Contract
Exhibit 10.7.1
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1 MANAGEMENT UNIT SUBSCRIPTION AGREEMENT (Preferred Units and Class A Units) THIS MANAGEMENT UNIT SUBSCRIPTION AGREEMENT (this “Agreement”) by and between PG Holdco, LLC, a Delaware limited liability company (the “Company”), and the individual named on the Master Signature Page hereto (“Executive”) is made as of the date set forth on such Master Signature Page. WHEREAS, on the terms and subject to the conditions hereof, Executive desires to subscribe for and acquire from the Company, and the Company desires to issue and provide or sell to Executive, the Company’s Participating Preferred Units (the “Preferred Units”) and Class A Common Units (the “Class A Units” and, together with the Preferred Units, the “Units”), in each case in the amounts set forth on Schedule I included in the Master Signature Page, as hereinafter set forth; and WHEREAS, this Agreement is one of several agreements being entered into by the Company on or after the date set forth on the Master Signature Page with certain persons who are or will be key employees of the Company or one or more Subsidiaries as part of a management equity incentive plan designed to comply with certain exemptions from registration under the Securities Act (as defined below). NOW, THEREFORE, in order to implement the foregoing and in consideration of the mutual representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows: 1. Definitions. 1.1 Activity Date. The term “Activity Date” shall have the meaning set forth in Section 6.2. 1.2 Affiliate. The term “Affiliate” shall have the meaning set forth in the Securityholders Agreement. 1.3 Agreement. The term “Agreement” shall have the meaning set forth in the preface. 1.4 Applicable Federal Rate. The term “Applicable Federal Rate” shall have the meaning set forth in Section 1274 of the Code. 1.5 Board. The term “Board” shall mean the Company’s Management Committee. 1.6 Call Notice. The term “Call Notice” shall have the meaning set forth in Section 4.1(b). 1.7 Call Period. The term “Call Period” shall have the meaning set forth in Section 4.1(a). |
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1.30 PGA Holdings. The term “PGA Holdings” shall mean PGA Holdings, Inc., a Delaware corporation. 1.31 Preferred Units. The term “Preferred Units” shall have the meaning set forth in the preface. 1.32 Public Offering. The term “Public Offering” shall have the meaning set forth in the Securityholders Agreement. 1.33 Purchase Date. The term “Purchase Date” shall have the meaning set forth in Section 2.2. 1.34 Purchase Price. The term “Purchase Price” shall have the meaning set forth in Section 2.1(a). 1.35 Restricted Area. The term “Restricted Area” means (A) the general area of measurement and improvement solutions, (B) data analytics and decision support tools focused on healthcare quality, and (C) products or services related to improvement solutions, educational programs, or taking any actions on, or publishing or reporting results in connection with, the general area of quality and performance, in all cases described in the foregoing clauses (A), (B) and (C), to or about healthcare or related institutions or employees thereof, or medical or other professionals operating in the health care industry, anywhere in North America, Europe, South America or Asia or any other geographic location where the Company or any of its Subsidiaries operates. The term “Restricted Area” also includes (x) consulting services and solutions relating to quality and performance improvement, or (y) any other business that the Company or any of its Subsidiaries is taking or has taken specific actions in furtherance of engaging in (so long as Executive knew or reasonably should have known about such actions). 1.36 Retirement. The term “Retirement” shall mean, with respect to Executive, Executive’s retirement as an employee of the Company or any of its Subsidiaries on or after reaching age 65 after at least three years of employment with the Company or any of its Subsidiaries after the Purchase Date. 1.37 Sale of the Company. The term “Sale of the Company” shall have the meaning set forth in the Securityholders Agreement. 1.38 Securities Act. The term “Securities Act” shall mean the Securities Act of 1933, as amended, and all rules and regulations promulgated thereunder, as the same may be amended from time to time. 1.39 Securityholders Agreement. The term “Securityholders Agreement” shall mean the Amended and Restated Securityholders Agreement dated as of March 9, 2010 by and among the Company and the other parties thereto, as it may be amended or supplemented thereafter from time to time. 1.40 Subsidiary. The term “Subsidiary” shall have the meaning set forth in the Securityholders Agreement. |
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applied pro rata against the proceeds receivable by each member of the Executive Group receiving consideration in such repurchase) and (ii) then, either (x) by the Company’s delivery of a check or wire transfer of immediately available funds or (y) by the Company’s delivery of shares of capital stock of PGA Holdings (“Holdings Shares”) with a fair market value (as determined by the Board) equal to the remainder of the purchase price, if any, against delivery of the certificates or other instruments, if any, representing the Units so purchased, duly endorsed; provided, that if Holdings Shares are issued pursuant to this Section 5, the Company shall be obligated to cause PGA Holdings to immediately repurchase, and Executive shall be obligated to sell, such Holdings Shares for a price equal to the aforementioned fair market value of such Holdings Shares, to be paid by check or wire transfer of immediately available funds. (b) Notwithstanding anything herein to the contrary, (i) to the extent that the purchase of such Units or the payment to the Company or one of its Subsidiaries of a cash dividend or distribution by a Subsidiary of the Company to fund such purchase (together with any other purchases of Units pursuant to Section 4 or pursuant to similar provisions in agreements with other employees of the Company and its Subsidiaries of which the Company has at such time been given or has given notice and together with cash dividends and distributions to fund such other purchases) would result (A) in a violation of any law, statute, rule, regulation, policy, order, writ, injunction, decree or judgment promulgated or entered by any federal, state, local or foreign court or governmental authority applicable to the Company or any of its Subsidiaries or any of its or their property, (B) after giving effect thereto, in a Financing Default, (C) in a violation of the LLC Agreement, or (D) in adverse accounting treatment for the Company, or (ii) if immediately prior to such purchase there exists a Financing Default which prohibits such purchase, dividend or distribution, in each case which prohibits either of the cash payments referred to in clause (ii) of Section 5(a) (either directly or indirectly as a result of the prohibition of a related cash dividend or distribution), the portion of the applicable cash payment so prohibited shall be made, to the extent such payment is not prohibited, by the Company’s delivery of a junior subordinated promissory note (which shall be subordinated and subject in right of payment to the prior payment of any debt outstanding under the Financing Agreements and any modifications, renewals, extensions, replacements and refunding of all such indebtedness) of the Company (a “Junior Subordinated Note”) in a principal amount equal to the balance of the purchase price, which note shall (x) (I) be payable, in the event of a termination of employment referenced in Sections 4.1(a)(i), 4.1(a)(ii) and 4.1(a)(iii)(B), as soon as the conditions set forth in this Section 5(b) no longer exist and (II) accrue interest, compounded annually, payable concurrently with the payment of principal, at the prevailing interest rate under the Company’s senior debt financing documents as in effect on the date of issuance, but in no event shall such interest rate exceed LIBOR plus four percent (4%) or (y) (I) be payable, in the event of a termination of employment referenced in Section 4.1(a)(iii)(A) or if Executive engages in Competitive Activity, on the fifth anniversary of the issuance thereof, and (II) accrue interest, compounded annually, payable concurrently with the payment of principal, at the applicable Applicable Federal Rate on the date of issuance. Notwithstanding the foregoing, if any of the conditions set forth in preceding sentence exists which prohibits such payment by delivery of a Junior Subordinated Note, the portion of the payment so prohibited shall be made, to the extent such payment is not prohibited, by the Company’s delivery of a new class of preferred units of the Company that will be senior to all other classes of units in the Company (“New Preferred Units”) having an aggregate liquidation preference equal to the balance of the purchase price and accruing dividends annually at a yield equivalent to the interest rate that |
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would have been payable on the aforementioned Junior Subordinated Note. Notwithstanding anything herein to the contrary, in the case of a purchase of Units pursuant to Section 4.1(a)(iii)(A) or if Executive engages in Competitive Activity, the Company shall deliver a Junior Subordinated Note in a principal amount equal to all or a portion of the cash purchase price (in lieu of paying such portion of the purchase price in cash), which Junior Subordinated Note shall mature on the fifth anniversary of its issuance and accrue interest, compounded annually, payable concurrently with the payment of principal, at the applicable Applicable Federal Rate on the date of issuance; provided that if any of the conditions set forth in the first sentence of this Section 5(b) exists which prohibits such payment by delivery of a Junior Subordinated Note, the portion of the payment so prohibited shall be made, to the extent such payment is not prohibited, by the Company’s delivery of New Preferred Units having an aggregate liquidation preference equal to the balance of the purchase price and accruing dividends, compounded annually, at a yield equivalent to the interest rate that would have been payable on the aforementioned Junior Subordinated Note. The Company shall use its reasonable efforts (or shall cause PGA Holdings to use its reasonable efforts) to repurchase Units pursuant to Section 4.1(a)(i), Section 4.1(a)(ii) or Section 4.1(a)(iii)(B) with cash and/or to prepay any Junior Subordinated Notes or redeem any New Preferred Units issued in connection with such repurchase of Units. The Company shall have the right set forth in clause (i) of Section 5(a) whether or not the member of the Executive Group selling such Units is an obligor of the Company. Any Junior Subordinated Note (or New Preferred Units issued in lieu thereof) shall be prepaid (or redeemed) upon a Sale of the Company from net cash proceeds, if any, payable to the Company or its unitholders; to the extent that sufficient net cash proceeds are not so payable, the Junior Subordinated Note (or New Preferred Units issued in lieu thereof) shall be cancelled in exchange for such other non-cash consideration received by unitholders in the Sale of the Company having a fair market value equal to the principal of and accrued interest on the note. Any Junior Subordinated Note (or New Preferred Units issued in lieu thereof) also shall be prepaid (or redeemed) upon the consummation of an initial Public Offering from net cash proceeds, if any, payable to the Company or its unitholders; to the extent that sufficient net cash proceeds are not so payable, the Junior Subordinated Note (or New Preferred Units issued in lieu thereof) shall be cancelled in exchange for such other non-cash consideration received by unitholders in the initial Public Offering having a fair market value equal to the principal of and accrued interest on the note. The principal of and accrued interest on any such note may be prepaid (and New Preferred Units issued in lieu thereof may be redeemed) in whole or in part at any time at the option of the Company. If interest (or a cash distribution) is required to be paid on any Junior Subordinated Note (or New Preferred Units issued in lieu thereof) and any of the conditions set forth in the first sentence of this Section 5(b) exists or if any such cash payment would result in adverse accounting treatment for the Company which prohibits the payment of such interest (or distributions) in cash, such interest may be cumulated and accrued until and to the extent that such prohibition no longer exists. 6. Non-Competition/Non-Solicitation. 6.1 Competitive Activity. Executive shall be deemed to have engaged in “Competitive Activity” if, during the period commencing on the date hereof and ending on the date that is eighteen (18) months following the Termination Date, Executive, whether on Executive’s own behalf or on behalf of or in conjunction with any other person or entity, directly or indirectly (A) solicits, or assists in soliciting, the business of any client of the Company or any |
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7.3 Executive’s Employment by the Company. Nothing contained in this Agreement shall be deemed to obligate the Company or any Subsidiary of the Company to employ Executive in any capacity whatsoever or to prohibit or restrict the Company (or any such Subsidiary) from terminating the employment of Executive at any time or for any reason whatsoever, with or without Cause. 7.4 Cooperation. Executive agrees to cooperate with the Company in taking action reasonably necessary to consummate the transactions contemplated by this Agreement. 7.5 Binding Effect. The provisions of this Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns; provided, however, that no transferee shall derive any rights under this Agreement unless and until such transferee has executed and delivered to the Company a valid undertaking and becomes bound by the terms of this Agreement; and provided further that Vestar is a third party beneficiary of this Agreement and shall have the right to enforce the provisions hereof. 7.6 Amendment; Waiver. This Agreement may be amended only by a written instrument signed by the parties hereto. No waiver by any party hereto of any of the provisions hereof shall be effective unless set forth in a writing executed by the party so waiving. 7.7 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware applicable to contracts made and to be performed therein. 7.8 Jurisdiction. Any suit, action or proceeding with respect to this Agreement, or any judgment entered by any court in respect of any thereof, shall be brought in any court of competent jurisdiction in the State of Delaware, and each of the Company and the members of the Executive Group hereby submits to the exclusive jurisdiction of such courts for the purpose of any such suit, action, proceeding or judgment. Each of the members of the Executive Group and the Company hereby irrevocably waives (a) any objections which it may now or hereafter have to the laying of the venue of any suit, action or proceeding arising out of or relating to this Agreement brought in any court of competent jurisdiction in the State of Delaware, (b) any claim that any such suit, action or proceeding brought in any such court has been brought in any inconvenient forum and (c) any right to a jury trial. 7.9 Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when personally delivered, telecopied (with confirmation of receipt), one day after deposit with a reputable overnight delivery service (charges prepaid) and three days after deposit in the U.S. Mail (postage prepaid and return receipt requested) to the address set forth below or such other address as the recipient party has previously delivered notice to the sending party. (a) If to the Company: PG Holdco, LLC c/o Vestar Capital Partners V, L.P. 000 Xxxx Xxxxxx, 00xx Xxxxx |
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067365-0145-10943-Active.12968086.3 * * * * * This Management Unit Subscription Agreement between the Company and the Executive named on the Master Signature Page hereto is dated and executed as of the Purchase Date set forth on such Master Signature Page. * * * * * |