EXHIBIT 10.13
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAWS.
NEITHER THE SECURITIES EVIDENCED HEREBY, NOR ANY INTEREST
THEREIN, MAY BE OFFERED, SOLD, TRANSFERRED, ENCUMBERED
OR OTHERWISE DISPOSED OF UNLESS EITHER (I) THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND LAWS
RELATING THERETO OR (II) THE CORPORATION HAS RECEIVED AN
OPINION OF COUNSEL, REASONABLY SATISFACTORY IN FORM AND
SUBSTANCE TO THE CORPORATION, STATING THAT SUCH
REGISTRATION IS NOT REQUIRED.
THIS NOTE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT ("OID") AS
DEFINED BY SECTION 1273(a)(1) OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED. THE FOLLOWING INFORMATION IS
PROVIDED PURSUANT TO THE INFORMATION REPORTING
REQUIREMENTS SET FORTH IN TREASURY REGULATION 1.1275-3.
THE ISSUE PRICE OF THIS DEBT INSTRUMENT IS $30,750,000. THE
AMOUNT OF OID ON THIS DEBT INSTRUMENT IS $5,250,000
ASSUMING ALL PAYMENTS OF PRINCIPAL ARE MADE AT MATURITY.
THE ISSUE DATE OF THIS DEBT INSTRUMENT IS MARCH 27, 2000. THE
PER ANNUM YIELD TO MATURITY OF THIS DEBT INSTRUMENT IS
12.61% COMPOUNDED SEMI-ANNUALLY.
UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
10% Senior Subordinated Note
Due March 27, 2010
$36,000,000 March 27, 2000
UNITED SURGICAL PARTNERS INTERNATIONAL, INC., a Delaware corporation
(hereinafter called the "Corporation"), for value received, hereby promises to
pay to WCAS CAPITAL PARTNERS III, L.P., the principal sum of THIRTY SIX MILLION
DOLLARS ($36,000,000) on March 27, 2010 (subject to applicable restrictions set
forth in Section 12 hereof), and to pay interest (computed on the basis of a
360-day year consisting of twelve 30-day months) from the date hereof on the
unpaid principal amount hereof at the rate of
10% per annum, payable semi-annually in arrears on September 27 and March 27 of
each year (each said day being an "Interest Payment Date"), commencing on
September 27, 2000 and until the date the outstanding principal amount hereof
shall have become due and payable in full, whether at maturity or by
acceleration or otherwise. If the principal amount hereof shall not be paid when
the same shall have become due and payable in full, whether at maturity or by
acceleration or otherwise, then such overdue principal amount and (to the extent
permitted by applicable law) any overdue interest shall thereupon bear interest
at the rate of 12% per annum until paid in full.
All payments of principal and interest on this Note shall be in such coin
or currency of the United States of America as at the time of payment shall be
legal tender for payment of public and private debts, and shall be made at the
offices of the person deemed the holder hereof in accordance with Section 4
below.
On any Interest Payment Date on or after March 27, 2005, the Company shall
also pay such amount of accrued original issue discount on this Note as shall be
necessary to ensure that this Note shall not be considered an "applicable high
yield discount obligation" within the meaning of Section 163(i) of the Internal
Revenue Code of 1986, as amended (the "Code"), or any successor provision. In
the event that any such payment of accrued original issue discount occurs, the
amount of principal payable on this Note shall be reduced to the extent
necessary to ensure that the yield to maturity on this Note (determined as
provided by Section 1272 of the Code and the regulations thereunder and computed
by taking into account any such payment of accrued original issue discount
pursuant to this paragraph) shall equal the yield to maturity on this Note
(computed as though no payment of accrued original issue discount had been made
under this paragraph). The Company and the holder hereof agree that the original
issue discount characteristics of the Note reflected in the legend were
determined in accordance with Treasury Regulation Section 1.1273-2(h)(1) and
that they shall report the accrual of interest and original issue discount on
the Note consistent with those determinations for all tax purposes.
1. THE NOTE. This Note is issued pursuant to and is subject to the terms
and provisions of the Securities Purchase Agreement dated as of March 27, 2000
(the "Securities Purchase Agreement") among the Corporation, Welsh, Carson,
Xxxxxxxx and Xxxxx VII, L.P. ("WCAS VII"), WCAS Capital Partners III, L.P., FFT
Capital Partners I, L.P. and the several other parties named therein. As used
herein, the term "Note" or "Notes" includes all of the 10% Senior Subordinated
Note or Notes due March 27, 2010 originally issued in connection with the
Securities Purchase Agreement and any 10% Senior Subordinated Note or Notes due
March 27, 2010 of the Corporation subsequently issued upon exchange or transfer
thereof.
2. TRANSFER. ETC. OF NOTES. The Corporation shall keep at its office or
agency maintained as provided in paragraph (a) of Section 6 a register in which
the Corporation shall provide for the registration of this Note and for the
registration of transfer and exchange of this Note. The holder of this Note
may, at its option, and either in person or by duly authorized attorney,
surrender the same for registration of transfer or exchange at the office or
agency of the
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Corporation maintained as provided in paragraph (a) of Section 6, and, without
expense to such holder (except for transfer taxes, if any, imposed in connection
therewith), receive in exchange therefor a Note or Notes each in such
denomination or denominations as such holder may request (which denominations
shall be $100,000 or an integral multiple thereof, except for any balance which
may be less than $100,000), dated as of the date to which interest has been paid
on the Note or Notes so surrendered for transfer or exchange, for the same
aggregate principal amount as the then unpaid principal amount of the Note or
Notes so surrendered for transfer or exchange, and registered in the name of
such person or persons as may be designated by such holder. This Note, when
presented or surrendered for registration of transfer or exchange, shall be duly
endorsed, or shall be accompanied by a written instrument of transfer,
satisfactory in form to the Corporation, duly executed by the holder of such
Note or his attorney duly authorized in writing. Every Note so made and
delivered in exchange for this Note shall in all other respects be in the same
form and have the same terms as this Note. No transfer or exchange of any Note
shall be valid unless made in the foregoing manner at such office or agency.
3. LOSS, THEFT, DESTRUCTION OR MUTILATION OF NOTE. Upon receipt of
evidence satisfactory to the Corporation of the loss, theft, destruction or
mutilation of this Note, and, in the case of any such loss, theft or
destruction, upon receipt of an affidavit of loss and indemnity from the holder
hereof reasonably satisfactory to the Corporation, or, in the case of any such
mutilation, upon surrender and cancellation of this Note, the Corporation will
make and deliver, in lieu of this Note, a new Note of like tenor and unpaid
principal amount and dated as of the date to which interest has been paid on
this Note.
4. PERSONS DEEMED OWNERS; HOLDERS. The Corporation may deem and treat the
person in whose name this Note is registered as the owner and holder of this
Note for the purpose of receiving payment of principal of and interest on this
Note and for all other purposes whatsoever, whether or not this Note shall be
overdue. With respect to any Note at any time outstanding, the term "holder", as
used herein, shall be deemed to mean the person in whose name such Note is
registered as aforesaid at such time.
5. PREPAYMENTS. The Corporation may prepay this Note as follows:
(a) MANDATORY PREPAYMENT. Except as and to the extent expressly prohibited
by applicable law, the Corporation shall prepay the principal amount, plus
accrued and unpaid interest, of all Notes which shall then be outstanding, upon
the consummation by the Corporation of an initial public offering of its Common
Stock, $.01 par value, registered under the Securities Act of 1933, as amended.
In case of the occurrence of any of the following (each a "Change of Control
Event"): (i) a consolidation or merger of the Corporation with or into any other
corporation (other than a merger which will not result in more than 50% of the
voting capital stock of the Corporation outstanding immediately after the
effective date of such merger being owned of record or beneficially by persons
other than the holders of such voting capital stock immediately prior to such
merger in the same proportions in which such shares were held immediately prior
to such merger), (ii) a sale of all or substantially all of the properties and
assets
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of the Corporation as an entirety in a single transaction or in a series of
related transactions to any other person or (iii) the acquisition of "beneficial
ownership" by any "person" or "group" (other than WCAS VII or its affiliates)
of voting stock of the Corporation representing more than 50% of the voting
power of all outstanding shares of such voting stock, whether by way of merger
or consolidation or otherwise, the Corporation shall not later than 20 days
prior to the effective date of any such Change of Control Event (the "Change of
Control Event Date"), give notice thereof to the holder or holders of the Notes
and, in the event that within 15 days after receipt of such notice, the holders
of a majority of the outstanding aggregate principal amount of the Notes elect,
by written notice to the Corporation, to have such Notes prepaid, the
Corporation shall prepay 100% of the principal amount of the Notes, plus any
accrued but unpaid interest as of the Change of Control Event Date, on or before
such date.
As used herein, (i) the terms "person" and "group" shall have the meaning
set forth in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), whether or not applicable, (ii) the term "beneficial
owner" shall have the meaning set forth in Rules 13d-3 and 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 Corporation
so long as such person or group beneficially owns, directly or indirectly, in
the aggregate a majority of the voting stock of a registered holder of the
voting stock of the Corporation.
(b) OPTIONAL PREPAYMENT. Upon notice given as provided in Section 5(c),
the Corporation may, at its option, prepay this Note without penalty, as a whole
at any time or in part from time to time in amounts which shall be integral
multiples of $10,000. Any date on which the Corporation elects to prepay any of
the Notes as provided in this subparagraph 5(b) and each date on which the
Corporation shall be required to prepay the Notes as provide in subparagraph
5(a) above shall be referred to as a "Prepayment Date."
(c) NOTICE OF PREPAYMENT. Not less than 20 days prior to a Prepayment
Date, written notice shall be given by registered or certified mail or by
overnight courier to the holders of record of the Notes to be prepaid, such
notice to be addressed to each such holder at his post office address as shown
by the records of the Corporation, specifying the dollar amount to be prepaid,
the paragraph or paragraphs of this Note pursuant to which such prepayment shall
be made, and the date of such prepayment, which date shall not be a day on which
the banks of New York are required or authorized to be closed. Upon notice of
prepayment being given as aforesaid, the Corporation covenants and agrees that
it will prepay, on the date therein fixed for prepayment, this Note or the
portion hereof, as the case may be, so called for prepayment, at the prepayment
price determined in accordance with Section 5(a) or 5(b) hereof. A prepayment of
less than all of the outstanding principal amount of this Note shall not relieve
the Corporation of its obligation to make scheduled payments of interest payable
in respect of the principal remaining outstanding on the Interest Payment Dates.
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(d) ALLOCATION OF ALL PAYMENTS. In the event of any partial payment of
less than all of the interest then due on the Notes then outstanding or any
prepayment, purchase, redemption or retirement of less than all of the
outstanding principal amount of the Notes, the Corporation will allocate the
amount of interest so to be paid and the principal amount so to be prepaid,
purchased, redeemed or retired to each Note in proportion, as nearly as may be,
to the aggregate principal amount of all Notes then outstanding.
(e) INTEREST AFTER DATE FIXED FOR PREPAYMENT. If this Note or a portion
hereof is called for prepayment as herein provided, this Note or such portion
shall cease to bear interest on and after the date fixed for such prepayment
unless, upon presentation for such purpose, the Corporation shall fail to pay
this Note or such portion, as the case may be) in which event this Note or such
portion, as the case may be, and, so far as may be lawful, any overdue
installment of interest, shall bear interest on and after the date fixed for
such prepayment and until paid at the rate per annum provided herein.
(f) SURRENDER OF NOTE; NOTATION THEREON. Upon any prepayment of a portion
of the principal amount of this Note, the holder hereof, at its option, may
require the Corporation to execute and deliver at the expense of the Corporation
(other than for transfer taxes, if any), upon surrender of this Note, a new Note
registered in the name of such person or persons as may be designated by such
holder for the principal amount of this Note then remaining unpaid, dated as of
the date to which the interest has been paid on the principal amount of this
Note then remaining unpaid, or may present this Note to the Corporation for
notation hereon of the payment of the portion of the principal amount of this
Note so prepaid.
6. COVENANTS. The Corporation covenants and agrees that, so long as this
Note shall be outstanding:
(a) MAINTENANCE OF OFFICE. The Corporation will maintain an office
or agency in such place in the United States of America as the Corporation
may designate in writing to the registered holder hereof, where this Note
may be presented for registration of transfer and exchange as herein
provided, where notices and demands to or upon the Corporation in respect
of this Note may be served and where, at the option of the holder thereof,
this Note may be presented for payment. Until the Corporation otherwise
notifies the holder of this Note, said office shall be the principal
office of the Corporation at 00000 Xxxxxxx Xxxx, Xxxxx 000 Xxxxx, Xxxxxx,
Xxxxx 00000.
(b) CORPORATE EXISTENCE. The Corporation will do or cause to be done
all things necessary and lawful to preserve and keep in full force and
effect its corporate existence, rights and franchises and the corporate or
partnership existence, rights and franchises of each of its subsidiaries;
PROVIDED, HOWEVER, that nothing in this paragraph (b) shall prevent (i) a
consolidation or merger of, or a sale, transfer or disposition of all or
any substantial part of the property and assets of, the Corporation or
(ii) the abandonment or termination of any rights or franchises of the
Corporation, or the liquidation or
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dissolution of, or a sale, transfer or disposition (whether through
merger, consolidation, sale or otherwise) of all or any substantial part
of the property and assets of, any subsidiary or the abandonment or
termination of the corporate or partnership existence, rights and
franchises of any subsidiary if such abandonment, termination,
liquidation, dissolution, sale, transfer or disposition is, in the good
faith business judgment of the Corporation, in the best interests of the
Corporation and is not disadvantageous in any material respect to the
holder of this Note.
(c) NOTICE OF DEFAULT. If any one or more events which constitute,
or which with notice or lapse of time or both would constitute, an Event
of Default under Section 8 of this Note shall occur, or if any holder of
the Notes shall demand payment or take any other action permitted upon the
occurrence of any such Event of Default, the Corporation shall,
immediately after it becomes aware that any such event has occurred or
that such demand has been made or that any such action has been taken,
give notice to all holders of the Notes, specifying the nature of such
event or of such demand or action, as the case may be, PROVIDED, HOWEVER,
that if such event, in the good faith judgment of the Corporation, will be
cured within ten days after the Corporation has knowledge that such event
would, with or without notice or lapse of time or both, constitute such an
Event of Default, no such notice need be given if such Event of Default
shall be cured within such ten-day period.
(d) MERGER OR CONSOLIDATION. Without limitation of the rights of the
holder of this Note set forth in Section 5(a) hereof, if the Corporation
shall effect a merger or consolidation in which it is not the surviving
entity, then the Corporation shall take such action as may be necessary,
as a condition to consummating such transaction, to cause the surviving
entity to assume all of the Corporation's obligations under this Note, as
if such entity had been the original issuer thereof, and such entity shall
acknowledge in writing its obligation to fully and timely honor the
Corporation's obligations under this Note.
(e) OPTIONAL PREPAYMENTS OF DEBT. Other than with respect to Senior
Indebtedness (as hereinafter defined), the Corporation will not make any
optional prepayment of any indebtedness for borrowed money, prior to the
repayment in full of this Note.
7. MODIFICATION, WAIVER. The Corporation may, with the written consent of
the holders of not less than 66 2/3% in principal amount of the Notes then
outstanding, modify the terms and provisions of the Notes or the rights of the
holders of the Notes or the obligations of the Corporation thereunder, and the
observance by the Corporation of any term or provision of the Notes may be
waived with the written consent of the holders of not less than 66 2/3% in
principal amount of the Notes then outstanding, PROVIDED, HOWEVER, that no such
modification or waiver shall:
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(a) change the maturity of any Note or reduce the principal amount
thereof or reduce the rate or extend the time of payment of interest
thereon or reduce the amount or change the time of payment of premium
payable on any prepayment thereof without the consent of the holder of
each Note so affected; or
(b) give any Note any preference over any other Note; or
(c) reduce the aforesaid percentage of Notes, the consent of the
holders of which is required for any such modification.
Any such modification or waiver shall apply equally to all the holders of
the Notes and shall be binding upon them, upon each future holder of any Note
and upon the Corporation, whether or not such Note shall have been marked to
indicate such modification or waiver, but any Note issued thereafter shall bear
a notation referring to any such modification or waiver. Promptly after
obtaining the written consent of the holders as herein provided, the Corporation
shall transmit a copy of such modification or waiver to all the holders of the
Notes at the time outstanding,
8. EVENTS OF DEFAULT. If any one or more of the following events, herein
called Events of Default, shall occur, for any reason whatsoever, and whether
such occurrence shall, on the part of the Corporation or any subsidiary, be
voluntary or involuntary or come about or be effected by operation of law or
pursuant to or in compliance with any judgment, decree or order of a court of
competent jurisdiction or any order, rule or regulation of any administrative or
other governmental authority, and such Event of Default shall be continuing:
(a) default shall be made in the payment of the principal when and
as the same shall become due and payable, whether on demand or at a date
fixed for prepayment or by acceleration or otherwise; or
(b) default shall be made in the payment of any installment of
interest when and as the same shall become due and payable or at a date
fixed for prepayment or by acceleration or otherwise and such default
shall continue for a period of 5 days; or
(c) default shall be made in the due observance or performance of
any other covenant, condition or agreement on the part of the Corporation
to be observed or performed pursuant to the terms hereof and such default
shall continue for 30 days after written notice thereof, specifying such
default and requesting that the same be remedied, shall have been given to
the Corporation by the holders of at least 25% of the principal amount of
the Notes then outstanding (the Corporation to give forthwith to all other
holders of Notes at the time outstanding written notice of the receipt of
such notice specifying the default referred to therein); or
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(d) the entry of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Corporation or any
subsidiary in an involuntary case under the federal bankruptcy laws, as
now constituted or hereafter amended, or any other applicable federal or
state bankruptcy, insolvency or other similar laws, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of the Corporation or any subsidiary or for any
substantial part of any of their property, or ordering the winding-up or
liquidation of any of their affairs and the continuance of any such decree
or order unstayed and in effect for a period of 60 consecutive days; or
(e) the commencement by the Corporation or any subsidiary of a
voluntary case under the federal bankruptcy laws, as now constituted or
hereafter amended, or any other applicable federal or state bankruptcy,
insolvency or other similar laws, or the consent by any of them to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) of the
Corporation or any subsidiary or for any substantial part of their
property, or the making by any of them of any assignment for the benefit
of creditors, or the failure of the Corporation or any subsidiary
generally to pay its debts as such debts become due;
then, the holder or holders of at least 25% in aggregate principal amount of the
Notes at the time outstanding may, at its or their option, by notice to the
Corporation, declare all the Notes to be, and all the Notes shall thereupon be
and become, forthwith due and payable together with interest accrued thereon
without presentment, demand, protest or further notice of any kind, all of which
are expressly waived to the extent permitted by law, PROVIDED, HOWEVER, that,
upon the occurrence and during the continuance of any of the events specified in
subsections (a) or (b) of this Section 8, the holder of any Note at the time
outstanding may, at its option by notice in writing to the Corporation, declare
any Note or Notes then held by it to be, and such Note or Notes shall thereupon
be and become, forthwith due and payable together with interest accrued thereon
without presentment, demand, protest or further notice of any kind, all of which
are expressly waived to the extent permitted by law,
At any time after any declaration of acceleration has been made as
provided in this Section 8, the holders of at least 66 2/3% in principal amount
of the Notes then outstanding may, by notice to the Corporation, rescind such
declaration and its consequences, PROVIDED, HOWEVER, that no such rescission
shall extend to or affect any subsequent default or Event of Default or impair
any right consequent thereon.
Without limiting the foregoing, the Corporation hereby waives any right to
trial by jury in any legal proceeding related in any way to this Note or the
Notes and agrees that any such proceeding may, if the holder so elects, be
brought and enforced in the Supreme Court of the State of New York for New York
County or the United States District Court for the Southern District of New York
and the Corporation hereby waives any objection to jurisdiction or venue in any
such proceeding commenced in such court, The Corporation further agrees that any
process required to be served on it for purposes of any such proceeding may be
served on it, with the
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same effect as personal service on it within the State of New York, by
registered mail addressed to it at its office or agency set forth in
subsection (a) of Section 6 for purposes of notices hereunder.
9. SUITS FOR ENFORCEMENT. Subject to the provisions of Section 12 of this
Note, in case any one or more of the Events of Default specified in Section 8 of
this Note shall occur and be continuing, the holder of this Note may proceed to
protect and enforce its rights by suit in equity, action at law and/or by other
appropriate proceeding, whether for the specific performance of any covenant or
agreement contained in this Note or in aid of the exercise of any power granted
in this Note, or may proceed to enforce the payment of this Note or to enforce
any other legal or equitable right of the holder of this Note.
In case of any default under this Note, the Corporation will pay to the
holder thereof such amounts as shall be sufficient to cover the reasonable costs
and expenses of such holder due to said default, including, without limitation,
collection costs and reasonable attorneys' fees, to the extent actually
incurred.
10. REMEDIES CUMULATIVE. No remedy herein conferred upon the holder of
this Note is intended to be exclusive of any other remedy and each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or otherwise.
11. REMEDIES NOT WAIVED. No course of dealing between the Corporation and
the holder of this Note or any delay on the part of the holder hereof in
exercising any rights hereunder shall operate as a waiver of any right of any
holder of this Note.
12. SUBORDINATION. (a) Anything contained in this Note to the contrary
notwithstanding, the indebtedness evidenced by this Note shall be subordinate
and junior, to the extent set forth in the following paragraphs (A), (B), (C)
and (D), to all Senior Indebtedness of the Corporation. "Senior Indebtedness"
shall mean the principal of, premium, if any, and interest (including any
interest accruing subsequent to the filing of a petition of bankruptcy at the
rate provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law and including any loans made
to the Corporation as a debtor in possession in any bankruptcy proceeding by any
persons who were the holders of any Senior Indebtedness on the date such
bankruptcy proceeding was commenced) on all indebtedness to a bank or banks or
other financial institutions for borrowed money and related fees and expenses
now existing or hereinafter incurred which by its terms is not subordinated to
any other indebtedness of the Corporation.
(A) In the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceedings, or any receivership
proceedings in connection therewith, relative to the Corporation or its
creditors or its property, and in the event of any proceedings for
voluntary liquidation, dissolution or other winding up of the Corporation,
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whether or not involving insolvency or bankruptcy proceedings, then all
Senior Indebtedness shall first be paid in cash in full before any
payment, whether on account of principal, interest or otherwise, is made
upon the Notes.
(B) In any of the proceedings referred to in paragraph (A) above,
any payment or distribution of any kind or character, whether in cash,
property, stock or obligations which may be payable or deliverable in
respect of the Notes shall be paid or delivered directly to the holders of
Senior Indebtedness for application in payment thereof, unless and until
all Senior Indebtedness shall have been paid in cash in full.
(C) No payment shall be made, directly or indirectly, on account of
the Notes (i) upon maturity of any Senior Indebtedness obligation, by
lapse of time, acceleration (unless waived), or otherwise, unless and
until all principal thereof and interest thereon and all other obligations
in respect thereof shall first be paid in full and have terminated, or
(ii) upon the happening of any default in payment of any principal of,
premium, if any, or interest on or any other amounts payable in respect of
Senior Indebtedness when the same becomes due and payable whether at
maturity or at a date fixed for prepayment or by declaration or otherwise
(a "Senior Payment Default"), unless and until such Senior Payment Default
shall have been cured or waived or shall have ceased to exist.
(D) Upon the happening of an event of default (other than described
in clause (A), (B) or (C) above) with respect to any Senior Indebtedness
permitting (after notice or lapse of time or both) one or more holders of
such Senior Indebtedness to declare such Senior Indebtedness due and
payable prior to the date on which it is otherwise due and payable (a
"Nonmonetary Default"), upon the occurrence of (i) receipt by the holder
of this Note of written notice from a holder of said Senior Indebtedness
of a Nonmonetary Default (any such notice, a "Blockage Notice"), or (ii)
if such Nonmonetary Default results from the acceleration of this Note,
the date of such acceleration; then (x) the Corporation will not make,
directly or indirectly, to the holder of this Note any payment of any kind
of or on account of this Note; (y) the holder of this Note will not accept
from the Corporation any payment of any kind of or on account of this Note
and (z) the holder of this Note may not take, demand, receive, sue for,
accelerate or commence any remedial proceedings with respect to any amount
payable under this Note, unless and until in each case described in
clauses (x), (y) and (z) all such Senior Indebtedness shall have been paid
in full; PROVIDED, HOWEVER, that if such Nonmonetary Default shall have
occurred and be continuing for a period (a "Blockage Period") commencing
on the earlier of the date of receipt of such Blockage Notice or the date
of the acceleration of this Note and ending 179 days thereafter (it being
understood that not more than one Blockage Period may be commenced with
respect to this Note during any period of 360 consecutive days), and
during such Blockage Period (i) such Nonmonetary Default shall not have
been cured or waived, (ii) the holder of such Senior Indebtedness shall
not have made a demand for payment and commenced an action, suit or other
proceeding against the Corporation and (iii) none of the events described
in subsection (A) above shall have occurred, then (to the
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extent not otherwise prohibited by subsections (A), (B) or (C) above) the
Corporation may, not less than 10 days after receipt by the holders of
such Senior Indebtedness of written notice to such effect from the holder
of this Note, make and the holder of this Note may accept from the
Corporation all past due and current payments of any kind of or on account
of this Note, and such holder may demand, receive, retain, sue for or
otherwise seek enforcement or collection of all amounts payable on account
of principal of or interest on this Note.
(b) Subject to the payment in full in cash of all Senior Indebtedness as
aforesaid, the holder of this Note shall be subrogated to the rights of the
holders of Senior Indebtedness to receive payments or distributions of any kind
or character, whether in cash, property, stock or obligations, which may be
payable or deliverable to the holders of Senior Indebtedness, until the
principal of, and interest on, this Note shall be paid in full in cash, and, as
between the Corporation, its creditors other than the holders of Senior
Indebtedness, and the holders of this Note, no such payment or distribution made
to the holders of Senior Indebtedness by virtue of this Section 12 which
otherwise would have been made to the holder of this Note shall be deemed a
payment by the Corporation on account of the Senior Indebtedness, it being
understood that the provisions of this Section 12 are and are intended solely
for the purposes of defining the relative rights of the holder of this Note, on
the one hand, and the holder of the Senior Indebtedness, on the other hand.
Subject to the rights, if any, under this Section 12 of holders of Senior
Indebtedness to receive cash, property, stock or obligations otherwise payable
or deliverable to the holder of this Note, nothing herein shall either impair,
as between the Corporation and the holder of this Note, the obligation of the
Corporation, which is unconditional and absolute, to pay to the holder thereof
the principal thereof and interest thereon in accordance with its terms or
prevent (except as otherwise specified therein) the holder of this Note from
exercising all remedies otherwise permitted by applicable law or hereunder upon
default hereunder.
(c) If any payment or distribution of any character or any security,
whether in cash, securities or other property, shall be received by any holder
of this Note in contravention of any of the terms hereof or before all the
Senior Indebtedness obligations have been paid in full in cash, such payment or
distribution or security shall be received in trust for the benefit of, and
shall be paid over or delivered and transferred to, the holders of the Senior
Indebtedness at the time outstanding in accordance with the priorities then
existing among such holders for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all such Senior
Indebtedness in full in cash. In the event of the failure of any such holder to
endorse or assign any such payment, distribution or security, each holder of any
Senior Indebtedness is hereby irrevocably authorized to endorse or assign the
name.
(d) The holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to any holder of this Note, without
incurring responsibility to, and without impairing or releasing any of the
rights of the holders of Senior Indebtedness, or any of the obligations of the
holder of this Note: (i) change the amount, manner, place, or terms of
11
payment, or change or extend the time of payment of, or renew, alter, extend or
otherwise modify Senior Indebtedness in any and all respects; (ii) release any
party to the extent liable or otherwise obligated for Senior Indebtedness; and
(iii) exercise or refrain from exercising any rights against the Corporation and
others (including the holder of this Note).
(e) No right of any holder of Senior Indebtedness to enforce the
subordination as provided in this Section 12 shall at any time or in any way be
prejudiced or impaired by any act or failure to act by the Corporation or by any
noncompliance by the Corporation with the terms, provisions and covenants of
this Note, regardless of any knowledge thereof with which any such holder may
have or be otherwise charged.
13. COVENANTS BIND SUCCESSORS AND ASSIGNS. All the covenants,
stipulations, promises and agreements in this Note contained by or on behalf of
the Corporation shall bind its successors and assigns, whether so expressed or
not.
14. GOVERNING LAW. This Note shall be governed and construed in accordance
with the laws of the State of Delaware.
15. HEADINGS. The headings of the Sections and paragraphs of this Note are
inserted for convenience only and do not constitute a part of this Note.
12
IN WITNESS WHEREOF, UNITED SURGICAL PARTNERS INTERNATIONAL, INC. has
caused this Note to be signed in its corporate name by one of its officers
thereunto duly authorized and to be dated as of the day and year first above
written.
UNITED SURGICAL PARTNERS
INTERNATIONAL, INC.
By:/s/ XXXXXX XXXXX
Name: Xxxxxx Xxxxx
Title: Chief Executive Officer
