EXHIBIT 4.13
DIRECTOR NOMINATION AGREEMENT
THIS DIRECTOR NOMINATION AGREEMENT (this "Agreement") is made and
entered into as of April 1, 2002, by and among Symbion, Inc., a Tennessee
corporation (the "Company"), on the one hand, and X.X. Xxxxxxx III, L.P., a
Delaware limited partnership ("JHW III"), X.X. Xxxxxxx XX, L.P., a Delaware
limited partnership ("JHW IV"), and Whitney Strategic Partners III, L.P., a
Delaware limited partnership ("WSP" and together with JHW III and JHW IV, the
"Whitney Shareholders"), on the other hand.
RECITALS:
WHEREAS, the Company, Symbion Acquisition Sub, Inc., a Delaware
corporation ("Symbion Sub"), and Physicians Surgical Care, Inc., a Delaware
corporation ("PSC"), are parties to that certain Agreement and Plan of Merger,
dated as of March 7, 2002 (the "Merger Agreement"), which provides, among other
things, for Symbion Sub to merge with and into PSC and for PSC to become a
wholly owned subsidiary of the Company (the "Merger");
WHEREAS, it is a condition to PSC's obligations under the Merger
Agreement that the Company provide the Whitney Shareholders with the right to
designate directors to the Board of Directors of the Company in the manner set
forth herein; and
WHEREAS, as a condition to the willingness of PSC to enter into the
Merger Agreement, PSC has required that the Company agree, and in order to
induce the Whitney Shareholders to approve the Merger Agreement, the Company has
agreed to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants and agreements contained herein, the sufficiency of which is hereby
acknowledged, the parties hereby agree and consent to the following:
1. Right of Whitney to Designate Board Members. Commencing on the date
hereof and continuing until the Termination Date (as hereinafter defined), the
Company (or its Board of Directors or a committee thereof) shall nominate and
recommend to its shareholders, and use its best efforts to elect, all of the
Company's candidates for the Board of Directors of the Company (the "Board of
Directors") at each annual meeting of the shareholders of the Company, or at any
meeting of the shareholders, at which members of the Board of Directors are to
be elected, and at every adjournment or postponement thereof, which such
candidates for the Board of Directors shall include two (2) individuals
designated by the Whitney Shareholders, acting through Whitney & Co. ("Whitney")
or its written designee (each a "Whitney Director" and collectively, the
"Whitney Directors"); provided, that at any such election, the Company shall
have no such obligation if there are already two (2) Whitney Directors on the
Board of Directors whose terms do not expire at such annual or other
shareholders' meeting; provided, further, that upon any mandatory conversion of
the Series A Convertible Preferred Stock, par value $.01 per share, of the
Company ("Series A Preferred Stock") and the Series B Convertible Preferred
Stock, par value $.01 per share, of the Company ("Series B Preferred Stock")
pursuant to Section 7(B)(5)(b) of the Amended and Restated Charter of the
Company as filed with the Secretary of State of the State of Tennessee on April
1, 2002 (the "Charter") and the payment of the
Series A Redemption Payment and the Series B Redemption Payment (each as defined
in the Charter), the number of directors to be designated by the Whitney
Shareholders pursuant to this section shall be decreased from two (2)
individuals to one (1) individual; provided, further, that any designee not
employed by Whitney shall be subject to the Company's prior approval.
2. Vacancy. If at any time during the term of this Agreement, a vacancy
is created on the Board of Directors by reason of incapacity, death, removal or
resignation of a Whitney Director, then the Whitney Shareholders, acting through
Whitney, shall designate an individual whom the Company shall cause to be
elected or designated to fill such vacancy.
3. Resignation of Directors. If requested by the Company, each Whitney
Director will resign from the Board of Directors if the Company is no longer
required to provide a Board seat for such designee pursuant to the terms hereof.
The Company's obligation to nominate and recommend each Whitney Director is
conditioned upon each director's execution and delivery to the Company of a
written agreement to be bound by the terms of this Section 3.
4. Termination. This Agreement shall terminate (the "Termination Date")
in its entirety upon the later to occur of (i) the second anniversary of the
effective time of the Merger or (ii) the first anniversary of the closing of an
initial public offering (the "IPO") pursuant to an effective registration
statement under the Securities Act of 1933, as amended, covering the offer and
sale of the common stock of the Company and providing for the payment of the
Series A Redemption Payment and the Series B Redemption Payment to the holders
of the Series A Preferred Stock of the Company and the Series B Preferred Stock
of the Company respectively (as provided in the Charter); provided, however,
that if on the first anniversary of the IPO, the Whitney Shareholders or any of
their affiliates (as defined in Rule 12b-2 under the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder)
beneficially own in the aggregate shares of common stock or other securities of
the Company convertible into or exchangeable for shares of voting capital stock
of the Company that represent (after giving effect to any adjustments assuming
the conversion or exchange of any such securities) at least 10% of the total
number of shares of common stock outstanding as of such first anniversary date,
the term of this Agreement shall automatically extend and it shall terminate
upon the second anniversary of the IPO.
5. Miscellaneous.
(a) Specific Performance. The parties hereto hereby declare that
it is impossible to measure in money the damages which will accrue to a
party hereto by reason of a failure to perform any of the obligations
under this Agreement and agree that the terms of this Agreement shall be
specifically enforceable. If any party hereto institutes any action or
proceeding to specifically enforce the provisions hereof, any person
against whom such action or proceeding is brought hereby waives the
claim or defense therein that such party has an adequate remedy at law,
and such person shall not offer in any such action or proceeding the
claim or defense that such remedy at law exists.
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(B) GOVERNING LAW. THIS AGREEMENT, AND THE RIGHTS OF THE PARTIES
HERETO, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO THE PROVISIONS THEREOF
RELATING TO CONFLICTS OF LAW.
(c) Amendment. This Agreement may be amended and any term hereof
may be waived only by an instrument in writing signed by (i) the Company
and (ii) each of the Whitney Shareholders.
(d) Severability. If any term or other provision of this
Agreement is held to be invalid or illegal or otherwise incapable of
being enforced by any law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full force and
effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated hereby are
consummated as originally contemplated to the greatest extent possible.
(e) Waivers. No waivers of any breach of this Agreement extended
by any party hereto to any other party shall be construed as a waiver of
any rights or remedies of any other party hereto or with respect to any
subsequent breach.
(f) Attorneys' Fees. In the event that any suit or action is
instituted to enforce any provision in this Agreement, the prevailing
party shall be entitled to all costs and expenses of maintaining such
suit or action, including reasonable attorneys' fees.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which
together shall constitute one and the same agreement.
(h) Entire Agreement; Assignment. This Agreement constitutes the
entire agreement among the parties hereto with respect to the matters
set forth herein, and it supersedes all prior oral or written
agreements, commitments or understandings with respect to the matters
provided for herein. This Agreement shall not be assigned by operation
of law or otherwise.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
COMPANY:
SYMBION, INC.
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
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Name: Xxxxxxx X. Xxxxxxx, Xx.
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Title: President and CEO
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WHITNEY SHAREHOLDERS:
X.X. XXXXXXX III, L.P.
By: X.X. Xxxxxxx Equity Partners III, L.L.C.,
its General Partner
By: /s/ Xxxxxx X. X'Xxxxx
---------------------------------------
Name: Xxxxxx X. X'Xxxxx
----------------------------
Title: Managing Partner
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X.X. XXXXXXX XX, L.P.
By: X.X. Xxxxxxx Equity Partners IV, L.L.C.,
its General Partner
By: /s/ Xxxxxx X. X'Xxxxx
----------------------------------------
Name: Xxxxxx X. X'Xxxxx
----------------------------
Title: Managing Partner
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WHITNEY STRATEGIC PARTNERS III, L.P.
By: X. X. Xxxxxxx Equity Partners III, L.L.C.,
its General Partner
By: /s/ Xxxxxx X. X'Xxxxx
---------------------------------------
Name: Xxxxxx X. X'Xxxxx
-----------------------------
Title: Managing Partner
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