REIMBURSEMENT AND CONVERSION
RIGHTS AGREEMENT
THIS REIMBURSEMENT AND CONVERSION RIGHTS AGREEMENT, made and entered
into as of this 2nd day of August, 1996, by and between AMERICAN MEDSERVE
CORPORATION (the "Company"), a Delaware corporation, and GOLDER, THOMA, XXXXXXX,
XXXXXX FUND IV, L. P. ("GTCR"), a Delaware limited partnership.
WHEREAS, GTCR has provided a guaranty (the "Guaranty") dated as of the
date hereof in favor of LaSalle National Bank, a national banking association
(the "Bank"), with respect to indebtedness of the Company to the Bank under that
certain term note (the "Note") made by the Company and dated the date hereof in
the aggregate principal amount of $5,000,000;
WHEREAS, subject to the terms and conditions set forth herein, the
Company and GTCR desire that the Company provide reimbursement to GTCR for
payments made by GTCR pursuant to the Guaranty;
WHEREAS, subject to the terms and conditions set forth herein, the
Company and GTCR desire that: (i) GTCR have the right to receive equity
securities of the Company as reimbursement in lieu of a cash or monetary
reimbursement to GTCR for payments made by GTCR pursuant to the Guaranty, and
(ii) if by January 2, 1997, the Obligations (as defined in the Guaranty) remains
unpaid, GTCR shall have the right to repay such Obligations on behalf of the
Company and to receive equity securities of the Company valued in an amount
equal to the amount of the Obligations so repaid.
NOW, THEREFORE, in consideration of the mutual promises herein made
and the mutual benefits to be derived from this Agreement and the transactions
provided for herein, the parties hereto represent, warrant, covenant, agree and
understand as follows:
SECTION 1. AGREEMENT TO REIMBURSE GTCR. Subject to Section 2 hereof:
(a) The Company hereby agrees to reimburse GTCR by making payment to GTCR
in immediately available funds at its address set forth on the signature page
hereto, for any payment made by GTCR under the Guaranty (each such amount so
paid until reimbursed, an "Unpaid Drawing") upon demand by GTCR, together with
interest accruing thereon from and including the date paid to but excluding the
date reimbursement is made at a rate per annum which shall be 10%, compounded
quarterly. Such interest shall be payable on demand.
(b) The obligations of the Company under this Section 1 to reimburse GTCR
with respect to Unpaid Drawings (including, in each case, interest thereon)
shall be absolute and unconditional under any and all circumstances and
irrespective of any set off, counterclaim or defense to payment which the
Company may have or have had against GTCR.
(c) The agreement by the Company in this Section 1 to reimburse GTCR for
Unpaid Drawings is in addition to any such rights that GTCR may have or
obligations that the Company may have under general principals of law or equity.
SECTION 2. OPTION BY GTCR TO CONVERT UNPAID DRAWINGS INTO EQUITY
SECURITIES.
(a) With respect to all or any portion of the Unpaid Drawings, GTCR shall
have the right, but not the obligation, from time to time, upon notice to the
Company, to receive Equity Securities (as defined below) valued at the Market
Price (as defined below) in aggregate amount not to exceed the aggregate amount
of any remaining Unpaid Drawings (plus interest accrued thereon) in lieu of the
cash or monetary reimbursement to GTCR for such Unpaid Drawings as provided in
Section 1 hereof. The Market Price of the Equity Securities shall be determined
as of the date of the notice by GTCR to the Company under this Section 2.
GTCR's rights to receive Equity Securities shall be subject to existing and
future preemptive rights to which the issuance of such securities may be
subject.
(b) As used in this Agreement, "Equity Securities" shall mean, so long as
any of the Company's Class A Common Stock, $0.01 par value per share, ("Class A
Common Stock") remains issued and outstanding, shares of Class A Common Stock,
and if no shares of Class A Common Stock are outstanding, it shall mean shares
of the Company's common equity securities into which Class A Common Stock has
been converted or for which it has been exchanged. As used in this Agreement,
"Market Price" shall mean as to any security the average of the closing prices
of such security's sales on all domestic securities exchanges on which such
security may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York time, on such day, or, if on any day
such security is not quoted in the NASDAQ System, the average of the highest bid
and lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which "Market Price" is being determined and the 20
consecutive business days prior to such day; provided that if such security is
listed on any domestic securities exchange the term "business days" as used in
this sentence means business days on which such exchange is open for trading.
If at any time such security is not listed on any domestic securities exchange
or quoted in the NASDAQ System or the domestic over-the-counter market, the
"Market Price" shall be the fair value thereof determined jointly by the
Company, GTCR and, so long as he holds at least 7.5% of the common stock of the
Company (on a fully diluted basis), Xxxxxxx X. Xxxxxxxx; provided that if such
parties are unable to reach agreement within a reasonable period of time, such
fair value shall be determined by an investment banking firm of national or
regional reputation jointly selected by the Company, Xxxxxxx X. Xxxxxxxx and
GTCR. The determination of such investment banking firm shall be final and
binding on the Company, Xxxxxxx X. Xxxxxxxx and GTCR, and the fees and expenses
of such investment banking firm shall be paid by the Company.
(c) To the extent that GTCR exercises its right to receive Equity
Securities under this Section 2, its right to reimbursement under Section 1
shall, upon consummation of the sale of the Equity Securities to GTCR, be deemed
satisfied with respect to the amount of the Unpaid Drawings (and interest
accrued thereon, to the extent Equity Securities are received in respect
thereof) specified in the notice by GTCR to the Company pursuant to this Section
2.
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SECTION 3. OPTION BY GTCR TO REPAY NOTE. If by January 2, 1997, any of the
Obligations remains unpaid, GTCR shall have the right, but not the obligation,
from time to time, upon notice to the Company, to repay all or any portion of
the Obligations on behalf of the Company (a "GTCR Repayment"). Upon the making
of a GTCR Repayment, GTCR shall be entitled to receive, in consideration thereof
(and in satisfaction and discharge of the Company's obligations to GTCR in
respect thereof), Equity Securities with a Market Value as of the date of the
GTCR Repayment equal to the amount of such GTCR Repayment. GTCR's rights to
receive Equity Securities shall be subject to existing and future preemptive
rights to which the issuance of such securities may be subject.
SECTION 4. SECURITIES LAW COMPLIANCE. The Company shall make all filings
under all applicable federal and state securities laws necessary to consummate
the issuance of the Equity Securities pursuant to this Agreement in compliance
with such laws. Without limiting the generality of the foregoing, if such
issuance can be effected in compliance with such securities laws without
registering such issuance under the securities laws then the Company shall not
be obligated to register such issuance. The forgoing shall not be deemed to
limit any existing rights under, or provide any additional rights under, any
other agreement between GTCR and the Company with respect to registration
rights.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As a material
inducement to GTCR to enter into this Agreement and the Guaranty, the Company
hereby represents and warrants to GTCR that:
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation and is duly
qualified to do business in every jurisdiction in which the failure to so
qualify has had or would reasonably be expected to have a material adverse
effect on its and its subsidiaries financial condition, operating results,
assets, operations or business prospects, taken as a whole.
(b) The execution, delivery and performance of this Agreement, the Note and
all other agreements and instruments contemplated hereby have been duly
authorized by the Company. This Agreement and the Note and all other agreements
and instruments contemplated hereby to which the Company is a party each
constitutes a valid and binding obligation of the Company, enforceable in
accordance with its terms. The execution and delivery by the Company of this
Agreement, the Note and all other agreements and instruments contemplated hereby
to which the Company is a party, the making of the Note, the issuance of the
Equity Securities upon exercise of the rights granted to GTCR under Sections 1
and 2 hereof, and the fulfillment of and compliance with the respective terms
hereof and thereof by the Company, do not and shall not (i) conflict with or
result in a breach of the terms, conditions or provisions of, (ii) constitute a
default under, (iii) result in the creation of any lien, security interest,
charge or encumbrance upon the Company's or any of its subsidiary's capital
stock or assets pursuant to, (iv) give any third party the right to modify,
terminate or accelerate any obligation under, (v) result in a violation of, or
(vi) require any authorization, consent, approval, exemption or other action
(which has not been obtained) by or notice or declaration to, or filing with,
any court or administrative or governmental body or agency pursuant to, the
charter or bylaws of the Company or any subsidiary, or any law, statute, rule or
regulation to which the Company or any subsidiary is sub-
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ject, or any agreement, instrument, order, judgment or decree to which the
Company or any subsidiary is subject.
(c) No material permit, consent, approval or authorization of, or
declaration to or filing with, any governmental authority is required in
connection with the execution, delivery and performance by the Company of this
Agreement, the Note or the other agreements contemplated hereby, or the
consummation by the Company of any other transactions contemplated hereby or
thereby, except as have been or, with respect to actions contemplated to occur
after the date hereof, will be, obtained or made.
(d) On a going concern basis, the Company is solvent as of the date of this
Agreement and shall not become insolvent as a result of the consummation of the
transactions contemplated by this Agreement or by the Note. The Company is, and
after giving effect to the transactions contemplated by this Agreement and the
Note shall be, able to pay its debts as they become due, and its property now
has, and after giving effect to the transactions contemplated hereby shall have,
a fair salable value (determined on a going concern basis) greater than the
amounts required to pay its debts (including a reasonable estimate of the amount
of all contingent liabilities). The Company has adequate capital to carry on
its business, and after giving effect to the transactions contemplated by this
Agreement, the Company shall have adequate capital to conduct its business. No
transfer of property is being made and no obligation is being incurred in
connection with the transactions contemplated by this Agreement or the Note with
the intent to hinder, delay or defraud either present or future creditors of the
Company.
SECTION 6. FEES AND EXPENSES. Whether or not any of the transactions
contemplated hereby are consummated, the Company shall pay any and all
reasonable fees and expenses of the Company and of GTCR, including the fees and
expenses of counsel and of any experts or agents, which may be incurred in
connection with (i) this Agreement, (ii) any of the actions or transactions
contemplated hereby and (iii) the exercise or enforcement of any of the
agreements hereunder.
SECTION 7. NOTICES. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, or mailed first class mail
(postage prepaid) or sent by reputable overnight courier service (charges
prepaid) to the addresses set forth on the signature page hereto or at such
address, to the attention of such other person, and with such other copy or
copies, as the recipient party has specified by prior written notice to the
sending party. Notices shall be deemed to have been given hereunder when
delivered personally, three days after deposit in the U.S. mail and one day
after deposit with a reputable overnight courier service.
SECTION 8. COOPERATION; FURTHER ASSURANCES. The Company and GTCR shall
reasonably cooperate with the other and will use reasonable efforts to cause
satisfaction of the conditions to and achievement of the objectives contemplated
herein. From and after the date hereof, the parties shall, from time to time,
execute and deliver or cause to be executed and delivered such further
instruments and agreements and perform such other acts, as the other party in
its reasonable its discretion may deem necessary, advisable or desirable to
carry out the actions and intentions contemplated herein either explicitly or
implicitly.
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SECTION 9. SUCCESSORS; ASSIGNMENT; EFFECT. This Agreement shall inure to
the benefit of, and be binding upon, the respective parties hereto and their
successors. This Agreement is not assignable by the Company, either in whole or
in part, without the prior written consent of GTCR. Nothing express or implied
in this Agreement is intended to, or shall be construed to, confer upon or give
to a person, firm or corporation other than the parties hereto any rights or
remedies hereunder or by reason of this Agreement or any transaction
contemplated hereby.
SECTION 10. AMENDMENT AND WAIVER. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement will be
effective against any party unless such modification, amendment or waiver is
approved in writing by such party. The failure of any party to enforce any of
the provisions of this Agreement will in no way be construed as a waiver of such
provisions and will not affect the right of such party thereafter to enforce
each and every provision of this Agreement in accordance with its terms.
SECTION 11. GOVERNING LAW. The corporate law of the State of Delaware
shall govern all issues and questions concerning the relative rights and
obligations of the Company and its stockholders. All other issues and questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Illinois, without giving effect to any choice of law or conflict of
law rules or provisions (whether of the State of Illinois or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Illinois.
SECTION 12. SEVERABILITY. In the event that any provision or any portion
of any provision of this Agreement shall be held invalid, illegal or
unenforceable under applicable law, the remainder of this Agreement shall remain
valid and enforceable, unless such invalidity, illegality or unenforceability
substantially diminishes the rights and obligations, taken as a whole, of any
party hereunder.
SECTION 13. NO STRICT CONSTRUCTION. The language used in this Agreement
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
party.
SECTION 14. DESCRIPTIVE HEADINGS; INTERPRETATION. The descriptive
headings of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement. The use of the word "including" in this
Agreement shall be by way of example rather than by limitation.
SECTION 15. COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together shall constitute
one and the same Agreement.
SECTION 16. CONSENT. Pursuant to the Equity Purchase Agreement, made as
of December 3, 1993, between the Company and GTCR (the "Equity Purchase
Agreement"), the Company has agreed not to take certain actions, including,
without limitation, issuing stock or incurring certain obligations, without
obtaining the prior written consent of the holders of a majority of the Investor
Common Stock (as defined in the Equity Purchase Agreement). This
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Agreement contemplates that the Company will take certain actions which are
restricted by the Equity Purchase Agreement. GTCR, as the holder of all of the
Investor Common Stock, hereby acknowledges, permits and consents to the taking
of such actions as contemplated by the terms of this Agreement.
* * *
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have caused this Agreement to be executed by their authorized representatives on
and as of the day and date first above set forth.
GOLDER, THOMA, XXXXXXX, XXXXXX
FUND IV, L.P.
By: GTCR IV, L.P.
Its General Partner
By: Xxxxxx, Xxxxx Cressey, Rauner, Inc.
Its General Partner
By /S/ Xxxxx X. Xxxxxxx
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Name (Print): Xxxxx X. Xxxxxxx
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Title (Print): Principal
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Address: 0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
AMERICAN MEDSERVE CORPORATION
By /s/ Xxxxxxx X. Xxxxxxxx
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Name (Print): Xxxxxxx X. Xxxxxxxx
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Title (Print): Vice President
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Address: 000 Xxxxxx Xxxx.
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
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Reference is made to the Stockholders Agreement, made as of December 3,
1993 (the "Stockholders Agreement"), by and among American Medserve
Corporation (the "Company"), Golder, Thoma, Xxxxxxx, Xxxxxx Fund IV, L.P.
("GTCR") and Xxxxxxx X. Xxxxxxxx (the "Executive") and to the Reimbursement
and Conversion Rights Agreement, made and entered into as of August __, 1996
(the "Reimbursement Agreement"), between the Company and GTCR.
The Executive acknowledges that the method for determining Market Price (as
defined in the Reimbursement Agreement) as set forth in Section 2(b) of the
Reimbursement Agreement is not consistent with the method prescribed by Section
8 of the Stockholders Agreement. The Executive consents to the use of the
method for determining Market Price set forth in Section 2(b) of the
Reimbursement Agreement only for purposes of the transactions contemplated by
the Reimbursement Agreement.
This acknowledgment and consent shall in no way be construed to be an
amendment to or modification of the Stockholders Agreement, but rather it is an
acknowledgment and consent to the use of the method for determining Market Price
as set forth in the Reimbursement Agreement only for purposes of the
transactions contemplated by the Reimbursement Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand as of the 2nd day of
August, 1996.
/s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
