WHEREOF, UNITED SURGICAL PARTNERS INTERNATIONAL, INC. has
caused this Note to be signed in its corporate name by one of its officers
thereunto duly authorized and to be dated as of the day and year first above
written.
UNITED SURGICAL PARTNERS
INTERNATIONAL, INC.
By_______________________
Name:
Title:
Exhibit B
Form of Promissory Note
SEE TAB 2
Execution Copy
EXHIBIT B
▇▇▇▇▇▇ ▇▇▇▇▇▇
PROMISSORY NOTE
$400,000 Dallas, Texas
October 26, 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 FOUR HUNDRED THOUSAND
DOLLARS 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 November 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 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 C
Form of Amendment No. 3 to the Amended and
Restated Registration Rights Amendment
SEE TAB 3
Execution Copy
EXHIBIT C
AMENDMENT NO. 3
TO
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
AMENDMENT NO. 3 to the Amended and Restated Registration Rights
Agreement, dated as of October 26, 1998 (the "Amendment"), among United Surgical
Partners International, Inc., a Delaware corporation (the "Company'") and the
several other parties named at the foot hereof, amending the Amended and
Restated Registration Rights Agreement dated as of April 30, 1998 among the
Company and the several signatories thereto (the "Registration Rights
Agreement'"). All capitalized terms used and not defined herein shall have the
meaning set forth in the Securities Purchase Agreement dated as of the date
hereof (the "Securities Purchase Agreement'") among the Company and the several
other parties named therein.
On the date hereof, the Company and the Purchasers are consummating
the transactions contemplated by the Securities Purchase Agreement pursuant to
which the Company has agreed to sell to the Purchasers from time to time an
aggregate 9,157,356 shares of the Company's Class A Common Stock, $.0l par value
('"Class A Common Stock").
It is a condition to the closing of the transactions contemplated by
the Securities Purchase Agreement that the Company and the parties hereto
execute this Amendment.
Pursuant to Section 13(d) of the Registration Rights Agreement, the
Registration Rights Agreement is hereby amended as follows:
1. Each WCASIHC Purchaser, other than ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇ ▇'▇▇▇▇▇▇▇▇, is hereby made a party to the Registration
Rights Agreement with the same rights and obligations as a holder of "Restricted
Stock" (with respect to the shares of Class A Common Stock purchased by such
WCAS/HC Purchaser pursuant to the Securities Purchase Agreement) as set forth in
the Registration Rights Agreement.
2. Each Management Purchaser, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇ and ▇▇▇ ▇'▇▇▇▇▇▇▇▇ is hereby made a party to the Registration Rights
Agreement with the same rights and obligations as a holder of "Investor Shares"
(with respect to the shares of Class A Common Stock purchased by such individual
pursuant to the Security Purchase Agreement) as set forth in the Registration
Rights Agreement.
3. The Registration Rights Agreement, as amended by this Amendment,
is hereby in all respects confirmed.
4. This Amendment shall be governed by and construed in accordance
with the laws of the State of Delaware.
5. This Amendment 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.
UNITED SURGICAL PARTNERS
INTERNATIONAL, INC.
By_______________________
▇▇▇▇▇▇ ▇▇▇▇▇
Chief Executive
WCAS/HC Purchasers
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
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By_____________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Attorney-in-Fact
_______________________________
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
_______________________________
D. ▇▇▇▇▇ ▇▇▇▇▇▇▇.
_______________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇
_______________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇
_______________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
_______________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇
_______________________________
▇▇▇ ▇'▇▇▇▇▇▇▇▇
HEALTH CARE CAPITAL
PARTNERS, L.P.
By ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., LLC
General Partner
By___________________________________
Name:
Title:
HEALTH CARE EXECUTIVE
PARTNERS, L.P.
By ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., LLC
General Partner
By___________________________________
Name:
Title:
Management Purchasers
_______________________________
▇▇▇▇▇▇ ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
_______________________________
▇▇▇ ▇▇▇▇▇▇▇
_______________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
_______________________________
▇▇▇▇▇▇ ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇
_______________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ FBO ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
_______________________________
▇▇▇▇▇ ▇▇▇▇▇▇
Exhibit D
Form of Amendment No 3 to the Amended and Restated Stockholders Agreement
SEE TAB 4
Execution Copy
EXHIBIT D
AMENDMENT NO. 3
TO
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
AMENDMENT NO. 3 to the Amended and Restated Stockholders Agreement,
dated as of October 26, 1998 (the "Amendment"), among United Surgical Partners
International, Inc., a Delaware corporation (the "Company") and the several
other parties named at the foot hereof, amending the Amended and Restated
Stockholders Agreement dated as of April 30, 1998 among the Company and the
several signatories thereto (the "Stockholders Agreement"). All capitalized
terms used and not defined herein shall have the meaning set forth in the
Securities Purchase Agreement dated as of the date hereof (the "Securities
Purchase Agreement") among the Company and the several other parties named
therein.
On the date hereof, the Company and the Purchasers are consummating
the transactions contemplated by the Securities Purchase Agreement pursuant to
which the Company has agreed to sell to the Purchasers from time to time an
aggregate 9,157,356 shares of the Company's Class A Common Stock, $.01 par
value.
It is a condition to the closing of the transactions contemplated by
the Securities Purchase Agreement that the Company and the parties hereto
execute this Amendment.
Pursuant to Section 13 of the Stockholders Agreement, the
Stockholders Agreement is hereby amended as follows:
1. ▇▇▇▇▇▇ ▇▇▇▇▇▇ is hereby made a party to the Stockholders
Agreement with the same rights and obligations as the "Stockholders" as set
forth in the Stockholders Agreement.
2. The several parties named in Annex I hereto are hereby
made a party to the Stockholders Agreement with the same rights and obligations
as the "Investors" as set forth in the Stockholders Agreement.
3. The Stockholders Agreement is hereby amended by deleting
Section I (a) thereto in its entirety and replacing it with the following
language:
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
the 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
(i) the Chief Executive Officer of the Company, which individual
will initially be ▇▇▇▇▇▇ ▇▇▇▇▇, and
(ii) for so long as Health Care Capital Partners, L.P. and Health
Care Executive Partners, L.P. (together, "HC Partners") collectively
maintain ownership of not less than 50% of the securities purchased
by HC Partners under the Securities Purchase Agreement dated as of
October 26, 1998 among the Company and the several other parties
named therein (or securities into which such securities are
converted, exchanged or reclassified), one individual designated by
HC Partners and which individual shall be acceptable to WCAS in its
reasonable discretion. Such individual shall be appointed to the
Board of Directors on or before October 30, 1998 and ▇▇▇▇▇▇ ▇▇▇▇▇▇
shall be HC Partners' initial designee.
4. The Stockholders Agreement is hereby amended by adding at the
end of Section 4 the following language:
(e) Notwithstanding the foregoing references in this Section 4 to
shares of Class A Common Stock, if all of the shares of the
Company's Class A Common Stock have been converted into shares of
the Company's Common Stock, $.01 par value ("Common Stock"),
pursuant to subparagraph 3B of Section II of Article IV of the
Company's Certificate of Incorporation, as amended, then this
Section 4 shall be applicable in its entirety to sales of such
shares of Common Stock.
5. The Stockholders Agreement is hereby amended by deleting the
phrase "of $2 per share" on line 7 of Section 5(a) and replacing it with the
following language:
equal to the original per share purchase price paid to the Company
with respect to each share of such Class A Common Stock (the
"Departing Management Share Price").
6. The Stockholders Agreement is hereby amended by deleting the
phrase "of $2" on line 8 of Section 5(b) and on line 8 of Section 5(c) and by
replacing it in each case with the following language:
equal to the Departing Management Share Price.
7. The Stockholders Agreement is hereby amended by deleting the
text on line 3 of Section 13 and replacing it with the following language:
by an instrument in writing signed by the Company, WCAS, HC Partners
and the holders of the majority of the
8. The Stockholders Agreement is hereby amended by deleting
Schedule I thereto in its entirety and replacing it with Schedule I attached
hereto.
9. The Stockholders Agreement, as amended by this Amendment, is
hereby in all respects confirmed.
10. This Amendment shall be governed by and construed in accordance
with the laws of the State of Delaware.
11. This Amendment 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.
UNITED SURGICAL PARTNERS
INTERNATIONAL, INC.
By_______________________
▇▇▇▇▇▇ ▇▇▇▇▇
Chief Executive
WELSH, CARSON, ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇ VII, L.P.
By WCAS VII Partners, L.P.
General Partner
By_____________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
General Partner
HEALTH CARE CAPITAL
PARTNERS, L.P.
By ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., LLC
General Partner
By_____________________________________
Name:
Title:
HEALTH CARE EXECUTIVE
PARTNERS, L.P.
By ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., LLC
General Partner
By_____________________________________
Name:
Title:
__________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇
__________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
__________________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇
__________________________________
▇▇▇ ▇'▇▇▇▇▇▇▇▇
__________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ FBO ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
__________________________________
▇▇▇▇▇ ▇▇▇▇▇▇
__________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇
______The undersigned, as the holder of in excess of a majority of the
outstanding shares of capital stock of the Company held by the Management
Stockholders, consents to the foregoing amendment.
_______________________________
▇▇▇▇▇▇ ▇▇▇▇▇
ANNEX I
Health Care Capital Partners, L.P.
Health Care Executive Partners, ▇.▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇'▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ FBQ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
SCHEDULE I -STOCKHOLDERS
1. Investors
a. Management Stockholders
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ FBO ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (with respect to all shares of capital stock acquired
after June 26, 1998)
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (with respect to all shares of capital stock
acquired after July 31, 1998)
c/o United Surgical Partners
International, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
b.
Health Care Capital Partners, L.P.
Health Care Executive Partners, L.P.
c/o Ferrer ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & Co., LLC
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: 203-532-8016
M. ▇▇▇▇▇▇ ▇▇▇▇▇ Trust
Calver Fund, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
NGKE/USPI Partners
L & W Co.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Rivid LLC
▇▇▇▇ ▇▇▇▇▇▇▇
CGJR II, L.P.
CGJR/MF III, L.P.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. & ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (with respect to the shares of Class A Common Stock
acquired on June 26, 1998)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (with respect to the shares of Class A Common Stock
acquired on July 31, 1998)
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇'▇▇▇▇▇▇▇▇
2. WCAS Stockholders
Welsh, Carson, ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇ VII, L.P.
WCAS Healthcare
Partners, L.P.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
D. ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
c/o Welch, Carson, ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Exhibit E
Form of Certificate of Amendment to the Certificate of Incorporation
SEE TAB 5
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
--------------------------------------------------------------------------------
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
--------------------------------------------------------------------------------
UNITED SURGIAL 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 adopted by unanimous written
consent of the Board of Directors for 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 50,033,916 shares, consisting of
20,000,000 shares of Class A Common Stock, $.01 par value, 30,000,000 shares of
Common Stock, $.01 par value, 31,200 Series A Redeemable Preferred Stock, $.01
par value and 2,716 shares of Series B Convertible Preferred Stock, $.01 par
value, to 70,033, 916 shares, consisting of 30,000,000 shares of Class A Common
Stock, $.01 par value ("Class A Common Stock"), 40,000,000 shares of Common
Stock, $.01 par value ("Common Stock"), 31,200 shares of Series A Redeemable
Preferred Stock, $.01 par value ("Series A Preferred Stock") and 2,716 shares of
Series B Convertible Preferred Stock, $.01 par value ("Series B Preferred
Stock") (the Series A Preferred Stock and Series B Preferred Stock being
collectively referred to as the "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 70,033,916 shares, consisting of
31,200 shares of Series A Redeemable Preferred Stock, $.01 par value ("Series A
Preferred Stock"), 2,716 shares of Series B Convertible Preferred Stock, $.01
par value ("Series B Preferred Stock") (the Series A Preferred
Stock and Series B Preferred Stock being collectively referred to herein as the
"Preferred Stock"), 30,000,000 shares of Class A Common Stock, $.01 par value
("Class A Common Stock") and 40,000,000 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, limitation so or restrictions
thereof, in respect of each class of stock of the Corporation:
I.
PREFERRED STOCK
Except as otherwise expressly provided herein, all shares of Preferred
Stock shall be identical and shall entitle the holders thereof to the same
rights and privileges.
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 therefore, the deficiency shall be paid, in whole or in part
(without declared and set apart therefore, 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 fund legally available
therefore) 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 share 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 April 30, 1998 (as
amended) among the Corporation and the stockholders named therein, shall
nay 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 Stick, 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)
April 30, 2008. 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 of 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 of 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 of 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. In
addition, at any time on or after the second anniversary of the date on
which shares of Series B Preferred Stock are first issued, the Corporation
shall, not later than 30 days after receipt of written notice from any
holder of shares of Series B Preferred Stock requesting redemption of any
or all of its shares of Series B Preferred Stock, redeem such shares of
Series B Preferred Stock (in the manner and with the effect provided in
subparagraphs 2C through 2E below).
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 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 person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time or upon the occurrences 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
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 2 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 amount 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 this 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. Conversion of Series B Preferred Stock.
4A. Optional Conversion of Series B Preferred Stock. At
any time on or after the second anniversary of the date on which shares of
Series B Preferred Stock are first issued, subject to an upon compliance
with the provisions of this paragraph 4, the holder of any share or shares
of Series B Preferred Stock shall have the right, at its option, to
convert any such shares of Series B Preferred Stock (except that upon any
liquidation, dissolution or winding up of the Corporation or upon any
redemption of the Series B Preferred Stock in accordance with paragraph 2,
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 Series B Preferred or payable with
respect thereto) into such number of fully paid and non-assessable whole
shares of Class A Common Stock as is obtained by multiplying the number of
shares of Series B Preferred Stock so to be converted by $1,000 (plus any
accrued and unpaid per share dividends through the time of conversion) and
dividing the result by the grater of (x) $2.00 (such price, or such price
as last adjusted hereunder, the "Base Conversion Price") and (y) the fair
market value per share of Class A Common Stock at the time of conversion
as determined in good faith by the Board of Directors of the Corporation.
Such rights of conversion shall be exercised by the holder thereof by
filing written notice that the holder elects to convert a stated number of
shares of Series B Preferred Stock into Class A 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 Series B Preferred 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
Class A Common Stock shall be issued.
4B. Issuance of Certificates; Time Conversion Effected.
Promptly after the receipt by the Corporation of the written notice
referred to in subparagraph 4A and surrender of the certificate or
certificates for the share or shares of the Series B Preferred 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 Class A Common Stock
issuable upon the conversion of such share or shares of Series B Preferred
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 persons in
whose name or names any certificate or certificates for shares of Class A
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.
4C. Fractional Shares; Dividends; Partial Conversion. No
fractional shares shall be issued upon conversion of the Series B
Preferred Stock into Class A Common Stock. In case the number of shares of
Series B Preferred Stock represented by the certificate or certificates
surrendered pursuant to subparagraph 4A 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 Series B Preferred
Stock, represented by the certificate or certificates surrendered which
are not to be converted. If any fractional interest in a share of Class A
Common Stock would, except for the provisions of the first sentence of
this subparagraph 4C, be deliverable upon any such conversion, the
Corporation, in lieu of delivering the fractional share there, shall pay
to the holder surrendering the Series B Preferred 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.
4D. Subdivision or Combination of Stock. In case the
Corporation shall at any time subdivide its outstanding shares of Class A
Common Stock into a greater number of shares or shall declare or pay a
dividend on its outstanding shares of Class A Common Stock payable in
shares of Class A Common Stock, then in each case the Base Conversion
Price shall be similarly reduced, and conversely, in case the outstanding
shares of Class A Common Stock of the Corporation shall be combined into a
smaller number of shares, the Base Conversion Price shall be similarly
increased.
4E. 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 Class A
Common Stock shall be entitled to receive stock, securities or assets with
respect to or in exchange for Class A Common Stock, then, as a condition
of such reorganization or reclassification, lawful and adequate provision
shall be made whereby each holder of a share or shares of Series B
Preferred 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 Class A Common Stock of the Corporation immediately theretofore
receivable upon the conversion of such share or shares of Series B
Preferred 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 Class A 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 Class
A Common Stock of the Corporation outstanding immediately prior to such
merger or consolidation, the Base Conversion Price shall e adjusted in the
same manner as though there were a subdivision or combination of the
outstanding shares of Class A Common Stock of the Corporation. The
Corporation will not effect any such consolidation or merger, or any sale
of any or substantially all its asserts and properties, unless prior to
the consummation thereof the successor corporation (if other than the
Corporation) resulting from such consolidation or merger of the
corporation purchasing such assets shall assume by written instrument
executed and mailed or delivered to each holder of shares of Series B
Preferred 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.
4F. Notice of Adjustment. Upon any adjustment made
pursuant to 4D or 4E, 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 Series B Preferred Stock at the
address of such holder as shown on the books of the Corporation, which
notice shall state the number of shares of Class A Common Stock or other
securities, cash or property issuable upon conversion of the Series B
Preferred stock resulting from such
adjustment, setting forth in reasonable detail the method of calculation
and the facts upon which such calculation is based.
4G. Stock to be Reserved. The Corporation will at all
times reserve and keep available out of it authorized but unissued Class A
Common Stock, solely for the purpose o issuance upon the conversion of the
Series B Preferred Stock as herein provided, such number of shares of
Class A Common Stock as shall then be issuable upon the conversion of all
outstanding shares of Series B Preferred Stock. All shares of Class A
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 Class A 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 Class A
Common Stock or the Corporation may be listed.
4H. No Reissuance of Series B Preferred Stock. Shares of
Series B Preferred Stock which are converted into shares of Class A Common
Stock as provided herein shall not be reissued.
4I. Issue Tax. The issuance of certificates for shares
of Class A Common Stock upon conversion of the Series B Preferred 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 n the
issuance and deliver of any certificate in a name other than that of the
holder of the Series B Preferred Stock which is being converted.
4J. Closing of Books. The Corporation will at no time
close its transfer books against the transfer of any Series B Preferred
Stock or of any shares of Class a Common Stock issued or issuable upon the
conversion of any shares of Series B Preferred Stock in any manner which
interferes with the timely conversion of such Series B Preferred Stock.
4K. Definition of Class A Common Stock. As used in this
paragraph 4, the term "Class A Common Stock" shall mean and include the
Corporation's authorized Class A Common Stock, $.01 par value, as
constituted on the date of filing of this Certificate of Amendment to the
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, provided that the shares of Class A Common
Stock receivable upon conversion of shares of the series B Preferred
Stock, or in case of any reorganization or reclassification of the
outstanding shares thereof, the stock, securities, or assets provided for
in subparagraphs 4D and 4E, shall include only shares designated as Class
A Common Stock of the Corporation on the date of filing of this
Certificate of Amendment to the Certificate of Incorporation.
5. 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 additional 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. In addition, no such action shall be taken that would
have the effect of creating any additional differences between the
respective preferences, qualifications, special or relative rights or
privileges of the Series A Preferred Stock and the Series B Preferred
Stock and the holders of a majority of the outstanding Series B Preferred
Stock, voting separately.
(c) The Corporation will not enter into any transaction
that will result in the occurrence of a Change of Control Event.
6. 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 the original per share purchase price paid
to the Corporation with respect to each such share of Class A Common Stock
plus any accrued but unpaid dividends, or, with respect to those shares of
Class A Common Stock outstanding as a result of the conversion of shares
of Series B Preferred Stock, $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 describe din classes (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 amount the holders of Common
Stock. Written notice of such liquidation, dissolution or winding up,
stating as 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 this 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 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 3and 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 liquidation, dissolution or winding upon 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 full 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 selects to convert a stated number of share 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 the 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 $6
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, suchconversion to be effective immediately prior to the
closing of such Qualified Offering 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 of
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 Common Stock issuable upon
the conversion of such share of 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 of record of the shares represented
thereby.
3D. Fractional Shares; Dividends; Partial Conversions.
No fractional shares shall be issued upon conversion of the Class A Common
Stock into Common Stock, nor shall any payment or adjustment be made upon
any conversion on account of any cash dividends on the Class A Common
Stock so converted to the Common Stock issued upon such conversion. In
case the number of shares of Class A Common Stock represented by the
certificate of 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 Common 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 any or substantially all
its asserts and properties, unless prior to the consummation thereof the
successor corporation (if other than the Corporation) resulting from such
consolidation or merger of 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 Common Stock at the address
of such holder as shown on the books of the Corporation, which notice
shall state the number of shares of Class A 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 it authorized but unissued Common
Stock, solely for the purpose o 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 or 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 n the issuance and deliver 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 Series B Preferred 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 4,
the term "Common Stock" shall mean and include the Corporation's
authorized Common Stock, $.01 par value, as constituted on the date
of filing of this Certificate of Amendment to the 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, provided
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 and 3F, shall
include only shares designated as Common Stock of the Corporation on
the date of filing of this Certificate of Amendment to the
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 By-laws 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 hold4er 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 WHEREOF, this Certificate of Amendment has been executed by the
Corporation by its Chief Executive Officer this 23rd day of October, 1998.
UNITED SURGICAL PARTNERS,
INTERNATIONAL, INC.
BY:__________________________
▇▇▇▇▇▇ ▇▇▇▇▇
Chief Executive Officer
SCHEDULE 2.01(b)
Company Ownership of Stock or Other Interests
A. SPANISH OPERATIONS
1. USP International Holdings, Inc., a Delaware corporation
("International Holdings"), which is 100% owned by the Company.
2. United Surgical Partners Europe, S.L., a Spanish corporation
("USP Europe"), which is 82.5% owned by International Holdings and 17.5% owned
by Hospital Management Team, S.L. ("HMT") , a Spanish corporation owned by the
executive officers of USP Europe's Spanish operations. The Company has entered
into a Shareholders Agreement with HMT pursuant to which HMT (a) purchased 17.5%
of the stock of USP Europe, (b) was granted an option to purchase an additional
2.5% of such stock and (c) has the right to purchase shares and be granted
options in connection with future stock issuances that will, if fully exercised,
allow HMT to maintain its 20% ownership interest (including shares underlying
options) in USP Europe. International Holdings has made loans to USP Europe that
are in the process of being converted into additional shares of USP Europe; when
these conversions are completed, the ownership percentage of International
Holdings in USP Europe may increase (depending on whether HMT exercises its
rights to purchase additional shares) USP Europe has the following subsidiaries
and ownership interests:
(a) Columbia Healthcare Corporation of Spain, S.L., a Spanish
corporation ("Spanish Parent"), which is 100% owned by USP Europe. Spanish
Parent has the following subsidiaries/investments:
(i) Instituto Dexeus, S.A., a Spanish corporation that is
79.0654% owned by Spanish Parent ("Dexeus").
(ii) Diagnosticos y Tratamientos, S.A., a Spanish corporation
that is 71.28% owned by Dexeus.
(iii) Densitometria Oseo Comuterizada, S.L., a Spanish
corporation that is 15% owned by Dexeus.
(iv) Imagenes Diagnosticas, S.A., a Spanish corporation that
is 7% owned by Dexeus.
(v) Estudios Funcionales, S.A., a Spanish corporation that is
12% owned by Dexeus.
(vi) Unidad de Recuperacion del Suelo PelvicoL S.L., a Spanish
corporation that is 15% owned by Dexeus.
(vii) Centro de Patologia Celular, S,A., a Spanish corporation
that is 10% owned by Dexeus.
(b) Clinica Maternal Nuestra Senora de la Esperanza, S.A., a Spanish
corporation that is 80% owned by USP Europe.
(c) Grupo CSC S.A. (the "Seville Parent"), a Spanish corporation
that is 100% owned by USP Europe and has the following subsidiaries and
affiliates:
(i) Clinica ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, S.A.., a Spanish corporation that
is 90% owned by the Seville Parent. (The remaining 10% is to be purchased from
the widow of one of the original shareholders; the purchase price for this 10%
interest is being held pending resolution of the estate issues with the deceased
shareholder's widow.)
(ii) Hospitales Andaluces, S.L, a Spanish corporation that is
100% owned by the Seville Parent.
(iii) Contechos, S.L., a Spanish corporation that is 100%
owned by the Seville Parent.
(iv) Servicio de Radiologia ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, S.A., a Spanish
corporation that is 24% owned by Centros Perefericos Asistenciales, S.L.
(referenced in paragraph (ix) below) and 76% owned by USP Europe.
(v) Servico Resonancia - TAC Vascular Clinica Sagrado Corazon,
S.L., a Spanish corporation that is 100% owned by USP Europe.
(vi) Servicios Asistenciales Clinica ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, S.A., a
Spanish corporation that is 99% owned by the Seville Parent and 1% owned by
R-E-Asesores, S.L. (referred to in paragraph (vii) below).
(vii) R-E-Asesores, S.L., a Spanish corporation that is 100%
owned by USP Europe.
(viii) Hospitalizacion y ▇▇▇▇▇▇▇▇▇, ▇,▇. (HOYS, S,A.), a
Spanish corporation that is 6.1% owned by R-E Asesores, S,L. (referred in
paragraph (vii) above) and 49% owned by Hospitales Andaluces, S.L. (referred to
in paragraph (ii) above).
(ix) Centros Perifericos Asistenciales, S.L,, a Spanish
corporation that is 100% owned by USP Europe.
(x) Laboratorio del ▇▇. ▇▇▇▇▇▇▇, ▇.▇,, a Spanish corporation
that is 99% owned by USP Europe.
B. DOMESTIC OPERATIONS
1. Health Horizons Subsidiaries. On July 31, 1998, Health Horizons,
Inc , a Delaware corporation, merged into the Company, which resulted in the
Company owning 100% of the following Tennessee corporations and, through such
subsidiaries, the indicated percentages of the following limited partnerships
and limited liability companies:
(a) Health Horizons of Nashville, Inc., which owns:
(i) 36% of Physicians Pavilion, L.P., a Delaware limited
partnership; and
(ii) 30.25% of Southern Hills Realty Investors, L.P., a
Delaware limited partnership.
(b) Health Horizons of Kansas City, Inc., which owns 50% of
Creekwood Surgery Center, LLC, a Missouri limited liability company.
(c) Health Horizons of Murfreesboro, Inc., which owns 39% of
Middle Tennessee Ambulatory Surgery Center, L,P., a Delaware limited
partnership.
(d) Health Horizons of Decatur, Inc., which owns 60% of
Decatur Surgery Center, L.P,, a Delaware limited partnership.
2. Joint Venture with St. Rose Hospital (Henderson, Nevada).
(a) USP Nevada, Inc., a Nevada corporation that is 100% owned
by the Company.
(b) Parkway Surgery Center, LLC, a Nevada limited liability
company that is currently 50% owned by USP Nevada, Inc. This LLC intends to
offer interests to local surgeons that, if fully subscribed, will reduce the
ownership of USP Nevada, Inc. to 40%.
3. University Surgical Center (Winter Park, Florida)
(a) USP Winter Park, Inc , a Florida corporation that is 100%
owned by the Company
(b) University Surgery Center, Ltd , a Florida limited
partnership that is 70% owned by USP Winter Park, Inc.
SCHEDULE 2.04(a) (10/23/98)
Ownership of Capital Stock of the Company
Stockholder of Record Shares of Class A Shares of Shares of
Common Stock Series Series B
A Preferred Convertible
Stock Preferred
Stock
Welsh, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ VII, L.P. 9,399,780 28,050
WCAS Healthcare Partners, L.P. 140,490 422
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 114,600 339
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 114,600 339
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 114,600 339
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 20,071 59
▇▇▇▇▇▇ ▇. ▇▇▇▇ 20,071 59
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 60,211 178
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1,004 12
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 20,071 59
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 7,024 24
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 3,010 12
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 15,454 48
D. ▇▇▇▇▇ ▇▇▇▇▇▇▇ 4,014 12
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 15,000 48
▇▇▇▇▇▇ ▇▇▇▇▇ 875,000
▇▇▇ ▇▇▇▇▇▇▇ 250,000
▇▇▇▇▇▇ ▇▇▇▇▇ 50,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ 100,000
▇▇▇▇▇ ▇▇▇▇▇▇ 50,000
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 100,000
M. ▇▇▇▇▇▇ ▇▇▇▇▇ Trust U/A
DTD August 31, 1990 20,000 60
Calver Fund, Inc. 40,000 120
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ 40,000 120
NGKE/USPI Partners 40,000 120
L & W Co. 20,000 60
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 30,000 90
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 20,000 60
▇▇▇▇ ▇▇▇▇▇▇▇ 40,000 120
Rivid LLC 30,000 90
CGJR II, L.P. 25,500 77
CGJR/MF III, L.P. 14,500 43
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 20,000 60
▇▇▇▇▇ ▇▇▇▇▇▇ 20,000 60
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 10,000 30
▇▇▇▇▇ ▇▇▇▇▇▇ 10,000 30
Stockholder of Record Shares of Class A Shares of Shares of
Common Stock Series Series B
A Preferred Convertible
Stock Preferred
Stock
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. 10,000 30
▇▇▇▇▇▇▇▇, as tenants in common 10,000 ▇▇
▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 473,581 1,420
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 327,031 981
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 65,587 196
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 2,677 8
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 14,261 42
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 7,138 21
▇▇▇▇▇ ▇▇▇ 16,298 48
TOTALS: 12,781,573 31,200 2,716
SCHEDULE 2.04(b)
Rights, Warrants, Options, Etc.
1. The Company's Board of Directors and stockholders have adopted
the Stock Option Plan, which authorizes the grant of stock options covering up
to 1,750,000 shares of Common Stock. There are presently outstanding under the
Stock Option Plan stock options covering a total of 1,290,800 shares of Common
Stock at an option price of $2.00 per share. Upon completion of the Initial
Closing, the number of shares covered by the Stock Option Plan will increase to
3,250,000 shares and additional options will be granted as follows: 550,000
shares at $3.50 per share; and 250,000 shares at $5.00 per share.
2. Pursuant to the Certificate of Amendment to the Company's
Certificate of Incorporation filed on July 30, 1998 in connection with the
merger of Health Horizons, Inc. into the Company, the Company is required to
redeem any or all outstanding shares of its Series B Convertible Preferred Stock
at the request of the respective holders of such shares given at any time on or
after July 31, 2000. The redemption price will be $1,000 per share plus accrued
but unpaid dividends.
3. The Company's outstanding shares of Series B Convertible
Preferred Stock are convertible into Class A Common Stock at the election of the
respective holders of such shares at any time on or after July 31, 2000 at a
conversion price for the Class A Common Stock equal to the greater of $2.00 per
share or the fair market value per share (as determined in good faith by the
Company's Board of Directors) at the time of conversion.
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
United Surgical Partners 1nternational
Consolidated Balance Sheet As of
July 31, 1998
External Method
ASSETS
Cash $ 5,772,193
Patient receivables 3,281,107
Other receivables 1,236.633
Allowance (703,663)
Inventories 616,727
Prepaids & other current assets 27,454
Total current assets 10,230,451
Land 1,154.864
Building 6,224,391
Equipment 7,866,014
Furniture & Fixtures 83,660
Total property and equipment 15,328.929
Investments in subsidiaries 1,469,409
Financial long-term investment 1,058,901
Intangible asset 7,031,380
Long-term notes receivable 650,000
Other assets 639,851
639,851
Total other noncurrent assets 10,849,542
Total assets $ 36,408,922
LIABILITIES & EQUITY
Accounts payable $ 3,636,161
Accrued salaries and benefits 23,614
Other accrued expenses 976.898
Current portion of long-term debt 1,455,930
Other current liabilities 719,608
Reserve for unexpired risks 239,404
Total current Liabilities 7,051,615
Minority interests 3,980,176
Long-term debt 719,400
Mortgage 1,647.300
Series A Redeemable Preferred Stock 1,205,000
Series B Convertible Redeemable Preferred Stock 2,716.000
Deferred gain 321,201
Other noncurrent liabilities 904,064
Total noncurrent liabilities 11,493,140
Current month earnings (369,143)
YTD earnings (439,168)
Common stock & paid-in capital - WC 13,862,500
Common stock & paid-in capital - others 4,750,646
Retained earnings (5,000)
Translation 64,331
Total equity 17,864,166
Total liabilities and equity $ 36,408,922
United Surgical Partners International
Consolidated Income Statement
For the period ended
July 31, 1998
Internal and External Methods*
% Total % Total
Current Month Revenue Year to Date Revenue
Routine $ 374,246 $ 1,107,116
Inpatient ancillary 901,053 2,581,017
Outpatient ancillary 250,753 706,295
Total patient revenue 1,526,052 4,394,428
Allowance (27,312) (84,097)
Other revenue 130,597 269,069
Miscellaneous revenue & deductions 103,285 184,972
Total revenue 1,629,337 4,579,400
Staffing and benefits 587,174 36.0% 1,721,590 37.6%
Supplies 272,921 16.8% 706,221 15.4%
Bad debt 13,109 0.8% 16,420 0.4%
Other operating expenses 503,654 30.9% 1,460,541 31.9%
Total operating expenses 1,376,857 84.5% 3,904,772 85.3%
EBITDA 252,480 15.5% 674,628 14.7%
Depreciation and amortization 192,487 11.8% 429,702 9.4%
Interest expense 20,290 1.2% 51,217 1.1%
Management fee 12,367 0.8% 16,593 0.4%
Corporate G&A 171,329 10.5% 792,220 17.3%
Minority interest expense (58,426) -3.6% (42,009) -0.9%
Exchange (gain) loss (3,002) -0.2% (3,002) -0.1%
Interest income - employee loans (31,413) -1.9% (89,837) -2.0%
Total nonoperating expenses 303,631 18.6% 1,154,884 25.2%
Pre-tax operating income before
nonrecurring organization costs for USPE (51,151) -3.1% (480,256) -10.5%
Nonrecurring organization costs for USPE (260,922) -16.0% (260,922) -5.7%
Pre-tax operating income (loss) (312,073) -19.2% (741,178) -16.2%
Tax provision 57,070 67,134
Net income (loss) $ (369,143) $ (808,313)
*Internal and external methods are the same for purposes of the July income
statement and equity rollforward as Health Horizons acquisition, which became
effective July 31, does not impact income until August.
SCHEDULE 2.07
Events Subsequent to July 31, 1998
1. See Schedules 2.01(b), 2.04(a) and 2.04(b), which are
incorporated herein by this reference.
2. The Company entered into an Amended and Restated Operating
Agreement, dated as of August 1, 1998, with St. Rose Dominican Hospital, a
Nevada not-for-profit corporation, relating to Parkway Surgery Center, LLC, a
Nevada limited liability company that owns an outpatient surgery center in
Henderson, Nevada that opened on October 12, 1998.
3. The Company has entered into non-binding letters of intent to
acquire (a) the assets of Health First Management, L.L.C. and its affiliates
(which own interests in five surgery centers in the Dallas/Fort Worth area), (b)
the assets of Day Op Center of Long Island and (c) a one-third interest in all
of the outpatient surgery centers owned by Physicians Resource Group, Inc.
(although the Company has executed a waiver allowing PRG to enter into a
transaction with another party which, if consummated, would terminate this
letter of intent).
4. USP Europe is in negotiations to acquire several additional
hospitals in Spain. A definitive Stock Purchase and Sale Agreement, providing
for the purchase by USP Europe of 62.31% of the outstanding stock of Instituto
Policlinico Santa Teresa, S.A. and 12.5% of the outstanding stock of Resonancia
Nuclear Magnetica Santa Teresa, S.L., each of which is a Spanish corporation,
was executed by USP Europe on September 23, 1998.
5. On October 1, 1998, USP Europe completed the purchase of 80% of
the outstanding stock of Clinica Maternal Nuestra Senora de la Esperanza, S.A.
6. USP Europe has also entered into and consummated an Agreement for
Sale of Shares and Company Stock on October 16, 1998, whereunder it purchased of
the stock of the Spanish corporations that operate Clinica ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and
related facilities, as indicated in Part A-2(c) on Schedule 2,01(b).
7. On October 15, 1998, the Company acquired a 70% interest in
University Surgical Center in Winter Park, Florida.
SCHEDULE 2.08
Actions Pending
None.
SCHEDULE 2.12
Title to Property
1. Dexeus has an outstanding mortgage ~debt of approximately $1.9
million.
2. Creekwood Surgery Center, LLC has granted security interests (a)
in certain leased assets to Lease Partners, Inc. and (b) in all of its accounts
receivable to North Kansas City Hospital.
3. Decatur Surgery Center, L.P. has granted a security interest in
all of its assets to Compass Bank.
SCHEDULE 2.14
Affiliated Transactions
1. See Schedule 2.04(b), which is incorporated herein by this
reference.
2. Each of the Management Purchasers and ▇▇▇▇▇ ▇▇▇▇▇▇ is both a
stockholder in the Company and a party to one or more option agreements under
the Stock Option Plan.
3. The partners of NGKE/USPI Partners are also partners in Nossaman,
Guthner, ▇▇▇▇ & ▇▇▇▇▇▇▇, LLP, which is a law firm that provides legal services
to the Company and its subsidiaries.
4. Certain of the former stockholders of Health Horizons, Inc. are
stockholders in the Company and are parties to the Agreement and Plan of
Reorganization referred to in paragraph 4 of Schedule 2.06.
SCHEDULE 2.15
Brokers' or Finders' Fees
None.
SCHEDULE 3.03(d)
Certain Purchasers
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
SCHEDULE 3.05
Brokers' or Finders' Fees
None.