CUSIP NO. 749084 10 9 Page 1 of 11 Pages
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. )[FN1]
Quorum Health Group, Inc.
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(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
749084 10 9
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(CUSIP Number)
Welsh, Carson, Anderson Robert A. Schwed, Esq.
& Stowe VIII, L.P. Reboul, MacMurray, Hewitt,
320 Park Avenue, Suite 2500 Maynard & Kristol
New York, New York 10022 45 Rockefeller Plaza
Attention: Jonathan M. Rather New York, New York 10111
Tel. (212) 893-9500 Tel. (212) 841-5700
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 18, 1999
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d- 1(e), 13d-1(f) or 13d-1(g), check the following
box [ ].
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[FN1]The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page. The information required
on the remainder of this cover page shall not be deemed to be "filed" for the
purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise
subject to the liabilities of that section of the Act but shall be subject to
all other provisions of the Act.
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CUSIP NO. 749084 10 9 Page 2 of 11 Pages
1) Name of Reporting Person Welsh, Carson, Ander-
I.R.S. Identification son & Stowe VIII, L.P.
No. of Above Person
(Entities Only)
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2) Check the Appropriate Box (a) [x]
if a Member of a Group (b) [ ]
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3) SEC Use Only
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4) Source of Funds WC
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5) Check if Disclosure of
Legal Proceedings Is Not Applicable
Required Pursuant to
Items 2(d) or 2(e)
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6) Citizenship or Place
of Organization Delaware
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Number of 7) Sole Voting 17,647,913 shares of
Shares Beneficially Power Common Stock
Owned by Each (including shares
Reporting Person issuable upon
With conversion of
Debentures)
-----------------------------------------------
8) Shared Voting
Power -0-
-----------------------------------------------
9) Sole Disposi- 17,647,913 shares of
tive Power Common Stock
(including shares
issuable upon
conversion of
Debentures)
-----------------------------------------------
10) Shared Dis-
positive Power -0-
-----------------------------------------------
11) Aggregate Amount Beneficially 17,647,913 shares of
Owned by Each Reporting Person Common Stock
(including shares
issuable upon
conversion of
Debentures)
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12) Check if the Aggregate
Amount in Row (11)
Excludes Certain Shares
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CUSIP NO. 749084 10 9 Page 3 of 11 Pages
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13) Percent of Class
Represented by 20.5%
Amount in Row (11)
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14) Type of Reporting
Person PN
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CUSIP NO. 749084 10 9 Page 4 of 11 Pages
1) Name of Reporting Person WCA Management
I.R.S. Identification Corporation
No. of Above Person
(Entities Only)
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2) Check the Appropriate Box (a) [x]
if a Member of a Group (b) [ ]
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3) SEC Use Only
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4) Source of Funds WC
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5) Check if Disclosure of
Legal Proceedings Is Not Applicable
Required Pursuant to
Items 2(d) or 2(e)
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6) Citizenship or Place
of Organization New York
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Number of 7) Sole Voting 75,500 shares of
Shares Beneficially Power Common Stock
Owned by Each
Reporting Person
With
-----------------------------------------------
8) Shared Voting
Power -0-
-----------------------------------------------
9) Sole Disposi- 75,500 shares of
tive Power Common Stock
-----------------------------------------------
10) Shared Dis-
positive Power -0-
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11) Aggregate Amount Beneficially 75,500 shares of
Owned by Each Reporting Person Common Stock
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12) Check if the Aggregate
Amount in Row (11)
Excludes Certain Shares
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13) Percent of Class
Represented by 0.1%
Amount in Row (11)
- --------------------------------------------------------------------------------
14) Type of Reporting
Person CO
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CUSIP NO. 749084 10 9 Page 5 of 11 Pages
SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER.
This statement relates to the Common Stock, $.01 par value (the
"Common Stock"), of Quorum Health Group, Inc., a Delaware corporation ("Quorum"
or the "Issuer"). The principal executive offices of the Issuer are located at
103 Continental Place, Brentwood, Tennessee 37027.
ITEM 2. IDENTITY AND BACKGROUND.
(a) Pursuant to Rules 13d-1(k)(1)-(2) of Regulation 13D-G of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended (the "Act"), the undersigned hereby file this statement on Schedule 13D
on behalf of Welsh, Carson, Anderson & Stowe VIII, L.P., a Delaware limited
partnership ("WCAS VIII"), and WCA Management Corporation, a New York
corporation ("WCA")(together, the "Reporting Persons"). The Reporting Persons
are making this single, joint filing because they may be deemed to constitute a
"group" within the meaning of Section 13(d)(3) of the Act. The agreement among
the Reporting Persons to file as a group (the "Group Agreement") is attached
hereto as Exhibit A.
(b)-(c) WCAS VIII is a Delaware limited partnership. The principal
business of WCAS VIII is that of a private investment partnership. The sole
general partner of WCAS VIII is WCAS VIII Associates L.L.C., a Delaware limited
liability company ("VIII Associates"). The principal business of VIII Associates
is that of acting as the general partner of WCAS VIII. Patrick J. Welsh, Russell
L. Carson, Bruce K. Anderson, Andrew M. Paul, Thomas E. McInerney, Laura
VanBuren, Robert A. Minicucci, Anthony J. deNicola, Paul B. Queally, Lawrence B.
Sorrel, Priscilla A. Newman, Rudolph E. Rupert and Jonathan Rather are the
managing members of VIII Associates. Patrick J. Welsh, Russell L. Carson and
Bruce K. Anderson are also the sole stockholders of WCA. Each individual named
herein is a citizen of the United States. The principal business address of each
entity and individual named herein is 320 Park Avenue, Suite 2500, New York, New
York 10022.
(d) None of the entities or individuals identified in this Item 2 has,
during the last five years, been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors).
(e) None of the entities or individuals identified in
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CUSIP NO. 749084 10 9 Page 6 of 11 Pages
this Item 2 has, during the last five years, been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS AND OTHER CONSIDERATION.
The Reporting Persons purchased $150,000,000 aggregate principal
amount of 6% Convertible Subordinated Debentures of the Issuer (the
"Debentures"), pursuant to a Securities Purchase Agreement dated as of August
18, 1999, among the Issuer, WCAS VIII and WCA (the "Purchase Agreement"). The
Purchase Agreement the Debentures are attached hereto as Exhibits B and C,
respectively, and any descriptions thereof are qualified in their entirety by
reference thereto. Subject to the terms of the Debentures, they are convertible
at any time in full or in part into such number of shares of Common Stock as is
obtained by dividing the principal amount to be converted by the conversion
price of $11.25 per share (subject to adjustment in accordance with the terms of
the Debentures.)
Between August 24 and August 31, 1999, the Reporting Persons purchased
an aggregate 1,510,000 shares of Common Stock, at an average purchase price of
$8.81 per share, in open market transactions. The source of funds for all of the
purchases described herein was the working capital, or funds available for
investment, of the Reporting Persons.
ITEM 4. PURPOSE OF TRANSACTION.
The Reporting Persons have acquired securities of the Issuer for
investment purposes.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
The following information is based on a total of 73,232,106 shares of
Common Stock outstanding as of August 31, 1999, and gives effect to the
conversion of all Debentures held by the entities and individuals named herein.
(a)
WCAS VIII
---------
WCAS VIII owns 17,647,913 shares of Common Stock, or approximately
20.5% of the Common Stock outstanding. VIII
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CUSIP NO. 749084 10 9 Page 7 of 11 Pages
Associates, as the general partner of WCAS VIII, may be deemed to beneficially
own the securities owned by WCAS VIII.
WCA
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WCA owns 75,500 shares of Common Stock, or approximately 0.1% of the
Common Stock outstanding.
MANAGING MEMBERS OF VIII ASSOCIATES AND STOCKHOLDERS OF WCA
(i) Patrick J. Welsh directly beneficially owns 424,261 shares of
Common Stock, and indirectly beneficially owns through The Welsh Family
Foundation 75,000 shares of Common Stock and through trusts for the benefit
of his children 36,000 shares of Common Stock, or, in the aggregate,
535,261 shares of Common Stock or approximately 0.7% of the Common Stock
outstanding.
(ii) Russell L. Carson directly beneficially owns 1,858,143 shares of
Common Stock (including shares issuable upon exercise of stock options that
are presently exercisable or exercisable within 60 days), and indirectly
beneficially owns through Carson Associates, Inc. 2,072 shares of Common
Stock and through trusts for the benefit of his children 3,000 shares of
Common Stock, or, in the aggregate, 1,863,215 shares of Common Stock or
approximately 2.5% of the Common Stock outstanding.
(iii) Bruce K. Anderson owns 1,619,613 shares of Common Stock, or
approximately 2.2% of the Common Stock outstanding.
(iv) Andrew M. Paul directly beneficially owns 115,916 shares of
Common Stock, and indirectly beneficially owns through The Andrew M. Paul
Family Foundation 3,000 shares of Common Stock, or, in the aggregate,
118,916 shares of Common Stock or approximately 0.2% of the Common Stock
outstanding.
(v) Thomas E. McInerney owns 254,024 shares of Common Stock, or
approximately 0.4% of the Common Stock outstanding.
(vi) Laura VanBuren owns 889 shares of Common Stock, or less than 0.1%
of the Common Stock outstanding.
(vii) Robert A. Minicucci owns 75,996, or approximately 0.1% of the
Common Stock outstanding.
(viii) Anthony J. deNicola owns 6,667 shares of Common Stock, or less
than 0.1% of the Common Stock outstanding.
(ix) Paul B. Queally owns 6,667 shares of Common Stock,
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CUSIP NO. 749084 10 9 Page 8 of 11 Pages
or less than 0.1% of the Common Stock outstanding.
(x) Lawrence B. Sorrell owns 8,889 shares of Common Stock, or less
than 0.1% of the Common Stock outstanding.
(xi) Priscilla A. Newman owns 3,111 shares of Common Stock, or less
than 0.1% of the Common Stock outstanding.
(xii) Rudolph E. Rupert owns 1,778 shares of Common Stock, or less
than 0.1% of the Common Stock outstanding.
(xiii) Jonathan M. Rather owns 1,778 shares of Common Stock, or less
than 0.1% of the Common Stock outstanding.
(b) The managing members of VIII Associates and the stockholders of
WCA may be deemed to share the power to vote or direct the voting of and to
dispose or direct the disposition of the securities owned by WCAS VIII and WCA.
Each such person has the sole power to vote or direct the voting of and to
dispose or direct the disposition of only the securities that he or she directly
beneficially owns. Each of the managing members of VIII Associates and
stockholders of WCA disclaims beneficial ownership of all shares of Common Stock
other than the shares he or she owns directly or by virtue of his or her
indirect pro rata interest, as a managing member of VIII Partners and/or as a
stockholder of WCA, in the shares owned by WCAS VIII and/or WCA.
(c) Except as described in this statement, none of the entities or
individuals identified in Item 2 above has effected any transactions in the
Common Stock during the past 60 days.
(d) Except as described in this statement, no person has the power to
direct the receipt of dividends on or the proceeds of sales of, the shares of
Common Stock owned by the Reporting Persons.
(e) Not Applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES
OF THE ISSUER.
WCA purchased the Debentures referred to in Item 3 above on behalf of
certain persons affiliated or associated with the investment firm of Welsh,
Carson, Anderson & Stowe, including the Managing Members of VIII Associates
(collectively, the "WCAS Persons"). Pursuant to the terms of the Purchase
Agreement, WCA is entitled to assign its rights and obligations thereunder to
the WCAS Persons in its sole discretion. On August 31, 1999, all
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CUSIP NO. 749084 10 9 Page 9 of 11 Pages
of the Debentures purchased by WCA were allocated to the WCAS Persons. Upon such
assignment, the WCAS Persons became "Purchasers" under the Purchase Agreement,
although WCA was not released from its liabilities thereunder.
Pursuant to a Registration Rights Agreement dated August 31, 1999 (the
"Registration Rights Agreement"), and subject to the terms thereof, the Issuer
has agreed to register under the Securities Act of 1933, as amended, the shares
of Common Stock issuable upon conversion of the Debentures (the "Conversion
Shares"). The Registration Rights Agreement is attached hereto as Exhibit D, and
any description thereof is qualified in its entirety by reference thereto.
Pursuant to a Stockholders Agreement dated as of August 31, 1999 by
and among the Issuer and the Reporting Persons, the Reporting Persons have
agreed, among other things, to vote at each annual or special stockholders
meeting, and whenever the stockholders of the Issuer act by written consent, all
shares of capital stock of the Issuer that they hold for the election to the
Issuer's Board of Directors of the candidates nominated by the Issuer's Board of
Directors, and as directed by the Issuer's Board of Directors with respect to
any proposed transaction that would constitute a "Change of Control", as defined
in the Stockholders Agreement. The Reporting Persons have further agreed under
the Stockholders Agreement to certain restrictions on the transfer of the
Debentures and the Conversion Shares, and that they will not, without the prior
approval of the Issuer's Board of Directors, purchase or otherwise acquire
shares of Common Stock or other securities convertible into, or exercisable or
exchangeable for, Common Stock, which when aggregated with all shares of Common
Stock previously beneficially owned would constitute greater than 30% of the
outstanding shares of Common Stock on a fully-diluted basis. The Stockholders
Agreement is attached hereto as Exhibit E, and any description thereof is
qualified in its entirety by reference thereto.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit A -- Group Agreement (Appears at Page 12)
Exhibit B -- Purchase Agreement
Exhibit C -- Debentures
Exhibit D -- Registration Rights Agreement
Exhibit E -- Stockholders Agreement
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CUSIP NO. 749084 10 9 Page 10 of 11 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: September 7, 1999
WELSH, CARSON, ANDERSON & STOWE VIII, L.P.
By: WCAS VIII Associates, LLC, General
Partner
By: /s/ Jonathan M. Rather
-----------------------------------
Managing Member
WCA MANAGEMENT CORPORATION
By: /s/ Jonathan M. Rather
-----------------------------------
Attorney-in-Fact
<PAGE>
CUSIP NO. 749084 10 9 Page 11 of 11 Pages
EXHIBIT A
AGREEMENT PURSUANT TO RULE 13d-1(k)
-----------------------------------
The undersigned hereby agree that the statement on Schedule 13D to
which this Agreement is annexed as Exhibit A is filed on behalf of each of them
in accordance with the provisions of 13d-1(k) under the Securities Exchange Act
of 1934, as amended.
Dated: September 7, 1999
WELSH, CARSON, ANDERSON & STOWE VIII, L.P.
By: WCAS VIII Associates, LLC, General
Partner
By: /s/ Jonathan M. Rather
-----------------------------------
Managing Member
WCA MANAGEMENT CORPORATION
By: /s/ Jonathan M. Rather
-----------------------------------
Attorney-in-Fact
<PAGE>
EXHIBIT B
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SECURITIES PURCHASE AGREEMENT
among
QUORUM HEALTH GROUP, INC.
WELSH, CARSON, ANDERSON & STOWE VIII, L.P.
and
the Other Purchasers Named Herein
Dated as of August 18, 1999
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<PAGE>
TABLE OF CONTENTS
Page
----
I. PURCHASE AND SALE OF SECURITIES...........................................1
SECTION 1.01. Issuance, Sale and Delivery of the Securities..............1
SECTION 1.02. Closing Date...............................................1
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................2
SECTION 2.01. Organization and Qualification.............................2
SECTION 2.02. Subsidiaries...............................................2
SECTION 2.03. Capitalization.............................................2
SECTION 2.04. Authorization of Agreements, etc...........................3
SECTION 2.05. Validity...................................................3
SECTION 2.06. Governmental Approvals.....................................4
SECTION 2.07. Financial Statements.......................................4
SECTION 2.08. SEC Filings................................................4
SECTION 2.09. Absence of Certain Changes or Events.......................5
SECTION 2.10. Actions Pending............................................5
SECTION 2.11. Compliance with Law; Permits...............................5
SECTION 2.12. Contracts..................................................6
SECTION 2.13. Rights Agreement Amendment.................................6
SECTION 2.14. Offering of the Debentures.................................6
SECTION 2.15. Related-Party Transactions.................................6
SECTION 2.16. Brokers....................................................6
III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS..........................7
SECTION 3.01. Beneficial Ownership.......................................7
SECTION 3.02. Authorization..............................................7
SECTION 3.03. Validity...................................................7
SECTION 3.04. Investment Representations.................................7
SECTION 3.05. Governmental Approvals.....................................8
SECTION 3.06. Schedule 13D...............................................8
SECTION 3.07. HSR........................................................8
IV. CONDITIONS PRECEDENT......................................................9
SECTION 4.01. Conditions Precedent to the Obligations of the Purchaser...9
SECTION 4.02. Conditions Precedent to the Obligations of the Company....10
-i-
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Page
----
V. SURVIVAL OF REPRESENTATIONS; INDEMNITY...................................10
SECTION 5.01. Survival of Representations...............................10
SECTION 5.02. General Indemnity.........................................10
SECTION 5.03. Conditions of Indemnification.............................11
SECTION 5.04. Limitation on Certain Indemnities.........................12
VI. MISCELLANEOUS............................................................12
SECTION 6.01. Restrictive Legends.......................................12
SECTION 6.02. Expenses, etc.............................................12
SECTION 6.03. Survival of Agreements....................................12
SECTION 6.04. Parties in Interest.......................................13
SECTION 6.05. Notices...................................................13
SECTION 6.06. Further Assurances........................................14
SECTION 6.07. Entire Agreement; Assignment..............................14
SECTION 6.08. Counterparts..............................................14
SECTION 6.09. Governing Law.............................................14
-ii-
<PAGE>
INDEX TO EXHIBITS, SCHEDULES AND ANNEXES
Exhibit Description
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A Form of Debenture
B Form of Registration Rights Agreement
C Form of Stockholders Agreement
Schedule Description
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I Purchasers
2.02 Subsidiaries
2.03 Capitalization
2.07 Financial Statements
2.09 Certain Changes or Events
2.10 Actions Pending
2.12 Contracts
2.15 Related-Party Transactions
Annex Description
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I Form of Opinion of Counsel
-iii-
<PAGE>
SECURITIES PURCHASE AGREEMENT dated as of August 18, 1999, among
QUORUM HEALTH GROUP, INC., a Delaware corporation (the "Company"), WELSH,
CARSON, ANDERSON & STOWE VIII, L.P., a Delaware limited partnership ("WCAS
VIII"), and WCA MANAGEMENT CORPORATION ("WCA Management" and, collectively with
WCAS VIII and each other person that shall become a "Purchaser" pursuant to
Section 6.07 hereof, the "Purchasers").
WHEREAS, the Company desires to sell to the Purchasers, and the
Purchasers desire to purchase from the Company, on the terms and subject to the
conditions set forth herein, $150,000,000 aggregate principal amount of 6%
Convertible Subordinated Debentures ("Debentures") of the Company in
substantially the form of EXHIBIT A hereto; and
WHEREAS, in order to induce the Purchasers to consummate the
transactions contemplated by this Agreement, the Company has agreed to grant to
the Purchasers certain registration rights with respect to the shares (the
"Conversion Shares") of the Company's Common Stock, $.01 par value ("Common
Stock"), issuable upon conversion of the Debentures purchased hereunder;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
I. PURCHASE AND SALE OF SECURITIES
SECTION 1.01. ISSUANCE, SALE AND DELIVERY OF THE SECURITIES. (a) On
the Closing Date (as defined below), the Company shall issue and sell to the
Purchasers, and each Purchaser shall purchase from the Company, a Debenture in
the aggregate principal amount set forth opposite the name of such Purchaser in
SCHEDULE I hereto under the heading "Principal Amount of Debenture," for a
purchase price equal to such principal amount, and the Company shall issue and
deliver to each Purchaser a Debenture substantially in the form attached as
EXHIBIT A hereto, registered in the name of such Purchaser, evidencing the
indebtedness of the Company to such Purchaser in connection herewith.
(b) As payment in full for the Debenture being purchased by each
Purchaser hereunder, and against delivery of the Debenture as aforesaid, on the
Closing Date each Purchaser shall wire transfer to the account of the Company in
immediately available funds the sum set forth opposite the name of such
Purchaser in SCHEDULE I hereto under the heading "Principal Amount of
Debenture."
SECTION 1.02. CLOSING DATE. Subject to the terms and provisions of
this Agreement, the transfer, sale and delivery of the Debentures contemplated
hereby (the "Closing") shall take place at the offices of Reboul, MacMurray,
Hewitt, Maynard & Kristol, 45 Rockefeller Plaza, New York, New York, on August
31, 1999, or at such date and time as may be mutually agreed upon among the
parties hereto (such date and time of the Closing being herein called the
"Closing Date").
1
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II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers as follows:
SECTION 2.01. ORGANIZATION AND QUALIFICATION. The Company is a
corporation validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own or lease and
operate its properties and assets and to carry on its business as it is now
being conducted. The Company is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction in which the character
of its properties owned or leased or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified would not
have a material adverse effect on the properties, assets, financial condition,
operating results or business of the Company and its subsidiaries, taken as a
whole (a "Material Adverse Effect").
SECTION 2.02. SUBSIDIARIES. (a) Except as set forth on SCHEDULE 2.02
hereto or as disclosed in the Company SEC Filings (as defined in Section 2.08),
the Company does not have any Significant Subsidiaries (as defined in Rule 1-02
of Regulation S-X).
SECTION 2.03. CAPITALIZATION. (a) The authorized capital stock of the
Company consists of 300,000,000 shares of Common Stock. As of August 17, 1999,
73,232,106 shares of Common Stock were issued and outstanding, all of which were
duly authorized and validly issued and are fully paid and nonassessable.
(b) As of the date hereof, except (i) for options granted pursuant to
the Company's stock option plan (the "Stock Option Plan") to purchase an
aggregate 5,900,075 shares of Common Stock, (ii) for issuances of shares of
Common Stock pursuant to the Company's Employee Stock Purchase Plan, (iii) as
contemplated by the Rights Agreement dated as of April 16, 1997 (the "Rights
Agreement") between the Company and First Union National Bank (as successor to
First Union National Bank of North Carolina), as Rights Agent, (iv) for
obligations to issue shares of Common Stock pursuant to the Company's Deferred
Compensation Plan for Directors, and (v) as set forth on Schedule 2.03 hereof,
no subscription, warrant, option, convertible security, stock appreciation or
other right (contingent or other) to purchase or acquire any shares of any class
of capital stock of the Company or any of its subsidiaries is authorized or
outstanding, and (except as otherwise expressly contemplated by this Agreement)
there is not any commitment of the Company or any of its subsidiaries to issue
any shares, warrants, options or other such rights or to distribute to holders
of any class of its capital stock, any evidences of indebtedness or assets.
2
<PAGE>
SECTION 2.04. AUTHORIZATION OF AGREEMENTS, ETC. (a) Each of (i) the
execution and delivery by the Company of this Agreement, the Debentures, the
Registration Rights Agreement in substantially the form attached hereto as
Exhibit B (the "Registration Rights Agreement") and the Stockholders Agreement
in substantially the form attached hereto as EXHIBIT C (the "Stockholders
Agreement," and, collectively with the Registration Rights Agreement, the
"Ancillary Agreements"), (ii) the performance by the Company of its obligations
hereunder and thereunder, and (iii) the issuance, sale and delivery by the
Company of the Debentures has 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 Bylaws of the
Company, or any provision of any indenture, agreement or other instrument to
which the Company or any of its properties or assets 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 liens, claims, charges, restrictions, rights
of others, security interests, prior assignments or other encumbrances
(collectively, "Claims") in favor of any third person upon any of the assets of
the Company or any of its subsidiaries, except that no representation is made as
to the compliance of the indemnification or contribution provisions of the
Registration Rights Agreement with law or public policy. The Board of Directors
of the Company has taken all actions necessary under the Delaware General
Corporation Law (the "DGCL"), including approving the transactions contemplated
by this Agreement, to ensure that Section 203 of the DGCL does not apply to the
Purchasers so long as the Purchasers in the aggregate do not beneficially own
greater than 30% of the outstanding shares of Common Stock. For purposes of this
Agreement, the term "beneficially own" shall have the meaning as set forth in
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations thereunder.
(b) The issuance, sale and delivery of the Debentures to the
Purchasers hereunder 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.
(c) The Conversion Shares have been duly authorized by the Company
and, when issued in accordance with the provisions of the Debentures, will be
validly issued, fully paid and nonassessable shares of Common Stock. The
issuance, sale and delivery of the Conversion Shares to the Purchasers are not
and upon conversion of the Debentures will not be 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 2.05. 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.
Each of the Debentures and the Ancillary Agreements, when executed and delivered
by the Company as provided in this Agreement, will constitute the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except that no representation is made as to the
3
<PAGE>
enforceability of the indemnification or contribution provisions of the
Registration Rights Agreement.
SECTION 2.06. GOVERNMENTAL APPROVALS. Subject to the accuracy of the
representations and warranties of the Purchasers set forth in Article III
hereof, 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, delivery and performance of this
Agreement, the Debentures or the Ancillary Agreements, or the issuance, sale and
delivery of the Conversion Shares.
SECTION 2.07. FINANCIAL STATEMENTS. (a) The Company has furnished to
the Purchasers the consolidated balance sheet of the Company and its
subsidiaries as of June 30, 1999 (the "June 30, 1999 Balance Sheet") and the
related consolidated statements of operations, stock holders' equity and cash
flows for the fiscal year then ended. All such financial statements (including
any related schedules and/or notes) have been prepared in accordance with
generally accepted accounting principles in the United States ("GAAP")
consistently applied and consistent with prior periods. Such balance sheet
fairly presents in all material respects the consolidated financial position of
the Company and its subsidiaries as of June 30, 1999, and such statements of
operations, stockholders' equity and cash flows fairly present in all material
respects the consolidated results of operations, stockholders' equity and cash
flows of the Company and its subsidiaries for the year ended June 30, 1999.
(b) Except as and to the extent (i) reflected on the June 30, 1999
Balance Sheet (including the notes thereto), (ii) incurred since June 30, 1999
in the ordinary course of business consistent with past practice, or (iii) set
forth on Schedule 2.07 hereto, neither the Company nor any of its subsidiaries
has any material liabilities or obligations of any kind or nature, whether known
or unknown, secured or unsecured, absolute, accrued, contingent or otherwise,
and whether due or to become due, that would be required to be reflected on a
balance sheet, or the notes thereto, prepared in accordance with GAAP. Since
June 30, 1999, neither the Company nor any of its subsidiaries has suffered any
Material Adverse Effect.
SECTION 2.08. SEC FILINGS. The Company has filed all forms, reports
and documents required to be filed with the Securities and Exchange Commission
(the "SEC") since June 30, 1997, and the Company has made available to the
Purchasers, as filed with the SEC, complete and accurate copies of (i) the
Annual Report of the Company on Form 10-K for the year ended June 30, 1998, and
(ii) all other reports, statements and registration statements (including
Current Reports on Form 8-K) filed by the Company with the SEC since June 30,
1998, in each case including all amendments and supplements (collectively, the
"Company SEC Filings"). The Company SEC Filings (excluding any financial
statements or schedules included therein, which are covered by the
representations and warranties of the Company in Section 2.07(a)) (i) were
prepared in compliance with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, and the rules and
regulations thereunder, as the case may be, and (ii) did not at the time of
filing (or if amended, supplemented or superseded by a filing
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prior to the date hereof, on the date of that filing) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
SECTION 2.09. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth on Schedule 2.09 hereto or as otherwise disclosed in the Company SEC
Filings and except as otherwise expressly contemplated by this Agreement, since
June 30, 1999, neither the Company nor any of its subsidiaries has (i) issued
any stock, bonds or other corporate securities, (ii) borrowed or refinanced any
indebtedness for borrowed money other than borrowings under the Company's
revolving credit facility, (iii) discharged or satisfied any material Claim or
incurred or paid any obligation or liability (absolute or contingent) other than
current liabilities shown on the June 30, 1999 Balance Sheet and current
liabilities incurred since the date of such balance sheet in the ordinary course
of business consistent with past practice, (iv) in the case of the Company only,
declared or made any payment or distribution to stockholders, or purchased or
redeemed any shares of its capital stock or other securities, or (v) except in
connection with this Agreement and the transactions contemplated hereby, entered
into any agreement, letter of intent or similar undertaking to take any of the
actions listed in clauses (i) through (iv) above.
SECTION 2.10. ACTIONS PENDING. Except (i) as set forth on SCHEDULE
2.10 hereto or (ii) as set forth in the Company SEC Filings, there is no action,
suit, investigation or proceeding pending or, to the best knowledge of the
Company, threatened against or affecting the Company to which its property is
subject, before any court or by or before any governmental body or arbitration
board or tribunal, which the Company would be required to disclose pursuant to
Item 1 of Part II of Form 10-Q if such Form 10-Q were required to be filed on
and as of the date hereof. For the purposes of this Agreement, the term "best of
the knowledge of the Company" shall mean the actual knowledge, without
independent inquiry, of the executive officers of the Company.
SECTION 2.11. COMPLIANCE WITH LAW; PERMITS. Neither the Company nor
any of its subsidiaries is in default in any respect under any order or decree
of any court, governmental authority, arbitrator or arbitration board or
tribunal or under any laws, ordinances, governmental rules or regulations to
which the Company or any of such subsidiaries or any of their respective
properties or assets is subject, except where such default would not have a
Material Adverse Effect. The Company possesses all permits, authorizations,
approvals, registrations, variances and licenses ("Permits") necessary for the
Company or its subsidiaries to own, use and maintain their properties and assets
or required for the conduct of its business in substantially the same manner as
it is currently conducted, except where the failure to possess any such Permit
would not have a Material Adverse Effect. Except to the extent the failure of
any of the following to be correct would not have a Material Adverse Effect,
each Permit is in full force and effect, and no proceeding is pending or, to the
best knowledge of the Company, threatened to modify, suspend, revoke or
otherwise limit any Permit, and no administrative or governmental actions have
been taken or, to the best knowledge of the Company, threatened in connection
with the expiration or renewal of any Permit.
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SECTION 2.12. CONTRACTS. Except as disclosed in SCHEDULE 2.12 or the
Company SEC Filings, there are no contracts or agreements that are material to
the conduct of the Business or to the financial condition or results of
operations of the Company and its subsidiaries, taken as a whole, that the
Company would be required to disclose pursuant to paragraph 10 of Item 601 of
Regulation S-K if a Form 10-Q were required to be filed on and as of the date
hereof. Each of the agreements (collectively, the "Material Agreements")
disclosed as an exhibit in the Company SEC Filings in response to paragraph 10
of Item 601 of Regulation S-K under which there are continuing rights or
obligations is a valid and enforceable obligation of the Company and, to the
best knowledge of the Company, of the other parties thereto, except where the
failure to be valid or enforceable would not have a Material Adverse Effect. To
the best knowledge of the Company, the Company has not been notified in writing
of any claim that any Material Agreement is not valid and enforceable in
accordance with its terms for the periods stated therein (other than where such
enforceability is in violation of public policy or law), or that there is under
any such contract any existing default or event of default or event that with
notice or lapse of time or both would constitute such a default, except any such
failure to be valid or enforceable and any such defaults that, in the aggregate,
would not have a Material Adverse Effect.
SECTION 2.13. RIGHTS AGREEMENT AMENDMENT. The Company has taken the
requisite corporate action (and will promptly cause the Rights Agent under the
Rights Agreement to enter into an agreement embodying such action) so that none
of the Purchasers shall be deemed an Acquiring Person (as defined in the Rights
Agreement) unless and until the Purchasers become the Beneficial Owners (as
defined in the Rights Agreement) of greater than 30% of the Voting Shares (as
defined in the Rights Agreement).
SECTION 2.14. OFFERING OF THE DEBENTURES. Assuming the accuracy of the
representations and warranties of the Purchasers set forth in Article III
hereof, neither the Company nor any person acting on the Company's behalf has
taken or will take any action (including, without limitation, any offer,
issuance or sale of any securities of the Company under circumstances which
might require the integration of such transactions with the sale of the
Debentures under the Securities Act or the rules and regulations of the SEC
thereunder) which would subject the offering, issuance or sale of the Debentures
to the Purchasers pursuant to this Agreement to the registration provisions of
the Securities Act.
SECTION 2.15. RELATED-PARTY TRANSACTIONS. Except (i) as set forth on
SCHEDULE 2.15 hereto, (ii) as set forth in the Company SEC Filings or (iii) as
contemplated hereby, there are no existing material arrangements or proposed
material transactions between the Company and any person or entity that the
Company would be required to disclose pursuant to Item 404 of Regulation S-K of
the SEC if a proxy statement of the Company were required to be filed on or as
of the date hereof, other than arrangements or transactions between the Company
and any of the Purchasers.
SECTION 2.16. BROKERS. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried on by the Company
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directly with the Purchasers, without the intervention of any other person on
behalf of the Company in such manner as to give rise to any valid claim by any
other person against the Purchasers for a finder's fee, brokerage commission or
similar payment.
III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser, severally and not jointly, represents and warrants to
the Company as follows:
SECTION 3.01. BENEFICIAL OWNERSHIP. As of the date hereof, WCAS VIII
and its affiliates beneficially own an aggregate of 7,390,217 shares of Common
Stock.
SECTION 3.02. AUTHORIZATION. The execution, delivery and performance
by such Purchaser of this Agreement and the Ancillary Agreements, and the
purchase and receipt by such Purchaser of the Debentures being acquired 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, the charter or other governing documents of 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, or result in any Claim upon any of the properties or assets of such
Purchaser.
SECTION 3.03. 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. Each of the Ancillary Agreements, when executed and delivered in
accordance with this Agreement, will constitute the legal, valid and binding
obligation of such Purchaser, enforceable against such Purchaser in accordance
with its terms.
SECTION 3.04. INVESTMENT REPRESENTATIONS. (a) Such Purchaser is
acquiring the Debentures being purchased by such Purchaser hereunder for such
Purchaser's own account, for investment, and not with a view toward the resale
or distribution thereof, except that WCA Management is acquiring the aggregate
principal amount of Debentures set forth opposite its name in SCHEDULE I hereto
on behalf of certain persons affiliated or associated with Welsh, Carson,
Anderson & Stowe (such persons being herein collectively referred to as the
"WCAS Persons").
(b) Such Purchaser understands that he, she or it, as the case may be,
must bear the economic risk of such Purchaser's investment for an indefinite
period of time, because the Debentures and, when issued upon conversion of
Debentures, the Conversion Shares are not registered under the Securities Act or
any applicable state securities laws and may not be resold unless subsequently
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<PAGE>
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 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 under the Securities
Act available to permit resale of the Debentures or the Conversion Shares.
(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
the investment in the Debentures being purchased hereunder for an indefinite
period of time. Such Purchaser further acknowledges that he, she or it, as the
case may be, has received copies of the Company SEC Filings and 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 Debentures 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 such Purchaser is capable of evaluating the merits and
risks of its investment in the Debentures. Such Purchaser further represents
that he, she or it, as the case may be, is an "accredited investor" as such term
is defined in Rule 501 of Regulation D of the SEC under the Securities Act with
respect to its purchase of the Debentures, and that any such Purchaser that is a
limited partnership has not been formed solely for the purpose of purchasing the
Debentures.
(e) If such Purchaser is a limited partnership, such Purchaser
represents that it has been organized and is existing as a limited partnership
under the laws of the State of Delaware.
SECTION 3.05. 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 the Purchasers
for the valid execution, delivery and performance of this Agreement and the
Ancillary Agreements other than as has been obtained under the HSR Act.
SECTION 3.06. SCHEDULE 13D. The Schedule 13D filed by the Purchasers
with the SEC on March 23, 1999 did not at the time of filing contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. No amendment to the
Schedule 13D has been or, except as may be required by reason of the purchase of
the Debentures pursuant to this Agreement, is required to be, made.
SECTION 3.07. HSR. The requisite filing under the Hart-Scott-Rodino
Anti- Trust Improvements Act of 1976, as amended, with respect to the
acquisition by the Purchasers of the Conversion Shares issuable upon conversion
of the Debentures being purchased by the Purchasers has been made, and the
applicable waiting period thereunder has expired without any request for
additional information or documentary material.
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IV. CONDITIONS PRECEDENT
SECTION 4.01. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
PURCHASERS. The obligations of the Purchasers hereunder are, at their 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
so certified to the Purchasers in writing.
(b) Performance. The Company shall have performed and complied in all
material respects 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 so certified 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 the
Purchasers and their counsel.
(d) Opinion of Counsel. The Purchasers shall have received from Ashby
Q. Burks, General Counsel of the Company, an opinion dated the Closing
Date, substantially in the form of ANNEX I attached hereto.
(e) Legal Proceedings. No preliminary or permanent injunction or other
order, decree or ruling issued by any court of competent jurisdiction nor
any statute, rule, regulation or order entered, promulgated or enacted by
any governmental, regulatory or administrative agency or authority, or
national securities exchange shall be in effect that would prevent the
consummation of the transactions contemplated Agreement.
(f) Ancillary Agreements. The Company shall have executed and
delivered each of the Ancillary Agreements.
(g) Financial Statements. The Company shall have delivered to the
Purchasers the financial statements described in Section 2.07 of this
Agreement in substantially the same form as already provided to the
Purchasers in accordance with Section 2.07, except that
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such financial statements shall have been audited and certified by Ernst &
Young LLP, the independent certified public auditors retained by the
Company.
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:
(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, and the Purchasers shall have so
certified to the Company in writing.
(b) Performance. The Purchasers shall have performed and complied in
all material respects with all agreements and conditions contained herein
required to be performed or complied with by them prior to or on the
Closing Date, and the Purchasers shall have so certified to the Company in
writing.
(c) All Proceedings to Be Satisfactory. All proceedings to be taken by
the Purchasers and all 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 Proceedings. No preliminary or permanent injunction or other
order, decree or ruling issued by any court of competent jurisdiction nor
any statute, rule, regulation or order entered, promulgated or enacted by
any governmental, regulatory or administrative agency or authority, or
national securities exchange shall be in effect that would prevent the
consummation of the transactions contemplated by this Agreement.
(e) Ancillary Agreements. Each Purchaser shall have executed and
delivered each of the Ancillary Agreements.
V. SURVIVAL OF REPRESENTATIONS; INDEMNITY
SECTION 5.01. SURVIVAL OF REPRESENTATIONS. Subject as set forth below,
all representations and warranties made by any party hereto in this Agreement or
pursuant hereto shall survive for the period commencing on the date hereof and
ending on the first anniversary of the date hereof.
SECTION 5.02. GENERAL INDEMNITY. (a) Subject to the terms and
conditions of this Article V, the Company hereby agrees to indemnify, defend and
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hold the Purchasers harmless from and against all demands, claims, actions or
causes of action, assessments, losses (including diminution in value of the
Debentures), damages, liabilities, costs and expenses, including, without
limitation, interest, penalties and reasonable attorneys' fees and expenses
(collectively, "Damages"), asserted against, resulting to, imposed upon or
incurred by the Purchasers by reason of or resulting from a breach of any
representation, warranty or covenant of the Company contained in or made
pursuant to this Agreement.
(b) Subject to the terms and conditions of this Article V, the
Purchasers hereby agree to indemnify, defend and hold the Company harmless from
and against all Damages asserted against, resulting to, imposed upon or incurred
by the Company by reason of or resulting from a breach of any representation,
warranty or covenant of the Purchasers contained in or made pursuant to this
Agreement.
SECTION 5.03. CONDITIONS OF INDEMNIFICATION. The respective
obligations and liabilities of the Purchasers, on the one hand, and the Company,
on the other hand (the "indemnifying party"), to the other (the "party to be
indemnified") under Section 5.02 hereof with respect to claims resulting from
the assertion of liability by third parties shall be subject to the following
terms and conditions:
(a) within 20 days after receipt of notice of commencement of any
action or the assertion in writing of any claim by a third party, the party
to be indemnified shall give the indemnifying party written notice thereof
together with a copy of such claim, process or other legal pleading, and
the indemnifying party shall have the right to undertake the defense
thereof by representatives of its own choosing;
(b) in the event that the indemnifying party, by the 30th day after
receipt of notice of any such claim (or, if earlier, by the tenth day
preceding the day on which an answer or other pleading must be served in
order to prevent judgment by default in favor of the person asserting such
claim), does not elect to defend against such claim, the party to be
indemnified will (upon further notice to the indemnifying party) have the
right to undertake the defense, compromise or settlement of such claim on
behalf of and for the account and risk of the indemnifying party, subject
to the right of the indemnifying party to assume the defense of such claim
at any time prior to settlement, compromise or final determination thereof,
provided that the indemnifying party shall be given at least 15 days prior
written notice of the effectiveness of any such proposed settlement or
compromise;
(c) anything in this Section 5.03 to the contrary notwithstanding (i)
if there is a reasonable probability that a claim may materially and
adversely affect the indemnifying party other than as a result of money
damages or other money payments, the indemnifying party shall have the
right, at its own cost and expense, to compromise or settle such claim, but
(ii) the indemnifying party shall not, without the prior written consent of
the party to be indemnified, settle or compromise any claim or consent to
the entry of any judgment which does not include as an unconditional term
thereof the giving by the claimant or the
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plaintiff to the party to be indemnified a release from all liability in
respect of such claim; and
(d) in connection with any such indemnification, the indemnified party
will cooperate in all reasonable requests of the indemnifying party.
SECTION 5.04. Limitation on Certain Indemnities. Notwithstanding
anything in this Article V to the contrary:
(a) the Company shall not be obligated to indemnify, defend and hold
harmless the Purchasers pursuant to Section 5.02 hereof unless the
aggregate amount of such Damages exceeds $2,500,000; and
(b) the Company's aggregate liability and obligation to indemnify,
defend and hold harmless the Purchasers pursuant to said Section 5.02 shall
in no event exceed the aggregate purchase price paid by the Purchasers for
the Debentures pursuant to Section 1.01 hereof.
VI. MISCELLANEOUS
SECTION 6.01. RESTRICTIVE LEGENDS. Each Debenture and each certificate
representing the Conversion Shares and any shares of capital stock received in
respect thereof, whether by reason of a stock split or share reclassification
thereof, a stock dividend thereon or otherwise, and each certificate for any
such securities issued to subsequent transferees of any such certificate shall
be stamped or otherwise imprinted with the legends required to be borne by such
securities by the Registration Rights Agreement and the Stockholders Agreement,
except as expressly provided in such agreements.
SECTION 6.02. EXPENSES, ETC. The Company shall reimburse WCAS VIII or
pay on its behalf, up to a maximum of $175,000 in the aggregate, (i) fees and
expenses related to any filings made by WCAS VIII pursuant to the HSR Act and
(ii) the reasonable fees and expenses of counsel retained by WCAS VIII in
connection with this Agreement and the transactions contemplated hereby. Such
fees and expenses shall be payable on the Closing Date.
SECTION 6.03. SURVIVAL OF AGREEMENTS. Except as specifically limited
as provided in Section 5.01 hereto, 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 Debentures pursuant hereto,
notwithstanding any investigation made at any time by or on behalf of any party
hereto. 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.
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SECTION 6.04. PARTIES IN INTEREST. All covenants and agreements
contained in this Agreement by or on behalf of any party hereto shall bind and
inure to the benefit of the respective successors and permitted assigns of such
party hereto whether so expressed or not.
SECTION 6.05. 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 duly sent by first class certified mail,
postage prepaid, by nationally recognized overnight courier, or by facsimile
addressed to such party at the address or facsimile number set forth below or
such other address or facsimile number as may hereafter be designated in writing
by the addressee to the addressor listing all parties:
if to the Company, to
Quorum Health Group, Inc.
103 Continental Place
Brentwood, Tennessee 37027
Fax: (615) 371-4788
Attention: Ashby Q. Burks, Esq.
with a copy to
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Fax: (212) 859-4000
Attention: Jeffrey Bagner, Esq.
if to any Purchaser, to
Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, New York 10022
Fax: (212) 893-9565
Attention: Russell L. Carson
with a copy to
Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10111
Fax: (212) 841-5725
Attention: Robert A. Schwed, Esq.
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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 delivery, on the date of such delivery, (b)
in the case of mailing, on the fifth business day following the date of such
mailing, (c) in the case of delivery by overnight courier, on the business day
following the date of delivery to such courier, and (d) in the case of
facsimile, when received.
SECTION 6.06. FURTHER ASSURANCES. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its reasonable best
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
as promptly as practicable the transactions contemplated by this Agreement.
SECTION 6.07 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (including
the Schedules, Exhibits and Annexes thereto) 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 Company and
the Purchasers. This Agreement shall not be assigned without the consent of the
other parties hereto, except that notwithstanding anything in this Agreement to
the contrary, WCA Management shall be entitled to assign its rights and
obligations under this Agreement to the WCAS Persons in its sole discretion. It
is understood and agreed that, in the event of such assignment, each of the WCAS
Persons shall, at such time, agree to be a "Purchaser" for all purposes of this
Agreement, and WCA Management shall not be released from its liabilities under
this Agreement.
SECTION 6.08 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all 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 New York, without regard
to conflict of laws principles.
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IN WITNESS WHEREOF, the Company and the Purchasers have executed this
Agreement as of the day and year first above written.
QUORUM HEALTH GROUP, INC.
By: /s/James E. Dalton, Jr.
Name: James E. Dalton, Jr.
Title: President and CEO
WELSH, CARSON, ANDERSON &
STOWE VIII, L.P.
By WCAS VIII Associates LLC,
General Partner
By: /s/ Russell L. Carson
--------------------------
Managing Member
WCA MANAGEMENT CORPORATION
By: /s/ Russell L. Carson
--------------------------
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SCHEDULE I
Purchasers
Principal Amount
Name of Debenture
- ------------------------------------------------ ---------------------
Welsh, Carson, Anderson & Stowe VIII, L.P....... $142,857,143.00
WCA Management Corporation...................... 7,142,857.00
----------------
TOTAL.................................. $150,000,000.00
===============
The address for each of the Purchasers is c/o Welsh, Carson, Anderson & Stowe,
320 Park Avenue, Suite 2500, New York, New York 10022.
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EXHIBIT C
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THAT ACT OR, IN THE OPINION OF COUNSEL, AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
THIS SECURITY MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 31, 1999 BETWEEN QUORUM HEALTH GROUP,
INC. AND THE STOCKHOLDER NAMED ON THE FACE HEREOF, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE CORPORATION.
QUORUM HEALTH GROUP, INC.
6% Convertible Subordinated Debenture
due August 31, 2009
Registered R-01 New York, New York
$142,857,143.00 August 31, 1999
QUORUM HEALTH GROUP, INC., a Delaware corporation (hereinafter called
the "Corporation"), for value received, hereby promises to pay WELSH, CARSON,
ANDERSON & STOWE VIII, L.P., or registered assigns, the principal sum of ONE
HUNDRED FORTY-TWO MILLION EIGHT HUNDRED FIFTY-SEVEN THOUSAND ONE HUNDRED
FORTY-THREE DOLLARS ($142,857,143.00), in a single installment on August 31,
2009, or the next preceding Business Day (as defined below) and to pay interest
(computed on the basis of a 360-day year consisting of twelve 30-day months)
from the date hereof on the unpaid principal amount hereof at the rate of 6% per
annum, payable on the last Business Day of March, June, September and December
of each year (each such day being an "Interest Payment Date") commencing on
September 30, 1999, until the principal amount hereof shall have become due and
payable, whether at maturity or by acceleration or otherwise, and thereafter at
the rate of 12% per annum on any overdue principal amount and (to the extent
permitted by applicable law) on any overdue interest until paid.
The payment of principal and interest on this Convertible Debenture
shall be in such currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private debts.
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THAT ACT OR, IN THE OPINION OF COUNSEL, AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
THIS SECURITY MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 31, 1999 BETWEEN QUORUM HEALTH GROUP,
INC. AND THE STOCKHOLDER NAMED ON THE FACE HEREOF, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE CORPORATION.
QUORUM HEALTH GROUP, INC.
6% Convertible Subordinated Debenture
due August 31, 2009
Registered R-02 New York, New York
$30,000.00 August 31, 1999
QUORUM HEALTH GROUP, INC., a Delaware corporation (hereinafter called
the "Corporation"), for value received, hereby promises to pay JOHN ALMEIDA, or
registered assigns, the principal sum of THIRTY THOUSAND DOLLARS ($30,000.00),
in a single installment on August 31, 2009, or the next preceding Business Day
(as defined below) and to pay interest (computed on the basis of a 360-day year
consisting of twelve 30-day months) from the date hereof on the unpaid principal
amount hereof at the rate of 6% per annum, payable on the last Business Day of
March, June, September and December of each year (each such day being an
"Interest Payment Date") commencing on September 30, 1999, until the principal
amount hereof shall have become due and payable, whether at maturity or by
acceleration or otherwise, and thereafter at the rate of 12% per annum on any
overdue principal amount and (to the extent permitted by applicable law) on any
overdue interest until paid.
The payment of principal and interest on this Convertible Debenture
shall be in such currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private debts.
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THAT ACT OR, IN THE OPINION OF COUNSEL, AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
THIS SECURITY MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 31, 1999 BETWEEN QUORUM HEALTH GROUP,
INC. AND THE STOCKHOLDER NAMED ON THE FACE HEREOF, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE CORPORATION.
QUORUM HEALTH GROUP, INC.
6% Convertible Subordinated Debenture
due August 31, 2009
Registered R-03 New York, New York
$1,345,650.00 August 31, 1999
QUORUM HEALTH GROUP, INC., a Delaware corporation (hereinafter called
the "Corporation"), for value received, hereby promises to pay BRUCE K.
ANDERSON, or registered assigns, the principal sum of ONE MILLION THREE HUNDRED
FORTY FIVE THOUSAND SIX HUNDRED FIFTY DOLLARS ($1,345,650.00), in a single
installment on August 31, 2009, or the next preceding Business Day (as defined
below) and to pay interest (computed on the basis of a 360-day year consisting
of twelve 30-day months) from the date hereof on the unpaid principal amount
hereof at the rate of 6% per annum, payable on the last Business Day of March,
June, September and December of each year (each such day being an "Interest
Payment Date") commencing on September 30, 1999, until the principal amount
hereof shall have become due and payable, whether at maturity or by acceleration
or otherwise, and thereafter at the rate of 12% per annum on any overdue
principal amount and (to the extent permitted by applicable law) on any overdue
interest until paid.
The payment of principal and interest on this Convertible Debenture
shall be in such currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private debts.
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THAT ACT OR, IN THE OPINION OF COUNSEL, AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
THIS SECURITY MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 31, 1999 BETWEEN QUORUM HEALTH GROUP,
INC. AND THE STOCKHOLDER NAMED ON THE FACE HEREOF, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE CORPORATION.
QUORUM HEALTH GROUP, INC.
6% Convertible Subordinated Debenture
due August 31, 2009
Registered R-04 New York, New York
$1,345,650.00 August 31, 1999
QUORUM HEALTH GROUP, INC., a Delaware corporation (hereinafter called
the "Corporation"), for value received, hereby promises to pay RUSSELL L.
CARSON, or registered assigns, the principal sum of ONE MILLION THREE HUNDRED
FORTY FIVE THOUSAND SIX HUNDRED FIFTY DOLLARS ($1,345,650.00), in a single
installment on August 31, 2009, or the next preceding Business Day (as defined
below) and to pay interest (computed on the basis of a 360-day year consisting
of twelve 30-day months) from the date hereof on the unpaid principal amount
hereof at the rate of 6% per annum, payable on the last Business Day of March,
June, September and December of each year (each such day being an "Interest
Payment Date") commencing on September 30, 1999, until the principal amount
hereof shall have become due and payable, whether at maturity or by acceleration
or otherwise, and thereafter at the rate of 12% per annum on any overdue
principal amount and (to the extent permitted by applicable law) on any overdue
interest until paid.
The payment of principal and interest on this Convertible Debenture
shall be in such currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private debts.
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THAT ACT OR, IN THE OPINION OF COUNSEL, AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
THIS SECURITY MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 31, 1999 BETWEEN QUORUM HEALTH GROUP,
INC. AND THE STOCKHOLDER NAMED ON THE FACE HEREOF, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE CORPORATION.
QUORUM HEALTH GROUP, INC.
6% Convertible Subordinated Debenture
due August 31, 2009
Registered R-05 New York, New York
$75,000.00 August 31, 1999
QUORUM HEALTH GROUP, INC., a Delaware corporation (hereinafter called
the "Corporation"), for value received, hereby promises to pay ANTHONY J. DE
NICOLA, or registered assigns, the principal sum of SEVENTY FIVE THOUSAND
DOLLARS ($75,000.00), in a single installment on August 31, 2009, or the next
preceding Business Day (as defined below) and to pay interest (computed on the
basis of a 360-day year consisting of twelve 30-day months) from the date hereof
on the unpaid principal amount hereof at the rate of 6% per annum, payable on
the last Business Day of March, June, September and December of each year (each
such day being an "Interest Payment Date") commencing on September 30, 1999,
until the principal amount hereof shall have become due and payable, whether at
maturity or by acceleration or otherwise, and thereafter at the rate of 12% per
annum on any overdue principal amount and (to the extent permitted by applicable
law) on any overdue interest until paid.
The payment of principal and interest on this Convertible Debenture
shall be in such currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private debts.
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THAT ACT OR, IN THE OPINION OF COUNSEL, AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
THIS SECURITY MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 31, 1999 BETWEEN QUORUM HEALTH GROUP,
INC. AND THE STOCKHOLDER NAMED ON THE FACE HEREOF, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE CORPORATION.
QUORUM HEALTH GROUP, INC.
6% Convertible Subordinated Debenture
due August 31, 2009
Registered R-06 New York, New York
$25,000.00 August 31, 1999
QUORUM HEALTH GROUP, INC., a Delaware corporation (hereinafter called
the "Corporation"), for value received, hereby promises to pay ERIC J. LEE, or
registered assigns, the principal sum of TWENTY-FIVE THOUSAND DOLLARS
($25,000.00), in a single installment on August 31, 2009, or the next preceding
Business Day (as defined below) and to pay interest (computed on the basis of a
360-day year consisting of twelve 30-day months) from the date hereof on the
unpaid principal amount hereof at the rate of 6% per annum, payable on the last
Business Day of March, June, September and December of each year (each such day
being an "Interest Payment Date") commencing on September 30, 1999, until the
principal amount hereof shall have become due and payable, whether at maturity
or by acceleration or otherwise, and thereafter at the rate of 12% per annum on
any overdue principal amount and (to the extent permitted by applicable law) on
any overdue interest until paid.
The payment of principal and interest on this Convertible Debenture
shall be in such currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private debts.
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THAT ACT OR, IN THE OPINION OF COUNSEL, AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
THIS SECURITY MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 31, 1999 BETWEEN QUORUM HEALTH GROUP,
INC. AND THE STOCKHOLDER NAMED ON THE FACE HEREOF, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE CORPORATION.
QUORUM HEALTH GROUP, INC.
6% Convertible Subordinated Debenture
due August 31, 2009
Registered R-07 New York, New York
$1,345,650.00 August 31, 1999
QUORUM HEALTH GROUP, INC., a Delaware corporation (hereinafter called
the "Corporation"), for value received, hereby promises to pay THOMAS E.
McINERNEY, or registered assigns, the principal sum of ONE MILLIOIN THREE
HUNDRED FORTY FIVE THOUSAND SIX HUNDRED FIFTY DOLLARS ($1,345,650.00), in a
single installment on August 31, 2009, or the next preceding Business Day (as
defined below) and to pay interest (computed on the basis of a 360-day year
consisting of twelve 30-day months) from the date hereof on the unpaid principal
amount hereof at the rate of 6% per annum, payable on the last Business Day of
March, June, September and December of each year (each such day being an
"Interest Payment Date") commencing on September 30, 1999, until the principal
amount hereof shall have become due and payable, whether at maturity or by
acceleration or otherwise, and thereafter at the rate of 12% per annum on any
overdue principal amount and (to the extent permitted by applicable law) on any
overdue interest until paid.
The payment of principal and interest on this Convertible Debenture
shall be in such currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private debts.
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THAT ACT OR, IN THE OPINION OF COUNSEL, AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
THIS SECURITY MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 31, 1999 BETWEEN QUORUM HEALTH GROUP,
INC. AND THE STOCKHOLDER NAMED ON THE FACE HEREOF, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE CORPORATION.
QUORUM HEALTH GROUP, INC.
6% Convertible Subordinated Debenture
due August 31, 2009
Registered R-08 New York, New York
$50,000.00 August 31, 1999
QUORUM HEALTH GROUP, INC., a Delaware corporation (hereinafter called
the "Corporation"), for value received, hereby promises to pay D. SCOTT MACKESY,
or registered assigns, the principal sum of FIFTY THOUSAND DOLLARS ($50,000.00),
in a single installment on August 31, 2009, or the next preceding Business Day
(as defined below) and to pay interest (computed on the basis of a 360-day year
consisting of twelve 30-day months) from the date hereof on the unpaid principal
amount hereof at the rate of 6% per annum, payable on the last Business Day of
March, June, September and December of each year (each such day being an
"Interest Payment Date") commencing on September 30, 1999, until the principal
amount hereof shall have become due and payable, whether at maturity or by
acceleration or otherwise, and thereafter at the rate of 12% per annum on any
overdue principal amount and (to the extent permitted by applicable law) on any
overdue interest until paid.
The payment of principal and interest on this Convertible Debenture
shall be in such currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private debts.
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THAT ACT OR, IN THE OPINION OF COUNSEL, AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
THIS SECURITY MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 31, 1999 BETWEEN QUORUM HEALTH GROUP,
INC. AND THE STOCKHOLDER NAMED ON THE FACE HEREOF, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE CORPORATION.
QUORUM HEALTH GROUP, INC.
6% Convertible Subordinated Debenture
due August 31, 2009
Registered R-09 New York, New York
$250,000.00 August 31, 1999
QUORUM HEALTH GROUP, INC., a Delaware corporation (hereinafter called
the "Corporation"), for value received, hereby promises to pay ROBERT A.
MINICUCCI, or registered assigns, the principal sum of TWO HUNDRED FIFTY
THOUSAND DOLLARS ($250,000.00), in a single installment on August 31, 2009, or
the next preceding Business Day (as defined below) and to pay interest (computed
on the basis of a 360-day year consisting of twelve 30-day months) from the date
hereof on the unpaid principal amount hereof at the rate of 6% per annum,
payable on the last Business Day of March, June, September and December of each
year (each such day being an "Interest Payment Date") commencing on September
30, 1999, until the principal amount hereof shall have become due and payable,
whether at maturity or by acceleration or otherwise, and thereafter at the rate
of 12% per annum on any overdue principal amount and (to the extent permitted by
applicable law) on any overdue interest until paid.
The payment of principal and interest on this Convertible Debenture
shall be in such currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private debts.
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THAT ACT OR, IN THE OPINION OF COUNSEL, AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
THIS SECURITY MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 31, 1999 BETWEEN QUORUM HEALTH GROUP,
INC. AND THE STOCKHOLDER NAMED ON THE FACE HEREOF, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE CORPORATION.
QUORUM HEALTH GROUP, INC.
6% Convertible Subordinated Debenture
due August 31, 2009
Registered R-10 New York, New York
$35,000.00 August 31, 1999
QUORUM HEALTH GROUP, INC., a Delaware corporation (hereinafter called
the "Corporation"), for value received, hereby promises to pay PRISCILLA A.
NEWMAN, or registered assigns, the principal sum of THIRTY-FIVE THOUSAND DOLLARS
($35,000.00), in a single installment on August 31, 2009, or the next preceding
Business Day (as defined below) and to pay interest (computed on the basis of a
360-day year consisting of twelve 30-day months) from the date hereof on the
unpaid principal amount hereof at the rate of 6% per annum, payable on the last
Business Day of March, June, September and December of each year (each such day
being an "Interest Payment Date") commencing on September 30, 1999, until the
principal amount hereof shall have become due and payable, whether at maturity
or by acceleration or otherwise, and thereafter at the rate of 12% per annum on
any overdue principal amount and (to the extent permitted by applicable law) on
any overdue interest until paid.
The payment of principal and interest on this Convertible Debenture
shall be in such currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private debts.
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THAT ACT OR, IN THE OPINION OF COUNSEL, AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
THIS SECURITY MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 31, 1999 BETWEEN QUORUM HEALTH GROUP,
INC. AND THE STOCKHOLDER NAMED ON THE FACE HEREOF, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE CORPORATION.
QUORUM HEALTH GROUP, INC.
6% Convertible Subordinated Debenture
due August 31, 2009
Registered R-11 New York, New York
$1,025,257.00 August 31, 1999
QUORUM HEALTH GROUP, INC., a Delaware corporation (hereinafter called
the "Corporation"), for value received, hereby promises to pay ANDREW M. PAUL,
or registered assigns, the principal sum of ONE MILLION TWENTY FIVE THOUSAND TWO
HUNDRED FIFTY-SEVEN DOLLARS ($1,025,257.00), in a single installment on August
31, 2009, or the next preceding Business Day (as defined below) and to pay
interest (computed on the basis of a 360-day year consisting of twelve 30-day
months) from the date hereof on the unpaid principal amount hereof at the rate
of 6% per annum, payable on the last Business Day of March, June, September and
December of each year (each such day being an "Interest Payment Date")
commencing on September 30, 1999, until the principal amount hereof shall have
become due and payable, whether at maturity or by acceleration or otherwise, and
thereafter at the rate of 12% per annum on any overdue principal amount and (to
the extent permitted by applicable law) on any overdue interest until paid.
The payment of principal and interest on this Convertible Debenture
shall be in such currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private debts.
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THAT ACT OR, IN THE OPINION OF COUNSEL, AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
THIS SECURITY MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 31, 1999 BETWEEN QUORUM HEALTH GROUP,
INC. AND THE STOCKHOLDER NAMED ON THE FACE HEREOF, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE CORPORATION.
QUORUM HEALTH GROUP, INC.
6% Convertible Subordinated Debenture
due August 31, 2009
Registered R-12 New York, New York
$75,000.00 August 31, 1999
QUORUM HEALTH GROUP, INC., a Delaware corporation (hereinafter called
the "Corporation"), for value received, hereby promises to pay PAUL B. QUEALLY,
or registered assigns, the principal sum of SEVENTY-FIVE THOUSAND DOLLARS
($75,000.00), in a single installment on August 31, 2009, or the next preceding
Business Day (as defined below) and to pay interest (computed on the basis of a
360-day year consisting of twelve 30-day months) from the date hereof on the
unpaid principal amount hereof at the rate of 6% per annum, payable on the last
Business Day of March, June, September and December of each year (each such day
being an "Interest Payment Date") commencing on September 30, 1999, until the
principal amount hereof shall have become due and payable, whether at maturity
or by acceleration or otherwise, and thereafter at the rate of 12% per annum on
any overdue principal amount and (to the extent permitted by applicable law) on
any overdue interest until paid.
The payment of principal and interest on this Convertible Debenture
shall be in such currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private debts.
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THAT ACT OR, IN THE OPINION OF COUNSEL, AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
THIS SECURITY MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 31, 1999 BETWEEN QUORUM HEALTH GROUP,
INC. AND THE STOCKHOLDER NAMED ON THE FACE HEREOF, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE CORPORATION.
QUORUM HEALTH GROUP, INC.
6% Convertible Subordinated Debenture
due August 31, 2009
Registered R-13 New York, New York
$20,000.00 August 31, 1999
QUORUM HEALTH GROUP, INC., a Delaware corporation (hereinafter
called the "Corporation"), for value received, hereby promises to pay JONATHAN
M. RATHER, or registered assigns, the principal sum of TWENTY THOUSAND DOLLARS
($20,000.00), in a single installment on August 31, 2009, or the next preceding
Business Day (as defined below) and to pay interest (computed on the basis of a
360-day year consisting of twelve 30-day months) from the date hereof on the
unpaid principal amount hereof at the rate of 6% per annum, payable on the last
Business Day of March, June, September and December of each year (each such day
being an "Interest Payment Date") commencing on September 30, 1999, until the
principal amount hereof shall have become due and payable, whether at maturity
or by acceleration or otherwise, and thereafter at the rate of 12% per annum on
any overdue principal amount and (to the extent permitted by applicable law) on
any overdue interest until paid.
The payment of principal and interest on this Convertible
Debenture shall be in such currency of the United States of America as at the
time of payment shall be legal tender for payment of public and private debts.
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THAT ACT OR, IN THE OPINION OF COUNSEL, AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
THIS SECURITY MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 31, 1999 BETWEEN QUORUM HEALTH GROUP,
INC. AND THE STOCKHOLDER NAMED ON THE FACE HEREOF, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE CORPORATION.
QUORUM HEALTH GROUP, INC.
6% Convertible Subordinated Debenture
due August 31, 2009
Registered R-14 New York, New York
$20,000.00 August 31, 1999
QUORUM HEALTH GROUP, INC., a Delaware corporation (hereinafter called
the "Corporation"), for value received, hereby promises to pay RUDOLPH E.
RUPERT, or registered assigns, the principal sum of TWENTY THOUSAND DOLLARS
($20,000.00), in a single installment on August 31, 2009, or the next preceding
Business Day (as defined below) and to pay interest (computed on the basis of a
360-day year consisting of twelve 30-day months) from the date hereof on the
unpaid principal amount hereof at the rate of 6% per annum, payable on the last
Business Day of March, June, September and December of each year (each such day
being an "Interest Payment Date") commencing on September 30, 1999, until the
principal amount hereof shall have become due and payable, whether at maturity
or by acceleration or otherwise, and thereafter at the rate of 12% per annum on
any overdue principal amount and (to the extent permitted by applicable law) on
any overdue interest until paid.
The payment of principal and interest on this Convertible Debenture
shall be in such currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private debts.
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THAT ACT OR, IN THE OPINION OF COUNSEL, AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
THIS SECURITY MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 31, 1999 BETWEEN QUORUM HEALTH GROUP,
INC. AND THE STOCKHOLDER NAMED ON THE FACE HEREOF, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE CORPORATION.
QUORUM HEALTH GROUP, INC.
6% Convertible Subordinated Debenture
due August 31, 2009
Registered R-15 New York, New York
$100,000.00 August 31, 1999
QUORUM HEALTH GROUP, INC., a Delaware corporation (hereinafter called
the "Corporation"), for value received, hereby promises to pay LAWRENCE B.
SORREL, or registered assigns, the principal sum of ONE HUNDRED THOUSAND DOLLARS
($100,000.00), in a single installment on August 31, 2009, or the next preceding
Business Day (as defined below) and to pay interest (computed on the basis of a
360-day year consisting of twelve 30-day months) from the date hereof on the
unpaid principal amount hereof at the rate of 6% per annum, payable on the last
Business Day of March, June, September and December of each year (each such day
being an "Interest Payment Date") commencing on September 30, 1999, until the
principal amount hereof shall have become due and payable, whether at maturity
or by accelera tion or otherwise, and thereafter at the rate of 12% per annum on
any overdue principal amount and (to the extent permitted by applicable law) on
any overdue interest until paid.
The payment of principal and interest on this Convertible Debenture
shall be in such currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private debts.
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THAT ACT OR, IN THE OPINION OF COUNSEL, AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
THIS SECURITY MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 31, 1999 BETWEEN QUORUM HEALTH GROUP,
INC. AND THE STOCKHOLDER NAMED ON THE FACE HEREOF, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE CORPORATION.
QUORUM HEALTH GROUP, INC.
6% Convertible Subordinated Debenture
due August 31, 2009
Registered R-16 New York, New York
$25,000.00 August 31, 1999
QUORUM HEALTH GROUP, INC., a Delaware corporation (hereinafter called
the "Corporation"), for value received, hereby promises to pay SANJAY SWANI, or
registered assigns, the principal sum of TWENTY-FIVE THOUSAND DOLLARS
($25,000.00), in a single installment on August 31, 2009, or the next preceding
Business Day (as defined below) and to pay interest (computed on the basis of a
360-day year consisting of twelve 30-day months) from the date hereof on the
unpaid principal amount hereof at the rate of 6% per annum, payable on the last
Business Day of March, June, September and December of each year (each such day
being an "Interest Payment Date") commencing on September 30, 1999, until the
principal amount hereof shall have become due and payable, whether at maturity
or by acceleration or otherwise, and thereafter at the rate of 12% per annum on
any overdue principal amount and (to the extent permitted by applicable law) on
any overdue interest until paid.
The payment of principal and interest on this Convertible Debenture
shall be in such currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private debts.
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THAT ACT OR, IN THE OPINION OF COUNSEL, AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
THIS SECURITY MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 31, 1999 BETWEEN QUORUM HEALTH GROUP,
INC. AND THE STOCKHOLDER NAMED ON THE FACE HEREOF, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE CORPORATION.
QUORUM HEALTH GROUP, INC.
6% Convertible Subordinated Debenture
due August 31, 2009
Registered R-17 New York, New York
$20,000.00 August 31, 1999
QUORUM HEALTH GROUP, INC., a Delaware corporation (hereinafter called
the "Corporation"), for value received, hereby promises to pay SEAN TRAYNOR, or
registered assigns, the principal sum of TWENTY THOUSAND DOLLARS ($20,000.00),
in a single installment on August 31, 2009, or the next preceding Business Day
(as defined below) and to pay interest (computed on the basis of a 360-day year
consisting of twelve 30-day months) from the date hereof on the unpaid principal
amount hereof at the rate of 6% per annum, payable on the last Business Day of
March, June, September and December of each year (each such day being an
"Interest Payment Date") commencing on September 30, 1999, until the principal
amount hereof shall have become due and payable, whether at maturity or by
acceleration or otherwise, and thereafter at the rate of 12% per annum on any
overdue principal amount and (to the extent permitted by applicable law) on any
overdue interest until paid.
The payment of principal and interest on this Convertible Debenture
shall be in such currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private debts.
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THAT ACT OR, IN THE OPINION OF COUNSEL, AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
THIS SECURITY MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 31, 1999 BETWEEN QUORUM HEALTH GROUP,
INC. AND THE STOCKHOLDER NAMED ON THE FACE HEREOF, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE CORPORATION.
QUORUM HEALTH GROUP, INC.
6% Convertible Subordinated Debenture
due August 31, 2009
Registered R-18 New York, New York
$10,000.00 August 31, 1999
QUORUM HEALTH GROUP, INC., a Delaware corporation (hereinafter called
the "Corporation"), for value received, hereby promises to pay LAURA M.
VANBUREN, or registered assigns, the principal sum of TEN THOUSAND DOLLARS
($10,000.00), in a single installment on August 31, 2009, or the next preceding
Business Day (as defined below) and to pay interest (computed on the basis of a
360-day year consisting of twelve 30-day months) from the date hereof on the
unpaid principal amount hereof at the rate of 6% per annum, payable on the last
Business Day of March, June, September and December of each year (each such day
being an "Interest Payment Date") commencing on September 30, 1999, until the
principal amount hereof shall have become due and payable, whether at maturity
or by acceleration or otherwise, and thereafter at the rate of 12% per annum on
any overdue principal amount and (to the extent permitted by applicable law) on
any overdue interest until paid.
The payment of principal and interest on this Convertible Debenture
shall be in such currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private debts.
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THAT ACT OR, IN THE OPINION OF COUNSEL, AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
THIS SECURITY MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 31, 1999 BETWEEN QUORUM HEALTH GROUP,
INC. AND THE STOCKHOLDER NAMED ON THE FACE HEREOF, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE CORPORATION.
QUORUM HEALTH GROUP, INC.
6% Convertible Subordinated Debenture
due August 31, 2009
Registered R-19 New York, New York
$1,345,650.00 August 31, 1999
QUORUM HEALTH GROUP, INC., a Delaware corporation (hereinafter called
the "Corporation"), for value received, hereby promises to pay PATRICK J. WELSH,
or registered assigns, the principal sum of ONE MILLION THREE HUNDRED FORTY FIVE
THOUSAND SIX HUNDRED FIFTY DOLLARS ($1,345,650.00), in a single installment on
August 31, 2009, or the next preceding Business Day (as defined below) and to
pay interest (computed on the basis of a 360-day year consisting of twelve
30-day months) from the date hereof on the unpaid principal amount hereof at the
rate of 6% per annum, payable on the last Business Day of March, June, September
and December of each year (each such day being an "Interest Payment Date")
commencing on September 30, 1999, until the principal amount hereof shall have
become due and payable, whether at maturity or by acceleration or otherwise, and
thereafter at the rate of 12% per annum on any overdue principal amount and (to
the extent permitted by applicable law) on any overdue interest until paid.
The payment of principal and interest on this Convertible Debenture
shall be in such currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private debts.
For purposes of this Convertible Debenture, "Business Day"
shall mean any day other than a Saturday, Sunday or a legal holiday under the
laws of the State of New York.
1. CONVERTIBLE DEBENTURES. This Convertible Debenture is issued
pursuant to the Securities Purchase Agreement, dated as of August 18, 1999 (the
"Purchase Agreement"), among the Corporation and the purchasers named therein,
providing for, among other things, the issuance of 6% Convertible Subordinated
Debentures due August 31, 2009 in the aggregate principal amount of $150,000,000
(such 6% Convertible Subordinated Debentures are referred to herein collectively
as the "Convertible Debentures").
2. TRANSFER OR EXCHANGE OF CONVERTIBLE DEBENTURES. The Corporation
shall keep at its office or agency maintained as provided in subsection (a) of
Section 8 a register in which the Corporation shall provide for the registration
of Convertible Debentures and for the registration of transfer and exchange of
Convertible Debentures. The holder of this Convertible Debenture may, at its
option, and either in person or by duly authorized attorney, surrender the same
for registration of transfer or exchange at the office or agency of the
Corporation maintained as provided in subsection (a) of Section 8, and, without
expense to such holder (except for taxes or governmental charges imposed in
connection therewith), receive in exchange therefor a Convertible Debenture or
Convertible Debentures in such denomination or denominations as such holder may
request, dated as of the date to which interest has been paid on the Convertible
Debenture or Convertible Debentures so surrendered for transfer or exchange, for
the same aggregate principal amount as the then unpaid principal amount of the
Convertible Debenture or Convertible Debentures so surrendered for transfer or
exchange, and registered in the name of such person or persons as may be
designated by such holder. Every Convertible Debenture presented or surrendered
for registration of transfer or exchange shall be duly endorsed, or shall be
accompanied by a written instrument of transfer, satisfactory in form to the
Corporation, duly executed by the holder of such Convertible Debenture or his
attorney, duly authorized in writing. Every Convertible Debenture so made and
delivered in exchange for this Convertible Debenture shall in all other respects
be in the same form and have the same terms as this Convertible Debenture. No
transfer or exchange of any Convertible Debenture shall be valid unless made in
the foregoing manner at such office or agency.
3. LOSS, THEFT, DESTRUCTION OR MUTILATION OF CONVERTIBLE DEBENTURE.
Upon receipt of evidence satisfactory to the Corporation of the loss, theft,
destruction or mutilation of this Convertible Debenture, and, in the case of any
such loss, theft or destruction, upon receipt of an affidavit of loss from the
holder hereof reasonably satisfactory to the Corporation, or, in the case of any
such mutilation, upon surrender and cancellation of this Convertible Debenture,
the Corporation will make and deliver, in lieu of this Convertible Debenture, a
new Convertible Debenture of like tenor and unpaid principal amount and dated as
of the date to which interest has been paid on this Convertible Debenture.
4. PERSONS DEEMED OWNERS; HOLDERS. The Corporation may deem and treat
the person in whose name any Convertible Debenture is registered as the owner
and holder of such
<PAGE>
Convertible Debenture for the purpose of receiving payment of principal of and
premium, if any, and interest on such Convertible Debenture and for all other
purposes whatsoever, whether or not such Convertible Debenture shall be overdue.
With respect to any Convertible Debenture at any time outstanding, the term
"holder," as used herein, shall be deemed to mean the person in whose name such
Convertible Debenture is registered as aforesaid at such time.
5. PREPAYMENTS.
(a) MANDATORY PREPAYMENT. Subject to the subordination provisions of
Section 14 hereof, in the event that the Corporation (i) shall merge or
consolidate with another corporation or entity (other than the consolidation or
merger of a wholly-owned subsidiary with or into the Corporation or with or into
any other wholly-owned subsidiary, and other than a merger or consolidation
involving the Corporation in which the holders of more than 50% of the
outstanding capital stock, on a fully-diluted basis, immediately prior to such
merger hold more than 50% of the outstanding capital stock of the surviving
corporation in any merger or consolidation, on a fully-diluted basis,
immediately after such merger or consolidation) or (ii) shall sell (including by
way of merger) more than 50% of the assets of the Corporation and its
subsidiaries, taken as a whole, in a single or series of related transactions,
the Corporation shall, at the option of the holder of each Convertible Debenture
then outstanding, prepay such Convertible Debenture at the principal amount
thereof, together with interest thereon to the date fixed for prepayment.
(b) OPTIONAL PREPAYMENT. Upon notice given as provided in Section 6,
the Corporation may, at its option, at any time after August 31, 2001, prepay
all, but not less than all, of the Convertible Debentures at the principal
amount thereof so to be prepaid, together with interest accrued thereon to the
date fixed for such prepayment.
(c) NON-IMPAIRMENT OF CONVERSION RIGHTS. Notwithstanding the foregoing
provisions of paragraphs (a) and (b), nothing in this Section 5 shall impair the
right of the holder hereof to convert all or any portion of this Convertible
Debenture into Common Stock in accordance with the provisions of Section 15
hereof until such time as the amount to be prepaid by the Corporation has been
received by such holder.
6. NOTICE OF PREPAYMENT AND OTHER NOTICES. The Corporation shall give
written notice of prepayment of this Convertible Debenture or any portion hereof
pursuant to Section 5 not less than 15 or not more the 30 days prior to the date
fixed for such prepayment. Such notice of prepayment and all other notices to be
given to any holder of this Convertible Debenture shall be given by registered
or certified mail to the person in whose name this Convertible Debenture is
registered at its address designated on the register maintained by the
Corporation on the date of mailing such notice of prepayment or other notice.
Upon notice of prepayment being given as aforesaid, the Corporation covenants
and agrees that it will prepay, on the date therein fixed for prepayment, this
Convertible Debenture or the portion hereof, as the case may be, so called for
prepayment, at the principal amount thereof so called for prepayment together
with interest accrued thereon to the date fixed for such prepayment.
<PAGE>
7. INTEREST AFTER DATE FIXED FOR PREPAYMENT. If this Convertible
Debenture or a portion hereof is called for prepayment as herein provided, this
Convertible Debenture or such portion shall cease to bear interest on and after
the date fixed for such prepayment unless, upon presentation for the purpose of
prepayment, the Corporation shall fail to pay this Convertible Debenture or such
portion, as the case may be, on such date, in which event this Convertible
Debenture or such portion, as the case may be, and, so far as may be lawful, any
overdue install ment of interest thereon, shall bear interest on and after the
date fixed for such prepayment and until paid at the rate of 12% per annum.
8. AFFIRMATIVE COVENANTS. The Corporation covenants and agrees that,
so long as any Convertible Debenture shall be outstanding:
(a) MAINTENANCE OF OFFICE. The Corporation will maintain an office or
agency in the City of Brentwood, in the State of Tennessee (or such other place
in the United States of America as the Corporation may designate in writing to
the registered holder hereof), where the Convertible Debentures may be presented
for registration of transfer and for exchange as herein provided, where notices
and demands to or upon the Corporation in respect of the Convertible Debentures
may be served and where, at the option of the holders thereof, the Convertible
Debentures may be presented for payment. Until the Corporation otherwise
notifies the holders of the Convertible Debentures, said office shall be the
principal office of the Corporation in Brentwood, Tennessee.
(b) PAYMENT OF TAXES. The Corporation will promptly pay and discharge
or cause to be paid and discharged, before the same shall become in default, all
lawful taxes and assessments imposed upon the Corporation or any subsidiary or
upon the income and profits of the Corporation or any subsidiary, or upon any
property, real, personal or mixed, belonging to the Corporation or any
subsidiary, or upon any part thereof by the United States or any State thereof,
as well as all lawful claims for labor, materials and supplies, which, if
unpaid, would become a lien or charge upon such property or any part thereof;
provided, however, that the Corporation shall not be required to pay and
discharge or to cause to be paid and discharged any such tax, assessment,
charge, levy or claim (I) so long as both (x) the Corporation has set aside
adequate reserves for such tax, assessment, charge, levy or claim and (y)(i) the
Corporation shall be contesting the validity thereof in good faith by
appropriate proceedings or (ii) the Corporation shall, in its good faith
judgment, deem the validity thereof to be questionable and the party to whom
such tax, assessment, charge, levy or claim is allegedly owed shall not have
made written demand for the payment thereof or (II) where the failure to pay or
discharge would not have a material adverse effect on the Corporation and its
subsidiaries, taken as a whole (a "Material Adverse Effect").
(c) CORPORATE EXISTENCE. The Corporation will do or cause to be done
all things necessary and lawful to preserve and keep in full force and effect
its corporate existence, rights and franchises under the laws of the United
States or any State thereof or the District of Columbia; provided, however, that
nothing in this subsection (c) shall prevent (i) a consolidation
<PAGE>
or merger of, or a sale, transfer or disposition of all or any substantial part
of the property and assets of, the Corporation, or (ii) the abandonment or
termination of any rights or franchises of the Corporation, if such abandonment
or termination is, in the good faith business judgment of the Corporation, in
the best interests of the Corporation or would not have a Material Adverse
Effect.
(d) MAINTENANCE OF PROPERTY. The Corporation will at all times
maintain and keep, or cause to be maintained and kept, in good repair, working
order and condition all significant properties of the Corporation used in the
conduct of the business of the Corporation, and will from time to time make or
cause to be made all needful and proper repairs, renewals, replacements,
betterments and improvements thereto, so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this subsection (d) shall require (i) the
making of any repair or renewal or (ii) the continuance of the operation and
maintenance of any property or (iii) the retention of any assets, if such action
(or inaction) is, in the good faith business judgment of the Corporation, in the
best interests of the Corporation or would not have a Material Adverse Effect.
(e) INSURANCE. The Corporation will (i) keep adequately insured, by
financially sound and reputable insurers, all property of a character usually
insured by corporations engaged in the same or a similar business similarly
situated against loss or damage of the kinds customarily insured against by such
corporations and (ii) carry, with financially sound and reputable insurers, such
other insurance (including, without limitation, liability insurance) in such
amounts as are available at reasonable expense and to the extent believed
necessary in the good faith business judgment of the Corporation.
(f) KEEPING OF BOOKS. The Corporation will at all times keep proper
books of record and account in which proper entries will be made of its
transactions in accordance with generally accepted accounting principles
consistently applied.
(g) NOTICE OF DEFAULT. If any one or more events which constitute, or
which with notice or lapse of time or both would constitute, an Event of Default
under Section 10 shall occur, or if the holder of any Convertible Debenture
shall demand payment or take any other action permitted upon the occurrence of
any such Event of Default, the Corporation shall immediately after it becomes
aware that any such event would with or without notice or lapse of time or both
constitute such an Event or that such demand has been made or that any such
action has been taken, give notice to the holder of this Convertible Debenture,
specifying the nature of such event or of such demand or action, as the case may
be; provided, however, that if such event, in the good faith judgment of the
Corporation, will be cured within ten Business Days after the Corporation has
knowledge that such event would, with or without notice or lapse of time or
both, constitute such an Event of Default, no such notice need be given if such
Event of Default shall be cured within such ten-day period.
9. MODIFICATION BY HOLDERS; WAIVER. The Corporation may, with the
written consent of the holders of not less than 66 2/3% in principal amount of
the Convertible Debentures
<PAGE>
then outstanding, modify the terms and provisions of the Convertible Debentures
or the rights of the holders of the Convertible Debentures or the obligations of
the Corporation thereunder, and the observance by the Corporation of any term or
provision of the Convertible Debentures may be waived with the written consent
of the holders of not less than 66 2/3% in principal amount of the Convertible
Debentures then outstanding; provided, however, that no such modification or
waiver shall:
(a) change the maturity of any Convertible Debenture or reduce
the principal amount thereof or reduce the rate or extend the time of
payment of interest thereon or reduce the amount or change the time of
payment of premium payable on any prepayment thereof without the
consent of the holder of each Convertible Debenture so affected; or
(b) give any Convertible Debenture any preference over any other
Convertible Debenture; or
(c) reduce the applicable aforesaid percentages of Convertible
Debentures, the consent of the holders of which is required for any
such modification.
Any such modification or waiver shall apply equally to all the holders
of the Convertible Debentures and shall be binding upon them, upon each future
holder of any Convertible Debenture and upon the Corporation, whether or not
such Convertible Debenture shall have been marked to indicate such modification
or waiver, but any Convertible Debenture issued thereafter shall bear a notation
referring to any such modification or waiver. Promptly after obtaining the
written consent of the holders as herein provided, the Corporation shall
transmit a copy of such modification or waiver to all the holders of the
Convertible Debentures at the time outstanding.
10. EVENTS OF DEFAULT. If any one or more of the following events,
herein called "Events of Default," shall occur, for any reason whatsoever, and
whether such occurrence shall, on the part of the Corporation, be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of a court of competent
jurisdiction or any order, rule or regulation of any administrative or other
governmental authority and such Event of Default shall be continuing:
(a) default shall be made in the payment of the principal of any
Convertible Debenture or the premium thereon, if any, when and as the same
shall become due and payable, whether at maturity or at a date fixed for
prepayment or by acceleration or otherwise; or
(b) default shall be made in the payment of any installment of
interest on any Convertible Debenture according to its terms when and as
the same shall become due and payable and such default shall continue for a
period of 15 days; or
<PAGE>
(c) (i) commencement of a voluntary case under the federal bankruptcy
laws (as now or hereafter in effect), (ii) filing a petition seeking to
take advantage of any other laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding-up or composition for
adjustment of debts, (iii) consenting to or failing to contest in a timely
and appropriate manner any petition filed against it in an involuntary case
under such bankruptcy laws or other laws, (iv) applying for or consenting
to, or failing to contest in a timely and appropriate manner, the
appointment of, or the taking of possession by, a receiver, custodian,
trustee, or liquidator of itself or of a substantial part of its property,
domestic or foreign, (v) admitting in writing its inability to pay its
debts as they become due, (vi) making a general assignment for the benefit
of creditors, or (vii) taking any corporate action for the purpose of
authorizing any of the foregoing; or
(d) the entry of a decree or order by any court of competent
jurisdiction in respect of the Corporation or any material subsidiary
granting (i) relief in any involuntary case under the federal bankruptcy
laws (as now or hereafter in effect) or under any other laws, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, winding up or
adjustment of debts, or (ii) appointment of a trustee, receiver, custodian,
liquidator or the like for the Corporation or any material subsidiary or
for all or any substantial part of their respective assets, domestic or
foreign, and such case or proceeding shall continue undismissed or unstayed
for a period of 60 consecutive days; or
(e) default as defined in any instrument evidencing Senior Obligations
as defined in Section 14 hereof shall occur and as a result thereof the
maturity of any such indebtedness shall have been accelerated so that the
same shall have become due and payable prior to the date on which the same
would otherwise have become due and payable and such acceleration shall not
have been rescinded or annulled or any such indebtedness shall not have
been paid at maturity;
then, the holder or holders of at least a majority in aggregate principal amount
of the Convertible Debentures at the time outstanding may, at its or their
option, by written notice to the Corporation, declare all the Convertible
Debentures to be, and all the Convertible Debentures shall thereupon be and
become, forthwith due and payable together with interest accrued thereon without
presentment, demand, protest or further notice of any kind, all of which are
expressly waived to the extent permitted by law; provided, however, that, upon
the occurrence and during the continuance of any of the events specified in
subsections (a) or (b) of this Section 10, the holder of any Convertible
Debenture at the time outstanding may, at its option by notice in writing to the
Corporation, declare any Convertible Debenture or Convertible Debentures then
held by it to be, and such Convertible Debenture or Convertible Debentures shall
thereupon be and become, forthwith due and payable together with interest
accrued thereon without presentment, demand, protest or further notice of any
kind, all of which are expressly waived to the extent permitted by law.
Notwithstanding the foregoing, nothing in this Section 10 shall impair the right
of the holder of this Convertible Debenture to convert all or any portion of
this Convertible Debenture into Common Stock in accordance with the provisions
of Section 15 hereof.
<PAGE>
At any time after any declaration of acceleration has been made as
provided in this Section 10, the holders of at least 66-2/3% in principal amount
of the Convertible Debentures then outstanding may, by notice to the
Corporation, rescind such declaration and its consequences if (i) the
Corporation has paid all overdue installments of interest on the Convertible
Debentures and all principal (and premium, if any) that has become due otherwise
than by such declaration of acceleration; and (ii) all other defaults and Events
of Default (other than nonpayments of principal and interest that have become
due solely by reason of acceleration) shall have been remedied or cured or shall
have been waived pursuant to this paragraph; provided, however, that no such
rescission shall extend to or affect any subsequent default or Event of Default
or impair any right consequent thereon.
Without limiting the foregoing, the Corporation hereby waives any
right to trial by jury in any legal proceeding related in any way to this
Convertible Debenture or the Convertible Debentures and agrees that any such
proceeding may, if the holder so elects, be brought and enforced in the Supreme
Court of the State of New York or the United States District Court for the
Southern District of New York and the Corporation hereby waives any objection to
jurisdiction or venue in any such proceeding commenced in such court. The
Corporation further agrees that any process required to be served on it for
purposes of any such proceeding may be served on it, with the same effect as
personal service on it within the State of Delaware, by registered mail
addressed to it at its office or agency set forth in Section 19 for purposes of
notices hereunder.
11. SUITS FOR ENFORCEMENT. In case any one or more of the Events of
Default specified in Section 10 of this Convertible Debenture shall happen and
be continuing, the holder of this Convertible Debenture may proceed to protect
and enforce its rights by suit in equity, action at law and/or by other
appropriate proceeding, whether for the specific performance of any covenant or
agreement contained in this Convertible Debenture or in aid of the exercise of
any power granted in this Convertible Debenture, or may proceed to enforce the
payment of this Convertible Debenture or to enforce any other legal or equitable
right of the holder of this Conve rtible Debenture.
In case of any default under any Convertible Debenture, the
Corporation will pay to the holder thereof such amounts as shall be sufficient
to cover the out-of-pocket costs and expenses of such holder due to said
default, including, without limitation, collection costs and reasonable
attorneys' fees, to the extent actually incurred.
12. REMEDIES CUMULATIVE. No remedy herein conferred upon the holder of
this Convertible Debenture is intended to be exclusive of any other remedy and
each and every such remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute or otherwise.
13. REMEDIES NOT WAIVED. No course of dealing between the Corporation
and the holders of this Convertible Debenture or any delay on the part of the
holder hereof in
<PAGE>
exercising any rights hereunder shall operate as a waiver of any right of any
holder of this Convertible Debenture.
14. SUBORDINATION. The Corporation covenants and agrees, and the
holder of this Convertible Debenture, by his, her or its acceptance thereof,
likewise covenants and agrees, that the indebtedness represented by this
Convertible Debenture and the payment of the principal of and interest on this
Convertible Debenture are hereby expressly made subordinate and subject in right
of payment to the prior payment in full of all Senior Obligations (as defined).
As used herein, "Senior Obligations" means the principal of (and premium, if
any) and interest on (a) all indebtedness of the Corporation (including
indebtedness of others guaranteed by the Corporation) other than the Convertible
Debentures, whether outstanding on the date of this Convertible Debenture or
thereafter created, incurred or assumed, which is (i) for money borrowed or (ii)
evidenced by a note or similar instrument given in connection with the
acquisition of any business, properties or assets of any kind, (b) any other
obligations included within the definition of "Debt" under the Indenture
relating to the Corporation's 8-3/4% Senior Subordinated Notes due November 1,
2005, whether outstanding on the date of this Convertible Debenture or
thereafter created, incurred or assumed, and (c) amendments, renewals,
extensions, modifications and refundings of any such indebtedness, unless in any
case in the instrument creating or evidencing any such indebtedness or pursuant
to which the same is outstanding it is expressly provided that such indebtedness
is not superior in right of payment to the Convertible Debentures.
(i) No payment or prepayment of any principal of or interest on
account of and no repurchase, redemption or other retirement (whether
at the option of the holder or otherwise) of, or any other payment of
any nature with respect to this Convertible Debenture shall be made,
if at the time of such payment, prepayment, repurchase, redemption or
retirement or immediately after giving effect thereto (1) there shall
exist a default in any payment with respect to any Senior Obligations,
or (2) there shall have occurred an event of default (other than (A) a
default in payment of the Senior Obligations or (B) an event of
default with respect to the Senior Obligations resulting from a
default arising under Section 10(a) or Section 10(b) hereof while the
payment blockage contemplated by this clause (i) is in effect and
solely as a result of such operation of this clause (i)) with respect
to any Senior Obligations permitting the holder or holders thereof to
require payment thereof (with notice, lapse of time, or both) and such
event of default shall not have been cured or waived.
(ii) In the event of any dissolution, winding-up, liquidation,
reorganization, arrangement, adjustment, protection, relief or
composition of the Corporation or its debts, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership, arrangement,
reorganization, relief or other proceedings or upon an assignment for
the benefit of creditors or any other marshaling of the assets and
liabilities of the Corporation or otherwise, then the holders of
Senior Obligations shall be entitled to receive payment in full in
cash of all Senior Obligations (including interest thereon accruing
after the commencement of any such proceedings) before the holder of
this Convertible Debenture
<PAGE>
is entitled to receive any payment on account of principal of, or
interest upon, or any other payment of any nature with respect to,
this Convertible Debenture, and to that end the holders of Senior
Obligations shall be entitled to receive distributions of any kind or
character, whether in cash or property or securities, that may be
payable or deliverable in any such proceedings in respect of this
Convertible Debenture, for application (in the case of cash) to or as
collateral (in the case of non-cash property or securities) for the
payment or prepayment of all Senior Obligations in full, after giving
effect to any concurrent payment or distribution to the holders of
such Senior Obligations.
(iii) In the event that this Convertible Debenture is declared
due and payable before its expressed maturity because of the
occurrence of an event of default (under circumstances when the
provision of the foregoing paragraphs (i) or (ii) are not applica-
ble), the holders of the Senior Obligations outstanding at the time
that this Convertible Debenture becomes due and payable because of
such occurrence of such an event of default shall be entitled to
receive payment in full in cash of all Senior Obligations before the
holder of this Convertible Debenture is entitled to receive any
payment on account of the principal of or premium, if any, or interest
on, or any other payment of any nature with respect to, this
Convertible Debenture.
(iv) In the event that any of the events described in paragraphs
(i), (ii) and (iii) shall occur and, notwithstanding the provisions of
said paragraphs, any such payment or distribution of assets of the
Corporation of any kind or character, whether in cash, property or
securities, shall be received by the holder of this Convertible
Debenture before all Senior Obligations are paid in full in cash, such
payment or distribution shall be held in trust for the benefit of, and
shall promptly be paid over or delivered to, the holders of such
Senior Obligations or their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which any
instruments evidencing any of such Senior Obligations may have been
issued, as their respective interests may appear, for application (in
the case of cash) to or as collateral (in the case of non-cash
property or securities) for the payment or prepayment of all Senior
Obligations remaining unpaid in full in accordance with their terms,
after giving effect to any concurrent payment or distribution to the
holders of such Senior Obligations.
(v) No holder of Senior Obligations shall be prejudiced in its
right to enforce subordination of this Convertible Debenture by any
act or failure to act on the part of the Corporation. The provisions
of this Section 14 are intended to be for the benefit of, and shall be
enforceable directly by, the holders of the Senior Obligations.
(vi) Any representative from time to time selected by the holders
of the Senior Obligations (each such representative, a "Senior Debt
Representative") is hereby irrevocably authorized and empowered (in
its own name or in the name of the holders of this Convertible
Debenture or otherwise), but shall have no obligation, to demand, sue
for, collect and receive every payment or distribution referred to
above in this Section 14 and
<PAGE>
give acquittance therefor and to file claims and proofs of claim and
take such other action (including, without limitation, voting the
indebtedness evidenced by this Convertible Debenture in any proceeding
referred to in paragraph (ii) above or otherwise or enforcing any
security interest or other lien securing payment of the indebtedness
evidenced by this Convertible Debenture as it may deem necessary or
advisable for the exercise or enforcement of any of the rights or
interest of the holders or owners of the Senior Obligations or any
Senior Debt Representative hereunder.
(vii) Each holder hereof shall duly and promptly take such action
as any Senior Debt Representative may request (1) to collect the
indebtedness evidenced by this Convertible Debenture for the account
of the holders and owners of the Senior Obliga tions and the Senior
Debt Representatives and to file appropriate claims or proofs of claim
in respect of the indebtedness evidenced by this Convertible
Debenture, (2) to execute and deliver to any Senior Debt
Representative such powers of attorney, assignments or other
instruments as it may request in order to enable it to enforce any and
all claims with respect to, and any security interests and other liens
securing payment of, the indebtedness evidenced by this Convertible
Debenture, and (3) to collect and receive any and all payments or
distributions that may be payable or deliverable upon or with respect
to the indebtedness evidenced by this Convertible Debenture.
(viii) Each Senior Debt Representative is hereby authorized to
demand specific performance of the provisions of this Section 14,
whether or not the Corporation shall have complied with any of the
provisions hereof applicable to it, at any time when the holder hereof
shall have failed to comply with any of the provisions of this Section
14 applicable to such holder. Each holder of this Convertible
Debenture hereby irrevocably waives any defense based on the adequacy
of a remedy at law that might be asserted as a bar to such remedy of
specific performance. Each holder of this Convertible Debenture hereby
acknowledges that the provisions of this Section 14 are intended to be
enforceable at all times, whether before or after the commencement of
a proceeding referred to in paragraph (ii) above.
(ix) Notwithstanding any other provision of this Convertible
Debenture, until such time as the Senior Obligations shall have been
paid in full in cash, no holder hereof may (1) ask, demand or sue for
any payment, distribution or any other remedy in respect of the
indebtedness evidenced hereby, (2) commence, or join with any other
creditor (other than the holders of the Senior Obligations or any
representative thereof) in commencing, any proceeding referred to in
paragraph (ii) above or (3) declare any amount of the indebtedness
evidenced hereby to be due and payable, in each case during the period
(the "Remedy Standstill Period") lasting until the later of (i) May
22, 2006 and (ii) one year after receipt of notice from any holder of
any Senior Obligations or any Senior Debt Representative that the
making of any payment with respect to this Convertible Debenture would
be prohibited at such time by the provisions of paragraph (i) of this
Section 14; provided, however, that the Remedy Standstill Period shall
terminate automatically (a) upon the
<PAGE>
commencement of any proceeding referred to in paragraph (ii) above,
(b) upon the acceleration of the maturity of the Senior Obligations or
the institution of any foreclosure or other proceedings to enforce the
payment of such obligations or (c) at such time as the making of any
payment with respect to this Convertible Debenture would not be
prohibited by the provisions of paragraph (i) of this Section 14
(unless, in the case of (a) and (b) above, any such proceeding or
acceleration shall be rescinded, in which event such Remedy Standstill
Period shall automatically be reinstated as of the date of such
rescission). Nothing contained herein shall affect the right of any
holder of Senior Obligations or any Senior Debt Representative to give
notice of any subsequent default under such obligations, including
notice of the recurrence of a default previously cured or waived.
(x) Each holder hereof and the Corporation will, at the
Corporation's expense and at any time and from time to time, promptly
execute and deliver all further instruments and documents, and take
all further action, that may be necessary or desirable, or that any
representative of the holders of the Senior Obligations may request,
in order to protect any right or interest granted or purported to be
granted by the provisions of this Section 14 or to enable the holders
of such Senior Obligations or such representative to exercise and
enforce its rights and remedies hereunder.
(xi) All rights and interests under this Section 14 of the
holders of the Senior Obligations or such representative, and all
agreements and obligations of each of the holders hereof and the
Corporation under this Section 14, shall remain in full force and
effect irrespective of:
(1) any lack of validity or enforceability of any
agreement or instrument evidencing or relating to any Senior
Obligations;
(2) any change in the time, manner or place of payment
of, or in any other term of, or in the amount of, all or any
of the Senior Obligations, or any other amendment or waiver
of or any consent to departure from any agreement or
instrument evidencing or relating to any Senior Obligations;
(3) any exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or
consent to departure from any guaranty, for all or any of
the Senior Obligations; or
(4) any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the
Corporation or a subordinated creditor.
(xii) The provisions of this Section 14 shall continue to be
effective or be reinstated, as the case may be, if at any time
any payment of any of the Senior Obligations is rescinded or must
otherwise be returned by any holder of Senior Obligations or any
<PAGE>
Senior Debt Representative upon the insolvency, bankruptcy or
reorganization of the Corporation or otherwise, all as though
such payment had not been made.
(xiii) Each holder hereof and the Corporation hereby waive
promptness, diligence, notice of acceptance and any other notice
with respect to any of the Senior Obligations and this Section 14
and any requirement that any holder of Senior Obligations or any
representative of such holder protect, secure, perfect or insure
any security interest or lien on any property subject thereto or
exhaust any right or take any action against the Corporation or
any other person or entity or any collateral.
(xiv) No failure on the part of any holder of Senior
Obligations or any representative of such holder to exercise, and
no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or
the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
(xv) The provisions of this Section 14 constitute a
continuing agreement and shall (1) remain in full force and
effect until the Senior Obligations shall have been paid in full,
(2) be binding upon the holders hereof and the Corporation and
each of their respective successors and assigns, and (3) inure to
the benefit of and be enforceable by each of the holders of
Senior Obligations and their representatives, successors,
transferees and assigns. Without limiting the generality of the
foregoing clause (3), any holder of Senior Obligations may assign
or otherwise transfer any note or other evidence of indebtedness
held by it, or grant any participation in any of its rights or
obligations under any agreement or instrument evidencing or
relating to such Senior Obligations to any other person or
entity, and such other person or entity shall thereupon become
vested with all the rights in respect thereof granted to such
holder herein or otherwise.
The provisions of this Section 14 are solely for the purpose of
defining the relative rights of the holders of Senior Obligations, on the one
hand, and each holder hereof, on the other hand, and nothing herein shall
impair, as between the Corporation and each of the holders hereof, the
obligation of this Corporation, which is unconditional and absolute, to pay the
principal of and interest hereon in accordance with their terms, nor shall
anything herein prevent each of the holders hereof from exercising all remedies
otherwise permitted by applicable law or this Convertible Debenture upon default
hereunder, subject to the rights as set forth above of holders of Senior
Obligations to receive cash, property or securities otherwise payable or
deliverable to each of the holders hereof.
Notwithstanding any provision contained herein to the contrary, the
indebtedness evidenced hereby shall not be subordinated to claims of any trade
creditors of the Corporation.
<PAGE>
15. CONVERSION.
(a) OPTIONAL CONVERSION. Subject to the terms and conditions of this
Section 15, the holder of this Convertible Debenture shall have the right, at
its option at any time, to convert all or any portion of the unpaid principal
amount of this Convertible Debenture into such number of fully paid and
nonassessable whole shares of Common Stock, $.01 par value, of the Corpo ration
("Common Stock") as is obtained by dividing the principal amount of this
Convertible Debenture so to be converted by the conversion price of $11.25 per
share or, if different, by the conversion price as last adjusted and in effect
at the date of such conversion (such price, or such price as last adjusted,
being referred to herein as the "Conversion Price"). Such right of conversion
shall be exercised by the holder hereof by giving written notice that the holder
elects to convert a stated unpaid principal amount of this Convertible Debenture
into Common Stock and by surrender of this Convertible Debenture to the
Corporation at its principal office (or such other office or agency of the
Corporation as the Corporation may designate by notice in writing to the holder
or holders of this Convertible Debenture) at any time during its usual business
hours on the date set forth in such notice, together with a statement of the
name or names (with address) in which the certificate or certificates for shares
of Common Stock shall be issued.
(b) AUTOMATIC CONVERSION. In the event that the average closing price
of the Common Stock over any 90-day period beginning on or after August 31, 2002
exceeds 150% of the then applicable Conversion Price, then all of the
Convertible Debentures at the time issued and outstanding shall be converted
into shares of Common Stock in accordance with the terms of paragraph (a) above,
automatically and without action on the part of the holders of the Convertible
Debentures, with the same effect as if such Convertible Debentures had been
surrendered for conversion on such date by the holders thereof.
(c) ISSUANCE OF CERTIFICATES; TIME CONVERSION EFFECTED. Promptly after
(i) the receipt of the written notice referred to in paragraph (a) above or (ii)
the occurrence of the events described in paragraph (b) above, as the case may
be, and surrender of this Convertible Debenture, the Corporation shall issue and
deliver, or cause to be issued and delivered, to the holder, registered in such
name or names as such holder may direct, a certificate or certificates for the
number of whole shares of Common Stock issuable upon the conversion of such
unpaid principal amount of this Convertible Debenture. To the extent permitted
by law, such conversion shall be deemed to have been effected and the Conversion
Price shall be determined as of the close of business on the date on which such
written notice shall have been received by the Corporation and this Convertible
Debenture shall have been surrendered as aforesaid or the last day of the 90-day
period described in paragraph (b), as the case may be, and at such time the
rights of the holder of this Convertible Debenture, to the extent of the
principal amount thereof to be converted, shall cease, and the person or persons
in whose name or names any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the shares represented thereby.
<PAGE>
(d) FRACTIONAL SHARES; DIVIDENDS; PARTIAL CONVERSION. No fractional
shares shall be issued upon conversion of the principal amount of this
Convertible Debenture or any portion thereof, and no payment or adjustment shall
be made upon any conversion on account of any cash dividends on the Common Stock
issued upon such conversion. At the time of each conversion, the Corporation
shall pay in cash an amount equal to all interest accrued and unpaid on the
principal amount of this Convertible Debenture to be converted to the date upon
which such conversion is deemed to take place as provided in paragraph (c)
above. In case of the conversion of only a portion of the unpaid principal
amount of this Convertible Debenture, the holder hereof, at its option, may
require the Corporation to execute and deliver at the expense of the Corpora-
tion (other than for transfer taxes, if any), upon surrender of this Convertible
Debenture, a new Convertible Debenture registered in the name of such person or
persons as may be designated by such holder for the principal amount of this
Convertible Debenture then remaining unpaid, dated as of the date to which
interest has been paid on the principal amount of this Convertible Debenture
then remaining unpaid, or may present this Convertible Debenture to the
Corporation for notation hereon of the payment of the portion of the principal
amount of this Convertible Debenture so converted. If any fractional interest in
a share of Common Stock would, except for the provisions of the first sentence
of this paragraph (d), be deliverable upon any such conversion, the Corporation,
in lieu of delivering the fractional share thereof, shall pay to the holder
surrendering this Convertible Debenture for conversion an amount in cash equal
to such fractional interest multiplied by the Conversion Price then in effect.
(e) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF COMMON SHARES. If
and whenever the Corporation shall issue or sell, or is in accordance with
subparagraphs (i) through (vii) deemed to have issued or sold, any shares of its
Common Stock for a consideration per share less than the Conversion Price in
effect immediately prior to the time of such issue or sale, then, forthwith upon
such issue or sale, the Conversion Price shall be reduced to the price
(calculated to the nearest cent) determined by dividing (x) an amount equal to
the sum of (1) the number of shares of Common Stock outstanding immediately
prior to such issue or sale (including as outstanding all shares of Common Stock
issuable upon conversion of outstanding Convertible Debentures) multiplied by
the then existing Conversion Price, and (2) the consideration, if any, received
by the Corporation upon such issue or sale, by (y) the total number of shares of
Common Stock outstanding immediately after such issue or sale (including as
outstanding all shares of Common Stock issuable upon conversion of outstanding
Convertible Debentures).
No adjustment of the Conversion Price, however, shall be made in an
amount less than $.01 per share, and any such lesser adjustment shall be carried
forward and shall be made at the time and together with the next subsequent
adjustment which together with any adjustments so carried forward shall amount
to $.01 per share or more.
For purposes of this subparagraph (e), the following subparagraphs (i)
to (vii) shall also be applicable:
<PAGE>
(i) ISSUANCE OF RIGHTS OR OPTIONS. In case at any time the
Corporation shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any rights to subscribe for
or to purchase, or any options for the purchase of, Common Stock
or any stock or securities convertible into or exchangeable for
Common Stock (such rights or options being herein called
"Options" and such convertible or exchangeable stock or
securities being herein called "Convertible Securities") whether
or not such Options, or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the price
per share for which Common Stock is issuable upon the exercise of
such Options or upon conversion or exchange of such Convertible
Securities (determined by dividing (x) the total amount, if any,
received or receivable by the Corporation as consideration for
the granting of such Options, plus the minimum aggregate amount
of additional consideration payable to the Corporation upon the
exercise of all such Options, plus, in the case of such Options
which relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable upon the
issue or sale of such Convertible Securities and upon the
conversion or exchange thereof, by (y) the total maximum number
of shares of Common Stock issuable upon the exercise of such
Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such
Options) shall be less than the Conversion Price in effect
immediately prior to the time of the granting of such Options,
then the total maximum number of shares of Common Stock issuable
upon the exercise of such Options or upon conversion or exchange
of the total maximum amount of such Convertible Securities
issuable upon the exercise of such Options shall be deemed to
have been issued for such price per share as of the date of
granting of such Options and thereafter shall be deemed to be
outstanding. Except as otherwise provided in subparagraph (iii),
no adjustment of the Conversion Price shall be made upon the
actual issue of such Common Stock or of such Convertible
Securities upon exercise of such Options or upon the actual issue
of such Common Stock upon conversion or exchange of such
Convertible Securities. If at the end of the period during which
such Options or Convertible Securities are exercisable not all
Options or Convertible Securities shall have been exercised or
converted, the adjusted Conversion Price shall be immediately
readjusted to what it would have been based upon the number of
additional shares of Common Stock actually issued in respect of
such Options and Convertible Securities.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. In case the
Corporation shall in any manner issue (whether directly or by
assumption in a merger or otherwise) or sell any Convertible
Securities, whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share
for which Common Stock is issuable upon such conversion or
exchange (determined by dividing (x) the total amount received or
receivable by the Corporation as consideration for the issue or
sale of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the
Corporation upon the conversion or exchange thereof, by (y) the
total maximum number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities) shall
be less than the Conversion Price in effect immediately prior
<PAGE>
to the time of such issue or sale, then the total maximum number
of shares of Common Stock issuable upon conversion or exchange of
all such Convertible Securities shall be deemed to have been
issued for such price per share as of the date of the issue or
sale of such Convertible Securities and thereafter shall be
deemed to be outstanding, provided that (1) except as otherwise
provided in subparagraph (iii) below, no adjustment of the
Conversion Price shall be made upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible
Securities and (2) if any such issue or sale of such Convertible
Securities is made upon exercise of any Option to purchase any
such Convertible Securities for which adjustments of the
Conversion Price have been or are to be made pursuant to other
provisions of this paragraph (e), no further adjustment of the
Conversion Price shall be made by reason of such issue or sale.
If at the end of the period during which such Convertible
Securities are convertible not all Convertible Securities shall
have been converted, the adjusted Conversion Price shall be
immediately readjusted to what it would have been based upon the
number of additional shares of Common Stock actually issued in
respect of such Convertible Securities.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. Upon the
happening of any of the following events, namely, if the purchase
price provided for in any Option referred to in subparagraph (i),
the additional consideration, if any, payable upon the conversion
or exchange of any Convertible Securities referred to in
subparagraph (i) or (ii), or the rate at which any Convertible
Securities referred to in subparagraph (i) or (ii) are
convertible into or exchangeable for Common Stock shall change at
any time (other than under or by reason of provisions designed to
protect against dilution), the Conversion Price in effect at the
time of such event shall forthwith be readjusted to the
Conversion Price which would have been in effect at such time had
such Options or Convertible Securities still outstanding provided
for such changed purchase price, additional consideration or
conversion rate, as the case may be, at the time initially
granted, issued or sold; and on the expiration of any such Option
or termination of any such right to convert or exchange such
Convertible Securities, the Conversion Price then in effect
hereunder shall forthwith be increased to the Conversion Price
which would have been in effect at the time of such expiration or
termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or
termination, never been issued, and the Common Stock issuable
thereunder shall no longer be deemed to be outstanding. If the
purchase price provided for in any such Option referred to in
subparagraph (i) or the rate at which any Convertible Securities
referred to in subparagraph (i) or (ii) are convertible into or
exchangeable for Common Stock shall be reduced at any time under
or by reason of provisions with respect thereto designed to
protect against dilution, then, in case of the delivery of Common
Stock upon the exercise of any such Option or upon conversion or
exchange of any such Convertible Securities, the Conversion Price
then in effect hereunder shall forthwith be adjusted to such
respective amount as would have been obtained had such Option or
Convertible Securities never been issued as to such Common Stock
and had adjustments been made upon the issuance of the shares of
Common Stock
<PAGE>
delivered as aforesaid, but only if as a result of such
adjustment the Conversion Price then in effect hereunder is
thereby reduced.
(iv) STOCK DIVIDENDS. Without duplication of the adjustment
contemplated by clause (f) below, in case the Corporation shall
declare a dividend or make any other distribution upon any stock
of the Corporation payable in Common Stock, Options or
Convertible Securities, any Common Stock, Options or Convertible
Securities, as the case may be, issuable in payment of such
dividend or distribution shall be deemed to have been issued or
sold without consideration.
(v) CONSIDERATION FOR STOCK. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold
for cash, the consideration received therefor shall be deemed to
be the amount received by the Corporation therefor, without
deduction therefrom of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Corporation in
connection therewith. In case any shares of Common Stock, Options
or Convertible Securities shall be issued or sold for a
consideration other than cash, the amount of the consideration
other than cash received by the Corporation shall be deemed to be
the fair value of such consideration as determined in good faith
by the Board of Directors of the Corporation, without deduction
of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection
therewith. In case any Options shall be issued in connection with
the issue and sale of other securities of the Corporation,
together compromising one integral transaction in which no
specific consideration is allocated to such Options by the
parties thereto, such Options shall be deemed to have been issued
without consideration.
(vi) RECORD DATE. In case the Corporation shall take a
record of the holders of its Common Stock for the purpose of
entitling them (x) to receive a dividend or other distribution
payable in Common Stock, Options or Convertible Securities, or
(y) to subscribe for or purchase Common Stock, Options or
Convertible Securities, then such record date shall be deemed to
be the date of the issue or sale of the shares of Common Stock
deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of
the granting of such right of subscription or purchase, as the
case may be.
(vii) TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or
held by or for the account of the Corporation, and the
disposition of any such shares shall be considered an issue or
sale of Common Stock for the purposes of this paragraph (e).
(f) SUBDIVISION OR COMBINATION OF STOCK. Without duplication of the
adjustment contemplated by clause (iv) of paragraph (e), in case the Corporation
shall at any time declare a dividend or make any other distribution upon any
stock of the Corporation payable in Common Stock or subdivide its outstanding
shares of Common Stock into a greater number of shares, the
<PAGE>
Conversion Price in effect immediately prior to such subdivision shall be
proportionately reduced, and conversely, in case the outstanding shares of
Common Stock of the Corporation shall be combined into a smaller number of
shares, the Conversion Price in effect immediately prior to such combination
shall be proportionately increased.
(g) CERTAIN ISSUES OF STOCK EXCEPTED. Anything herein to the contrary
notwithstanding, the Corporation shall not make any adjustment of the Conversion
Price in the case of (i) the issuance of shares of Common Stock upon conversion
of Convertible Debentures; (ii) the issuance of Options or shares of Common
Stock to employees, directors or consultants of the Corporation or its
subsidiaries, either directly or pursuant to Options, pursuant to plans or
arrangements approved by the Board of Directors (or Compensation Committee
thereof) of the Corporation; (iii) the issuance of shares of Common Stock in
respect of any Convertible Securities or Options issued by the Corporation prior
to the date of this Convertible Debenture; or (iv) the issuance of shares of
Common Stock in connection with any acquisition, merger, consolidation, or other
business combination transaction.
(h) REORGANIZATION OR RECLASSIFICATION. If any capital reorganization
or reclassification of the capital stock of the Corporation shall be effected in
such a way that holders of Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such reorganization or reclassification, lawful and adequate
provisions shall be made whereby each holder of a Convertible Debenture shall
thereafter have the right to receive, upon the basis and upon the terms and
conditions specified herein and in lieu of the shares of Common Stock of the
Corporation immediately there tofore receivable upon the conversion of such
shares of stock, securities or assets as may be issued or payable with respect
to or in exchange for a number of outstanding shares of such Common Stock equal
to the number of shares of such stock immediately theretofore so receivable had
such reorganization or reclassification not taken place, and in any such case
appropriate provision shall be made with respect to the rights and interests of
such holder to the end that the provisions hereof (including without limitation
provisions for adjustments of the Conversion Price) shall thereafter be
applicable, as nearly as may be, in relation to any shares of stock, securities
or assets thereafter deliverable upon the exercise of such conversion rights
(including an immediate adjustment, by reason of such reorganization or
reclassification, of the Conversion Price to the value for the Common Stock
reflected by the terms of such reorganization or reclassification if the value
so reflected is less than the Conversion Price in effect immediately prior to
such reorganization or reclassification). In the event of a merger or
consolidation of the Corporation as a result of which a greater or lesser number
of shares of Common Stock of the surviving corporation are issuable to holders
of Common Stock of the Corporation outstanding immediately prior to such merger
or consolidation, the Conversion Price in effect immediately prior to such
merger or consolidation shall be adjusted in the same manner as though there
were a subdivision or combination of the outstanding shares of Common Stock of
the Corporation. The Corporation will not effect any such consolidation, merger,
or any sale of all or substantially all of its assets or properties, unless
prior to the consummation thereof the successor corporation or other entity (if
other than the Corporation) resulting from such consolidation or merger or the
<PAGE>
corporation purchasing such assets shall assume, by written instrument executed
and mailed or delivered to each holder of Convertible Debentures at the last
address of such holder appearing on the books of the Corporation, the obligation
to deliver to such holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
receive.
(i) NOTICE OF ADJUSTMENT. Upon any adjustment of the Conversion Price,
then and in each such case the Corporation shall give written notice thereof, by
first class mail, postage prepaid, addressed to each holder of Convertible
Debenture at the address of such holder as set forth in the register maintained
by the Corporation for the registration of transfer and exchange of Convertible
Debentures, which notice shall state the Conversion Price resulting from such
adjustment, setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based.
(j) OTHER NOTICES. In case at any time:
(i) the Corporation shall declare any dividend upon its Common Stock
payable in cash or stock or make any other distribution to the holders of
its Common Stock;
(ii) the Corporation shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or
other rights;
(iii) there shall be any capital reorganization or reclassification of
the capital stock of the Corporation, or a consolidation or merger of the
Corporation with, or a sale of all or substantially all its assets to,
another corporation or other entity; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, addressed to each holder of Convertible Debentures
at the address of such holder as set forth in the register maintained by the
Corporation for the registration of transfer and exchange of Convertible
Debentures, (A) at least 20 days' prior written notice of the date on which the
books of the Corporation shall close or a record shall be taken for such
dividend, distribution or sub scription rights or for determining rights to vote
in respect of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up, and (B) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, at least 20 days' prior written notice of the date
when the same shall take place. Such notice in accordance with the foregoing
clause (A) shall also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common Stock shall be
entitled thereto, and such notice in accordance with the foregoing clause (B)
shall also specify the date on which the holders of Common Stock shall be
entitled to exchange their Common
<PAGE>
Stock for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be.
(k) STOCK TO BE RESERVED. The Corporation will at all times reserve
and keep available out of its authorized Common Stock or its treasury shares,
solely for the purpose of issue upon the conversion of the Convertible
Debentures as herein provided, such number of shares of Common Stock as shall
then be issuable upon the conversion of the unpaid principal amount of all
outstanding Convertible Debentures. The Corporation covenants that all shares of
Common Stock which shall be so issued shall be duly and validly issued and fully
paid and nonas sessable and free from all taxes, liens and charges with respect
to the issue thereof, and, without limiting the generality of the foregoing, the
Corporation covenants that it will from time to time take all such action within
its control as may be requisite to assure that the par value per share of the
Common Stock is at all times equal to or less than the effective Conversion
Price. The Corporation will take all such action as may be necessary to assure
that all such shares of Common Stock may be so issued without violation of any
applicable law or regulation, or of any requirements of any national securities
exchange upon which the Common Stock of the Corporation may be listed. The
Corporation will not take any action which results in any adjust ment of the
Conversion Price if the total number of shares of Common Stock issued and
issuable after such action upon conversion of the Convertible Debentures would
exceed the total number of shares of Common Stock then authorized by the
Corporation's Certificate of Incorporation.
(l) ISSUE TAX. The issuance of certificates for shares of Common Stock
upon conversion of the Convertible Debentures shall be made without charge to
the holders thereof for any issuance tax in respect thereof, provided that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of the holder of the Convertible Debenture the principal
amount of which is being converted.
(m) CLOSING OF BOOKS. The Corporation will at no time close its
transfer books against the transfer of any Convertible Debenture or of any
shares of Common Stock issued or issuable upon the conversion of any Convertible
Debenture in any manner which interferes with the timely conversion of such
Convertible Debenture.
(n) DEFINITION OF COMMON STOCK. As used in this Section 15, the term
"Common Stock" shall mean and include the Corporation's authorized Common Stock,
$.01 par value, as constituted on August 31, 1999, and shall also include any
capital stock of any class of the Corporation thereafter authorized which shall
not be limited to a fixed sum or percentage of par value in respect of the
rights of the holders thereof to participate in dividends or in the distribution
of assets upon the voluntary or involuntary liquidation, dissolution or winding
up of the Corporation.
<PAGE>
16. COVENANTS BIND SUCCESSORS AND ASSIGNS. All the covenants,
stipulations, promises and agreements in this Convertible Debenture contained by
or on behalf of the Corporation shall bind its successors and assigns, whether
so expressed or not.
17. GOVERNING LAW. This Convertible Debenture shall be governed and
construed in accordance with the laws of the State of New York, without giving
effect to the conflict of laws principles thereof.
18. HEADINGS. The headings of the Sections and subsections of this
Convertible Debenture are inserted for convenience only and do not constitute a
part of this Convertible Debenture.
19. 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 duly sent by first class certified mail, postage prepaid,
by nationally recognized overnight courier, or by facsimile addressed to such
party at the address or facsimile number set forth below or such other address
or facsimile number as may hereafter be designated in writing by the addressee
to the addressor listing all parties:
if to the Corporation, to
Quorum Health Group, Inc.
103 Continental Place
Brentwood, Tennessee 37027
Fax: (615) 371-4788
Attention: Ashby Q. Burks, Esq.
with a copy to
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Fax: (212) 859-4000
Attention: Jeffrey Bagner, Esq.
if to the holder of this Convertible Debenture, to
Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, New York 10022
Fax: (212) 893-9565
Attention: Russell L. Carson
<PAGE>
with a copy to
Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10111
Fax: (212) 841-5725
Attention: Robert A. Schwed, Esq.
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 delivery, on the date of such delivery, (b)
in the case of mailing, on the fifth business day following the date of such
mailing, (c) in the case of delivery by overnight courier, on the business day
following the date of delivery to such courier, and (d) in the case of
facsimile, when received.
<PAGE>
IN WITNESS WHEREOF, QUORUM HEALTH GROUP, INC. has caused this
Convertible Debenture to be signed in its corporate name by one of its officers
thereunto duly authorized and to be dated as of the day and year first above
written.
QUORUM HEALTH GROUP, INC.
By
-------------------------
Name:
Title:
<PAGE>
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
August 31, 1999
To the several persons named in
Schedule I hereto
Ladies and Gentlemen:
This will confirm that, in consideration of the purchase by Welsh,
Carson, Anderson & Stowe VIII, L.P., a Delaware limited partnership ("WCAS
VIII") and the several other persons named in Schedule I hereto (collectively
with WCAS VIII, the "WCAS Purchasers") from Quorum Health Group, Inc., a
Delaware corporation (the "Company"), of $150,000,000 aggregate principal amount
of the Company's 6% Convertible Subordinated Debentures due August 31, 2009 (the
"WCAS Debentures"), which WCAS Debentures are convertible into shares (the
"Conversion Shares") of Common Stock, $.01 par value ("Common Stock"), of the
Company on the terms set forth therein, all on the terms and subject to the
conditions set forth in the Securities Purchase Agreement dated as of August
18, 1999 (the "WCAS Purchase Agreement"), among the Company and the WCAS
Purchasers, the Company hereby covenants and agrees with each of you, and with
each subsequent holder of Restricted Stock (as defined herein) as follows:
1. CERTAIN DEFINITIONS; INCONSISTENT PROVISIONS. As used herein, the
following terms shall have the following respective meanings:
"Commission" means the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.
"Conversion Shares" means the shares of Common Stock into which the
WCAS Debentures may be converted.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Registration Expenses" means the expenses so described in Section 7
hereof.
"Restricted Stock" means the shares of capital stock of the Company,
the certificates for which are required to bear the legend set forth in Section
2 hereof.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" means the expenses so described in Section 7
hereof.
2. RESTRICTIVE LEGEND. Each certificate representing the Conversion
Shares and each certificate issued upon exchange, adjustment or transfer of any
of the foregoing, other than in a public sale or as otherwise permitted by the
last paragraph of Section 3 hereof, shall be stamped or otherwise imprinted with
a legend substantially in the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS THEY HAVE BEEN
REGISTERED UNDER THAT ACT OR AN EXEMPTION
FROM REGISTRATION IS AVAILABLE.
3. TRANSFER. Each certificate for Restricted Stock transferred shall
bear the legend set forth in Section 2, unless (i) such transfer is in
accordance with the provisions of Rule 144 (or any other rule permitting public
sale without registration under the Securities Act), (ii) such transfer is
pursuant to a public sale as contemplated by Sections 4 or 5 hereof or (iii) an
opinion of counsel reasonably satisfactory to the Company (it being agreed that
Reboul, MacMurray, Hewitt, Maynard & Kristol is and shall be satisfactory) is
rendered to the effect that the proposed transfer of Restricted Stock may be
effected without registration under the Securities Act and the transferee and
any subsequent transferee (other than an affiliate of the Company) would be
entitled to transfer such securities in a public sale without registration under
the Securities Act. The Company acknowledges and agrees that transfer made in
compliance with the Securities Act and applicable state securities or Blue Sky
laws to an entity owning, directly or indirectly, all the common equity of such
holder or any wholly-owned direct or indirect subsidiary of such parent entity
shall be deemed to be in compliance with this Agreement, provided such new
holder shall execute a writing agreeing to be bound hereby.
The foregoing restrictions on transferability of Restricted Stock
shall terminate as to any particular shares of Restricted Stock when such shares
shall have been effectively registered under the Securities Act and sold or
otherwise disposed of in accordance with the intended method of disposition by
the seller or sellers thereof set forth in the registration statement concerning
such shares. Whenever a holder of Restricted Stock is able to demonstrate to the
Company (and its counsel) that the provisions of Rule 144(k) of the Securities
Act are available to such holder without limitation, such holder of Restricted
Stock shall be entitled to receive from the Company, without expense, a new
certificate not bearing the restrictive legend set forth in Section 2.
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<PAGE>
4. REQUIRED REGISTRATION.
(a) Subject to the provisions of paragraph(e) below, at any time
after the second anniversary of the date hereof and prior to the fifth
anniversary of the date hereof, the holders of Restricted Stock constituting at
least a majority of the Restricted Stock outstanding at such time may request in
writing the Company to register under the Securities Act all or any portion of
the Restricted Stock held by such requesting holder or holders for sale in the
manner specified in such notice; provided, however, that the only securities
which the Company shall be required to register pursuant hereto shall be shares
of Common Stock; and provided further, however, that (i) the aggregate number of
shares of Restricted Stock so requested to be registered shall not be less than
3,333,333 shares, and (ii) the reasonably anticipated price to the public of
such shares shall be at least $37,500,000.
(b) As soon as practicable following receipt of any written notice
under this Section 4, the Company shall notify any holders of Restricted Stock
from whom notice has not been received, and shall use its reasonable best
efforts to register under the Securities Act, for public sale in accordance with
the method of disposition specified in such notice from such requesting holders,
the number of shares of Restricted Stock specified in such notice (and the
number of shares of Restricted Stock specified in any notices received from
other such holders of Restricted Stock within 30 days after the date such notice
was sent by the Company); provided, however, that if the proposed method of
disposition specified by the requesting holders of Restricted Stock shall be an
underwritten publicing, the number of shares of Restricted Stock to be
included in such an offering may be reduced if and to the extent that the
managing underwriter shall be of the opinion that such inclusion would adversely
affect the marketing of the Restricted Stock to be sold. If such method of
disposition shall be an underwritten public offering, the Company may designate
the managing underwriter of such offering, subject to the approval of the
selling holders of a majority of the Restricted Stock included in the offering,
which approval shall not be unreasonably withheld. Notwithstanding anything to
the contrary contained herein, the obligation of the Company under this Section
4 shall be deemed satisfied only when a registration statement covering all
shares of Restricted Stock specified in notices received as aforesaid, for sale
in accordance with the method of disposition specified by the requesting holders
of Restricted Stock, shall have become effective and, if such method of dis-
position is a firm commitment underwritten public offering, either (i) all such
shares shall have been sold pursuant thereto or (ii) if such number of shares
registered for sale in such underwritten public offering is reduced upon the
advice of the managing underwriter thereof as described above, not less than 75%
of all the shares of Restricted Stock that was requested to be included in such
underwriting shall have been sold pursuant thereto, as the case may be.
(c) In the event that the Board of Directors of the Company determines
in good faith that the filing of a registration statement pursuant hereto would
be detrimental to the Company, the Board of Directors may defer such filing for
a period not to exceed 180 days. The Board of Directors may not effect more than
180 days of deferral during any twelve-month period. The Company's Board of
Directors agrees to notify as soon as practicable all holders of
3
<PAGE>
Restricted Stock who requested registration of any such deferral, and shall
provide to such holders a reasonably complete explanation therefor.
(d) The Company shall be entitled to include in any registration
statement referred to in this Section 4, for sale in accordance with the method
of disposition specified by the requesting holders, shares of Common Stock to be
sold by the Company for its own account, except to the extent that, in the
opinion of the managing underwriter in an underwritten public offering, such
inclusion would adversely affect the marketing of the Restricted Stock to be
sold.
(e) Notwithstanding anything to the contrary contained herein, the
Company shall be obligated to register Restricted Stock pursuant to this Section
4 on only one occasion.
(f) A registration will not be considered to be registration under
this Section 4 unless it has been kept continuously effective for a period of at
least 90 days following the date on which such registration was declared
effective or such shorter period that will terminate when all the Restricted
Stock covered by the registration have been sold pursuant to the terms of such
registration.
5. INCIDENTAL REGISTRATION. If the Company at any time (other than
pursuant to Section 4 hereof) after the second anniversary of the date hereof
and during the term of this Agreement proposes to register any of its Common
Stock under the Securities Act for sale to the public for cash, whether for its
own account or for the account of other security holders or both (except with
respect to registration statements on Form S-4 or Form S-8 or another form not
available for registering the Restricted Stock for sale to the public), it will
give written notice at such time to all holders of outstanding Restricted Stock
of its intention to do so. Upon the written request of any such holder, given
within 30 days after the date any such notice was sent by the Company, to
register any of its Restricted Stock (which request shall state the intended
method of disposition thereof), the Company will use its reasonable best efforts
to cause the Restricted Stock as to which registration shall have been so
requested to be included in the securities to be covered by the registration
statement proposed to be filed by the Company, all to the extent requisite to
permit the sale or other disposition by the holder of such Restricted Stock so
registered with the same intended method of disposition as proposed by the
Company; provided that nothing herein shall prevent the Company from abandoning
or delaying such registration at any time; provided, further, that the only
securities which the Company shall be required to register shall be shares of
Common Stock. In the event that any registration pursuant to this Section 5
shall be, in whole or in part, an underwritten public offering of Common Stock,
the Company may designate the managing underwriter of such offering. The number
of shares of Restricted Stock to be included in an underwriting may be reduced
pro rata among the requesting holders of Restricted Stock and other holders of
Restricted Stock who have exercised similar registration rights (other than such
holders who may have exercised their registration rights to initiate the
registration statement giving rise to the rights of the holders of Restricted
Stock under this Section 5, which holders shall be given priority if the number
of shares registered is reduced) based upon the number of shares of Restricted
Stock so requested to be registered, if and to the
4
<PAGE>
extent that the managing underwriter shall be of the opinion that such inclusion
or sale would adversely affect the marketing of the securities to be sold by the
Company therein.
Notwithstanding anything to the contrary contained in this Section 5,
in the event that there is an underwritten public offering of securities of the
Company pursuant to a registration covering Restricted Stock and a holder of
Restricted Stock does not elect to sell such holder's Restricted Stock to the
underwriters of the Company's securities in connection with such offering or
such holder's Restricted Stock is excluded from the offering as provided above,
such holder shall refrain from selling such Restricted Stock so registered
pursuant to this Section 5 during the period of distribution of the Company's
securities by such underwriters and the period in which the underwriting
syndicate participates in the after market; provided, however, that such holder
shall, in any event, be entitled to sell its Restricted Stock commencing on the
90th day after the effective date of such registration statement or, if later,
on such date (but in no event later than the 180th day after such effective
date) as contractual "lock-up" restrictions imposed by the underwriters shall
expire or be released.
6. REGISTRATION PROCEDURES. If and whenever the Company is required by
the provisions of Section 4 or 5 hereof to use its reasonable best efforts to
effect the registration of any of the Restricted Stock under the Securities Act,
the Company will, as expeditiously as possible:
(a) prepare (and afford counsel for the selling holders reasonable
opportunity to review and comment thereon) and file with the Commission a
registration statement on the most appropriate form adequate for the
purposes thereof with respect to such securities and use its reasonable
best efforts to cause such registration statement to become and remain
effective for the period of the distribution required under the terms of
this Agreement;
(b) prepare (and afford counsel for the selling holders reasonable
opportunity to review and comment thereon if time permits) and file with
the Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for the period
required under the terms of this Agreement and to comply with the
provisions of the Securities Act with respect to the disposition of all
Restricted Stock covered by such registration statement in accordance with
the sellers' intended method of disposition set forth in such registration
statement for such period (and in accordance with the terms of this
Agreement);
(c) furnish to each seller and to each underwriter such number of
copies of the registration statement and the prospectus included therein
(including each preliminary prospectus) as such persons may reasonably
request in order to facilitate the public sale or other disposition of the
Restricted Stock covered by such registration statement;
5
<PAGE>
(d) use its reasonable best efforts to register or qualify the
Restricted Stock covered by such registration statement under the
securities or blue sky laws of such jurisdictions as the sellers of
Restricted Stock or, in the case of an underwritten public offering, the
managing underwriter, shall reasonably request (provided that the Company
will not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for
this paragraph (d), (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction);
(e) immediately notify each seller under such registration statement
and each underwriter, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus contained in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing (following which notification the sellers agree
to discontinue sales of their Restricted Stock covered by such registration
statement until such misstatement or omission shall have been remedied);
(f) use all reasonable efforts (if the offering is underwritten) to
furnish, at the request of any seller, on the date that Restricted Stock is
delivered to the underwriters for sale pursuant to such registration:
(i) an opinion of counsel representing the Company for the purposes of such
registration, addressed to the underwriters and to such seller and dated
such date, stating (A) to the best knowledge of such counsel, that such
registration statement has become effective under the Securities Act, no
stop order suspending the effectiveness thereof has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the Securities Act, (B) the registration statement, the
related prospectus, and each amendment or supplement thereof comply as to
form in all material respects with the requirements of the Securities Act
and the applicable rules and regulations of the Commission thereunder
(except that such counsel need express no opinion as to financial
statements, the notes thereto, and the financial schedules and other
financial and statistical data contained therein), and (C) to such other
effects as may reasonably be requested by counsel for the underwriters or
by such seller or its counsel and which are customary in underwritings of
the type being undertaken, and (ii) a letter dated such date from the
independent public accountants retained by the Company, addressed to the
underwriters, stating that they are independent public accountants within
the meaning of the Securities Act and that, in the opinion of such
accountants, the financial statements of the Company included in the
registration statement or the prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information as
to the period ending no more than five business days prior to the date of
such letter) with respect to the registration in respect of which such
letter is being given as such
6
<PAGE>
underwriters or seller may reasonably request and which are customary in
underwritings of the type being undertaken; and
(g) make available for inspection by each seller, any underwriter
participating in any distribution pursuant to such registration statement,
and any attorney, accountant or other agent retained by such seller or
underwriter, subject to customary undertakings with respect to the
confidentiality thereof, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such registration statement and permit such seller,
attorney, accountant or agent to participate in the preparation of such
registration statement.
In connection with each registration hereunder, the selling holders of
Restricted Stock will furnish to the Company in writing such information with
respect to themselves and the proposed distribution by them as shall be
reasonably necessary in order to assure compliance with federal and applicable
state securities laws.
In connection with each registration pursuant to Sections 4 and 5
hereof covering an underwritten public offering, the Company and each holder of
Restricted Stock selling shares in such offering agrees to enter into a written
agreement with the managing underwriter selected in the manner herein provided
in such form (as well as all other customary questionnaires, powers of attorney,
custody agreements and other documents) and containing such provisions as are
customary in the securities business for such an arrangement between nationally
recognized underwriters and companies of the Company's size and investment
stature; provided, however, that such agreement shall not contain any such
provision applicable to the Company or any selling stockholder which is
inconsistent in any material respect with the provisions hereof.
7. EXPENSES. All expenses incurred by the Company in complying with
Sections 4 and 5 hereof, including without limitation all registration and
filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, fees of the National Association
of Securities Dealers, Inc., transfer taxes (other than any transfer tax arising
from the transfer of shares by a stockholder to another person other than in
connection with the public sale of such shares), and fees of transfer agents and
registrars, but excluding any Selling Expenses, are herein called "Registration
Expenses." Notwithstanding the foregoing, (i) the Company shall not be required
to pay the fees and expenses of counsel for the holders of Restricted Stock, and
the holders shall be responsible for, and reimburse the Company for, all
Registration Expenses if the registration statement relating to the incurrence
of such expenses was withdrawn at the request of the holders (unless the holders
agree in writing that the withdrawn registration statement counts as a
registration for purposes of Section 4(e) hereof). All underwriting discounts
and selling commissions applicable to the sale of Restricted Stock and other
expenses not required to be paid by the Company are herein called "Selling
Expenses."
7
<PAGE>
The Company will pay all Registration Expenses in connection with each
registration statement filed pursuant to Section 4 or 5 hereof. All Selling
Expenses in connection with any registration statement filed pursuant to Section
4 or 5 hereof shall be borne by the participating sellers in proportion to the
number of shares sold by each, or by such persons other than the Company (except
to the extent the Company shall be a seller) as they may agree.
8. INDEMNIFICATION. In the event of a registration of any of the
Restricted Stock under the Securities Act pursuant to Section 4 or 5 hereof, the
Company will indemnify and hold harmless each seller of such Restricted Stock
thereunder and each underwriter of Restricted Stock thereunder and each other
person, if any, who controls such seller or underwriter within the meaning of
the Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which such seller or underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such Restricted Stock was
registered under the Securities Act pursuant to Section 4 or 5, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each such seller, each
such underwriter and each such controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case if and to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished by such seller, such underwriter
or such controlling person in writing specifically for use in such registration
statement or prospectus.
In the event of a registration of any of the Restricted Stock under
the Securities Act pursuant to Section 4 or 5 hereof, each seller of such
Restricted Stock thereunder, severally and not jointly, will indemnify and hold
harmless the Company and each person, if any, who controls the Company within
the meaning of the Securities Act, each officer of the Company who signs the
registration statement, each director of the Company, each underwriter and each
person who controls any underwriter within the meaning of the Securities Act,
against all losses, claims, damages or liabilities, joint or several, to which
the Company or such officer, director, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the registration statement under which such Restricted Stock
was registered under the Securities Act pursuant to Section 4 or 5, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company and each such officer, director, underwriter and controlling person for
any legal or other expenses reasonably incurred
8
<PAGE>
by them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that such seller will be liable
hereunder in any such case if and only to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with information pertaining to such seller, as such, furnished
in writing to the Company by such seller specifically for use in such
registration statement or prospectus; and provided, further, that the liability
of each seller hereunder shall be limited to the proceeds (net of underwriting
discounts and commissions) received by such seller from the sale of Restricted
Stock covered by such registration statement.
Promptly after receipt by an indemnified party hereunder of notice of
the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party except to the extent the indemnified party is materially
prejudiced thereby or other than under this Section 8. In case any such action
shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel reasonably satisfactory to such
indemnified party, and, after notice from the indemnifying party to such
indemnified party of its election so to assume and undertake the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under this Section 8 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected; provided,
however, that if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the indemnifying party, or if
the interests of the indemnified party reasonably may be deemed to conflict in
any material respect with the interests of the indemnifying party, the
indemnified party shall have the right to select a separate counsel and to
assume such legal defenses and otherwise to participate in the defense of such
action, with the reasonable expenses and fees of such separate counsel and other
reasonable expenses related to such participation to be reimbursed by the
indemnifying party as incurred.
Notwithstanding the foregoing, any indemnified party shall have the
right to retain its own counsel in any such action, but the fees and
disbursements of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party shall have failed to retain counsel for the
indemnified person as aforesaid, (ii) the indemnifying party and such
indemnified party shall have mutually agreed to the retention of such counsel or
(iii) in the circumstances described in the proviso at the end of the
immediately preceding paragraph. It is understood that the indemnifying party
shall not, in connection with any action or related actions in the same
jurisdiction, be liable for the fees and disbursements of more than one separate
firm qualified in such jurisdiction to act as counsel for all of the indemnified
parties. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if
9
<PAGE>
settled with such consent, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement.
If the indemnification provided for in the first two paragraphs of
this Section 8 is unavailable or insufficient to hold harmless an indemnified
party under such paragraphs in respect of any losses, claims, damages or
liabilities or actions in respect thereof referred to therein for any reason
other than any exclusion or limitation expressly stated in such paragraphs, then
each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or actions in such proportion as
appropriate to reflect the relative fault of the Company, on the one hand, and
the underwriters and the sellers of such Restricted Stock, on the other, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or actions as well as any other relevant equitable
considerations, including the failure to give any notice under the third
paragraph of this Section 8. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact relates to information supplied by the Company, on the one hand,
or the underwriters and the sellers of such Restricted Stock, on the other, and
to the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
each of you agree that it would not be just and equitable if contributions
pursuant to this paragraph were determined by pro rata allocation (even if all
of the sellers of such Restricted Stock were treated as one entity for such
purpose) or by any other method of allocation which did not take account of the
equitable considerations referred to above in this paragraph. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
liabilities or action in respect thereof, referred to above in this paragraph,
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this paragraph, the sellers
of such Restricted Stock shall not be required to contribute any amount in
excess of the amount, if any, by which the total price at which the Common Stock
sold by each of them was offered to the public exceeds the amount of any damages
which they would have otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission and subject to reasonable limitations on
the contribution obligations of underwriters. No person guilty of fraudulent
misrepresentations (within the meaning of Section 11(f) of the Securities Act),
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation.
The indemnification and contribution of underwriters provided for in
this Section 8 shall be on such other terms and conditions as are at the time
customary and reasonably required by such underwriters. In that event, the
indemnification and contribution of the sellers of Restricted Stock in such
underwriting shall at the sellers' request be modified to conform to such terms
and conditions.
9. CHANGES IN COMMON STOCK. If, and as often as, there are any changes
in the Common Stock by way of stock split, stock dividend, combination or
reclassification, or through merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate
10
<PAGE>
adjustment shall be made in the provisions hereof, as may be required, so that
the rights and privileges granted hereby shall continue with respect to the
Common Stock as so changed.
10. RULE 144 REPORTING. The Company agrees with you as follows:
(a) The Company shall make and keep public information available, as
those terms are understood and defined in Rule 144(c)(1) or (c)(2),
whichever is applicable, under the Securities Act, at all times from and
after the date it is first required to do so.
(b) The Company shall file with the Commission in a timely manner all
reports and other documents as the Commission may prescribe under Section
13(a) or 15(d) of the Exchange Act at all times during which the Company is
subject to such reporting require ments of the Exchange Act.
(c) The Company shall furnish to such holder of Restricted Stock as
promptly as practicable upon request (i) a written statement by the Company
as to its compliance with the reporting requirements of Rule 144 (at any
time from and after the date it first becomes subject to such reporting
requirements) and of the Securities Act and the Exchange Act (at any time
during which it is subject to such reporting requirements), (ii) a copy of
the most recent annual or quarterly report of the Company and (iii) such
other reports and documents so filed as a holder may reasonably request to
avail itself of any rule or regulation of the Commission allowing a holder
of Restricted Stock to sell any such securities without registration.
11. MISCELLANEOUS.
(a) 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 until the expiration of this Agreement on August 31, 2009. Without limiting
the generality of the foregoing, the registration rights conferred herein on the
holders of Restricted Stock shall inure to the benefit of any and all subsequent
holders from time to time of the Restricted Stock for so long as the
certificates representing the Restricted Stock shall be required to bear the
legend specified in Section 2 hereof.
(b) 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 duly sent by first class certified mail, postage prepaid, by
nationally recognized overnight courier, or by facsimile addressed to such party
at the address or facsimile number set forth below or such other address or
facsimile number as may hereafter be designated in writing by the addressee to
the addressor listing all parties:
11
<PAGE>
if to the Company, to
Quorum Health Group, Inc.
103 Continental Place
Brentwood, Tennessee 37027
Fax: (615) 371-4788
Attention: Ashby Q. Burks, Esq.
with a copy to
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Fax: (212) 859-4000
Attention: Jeffrey Bagner, Esq.
if to any WCAS Purchaser, to
Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, New York 10022
Fax: (212) 893-9565
Attention: Russell L. Carson
with a copy to
Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10111
Fax: (212) 841-5725
Attention: Robert A. Schwed, Esq.
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 delivery, on the date of such delivery, (b)
in the case of mailing, on the fifth business day following the date of such
mailing, (c) in the case of delivery by overnight courier, on the business day
following the date of delivery to such courier, and (d) in the case of
facsimile, when received.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to conflict of laws
principles.
12
<PAGE>
(d) This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof and may not be modified or amended
except in a writing signed by the Company and the holders of not less than a
majority of the Restricted Stock then outstanding.
(e) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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<PAGE>
Please indicate your acceptance of the foregoing by signing and
returning the enclosed counterpart of this letter, whereupon this letter (herein
sometimes called "this Agreement") shall be a binding agreement between the
Company and you.
Very truly yours,
QUORUM HEALTH GROUP, INC.
By:
----------------------
Name:
Title:
AGREED TO AND ACCEPTED
as of the date first above written:
WELSH, CARSON, ANDERSON &
STOWE VIII, L.P.
By WCAS VIII Associates LLC,
General Partner
By:
-------------------------
Managing Member
<PAGE>
John Almeida
Bruce K. Anderson
Russell L. Carson
Anthony J. de Nicola
Eric J. Lee
D. Scott Mackesy
Thomas E. McInerney
Robert A. Minicucci
Priscilla A. Newman
Andrew M. Paul
Paul B. Queally
Rudolph E. Rupert
Lawrence B. Sorrel
Sanjay Swani
Sean Traynor
Laura M. VanBuren
Patrick J. Welsh
By:
-------------------------
Jonathan M. Rather,
Individually and as Attorney-In-Fact
<PAGE>
Schedule I
Welsh, Carson, Anderson & Stowe VIII, L.P.
John Almeida
Bruce K. Anderson
Russell L. Carson
Anthony J. de Nicola
Eric J. Lee
Thomas E. McInerney
D. Scott Mackesy
Robert A. Minicucci
Priscilla A. Newman
Andrew M. Paul
Paul B. Queally
Jonathan M. Rather
Rudolph E. Rupert
Lawrence B. Sorrel
Sanjay Swani
Sean Traynor
Laura M. VanBuren
Patrick J. Welsh
<PAGE>
EXHIBIT E
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT dated as of August 31, 1999, by and among
QUORUM HEALTH GROUP, INC., a Delaware corporation (the "Company"), WELSH,
CARSON, ANDERSON & STOWE VIII, L.P. ("WCAS VIII") and the several other persons
named in Schedule I hereto (collectively with WCAS VIII, the "Stockholders").
WHEREAS, the Company and the Stockholders have entered into a
Securities Purchase Agreement dated as of August 18, 1999 (the "WCAS Purchase
Agreement"), pursuant to which and on the terms and subject to the conditions
set forth therein, such Stockholders shall purchase $150,000,000 aggregate
principal amount of the Company's 6% Convertible Subordinated Debentures due
August 31, 2009 ("Debentures"), which are convertible under certain
circumstances into shares (the "Conversion Shares") of Common Stock, $.01 par
value ("Common Stock"), of the Company; and
WHEREAS, the Company and each of the Stockholders desire to make
certain arrangements among themselves with respect to the matters set forth
herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto hereby agree as
follows:
Section 1. VOTING AGREEMENT. During the term of this Agreement, at
each annual or special stockholders' meeting, and whenever the stockholders of
the Company act by written consent with respect to the election of directors,
each Stockholder, severally and not jointly, agrees to vote or otherwise give
such Stockholder's consent in respect of all shares of capital stock of the
Company (whether now or hereafter acquired) owned by such Stockholder as
follows:
(a) for the election to the Company's Board of Directors of the
candidates nominated by the Company's Board of Directors at such meeting,
if any, each to serve in accordance with the provisions of the Company's
Bylaws and applicable corporate law until his or her successor shall have
been elected and shall have qualified, and
(b) as directed by the Company's Board of Directors with respect to
any proposed transaction that would constitute a Change of Control (as
hereinafter defined) of the Company.
For purposes of this Section 1, "Change of Control" means (i) the
sale, lease or transfer, whether direct or indirect (other than by way of merger
or consolidation), of all or substantially all of the assets of the Company and
its subsidiaries, taken as a whole, in one transaction or a series of related
transactions, to any "person" or "group," (ii) the liquidation or dissolution of
the Company or the adoption of a plan of liquidation or dissolution of the
Company, (iii) the acquisition of "beneficial ownership" by any "person" or
"group" of securities
1
<PAGE>
of the Company which when aggregated with all other securities of the Company
then owned by such person or group would permit such person or group to elect a
majority of the directors of the Company or any successor entity (such
securities entitled to so vote being referred to as "Voting Stock") by way of
sale, transfer or issuance of, or a series of sales, transfers and/or issuances
of, Voting Stock or otherwise, or (iv) any merger or consolidation to which the
Company is a party, except for a merger or consolidation in which the holders of
the Company's outstanding Voting Stock entitled to elect a majority of the
members of the Company's Board of Directors immediately prior to the merger or
consolidation shall continue to own directly or beneficially the outstanding
Voting Stock of the surviving corporation entitled to elect a majority of the
Board of Directors of the surviving corporation after giving effect to the
merger or consolidation.
For purposes of this Agreement, (i) the terms "person" and "group"
shall have the meanings set forth in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), whether or not applicable, and
(ii) the term "beneficial owner" shall have the meaning set forth in Rules 13d-3
and 13d-5 under the Exchange Act, whether or not applicable.
Section 2. TRANSFER RESTRICTIONS. Each of the Stockholders hereby
covenants and agrees, severally and not jointly, that, (i) during the term of
this Agreement, with respect to the Debentures, and (ii) during a period of two
years from the date hereof, with respect to the Conversion Shares, it will not,
directly or indirectly, offer, transfer, sell, assign, pledge, hypothecate or
otherwise dispose of (any such act being referred to herein as a "transfer") any
of the Debentures or Conversion Shares, other than (x) a transfer to any other
Stockholder, (y) a transfer by a Stockholder to his or her spouse or lineal
descendants, or any trust or other entity owned by or for the benefit of any
such person, or (z) a transfer pursuant to a transaction that would constitute a
Change of Control that is approved by the Board of Directors of the Company as
provided in Section 1(b) above. Thereafter, each Stockholder hereby covenants
and agrees, severally and not jointly, that it will not, directly or indirectly,
transfer any of the Debentures or Conversion Shares, other than (i) in the case
of WCAS VIII, to its partners, (ii) in compliance with Rule 144 of the Exchange
Act, (iii) pursuant to the Registration Rights Agreement entered into in
connection with the WCAS Purchase Agreement, or (iv) as permitted by clauses
(x), (y) or (z) of the immediately preceding sentence. Any such transferee
pursuant to clause (y) of the first sentence of this Section 2 and clause (i) of
the second sentence of this Section 2 shall agree in writing with the parties
hereto to be bound by, and to comply with, all applicable provisions of this
Agreement and to be deemed to be a Stockholder for purposes of this Agreement.
Section 3. LIMITATION ON BENEFICIAL OWNERSHIP. Each of the
Stockholders hereby covenants and agrees, severally and not jointly, that
without the prior approval of the Company's Board of Directors (it being
understood that no director who is an affiliate of any of the Stockholders shall
participate in granting such approval) for the term of this Agreement, it shall
not purchase or otherwise acquire shares of Common Stock or other securities
convertible into, or exercisable or exchangeable for, Common Stock, which
shares, when aggregated with all shares of Common Stock beneficially owned by
the Stockholders immediately prior to such
2
<PAGE>
transaction, would constitute greater than 30% of the outstanding shares of
Common Stock on a fully-diluted basis.
Section 4. CERTAIN OTHER LIMITATIONS. Each of the Stockholders hereby
covenants and agrees, severally and not jointly, that during the term of this
Agreement it will not, without the prior approval of the Board of Directors of
the Company (it being understood that no director that is an affiliate of any of
the Stockholders shall participate in granting such approval), either alone or
as part of a group:
(a) make, or in any way participate, directly or indirectly, in any
"solicitation" of "proxies" (as such terms are defined or used in
Regulation 14A under the Exchange Act) or become a "participant" in any
"election contest" (as such terms are defined or used in Rule 14a-11 under
the Exchange Act) to vote, or seek to advise or influence any person or
entity with respect to the voting of, any voting securities of the Company
or any of its affiliates;
(b) initiate or propose any stockholder proposals for submission to a
vote of stockholders, whether by action at a stockholder meeting or by
written consent, with respect to the Company or any of its affiliates, or
propose any person for election to the Board of Directors of the Company or
any of its affiliates, or propose the removal of any member of the Board of
Directors of the Company or any of its affiliates;
(c) make any offer or proposal to the Board of Directors of the
Company or publicly announce any offer or proposal (or publicly announce
its interest in making any such offer or proposal) to enter into any
transaction of merger, consolidation, sale of substantial assets or any
other business combination involving the Company or any of its affiliates,
whether or not any parties other than the Stockholders and their affiliates
are involved (it being understood that this clause (c) shall not apply if a
third party not acting in concert with any of the Stockholders or their
affiliates publicly announces any offer or proposal (or publicly announces
its interest in making any such offer or proposal) to enter into any such
transaction, sale or combination); or
(d) form, join or in any way participate in a group to take any
actions otherwise prohibited by the terms of this Agreement.
Section 5. LEGEND. Each WCAS Debenture and each certificate
representing Conversion Shares shall conspicuously bear the following legend
until such time as the shares represented thereby are no longer subject to the
provisions hereof:
THIS SECURITY MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNLESS SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
3
<PAGE>
DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 31,
1999 BETWEEN QUORUM HEALTH GROUP, INC. AND THE
STOCKHOLDER NAMED ON THE FACE HEREOF, A COPY
OF WHICH IS ON FILE WITH THE SECRETARY OF THE
CORPORATION.
The Company covenants that it shall keep a copy of this Agreement on
file at the address listed in Section 10 for the purpose of furnishing copies to
the parties hereto.
Section 6. DURATION OF AGREEMENT. This Agreement shall terminate upon
the earliest to occur of (a) the sale, lease or transfer, whether direct or
indirect, of all or substantially all of the assets of the Company and its
subsidiaries, taken as a whole, in one transaction or a series of related
transactions, to any person or persons, or (b) with respect to any Stockholder,
the date on which such Stockholder no longer beneficially owns any Debentures or
Conversion Shares, or (c) the fifth anniversary of the date hereof.
Section 7. HEADINGS. Headings of articles, sections and paragraphs of
this Agreement are inserted for convenience of reference only and shall not
affect the interpretation or be deemed to constitute a part hereof.
Section 8. SEVERABILITY. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein shall, for any reason, be held to be invalid, illegal or unenforceable,
such illegality, invalidity or unenforceability shall not affect any other
provisions of this Agreement; provided that in such event the parties shall
negotiate in good faith in an attempt to agree to another provision (in lieu of
the provision held to be invalid or unenforceable) that will be valid and
enforceable and that will carry out the parties' intentions hereunder.
Section 9. BENEFITS OF AGREEMENT. Nothing expressed by or mentioned in
this Agreement is intended or shall be construed to give any person other than
the parties hereto and their respective successors and permitted assigns any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of the parties hereto and their respective successors and permitted
assigns.
Section 10. 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 courier or duly sent by first class
certified mail, postage prepaid, by nationally recognized courier, or by
facsimile addressed to such party at the address or facsimile number set forth
below:
4
<PAGE>
(1) if to the Company, to it at:
Quorum Health Group, Inc.
103 Continental Place
Brentwood, Tennessee 37027
Attention: Ashby Q. Burks, Esq.
Fax: (615) 371-4788
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Jeffrey Bagner, Esq.
Fax: (212) 859-4000
(2) if to a Stockholder, to such Stockholder at:
Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, New York 10022
Fax: (212) 893-9575
with a copy to:
Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10111
Attention: Robert A. Schwed, Esq.
Fax: (212) 841-5725
or, in any case, at such other address or facsimile number 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 delivery, on the date of such
delivery, (b) in the case of mailing, on the fifth business day following the
date of such mailing (c) in the case of delivery by overnight courier, on the
business day following the date of delivery to such courier and (d) in the case
of facsimile, when received.
Section 10. MODIFICATION. Neither this Agreement nor any provision
hereof may be modified, changed, discharged or terminated except by an
instrument in writing signed by the parties hereto.
5
<PAGE>
Section 11. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 12. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to conflict of laws principles.
Section 13. INJUNCTIVE RELIEF. Each of the parties hereto acknowledges
that in the event of a breach by any of them of the provisions of this
Agreement, the aggrieved party may be without an adequate remedy at law. Each of
the parties therefore agrees that in the event of such a breach hereof, the
aggrieved party may elect to institute and prosecute proceedings in any court of
competent jurisdiction to enforce specific performance or to enjoin the
continuing breach hereof. By seeking or obtaining any such relief, the aggrieved
party shall not be precluded from seeking or obtaining any other relief to which
it may be entitled.
6
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as a sealed instrument, all as of the day and year first above
written.
QUORUM HEALTH GROUP, INC.
By:
------------------------
Name:
Title:
WELSH, CARSON, ANDERSON &
STOWE VIII, L.P.
By WCAS VIII Associates LLC,
General Partner
By:
------------------------
Managing Member
7
<PAGE>
John Almeida
Bruce K. Anderson
Russell L. Carson
Eric J. Lee
Anthony J. de Nicola
D. Scott Mackesy
Thomas E. McInerney
Robert A. Minicucci
Priscilla A. Newman
Andrew M. Paul
Paul B. Queally
Rudolph E. Rupert
Lawrence B. Sorrel
Sanjay Swani
Sean Traynor
Laura M. VanBuren
Patrick J. Welsh
By:
------------------------
Jonathan M. Rather,
Individually and as Attorney-In-Fact
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SCHEDULE I
STOCKHOLDERS
Welsh, Carson, Anderson & Stowe VIII, L.P.
John Almeida
Bruce K. Anderson
Russell L. Carson
Anthony J. de Nicola
Eric J. Lee
Thomas E. McInerney
D. Scott Mackesy
Robert A. Minicucci
Priscilla A. Newman
Andrew M. Paul
Paul B. Queally
Jonathan M. Rather
Rudolph E. Rupert
Lawrence B. Sorrel
Sanjay Swani
Sean Traynor
Laura M. VanBuren
Patrick J. Welsh
