EXHIBIT 2
SECOND AMENDMENT
TO
SECURITIES PURCHASE AGREEMENT
SECOND AMENDMENT (this "Second Amendment") dated as of July 13, 2000,
by and among PROMEDCO MANAGEMENT COMPANY, a Delaware corporation (the
"Company"), GS CAPITAL PARTNERS III, L.P., a Delaware limited partnership
("GSCP"), and certain affiliates of GSCP set forth on the signature page of
this Second Amendment (the "GSCP Affiliates", and collectively with GSCP
and including their respective successors and assigns, the "Investors", and
each individually, an "Investor").
WHEREAS, the Company and the Investors previously entered into a
Securities Purchase Agreement, dated as of January 13, 2000, and the First
Amendment to the Securities Purchase Agreement, dated as of May 5, 2000 (as
amended, the "Securities Purchase Agreement"); and
WHEREAS, on June 12, 2000, the Second Closing occurred and the
Investors purchased 265,000 shares of Series A Preferred Stock and Warrants
to purchase 125,000 shares of Series B Preferred Stock; and
WHEREAS, simultaneously with the Second Closing, the Investors
exercised all of the Warrants; and
WHEREAS, the Investors are contemplating transferring shares of Series
A Preferred Stock and Series B Preferred Stock to MTS Investors E, L.P., a
Delaware limited partnership ("MTS"), after the date hereof (the "MTS
Transfer"); and
WHEREAS, the Company and the Investors desire to further amend the
Securities Purchase Agreement to provide MTS with certain rights.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. DEFINED TERMS; INTERPRETATION. Unless otherwise
specifically defined herein, each term used herein which is defined in the
Securities Purchase Agreement has the meaning assigned to such term in the
Securities Purchase Agreement. Each reference to "hereof", "hereunder",
"herein" and "hereby" and each other similar reference and each reference
to "this Agreement" and each other similar reference contained in the
Securities Purchase Agreement shall from and after the effective date of
this Second Amendment refer to the Securities Purchase Agreement as amended
hereby and by the First Amendment to the Securities Purchase Agreement,
except in any instance in the Securities Purchase Agreement where any such
reference relates to the date of the execution of the Securities Purchase
Agreement in which instance such reference shall relate to the Securities
Purchase Agreement without giving effect to this amendment.
SECTION 2. AMENDMENTS. The Securities Purchase Agreement is hereby
amended as follows:
(a) The following definitions are hereby added to Section 1.1:
"GS Preferred Designees" shall have the meaning ascribed thereto
in Section 5.9(b).
"MTS" shall mean MTS Investors E, L.P., a Delaware limited
partnership.
"MTS Designees" shall have the meaning ascribed thereto in
Section 5.9(c).
(b) The definition of "Second Closing Ownership Amount" is hereby
amended and restated as follows:
"Second Closing Ownership Amount" shall mean the number of shares
of Common Stock beneficially owned by the Investors as of the Second
Closing.
(c) Section 2.6(a)(ix) is hereby amended by adding the words "GS"
immediately before the words "Preferred Designees".
(d) Sections 5.9 is hereby amended and restated in its entirety as
follows:
5.9. Board Representation. (a) From January 20, 2000 and for so
long as the Investors and their Affiliates own at least $5,500,000 in
aggregate principal amount of the Notes, GSCP shall have the right to
designate, at all times and from time to time, one director of the Company
(which director shall also serve on the Executive Committee of the Board of
Directors) (individuals designated pursuant to this paragraph, together
with the Initial Noteholder Designee, the "Noteholder Designees"). GSCP
shall cause the Noteholder Designee to resign from the Executive Committee
of the Board of Directors on the Second Closing Termination Date.
(b) From the Second Closing Date and for so long as the Investors
(excluding MTS and its Affiliates) and their Affiliates collectively
beneficially own not less than (i) 85% of the Second Closing Ownership
Amount (as such ownership may be adjusted for stock splits, reverse stock
splits, dividends paid in Common Stock, reclassifications of the Common
Stock, and other similar events), GSCP shall have the right to designate,
at all times and from time to time, three directors of the Company; (ii) 33
1/3% of the Second Closing Ownership Amount (as such ownership may be
adjusted for stock splits, reverse stock splits, dividends paid in Common
Stock, reclassifications of the Common Stock, and other similar events),
GSCP shall have the right to designate, at all times and from time to time,
two directors of the Company; and (iii) 10.0% of the Second Closing
Ownership Amount (as such ownership may be adjusted for stock splits,
reverse stock splits, dividends paid in Common Stock, reclassifications of
the Common Stock, and other similar events), GSCP shall have the right to
designate, at all times and from time to time, one director of the Company
(individuals designated pursuant to this paragraph, the "GS Preferred
Designees"). The initial GS Preferred Designees elected pursuant to
paragraph (d) below and the initial Noteholder Designee elected prior to
the Initial Closing shall be the initial GS Preferred Designees.
(c) From the date of the MTS Transfer and for so long as MTS and
its Affiliates collectively beneficially own not less than 10% of the
Second Closing Ownership Amount (as such ownership may be adjusted for
stock splits, reverse stock splits, dividends paid in Common Stock,
reclassifications of the Common Stock, and other similar events), MTS shall
have the right to designate, at all times and from time to time, one
director of the Company (the individuals designated pursuant to this
paragraph, the "MTS Designee"), and together with the GS Preferred
Designees, the "Preferred Designees", and together with the GS Preferred
Designees and the Noteholder Designee, the "Investor Designees").
(d) Prior to the Second Closing, each of the Company and the
Board of Directors shall take such action as may be necessary (including
seeking any necessary vote or approval of any stockholder of the Company,
taking any action necessary to expand the size of the Board of Directors,
or causing any existing director to resign in order to make room for the
initial GS Preferred Designees) to cause the initial GS Preferred Designees
to be elected to the Board of Directors. Promptly after the MTS Transfer,
if MTS is entitled to designate a director pursuant to paragraph (c) above,
each of the Company and the Board of Directors shall take such action as
may be necessary (including seeking any necessary vote or approval of any
stockholder of the Company, taking any action necessary to expand the size
of the Board of Directors, or causing any existing director to resign in
order to make room for the MTS Designee) to cause the initial MTS Designee
to be elected to the Board of Directors.
(e) GSCP and the Company agree that one GS Preferred Designee
shall have the right to sit on the Executive Committee of the Board of
Directors.
(f) If requested by GSCP, the Company will use its reasonable
best efforts (in accordance with the certificate of incorporation and
by-laws of the Company and the DGCL) to cause the removal any GS Preferred
Designee (in accordance with the certificate of incorporation and by-laws
of the Company and the DGCL). Any vacancy among the GS Preferred Designees
caused by removal or by the death, retirement or resignation of any GS
Preferred Designee shall be filled by a Person designated by GSCP, and the
Company agrees to take any such action as is necessary, in accordance with
the certificate of incorporation and by-laws of the Company and the DGCL,
to cause such designee to be appointed or elected to the Board of
Directors. In the event that the term of any director who at such time is a
GS Preferred Designee is to expire, then in connection with any meeting of
the Company's stockholders at which a successor to such director is to be
elected, the Company shall nominate a GS Preferred Designee designated by
GSCP and shall recommend that stockholders vote in favor of such
individual's election to the Board of Directors in any proxy statement,
information statement or other communication to stockholders issued or
disseminated by the Company. In the event of any vacancy among the GS
Preferred Designees, the Board of Directors shall not take any action not
approved by the remaining GS Preferred Designee(s) (or by GSCP if there be
no remaining GS Preferred Designee) during the period from the time GSCP
informs the Company of a designee to fill any such vacancy to the time such
designee is duly appointed or elected to the Board of Directors. Whenever
the number of directors that GSCP has the right to designate is reduced in
accordance with paragraphs (a) and (b) above, GSCP will cause the
appropriate number of GS Preferred Designee(s) to tender their
resignation(s) from the Board of Directors.
(g) If requested by MTS, the Company will use its reasonable best
efforts (in accordance with the certificate of incorporation and by-laws of
the Company and the DGCL) to cause the removal of the MTS Designee (in
accordance with the certificate of incorporation and by-laws of the Company
and the DGCL). If no MTS Designee is on the Board of Directors due to
removal or by the death, retirement or resignation of the MTS Designee, the
vacancy shall be filled by a Person designated by MTS, and the Company
agrees to take any such action as is necessary, in accordance with the
certificate of incorporation and by-laws of the Company and the DGCL, to
cause such designee to be appointed or elected to the Board of Directors.
In the event that the term of the MTS Designee is to expire, then in
connection with any meeting of the Company's stockholders at which a
successor to the MTS Designee is to be elected, the Company shall nominate
the MTS Designee designated by MTS and shall recommend that stockholders
vote in favor of such individual's election to the Board of Directors in
any proxy statement, information statement or other communication to
stockholders issued or disseminated by the Company. If at any time MTS is
no longer permitted to designate a director pursuant to paragraph (c)
above, MTS will cause the MTS Designee to tender his resignation(s) from
the Board of Directors.
(h) After the date hereof, without the prior written consent of
GSCP, the Board of Directors (i) shall not consist of more than eight
members so long as the Investors and their Affiliates own any Notes and
(ii) shall not consist of more than ten members so long as the Investors
and their Affiliates beneficially own at least 10.0% of Second Closing
Ownership Amount (as such ownership may be adjusted for stock splits,
reverse stock splits, dividends paid in Common Stock, reclassifications of
the Common Stock, and other similar events).
(i) The rights of GSCP set forth in this Section 5.9 are intended
to satisfy the requirement of contractual management rights for purposes of
qualifying GSCP's interests in the Company as venture capital investments
for purposes of the Department of Labor's "plan assets" regulations, and in
the event such rights are not satisfactory for such purpose as to GSCP, the
Company and the Investors shall reasonably cooperate in good faith to agree
upon mutually satisfactory management rights which satisfy such
regulations.
(e) Section 6.2(f) is hereby amended by inserting the words "GS"
immediately prior to the words "Preferred Designees".
SECTION 3. COUNTERPARTS; EFFECTIVENESS. This Second Amendment may be
signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the
same instrument. This Second Amendment shall become effective
simultaneously with the consummation of the MTS Transfer.
SECTION 4. MISCELLANEOUS. Except as expressly set forth in this Second
Amendment, the Securities Purchase Agreement shall otherwise remain
unchanged and in full force and effect and remain binding upon the parties
hereto.
SECTION 5. CONSENT. The Company hereby acknowledges and consent to the
MTS Transfer, and in connection therewith the Company hereby consents,
pursuant to Section 9.5 of the Securities Purchase Agreement, to the
assignment of certain of the Investors' rights and obligations under the
Securities Purchase Agreement such that MTS will, upon consummation of the
MTS Transfer, be an "Investor" under the Securities Purchase Agreement for
all purposes and as such will be entitled to all of the rights and subject
to all of the obligations of an "Investor".
IN WITNESS WHEREOF, the parties hereto have duly executed this Second
Amendment or have caused this Second Amendment to be duly executed by their
respective authorized officers as of the day and year first above written.
PROMEDCO MANAGEMENT COMPANY
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Finaicial Officer
GS CAPITAL PARTNERS III, L.P.
By: GS Advisors III, L.L.C.,
its general partner
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
GS CAPITAL PARTNERS III OFFSHORE, L.P.
By: GS Advisors III, L.L.C.,
its general partner
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
XXXXXXX, XXXXX & CO.
VERWALTUNGS GMBH
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Managing Director
and
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Name: Xxxx X. Xxxxxx
Title: Registered Agent
XXXXX XXXXXX XXXX 0000, X.X.
By: Stone Street 2000, L.L.C.,
its general partner
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
AGREED TO AND ACCEPTED
MTS INVESTORS E, L.P.
By: MTS Investors, L.L.C.,
its general partner
By: /s/ Xxxxxx X. Xxxx
-----------------------------
Name: Xxxxxx X. Xxxx
Title: Partner
