EXHIBIT 10.10
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SECURITIES PURCHASE AGREEMENT
AMONG
UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
WELSH, CARSON, XXXXXXXX & XXXXX VII, L.P.
WCAS CAPITAL PARTNERS III, L.P.
FFT PARTNERS I, L.P.
AND
THE SEVERAL OTHER PURCHASERS NAMED IN ANNEX I HERETO
DATED AS OF MARCH 27, 2000
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TABLE OF CONTENTS
PAGE
I. PURCHASE AND SALE OF SECURITIES
SECTION 1.01 Issuance, Sale and Delivery of Securities
the Closing Date.......................................2
SECTION 1.02 Closing Date...........................................2
I. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 2.01 Organization, Qualifications and Corporate Power.......5
SECTION 2.02 Authorization of Agreements, Etc.......................6
SECTION 2.03 Validity...............................................6
SECTION 2.04 Authorized Capital Stock...............................7
SECTION 2.05 Governmental Approvals.................................7
SECTION 2.06 Financial Statements...................................7
SECTION 2.07 Events Subsequent to Date of Financial Statements......8
SECTION 2.08 Actions Pending........................................8
SECTION 2.09 Trade Secrets..........................................9
SECTION 2.10 Taxes..................................................9
SECTION 2.11 Other Agreements.......................................9
SECTION 2.12 Title to Properties....................................9
SECTION 2.13 Compliance with Laws, Etc..............................9
SECTION 2.14 Affiliated Transactions................................9
SECTION 2.15 Brokers' or Finders' Fees..............................9
SECTION 2.16 Disclosure............................................10
III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
SECTION 3.01 Authorization.........................................10
SECTION 3.02 Validity..............................................10
SECTION 3.03 Investment Representations............................11
SECTION 3.04 Governmental Approvals................................12
SECTION 3.05 Brokers' or Finders' Fees.............................12
III. CONDITIONS PRECEDENT
SECTION 4.01 Conditions Precedent to the Obligations of the
Purchasers............................................12
SECTION 4.02 Conditions Precedent to the Obligations of the
Company...............................................14
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PAGE
V. COVENANTS
SECTION 5.01 Financial Statements, Reports, Etc....................17
SECTION 5.02 Rights of Inspection..................................18
SECTION 5.03 Notice of Certain Events..............................18
SECTION 5.04 Use of Proceeds.......................................19
SECTION 5.05 Consents and Approva1s................................19
SECTION 5.06 Compliance with Laws..................................19
SECTION 5.07 Preemptive Rights.....................................19
SECTION 5.08 Management Fee........................................20
VI. MISCELLANEOUS
SECTION 6.01 Expenses, Etc.........................................20
SECTION 6.02 Survival of Agreements................................21
SECTION 6.03 Parties in Interest...................................21
SECTION 6.04 Notices...............................................21
SECTION 6.05 Waiver of Prior Preemptive Rights.....................22
SECTION 6.06 Entire Agreement; Modifications.......................22
SECTION 6.07 Assignment............................................22
SECTION 6.08 Counterparts..........................................22
SECTION 6.09 Governing Law.........................................22
TESTIMONIUM
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INDEX TO EXHIBITS, ANNEXES AND SCHEDULES
EXHIBIT DESCRIPTION
A Form of 10% Senior Subordinated Note
B Form of Amendment No. 6 to Amended and Restated
Registration Rights Agreement
C Form of Third Amended and Restated Stockholders
Agreement D
D Form of Certificate of Amendment to the
Certificate of Incorporation
ANNEX DESCRIPTION
I Purchasers
II Shares Purchased
SCHEDULE DESCRIPTION
2.01(b) Company Ownership of Stock or Other Interests
2.04(a) Ownership of Capital Stock of Company
2.04(b) Rights, Warrants, Options, Etc.
2.05 Government Approvals
2.06 Financial Statements
2.07 Events Subsequent to Date of Financial Statements
2.08 Actions Pending
2.12 Title to Properties
2.14 Affiliated Transactions
2.15 Brokers' or Finders' Fee
3.03(d) Certain Purchasers
3.05 Brokers' or Finders' Fee
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SECURITIES PURCHASE AGREEMENT, dated as of March 27, 2000, among UNITED
SURGICAL PARTNERS INTERNATIONAL, INC., a Delaware corporation (the "Company"),
WELSH, CARSON, XXXXXXXX & XXXXX VII, L.P., a Delaware limited partnership ("WCAS
VII"), FFT PARTNERS I, L.P., a Delaware limited partnership, FFT EXECUTIVE
PARTNERS I, L.P., a Delaware limited partnership (together with FFT Partners I,
L.P., "FFT Partners"), WCAS CAPITAL PARTNERS III, L.P., a Delaware limited
partnership ("WCAS CP III") and the several other purchasers named in Annex I
hereto (such purchasers, WCAS VII, FFT Partners and WCAS CP III being
hereinafter at times referred to individually as a "Purchaser" and collectively
as the "Purchasers").
WHEREAS, the Company is engaged in the business of owning and operating
hospitals and/or surgical centers and acquiring additional hospitals and/or
surgical centers and other businesses related thereto (collectively, the
"Business");
WHEREAS, the Company desires to sell to the Purchasers (other than WCAS CP
III) on the Closing Date (as hereinafter defined), and such Purchasers desire to
purchase from the Company, on the terms and subject to the conditions set forth
therein, an aggregate 20,000 shares of Series C Convertible Preferred Stock,
$.01 par value ("Series C Preferred Stock") of the Company at a purchase price
of $1, 000 per share;
WHEREAS, the Company desires to sell to WCAS CP III on the Closing Date,
and WCAS CP III desires to purchase from the Company, on the terms and subject
to the conditions set forth therein, (i) a 10% Senior Subordinated Note
substantially in the form attached hereto as Exhibit A (such note and any note
issued in substitution therefor being hereinafter called a "Note") in the
principal amount of $36,000,000 and (ii) an aggregate of 1,500,000 shares of
Class A Common Stock, $.01 par value per share (the "Common Stock", and together
with the Series C Preferred Stock, the "Shares"), of the Company; and
WHEREAS, the Company has agreed to use the proceeds from the sale of the
Securities all in order to finance the expansion of the Business through
additional acquisitions or for certain operating expenses approved by the Board
of Directors of the Company;
WHEREAS, the Purchasers, severally and not jointly, wish to purchase the
Securities (as hereinafter defined), all on the terms and subject to the
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF SECURITITES
SECTION 1.01 ISSUANCE. SALE AND DELIVERY OF SERIES C PREFERRED STOCK ON
THE CLOSING DATE. (a) Subject to the terms and conditions set forth herein, on
the Closing Date, the Company shall issue, sell and deliver to each Purchaser
(other than WCAS CP III), and each Purchaser (other than WCAS CP III) shall
purchase from the Company the number of shares of Series C Preferred Stock set
forth opposite the name of such Purchaser on Annex II hereto under the heading
"Number of Series C Preferred Shares" at a purchase price of $1,000 per share.
On the Closing Date, the Company shall issue a certificate or certificates in
definitive form, registered in the name of each Purchaser (other than WCAS CP
III), evidencing the securities being purchased by each such Purchaser
hereunder.
(b) As payment in full for the shares of Series C Preferred Stock
being purchased by each Purchaser (other than WCAS CP III) hereunder on the
Closing Date, and against delivery thereof as aforesaid, on the Closing Date,
each Purchaser (other than WCAS CP III) shall (i) pay to the Company, by wire
transfer of immediately available funds to an account or accounts designated by
the Company, the amount set forth opposite the name of such Purchaser on Annex
II hereto under the heading "Cash Purchase Price".
SECTION 1.02 ISSUANCE SALE AND DELIVERY OF THE NOTE AND COMMON
STOCK TO WCAS CP III ON THE CLOSING DATE. (a) Subject to the terms and
conditions set forth herein, on the Closing Date, the Company shall issue, sell
and deliver to WCAS CP III, and WCAS CP III shall purchase from the Company the
Note and an aggregate 1,500,000 shares of Common Stock (said securities,
together with the Shares and the Note, being hereinafter collectively called the
"Securities"), for an aggregate purchase price of $36,000,000. On the Closing
Date, the Company shall issue the Note and a certificate representing 1,500,000
shares of Common Stock, in each case registered in the name of WCAS CP III.
(b) On the Closing Date, as payment in full for the Note and the
shares of Common Stock being purchased by it, and against delivery of the Note
and certificates for such shares of Common Stock as aforesaid, WCAS CP III shall
pay to the Company $36,000,000 by wire transfer of immediately available funds
to an account designated by the Company.
SECTION 1.03 CLOSING DATE. The closing of the sale and
purchase of the Securities shall take place at the offices of Reboul, MacMurray,
Xxxxxx, Xxxxxxx & Kristol, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx, at 10 a.m.,
New York time, on March 27, 2000, or at such other date and time as may be
mutually agreed upon among the Purchasers and the Company (such closing being
herein called the "Closing" and such date and time being herein called the
"Closing Date").
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II
REPRESENT A TIONS AND W ARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers as follows:
SECTION 2.01 ORGANIZATION QUALIFICATIONS AND CORPORATE POWER. (a)
The Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and is duly licensed or
qualified in each jurisdiction in which the nature of its business or the
ownership of its properties makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have a
material adverse effect on its ability to carry on its business. The Company has
the corporate power and authority to own and hold its properties, to carry on
its business as currently conducted and to execute and deliver this Agreement,
the Note, Amendment No. 6 to Amended and Restated Registration Rights Agreement
dated as of the date hereof substantially in the form attached hereto as Exhibit
C (the "Registration Rights Agreement Amendment") among the Company and the
several other parties named therein and the Third Amended and Restated
Stockholders Agreement dated as of the date hereof substantially in the form
attached hereto as Exhibit D (the "Amended and Restated Stockholders Agreement")
among the Company and the several other parties named therein, to perform its
obligations under this Agreement, the Note, the Amended and Restated
Stockholders Agreement and the Registration Rights Agreement Amendment, and to
issue, sell and deliver the Securities.
(b) Except as set forth on Schedule 2.01(b) hereto, the acquisition
of (i) any shares of 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, owned of record of
beneficially, directly or indirectly, by the Company was duly approved by the
Board of Directors of the Company.
SECTION 2.02 AUTHORIZATION OF AGREEMENTS ETC.
(a) Each of the execution and delivery by the Company of this
Agreement, the Note, the Amended and Restated Stockholders Agreement and the
Registration Rights Agreement Amendment, the performance by the Company of its
obligations hereunder and thereunder, and the issuance, sale and delivery by the
Company of the Securities have been duly authorized by all requisite corporate
action and will not violate any provision of law, any order of any court or
other agency of government, the Certificate of Incorporation or By-laws of the
Company, or any provision of any indenture, agreement or other instrument to
which the Company or any of the properties or assets of the Company is bound, or
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any such indenture, agreement or other instrument,
or result in the creation or imposition of any lien,charge or encumbrance of any
nature whatsoever upon any of the properties or assets of the Company or of any
corporation, partnership, joint venture or other entity in which the Company
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owns, of record or beneficially, 50% or more of the voting interests of the same
(such an entity being hereinafter referred to individually as a "Subsidiary" and
collectively as subsidiaries").
(b) The Shares have been duly authorized by the Company and, when
sold and paid for in accordance with this Agreement, will be validly issued,
fully paid and non-assessable shares of Common Stock and Series C Preferred
Stock, as the case may be. The issuance, sale and delivery of the Shares to the
Purchasers (other than WCAS CP III) hereunder 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.
(c) The Conversion Shares (as hereinafter defined) have been duly
authorized by the Company and, when issued upon the conversion of the Series C
Preferred Stock, will be validly issued, fully paid and non-assessable shares of
Common Stock (the "Conversion Shares"). The issuance, sale and delivery of the
Conversion Shares to the Purchasers are 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.
SECTION 2.03 VALIDITY. This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
subject, as to enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws from time to time in effect
affecting the enforcement of creditors' rights generally and to general equity
principles. The Note, the Amended and Restated Stockholders Agreement and the
Registration Rights Agreement Amendment, when executed and delivered by the
Company as provided in this Agreement, and when executed and delivered by the
other parties hereto (if applicable), will constitute the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws from time to time in
effect affecting the enforcement of creditors' rights generally and to general
equity principles.
SECTION 2.04 AUTHORIZED CAPITAL STOCK.
(a) The authorized capital stock of the Company consists of (i)
40,000,000 shares of Common Stock, $.01 par value, (ii) 30,000,000 shares of
Class A Common Stock, (iii) 31,200 shares of Series A Redeemable Preferred
Stock, (iv) 2,716 shares of Series B Convertible referred Stock, $.01 par value
and (v) 20,000 shares of Series C Preferred Stock. All of the issued and
outstanding shares of capital stock of the Company are owned of record as set
forth on Schedule 2.04(a) hereto.
(b) Except as contemplated by this Agreement, the Amended and
Restated Stockholders Agreement dated as of April 30, 1998 among the Company and
the several other parties named therein, as amended, the Company's Certificate
of Incorporation or as set forth on Schedule 2.04(b) hereto, (i) no
subscription, warrant, option, convertible security or other right
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(contingent or other) to purchase or acquire any shares of any class of capital
stock of the Company is authorized or outstanding, (ii) there is no binding
commitment of the Company to issue any shares, warrants, options or other such
rights or to distribute to holders of any class of the Company's capital stock,
any evidences of indebtedness or assets, and (iii) the Company has no
obligations (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 GOVERNMENTAL APPROVALS. Subject to the accuracy of the
representations and warranties of the Purchasers set forth in Article III
hereof, except as set forth on Schedule 2.05 hereto, 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 and delivery of this Agreement, the Amended and Restated Stockholders
Agreement and the Registration Rights Agreement Amendment, the performance of
this Agreement, the Amended and Restated Stockholders Agreement and the
Registration Rights Agreement Amendment, or the issuance, sale and delivery of
the Securities, other than, if applicable, compliance with the requirements of
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act").
SECTION 2.06 FINANCIAL STATEMENTS. Attached hereto as Schedule 2.06
are (x) the audited balance sheet of the Company as of December 31, 1998, and
the related statements of operations, stockholders' equity and cash flow of the
Company for the year then ended, certified by KPMG Peat Marwick LLP, the
independent public accountants retained by the Company and (y) the unaudited
balance sheet of the Company as of December 31, 1999, and the related statements
of operations, stockholders' equity and cash flow of the Company for the year
then ended. Such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied, and fairly
present the consolidated financial position of the Company as of the date of
such financial statements and the results of its operations for the period then
ended in accordance with generally accepted accounting principles. Except as
reflected in said financial statements or as disclosed in writing to WCAS VII
and FFT Partners, the Company had no material (individually or in the aggregate)
obligations or liabilities, absolute, accrued or contingent, as of the date of
such financial statements that would be required to be reflected on said
financial statements. Since December 31, 1999 there has been no material adverse
change in the properties, assets, condition (financial or other), prospects,
operating results or business of the Company and its Subsidiaries taken as a
whole.
SECTION 2.07 EVENTS SUBSEQUENT TO DATE OF FINANCIAL STATEMENTS.
Since December 31, 1999, and except as set forth on Schedule 2.07 hereto, the
Company has not (i) issued any stock, bonds or other corporate securities, (ii)
borrowed any amount or incurred any liabilities (absolute or contingent) that
would be required to be disclosed on a balance sheet as of the date hereof
prepared in accordance with generally accepted accounting principles, except
current liabilities incurred, and liabilities under contracts entered into, in
the ordinary course of business, (iii) discharged or satisfied any lien or paid
any obligation or liability (absolute or contin-
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gent) other than current liabilities shown on such financial statements and
current liabilities incurred since that date in the ordinary course of business,
(iv), declared or made any payment or distribution to stockholders or purchased
or redeemed any shares of its capital stock or other securities, (v) mortgaged,
pledged or subjected to lien any of its assets, tangible or intangible, other
than liens of current real property taxes not yet delinquent and payable, (vi)
sold, assigned or transferred any of its material tangible assets, except in the
ordinary course of business, (vii) acquired any material tangible assets or
properties, except in the ordinary course of business, (viii) canceled or
compromised any debts or claims, except in the ordinary course of business, (ix)
sold, assigned or transferred any patents, trademarks, tradenames, or other
intangible rights (or licenses thereto) or permitted any license, permit, or
other form of authorization relating to such rights to lapse, (x) suffered any
material losses, or waived any rights of material value, whether or not in the
ordinary course of business, (xi) received notification of cancellation, or
canceled or waived any rights which, individually or in the aggregate, are
material with respect to any currently existing agreement, contract, right or
understanding, (xii) made any changes in officer compensation, except for
compensation attributed to newly hired officers and for changes made in the
ordinary course of business and consistent with past practice or (xiii) entered
into any transaction except in the ordinary course of business.
SECTION 2.08 ACTIONS PENDING. Except as set forth on Schedule 2.08
hereto, there is no action, suit, investigation or proceeding pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
Subsidiary or any of their respective properties or rights before any court or
by or before any governmental body or arbitration board or tribunal, the outcome
of which might reasonably be expected to result in any material adverse effect
on the properties, assets, condition (financial or other), prospects, operating
results or business of the Company and its Subsidiaries taken as a whole. To the
knowledge of the Company, except as set forth on Schedule 2.08 hereto, there
does not exist any reasonable basis for any such action, suit, investigation or
proceeding.
SECTION 2.09 TRADE SECRETS. To the knowledge of the Company, (a) no
third party has claimed that any person affiliated with the Company or any
Subsidiary has violated any of the terms or conditions of his employment
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
and (b) no person affiliated with the Company or any Subsidiary has employed any
trade secrets or any information or documentation proprietary to any former
employer.
SECTION 2.10. TAXES. The Company and each Subsidiary, as applicable,
has duly and timely filed or caused to be filed all Federal, state, local and
foreign tax returns that have been required to be filed to date by it and has
timely paid or caused to be timely paid all taxes or all assessments received by
it to the extent that such taxes or assessments have become due.
SECTION 2.11 OTHER AGREEMENTS. Neither the Company nor any
Subsidiary is in default in any material respect in the performance, observance
or fulfillment of any of the
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obligations, covenants or conditions contained in any material agreement or
instrument to which it is a party.
SECTION 2.12 TITLE TO PROPERTIES. Except as set forth on Schedule
2.12 hereto, the Company and each of its Subsidiaries owns its properties and
assets free and clear of mortgages, pledges, security interests, liens, charges
and other encumbrances.
SECTION 2.13 COMPLIANCE WITH LAWS. ETC. (a) Each of the Company and
its Subsidiaries has all material governmental licenses, franchises and permits
for the conduct of its business as currently conducted (collectively,
"Governmental Permits").
(b) The business of the Company and each of its Subsidiaries is
being conducted in compliance with all applicable laws, ordinances, rules and
regulations of all governmental authorities relating to their respective
properties or applicable to their respective businesses, including without
limitation the terms of all Governmental Permits and federal securities laws,
other than minor non-compliance that can be cured at nominal cost without
adversely affecting the business of the Company or any Subsidiary as it is
currently conducted. Neither the Company nor any Subsidiary has received any
notice of any alleged violation of any of the foregoing, nor is the Company
aware of any basis for any such allegation.
SECTION 2.14 AFFILIATED TRANSACTIONS. Except as contemplated by this
Agreement, as set forth on Schedule 2.14 hereto or as disclosed to and approved
by the Board of Directors of the Company, to the knowledge of the Company, no
officer, director or stockholder of the Company or any person related by blood
or marriage to any such person or any entity in which any such person owns any
beneficial interest, is a party to any agreement, contract, commitment or
transaction with the Company or has any material interest in any material
property used by the Company.
SECTION 2.15 BROKERS' OR FINDERS' FEES. Except as set forth on
Schedule 2.15, all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by the Company with the Purchasers,
without the intervention of any person on behalf of the Company in such a manner
to give rise to any claim by any person for a finders' fee, brokerage commission
or similar payment.
SECTION 2.16 DISCLOSURE. Neither this Agreement nor the Schedules
and Exhibits attached hereto contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained herein and therein, in the light of circumstances under which made,
not misleading.
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III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser represents and warrants to the Company, severally and
not jointly, as follows:
SECTION 3.01 AUTHORIZATION. The execution, delivery and performance
by such Purchaser of this Agreement, the Amended and Restated Stockholders
Agreement and the Registration Rights Agreement Amendment, if any, and the
purchase and receipt by such Purchaser of the Securities being purchased by it
hereunder have been duly authorized by all requisite action on the part of such
Purchaser, and will not violate any provision of law, any order of any court or
other agency of government applicable to such Purchaser, or any provision of
any indenture, agreement or other instrument by which such Purchaser or any of
such Purchaser's properties or assets are bound, or conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any such indenture, agreement or other instrument.
SECTION 3.02 VALIDITY. This Agreement has been duly executed and
delivered by such Purchaser and constitutes the legal, valid and binding
obligation of such Purchaser, enforceable against such Purchaser in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws from time to time in effect affecting the
enforcement of creditors' rights generally and to general equity principles. The
Amended and Restated Stockholders Agreement and the Registration Rights
Agreement Amendment, when executed and delivered by such Purchaser in accordance
with this Agreement, and when executed and delivered by the other parties
thereto, will constitute the legal, valid and binding obligation of such
Purchaser, enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws from time to
time in effect affecting the enforcement of creditors' rights generally and to
general equity principles.
SECTION 3.03 INVESTMENT REPRESENTATIONS. (a) Such Purchaser is
acquiring the Securities for its own account, for investment, and not with a
view toward the resale or distribution thereof in violation of applicable law.
(b) Such Purchaser understands that it must bear the economic risk
of its investment for an indefinite period of time because the Securities are
not registered under the Securities Act or any applicable state securities laws,
and may not be resold unless subsequently registered under the Securities Act
and such other laws or unless an exemption from such registration is available.
Such Purchaser also understands that, except as provided in the Amended and
Restated Registration Rights Agreement dated as of April 30, 1998 among the
Company and the several other parties named therein, as amended (the "Amended
and Restated Registration Rights Agreement"), it is not contemplated that any
registration will be made under the Securities Act or that the Company will take
steps which will make the provisions of Rule 144
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under the Securities Act available to permit resale of the Securities Such
Purchaser will not pledge, transfer, conveyor otherwise dispose of any of the
Securities, except in a transaction that is the subject of either (x) an
effective registration statement under the Securities Act and any applicable
state securities laws, or (y) an opinion of counsel to the effect that such
registration is not required (which opinion and counsel shall be reasonably
satisfactory to the Company, it being agreed that Reboul, MacMurray, Xxxxxx,
Xxxxxxx & Kristol shall be satisfactory, and may be relied on by the Company in
making such determination), it being intended that the agreements with respect
to the Securities contained in this sentence shall be construed consistently
with the provisions relating to the same subject matter contained in the Amended
and Restated Registration Rights Agreement.
(c) Such Purchaser is able to fend for itself in the transactions
contemplated by this Agreement and has the ability to bear the economic risks of
its investment in the Securities being purchased by it for an indefinite period
of time. Such Purchaser has had the opportunity to ask questions of, and receive
answers from, officers of the Company with respect to the business and financial
condition of the Company and the terms and conditions of the offering of the
Securities and to obtain additional information necessary to verify such
information or can acquire it without unreasonable effort or expense.
(d) Such Purchaser has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
its investment in the Securities. Such Purchaser (other than the Purchasers set
forth on Schedule 3.03(d) hereto) is an "accredited investor" as such term is
defined in Rule 501 of Regulation D under the Securities Act with respect to its
purchase of the Securities, and that if such Purchaser is a partnership, it has
not been formed solely for the purpose of purchasing the Securities it is
purchasing hereunder (unless each of the partners of such partnership is an
accredited investors).
(e) Such Purchaser, to the extent that such Purchaser is subject to
the Connecticut Uniform Securities Act, is an institutional buyer under
ss.36b-21(b)(8) thereto.
SECTION 3.04 GOVERNMENTAL APPROVALS. 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 by such Purchaser
for the valid execution, delivery and performance of this Agreement, the Amended
and Restated Stockholders Agreement and the Registration Rights Agreement
Amendment, other than, if applicable, compliance with the requirements of the
HSR Act.
SECTION 3.05 BROKERS' OR FINDERS' FEES. Except as set forth on
Schedule 3.05, all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by the Purchasers with the Company,
without the intervention of any person on behalf of the Purchasers in such a
manner as to give rise to any claim by any person for a finders' fee, brokerage
commission or similar payment.
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IV
CONDITIONS PRECEDENT
SECTION 4.01 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
PURCHASERS. The obligations of each Purchaser hereunder are, at its option,
subject to the satisfaction, on or before the Closing Date, of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties of the Company contained in this Agreement shall
be true and correct in all material respects on the Closing Date, with the same
force and effect as though such representations and warranties had been made on
and as of such date, and the Company shall have certified to such effect to the
Purchasers in writing.
(b) PERFORMANCE. The Company shall have performed and complied with
all agreements and conditions contained herein required to be performed or
complied with by it prior to or on the Closing Date, and the Company shall have
certified to such effect to the Purchasers in writing.
(c) ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and other
proceedings to be taken by the Company and all waivers and consents to be
obtained by the Company in connection with the transactions contemplated hereby
shall have been taken or obtained by the Company and all documents incident
thereto shall be satisfactory in form and substance to such Purchaser and its
counsel.
(d) LEGAL ACTIONS OR PROCEEDINGS. No legal action or proceeding
shall have been instituted or threatened seeking to restrain, prohibit,
invalidate or otherwise affect the consummation of the transactions contemplated
hereby.
(e) AMENDED AND RESTATED STOCKHOLDERS AGREEMENT AND REGISTRATION
RIGHTS AGREEMENT AMENDMENT. Each of the Amended and Restated Stockholders
Agreement and the Registration Rights Agreement Amendment shall have been
executed and delivered by the Company and a sufficient number of parties to
effect each such Agreement and Amendment.
(f) CERTIFICATE OF AMENDMENT. The Certificate of Amendment to the
Certificate of Incorporation of the Company substantially in the form of Exhibit
E hereto shall have been duly adopted and shall have been duly filed with the
Secretary of State of the State of Delaware and become legally effective.
(g) OPINION OF COUNSEL. The Purchasers shall have received an
opinion of Nossaman, Guthner, Xxxx & Xxxxxxx, LLP, in form and substance
reasonably satisfactory to the Purchasers and their counsel.
10
(h) SUPPORTING DOCUMENTS. WCAS VII (on behalf of the Purchases and
its counsel shall have received copies of the following supporting documents:
(i)(x) copies of the Certificate of Incorporation of the Company,
and all amendments thereto, certified as of a recent date by the Secretary
of State of the State of Delaware, and (y) 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 a Assistant Secretary of the
Company dated the Closing Date and certifying (w) that attached thereto is
true and complete copy of the By-laws of the Company as in effect on the
date of such certification; (x) 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 Amendment, the Amended and
Restated Stockholders Agreement, the Note and the issuance, sale and
delivery of the Securities, and that all such resolutions are still in
full force and effect and are all the resolutions adopted in connection
with the transactions contemplated hereby and thereby; (y) that the
Certificate of Incorporation of the Company has not been amended since the
date of the last amendment referred to in the certificate delivered
pursuant to clause (i)(x) above; and (z) as to the incumbency and specimen
signature of each officer of the Company executing this Agreement, the
Registration Rights Agreement Amendment, the Amended and Restated
Stockholders Agreement, the Note and the stock certificates representing
the Shares and any certificate or instrument furnished pursuant hereto,
and a certification by another officer of the Company as to the incumbency
and signature of the officer signing the certificate referred to in this
paragraph (ii); and
(iii) such additional supporting documents and other information
with respect to the operations and affairs of the Company as the
Purchasers of their counsel may reasonably request
All such documents shall be satisfactory in form and substance to
the Purchasers and their counsel.
(i) CONSENTS; HSR ACT WAITING PERIOD. The Company shall have
obtained all consents required to be obtained pursuant to Section 5.05 hereof.
Without limiting the generality of the foregoing, all applicable waiting periods
under the HSR Act with respect to the transactions contemplated hereby shall
have expired or been terminated.
SECTION 4.02 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company hereunder are, at its option, subject to the
satisfaction, on or before the Closing Date of the following conditions:
11
(a) REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties of the Purchasers contained in this Agreement
shall be true and correct in all material respects on the Closing Date, with the
same effect as though such representations and warranties had been made on and
as of such date.
(b) PERFORMANCE. The Purchasers shall have performed and complied
with all agreements and conditions contained herein required to be performed or
complied with by them prior to or on the Closing Date.
(c) ALL PROCEEDINGS TO BE SATISFACTORY. All proceedings to be taken
by the Purchasers and any waivers and consents to be obtained by the Purchasers
in connection with the transactions contemplated hereby shall have been taken or
obtained by the Purchasers and all documents incident thereto shall be
satisfactory in form and substance to the Company and its counsel.
(d) LEGAL ACTIONS OR PROCEEDINGS. No legal action or proceeding
shall have been instituted or threatened seeking to restrain, prohibit,
invalidate or otherwise affect the consummation of the transactions contemplated
hereby.
(e) AMENDED AND RESTATED STOCKHOLDERS AGREEMENT, REGISTRATION RIGHTS
AGREEMENT AMENDMENT. Each of the Amended and Restated Stockholders Agreement and
the Registration Rights Agreement Amendment shall have been executed and
delivered by a sufficient number of parties (other than the Company) to effect
each such Agreement and Amendment.
V
COVENANTS
SECTION 5.01 FINANCIAL STATEMENTS, REPORTS, ETC.
The Company shall furnish to each of WCAS VII and FFT Partners,
prior to the consummation of the Company's IPO and for so long as WCAS VII or
FFT Partners, as applicable, shall hold at least 25% of the Securities (or
securities into which such Securities are converted, exchanged or reclassified)
purchased by WCAS VII or FFT Partners hereunder:
(a) within 90 days after the end of each fiscal year of the Company,
a consolidated balance sheet of the Company as of the end of such fiscal
year and the related consolidated statements of operations and retained
earnings, changes in stockholders' equity and cash flows of the Company
for the fiscal year then ended, together with supporting notes thereto,
certified in accordance with generally accepted accounting principles,
without qualification as to scope of audit, by a firm of independent
public accountants of recognized national standing selected by the
Company;
12
(b) within 30 days after the end of each month in each fiscal year
(other than the last month in each fiscal year), a consolidated balance
sheet of the Company and the related consolidated statement of operations
and retained earnings, unaudited but certified by the principal financial
officer of the Company, such balance sheets to be as of the end of such
month and such statements of operations and retained earnings 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;
(c) within 30 days prior to the beginning of each fiscal year of the
Company (and with respect to any revision thereof, promptly after such
revision has been prepared), a proposed annual operating budget for the
Company, including projected monthly income statements, cash flow
statements during such fiscal year and a projected consolidated balance
sheet as of the end of such fiscal year, and each monthly financial
statement furnished pursuant to (b) above shall reflect variances from
such operating budget, as the same may from time to time be revised; and
(d) promptly upon filing, copies of all registration statements,
prospectuses, periodic reports and other documents filed by the Company or
any Subsidiary with the Securities and Exchange Commission.
SECTION 5.02 RIGHTS OF INSPECTION. The Company shall, and shall
cause its Subsidiaries, officers, directors, employees, representatives,
advisors and agents to, afford, from the date hereof, the representatives,
advisors and agents of WCAS VII (on behalf of the Purchasers) complete access
at all reasonable times during normal business hours to its officers, employees,
agents, properties, books, records and workpapers, and shall furnish WCAS VII
all financial, operating and other information and data that WCAS VII may
reasonably request through such representatives, advisors or agents. At the
request of WCAS VII, the Company shall promptly furnish to the Purchasers a copy
of all material written correspondence, filings communications (or memoranda
setting forth the substance thereof) between the Company or any of its officers,
employees, representatives, advisors or agents and any governmental entity with
respect to the obtaining of any waivers, consent or approvals and the making of
any registrations or filings that are necessary to the transactions contemplated
by this Agreement. The Purchasers agree to keep confidential any confidential
business information that may be provided to them by the Company pursuant to
this Agreement, unless disclosure is required by law as advised by counsel.
SECTION 5.03 NOTICE OF CERTAIN EVENTS. The Company shall give WCAS
VII and FFT Partners prompt notice of (i) the occurrence, or failure to occur,
of any event that the Company believes would be likely to (x) cause any of the
representations or warranties of the Company contained in this Agreement to be
untrue or inaccurate in any material respect at any time from the date hereof or
(y) cause any covenant, condition or agreement contained in this Agreement not
to be complied with or satisfied in any material respect, (ii) any failure of
the Company, or any officer, director, employee or agent thereof, to comply in
any material respect
13
with or satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by it hereunder, (iii) any event of default under
any agreement with respect to indebtedness for borrowed money or a purchase
money obligation, and any event which, upon notice or lapse of time or both,
would constitute such an event of default, that would permit the holder of such
indebtedness or obligation to accelerate the maturity thereof, (iv) any claim,
action, suit or proceeding at law or in equity or by or before any governmental
instrumentality or agency which, if adversely determined, would materially
impair the ability of the Company to carry on its business substantially as now
or then conducted, and which, in the case of each of the items set forth in
clauses (i) through (iv) above, would be likely to have material adverse effect
on the properties, assets, condition (financial or other), prospects, operating
results or business of the Company and its Subsidiaries taken as a whole.
SECTION 5.04 USE OF PROCEEDS. The Company shall use the proceeds
from the sale of the Securities hereunder for the acquisition of certain
domestic or international surgical centers or hospitals (or assets relating
thereto) and for general corporate or other purposes approved by WCAS VII.
SECTION 5.05 CONSENTS AND APPROVALS. Prior to the Closing Date, the
Company shall promptly apply for or otherwise seek and use its best efforts to
obtain all authorizations, consents, waivers and approvals (whether by or from
any person, entity, court or governmental agency or authority) as may be
required in connection with the consummation of this Agreement and the
transactions contemplated hereby. In addition, the Company shall pay any filing
fees and expenses relating to compliance with the HSR Act in connection with any
transaction to which the Company is a party, regardless of who may be deemed to
be the "ultimate parent" of the Company (as such term is defined in the HSR
Act).
SECTION 5.06 COMPLIANCE WITH LAWS. The Company shall comply, and
shall cause each of its Subsidiaries to comply, with all applicable laws, rules,
regulations and orders, the noncompliance with which could have a material
adverse effect on the properties, assets, condition (financial or other),
prospects, operating results or business of the Company and its Subsidiaries
taken as a whole.
SECTION 5.07 PREEMPTIVE RIGHTS. (a) Until such time as the Company
has consummated an IPO, the Company hereby grants to each of the Purchasers and
Xxxxxx Xxxxx (collectively, the "Original Investors") the right to purchase such
Original Investor's Proportionate Percentage (as hereinafter defined) of any
future Eligible Offering (as hereinafter defined). For the purposes of this
Section 5.07 , the following terms shall have the meanings set forth below:
"PROPORTIONATE PERCENTAGE" means, with respect to such
Original Investor as of any date, the result (expressed as
percentage) obtained by dividing (i) the number of shares of Class A
Common Stock and Common Stock owned by such Original Investor as of
such date (treating, for purposes of such calculation, each share of
Series C Preferred Stock as the number of shares of Class A Common
Stock issuable upon conversion
14
thereof) by (ii) the total number of shares of Class A Common Stock
and Common Stock outstanding as of such date (treating, for purposes
of such calculation, each share of Series C Preferred Stock as the
number of shares of Class A Common Stock issuable upon conversion
thereof).
"ELIGIBLE OFFERING" means an offer by the Company to sell to
investors (including any of the Original Investors) for cash, shares
of capital stock of the Company, or any security convertible into or
exchangeable for, or carrying rights or options to purchase, capital
stock of the Company, other than an offering of securities by the
Company:
(i) to its full-time employees, and/or officers and/or
directors and/or consultants and/or advisors of options to
purchase shares of Common Stock in connection with or pursuant
to the Company's Stock Option Plan as in effect from time to
time;
(ii) in connection with the conversion or exercise of
outstanding securities of the Company;
(iii) in connection with any merger of, or acquisition
by, the Company; or
(iv) in an underwritten public offering of shares of
Common Stock registered under the Securities Act.
(b) The Company shall, before issuing any securities pursuant
to an Eligible Offering, give written notice thereof to each of the Original
Investors. Such notice shall specify the security or securities the Company
proposes to issue and the consideration that the Company intends to receive
therefor. For a period often (10) days following the date of such notice, each
of the Original Investors shall be entitled, by written notice to the Company,
to elect to purchase all or any part of such Original Investor's Proportionate
Percentage of the securities being sold in the Eligible Offering; PROVIDED,
HOWEVER, that if two or more securities shall be proposed to be sold as a "unit"
in an Eligible Offering, any such election must relate to such unit of
securities. In the event that elections pursuant to this Section 5.07 shall not
be made with respect to any securities included in an Eligible Offering within
such ten (10) day period, then the Company may issue such securities to
investors, but only for a consideration payable in cash not less than, and
otherwise on no more favorable terms to the investors than, that set forth in
the Company's notice and only within 180 days after the end of such ten (10) day
period. In the event that any such offer is accepted by one or more Original
Investors, on a mutually agreeable date not less than ten (10) business days
following such acceptance, the Company shall sell to such Original Investors and
such Original Investors shall purchase from the Company, for the consideration
and on the terms set forth in the notice as aforesaid, the securities that such
Original Investors shall have elected to purchase.
15
SECTION 5.08 MANAGEMENT FEE. At no time shall WCAS VII (or its
partners) charge the Company for management or similar fees relating to its
investment in the Company.
VI
MISCELLANEOUS
SECTION 6.01 EXPENSES. ETC. The Company shall pay its own expenses.
All fees and expenses of WCAS VII incident to the negotiation, preparation and
execution of this Agreement, including the fees and expenses of counsel,
accountants or other advisors (i) shall be paid by the Company in the event that
such transactions are consummated and (ii) shall be borne by the party incurring
such expense in the event such transactions are not consummated. Each party
hereto will indemnify and hold harmless the others against and in respect of any
claim for brokerage or other commissions relative to this Agreement or to the
transactions contemplated hereby, made as a result of any agreements,
arrangements or understandings made or claimed to have been made by such party
with any third party.
SECTION 6.02 SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the issuance, sale and delivery of the Securities
pursuant hereto and all statements contained in any certificate or other
instrument delivered by the Company hereunder shall be deemed to constitute
representations and warranties made by the Company.
SECTION 6.03 PARTIES IN INTEREST. All covenants and agreements
contained in this Agreement by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
parties hereto whether so expressed or not.
SECTION 6.04 NOTICES. Any notice or other communications required or
permitted hereunder shall be deemed to be sufficient if contained in a written
instrument delivered in person or by overnight courier or duly sent by first
class certified mail, postage prepaid, or by facsimile addressed to such party
at the address or facsimile number set forth below:
if to the Company, to:
United Surgical Partners International, Inc.
00000 Xxxxxxx Xxxx Xxxxx 000 Xxxxx
Xxxxxx, Xxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxx Xxxxx
16
with a copy to:
Nossaman, Guthner, Xxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Facsimile: 000-000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
if to any Purchaser, to such Purchaser at the address appearing on
Annex I hereto;
or, in any case, at such other address or addresses as shall have been furnished
in writing by such party to the other parties hereto. All such notices,
requests, consents and other communications shall be deemed to have been
received (a) in the case of personal or courier delivery, on the date of such
delivery, (b) in the case of mailing, on the fifth business day following the
date of such mailing and (c) in the case of facsimile, when received.
SECTION 6.05 WAIVER OF PRIOR PREEMPTIVE RIGHTS. Each of the
Purchasers and Xxxxxx Xxxxx hereby (i) waive their respective rights to purchase
a proportionate percentage of the Shares as set forth in Section 5.07 of the
Securities Purchase Agreement dated Apri1 30, 1998 (the "Apri1 1998 Agreement")
among the Company, WCAS VII and the several other parties named therein and
Section 5.07 of the Securities Purchase Agreement dated October 26, 1998 (the
"October 1998 Agreement") among the Company, WCAS VII, FFT Partners and the
several other parties named therein and (ii) agree that Section 5.07 of this
Agreement shall supercede Section 5.07 of each of the April 1998 Agreement and
October 1998 Agreement in all respects.
SECTION 6.06 ENTIRE AGREEMENT; MODIFICATIONS. This Agreement
(including the Exhibits, Annexes and Schedules hereto) constitutes the entire
agreement of the parties with respect to the subject matter hereof and may not
be amended or modified nor any provisions waived except in a writing signed by
the party to be charged.
SECTION 6.07 ASSIGNMENT. This Agreement may not be assigned by the
Company or the Purchasers without the prior written consent of the Company and
each of the Purchasers.
SECTION 6.08 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but alJ of which
together shall constitute one and the same instrument.
SECTION 6.09 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
17
IN WITNESS WHEREOF, the Company and the Purchasers have executed
this Agreement as of the day and year first above written.
UNITED SURGICAL PARTNERS
INTERNATIONAL, INC.
By /s/ XXXXXX XXXXX
Xxxxxx Xxxxx
Chief Executive Officer
WCAS PURCHASERS:
WELSH, CARSON, XXXXXXXX
& XXXXX VII, L.P .
By WCAS VII Partners, L.L.C.
General Partner
By /s/ XXXXXXXX X. RATHER
Xxxxxxxx X. Rather
General Partner
WCAS CAPITAL PARTNERS III, L.P.
By WCAS CP III Associates, L.L.C.
General Partner
By /s/ XXXXXXXX X. RATHER
Xxxxxxxx X. Rather
General Partner
WCAS HEALTHCARE PARTNERS, L.P.
By WCAS HC Partners
General Partner
By /s/ XXXXXXXX X. RATHER
Xxxxxxxx X. Rather
Attorney-in-Fact
Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxx
Xxxxx XxxXxxxx
Xxxxxxx X. Xxxxxx
D. Xxxxx Xxxxxxx
Xxxxxx X. XxXxxxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxxx X. xxXxxxxx
Xxxx X. Xxxxxxx
Xxxxxx Xxxxx
Xxxx Xxxxxxx
/s/ XXXXXXXX X. RATHER
By Xxxxxxxx X. Rather
Attorney-in-Fact
/s/ XXXXXX XXXXXX
Xxxxxx Xxxxxx
/s/ XXXXXXXX RATHER
Xxxxxxxx Rather
FFT PARTNERS I, L.P.
By Xxxxxx Xxxxxxx Xxxxxxxx & Co., LLC
General Partner
By /s/ XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title: General Partner
FFT EXECUTIVE PARTNERS I, L.P.
By Xxxxxx Xxxxxxx Xxxxxxxx & Co., LLC
General Partner
By /s/ XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title: General Partner
Acknowledge and Agreed
as to Section 6.05
/s/ XXXXXX XXXXX
Xxxxxx Xxxxx
