THIRD AMENDMENT TO STOCKHOLDERS’ AGREEMENT
Exhibit 10.1
THIRD AMENDMENT TO STOCKHOLDERS’ AGREEMENT
THIS
AGREEMENT is made and entered into effective as of the 15th day of July, 2008, by and
between Spheris Holding III, Inc. (hereinafter referred to as the “Company”), Spheris Investment
LLC, the Warburg Investors and the TowerBrook Investors (f/k/a Xxxxx Investors). Capitalized terms
used herein without definition elsewhere in this Amendment are defined in Section 17 of the
Stockholders’ Agreement (as defined below).
W I T N E S S E T H :
WHEREAS, the Company, the Warburg Investors, the TowerBrook Investors and Spheris Investment
LLC have previously entered into a Stockholders’ Agreement, dated November 5, 2004 as amended by
that certain First Amendment to Stockholders’ Agreement, dated August 17, 2006, and that certain
Second Amendment to Stockholders’ Agreement, dated May 2, 2007 (the “Stockholders’ Agreement”);
WHEREAS, the Company, Spheris Investment LLC, the Warburg Investors and the TowerBrook
Investors wish to modify and amend the Stockholders’ Agreement according to the terms set forth
herein.
NOW, THEREFORE, in consideration of the premises and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company, the Warburg Investors and
the TowerBrook Investors do hereby agree as follows:
1. Paragraph 3.1 of the Stockholders’ Agreement is hereby deleted in its entirety and amended
and restated as follows:
“As of the date hereof, the Board of Directors of the Company (the “Board”) shall consist of
Xxxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxx Xxxxxxxxxx, Xxxxxx Xxxxxxx, Xxxxxxx Xxxx, Xxxxxx X. Xxxxxxx and
Xxxx X. Xxxx. From and after the date hereof, the Investors and the Company shall take all action
within their respective power, including but not limited to, the voting of all Shares Owned by
them, required to cause the Board to consist of no more than nine (9) members, and at all times
throughout the term of this Agreement, to include:
(a) at the option of the Warburg Investors, for as long as the Warburg Investors Own at
least twenty percent (20%) of the Common Stock Owned by Investors, two (2) members
designated by Warburg Pincus and, for as long as the Warburg Investors Own at least five
percent (5%) but less than twenty percent (20%) of the Common Stock Owned by Investors, one
(1) member designated by Warburg Pincus (such members referred to herein as “Warburg
Directors” and each a “Warburg Director”);
(b) for as long as the TowerBrook Investors Own at least twenty percent (20%) of the Common
Stock Owned by Investors, two (2) members designated by the TowerBrook Investors and, for as
long as the TowerBrook Investors Own at least five percent (5%) but less than twenty percent
(20%) of the Common Stock Owned by Investors, one (1)
member designated by the TowerBrook Investors (such members referred to herein as
“TowerBrook Directors” and each a “TowerBrook Director”);
(c) one (1) member of management who shall be the Chief Executive Officer of the Company
then in office (the “Management Director”);
(d) four (4) independent members selected by the Majority Warburg Investors and the Majority
TowerBrook Investors (such members referred to herein as “Independent Directors” and each an
“Independent Director”).
The parties hereto acknowledge that the four representatives to be designated by the Warburg
Investors and the TowerBrook Investors are the directors that the holders of Preferred Stock are
entitled to elect under the Restated Certificate. The parties hereto further acknowledge that as
of the date hereof there are no Warburg Directors, the TowerBrook Directors shall be Xxxxxxxx
Xxxxxx and Xxxx Xxxxxxxxxx, the Management Director shall be Xxxxxx Xxxxxxx and the Independent
Directors shall be Xxxxx Xxxxx, Xxxxxx X. Xxxxxxx, Xxxx X. Xxxx and Xxxxxxx Xxxx. In addition,
subject to the ownership requirements set forth in paragraphs (a) and (b) of this Section 3.1, the
Warburg Investors, on the one hand, and the TowerBrook Investors, on the other hand, shall be
entitled to designate an equal number of directors.”.
2. Paragraph 3.3 of the Stockholders’ Agreement is hereby amended as follows:
(i) by inserting the words “, at the option of the Majority Warburg Investors,” after the
words “any such committee shall have,” and
(ii) by inserting the words “, at the option of the Majority TowerBrook Investors,” after the
words “so long as the Warburg Investors are entitled to elect at least one member of the Board
and”.
3. Paragraph 3.4 of the Stockholders’ Agreement is hereby amended as follows:
(i) by deleting the words “(which director shall be one of the TowerBrook Directors)”
contained in subparagraph (a) thereof and
(ii) by deleting the words “(which director shall be one of the Warburg Directors)” contained
in subparagraph (b) thereof.
4. A new Paragraph 3.5 shall be added to the Stockholders’ Agreement and shall read as
follows:
“(a) For so long as there are no Warburg Directors serving on the Board and the Warburg
Investors Own at least twenty percent (20%) of the Common Stock Owned by Investors, the Warburg
Investors shall be entitled to designate two non-voting observers (the “Warburg Observers”), who
shall be entitled to observe meetings of the Board. For so long as there are no Warburg Directors
serving on the Board and the Warburg Investors Own at least five percent (5%) but less than twenty
percent (20%) of the Common Stock Owned by the
Investors, the Warburg Investors shall be entitled to designate one such Warburg Observer.
For so long as there are no TowerBrook Directors serving on the Board and the TowerBrook Investors
Own at least twenty percent (20%) of the Common Stock Owned by Investors, the TowerBrook Investors
shall be entitled to designate two non-voting observers (the “TowerBrook Observers” and, together
with the Warburg Observers, the “Board Observers”), who shall be entitled to observe meetings of
the Board. For so long as there are no TowerBrook Directors serving on the Board and the
TowerBrook Investors Own at least five percent (5%) but less than twenty percent (20%) of the
Common Stock Owned by the Investors, the TowerBrook Investors shall be entitled to designate one
such Warburg Observer.
(b) The Board Observers shall be entitled to receive notice of all meetings of the Board at
the same time and in the same manner as the Board, and have full rights to attend all meetings
thereof and all meetings (whether such meetings are formal or informal, are convened in person,
telephonically, or by any other telecommunication means) of any committee or subcommittee of the
Board, including, without limitation, any executive committee. The Company shall provide the Board
Observers all materials distributed to the Board and all other information related to the Company
which is made available to, or which would otherwise be available upon reasonable request by, the
Board or committee members thereof. The Company shall also pay the reasonable out-of-pocket
expenses incurred by the Board Observers in connection with attending the meetings of the Board and
all committees thereof (including travel and related expenses).
(c) No Board Observer shall (i) be permitted to act in any way as a director of the Board,
(ii) be included for purposes of determining a quorum at a meeting of the Board for the transaction
of business or otherwise, (iii) vote on any matter presented to or voted upon by the Board or (iv)
without the prior consent of the Board, disclose non-public, competitively sensitive Company
information to anyone outside of the Company.
(d) The Chairman of the Board shall be entitled to, in its reasonable discretion, excuse any
Board Observer from any meeting or proceeding of the Board, to the extent that the Chairman of the
Board in good faith believes that such action is required in order to comply with applicable law.”.
5. Paragraph 5.1(a) of the Stockholders’ Agreement is hereby amended and restated as follows:
“Without the approval of (x) the Board and (y) for so long as the Warburg Investors own at least
five percent (5%) of the Common Stock Owned by Investors, the affirmative vote of the Majority
Warburg Investors, the Company will not, and will not permit any Subsidiary to:”.
6. A new Paragraph 5.5 shall be added to the Stockholders’ Agreement and shall read as
follows:
“(a) In addition to the rights provided for in Paragraph 5.3, The Warburg Investors will be
entitled to the following contractual rights:
(1) The Warburg Investors shall be permitted to consult with management of the Company and its
Subsidiaries (“Management”) on significant business
issues, including Management’s proposed annual operating plans, and Management will make
itself available to meet with the Warburg Investors regularly at mutually agreeable times for such
consultation and to review progress in achieving said plans;
(2) In the event of any material development to or affecting the Company’s business, the
Company shall notify the Warburg Investors and provide the Warburg Investors with the opportunity,
on reasonable prior written notice, to consult with Management of its views with respect thereto;
and
(3) On reasonable prior written notice, the Warburg Investors may discuss the business
operations, properties and financial and other conditions of the Company with Management and with
the Company’s independent accountants and investment bankers;
provided, however, that the Board shall be entitled to, in its reasonable discretion, limit the
foregoing rights to the extent that the Board in good faith believes that such action is required
in order to comply with applicable law.
(b) The aforementioned rights are intended to satisfy the requirement of management rights for
purposes of qualifying the Warburg Investors’ investments in the Company as “venture capital
investments” for purposes of the Department of Labor “plan assets” regulation, 29 C.F.R.
§2510.3-101. In the event the aforementioned rights are not satisfactory for such purpose, the
Company and the Warburg Investors shall reasonably cooperate in good faith to agree upon mutually
satisfactory management rights that satisfy such regulations.”.
7. Except as expressly modified herein, all of the terms of the Stockholders’ Agreement shall
remain in full force and effect.
8. This Agreement may be executed in counterparts.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be effective as of the
date first written above.
| SPHERIS HOLDING III, INC. | ||||||
| By: | /s/ Xxxxxx X. Xxxxxxx | |||||
| Name: | Xxxxxx X. Xxxxxxx | |||||
| Title: | President and CEO | |||||
| SPHERIS INVESTMENT LLC (individually and as attorney-in-fact for the holders of the Company’s Restricted Series A Preferred and Common Stock and the Vianeta SPE General Partnership) | ||||||
| By: | /s/ Xxxx Xxxxxxxx | |||||
| Name: | Xxxx Xxxxxxxx | |||||
| Title: | Member | |||||
| WARBURG PINCUS PRIVATE EQUITY VIII, L.P. | ||||||
| By: | Warburg Pincus Partners LLC, its General Partner | |||||
| By: | /s/ Xxxx Xxxxxxxx | |||||
| Name: | Xxxx Xxxxxxxx | |||||
| Title: | Member | |||||
| WARBURG PINCUS NETHERLANDS PRIVATE EQUITY VIII, C.V. I | ||||||
| By: | Warburg Pincus Partners LLC, its General Partner | |||||
| By: | /s/ Xxxx Xxxxxxxx | |||||
| Name: | Xxxx Xxxxxxxx | |||||
| Title: | Member | |||||
| WP-WP VIII INVESTORS L.P. | ||||||
| By: | Warburg Pincus Partners LLC, its General Partner | |||||
| By: | /s/ Xxxx Xxxxxxxx | |||||
| Name: | Xxxx Xxxxxxxx
|
|||||
| Title: | Member | |||||
| TOWERBROOK INVESTORS L.P. (formerly Xxxxx Private Equity Investors L.P.) |
||||||
| By: | /s/ Xxxxx X. Xxxxxx | |||||
| Name: | Xxxxx X. Xxxxxx
|
|||||
| Title: | Attorney-in-Fact | |||||
