SALE PARTICIPATION AGREEMENT
Exhibit 10.13
November
17, 2006
To: The Person whose name is
set forth on the signature page hereof
set forth on the signature page hereof
Dear Sir or Madam:
You have entered into an Exchange and Purchase Agreement with Hercules Holding II, LLC, a
Delaware limited liability company and the parent entity of the Company (“Hercules
Holding”), and/or a Management Stockholder’s Agreement, dated as of the date hereof, between
HCA Inc., a Delaware corporation (the “Company”), and you (the “Stockholder’s
Agreement”) relating to (i) Rollover Stock (as defined in the Stockholder’s Agreement); (ii)
Rollover Options (as defined in the Stockholder’s Agreement); (iii) the purchase by you of
Purchased Stock (as defined in the Stockholder’s Agreement); and/or (iv) the grant by the Company
to you of new options (together with the Rollover Options, “Options”) to purchase shares of
common stock, par value $0.01 per share, of the Company (“Common Stock”). The undersigned,
Xxxx Capital Fund IX, L.P., KKR Millennium Fund L.P., KKR 2006 Fund L.P. and ML Global Private
Equity Fund, L.P. (each, an “Investor” and, collectively, the “Investors”), who
each hold interests in Hercules Holding, hereby agree with you as follows, effective as of the
Closing Date (as defined in the Stockholder’s Agreement):
1. (a) In the event that at any time on or after the Closing Date any of the Investors
(together with any of their respective affiliates, to the extent provided for in Paragraph 9
hereof, the “Selling Investors”) proposes to sell, directly or indirectly, for cash or any
other consideration any shares of Common Stock owned, directly or indirectly, by it, in any
transaction other than a Public Offering (as defined in the Stockholder’s Agreement) or a sale,
directly or indirectly, to an affiliate of the Selling Investors, then, unless the Selling
Investors are entitled to and do exercise the drag-along rights pursuant to Paragraph 7 below and
the Drag Transaction is consummated, solely to the extent you are a Senior Management Stockholder
(as defined in the Stockholder’s Agreement) or the provisions hereof are otherwise applicable to
you pursuant to and in accordance with Section 11 of the Stockholder’s Agreement or as a result of
a decision by the Board (as defined in the Stockholder’s Agreement), after consultation with the
Chief Executive Officer of the Company, to extend the rights under this Section 1 to you, the
Selling Investors will notify you or your Management Stockholder’s Estate or Management
Stockholder’s Trust (as such terms are defined in the Stockholder’s Agreement, and collectively
with you, the “Management Stockholder Entities”), as the case may be, in writing (a
“Notice”) of such proposed sale (a “Proposed Sale”) specifying the principal terms
and conditions of the Proposed Sale (the “Material Terms”) including (A) the amount of
Common Stock to be included in the Proposed Sale, (B) the percentage of the outstanding Common
Stock at the time the Notice is given that is represented by the number of shares to be included in
the Proposed Sale, (C) the price per share of Common Stock subject to the Proposed Sale, including
a description of any pricing formulae and of any non-cash consideration sufficiently detailed to
permit valuation thereof, (D) the Tag Along Sale Percentage of the initial Selling Investor and
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(E) the name and address of the Person (as defined in the Stockholder’s Agreement) to whom the Offered Stock is
proposed to be issued.
(b) If, within 10 business days after the delivery of Notice under Section 1(a), the Selling
Investors receive from the Management Stockholder Entities a written request (a “Request”)
to include in the Proposed Sale an amount of Common Stock held by the Management Stockholder
Entities that does not exceed the Tag Along Sale Percentage multiplied by the total number of
shares of Common Stock held by the Management Stockholder Entities in the aggregate (which Request
shall be irrevocable except (a) as set forth in clauses (c) and (d) of this Section 1 below or (b)
if otherwise mutually agreed to in writing by the Management Stockholder Entities and the Selling
Investor(s)), the Common Stock held by you will be so included to the extent and as otherwise
provided herein; provided that only one Request, which shall be executed by the Management
Stockholder Entities, may be delivered with respect to any Proposed Sale for Common Stock held by
the Management Stockholder Entities. Promptly after the execution of the Sale Agreement, the
Selling Investors will furnish the Management Stockholder Entities with a copy of the Sale
Agreement, if any. For purposes of this Section 1(b), the “Tag Along Sale Percentage”
shall mean the fraction, expressed as a percentage, determined by dividing the number of shares of
Common Stock to be purchased from the initial Selling Investor by the total number of shares of
Common Stock owned directly or indirectly by such initial Selling Investor.
(c) Notwithstanding anything to the contrary contained in this Agreement, if any of the
economic terms of the Proposed Sale change, including without limitation if the per share price
will be less than the per share price disclosed in the Notice, or any of the other principal terms
or conditions will be materially less favorable to the selling Management Stockholder Entities than
those described in the Notice, the prospective Selling Investors will provide written notice
thereof to each Management Stockholder Entity who has made a Request and each such Management
Stockholder Entity will then be given an opportunity to withdraw the offer contained in such
holder’s Request (by providing prompt (and in any event within five (5) business days; provided
that, notwithstanding the foregoing, if the proposed closing with respect to the Proposed Sale is
to occur within five (5) business days or less, no later than three (3) business days prior to such
closing) written notice of such withdrawal to the Selling Investors), whereupon such withdrawing
Management Stockholder Entity will be released from all obligations thereunder.
(d) If the Selling Investors do not complete the Proposed Sale by the end of the 180th day
following the date of the effectiveness of the Notice, each selling Management Stockholder Entity
may elect to be released from all obligations under the applicable Request by notifying the Selling
Investors in writing of its desire to so withdraw. Upon receipt of that withdrawal notice, the
Notice of the relevant Management Stockholder Entities shall be null and void, and it will then be
necessary for a separate Notice to be furnished, and the terms and provisions of clauses (a) and
(b) of this Section 1 separately complied with, in order to consummate such Proposed Sale pursuant
to this Section 1, unless the failure to complete such proposed sale resulted from any failure by
any selling Management Stockholder Entity to comply with the terms of this Section 1.
2. (a) The number of shares of Common Stock which the Management Stockholder Entities will be
permitted to include in a Proposed Sale pursuant to a Request will be
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the lesser of (A) the number of shares of Common Stock such Management Stockholder Entities have offered to sell in the Proposed
Sale as set forth in the Request and (B) the number of shares of Common Stock determined by
multiplying (i) the number of shares of Common Stock to be included in the Proposed Sale by (ii) a
fraction the numerator of which is the number of shares of Common Stock owned by the Management
Stockholder Entities plus all shares of Common Stock which they are then entitled to
acquire under any unexercised portion of Options, to the extent such Option is then exercisable or
would become exercisable as a result of the consummation of the Proposed Sale, and the denominator
of which is the total number of shares of Common Stock owned by the Management Stockholder Entities
and all other Persons participating in such sale as tag-along sellers pursuant to Other Management
Stockholder Agreements (as defined in the Stockholder’s Agreement) or other agreements (all such
participants, together with the Selling Investors, the “Tag Along Sellers”) plus all shares of Common Stock which the
Tag Along Sellers are then entitled to acquire under any unexercised portion of Options, to the
extent such Options are then exercisable or would become exercisable as a result of the
consummation of the Proposed Sale, plus all shares of Common Stock owned by the Selling
Investors (the lesser of (A) or (B), the “Pro Rata Share”).
(b) Any remaining shares of Common Stock subject to the Proposed Sale that would be allocated
to the Tag Along Sellers if each had offered to sell a number of shares equal to the Tag Along Sale
Percentage multiplied by the number of shares of Common Stock held by it shall be allocated to each
Tag Along Seller in an amount up to the excess of (i) the Tag Along Sale Percentage multiplied by
the number of shares of Common Stock held by such Tag Along Seller over (ii) its Pro Rata Share, or
as the Tag Along Sellers and the Selling Investors and any other Persons participating in such sale
may otherwise agree.
3. Except as may otherwise be provided herein, shares of Common Stock subject to a Request
will be included in a Proposed Sale pursuant hereto and in any agreements with purchasers relating
thereto on the same terms and subject to the same conditions applicable to the shares of Common
Stock which the Selling Investors propose to sell (directly or indirectly) in the Proposed Sale
(with appropriate adjustments, as determined in good faith by the Selling Investors, in the event
that the Investors are proposing to transfer interests in Hercules Holding). Such terms and
conditions shall include, without limitation: the sale price; the payment of fees, commissions and
expenses; the provision of, and customary representations and warranties as to, information
reasonably requested by the Selling Investors covering matters regarding the Management Stockholder
Entities’ ownership of shares; and the provision of requisite indemnification; provided
that any indemnification provided by the Management Stockholder Entities shall be pro rata in
proportion with the number of shares of Common Stock to be sold; provided, further,
that no Management Stockholder Entity shall be required to indemnify any Person for an amount, in
the aggregate, in excess of the gross proceeds received in such Proposed Sale. Notwithstanding
anything to the contrary in the foregoing, if the consideration payable for shares of Common Stock
is securities and a Management Stockholder Entity is not able to acquire such securities under
U.S., foreign or state securities laws, such Management Stockholder Entity shall be entitled to
receive an amount in cash equal to the value of any such securities such Person would otherwise be
entitled to receive.
4. Upon delivering a Request, the Management Stockholder Entities will, if requested by the
Selling Investors, execute and deliver a custody agreement and power of attorney in form and
substance reasonably satisfactory to the Selling Investors with respect to the shares of Common
Stock which are to be sold by the Management Stockholder Entities pursuant hereto (a “Custody
Agreement and Power of Attorney”). The Custody Agreement and Power of Attorney will contain
customary provisions and will provide, among other things, that the
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Management Stockholder Entities
will deliver to and deposit in custody with the custodian and attorney-in-fact named therein a
certificate or certificates (if such shares are certificated) representing such shares of Common
Stock (duly endorsed in blank by the registered owner or owners thereof) and irrevocably appoint
said custodian and attorney-in-fact as the Management Stockholder Entities’ agent and
attorney-in-fact with full power and authority to act under the Custody Agreement and Power of
Attorney on the Management Stockholder Entities’ behalf with respect to the matters specified
therein.
5. The Management Stockholder Entities’ right pursuant hereto to participate in a Proposed
Sale shall be contingent on the Management Stockholder Entities’ material compliance with each of
the provisions hereof and the Management Stockholder Entities’ respective willingness to execute
such documents in connection therewith as may be reasonably requested by the Selling Investors.
6. If the consideration to be paid in exchange for shares of Common Stock in a Proposed Sale
pursuant to Section 1 includes any securities, and the receipt thereof by a Selling Investor and
Management Shareholder Entity would require under applicable law (a) the registration or
qualification of such securities or of any Person as a broker or dealer or agent with respect to
such securities or (b) the provision to any selling Management Shareholder Entity of any
information regarding the Company, its subsidiaries, such securities or the issuer thereof that
would not be required to be delivered in an offering solely to a limited number of “accredited
investors” under Regulation D promulgated under the Securities Act of 1933, as amended, and the
rules and regulations in effect thereunder, such Selling Investor and Management Shareholder Entity
shall not, subject to the following sentence, have the right to sell shares of Common Stock in such
proposed sale. In such event, the Selling Investors shall have the right to cause to be paid to
such selling Management Shareholder Entity in lieu thereof, against surrender of the shares of
Common Stock which would have otherwise been sold by such selling Management Shareholder Entity to
the prospective buyer in the proposed sale, an amount in cash equal to the Fair Market Value (as
defined in the Stockholder’s Agreement) of such shares of Common Stock as of the date such
securities would have been issued in exchange for such shares of Common Stock.
7. (a) If any of the Investors (together with their respective affiliates) propose to
transfer, directly or indirectly, a number of shares of Common Stock equal to 50% or more of the
Current Selling Investors Ownership Share Number (such Person, the “Drag-Along Purchaser”),
then if requested by the Investors, the Management Stockholder Entities shall be required to sell a
number of shares of Common Stock equal to the aggregate number of shares of Common Stock held by
the Management Stockholder Entities (including shares of Common Stock underlying exercisable
Options) multiplied by a fraction, the numerator of which is the number of shares of Common Stock
proposed to be sold (directly or indirectly) by the Investors (together with their respective affiliates) and the denominator of which is the Current Selling Investors Ownership
Share Number (such transaction, a “Drag Transaction”).
(b) Shares of Common Stock held by the Management Stockholder Entities included in a Drag
Transaction will be included in any agreements with the Drag-Along Purchaser relating thereto on
the same terms and subject to the same conditions applicable to the shares of Common Stock which
the Investors propose to sell in the Drag Transaction (provided
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that appropriate adjustments, as
determined in good faith by the Investors, shall be made in the event the Investors are proposing
to transfer interests in Hercules Holding). Such terms and conditions shall include, without
limitation: the pro rata reduction of the number of shares of Common Stock to be sold by the
Investors and the Management Stockholder Entities to be included in the Drag Transaction if
required by the Drag-Along Purchaser; the sale price; the payment of fees, commissions and
expenses; the provision of, and representation and warranty as to, information reasonably requested
by the Investors covering matters regarding the Management Stockholder Entities’ ownership of
shares; and the provision of requisite indemnification; provided that any indemnification
provided by the Management Stockholder Entities shall be pro rata in proportion with the number of
shares of Common Stock to be sold; provided, further, that no Management
Stockholder Entity shall be required to indemnify any Person for an amount, in the aggregate, in
excess of the proceeds received in such Proposed Sale.
(c) Your pro rata share of any amount to be paid pursuant to Paragraph 3 or 7(b) shall be
based upon the number of shares of Common Stock intended to be transferred by the Management
Stockholder Entities plus the number of shares of Common Stock you would have the right to acquire
under any unexercised portion of the Option which is then vested or would become vested as a result
of the Proposed Sale or Drag Transaction, assuming that you receive a payment in respect of such
Option.
(d) Notwithstanding anything to the contrary in the foregoing, if the consideration payable
for shares of Common Stock is securities and a Management Stockholder Entity is not able to acquire
such securities under U.S., foreign or state securities laws, such Management Stockholder Entity
shall be entitled to receive an amount in cash equal to the value of any such securities such
Person would otherwise be entitled to receive.
8. For purposes of this Agreement, the “Current Selling Investors Ownership Share
Number” shall mean the sum of (x) the product of (A) the aggregate number of shares of Common
Stock issued and outstanding as of the date of the proposed Drag Transaction, as applicable,
times (B) the Investors HoldCo Ownership Percentage (as defined in the Stockholder’s
Agreement) as of such date (calculated, in the case of a Proposed Sale pursuant to Section 1,
solely with respect to the Selling Investors, and with respect to a Drag Transaction, with respect
to all of the Investors), times (C) the HoldCo Company Ownership Percentage (as defined in the
Stockholder’s Agreement) as of such date and (y) the number of shares of Common Stock owned
directly by the Selling Investors (or all Investors, in the case of a Drag Transaction) and their
respective affiliates as of such date.
9. The obligations of the Selling Investors hereunder shall extend only to the Management
Stockholder Entities and any transferees (“Permitted Transferees”) who (a) are Other
Management Stockholders (as defined in the Stockholder’s Agreement), (b) are party to a
Management Stockholder’s Agreement with the Company and (c) have acquired Common Stock
pursuant to a Permitted Transfer (as defined in the Stockholder’s Agreement), and none of the
Management Stockholder Entities’ successors or assigns, with the exception of any Permitted
Transferee and only with respect to the Common Stock acquired by such Permitted Transferee pursuant
to a Permitted Transfer, shall have any rights pursuant hereto.
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10. If the Investors or any of them transfer, directly or indirectly, any of their interests
in the Company or Hercules Holding to an affiliate of any of the Investors, such affiliate shall
assume the obligations hereunder of the Investors.
11. This Agreement shall terminate and be of no further force and effect on the occurrence of
the earlier of the IPO (as defined in the Stockholder’s Agreement) or a Change in Control.
12. All notices and other communications required or permitted hereunder shall be in writing
and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b)
when sent by confirmed facsimile if sent during normal business hours of the recipient, if not,
then on the next business day, (c) five (5) days after having been sent by registered or certified
mail, return receipt requested, postage prepaid or (d) one (1) business day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with written verification of
receipt. All communications shall be sent to such party’s address as set forth below or at such
other address or to such other person as the party shall have furnished to each other party in
writing in accordance with this provision:
If to the Investors, to them at the following addresses:
Xxxxxxx Xxxxx Global Private Equity
Four World Financial Xxxxxx, Xxxxx 00
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
Four World Financial Xxxxxx, Xxxxx 00
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
and
Xxxx Capital Partners, LLC
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Telecopy: (000) 000-0000
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Telecopy: (000) 000-0000
and
Kohlberg Kravis Xxxxxxx & Co. L.P.
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
with copies to:
Hercules Holding II, LLC
c/o Merrill Xxxxx Global Private Equity
Four World Financial Xxxxxx, Xxxxx 00
Xxx Xxxx, XX 00000
c/o Merrill Xxxxx Global Private Equity
Four World Financial Xxxxxx, Xxxxx 00
Xxx Xxxx, XX 00000
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Attention: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
Telecopy: (000) 000-0000
and
Xxxx Capital Partners, LLC
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Telecopy: (000) 000-0000
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Telecopy: (000) 000-0000
and
Kohlberg Kravis Xxxxxxx & Co. L.P.
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
and
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
If to the Company, to the Company at the following address:
HCA Inc.
Xxx Xxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Telecopy: (000) 000-0000
Xxx Xxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
If to you, to you at the address first set forth above herein;
If to your Management Stockholder’s Estate or Management Stockholder’s Trust, to the address
provided to the Company by such entity.
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13. The laws of the State of Delaware shall govern the interpretation, validity and
performance of the terms of this Agreement. In the event of any controversy among the parties
hereto arising out of, or relating to, this Agreement which cannot be settled amicably by the
parties, such controversy shall be finally, exclusively and conclusively settled by mandatory
arbitration conducted expeditiously in accordance with the American Arbitration Association rules,
by a single independent arbitrator. Such arbitration process shall take place in Nashville,
Tennessee. The decision of the arbitrator shall be final and binding upon all parties hereto and
shall be rendered pursuant to a written decision, which contains a detailed recital of the
arbitrator’s reasoning. Judgment upon the award rendered may be entered in any court having
jurisdiction thereof. Each party shall bear its own legal fees and expenses, unless otherwise
determined by the arbitrator; provided that if the Management Stockholder substantially prevails on
any of his or her substantive legal claims, then the Investors shall reimburse all legal fees and
arbitration fees incurred by the Management Stockholder to arbitrate the dispute. Each party
hereto hereby irrevocably waives any right that it may have had to bring an action in any court,
domestic or foreign, or before any similar domestic or foreign authority with respect to this
Agreement.
14. This Agreement may be executed in counterparts, and by different parties on separate
counterparts, each of which shall be deemed an original, but all such counterparts shall together
constitute one and the same instrument.
15. It is the understanding of the undersigned that you are aware that no Proposed Sale is
contemplated and that such a sale may never occur.
16. This Agreement may be amended by the Investors at any time upon notice to the Management
Stockholder thereof; provided that any amendment (i) that materially disadvantages the
Management Stockholder shall not be effective unless and until the Management Stockholder has
consented thereto in writing and (ii) that disadvantages a class of stockholders that in more than
a de minimus way but less than a material way shall require the consent of a majority of the equity
interests held by such affected class of stockholders.
[Signatures on following pages]
If the foregoing accurately sets forth our agreement, please acknowledge your acceptance
thereof in the space provided below for that purpose.
Very truly yours, | ||||||
XXXX CAPITAL FUND IX, L.P. | ||||||
By: | XXXX CAPITAL PARTNERS IX, L.P., | |||||
its general partner | ||||||
By: | XXXX CAPITAL INVESTORS, LLC, its general partner |
|||||
By: | ||||||
Name: | ||||||
Title: | ||||||
KKR MILLENNIUM FUND, L.P. | ||||||
By: | KKR ASSOCIATES MILLENNIUM L.P., | |||||
its general partner | ||||||
By: | KKR MILLENNIUM GP LLC, | |||||
its general partner | ||||||
By: | ||||||
Name: | ||||||
Title: | ||||||
KKR 2006 FUND L.P. | ||||||
By: | KKR Associates 2006 L.P. | |||||
its General Partner | ||||||
By: | KKR 2006 GP LLC | |||||
its General Partner | ||||||
By: | ||||||
Title: |
[signature page to Sale Participation Agreement]
ML GLOBAL PRIVATE EQUITY FUND, L.P. | ||||||
By: | MLGPE LTD, its General Partner | |||||
By: | ||||||
Name: | ||||||
Title: |
[signature page to Sale Participation Agreement]