Exhibit 10.13
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SUBSCRIPTION AND EXCHANGE AGREEMENT
among
NOVA HOLDINGS, INC.,
THE SEVERAL PURCHASERS NAMED
IN SCHEDULE I HERETO
and
THE SEVERAL EXCHANGING SHAREHOLDERS
NAMED IN SCHEDULE II HERETO
Dated as of May 31, 1996
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TABLE OF CONTENTS
Page
I. PURCHASE, SALE AND EXCHANGE OF SECURITIES.......................................................... 2
SECTION 1.01 Issuance, Sale or Exchange and Delivery of Shares........................ 2
SECTION 1.02 Additional Agreement..................................................... 3
II. THE CLOSING........................................................................................ 4
III. REPRESENTATIONS AND WARRANTIES OF COMPANY.......................................................... 4
SECTION 3.01 Organization, Power, Etc................................................. 4
SECTION 3.02 Authorization of Agreements, Etc......................................... 4
SECTION 3.03 Validity................................................................. 5
SECTION 3.04 Authorized Capital Stock................................................. 5
SECTION 3.05 Governmental Approvals................................................... 5
SECTION 3.06 Activities................................................................ 6
IV. REPRESENTATIONS AND WARRANTIES OF PURCHASERS
AND EXCHANGING SHAREHOLDERS........................................................................ 6
SECTION 4.01 Organization, Power, Etc................................................. 6
SECTION 4.02 Authorization of Agreements, Etc......................................... 6
SECTION 4.03 Validity................................................................. 7
SECTION 4.04 Government Approvals..................................................... 7
SECTION 4.05 Investment............................................................... 7
V. COVENANTS.......................................................................................... 8
SECTION 5.01 Certain Covenants of Company............................................. 8
SECTION 5.02 Financial Statements, Reports, Etc....................................... 8
SECTION 5.03 Tax Treatment of Transaction............................................. 10
VI. CONDITIONS PRECEDENT............................................................................... 10
SECTION 6.01 Conditions Precedent to Obligations of Purchasers........................ 10
SECTION 6.02 Conditions Precedent to Obligations of Company........................... 12
VII. MISCELLANEOUS...................................................................................... 13
SECTION 7.01 Expenses, Etc............................................................ 13
SECTION 7.02 Survival of Agreements................................................... 13
Page
SECTION 7.03 Parties in Interest...................................................... 14
SECTION 7.04 Notices.................................................................. 14
SECTION 7.05 Entire Agreement; Modifications.......................................... 14
SECTION 7.06 Counterparts............................................................. 15
SECTION 7.07 Governing Law............................................................ 15
SECTION 7.08 Notice for Pennsylvania Residents........................................ 15
Exhibits Description
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A Form of Registration Rights Agreement
Schedules Description
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I Purchasers
II Exchanging Shareholders
ii
ATTENTION: PENNSYLVANIA RESIDENTS
OFFERS TO PURCHASE THE SECURITIES ISSUED HEREUNDER THAT ARE
MADE TO PENNSYLVANIA RESIDENTS WILL BE MADE ONLY TO PENNSYLVANIA RESIDENTS WHO
ARE ACCREDITED INVESTORS AS DEFINED IN REGULATION D UNDER THE SECURITIES ACT OF
1933.
EACH PENNSYLVANIA RESIDENT WHO PURCHASES ANY OF THE SECURITIES
ISSUED HEREUNDER HEREBY AGREES NOT TO SELL THE SECURITIES PURCHASED FOR A PERIOD
OF TWELVE MONTHS FROM THE DATE OF PURCHASE UNLESS THE PURCHASER'S SECURITIES ARE
SUBSEQUENTLY REGISTERED UNDER THE PENNSYLVANIA SECURITIES ACT OF 1972 OR UNDER
THE SECURITIES ACT OF 1933, OR OTHERWISE IN ACCORDANCE WITH REGULATION 204.011
OF THE PENNSYLVANIA CODE.
PURSUANT TO SECTION 207(M) OF THE PENNSYLVANIA SECURITIES ACT
OF 1972, EACH PERSON WHO ACCEPTS AN OFFER TO PURCHASE SECURITIES EXEMPTED FROM
REGISTRATION BY SECTION 203(D) OF THE PENNSYLVANIA SECURITIES ACT OF 1972
DIRECTLY FROM AN ISSUER OR AN AFFILIATE OF AN ISSUER SHALL HAVE THE RIGHT TO
WITHDRAW HIS OR HER ACCEPTANCE, WITHOUT INCURRING ANY LIABILITY TO THE SELLER,
UNDERWRITER (IF ANY) OR ANY OTHER PERSON, WITHIN TWO BUSINESS DAYS FROM THE DATE
OF RECEIPT BY THE ISSUER OF HIS OR HER WRITTEN BINDING CONTRACT OF PURCHASE OR,
IN THE CASE OF A TRANSACTION IN WHICH THERE IS NO WRITTEN BINDING CONTRACT OF
PURCHASE, WITHIN TWO BUSINESS DAYS AFTER HE OR SHE MAKES THE INITIAL PAYMENT FOR
THE SECURITIES BEING OFFERED. TO ACCOMPLISH THIS WITHDRAWAL, THE PURCHASER NEED
ONLY SEND A LETTER OR TELEGRAM TO THE COMPANY X/X XXXXX, XXXXXX, XXXXXXXX &
XXXXX, XXX WORLD FINANCIAL CENTER, XXXXX 0000, XXX XXXX, XXX XXXX 00000,
ATTENTION: XXXXXX X. XXXX INDICATING HIS OR HER INTENTION TO WITHDRAW. SUCH
LETTER OR TELEGRAM SHOULD BE SENT AND POSTMARKED PRIOR TO THE END OF THE
AFOREMENTIONED SECOND BUSINESS DAY. IF THE PURCHASER IS SENDING A LETTER, IT IS
PRUDENT TO SEND IT BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ENSURE THAT
IT IS RECEIVED AND ALSO TO EVIDENCE THE TIME WHEN IT WAS MAILED. SHOULD THE
PURCHASER MAKE THE REQUEST ORALLY (EITHER IN PERSON OR BY TELEPHONE TO THE
COMPANY AT 212-945-2012), THE PURCHASER SHOULD ASK FOR WRITTEN CONFIRMATION THAT
SUCH REQUEST HAS BEEN RECEIVED.
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SUBSCRIPTION AND EXCHANGE AGREEMENT
SUBSCRIPTION AND EXCHANGE AGREEMENT dated as of May 31, 1996
among NOVA HOLDINGS, INC., a Delaware corporation (the "Company"), WELSH,
CARSON, XXXXXXXX & XXXXX VII, L.P., a Delaware limited partnership ("WCAS VII"),
the other several purchasers named in Schedule I hereto (WCAS VII and such other
purchasers being sometimes hereinafter referred to individually as a "Purchaser"
and collectively as the "Purchasers") and the several individuals named in
Schedule II hereto (individually an "Exchanging Shareholder" and collectively,
the "Exchanging Shareholders");
WHEREAS, Le Bonheur Health Systems, Inc., a Tennessee
nonprofit corporation ("LHS"), the Exchanging Shareholders and certain other
individuals collectively own all of the issued and outstanding shares of capital
stock of Southern Health Systems, Inc. a Tennessee corporation ("SHS");
WHEREAS, pursuant to a Stock Purchase Agreement (the "Stock
Purchase Agreement") dated as of the date hereof among LHS, SHS, the Company and
WCAS VII, the Company has agreed to purchase, and LHS has agreed to sell, all of
the shares of capital stock of SHS owned by LHS for cash on the terms and
subject to the conditions set forth therein;
WHEREAS, on the Closing Date (as hereinafter defined) and in
order to obtain the funds necessary to make the purchase from LHS described
above, the Company wishes to sell to the Purchasers, and the Purchasers wish to
purchase from the Company, the shares of capital stock of the Company described
below on the terms and conditions hereinafter set forth;
WHEREAS, the Exchanging Shareholders wish to transfer to the
Company on the Closing Date all the shares of capital stock of SHS owned by them
in exchange for shares of capital stock of the Company as provided below on the
terms and conditions hereinafter set forth; and
WHEREAS, in a single overall plan and transaction, the parties
contemplate that:
(a) the Purchasers will, severally and not jointly, on the
terms and conditions and in the respective proportions for each
Purchaser hereinafter set forth, (i) purchase from the Company for an
aggregate price of $15,000,000, such price being subject to adjustment
as hereinafter provided, an aggregate 5,000,000 shares of Common Stock
(the "Pur-
chaser Common Shares"), par value $0.01 per share, of the Company
("Common Stock") and (ii) purchase from the Company for an
aggregate price of $25,000,000, such price being subject to adjustment
as hereinafter provided, an aggregate 250,000 shares of Series A
Cumulative Preferred Stock (the "Purchaser Preferred Shares"), par
value $1.00 per share, of the Company ("Preferred Stock") (the
Purchaser Common Shares and the Purchaser Preferred Shares are
hereinafter sometimes referred to collectively as the "Purchaser
Shares"), and
(b) each Exchanging Shareholder will transfer to the Company
all shares of Class B Common Stock, par value $.01 per share ("Class B
Stock"), of SHS owned by him (such Exchanging Shareholder's "Class B
Shares"), and in exchange for the Class B Shares so transferred the
Company will, on the terms and conditions hereinafter set forth, issue
and deliver to such Exchanging Shareholder shares of Common Stock and
shares of Preferred Stock as hereinafter provided (collectively, the
"Exchange Shares"; the Purchaser Shares and the Exchange Shares are
hereinafter sometimes referred to collectively as the "Shares");
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto agree as follows:
I.
PURCHASE, SALE AND EXCHANGE OF SECURITIES
SECTION 1.01 Issuance, Sale or Exchange and Delivery of
Shares. On the Closing Date, subject to the terms and conditions hereinafter set
forth, the following transactions shall occur:
(a) The Company shall issue and sell to each Purchaser, and
each Purchaser shall purchase from the Company, (i) the number of
shares of Common Stock set forth opposite the name of such Purchaser in
Schedule I hereto under the heading "Common Shares" at a price of $3.00
per share (the "Common Share Price"), such price being subject to
increase or decrease as provided in Section 1.02, and (ii) the number
of shares of Preferred Stock set forth opposite the name of such
Purchaser in Schedule I hereto under the heading "Preferred Shares" at
a price of $100.00 per share (the "Preferred Share Price"). The Company
will issue to each Purchaser certificates in definitive form,
registered in the name of such Purchaser, evidencing the number of
Purchaser Shares so issued and sold to such Purchaser hereunder. As
payment in full for such Purchaser Shares, each Purchaser
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shall pay to the Company, by certified or official bank check in New
York Clearing House funds payable to the order of the Company, the
amount of the purchase price for such Purchaser Shares or, if
requested by the Company, shall transfer such amount by wire transfer
to a bank account of the Company designated by it.
(b) Each Exchanging Shareholder shall transfer to the Company
the number of Class B Shares set forth opposite the name of such
Exchanging Shareholder in Schedule II hereto under the heading "Number
of Class B Shares" and, in exchange for such Class B Shares transferred
to the Company by such Exchanging Shareholder, the Company shall issue
and deliver to such Exchanging Shareholder the number of shares of
Common Stock and the number of shares of Preferred Stock set forth
opposite the name of such Exchanging Shareholder in Schedule II hereto
under the headings "Number of Common Shares" and "Number of Preferred
Shares", respectively. No fractional shares of Common Stock or
Preferred Stock will be issued, and the Company will pay to each
Exchanging Shareholder, as promptly as practical after the Closing
Date, cash equal to the value of any fractional share of Common Stock
or Preferred Stock which would be delivered to such Exchanging
Shareholder but for this sentence, the amount thereof to be as set
forth opposite the name of such Exchanging Shareholder in Schedule II
hereto under the heading "Cash in Lieu of Fractional Shares". The
Company shall, against delivery of a certificate for the number of
Class B Shares to be transferred to it as provided above by an
Exchanging Shareholder registered in the Company's name, deliver to
such Exchanging Shareholder certificates in definitive form and
registered in the name of such Exchanging Shareholder, evidencing the
number of Exchange Shares to be so issued to such Exchanging
Shareholder.
Each party hereto agrees that the transactions set forth above constitute part
of a single overall plan, and, accordingly, understands that unless all such
transactions are consummated on the Closing Date, none of them is required to be
consummated.
SECTION 1.02 Additional Agreement. On the Closing Date,
concurrently with the issuance and delivery of the Purchaser Shares and Exchange
Shares hereunder, the Company, the Purchasers and the Exchanging Shareholders
shall execute and deliver a Registration Rights Agreement in the form of Exhibit
A hereto (the "Registration Rights Agreement").
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II.
THE CLOSING
The closing of the transactions described in Section 1.01
shall take place at the offices of Reboul, MacMurray, Xxxxxx, Xxxxxxx & Kristol,
00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 concurrently with the
consummation of the transactions described in Section 1.01 of the Stock Purchase
Agreement (such date and time of closing being herein called the "Closing
Date").
III.
REPRESENTATIONS AND WARRANTIES OF COMPANY
The Company represents and warrants to each Purchaser and
Exchanging Shareholder as follows:
SECTION 3.01 Organization, Power, Etc. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. The Company has the corporate power and authority
to execute and deliver this Agreement, the Registration Rights Agreement, the
Stock Purchase Agreement and the Additional Agreements (as defined in the Stock
Purchase Agreement) to which the Company is to be a party (collectively the
"Agreements"), to perform its obligations hereunder and thereunder, and to
issue, sell or exchange and deliver the Purchaser Shares and the Exchange
Shares.
SECTION 3.02 Authorization of Agreements, Etc. (a) The Company
has duly approved the Agreements and has duly authorized the execution and
delivery of the Agreements, and the consummation of the transactions
contemplated thereby. Neither the execution and delivery by the Company of the
Agreements, nor the consummation of the transactions contemplated thereby, will
violate any provision of law, any order of any court or other agency of
government, the Certificate of Incorporation (as amended by the Amendment
hereinafter referred to) or By-laws of the Company, or any judgment, award or
decree or any indenture, agreement or other instrument to which the Company is a
party, or by which it or any of its properties or assets is bound or affected,
or result in a breach of or constitute (with due notice or lapse of time or
both) a default under any such indenture, agreement or other instrument, or
result in the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of the properties or assets of the Company.
(b) Upon the filing of the Amendment to Certificate of
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Incorporation attached hereto as Exhibit B (the "Amendment") with the Secretary
of State of the State of Delaware, the Purchaser Shares and the Exchange Shares
will have been duly authorized by the Company and, when issued and paid for in
accordance with this Agreement, will be validly issued, fully paid and
nonassessable shares of Common Stock and Preferred Stock. None of the issuance,
sale and delivery hereunder of the Purchaser Shares or the Exchange Shares is or
will be 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 3.03 Validity. This Agreement has been duly executed
and delivered by the Company, and, subject to due execution by the other parties
thereto, constitutes, and each of the other Agreements, when executed and
delivered by the Company as contemplated hereby and by the Stock Purchase
Agreement and subject to due execution by the other parties thereto, will
constitute, legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms, except as
enforceability may be limited by bankruptcy or other laws affecting creditor's
rights generally and limitations on the availability of equitable remedies and
except as rights to indemnity may be limited by public policy or by law.
SECTION 3.04 Authorized Capital Stock. (a) As of the date
hereof, no shares of Common Stock or Preferred Stock have ever been issued. The
authorized capital stock of the Company consists of 7,000,000 shares of Common
Stock and 300,000 shares of Preferred Stock. After giving effect to the
issuances of the Purchaser Shares and the Exchange Shares pursuant to Sections
1.01(a) and (b) hereof, no shares of capital stock of the Company will be issued
and outstanding, other than the Purchaser Shares and the Exchange Shares.
(b) Except as provided in this Agreement or in any of the
other Agreements, (i) no subscription, warrant, option, convertible security or
other right (contingent or other) to purchase or acquire any shares of the
capital stock of the Company is authorized or outstanding and (ii) there is not
any commitment of the Company to issue any shares, warrants, options or other
such rights or to distribute to holders of the Company's capital stock, any
evidences of indebtedness or assets, it being understood that the Company may in
the future establish stock options plans and grant stock options to employees.
Except as provided in this Agreement or in accordance with the terms of the
Amendment, the Company has no obligation (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 3.05 Governmental Approvals. No order,
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authorization, approval or consent from, or filing with, any federal or state
governmental or public body or other authority having jurisdiction over the
Company not already obtained or made is required to be made or obtained by the
Company for the execution, delivery and performance of the Agreements or is
necessary in order to ensure the legality, validity, binding effect or
enforceability of the Agreements.
SECTION 3.06 Activities. Since its formation, the Company has
engaged in no activities and has incurred no obligations or liabilities, except
those incident to its formation and the consummation of the transactions
contemplated hereby and by the Stock Purchase Agreement.
IV.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
AND EXCHANGING SHAREHOLDERS
Each Purchaser and each Exchanging Shareholder (solely for
purposes of this Article IV, each such Purchaser or Exchanging Shareholder, as
the case may be, is referred to as an "Acquiror"), severally and not jointly,
represents and warrants to the Company, solely with respect to itself or
himself, as the case may be, as follows:
SECTION 4.01 Organization, Power, Etc. Such Acquiror, if
not a natural person, is a partnership or a corporation or trust duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation. Such Acquiror has individual, partnership or
corporate power and authority to execute and deliver this Agreement and the
Registration Rights Agreement, and to perform its obligations hereunder and
thereunder.
6
SECTION 4.02 Authorization of Agreements, Etc. The execution,
delivery and performance by such Acquiror of this Agreement and the Registration
Rights Agreement and the purchase or exchange, as the case may be, and receipt
by such Acquiror of the Shares being acquired by such Acquiror hereunder, as the
case may be, have been duly authorized by all requisite action on the part of
such Acquiror, and will not violate any provision of law, any order of any court
or other agency of government applicable to such Acquiror, the governing
instrument of such Acquiror, or any provision of any indenture, agreement or
other instrument by which such Acquiror or any of such Acquiror'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, or result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any of the properties
or assets of such Acquiror.
SECTION 4.03 Validity. This Agreement has been duly executed
and delivered by such Acquiror and constitutes the legal, valid and binding
obligation of such Acquiror, enforceable against such Acquiror 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 Registration Rights Agreement, when executed and
delivered in accordance with this Agreement, will constitute the legal, valid
and binding obligation of such Acquiror, enforceable 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.
SECTION 4.04 Governmental Approvals. No order, authorization,
approval or consent from, or filing with, any federal or state governmental or
public body or other authority having jurisdiction over such Acquiror not
already obtained or made is required for the execution, delivery and performance
of this Agreement or the Registration Rights Agreement or is necessary in order
to ensure the legality, validity, binding effect or enforceability of this
Agreement or the Registration Rights Agreement.
SECTION 4.05 Investment. Such Acquiror understands that the
Acquiror Shares being acquired by such Acquiror have not been, and are not
proposed to be, registered under the Securities Act of 1933, as amended (the
"Securities Act") or any state securities laws, and are being offered and sold
in reliance upon United States federal and state exemptions for transactions not
7
involving any public offering. Such Acquiror acknowledges that it is acquiring
its Acquiror Shares for investment purposes and not with a view to, or intention
to effect, the distribution thereof in violation of the Securities Act, and that
such Acquiror Shares may not be disposed of in contravention of the Securities
Act. Such Acquiror represents that it is a sophisticated investor with knowledge
and experience in business and financial matters, is able to evaluate the risks
and benefits of the investment in its Acquiror Shares, has received certain
information concerning the Company and has had the opportunity to obtain
additional information as desired in order to evaluate the merits of and the
risks inherent in acquiring such Acquiror Shares. Each Purchaser represents that
it is an "accredited investor" as defined in Regulation D promulgated pursuant
to the Securities Act.
V.
COVENANTS
SECTION 5.01 Certain Covenants of Company. The Company shall
not waive, without the prior written consent of WCAS VII, any conditions
precedent to its obligation to consummate the transactions contemplated by the
Stock Purchase Agreement. The Company further acknowledges and agrees that WCAS
VII has the unrestricted right to take unilateral action under the Stock
Purchase Agreement, including, among other things, the termination of the Stock
Purchase Agreement if the Closing Date has not occurred on or before June 14,
1996.
SECTION 5.02 Financial Statements, Reports, Etc. Except as set
forth below, so long as any Purchaser shall hold not less than 25% of Purchaser
Shares issued to such Purchaser under this Agreement, the Company shall furnish
to such Purchaser:
(a) as soon as practicable and, in any case, within
ninety-five (95) days after the end of each fiscal year, consolidated
and consolidating financial statements of the Company, consisting of
the balance sheet of the Company as of the end of such fiscal year and
the statements of operations, changes in shareholders' equity and cash
flows of the Company for such fiscal year, setting forth in each case,
in comparative form, the figures for the preceding fiscal year, all in
reasonable detail and fairly presented in accordance with generally
accepted accounting principles applied on a consistent basis throughout
the periods reflected therein, except as stated therein, and
accompanied by an opinion thereon of independent certified public
accountants selected by the Company of good and recognized national
standing in
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the United States and reasonably acceptable to the Purchasers holding
a majority of the Purchaser Shares issued under this Agreement, which
opinion shall provide that (1) the audit of such financial statements
has been conducted in accordance with generally accepted auditing
standards and, accordingly, included examining, on a test basis,
evidence supporting amounts and disclosures in the financial
statements and (2) such financial statements present fairly, in all
material respects, the financial position of the Company and its
subsidiaries taken as a whole at such date and the results of
operations and cash flows thereof for such period and have been
prepared in conformity with generally accepted accounting principles
and subject to qualifications noted therein;
(b) as soon as practicable and, in any case, within fifty (50)
days after the end of each of the first three fiscal quarters in each
fiscal year, unaudited consolidated and consolidating financial
statements of the Company setting forth the balance sheet of the
Company at the end of each such fiscal quarter and the statements of
operations, shareholders' equity and changes in cash flows of the
Company for each such fiscal quarter and for the year to date, and
setting forth in comparative form figures as of the corresponding date
and for the corresponding periods of the preceding fiscal year, all in
reasonable detail and certified by the principal financial officer of
the Company as complete and correct, as having been prepared in
accordance with generally accepted accounting principles consistently
applied (except as otherwise disclosed therein) and as presenting
fairly, in all material respects, the financial position of the Company
and its subsidiaries and results of operations, shareholders' equity
and cash flows thereof subject, in each case, to changes resulting from
normal year-end adjustments consisting only of normal recurring
accruals and to the absence of footnotes;
(c) as soon as available, but in any event within thirty (30)
days after the end of each calendar month, copies of the unaudited
consolidated and consolidating balance sheet of the Company as at the
end of such calendar month and the related unaudited consolidated and
consolidating statements of operations, shareholders' equity and cash
flows for such calendar month and the portion of the calendar year
through such calendar year, in each case setting forth in comparative
form the figures for the corresponding periods of the previous calendar
year, prepared in reasonable detail and in accordance with generally
accepted accounting principles applied consistently throughout the
periods reflected therein (except as otherwise disclosed therein) and
certified by the principal financial officer of
9
the Company as presenting fairly the financial condition and results
of operations of the Company and its subsidiaries (subject to normal
year-end adjustments consisting only of normal recurring accruals and
to the absence of footnotes);
(d) within 30 days after 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 and its subsidiaries, including projected monthly
consolidated and consolidating income and cash flow statements during
such fiscal year and projected consolidating balance sheets as of the
end of each fiscal quarter and as of the end of such fiscal year, and
each monthly financial statement furnished pursuant to (c) above shall
reflect variances from such operating budget, as the same may from time
to time be revised; and
(e) promptly after filing, copies of all registration
statements, prospectuses, periodic reports and other documents filed by
the Company or any of its subsidiaries with the Commission.
The obligations of the Company under paragraphs (c), (d) and (e) above, and
under paragraphs (a) and (b) above as to consolidating financial statements,
shall cease at such time as the Company shall have completed an Initial Public
Offering. For purposes hereof, the term "Initial Public Offering" means a firm
commitment underwritten public offering of Common Stock registered under the
Securities Act of 1933, as amended (the "Securities Act"), resulting in proceeds
to the Company of not less than $15,000,000, after deduction of underwriting
discounts and commissions but before deduction of other expenses of issuance.
SECTION 5.03 Tax Treatment of Transaction. Each of the parties
hereto shall, for all tax purposes, treat the transactions effected pursuant to
paragraphs (a) and (b) of Section 1.01 as collectively constituting a
transaction under Section 351 of the Internal Revenue Code of 1986, as amended
(the "Code"), in which the Purchasers and the Exchanging Shareholders
(collectively, the "Transferors") transfer property to the Company in exchange
for shares of Common Stock, and immediately after the exchange the Transferors
are in control (as defined in Section 368(c) of the Code) of the Company. It is
understood and agreed that none of the Company, any Purchaser or any of their
respective affiliates is making any representation or warranty as to whether or
not the transactions described in paragraphs (a) and (b) of Section 1.01 will
collectively constitute a transaction in which the Exchanging Shareholders will
not recognize gain or loss under Section 351 of the Code.
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VI.
CONDITIONS PRECEDENT
SECTION 6.01 Conditions Precedent to Obligations of
Purchasers. The obligations of each Purchaser hereunder are, at its option,
subject to the satisfaction, on or before the 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 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 and in the Stock Purchase
Agreement required to be performed or complied with by it prior to or on the
Closing Date, and the Company shall have certified to such effect to the
Purchasers in writing.
(c) All Proceedings to Be Satisfactory. All corporate and
other proceedings to be taken by the Company and all waivers and consents to be
obtained by the Company in connection with the transactions contemplated hereby
shall have been taken or obtained by the Company and all documents incident
thereto shall be satisfactory in form and substance to the Purchasers and their
counsel.
(d) Registration Rights and Other Agreements. The Company
shall have executed and delivered the Registration Rights Agreement and other
Agreements to which the Company is a party.
(e) Opinion of Counsel for Company and Purchasers. The
Purchasers shall have received the opinion of Reboul, MacMurray, Xxxxxx, Xxxxxxx
& Kristol, counsel to the Company and the Purchasers, addressed to the
Purchasers and dated the Closing Date, satisfactory in form and substance to the
Purchasers and covering such matters as the Purchasers shall reasonably request.
(f) Supporting Documents. The Purchasers shall have received
copies of the following supporting documents:
(i) (1) 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, (2) a certificate of
said Secretary dated as of a
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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 and (3) a telegram or facsimile from said Secretary as of
the close of business on the next business day preceding the Closing
Date as to the continued due incorporation and good standing of the
Company and to the effect that no amendment to its Certificate of
Incorporation (other than the Amendment) has been filed since the
date of the certificate referred to in clause (2) above;
(ii) a certificate of the Secretary or an Assistant Secretary of
the Company dated the Closing Date and certifying (1) that attached
thereto are true and complete copies of the By-laws of the Company as
in effect on the date of such certification and of the Amendment as
filed with the Secretary of State of the State of Delaware; (2) 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 and the Registration Rights
Agreement, the issuance, sale and delivery of the Purchaser Shares, and
the issuance, exchange and delivery of the Exchange Shares and that all
such resolutions are still in full force and effect and are all the
resolutions adopted in connection with the transactions contemplated by
this Agreement and the Registration Rights Agreement; (3) that the
Certificate of Incorporation of the Company has not been amended
(except by filing of the Amendment) since the date of the last
amendment referred to in the certificate delivered pursuant to clause
(i)(2) above; and (4) as to the incumbency and specimen signature of
each officer of the Company executing this Agreement and the
Registration Rights Agreement, the stock certificates representing the
Shares and any certificate or instrument furnished pursuant hereto, and
a certification by another officer of the Company as to the incumbency
and signature of the officer signing the certificate referred to in
this paragraph (ii); and
(iii) such additional supporting documents and other information
with respect to the operations and affairs of the Company as the
Purchasers or their counsel may reasonably request.
(g) Closing under Stock Purchase Agreement. All conditions
precedent to the Company's obligations to close under the Stock Purchase
Agreement shall have been met (or waived in accordance with the provisions
hereof and of the Stock Purchase Agreement) and such closing shall occur
concurrently with the closing hereunder.
Each Exchanging Shareholder shall be obligated to close
12
hereunder if the Purchasers are so obligated or otherwise elect to close.
SECTION 6.02 Conditions Precedent to Obligations of Company.
The obligations of the Company hereunder are, at its option, subject to the
satisfaction, on or before the Closing Date, of the following conditions:
(a) Representations and Warranties to Be True and Correct. The
representations and warranties of each Purchaser and each Exchanging Shareholder
contained in this Agreement shall be true and correct in all material respects
on the Closing Date, with the same effect as though such representations and
warranties had been made on and as of such date.
(b) Performance. WCAS VII and each Exchanging Shareholder
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
Closing Date.
(c) All Proceedings to Be Satisfactory. All proceedings to be
taken by any Purchaser and any Exchanging Shareholder and all waivers and
consents to be obtained by any Purchaser or any Exchanging Shareholder in
connection with the transactions contemplated hereby shall have been taken or
obtained by such Purchaser or Exchanging Shareholder and all documents incident
thereto shall be satisfactory in form and substance to the Company and its
counsel.
(d) Closing under Stock Purchase Agreement. All conditions
precedent to the Company's obligation to close under the Stock Purchase
Agreement shall have been met (or waived in accordance with the provisions
hereof and of the Stock Purchase Agreement) and such closing shall occur
concurrently with the closing hereunder.
13
VII.
MISCELLANEOUS
SECTION 7.01 Expenses, Etc. (a) Each party hereto will pay its
own expenses in connection with the transactions contemplated by this Agreement,
whether or not such transactions shall be consummated; provided, however, that
the Company shall pay the reasonable fees and disbursements of Reboul,
MacMurray, Xxxxxx, Xxxxxxx & Kristol. 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.
(b) The Company covenants and agrees that, if in the future
any Purchaser is required to make any filing under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, in connection with any
transaction to which the Company is hereafter a party, the Company will pay the
reasonable fees and expenses of such Purchaser's counsel in preparing such
filing, together with all filing fees.
SECTION 7.02 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 Shares 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 7.03 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. The Purchasers hereby agree for the
express benefit of LHS that if the conditions precedent to the obligations of
the Company set forth in the Stock Purchase Agreement are satisfied on and as of
the Closing Date, the Purchasers will consummate the transactions contemplated
by this Agreement.
SECTION 7.04 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 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:
14
if to the Company, to:
Nova Holdings, Inc.
c/o Welsh, Carson, Xxxxxxxx & Xxxxx
One World Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Facsimile Number: (000) 000-0000
Attention: Xxxxxx X. Xxxx
with a copy to:
Reboul, MacMurray, Xxxxxx, Xxxxxxx & Kristol
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile Number: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
if to any Purchaser or Exchanging Shareholder, to the address
of such Purchaser or Exchanging Shareholder appearing on
Schedule I or Schedule II hereto, as the case may be;
or, in any case, at such other address or addresses or facsimile number as shall
have been furnished in writing by such party to the other parties hereto. All
such notices, requests, consents and other communications shall be deemed to
have been received (a) in the case of personal 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 7.05 Entire Agreement; Modifications. This Agreement,
and the other agreements referred to herein, 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 Company and
WCAS VII.
SECTION 7.06 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
SECTION 7.07 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York.
SECTION 7.08 Notice for Pennsylvania Residents. OFFERS TO
PURCHASE THE SECURITIES ISSUED HEREUNDER THAT ARE MADE
15
TO PENNSYLVANIA RESIDENTS WILL BE MADE ONLY TO PENNSYLVANIA RESIDENTS WHO ARE
ACCREDITED INVESTORS AS DEFINED IN REGULATION D UNDER THE SECURITIES ACT OF
1933.
EACH PENNSYLVANIA RESIDENT WHO PURCHASES ANY OF THE SECURITIES
ISSUED HEREUNDER HEREBY AGREES NOT TO SELL THE SECURITIES PURCHASED FOR A PERIOD
OF TWELVE MONTHS FROM THE DATE OF PURCHASE UNLESS THE PURCHASER'S SECURITIES ARE
SUBSEQUENTLY REGISTERED UNDER THE PENNSYLVANIA SECURITIES ACT OF 1972 OR UNDER
THE SECURITIES ACT OF 1933, OR OTHERWISE IN ACCORDANCE WITH REGULATION 204.011
OF THE PENNSYLVANIA CODE.
PURSUANT TO SECTION 207(M) OF THE PENNSYLVANIA SECURITIES ACT
OF 1972, EACH PERSON WHO ACCEPTS AN OFFER TO PURCHASE SECURITIES EXEMPTED FROM
REGISTRATION BY SECTION 203(D) OF THE PENNSYLVANIA SECURITIES ACT OF 1972
DIRECTLY FROM AN ISSUER OR AN AFFILIATE OF AN ISSUER SHALL HAVE THE RIGHT TO
WITHDRAW HIS OR HER ACCEPTANCE, WITHOUT INCURRING ANY LIABILITY TO THE SELLER,
UNDERWRITER (IF ANY) OR ANY OTHER PERSON, WITHIN TWO BUSINESS DAYS FROM THE DATE
OF RECEIPT BY THE ISSUER OF HIS OR HER WRITTEN BINDING CONTRACT OF PURCHASE OR,
IN THE CASE OF A TRANSACTION IN WHICH THERE IS NO WRITTEN BINDING CONTRACT OF
PURCHASE, WITHIN TWO BUSINESS DAYS AFTER HE OR SHE MAKES THE INITIAL PAYMENT FOR
THE SECURITIES BEING OFFERED. TO ACCOMPLISH THIS WITHDRAWAL, THE PURCHASER NEED
ONLY SEND A LETTER OR TELEGRAM TO THE COMPANY AT THE ADDRESS SET FORTH IN
SECTION 7.04 ABOVE INDICATING HIS OR HER INTENTION TO WITHDRAW. SUCH LETTER OR
TELEGRAM SHOULD BE SENT AND POSTMARKED PRIOR TO THE END OF THE AFOREMENTIONED
SECOND BUSINESS DAY. IF THE PURCHASER IS SENDING A LETTER, IT IS PRUDENT TO SEND
IT BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ENSURE THAT IT IS RECEIVED
AND ALSO TO EVIDENCE THE TIME WHEN IT WAS MAILED. SHOULD THE PURCHASER MAKE THE
REQUEST ORALLY (EITHER IN PERSON OR BY TELEPHONE TO THE COMPANY AT
212-945-2012), THE PURCHASER SHOULD ASK FOR WRITTEN CONFIRMATION THAT SUCH
REQUEST HAS BEEN RECEIVED.
16
IN WITNESS WHEREOF, the Company, the Purchasers and the
Exchanging Shareholders have executed this Agreement as of the day and year
first above written.
NOVA HOLDINGS, INC.
By /s/ Nova Holdings, Inc.
---------------------------------
President
WELSH, CARSON, XXXXXXXX & XXXXX VII, L.P.
By WCAS VII Partners, L.P.,
General Partner
By /s/ WCAS VII Partners, L.P.
---------------------------------
General Partner
WCAS HEALTHCARE PARTNERS, L.P.
By WCAS HP Partners,
General Partner
By /s/ WCAS HP Partners
---------------------------------
General Partner
*
---------------------------------
Xxxxxxx X. Xxxxx
*
---------------------------------
Xxxxxxx X. Xxxxxx
*
---------------------------------
Xxxxx X. Xxxxxxxx
*
---------------------------------
Xxxxxxx X. Xxxxx
*
---------------------------------
Xxxxxx X. Xxxx
*
---------------------------------
Xxxxxx X. XxXxxxxxx
---------------------------------
Xxxxx XxxXxxxx, individually and
as attorney-in-fact*
*
---------------------------------
Xxxxx X. Xxxxxx
*
---------------------------------
Xxxxxx X. Xxxxxxxxx
*
---------------------------------
Xxxxxxx X. xx Xxxxxx
*
---------------------------------
Xxxx X. Xxxxxxx
HORIZON INVESTMENTS ASSOCIATES I
By /s/ Horizon Investments Associates
-----------------------------------
General Partner
THE SSB FOUNDATION
By /s/ Xxxxx X. Xxxxxx
------------------------------
Xxxxx X. Xxxxxx, Trustee
XXXXX X. XXXXXX TRUSTEE PROFIT SHARING PLAN
DLJSC CUSTODIAN FBO XXXXX X. XXXXXX
By /s/ Xxxxx X. Xxxxxx
------------------------------
/s/ Xxxxxxx X. Xxxxx
------------------------------
Xxxxxxx X. Xxxxx
/s/ Xxx Xxxxxxx
------------------------------
Xxx Xxxxxxx
/s/ Xxxx X. Grow
------------------------------
Xxxx X. Grow
/s/ Xxxx Xxxx
------------------------------
Xxxx Xxxx
/s/ Xxxx X. Xxxxxxxxx
------------------------------
Xxxx X. Xxxxxxxxx
/s/ Xxxx Stem
------------------------------
Xxxx Stem
/s/ Xxxxx X. Xxxxxxx
------------------------------
Xxxxx X. Xxxxxxx
SCHEDULE I
Purchase
Number of Purchase Number of Price of
Name and Common Price of Preferred Preferred
Address of Purchaser Shares Common Shares Shares Shares
-------------------- ---------- ------------- ---------- ---------
WELSH, CARSON, XXXXXXXX 4,635,670 $13,907,010 231,780 $23,178,000
& XXXXX VII, L.P.
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
WCAS HEALTHCARE PARTNERS, L.P. 93,733 281,199 4,688 468,800
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxxx X. Xxxxx 58,133 174,399 2,906 290,600
Xxxxxxx X. Xxxxxx 58,133 174,399 2,906 290,600
Xxxxx X. Xxxxxxxx 58,133 174,399 2,906 290,600
Xxxxxxx X. Xxxxx 13,133 39,399 656 65,600
Xxxxxx X. Xxxx 18,733 56,199 938 93,800
Xxxxxx X. XxXxxxxxx 13,133 39,399 656 65,600
Xxxxx XxxXxxxx 1,867 5,601 94 9,400
Xxxxx X. Xxxxxx 8,133 24,399 406 40,600
Xxxxxx X. Xxxxxxxxx 8,133 24,399 406 40,600
Xxxxxxx X. xx Xxxxxx 4,367 13,101 219 21,900
Xxxx X. Xxxxxxx 1,233 3,699 63 6,300
In care of WCA Management
Corporation
One World Financial Center
New York, NY 1281
Horizon Investments Associates I 10,633 31,899 531 53,100
c/o Continental Medical Systems, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000
The SSB Foundation 1,233 3,699 63 6,300
c/o Xxxxx X. Xxxxxx
000 X. 00 Xxxxxx
Xxx Xxxx, XX 00000
Xxxxx X. Xxxxxx Trustee Profit Sharing
Plan DLJSC Custodian FBO
Xxxxx X. Xxxxxx 9,367 28,101 469 46,900
c/x Xxxxxxxxx, Xxxxxx & Xxxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
X. Xxxxx Sweat as Custodian for
X. Xxxxx Sweat, Jr. 3,116 9,348 156 15,600
X. Xxxxx Sweat as Custodian for
Xxxxxxxx Xxxxxx Sweat 3,117 9,351 157 15,700
c/o X. Xxxxx Sweat
Equitable Securities
000 Xxxxxxxxx Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
TOTAL: 5,000,000 $15,000,000 250,000 $25,000,000
--------- ----------- ------- -----------
--------- ----------- ------- -----------
SCHEDULE II
Number of Number of Number of Cash in Lieu
Name and Address Class B Common Preferred of Fractional
of Exchanging Shareholder Shares Shares Shares Shares
------------------------- --------- --------- --------- -------------
Xxx Xxxxxxx 1,500 611 30 $57.00
Xxxx X. Grow 48,000 19,560 978 0.00
Xxxx Xxxx 11,900 4,849 242 47.00
Xxxx X. Xxxxxxxxx 30,000 12,225 611 25.00
Xxxx Stem 21,800 8,883 444 19.00
Xxxxx X. Xxxxxxx 150,000 61,125 3,056 25.00
In care of Nova Factor, Inc.
0000 Xxxxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
TOTAL: 263,200 107,253 5,361 $173.00
------- ------- ------ -------
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