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Exhibit 10.7
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SECURITIES PURCHASE AGREEMENT
Among
NEW AMERICAN HEALTHCARE CORPORATION,
WELSH, CARSON, XXXXXXXX & XXXXX VII, L.P.,
THE OTHER SEVERAL PURCHASERS NAMED IN ANNEX I HERETO
and
THE FOUNDERS NAMED IN ANNEX II HERETO
Dated as of December 19, 1995
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TABLE OF CONTENTS
Page
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ARTICLE I. THE SHARES ...................................................... 2
SECTION 1.01 Sales and Purchases of Initial Shares.................... 2
SECTION 1.02 First Closing Date ...................................... 2
SECTION 1.03 Additional Investment Requests by Company;
Purchaser's Right to Require Sales of
Additional Shares...................................... 2
SECTION 1.04 Purchase and Sale of Additional Shares .................. 6
SECTION 1.05 Subsequent Closing Dates................................. 6
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................... 7
SECTION 2.01 Organization, Qualification and Corporate Power.......... 7
SECTION 2.02 Authorization of Agreement, Etc.......................... 8
SECTION 2.03 Validity................................................. 8
SECTION 2.04 Capital Stock............................................ 9
SECTION 2.05 Actions Pending.......................................... 9
SECTION 2.06 Third Party Agreements, Etc.............................. 10
SECTION 2.07 Governmental Approvals................................... 10
SECTION 2.08 Use of Proceeds.......................................... 10
SECTION 2.09 Disclosure............................................... 10
SECTION 2.10 Offering of Shares....................................... 11
SECTION 2.11 Contracts and Commitments................................ 11
SECTION 2.12 No Liabilities........................................... 11
SECTION 2.13 Compliance with Law...................................... 11
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF PURCHASERS AND FOUNDERS ..... 12
ARTICLE IV. CONDITIONS TO THE OBLIGATIONS OF PURCHASERS..................... 13
SECTION 4.01 Conditions to the Obligations of Purchasers with
Respect to First Closing............................... 13
SECTION 4.02 Conditions to the Obligations of Purchasers with
Respect to Each Subsequent Closing..................... 17
ARTICLE V. COVENANTS........................................................ 19
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Page
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ARTICLE VI. MISCELLANEOUS .................................................. 23
SECTION 6.01 Expenses................................................. 23
SECTION 6.02 Survival of Agreements; Limitation on Customer
Liabilities............................................ 23
SECTION 6.03 Brokerage................................................ 23
SECTION 6.04 Parties in Interest...................................... 23
SECTION 6.05 Notices.................................................. 23
SECTION 6.06 GOVERNING LAW............................................ 24
SECTION 6.07 Entire Agreement......................................... 24
SECTION 6.08 Counterparts............................................. 25
SECTION 6.09 NOTICE FOR PENNSYLVANIA RESIDENTS........................ 25
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INDEX TO ANNEXES
Description
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ANNEX I Purchasers
ANNEX II Founders
ANNEX III Additional Shares
INDEX TO EXHIBITS
Description
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EXHIBIT A Form of Registration Rights Agreement
EXHIBIT B Form of Stockholders Agreement
EXHIBIT C Form of Restricted Stock Agreement
EXHIBITS D-1 Forms of Employment Agreements
through D-4
EXHIBIT E Form of Amended and Restated Charter
INDEX TO SCHEDULES
Description
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2.01(b) Subsidiaries, Partnership Interests and Joint Ventures
2.04 Capitalization
2.05 Actions Pending
2.06 Third Party Agreements, Etc.
2.11 Contracts and Commitments
2.12 Liabilities
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SECURITIES PURCHASE AGREEMENT, dated as of December 19, 1995, among NEW
AMERICAN HEALTHCARE CORPORATION, a Tennessee corporation (the "Company"),
WELSH, CARSON, XXXXXXXX & XXXXX VII, L.P., a Delaware limited partnership
("WCAS VII"), the several persons named in Annex I hereto (collectively, with
WCAS VII, the "Purchasers") and the persons named in Annex II hereto
(collectively, the "Founders").
WHEREAS, the Company has been formed for the purpose of acquiring, managing
and operating rural hospitals;
WHEREAS, in order to obtain funds for acquisitions of rural hospitals, the
Company wishes to issue and sell to the Purchasers and the Founders (i) on the
First Closing Date (as hereinafter defined) an aggregate 5,026,500 shares of
Common Stock, $0.01 par value ("Common Stock"), of the Company (the "Initial
Shares") and (ii) subject to the provisions of Sections 1.03, 1.04 and 1.05
hereof, from time to time over a five-year period after the First Closing Date,
up to (A) an aggregate 250,000 shares of the Company's Series A Non-Convertible
Cumulative Preferred Stock, $0.01 par value ("Series A Preferred"), and (B) an
aggregate 235,000 shares of the Company's Series B Convertible Preferred Stock,
$0.01 par value ("Series B Preferred"); and
WHEREAS, the Founders own all the presently issued and outstanding shares
of Common Stock and wish the Company to be able to issue and sell to the
Purchasers and the Founders hereunder the Initial Shares and the shares of
Series A Preferred and Series B Preferred as provided above and, in order to
induce such purchases by the Purchasers, are willing to make the covenants and
agreements on their part contained herein and in the other agreements to be
executed and delivered by them as contemplated hereby; and
WHEREAS, the Purchasers and the Founders, severally and not jointly, are
willing to purchase, on the terms and subject to the conditions hereinafter set
forth, their respective proportions of the Initial Shares and, if WCAS VII so
determines from time to time as hereinafter provided, of the Series A Preferred
and the Series B Preferred;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
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I.
THE SHARES
SECTION 1.01 Sales and Purchases of Initial Shares. (a) Subject to the
terms and conditions set forth herein, the Company shall issue and sell to each
Purchaser or Founder, as the case may be, and each Purchaser or Founder, as the
case may be, shall purchase from the Company, on the First Closing Date (as
hereinafter defined), the number of Initial Shares set opposite the name of such
Purchaser in annex I or such Founder in Annex II hereto at a purchase price of
$0.30 per share, and the Company shall on the First Closing Date issue and
deliver to each Purchaser or Founder, as the case may be, a stock certificate or
certificates in definitive form, registered in the name of such Purchaser or
Founder, as the case may be, evidencing the number of Initial Shares being
purchased by it hereunder.
(b) As payment in full for the number of Initial Shares being purchased by
a Purchaser or a Founder hereunder, and against delivery of the certificate or
certificates therefor as aforesaid, such Purchaser or Founder, as the case may
be, shall deliver to the Company on the First Closing Date a certified or
official bank check, payable to the order of the Company, in the amount set
opposite the name of such Purchaser or Founder, as the case may be, in Annex I
or Annex II hereto, as applicable, under the heading "Purchase Price of Initial
Shares", or shall transfer such sum to the account of the Company by wire
transfer; provided, however, that in the case of WCAS VII, such payment by it
shall be made by wire transfer of immediately available funds.
SECTION 1.02 First Closing Date. The closing of the sales and purchases
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, at 10
a.m., New York time on December 26, 1995; provided, however, that if WCAS VII
shall not as of such date have made its initial investment in an operating
company, then at such later date and time within 5 business days after the date
of such initial investment as may be mutually agreed upon among the Purchasers,
the Founders and the Company (such date and time of closing being herein called
the "First Closing Date").
SECTION 1.03 Additional Investment Requests by Company; Purchaser's Right
to Require Sales of Additional Shares. (a) The Additional Shares. (i) There
shall be reserved for issuance pursuant to this Section 1.03 (i) 250,000 shares
of Series A Preferred and (ii) 235,000 shares of Series B Preferred (the shares
of Series A Preferred and Series B Preferred being hereinafter referred to
collectively as the "Additional Shares" and, together with the Initial Shares,
the "Shares").
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(ii) The respective maximum numbers of shares of Series A Preferred and
Series B Preferred which are subject to purchase by each Purchaser pursuant to
this Section 1.03 are set forth opposite the name of such Purchaser in Annex III
hereto under the respective headings "Maximum Number of Series A Preferred
Shares" and "Maximum Number of Series B Preferred Shares". The aggregate number
of Additional Shares purchased by the Purchasers on a Subsequent Closing Date
(as hereinafter defined) shall (after deduction of the number of Additional
Shares to be purchased by the Founders on such Subsequent Closing Date pursuant
to Section 1.03(b)(iii)) be allocated pro rata among the Purchasers in
proportion to the respective maximum numbers of Additional Shares so set forth,
except for Horizon Investment Associates, I and Xxxxx X. Xxxxxx, who shall each
purchase the entire amount of Series B Preferred so set forth on the first
Subsequent Closing Date. The maximum aggregate number of Additional Shares
subject to purchase by each Purchaser on any Subsequent Closing Date shall be
reduced by the aggregate number of Additional Shares purchased by such Purchaser
on all previous Subsequent Closing Dates. On the Termination Date (as defined in
subparagraph (iii) below) no further Additional Shares shall be subject to
purchase hereunder, except as provided in Section 1.03(c). The purchase price
for Additional Shares shall in all cases be $100 per share.
(iii) For purposes of this Section 1.03, the term "Termination Date" means
the earliest of (A) the fifth anniversary of the First Closing Date, (B) the
completion of an Initial Public Offering (as defined below) and (C) the date on
which the proceeds of issuance of the Initial Shares shall have been fully
expended, unless prior thereto the first Subsequent Closing Date shall have
occurred. The term "Initial Public Offering" means the first to occur of either
(x) a firm commitment public offering of Common Stock of the Company registered
pursuant to the Securities Act of 1933, as amended, and the rules and
regulations of the Securities and Exchange Commission thereunder (the
"Securities Act") (i) at a price to the public of not less than $10.00 per share
and (ii) resulting in proceeds to the Company of not less than $20,000,000,
after deduction of underwriting discounts and commissions but before deduction
of other expenses of issuance and (y) the merger or consolidation by the Company
with or into a company which has capital stock which is publicly traded and
which throughout the Relevant Time Period (as hereinafter defined) has a public
float of at least $30,000,000 and which merger or consolidation is on terms
whereby shares of Common Stock are exchanged for publicly traded stock, and the
fair market value of the consideration to be received for each share of Common
Stock is equal to or greater than $10.00. The term "Relevant Time Period" means
the ten consecutive trading days commencing two trading days after the public
announcement of the terms of the proposed merger or consolidation.
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(b) Company's Right to Request Purchases of Additional Shares. (i) From
time to time prior to the Termination Date, the Company may, if it proposes to
acquire a rural hospital (a "Facility"), and in any event prior to the execution
of a letter of intent with respect thereto, request that the Purchasers consider
the purchase by them of all or any portion of the Additional Shares which then
remain subject to purchase hereunder, but not more in the aggregate than shall
be required to provide (A) funds to finance the acquisition of such Facility,
(B) provide working capital therefor and (C) provide for capital expenditures of
up to $500,000 for such Facility. Such request (an "Additional Investment
Request") shall be in writing and shall set forth (w) the terms of the proposed
acquisition of the Facility, supported in reasonable detail, including
appropriate historical and projected financial information, (x) the number of
Additional Shares (the "Requested Securities") that the Company wishes to issue
to the Purchasers and the Founders in connection therewith, and (y) the
anticipated Subsequent Closing Date for the share purchase transaction, which
shall be the date on which the acquisition of the Facility is consummated. The
Requested Securities shall consist entirely of Series B Preferred until such
time as all Series B Preferred have been issued and sold to the Purchasers and
Founders in accordance with this Agreement, at which time the Requested
Securities shall be Series A Preferred. No Subsequent Closing Date shall be
scheduled to occur less than 10 or more than the number of days acceptable to a
majority of the Board of Directors of the Company after the date of the
Additional Investment Request to which it relates. Until such time as the first
Additional Investment Request has been affirmatively accepted by WCAS VII as
provided in subparagraph (ii) below, each Additional Investment Request shall
also include an accounting of the proceeds of the sale of the Initial Shares by
the Company to the Purchasers and the Founders.
(ii) Within five business days after receipt of an Additional Investment
Request pursuant to subparagraph (i) above, WCAS VII shall (x) determine in its
sole discretion whether it believes that the proposed acquisition is appropriate
for the Company and (y) notify the Company in writing of the results of such
determination. If such notice from WCAS VII shall state that it has made such
determination affirmatively, then the Purchasers shall purchase the Requested
Securities, less the amount thereof to be purchased by the Founders as provided
in subparagraph (iii) below, in accordance with Section 1.04 below unless, prior
to the Subsequent Closing Date specified in the Additional Investment Request,
the Company determines that it is unable for any reason, or it would not be in
the best interests of the Company (in each case as reasonably determined by the
Board of Directors of the Company), to proceed with the acquisition of any
Facility as contemplated by the Additional Investment Request relating thereto,
in which case it shall
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promptly notify the Purchasers and Founders of such determination, and the
obligation of the Purchasers and Founders to purchase, and of the Company to
issue and sell, the Requested Securities shall thereupon cease and the
Additional Investment Request relating thereto shall be of no further force or
effect. If such notice from WCAS VII shall not state that it has made such
determination affirmatively, the related Additional Investment Request shall,
for all purposes hereof, be deemed to be terminated, and such Additional
Investment Request shall be of no further force or effect.
(iii) If WCAS VII affirmatively accepts an Additional Investment Request in
accordance with sub-paragraph (ii) above, each of the Founders shall purchase on
the relevant Subsequent Closing Date a portion of the Requested Securities equal
to the product of (A) the aggregate number of Requested Securities to be sold on
such Subsequent Closing Date and (B) a fraction, the numerator of which is as
follows:
Xx. Xxxxxx 100,000
Xx. XxXxxxxx 100,000
Xx. Xxxxxx 50,000
Xx. Xxxx 15,000
and the denominator of which is 50,000,000.
(c) WCAS Right to Purchase Additional Shares. Not later than sixty (60)
days after the Termination Date (unless the Termination Date occurs by reason of
an Initial Public Offering), the Purchasers shall have the option to require the
Company to issue and sell, on the terms and conditions set forth herein, all or
any portion of the Additional Shares then remaining available for purchase
hereunder, by an instrument in writing (a "Purchase Notice"), executed on behalf
of the Purchasers by WCAS VII, notifying the Company of the Purchasers'
intention to purchase such Additional Shares; provided, however, that such
option shall not be available if WCAS VII shall not have purchased on a
Subsequent Closing Date any Additional Securities which it has agreed to
purchase on such date pursuant to Section (b)(ii) above other than by reason of
the Company's withdrawal of the relevant Additional Investment Request or the
non-satisfaction of any of the conditions to WCAS VII's obligation to purchase
such securities on such date set forth in Section 4.02; provided, further, that
such options shall be available only to accredited investors within the meaning
of Rule 501 of the Securities Act. The Purchase Notice shall specify the number
of Additional Shares to be acquired from the Company, the Subsequent Closing
Date for such transaction, which date shall be not less than 20 days after the
date of the Purchase Notice. Such Purchase Notice shall be effective upon
delivery thereof. The Company shall notify the Founders upon its receipt of the
Purchase Notice and each of them
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shall have the option to purchase a number of the Additional Shares proposed to
be purchased by the Purchasers equal to the product of (A) the aggregate number
of Additional Shares proposed to be so purchased by the Purchasers and (B) a
fraction, the numerator of which is as follows:
Xx. Xxxxxx 100,000
Xx. XxXxxxxx 100,000
Xx. Xxxxxx 50,000
Xx. Xxxx 15,000
and the denominator of which is 50,000,000.
SECTION 1.04 Purchase and Sale of Additional Shares. (a) If either (i) the
Company shall have delivered an Additional Investment Request pursuant to
Section 1. 03 (b) (i) above which shall have become effective pursuant to
Section 1.03(b)(ii) above or (ii) WCAS VII shall have delivered a Purchase
Notice pursuant to Section 1.03(c) above, then, subject to the other terms and
conditions of this Agreement, on the Subsequent Closing Date specified in such
Additional Investment Request or Purchase Notice, as the case may be, the
Company shall issue and sell to the Purchasers and the Founders, and the
Purchasers and the Founders shall purchase from the Company, the number of
Additional Shares specified in the Additional Investment Request or the Purchase
Notice, as the case may be, subject to compliance with applicable securities
laws, at a purchase price per share of $100, and the Company shall issue and
deliver to the Purchasers and the Founders stock certificates in definitive
form, registered in the names of the respective Purchasers and Founders,
evidencing the Additional Shares purchased by them hereunder.
(b) As payment in full for the Additional Shares being purchased by it
hereunder, and against delivery of the certificate or certificates therefor as
aforesaid, each Purchaser or Founder, as the case may be, shall pay to the
Company on each Subsequent Closing Date the purchase price for the Additional
Shares to be purchased by such Purchaser or Founder, as the case may be, on such
Subsequent Closing Date, in accordance with the procedures established pursuant
to Section 1.05 below.
SECTION 1.05 Subsequent Closing Dates. Each closing of a sale and purchase
of Additional Shares shall take place at the offices of Xxxxxxx Xxxxxx Xxxx
Xxxxxxx & Manner, P.C. at 10 a.m., Nashville time, on such date (which shall not
be a day on which banking institutions in New York State or the State of
Tennessee are required or authorized to close) as shall be specified in any
Additional Investment Request or Purchase Notice, as the case may be, or at such
other date and time as may be mutually agreed upon between the Purchasers, the
Founders and
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the Company (each such date and time of closing being herein called a
"Subsequent Closing Date"). The Company and WCAS VII agree that they will
cooperate in good faith to establish procedures, including, where appropriate,
mutually acceptable escrow arrangements, for Subsequent Closing Dates so as to
permit funding of the acquisition of the applicable Facility while minimizing
the related costs and inconvenience to the Purchaser, it being understood that
no purchaser other than WCAS VII shall be required to pay the purchase price for
the Additional Shares acquired by it by wire transfer.
II.
REPRESENTATIONS AND WARRANTIES OF COMPANY
The Company represents and warrants to, and agrees with, the Purchasers as
follows:
SECTION 2.01 Organization, Qualification and Corporate Power. (a) The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Tennessee, and is licensed or qualified
to do business as a foreign corporation and is in good standing in each other
jurisdiction in which it owns or leases any real property or in which the nature
of business transacted by it makes such licensing or qualification necessary and
where the failure to be so licensed or qualified would have a material adverse
effect on the business, operations or financial condition of the Company. The
Company has the corporate power and authority to own and hold its properties and
to carry on its business as currently conducted, to execute, deliver and perform
this Agreement, the Registration Rights Agreement annexed hereto as Exhibit A
(the "Registration Rights Agreement"), the Stockholders Agreement among the
Company, the Founders and the Purchasers annexed hereto as Exhibit B (the
"Stockholders Agreement"), the Restricted Stock Agreement between the Company,
the Purchasers and each of the Founders annexed hereto as Exhibit C (the
"Restricted Stock Agreement") and the Employment Agreements between the Company
and each of Xxxxxx X. Xxxxxx, Xxxx X. XxXxxxxx, Xx., Xxxxx X. Xxxxxx and
Xxxxxxx X. Xxxx in the respective forms annexed hereto as Xxxxxxxx X-0, X-0, X-0
and D-4 (collectively, the "Employment Agreements").
(b) Except as set forth on Schedule 2.01(b) hereto, the Company does not
own of record or beneficially, directly or indirectly, (i) any shares of
outstanding capital stock or securities convertible into capital stock of any
other corporation or (ii) any participating interest in any partnership, joint
venture or other non-corporate business enterprise.
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SECTION 2.02 Authorization of Agreement, Etc. (a) The execution, delivery
and performance by the Company of this Agreement, the Registration Rights
Agreement, the Shareholders Agreement and the Restricted Stock Agreement, and
the issuance, sale and delivery of the Shares have been duly authorized by all
requisite corporate action and will not violate any provision of law (assuming
the accuracy of the representations of the persons purchasing securities
contained in Article III), any order of any court or other agency of government,
the Charter or By-laws of the Company, or any provision of any indenture,
agreement or other instrument by which the Company or any of its properties or
assets is bound or affected, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the properties or assets of the Company.
(b) The Initial Shares have been duly authorized and, when issued and
delivered in accordance with this Agreement, will be validly issued and
outstanding, fully paid and nonassessable shares of Common Stock. The Additional
Shares have been duly authorized and reserved for issuance upon Subsequent
Closing Dates and, when so issued and paid for in accordance with the terms of
this Agreement, will be duly authorized, validly issued and outstanding, fully
paid and nonassessable shares of Series A Preferred or Series B Preferred, as
the case may be (assuming the accuracy of the representations and warranties of
the persons purchasing securities under this Agreement). The issuance, sale and
delivery of the Shares is not subject to any preemptive rights of stockholders
of the Company or to any right of first refusal or other similar right in favor
of any person which has not been waived in its entirety.
SECTION 2.03 Validity. This Agreement has been duly executed and delivered
by the Company and the Founders and constitutes the legal, valid and binding
agreement of the Company and the Founders, enforceable in accordance with its
terms (subject, as to enforcement of remedies to applicable bankruptcy,
reorganization, insolvency and similar laws, to moratorium laws from time to
time in effect and to general principles of equity). Each of the Registration
Rights Agreement, the Stockholders Agreement, the Employment Agreements and the
Restricted Stock Agreement, when executed and delivered in accordance with this
Agreement, will constitute the legal, valid and binding obligation of the
Company and the Founders (or, in the case of each Employment Agreement, the
Company and the respective Founder), enforceable in accordance with its terms
(subject, as to enforcement of remedies to applicable bankruptcy,
reorganization, insolvency and similar laws, to moratorium laws
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from time to time in effect and to general principles of equity).
SECTION 2.04 Capital Stock. As of the date hereof, the authorized capital
stock of the company consists of (i) 500,000,000 shares of Common Stock of which
2,800,000 shares are validly issued and outstanding, fully paid and
nonassessable and no other shares have ever been issued and (ii) 500,000,000
shares of Preferred Stock, none of which have been issued. As of the Initial
Closing Date, the authorized capital stock of the Company will consist of (x)
20,000,000 shares of Common Stock of which 2,800,000 shares (prior to giving
effect to the transactions to occur on the Initial Closing Date) will be validly
issued and outstanding, fully paid and non-assessable and 4,000,000 shares will
have been duly reserved for issuance upon conversion of Series B Preferred and
(y) 485,000 shares of Preferred Stock, of which 250,000 shares will have been
designated as Series A Preferred and 235,000 shares will have been designated as
Series B Preferred. As of the date hereof, the Founders are the sole
stockholders of the Company and the number of shares of Common Stock owned by
each of them are as set forth in Schedule 2.04 hereto. Except as contemplated or
permitted by this Agreement, (A) no subscription, warrant, option, convertible
security or other right (contingent or other) to purchase or acquire any shares
of any class of capital stock of the Company is authorized or outstanding, (B)
there is no commitment of the Company to issue any shares, warrants, options or
other such rights or to distribute to holders of any class of its capital stock
any evidences of indebtedness or assets and (C) 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 2.05 Actions Pending. Except as set forth in Schedule 2.05 hereto:
(i) there is no action, suit, investigation or proceeding pending or, to the
best knowledge and belief of the Company, threatened against the Company or any
subsidiary which, if adversely determined, might have a material adverse effect
on the business, operations or financial condition of, the Company or its
Subsidiaries, taken as a whole, or any of their respective properties or rights,
before any court or by or before any governmental body or arbitration board or
tribunal; and (ii) to the best knowledge and belief of the Company, there does
not exist any basis for any such action, suit, investigation or proceeding that,
if adversely determined, might materially, adversely affect the business,
operations or financial condition of the Company or its subsidiaries, taken as a
whole, or any of their properties or assets. The foregoing includes, without
limiting its generality, actions pending or threatened (or any basis therefor
known to the Company) involving the prior employment of any employees or
prospective employees of the
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Company or their use, in connection with the Company's business, of any
information or techniques which might be alleged to be proprietary to their
former employer(s).
SECTION 2.06 Third Party Agreements, Etc. Except as set forth on Schedule
2.06 hereto, none of the Founders or any other person affiliated with the
Company is party to any employment, non-compete, confidentiality or other
agreement with a third party that would materially restrict the ability of such
person to own Common Stock of, or perform services for, the Company, assuming
for these purposes that the Company shall carry on its business as such business
is intended to be conducted as contemplated in the Business Plan (as hereinafter
defined). No third party has claimed that any of the Founders or any other
person affiliated with the Company has, in respect of his activities to date,
violated any of the terms or conditions of any such contract with such third
party, or disclosed or utilized any trade secrets or proprietary information or
documentation of such third party, or interfered in the employment relationship
between such third party and any of its employees. None of the Founders or any
other person affiliated with the Company has employed or will employ any trade
secrets or any information or documentation proprietary to any former employer,
and no such person has violated any confidential relationship which such person
may have had with any third party, in connection with the development or
operation of the Company's business.
SECTION 2.07 Governmental Approvals. Assuming the accuracy of the
representations by the Purchasers and the Founders in Article III, no
registration or filing with, or consent or approval of, or other action by, any
Federal, state or other governmental agency or instrumentality is or will be
necessary for the valid execution, delivery and performance of this Agreement
and the execution and delivery of the Registration Rights Agreement, or the
issuance, sale and delivery of the Shares, except that compliance with the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), may be required in connection with the issuance, sale and delivery of the
Additional Shares.
SECTION 2.08 Use of Proceeds. The Company will apply the proceeds of the
issuance and sale of the Additional Shares to finance the acquisition and
operation of Facilities.
SECTION 2.09 Disclosure. The Company has furnished to the Purchasers a copy
of the Company's proposed business objectives, revised as of September 26, 1995
(the "Business Plan") and all of the schedules and underlying agreements listed
on any Schedules hereto.
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SECTION 2.10 Offering of Shares. Neither the Company nor any person
authorized or employed by the Company as agent, broker, dealer or otherwise in
connection with the offering or sale of the Shares or any similar security of
the Company has offered the Shares or any such security for sale to, or
solicited any offers to buy the Shares or any similar security of the Company
from, or otherwise approached or negotiated with respect thereto with, any
person or persons other than the Purchasers and not more than 20 other persons
or groups of persons (treating for this purpose an investment fund and the
partners, employees and affiliates thereof as a single group), and neither the
Company nor any person acting on its behalf has taken or will take any action
(including, without limitation, any offer, issuance or sale of any security of
the Company under circumstances which might require the integration of such
offer, issuance or sale with the offer, issuance and sale of the Shares under
the Securities Act) which might subject the offering, issuance or sale of the
Shares to the registration provisions of the Securities Act.
SECTION 2.11 Contracts and Commitments. Except as set forth in this
Agreement or in Schedule 2.11 hereto, the Company is not a party to any
contract, lease or commitment (or group of related contracts, leases or
commitments). The Company is not in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement or instrument to which it is a party which may result in any material
adverse change in the business, operations or financial condition of the
Company.
SECTION 2.12 No Liabilities. The Company has not engaged in any material
business activities other than those incident to its incorporation and the sale
of its equity and has no absolute, accrued or contingent liabilities other than
those listed in Schedule 2.12 hereof.
SECTION 2.13 Compliance with Law. The Company is not in default under any
order of any court, governmental authority or arbitration board or tribunal to
which the Company is subject or in violation of any laws, ordinances,
governmental rules or regulations (including, but not limited to, those relating
to environmental, safety, building, product safety or health standards or
employment matters) to which the Company is or was subject, in each case, that
would have a material adverse effect on the business, operations or financial
condition of the Company or its subsidiaries, taken as a whole, or any of its
properties or assets. The business of the Company or its subsidiaries, taken as
a whole, is being conducted in compliance with all applicable laws, ordinances,
rules and regulations applicable to it, non-compliance with which would have a
material, adverse effect on the business, operations or financial condition of
the
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Company or its subsidiaries, taken as a whole, or any of its properties or
assets. The Company has not failed to obtain any licenses, permits, franchises
or other governmental authorizations necessary to the ownership of their
respective properties or to the conduct of the business of the Company, which
failure would have a material, adverse effect on the business, operations or
financial condition of the Company or its subsidiaries, taken as a whole, or any
of its properties or assets.
III.
REPRESENTATIONS AND WARRANTIES OF PURCHASERS AND FOUNDERS
Each Purchaser represents and warrants to the Company that such Purchaser
is acquiring the Initial Shares and will acquire any Additional Shares purchased
by it hereunder for such Purchaser's own account for the purpose of investment
and not with a view to or for sale in connection with any distribution or other
allocation thereof. Each Founder represents and warrants to the Company that
such Founder is acquiring the Initial Shares and will acquire any Additional
Shares purchased by such Founder hereunder for such Founder's own account for
the purpose of investment and not with a view to or for sale in connection with
any distribution or other allocation thereof. Each Purchaser and Founder further
represents, as to itself, that such Purchaser or Founder, as the case may be,
understands that (i) the Shares have not been registered under the Securities
Act by reason of their issuance in a transaction exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) or 4(6) or
Regulation D thereof and have not been registered under any state securities
laws, (ii) the Shares must be held indefinitely unless a subsequent disposition
thereof is registered under the Securities Act or is exempt from such
registration, (iii) the Shares will bear a legend to such effect and (iv) the
Company will make a notation on its transfer books to such effect. Each
Purchaser and Founder further understands that the exemption from registration
afforded by Rule 144 under the Securities Act depends on the satisfaction of
various conditions and that the Company does not currently meet those conditions
and no assurance can be made that the Company will be able to meet those
conditions in the foreseeable future, and that, if applicable, Rule 144 affords
the exemptions of sales of the Shares only in limited amounts under certain
conditions. Each Purchaser and Founder (A) has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of its purchase and is able to bear the substantial economic risks of the
investment and can afford a complete loss in its investment, (B) acknowledges
that such Purchaser or Founder, as the case may be, has had a full opportunity
to request from the Company and to review and has received
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all information which it deems relevant in making a decision to purchase the
Shares being purchased or to be purchased by it or him hereunder and (C) will
comply with the applicable restrictions on transferability of the Shares
contained in the Registration Rights Agreement, Restricted Stock Agreement and
Stockholders Agreement. Each Purchaser and Founder, severally and not jointly,
further represents and covenants as to itself that it is, and will be at each
Subsequent Closing Date, an "accredited investor" within the meaning of Rule
501(a) of the Securities Act and will advise the Company if its state of
residence indicated on Annex III hereto shall hereafter change.
IV.
CONDITIONS TO OBLIGATIONS OF PURCHASERS
SECTION 4.01 Conditions to Obligations of Purchasers with Respect to First
Closing. The obligation of the Purchasers to purchase and pay for the Initial
Shares being purchased by them on the First Closing Date is, at their option,
subject to the satisfaction, on or before such date, of the following
conditions:
(a) Opinion of Counsel. Each Purchaser shall have received from Xxxxxxx
Xxxxxx Xxxx Xxxxxxx & Manner, P.C., counsel for the Company, an opinion
dated the First Closing Date, in form and substance satisfactory to WCAS
VII and its counsel, Reboul, MacMurray, Xxxxxx, Xxxxxxx & Kristol (and the
parties agree that the opinion shall be governed by and interpreted in
accordance with the legal opinion accord of the ABA Section of Business Law
(1991) the "Accord"), to the effect that:
(i) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Tennessee, and is
duly licensed or qualified to do business as a foreign corporation and is
in good standing in each other jurisdiction in which it owns or leases
any real property. The Company has the corporate power and authority to
own and hold its properties and to carry on its business as currently
conducted, to acquire, own, operate and manage acute care hospitals, to
execute, deliver and perform this Agreement, the Registration Rights
Agreement, the Stockholders Agreement, the Employment Agreements and the
Restricted Stock Agreement, and to issue, sell and deliver the Initial
Shares.
(ii) The authorized capital stock of the Company is as set forth in
Section 2.04.
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(iii) The execution, delivery and performance by the Company of
this Agreement, the Registration Rights Agreement, the Stockholders
Agreement, the Employment Agreements and the Restricted Stock
Agreement have been duly authorized by all requisite corporate action,
and each has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company and
the Founders, enforceable in accordance with its terms (subject, as to
enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency and similar laws, to moratorium laws from time to time in
effect and to general equity principles), except that such counsel
need express no opinion as to the indemnification and contribution
provisions of any of the agreements nor the availability of the remedy
of specific performance nor the enforceability of any noncompetition
or nonsolicitation provisions in any such agreement.
(iv) The execution, delivery and performance by the Company of this
Agreement, the Registration Rights Agreement, the Stockholders
Agreement, the Employment Agreements and the Restricted Stock
Agreement, and the issuance, sale and delivery of the Initial Shares
will not violate any provision of law, or, to the Opinion Giver's
Actual Knowledge (as defined in the Accord), any order of any court or
other agency of government, the Charter or By-laws of the Company, or,
to the Opinion Giver's Actual Knowledge, after review of the
agreements listed on Schedule 2.11, any provision of any indenture,
agreement or other instrument by which the Company 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.
(v) The Initial Shares have been issued and sold by the Company
pursuant to this Agreement and are duly authorized, validly issued and
outstanding, fully paid and nonassessable shares of Common Stock. The
issuance and delivery of the Additional Shares upon Subsequent Closing
Dates (and the shares of Common Stock issuable upon conversion of the
Series B Preferred) have been duly authorized by all requisite
corporate action and have been duly reserved for issuance upon
Subsequent Closing Dates (or upon such conversion) and, if and when so
issued and paid for in accordance with the provisions of this
Agreement pursuant to an Additional Investment Request or a Purchase
Notice (or when so issued upon such conversion in accordance with the
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Charter), provided that the Board of Directors of the Company has not
rescinded its authorization thereof, will be duly authorized, validly
issued and outstanding, fully paid and nonassessable shares of Series
A Preferred, Series B Preferred or Common Stock, as the case may be.
The issuance, sale and delivery of the Shares (or Common Stock
issuable upon conversion thereof) are not subject to any statutory
preemptive rights of stockholders of the Company or, to the best
knowledge and belief of such counsel, after inquiry of officers of the
Company to any contractual right of first refusal or other similar
right in favor of any person.
(vi) The issuance, sale and delivery of the Initial Shares to the
Purchasers and the Founders on the First Closing Date, under the
circumstances contemplated by this Agreement, are exempt from the
registration requirements of the Securities Act. For purposes of the
opinions expressed in Sections 4.01(a)(v) and (vi), counsel can assume
the veracity of the representations and warranties of all purchasers
of all securities pursuant to this Agreement and compliance by such
purchasers with all covenants and agreements hereunder and can assume
that there is no subsequent action taken by the Company, the Founders
or the Purchasers which would cause the exemption to be lost.
(b) Representations and Warranties to Be True and Correct. The
representations and warranties contained in Article II hereof shall be true and
correct on and as of the First Closing Date with the same effect as if made on
and as of such date, and the Company shall have certified to such effect to the
Purchasers in writing.
(c) Performance. The Company shall have performed and complied with
all agreements and conditions contained herein required to be performed or
complied with by it prior to or at the First Closing Date, and the Company shall
have certified to such effect to the Purchasers in writing.
(d) All Proceedings to Be Satisfactory. All corporate and other
proceedings to be taken by the Company in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to WCAS VII and its counsel, Reboul,
MacMurray, Xxxxxx, Xxxxxxx & Kristol, and WCAS VII and said counsel shall have
received all such counterpart originals or certified or other copies of such
documents as they may reasonably request.
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(e) Registration Rights Agreement. The Company shall have executed and
delivered the Registration Rights Agreement.
(f) Stockholders Agreement. The Company and the Founders shall have
executed and delivered the Stockholders Agreement.
(g) Restricted Stock Agreement. The Company and the Founders shall
have executed and delivered the Restricted Stock Agreement.
(h) Employment Agreements. The Company and each of Xxxxxx X. Xxxxxx,
Xxxx X. XxXxxxxx, Xx., Xxxxx X. Xxxxxx and Xxxxxxx X. Xxxx shall have executed
and delivered an Employment Agreement.
(i) Founders' Certificates. Messrs. Xxxxxx and XxXxxxxx shall each
have executed and delivered to the Purchasers a certificate and undertaking in
the form agreed to be given by them prior to the date of this Agreement.
(j) Amended and Restated Charter. The Charter of the Company shall
have been amended and restated as provided in Exhibit E annexed hereto, and such
Amended and Restated Charter shall have become effective.
(k) Supporting Documents. on or prior to the First Closing Date, the
Purchasers and their counsel shall have received copies of the following
supporting documents:
(i) (1) copies of the Charter of the Company, and all amendments
thereto, certified as of a recent date by the Secretary of State of
the State of Tennessee and (2) a certificate of said Secretary dated
as of a recent date as to the due incorporation and good standing of
the Company and listing all documents of the Company on file with said
Secretary;
(ii) a certificate of the Secretary or an Assistant Secretary of
the Company dated the First Closing Date and certifying (1) that
attached thereto is a true and complete copy of the By-laws of the
Company as in effect on the date of such certification and at all
times since December 1, 1995; (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, the Registration Rights Agreement, the Employment
Agreements, the Restricted Stock Agreement, and the
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Stockholders Agreement, the issuance, sale and delivery of the Initial
Shares and the reservation, issuance and delivery of the Additional
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, the Registration Rights
Agreement, the Restricted Stock Agreement and the Stockholders
Agreement; (3) that the Charter of the Company has not been amended
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, the Registration Rights Agreement, the
Employment Agreements, the Restricted Stock Agreement, and the
Stockholders Agreement, the stock certificates representing the
Initial 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.
All such documents shall be reasonably satisfactory in form and
substance to WCAS VII and its counsel.
SECTION 4.02 Conditions to Obligations of Purchasers with Respect to Each
Subsequent Closing. The obligation of the Purchasers to purchase and pay for the
Additional Shares being purchased by them on each Subsequent Closing Date is, at
their option, subject to the satisfaction, on or before such date, of the
following conditions:
(a) Consummation of First Closing and Each Prior Subsequent Closing. On the
First Closing Date the Purchasers shall have purchased and paid for the
Initial Shares, and on each previous Subsequent Closing Date, the Purchasers
and Founders shall have purchased and paid for the Additional Shares being
issued and sold on such Subsequent Closing Date unless, in each case, the
non-occurrence of such event shall have been caused by a breach of this
Agreement by the Purchasers or by an election by the Company not to proceed
with the acquisition of the related Facility pursuant to Section 1.03(b)(ii)
hereof.
(b) Additional Investment Request or Purchase Notice. An Additional
Investment Request given pursuant to Section
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1.03(b)(i) above shall have become effective pursuant to Section 1.03(b)(ii)
above or a Purchase Notice shall have been given pursuant to Section 1.03 above.
(c) Opinion of Company's Counsel. If, on such Subsequent Closing Date, the
Additional Shares to be purchased consist exclusively of Requested Securities,
the Purchasers shall have received from Xxxxxxx Xxxxxx Xxxx Xxxxxxx & Manner,
P.C., counsel for the Company (or such other counsel for the Company as shall be
designated by the Company and reasonably satisfactory to WCAS VII) an opinion
dated such Subsequent Closing Date, in form and substance reasonably
satisfactory to WCAS VII and its counsel, confirming (other than the opinion
described in clause (iii) of Section 4.01(a) hereof and with such other changes
as may be required as a result of transactions contemplated by this Agreement)
the opinion delivered by such counsel in accordance with said Section 4.01,
except that the opinion described in clause (vi) of Section 4.01(a) hereof shall
be revised to apply to such Additional Shares.
(d) Representations and Warranties. The representations and warranties
contained in Sections 2.01 (other than paragraph (b) thereof), 2.02 and 2.03 (to
the extent that such representation pertains to the validity and binding effect
upon a Founder of any Agreement referenced therein, such representation shall
apply only as to the provisions thereof to which such Founder remains subject)
hereof shall be true and correct on and as of such Subsequent Closing Date, and
the representations and warranties contained in Sections 2.05, 2.06, 2.07, 2.08,
2.11 (last sentence) and 2.13 hereof shall be true on and as of such Subsequent
Closing Date (except as disclosed in writing to the Purchasers on or prior to
the date on which the relevant Additional Investment Request is delivered), and
the Company shall have certified to such effect to the Purchasers in writing.
(e) No Material Adverse Change. Since the Subsequent Closing Date next
preceding such Subsequent Closing Date (or, in the case of the first Subsequent
Closing Date, since the Initial Closing Date) there shall have been no material
adverse change in the business, operations or financial condition of the Company
and its Subsidiaries, taken as a whole, and the Company shall have certified to
such effect to the Purchasers in writing.
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(f) Performance. The Company shall have performed and complied with
all agreements and conditions contained herein required to be performed or
complied with by it prior to or at such Subsequent Closing Date, and the Company
shall have certified to such effect to the Purchasers in writing.
(g) All Proceedings to Be Satisfactory. All corporate and other proceedings
to be taken by the Company in connection with the Subsequent Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to WCAS VII and its counsel, Reboul, MacMurray, Xxxxxx, Xxxxxxx &
Kristol, and WCAS VII and said counsel shall have received all such counterpart
originals or certified or other copies of such documents as they may reasonably
request.
(h) Supporting Documents. On or prior to such Subsequent Closing Date the
Purchasers and their counsel shall have received copies of the supporting
documents referred to in Section 4.01(k) above as if such Subsequent Closing
Date were the First Closing Date.
(i) Closing of Facilities Acquisition. The acquisition described in the
relevant Additional Investment Request shall occur concurrently therewith,
substantially on the terms set forth in such Request, and all matters incident
thereto shall be reasonably satisfactory to WCAS VII and its counsel.
All such documents shall be reasonably satisfactory in form and substance
to WCAS VII and its counsel.
In the event that the Charter and/or By-laws of the Company shall not have
been amended since the First Closing Date, the Company may, in lieu of
furnishing such documents, cause the certificate with respect thereto
contemplated by paragraph (g) above to be replaced by a certificate as to the
fact that such documents were previously furnished and as to the absence of any
amendments thereto.
V.
COVENANTS
The Company covenants and agrees as follows:
(a) Financial Statements, Reports, Etc. Until the occurrence of an Initial
Public Offering, so long as WCAS VII shall hold 25% or more of the Shares
acquired by it pursuant to this Agreement, the Company shall furnish to
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WCAS VII and, so long as the Company is not subject to the reporting
requirements of the Securities Exchange Act of 1934, the Company shall furnish
to (x) any other Purchaser holding 25% or more of the Shares acquired by it
pursuant to this Agreement and (y) any subsequent holder of Shares holding 25%
of more of the Shares:
(i) within 90 days after the end of each fiscal year of the
Company, a balance sheet of the Company (or a consolidated balance
sheet of the Company and its subsidiaries, as the case may be) as of
the end of such fiscal year and the related statements (or consolidated
statements) of income, changes in stockholders' equity and cash flows
of the Company (or of the Company and its subsidiaries) for the fiscal
year then ended, together with supporting notes thereto, certified
without limitation as to scope of audit by KPMG Peat Marwick, LLP or
such other firm of independent public accountants of recognized
national standing selected by the Company and reasonably acceptable to
WCAS VII;
(ii) commencing with the fiscal quarter ending March 31, 1996,
within 45 days after the end of each fiscal quarter in each fiscal year
(other than the last fiscal quarter in each fiscal year), a balance
sheet of the Company (or a consolidated balance sheet of the Company
and its subsidiaries, as the case may be) and the related statements
(or consolidated statements) of income and cash flows of the Company
(or of the Company and its subsidiaries), unaudited but certified by
the principal financial officer of the Company, such balance sheet to
be as of the end of such fiscal quarter and such statements of income
and cash flows to be for such fiscal quarter, for the corresponding
fiscal quarter of the immediately preceding fiscal year, for the period
from the beginning of the fiscal year to the end of such fiscal quarter
and for the period from the beginning of the immediately preceding year
to the end of the corresponding fiscal quarter in such fiscal year, in
each case subject to normal year-end adjustments;
(iii) commencing with the month ending January 31, 1996, within
30 days after the end of each month in each fiscal year (other than the
last month in each fiscal year), a balance sheet of the Company (or a
consolidated balance sheet of the Company and its subsidiaries, as the
case may be) and the related statement (or consolidated statement) of
income, unaudited but certified by the principal financial officer of
the Company, such balance sheets to be as of
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the end of such month and such statements of income to be for such
month and for the period from the beginning of the fiscal year to the
end of such month, in each case subject to normal year-end adjustments;
(iv) within 30 days prior to the commencement of each fiscal
year of the Company (and with respect to any revision thereof, promptly
after such revision has been prepared), a proposed operating budget for
the Company (or of the Company and its subsidiaries, as the case may
be) including projected monthly income statements, cash flow statements
during such fiscal year and a projected balance sheet as of the end of
such fiscal year, and each monthly financial statement furnished
pursuant to subparagraph (iii) above shall reflect variances from such
operating budget, as the same may from time to time be revised;
(v) promptly upon filing, copies of all registration
statements, prospectuses, periodic reports and other documents filed by
the Company with the Commission; and
(vi) promptly, from time to time, such other information
regarding the operations, business, affairs and financial condition of
the Company or any subsidiary as the Purchasers or such other holders
may reasonably request (the term "subsidiary" as used herein being
defined to mean any corporation or other business entity a majority of
whose outstanding voting stock entitled to vote for the election of
directors is at the time owned by the Company and/or one or more other
subsidiaries).
(b) Change of Business. Prior to the Termination Date, unless the
holders of a majority of the shares of Common Stock at the time outstanding
shall otherwise agree in writing (treating for purposes of such computation the
holders of the Series B Preferred as holders of the number of shares of Common
Stock then issuable upon conversion of such shares), the Company shall not enter
into, or permit any subsidiary of the Company to enter into, the ownership,
active management or operation of any business other than the businesses
contemplated to be conducted by the Business Plan and such other activities as
are reasonably incidental thereto;
(c) Compliance with HSR Act. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its best efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things
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necessary, proper or advisable to obtain all necessary waivers, consents and
approvals and to effect all necessary registrations and filings that may be
required under the HSR Act and submissions of information requested by
governmental authorities in connection with all transactions contemplated
hereby; provided that the foregoing shall not require any party to make any
divestiture of assets in order to obtain any such waiver, consent or approval.
(d) Issuance of Equity Securities. (i) Prior to the Termination Date, the
Company shall not issue and sell any Equity Securities (as hereinafter defined)
except (A) pursuant to the terms of this Agreement, (B) such issuances and sales
as shall have been approved by holders of a majority of the shares of Common
Stock at the time outstanding (treating for purposes of such computation the
holders of the Series B Preferred as holders of the number of shares of Common
Stock then issuable upon conversion of such shares), (C) the issuance of up to
1,500,000 shares of Common Stock to be reserved for issuance to employees of the
Company either directly or pursuant to stock options, in either case pursuant to
a plan approved by the Board of Directors of the Company and as such number of
shares may be increased upon the approval of the non-management members of the
Board of Directors of the Company, (D) the issuance of up to 200,000 shares of
Common Stock to be reserved for issuance to a future Vice President -
Acquisition and Development of the Company and (E) upon the approval of the
non-management members of the Board of Directors of the Company, the issuance of
shares of capital stock of the Company in connection with acquisitions of one or
more Facilities as incentives (as opposed to as primary consideration for the
acquisition of a Facility or shares of the entity owning the same) to selected
individuals in connection with the acquisition of a Facility.
(ii) The term "Equity Securities" shall mean (A) Common Stock, rights,
options or warrants to purchase Common Stock, (B) any equity security other than
Common Stock having voting rights in the election of the Board of Directors not
contingent upon a failure to pay dividends, (C) any security convertible into or
exchangeable for any of the foregoing and (D) any agreement or commitment to
issue any of the foregoing.
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VI.
MISCELLANEOUS
SECTION 6.01 Expenses. Each party hereto will pay its own expenses in
connection with the transactions contemplated hereby, whether or not such
transactions shall be consummated, provided, however, that the Company shall pay
the reasonable documented fees and disbursements of the Purchasers' counsel,
Reboul, MacMurray, Xxxxxx, Xxxxxxx & Kristol in connection with the Initial
Closing and any Subsequent Closings. In addition, the Company will pay any
filing fees that any Purchaser may be required to pay from time to time in order
to comply with the HSR Act in connection with any of the transactions
contemplated hereby or any acquisition by the Company of any Facility.
SECTION 6.02 Survival of Agreements; Limitation on Customer Liabilities.
Except as otherwise expressly provided in Article V hereof with respect to
certain covenants, 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 until the earlier to
occur of (i) the Termination Date and (ii) the second anniversary of the last
Subsequent Closing Date, and all statements contained in any certificate or
other instrument delivered by the Company hereunder shall be deemed to
constitute representations and warranties made by the Company.
SECTION 6.03 Brokerage. 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, based in any way on agreements, arrangements or understandings made or
claimed to have been made by such party with any third party.
SECTION 6.04 Parties in Interest. All covenants and agreements contained in
this Agreement by or on behalf of any of the parties hereto shall bind and inure
to the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not.
SECTION 6.05 Notices. All notices which are required or may be given
pursuant to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if given in writing and (i) delivered personally,
(ii) mailed by certified or registered mail, return receipt requested and
postage prepaid, (iii) sent via a nationally recognized overnight courier or
(iv) sent via facsimile confirmed in writing to the recipient, in each case as
follows:
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(a) if to the Company, at
New American Healthcare Corporation
000 Xxxx Xxxxxx, Xxxxx X-00
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Xxxx X. XxXxxxxx, Xx.
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxx Xxxx Xxxxxxx & Manner, P.C.
1800 First American Center
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, XX, Esq.
Telecopy No.: (000) 000-0000
(b) if to any Purchaser, at the address for such Purchaser set forth in
Annex I hereto, with a copy to:
Reboul, MacMurray, Xxxxxx, Xxxxxxx & Kristol
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
(c) if to any subsequent holder of Shares, to such holder at its address
appearing on the stock transfer records of the Company;
(d) if to any Founder at the address for such Founder set forth in Annex II
hereto;
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
SECTION 6.06 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES OF SUCH STATE.
SECTION 6.07 Entire Agreement. This Agreement, together with the other
agreements referred to herein, constitutes the entire Agreement of the parties
with respect to the subject matter hereof and may not be modified or amended
except in writing.
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SECTION 6.08 Counterparts. This Agreement may be executed in one or more
counterparts and by the parties hereto on separate counterparts, each of which
shall be deemed an original, and all of which together shall constitute one and
the same instrument.
SECTION 6.09 NOTICE FOR 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 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, THE PURCHASER SHOULD ASK FOR WRITTEN
CONFIRMATION THAT SUCH REQUEST HAS BEEN RECEIVED.
25
30
IN WITNESS WHEREOF, the Company, the Founders and the
Purchasers have executed this Securities Purchase Agreement as of the day and
year first above written.
NEW AMERICAN HEALTHCARE CORPORATION
By
---------------------------------
Xxxxxx X. Xxxxxx
Chairman, President and CEO
PURCHASERS:
WELSH, CARSON, XXXXXXXX & XXXXX VII, L.P.
By WCAS VII Partners, General Partner
By
----------------------------------
General Partner
WCAS Healthcare Partners, L.P.
By WCAS HP Partners, General Partner
By
----------------------------------
General Partner
----------------------------------
Xxxxxxx X. Xxxxx
----------------------------------
Xxxxxxx X. Xxxxxx
----------------------------------
Xxxxx X. Xxxxxxxx
----------------------------------
Xxxxxxx X. Xxxxx
31
----------------------------------
Xxxxxx X. Xxxx
----------------------------------
Xxxxxx X. XxXxxxxxx
----------------------------------
Xxxxx XxxXxxxx
----------------------------------
Xxxxx X. Xxxxxx
----------------------------------
Xxxxxx X. Xxxxxxxxx
----------------------------------
Xxxxxxx X. xx Xxxxxx
XXXXX X. XXXXXX - TRUSTEE
PROFIT SHARING PLAN DLJSC -
CUSTODIAN FBO XXXXX X. XXXXXX
By
-------------------------------
HORIZON INVESTMENTS ASSOCIATES, I
By
-------------------------------
32
FOUNDERS:
----------------------------------
Xxxxxx X. Xxxxxx
----------------------------------
Xxxx X. XxXxxxxx, Xx.
----------------------------------
Xxxxx X. Xxxxxx
----------------------------------
Xxxxxxx X. Xxxx
33
ANNEX I
The Purchasers
Number of Purchase Price
Name and Address Initial Shares of Initial Shares
---------------- -------------- -----------------
Welsh, Carson, Xxxxxxxx & 4,778,500 $1,433,550
Xxxxx VII, L.P.
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy No. (000) 000-0000
WCAS Healthcare Partners, L.P. 75,000 $ 22,500
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy No. (000) 000-0000
Xxxxxxx X. Xxxxx 25,000 $ 7,500
Xxxxxxx X. Xxxxxx 50,000 $ 15,000
Xxxxx X. Xxxxxxxx 30,000 $ 9,000
Xxxxxxx X. Xxxxx 15,000 $ 4,500
Xxxxxx X. Xxxx 5,000 $ 1,500
Xxxxxx X. XxXxxxxxx 7,500 $ 2,250
Xxxxx XxxXxxxx 2,000 $ 600
Xxxxx X. Xxxxxx 5,000 $ 1,500
Xxxxxx X. Xxxxxxxxx 4,000 $ 1,200
Xxxxxxx X. xx Xxxxxx 3,000 $ 900
In care of
WCAS Management Corporation
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy No. (000) 000-0000
Xxxxx X. Xxxxxx - Trustee
0 0
Profit Sharing Plan DLJSC-Custodian
FBO Xxxxx X. Xxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
copy to:
Xx. Xxx-Xxxxx Xxxx Sieczka
Sales Associate
Xxxxxxxxx, Lufkin & Xxxxxxxx
Investment Services Group
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
HORIZON INVESTMENTS ASSOCIATES, I 0 0
c/o X.X. Xxxxxxxx
Continental Medical Systems, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000
--------- ----------
TOTAL 5,000 000 $1,500,000
========= ==========
34
ANNEX II
Founders
Purchase Price Aggregate
Number of of Purchase Price
Name and Address Initial Shares Initial Shares (Common & Preferred)
---------------- -------------- -------------- --------------------
Xxxxxx X. Xxxxxx
000 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000 10,000 $3,000 $100,000
Xxxx X. XxXxxxxx, Xx.
Xxx Xxxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000 10,000 $3,000 $100,000
Xxxxx X. Xxxxxx
00000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000 5,000 $1,500 $ 50,000
Xxxxxxx X. Xxxx
000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000 1,500 $ 450 $ 15,000
-------------------- ------ ------ --------
Total 26,500 $7,950 $265,000
35
ANNEX III
Additional Shares
Maximum Number Maximum
Number of Number of
Series A Series B
Name and Address Preferred Shares Preferred Shares
---------------- ---------------- ----------------
PURCHASERS:
----------
Welsh, Carson, Xxxxxxxx & 238,641 222,389
Xxxxx VII, L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000-0000
WCAS Healthcare Partners, L.P. 3,513 3,762
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000-0000
Xxxxxxx X. Xxxxx (NJ)* 1,254 1,171
Xxxxxxx X. Xxxxxx (NY) 2,508 2,342
Xxxxx X. Xxxxxxxx (NJ) 1,505 1,405
Xxxxxxx X. Xxxxx (NY) 752 703
Xxxxxx X. Xxxx (NY) 251 234
Xxxxxx X. XxXxxxxxx (NY) 376 351
Xxxxx XxxXxxxx (NY) 100 94
Xxxxx X. Xxxxxx (NY) 251 234
Xxxxxx X. Xxxxxxxxx (CT) 201 187
Xxxxxxx X. xx Xxxxxx (NJ) 150 141
In care of
WCAS Management Corporation
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000-0000
Xxxxx X. Xxxxxx - Trustee (NY) 0 500
Profit Sharing Plan DLJSC
- Custodian
FBO Xxxxx X. Xxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
copy to:
Xx. Xxxxxx Xxxxxxx
Sales Associate
Xxxxxxxxx, Lufkin & Xxxxxxxx
Investment Services Group
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
36
HORIZON INVESTMENTS
ASSOCIATES, I (PA) 0 1,000
c/o X.X. Xxxxxxxx
Continental Medical Systems, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Xxxxxxx X. Xxxx 0 500
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
PURCHASERS TOTAL: 250,000** 235,000**
FOUNDERS
--------
Xxxxxx X. Xxxxxx (TN) 500 470
Xxxx X. XxXxxxxx, Xx. (TN) 500 470
Xxxxx X. Xxxxxx (TX) 250 235
Xxxxxxx X. Xxxx (TN) 75 70.5
Xxxx XxXxxx (TN) 250 235
------- ------- -------
FOUNDERS TOTAL: 1,575 1480.5
======= =======
* State of Residence
** Less shares purchased by Founders
37
ANNEX III
Additional Shares
Maximum Number Maximum
Number of Number of
Series A series B
Name and Address Preferred Shares Preferred Shares
---------------- ---------------- ----------------
PURCHASERS:
----------
Welsh, Carson, Xxxxxxxx & 238,891 223,124
Xxxxx VII, L.P.
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
WCAS Healthcare Partners, L.P. 3,513 3,762
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxxx X. Xxxxx (NJ)* 1,254 1,171
Xxxxxxx X. Xxxxxx (NY) 2,508 2,342
Xxxxx X. Xxxxxxxx (NJ) 1,505 1,405
Xxxxxxx X. Xxxxx (NY) 752 703
Xxxxxx X. Xxxx (NY) 251 234
Xxxxxx X. XxXxxxxxx (NY) 376 351
Xxxxx XxxXxxxx (NY) 100 94
Xxxxx X. Xxxxxx (NY) 251 234
Xxxxxx X. Xxxxxxxxx (CT) 201 187
Xxxxxxx X. xx Xxxxxx (NJ) 150 141
In care of
WCAS Management Corporation
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxx X. Xxxxxx - Trustee (NY) 0 500
Profit Sharing Plan DLJSC
- Custodian
FBO Xxxxx X. Xxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
copy to:
Xx. Xxxxxx Xxxxxxx
Sales Associate
Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Investment Services Group
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
HORIZON INVESTMENTS
ASSOCIATES, I (PA) 0 1,000
c/o X.X. Xxxxxxxx
Continental Medical Systems, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000
PURCHASERS TOTAL: 235,000** 250,000**
38
FOUNDERS
--------
Xxxxxx X. Xxxxxx (TN) 500 470
Xxxx X. XxXxxxxx, Xx. (TN) 500 470
Xxxxx X. Xxxxxx (TX) 250 235
Xxxxxxx X. Xxxx (TN) 75 70.5
-------- ------- -------
FOUNDERS TOTAL: 1,325 1245.5
======= =======
* State of Residence
** Less shares purchased by Founders
