EXHIBIT 10.9
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SECURITIES PURCHASE AGREEMENT
among
UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
WELSH, CARSON, XXXXXXXX & XXXXX 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, XXXXXXXX & XXXXX 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, Xxxxxx Xxxxxx,
Xxxxx Xxxxxxxx, Xxxx Xxxxxxxx and Xxx X'Xxxxxxxx being hereinafter collectively
called the "WCAS Purchasers", and the WCAS Purchasers, HC Partners, Xxxxxx
Xxxxxx, Xxxxx Xxxxxxxx, Xxxx Xxxxxxxx and Xxx X'Xxxxxxxx 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, Xxxx &
Xxxxxxx, LLP, 000 Xxxxx Xxxxxxxx Xxxxxx, Xxx Xxxxxxx Xxxxxxxxxx, 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, 00000
Xxxxxxx Xxxx, Xxxxx 000 Xxxxx, Xxxxxx, Xxxxx, 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
5
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,
6
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 Xxxx-Xxxxx-Xxxxxx
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,
8
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, Xxxxxx, Xxxxxxx & 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, Xxxx & Xxxxxxx, 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, Xxxx & Xxxxxxx, 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.
00000 Xxxxxxx Xxxx
Xxxxx 000 Xxxxx
Xxxxxx, Xxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxx Xxxxx
with a copy to:
Nossaman, Guthner, Xxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Facsimile: 213-612- 7801
Attention: Xxxxxx X. Xxxxxx, 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 Xxxxxx Xxxxx 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/ XXXXXX XXXXX
Xxxxxx Xxxxx
Chief Executive Officer
WCAS PURCHASERS:
WELSH, CARSON, XXXXXXXX
& XXXXX VII, L.P .
By WCAS VII Partners, L.P.
General Partner
By /s/ XXXXX XXXXXXXX
Xxxxx XxxXxxxx
General Partner
WCAS HEALTHCARE PARTNERS, L.P.
By WCAS HC Partners
General Partner
By /s/ XXXXX XXXXXXXX
Xxxxx XxxXxxxx
Attorney-in-Fact
Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxxx X. xxXxxxxx
Xxxx X. Xxxxxxx
/s/ XXXXX XXXXXXXX
By Xxxxx XxxXxxxx
Attorney-in-Fact
/s/ XXXXX XXXXXXXX
Xxxxx XxxXxxxx
/s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
/s/ D. XXXXX XXXXXXX
D. Xxxxx Xxxxxxx
/s/ XXXXXX XXXXXX
Xxxxxx Xxxxxx
/s/ XXXXXX XXXXXX
Xxxxxx Xxxxxx
/s/ XXXXX XXXXXXXX
Xxxxx Xxxxxxxx
/s/ XXXX XXXXXXXX
Xxxx Xxxxxxxx
/s/ XXX X'XXXXXXXX
Xxx X'Xxxxxxxx
HEALTH CARE CAPITAL
PARTNERS, L.P.
By Xxxxxx Xxxxxxx Xxxxxxxx & Co., LLC
General Partner
By /s/ XXXXXX X. XXXXXXXX
Name: Xxxxxx X. Xxxxxxxx
Title: Member
HEALTH CARE EXECUTIVE
PARTNERS, L.P.
By Xxxxxx Xxxxxxx Xxxxxxxx & Co., LLC
General Partner
By /s/ XXXXXX X. XXXXXXXX
Name: Xxxxxx X. Xxxxxxxx
Title: Member
MANAGEMENT PURCHASERS
/s/ XXXXXX XXXXX
Xxxxxx Xxxxx
/s/ XXXXXXX XXXXXX
Xxxxxxx Xxxxxx
/s/ XXX XXXXXXX
Xxx Xxxxxxx
/s/ XXXXXXX XXXXXXXX
Xxxxxxx Xxxxxxxx
/s/ XXXXXX XXXXX
Xxxxxx Xxxxx
/s/ XXXXXXX XXXXX
Xxxxxxx Xxxxx
/s/ XXXXX XXXXXXXX
Xxxxx XxXxxxxx FBO Xxxxx XxXxxxxx
/s/ XXXXX XXXXXX
Xxxxx Xxxxxx
