PROFESSIONAL SERVICES AGREEMENT
EXHIBIT 10.7
THIS PROFESSIONAL SERVICES AGREEMENT (this “Agreement”) is made as of May 4, 2005,
between GTCR Xxxxxx Xxxxxx XX, L.L.C., a Delaware limited liability company (“GTCR”), and
Capella Healthcare. Inc., a Delaware corporation (the “Company”).
WHEREAS, the Company is the wholly owned subsidiary of Capella Holdings, Inc., a Delaware
corporation (the; “Parent”);
WHEREAS, GTCR (together with any investment fund or special investment vehicle controlled by
GTCR or GTCR Xxxxxx Xxxxxx XX, L.L.C., a Delaware limited liability company, (the
“Investors”) will purchase (the “Investment”) Preferred Stock, par value $0.01 per
share, of the Company and Common Stock, par value $0.01 per share, of the Company pursuant to that
certain Stock Purchase Agreement of even date herewith between the Company and the Investors (the
“Purchase Agreement”);
WHEREAS, in connection with the Investment, the Company desires to receive financial and
management consulting services from GTCR, and obtain the benefit of the experience of GTCR in
business and financial management generally and its knowledge of the Company and the Company’s
financial affairs in particular; and
WHEREAS, GTCR is willing to provide financial and management consulting services to the
Company and the compensation arrangements set torn in this Agreement are designed to compensate
GTCR for such services.
NOW, THEREFORE, in consideration of the foregoing premises and the respective agreements
hereinafter set forth and the mutual benefits to be derived herefrom, GTCR and the Company hereby
agree as follows:
1. Engagement. The Company hereby engages GTCR as a financial and management
consultant and GTCR hereby agrees to provide financial and management consulting services to the
Company, all on the terms and subject to the conditions set forth below.
2. Services of GTCR. GTCR hereby agrees during the term of this engagement to consult
with the board of directors of the Company (the “Board”), the boards of directors (or
similar governing body) of the Company’s affiliates, including the Parent and the management of the
Company and its affiliates, including the Parent, in such manner and on such business and financial
matters as may be reasonably requested from time to time by the Board, including, but not limited
to:
(a) corporate strategy;
(b) budgeting of future corporate investments;
(c) acquisition and divestiture strategies; and
(d) debt and equity financings.
3. Personnel. GTCR shall provide and devote to the performance of this Agreement such
partners, employees and agents of GTCR as GTCR shall deem appropriate for the furnishing of the
services required thereby.
4. Placement Fees. At the time of any debt financing for the Parent, the Company or
any of their respective subsidiaries prior to a Public Offering (as defined in the Purchase
Agreement), the Company shall pay to GTCR placement fee in immediately available funds in an amount
to be mutually determined by GTCR and the Company, based on the extent of GTCR’s (or its
affiliate’s) involvement in such financing; provided that such placement fee shall not exceed one
percent (1%) of the gross amount of such debt financing (including the committed amount of any
revolving credit facility).
5. Management Fee. Commencing upon the occurrence of the EBITDA Threshold Date and
continuing until the Second EBITDA Threshold Dare or until this Agreement has been terminated in
accordance with its terms, the Company shall pay to GTCR an annual management fee equal to $100,000
payable in equal monthly installments beginning on the first day of the calendar month following
the EBITDA Threshold Date. Commencing upon the occurrence of the Second EBITDA Threshold Date and
continuing until this Agreement has been terminated in accordance with its terms, the Company shall
pay GTCR an annual management fee equal to $150,000 payable in equal monthly installments beginning
on the first day of the calendar month following the Second EBITDA Threshold Date. For purposes
hereof, “EBITDA Threshold Date” means the last day of the first calendar month, if any, in
which the Parent and its subsidiaries would together have consolidated EBITDA of at least $10
million on a pro forma basis (after giving effect to any acquisitions) over the preceding twelve
full calendar months. For purposes hereof, “Second EBITDA Threshold Date” means the last
day of the first calendar month, if any, in which the Parent and its subsidiaries would together
have consolidated EBITDA of at least $30 million on a pro forma basis (after giving effect to any
acquisitions) over the preceding twelve full calendar months. For purposes hereof,
“EBITDA” means, for any period, earnings for such period before interest, taxes,
depreciation and amortization for such period, determined on a consolidated basis in accordance
with United States generally accepted accounting principles as in effect from time to time.
6. Expenses. The Company shall promptly reimburse GTCR for such reasonable travel
expenses, legal fees and other out-of-pocket fees and expenses as have been or may be incurred by
GTCR, its directors, officers and employees in connection with the Initial Closing (as defined in
the Purchase Agreement), in connection with any financing of the Parent, the Company or any of
their respective subsidiaries, and in connection with the rendering of any other services hereunder
(including, but not limited to fees and expenses incurred in attending Parent or Company-related
meetings.)
7 Term. This Agreement will continue from the date hereof until the investors and
their affiliates cease to own at least 10% of the Investor Securities (as defined in the Purchase
Agreement.) No termination of this Agreement, whether pursuant to this paragraph
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or otherwise, shall affect the Company’s obligations with respect to the fees, costs and
expenses incurred by GTCR in rendering services hereunder and not reimbursed by the Company as of
the effective date of such termination.
8. Liability. Neither GTCR nor any of its affiliates, partners, employees or agents
shall be liable to the Parent, Company or any of their respective subsidiaries or affiliates for
any loss, liability, damage or expense arising our of in connection with the performance of
services contemplated by this Agreement, unless such loss, liability, damage or expense shall be
proven to result directly from the gross negligence or willful misconduct of GTCR.
9. Indemnification. The Company agrees to indemnify and hold harmless GTCR, its
partners, affiliates, officers, agents and employees against and from any and all loss, liability,
suits, claims, costs, damages and expenses (including attorneys’ fees) arising from their
performance hereunder, except as a result of their gross negligence or intentional wrongdoing.
10. GTCR an Independent Contractor. GTCR and the Company agree that GTCR shall
perform services hereunder as an independent contractor, retaining control over and responsibility
for its own operations and personnel. Neither GTCR nor its directors, officers, or employees shall
be considered employees or agents of the Company as a result of this Agreement nor shall any of
them have authority to contract in the name of or bind the Company, except as expressly agreed to
in writing by the Company.
11. Notices. All notices, demands or other communications to be given or delivered
under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to
have been given when (i) delivered personally to the recipient, (ii) sent to the recipient by
reputable express courier service (charges prepaid), (iii) mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid, or (iv) telecopied to the recipient
(with hard copy sent to the recipient by reputable overnight courier service (charges prepaid that
same day) if telecopied before 5:00 p.m. Chicago, Illinois time on a business day, and otherwise on
the next business day. Such notices, demands and other communications shall be sent to the
Investors and to the Company at the addresses indicated below (or at such other address as shall be
given in writing by one party to the others):
If to GTCR:
GTCR Xxxxxx Xxxxxx XX, L.L.C.
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
Xxxxx X. Xxxxxxx
Telephone: (000 000-0000Facsimile: (312) 382-2201
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With a copy to:
Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, P.C.
Facsimile: (000) 000-0000
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, P.C.
Xxxxxxx X. Fine, Esq.
Telephone: (000) 000-0000Facsimile: (000) 000-0000
If to the Company:
Capella Holdings, Inc.
000 Xxxxxxxx Xxxxxx #000
Xxxxxxxxx, XX 00000
Attention: Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
000 Xxxxxxxx Xxxxxx #000
Xxxxxxxxx, XX 00000
Attention: Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with copies to:
GTCR Xxxxxx Xxxxxx XX, L.L.C.
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
Xxxxx X. Xxxxxxx
Telephone: (000 000-0000Facsimile: (000) 000-0000
Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, P.C.
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, P.C.
Xxxxxxx X. Fine, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Facsimile: (000) 000-0000
12. Entire Agreement Modification. This Agreement, those documents expressly referred
to herein and other documents of even date herewith (a) contain the complete and entire
understanding and agreement of GTCR and the Company with respect to the subject matter hereof and
(b) supersede all prior and contemporaneous understandings, conditions and agreements, oral or
written, express or implied, respecting the engagement of GTCR in connection with the subject
matter hereof The provisions of this Agreement may be amended, modified and/or waived only with the
prior written consent of the Company and GTCR.
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13. Waiver of Breach. The waiver by either party of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of any subsequent breach
of that provision or any other provision hereof.
14. Assignment. GTCR nor the Company may assign its rights or obligations under this
Agreement without the express written consent of the other, except that GTCR may assign its rights
and obligations to an affiliate of GTCR (which shall include GTCR Xxxxxx Xxxxxx, L.L.C.).
15. Successors. This Agreement and all the obligations and benefits hereunder shall
inure to the successors and permitted assigns of the parties.
16. Counterparts. This Agreement may be executed and delivered by each party hereto
in separate counterparts (including by means of facsimile), each of which when so executed and
delivered shall be deemed an original and both of which taken together shall constitute one and the
same agreement.
17. Choice of Law. This Agreement shall be governed by and construed in accordance
with the domestic laws of the State of Delaware, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State of Delaware.
18. MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE
PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE
PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE,
TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, EACH
PARTY TO THIS AGREEMENT HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE BETWEEN THE PARTIES HERETO, WHETHER ARISING IN CONTRACT,
TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THIS AGREEMENT AND/OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
19. No Strict Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly by the parties
hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party, by
virtue of the authorship of any of the provisions of this Agreement.
20. Descriptive Headings; Interpretation. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a substantive part of this Agreement.
Whenever required by the context, any pronoun used in this Agreement shall include the
corresponding masculine, feminine, or neuter forms, and the singular form of nouns,
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pronouns, and verbs shall include the plural and vice versa. The use of the word
“including,” in this Agreement shall be, in each case, by way of example and without
limitation. The use of the. words “or,” “either,” and “any” shall not be
exclusive. Reference to any agreement, document. or instrument means such agreement, document, or
instrument as amended or otherwise modified from time to time in accordance with the terms thereof,
and. if applicable, hereof.
* * * * *
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IN WITNESS WHEREOF, the undersigned have caused this Professional Services Agreement to be
executed and delivered on the date and year first above written.
| GTCR XXXXXX XXXXXX XX, L.L.C. | ||||||
| By: Name: |
/s/ Xxxxxx X. Xxxxx
|
|||||
| Its: | Principal | |||||
| CAPELLA HEALTHCARE, INC. | ||||||
| By: | /s/ Xxxxxx X. Xxxxxxxxxx | |||||
| Name: | ||||||
| Its: | Chief Executive Officer | |||||
SIGNATURE PAGE TO PROFESSIONAL SERVICES AGREEMENT
