UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934*
ProMedCo Management Company
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(Name of Issuer)
Common Stock (Par Value $ 0.01 Per Share)
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(Title of Class of Securities)
74342L 10 5
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(CUSIP Number)
Robert C. Schwenkel, Esq. David J. Greenwald, Esq.
Fried, Frank, Harris, Shriver & Jacobson Goldman, Sachs & Co.
One New York Plaza 85 Broad Street
New York, NY 10004 New York, NY 10004
(212) 859-8000 (212) 902-1000
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(Name, Address and Telephone Number of Persons Authorized to Receive
Notices and Communications)
January 13, 2000
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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 |_|.
*The remainder of this cover page will 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 will not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but will be subject to all other provisions of the
Act (however, see the Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 74342L 10 5
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Goldman, Sachs & Co.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF, WC, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 1,253,335
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
1,253,335
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,253,335
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.5%
14 TYPE OF REPORTING PERSON
BD-PN-IA
<PAGE>
SCHEDULE 13D
CUSIP No. 74342L 10 5
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Goldman Sachs Group, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 1,253,335
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
1,253,335
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,253,335
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.5%
14 TYPE OF REPORTING PERSON
HC-CO
<PAGE>
SCHEDULE 13D
CUSIP No. 74342L 10 5
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GS Capital Partners III, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 928,994
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
928,994
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
928,994
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.0%
14 TYPE OF REPORTING PERSON
PN
<PAGE>
SCHEDULE 13D
CUSIP No. 74342L 10 5
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GS Advisors III, L.L.C.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 1,184,385
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
1,184,385
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,184,385
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.2%
14 TYPE OF REPORTING PERSON
OO
<PAGE>
SCHEDULE 13D
CUSIP No. 74342L 10 5
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GS Capital Partners III Offshore, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 255,391
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
255,391
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
255,391
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.1%
14 TYPE OF REPORTING PERSON
PN
<PAGE>
SCHEDULE 13D
CUSIP No. 74342L 10 5
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GS Capital Partners III Germany Civil Law Partnership
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Germany
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 42,888
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
42,888
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
42,888
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.2%
14 TYPE OF REPORTING PERSON
PN
<PAGE>
SCHEDULE 13D
CUSIP No. 74342L 10 5
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Goldman, Sachs & Co. oHG
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Germany
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 42,888
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
42,888
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
42,888
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.2%
14 TYPE OF REPORTING PERSON
PN
<PAGE>
SCHEDULE 13D
CUSIP No. 74342L 10 5
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Stone Street Fund 2000, L.L.C.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF, WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 22,727
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
22,727
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
22,727
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
14 TYPE OF REPORTING PERSON
OO
<PAGE>
ITEM 1. SECURITY AND ISSUER.
--------------------
This statement on Schedule 13D relates to the common stock, par
value $.01 per share (the "Common Stock") of ProMedCo Management Company, a
Delaware corporation (the "Company"). The principal executive offices of
the Company are at 801 Cherry Street, Suite 1450, Fort Worth, Texas 76102.
ITEM 2. IDENTITY AND BACKGROUND.
------------------------
This statement is being filed by GS Capital Partners III, L.P.
("GS Capital III"), GS Capital Partners III Offshore, L.P. ("GS Offshore"),
GS Capital Partners III Germany Civil Law Partnership ("GS Germany" and
together with GS Capital III and GS Offshore, the "Limited Partnerships"),
Stone Street Fund 2000, L.L.C. ("Stone 2000"), GS Advisors III, L.L.C. ("GS
Advisors"), Goldman, Sachs & Co. oHG ("GS oHG"), Goldman, Sachs & Co.
("Goldman Sachs"), and The Goldman Sachs Group, Inc. ("GS Group" and,
together with Goldman Sachs, GS Advisors, GS oHG, Stone 2000 and the
Limited Partnerships, the "Filing Persons").[FN1]
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1 Neither the present filing nor anything contained herein will be
construed as an admission that any Filing Person constitutes a
"person" for any purpose other than for compliance with Section 13(d)
of the Securities Exchange Act of 1934.
Each of GS Capital III, a Delaware limited partnership, GS
Offshore, a Cayman Islands exempted limited partnership, and GS Germany, a
German civil law partnership, was formed for the purpose of investing in
equity and equity-related securities primarily acquired or issued in
leveraged acquisitions, reorganizations and other private equity
transactions. GS Advisors, a Delaware limited liability company, is the
sole general partner of GS Capital III and GS Offshore. GS oHG is the sole
managing partner of GS Germany. Stone 2000, a Delaware limited liability
company, was formed for the purpose of investing in various investments
seeking the long-term growth of capital. Goldman Sachs, a New York limited
partnership, is an investment banking firm and a member of the New York
Stock Exchange, Inc. and other national exchanges. Goldman Sachs also
serves as the manager for GS Advisors and Stone 2000 and the investment
manager for GS Capital III, GS Offshore and GS Germany. Goldman Sachs is
wholly owned, directly and indirectly, by GS Group. GS Group is a Delaware
corporation and holding company that (directly and indirectly through
subsidiaries or affiliated companies or both) is a leading investment
banking organization. The principal business address of each Filing Person
(other than GS Offshore, GS Germany and GS oHG) is 85 Broad Street, New
York, NY 10004. The principal business address for GS Offshore is c/o
Maples and Calder, P.O. Box 309, Grand Cayman, Cayman Islands. The
principal business address for each of GS Germany and GS oHG is MesseTurm,
60308 Frankfurt am Main, Germany.
The name, business address, present principal occupation or
employment and citizenship of each director of GS Group are set forth in
Schedule I hereto and are incorporated herein by reference. The name,
business address, present principal occupation or employment and
citizenship of each executive officer of GS Advisors are set forth in
Schedule II-A-i hereto and are incorporated herein by reference. The name,
business address, present principal occupation or employment and
citizenship of each member of the Principal Investment Area Investment
Committee of Goldman Sachs, which is responsible for making all investment
and management decisions for GS Advisors on behalf of Goldman Sachs, are
set forth in Schedule II-A-ii hereto and are incorporated herein by
reference. The name, business address, present principal occupation or
employment and citizenship of each executive officer and director of
Goldman, Sachs & Co. Finanz GmbH, which is the sole managing general
partner of GS oHG, are set forth in Schedule II-B and are incorporated
herein by reference. The name, business address, present principal
occupation or employment and citizenship of each executive officer of Stone
2000 are set forth in Schedule II-C-i hereto and are incorporated herein by
reference. The name, business address, present principal occupation or
employment and citizenship of each member of the Stone Street Investment
Committee of Goldman Sachs, which is responsible for making all investment
and management decisions for Stone 2000 on behalf of Goldman Sachs, are set
forth in Schedule II-C-ii hereto and are incorporated herein by reference.
During the last five years, none of the Filing Persons, nor, to
the knowledge of each of the Filing Persons, any of the persons listed on
Schedules I, II-A-i, II-A-ii, II-B, II-C-i or II-C-ii hereto, (i) has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) has 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.
The Filing Persons have entered into a Joint Filing Agreement,
dated as of January 24, 2000, a copy of which is attached hereto as Exhibit
1.
In addition, by reason of the Voting Agreements (as defined in
Item 4), Richard E. Ragsdale, H. Wayne Posey, E. Thomas Chaney, Jack W.
McCaslin and Robert M. Sontheimer (collectively, the "Stockholder Parties")
and the Purchasers (as defined in Item 3) may be deemed to constitute a
"group" (a "Group") as such term is used in Section 13(d)(3) of the rules
and regulations under the Act. Neither the fact of this filing nor anything
contained herein will be deemed an admission by the Filing Persons that
such a Group exists, and the existence of any such Group is hereby
expressly disclaimed. The Filing Persons hereby expressly disclaim any
beneficial ownership in any Common Stock beneficially owned by any of the
Stockholder Parties. In addition, Richard E. Ragsdale, H. Wayne Posey, E.
Thomas Chaney separately file statements on Schedule 13G with respect to
their beneficial ownership of the Company's securities.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
--------------------------------------------------
As more fully described herein, on January 13, 2000, at the
initial closing (the "Initial Closing"), GS Capital III, GS Offshore, GS
Germany (through its nominee, Goldman, Sachs & Co. Verwaltungs GmbH) and
Stone 2000 (collectively, the "Purchasers") purchased, pursuant to the
Securities Purchase Agreement, dated as of January 13, 2000, by and among
the Company and the Purchasers (the "Securities Purchase Agreement"), the
full text of which is filed as Exhibit 2 hereto and incorporated herein by
this reference, for an aggregate purchase price of $16,000,000 in cash,
less the Initial Closing Payment (defined below), an aggregate of (i)
1,250,000 shares of Common Stock (the "GS Shares"), and (ii) $16,000,000 in
aggregate principal amount of the Company's Senior Subordinated Notes, due
January 13, 2005 (the "Notes"). The "Initial Closing Payment" is an amount
in cash equal to $480,000.
The Purchasers agreed to purchase from the Company, at the second
closing (the "Second Closing"), pursuant to the Securities Purchase
Agreement and upon the terms and subject to the conditions set forth
therein, (i) an aggregate of 390,000 shares of the Company's Series A
Convertible Preferred Stock, par value $0.01 per share (the "Preferred
Stock") for an aggregate purchase price of $39,000,000 in cash, less (x)
the Second Closing Payment (defined below) and (y) any accrued and unpaid
interest on the Notes and (ii) an aggregate of 160,000 shares of Preferred
Stock for an aggregate purchase price of $16,000,000 payable by delivery to
the Company of all outstanding Notes and GS Shares in exchange therefor.
The "Second Closing Payment" is an amount in cash equal to $1,170,000.
The funds used by the Limited Partnerships to purchase the GS
Shares and Notes at the Initial Closing were obtained by such entities from
capital contributions by their partners and from the available funds of
such entities. The funds used by Stone 2000 to purchase the GS Shares and
Notes at the Initial Closing were obtained from a loan from GS Group, which
loan will be repaid with interest to GS Group out of capital contributions
from members of Stone 2000.
It is expected that the funds to be used by the Limited
Partnerships to purchase the Preferred Stock at the Second Closing will be
obtained by such entities from capital contributions by their partners and
from the available funds of such entities. It is expected that the funds to
be used by Stone 2000 to purchase the Preferred Stock at the Second Closing
will be obtained either from capital contributions from its members or from
a loan from GS Group, which loan will be repaid with interest to GS Group
out of capital contributions from members of Stone 2000.
None of the individuals listed on Schedules I, II-A-i, II-A-ii,
II-B, II-C-i or II-C-ii hereto has contributed any funds or other
consideration towards the purchase of the securities of the Company except
insofar as they may have partnership interests in any of the Filing Persons
and have made capital contributions to any of the Filing Persons, as the
case may be.
ITEM 4. PURPOSE OF TRANSACTION.
-----------------------
General
- -------
Pursuant to the Securities Purchase Agreement, on January 13,
2000, the Purchasers purchased (i) the GS Shares, and (ii) the Notes. The
Purchasers also agreed to purchase from the Company at the Second Closing,
pursuant to the Securities Purchase Agreement and upon the terms and
subject to the conditions set forth therein, including, without limitation,
the approval by the stockholders of the Company of the issuance and sale of
the Preferred Stock to the Purchasers at the Second Closing in accordance
with the rules of The Nasdaq Stock Market, Inc., (i) an aggregate of
390,000 shares of Preferred Stock for an aggregate purchase price of
$39,000,000 in cash, less (x) the Second Closing Payment and (y) any
accrued and unpaid interest on the Notes, and (ii) an aggregate of 160,000
shares of Preferred Stock for an aggregate purchase price of $16,000,000
payable by delivery to the Company of all outstanding Notes and Common
Stock held by the Purchasers in exchange therefor.
The purpose of the acquisition of the GS Shares and the Notes by
the Purchasers was to acquire an interest in the Company and provide the
Company with financing pending the consummation of the Second Closing. The
purpose of the acquisition of the Preferred Stock by the Purchasers is to
acquire a significant equity interest in the Company.
Board Representation; Voting Rights
- -----------------------------------
Pursuant to the Securities Purchase Agreement, from January 20,
2000, and for so long as the Purchasers and their affiliates own at least
$5,500,000 in aggregate principal amount of the Notes, GS Capital III has
the right to designate one director (the "Noteholder Designee") to the
Company's board of directors ("Board of Directors"). Mr. Sanjeev Mehra has
been appointed to the Board of Directors effective January 20, 2000, as the
initial Noteholder Designee. The Noteholder Designee has the right to sit
on the executive committee of the Board of Directors until such director's
resignation in connection with the Second Closing or the Second Closing
Termination Date (as defined in Item 6), as the case may be.
If the Second Closing occurs, the Notes will no longer be
outstanding and the Noteholder Designee will resign, and, pursuant to the
Securities Purchase Agreement, from the Second Closing and for so long as
the Purchasers and their affiliates collectively beneficially own a number
of shares of Common Stock that is not less than (i) 66 2/3% of the Second
Closing Amount (defined below), GS Capital III will have the right to
designate three directors of the Company; (ii) 33 1/3% of the Second
Closing Amount, GS Capital III will have the right to designate two
directors of the Company; and (iii) 10% of the Second Closing Amount, GS
Capital III will have the right to designate one director of the Company
(collectively, the "Preferred Designees"). Mr. Sanjeev Mehra will be one of
the initial Preferred Designees, and the remaining two initial Preferred
Designees will be designated by GS Capital III prior to the Second Closing.
In addition, one Preferred Designee will have the right to sit on the
executive committee of the Board of Directors. The "Second Closing Amount"
is the number of shares of Common Stock beneficially owned by the
Purchasers immediately after the Second Closing (as such number may be
adjusted for stock splits, reverse stock splits, dividends paid in Common
Stock, reclassifications of the Common Stock, and other similar events).
Pursuant to the Securities Purchase Agreement, without the prior
written consent of GS Capital III, the Board of Directors (i) will not
consist of more than eight members so long as the Purchasers and their
affiliates own any Notes and (ii) if the Second Closing occurs, will not
consist of more than ten members so long as the Purchasers and their
affiliates beneficially own at least 10% of the Second Closing Amount.
Pursuant to the Securities Purchase Agreement, the Company is
required, in connection with the Second Closing, to cause the Certificate
of Designation of Preferred Stock (the "Certificate of Designation") to be
filed with the Secretary of State of the State of Delaware. The Certificate
of Designation is attached hereto as Exhibit 3, and is incorporated in and
made a part of this Schedule 13D in its entirety by this reference. Under
the terms of the Certificate of Designation, in the event the Company fails
(i) to pay in full dividends on the shares of Preferred Stock for a period
of twelve consecutive months or (ii) within 30 days following the seventh
anniversary of the Second Closing, to redeem the Preferred Stock in full on
such date, then, in addition to any other rights that may otherwise be
available to holders of Preferred Stock, the total number of directors of
the Company will be increased by two, and the holders of Preferred Stock,
voting together as a class, will be entitled to elect to the Board of
Directors two additional directors (which directors will be in addition to,
and not in lieu of, any Preferred Designees).
Pursuant to the Certificate of Designation, the holders of the
Preferred Stock will have the right to vote on an as-converted basis
together with the holders of Common Stock as a single class on all matters,
including the election of directors, submitted to the Company's
stockholders for a vote. Assuming the Second Closing occurs, the Purchasers
will hold in the aggregate 550,000 shares of Preferred Stock, which shares
will be convertible into 16,923,077 shares of Common Stock as of the Second
Closing (subject to adjustment as provided in the Certificate of
Designation).
Pursuant to the rules of the The Nasdaq Stock Market, Inc.,
stockholder approval is required in connection with the transactions to be
consummated at the Second Closing. The Purchasers have entered into
agreements (collectively, the "Voting Agreements") with each of the
Stockholder Parties requiring that, subject to the terms and conditions of
such agreements, each of such parties vote its shares of Common Stock in
favor of the transactions contemplated by the Securities Purchase
Agreement. Each of the Stockholder Parties have delivered to the Purchasers
an irrevocable proxy to vote such stockholders' shares of Common Stock in
favor of the transaction contemplated by the Securities Purchase Agreement.
On January 13, 2000, the Stockholder Parties owned 3,559,294 shares of
Common Stock. The form of Voting Agreement and accompanying proxy are
attached as Exhibit 4 hereto, and are incorporated in and made a part of
this Schedule 13D in their entirety by this reference.
Under the terms of the Certificate of Designation, so long as any
shares of Preferred Stock are outstanding, the Company may not declare, pay
or set apart for payment any dividend on any shares of Common Stock or
other capital stock of the Company unless all unpaid dividends on the
shares of Preferred Stock have been paid in full.
Under the terms of the Certificate of Designation, so long as any
shares of Preferred Stock remain outstanding, if the Company pays a
dividend in cash, securities or other property on shares of Common Stock
then at the same time the Company is required to declare and pay a dividend
on shares of Preferred Stock in the amount of dividends that would be paid
with respect to shares of Preferred Stock if such shares were converted
into shares of Common Stock on the record date for such dividends (or if no
record date is established, at the date such dividend is declared).
Pursuant to the Securities Purchase Agreement, so long as the
Purchasers and their affiliates beneficially own at least one-third of the
shares of Preferred Stock issued at the Second Closing, the Company has
agreed it will not, and will not permit any of its subsidiaries to,
directly or indirectly, without the consent of GS Capital III: (a)
authorize a consolidation with or merger with or into, or conveyance,
transfer or lease of all or substantially all assets as an entirety to, any
person; (b) authorize a liquidation, dissolution, recapitalization or
reorganization; (c) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, a limited liability company, a
partnership, an association, a trust or any other entity or organization
for a purchase price greater than $20 million; (d) create, incur, assume or
suffer to exist any indebtedness if such additional indebtedness would
cause the ratio of (i) total debt (less restricted cash) to (ii)
consolidated EBITDA for the period of four consecutive quarters of the
Company ending on, or most recently preceding, the date of determination,
to be greater than 4.5 to 1.00; (e) enter into any business, either
directly or through any subsidiary or joint venture or similar arrangement,
except for those businesses in which the Company and its subsidiaries,
taken as whole, are engaged on January 13, 2000, or which are reasonably
related, incidental, or ancillary thereto; or (f) authorize, adopt or
approve an amendment to the certificate of incorporation or by-laws of the
Company, each as in effect as of the Second Closing.
Pursuant to the Certificate of Designation, the Company has
agreed it will not, and will not permit any of its subsidiaries to,
directly or indirectly, without the affirmative vote or consent of the
holders of not less than 50% of all shares of Preferred Stock at any time
outstanding: (i) authorize, increase the authorized number of shares of, or
issue any shares of stock senior to or on parity with the Preferred Stock;
(ii) increase the authorized number of shares of, or issue (including on
conversion or exchange of any convertible or exchangeable securities or by
reclassification) any shares of, Preferred Stock; or (iii) reclassify any
shares of Preferred Stock or authorize, adopt or approve an amendment to
the Certificate of Designation which would increase or decrease the par
value of the shares of Preferred Stock, or alter or change the powers,
preferences or special rights of the Preferred Stock so as to affect such
shares of Preferred Stock adversely.
Preemptive Rights
- -----------------
Pursuant to the Securities Purchase Agreement, from the Second
Closing and for so long as the Purchasers collectively beneficially own not
less than 10% of the total number of shares of Common Stock outstanding
from time to time, in the event the Company proposes to issue any capital
stock of any kind (including any Common Stock, preferred stock, warrants,
options or securities or units comprising securities convertible into or
exchangeable for Common Stock or preferred stock or rights to acquire the
same) of the Company, other than (1) pursuant to an employee or
non-management director stock option plan, stock bonus plan, stock purchase
plan or other management equity program or plan, (2) pursuant to any
merger, share exchange or acquisition pursuant to which shares of Common
Stock are exchanged for, or issued upon cancellation or conversion of,
equity securities of an entity engaged primarily in, or to acquire assets
primarily for use in, the business conducted by the Company and the
subsidiaries or a business reasonably related to the business conducted by
the Company and the subsidiaries, or (3) securities issuable upon exercise
of previously issued warrants, options or other rights to acquire capital
stock or upon conversion of previously issued securities convertible into
capital stock, then the Company is required to: (i) deliver to the
Purchasers written notice setting forth in reasonable detail (1) the terms
and provisions of the securities proposed to be issued (the "Proposed
Securities"); (2) the price and other terms of the proposed sale of such
securities; (3) the amount of such securities proposed to be issued; and
(4) such other information as the Purchasers may reasonably request in
order to evaluate the proposed issuance; and (ii) offer to issue to the
Purchasers in the aggregate a portion of the Proposed Securities equal to a
percentage determined by dividing (x) the number of shares of Common Stock
beneficially owned by the Purchasers, by (y) the total number of shares of
Common Stock then outstanding. The Purchasers must exercise such rights
within ten business days after receipt of such notice from the Company.
Standstill Agreement
- --------------------
Pursuant to the Securities Purchase Agreement, from the period
commencing on January 13, 2000, and ending on the earlier of (i) the
expiration of the Standstill Period (as defined below), (ii) the occurrence
of any breach by the Company in any material respect of any covenant or
agreement contained in the Securities Purchase Agreement or in any other
transaction document, (iii) the occurrence of the filing of a voluntary
bankruptcy petition by the Company or on the 60th day following the filing
of an involuntary bankruptcy petition against the Company if such petition
is not discharged with prejudice during such 60-day period, (iv) the
occurrence of a change in control of the Company or (v) the occurrence of a
third party proposal, except as (x) contemplated by the Securities Purchase
Agreement or any other transaction document or (y) specifically approved in
writing in advance by the Company, the Purchasers will not, and will cause
any affiliates controlled by them to not, in any manner, directly or
indirectly: (A) acquire, or offer or agree to acquire, or become the
beneficial owner of or obtain any rights in respect of any capital stock of
the Company in an amount in excess of the Grandfathered Amount (as defined
below); or (B) solicit proxies or consents or become a "participant" in a
"solicitation" (as such terms are defined or used in Regulation 14A under
the Act) of proxies or consents with respect to any voting securities of
the Company or any of its successors or initiate or become a participant in
any stockholder proposal or "election contest" (as such term is defined or
used in Rule 14a-11 under the Act) with respect to the Company or any of
its successors or induce others to initiate the same (except for activities
undertaken by the Purchasers or the directors designated by GS Capital III
in connection with solicitations by the Board of Directors). "Standstill
Period" means the later of (i) January 13, 2003, or (ii) the date on which
the Purchasers and their affiliates beneficially own, in the aggregate,
less than 10% of the Second Closing Amount.
Shareholder Rights Amendment
- ----------------------------
Pursuant to the Securities Purchase Agreement, the Company
entered into Amendment No. 1 to the Shareholder Rights Agreement (the
"Rights Amendment"), dated as of January 13, 2000. The Rights Amendment is
attached hereto as Exhibit 5, and is incorporated in and made a part of
this Schedule 13D in its entirety by this reference. The Rights Amendment
amended the Company's "rights plan" to exempt therefrom certain shares of
Common Stock which may be beneficially owned by the Purchasers and their
affiliates including (i) all shares of Common Stock beneficially owned by
the Purchasers and their affiliates as of January 13, 2000, (ii) all shares
of Common Stock the Purchasers and their affiliates become the beneficial
owner of after January 13, 2000, pursuant to, and in accordance with the
terms of the Securities Purchase Agreement and the other transaction
documents, (iii) Ordinary Course Broker Dealer Shares (as defined in the
Rights Amendment), and (iv) an additional 1,400,000 shares of Common Stock
(other than Ordinary Broker Dealer Shares) (collectively, the
"Grandfathered Amount").
Lock-up Agreements
- ------------------
Pursuant to the Securities Purchase Agreement, Richard E.
Ragsdale, H. Wayne Posey and E. Thomas Chaney (the "Lock-up Stockholders")
executed Lock-up Agreements ("Lock-up Agreements") in which the Lock-up
Stockholders agreed that (i) during a period of six months from January 13,
2000, (the "Initial Lock-up Period"), such stockholders will not, directly
or indirectly, (x) offer, pledge, sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant for the sale of, or otherwise dispose of or
transfer (collectively, "Transfer") any shares of Common Stock or any
securities convertible into or exchangeable or exercisable for Common
Stock, owned by such stockholders or with respect to which such stockholder
has the power of disposition as of January 13, 2000, or (y) enter into any
swap or any other agreement or any transaction that Transfers, in whole or
in part, directly or indirectly, the economic consequence of such
stockholder's ownership of the Common Stock as of January 13, 2000, whether
any such swap or transaction is to be settled by delivery of Common Stock
or other securities, in cash or otherwise, and (ii) for a period of
eighteen months following the end of the Initial Lock-up Period, such
stockholders will not, directly or indirectly, (x) Transfer greater than
25% of such stockholder's shares of Common Stock or any securities
convertible into or exchangeable or exercisable for Common Stock, owned by
such stockholder or with respect to which such stockholder has the power of
disposition as of January 13, 2000, or (y) enter into any swap or any other
agreement or any transaction that Transfers, in whole or in part, directly
or indirectly, greater than 25% of the economic consequence of such
stockholder's ownership of the Common Stock as of January 13, 2000, whether
any such swap or transaction is to be settled by delivery of Common Stock
or other securities, in cash or otherwise. Notwithstanding the foregoing,
each of the Lock-up Stockholders may, at any time after the Second Closing
and following a Transfer by the Purchasers of greater than 25% of the
Second Closing Amount to a person who or which is not an affiliate of the
Purchasers, Transfer shares of Common Stock in an amount up to the number
of shares of Common Stock equal to the number of shares of Common Stock
beneficially owned by such Lock-up Stockholder on January 13, 2000
multiplied by a fraction, the numerator of which is the number of shares of
Common Stock sold or transferred by the Purchasers prior to such date in
excess of 25% of the Second Closing Amount and the denominator of which is
the number of shares of Common Stock equal to 75% of the Second Closing
Amount. The form of Lock-up Agreement is attached hereto as Exhibit 6, and
is incorporated in and made a part of this Schedule 13D in its entirety by
this reference.
Other Plans and Proposals
- -------------------------
Except as described above or otherwise described in this Schedule
13D, the Filing Persons currently have no plans or proposals which relate
to or would result in any transaction, event or action enumerated in
paragraphs (a) through (j) of Item 4 of the form of Schedule 13D
promulgated under the Act.
Each of the Filing Persons expects to evaluate on an ongoing
basis the Company's financial condition, business, operations and
prospects, the market price of the Common Stock, conditions in the
securities markets generally, general economic and industry conditions and
other factors. Accordingly, each Filing Person reserves the right to change
its plans and intentions at any time, as it deems appropriate. In
particular, any one or more of Filing Persons (and their respective
affiliates) may purchase additional shares of Common Stock or Preferred
Stock or other securities of the Company or may sell or transfer shares of
Common Stock or Preferred Stock (or any of the shares of Common Stock into
which such Preferred Stock is converted or any convertible notes, for which
such Preferred Stock is exchanged) beneficially owned by them from time to
time in public or private transactions and/or may enter into privately
negotiated derivative transactions with institutional counterparties to
hedge the market risk of some or all of their positions in the shares of
Common Stock, Preferred Stock or other securities and/or may cause any of
the Limited Partnerships or Stone 2000 to distribute in kind to their
respective partners or members, as the case may be, shares of Common Stock
or Preferred Stock or other securities owned by such Limited Partnerships
or Stone 2000. Any such transactions may be effected at any time or from
time to time subject to (i) the restrictions contained in the Securities
Purchase Agreement, and (ii) any applicable limitations imposed on the sale
of any of their Company securities by the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder (the
"Securities Act") or other applicable law. To the knowledge of each Filing
Person, each of the persons listed on Schedules I, II-A-i, II-A-ii, II-B,
II-C-i or II-C-ii hereto may make similar evaluations from time to time or
on an ongoing basis.
ITEM 5. INTERESTS IN SECURITIES OF THE ISSUER.
--------------------------------------
(a) Based on the information disclosed by the Company in the
Securities Purchase Agreement, as of January 13, 2000, there were
22,982,423 shares of Common Stock outstanding immediately following the
issuance of the GS Shares.
As of January 13, 2000, GS Capital III beneficially owns 928,994
shares of Common Stock, representing 4.0% of the outstanding shares of
Common Stock.
As of January 13, 2000, GS Offshore beneficially owns 255,391
shares of Common Stock, representing 1.1% of the outstanding shares of
Common Stock.
As of January 13, 2000, GS Advisors may be deemed to beneficially
own an aggregate of 1,184,385 shares of Common Stock beneficially owned by
GS Capital III and GS Offshore, as described above, representing in the
aggregate approximately 5.2% of the outstanding shares of Common Stock.
As of January 13, 2000, GS Germany beneficially owns and its
managing partner, GS oHG may be deemed to beneficially own, 42,888 shares
of Common Stock shares representing 0.2% of the outstanding shares of
Common Stock.
As of January 13, 2000, Stone 2000 beneficially owns 22,727
shares of Common Stock representing 0.1% of the outstanding shares of
Common Stock.
As of January 13, 2000, Goldman Sachs and GS Group may be deemed
to beneficially own an aggregate of 1,253,335 shares of Common Stock,
consisting of (i) 1,250,000 shares of Common Stock beneficially owned by
the Limited Partnerships and Stone 2000, as described above and (ii) 3,335
shares of Common Stock held in client accounts with respect to which
Goldman Sachs or employees of Goldman Sachs have voting or investment
discretion or both ("Managed Accounts"), representing in the aggregate
approximately 5.5% of the outstanding shares of Common Stock. Goldman Sachs
disclaims beneficial ownership of (i) the shares of Common Stock
beneficially owned by the Limited Partnerships and Stone 2000 to the extent
of partnership or membership interests, as the case may be, in the Limited
Partnerships and Stone 2000 are held by persons other than Goldman Sachs or
its affiliates and (ii) the shares of Common Stock held in Managed
Accounts.
None of the Filing Persons or, to the knowledge of the Filing
Persons, the persons listed on Schedules I, II-A-i, II-A-ii, II-B, II-C-i
or II-C-ii hereto beneficially owns any shares of Common Stock other than
as set forth herein.
(b) Each Filing Person shares the power to vote or direct the
vote and to dispose or to direct the disposition of shares of Common Stock
beneficially owned by such Filing Person as indicated above.
(c) Except as described in this Schedule 13D, no transactions in
the shares of Common Stock were effected by the Filing Persons, or, to
their knowledge, any of the persons listed on Schedules I, II-A-i, II-A-ii,
II-B, II-C-i or II-C-ii hereto, during the past sixty days.
(d) Except for clients of Goldman Sachs who may have the right to
receive or the power to direct the receipt of dividends from, or the
proceeds from the sale of, any shares of Common Stock held in Managed
Accounts, no other person is known by any Filing Person to have the right
to receive or the power to direct the receipt of dividends from, or the
proceeds from the sale of, any shares of Common Stock beneficially owned by
any Filing Person.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER.
--------------------------------------------------------
The responses set forth in Items 3 and 4 of this Schedule 13D are
incorporated herein by this reference in their entirety.
On January 13, 2000, the Company issued the Notes to the
Purchasers. The form of Note is attached hereto as Exhibit 7, and is
incorporated in and made a part of this Schedule 13D in its entirety by
this reference. The Notes are subordinated in right of payment to certain
"senior indebtedness" and contain customary events of default, as well as
certain covenants of the Company including limitations on indebtedness,
encumbrances, fundamental changes, sales of assets, investments, and
restricted payments. In the event the Second Closing does not occur, the
Notes will remain outstanding and the interest rate on the Notes will
increase from 12% per annum to 14% per annum.
The Securities Purchase Agreement contains customary
representations, warranties, covenants, agreements and conditions for
transactions of the type contemplated thereby.
In addition to the approval by the stockholders of the Company of
the issuance and sale of the Preferred Stock to the Purchasers at the
Second Closing described in Item 4, the consummation of the Second Closing
is subject to the satisfaction or waiver of certain customary conditions to
closing, including the termination or expiration of any required waiting
period pursuant to the Hart-Scott-Rodino Antitrust Improvement Act of 1976,
as amended. In addition, pursuant to the Securities Purchase Agreement,
prior to the Second Closing, the Company must obtain additional senior debt
financing under its credit agreement or another facility syndicated or
privately placed by a bank or its affiliates in an amount not less than $65
million, on terms reasonably satisfactory to the Purchasers taking into
account current market conditions.
Pursuant to the Securities Purchase Agreement, until the earlier
of the Second Closing and the Second Closing Termination Date (as defined
below), other than in connection with the transactions contemplated by the
Securities Purchase Agreement, the Company agreed that neither it nor any
of its subsidiaries will solicit, propose or facilitate (including by way
of providing information regarding the Company or any of the subsidiaries
or their respective businesses to any person), directly or indirectly, any
inquiries, discussions, offers or proposals for, continue or enter into
negotiations looking toward, or enter into or consummate any commitment or
understanding in connection with any offer or proposal regarding, any
purchase or other acquisition of all or any material portion of the Company
and the subsidiaries taken as a whole, the business or assets of the
Company and the subsidiaries taken as a whole, any debt financing (other
than pursuant to the Securities Purchase Agreement), or any of the capital
stock of or equity interests in (whether newly issued or currently
outstanding) the Company or any of the subsidiaries (other than with
respect to proposed acquisitions by the Company of businesses for which the
Company would use its capital stock as consideration as permitted by the
Notes), or any merger, business combination or recapitalization involving
the Company or any of the material subsidiaries or their respective
businesses; and the Company will cause the subsidiaries and the affiliates,
officers, directors, employees, representatives and agents of the Company
and the subsidiaries to refrain from engaging in any of the above
activities that the Company is restricted from engaging in. The Company
also agreed to promptly inform the Purchasers of the identity of any person
making any inquiry, offer or proposal, and the nature and terms of any such
inquiry, offer or proposal, and to keep the Purchasers promptly and fully
informed as to the status thereof.
Pursuant to the Securities Purchase Agreement, the obligations of
the parties to consummate the Second Closing may be terminated at any time
prior to the Second Closing, notwithstanding approval thereof by the
stockholders of the Company: (a) by mutual written consent of the Company
and the Purchasers at any time prior to the Second Closing; or (b) by
either the Purchasers or the Company if the Second Closing is not
consummated by May 15, 2000; or (c) by either the Purchasers or the Company
if a governmental entity issues a nonappealable final order, decree or
ruling or taken any other action having the effect of permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by Securities Purchase Agreement; or (d) by the Purchasers or
the Company, (i) if any representation or warranty of the other set forth
in the Securities Purchase Agreement or in any other transaction document
is untrue in any material respect when made, or (ii) upon a breach in any
material respect of any covenant or agreement on the part of the other set
forth in the Securities Purchase Agreement or in any other transaction
document; or (e) by the Purchasers if an "event of default" under the Notes
occurs and is continuing; or (f) by either the Company or the Purchasers in
the event that the stockholders of the Company fail to approve the
transactions described in the Securities Purchase Agreement at the
stockholder meeting; or (g) by the Purchasers if the Company has not
complied in all respects with the covenants relating to GS Capital III's
right to designate the Noteholder Designee to the Board of Directors. The
date of any termination of the obligations of the parties to consummate the
Second Closing is referred to as the "Second Closing Termination Date."
The Company has agreed to reimburse the Purchasers for their fees
and expenses incurred in connection with the transactions contemplated by
the Securities Purchase Agreement provided that such fees and expenses do
not exceed $700,000.
Pursuant to the Certificate of Designation, if the Company shall
liquidate, dissolve or wind-up, before any payment or distribution to
holders of shares of junior stock or parity stock, holders of shares of
Preferred Stock will be entitled to receive an amount equal to the greater
of (x) the Liquidation Preference (defined below) with respect to each
share of Preferred Stock held by such holder as of the date of Liquidation,
or (y) the amount that would have been received with respect to shares of
Preferred Stock upon any such Liquidation if such shares had been converted
to shares of Common Stock immediately prior to the date of such
Liquidation. If, upon any such Liquidation, whether voluntary or
involuntary, the assets to be distributed to the holders of the Preferred
Stock are insufficient to permit payment of the full amount of the
Liquidation Preference with respect to each share of Preferred Stock, then
the entire assets of the Company to be distributed among the holders of the
Preferred Stock will be distributed ratably among such holders in
accordance with the number of shares of Preferred Stock held by each such
holder. The "Liquidation Preference" is $100.00 per share (as adjusted for
any stock dividends, combinations or splits with respect to such share),
plus an amount equal to all accrued but unpaid dividends (whether or not
declared) on such share.
Pursuant to the Certificate of Designation, the holders of shares
of Preferred Stock, in preference to the holders of shares of Common Stock
and of any shares of other capital stock of the Company as to payment of
dividends, are entitled to receive cumulative dividends at an annual rate
equal to 6% of the Liquidation Preference from and after the Second
Closing. Dividends will be (i) computed on the basis of the Liquidation
Preference; (ii) accrue and be payable quarterly, in arrears, on the last
business day of March, June, September and December in each year (each such
date being referred to as a "Quarterly Dividend Payment Date"), commencing
on the first Quarterly Dividend Payment Date following the Second Closing;
and (iii) payable in cash. Under the terms of the Certificate of
Designation, accrued dividends not paid within 10 days of any Quarterly
Dividend Payment Date will accrue dividends at an annual dividend rate of
8% of the Liquidation Preference until paid in full.
Under the terms of the Certificate of Designation and subject to
certain adjustment provisions as provided therein, at any time from and
after the respective dates of issuance of applicable shares of Preferred
Stock, each share of Preferred Stock is convertible at the option of the
holder into such number of fully paid and nonassessable shares of Common
Stock as is determined by dividing the Liquidation Preference, as of the
conversion date by the conversion price as of the conversion date. The
initial conversion price is $3.25 per share, which is subject to adjustment
as provided in the Certificate of Designation.
Registration Rights Agreement
- -----------------------------
Pursuant to the Securities Purchase Agreement, the Company and
the Purchasers entered into a Registration Rights Agreement (the
"Registration Rights Agreement") at the Initial Closing. The Registration
Rights Agreement is attached as Exhibit 8 hereto and is incorporated in and
made a part of this Schedule 13D in its entirety by this reference.
Pursuant to the Registration Rights Agreement, the Company will grant the
Purchasers the right, subject to certain limitations and restrictions, (i)
to require the Company at the request of the Purchasers on two separate
occasions to effect a registration of shares of Common Stock and securities
convertible into, or exercisable or exchangeable for, shares of Common
Stock ("Common Stock Equivalents") held by the Purchasers, and (ii) to
require the Company to include shares of Common Stock and Common Stock
Equivalents then held by the Purchasers (on a pro rata basis with other
participating selling stockholders) in any other registration by the
Company of its equity securities under the Securities Act. The Company
will pay certain expenses of the Purchasers in connection with such
registrations as provided in the Registration Rights Agreement.
Other than as set forth in this Item 6 and Items 3, 4, and 5
above, none of the Filing Persons is a party to any contract, arrangement,
understanding or relationship with respect to any securities of the issuer,
and none of the securities as to which this Schedule 13D relates is pledged
or is otherwise subject to a contingency the occurrence of which would give
another person voting power or investment power over such securities.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
---------------------------------
Exhibit 1 Joint Filing Agreement, dated as of January 24, 2000
Exhibit 2 Securities Purchase Agreement, dated as of January 13, 2000,
by and among the Company and the Purchasers
Exhibit 3 Certificate of Designation of Series A Convertible Preferred
Stock
Exhibit 4 Form of Stockholder Voting Agreement and accompanying Proxies
Exhibit 5 Amendment No. 1 to the Shareholder Rights Agreement, dated as
of January 13, 2000
Exhibit 6 Form of Lock-up Agreement
Exhibit 7 Form of Senior Subordinated Note, due January 2005
Exhibit 8 Registration Rights Agreement, dated as of January 13, 2000,
by and among ProMedCo Management Company and the Investors
Exhibit 9 Power of Attorney, dated December 21, 1999, relating to
Goldman, Sachs & Co.
Exhibit 10 Power of Attorney, dated May 7, 1999, relating to The Goldman
Sachs Group, Inc.
Exhibit 11 Power of Attorney, dated September 22, 1999, relating to GS
Capital Partners III, L.P.
Exhibit 12 Power of Attorney, dated September 22, 1999, relating to GS
Capital Partners III Offshore, L.P.
Exhibit 13 Power of Attorney, dated October 7, 1999, relating to GS
Capital Partners III Germany Civil Law Partnership.
Exhibit 14 Power of Attorney, dated January 21, 2000, relating to GS
Advisors III, L.L.C.
Exhibit 15 Power of Attorney, dated May 26, 1999, relating to Goldman,
Sachs & Co. oHG
Exhibit 16 Power of Attorney, dated January 19, 2000, relating to Stone
Street Fund 2000 LLC
<PAGE>
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.
January 24, 2000
GOLDMAN, SACHS & CO.
By: /s/ Roger S. Begelman
---------------------------------
Name: Roger S. Begelman
Title: Attorney-in-fact
THE GOLDMAN SACHS GROUP, INC.
By: /s/ Roger S. Begelman
---------------------------------
Name: Roger S. Begelman
Title: Attorney-in-fact
GS ADVISORS III, L.L.C.
By: /s/ Roger S. Begelman
---------------------------------
Name: Roger S. Begelman
Title: Attorney-in-fact
GS CAPITAL PARTNERS III, L.P.
By: /s/ Roger S. Begelman
---------------------------------
Name: Roger S. Begelman
Title: Attorney-in-fact
GS CAPITAL PARTNERS III OFFSHORE, L.P.
By: /s/ Roger S. Begelman
---------------------------------
Name: Roger S. Begelman
Title: Attorney-in-fact
GS CAPITAL PARTNERS III GERMANY
CIVIL LAW PARTNERSHIP (with
limitation of liability)
By: /s/ Roger S. Begelman
---------------------------------
Name: Roger S. Begelman
Title: Attorney-in-fact
GOLDMAN, SACHS & CO. oHG
By: /s/ Roger S. Begelman
---------------------------------
Name: Roger S. Begelman
Title: Attorney-in-fact
STONE STREET FUND 2000, L.L.C.
By: /s/ Roger S. Begelman
---------------------------------
Name: Roger S. Begelman
Title: Attorney-in-fact
<PAGE>
EXHIBITS
Exhibit 1 Joint Filing Agreement, dated as of January 24, 2000
Exhibit 2 Securities Purchase Agreement, dated as of January
13, 2000, by and among the Company and the Purchasers
Exhibit 3 Certificate of Designation of Series A Convertible Preferred
Stock
Exhibit 4 Form of Stockholder Voting Agreement and accompanying Proxies
Exhibit 5 Amendment No. 1 to the Shareholder Rights Agreement, dated as
of January 13, 2000
Exhibit 6 Form of Lock-up Agreement
Exhibit 7 Form of Senior Subordinated Note, due January 2005
Exhibit 8 Registration Rights Agreement, dated as of January 13, 2000,
by and among ProMedCo Management Company and the Investors
Exhibit 9 Power of Attorney, dated December 21, 1999, relating to
Goldman, Sachs & Co.
Exhibit 10 Power of Attorney, dated May 7, 1999, relating to The Goldman
Sachs Group, Inc.
Exhibit 11 Power of Attorney, dated September 22, 1999, relating to
GS Capital Partners III, L.P.
Exhibit 12 Power of Attorney, dated September 22, 1999, relating to
GS Capital Partners III Offshore, L.P.
Exhibit 13 Power of Attorney, dated October 7, 1999, relating to
GS Capital Partners III Germany Civil Law Partnership.
Exhibit 14 Power of Attorney, dated January 21, 2000, relating to
GS Advisors III, L.L.C.
Exhibit 15 Power of Attorney, dated May 26, 1999, relating to Goldman,
Sachs & Co. oHG
Exhibit 16 Power of Attorney, dated January 19, 2000, relating to Stone
Street Fund 2000 LLC
<PAGE>
SCHEDULE I
----------
The name of each director of The Goldman Sachs Group, Inc. is set
forth below.
The business address of each person listed below except John L.
Thornton, Sir John Browne, James A. Johnson, John H. Bryan and Ruth J.
Simmons is 85 Broad Street, New York, NY 10004. The business address of
John L. Thornton is 133 Fleet Street, London EC4A 2BB, England. The
business address of Sir John Browne is BP Amoco plc, Brittanic House, 1
Finsbury Circus, London EC2M, England. The business address of James A.
Johnson is Fannie Mae, 3900 Wisconsin Avenue NW, Washington, D.C. 20016.
The business address of John H. Bryan is Three First National Plaza,
Chicago, IL 60602-4260. The business address of Ruth J. Simmons is Office
of the President, Smith College, College Hall Room 20, Northhampton, MA
01063.
Each person is a citizen of the United States of America except
for Sir John Browne, who is a citizen of the United Kingdom. The present
principal occupation or employment of each of the listed persons is set
forth below.
<TABLE>
<CAPTION>
Name Present Principal Occupation
- -------------------------------------------------------------------------------------------------
<S> <C>
Henry M. Paulson, Jr. Chairman and Chief Executive Officer of The Goldman Sachs Group, Inc.
Robert J. Hurst Vice Chairman of The Goldman Sachs Group, Inc.
John A. Thain President and Co-Chief Operating Officer of The Goldman Sachs Group, Inc.
John L. Thornton President and Co-Chief Operating Officer of The Goldman Sachs Group, Inc.
Sir John Browne Group Chief Executive of BP Amoco plc
James A. Johnson Chairman of the Executive Committee of the Board of Fannie Mae
John H. Bryan Chairman and Chief Executive Officer of Sara Lee Corporation
Ruth J. Simmons President of Smith College
John L. Weinberg Senior Chairman of The Goldman Sachs Group, Inc.
</TABLE>
<PAGE>
SCHEDULE II-A-i
---------------
The name, position and present principal occupation of each
executive officer of GS Advisors III, L.L.C., the sole general partner of
GS Capital Partners III, L.P. and GS Capital Partners III Offshore, L.P.,
are set forth below.
The business address for all the executive officers listed below
except Barry S. Volpert is 85 Broad Street, New York, New York 10004. The
business address of Barry S. Volpert is 133 Fleet Street, London EC4A 2BB,
England.
All executive officers listed below are United States citizens.
<TABLE>
<CAPTION>
Name Position Present Principal Occupation
---------------------------------------------------------------------------------------------
<S> <C> <C>
Richard A. Friedman Director/President Managing Director of Goldman, Sachs & Co.
Terence M. O'Toole Director/Vice President Managing Director of Goldman, Sachs & Co.
Elizabeth S. Fascitelli Treasurer Managing Director of Goldman, Sachs & Co.
Joseph H. Gleberman Director/Vice President Managing Director of Goldman, Sachs & Co.
Henry Cornell Vice President Managing Director of Goldman, Sachs & Co.
Barry S. Volpert Director/Vice President Managing Director of Goldman Sachs International
David J. Greenwald Assistant Secretary Managing Director of Goldman, Sachs & Co.
Esta E. Stecher Assistant Secretary Managing Director of Goldman, Sachs & Co.
James B. McHugh Assistant Secretary Vice President of Goldman, Sachs & Co.
C. Douglas Fuge Assistant Treasurer Managing Director of Goldman, Sachs & Co.
Dan H. Jester Assistant Treasurer Managing Director of Goldman, Sachs & Co.
David A. Viniar Assistant Treasurer Managing Director of Goldman, Sachs & Co.
Katherine B. Enquist Vice President/Secretary Vice President of Goldman, Sachs & Co.
John E. Bowman Vice President Vice President of Goldman, Sachs & Co.
Katherine L. Nissenbaum Vice President Vice President of Goldman, Sachs & Co.
</TABLE>
<PAGE>
SCHEDULE II-A-ii
----------------
The name and principal occupation of each member of the Principal
Investment Area Investment Committee of Goldman, Sachs & Co., which
exercises the authority of Goldman, Sachs & Co. in managing GS Advisors
III, L.L.C., are set forth below.
The business address for each member listed below except Gene T.
Sykes, Richard Sharp and Barry S. Volpert is 85 Broad Street, New York, New
York 10004. The business address of Gene T. Sykes is 2765 Sand Hill Road,
Menlo Park, CA 94025. The business address of Richard Sharp and Barry S.
Volpert is 133 Fleet Street, London EC4A 2BB, England.
All members listed below except Richard S. Sharp and Sanjeev K.
Mehra are United States citizens. Richard S. Sharp is a citizen of the
United Kingdom and Sanjeev K. Mehra is a citizen of India.
Name Present Principal Occupation
- -----------------------------------------------------------------------------
Peter M. Sacerdote Advisory Director of Goldman, Sachs & Co.
Richard A. Friedman Managing Director of Goldman, Sachs & Co.
Joseph H. Gleberman Managing Director of Goldman, Sachs & Co.
Robin Neustein Managing Director of Goldman, Sachs & Co.
Terence M. O'Toole Managing Director of Goldman, Sachs & Co.
Gene T. Sykes Managing Director of Goldman, Sachs & Co.
Henry Cornell Managing Director of Goldman, Sachs & Co.
Robert V. Delaney Managing Director of Goldman, Sachs & Co.
Richard S. Sharp Managing Director of Goldman Sachs International
Barry S. Volpert Managing Director of Goldman Sachs International
Sanjeev K. Mehra Managing Director of Goldman, Sachs & Co.
Muneer A. Satter Managing Director of Goldman, Sachs & Co.
<PAGE>
SCHEDULE II-B
-------------
The name, position and present principal occupation of each
executive officer and director of Goldman, Sachs & Co. Finanz GmbH which is
the sole managing general partner of Goldman, Sachs & Co. oHG are set forth
below.
The business address for each of the executive officers and
directors listed below is MesseTurm, 60308 Frankfurt am Main, Germany.
Of the directors and executive officers listed below, Stefan J.
Jentzsch and Timothy C. Plaut are citizens of Germany, Gregory T. Hoogkamp
and Daniel W. Stanton are citizens of the United States and Rudolf W.
Ferscha is a citizen of Austria.
<TABLE>
<CAPTION>
Name Position Present Principal Occupation
- --------------------------------------------------------------------------------
<S> <C> <C>
Stefan J. Jentzsch Managing Director Managing Director of Goldman, Sachs & Co. oHG
Gregory T. Hoogkamp Managing Director Managing Director of Goldman, Sachs & Co. oHG
Rudolf W. Ferscha Managing Director Executive Director of Goldman, Sachs & Co. oHG
Timothy C. Plaut Managing Director Managing Director of Goldman, Sachs & Co. oHG
Daniel W. Stanton Managing Director Managing Director of Goldman, Sachs & Co. oHG
</TABLE>
<PAGE>
SCHEDULE II-C-i
---------------
The name, position and present principal occupation of each
executive officer of Stone Street Fund 2000, L.L.C. are set forth below.
The business address for each of the executive officers listed
below is 85 Broad Street, New York, New York 10004.
All executive officers listed below except Sanjeev K. Mehra are
United States citizens. Sanjeev K. Mehra is a citizen of India.
<TABLE>
<CAPTION>
Name Position Present Principal Occupation
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Richard A. Friedman Vice President Managing Director of Goldman, Sachs & Co.
Terence M. O'Toole Vice President Managing Director of Goldman, Sachs & Co.
Joseph H. Gleberman Vice President Managing Director of Goldman, Sachs & Co.
Sanjeev K. Mehra Vice President/Treasurer Managing Director of Goldman, Sachs & Co.
Peter G. Sachs Vice President Senior Director of The Goldman Sachs Group, Inc.
Peter M. Sacerdote President Advisory Director of Goldman, Sachs & Co.
David J. Greenwald Vice President Managing Director of Goldman, Sachs & Co.
Esta E. Stecher Vice President Managing Director of Goldman, Sachs & Co.
C. Douglas Fuge Assistant Treasurer Managing Director of Goldman, Sachs & Co.
Elizabeth S. Fascitelli Vice President Managing Director of Goldman, Sachs & Co.
Katherine B. Enquist Vice President/Secretary Vice President of Goldman, Sachs & Co.
Richard J. Stingi Vice President Vice President of Goldman, Sachs & Co.
John E. Bowman Vice President Vice President of Goldman, Sachs & Co.
Katherine L. Nissenbaum Vice President Vice President of Goldman, Sachs & Co.
</TABLE>
<PAGE>
SCHEDULE II-C-ii
----------------
The name and principal occupation of each member of the Stone
Street Investment Committee of Goldman, Sachs & Co., which exercises the
authority of Goldman, Sachs & Co. in managing Stone Street Fund 2000,
L.L.C., are set forth below.
The business address for each member listed below is 85 Broad
Street, New York, New York 10004.
All members listed below except Sanjeev K. Mehra are United
States citizens. Sanjeev K. Mehra is a citizen of India.
Name Present Principal Occupation
- ---------------------------------------------------------------------------
Peter M. Sacerdote Advisory Director of Goldman, Sachs & Co.
Peter G. Sachs Senior Director of The Goldman Sachs Group, Inc.
Richard A. Friedman Managing Director of Goldman, Sachs & Co.
Joseph H. Gleberman Managing Director of Goldman, Sachs & Co.
Terence M. O'Toole Managing Director of Goldman, Sachs & Co.
Sanjeev K. Mehra Managing Director of Goldman, Sachs & Co.
Joint Filing Agreement
The undersigned hereby agree that the Statement on Schedule 13D filed
herewith (and any amendments thereto), relating to the common stock, par
value $0.01 per share, of ProMedCo Management Company, is being filed
jointly with the Securities and Exchange Commission pursuant to Rule
13d-1(k)(1) under the Securities Exchange Act of 1934, as amended, on
behalf of each such person.
Dated: January 24, 2000
GOLDMAN, SACHS & CO.
By: /s/ Roger S. Begelman
------------------------
Name: Roger S. Begelman
Title: Attorney-in-fact
THE GOLDMAN SACHS GROUP, INC.
By: /s/ Roger S. Begelman
------------------------
Name: Roger S. Begelman
Title: Attorney-in-fact
GS ADVISORS III, L.L.C.
By: /s/ Roger S. Begelman
------------------------
Name: Roger S. Begelman
Title: Attorney-in-fact
GS CAPITAL PARTNERS III, L.P.
By: /s/ Roger S. Begelman
------------------------
Name: Roger S. Begelman
Title: Attorney-in-fact
GS CAPITAL PARTNERS III OFFSHORE, L.P.
By: /s/ Roger S. Begelman
------------------------
Name: Roger S. Begelman
Title: Attorney-in-fact
GS CAPITAL PARTNERS III GERMANY
CIVIL LAW PARTNERSHIP (with
limitation of liability)
By: /s/ Roger S. Begelman
------------------------
Name: Roger S. Begelman
Title: Attorney-in-fact
GOLDMAN, SACHS & CO. oHG
By: /s/ Roger S. Begelman
------------------------
Name: Roger S. Begelman
Title: Attorney-in-fact
STONE STREET FUND 2000, L.L.C.
By: /s/ Roger S. Begelman
------------------------
Name: Roger S. Begelman
Title: Attorney-in-fact
SECURITIES PURCHASE AGREEMENT
by and among
PROMEDCO MANAGEMENT COMPANY
GS CAPITAL PARTNERS III, L.P.
and
The Parties Listed On The Signature Page Hereto
January 13, 2000
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS................................................2
1.1. Defined Terms; Interpretations.......................2
ARTICLE II ISSUANCE AND SALE OF NOTES, GS SHARES AND PREFERRED
STOCK.....................................................11
2.1. Initial Issuance, Purchase and Sale.................11
2.2. The Initial Closing.................................12
2.3. Initial Closing Deliveries..........................12
2.4. Second Issuance, Purchase and Sale..................14
2.5. The Second Closing..................................14
2.6. Second Closing Deliveries...........................15
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............16
3.1. Organization; Subsidiaries..........................16
3.2. Due Authorization...................................18
3.3. Capitalization......................................18
3.4. SEC Reports.........................................19
3.5. Financial Statements................................20
3.6. Absence of Certain Changes..........................20
3.7. Litigation..........................................20
3.8. Title to Properties.................................21
3.9. Consents; No Violations.............................21
3.10. Compliance with Laws; Licenses......................22
3.11. Tax Matters.........................................22
3.12. Employee Benefit Plans..............................23
3.13. Intellectual Property...............................24
3.14. Commitments.........................................24
3.15. Acquisitions........................................27
3.16. Brokers or Finders..................................27
3.17. Proxy Statement.....................................27
3.18. Insurance...........................................28
3.19. Holding Company Act and Investment Company Act......28
3.20. Offering of the Notes, the GS Shares and the
Preferred Stock.....................................28
3.21. Existing Indebtedness; Future Liens.................29
3.22. Solvency............................................30
3.23. Section 203 of the DGCL; Takeover Statute...........30
3.24. Year 2000...........................................30
3.25. Margin Regulations..................................31
3.26. Disclosure..........................................31
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE INVESTORS...........31
4.1. Acquisition for Investment..........................31
4.2. Restricted Securities...............................31
4.3. Accredited Investor.................................32
4.4. Sufficient Funds....................................32
ARTICLE V COVENANTS.................................................32
5.1. Conduct of Business by the Company Pending the
Second Closing......................................32
5.2. No Solicitation.....................................33
5.3. Bank Financing......................................34
5.4. Press Releases; Interim Public Filings..............34
5.5. HSR Act.............................................35
5.6. Proxy Statement; Stockholders Meeting...............35
5.7. Consents; Approvals.................................36
5.8. Listing.............................................36
5.9. Board Representation................................36
5.10. Certificate of Designation..........................39
5.11. Cooperation.........................................39
5.12. Access to Property; Records.........................39
5.13. Incentive Stock Options.............................39
5.14. Notice of Breach....................................40
5.15. Transfer Taxes......................................40
5.16. Rule 144; Integration...............................40
5.17. Transfer Restrictions; Resale of Notes..............41
5.18. Preemptive Rights...................................41
5.19 Standstill Agreement................................42
5.20. Actions Requiring Investor Approval.................43
5.21. Dividends...........................................44
5.22. Use of Proceeds.....................................44
ARTICLE VI CONDITIONS................................................45
6.1. Conditions to Obligations of the Investors and
the Company.........................................45
6.2. Conditions to Obligations of the Investors..........45
6.3. Conditions to Obligations of the Company............46
ARTICLE VII TERMINATION...............................................47
7.1. Termination.........................................47
7.2. Effect of Termination...............................48
ARTICLE VIII SURVIVAL; CERTAIN REMEDIES...............................48
8.1. Survival............................................48
8.2 Indemnification for the Benefit of the Company......49
8.3 Indemnification by the Company......................49
8.4 Materiality.........................................49
8.5 Indemnification Procedures..........................50
8.6 Duplication.........................................51
ARTICLE IX MISCELLANEOUS.............................................52
9.1. Fees and Expenses...................................52
9.2. Public Announcements................................52
9.3. Restrictive Legends.................................52
9.4. Further Assurances..................................53
9.5. Successors and Assigns..............................53
9.6. Entire Agreement....................................53
9.7. Notices.............................................53
9.8. Amendments..........................................55
9.9. Counterparts........................................55
9.10. Headings............................................55
9.11. Nouns and Pronouns..................................55
9.12. GOVERNING LAW.......................................55
9.13. Submission to Jurisdiction..........................55
9.14. WAIVER OF JURY TRIAL................................56
9.15. Severability........................................56
<PAGE>
EXHIBITS
Exhibit 2.3(a)(vi) Form of Opinion
Exhibit 2.3(a)(ix) Form of Amendment No. 1 to Rights Agreement
Exhibit 2.6(a)(iii) Form of Second Closing Opinion
Exhibit 5.10 Form of Certificate of Designation
<PAGE>
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as
of January 13, 2000, by and among PROMEDCO MANAGEMENT COMPANY, a Delaware
corporation (the "Company"), GS CAPITAL PARTNERS III, L.P., a Delaware
limited partnership ("GSCP"), and certain affiliates of GSCP set forth on
the signature page of this Agreement (the "GSCP Affiliates", and
collectively with GSCP and including their respective successors and
permitted assigns, the "Investors", and each individually, an "Investor").
W I T N E S S E T H :
WHEREAS, upon the terms and subject to the conditions set forth
in this Agreement, simultaneously with the execution and delivery of this
Agreement, at the initial closing (the "Initial Closing"), the Company is
issuing and selling to the Investors, and the Investors are purchasing from
the Company, (i) $16,000,000 in aggregate principal amount of the Company's
Senior Subordinated Notes, due January 13, 2005 (the "Notes") and (ii)
1,250,000 shares (the "GS Shares") of the Company's common stock, par value
$0.01 per share (the "Common Stock"), for an aggregate purchase price of
$16,000,000 in cash; and
WHEREAS, upon the terms and subject to the conditions set forth
in this Agreement, at the second closing (the "Second Closing"), the
Company wishes to issue and sell to the Investors, and the Investors wish
to purchase from the Company, (i) an aggregate of 390,000 shares of the
Company's Series A Convertible Preferred Stock, par value $0.01 per share
(the "Preferred Stock") for an aggregate purchase price of $39,000,000 in
cash, and (ii) an aggregate of 160,000 shares of Preferred Stock for an
aggregate purchase price of $16,000,000 payable by delivery to the Company
of all outstanding Notes and GS Shares held by the Investors in exchange
therefor; and
WHEREAS, the Investors and the Company desire to provide for the
purchase and sale of the Notes, the GS Shares and the Preferred Stock and
to establish certain rights and obligations in connection therewith.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. Defined Terms; Interpretations. The following terms, as used
herein, shall have the following meanings:
"Additional Financing" shall have the meaning ascribed thereto in
Section 5.3.
"Affiliate" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act.
"Agreement" shall have the meaning ascribed thereto in the
preamble.
"Board of Directors" shall mean the Board of Directors of the
Company.
"Capitalized Lease" shall mean, with respect to any Person, any
lease or any other Commitment for the use of property which, in accordance
with generally accepted accounting principles, should be capitalized on the
lessee's or user's balance sheet.
"Capitalized Lease Obligation" of any Person shall mean and
include, as of any date as of which the amount thereof is to be determined,
the amount of the Liability capitalized or disclosed (or which should be
disclosed under U.S. GAAP) in a balance sheet of such Person as of such
date in respect of a Capitalized Lease of such Person.
"Certificate of Designation" shall have the meaning ascribed
thereto in Section 2.6(a)(iii).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commitment" and "Commitments" shall have the meaning ascribed
thereto in Section 3.14(a).
"Common Stock" shall have the meaning ascribed thereto in the
recitals.
"Company" shall have the meaning ascribed thereto in the
preamble.
"Company Affiliates" shall have the meaning ascribed thereto in
Section 5.2.
"Company Indemnified Party" shall have the meaning ascribed
thereto in Section 8.2.
"Compensation and Benefit Plans" shall mean all bonus, vacation,
deferred compensation, pension, retirement, profit-sharing, thrift,
savings, employee stock ownership, stock bonus, stock purchase, restricted
stock and stock option plans, all employment or severance contracts, all
medical, dental, disability, health and life insurance plans, all other
material employee benefit and fringe benefit plans, contracts or
arrangements and any applicable "change of control" or similar provisions
in any plan, contract or arrangement sponsored, maintained or contributed
to by the Company or any of the Subsidiaries for the benefit of officers,
former officers, employees, former employees, directors, former directors,
or the beneficiaries of any of the foregoing or pursuant to which the
Company, any of the Subsidiaries or any ERISA Affiliate has or may have any
liability or obligation, contingent or otherwise.
"Confidentiality Agreement" shall have the meaning ascribed
thereto in Section 5.12.
"Consents" shall have the meaning ascribed thereto in Section
5.7.
"Consolidated EBITDA" shall have the meaning ascribed thereto in
the Credit Agreement as in effect on the date hereof.
"Conversion Shares" shall mean the shares of Common Stock
issuable upon conversion of the Preferred Stock.
"Credit Agreement" shall mean the Credit Agreement dated as of
December 17, 1998, among the Company, the Lenders referred to therein and
Bank of America, N.A. as Agent and Banc of America Securities, LLC, as
Arranger, and as amended by the First Amendment to Credit Agreement, dated
as of December 31, 1998, the Amended and Restated Credit Agreement and
First Amendment to Guarantee and Collateral Agreement, dated as of June 29,
1999, the First Amendment to Amended and Restated Credit Agreement dated as
of November 9, 1999 and the Consent and Second Amendment to Amended and
Restated Credit Agreement, dated as of November 12, 1999, all as amended,
modified, renewed, refunded, restated, replaced or refinanced from time to
time.
"Designated Senior Indebtedness" shall mean the obligations of
the Company under the Credit Agreement.
"DGCL" shall mean the Delaware General Corporation Law.
"Encumbrances" shall mean any liens, charges, claims, security
interests, restrictions, options, proxies, voting trusts or other
encumbrances.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean each business or entity which is a
member of a "controlled group of corporations," under "common control" or a
member of an "affiliated service group" with the Company or any of its
Subsidiaries within the meaning of Articles 414(b), (c) or (m) of the Code,
or required to be aggregated with the Company under Article 414(o) of the
Code, or is under "common control" with the Company, within the meaning of
Article 4001(a)(14) of ERISA, and the regulations promulgated and proposed
thereunder.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of
the SEC thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Exchange Act shall include
reference to the comparable section, if any, of any such successor federal
statute.
"Exchange and Registration Rights Agreement" shall have the
meaning ascribed thereto in the Notes.
"Fried Frank Offices" shall have the meaning ascribed thereto in
Section 2.2.
"GAAP" shall have the meaning ascribed thereto in Section 3.5.
"Governmental Entity" shall mean any supernational, national,
foreign, federal, state or local judicial, legislative, executive,
administrative or regulatory body or authority.
"Grandfathered Amount" shall have the meaning ascribed thereto in
the Shareholder Rights Plan.
"GS Shares" shall have the meaning ascribed thereto in the
recitals.
"GSCP" shall have the meaning ascribed thereto in the preamble.
"GSCP Affiliates" shall have the meaning ascribed thereto in the
preamble.
"Guarantee" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments
for deposit or collection) of any Person guaranteeing, or in effect
guaranteeing, any Indebtedness or other obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly,
including, without limitation, all obligations incurred through an
agreement, contingent or otherwise, by such Person: (i) to purchase such
Indebtedness or obligation or any property or assets constituting security
therefor, (ii) to advance or supply funds (x) for the purchase or payment
of such Indebtedness or obligation, or (y) to maintain working capital or
other balance sheet condition, (iii) to lease property or to purchase
securities or other property or services primarily for the purpose of
assuring the owner of such Indebtedness or obligation of the ability of the
primary obligor to make payment of such Indebtedness or obligation, or (iv)
otherwise to assure the owner of the Indebtedness or obligation of the
primary obligor against loss in respect thereof. For the purposes of any
computations made under this Agreement, a Guarantee in respect of any
Indebtedness for borrowed money shall be deemed to be Indebtedness equal to
the outstanding amount of the Indebtedness for borrowed money which has
been guaranteed, and a Guarantee in respect of any other Liability shall be
deemed to be Indebtedness equal to the maximum aggregate amount of such
Liability.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder.
"Indebtedness" shall mean, with respect to any Person, (i) all
obligations of such Person for borrowed money, or with respect to deposits
or advances of any kind, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, (iii) all obligations of
such Person under conditional sale or other title retention agreements
relating to property purchased by such Person, (iv) all obligations of such
Person issued or assumed as the deferred purchase price of property or
services (other than accounts payable to suppliers and similar accrued
liabilities incurred in the ordinary course of business and paid in a
manner consistent with industry practice), (v) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any lien or security
interest on property owned or acquired by such Person whether or not the
obligations secured thereby have been assumed, (vi) all Capitalized Lease
Obligations of such Person, (vii) all Guarantees of such Person, (viii) all
obligations (including but not limited to reimbursement obligations)
relating to the issuance of letters of credit for the account of such
Person, (ix) all obligations arising out of foreign exchange contracts, and
(x) all obligations arising out of interest rate and currency swap
agreements, cap, floor and collar agreements, interest rate insurance,
currency spot and forward contracts and other agreements or arrangements
designed to provide protection against fluctuations in interest or currency
exchange rates.
"Indemnification Claim Notice" shall have the meaning ascribed
thereto in Section 8.5(a).
"Indemnified Party" shall have the meaning ascribed thereto in
Section 8.5(a).
"Indemnifying Party" shall have the meaning ascribe thereto in
Section 8.5(a).
"Initial Closing" shall have the meaning ascribed thereto in the
recitals.
"Initial Closing Payment" shall be an amount in cash equal to
$480,000 payable to the Investors at the Initial Closing as provided in
Section 2.1.
"Initial Closing Purchase Price" shall have the meaning ascribed
thereto in Section 2.1.
The "Initial Noteholder Designee" shall be Mr. Sanjeev Mehra.
"Intellectual Property" shall mean (i) all inventions and
discoveries (whether patentable or unpatentable and whether or not reduced
to practice), all improvements thereto, and all patents, patent
applications and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions and
reexaminations thereof, (ii) all trademarks, service marks, trade dress,
logos, trade names and corporate names, together with all translations,
adaptations, derivations and combinations thereof and including all
goodwill associated therewith, and all applications, registrations and
renewals in connection therewith, (iii) all copyrightable works, all
copyrights and all applications, registrations and renewals in connection
therewith, (iv) all mask works and all applications, registrations and
renewals in connection therewith, (v) all know-how, trade secrets and
confidential business information, whether patentable or unpatentable and
whether or not reduced to practice (including ideas, research and
development, formulas, compositions, manufacturing and production process
and techniques, technical data, designs, drawings, specifications, customer
and supplier lists, pricing and cost information and business and marketing
plans and proposals), (vi) all computer software (including data and
related documentation), (vii) all management information systems, (viii)
all other proprietary rights, (ix) all copies and tangible embodiments
thereof (in whatever form or medium) and (x) all licenses and agreements in
connection therewith.
"Investor" and "Investors" shall have the meaning ascribed
thereto in the preamble.
"Investor Designees" shall have the meaning ascribed thereto in
Section 5.9(b).
"Investor Expenses" shall have the meaning ascribed thereto in
Section 9.1.
"Investor Indemnified Party" shall have the meaning ascribed
thereto in Section 8.3.
"IRS" shall mean the Internal Revenue Service.
"Knowledge", with respect to the Company, shall mean the
knowledge of each member of the board of directors of the Company and each
of the material Subsidiaries and each executive officer of the Company and
each of the material Subsidiaries, and the knowledge that any of the
foregoing individuals would have after due and reasonable inquiry and
investigation.
"Laws" shall mean any law, statute, rule, regulation, order or
other restriction of any court or Governmental Entity applicable to the
businesses conducted by the Company and the Subsidiaries.
"Leased Real Property" shall mean the real property leased or
subleased by the Company or any Subsidiary, together with, to the extent
leased or subleased by the Company or any Subsidiary, all buildings and
other structures, facilities or improvements currently or hereafter located
thereon, all fixtures, systems, equipment and items of personal property of
the Company or any Subsidiary attached or appurtenant thereto, and all
easements, licenses, rights and appurtenances relating to the foregoing.
"Liability" shall mean any debt, liability or obligation, whether
known or unknown, asserted or unasserted, accrued, absolute, contingent or
otherwise, whether due or to become due.
"Licenses" shall mean any licenses, franchise permits,
accreditations, consents, registrations, certificates, and other
governmental or regulatory permits, accreditations, authorizations or
approvals required for the operation of the businesses of the Company and
the Subsidiaries as presently conducted and for the ownership, lease or
operation of the Company's and the Subsidiaries' properties.
"Litigation" shall mean any claim, demand, action, suit,
proceeding, arbitration, investigation, civil, criminal or administrative
action, inquiry or hearing by or before any Governmental Entity or private
arbitration tribunal.
"Lock-up Agreements" shall mean the letters, date as of the date
hereof, from certain stockholders of the Company to the Investors.
"Losses" shall mean each and all of the following items: claims,
losses, (including, without limitation, losses of earnings) Liabilities,
obligations, payments, damages (actual, punitive or consequential),
charges, judgments, fines, penalties, amounts paid in settlement, costs and
expenses (including, without limitation, interest that may be imposed in
connection therewith, costs and expenses of investigation, suits,
proceedings, demands, assessments and fees, expenses and disbursements of
counsel, consultants and other experts).
"Market Value" shall mean the closing price of the Common Stock
on NASDAQ or such other exchange upon which the Common Stock might later be
traded, on the date specified.
"Material Adverse Effect" shall mean a material adverse effect on
the properties, business, operations, results of operations, earnings,
prospects, assets, Liabilities or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole.
"Multi-Employer Plan" shall have the meaning ascribed thereto in
Section 3.12(c).
"NASDAQ" shall mean the National Association of Securities
Dealers Automated Quotation National Market System.
"1998 Balance Sheet" shall have the meaning ascribed thereto in
Section 3.5.
"Notes" shall have the meaning ascribed thereto in the recitals.
"Noteholder Designees" shall have the meaning ascribed thereto in
Section 5.9(a).
"Owned Real Property" shall mean the real property owned by the
Company or any Subsidiary, together with all buildings and other
structures, facilities or improvements currently or hereafter located
thereon, all fixtures, systems, equipment and items of personal property of
the Company or any Subsidiary attached or appurtenant thereto and all
easements, licenses, rights and appurtenances relating to the foregoing.
"Permitted Encumbrances" shall have the meaning ascribed thereto
in Section 3.8(b).
"Person" shall mean any individual, firm, corporation, limited
liability company, partnership, company or other entity, and shall include
any successor (by merger or otherwise) of such entity.
"Preferred Designees" shall have the meaning ascribed thereto in
Section 5.9(b).
"Preferred Stock" shall have the meaning ascribed thereto in the
recitals.
"Preferred Stock Registration Rights Agreement" shall have the
meaning ascribed thereto in Section 2.6(a)(ii).
"Proposed Securities" shall have the meaning ascribed thereto in
Section 5.18.
"Proxy Statement" shall have the meaning ascribed thereto in
Section 3.17.
"Registration Rights Agreement" shall mean the Registration
Rights Agreement, dated as of the date hereof, among the Company and the
Investors.
"Representatives" shall have the meaning ascribed thereto in
Section 5.9(g).
"Required Lenders" shall have the meaning ascribed to such term
in the Credit Agreement.
"Restricted Cash" shall have the meaning ascribed thereto in the
Credit Agreement as in effect on the date hereof.
"Return" shall mean any report, return, statement, estimate,
declaration, notice, form or other information required to be supplied to a
taxing authority in connection with Taxes.
"SEC" shall mean the Securities and Exchange Commission.
"Second Closing" shall have the meaning ascribed thereto in the
recitals.
"Second Closing Date" shall have the meaning ascribed thereto in
Section 2.5.
"Second Closing Cash Purchase Price" shall have the meaning
ascribed thereto in Section 2.4.
"Second Closing Payment" shall be an amount in cash equal to
$1,170,000 payable to the Investors at the Second Closing as provided in
Section 2.4.
"Second Closing Termination Date" shall have the meaning ascribed
thereto in Section 7.1.
"SEC Reports" shall have the meaning ascribed thereto in Section
3.4.
"Second Purchase" shall have the meaning ascribed thereto in
Section 2.4.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor federal statute, and the rules and regulations of
the SEC thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Act shall include
reference to the comparable section, if any, of such successor federal
statute.
"Senior Indebtedness" shall have the meaning ascribed thereto in
the Notes.
"Shareholder Rights Plan" shall mean the Agreement, dated as of
February 18, 1997, between the Company and Harris Trust Company, as Rights
Agent.
"Significant Subsidiaries" shall mean any direct or indirect
subsidiary of the Company which would constitute a "significant subsidiary"
as defined in Rule 1-02 of Regulation S-X (or any successor thereto).
"Standstill Period" shall mean the period from the date hereof
until the later of (i) the third anniversary of the date hereof and (ii)
the date on which the Investors and Affiliates controlled by the Investors
beneficially own, in the aggregate, a number of shares of Common Stock
constituting less than 10.0% of the shares of Common Stock (assuming
conversion at such time of the Preferred Stock held by the Investors and
their Affiliates) beneficially owned by them immediately after the Second
Closing (as such number may be adjusted from time to time for stock splits,
reverse stock splits, dividends paid in Common Stock, reclassifications of
the Common Stock, and other similar events).
"Stockholders Meeting" shall have the meaning ascribed thereto in
Section 3.17.
"Subsidiary" or "Subsidiaries" shall mean any corporation,
limited liability company, partnership, business association or other
Person with respect to which the Company has, directly or indirectly,
ownership of or rights with respect to securities or other interests having
the power to elect a majority of such Person's board of directors or
analogous or similar governing body, or otherwise having the power to
direct the management, business or policies of that corporation, limited
liability company, partnership, business association or other Person.
"Tax" and "Taxes" shall means any and all federal, state, local,
foreign or other taxes of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect
thereto) imposed by any taxing authority, including, without limitation,
taxes or other charges on or with respect to income, franchises, windfall
or other profits, gross receipts, property, sales, use, capital stock,
payroll, employment, social security, workers' compensation, unemployment
compensation, or net worth, and taxes or other charges in the nature of
excise, withholding, ad valorem or value added, and includes, without
limitation, any liability for Taxes of another person, as a transferee or
successor, under Treas. Reg. ss. 1.1502-6 or analogous provision of Law or
otherwise.
"Tax Return" shall mean any return, report or similar statement
(including the attached schedules) required to be filed with respect to any
Tax, including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax.
"Terminating Breach" shall have the meaning ascribed thereto in
Section 7.1(d).
"TIA" shall mean the Trust Indenture Act of 1939.
"Total Debt" shall have the meaning ascribed thereto in the
Credit Agreement as in effect on the date hereof.
"Transaction Documents" shall mean this Agreement, the Notes, the
Voting Agreements, the Lock-up Agreements, the Certificate of Designation,
the Registration Rights Agreement and all other contracts, agreements,
schedules, certificates and other documents being delivered pursuant to or
in connection with this Agreement or the transactions contemplated hereby
or thereby.
"Transfer" shall have the meaning ascribed thereto in Section
5.17.
"Voting Agreements" shall mean the Voting Agreements, date as of
the date hereof, between the Investors and certain stockholders of the
Company.
ARTICLE II
ISSUANCE AND SALE OF NOTES, GS SHARES AND PREFERRED STOCK
2.1. Initial Issuance, Purchase and Sale. Simultaneously with the
execution and delivery of this Agreement, at the Initial Closing, the
Company is issuing and selling to each Investor, and each Investor is
purchasing from the Company, the aggregate principal amount of Notes and
the number of GS Shares set forth opposite such Investor's name on the
signature page hereto, for an aggregate purchase price of $16,000,000 in
cash, less the Initial Closing Payment (the "Initial Closing Purchase
Price"). The Company and the Investors agree that for U.S. federal, state
and local income Tax purposes, the portion of the Initial Closing Purchase
Price allocable to the Notes shall be $13,484,375 and the portion of the
Initial Closing Purchase Price allocable to the GS Shares shall be
$2,515,625. The Company and the Investors agree that they shall not take
any position inconsistent with any such allocation.
2.2. The Initial Closing. The Initial Closing is taking place at
the offices of Fried, Frank, Harris, Shriver & Jacobson, One New York
Plaza, New York, New York 10004 (the "Fried Frank Offices") simultaneously
with the execution and delivery of this Agreement.
2.3. Initial Closing Deliveries. (a) Simultaneously with the
execution and delivery of this Agreement, at the Initial Closing, the
Company is delivering or causing to be delivered to the Investors the
following:
(i) duly executed Notes in the principal amounts set forth
opposite such Investor's name on the signature page hereto;
(ii) certificates representing the number of GS Shares in
the amounts set forth opposite such Investor's name on the signature
page hereto;
(iii) a duly executed copy of the Registration Rights
Agreement;
(iv) duly executed copies of the Voting Agreements;
(v) duly executed copies of the Lock-up Agreements;
(vi) an opinion of the Company's counsel, dated as of the
date hereof, addressed to the Investors in the form of Exhibit
2.3(a)(vi), which opinion shall be reasonably satisfactory to the
Investors;
(vii) good standing certificates for the Company and each of
its Significant Subsidiaries, dated no earlier than five days prior to
the date hereof, from the jurisdiction in which each is incorporated;
(viii) a copy of the resolutions of the Board of Directors
(A) duly authorizing the execution and delivery of each of the
Transaction Documents and the performance of the transactions
contemplated thereby, and (B) approving the Investors becoming
"interested stockholders" under Section 203 of the DGCL, which
resolutions shall be certified as true, correct and effective as of
the date hereof by the Secretary or Assistant Secretary of the Company
and which shall be satisfactory to the Investors;
(ix) evidence, satisfactory to the Investors, that Amendment
No. 1 to the Rights Agreement, in the form attached hereto as Exhibit
2.3(a)(ix), has been duly executed;
(x) evidence, satisfactory to the Investors, that the
Initial Noteholder Designee shall be duly appointed to serve as a
member of "Class II" of the Board of Directors and the Executive
Committee of the Board of Directors and that the Board of Directors
shall consist of eight directors in each case effective as of January
20, 2000;
(xi) evidence, satisfactory to the Investors, that the
transactions contemplated hereby will not constitute a "Change in
Control" of the Company under any Commitment to which an officer is a
party or under any of the Compensation and Benefit Plans;
(xii) copies of all third-party consents required to be
obtained by the Company prior to the Initial Closing as set forth on
Schedule 3.9(b), including, without limitation, the consent of the
Required Lenders under the Credit Agreement, which consents shall be
reasonably satisfactory to the Investors;
(xiii) an Officers' Certificate, dated as of the date
hereof, certifying that each of the representations and warranties of
the Company contained in this Agreement are true and correct as of the
date hereof (disregarding for this purpose all references in such
representations and warranties to any materiality, Material Adverse
Effect, Knowledge or similar qualifications) (except to the extent
such representations and warranties are made as of a particular date,
in which case such representations and warranties shall have been true
and correct in all material respects as of such date), except for
failures to be true and correct which individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect;
and
(xiv) such other instruments and documents as the Investors
reasonably request.
(b) Simultaneously with the execution and delivery of this
Agreement, at the Initial Closing, the Investors are delivering to the
Company the following:
(i) the Initial Closing Purchase Price, which shall be paid
by wire transfer of immediately available funds to an account
designated at least three business days prior to the date hereof by
the Company;
(ii) a duly executed copy of the Registration Rights
Agreement; and
(iii) an Officers' Certificate, dated as of the date hereof,
certifying that each of the representations and warranties of the
Investors contained in this Agreement are true and correct
(disregarding for this purpose all references in such representations
and warranties to any materiality, material adverse effect, knowledge
or similar qualifications) as of the date hereof (except to the extent
such representations and warranties are made as of a particular date,
in which case such representations and warranties shall have been true
and correct in all material respects as of such date), except for
failures to be true and correct which individually or in the aggregate
would not reasonably be expected to have a material adverse effect on
the ability of the Investors to fulfill its obligations hereunder.
2.4. Second Issuance, Purchase and Sale. Upon the terms and
subject to the conditions set forth herein, at the Second Closing, the
Company shall issue and sell to each Investor, and each Investor shall
purchase from the Company, the number of shares of Preferred Stock set
forth opposite such Investor's name on the signature page hereto (i) for an
aggregate cash purchase price equal to $39,000,000, minus (x) the Second
Closing Payment and (y) any accrued and unpaid interest on the Notes
through and including the Second Closing Date (the "Second Closing Cash
Purchase Price"), and (ii) in exchange for all of the Notes and GS Shares
issued to such Investor at the Initial Closing (the transactions to occur
at the Second Closing, the "Second Purchase"); provided, that the Investors
shall have the right to reallocate among the Investors the Preferred Stock
to be purchased by each Investor by delivering written notice of such
reallocation to the Company not less than three days prior to the Second
Closing so long as such reallocation does not change the total number of
Preferred Stock being acquired hereunder or the Second Closing Purchase
Price.
2.5. The Second Closing. The parties agree that the Second
Closing shall take place at the Fried Frank Offices on the date of the
Stockholders Meeting in accordance with the provisions of Section 5.6.
2.6. Second Closing Deliveries. (a) At the Second Closing, the
Company shall deliver to the Investors the following:
(i) certificates representing the shares of Preferred Stock
in the amounts set forth opposite such Investor's name on the
signature page hereto;
(ii) a copy of the Certificate of Designation of the
Preferred Stock (the "Certificate of Designation"), as filed with the
Secretary of State of the State of Delaware;
(iii) an opinion of the Company's counsel, dated as of the
Second Closing Date, addressed to the Investors in the form of Exhibit
2.6(a)(iii), which opinion shall be satisfactory to the Investors;
(iv) a copy of the resolutions adopted by the Company's
stockholders at the Stockholders Meeting, which resolutions shall be
satisfactory to the Investors;
(v) evidence, satisfactory to the Investors, that the
Preferred Designees have been appointed to the Board of Directors and
that the Board of Directors consists of ten directors effective as of
the Second Closing;
(vi) evidence, satisfactory to the Investors, that the
Conversion Shares have been reserved for issuance and delivery upon
conversion of the Preferred Stock;
(vii) copies of all third-party consents required to be
obtained by the Company prior to the Second Closing as set forth on
Schedule 6.2(h), which consents shall be satisfactory to the
Investors;
(viii) an Officers' Certificate, dated as of the Second
Closing Date, certifying that the conditions set forth in Sections
6.2(a) and 6.2(b) have been satisfied; and
(ix) such other instruments and documents as the Investors
reasonably request.
(b) At the Second Closing, the Investors shall deliver to the
Company the following:
(i) the Second Closing Cash Purchase Price, which shall be
paid by wire transfer of immediately available funds to an account
designated at least three business days prior to the Second Closing
Date by the Company;
(ii) the Notes and the GS Shares purchased by the Investors
at the Initial Closing; and
(iii) an Officers' Certificate, dated as of the Second
Closing Date, certifying that the conditions set forth in Sections
6.3(a) and 6.3(b) have been satisfied.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Investor, as
of the date hereof and as of the Second Closing Date (to the extent the
Second Closing is consummated), as follows:
3.1. Organization; Subsidiaries. (a) The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to
carry on its business as it is now being conducted. The Company is duly
qualified and licensed as a foreign corporation to do business, and is in
good standing (and has paid all relevant franchise or analogous taxes), in
each jurisdiction where the character of its assets owned or held under
lease or the nature of its business makes such qualification necessary,
except where the failure to so qualify or be licensed could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The minute books (containing the records of meetings of
stockholders, the Board of Directors, and any committees of the Board of
Directors), stock record books and certificate books of the Company contain
complete and correct records in all material respects of all corporate
actions taken at any such meetings and other corporate governance matters,
the stock ownership of the Company and the transfer of the shares of its
capital stock since the date of inception of the Company. Complete and
correct copies of all of the foregoing have previously been made available
to the Investors.
(b) Schedule 3.1(b) sets forth a complete and correct list of
each of the Subsidiaries. Except as set forth on Schedule 3.1(b), the
Company owns, either directly or indirectly through one or more
Subsidiaries, all of the capital stock or other equity interests of the
Subsidiaries free and clear of all Encumbrances, other than transfer
restrictions imposed by applicable federal and state securities Laws. All
of the issued and outstanding shares of capital stock or other equity
interests of each of the Subsidiaries held directly or indirectly by the
Company have been duly authorized and are validly issued, fully paid and
nonassessable. No shares of capital stock or other equity interests of any
of the Subsidiaries are entitled to preemptive rights. Except as set forth
on Schedule 3.1(b) or as disclosed in the SEC Reports, there are no
outstanding subscription rights, options, warrants, convertible or
exchangeable securities or other rights of any character whatsoever
relating to issued or unissued capital stock or other equity interests of
any of the Subsidiaries, or any Commitments of any character whatsoever
relating to issued or unissued capital stock or other equity interests of
any of the Subsidiaries or pursuant to which the Company or any of the
Subsidiaries is or may become bound to issue or grant additional shares of
its capital stock or other equity interests or related subscription rights,
options, warrants, convertible or exchangeable securities or other rights,
or to grant preemptive rights. Except as set forth on Schedule 3.1(b) or as
disclosed in the SEC Reports, there are no voting trusts, stockholders
agreements, proxies or other Commitments or understandings to which any of
the Subsidiaries is a party with respect to the voting or transfer of any
capital stock or other equity interest of any of the Subsidiaries. Except
as set forth on Schedule 3.1(b), the Company does not own, directly or
indirectly, any interest in any corporation, limited liability company,
partnership, business association or other Person.
(c) Each of the Subsidiaries is a corporation, limited liability
company, partnership, business association or other Person duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization and has the requisite power and authority to carry on its
business as it is now being conducted. Except as set forth on Schedule
3.1(c), each of the Subsidiaries is duly qualified and licensed to do
business, and is in good standing (and has paid all relevant franchise or
analogous taxes), in each jurisdiction where the character of its assets
owned or held under lease or the nature of the business conducted by it
makes such qualification necessary except where the failures of all of such
Subsidiaries to so qualify or be licensed could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The
minute books or other records (containing the records of meetings of
stockholders or other holders of other equity interests, the board of
directors or other similar governing body, and any committees thereof), the
stock ownership or analogous records and the certificate books of each of
the Subsidiaries contain complete and correct records in all material
respects of substantially all actions taken at any such meetings and other
governance matters, the stock or other equity ownership of each of the
Subsidiaries and the transfer of the shares of its capital stock or other
equity interest since the date of inception of the applicable Subsidiary.
Complete and correct copies of all of the foregoing have previously been
made available to the Investors.
3.2. Due Authorization. The Company has all right, corporate
power and authority to enter into this Agreement and each of the other
Transaction Documents to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by
the Company of this Agreement and each of the other Transaction Documents
to which it is a party, the issuance and sale of the Notes, the GS Shares
and the Preferred Stock by the Company and the compliance by the Company
with each of the provisions of this Agreement and each of the other
Transaction Documents to which it is a party (including the reservation and
issuance of the Conversion Shares and the consummation by the Company of
the transactions contemplated hereby and thereby) (a) are within the
corporate power and authority of the Company and (b) have been duly
authorized by all requisite corporate proceedings on the part of the
Company, except for the approval by the stockholders of the Company
referenced in Section 5.6. The Board of Directors has determined that it is
advisable and in the best interest of the Company's stockholders for the
Company to consummate the issuance and sale of the Notes, the GS Shares and
the Preferred Stock upon the terms and subject to the conditions set forth
in this Agreement, and has unanimously recommended that the Company's
stockholders approve the transactions referenced in Section 5.6. As of the
date hereof, the Board of Directors consist of seven directors and the
Initial Noteholder Designee shall be duly appointed to serve as a member of
the Board of Directors and the Executive Committee of the Board of
Directors as of January 20, 2000. This Agreement has been, and each of the
other Transaction Documents to which the Company is a party when executed
and delivered by the Company will be, duly and validly executed and
delivered by the Company, and this Agreement constitutes, and each of such
other Transaction Documents when executed and delivered by the Company will
constitute, a valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, except as enforceability
against the Company may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws now or hereafter in effect
relating to the rights of creditors generally. The GS Shares have been duly
and validly issued and are outstanding, fully paid and nonassessable. The
Conversion Shares at the Second Closing will be validly reserved for
issuance, and upon issuance in accordance with the Certificate of
Designation will be duly and validly issued and outstanding, fully paid and
nonassessable.
3.3. Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of (i) 50,000,000 shares of Common
Stock, of which 21,732,423 shares are issued and outstanding and (ii)
20,000,000 shares of preferred stock, par value $0.01 per share, of which
no shares are issued and outstanding. All of the issued and outstanding
shares of Common Stock have been duly authorized and are validly issued,
fully paid and nonassessable. Other than the shares of Preferred Stock to
be issued to the Investors at the Second Closing, no shares of capital
stock of the Company are entitled to preemptive rights. Except as set forth
on Schedule 3.3, as disclosed in the SEC Reports or as contemplated by this
Agreement or the other Transaction Documents, there are no outstanding
subscription rights, options, warrants, convertible or exchangeable
securities or other rights of any character whatsoever relating to issued
or unissued capital stock of the Company, or any Commitments of any
character whatsoever relating to issued or unissued capital stock of the
Company or pursuant to which the Company or any of the Subsidiaries is or
may become bound to issue or grant additional shares of its capital stock
or related subscription rights, options, warrants, convertible or
exchangeable securities or other rights, or to grant preemptive rights.
Except as set forth on Schedule 3.3, as disclosed in the SEC Reports or as
contemplated by this Agreement or the other Transaction Documents, (i) the
Company has not agreed to register any securities under the Securities Act
or under any state securities law or granted registration rights to any
Person or entity and (ii) there are no voting trusts, stockholders
agreements, proxies or other Commitments or understandings in effect to
which the Company is a party or of which it has Knowledge with respect to
the voting or transfer of any of the shares of Common Stock. Except as set
forth on Schedule 3.3, to the extent that any options, warrants or any of
the other rights described above are outstanding, neither the issuance and
sale of the Notes, the GS Shares or the Preferred Stock nor the issuance of
any Conversion Shares will result in an adjustment of the exercise or
conversion price or number of shares issuable upon the exercise or
conversion of any such options, warrants or other rights.
3.4. SEC Reports. The Company has timely filed all proxy
statements, reports and other documents required to be filed by it with the
SEC under the Exchange Act from and after January 1, 1997, and the Company
has made available to each of the Investors complete and correct copies of
all annual reports, quarterly reports, proxy statements and other reports
filed by the Company with the SEC under the Exchange Act from and after
such date (collectively, the "SEC Reports"). Each SEC Report was on the
date of its filing in compliance in all material respects with the
requirements of its respective report form and did not on the date 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 the light of the circumstances under which they were
or will be made, not misleading, and as of the date hereof there is no fact
or facts not disclosed in the SEC Reports that relate specifically to the
Company or any of the Subsidiaries and which could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
Complete and correct copies of all material correspondence between the
Company or any of the Subsidiaries, on the one hand, and the SEC, on the
other hand, have previously been made available to the Investors.
3.5. Financial Statements. The consolidated financial statements
(including any related schedules and/or notes) included in the SEC Reports
have been prepared in accordance with United States generally accepted
accounting principles ("GAAP") consistently followed throughout the periods
involved, except as may be noted therein, and fairly present in all
material respects the consolidated financial condition, results of
operations and changes in stockholders' equity of the Company and the
Subsidiaries as of the respective dates thereof and for the respective
periods then ended (in each case subject, as to interim statements, to
changes resulting from year-end adjustments). Neither the Company nor any
of the Subsidiaries has any Liability, except (i) liabilities and
obligations in the respective amounts reflected or reserved against in the
audited consolidated balance sheet of the Company and the Subsidiaries as
of December 31, 1998 (the "1998 Balance Sheet"), or (ii) liabilities and
obligations incurred in the ordinary course of business since December 31,
1998 which could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
3.6. Absence of Certain Changes. Except as set forth on Schedule
3.6, as disclosed in the SEC Reports or as contemplated by this Agreement
or the other Transaction Documents, since December 31, 1998: (i) the
business of the Company and the Subsidiaries taken as a whole has been
conducted in the ordinary course of business consistent with past practice,
(ii) the Company and each of the Subsidiaries have not (a) suffered any
change, event or development or series of changes, events or developments
which could, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect, (b) suffered any damage, destruction or
casualty loss to its physical properties (whether or not covered by
insurance) which could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect or (c) been the subject of any
Litigation or threatened or commenced investigation by a Governmental
Entity, and (iii) there has not been any transaction, act, development,
circumstance or event that if it had occurred on or after the date hereof
without the prior consent of the Investors would constitute a breach of
Section 5.1.
3.7. Litigation. (a) Except as set forth on Schedule 3.7(a) or as
disclosed in the SEC Reports, there is no Litigation pending or, to the
Knowledge of the Company, threatened against the Company or any of the
Subsidiaries or involving any of their respective properties or assets by
or before any court, arbitrator or other Governmental Entity, which, if
determined adversely to the Company, could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(b) Neither the Company nor any of the Subsidiaries is in default
under or in breach of any order, judgment or decree of any court,
arbitrator or other Governmental Entity, and neither the Company nor any of
the Subsidiaries is a party or subject to any order, judgment or decree of
any court, arbitrator or other Governmental Entity.
3.8. Title to Properties. (a) The Company and each of the
Subsidiaries have good and valid title to, or, in the case of property
leased by them, a valid and subsisting leasehold interest in, their
respective properties and assets, free of all Encumbrances except for
Permitted Encumbrances.
(b) Schedule 3.8(b) sets forth a complete and correct list of all
Owned Real Property. With respect to the Owned Real Property, the Company
or a Subsidiary has good and marketable title in fee simple to the Owned
Real Property, free and clear of all Encumbrances except for (A)
Encumbrances set forth on Schedule 3.8(b), (B) liens for taxes not yet due
and payable, and (C) Encumbrances that are not individually or in the
aggregate material (the Encumbrances described in clauses (A), (B) and (C)
collectively, "Permitted Encumbrances").
(c) Schedule 3.8(c) sets forth a complete and correct list of all
Leased Real Property. With respect to the Leased Real Property, the Company
or a Subsidiary has good and valid leasehold estates in the Leased Real
Property, free and clear of all Encumbrances except for Permitted
Encumbrances.
3.9. Consents; No Violations. (a) Except as set forth on Schedule
3.9(a), neither the execution, delivery or performance by the Company of
this Agreement or any of the other Transaction Documents to which it is a
party nor the consummation of the transactions contemplated hereby or
thereby will (i) conflict with, or result in a breach or a violation of,
any provision of the certificate of incorporation or by-laws or other
organizational documents of the Company or any of the Subsidiaries; (ii)
constitute, with or without notice or the passage of time or both, a
breach, violation or default, create an Encumbrance, or give rise to any
right of termination, modification, cancellation, prepayment, suspension,
limitation, revocation or acceleration, under (A) any Law or (B) any
Commitment to which the Company or any of the Subsidiaries is a party or
pursuant to which any of them or any of their assets or properties is
subject, except, with respect to the matters set forth in this clause (ii),
for breaches, violations, defaults, Encumbrances, or rights of termination,
modification, cancellation, prepayment, suspension, limitation, revocation
or acceleration, which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect or adversely
affect the ability of the Company to consummate the transactions
contemplated by this Agreement or any other Transaction Document to which
it is a party; (C) constitute a "Change in Control" of the Company under
any Commitment to which an officer is a party or under any of the
Compensation and Benefit Plans; or (D) except for any required filing under
the HSR Act, require any consent, approval or authorization of,
notification to, filing with, or exemption or waiver by, any Governmental
Entity or any other Person on the part of the Company or any of the
Subsidiaries. Neither the Company nor any of the Subsidiaries is a party to
any agreement or bound by the terms of any instrument or security which
would prevent the Company from paying cash dividends on the Preferred Stock
on a current basis.
(b) The Company has received all consents required to be obtained
prior to or at the Initial Closing as set forth on Schedule 3.9(b),
including, without limitation, the consent of the Required Lenders under
the Credit Agreement to the transactions contemplated hereby and by the
other Transaction Documents.
3.10. Compliance with Laws; Licenses. Except as set forth on
Schedule 3.10 or as disclosed in the SEC Reports, the Company and each of
the Subsidiaries are in compliance in all material respects with all Laws,
and since January 1, 1997, neither the Company nor any of the Subsidiaries
has received any notice of any alleged violation of Law applicable to it.
Except as set forth on Schedule 3.10, the Company and each of the
Subsidiaries have all Licenses, and all of such Licenses are valid and in
full force and effect, and the Company and each of the Subsidiaries have
duly performed and are in compliance in all material respects with all of
their obligations under such Licenses. No event has occurred with respect
to any of such Licenses that allows, or after notice or lapse of time or
both would allow, the suspension, limitation, revocation, non-renewal or
termination thereof or would result in any other material impairment of the
rights of the holder thereof in and under any of such Licenses, and no
terminations thereof or proceedings to suspend, limit, revoke or terminate
any License have been threatened.
3.11. Tax Matters. The Company and each of the Subsidiaries have
(i) filed all federal, state, local and foreign Tax Returns required to be
filed by them (taking into account extensions), (ii) paid all Taxes shown
to be due on such Returns and paid or accrued on the 1998 Balance Sheet all
Taxes which are otherwise due and payable and (iii) paid or accrued on the
1998 Balance Sheet all Taxes for which a notice of assessment or collection
has been received, except in the case of clauses (i), (ii) or (iii) for any
such filings, payments or accruals which could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
Neither the IRS nor any other taxing authority has asserted any claim for
Taxes, nor to the Knowledge of the Company, is threatening to assert any
claims for Taxes, against the Company or any of the Subsidiaries which
claims, if determined adversely to the Company or any of the Subsidiaries,
would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. The Company and each of the Subsidiaries have
withheld or collected and paid over to the appropriate Governmental
Entities (or are properly holding for such payment) all Taxes required by
Law to be withheld or collected, except for amounts which could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. There are no liens for Taxes upon the assets of the Company
or any of the Subsidiaries (other than liens for Taxes that are not yet
due), except for liens which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any of the Subsidiaries (i) has any Liability under Treasury
Regulation Section 1.1502-6 or analogous state, local, or foreign law
provision, except to the extent any such Liabilities could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, or (ii) is a party to a Tax sharing or Tax indemnity
agreement or any other Commitment of a similar nature with any entity other
than the Company or any of the Subsidiaries that remains in effect and
under which the Company or any of the Subsidiaries could have any material
Liability for Taxes. No claim has been made by a taxing authority in a
jurisdiction where the Company or any of the Subsidiaries does not file Tax
Returns that the Company or any of the Subsidiaries is or may be subject to
taxation by that jurisdiction where such claim, if determined adversely to
the Company or any of the Subsidiaries, would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any of the Subsidiaries is the subject of any
currently ongoing audit or examination with respect to a material amount of
Taxes, nor, to the Knowledge of the Company, has any such audit been
threatened or proposed, by any taxing authority.
3.12. Employee Benefit Plans. (a) Schedule 3.12 sets forth a
complete and correct list of (i) each material Compensation and Benefit
Plan, and (ii) each Compensation and Benefit Plan (whether or not material)
which contains a "change of control" or similar provision. The Company has
heretofore delivered or made available to the Investors complete and
correct copies of all such Compensation and Benefit Plans and any
amendments thereto (or if a Compensation and Benefit Plan is not in written
form, a written description thereof), any related trust or other funding
agreement or vehicle, the most recent reports or summaries required under
ERISA or the Code and, with respect to each Compensation and Benefit Plan
intended to qualify under Article 401 of the Code, the most recent
determination letter received from the IRS.
(b) The Company, each of the Subsidiaries and each ERISA
Affiliate have performed in all material respects all obligations required
to be performed by them under each Compensation and Benefit Plan and none
of the Company, any of the Subsidiaries or any ERISA Affiliate is in
material default under or in material violation of any Compensation and
Benefit Plan. Each Compensation and Benefit Plan has been established,
operated, maintained and administered, as the case may be, substantially in
accordance with its terms and in compliance with all applicable laws,
statutes, orders, rules and regulations, including, but not limited to,
ERISA and the Code.
(c) Except as set forth on Schedule 3.12, at no time has the
Company, any of the Subsidiaries or any ERISA Affiliate contributed to or
been required to contribute to, or incurred any withdrawal liability
(within the meaning of Article 4201 of ERISA) to, any Compensation and
Benefit Plan that is a "multi-employer plan" within the meaning of Sections
3(37) or 4001(a)(3) of ERISA (a "Multi-Employer Plan").
(d) None of the Company, any of the Subsidiaries or any ERISA
Affiliate (i) presently sponsors, maintains or contributes to, (ii) is
required to sponsor, maintain or contribute to or (iii) has ever sponsored,
maintained, contributed to or been required to contribute to, any
Compensation and Benefit Plan (other than a Multi-Employer Plan) that is an
"employee pension benefit plan" within the meaning of Section 3(2) of ERISA
and that is subject to Title IV of ERISA.
3.13. Intellectual Property. Schedule 3.13 sets forth a complete
and correct list of each item of Intellectual Property owned or used by the
Company or any of the Subsidiaries. Except as disclosed on Schedule 3.13,
(i) the Company or a Subsidiary owns or has the right to use pursuant to a
valid license, sub-license or other agreement all of the Intellectual
Property used by it, except where the absence of any thereof could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect and (ii) neither the Company nor any of the Subsidiaries has
interfered with, infringed upon or misappropriated any Intellectual
Property rights of third parties, except for interferences, infringements
and misappropriations which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, and neither the
Company nor any of the Subsidiaries has received any written claim, demand
or notice alleging any such interference, infringement or misappropriation.
To the Knowledge of the Company, no third party has interfered with,
infringed upon or misappropriated any Intellectual Property rights of the
Company or any of the Subsidiaries, except for interferences, infringements
and misappropriations which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
3.14. Commitments.
-----------
(a) Schedule 3.14 sets forth (or cross-references to another
schedule hereto that sets forth) a complete and correct list of all
contracts or agreements (whether written or oral), including any amendments
thereto, (x) to which the Company or any of the Subsidiaries is a party or
(y) by or to which the Company or any of the Subsidiaries or any of their
properties may be bound or subject (whether or not listed or required to be
listed on Schedule 3.14, individually a "Commitment" and collectively, the
"Commitments") of the following types:
(i) Commitments for the sale of any tangible or
intangible properties or assets other than in the ordinary course of
business, or for the grant of any option or preferential rights to
purchase any such properties or assets, in each case providing for
aggregate payments in excess of $100,000;
(ii) Commitments for the construction, modification or
repair of any building, structure or facility or for the incurrence of
any capital expenditures or for the acquisition of fixed assets, in
each case providing for aggregate payments in excess of $100,000;
(iii) Commitments relating to the acquisition or
disposition by the Company or any of the Subsidiaries of any business
or the capital stock of any other Person that have not been
consummated or that have been consummated but contain representations,
covenants, guaranties, indemnities or other obligations that remain in
effect;
(iv) Commitments relating to any Litigation;
(v) Commitments relating to the lending or borrowing of
money, including loan agreements, performance bonds, letters of
credit, bankers acceptances and similar instruments or arrangements;
(vi) Commitments containing covenants of the Company or
any of the Subsidiaries or any successor thereto not to compete, not
to engage in any line of business or conduct business in any
geographical area or with any Person, or not to disclose certain
information;
(vii) Commitments pursuant to which the Company or any
of the Subsidiaries (x) leases, subleases, licenses or otherwise has
the right to use any real or personal property, whether tangible or
intangible, including leases and subleases of the Leased Real
Property, or (y) is the lessor of any real or personal property, in
each case providing for aggregate payments in excess of $100,000;
(viii) Commitments in respect of Licenses and
Commitments relating to Intellectual Property;
(ix) Commitments in respect of any joint venture,
partnership or other similar arrangement (including, without
limitation, any joint development agreement);
(x) Commitments with any Governmental Entity,
including, without limitation, the United States Department of Health
and Human Services;
(xi) Commitments relating to Indebtedness not included
under clause (v), including Commitments relating to outstanding
letters of credit or performance bonds or creating any Liability as
guarantor, surety, co-signer, endorser, co-maker, indemnitor or
otherwise in respect of the obligation of any Person, except as
endorser or maker of checks or letters of credit endorsed or made in
the ordinary course of business;
(xii) any Commitment that is material to the Company or
any of the Subsidiaries regardless of the size of any payment
thereunder and regardless of whether it would otherwise not be
required to be listed on Schedule 3.14 because of the exclusions set
forth in any of clauses (i) through (xi) of this Section 3.14(a); and
(xiii) Commitments currently in negotiation by the
Company or any of the Subsidiaries of a type that if entered into
would be required to be listed on Schedule 3.14 or to be disclosed on
any other schedule hereto.
(b) Complete and correct copies (or, if oral, full written
descriptions) of all Commitments required to be listed on Schedule 3.14,
including all amendments thereto, and complete and correct copies of all
standard form Commitments used in the conduct of the business, have been
made available to the Investors. Except as set forth on Schedule 3.14, all
of the Commitments are valid, binding, in full force and effect and
enforceable in accordance with their respective terms by the Company or a
Subsidiary (as the case may be) against the respective counterparties to
such Commitments except where the failure to be valid, binding or in full
force and effect could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except as set forth on Schedule
3.14, (i) there is no breach, violation or default and no event that, with
or without notice or the passage of time or both, would constitute a
breach, violation or default, or give rise to any Encumbrance or right of
termination, modification, cancellation, prepayment, suspension,
limitation, revocation or acceleration under, any Commitment, except for
breaches, violations, defaults, Encumbrances or rights of termination,
modification, cancellation, prepayment, suspension, limitation, revocation
or acceleration that could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, and (ii) neither
the Company nor any of the Subsidiaries or, to the Company's Knowledge, any
other party to any of the Commitments is in arrears in respect of the
performance or satisfaction of the terms and conditions on its part to be
performed or satisfied under any of such Commitments except where any such
failure could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect, and no waiver or indulgence thereunder
has been granted by any of the parties thereto. Schedule 3.14 sets forth a
complete and correct list of each Commitment that contains a provision
requiring the other party thereto to consent to the transactions
contemplated hereby in order for such Commitment to remain in full force
and effect following each Closing in accordance with its current terms.
3.15. Acquisitions. Schedule 3.15 sets forth a complete and
correct list of all acquisitions (by purchase of assets, purchase of stock,
merger or otherwise) of any Person or any businesses, business lines or
material assets pending or consummated or agreed to be consummated by the
Company or any of the Subsidiaries since January 1, 1997 or earlier to the
extent that the Company or any of the Subsidiaries has continuing
Liabilities with respect to any acquisition. All continuing material
Liabilities of the Company or any of the Subsidiaries in connection with
any acquisition (including, without limitation, arising out of
indemnification, the granting of registration rights or the terms of any
earn-out or make-whole provisions) are summarized on Schedule 3.15. In
connection with any acquisition consummated by the Company or any of the
Subsidiaries in which part or all of the consideration consisted of shares
of capital stock or any other securities (including, without limitation,
capital stock of the Company), such shares of capital stock or other
securities were issued in compliance with the registration requirements of
all applicable federal and state securities laws.
3.16. Brokers or Finders. No agent, broker, investment banker or
other Person is or will be entitled to any broker's or finder's fee or any
other commission or similar fee in connection with any of the transactions
contemplated by this Agreement or the other Transaction Documents based on
arrangements made by or on behalf of the Company or any of the
Subsidiaries.
3.17. Proxy Statement. Any proxy statement to be sent to the
stockholders of the Company in connection with a meeting of the
stockholders of the Company in connection with the transactions
contemplated by this Agreement and the other Transaction Documents (the
"Stockholders Meeting"; such proxy statement as amended or supplemented is
referred to herein as the "Proxy Statement") will comply as to form in all
material respects with Article 14(a) of the Exchange Act and the rules
promulgated thereunder, and it shall not, on the date the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed to
stockholders or at the time of the Stockholders Meeting, contain any untrue
statement of a material fact, or, in light of the circumstances under which
made, omit to state any material fact necessary in order to make the
statements made therein not false or misleading, or omit to state any
material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the
Stockholders Meeting which has become false or misleading. If at any time
prior to the Second Closing any event relating to the Company or any of the
Subsidiaries or any of their respective Affiliates, officers or directors
should be discovered by the Company that is required to be set forth in a
supplement to the Proxy Statement, the Company shall promptly inform the
Investors thereof.
3.18. Insurance. Schedule 3.18 sets forth a complete and correct
list of all insurance coverage carried by the Company and each of the
Subsidiaries, including for each policy the type and scope of coverage, the
carrier and the amount of coverage. The Company maintains a directors' and
officers' insurance policy with National Union Fire Insurance Company of
Pittsburgh, PA, a complete and correct copy of which has previously been
delivered to the Investors.
3.19. Holding Company Act and Investment Company Act. Neither the
Company nor any of the Subsidiaries is: (i) a "public utility company" or a
"holding company," or an "affiliate" or a "subsidiary company" of a
"holding company," or an "affiliate" of such a "subsidiary company," as
such terms are defined in the Public Utility Holding Company Act of 1935,
as amended, or (ii) a "public utility," as defined in the Federal Power
Act, as amended, or (iii) an "investment company" or an "affiliated person"
thereof or an "affiliated person" of any such "affiliated person," as such
terms are defined in the Investment Company Act of 1940, as amended.
3.20. Offering of the Notes, the GS Shares and the Preferred
Stock. (a) It is not necessary in connection with the offer, sale and
delivery of the Notes, the GS Shares and the Preferred Stock to the
Investors to register the Notes, the GS Shares or the Preferred Stock under
the Securities Act. Until such time as the exchange notes are issued
pursuant to the Exchange and Registration Rights Agreement or the Notes or
exchange notes are otherwise registered pursuant to an effective
registration statement under the Securities Act, it is not necessary to
qualify an indenture relating to the Notes or exchange notes under the TIA.
(b) The Company has not, directly or indirectly, offered, sold or
solicited any offer to buy and will not, directly or indirectly, offer,
sell or solicit any offer to buy, any security of a type or in a manner
which would be integrated with the sale of the Notes, the GS Shares or the
Preferred Stock and require any of the Notes, the GS Shares or the
Preferred Stock to be registered under the Securities Act. None of the
Company, its Affiliates or any person acting on its or any of their behalf
has engaged or will engage in any form of general solicitation or general
advertising (within the meaning of Rule 502(c) under the Securities Act) in
connection with the offering of the Notes, the GS Shares and the Preferred
Stock. With respect to any Notes, GS Shares or Preferred Stock, if any,
sold in reliance upon the exemption afforded by Regulation S: (i) none of
the Company, its Affiliates or any person acting on its or their behalf has
engaged or will engage in any directed selling efforts within the meaning
of Regulation S and (ii) each of the Company and its Affiliates and any
Person acting on its or their behalf has complied and will comply with the
offering restrictions set forth in Regulation S.
(c) The Notes are eligible for resale pursuant to Rule 144A and
will not, as of the date hereof, be of the same class as securities listed
on a national securities exchange registered under Section 6 of the
Exchange Act or quoted on a U.S. automated interdealer quotation system.
3.21. Existing Indebtedness; Future Liens. (a) Schedule 3.21 sets
forth a complete and correct list of all outstanding Indebtedness of the
Company and each of the Subsidiaries as of the date hereof. Neither the
Company nor any of the Subsidiaries has defaulted and no waiver of default
is currently in effect, in the payment of any principal or interest on any
such Indebtedness and no event or condition exists with respect to any such
Indebtedness that would permit (or that with notice or the lapse of time,
or both, would permit) one or more Persons to cause such Indebtedness to
become due and payable before its stated maturity or before its regularly
scheduled dates of payment. Neither the Company nor any of the Subsidiaries
has received any notice from any Person declaring or threatening to declare
any Indebtedness owed by the Company or any of the Subsidiaries to such
Person due and payable prior to the stated maturity of such Indebtedness or
before its regularly scheduled dates of payment.
(b) Neither the Company nor any of the Subsidiaries has agreed or
consented to cause or permit in the future (upon the happening of a
contingency or otherwise) any of its property or assets, whether now owned
or hereafter acquired, to be subject to any Encumbrances (other than
Permitted Encumbrances).
3.22. Solvency. The Company is not, and after giving effect to
the issuance and sale of the Notes, the GS Shares and the Preferred Stock
and the application of the proceeds therefrom will not be, insolvent within
the meaning of Title 11 of the United States Code or any comparable state
law provision.
3.23. Section 203 of the DGCL; Takeover Statute. The Board of
Directors has taken all action necessary to cause the restrictions
contained in Section 203 of the DGCL to be inapplicable to the transactions
contemplated by this Agreement or the other Transaction Documents and to
approve the Investors becoming "interested stockholders" (as defined in
such Section), whether by way of the transactions contemplated by this
Agreement or the other Transaction Documents, conversion of the Preferred
Stock or any other future transaction. The execution, delivery and
performance of this Agreement or any of the other Transaction Documents and
the consummation of the transactions contemplated hereby or thereby will
not cause to be applicable to the Company any "fair price," "moratorium,"
"control share acquisition" or other similar antitakeover statute or
regulation enacted under state or federal laws.
3.24. Year 2000. To the knowledge of the Company, the software,
computers and other hardware and systems used by the Company and each of
the Subsidiaries will (i) accurately process date information before,
during and after January 1, 2000, including, but not limited to, accepting
date input, providing date output and performing calculations on dates or
portions of dates; (ii) function accurately and without interruption
before, during and after January 1, 2000 without any change in operations
associated with the advent of the new century; (iii) respond to two digit
year date input in a way that resolves the ambiguity as to century in a
disclosed, defined and predetermined manner; and (iv) store and provide
output of date information in ways that are unambiguous as to century. The
Company and each of the Subsidiaries have contacted their principal vendors
and suppliers and other Persons with whom the Company or any of the
Subsidiaries has material business relationships, and each of such vendors,
suppliers and other Persons have notified the Company or the applicable
Subsidiary that its software, computers and other hardware and systems are
Year 2000 compliant in all material respects to the extent affecting the
Company or any of the Subsidiaries. The ability of such vendors, suppliers
and other Persons to identify and resolve their own Year 2000 issues could
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
3.25. Margin Regulations. No part of the proceeds from the sale
of the Notes will be used, directly or indirectly, for the purpose of
buying or carrying any margin stock within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System (12 C.F.R. 221), or
for the purpose of buying or carrying or trading in any securities. Margin
stock does not constitute more than 5% of the value of the consolidated
assets of the Company and the Subsidiaries and the Company has no present
intention that margin stock will constitute more than 5% of the value of
such assets. As used in this Section, the terms "margin stock" and "purpose
of buying or carrying" shall have the meanings assigned to them in
Regulation U.
3.26. Disclosure. Neither this Agreement nor any other
Transaction Document, nor any schedule or exhibit hereto or thereto, nor
any certificate furnished to the Investors by or on behalf of the Company
in connection with the transactions contemplated hereby and thereby,
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. The financial forecasts furnished by the Company to
the Investors have been reasonably prepared and reflect the best currently
available estimates and judgment of the Company's management as to the
expected future financial performance of the Company and the Subsidiaries.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each of the Investors, severally and not jointly, hereby
represents and warrants to the Company, as of the date hereof and as of the
Second Closing Date (to the extent the Second Closing is consummated), as
follows:
4.1. Acquisition for Investment. Such Investor is acquiring the
Notes, the GS Shares and the Preferred Stock for its own account, for
investment and not with a view to the distribution thereof within the
meaning of the Securities Act.
4.2. Restricted Securities. Such Investor understands that (i)
the Notes, the GS Shares and the Preferred Stock will not be registered
under the Securities Act or any state securities laws by reason of their
issuance by the Company in a transaction exempt from the registration
requirements thereof and (ii) the Notes, the GS Shares, the Preferred Stock
and the Conversion Shares may not be sold unless such disposition is
registered under the Securities Act and applicable state securities laws or
is exempt from registration thereunder.
4.3. Accredited Investor. Such Investor is an "accredited
investor" (as defined in Rule 501(a) under the Securities Act).
4.4. Sufficient Funds. Such Investor will have available
sufficient funds to pay its obligations under this Agreement on the date
any such obligation is due.
ARTICLE V
COVENANTS
5.1. Conduct of Business by the Company Pending the Second
Closing. The Company covenants and agrees that, between the date hereof and
the earlier of the Second Closing Date and the Second Closing Termination
Date, unless the Investors otherwise agree in writing, the Company shall,
and shall cause each of the Subsidiaries to, (a) conduct its business only
in the ordinary course and consistent with past practice; (b) use
reasonable best efforts to preserve and maintain its assets and properties
and its relationships with its customers, suppliers, advertisers,
distributors, agents, officers and employees and other Persons with which
it has significant business relationships; (c) use reasonable best efforts
to maintain all of the material assets it owns or uses in the ordinary
course of business consistent with past practice; (d) use reasonable best
efforts to preserve the goodwill and ongoing operations of its business;
(e) maintain its books and records in the usual, regular and ordinary
manner, on a basis consistent with past practice; (f) perform and comply in
all material respects with its Commitments; and (g) comply in all material
respects with applicable Laws. Except as expressly contemplated by this
Agreement or as set forth on Schedule 5.1, between the date hereof and the
earlier of the Second Closing Date and the Second Closing Termination Date,
the Company shall not, and shall cause each of the Subsidiaries not to, do
any of the following without the prior written consent of the Investors:
(i) change any method of accounting or accounting
practice used by the Company or any Subsidiary, other than such
changes required by GAAP;
(ii) other than in connection with the transactions
contemplated hereby, repurchase, redeem or otherwise acquire or
exchange any share of Common Stock or other equity interests; except
for issuances of Common Stock pursuant to the exercise of options to
purchase Common Stock or pursuant to existing Commitments outstanding
on the date hereof, in each case listed on Schedule 3.3, and except as
contemplated by this Agreement and pursuant to acquisitions permitted
pursuant to Sections 3.7 and 3.13 of the Notes, issue or sell any
additional shares of the capital stock of, or other equity interests
in, the Company or any of the Subsidiaries, or securities convertible
into or exchangeable for such shares or other equity interests, or
issue or grant any subscription rights, options, warrants or other
rights of any character relating to shares of such capital stock, such
other equity interests or such securities;
(iii) amend the Company's certificate of incorporation
or by-laws, except with respect to the filing of the Certificate of
Designation, or amend any Subsidiary's charter or by-laws or other
organizational documents in any material respect;
(iv) make any change in the Company's or any
Subsidiary's Tax accounting methods, any new election with respect to
Taxes or any modification or revocation of any existing election with
respect to Taxes or settle or otherwise dispose of any Tax audit,
dispute, or other Tax proceeding;
(v) take any action that is reasonably likely to result
in any of the representations and warranties set forth in Article III
becoming false or inaccurate in any material respect as of the Second
Closing Date; or
(vi) agree to take any of the actions restricted by
this Section 5.1.
5.2. No Solicitation. Between the date hereof and the earlier of
the Second Closing and the Second Closing Termination Date, other than in
connection with the transactions contemplated hereby, neither the Company
nor any of the Subsidiaries shall solicit, propose or facilitate (including
by way of providing information regarding the Company or any of the
Subsidiaries or their respective businesses to any Person), directly or
indirectly, any inquiries, discussions, offers or proposals for, continue
or enter into negotiations looking toward, or enter into or consummate any
Commitment or understanding in connection with any offer or proposal
regarding, any purchase or other acquisition of all or any material portion
of the Company and the Subsidiaries taken as a whole, the business or
assets of the Company and the Subsidiaries taken as a whole, any debt
financing (other than pursuant to Section 5.3 hereof), or any of the
capital stock of or equity interests in (whether newly issued or currently
outstanding) the Company or any of the Subsidiaries (other than with
respect to proposed acquisitions by the Company of businesses for which the
Company would use its capital stock as consideration as permitted by
Sections 3.7 and 3.13 of the Notes), or any merger, business combination or
recapitalization involving the Company or any of the material Subsidiaries
or their respective businesses; and the Company shall cause the
Subsidiaries and the Affiliates, officers, directors, employees,
representatives and agents of the Company and the Subsidiaries
(collectively, "Company Affiliates") to refrain from engaging in any of the
above activities that the Company is restricted from engaging in. The
Company agrees to promptly inform the Investors of the identity of any
Person making any inquiry, offer or proposal, and the nature and terms of
any such inquiry, offer or proposal, and to keep the Investors promptly and
fully informed as to the status thereof. The Company shall be liable to the
Investors for any breach of the covenants set forth in this Section 5.2 by
any Company Affiliate.
5.3. Bank Financing. Prior to the Second Closing, the Company
shall obtain additional senior debt financing under the Credit Agreement or
another facility syndicated or privately placed by a bank or its affiliates
in an amount not less than $65 million, on terms reasonably satisfactory to
the Investors taking into account current market conditions (the
"Additional Financing"). The Investors shall use their reasonable best
efforts to assist and cooperate with the Company in its efforts to obtain
the Additional Financing; provided, however, that any such assistance and
cooperation by the Investors shall not, in any case, require the Investors
to waive or modify any of their rights under any of the Transaction
Documents and shall not require the expenditure of any funds by the
Investors.
5.4. Press Releases; Interim Public Filings. Subject to Section
9.2, the Company shall deliver to the Investors complete and correct copies
of all press releases and public filings made between the date hereof and
the earlier of the Second Closing and the Second Closing Termination Date.
The Company shall not disclose the name or identity of any of the Investors
as an investor in the Company in any press release or other public
announcement or in any document or material filed with any Governmental
Entity without the prior written consent of such Investor, unless such
disclosure is required by applicable Law, in which case prior to making
such disclosure the Company shall give written notice to such Investor,
describing in reasonable detail the proposed content of such disclosure,
shall permit such Investor to review and comment upon the form and
substance of such disclosure and shall take such comments into account in
making such disclosure.
5.5. HSR Act. Each of the Investors and the Company shall
cooperate with the other in making filings under the HSR Act and shall use
its best efforts to take, or cause to be taken, all actions necessary,
proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement to occur at the
Second Closing, including using its reasonable best efforts to resolve such
objections, if any, as the Antitrust Division of the Department of Justice
or the Federal Trade Commission or state antitrust enforcement or other
Governmental Entities may assert under antitrust Laws with respect to the
transactions contemplated hereby. In the event an action is instituted by
any Person challenging the transactions contemplated hereby as violative of
the antitrust laws, the Investors and the Company shall use their
reasonable best efforts to resist or resolve such action.
5.6. Proxy Statement; Stockholders Meeting. The Company shall
hold the Stockholders Meeting as soon as practicable after the date hereof
for the purpose of acting upon this Agreement and the transactions to be
consummated at the Second Closing to the extent requiring stockholder
approval, including, without limitation, the issuance and sale of the
Preferred Stock to the Investors; provided, however, that the Company shall
adjourn the Stockholders Meeting from time to time until all of the
conditions set forth in Article VI (other than the condition set forth in
Section 6.1(c) and other than those conditions that by their nature are to
be satisfied at the Second Closing) are satisfied or waived, such that the
Stockholders Meeting shall take place on the same day as the Second Closing
in accordance with Section 2.5. The Company shall recommend that its
stockholders approve this Agreement and the transactions contemplated
hereby requiring such stockholder approval. The Company and the Investors
shall cooperate in the preparation of the Proxy Statement to be mailed to
the Company's stockholders in connection with the solicitation of such
approval and shall use their reasonable best efforts to take, or cause to
be taken, all actions necessary to prepare the Proxy Statement, file the
Proxy Statement with the SEC and respond to any comments it may have, and
distribute the Proxy Statement to the Company's stockholders as
expeditiously as practicable; provided, that the Company shall file the
Proxy Statement with the SEC no later than January 31, 2000. The Company
shall give the Investors a reasonable opportunity to review and comment on
the Proxy Statement and related communications with stockholders of the
Company, and the Investors shall have the right to consent to any
descriptions of or references to (i) the Investors or any of their
Affiliates, and (ii) the Transaction Documents and the other agreements
executed concurrently therewith and the transactions contemplated thereby
in the Proxy Statement or such communications, which consent shall not be
unreasonably withheld or delayed.
5.7. Consents; Approvals. The Company shall use its reasonable
best efforts to obtain all consents, waivers, exemptions, approvals,
authorizations or orders (collectively, "Consents") (including, without
limitation (i) Consents required to avoid any breach, violation, default,
encumbrance or right of termination, modification, cancellation,
prepayment, suspension, limitation, revocation or acceleration set forth on
Schedule 3.9 or required to be set forth thereon, (ii) all Consents
pursuant to the Company's or any of the Subsidiaries' financing documents,
including without limitation, all indentures and credit agreements of the
Company or any of the Subsidiaries, and (iii) all United States and foreign
governmental and regulatory rulings and approvals), and the Company shall
make all filings (including, without limitation, all filings with United
States and foreign governmental or regulatory agencies), required or
desirable in connection with the consummation of the transactions
contemplated by this Agreement and the other Transaction Documents, in each
case as promptly as practicable but in any event prior the Second Closing
if permitted to be filed prior thereto; provided, however, no payment
(other than filing fees related to the matters contemplated hereby and
except as set forth on Schedule 6.2(h)) or other accommodation shall be
made by the Company in connection with obtaining any of the foregoing
without the Investors' prior written consent. The Company also shall use
its reasonable best efforts to obtain all necessary state securities laws
or blue sky permits and approvals required to consummate the transactions
contemplated by the Second Purchase and shall furnish all information as
may be reasonably requested in connection with any such action.
5.8. Listing. The Company shall use its best efforts to cause the
Common Stock to continue to be listed on NASDAQ during the term of this
Agreement and for so long as any Notes, Preferred Stock, GS Shares or
Conversion Shares are outstanding. Prior to the Second Closing, the Company
shall prepare and submit to NASDAQ a listing application covering the
Conversion Shares and shall obtain approval for the listing of such
Conversion Shares, subject to official notice of issuance. Promptly after
the Second Closing Termination Date, the Company shall prepare and submit
to NASDAQ a listing application covering the GS Shares and shall obtain
approval for the listing of such GS Shares, subject to official notice of
issuance.
5.9. Board Representation. (a) From January 20, 2000 and for so
long as the Investors and their Affiliates own at least $5,500,000 in
aggregate principal amount of the Notes, GSCP shall have the right to
designate, at all times and from time to time, one director of the Company
(which director shall also serve on the Executive Committee of the Board of
Directors) (individuals designated pursuant to this paragraph, together
with the Initial Noteholder Designee, the "Noteholder Designees"). GSCP
shall cause the Noteholder Designee to resign from the Executive Committee
of the Board of Directors on the Second Closing Termination Date.
(b) From the Second Closing Date and for so long as the Investors
and their Affiliates collectively beneficially own a number of shares of
Common Stock (assuming conversion at such time of the Preferred Stock held
by the Investors and their Affiliates) that is not less than (i) 66 2/3% of
the number of shares of Common Stock beneficially owned (assuming
conversion at such time of the Preferred Stock held by the Investors and
their Affiliates) by them immediately after the Second Closing (as such
number may be adjusted for stock splits, reverse stock splits, dividends
paid in Common Stock, reclassifications of the Common Stock, and other
similar events), GSCP shall have the right to designate, at all times and
from time to time, three directors of the Company; (ii) 33 1/3% of the
number of shares of Common Stock beneficially owned (assuming conversion at
such time of the Preferred Stock held by the Investors and their
Affiliates) by them immediately after the Second Closing (as such number
may be adjusted for stock splits, reverse stock splits, dividends paid in
Common Stock, reclassifications of the Common Stock, and other similar
events), GSCP shall have the right to designate, at all times and from time
to time, two directors of the Company; and (iii) 10.0% of the number of
shares of Common Stock beneficially owned (assuming conversion at such time
of the Preferred Stock held by the Investors and their Affiliates) by them
immediately after the Second Closing (as such number may be adjusted for
stock splits, reverse stock splits, dividends paid in Common Stock,
reclassifications of the Common Stock, and other similar events), GSCP
shall have the right to designate, at all times and from time to time, one
director of the Company (individuals designated pursuant to this paragraph,
the "Preferred Designees", and together with the Noteholder Designees, the
"Investor Designees") The Initial Preferred Designees elected pursuant to
paragraph (c) below and the Initial Noteholder Designee elected prior to
the Initial Closing shall be the initial Preferred Designees.
(c) Prior to the Second Closing, each of the Company and the
Board of Directors shall take such action as may be necessary (including
seeking any necessary vote or approval of any stockholder of the Company,
taking any action necessary to expand the size of the Board of Directors,
or causing any existing director to resign in order to make room for the
Initial Preferred Designees) to cause the Initial Preferred Designees to be
elected to the Board of Directors.
(d) GSCP and the Company agree that one Preferred Designee shall
have the right to sit on the Executive Committee of the Board of Directors.
(e) If requested by GSCP, the Company will use its reasonable
best efforts (in accordance with the certificate of incorporation and
by-laws of the Company and the DGCL) to cause the removal any Investor
Designee (in accordance with the certificate of incorporation and by-laws
of the Company and the DGCL). Any vacancy among the Investor Designees
caused by removal or by the death, retirement or resignation of any
Investor Designee shall be filled by a Person designated by GSCP, and the
Company agrees to take any such action as is necessary, in accordance with
the certificate of incorporation and by-laws of the Company and the DGCL,
to cause such designee to be appointed or elected to the Board of
Directors. In the event that the term of any director who at such time is
an Investor Designee is to expire, then in connection with any meeting of
the Company's stockholders at which a successor to such director is to be
elected, the Company shall nominate an Investor Designee designated by GSCP
and shall recommend that stockholders vote in favor of such individual's
election to the Board of Directors in any proxy statement, information
statement or other communication to stockholders issued or disseminated by
the Company. In the event of any vacancy among the Investor Designees, the
Board of Directors shall not take any action not approved by the remaining
Investor Designee(s) (or by the Investors if there be no remaining Investor
Designee) during the period from the time GSCP informs the Company of a
designee to fill any such vacancy to the time such designee is duly
appointed or elected to the Board of Directors. Whenever the number of
directors that GSCP has the right to designate is reduced in accordance
with paragraphs (a) and (b) above, GSCP will cause the appropriate number
of Investor Designee(s) to tender their resignation(s) from the Board of
Directors.
(f) After the date hereof, without the prior written consent of
GSCP, the Board of Directors (i) shall not consist of more than eight
members so long as the Investors and their Affiliates own any Notes and
(ii) shall not consist of more than ten members so long as the Investors
and their Affiliates beneficially own at least 10.0% of the number of
shares of Common Stock beneficially owned (assuming conversion at such time
of the Preferred Stock held by the Investors and their Affiliates) by them
immediately after the Second Closing (as such number may be adjusted for
stock splits, reverse stock splits, dividends paid in Common Stock,
reclassifications of the Common Stock, and other similar events).
(g) The rights set forth in this Section 5.9 are intended to
satisfy the requirement of contractual management rights for purposes of
qualifying GSCP's interests in the Company as venture capital investments
for purposes of the Department of Labor's "plan assets" regulations, and in
the event such rights are not satisfactory for such purpose as to GSCP, the
Company and the Investors shall reasonably cooperate in good faith to agree
upon mutually satisfactory management rights which satisfy such
regulations.
5.10. Certificate of Designation. The Preferred Stock shall have
the terms, designations, powers, preferences and relative participation,
optional and other special rights, qualifications, limitations and
restrictions set forth in the form of the Certificate of Designation
attached hereto as Exhibit 5.10. The Company shall, prior to or
concurrently with the Second Closing, cause the Certificate of Designation
to be filed with the Secretary of State of the State of Delaware.
5.11. Cooperation. The Investors and the Company agree to use
their reasonable best efforts to take, or cause to be taken, as promptly as
practicable all such further actions as shall be necessary to make
effective and consummate the transactions contemplated by the Second
Purchase and the other transactions contemplated hereby.
5.12. Access to Property; Records. Between the date hereof and
the earlier of the Second Closing and the Second Closing Termination Date,
the Company shall give the Investors and their Affiliates, officers,
employees, directors, attorneys, accountants, investment bankers, agents
and representatives reasonable access upon reasonable advance notice to the
assets, properties, offices and other facilities, Commitments, accounting
books, legal documents and other business and financial records (including
all interim financial statements) of the Company, and to the outside
auditors of the Company and their work papers relating to the Company and
the Subsidiaries. The parties hereto agree that no investigation by the
Investors or its representatives shall affect or limit the scope of the
representations and warranties of the Company contained in this Agreement
or in any other Transaction Document delivered pursuant hereto or limit the
Liability for breach of any such representation or warranty. Each Investor
agrees to hold all information obtained pursuant to this Section 5.12
confidential pursuant to the letter agreement, dated October 18, 1999,
between the Company and Goldman, Sachs & Co. (the "Confidentiality
Agreement").
5.13. Incentive Stock Options. (a) At the Initial Closing, the
Company shall cause to be granted options to acquire 660,000 shares of
Common Stock, at a per share exercise price equal to the Market Value as of
such date, in such amounts and to such persons as are reasonably determined
by the Board of Directors after consultation with the Investors. Such
options shall be "incentive stock options" within the meaning of Section
422 of the Code to the extent possible (and shall otherwise be
non-qualified stock options) and shall be evidenced by award agreements
which contain customary terms and conditions reasonably acceptable to the
Investors.
(b) At the Second Closing, the Company shall cause to be granted
options to acquire 1,540,000 shares of Common Stock at a per share exercise
price equal to the Market Value as of such date, in such amounts and to
such persons as are reasonably determined by the Board of Directors after
consultation with the Investors. Such options shall be "incentive stock
options" within the meaning of Section 422 of the Code to the extent
possible (and shall otherwise be non-qualified stock options) and shall be
evidenced by award agreements which contain customary terms and conditions
reasonably acceptable to the Investors.
5.14. Notice of Breach. From the date hereof through the earlier
of the Second Closing and the Second Closing Termination Date, as promptly
as practicable, and in any event not later than five business days after
senior management of the Company becomes aware thereof, the Company shall
provide the Investors with written notice of (a) any representation or
warranty of the Company contained in this Agreement or any other
Transaction Document being untrue or inaccurate in any material respect at
any time from the date hereof to the earlier of the Second Closing and the
Second Closing Termination Date, or (b) any failure of the Company to
comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by the Company under this Agreement or any other
Transaction Document; provided, however, that the delivery of any notice
pursuant to this Section 5.14 shall not limit or otherwise affect the
remedies available to the Investors, or modify in any way any disclosure
made in this Agreement or any other Transaction Document or the schedules
hereto or thereto as of the date hereof.
5.15. Transfer Taxes. The Company shall be responsible for any
Liability with respect to any transfer, stamp or similar Taxes that may be
payable in connection with the execution, delivery and performance of this
Agreement including, without limitation, any such Taxes with respect to the
issuance of the Notes, the GS Shares, the Preferred Stock or the Conversion
Shares.
5.16. Rule 144; Integration. (a) So long as any Notes, GS Shares,
Preferred Stock or Conversion Shares are outstanding, the Company shall
file all reports required to be filed by it under the Securities Act and
the Exchange Act and after the Second Closing, shall take such further
action as the Investors may reasonably request, all to the extent required
to enable the Investors to sell any of the foregoing securities pursuant to
and in accordance with Rule 144. Such action shall include, but not be
limited to, making available adequate current public information meeting
the requirements of paragraph (c) of Rule 144. During the period of two
years following the Initial Closing, the Company shall not, and shall not
permit any of its Affiliates to, resell any of the Notes which constitute
"restricted securities" under Rule 144 that have been reacquired by any of
them.
(b) The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined
in the Securities Act) that would be integrated with the sale of the Notes
in a manner that would require the registration under the Securities Act of
the sale of Notes to the Investors or any Affiliate of the Investors.
(c) From the date hereof until December 31, 2000, the
Company shall not offer for sale, sell, contract to sell, loan or pledge or
otherwise dispose of, directly or indirectly, or file a registration
statement for, or announce any offer, sale, contract for sale of or other
disposition of any debt securities (or securities convertible into or
exercisable or exchangeable into debt securities) issued or guaranteed by
the Company without the prior written consent of the Investors.
5.17. Transfer Restrictions; Resale of Notes. The Investors will
not, prior to the 90th day following the Second Closing Termination Date,
sell, transfer, assign, convey, gift, mortgage, pledge, encumber,
hypothecate, or otherwise dispose of, directly or indirectly, ("Transfer")
any of the Notes except for Transfers between and among the Investors and
their Affiliates.
5.18. Preemptive Rights. (a) From the Second Closing Date and for
so long as the Investors collectively beneficially own (assuming conversion
of all shares of Preferred Stock into Common Stock) not less than 10.0% of
the total number of shares of Common Stock outstanding from time to time,
in the event the Company proposes to issue any capital stock of any kind
(including any Common Stock, preferred stock, warrants, options or
securities or units comprising securities convertible into or exchangeable
for Common Stock or preferred stock or rights to acquire the same) of the
Company, other than (1) pursuant to an employee or non-management director
stock option plan, stock bonus plan, stock purchase plan or other
management equity program or plan, (2) pursuant to any merger, share
exchange or acquisition pursuant to which shares of Common Stock are
exchanged for, or issued upon cancellation or conversion of, equity
securities of an entity engaged primarily in, or to acquire assets
primarily for use in, the business conducted by the Company and the
Subsidiaries or a business reasonably related to the business conducted by
the Company and the Subsidiaries, or (3) securities issuable upon exercise
of previously issued warrants, options or other rights to acquire capital
stock or upon conversion of previously issued securities convertible into
capital stock, then the Company shall:
(i) deliver to the Investors written notice setting
forth in reasonable detail (1) the terms and provisions of the
securities proposed to be issued (the "Proposed Securities"); (2) the
price and other terms of the proposed sale of such securities; (3) the
amount of such securities proposed to be issued; and (4) such other
information as the Investors may reasonably request in order to
evaluate the proposed issuance; and
(ii) offer to issue to the Investors in the aggregate a
portion of the Proposed Securities equal to a percentage determined by
dividing (x) the number of shares of Common Stock beneficially owned
by the Purchasers (assuming conversion of all shares of Preferred
Stock into Common Stock, by (y) the total number of shares of Common
Stock then outstanding.
The Investors must exercise the purchase rights hereunder within ten
business days after receipt of such notice from the Company.
(b) Upon the expiration of the offering period described above,
or if the Investors shall default in paying for or purchasing the Proposed
Securities on the terms offered by the Company, the Company shall
thereafter be free to sell such Proposed Securities that the Investors have
not elected to purchase during the ninety days following such expiration on
terms and conditions no more favorable to the purchasers thereof than those
offered to the Investors. Any Proposed Securities offered or sold by the
Company after such 90 day period must be reoffered to the Investor pursuant
to this Section 5.18.
(c) The election by the Investors not to exercise preemptive
rights under this Section 5.18 in any one instance shall not affect their
rights (other than in respect of a reduction in its percentage holdings) as
to any subsequent proposed issuance. Any sale of such securities by the
Company without first giving the Investors the rights described in this
Section 5.18 shall be void and of no force and effect, and the Company
shall not register such sale or issuance on the books and records of the
Company.
5.19 Standstill Agreement. (a) During the period commencing on
the date hereof and ending on the earlier of (i) the expiration of the
Standstill Period or (ii) the date these provisions terminate as provided
herein, except as (x) contemplated by this Agreement or any other
Transaction Document or (y) specifically approved in writing in advance by
the Company, the Investors shall not, and shall cause any Affiliates
controlled by them to not, in any manner, directly or indirectly:
(A) acquire, or offer or agree to acquire, or become
the beneficial owner of or obtain any rights in respect of any capital
stock of the Company in an amount in excess of the Grandfathered
Amount, except for the Conversion Shares or otherwise as permitted
pursuant to this Agreement or any other Transaction Document,
provided, however, that the foregoing limitation shall not prohibit
the acquisition of securities of the Company or any of its successors
issued as dividends or as a result of stock splits and similar
reclassifications or received in a merger or other business
combination in respect of Preferred Shares or Shares held by the
Investors or any of their Affiliates at the time of such dividend,
split or reclassification or merger or business combination; or
(B) solicit proxies or consents or become a
"participant" in a "solicitation" (as such terms are defined or used
in Regulation 14A under the Exchange Act) of proxies or consents with
respect to any voting securities of the Company or any of its
successors or initiate or become a participant in any stockholder
proposal or "election contest" (as such term is defined or used in
Rule 14a-11 under the Exchange Act) with respect to the Company or any
of its successors or induce others to initiate the same (except for
activities undertaken by the Investors or the Investor Designees in
connection with solicitations by the Board of Directors).
(b) The standstill provisions set forth herein shall terminate on
the earliest of (i) the last day of the Standstill Period, (ii) the
occurrence of any breach by the Company in any material respect of any
covenant or agreement contained in this Agreement or in any other
Transaction Document, (iii) the filing of a voluntary bankruptcy petition
by the Company or on the 60th day following the filing of an involuntary
bankruptcy petition against the Company if such petition is not discharged
with prejudice during such 60-day period, (iv) the occurrence of a change
in control (as defined in the Certificate of Designation) of the Company or
(v) the occurrence of a Third Party Proposal.
(c) For purposes of this Agreement, a Third Party Proposal shall
mean and occur if any Person (other than the Investors or their Affiliates)
makes a bona fide offer for all or substantially all of the Company's
outstanding equity securities or assets.
(d) Notwithstanding anything to the contrary in this Agreement or
in any other Transaction Document, nothing shall prohibit the Investors
from making an offer to the Board of Directors to purchase all or
substantially all of the Company's outstanding equity securities or assets.
5.20. Actions Requiring Investor Approval. So long as at the
Investors and their Affiliates beneficially own at least one-third of the
shares of Preferred Stock issued at the Second Closing, the Company shall
not, and shall not permit any of its Subsidiaries to, directly or
indirectly, without the consent of GSCP:
(a) authorize a consolidation with or merger with or into,
or conveyance, transfer or lease of all or substantially all assets as an
entirety to, any Person;
(b) authorize a liquidation, dissolution, recapitalization
or reorganization;
(c) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, a limited liability company, a
partnership, an association, a trust or any other entity or organization
for a purchase price greater than $20 million;
(d) create, incur, assume or suffer to exist any
Indebtedness after the date hereof if such additional Indebtedness would
cause the ratio of (i) Total Debt (less Restricted Cash) to (ii)
Consolidated EBITDA for the period of four consecutive quarters of the
Company ending on, or most recently preceding, the date of determination,
to be greater than 4.5 to 1.00;
(e) enter into any business, either directly or through any
subsidiary or joint venture or similar arrangement, except for those
businesses in which the Company and its Subsidiaries, taken as whole, are
engaged on the date hereof or which are reasonably related, incidental, or
ancillary thereto; or
(f) authorize, adopt or approve an amendment to the
certificate of incorporation or by-laws of the Company, each as in effect
as of the Second Closing.
5.21. Dividends. The Company agrees that it shall pay cash
dividends on the Preferred Stock on a current basis so long as it is not
precluded from doing so under its debt instruments or Delaware law. In
furtherance thereof, the Company agrees to use its best efforts to pay such
dividends, including, without limitation, using its best efforts to refrain
from entering into any agreements which would preclude such payments, to
seek a waiver under any agreements which would prevent such payments at any
time and to take whatever actions are necessary, including revaluing
assets, to create surplus for the purpose of paying such dividends.
5.22. Use of Proceeds. The proceeds from the sale of the Notes,
the GS Shares and the Preferred Stock shall be used for general corporate
purposes as shall be determined by the Board of Directors.
ARTICLE VI
CONDITIONS
6.1. Conditions to Obligations of the Investors and the Company.
The respective obligations of the Investors and the Company to consummate
the Second Purchase shall be subject to the satisfaction or waiver at or
prior to the Second Closing of each of the following conditions:
(a) no statute, rule or regulation or order of any
Governmental Entity court or administrative agency shall be in effect
that prohibits the consummation of the transactions to be consummated
at the Second Closing;
(b) any waiting period (and any extension thereof) under the
HSR Act applicable to the transactions to be consummated at the Second
Closing shall have expired or been terminated; and
(c) the issuance of the Preferred Stock to the Investors in
connection with the Second Purchase shall have been approved and
adopted by the requisite vote of the stockholders of the Company in
accordance with applicable NASDAQ rules and the Company's certificate
of incorporation and by-laws.
6.2. Conditions to Obligations of the Investors. The obligation
of the Investors to consummate the Second Purchase shall be subject to the
satisfaction or waiver at or prior to the Second Closing of each of the
following conditions:
(a) each of the representations and warranties of the
Company contained in this Agreement shall be true and correct
(disregarding for this purpose all references in such representations
and warranties to any materiality, Material Adverse Effect, Knowledge
or similar qualifications) when made and as of the Second Closing
(except to the extent such representations and warranties are made as
of a particular date, in which case such representations and
warranties shall have been true and correct in all material respects
as of such date), except for failures to be true and correct which
individually or in the aggregate would not reasonably be expected to
have a Material Adverse Effect;
(b) the Company in all material respects shall have
performed, satisfied and complied with each of its covenants and
agreements set forth in this Agreement to be performed, satisfied and
complied with prior to or at the Second Closing, disregarding for this
purpose all references in such covenants and agreements to any
materiality or similar qualifications;
(c) the Certificate of Designation shall have been duly
filed with the Secretary of State of the State of Delaware and shall
be in full force and effect;
(d) the Conversion Shares shall have been duly authorized
and reserved for issuance and approved for listing on NASDAQ, subject
to official notice of issuance;
(e) the Company shall have obtained the Additional
Financing;
(f) the Board of Directors shall consist of ten directors,
three of whom shall be the Preferred Designees, effective as of the
Second Closing;
(g) there shall not have occurred after December 31, 1998
any change or development or series of changes or developments
(including without limitation as a result of any change in the Law)
which has resulted in or could reasonably be expected to result
individually or in the aggregate in a Material Adverse Effect;
(h) the Consents set forth on Schedule 6.2(h) shall have
been obtained or made by the Company, without any payment or other
accommodation having been or being made by the Company or any of the
Subsidiaries (except for the payment set forth on Schedule 6.2(h));
and
(i) the Company shall have made the deliveries set forth in
Section 2.6(a) hereof.
6.3. Conditions to Obligations of the Company. The obligation of
the Company to consummate the Second Purchase shall be subject to the
satisfaction or waiver at or prior to the Second Closing of each of the
following conditions:
(a) each of the representations and warranties of the
Investors contained in this Agreement shall be true and correct
(disregarding for this purpose all references in such representations
and warranties to any materiality, material adverse effect, knowledge
or similar qualifications) when made and as of the Second Closing
(except to the extent such representations and warranties are made as
of a particular date, in which case such representations and
warranties shall have been true and correct in all material respects
as of such date), except for failures to be true and correct which
individually or in the aggregate would not reasonably be expected to
have a material adverse effect on the ability of the Investors to
fulfill its obligations hereunder;
(b) the Investors in all material respects shall have
performed, satisfied and complied with each of its covenants and
agreements set forth in this Agreement to be performed, satisfied and
complied with prior to or at the Second Closing, disregarding for this
purpose all references in such covenants and agreements to any
materiality or similar qualifications; and
(c) the Investors shall have made the deliveries set forth
in Section 2.6(b) hereof.
ARTICLE VII
TERMINATION
7.1. Termination. The obligations of the parties to consummate
the Second Closing may be terminated at any time prior to the Second
Closing, notwithstanding approval thereof by the stockholders of the
Company:
(a) by mutual written consent of the Company and the
Investors at any time prior to the Second Closing; or
(b) by either the Investors or the Company if the Second
Closing shall not have been consummated by May 15, 2000; or
(c) by either the Investors or the Company if a Governmental
Entity shall have issued a nonappealable final order, decree or ruling
or taken any other action having the effect of permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement; or
(d) by the Investors or the Company, (i) if any
representation or warranty of the other set forth in this Agreement or
in any other Transaction Document shall be untrue in any material
respect when made, or (ii) upon a breach in any material respect of
any covenant or agreement on the part of the other set forth in this
Agreement or in any other Transaction Document (either (i) or (ii)
above being a "Terminating Breach"); provided, that, if such
Terminating Breach is curable within ten business days after notice of
a party's intent to terminate this Agreement, through the exercise of
reasonable efforts, and for so long as the other party continues to
exercise such reasonable efforts during such ten business day cure
period, the termination shall be effective immediately following
notice and such ten business day cure period and only if the
Terminating Breach is not cured as of such time; or
(e) by the Investors if an "Event of Default" under the
Notes shall have occurred and be continuing; or
(f) by either the Company or the Investors in the event that
the stockholders of the Company fail to approve the transactions
described in Section 5.6 at the Stockholders Meeting; or
(g) by the Investors if the Company shall not have complied
in all respects with the covenants set forth in Section 5.9(a).
Any party exercising its right to terminate under this Section
7.1 shall exercise such right by delivery of written notice to the other
party in accordance with Section 9.7 hereof. The date of any termination of
the obligations of the parties to consummate the Second Closing pursuant to
this Section 7.1 is referred to herein as the "Second Closing Termination
Date".
7.2. Effect of Termination. In the event of any termination of
the obligations to consummate the Second Closing pursuant to Section 7.1,
all obligations and agreements of the parties contained in this Agreement
or in any other Transaction Document that relate to the Second Closing
shall forthwith become void and there shall be no Liability on the part of
any party hereto relative to such obligations and agreements, provided that
nothing contained in this Agreement shall relieve any party from Liability
for any breach of this Agreement or any other Transaction Document
occurring prior to any such termination.
ARTICLE VIII
SURVIVAL; CERTAIN REMEDIES
8.1. Survival. The representations and warranties of the parties
contained in this Agreement or in any of the other Transaction Documents
shall expire on the later of (i) the one year anniversary of the Initial
Closing if the parties' obligations to consummate the Second Closing are
terminated under Section 7.1 or (ii) the one year anniversary of the Second
Closing, except that the representations and warranties set forth in
Section 3.11 shall survive until 30 days after the expiration of the
applicable statute of limitations (including any extensions thereof) and
the representations and warranties set forth in Sections 3.2 and 3.3 shall
survive indefinitely. After the expiration of such periods, any claim by a
party hereto based upon any such representation or warranty shall be of no
further force and effect unless a party has asserted a claim in accordance
with this Article VIII for breach of any such representation or warranty
prior to the expiration of such period, in which event any representation
or warranty to which such claim relates shall survive with respect to such
claim until such claim is resolved as provided in this Article VIII. The
covenants and agreements of the parties contained in this Agreement or in
any of the other Transaction Documents shall survive until performed in
accordance with their terms without limitation as to time.
8.2 Indemnification for the Benefit of the Company. Each Investor
agrees, from and after the date hereof, to indemnify the Company and its
Affiliates and agents, and the officers, directors, employees, successors,
transferees and assigns of each of them (each, a "Company Indemnified
Party") against and hold them harmless from and against all Losses incurred
by any of them based upon, resulting from or arising out of (i) the breach
of any representation or warranty of such Investor contained in this
Agreement or any of the other Transaction Documents or (ii) the breach of
or failure to perform any covenant or agreement of such Investor contained
in this Agreement or any of the other Transaction Documents.
8.3 Indemnification by the Company. The Company agrees, subject
to Section 8.1, from and after the date hereof, to indemnify the Investors
and their respective Affiliates and agents and the officers, directors,
employees, members, successors, transferees and assigns of each of them
(each, an "Investor Indemnified Party") against and hold them harmless from
and against all Losses incurred by any of them based upon, resulting from
or arising out of (i) the breach of any representation or warranty of the
Company contained in this Agreement or any of the other Transaction
Documents, or (ii) the breach of or failure to perform any covenant or
agreement of the Company contained in this Agreement or any of the other
Transaction Documents.
8.4 Materiality. Except for the representation and warranty
contained in the penultimate sentence of Section 3.4, the Material Adverse
Effect and other materiality (or correlative meaning) qualifications
included in the representations, warranties, covenants and agreements
contained herein or in any of the other Transaction Documents shall have no
effect on any provisions in this Article VIII concerning the indemnities of
the Company or the Investors with respect to such representations,
warranties, covenants and agreements, each of which representations,
warranties, covenants and agreements shall be read as though there were no
Material Adverse Effect or other materiality qualification for purposes of
such indemnities.
8.5 Indemnification Procedures. (a) An Investor Indemnified Party
or a Company Indemnified Party, as the case may be (for purposes of this
Section 8.5, an "Indemnified Party"), shall give the indemnifying party
under Section 8.2 or 8.3, as applicable (for purposes of this Section 8.5,
an "Indemnifying Party"), prompt written notice (the "Indemnification Claim
Notice") of any third party claim for which it will seek indemnification
hereunder; provided that failure of the Indemnified Party to give the
Indemnifying Party prompt written notice as provided herein shall not
relieve the Indemnifying Party of any of its obligations hereunder except
to the extent that the Indemnifying Party is prejudiced thereby. The
Indemnifying Party shall have the right to assume, through counsel of its
own choosing, which counsel shall be reasonably satisfactory to the
Indemnified Party, the defense of any third party claim which is the
subject of indemnification hereunder at its own expense. If the
Indemnifying Party elects to assume the defense of any such claim, the
Indemnified Party may participate with its own counsel in such defense, but
in such case the fees and expenses of counsel to the Indemnified Party
shall be paid by the Indemnified Party. The Indemnified Party shall, upon
reasonable notice, provide the Indemnifying Party with access to its
records and personnel relating to any such claim during normal business
hours and shall otherwise cooperate with the Indemnifying Party in the
defense or settlement thereof, and the Indemnifying Party shall reimburse
the Indemnified Party for all its reasonable out-of-pocket expenses in
connection therewith. If the Indemnifying Party elects to direct the
defense of any such claim, the Indemnified Party shall not pay, or permit
to be paid, any part of such claim unless the Indemnifying Party consents
in writing to such payment (which consent shall not be unreasonably
withheld) or unless the Indemnifying Party withdraws from or fails to
maintain the defense of such claim or unless a final judgment from which no
appeal may be taken by or on behalf of the Indemnifying Party is entered
against the Indemnified Party for indemnification; provided that, if the
third party claimant is prepared to settle its claim by payment to it of a
specified amount and, notwithstanding the request of the Indemnified Party
for consent to the proposed settlement, the Indemnifying Party does not
consent thereto, then the Indemnifying Party shall indemnify the
Indemnified Party separately for the difference, if any, between the
specified amount of the proposed settlement and the amount which is finally
adjudicated to be the amount of the Liability to the third party. No
settlement in respect of any third-party claim may be effected by the
Indemnifying Party without the Indemnified Party's prior written consent
(which consent shall not be unreasonably withheld). If the Indemnifying
Party shall fail to undertake any such defense (or shall fail upon request
to advise the Indemnified Party in writing that it will undertake such
defense) within 30 days of receipt of the Indemnification Claim Notice, or
subsequently withdraws from or fails to maintain the defense of such claim,
the Indemnified Party shall have the right to undertake the defense or
settlement thereof at the Indemnifying Party's expense. If the Indemnified
Party assumes the defense of any such claim pursuant to this Section 8.5 it
may conduct such defense (including entering into any settlement) as it
reasonably deems appropriate.
(b) Notwithstanding the foregoing, with respect to any claim
that the Indemnifying Party is defending, the Indemnified Party shall have
the right to retain separate counsel to represent it and the Indemnifying
Party shall pay the fees and expenses of such separate counsel if there are
conflicts that make it reasonably necessary for separate counsel to
represent the Indemnified Party and the Indemnifying Party.
(c) The parties agree to treat any indemnification payments
made by the Company pursuant to this Agreement for Tax purposes as
adjustments to the purchase price of the Notes and the GS Shares or the
Preferred Stock, as the case may be.
8.6 Duplication. Any Liability for indemnification hereunder
shall be determined without duplication of recovery by reason of the state
of facts giving rise to such Liability constituting a breach of more than
one representation, warranty, covenant or agreement; provided, however,
that subject to there being no duplication of recovery, the Indemnified
Party shall be entitled to recover to the maximum extent provided in this
Agreement (by way of example, if any Indemnified Party's entitlement to
indemnification is both by reason for a breach of a representation and
warranty to which the one year survival period of Section 8.1 applies and
by reason of a breach of a representation and warranty to which such
survival period does not apply, the Indemnified Party shall be entitled to
indemnification without regard to such one year survival period.)
8.7 Subordination. The Investors agree that the indemnification
obligations of the Company pursuant to this Article VIII are hereby made
subordinate and subject in right of payment to the prior payment in full of
the Designated Senior Indebtedness in the same manner as the Notes are
subordinated to the Senior Indebtedness pursuant to the subordination
provisions of the Notes. The provisions of this Section 8.7 shall not be
amended or modified without the prior written consent of the Required
Lenders.
ARTICLE IX
MISCELLANEOUS
9.1. Fees and Expenses. At the Initial Closing and at the Second
Closing or the Second Closing Termination Date, as applicable, the Company
shall reimburse the Investors in cash for their fees and expenses incurred
as of the date hereof or the Second Closing (to the extent not previously
reimbursed by the Company) as the case may be, in connection with this
Agreement and the other Transaction Documents and the transactions
contemplated hereby and thereby (including, without limitation, the fees
and disbursements of its attorneys, accountants, consultants and other
advisors) (collectively, "Investor Expenses"); provided, however, that the
amount of Investor Expenses in respect of which the Investors shall be
reimbursed hereunder shall not exceed $700,000 in the aggregate.
9.2. Public Announcements. The Investors and the Company shall
consult with each other before issuing any press release with respect to
this Agreement or the transactions contemplated hereby and neither shall
issue any such press release or make any such public statement without the
prior consent of the other, which consent shall not be unreasonably
withheld; provided, however, that a party may, without the prior consent of
the other party, issue such press release or make such public statement as
may upon the advice of counsel be required by Law or the rules and
regulations of NASDAQ, if it has used reasonable efforts to consult with
the other party prior thereto.
9.3. Restrictive Legends. None of the Notes, the Preferred Stock,
the GS Shares or the Conversion Shares may be transferred without
registration under the Securities Act and applicable state securities laws
unless counsel to the Company shall advise the Company that such transfer
may be effected without such registration. Each Note or certificate
representing any of the foregoing shall bear legends in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS [NOTE] [CERTIFICATE]
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT, OR
THE SECURITIES LAWS OF ANY JURISDICTION. SUCH
SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED, ASSIGNED, ENCUMBERED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (I) A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES
THAT IS EFFECTIVE UNDER SUCH ACT OR APPLICABLE STATE
SECURITIES LAW, OR (II) ANY EXEMPTION FROM REGISTRATION
UNDER SUCH ACT, OR APPLICABLE STATE SECURITIES LAW,
RELATING TO THE DISPOSITION OF SECURITIES, INCLUDING
RULE 144.
9.4. Further Assurances. At any time or from time to time after
the Initial Closing, the Company, on the one hand, and the Investors, on
the other hand, agree to cooperate with each other, and at the request of
the other party, to execute and deliver any further instruments or
documents and to take all such further action as the other party may
reasonably request in order to evidence or effectuate the consummation of
the transactions contemplated hereby or by the other Transaction Documents
and to otherwise carry out the intent of the parties hereunder or
thereunder.
9.5. Successors and Assigns. This Agreement shall bind and inure
to the benefit of the Company and the Investors and their respective
successors, permitted assigns, heirs and personal representatives of the
Company and the Investors, provided that the Company may not assign its
rights or obligations under this Agreement to any Person without the prior
written consent of the Investors, and provided further that no Investor may
assign its rights or obligations under this Agreement to any Person (other
than an Affiliate of such Investor) without the prior written consent of
the Company, which consent shall not be unreasonably withheld or delayed.
In addition, and whether or not any express assignment has been made, the
provisions of this Agreement that are for the Investors' benefit as
purchasers or holders of Notes, Preferred Stock, the GS Shares or the
Conversion Shares are also for the benefit of, and enforceable by, any
subsequent holder of such Notes, Preferred Stock, GS Shares or Conversion
Shares.
9.6. Entire Agreement. This Agreement and the other Transaction
Documents and the Confidentiality Agreement contain the entire agreement
among the parties with respect to the subject matter hereof and supersede
all prior and contemporaneous arrangements or understandings with respect
thereto.
9.7. Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally recognized overnight courier or first class registered or
certified mail, return receipt requested, postage prepaid, addressed to
such party at the address set forth below or such other address as may
hereafter be designated in writing by such party to the other parties:
(i) if to the Company, to:
ProMedCo Management Company
801 Cherry Street, Suite 1450
Fort Worth, Texas 76102
Facsimile: (817) 335-8321
Attention: Mr. Robert Smith
Chief Financial Officer
with a copy to (which shall not constitute notice):
Dyer, Ellis & Joseph
600 New Hampshire, NW
Washington, DC 20037
Telecopy: (202) 944-3068
Attention: Michael Joseph, Esq.
(ii) if to the Investors, to:
GS Capital Partners III, L.P.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Telecopy: (212) 357-5505
Attention: Mr. Sanjeev Mehra
Attention: Ben Adler, Esq.
with copies to (which shall not constitute notice):
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Telecopy: (212) 859-8587
Attention: Robert C. Schwenkel, Esq.
All such notices, requests, consents and other communications
shall be deemed to have been given or made if and when delivered personally
or by overnight courier to the parties at the above addresses or sent by
electronic transmission, with confirmation received, to the telecopy
numbers specified above (or at such other address or telecopy number for a
party as shall be specified by like notice).
9.8. Amendments. The terms and provisions of this Agreement may
be modified or amended, or any of the provisions hereof waived, temporarily
or permanently, in a writing executed and delivered by the Company and the
Investors. No waiver of any of the provisions of this Agreement shall be
deemed to or shall constitute a waiver of any other provision hereof
(whether or not similar). No delay on the part of any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof.
9.9. Counterparts. This Agreement may be executed in any number
of counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute
but one agreement.
9.10. Headings. The headings of the sections of this Agreement
have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.
9.11. Nouns and Pronouns. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of names and pronouns shall include the
plural and vice versa.
9.12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW.
9.13. Submission to Jurisdiction. Each of the parties hereto
hereby irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of New York and of the United
States of America, in each case located in the County of New York, for any
Litigation arising out of or relating to this Agreement or the other
Transaction Documents and the transactions contemplated hereby and thereby
(and agrees not to commence any Litigation relating hereto or thereto
except in such courts), and further agrees that service of any process,
summons, notice or document by U.S. registered mail to its respective
address set forth in this Agreement shall be effective service of process
for any Litigation brought against it in any such court. Each of the
parties hereto hereby irrevocably and unconditionally waives any objection
to the laying of venue of any Litigation arising out of this Agreement or
the transactions contemplated hereby in the courts of the State of New York
or the United States of America, in each case located in the County of New
York, hereby further irrevocably and unconditionally waives and agrees not
to plead or claim in any such court that any such Litigation brought in any
such court has been brought in an inconvenient forum.
9.14. WAIVER OF JURY TRIAL. THE COMPANY AND THE INVESTORS HEREBY
WAIVE ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS.
9.15. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid,
but if any provision of this Agreement is held to be invalid or
unenforceable in any respect, such invalidity or unenforceability shall not
render invalid or unenforceable any other provision of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PROMEDCO MANAGEMENT COMPANY
By: /s/ Robert D. Smith
-------------------------
Name: Robert D. Smith
Title: Chief Financial Officer
GS CAPITAL PARTNERS III, L.P.
$11,891,152.84 Notes
By: GS ADVISORS III, L.P.
its general partner 928,994 GS Shares
By: GS ADVISORS III, INC., 408,757 shares of Preferred Stock
its general partner
By: /s/ Katherine L. Nissenbaun
----------------------------
Name: Katherine L. Nissenbaun
Title: Vice President
GS CAPITAL PARTNERS III
OFFSHORE, L.P.
By: GS ADVISORS III (CAYMAN), L.P. $3,269,010.03 Notes
its general partner
255,391 GS Shares
By: GS ADVISORS III, INC.,
its general partner 112,372 shares of Preferred Stock
By: /s/ Katherine L. Nissenbaun
----------------------------
Name: Katherine L. Nissenbaun
Title: Vice President
<PAGE>
GOLDMAN, SACHS & CO.
VERWALTUNGS GMBH
By: /s/ Joseph H. Gleberman $548,955.04 Notes
/s/ Katherine L. Nissenbaun
---------------------------- 42,888 GS Shares
Name: Joseph H. Gleberman
Title: Managing Director 18,871 shares of Preferred Stock
Name: Katherine L. Nissenbaun
Title: Registered Agent
STONE STREET FUND 2000, LLC
By: /s/ Katherine L. Nissenbaun $290,909.09 Notes
--------------------------
Name: Katherine L. Nissenbaun 22,727 GS Shares
Title: Vice President
10,000 shares of Preferred Stock
PROMEDCO MANAGEMENT COMPANY
CERTIFICATE OF DESIGNATION
OF
SERIES A CONVERTIBLE PREFERRED STOCK
Pursuant to Section 151(g) of the General Corporation Law of the
State of Delaware, ProMedCo Management Company (the "Corporation"), a
corporation organized and existing under the General Corporation Law of the
State of Delaware ("DGCL"), DOES HEREBY CERTIFY that:
Pursuant to the authority conferred upon the Board of Directors
of the Corporation (the "Board of Directors") by Section A of Article IV of
the Restated Certificate of Incorporation of the Corporation (the
"Certificate of Incorporation"), and in accordance with the provisions of
Section 151(g) of the DGCL, the Board of Directors on December 27, 1999,
adopted the following resolution creating a series of Preferred Stock
designated as Series A Convertible Preferred Stock.
RESOLVED, that pursuant to the authority vested in the Board of
Directors in accordance with the DGCL and the provisions of the Certificate
of Incorporation, a series of the class of authorized Preferred Stock, par
value $0.01 per share, of the Corporation is hereby created and that the
designation and number of shares thereof and the voting powers, preferences
and relative, participating, optional and other special rights of the
shares of such series, and the qualifications, limitations and restrictions
thereof, are as follows:
SECTION 1. DEFINITIONS.
Unless the context otherwise requires, when used herein the
following terms shall have the meaning indicated.
"Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which banking institutions in The City of New York or at a
place of payment are authorized by law, regulation or executive order
to remain closed.
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or more related
transactions, of all or substantially all of the properties and assets
of the Corporation and its Subsidiaries taken as a whole to any Person
(as such term is used in Section 13(d)(3) of the Exchange Act), other
than the Purchasers or their affiliates, (ii) the adoption of a plan
relating to the liquidation or dissolution of the Corporation, (iii)
the consummation of any transaction or other event (including, without
limitation, any merger or consolidation) the result of which is that
any "Person" or "Group" (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act) (other than the Purchasers and their
affiliates) becomes the "beneficial owner" (as such term is defined in
Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that a Person
shall be deemed to have beneficial ownership of all shares that such
Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or
indirectly, of more than 45% of the voting stock of the Corporation,
or (iv) the first day on which a majority of the members of the Board
of Directors are not Continuing Directors.
"Commission" shall mean the Securities and Exchange Commission.
"Continuing Directors" means, as of any date of determination,
any member of the Board of Directors who (i) was a member of the Board
of Directors as of January 13, 2000 or (ii) was nominated for election
or elected to the Board of Directors with the approval, recommendation
or endorsement of a majority of the Continuing Directors who were
members of the Board of Directors at the time of such nomination or
election.
"Conversion Price" shall mean the Initial Conversion Price,
subject to adjustment as provided in Section 9.
"Current Market Price" shall mean the average of the daily Market
Prices of the Common Stock for twenty consecutive Trading Days
immediately preceding the date for which such value is to be computed.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and
regulations of the SEC thereunder, all as the same shall be in effect
at the time. Reference to a particular section of the Exchange Act
shall include reference to the comparable section, if any, of any such
successor federal statute.
"Fair Market Value" shall mean, as to shares of Common Stock or
any other class of capital stock or securities of the Corporation or
any other issuer which are publicly traded, the average of the daily
Market Prices of such shares for twenty consecutive Trading Days
immediately preceding the date for which the Fair Market Value of any
such security is to be determined. The "Fair Market Value" of any such
security which is not publicly traded or of any other property shall
mean the fair value thereof as determined by an independent investment
banking or appraisal firm experienced in the valuation of such
securities or property selected in good faith by the Board of
Directors or a committee thereof.
"Junior Stock" shall mean any capital stock or any rights,
warrants or other securities convertible into or exchangeable for
shares of any capital stock of the Corporation ranking junior (either
as to dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock.
"Liquidation Preference" with respect to a share of Series A
Preferred Stock shall mean, as at any date, $100.00 per share (as
adjusted for any stock dividends, combinations or splits with respect
to such share), plus an amount equal to all accrued but unpaid
dividends (whether or not declared) on such share as at such date.
"Market Price" when used with reference to shares of Common Stock
or other securities on any date, shall mean (i) the price of the last
trade, as reported on the Nasdaq National Market, not identified as
having been reported late to such system, or (ii) if the Common Stock
is so traded, but not so quoted, the average of the last bid and ask
prices, as those prices are reported on the Nasdaq National Market, or
(iii) if the Common Stock is not listed or authorized for trading on
the Nasdaq National Market or any comparable system, the average of
the closing bid and asked prices as furnished by two members of the
National Association of Securities Dealers, Inc. selected from time to
time by the Corporation for that purpose. If the Common Stock or such
other securities are not publicly held or so listed or publicly
traded, "Market Price" shall mean the Fair Market Value per share of
Common Stock or of such other securities as determined in good faith
by the Board of Directors based on an opinion of an independent
investment banking firm acceptable to holders of a majority of the
shares of Series A Preferred Stock, which opinion may be based on such
assumptions as such firm shall deem to be necessary and appropriate.
"Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be
determined, fully diluted shares of Common Stock (calculated as
prescribed by generally accepted accounting principles), except shares
then owned or held by or for the account of the Corporation or any
subsidiary thereof, and shall include all shares (i) issuable in
respect of outstanding scrip or any certificates representing
fractional interests in shares of Common Stock and (ii) issuable in
respect of options or warrants to purchase, or securities convertible
into, shares of Common Stock.
"Parity Stock" shall mean any capital stock or any rights,
warrants or other securities convertible into or exchangeable for
shares of any capital stock of the Corporation ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding
up) with the Series A Preferred Stock.
"Paying Agent" shall mean the Transfer Agent or such other Person
or Persons as may be appointed by the Board of Directors from time to
time.
"Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor (by
merger or otherwise) of such entity.
"Securities Purchase Agreement" shall mean the Securities
Purchase Agreement, dated as of January 13, 2000, by and among the
Corporation and GS Capital Partners III, L.P. ("GSCP"), and certain
affiliates of GSCP set forth on the signature page thereto (the "GSCP
Affiliates", and collectively with GSCP and including their respective
successors and permitted assigns, the "Purchasers").
"Senior Stock" shall mean any capital stock or any rights,
warrants or other securities convertible into or exchangeable for
shares of any capital stock of the Corporation ranking senior to
(either as to dividends or upon liquidation, dissolution or winding
up) the Series A Preferred Stock.
"Subsidiary" or "Subsidiaries" shall mean any corporation,
limited liability company, partnership, business association or other
Person with respect to which the Company has, directly or indirectly,
ownership of or rights with respect to securities or other interests
having the power to elect a majority of such Person's board of
directors or analogous or similar governing body, or otherwise having
the power to direct the management, business or policies of that
corporation, limited liability company, partnership, business
association or other Person.
"Trading Day" means a Business Day or, if the Common Stock is
listed or admitted to trading on any national securities exchange, a
day on which such exchange is open for the transaction of business.
SECTION 2. DESIGNATION; NUMBER; RANK.
(a) Number; Designation. 550,000 shares of Preferred Stock of the
Corporation shall constitute a series designated as "Series A Convertible
Preferred Stock" (the "Series A Preferred Stock").
(b) Rank. The Series A Preferred Stock shall, with respect to
dividend rights and rights on liquidation, dissolution or winding up, rank
senior to the Common Stock, par value $0.01 per share, of the Corporation
(the "Common Stock") and all other capital stock of the Corporation issued
prior to or on or after the date hereof.
SECTION 3. DIVIDENDS.
(a) Payment of Dividends. The holders of shares of Series A
Preferred Stock, in preference to the holders of shares of Common Stock and
of any shares of other capital stock of the Corporation as to payment of
dividends, shall be entitled to receive, when, as and if declared by the
Board of Directors, out of the assets of the Corporation legally available
therefor, distributions in the form of cumulative cash dividends at an
annual rate per share equal to 6% of the Liquidation Preference from and
after the respective dates of issuance of applicable shares of Series A
Preferred Stock (the "Issue Date"), as long as the shares of Series A
Preferred Stock remain outstanding. Dividends shall be (i) computed on the
basis of the Liquidation Preference; (ii) accrue and be payable quarterly,
in arrears, on March 31, June 30, September 30 and December 31 (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
except that if any Quarterly Dividend Payment Date is not a Business Day
then the Quarterly Dividend Payment Date shall be on the first immediately
succeeding Business Day, commencing on the first Quarterly Dividend Payment
Date following the Issue Date; and (iii) payable in cash.
(b) Accrual of Dividends; Default Dividends. Dividends payable
pursuant to clause (a) of this Section 3 shall begin to accrue and be
cumulative from the Issue Date, whether or not declared on a daily basis.
The amount of dividends so payable shall be determined on the basis of
twelve 30-day months and a 360-day year. Accrued dividends not paid within
10 days of any Quarterly Dividend Payment Date shall accrue dividends at an
annual dividend rate of 8% of the Liquidation Preference (the "Default
Dividend Rate") until paid in full and shall be payable at any time as of
which funds legally available therefor are available to the Corporation
(without reference to any regular Quarterly Dividend Payment Date) to the
holders of record on such date, not exceeding 30 days preceding the payment
thereof, as may be fixed by the Board of Directors. Dividends paid on
shares of Series A Preferred Stock (including any dividends payable at the
Default Dividend Rate (such dividends, "Default Dividends")) in an amount
less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding. All references herein
to "unpaid dividends" shall be deemed to include any unpaid Default
Dividends.
(c) Restricted Payments. So long as any shares of Series A
Preferred Stock are outstanding, the Corporation shall not declare, pay or
set apart for payment any dividend on any of shares of Common Stock or
other capital stock of the Corporation or make any payment on account of,
or set apart for payment money for a sinking or other similar fund for, the
purchase, redemption or other retirement of, any of shares of Common Stock
or other capital stock of the Corporation or any warrants, rights, calls or
options exercisable for or convertible into any shares of Common Stock or
other capital stock of the Corporation, or make any distribution in respect
thereof, either directly or indirectly, and whether in cash, obligations or
shares of the Corporation or other property, and shall not permit any
corporation or other entity directly or indirectly controlled by the
Corporation to purchase or redeem any of the Common Stock or other capital
stock of the Corporation or any warrants, rights, calls or options
exercisable for or convertible into any Common Stock or other capital stock
of the Corporation unless, all unpaid dividends on the shares of Series A
Preferred Stock shall have been paid.
(d) Dividends on Common Stock. So long as any shares of Series A
Preferred Stock remain outstanding, if the Corporation pays a dividend in
cash, securities or other property on shares of Common Stock then at the
same time the Corporation shall declare and pay a dividend on shares of
Series A Preferred Stock in the amount of dividends that would be paid with
respect to shares of Series A Preferred Stock if such shares were converted
into shares of Common Stock on the record date for such dividends (or if no
record date is established, at the date such dividend is declared).
SECTION 4. VOTING RIGHTS.
In addition to any voting rights provided by law, the holders of
shares of Series A Preferred Stock shall have the voting rights set forth
in this Section 4:
(a) Right to Vote as a Single Class with Holders of Common Stock.
So long as any shares of Series A Preferred Stock are outstanding, each
share of Series A Preferred Stock shall entitle the holder thereof to
notice of and to vote on all matters submitted to a vote of the
stockholders of the Corporation, voting together as a single class with the
holders of shares of Common Stock. The holders of each share of Series A
Preferred Stock shall be entitled to vote with respect to each share of
Series A Preferred Stock held by each such holder a number of votes equal
to the number of votes which could be cast in such vote by a holder of the
number of shares of Common Stock into which such share of Series A
Preferred Stock is convertible (as adjusted pursuant to Section 9) on the
record date for such vote. Fractional votes shall not, however, be
permitted and any fractional voting rights available on an as-converted
basis (after aggregation of all shares of Common Stock into which shares of
Series A Preferred Stock held by each holder could be converted) shall be
rounded to the nearest whole number (with one-half being rounded upward).
(b) Right to Designate Directors. In addition to any of the
voting rights provided to the holders of shares of Series A Preferred Stock
pursuant to the Securities Purchase Agreement, in the event the Corporation
shall have failed to pay in full (i) dividends on the shares of Series A
Preferred Stock for a period of twelve consecutive months or (ii) the
Mandatory Redemption Price within 30 days of the Mandatory Redemption Date,
then, in addition to any other rights that may otherwise be available to
holders of Series A Preferred Stock pursuant to this Certificate of
Designation or otherwise, the total number of directors of the Corporation
shall be increased by two, and the holders of Series A Preferred Stock,
voting together as a single class, shall by affirmative vote of holders of
a plurality of the total number of shares of Series A Preferred Stock
voting thereon, be entitled to elect to the Board of Directors, at a
meeting of such stockholders or by written consent in lieu thereof, two
additional directors (the "Default Directors") (which directors shall be in
addition to, and not in lieu of, any Preferred Designees (as defined in the
Securities Purchase Agreement) and which shall each be required to satisfy
any qualifications existing under applicable law and shall be entitled to
all rights of voting and participation as are directors of the Corporation
generally), and shall be entitled, by affirmative vote of holders of a
majority of the total number of shares of Series A Preferred Stock then
outstanding or by written consent in lieu thereof, at any time to remove
any director so elected. Any other provision of this Certificate of
Designation or the Certificate of Incorporation or By-laws of the
Corporation notwithstanding, no Default Director may be removed except in
the manner provided for in this paragraph. Vacancies among the Default
Directors resulting from death, resignation, retirement, disqualification,
removal from office or other cause may be filled at any time, but only by
the affirmative vote of holders of a plurality of the total number of
shares of Series A Preferred Stock then outstanding, voting together as a
single class, or by written consent in lieu thereof, and any director so
chosen shall hold office for a term expiring on the date the term of office
of the director such newly-elected director shall have replaced would have
expired. At any time during which the holders of Series A Preferred Stock
are entitled to elect Default Directors, in the event the Corporation
declares and pays in cash all theretofore unpaid dividends and/or pays in
full the Mandatory Redemption Amount, as the case may be, then the term of
any Default Director then in office shall be deemed to have expired as of
the time such payments are made, and the total number of directors of the
Corporation shall be reduced by the number of Default Directors then in
office whose term shall have expired and the holders of Series A Preferred
Stock shall cease to have any rights hereunder to elect Default Directors,
in each case, unless and until one or more of the conditions specified in
clauses (i) and (ii) hereof shall recur.
(c) Actions Not to be Taken Without Vote of Holders of Series A
Preferred Stock. The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, without the affirmative vote or
consent of the holders of not less than 50% of all shares of Series A
Preferred Stock at any time outstanding:
(i) authorize, increase the authorized number of shares of,
or issue any shares of Senior Stock or Parity Stock;
(ii) increase the authorized number of shares of, or issue
(including on conversion or exchange of any convertible or exchangeable
securities or by reclassification) any shares of, Series A Preferred Stock
other than as required by this Certificate of Designation; or
(iii) reclassify any shares of Series A Preferred Stock or
authorize, adopt or approve an amendment to this Certificate of Designation
which would increase or decrease the par value of the shares of Series A
Preferred Stock, or alter or change the powers, preferences or special
rights of the Series A Preferred Stock so as to affect such shares of
Series A Preferred Stock adversely.
(d) Exercise of Voting Rights. (i) The foregoing rights of
holders of shares of Series A Preferred Stock to take any actions as
provided in this Section 4 may be exercised at any annual meeting of
stockholders or at a special meeting of stockholders held for such purpose
or at any adjournment thereof, or by the written consent, delivered to the
Secretary of the Corporation, of the holders of not less than 50% of all
shares of Series A Preferred Stock outstanding as of the record date of
such written consent.
So long as such right to vote continues, the Chairman of the
Board of the Corporation may call, and if the holders of shares of Series A
Preferred Stock are to vote separately as a single class, upon the written
request of holders of record of 20% of the outstanding shares of Series A
Preferred Stock, addressed to the Secretary of the Corporation, at the
principal office of the Corporation, the Chairman of the Board of the
Corporation shall call, a special meeting of the holders of shares of
Series A Preferred Stock entitled to vote as provided herein. The
Corporation shall use its best efforts to hold such meeting within 60, but
in any event not later than 90, days after delivery of such request to the
Secretary, at the place and upon the notice provided by law and in the
By-laws of the Corporation for the holding of meetings of stockholders;
provided that the Corporation shall not be required to call such a special
meeting if such request is received fewer than 90 days before the date
fixed for the next ensuing annual meeting of stockholders of the
Corporation; and provided, further, that if it is necessary for the
Corporation to solicit proxies for use at such special meeting, the
Corporation's obligation to conduct such special meeting shall be delayed
for such period of time as is necessary for the Corporation to prepare and
file a proxy statement and to obtain the Commission's clearance of such
proxy statement.
(ii) At each meeting of stockholders at which the holders of
shares of Series A Preferred Stock shall have the right, voting separately
as a single class, to take any action, the presence in person or by proxy
of the holders of record of one-half of the total number of shares of
Series A Preferred Stock then outstanding and entitled to vote on the
matter shall be necessary and sufficient to constitute a quorum. At any
such meeting or at any adjournment thereof, in the absence of a quorum of
the holders of shares of Series A Preferred Stock, a majority of the
holders of such shares present in person or by proxy shall have the power
to adjourn the meeting as to the actions to be taken by the holders of
shares of Series A Preferred Stock from time to time and place to place
without notice other than announcement at the meeting until a quorum shall
be present.
(iii) For the taking of any action as provided in this
Section 4 by the holders of shares of Series A Preferred Stock, each such
holder shall have one vote for each share of such stock standing in his
name on the transfer books of the Corporation as of any record date fixed
for such purpose or, if no such date be fixed, at the close of business on
the Business Day next preceding the day on which notice is given, or if
notice is waived, at the close of business on the Business Day next
preceding the day on which the meeting is held.
SECTION 5. REDEMPTION.
(a) Optional Redemption. (i) Subject to the rights of holders of
shares of Series A Preferred Stock set forth in Section 9 hereof, the
Corporation shall, at any time following the fourth anniversary of the
Issue Date, have the right, at its sole option and election made in
accordance with clause (a)(ii) below, to redeem, to the extent the
Corporation shall have the funds legally available therefor, all, but not
less than all, of the then outstanding shares of Series A Preferred Stock
within 45 days following any date on which the Market Price per share of
Common Stock for at least 20 out of 30 consecutive Trading Days immediately
preceding such date, including the last Trading Day of such period, is
equal to or greater than 150% of the Conversion Price in effect as of the
first day of such 30-Trading Day period (any such date, a "Redemption
Trigger Date"), for an amount per share equal to the Liquidation Preference
(the "Optional Redemption Price") as of the Optional Redemption Date (as
defined below). Notwithstanding the foregoing, no redemption shall be
permitted pursuant to this Section 5(a) at any time during which the Common
Stock is not listed or admitted to be listed on any of the New York Stock
Exchange, the American Stock Exchange, or the Nasdaq National Market.
(ii) Notice of any redemption of shares of Series A
Preferred Stock pursuant to clause (a)(i) shall be mailed, first class
postage prepaid, to each holder of shares of Series A Preferred Stock, at
such holder's address as it appears on the transfer books of the
Corporation, specifying (x) the Optional Redemption Price and (y) the
redemption date (the "Optional Redemption Date"); and calling upon such
holder to surrender to the Corporation, in the manner and at the place
designated, such holder's certificate or certificates representing the
shares to be redeemed (the "Optional Redemption Notice"). The Optional
Redemption Notice shall be mailed not more than 20 days following the
applicable Redemption Trigger Date. The Optional Redemption Date shall be
determined by the Corporation but in no event shall be earlier than the
10th day following the date of the Redemption Notice or later than the 25th
day following the Redemption Notice.
(b) Mandatory Redemption. (i) Subject to the rights of holders of
shares of Series A Preferred Stock set forth in Section 9 hereof, the
Corporation shall, on the seventh anniversary of the Issue Date (such date,
the "Mandatory Redemption Date"), redeem, to the extent the Corporation
shall have the funds legally available therefor, all, but not less than
all, of the then outstanding shares of Series A Preferred Stock for an
amount per share equal to the Liquidation Preference as of such date (the
"Mandatory Redemption Price"). If the funds of the Corporation legally
available for redemption of shares of Series A Preferred Stock on the
Mandatory Redemption Date are insufficient to redeem the total number of
shares to be redeemed on such date, those funds which are legally available
will be used to redeem the maximum possible number of such shares ratably
among the holders of such shares to be redeemed based upon the number of
shares of Series A Preferred Stock held by each such holder. The shares of
Series A Preferred Stock not redeemed shall remain outstanding and entitled
to all the rights and preferences provided in this Certificate of
Designation at any time. Thereafter, when sufficient additional funds of
the Corporation are legally available for the redemption of shares of
Series A Preferred Stock that remain outstanding, such funds shall
immediately be used to redeem the entire balance of the shares of Series A
Preferred Stock that the Corporation has become obliged to redeem on the
Mandatory Redemption Date but which the Corporation has not redeemed.
(ii) Notice of any redemption of shares of Series A
Preferred Stock pursuant to clause (b)(i) shall be mailed, first class
postage prepaid, to each holder of shares of Series A Preferred Stock, at
such holder's address as it appears on the transfer books of the
Corporation, specifying (x) the number of shares of Series A Preferred
Stock to be redeemed, (y) the Mandatory Redemption Price and (z) the
Mandatory Redemption Date; and calling upon such holder to surrender to the
Corporation, in the manner and at the place designated, such holder's
certificate or certificates representing the shares to be redeemed (the
"Mandatory Redemption Notice"). The Mandatory Redemption Notice shall be
mailed not less than 25 and not more than 45 days prior to the Mandatory
Redemption Date.
(c) Payment of Redemption Price. On the date of any redemption
pursuant to this Section 5, (i) the Corporation shall in cash or by wire
transfer to an account designated by each holder the Optional Redemption
Price or the Mandatory Redemption Price, as the case may be, for each of
its shares of Series A Preferred Stock, and (ii) after payment has been
made in accordance with clause (i) above, dividends on the shares of Series
A Preferred Stock so called for redemption shall cease to accrue, and all
rights of the holders thereof as stockholders of the Corporation (except
the right to receive from the Corporation the Optional Redemption Price or
the Mandatory Redemption Price, as the case may be, and except the right to
convert shares of Series A Preferred Stock so called for redemption prior
to the close of business on the date immediately preceding the date fixed
for such redemption) shall cease.
SECTION 6. CHANGE OF CONTROL.
(a) Offer to Repurchase. Upon the occurrence of a Change of
Control, the Corporation shall make an offer (a "Change of Control Offer")
to each holder of shares of Series A Preferred Stock to repurchase all or
any part (subject to the rights of holder pursuant to Section 9) of each
such holder's shares of Series A Preferred Stock at an offer price in cash
equal to 101% of the Liquidation Preference as of the Change of Control
Payment Date (the "Change of Control Payment"). The Corporation shall
comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of shares
of Series A Preferred Stock as a result of a Change of Control, and the
Corporation shall not be in violation of this Certificate of Designation by
reason of any act required by such rule or other applicable law.
(b) Within 25 days following any Change of Control, the
Corporation shall mail a notice to each holder of shares of Series A
Preferred Stock stating:
(i) that the Change of Control Offer is being made pursuant
to this Section 6 and that all shares of Series A Preferred Stock tendered
will be accepted for payment;
(ii) the purchase price and the purchase date, which shall
be at least 30 but no more than 60 days from the date on which the
Corporation mails notice of the Change of Control (the "Change of Control
Payment Date");
(iii) that any shares of Series A Preferred Stock not
tendered will continue to accrue dividends as provided in this Certificate
of Designation;
(iv) that, unless the Corporation defaults in the payment of
the Change of Control Payment, all shares of Series A Preferred Stock
accepted for payment pursuant to the Change of Control Offer shall cease to
accrue dividends after the Change of Control Payment Date;
(v) that holders of shares of Series A Preferred Stock
electing to have any shares of Series A Preferred Stock purchased pursuant
to a Change of Control Offer shall be required to surrender the shares of
Series A Preferred Stock to the Corporation or its designated agent for
such purpose, at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control Payment
Date; and
(vi) that holders of shares of Series A Preferred Stock will
be entitled to withdraw their election if the Corporation or its designated
agent for such purpose, receives, not later than the close of business on
the second Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the name of
the holder of shares of Series A Preferred Stock, the number of shares of
Series A Preferred Stock delivered for purchase, and a statement that such
holder is withdrawing his election to have such shares purchased.
(c) On the Change of Control Payment Date, the Corporation shall,
to the extent lawful, (i) accept for payment all shares of Series A
Preferred Stock tendered pursuant to the Change of Control Offer and (ii)
deposit with the Paying Agent an amount equal to the Change of Control
Payment in respect of all shares of Series A Preferred Stock so tendered.
The Corporation shall promptly mail to each holder of shares of Series A
Preferred Stock so tendered the Change of Control Payment for such shares.
The Corporation shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control
Payment Date.
SECTION 7. STATUS OF CONVERTED OR REDEEMED STOCK.
Any shares of Series A Preferred Stock converted, redeemed,
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All
such shares of Series A Preferred Stock shall upon their cancellation, and
upon the filing of any document required by the DGCL, become authorized but
unissued shares of Preferred Stock, $0.01 par value, of the Corporation and
may be reissued as part of another series of Preferred Stock, $0.01 par
value, of the Corporation.
SECTION 8. LIQUIDATION, DISSOLUTION OR WINDING UP.
(a) (i) In the event the Corporation shall (A) commence a
voluntary case under the Federal bankruptcy laws or any other applicable
Federal or state bankruptcy, insolvency or similar law, or (B) consent to
the entry of an order for relief in an involuntary case under such law or
to the appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of the Corporation, or of any
substantial part of its property, or (C) make an assignment for the benefit
of its creditors, or (D) admit in writing its inability to pay its debts
generally as they become due, or (ii)(x) if a decree or order for relief in
respect of the Corporation shall be entered by a court having jurisdiction
in the premises in an involuntary case under the Federal bankruptcy laws or
any other applicable Federal or state bankruptcy, insolvency or similar
law, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of the Corporation or of any
substantial part of its property, or ordering the winding up or liquidation
of its affairs, and (y) any such decree or order shall be unstayed and in
effect for a period of 60 consecutive days and on account of any such event
the Corporation shall liquidate, dissolve or wind up, or (iii) if the
Corporation shall otherwise liquidate, dissolve or wind up, after payment
or provision for the payment for the debts and other liabilities of the
Corporation (each, a "Liquidation"), before any payment or distribution to
holders of shares of Junior Stock or Parity Stock, holders of shares of
Series A Preferred Stock shall be entitled to receive an amount equal to
the greater of (x) the Liquidation Preference with respect to each share of
Series A Preferred Stock held by such holder as of the date of Liquidation,
or (y) the amount that would have been received with respect to shares of
Series A Preferred Stock upon any such Liquidation if such shares had been
converted to shares of Common Stock immediately prior to the date of such
Liquidation.
(b) If, upon any such Liquidation, whether voluntary or
involuntary, the assets to be distributed to the holders of the Series A
Preferred Stock shall be insufficient to permit payment of the full amount
of the Liquidation Preference with respect to each share of Series A
Preferred Stock, then the entire assets of the Corporation to be
distributed among the holders of the Series A Preferred Stock shall be
distributed ratably among such holders in accordance with the number of
shares of Series A Preferred Stock held by each such holder.
(c) After the payment to the holders of shares of the Series A
Preferred Stock of the full amount of any liquidating distribution to which
they are entitled under this Section 8, the holders of the Series A
Preferred Stock as such shall have no right or claim to any of the
remaining assets of the Corporation.
(d) Whenever the distribution provided for in this Section 8
shall be payable in securities or property other than cash, the value of
such distribution shall be the Fair Market Value of such securities or
property.
SECTION 9. CONVERSION.
(a) Right to Convert. Subject to the provisions for adjustment
hereinafter set forth, each share of Series A Preferred Stock shall be
convertible into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing the Liquidation Preference as of
the Conversion Date by the Conversion Price in effect as of the Conversion
Date. The Conversion Price shall initially be $3.25 (the "Initial
Conversion Price"), and shall be subject to adjustment as provided in
clauses (e) through (g) of this Section 9. The conversion right set forth
in this clause (a) shall be exercisable at the option of the holder at any
time following the Issue Date. In the case of shares of Series A Preferred
Stock called for redemption pursuant to Section 5 hereof, conversion rights
shall expire with respect to such shares on the Optional Redemption Date or
the Mandatory Redemption Date, as the case may be, when payment in full of
the applicable redemption price shall have been made by the Corporation.
(b) Mechanics of Conversion. Conversion of shares of Series A
Preferred Stock may be effected by any such holder upon the surrender to
the Corporation at the principal office of the Corporation or at the office
of any agent or agents of the Corporation, as may be designated by the
Board of Directors (the "Transfer Agent"), of the certificate(s) for such
Series A Preferred Stock to be converted, accompanied by a written notice
(the date of such notice being referred to as the "Conversion Date")
stating that such holder elects to convert all or a specified whole number
of such shares in accordance with the provisions of this Section 9 and
specifying the name or names in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued; provided that in all
cases the converting holder shall convert at least 1000 shares of Series A
Preferred Stock (or if such holder holds less than 1000 shares, all shares
of Series A Preferred Stock held by such holder). In case any holder's
notice shall specify a name or names other than that of such holder, such
notice shall be accompanied by payment of all transfer taxes payable upon
the issuance of shares of Common Stock in such name or names. Other than
such taxes, the Corporation will pay any and all transfer, issue, stamp and
other taxes (other than taxes based on income) that may be payable in
respect of any issue or delivery of shares of Common Stock on conversion of
Series A Preferred Stock pursuant hereto. As promptly as practicable, and
in any event within five Business Days after the surrender of such
certificate or certificates and the receipt of such notice relating thereto
and, if applicable, payment of all transfer taxes which are the
responsibility of the holder as set forth above (or the demonstration to
the satisfaction of the Corporation that such taxes have been paid), the
Corporation shall deliver or cause to be delivered (i) certificates
representing the number of validly issued, fully paid and nonassessable
full shares of Common Stock, to which the holder of shares of Series A
Preferred Stock being converted shall be entitled and (ii) if less than the
full number of shares of Series A Preferred Stock evidenced by the
surrendered certificate or certificates is being converted, a new
certificate or certificates, of like tenor, for the number of shares
evidenced by such surrendered certificate or certificates less the number
of shares being converted. Such conversion shall be deemed to have been
made at the close of business on the Conversion Date so that the rights of
the holder thereof as to the shares being converted shall cease except for
the rights pursuant to Section 9(c) to receive shares of Common Stock, in
accordance herewith, and the person entitled to receive the shares of
Common Stock shall be treated for all purposes as having become the record
holder of such shares of Common Stock at such time.
In case any shares of Series A Preferred Stock are to be redeemed
pursuant to Sections 5 or 6, such right of conversion shall cease and
terminate as to the shares of Series A Preferred Stock to be redeemed at
the close of business on the Business Day preceding the applicable
redemption date.
(c) Fractional Shares. In connection with the conversion of any
shares of Series A Preferred Stock into shares of Common Stock, no
fractions of shares of Common Stock shall be issued, but in lieu thereof
the Corporation shall pay a cash adjustment in respect of such fractional
interest in an amount equal to such fractional interest multiplied by the
Market Price per share of Common Stock on the Trading Day on which such
shares of Series A Preferred Stock are deemed to have been converted. If
more than one share of Series A Preferred Stock shall be surrendered for
conversion by the same holder at the same time, the number of full shares
of Common Stock issuable on conversion thereof shall be computed on the
basis of the total number of shares of Series A Preferred Stock so
surrendered. Promptly upon conversion, the Corporation shall pay to the
holder of shares of Series A Preferred Stock so converted out of funds
legally available, an amount equal to any accrued and unpaid dividends on
the shares of Series A Preferred Stock surrendered for conversion to the
date of such conversion, together with cash in lieu of any fractional
interest of such holder.
(d) Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available for issuance upon
the conversion of the Series A Preferred Stock, free from any preemptive
rights, such number of its authorized but unissued shares of Common Stock
as will from time to time be sufficient to permit the conversion of all
outstanding shares of Series A Preferred Stock issued or issuable pursuant
to the Securities Purchase Agreement into shares of Common Stock, and shall
take all actions required to increase the authorized number of shares of
Common Stock if necessary to permit the conversion of all outstanding
shares of Series A Preferred Stock.
(e) Adjustment to Conversion Price for Dividends and for
Combinations or Subdivisions of Common Stock; Additional Shares. (i) In
case the Corporation shall at any time or from time to time after the Issue
Date (A) pay a dividend, or make a distribution, on the outstanding shares
of Common Stock in shares of Common Stock, (B) subdivide the outstanding
shares of Common Stock, (C) combine the outstanding shares of Common Stock
into a smaller number of shares or (D) issue by reclassification of the
shares of Common Stock any shares of capital stock of the Corporation,
then, and in each such case, the Conversion Price in effect immediately
prior to such event or the record date therefor, whichever is earlier,
shall be adjusted so that the holder of any shares of Series A Preferred
Stock thereafter surrendered for conversion into Common Stock shall be
entitled to receive the number of shares of Common Stock or other
securities of the Corporation which such holder would have owned or have
been entitled to receive after the happening of any of the events described
above, had such shares of Series A Preferred Stock been surrendered for
conversion immediately prior to the happening of such event or the record
date therefor, whichever is earlier. An adjustment made pursuant to this
clause (i) shall become effective (x) in the case of any such dividend or
distribution, immediately after the close of business on the record date
for the determination of holders of shares of Common Stock entitled to
receive such dividend or distribution, or (y) in the case of such
subdivision, reclassification or combination, at the close of business on
the day upon which such corporate action becomes effective. No adjustment
shall be made pursuant to this clause (i) in connection with any
transaction to which clause (f) applies.
(ii) In case the Corporation shall pay a dividend or make a
distribution to all holders of shares of Common Stock (including any
dividend or distribution paid in connection with a consolidation or merger
in which the Corporation is the continuing corporation) of any shares of
capital stock of the Corporation or evidences of its indebtedness or assets
or cash (excluding dividends or distributions in connection with the
liquidation, dissolution or winding up of the Corporation) or rights or
warrants to subscribe for or purchase shares of Common Stock or securities
convertible into or exchangeable for Common Stock (excluding those
securities referred to in subsection (i) above), then in each such case the
Conversion Price in effect immediately prior thereto shall be reduced to an
amount determined by determined by multiplying (A) the Conversion Price in
effect on the record date for the determination of stockholders entitled to
receive the payment or distribution by (B) a fraction, the numerator of
which shall be the Current Market Price per share of Common Stock on such
record date less the then Fair Market Value as of such record date of the
cash, assets, evidences of indebtedness or securities so paid with respect
to one share of Common Stock, and the denominator of which shall be the
Current Market Price per share of Common Stock on such record date. Such
adjustment shall be made whenever any such payment is made, and shall
become effective retroactively immediately after such record date.
(iii) In case the Corporation shall issue shares of Common
Stock (or rights, warrants or other securities convertible into or
exchangeable for shares of Common Stock) (collectively, "Additional
Shares") after the Issue Date at a price per share (or having a conversion
price per share) less than the greater of (A) the Current Market Price per
share of Common Stock on the date preceding the earlier of the issuance or
public announcement of the issuance of such Additional Shares of Common
Stock and (B) the Conversion Price as of the date of issuance of such
shares (or, in the case of convertible or exchangeable securities, less
than the Current Market Price as of the date of issuance of the rights,
warrants or other securities in respect of which shares of Common Stock
were issued), then, and in each such case, the Conversion Price shall be
reduced to an amount determined by multiplying (A) the Conversion Price in
effect on the day immediately prior to such date by (B) a fraction, the
numerator of which shall be the sum of (1) the number of shares of Common
Stock Outstanding immediately prior to such sale or issue multiplied by the
greater of (a) the then applicable Conversion Price per share and (b) the
Current Market Price per share of Common Stock on the date preceding the
earlier of the issuance or public announcement of the issuance of such
Additional Shares of Common Stock (the greater of (a) and (b) above
hereinafter referred to as the "Adjustment Price") and (2) the aggregate
consideration receivable by the Corporation for the total number of shares
of Common Stock so issued (or into or for which the rights, warrants or
other convertible securities may convert or be exercisable), and the
denominator of which shall be the sum of (x) the total number of shares of
Common Stock Outstanding immediately prior to such sale or issue and (y)
the number of Additional Shares issued (or into or for which the rights,
warrants or convertible securities may be converted or exercised),
multiplied by the Adjustment Price. An adjustment made pursuant to this
clause (iii) shall be made on the next Business Day following the date on
which any such issuance is made and shall be effective retroactively to the
close of business on the date of such issuance. For purposes of this clause
(iii), the aggregate consideration receivable by the Corporation in
connection with the issuance of shares of Common Stock or of rights,
warrants or other securities convertible into shares of Common Stock shall
be deemed to be equal to the sum of the aggregate offering price (before
deduction of underwriting discounts or commissions and expenses payable to
third parties) of all such Common Stock, rights, warrants and convertible
securities plus the aggregate amount (as determined on the date of
issuance), if any, payable upon exercise or conversion of any such rights,
warrants and convertible securities into shares of Common Stock. If,
subsequent to the date of issuance of such right, warrants or other
convertible securities, the exercise or conversion price thereof is
reduced, such aggregate amount shall be recalculated and the Conversion
Price shall be adjusted retroactively to give effect to such reduction. On
the expiration of any option or the termination of any right to convert or
exchange any securities into Additional Shares, 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 (but taking into account other adjustments made following the
time of issuance of such options or securities) had such option or
security, to the extent outstanding immediately prior to such expiration or
termination, never been issued. If Common Stock is sold as a unit with
other securities, the aggregate consideration received for such Common
Stock shall be deemed to be net of the Fair Market Value of such other
securities. The issuance or reissuance of (i) any shares of Common Stock or
rights, warrants or other securities convertible into shares of Common
Stock (whether treasury shares or newly issued shares) (A) pursuant to a
dividend or distribution on, or subdivision, combination or
reclassification of, the Outstanding shares of Common Stock requiring an
adjustment in the Conversion Price pursuant to clause (i) of this clause
(e); (B) pursuant to any restricted stock or stock option plan or program
of the Corporation involving the grant of options or rights to acquire
shares of Common Stock after the date hereof to directors, officers and
employees of the Corporation and its Subsidiaries as provided in Section
5.13 of the Purchase Agreement; (C) pursuant to any option, warrant, right,
or convertible security outstanding as of the Issue Date, or (ii) the
Series A Preferred Stock and any shares of Common Stock issuable upon
conversion or exercise thereof, shall not be deemed to constitute an
issuance of Common Stock or convertible securities by the Corporation to
which this clause (iii) applies. No adjustment shall be made pursuant to
this clause (iii) in connection with any transaction to which clause (f)
applies.
(iv) The term "dividend," as used in this clause (e), shall
mean a dividend or other distribution upon the capital stock of the
Corporation.
(v) Anything in this clause (e) to the contrary
notwithstanding, the Corporation shall not be required to give effect to
any adjustment in the Conversion Price (x) if, in connection with any event
which would otherwise require an adjustment pursuant to this clause (e),
the holders of Series A Preferred Stock have received the dividend or
distribution to which such holders are entitled under Section 3 hereof or
(y) unless and until the net effect of one or more adjustments (each of
which shall be carried forward), determined as above provided, shall have
resulted in a change of the Conversion Price such that the number of shares
of Common Stock receivable upon conversion of each share of Series A
Preferred Stock would differ by at least one one-hundredth of one share of
Common Stock, and when the cumulative net effect of more than one
adjustment so determined shall be to change the Conversion Price by at
least one one-hundredth of one share of Common Stock, such change in
Conversion Price shall thereupon be given effect.
(vi) The certificate of any firm of independent public
accountants of recognized national standing selected by the Board of
Directors (which may be the firm of independent public accountants
regularly employed by the Corporation) shall be presumptively correct for
any computation made under this clause (e).
(vii) If the Corporation shall take a record of the holders
of its Common Stock for the purpose of entitling them to receive a dividend
or other distribution, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such
dividend or distribution, then thereafter no adjustment in the number of
shares of Common Stock issuable upon exercise of the right of conversion
granted by this clause (e) or in the Conversion Price then in effect shall
be required by reason of the taking of such record.
(viii) If any event occurs as to which the provisions of
this Section 9(e) are not strictly applicable or if strictly applicable
would not fairly protect the rights of the holders of the Series A
Preferred Stock in accordance with the essential intent and principles of
such provisions, the Board of Directors shall make an adjustment in the
application of such provisions, in accordance with such essential intent
and principles, so as to protect such rights of the holders of the Series A
Preferred Stock.
(f) Adjustment to Conversion Price for Reclassification and
Reorganization. In the case of any reclassification of the Common Stock,
any consolidation of the Corporation with, or merger with the Corporation
into, any other Person, any merger of another entity into the Corporation
(other than a merger that does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock
of the Corporation), any sale or transfer of all or substantially all of
the assets of the Corporation or any compulsory share exchange pursuant to
which share exchange the shares of Common Stock are converted into other
securities, cash or other property (each of the foregoing, a
"Transaction"), in addition to any rights of holders of shares of Series A
Preferred Stock pursuant to Section 6, each share of Series A Preferred
Stock then outstanding shall thereafter be convertible into, in lieu of the
Common Stock issuable upon such conversion prior to consummation of such
Transaction, the kind and amount of shares of stock and other securities
and property receivable (including cash) upon the consummation of such
Transaction by a holder of that number of shares of Common Stock into which
one share of Series A Preferred Stock was convertible immediately prior to
such Transaction. In case securities or property other than Common Stock
shall be issuable or deliverable upon conversion as aforesaid, then all
references in this Section 9 shall be deemed to apply, so far as
appropriate and nearly as may be, to such other securities or property. The
Corporation, the person formed by the consolidation or resulting from the
merger or which acquires such assets or which acquires the Corporation's
shares, as the case may be, shall make provisions in its certificate or
articles of incorporation or other constituent document to establish such
rights and such rights shall be clearly provided for in the definitive
transaction documents relating to such transaction. The certificate or
articles of incorporation or other constituent document shall provide for
adjustments, which, for events subsequent to the effective date of the
certificate or articles of incorporation or other constituent document,
shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 9. The provisions of this Section 9(f) shall
similarly apply to successive reclassifications, consolidations, mergers,
sales, transfers or share exchanges.
(g) Adjustment to Conversion Price for Redemption. In case the
Corporation shall purchase, redeem or otherwise acquire any shares of
Common Stock at a price per share greater than the Current Market Price per
share of such Common Stock on the date of such event, or in case the
Corporation shall purchase, redeem or otherwise acquire other securities
convertible into or exchangeable for Common Stock for a consideration per
share of Common Stock into which such security is convertible or
exchangeable greater than the Current Market Price per share of Common
Stock on the date of such event, then the Conversion Price in effect
immediately prior thereto shall be reduced to an amount determined by
multiplying (A) the Conversion Price in effect on the day immediately prior
to such date by (B) a fraction, the numerator of which shall be the
difference between (1) the number of shares of Common Stock Outstanding
immediately prior to such purchase, redemption or acquisition multiplied by
the then applicable Current Market Price per share and (2) the aggregate
consideration payable by the Corporation for the total number of shares of
Common Stock so purchased, redeemed or acquired (or, into or for which the
rights, warrants or other convertible securities may convert or be
exercisable), and the denominator of which shall be the difference between
(x) the total number of shares of Common Stock Outstanding immediately
prior to such event and (y) the number of shares so purchased, redeemed or
acquired, multiplied by the then applicable Current Market Price per share.
Such adjustment shall be made whenever such Common Stock is purchased,
redeemed or otherwise acquired by the Corporation, and shall become
effective immediately after such date.
(h) Notice of Record Date. In case at any time or from time to
time (i) the Corporation shall pay any stock dividend or make any other
non-cash distribution to the holders of its Common Stock, or offer for
subscription pro rata to the holders of its Common Stock any additional
shares of stock of any class or any other right, or (ii) there shall be any
capital reorganization or reclassification of the Common Stock of the
Corporation or consolidation or merger of the Corporation with or into
another corporation, or any sale or conveyance to another corporation of
the property of the Corporation as an entirety or substantially as an
entirety, or (iii) 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 at least 20 days' prior written
notice (the time of mailing of such notice shall be deemed to be the time
of giving thereof) to the registered holders of the Series A Preferred
Stock at the addresses of each as shown on the books of the Corporation
maintained by the Transfer Agent thereof of the date on which (A) a record
shall be taken for such stock dividend, distribution or subscription rights
or (B) such reorganization, reclassification, consolidation, merger, sale
or conveyance, dissolution, liquidation or winding up shall take place, as
the case may be; provided that, in the case of any Transaction to which
clause (f) applies the Corporation shall give at least 30 days' prior
written notice as aforesaid. Such notice shall also specify the date as of
which the holders of the Common Stock of record shall participate in said
dividend, distribution or subscription rights or shall be entitled to
exchange their Common Stock for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, sale or
conveyance or participate in such dissolution, liquidation or winding up,
as the case may be. Failure to give such notice shall not invalidate any
action so taken.
SECTION 10. REPORTS.
(a) Reports as to Adjustments. Upon any adjustment of the
Conversion Price then in effect and any increase or decrease in the number
of shares of Common Stock issuable upon the operation of the conversion
provisions set forth in Section 9, then, and in each such case, the
Corporation shall promptly deliver to the Transfer Agent of the Series A
Preferred Stock and Common Stock, a certificate signed by the President or
a Vice President and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the Corporation, setting forth in
reasonable detail the event requiring the adjustment and the method by
which such adjustment was calculated and specifying the Conversion Price
then in effect following such adjustment and the increased or decreased
number of shares issuable upon a conversion following such adjustment, and
shall set forth in reasonable detail the method of calculation of each and
a brief statement of the facts requiring such adjustment. Where
appropriate, such notice to holders of the Series A Preferred Stock may be
given in advance and included as part of the notice required under the
provisions of Section 9(i).
(b) Financial Reports. So long as any of shares of Series A
Preferred Stock is outstanding, in the event the Corporation is not
required to file quarterly and annual financial reports with the Securities
and Exchange Commission pursuant to Section 13 or Section 15(d) of the
Exchange Act, the Corporation will furnish the holders of the Series A
Preferred Stock with reports containing the same information as would be
required in such reports.
SECTION 11. CERTAIN COVENANTS.
Any registered holder of Series A Preferred Stock may proceed to
protect and enforce its rights and the rights of such holders by any
available remedy by proceeding at law or in equity to protect and enforce
any such rights, whether for the specific enforcement of any provision in
this Certificate of Designation or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
<PAGE>
IN WITNESS WHEREOF, the officers named below, acting for and on
behalf of ProMedCo Management Company have hereunto subscribed their names
on this ___ day of ________________.
PROMEDCO MANAGEMENT COMPANY
By:
----------------------------------
Name:
Title:
Attest:
By:
--------------------------
Name:
Title:
STOCKHOLDER VOTING AGREEMENT
STOCKHOLDER VOTING AGREEMENT, dated January 13, 2000 (this
"Agreement"), among ________________ ("Stockholder"), GS Capital Partners
III, L.P., GS Capital Partners III Offshore, L.P., Goldman, Sachs & Co.
Verwaltungs GMBH and Stone Street Fund 2000, LLC (collectively, the
"Purchaser").
WHEREAS, ProMedCo Management Company, a Delaware corporation (the
"Company"), and Purchaser, are contemporaneously herewith entering into a
Securities Purchase Agreement, dated as of the date hereof (the "Purchase
Agreement"), which provides, among other things, for the acquisition by
Purchaser of certain securities of the Company upon the terms and subject
to the conditions set forth therein;
WHEREAS, as a condition to its willingness to enter into the
Purchase Agreement, Purchaser has requested that Stockholder make certain
agreements with respect to the shares of Common Stock beneficially owned by
Stockholder and listed under Stockholder's name on the signature page
hereto (the "Stockholder Shares"), upon the terms and subject to the
conditions hereof; and
WHEREAS, in order to induce Purchaser to enter into the Purchase
Agreement, Stockholder is willing to make certain agreements with respect
to the Stockholder Shares.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereto agree as
follows:
1. Voting Agreements; Proxy.
------------------------
(a) For so long as this Agreement is in effect, in any meeting of
stockholders of the Company, however called, and in any action by consent
of the stockholders of the Company, Stockholder shall vote, or, if
applicable, give consents with respect to, all of the Stockholder Shares
(and any other shares of Common Stock over which Stockholder has voting
power) (collectively, "Shares") that are held on the record date applicable
thereto in favor of (i) the Purchase Agreement, (ii) the transactions
contemplated by the Purchase Agreement and (iii) any actions required in
furtherance thereof. Any such vote shall be cast or consent shall be given
in accordance with such procedures relating thereto as shall ensure that it
is duly counted for purposes of determining that a quorum is present and
for purposes of recording the results of such vote or consent.
Stockholder's execution and delivery of a proxy in accordance with Section
1(b) shall constitute full compliance with Stockholder's obligations
pursuant to this Section 1(a).
(b) Upon the written request of Purchaser, Stockholder, in
furtherance of the transactions contemplated hereby and by the Purchase
Agreement, and in order to secure the performance by Stockholder of its
duties under this Agreement, shall promptly execute, in accordance with the
provisions of Section 212 of the Delaware General Corporation Law, and
deliver to Purchaser an irrevocable proxy, substantially in the form
attached as Exhibit A hereto, and irrevocably appoint Purchaser or its
designees, with full power of substitution, its attorney and proxy to vote
or, if applicable, to give consent with respect to, all Shares with regard
to any of the matters referred to in Section 1(a) at any meeting of the
stockholders of the Company, however called, or in connection with any
action by written consent by the stockholders of the Company. Stockholder
acknowledges and agrees that (i) such proxy, if and when given, shall be
coupled with an interest, shall constitute, among other things, an
inducement for Purchaser to enter into the Purchase Agreement, shall be
irrevocable and shall not be terminated by operation of law or otherwise
upon the occurrence of any event, except as provided in Section 14 hereof,
and (ii) that no subsequent proxies with respect to the Shares shall be
given (and if given shall not be effective), with respect to any of the
matters referred to in Section 1(a).
2. Covenants. During the term of this Agreement, Stockholder
agrees not to: (i) sell, transfer, pledge, assign, hypothecate, encumber,
tender or otherwise dispose of, or enter into any contract with respect to
the sale, transfer, pledge, assignment, hypothecation, encumbrance, tender
or other disposition of, any Stockholder Shares; (ii) grant any proxies
with respect to any Shares, deposit any Shares into a voting trust or enter
into a voting or option agreement with respect to any Shares; (iii) take
any action, directly or indirectly through any of its affiliates (other
than the Company or any of its subsidiaries), which the Company is
prohibited from taking under Section 5.2 of the Purchase Agreement; or (iv)
take any action which would make any representation or warranty of
Stockholder herein untrue or incorrect or prevent, burden or materially
delay the consummation of the transactions contemplated by this Agreement.
3. Representations and Warranties of Stockholder. Stockholder
represents and warrants to Purchaser that:
(a) Capacity; No Violations. Stockholder has the legal capacity
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Stockholder, and constitutes a valid and binding agreement of Stockholder
enforceable against Stockholder in accordance with its terms and such
execution and delivery and performance by Stockholder of this Agreement
will not (i) conflict with, require a consent, waiver or approval under, or
result in a breach or default under, any of the terms of any contract,
commitment or other obligation to which Stockholder is a party or by which
Stockholder is bound; (ii) violate any order, writ, injunction, decree or
statute, or any law, rule or regulation applicable to Stockholder or the
Shares; or (iii) result in the creation of, or impose any obligation on
Stockholder to create, any Encumbrance upon the Shares.
(b) Shares. As of the date of this Agreement, Stockholder is the
record holder of, and has good and valid title to, the Shares free and
clear of all Encumbrances. The Shares are the only shares of any class of
capital stock of the Company which Stockholder has the right, power or
authority (sole or shared) to sell or vote, and Stockholder does not have
any right to acquire, nor is it the beneficial owner of, any other shares
of any class of capital stock of the Company or any securities convertible
into or exchangeable or (except for stock options) exercisable for any
shares of any class of capital stock of the Company. There are no options
or rights to acquire, or other contracts (including proxies, voting trusts
or voting agreements) relating to, the Shares to which Stockholder is a
party.
4. Adjustments; Additional Shares. In the event (i) of any stock
dividend, stock split, recapitalization, reclassification, combination or
exchange of Shares on, of or affecting the Shares, or (ii) Stockholder
shall become the beneficial owner of any additional Shares or other
securities entitling the holder thereof to vote or give consent with
respect to the matters set forth in Section 1(a) hereof, then the terms of
this Agreement shall apply to the Shares held by Stockholder immediately
following the effectiveness of the events described in clause (i) above or
Stockholder becoming the beneficial owner of the Shares or other
securities, as described in clause (ii) above, in each case as though they
were Shares hereunder.
5. Expenses. Each party hereto shall pay its own expenses
incurred in connection with this Agreement.
6. Specific Performance. Stockholder acknowledges and agrees that
if it fails to perform any of its obligations under this Agreement,
immediate and irreparable harm or injury would be caused to Purchaser for
which money damages would not be an adequate remedy. In such event,
Stockholder agrees that Purchaser shall have the right, in addition to any
other rights it may have, to specific performance of this Agreement.
Accordingly, if Purchaser should institute an action or proceeding seeking
specific enforcement of the provisions hereof, Stockholder hereby waives
the claim or defense that Purchaser has an adequate remedy at law and
hereby agrees not to assert in any such action or proceeding the claim or
defense that such a remedy at law exists. Stockholder further agrees to
waive any requirements for the securing or posting of any bond in
connection with obtaining any such equitable relief.
7. Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally recognized overnight courier or first class registered or
certified mail, return receipt requested, postage prepaid, addressed to
such party at the address set forth below or such other address as may
hereafter be designated in writing by such party to the other parties:
If to the Purchaser:
-------------------------
GS Capital Partners III, L.P.
c/o Goldman, Sachs & Co.
New York, New York 10004
Telecopy: (212) 357-5505
Attention: Mr. Sanjeev Mehra
Ben Adler, Esq.
with a copy to:
-------------------------
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Telecopy: (212) 859-8587
Attention: Robert C. Schwenkel, Esq.
if to Stockholder:
-------------------------
c/o ProMedCo Management Company
801 Cherry Street, Suite 1450
Fort Worth, Texas 76102
Facsimile: (817) 335-8321
Attention: H. Wayne Posey
Chief Executive Officer
with a copy to:
-------------------------
Dyer, Ellis & Joseph
600 New Hampshire, NW
Washington, DC 20037
Telecopy: (202) 944-3068
Attention: Michael Joseph, Esq.
8. Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties named herein and their respective
successors and assigns; provided, however, that each such successor in
interest or assign shall agree to be bound by the provisions of this
Agreement. Nothing in this Agreement, express or implied, is intended to
confer upon any person or entity other than Purchaser, Stockholder and
their respective successors and assigns, any rights or remedies under or by
reason of this Agreement.
9. Entire Agreement; Amendments. This Agreement contains the
entire agreement between Stockholder and Purchaser with respect to the
subject matter hereof and supersedes all prior and contemporaneous
agreements and understandings, oral or written, with respect to such
subject matter. This Agreement may not be changed, amended or modified
orally, but may be changed only by an agreement in writing signed by the
party against whom any waiver, change, amendment, modification or discharge
may be sought.
10. Assignment. No party to this Agreement may assign any of its
rights or obligations under this Agreement without the prior written
consent of the other party hereto, except that Purchaser may assign its
rights and obligations hereunder to any of its affiliates or direct or
indirect wholly owned subsidiaries, but no such transfer shall relieve
Purchaser of its obligations hereunder if such transferee does not perform
such obligations.
11. Defined Terms; Headings. Capitalized terms not otherwise
defined herein shall have the meaning ascribed to such terms in the
Purchase Agreement. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to
be a part of this Agreement.
12. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute
but one agreement.
13. Governing Law. This agreement shall be governed by and
construed in accordance with the laws of the state of New York without
giving effect to the principles of conflicts of law.
14. Termination. This Agreement shall terminate on the earlier of
(i) the date the Second Closing occurs under the Purchase Agreement or (ii)
the date of any termination of the obligations of the Company and Purchaser
to consummate the Second Closing pursuant to Section 7.1 of the Purchase
Agreement; provided, that the parties shall continue to be liable for any
breach of this Agreement following any such termination.
<PAGE>
IN WITNESS WHEREOF, Purchaser and Stockholder have caused this
Agreement to be duly executed and delivered on the day and year first above
written.
GS CAPITAL PARTNERS III, L.P.
By: GS ADVISORS III, L.P.,
its general partner
By: GS ADVISORS III, INC.,
its general partner
By:
-----------------------------
Name:
Title:
GS CAPITAL PARTNERS III OFFSHORE, L.P.
By: GS ADVISORS III (CAYMAN), L.P.,
its general partner
By: GS ADVISORS III, INC.,
its general partner
By:
-----------------------------
Name:
Title:
GOLDMAN, SACHS & CO. VERWALTUNGS GMBH
By:
----------------------------------
Name:
Title:
STONE STREET FUND 2000, LLC
By:
----------------------------------
Name:
Title:
STOCKHOLDER
By:
----------------------------------
Number of Shares Subject to this Agreement:
<PAGE>
EXHIBIT A
IRREVOCABLE PROXY
In order to secure the performance of the duties of the
undersigned pursuant to the Stockholder Voting Agreement, dated as of
January __, 2000 (the "Voting Agreement"), among the undersigned, GS
Capital Partners III, L.P., GS Capital Partners III Offshore, L.P.,
Goldman, Sachs & Co. Verwaltungs GMBH and Stone Street Fund 2000, LLC
(collectively, the "Purchaser"), a copy of such agreement being attached
hereto and incorporated by reference herein, the undersigned hereby
irrevocably appoints ______________________ and ___________________, and
each of them, attorneys, agents and proxies, with full power of
substitution, for the undersigned and in the name, place and stead of the
undersigned, to vote or, if applicable, to give written consent, in such
manner as each such attorney, agent and proxy or his substitute shall in
his sole discretion deem proper to record such vote or consent in the
manner set forth in Section 1(a) of the Voting Agreement with respect to
all shares of Common Stock, par value $.01 per share (the "Shares"), of
ProMedCo Management Company, a Delaware corporation (the "Company"), (i)
which the undersigned is or may be entitled to vote at any meeting of the
Company held after the date hereof, whether annual or special and whether
or not an adjourned meeting, or, if applicable, with respect to which the
undersigned is or may be entitled to give written consent in connection
with any action by written consent by the stockholders of the Company to
give written consent with respect thereto. This Proxy is coupled with an
interest, shall be irrevocable and binding on any successor in interest of
the undersigned and shall not be terminated by operation of law or
otherwise upon the occurrence of any event (except as provided in Section
14 of the Voting Agreement), including, without limitation, the death or
incapacity of the undersigned. This Proxy shall operate to revoke any prior
proxy as to the Shares heretofore granted by the undersigned. This Proxy
shall terminate upon the date on which the Voting Agreement shall terminate
in accordance with Section 14 of the Voting Agreement. This Proxy has been
executed in accordance with Section 212 of the Delaware General Corporation
Law.
Dated:
---------------------
--------------------------------
AMENDMENT NO. 1 TO
RIGHTS AGREEMENT
----------------
Amendment No. 1 (this "Amendment"), dated as of January 13, 2000,
to the Rights Agreement, dated as of February 18, 1997 (the "Rights
Agreement"), between ProMedCo Management Company, a Delaware corporation
(the "Company") and Harris Trust and Savings Bank, an Illinois Banking
Corporation (the "Rights Agent"), at the direction of the Company.
WHEREAS, pursuant to Section 27 of the Rights Agreement, the
Company and the Rights Agent may from time to time supplement or amend the
Rights Agreement in accordance with Section 27 thereof;
WHEREAS, all acts and things necessary to make this Amendment
valid and enforceable have been performed and done; and
WHEREAS, on December 27, 1999 the Board of Directors resolved
to adopt this Amendment No. 1 to Rights Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, that the Rights Agreement is hereby amended as
follows:
1. Section 1(a) of the Rights Agreement is hereby amended to read
in its entirety as follows:
"Acquiring Person" shall mean, subject to the next sentence,
any Person (as such term is hereinafter defined) who or which,
together with any Affiliates and Associates of such Person, shall
be the Beneficial Owner (as such term is hereinafter defined) of
15% or more of the then outstanding Common Shares.
Notwithstanding the foregoing, (A) the term "Acquiring Person"
shall not include (i) the Company, (ii) any Subsidiaries of the
Company, (iii) any employee benefit plan of the Company or of any
Subsidiaries of the Company, (iv) any Person or entity organized,
appointed or established by the Company for or pursuant to the
terms of any such plan, or (v) any of the Goldman Stockholders
(as such term is hereinafter defined), unless such Goldman
Stockholders subsequently become the Beneficial Owner of more
than the Grandfathered Amount of Common Shares and (B) no Person
shall be deemed to be an Acquiring Person, either (x) as a result
of the acquisition of Common Shares by the Company which, by
reducing the number of Common Shares outstanding, increases the
proportional number of Common Shares beneficially owned by such
Person together with all Affiliates and Associates of such
Person; except that if (1) a Person would become an Acquiring
Person (but for the operation of this sub clause (x)) as a result
of the acquisition of Common Shares by the Company and (2) after
such share acquisition by the Company, such Person, or an
Affiliate or Associate of such Person, becomes the Beneficial
Owner of any additional Common Shares, then such Person shall be
deemed an Acquiring Person, or (y) if (1) within 8 days after
such Person would otherwise have become an Acquiring Person (but
for the operation of this sub-clause (y)), such Person notifies
the Board of Directors that such Person did so inadvertently and
(2) within 2 days after such notification, such Person divests a
sufficient number of Common Shares so that such Person is the
Beneficial Owner of less than 15% of the outstanding Common
Shares following such divestiture.
2. Section 1(f) of the Rights Agreement is hereby amended to read
in its entirety as follows:
"Common Shares" when used with reference to the Company shall
mean the shares of Common Stock, par value $0.01 per share, of the Company
and securities convertible into or exchangeable for shares of such Common
Stock. "Common Shares" when used with reference to any Person other than
the Company shall mean the capital stock (or equity interest) with the
greatest voting power of such other Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which ultimately
control such first-mentioned Person.
3. The following definitions are hereby added to Section 1:
"Goldman Stockholders" shall mean each of GS Capital
Partners III, L.P., GS Capital Partners III Offshore, L.P.,
Goldman, Sachs & Co. Verwaltungs Gmbh, Stone Street Fund 2000,
LLC and their respective Affiliates, Associates, successors and
assigns and each of their respective, partners, stockholders,
members, officers and directors.
"Grandfathered Amount" shall mean, with respect to the
Goldman Stockholders, as of any date, an amount equal to the sum
of (i) all Common Shares of the Company beneficially owned by the
Goldman Stockholders as of January 13, 2000, (ii) all Common
Shares the Goldman Stockholders become the Beneficial Owner of
after January 13, 2000, pursuant to, and in accordance with the
terms of, the Securities Purchase Agreement (the "Securities
Purchase Agreement"), dated as of January 13, 2000, by and among
the Company and the Investors (as defined therein) and the other
Transaction Documents (as defined therein) entered into in
connection therewith, (iii) Ordinary Course Broker Dealer Shares,
and (iv) an additional 1,400,000 Common Shares (other than
Ordinary Broker Dealer Shares).
"Ordinary Course Broker Dealer Shares" shall mean Common
Shares, the beneficial ownership of which is acquired in
connection with the activities of a broker or dealer registered
under Section 15 of the Exchange Act, including, but not limited
to, the acquisitions of beneficial ownership of such shares as a
result of any market-making or underwriting activities (including
any shares acquired for the investment account of a broker or
dealer in connection with such underwriting activities), or the
acquisition of Common Shares as a result of the exercise of
investment or voting discretion authority with respect to any of
its customer accounts, or the acquisition in good faith of such
shares in connection with a debt previously contracted.
4. Section 27 of the Rights Agreement is hereby amended to read
in its entirety as follows:
The Company may from time to time supplement or amend this
Agreement without the approval of any holders of Right
Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective
or inconsistent with any other provisions herein, or to make any
other provisions with respect to the Rights which the Company may
deem necessary or desirable, any such supplement or amendment to
be evidenced by a writing signed by the Company and the Rights
Agent; provided, however, that from and after such time as any
Person becomes an Acquiring Person, this Agreement shall not be
amended in any manner which would adversely affect the interests
of the holders of Rights (other than an Acquiring Person or an
Affiliate or Associate of such person). Without limiting the
foregoing, the Company may at any time prior to such time as any
Person becomes an Acquiring Person amend this Agreement to lower
the thresholds in Sections 1(a) and 3 hereof to not less than the
greater of (x) the sum of .001% and the largest percentage of the
outstanding Common Shares then known by the Company to be
beneficially owned by any Person (other than the Company, or any
Subsidiary of the Company, or any entity holding Common Shares
for or pursuant to the terms of any such plan) and (y) 10%.
Notwithstanding anything in this Agreement to the contrary, (i)
no supplement or amendment that changes the rights and duties of
the Rights Agent under this Agreement shall be effective without
the written consent of the Rights Agent and (ii) the Company
shall not amend, modify or supplement any provision of this
Agreement which adversely affects the rights and benefits of any
Goldman Stockholder under any such provision in any such case
without the prior written consent of the Goldman Stockholders. It
is understood and agreed that the Goldman Stockholders are each a
third party beneficiary to this Rights Agreement and may enforce
the provisions of this Section as if it were a party to the
Rights Agreement.
5. The Rights Agreement shall not otherwise be supplemented or
amended by virtue of this Amendment, but shall remain in full force and
effect. This Amendment may be executed in one or more counterparts, all of
which shall be considered one and the same amendment and each of which
shall be deemed an original.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Amendment to
be duly executed, all on the day and year first above written.
Attest: PROMEDCO MANAGEMENT COMPANY
By: /s/ Deborah Johnson By: /s/ H. Wayne Posey
------------------------ -----------------------------
Name: Deborah Johnson Name: H. Wayne Posey
Title: Senior Vice President Title: President and CEO
Attest: HARRIS TRUST AND SAVINGS BANK,
as Rights Agent
By: /s/ Jill Wessell By: /s/ Mark Asbury
------------------------ -----------------------------
Name: Jill Wessell Name: Mark Asbury
Title: Vice President Title: Vice President
January 13, 2000
GS Capital Partners III, L.P.
GS Capital Partners III Offshore, L.P.
Goldman, Sachs & Co. Verwaltungs GMBH
c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Re: Sale of ProMedCo Management Company Securities
----------------------------------------------
Ladies and Gentlemen:
The undersigned is a holder of securities of ProMedCo Management
Company, a Delaware corporation (the "Company"), and understands that the
Company and GS Capital Partners III, L.P., GS Capital Partners III
Offshore, L.P. and Goldman, Sachs & Co. Verwaltungs GMBH (collectively, the
"Purchaser") are contemporaneously herewith entering into a Securities
Purchase Agreement, dated as of the date hereof (the "Purchase Agreement"),
which provides, among other things, for the acquisition by the Purchaser of
certain securities of the Company (the "Acquisition") upon the terms and
subject to the conditions set forth therein. Capitalized terms used but not
defined herein shall have the meanings ascribed to such terms in the
Purchase Agreement.
To facilitate the Acquisition and as a material inducement for
the Purchaser to enter into the Purchase Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned agrees that subject the next paragraph
hereof, (i) during a period of six months from the date hereof (the
"Initial Lock-up Period"), the undersigned will not, directly or
indirectly, (x) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant for the sale of, or otherwise dispose of or
transfer (collectively, "Transfer") any shares of the Company's Common
Stock, par value $0.01 per share (the "Common Stock") or any securities
convertible into or exchangeable or exercisable for Common Stock, owned by
the undersigned or with respect to which the undersigned has the power of
disposition as of the date hereof, or (y) enter into any swap or any other
agreement or any transaction that Transfers, in whole or in part, directly
or indirectly, the economic consequence of the undersigned's ownership of
the Common Stock as of the date hereof, whether any such swap or
transaction is to be settled by delivery of Common Stock or other
securities, in cash or otherwise, and (ii) for a period of eighteen months
following the end of the Initial Lock-up Period, the undersigned will not,
directly or indirectly, (x) Transfer greater than 25% of the undersigned's
shares of Common Stock or any securities convertible into or exchangeable
or exercisable for Common Stock, owned by the undersigned or with respect
to which the undersigned has the power of disposition as of the date
hereof, or (y) enter into any swap or any other agreement or any
transaction that Transfers, in whole or in part, directly or indirectly,
greater than 25% of the economic consequence of the undersigned's ownership
of the Common Stock as of the date hereof, whether any such swap or
transaction is to be settled by delivery of Common Stock or other
securities, in cash or otherwise.
Notwithstanding the foregoing, the undersigned may Transfer any
and all of its shares of Common Stock (i) as a bona fide gift or gifts,
provided that the donee or donees thereof agree to be bound in writing by
the restrictions set forth herein, (ii) to any trust for the direct or
indirect benefit of the undersigned or the immediate family of the
undersigned, provided that the trustee of the trust agrees to be bound in
writing by the restrictions set forth herein, and provided further that any
such Transfer shall not involve a disposition for value, (iii) with the
prior written consent of the Purchaser, or (iv) at any time after the
Second Closing Date and following the occurrence of a Purchaser Transfer
Event (as defined below), Transfer shares of Common Stock in an amount up
to the Released Amount (as defined below). For purposes of subclause (iv)
(A) a "Purchaser Transfer Event" shall be deemed to have occurred on the
date the Purchaser Transfers in excess of 25% of the shares of Common Stock
beneficially owned by the Purchaser as of the Second Closing Date to a
Person who or which is not an Affiliate of the Purchaser and (B) the
"Released Amount", as at any date, shall mean a number of shares of Common
Stock equal to the number of shares of Common Stock beneficially owned by
the undersigned in the date hereof multiplied by a fraction, the numerator
of which is the number of shares of Common Stock sold or transferred by the
Purchaser prior to such date in excess of 25% of the shares of Common Stock
beneficially owned by the Purchaser as of the Second Closing and the
denominator of which is the number of shares of Common Stock equal to 75%
of the shares of Common Stock beneficially owned by the Purchaser as of the
Second Closing (as such numbers may be adjusted for stock splits, reverse
stock splits, dividends paid in Common Stock, reclassifications of the
Common Stock, and other similar events). For purposes hereof, "immediate
family" shall mean any relationship by blood, marriage or adoption, not
more remote than first cousin.
The undersigned understands that the Company and the Purchaser
are relying upon this letter in proceeding toward consummation of the
Acquisition. The undersigned further understands that this letter is
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors, and assigns.
<PAGE>
This letter shall terminate on the earlier to occur of (i) the
Second Closing Termination Date and (ii) the date on which the Purchaser
owns less than 10.0% of the number of shares of Common Stock beneficially
owned by the Purchaser and its affiliates as of the Second Closing, as such
number may be adjusted for stock splits, reverse stock splits, dividends
paid in Common Stock, reclassifications of the Common Stock, and other
similar events.
Very truly yours,
---------------------------------
Exact Name of Shareholder
---------------------------------
Authorized Signature
THE SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT, OR THE SECURITIES LAWS OF ANY
JURISDICTION. SUCH SECURITIES MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED, ASSIGNED, ENCUMBERED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (I) A REGISTRATION
STATEMENT WITH RESPECT TO SUCH SECURITIES THAT IS EFFECTIVE UNDER
SUCH ACT OR APPLICABLE STATE SECURITIES LAW, OR (II) ANY
EXEMPTION FROM REGISTRATION UNDER SUCH ACT, OR APPLICABLE STATE
SECURITIES LAW, RELATING TO THE DISPOSITION OF SECURITIES,
INCLUDING RULE 144.
NO TRANSFER OF THIS NOTE SHALL BE VALID UNLESS THE HOLDER THEREOF
PROVIDES WRITTEN NOTICE TO THE COMPANY OF SUCH TRANSFER, WHICH
NOTICE SHALL INCLUDE THE DATE OF SUCH TRANSFER AND THE IDENTITY
OF THE TRANSFEREE.
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT. FOR
INFORMATION REGARDING THE ISSUE PRICE OF THE NOTE, THE AMOUNT OF
ORIGINAL ISSUE DISCOUNT ON THE NOTE, THE ISSUE DATE OF THE NOTE
OR THE YIELD TO MATURITY OF THE NOTE, CONTACT ROBERT SMITH, CHIEF
FINANCIAL OFFICER OF THE COMPANY, AT 801 CHERRY STREET, SUITE
1450, FORT WORTH, TEXAS 76102.
No. [___________] $__________
SENIOR SUBORDINATED NOTE DUE 2005
Dated as of January 13, 2000
PROMEDCO MANAGEMENT COMPANY, a Delaware corporation (herein called the
"Company", which term includes any successor Person under the Notes), for
value received, hereby promises to pay to __________________, or registered
assigns, the principal sum of _____________________ Dollars, together with
accrued and unpaid interest plus Special Interest, if any, thereon on
January 13, 2005 (the "Stated Maturity Date").
This Note is one of a duly authorized issue of securities of the
Company designated as Senior Subordinated Notes due 2005 (including any PIK
Notes issued as interest on the Notes as provided herein, the "Notes"),
issued pursuant to the Securities Purchase Agreement, dated as of January
13, 2000 (the "Securities Purchase Agreement"), by and among the Company,
GS CAPITAL PARTNERS III, L.P., a Delaware limited partnership ("GSCP"), and
certain affiliates of GSCP set forth on the signature page thereto (the
"GSCP Affiliates", and collectively with GSCP and including their
respective successors and permitted assigns, the "Purchasers", and each
individually a "Purchaser").
SECTION ONE
THE NOTES
1.1. Payment of Interest. The Company promises to pay interest on the
unpaid principal balance of this Note, including accrued and unpaid
interest thereon, as follows:
(a) from January 13, 2000 until May 15, 2000, interest on this
Note shall accrue at the rate of 12.0% per annum and shall be paid in
arrears on May 15, 2000 (the "Initial Interest Payment"). Two-thirds of
such interest shall be paid by the Company to the Holder in cash and
one-third of such interest shall be paid by the Company to the Holder
through the issuance of an additional Note (which shall have terms
identical to the Notes initially issued under the Securities Purchase
Agreement except as to the date of issue), dated as of May 15, 2000, in an
aggregate principal amount equal to the portion of the interest payment not
being paid in cash (such additional Notes sometimes also referred to as
"PIK Notes");
(b) from May 15, 2000 until the Stated Maturity Date, interest on
this Note shall accrue at the rate of 14.0% per annum and shall be paid
semiannually in arrears on November 15 and May 15 of each year (the
"Interest Payment Dates"), commencing November 15, 2000. Four-sevenths of
any interest payment made after May 15, 2000 shall be paid by the Company
to the Holder in cash and three-sevenths shall be paid by the Company to
the Holder through the issuance of PIK Notes, each dated as of such
Interest Payment Date, in an aggregate principal amount equal to the
portion of the interest payment not being paid in cash;
(c) if a Registration Default shall have occurred, then the
Company shall pay, in addition to the interest provided for above, cash
interest on the principal amount of this Note ("Special Interest") to the
Holder hereof in an amount equal to 0.5% per annum, which amount shall
increase to 1.0% per annum after the first 90-day period following the
occurrence of the first Registration Default, for the period from and
including the date of occurrence of the first Registration Default until
such time as no Registration Default is in effect (after which such Special
Interest for period after the time no Registration Default is in effect
shall cease to be payable). Accrued Special Interest shall be paid
semi-annually on the Interest Payment Dates. Upon the issuance of an
exchange note in exchange for this Note (in accordance with the provisions
of Section 2.3), any accrued and unpaid interest (including Special
Interest) on this Note shall cease to be payable to the Holder hereof but
such accrued and unpaid interest (including Special Interest) shall be
payable on the next Interest Payment Date for such exchange note to the
Holder thereof on the related Regular Record Date. All references to
interest in this Note shall include Special Interest whether or not
specifically stated;
(d) notwithstanding the foregoing, to the extent that the payment
of such interest shall be legally enforceable, any principal of, or premium
or installment of interest or Special Interest on, this Note which is
overdue shall bear interest at the rate of 15% per annum from the date such
amounts are due until they are paid or made available for payment, and such
interest shall be payable in cash on demand; and
(e) interest payments on this Note pursuant to clauses (a), (b),
(c) and (d) shall be based on a 360-day year of twelve 30-day months.
1.2. Method of Payment. The Company shall pay the Initial Interest
Payment to the Persons who are registered holders of Notes at the close of
business on May 15, 2000, and the Company shall pay all other interest
payments on the Notes to the Persons who are registered holders of Notes at
the close of business on the May 15 or November 15 next preceding the
interest payment date beginning with November 15, 2000 even if Notes are
canceled after the record date and on or before the Interest Payment Date
(the "Regular Record Dates"). Holders must surrender Notes to the Company
or the paying agent if the Company has appointed one (the "Paying Agent")
and notified the Holders of the Notes to collect principal payments. The
Company shall pay the principal and the cash portion of any interest in
money of the United States of America that at the time of payment is legal
tender for payment of public and private debts. The Company will make all
payments payable in cash in respect of a Note (including principal and
interest), by mailing a check to the registered address of each Holder
thereof; provided, however, that payments on the Notes shall instead be
made by wire transfer to a U.S. dollar account maintained by the payee with
a bank in the United States if such Holder elects payment by wire transfer
by giving written notice to the Company to such effect designating such
account no later than 5 days immediately preceding the relevant due date
for payment (or such other date as the Company may accept in its
discretion). The Company will make all payments payable in PIK Notes by
promptly mailing such Notes to the registered address of each Holder
entitled to the PIK Notes.
1.3. Registration, Registration of Transfer and Exchange. The Company
shall maintain a register (the "Security Register") for the registration or
transfer of the Notes. The name and address of the Holder of each Note,
records of any transfers of the Notes and the name and address of any
transferee of a Note shall be entered in the Security Register and the
Company shall, promptly upon receipt thereof, update the Security Register
to reflect all information received from a Holder. There shall be no more
than one Holder for each Note, including all beneficial interests therein.
No transfer of any Note shall be valid unless the Holder thereof provides
written notice to the Company of such transfer, which notice shall include
the date of such transfer and the identity of the transferee. Upon
surrender for registration of transfer of any Note at the office or agency
of the Company, the Company shall execute and deliver, in the name of the
designated transferee or transferees, one or more new Notes, of any
authorized denominations and like aggregate principal amount. At the option
of the Holder, Notes may be exchanged for other Notes, of any authorized
denominations and of like aggregate principal amount, upon surrender of the
Notes to be exchanged at such office or agency. Whenever any Notes are so
surrendered for exchange, the Company shall execute and deliver the Notes
which the Holder making the exchange is entitled to receive. The registered
owner of Notes shall be treated as the owner of the Notes for all purposes
hereunder, including, without limitation, the right to receive payments of
principal and interest, and the Company shall not be affected by any notice
or knowledge to the contrary.
1.4. Mutilated, Destroyed, Lost and Stolen Notes. If any mutilated
Note is surrendered to the Company, the Company shall execute and deliver
in exchange therefor new Notes of the same principal amount and bearing a
number not contemporaneously outstanding. If there shall be delivered to
the Company (a) evidence to its satisfaction of the destruction, loss or
theft of any Note and (b) such security or indemnity as may be required by
then to save each of it and any agent harmless, then, in the absence of
notice that such Note has been acquired by a bona fide purchaser, the
Company shall execute and deliver, in lieu of any such destroyed, lost or
stolen Note, a new Note of a like principal amount and bearing a number not
contemporaneously outstanding. Every new Note issued pursuant to this
Section in lieu of any destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Note equally and
proportionately with any and all other Notes duly issued hereunder.
1.5. Cancellation. All Notes surrendered for payment, redemption,
registration of transfer or exchange shall, if surrendered to any Person
other than the Company, be delivered to the Company and shall be promptly
canceled by it. The Company shall cancel any Notes previously issued and
delivered hereunder which the Company may have reacquired.
1.6. Home Office Payment. So long as any Purchaser or its nominee
shall be the holder of any Note, and notwithstanding anything contained in
the Notes to the contrary, the Company will pay all sums becoming due on
such Note for principal, premium, if any, and interest by such method and
at such address as such Purchaser shall have from time to time specified to
the Company in writing for such purpose, without the presentation or
surrender of such Note or the making of any notation thereon, except that
upon written request of the Company made concurrently with or reasonably
promptly after payment or prepayment in full of any Note, such Purchaser
shall surrender such Note for cancellation reasonably promptly after any
such request, to the Company at its principal executive office. The Company
will afford the benefits of this Section 1.6 to any Institutional Investor
that is the direct or indirect transferee of any Note purchased by such
Purchaser under the Securities Purchase Agreement and that has made the
same agreement relating to such Note as such Purchaser made in this Section
1.6.
SECTION TWO
AFFIRMATIVE COVENANTS
The Company covenants and agrees with each Holder that until the
principal amount of (and premium, if any, on) all the Notes, and all
interest, Special Interest and other obligations hereunder in respect
thereof, shall have been paid in full:
2.1. Informational Covenants. (a) The Company shall deliver to each
Purchaser (for so long as such Purchaser holds any Notes) and each
Subsequent Purchaser that is an Institutional Investor: (i) the financial
statements and other information required to be delivered by the Company to
the Agent and the Lenders pursuant to Section 6.1 of the Credit Agreement
as in effect on the date hereof whether or not so delivered no later than
the times such financial statements and other information is furnished or
required to be furnished under such Section or otherwise (including,
without limitation, all certificates thereunder); provided, however, that
if the Company is then subject to the reporting requirements under Section
13 or Section 15(d) of the Exchange Act, the delivery by the Company to
such Purchaser or Subsequent Purchaser that is an Institutional Investor of
a Quarterly Report on Form 10-Q, of an Annual Report on Form 10-K or
current reports on Form 8-K or any successor forms within the time periods
above described shall satisfy the requirements of this clause (i), (ii)
subject to Section 8.2, the financial and other information, certificates
and notices required to be delivered by the Company to the Agent and the
Lenders pursuant to paragraphs (a) (and such auditors' certificate(s) shall
be addressed to the Holders of the Notes and cover compliance with and
Defaults or Events of Default under the Notes rather than the Credit
Agreement), (d), (e), (f) and (g) of Section 6.2 and Section 6.7 of the
Credit Agreement as in effect on the date hereof whether or not so
delivered (or any additional information delivered to any agent or lenders
under a credit facility or other agreement) no later than the times such
information, certificate or notice is furnished or required to be furnished
under such Sections or otherwise (including, without limitation, all
certificates and notices thereunder), (iii) within 100 days after the end
of the fiscal year of the Company and within 50 days after the end of each
of the first three quarterly periods of each fiscal year of the Company, a
compliance certificate signed by a Responsible Officer (x) stating that, to
the best of such officer's knowledge, no Default or Event of Default
exists, or if any Default or Event of Default does exist, specifying the
nature and extent thereof and what action the Company proposes to take with
respect thereto, and (y) setting forth in reasonable detail the
calculations required to determine the Total Debt to EBITDA Ratio, and (iv)
promptly, such additional financial and other information as each Purchaser
or Subsequent Purchaser that is an Institutional Investor may from time to
time reasonably request.
(b) As soon as possible and in any event within five days after
the occurrence thereof, the Company shall give notice to the Holders of the
Notes of any Default or Event of Default.
2.2. Additional Covenants. The Company agrees that it will perform,
comply with and be bound by the agreements, covenants and obligations
contained in Sections 6.4 (Conduct of Business and Maintenance of
Existence), 6.5 (Maintenance of Property; Insurance), and 6.11 (Year 2000
Compliance) of the Credit Agreement as in effect on the date hereof, and
such Sections are hereby incorporated by reference herein, provided,
however, that for purposes of this Section 2.2:
(a) all references therein to the "Borrower" shall be deemed to
be references to "the Company";
(b) all references therein to the "Lender" or "Lenders" or the
"Agent" shall be deemed to be references to the "Holder" or "Holders";
(c) all references therein to the "Closing Date" shall be deemed
to be references to "the date hereof"; and
(d) the definitions of "Affiliated Providers," "Contractual
Obligations," "Material Adverse Effect," "Requirements of Law," and "Year
2000 Compliant" of the Credit Agreement as in effect on the date hereof are
incorporated by reference.
2.3. Preparation of Indenture; Registration Rights; Cooperation.
----------------------------------------------------------
At any time after the 90th day following the Second Closing
Termination Date, upon the request of Holders holding Notes in an aggregate
principal amount of $4.0 million or more, the Company will at its expense,
as promptly as is reasonably possible:
(a) Execute and deliver to a bank or trust company satisfactory
to the majority of the Holders making the request an indenture (which shall
be in such form (other than with respect to covenants and events of default
and other matters covered hereby) customarily entered into by the
Purchasers and their affiliates in connection with securities transactions
similar to the purchase of the Notes) providing for the issuance of, and,
subject to Section 2.3(b) and (c), will issue thereunder and deliver to the
Holders in exchange for the Notes, a principal amount of debentures (the
"Debentures") (in registered form) equal to the unpaid principal amount of
the Notes and in such denominations as the Holders may specify. Such
indenture and such Debentures shall, insofar as may be appropriate,
respectively constitute the same Indebtedness as the Notes and embody the
substance of all of the terms, covenants, conditions and provisions of the
Notes, together with all customary provisions included in indentures
related to, among other things, trustee duties and indemnities and
informational requirements, and shall be in form satisfactory to the
Holders and to their counsel. Such indenture shall comply with the Trust
Indenture Act of 1939 (the "1939 Act"), as then in effect and be qualified
under the 1939 Act if required;
(b) enter into an Exchange and Registration Rights Agreement
(which shall be in such form customarily entered into by the Purchasers and
their affiliates in securities transactions similar to the purchase of the
Notes) with the Holders with respect to the Notes (the "Exchange and
Registration Rights Agreement"), pursuant to which the Company will agree
to file with the Commission an exchange offer registration statement
relating to an exchange of the Notes for the Debentures on the appropriate
form under the Securities Act within 30 days after a request by such
Holders and use its best efforts to cause the registration statement to be
effective within 90 days after filing and cause the exchange offer to be
consummated within 30 days after the effectiveness of the registration
statement. Upon the effectiveness of such exchange offer registration
statement, the Company will offer to the Holders of the Notes pursuant to
the exchange offer who are able to make certain representations the
opportunity to exchange their Notes for such Debentures. The Exchange and
Registration Rights Agreement will also provide that if (i) the Company is
not required to file the exchange offer registration statement or permitted
to consummate the exchange offer because the exchange offer is not
permitted by applicable law or Commission policy, (ii) any holder of Notes
notifies the Company within the specified time period that (A) it is
prohibited by law or Commission policy from participating in the exchange
offer or (B) that it may not resell the Debentures acquired by it in the
exchange offer to the public without delivering a prospectus and the
prospectus contained in the exchange offer registration statement is not
appropriate or available for such resales or (C) that it is a broker-dealer
and owns Notes acquired directly from the Company or an affiliate of the
Company, or (iii) upon the request of any Holder, the Company will file
with the Commission a shelf registration statement pursuant to Rule 415
under the Securities Act to cover resales of the Notes by the Holders who
satisfy certain conditions relating to the provision of information in
connection with the shelf registration statement. The Company will use its
best efforts to cause the applicable registration statement to be filed
within 30 days after the requirement to file arises and be declared
effective as promptly as possible by the Commission but no later than 90
days after filing; and
(c) pursuant to the Exchange and Registration Rights Agreement,
(i) file an exchange offer registration statement and/or a prospectus with
the Commission on or prior to 30 days after the date of such request by
such Holders, (ii) use its best efforts to have the exchange offer
registration statement declared effective and a final receipt issued for
the prospectus by the Commission on or prior to 90 days after the date of
such request by such Holder, (iii) unless the exchange offer would not be
permitted by applicable law or Commission policy, commence the exchange
offer and use its best efforts to issue on or prior to 30 business days
after the date on which the exchange offer registration statement was
declared effective by the Commission and the final receipt for the
prospectus was issued, Debentures in exchange for all Notes tendered prior
thereto in the exchange offer and (iv) if obligated to file the shelf
registration statement, file the shelf registration statement with the
Commission on or prior to 30 days after such filing obligation arises and
to cause the shelf registration to be declared effective by the Commission
on or prior to 90 days after such obligation arises.
(d) in connection with a resale pursuant to Rule 144A, Regulation
S or other exemption from registration under the Securities Act (the
"Private Placement") of the Notes prepare as promptly as practicable an
offering memorandum or circular with respect to the Notes (the "Offering
Memorandum," which term shall be deemed to include any preliminary or final
Offering Memorandum related to the Notes), with such changes as such
Holders may reasonably request. The term "Offering Memorandum" used herein
shall include all information incorporated by reference into the Offering
Memorandum. If requested by such Holders, a substantially finalized draft
of the Offering Memorandum shall be made available to such Holders promptly
after the 90th day following the Second Closing Termination Date. The
Company shall thereafter update, revise and/or supplement the Offering
Memorandum to comply with applicable Law and as reasonably requested by the
Holders to enable the Holders or any Affiliates of the Holders to market
the Notes to potential investors and for the Offering Memorandum to comply
with applicable Requirements of Law. The Company shall use its best efforts
to qualify the Notes for offering and sale under the applicable securities
or blue sky laws of such jurisdictions as the Holders reasonably request.
In connection with the Private Placement, at the request of any Holder of
Notes, the Company shall enter into a Private Placement Agreement with
respect to the Notes, containing such terms as shall be customary for
transactions of the type contemplated by the Private Placement, including
customary indemnification and representations and warranties, and agree to
deliver all opinions and comfort letters reasonably requested by the
Holders or the purchasers of the Notes.
Any breach of any of the provisions of clauses (b), (c) and (d)
of this Section 2.3 or any "Registration Default" under the Exchange and
Registration Rights Agreement shall constitute a "Registration Default"
hereunder.
Notwithstanding any provision to the contrary in this Section
2.3, the Company shall not be required (i) to file more than one exchange
offer registration statement and one shelf registration statement in
accordance with clauses (b) and (c) above, (ii) to update, revise and/or
supplement the Offering Memorandum, or enter into more than two Private
Placement Agreements, after the Holders of the Notes have requested two
Offering Memorandums and have completed two Private Placements in
accordance with clause (d) above.
2.4. Cooperation. (a) In connection with the preparation of the
Offering Memorandum and during any period that the Notes are marketed
pursuant thereto, the Company shall provide to any placement agent or
underwriter participating in any Private Placement such information as is
customarily provided to such persons in transactions of the type
contemplated by the Private Placement.
(b) The Company shall take all other actions as the Holders, or
the placement agents or underwriters participating in such offering and
sale may reasonably request in order to expedite or facilitate such
offering and sale of the Notes, including providing reasonable availability
of appropriate members of senior management and other employees of the
Company to provide customary due diligence assistance in connection with
such offering, participate in the preparation of any offering documents and
to participate in customary "road show" presentations or investor
conference calls in connection with any offering of the Notes.
(c) The Company shall make available, upon request, to any Holder
of or prospective purchasers of the Notes the information specified in Rule
144A(d)(4), unless the Company furnishes information to the SEC pursuant to
Section 13 or 15(d) of the Exchange Act.
2.5. Further Assurances.
------------------
Upon the request of any Holder, the Company shall promptly
perform or cause to be performed any and all acts and execute or cause to
be executed any and all documents, instruments and agreements which are
necessary or reasonably advisable to carry out the provisions and purposes
of the Notes.
SECTION THREE
NEGATIVE COVENANTS
------------------
The Company hereby covenants and agrees with each Holder that
until the principal amount of (and premium, if any, on) all the Notes, and
all interest, Special Interest and other obligations hereunder in respect
thereof, shall have been paid in full:
3.1. Stay, Extension and Usury Laws. The Company covenants (to the
extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay, extension or usury law wherever enacted, now or at
any time hereafter in force, that may affect the covenants or the
performance of its obligations under the Notes, and the Company hereby
expressly waives all benefit or advantage of any such law, and covenants
that it shall not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Purchasers, but shall suffer
and permit the execution of every such power as though no such law has been
enacted.
3.2. Incurrence of Indebtedness. The Company shall not, and shall not
permit any of its Subsidiaries to, create, incur, assume or suffer to exist
any Indebtedness, except for:
(a) Indebtedness permitted under clauses (b) through (g) and (i),
(j) and (k) under Section 7.2 of the Credit Agreement as in effect on
the date hereof;
(b) Indebtedness of the Company under the Notes;
(c) Indebtedness of the Company under the Credit Agreement not to
exceed $230 million at any one time outstanding minus the amount of
any payments which permanently reduce the amount available under the
Credit Agreement, and any refinancings, refundings, replacements,
renewals or extension thereof;
(d) Indebtedness outstanding on the date hereof and listed on
Schedule 3.21 of the Securities Purchase Agreement, and any
refinancings, refundings, renewals or extension thereof; provided that
(i) the amount of such Indebtedness is not increased at the time of
such refinancing, refunding, renewal or extension and (ii) in the case
of any refinancing of Indebtedness that is Subordinated Indebtedness,
(A) such new Indebtedness is made subordinated to the Notes at least
to the same extent as the Indebtedness being refinanced and (B) such
refinancing does not reduce the Average Life to Stated Maturity or the
Stated Maturity of such Indebtedness; and
(e) unsecured Subordinated Indebtedness which for purposes of
this Section 3.2(e) shall include all unsecured Indebtedness that
constitutes Deferred Purchase Price and the payment of the principal
of and interest on which and other obligations of the Company in
respect thereof are otherwise subordinated to the prior payment in
full of the principal of and interest (including post-petition
interest) on the Notes and all other Obligations on terms and
conditions at least as favorable to the Holders of the Notes as the
terms and conditions of the subordination of the Notes to the Senior
Indebtedness;
(f) senior notes ranking pari passu with Indebtedness under the
Credit Agreement and secured by the collateral secured pursuant to the
Credit Agreement; provided that the aggregate amount of Indebtedness
of the Company outstanding pursuant to clause (c) above and this
clause (f) shall not exceed at any one time the aggregate amount of
Indebtedness permitted by clause (c) above;
provided, however, that (i) the Company shall not create, incur, assume or
suffer to exist any Indebtedness after the date hereof if such additional
Indebtedness would cause the ratio of (x) Total Debt (less Restricted Cash)
to (y) Consolidated EBITDA for the period consisting of the four
consecutive fiscal quarters for which completed financial statements of the
Company are available ending on, or most recently preceding, the date of
determination, to be greater than 4.25 to 1.00 (the "Total Debt to EBITDA
Ratio"), and (ii) notwithstanding the foregoing, the Company shall not and
shall not permit any of its Subsidiaries to incur, create, issue, assume,
guarantee or otherwise become liable for any Indebtedness that is both (i)
subordinate or junior in right of payment to any Senior Indebtedness and
(ii) senior in right of payment to the Notes.
3.3. Limitation on Liens. The Company shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, create, incur, assume
or suffer to exist any Lien upon any of its property, assets or revenues,
whether now owned or hereafter acquired, except for Liens permitted by
Section 7.3 of the Credit Agreement as in effect on the date hereof,
Section 3.2(f) hereof, or as set forth on Schedule 3.3 hereto, or as may be
incurred or created in connection with any amendment, restatement,
refinancing, replacement, extension, or modification of the Credit
Agreement (provided that the aggregate principal amount of the Indebtedness
of the Company under the Credit Agreement shall not exceed the amount
permitted under Section 3.2(c) hereof).
3.4. Limitation on Fundamental Changes. The Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, enter
into any merger, consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), or convey,
sell, lease, assign, transfer or otherwise dispose of, all or substantially
all of its property, business or assets, or make any material change in its
present method of conducting business, unless (i) such transaction is
permitted by Section 7.5 of the Credit Agreement as in effect on the date
hereof, or (ii) (A) the Company is the surviving corporation, (B)
immediately after such transaction no Default or Event of Default exists,
(C) the Company will, at the time of such transaction and after giving pro
forma effect thereto as if such transaction had occurred at the beginning
of the applicable four-quarter period, be permitted to incur at least $1.00
of additional Indebtedness pursuant to the Total Debt to EBITDA Ratio set
forth in Section 3.2, and (D) the Company shall have delivered to the
Holders an Officer's Certificate signed by a Responsible Officer and an
opinion of counsel, each stating that such consolidation, merger, sale,
assignment, transfer, lease, conveyance or other disposition and, if an
assumption agreement is required in connection with such transaction, such
assumption agreement, comply with the applicable provisions of the Notes
and that all conditions precedent set forth in the Notes relating to such
transaction have been satisfied.
3.5. Limitation on Sale of Assets. The Company shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly, convey,
sell, lease, assign, transfer or otherwise dispose of any of its property,
business or assets (including, without limitation, receivables and
leasehold interests), whether now owned or hereafter acquired, or, in the
case of any Subsidiary, issue or sell any shares of such Subsidiary's
Capital Stock to any Person other than the Company or any Wholly Owned
Subsidiary of the Company, except (i) as permitted by Section 7.6 of the
Credit Agreement as in effect on the date hereof and (ii) any sale or other
disposition to a Physician Group in connection with the Company's
termination of a business relationship with such Physician Group.
3.6. Limitation on Restricted Payments. The Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly,
declare or pay any dividend (other than dividends payable solely in Capital
Stock of the Company) on, or make any payment on account of, or set apart
assets for a sinking or other analogous fund for, the purchase, redemption,
defeasance, retirement or other acquisition of, any Capital Stock of the
Company or any Subsidiary or any warrants or options to purchase any such
Capital Stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in
cash or property or in obligations of the Company or any of it
Subsidiaries, except:
(a) any Subsidiary may declare and pay dividends to the
Company or a Wholly Owned Subsidiary;
(b) the Company may repurchase, redeem or otherwise acquire
for value any Capital Stock of the Company held by employees of the
Company or any of its Subsidiaries pursuant to any employee equity
subscription agreement, stock option agreement or stock ownership
arrangement, provided that (i) the aggregate price paid for all such
repurchased, redeemed, acquired or retired Capital Stock during any
fiscal year of the Company shall not exceed $1,000,000 and (ii) no
Default or Event of Default shall have occurred and be continuing or
would result therefrom; and
(c) the redemption or repurchase by the Company of its
Common Stock, provided that (i) any Common Stock so redeemed or
repurchased must be held by the Company as treasury stock or reissued
as a portion of the consideration for Permitted Physician
Transactions, (ii) any such stock held in treasury may not be
canceled, (iii) the aggregate amount paid for the redemption or
repurchase or any such stock held in treasury by the Company at any
particular time shall not exceed $5,000,000 and (iv) no Common Stock
of the Company may be redeemed or repurchased if a Default or Event of
Default shall have occurred and be continuing or would result
therefrom.
3.7. Limitation on Investments, Loans and Advances. The Company shall
not, and shall not permit any of its Subsidiaries to, directly or
indirectly, make any advance, loan, extension of credit or capital
contribution to, or purchase any stock, bonds, notes, debentures or other
securities of or any assets constituting a business unit of, or make any
other investment in, or guarantee an obligation of, any Person (an
"Investment"), except (i) as permitted by clauses (a), (b), and (f) through
(k) and (m) of Section 7.8 of the Credit Agreement as in effect on the date
hereof, and (ii) Investments in any line of business permitted under
Section 3.12, provided that no such Investment or series of related
Investments exceeds $15 million and the aggregate amount of all such
Investments during any twelve month period after January 13, 2000 does not
exceed $40 million; provided, however, that if at any time the Purchasers
and their Affiliates own less than $8 million in aggregate principal amount
of Notes, then for purposes of this clause (ii) no such Investment or
series of related Investments shall exceed $20 million and the aggregate
amount of all such Investments during any twelve month period after January
13, 2000 shall not exceed $50 million (all of clause (ii) being defined as
the "Permitted Investment Funds") and (iii) the Investments set forth on
Schedule 3.7 hereto.
3.8. Limitation on Optional Payments and Modifications of Debt
Instruments. The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, (a) make any optional payment or
prepayment of principal of or any redemption, purchase or defeasance of any
Indebtedness other than Senior Indebtedness, Reimbursement Obligations and
the Notes, (b) make any payment of principal of or interest on or any other
amount with respect to any Subordinated Indebtedness if any Default or
Event of Default shall have occurred and be continuing, or would result
therefrom, (c) amend, modify or change, or consent or agree to any
amendment, modification or change to any of the terms relating to any
Subordinated Indebtedness (other than any such amendment, modification or
change which would extend the maturity or reduce the amount of any payment
of principal thereof or which would reduce the rate or extend the date for
payment of interest thereon) or (d) amend the subordination provisions
contained in the Subordinated Indebtedness Documentation.
3.9. Limitation on Transactions with Affiliates. The Company shall
not, and shall not permit any of its Subsidiaries to, directly or
indirectly, enter into or suffer to exist any transaction, including,
without limitation, any purchase, sale, lease or exchange of property or
the rendering of any service, with any Affiliate (an "Affiliate
Transaction") unless such transaction is (a) permitted by Section 7.11 of
the Credit Agreement as in effect on the date hereof and (b) otherwise
permitted by the terms of the Notes; provided, however, that the Company
delivers to the Holders with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving aggregate consideration in
excess of $1.0 million, a resolution of the Board set forth in an Officers'
Certificate signed by a Responsible Officer certifying that such Affiliate
Transaction complies with clauses (a) and (b) above and that such Affiliate
Transaction has been approved by a majority of the disinterested members of
the Board; provided, however, that the following shall not be deemed to be
Affiliate Transactions: (1) transactions between or among the Company
and/or its Wholly Owned Subsidiaries, (2) the transactions contemplated by
the Securities Purchase Agreement, and (3) the payment of reasonable and
customary regular fees to, and indemnity provided on behalf of, officers,
directors and employees of the Company or any Subsidiary of the Company.
3.10. Limitation on Sales and Leasebacks. The Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, enter
into any arrangement with any Person providing for the leasing by the
Company or any Subsidiary of real or personal property which has been or is
to be sold or transferred by the Company or such Subsidiary to such Person
or to any other Person to whom funds have been or are to be advanced by
such Person on the security of such property or rental obligations of the
Company or such Subsidiary, except the sale and leaseback of equipment in
the ordinary course of business where the Company or a Subsidiary (a)
transfers to such Person its right to purchase such equipment within ninety
days after the Company or such Subsidiary has entered into an agreement to
purchase such equipment and (b) lease the equipment from such Person.
3.11. Limitation on Restricted Actions. The Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, enter
into or permit to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary to (a) pay dividends or make
any other distributions on its Capital Stock, (b) pay any Indebtedness or
other obligation owed to the Company or any other Subsidiary, (c) make
loans or advances to the Company or any other Subsidiary, (d) sell, lease
or transfer any of its properties or assets to the Company or any other
Subsidiary, except as permitted by the Credit Agreement and documents
executed thereunder or pursuant thereto, each as in effect on the date
hereof, or any such encumbrances or restrictions contained in the Credit
Agreement (including any replacements or refinancings thereof) and
documents executed thereunder or related thereto after the date hereof
which are not materially more onerous to the Holders of the Notes than
those contained in the Credit Agreement and documents executed thereunder
or related thereto as in effect on the date hereof.
3.12. Limitation on Lines of Business. The Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, enter
into any business, either directly or through any subsidiary or joint
venture or similar arrangement, except for those businesses in which the
Company and its Subsidiaries are engaged on the date hereof or which are
reasonably related, incidental, or ancillary thereto.
3.13. Limitations on Acquisitions. The Company shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly, acquire by
purchase or otherwise all or a substantial part of the business or assets
of, or Capital Stock or other evidences of beneficial ownership of, or any
line of business or division of, any Person, other than acquisitions made
by the Company or any of its Subsidiaries using the Permitted Investment
Funds in compliance with Section 3.7(ii).
3.14. Limitation on Modification of Other Agreements; Refinancings.
(a) The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, modify, terminate, amend, supplement, or waive, or
permit any modification, termination, amendment, supplement or waiver of
(i) any Material Contract (other than the Credit Agreement and the
documents executed thereunder or pursuant thereto (subject to clause (b)
below)), (ii) the certificate of incorporation or bylaws (or analogous
constitutional documents) of the Company or any Subsidiary or (iii) any
Health Care Permit, if any of the same, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
(b) Notwithstanding the provisions of Section 3.14(a), the
Company shall not, directly or indirectly, without the consent of the
Holders of a majority of the aggregate principal amount of Notes then
outstanding, (i) make the Term Loan Election pursuant to Section 2.4 of the
Credit Agreement as in effect on the date hereof, or extend the Revolving
Credit Termination Date, unless the Credit Agreement is amended to permit
the Company to perform all of its obligations pursuant to the Notes
(including, without limitation, the Company's obligations pursuant to
Section 4.3), or (ii) enter into any agreement (including, without
limitation, an agreement relating to a refinancing of the Indebtedness
under the Credit Agreement), or modify, terminate, amend, supplement, or
waive, or permit any modification, termination, amendment, supplement or
waiver of any existing agreement, which agreement or modification,
termination, amendment, supplement or waiver restricts in any way the
Company's ability to perform all of its obligations pursuant to the Notes
(including, without limitation, the Company's obligations pursuant to
Section 4.3).
3.15. Additional Covenants. The Company shall, and shall cause its
Subsidiaries to, comply with the covenants set forth in Sections 7.18
(Health Care Permits and Approvals) and 7.19 (Fraud and Abuse) set forth in
the Credit Agreement as in effect as of the date hereof, and such Sections
are hereby incorporated by reference, provided, however, that for purposes
of this Note:
(a) all references therein to the "Borrower" shall be deemed to
be references to "the Company";
(b) all references therein to the "Lender" or "Lenders" shall be
deemed to be references to the "Purchaser" or "Purchasers";
(c) the definitions of "Affiliated Provider" and "Governmental
Program" of the Credit Agreement as in effect on the date hereof are
incorporated by reference.
3.16. Payments for Consents. Neither the Company nor any of its
Subsidiaries shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder
of any Notes in consideration for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of the Notes unless
such consideration is concurrently offered to be paid or is concurrently
paid to all Holders of the Notes that consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such
consent, waiver or agreement.
3.17. Successor Company Substituted. Upon any consolidation of the
Company with, or merger of the Company into, any other Person or any
transfer, conveyance, sale, lease or other disposition of all or
substantially all of the properties and assets of the Company and its
Subsidiaries taken as a whole in one or more related transactions in
accordance with Section 3.4, the Successor Company shall succeed to, and be
substituted for, and may exercise every right and power of, the Company
under the Notes with the same effect as if such Successor Company had been
named as the Company herein, and thereafter, except in the case of a lease,
the predecessor Company shall be relieved of all obligations and covenants
under the Notes (other than in a transaction that results in the transfer
of assets constituting or accounting for less than 95% of the consolidated
assets (as of the last balance sheet available to the Company) of the
Company or less than 95% of the consolidated revenue of the Company (as of
the last 12-month period for which financial statements are available)).
SECTION FOUR
PREPAYMENT OF NOTES
-------------------
4.1. Offer to Repurchase Upon Change of Control. (a) Upon the
occurrence of a Change of Control, the Company shall make an offer (a
"Change of Control Offer") to each Holder to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of each Holder's Notes at
an offer price in cash equal to 101% of the principal amount thereof as of
the Change of Control Payment Date, plus accrued and unpaid interest and
Special Interest thereon, if any, until the Change of Control Payment Date
(the "Change of Control Payment"). The Company shall comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes as a result of a
Change of Control, and the Company shall not be in violation of the Notes
by reason of any act required by such rule or other applicable law.
(b) Within 25 days following any Change of Control, the Company
shall mail a notice to each Holder stating:
(i) that the Change of Control Offer is being made pursuant
to this Section 4.1 and that all Notes tendered will be accepted for
payment;
(ii) the purchase price and the purchase date, which shall
be at least 30 but no more than 60 days from the date on which the
Company mails notice of the Change of Control (the "Change of Control
Payment Date");
(iii) that any Notes not tendered will continue to accrue
interest;
(iv) that, unless the Company defaults in the payment of the
Change of Control Payment, all Notes accepted for payment pursuant to
the Change of Control Offer shall cease to accrue interest after the
Change of Control Payment Date;
(v) that Holders electing to have any Notes purchased
pursuant to a Change of Control Offer shall be required to surrender
the Notes, with the form entitled "Option of Holder to Elect Purchase"
attached as Exhibit A hereto completed, to the Company or its
designated agent for such purpose, at the address specified in the
notice prior to the close of business on the third Business Day
preceding the Change of Control Payment Date;
(vi) that Holders will be entitled to withdraw their
election if the Company or its designated agent for such purpose,
receives, not later than the close of business on the second Business
Day preceding the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder,
the principal amount of Notes delivered for purchase, and a statement
that such Holder is withdrawing his election to have the Notes
purchased; and
(vii) that Holders whose Notes are being purchased only in
part will be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered.
(c) On the Change of Control Payment Date, the Company shall, to
the extent lawful, (i) accept for payment all Notes or portions thereof
properly tendered pursuant to the Change of Control Offer and (ii) deposit
with the Paying Agent (such Paying Agent having been appointed by the
Company prior to the Change of Control Payment Date) an amount equal to the
Change of Control Payment in respect of all Notes or portions thereof so
tendered. The Company shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Company
shall promptly execute and mail (or cause to be transferred by book-entry)
to each Holder a new Note equal in principal amount to any unpurchased
portion of the Notes surrendered. The Company shall publicly announce the
results of the Change of Control Offer on or as soon as practicable after
the Change of Control Payment Date.
4.2. Redemption by the Company. (a) At any time from March 31, 2001
until September 30, 2001, all of the outstanding Notes shall be redeemable
at the option of Company on not less than 30 nor more than 60 days' prior
notice, at a purchase price in cash equal to 101% of the outstanding
principal amount thereof plus all accrued and unpaid interest thereon,
including accrued and unpaid Special Interest, if any.
(b) Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 30 nor more than 60 days prior to the
Redemption Date, to each Holder of Notes to be redeemed, at his address
appearing in the Security Register. Notice of redemption of Notes to be
redeemed at the election of the Company shall be given by and at the
expense of the Company.
(c) If notice of redemption shall have been given as provided
above, all of the outstanding Notes shall, on the Redemption Date, become
due and payable at the Redemption Price therein specified, and from and
after such date (unless the Company shall default in the payment of the
Redemption Price and any applicable accrued interest and Special Interest)
none of the Notes shall bear interest. Upon surrender of the Notes for
redemption in accordance with said notice, the Notes shall be paid by the
Company at the Redemption Price, together with any applicable accrued
interest and Special Interest to the Redemption Date; provided, however,
that installments of interest or Special Interest with a Stated Maturity on
or prior to the Redemption Date shall be payable to the Holders of the
Notes, or one or more Predecessor Notes, registered as such at the close of
business on the relevant Regular Record Dates according to their terms and
the provisions of this Note. If any Note shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any)
shall, until paid, bear interest from the Redemption Date at the rate
provided by the Note.
4.3. Redemption by the Holder. (a) At any time on or after March 31,
2002, each Holder shall have the right to require that the Company redeem
all or any portion of such Holder's Notes upon 30 days' prior written
notice to the Company at a purchase price in cash equal to 100% of the
outstanding principal amount thereof plus all accrued and unpaid interest
thereon, including accrued and unpaid Special Interest, if any.
(b) If notice of redemption shall have been given as provided
above, the Notes so to be redeemed shall, on the Redemption Date, become
due and payable at the Redemption Price therein specified, and from and
after such date (unless the Company shall default in the payment of the
Redemption Price and any applicable accrued interest and Special Interest)
such Notes shall not bear interest. Upon surrender of any such Note for
redemption in accordance with said notice, such Note shall be paid by the
Company at the Redemption Price, together with any applicable accrued
interest and Special Interest to the Redemption Date; provided, however,
that installments of interest or Special Interest with a Stated Maturity on
or prior to the Redemption Date shall be payable to the Holders of such
Notes, or one or more Predecessor Notes, registered as such at the close of
business on the relevant Regular Record Dates according to their terms and
the provisions of this Note. If any Note called for redemption shall not be
so paid upon surrender thereof for redemption, the principal (and premium,
if any) shall, until paid, bear interest from the Redemption Date at the
rate provided by the Note.
(c) Any Note which is to be redeemed only in part shall be
surrendered at the principal offices of the Company (with, if the Company
so requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company duly executed by, the Holder thereof or
his attorney duly authorized in writing), and the Company shall execute and
deliver to the Holder of such Note without service charge, a new Note or
Notes, of any authorized denomination as requested by such Holder, in
aggregate principal amount equal to and in exchange for the unredeemed
portion of the principal of the Note so surrendered.
SECTION FIVE
EVENTS OF DEFAULT
-----------------
5.1. Events of Default. An Event of Default shall exist upon the
occurrence of any of the following specified events (each an "Event of
Default"):
(a) the Company defaults in the payment when due of interest or
Special Interest, if any, on the Notes and such default continues for a
period of 30 days;
(b) the Company defaults in the payment when due of principal of
or premium, if any, on the Notes when the same becomes due and payable at
its Maturity;
(c) the Company fails to comply with any of the provisions of
Sections 3.4 or 3.5 or Section Four hereof, or Section 5.9 of the
Securities Purchase Agreement;
(d) the Company fails to observe or perform any other covenant or
other agreement contained in the Notes or any of the other Transaction
Documents and such failure continues for a period of 30 days (i) after
notice of such Default or Event of Default is given by the Company to the
Holders pursuant to Section 2.1(b) or (ii) after the Company fails to give
the notice of such Default or Event of Default to the Holders as required
by Section 2.1(b);
(e) any representation, warranty, certification or statement made
or deemed to have been made by or on behalf of the Company or any
Subsidiary of the Company or by any officer of the Company or any
Subsidiary of the Company in respect of any Transaction Document or in any
statement or certificate at any time given by or on behalf of the Company
or any of its Subsidiaries or by any officer of the Company or any of its
Subsidiaries in writing pursuant hereto or in connection herewith or
therewith shall be false in any material respect on the date as of which
made;
(f) a default occurs under any credit facility, mortgage,
indenture or instrument under which there may be issued or by which there
may be secured or evidenced any Indebtedness of the Company or any of its
Subsidiaries (or payment of which is Guaranteed by the Company or any of
its Subsidiaries), whether such Indebtedness or Guarantee now exists, or is
created after January 13, 2000, which default (i) constitutes a failure to
pay any portion of the principal of or premium, if any, or interest on such
Indebtedness when due and payable after the expiration of any applicable
grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (ii) shall have resulted in such Indebtedness being
accelerated or otherwise becoming or being declared due and payable prior
to its Stated Maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $7.5 million or more;
(g) a final judgment or final judgments for the payment of money
are entered by a court or courts of competent jurisdiction against the
Company or any of its Subsidiaries and such judgment or judgments remain
unpaid and undischarged for a period (during which execution shall not be
effectively stayed) of 60 days, provided that the aggregate of all such
undischarged judgments exceeds $7.5 million;
(h) any holder or holders of at least $7.5 million in aggregate
principal amount of Indebtedness of the Company or any Subsidiary after a
default under such Indebtedness shall notify the Company or any other
Person of the intended sale or disposition of any assets of the Company or
and of its Subsidiaries that have been pledged to or for the benefit of
such holder or holders to secure such Indebtedness or shall commence
proceeding or take any action (including by way of set-off), to retain in
satisfaction of such Indebtedness or to collect on, seize, dispose of or
apply in satisfaction of Indebtedness, assets of the Company or any of its
Subsidiaries (including funds on deposit or held pursuant to lock-box and
other similar arrangements);
(i) any of the events set forth in clauses (g) or (l) of Section
8 of the Credit Agreement as in effect as of the date hereof shall have
occurred; provided that for purposes of this Section 5.1(i), (i) the number
"$5,000,000" appearing at the end of clause (g) of the Credit Agreement as
in effect on the date hereof shall be replaced by "$7,500,000" and (ii) the
reference to "15%" appearing in clause (l) of the Credit Agreement as in
effect on this date hereof shall be replaced by "17.5%" and the words "for
cash" in clause (l)(i) of the Credit Agreement as in effect on the date
hereof shall be deleted;
(j) (i) the Company or any of its Significant Subsidiaries shall
commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts or (B) seeking appointment
of a receiver, trustee, custodian, conservator or other similar official
for it or for all or any substantial part of its assets or the Company or
any of its Significant Subsidiaries shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against the
Company or any of its Significant Subsidiaries any case, proceeding or
other action of a nature referred to in clause (i) above which (A) results
in the entry of an order for relief or any such adjudication or appointment
or (B) remains undismissed, undischarged or unbonded for a period of sixty
days; or (iii) there shall be commenced against the Company or any of its
Significant Subsidiaries any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar
process against all of any substantial part of its assets which results in
the entry of an order for any such relief which shall not have been
vacated, discharged or stayed or bonded pending appeal within sixty days
from the entry thereof; or (iv) the Company or any of its Significant
Subsidiaries shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in
clause (i), (ii) or (iii) above; or (v) the Company or any of its
Significant Subsidiaries shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become due.
5.2. Remedies. If an Event of Default (other than an Event of Default
specified in Section 5.1(j)) occurs and is continuing, then and in every
such case Holders holding Notes in an aggregate principal amount of $4.0
million or more may declare the principal of and any accrued interest and
Special Interest, if any, on all of the Notes to be due and payable
immediately, by a notice in writing to the Company and the holders of the
Designated Senior Indebtedness of which the Holders are aware, and upon any
such declaration such principal and any accrued interest and Special
Interest, if any, shall become immediately due and payable. If an Event of
Default specified in Section 5.1(j) occurs and is continuing, the principal
of and any accrued interest and Special Interest, if any, on the
outstanding Notes shall automatically, and without any declaration or other
action on the part of any Holder, become immediately due and payable.
At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has been
obtained, the Holders of a majority of the aggregate principal amount of
Notes then outstanding, by written notice to the Company, may rescind and
annul such declaration and its consequences if the Company has paid a sum
sufficient to pay
(a) all overdue interest and Special Interest on all Notes;
(b) the principal of (and premium, if any, on) any Notes
which have become due otherwise than by such declaration of
acceleration (including any Notes required to have been purchased
pursuant to Section 4 hereunder) and any interest, Special Interest
and overdue interest thereon at the rate borne by the Notes; and
(c) to the extent that payment of such interest is lawful,
interest upon overdue interest and overdue Special Interest at the
rate provided therefor in the Notes.
SECTION SIX
SUBORDINATION OF NOTES
----------------------
6.1. Notes Subordinate to Senior Indebtedness. The Company covenants
and agrees, and each Holder of a Note, by its acceptance thereof, likewise
covenants and agrees, that, to the extent and in the manner hereinafter set
forth in this Section Six, the payment of the principal of (and premium, if
any), and interest and any Special Interest on, each and all of the Notes
are hereby expressly made subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness of the Company. The
provisions of this Section Six shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Senior Indebtedness is rescinded or must otherwise be returned by a holder
of Senior Indebtedness upon any Proceeding or otherwise, all as though such
payment had not been made.
6.2. Payment Over of Proceeds Upon Dissolution, Etc. In the event of
(a) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Company or to its creditors, as such,
or to its assets, or (b) any liquidation, dissolution or other winding up
of the Company, whether voluntary or involuntary and whether or not
involving insolvency or bankruptcy, or (c) any assignment for the benefit
of creditors or any other marshalling of assets and liabilities of the
Company, then and in any such event specified in clause (a), (b) or (c)
above (each such event, if any, herein sometimes referred to as a
"Proceeding") the holders of Senior Indebtedness shall be entitled to
receive or retain payment in full in cash or Cash Equivalents or as
otherwise agreed to by the holders of Senior Indebtedness all amounts due
or to become due on or in respect of all Senior Indebtedness, before the
Holders of the Notes are entitled to receive any payment or distribution of
any kind or character, whether in cash, property or securities, on account
of principal of (or premium, if any) or interest or any Special Interest on
or other obligations (including, without limitation, indemnities and claims
for damages) in respect of the Notes (including any interest accruing on or
after the filing of any Proceeding relating to the Company, whether or not
allowed in such Proceeding) or on account of any purchase or other
acquisition of Notes by the Company or any Subsidiary of the Company (other
than a payment or distribution in the form of Permitted Junior Securities)
(all such payments, distributions, purchases and acquisitions herein
referred to, individually and collectively, as a "Notes Payment"), and to
that end the holders of Senior Indebtedness shall be entitled to receive,
for application to the payment thereof, any Notes Payment which may be
payable or deliverable in respect of the Notes in any such Proceeding.
In the event that, notwithstanding the foregoing provisions of
this Section 6.2, the Holder of any Note shall have received any Notes
Payment before all Senior Indebtedness of the Company is paid in full, then
and in such event such Notes Payment shall be held in trust by such Holder
as property of the holders of the Senior Indebtedness and shall be paid
over or delivered forthwith to the holders of Senior Indebtedness or their
representative for the application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay the Senior
Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
The consolidation of the Company with, or the merger of the
Company into, another Person or the liquidation or dissolution of the
Company following the conveyance or transfer of all or substantially all of
its properties and assets as an entirety to another Person upon the terms
and conditions set forth in Section 3.4 shall not be deemed a Proceeding
for the purposes of this Section 6.2 if the Person formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer such properties and assets, as the case
may be, shall, as a part of such consolidation, merger, conveyance or
transfer, complies with the conditions set forth in Section 3.4.
6.3. No Payment When Senior Indebtedness in Default. In the event that
any Senior Payment Default (as defined below) shall have occurred and be
continuing, then no Notes Payment shall be made unless and until such
Senior Payment Default shall have been cured or waived or shall have ceased
to exist or all amounts then due and payable in respect of Senior
Indebtedness shall have been paid in full. "Senior Payment Default" means
any default in the payment of principal of (or premium, if any) or interest
on Designated Senior Indebtedness when due, whether at the due date of any
such payment or by declaration of acceleration or call for redemption or
mandatory prepayment.
Upon the occurrence of a Senior Nonmonetary Default and receipt
of written notice by the Company and each Holder listed in the Security
Register (and the holders of Senior Indebtedness may rely on the Security
Register for its accuracy) and the indenture trustee if the Notes are
issued pursuant to an Indenture of the occurrence of such Senior
Nonmonetary Default from any holder of Designated Senior Indebtedness (or
any trustee, agent or other representative for such holder) which is the
subject of such Senior Nonmonetary Default, no payments on account of
principal of, premium, if any, or Notes Payment may be made during a period
(the "Payment Blockage Period") commencing on the date of the receipt by
the Company of such notice and ending the earlier of (i) the date on which
the holders of Designated Senior Indebtedness (or the trustee, agent or
other representative of such holders) shall have given written notice to
the Company stating that such Senior Nonmonetary Default has been cured or
waived or has ceased to exist or all Designated Senior Indebtedness which
was the subject of such Senior Nonmonetary Default has been paid in full
and (ii) the 179th day after the date of the receipt of such notice. No
Senior Nonmonetary Default that existed or was continuing on the date of
the commencement of a Payment Blockage Period may be made the basis of the
commencement of a subsequent Payment Blockage Period whether or not within
a period of 360 consecutive days, unless such Senior Nonmonetary Default
shall have been cured for a period of not less than 90 consecutive days. In
any event, notwithstanding the foregoing, no more than one Payment Blockage
Period may be commenced during any 365-day period and there shall be a
period of at least 186 days during each 365-day period when no Payment
Blockage Period is in effect. "Senior Nonmonetary Default" means the
occurrence or existence and continuance of an event of default with respect
to Senior Indebtedness, other than a Senior Payment Default, that permits
the holders of the Designated Senior Indebtedness (or a trustee or other
agent on behalf of the holders thereof) then to declare such Designated
Senior Indebtedness due and payable immediately prior to the date on which
it would otherwise become due and payable.
The failure to make any payment on the Notes by reason of the
provisions of this Section 6.3 will not be construed as preventing the
occurrence of an Event of Default with respect to the Notes arising from
any such failure to make payment and during the periods covered by this
Section 6.3, the Holders of the Notes may accelerate the payments due on
their Notes or take any other actions or seek any other remedies. Upon
termination of any period of Payment Blockage Period the Company shall
resume making any and all required payments in respect of the Notes,
including any missed payments and shall immediately make all missed
payments.
In the event that, notwithstanding the foregoing, the Company
shall make any Notes Payment to any Holder prohibited by the foregoing
provisions of this Section 6.3, then and in such event such Notes Payment
shall be paid over and delivered forthwith to the holders of the Senior
Indebtedness of the Company in the same form received and, until so turned
over, the same shall be held in trust by such Holder as the property of the
holders of the Senior Indebtedness.
The provisions of this Section 6.3 shall not apply to any Notes
Payment with respect to which Section 6.2 would be applicable.
6.4. Payment Permitted If No Default. Nothing contained in this
Section Six or elsewhere in the Notes shall prevent the Company, at any
time except during the pendency of any Proceeding referred to in Section
6.2 or under the conditions described in Section 6.3, from making Notes
Payments.
6.5. Subrogation to Rights of Holders of Senior Indebtedness. Only
after the payment in full of all amounts due or to become due on or in
respect of Senior Indebtedness of the Company and the termination of all
commitments in respect thereof, the Holders of the Notes shall be
subrogated to the rights of the holders of Senior Indebtedness to receive
payments and distributions of cash, property and securities applicable to
such Senior Indebtedness until the principal of (and premium, if any) and
interest and any Special Interest on the Notes shall be paid in full. For
purposes of such subrogation, no payments or distributions to the holders
of the Senior Indebtedness of the Company of any cash, property or
securities to which the Holders of the Notes would be entitled except for
the provisions of this Section Six, and no payments over pursuant to the
provisions of this Section Six to the holders of Senior Indebtedness by
Holders of the Notes, shall, as among the Company, its creditors other than
holders of Senior Indebtedness and the Holders of the Notes, be deemed to
be a payment or distribution by the Company to or on account of the Senior
Indebtedness of the Company.
6.6. Provisions Solely to Define Relative Rights. The provisions of
this Section Six are and are intended solely for the purpose of defining
the relative rights of the Holders on the one hand and the holders of
Senior Indebtedness on the other hand. Nothing contained in this Section
Six or elsewhere in the Notes is intended to or shall (a) impair, as among
the Company, its creditors other than holders of Senior Indebtedness and
the Holders of the Notes, the obligation of the Company, which is absolute
and unconditional (and which, subject to the rights under this Section Six
of the holders of Senior Indebtedness, is intended to rank equally with all
other general unsecured obligations of the Company), to pay to the Holders
of the Notes the principal of (and premium, if any) and interest and any
Special Interest on the Notes as and when the same shall become due and
payable in accordance with their terms; or (b) affect the relative rights
against the Company of the Holders of the Notes and creditors of the
Company other than the holders of Senior Indebtedness; or (c) prevent the
Holder of any Note from exercising all remedies otherwise permitted by
applicable law upon default under the Notes, subject to the rights, if any,
under this Section Six of the holders of Senior Indebtedness to receive
cash, property and securities otherwise payable or deliverable to such
Holder.
6.7. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets or securities of the Company
referred to in this Section Six, the Holders of the Notes shall be entitled
to rely upon any order or decree entered by any court of competent
jurisdiction in which such Proceeding is pending, or a certificate of the
trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee
for the benefit of creditors, agent or other Person making such payment or
distribution, delivered to the Holders of Notes, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other Indebtedness
of the Company, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto
or to this Section Six.
6.8. Reliance by Holders of Senior Indebtedness on Subordination
Provisions. Each Holder of a Note, by accepting such Note, acknowledges and
agrees that the foregoing subordination provisions are, and are intended to
be, an inducement and a consideration to each holder of any Senior
Indebtedness, whether such Senior Indebtedness was created or acquired
before or after the issuance of the Note, to acquire and continue to hold,
or to continue to hold, such Senior Indebtedness, and such holder of such
Senior Indebtedness shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Indebtedness. The provisions of this
Section Six shall not be amended or modified without the prior written
consent of the holders of the Senior Indebtedness.
SECTION SEVEN
DEFINITIONS
-----------
7.1. Definitions. As used herein, the following terms shall have the
meanings specified herein unless the context otherwise requires:
"Affiliate" means as to any Person, any other Person that,
directly or indirectly, controls, is controlled by, or is under common
control with, such Person or is a director or officer of such Person.
"Affiliate Transaction" shall have the meaning ascribed thereto
in Section 3.9.
"Agent" shall have the meaning ascribed thereto in the Credit
Agreement as in effect on the date hereof.
"Average Life to Stated Maturity" shall mean, as of the date of
determination with respect to any Indebtedness, the quotient obtained by
dividing (1) the sum of the products of (a) the number of years from the
date of determination to the date or dates of each successive scheduled
principal payment of such Indebtedness multiplied by (b) the amount of each
such principal payment by (2) the sum of all such principal payments.
"Board" means the Board of Directors of the Company, or any
authorized committee of such Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligations" means, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of
(or other agreement conveying the right to use) real and/or personal
property which obligations are required to be classified and accounted for
as a capital lease on a balance sheet of such Person under GAAP and, for
purposes of the Notes, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP.
"Capital Stock" shall have the meaning ascribed thereto in the
Credit Agreement as in effect on the date hereof.
"Cash Equivalents" shall mean (i) securities issued or directly
and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and credit
of the United States of America is pledged in support thereof) in each case
maturing within one year after the date of acquisition, (ii) time deposits
and certificates of deposit and commercial paper issued by the parent
corporation of any domestic commercial bank of recognized standing having
capital and surplus in excess of $500 million and commercial paper issued
by others rated at least A-2 or the equivalent thereof by Standard & Poor's
Ratings Group or at least P-2 or the equivalent thereof by Moody's
Investors Service, Inc. and in each case maturing within one year after the
acquisition and (iii) investments in money market funds substantially all
of whose assets comprise securities of the types described in clauses (i)
and (ii) above.
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition (other than
by way of merger or consolidation), in one or more related transactions, of
all or substantially all of the properties and assets of the Company and
its Subsidiaries taken as a whole to any Person (as such term is used in
Section 13(d)(3) of the Exchange Act), other than the Purchasers or their
Affiliates, (ii) the adoption of a plan relating to the liquidation or
dissolution of the Company, (iii) the consummation of any transaction or
other event (including, without limitation, any merger or consolidation)
the result of which is that any "Person" or "Group" (as such terms are used
in Sections 13(d) and 14(d) of the Exchange Act) (other than the Purchasers
and their Affiliates) becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that a
Person shall be deemed to have beneficial ownership of all shares that such
Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of
more than 45% of the voting stock of the Company, or (iv) the first day on
which a majority of the members of the Board are not Continuing Directors.
"Change of Control Offer" shall have the meaning ascribed thereto
in Section 4.1.
"Change of Control Payment" shall have the meaning ascribed
thereto in Section 4.1.
"Change of Control Payment Date" shall have the meaning ascribed
thereto in Section 4.1.
"Common Stock" shall mean the Company's common stock, par value
$0.01 per share.
"Commission" means the Securities and Exchange Commission.
"Company" shall have the meaning ascribed thereto in the preamble
to the Note.
"consolidated", when used with reference to any financial term in
this Note (but not when used with respect to any tax return or tax
liability), means the aggregate for two or more Persons of the amounts
signified by such term for all such Persons, with inter-company items
eliminated and, with respect to net income or earnings, after eliminating
the portion of net income or earnings properly attributable to minority
interests, if any, in the capital stock of any such Person or attributable
to shares of preferred stock of any such Person not owned by any other such
Person, in accordance with GAAP.
"Consolidated EBITDA" shall have the meaning ascribed thereto in
the Credit Agreement as in effect as of the date hereof.
"Continuing Directors" means, as of any date of determination,
any member of the Board of the Company who (i) was a member of such Board
as of January 13, 2000 or (ii) was nominated for election or elected to
such Board with the approval, recommendation or endorsement of a majority
of the Continuing Directors who were members of such Board at the time of
such nomination or election.
"Credit Agreement" shall mean the Credit Agreement dated as of
December 17, 1998, among the Company, the Lenders referred to therein and
Bank of America, N.A. as Agent and Banc of America Securities, LLC, as
Arranger, and as amended by the First Amendment to Credit Agreement, dated
as of December 31, 1998, the Amended and Restated Credit Agreement and
First Amendment to Guarantee and Collateral Agreement, dated as of June 29,
1999, the First Amendment to Amended and Restated Credit Agreement dated as
of November 9, 1999 and the Consent and Second Amendment to Amended and
Restated Credit Agreement, dated as of November 12, 1999, all as amended,
modified, renewed, refunded, restated, replaced or refinanced from time to
time.
"Debentures" shall have the meaning ascribed thereto in Section
2.3(a).
"Default" shall means any Event of Default, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any
other condition, has been satisfied.
"Deferred Purchase Price" shall mean a deferred purchase price
owed by the Company (and not a Subsidiary), that arises in connection with
(a) an Investment permitted under Section 3.7 hereof, or (b) any other
Investment or other acquisition that is approved in writing in advance by a
majority of the Holders, and where (i) the obligation to pay the deferred
purchase price arises pursuant to an instrument or agreement other than a
promissory note, and (ii) the deferred purchase price is to be amortized on
a straight line basis over a period of at least two years, whether such
amoritization consists of quarterly, annual, or semi-annual. Deferred
Purchase Price does not include the portion of the purchase price in an
acquisition that is retained by the Company (exclusive of amounts in
escrow) as a holdback pending verification of financial information
relevant to calculating the acquisition price.
"Designated Senior Indebtedness" shall mean (i) the obligations
of the Company under the Credit Agreement and (ii) any other Senior
Indebtedness of the Company (other than to an Affiliate of the Company)
permitted under the Notes the principal amount outstanding is at least
$25.0 million or more and that has been designated by the Company as
Designated Senior Indebtedness.
"Disqualified Stock" means any Capital Stock that, by its terms
(or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
or redeemable at the option of the holder thereof in any one or more
circumstances, in whole or in part, on or prior to the date that is 91 days
after the Stated Maturity of the Notes.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"Event of Default" shall have the meaning ascribed thereto in
Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange and Registration Rights Agreement" shall have the
meaning ascribed thereto in Section 2.3(b).
"Existing Subordinated Indebtedness" shall mean all Indebtedness
of the Company and its Subsidiaries that, as of January 13, 2000, is
subordinated to the prior payment in full of the Obligations.
"GAAP" means United States generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards
Board or in such other statements by such other entity as have been
approved by a significant segment of the accounting profession, as in
effect from time to time.
"GSCP" shall have the meaning ascribed thereto in the preamble.
"GSCP Affiliates" shall have the meaning ascribed thereto in the
preamble.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters
of credit and reimbursement agreements in respect thereof), of all or any
part of any Indebtedness.
"Guarantee Obligation" means as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of credit)
to induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary obligations") of any other third Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or
any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (A) for the purchase or payment of any such primary
obligation or (B) to maintain working capital, equity capital, earnings or
other financial performance of the primary obligor or otherwise to maintain
the net worth or solvency of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring the
owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or
hold harmless the owner of any such primary obligation against loss in
respect thereof; provided, however, that the term Guarantee Obligation
shall not include endorsements of instruments for deposit or collection in
the ordinary course of business. The amount of any Guarantee Obligation of
any guaranteeing person shall be deemed to be the lower of (a) an amount
equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee Obligation is made and (b) the maximum
amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation, unless such
primary obligation and the maximum amount for which such guaranteeing
person may be liable are not stated or determinable, in which case the
amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined
by the Company in good faith.
"Health Care Permit" shall have the meaning ascribed thereto in
the Credit Agreement as in effect on the date hereof.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements and (ii)
other agreements or arrangements designed to protect such Person against
fluctuations in interest rates.
"Holder" means a Person in whose name a Note is registered on the
Security Register.
"Indebtedness" means, with respect to any Person, without
duplication, (a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such Person under conditional sale or
other title retention agreements relating to property or assets purchased
by such Person, (d) all obligations of such Person for the deferred
purchase price of property or services (excluding trade accounts payable
not more than ninety days past due incurred in the ordinary course of
business, but including commitments or obligations to advance or fund
premiums on split-dollar life insurance policies), (e) all obligations of
such Person secured by any Lien on any property or asset owned by such
Person, whether or not the obligations of such Person secured thereby shall
have been assumed, (f) all Capital Lease Obligations of such Person, (g)
all obligations of such Person in respect of letters of credit, bankers'
acceptances and similar instruments, (h) all obligations of such Person
under Hedging Obligations, (i) any "withdrawal liability" of such Person as
such term is defined under Part I of Subtitle E of Title IV of ERISA, (j)
the principal portion of all obligations of such Person under any Synthetic
Lease, (k) all Guarantee Obligations of such Person, (l) all Redeemable
Securities of such Person, (m) at any date of determination, all
obligations or commitments of such Person to make or fund advances or
payments with respect to Program Loans during the twelve month period
following such date and (n) the aggregate amount of uncollected accounts
receivable of such Person subject at such time to a sale of receivables (or
similar transaction) regardless of whether such transaction is effected
without recourse to such Person or in a manner that would not be reflected
on the balance sheet of such Person in accordance with GAAP. The
Indebtedness of any Person shall include the Indebtedness of any Subsidiary
or partnership or unincorporated joint venture in which such Person is a
general partner or joint venturer.
"Initial Interest Payment" shall have the meaning ascribed
thereto in Section 1.1(a).
"Initial Subsequent Purchasers" shall mean the first three
Subsequent Purchasers.
"Institutional Investor" means (a) any original purchaser of a
Note and any transferee that is an Affiliate of any original purchaser, (b)
any holder of a Note holding more than 25% of the aggregate principal
amount of the Notes then outstanding, (c) any bank, trust company, savings
and loan association or other financial institution, any pension plan, any
investment company or investment fund, any insurance company, any broker or
dealer, or any other similar financial institution or entity, regardless of
legal form organized under the laws of the United States or a State
thereof, with capital and surplus in excess of $50,000,000, and (d) any
Person that is a "qualified institutional buyer" within the meaning of Rule
144A.
"Interest Payment Date" shall have the meaning ascribed thereto
in Section 1.1(b).
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in The City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed. If any
payment date in respect of the Notes is a Legal Holiday at a place of
payment, payment may be made at that place on the next succeeding day that
is not a Legal Holiday, and no interest shall accrue for the intervening
period.
"Lender" and "Lenders" shall have the meaning ascribed thereto in
the Credit Agreement as in effect on the date hereof.
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
charge, levy, execution, seizure, attachment, garnishment, security
interest or other encumbrance or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement having substantially the same economic effect as any of
the foregoing and any Synthetic Lease).
"Loans" shall have the meaning ascribed thereto in the Credit
Agreement as in effect as of the date hereof.
"Material Adverse Effect" shall have the meaning ascribed thereto
in the Credit Agreement as in effect on the date hereof.
"Material Contract" shall have the meaning ascribed thereto in
the Credit Agreement as in effect on the date hereof.
"Maturity", when used with respect to any Note, means the date on
which the principal of such Note becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise (including in connection
with any offer to purchase that the Notes require the Company to make).
"1939 Act" shall have the meaning ascribed thereto in Section
2.3(a).
"Non-Private Transaction" shall mean (i) any sale or transfer of
Notes to any Subsequent Purchaser other than the Initial Subsequent
Purchasers or (ii) any sale or transfer of Notes by any Person other than
the Purchasers or their Affiliates.
"Notes" shall have the meaning ascribed thereto in the preamble.
"Notes Payment" shall have the meaning ascribed thereto in
Section 6.2.
"Obligations" means all present and future indebtedness,
obligations and liabilities of every type and description of the Company or
any of its Subsidiaries at any time arising under or in connection with the
Notes or the Exchange and Registration Rights Agreement, whether fixed or
contingent, due or to become due to the Holders and shall include all
liability for principal of, interest and Special Interest, if any,
(including post-petition interest) on the Notes.
"Offering Memorandum" shall have the meaning ascribed thereto in
Section 2.3(d).
"outstanding", when used with respect to the Notes, means, as of
the date of determination, all Notes theretofore executed and delivered
under the Securities Purchase Agreement and the terms of the Notes, except:
(i) Notes theretofore canceled by the Company or delivered to the
Company for cancellation;
(ii) Notes for whose payment or redemption money in the necessary
amount has been theretofore set aside by the Company with a third
party in trust for the Holders of such Notes; provided that if such
Notes are to be redeemed, notice of such redemption has been duly
given as provided in the Notes; and
(iii) Notes which have been paid pursuant to Section 1.4 or in
exchange for or in lieu of which other Notes have been executed and
delivered pursuant to the terms of the Notes, other than any such
Notes in respect of which there shall have been presented to the
Company proof satisfactory to it that such Notes are held by a bona
fide purchaser in whose hands such Notes are valid obligations of the
Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned
by the Company or any other obligor upon the Notes or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
outstanding. Notes so owned which have been pledged in good faith may be
regarded as outstanding if the pledgee establishes to the satisfaction of
the Required Holders the pledgee's right so to act with respect to such
Notes and that the pledgee is not the Company or any other obligor upon the
Notes or any Affiliate of the Company or of such other obligor.
"Paying Agent" shall have the meaning ascribed thereto in Section
1.2.
"Payment Blockage Period" shall have the meaning ascribed thereto
in Section 6.3.
"Payment Default" shall have the meaning ascribed thereto in
Section 6.1(f).
"Permitted Investment Funds" shall have the meaning ascribed
thereto in Section 3.7.
"Permitted Junior Securities" shall mean any payment or
distribution in the form of equity securities of the Company or any
successor obligor that, in the case of any such subordinated securities,
are subordinated in right of payment to all Senior Indebtedness that may at
the time be outstanding to at least the same extent as the Notes are so
subordinated.
"Permitted Physician Transactions" shall have the meaning
ascribed thereto in the Credit Agreement as in effect on the date hereof.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company,
trust, unincorporated organization or government or agency or political
subdivision thereof (including any subdivision or ongoing business of any
such entity or substantially all of the assets of any such entity,
subdivision or business).
"Physician Group" shall have the meaning ascribed thereto in the
Credit Agreement as in effect as of the date hereof.
"PIK Notes" shall have the meaning ascribed thereto in Section
1.1(a).
"Predecessor Note" of any particular Note means every previous
Note evidencing all or a portion of the same debt as that evidenced by such
particular Note.
"principal amount" means, when used with respect to any
particular Note, the principal amount of such Note at its Stated Maturity.
"Private Placement" shall have the meaning ascribed thereto in
Section 2.3(d).
"Proceeding" shall have the meaning ascribed thereto in Section
6.2.
"property" means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Public Resale Transaction" shall have the meaning ascribed
thereto in Section 8.2.
"Purchaser" and "Purchasers" shall have the meanings ascribed
thereto in the preamble.
"Redeemable Securities" of any Person means any Capital Stock of
such Person which by its terms (or by the terms of any security into which
it is convertible or for which it is exchangeable or exercisable), upon the
happening of any event or otherwise (a) matures or is mandatorily
redeemable or subject to any mandatory repurchase requirement, pursuant to
a sinking fund obligation or otherwise, (b) is convertible into or
exchangeable or exercisable for Indebtedness or Redeemable Securities or
(c) is redeemable or subject to any repurchase requirement arising at the
option of the holder thereof, in whole or in part, in each case on or prior
to the first anniversary of the Stated Maturity Date.
"Redemption Date", when used with respect to any Note to be
redeemed, means the date fixed for such redemption by or pursuant to the
Notes.
"Redemption Price", when used with respect to any Note to be
redeemed, means the price at which it is to be redeemed pursuant to the
Notes.
"Registration Default" shall have the meaning ascribed thereto in
Section 2.3.
"Regular Record Date" shall have the meaning ascribed thereto in
Section 1.2.
"Reimbursement Obligations" shall have the meaning ascribed
thereto in the Credit Agreement as in effect as of the date hereof.
"Required Holders" means Holders holding more than 25% of the
aggregate principal amount of the outstanding Notes.
"Requirements of Law" shall have the meaning ascribed thereto in
the Credit Agreement as in effect as of the date hereof.
"Responsible Officer" shall mean the chief executive officer, the
president of the Company and the chief financial officer of the Company.
"Restricted Cash" shall have the meaning ascribed thereto in the
Credit Agreement as in effect as of the date hereof.
"Revolving Credit Termination Date" shall have the meaning
ascribed thereto in the Credit Agreement as in effect as of the date
hereof.
"Rule 144A" means Rule 144A under the Securities Act (or any
successor provision), as it may be amended from time to time.
"Second Closing Termination Date" shall have the meaning ascribed
thereto in the Securities Purchase Agreement.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Securities Purchase Agreement" shall mean the Securities
Purchase Agreement, dated as January 13, 2000, by and among the Purchasers
and the Company.
"Security Register" shall have the meaning ascribed thereto in
Section 1.3.
"Senior Indebtedness" means (i) the principal of (and premium, if
any) and interest (including interest accruing on or after the filing of
any petition in bankruptcy or for reorganization relating to the Company
whether or not such claim for post-petition interest is allowed in such
proceeding) on, and penalties and any obligation of the Company for
reimbursement (including attorneys' fees incurred in connection with any
such proceeding, whether or not allowed in such proceeding), indemnities
and fees relating to, and all other amounts, including amounts in respect
of letters of credit and letter of credit reimbursement obligations, owing
under, the Credit Agreement (as permitted by Section 3.2(c) hereof), (ii)
the principal of (and premium, if any) and interest on Indebtedness of the
Company for money borrowed, whether incurred on or prior to the date of
original issuance of the Notes or thereafter, and any amendments, renewals,
extensions, modifications, refinancings and refundings of any such
Indebtedness, (iii) Hedging Obligations entered into with respect to
Indebtedness described in clauses (i) and (ii) above, and (iv) senior notes
ranking pari passu with Indebtedness under the Credit Agreement and secured
by the collateral secured pursuant to the Credit Agreement (as permitted by
Section 3.2(f) hereof); provided, however, that the following shall not
constitute Senior Indebtedness: (1) any Indebtedness as to which the terms
of the instrument creating or evidencing the same provide that such
Indebtedness is not superior in right of payment to the Notes, (2) any
Indebtedness as to which the terms of the instrument creating or evidencing
the same provide that such Indebtedness is subordinated in right of payment
in any respect to any other Indebtedness of the Company, (3) Indebtedness
evidenced by the Notes, (4) any Indebtedness owed to a Person when such
Person is a Subsidiary or Affiliate of the Company, (5) any obligation of
the Company arising from Disqualified Stock of the Company, (6) any portion
of any Indebtedness which is incurred in violation of the terms of the
Notes, and (7) Indebtedness which, when incurred and without respect to any
election under Section 1111(b) of Title 11, United States Code, is without
recourse to the Company.
"Senior Nonmonetary Default" shall have the meaning ascribed
thereto in Section 6.3.
"Senior Payment Default" shall have the meaning ascribed thereto
in Section 6.3.
"Significant Subsidiary" shall mean, at any particular time, any
Subsidiary that, together with the Subsidiaries of such Subsidiary, (i) for
the most recent fiscal year of the Company accounted for more than 5% of
the consolidated revenues of the Company and its Subsidiaries or (ii) at
the end of such fiscal year, was the owner (beneficial or otherwise) of
more than 5% of the consolidated assets of the Company and its Subsidiaries
all as calculated in accordance with GAAP and as shown on the consolidated
financial statements of the Company and its Subsidiaries.
"Special Interest" shall have the meaning ascribed thereto in
Section 1.1(c).
"Stated Maturity", when used with respect to any Indebtedness or
any installment of interest thereon, means the date specified in such
Indebtedness as the fixed date on which the principal of such Indebtedness
or such installment of interest is due and payable.
"Stated Maturity Date" shall have the meaning ascribed thereto in
the preamble.
"Subordinated Indebtedness" means (a) the Existing Subordinated
Indebtedness and (b) any other unsecured Indebtedness of the Company or any
Subsidiary (i) no part of the principal of which is required to be paid
under any circumstances (whether by way of scheduled amortization,
mandatory sinking fund, mandatory redemption, mandatory prepayment or
otherwise) prior to the Stated Maturity Date (exclusive of future loans or
advances to pay premiums on split-dollar life insurance policies), (ii) the
payment of the principal of and interest on which and other obligations of
the Company or any Subsidiary in respect thereof are subordinated to the
prior payment in full of the principal of and interest (including
post-petition interest) on the Notes and all other Obligations on terms and
conditions at least as favorable to the Holders of the Notes as the
subordination of the Notes are to the holders of Senior Indebtedness, and
(iii) all other terms and conditions of which are satisfactory in form and
substance to the Holders of a majority of the aggregate principal amount of
Notes then outstanding (as evidenced by their prior written approval
thereof).
"Subordinated Indebtedness Documentation" means the agreements,
indentures and other documentation pursuant to which any Subordinated
Indebtedness is or has been issued.
"Subsequent Purchaser" shall mean any Person to whom any
Purchaser sells any of the Notes (other than Affiliates of the Purchasers).
"Subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of
the total voting power of shares of Capital Stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly
or indirectly, by such Person or one or more of the other Subsidiaries of
that Person (or a combination thereof) and (ii) any partnership (A) the
sole general partner or the managing general partner of which is such
Person or a Subsidiary of such Person or (B) the only general partners of
which are such Person or of one or more Subsidiaries of such Person (or any
combination thereof).
"Successor Company" shall mean the entity or the Person formed by
or surviving any consolidation or merger with the Company (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made.
"Synthetic Lease" means any synthetic lease, tax retention
operating lease or off-balance sheet financing product where such
transaction is considered borrowed money indebtedness for tax purposes but
which is classified as an operating lease pursuant to GAAP.
"Term Loan Election" shall have the meaning ascribed thereto in
the Credit Agreement as in effect as of the date hereof.
"Total Debt" shall have the meaning ascribed thereto in the
Credit Agreement as in effect as of the date hereof.
"Total Debt to EBITDA Ratio" shall have the meaning ascribed
thereto in Section 3.2.
"Transaction Documents" shall mean the Notes, the Securities
Purchase Agreement, the Warrants, the Registration Rights Agreement (as
defined in the Securities Purchase Agreement), the Exchange and
Registration Rights Agreement, and all other contracts, agreements,
schedules, certificates and other documents being delivered pursuant to or
in connection with the Notes or the transactions contemplated hereby or
thereby.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of
such Person all of the outstanding Capital Stock or other ownership
interests of which (other than directors' qualifying shares) shall at the
time be owned by such Person or by one or more Wholly Owned Subsidiaries of
such Person or by such Person and one or more Wholly Owned Subsidiaries of
such Person.
SECTION EIGHT
MISCELLANEOUS
-------------
8.1. Amendments, Waivers and Consents. This terms of the Notes may be
amended, and the observance of any term hereof may be waived (either
retroactively or prospectively) with (and only with) the written consent of
the Company and the Holders of a majority of the aggregate principal amount
of Notes then outstanding; provided, however, that no such amendment or
waiver may, without the prior written consent of the Holder of each Note or
exchange note then outstanding and affected thereby (i) subject any Holder
to any additional obligation, (ii) reduce the principal of (or premium, if
any) or rate of interest or Special Interest on, any Note or exchange note,
(iii) postpone the date fixed for any payment of principal of (or premium,
if any) or interest or Special Interest on, any Note, (iv) change the
ranking or priority of the Notes or the percentage of the aggregate
principal amount of the Notes the Holders of which shall be required to
consent or take any other action under this Section 8.1 or any other
provision of the Notes, (v) amend or waive the provisions of Section 3.4 or
Section Four or any of the definitions used in such Sections. No amendment
or waiver of the Holders will extend to or affect any obligation, covenant,
agreement, Default or Event of Default not expressly amended or waived or
thereby impair any right consequent thereon.
8.2. Expiration of Certain Covenants. The covenants set forth in
clauses (ii) and (iv) of Section 2.1(a) and Sections 3.14 and 3.15 shall
expire with respect to any Note sold in a Non-Private Transaction.
8.3. Governing Law. THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
THE PRINCIPLES OF CONFLICTS OF LAW.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed.
PROMEDCO MANAGEMENT COMPANY
By:
-------------------------------------
Name:
Title:
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this
Note on the books of the Company. The agent may substitute another to act
for him.
- ----------------------------------------------------------------------
Date: Your Signature:
--------------- ------------------------
- ----------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Note.
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased in its entirety
by the Company pursuant to Section 4.1 of the Agreement, check the box:
[ ]
If you want to elect to have only a part of the principal amount
of this Note purchased by the Company pursuant to Section 4.1 of the
Agreement, state the portion of such amount (such portion must be equal to
$1,000 or an integral multiple thereof): $_________
Dated: Your Signature:
---------------------------
(Sign exactly as name appears
on the other side of this Note)
REGISTRATION RIGHTS AGREEMENT
by and among
PROMEDCO MANAGEMENT COMPANY
GS CAPITAL PARTNERS III, L.P.
and
The Parties Listed On The Signature Page Hereto
January 13, 2000
<PAGE>
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made as of
January 13, 2000, by and among PROMEDCO MANAGEMENT COMPANY, a Delaware
corporation (the "Company"), GS CAPITAL PARTNERS III, L.P., a Delaware
limited partnership ("GSCP"), and certain affiliates of GSCP set forth on
the signature page of this Agreement (the "GSCP Affiliates", and
collectively with GSCP and including their respective successors and
permitted assigns, the "GSCP Parties").
WHEREAS, as of the date hereof, the Company and the GSCP Parties are
entering into a Securities Purchase Agreement (the "Purchase Agreement"),
pursuant to which, among other things, the GSCP Parties are purchasing
1,250,000 shares of the Company's common stock, par value $0.01 per share
(the "Common Stock"), of the Company; and
WHEREAS, in connection with the Company and the GSCP Parties entering
into the Purchase Agreement, the Company has agreed to provide the
registration rights set forth in this Agreement.
ACCORDINGLY, the parties hereto agree as follows:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the meanings
ascribed to them below:
"Affiliate" means (i) with respect to any Person, any other Person
that, directly or indirectly controls, is controlled by, or is under common
control with, such Person or (ii) with respect to any individual, shall
also mean the spouse or child of such individual; provided, that neither
the Company nor any Person controlled by the Company shall be deemed to be
an Affiliate of any Holder.
"Certificate of Incorporation" means the Certificate of Incorporation
of the Company, as amended.
"Common Stock Equivalents" means any securities convertible into, or
exercisable or exchangeable for, shares of Common Stock.
"Holder" or "Holders" means any party who is a signatory to this
Agreement and any party who shall hereafter acquire and hold Registrable
Securities.
"Major Holder" means with respect to any registration the Holder that,
together with its Affiliates, includes the largest number of Registrable
Securities in such registration.
"Person" shall mean any individual, firm, corporation, limited
liability company, partnership, company or other entity, and shall include
any successor (by merger or otherwise) of such entity.
"Second Closing" shall have the meaning ascribed thereto in the
Purchase Agreement.
"Series A Preferred Stock" shall mean the shares of Series A Preferred
Stock, par value $0.01 per share, to be issued by the Company to the GS
Parties at the Second Closing.
"Registrable Securities" means (a) any shares of Common Stock or
Common Stock Equivalents owned by the GS Parties, (b) any shares of Common
Stock issued or issuable upon the conversion, exercise or exchange of any
shares of Series A Preferred Stock held by the GS Parties, and (c) any
shares of Common Stock issued with respect to the securities referred to in
clauses (a), (b) or (c) by way of a stock dividend, stock split or reverse
stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or otherwise. As to any particular
Registrable Securities, such securities shall cease to be Registrable
Securities when (A) a registration statement with respect to the sale of
such securities shall have been declared effective under the Securities Act
and such securities shall have been disposed of in accordance with such
registration statement, (B) such securities shall have been sold (other
than in a privately negotiated sale) pursuant to Rule 144 (or any successor
provision) under the Securities Act and in compliance with the requirements
of paragraphs (f) and (g) of Rule 144 (notwithstanding the provisions of
paragraph (k) of such Rule) or (C) such securities may be sold pursuant to
Rule 144(k) under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
2. Registration Rights.
-------------------
2.1. Demand Registrations.
--------------------
(a) (i) Subject to Sections 2.1(b) and 2.3 below, the Holders of
15% of the Registrable Securities (which calculation shall include all
Registrable Securities then outstanding and all Registrable Securities into
which all shares of Series A Preferred Stock then outstanding may be
converted) shall have the right to require the Company to file a
registration statement under the Securities Act covering all or any part of
their respective Registrable Securities, by delivering a written request
therefor to the Company specifying the number of Registrable Securities to
be included in such registration by such Holder(s) and the intended method
of distribution thereof. All such requests by any Holder(s) pursuant to
this Section 2.1(a)(i) are referred to herein as "Demand Registration
Requests," and the registrations so requested are referred to herein as
"Demand Registrations" (with respect to any Demand Registration, the
Holder(s) making such demand for registration being referred to as the
"Initiating Holder"). As promptly as practicable, but no later than ten
days after receipt of a Demand Registration Request, the Company shall give
written notice (the "Demand Exercise Notice") of such Demand Registration
Request to all Holders of record of Registrable Securities. After the
Company has effected two Demand Registrations pursuant to this Section
2.1(a)(i), the related registration statements have been declared
effective, and with respect to a shelf registration pursuant to Rule 415
under the Securities Act, the distribution contemplated thereunder
completed, the Company shall have no further obligation under this Section
2.1(a)(i); provided however, that with respect to a shelf registration
pursuant to Rule 415 under the Securities Act, such registration statement
shall have been effective for a period of not less than 60 days.
(ii) The Company, subject to Sections 2.3 and 2.6, shall
include in a Demand Registration (x) the Registrable Securities of the
Initiating Holder and (y) the Registrable Securities of any other Holder
which shall have made a written request to the Company for inclusion in
such registration (which request shall specify the maximum number of
Registrable Securities intended to be disposed of by such Holder) within 30
days after the receipt of the Demand Exercise Notice (or, 15 days if, at
the request of the Initiating Holder or the Major Holder participating in
such registration, the Company states in such written notice or gives
telephonic notice to all Holders, with written confirmation to follow
promptly thereafter, that such registration will be on a Form S-3).
(iii) The Company shall, as expeditiously as possible, use
its best efforts to (x) effect such registration under the Securities Act
(including, without limitation, by means of a shelf registration pursuant
to Rule 415 under the Securities Act if so requested and if the Company is
then eligible to use such a registration) of the Registrable Securities
which the Company has been so requested to register, for distribution in
accordance with such intended method of distribution, and (y) if requested
by the Initiating Holder or the Major Holder participating in such
registration, obtain acceleration of the effective date of the registration
statement relating to such registration.
(b) The Demand Registration rights granted in Section 2.1(a) to
the Holders are subject to the following limitations: (i) with respect to
any registration in respect of a Demand Registration Request initiated by a
transferee of any GSCP Party (other than another GSCP Party), such
registration statement must include shares of Common Stock representing, in
the aggregate (based on the Common Stock included in such registration by
all GSCP Parties participating in such registration), in excess of 20% of
the sum of (x) the amount of shares of Registrable Securities held, in the
aggregate, by the GSCP Parties and their transferees immediately prior to
such registration plus (y) the amount of shares of Common Stock obtainable
upon the conversion of Common Stock Equivalents held, in the aggregate, by
the GSCP Parties and their transferees immediately prior to such
registration; (ii) the Company shall not be required to cause a
registration pursuant to Section 2.1(a)(i) to be declared effective within
a period of 180 days after the effective date of any registration statement
of the Company registering shares of Common Stock or Common Stock
Equivalents (other than pursuant to a registration statement on Form S-4 or
S-8 or an equivalent registration form then in effect); and (iii) if the
Company shall furnish to Holders who have elected to exercise their rights
under Sections 2.1(a)(i) and 2.1(a)(ii) a certificate signed by the
President or the Chief Executive Officer of the Company stating that, in
the good faith judgment of the Board of Directors of the Company, effecting
the registration would adversely affect any material financing, material
acquisition, or disposition of material assets or stock, or merger or other
material comparable transaction or that disclosure of certain information
that would otherwise be required to be disclosed in a Registration
Statement to be filed pursuant to Section 2.1(a)(i) would be seriously
detrimental to the Company, and it is therefore desirable and in the best
interests of the Company to defer the filing of such registration
statement, then the Company shall have the right to defer such filing for a
period of time after receipt of such request; provided, however, that the
Company may not defer such filing more than once in any 12-month period and
the aggregate period of time during any such 12-month period which the
Company may defer such filing shall not exceed 90 days.
If the Company shall give any notice of postponement of any
registration statement, the Company shall not, during the period of
postponement, register any Common Stock, other than pursuant to a
registration statement on Form S-4 or S-8 (or an equivalent registration
form then in effect). If the Company shall withdraw or prematurely
terminate a registration statement filed under Section 2.1(a)(i) as a
result of any stop order, injunction or other order or requirement of the
SEC or any other governmental agency or court, the Company shall not be
considered to have effected an effective registration for the purposes of
this Agreement until the Company shall have filed a new registration
statement covering the Registrable Securities covered by the withdrawn
registration statement and such registration statement shall have been
declared effective and shall not have been withdrawn. If the Company shall
give any notice of postponement of a registration statement, the Company
shall, at the end of such postponement period (which shall not exceed 90
days), use its best efforts to effect the registration under the Securities
Act of the Registrable Securities covered by the postponed registration
statement in accordance with this Section 2.1 (unless the Initiating Holder
shall have withdrawn such request, in which case the Company shall not be
considered to have effected an effective registration for the purposes of
this Agreement).
(c) If the Company, or any stockholder (other than a Holder) that
has piggyback registration rights granted to such stockholder by the
Company prior to the date hereof ("Additional Piggyback Rights"), wishes to
offer any of its securities in connection with any registration initiated
pursuant to this Section 2.1, no such securities may be offered by the
Company or such other stockholder without the consent of the Major Holder
unless the terms of such Additional Piggyback Rights require that such
securities be registered in connection with any such Demand Registration,
in which case such securities shall be offered only to the extent permitted
by Section 2.3(a).
(d) In connection with any Demand Registration, the Major Holder
participating in such registration shall have the right to designate, (i)
if Goldman, Sachs & Co. or one of its Affiliates (such Person, "GS & Co.")
is not retained by the Company to serve as the lead managing underwriter in
connection with such registration, the lead managing underwriter for such
registration and (ii) each other managing underwriter for such
registration, provided that each such other managing underwriter is
reasonably satisfactory to the Company.
2.2. Piggyback Registrations.
-----------------------
(a) If, at any time, the Company proposes or is required to
register any of its equity securities under the Securities Act (other than
pursuant to (i) registrations on such form or similar form(s) solely for
registration of securities in connection with an employee benefit plan or
dividend reinvestment plan or a merger or consolidation or (ii) a Demand
Registration under Section 2.1) on a registration statement on Form S-1,
Form S-2 or Form S-3 (or an equivalent general registration form then in
effect), whether or not for its own account, the Company shall give prompt
written notice of its intention to do so to each of the Holders of record
of Registrable Securities. Upon the written request of any such Holder,
made within 20 days following the receipt of any such written notice (which
request shall specify the maximum number of Registrable Securities intended
to be disposed of by such Holder and the intended method of distribution
thereof), the Company shall, subject to Sections 2.2(b), 2.3 and 2.6
hereof, use its best efforts to cause all such Registrable Securities, the
Holders of which have so requested the registration thereof, to be
registered under the Securities Act (with the securities which the Company
at the time proposes to register) to permit the sale or other disposition
by the Holders (in accordance with the intended method of distribution
thereof) of the Registrable Securities to be so registered. There is no
limitation on the number of such piggyback registrations pursuant to the
preceding sentence which the Company is obligated to effect. No
registration effected under this Section 2.2(a) shall relieve the Company
of its obligations to effect Demand Registrations.
(b) If, at any time after giving written notice of its intention
to register any equity securities and prior to the effective date of the
registration statement filed in connection with such registration, the
Company shall determine for any reason not to register or to delay
registration of such equity securities, the Company may, at its election,
give written notice of such determination to all Holders of record of
Registrable Securities and (i) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with such abandoned registration, without
prejudice, however, to the rights of Holders under Section 2.1, and (ii) in
the case of a determination to delay such registration of its equity
securities, shall be permitted to delay the registration of such
Registrable Securities for the same period as the delay in registering such
other equity securities.
(c) Any Holder shall have the right to withdraw its request for
inclusion of its Registrable Securities in any registration statement
pursuant to this Section 2.2 by giving written notice to the Company of its
request to withdraw; provided, however, that (i) such request must be made
in writing prior to the earlier of the execution of the underwriting
agreement or the execution of the custody agreement with respect to such
registration and (ii) such withdrawal shall be irrevocable and, after
making such withdrawal, a Holder shall no longer have any right to include
Registrable Securities in the registration as to which such withdrawal was
made.
2.3. Allocation of Securities Included in Registration Statement.
-----------------------------------------------------------
(a) If any requested registration pursuant to Section 2.1
involves an underwritten offering and the lead managing underwriter of such
offering (the "Manager") shall advise the Company that, in its view, the
number of securities requested to be included in such registration by the
Holders or any other persons (including those shares of Common Stock
requested by the Company and pursuant to Additional Piggyback Rights (each
as permitted by the Major Holder)) exceeds the largest number (the "Section
2.1 Sale Number") that can be sold in an orderly manner in such offering
within a price range acceptable to the Major Holder, the Company shall
include in such registration:
(i) all Registrable Securities requested to be included in
such registration by Holders of Registrable Securities; provided,
however, that, if the number of such Registrable Securities exceeds
the Section 2.1 Sale Number, the number of such Registrable Securities
(not to exceed the Section 2.1 Sale Number) to be included in such
registration shall be allocated on a pro rata basis among all Holders
requesting that Registrable Securities be included in such
registration, based on the number of Registrable Securities then owned
by each Holder requesting inclusion in relation to the number of
Registrable Securities owned by all Holders requesting inclusion;
(ii) to the extent that the number of Registrable Securities
to be included by all Holders pursuant to clause (i) of this Section
2.3(a) is less than the Section 2.1 Sale Number, securities that the
Company proposes to register (as approved by the Major Holder); and
(iii) to the extent that the number of Registrable
Securities to be included by all Holders and the number of securities
to be included by the Company is less than the Section 2.1 Sale
Number, any other securities that the Holders thereof propose to
register pursuant to the exercise of Additional Piggyback Rights (as
approved by the Major Holder).
If, as a result of the proration provisions of this Section
2.3(a), any Holder shall not be entitled to include all Registrable
Securities in a registration that such Holder has requested be included,
such Holder may elect to withdraw his request to include Registrable
Securities in such registration or may reduce the number requested to be
included; provided, however, that (x) such request must be made in writing
prior to the earlier of the execution of the underwriting agreement or the
execution of the custody agreement with respect to such registration and
(y) such withdrawal shall be irrevocable and, after making such withdrawal,
a Holder shall no longer have any right to include Registrable Securities
in the registration as to which such withdrawal was made.
(b) If any registration pursuant to Section 2.2 involves an
underwritten offering that was initially proposed by the Company as a
primary registration of its securities and the Manager shall advise the
Company that, in its view, the number of securities requested to be
included in such registration exceeds the number (the "Section 2.2 Company
Sale Number") that can be sold in an orderly manner in such registration
within a price range acceptable to the Company, the Company shall include
in such registration:
(i) all Common Stock or securities convertible into, or
exchangeable or exercisable for, Common Stock that the Company
proposes to register for its own account (the "Company Securities");
(ii) to the extent that the number of Company Securities is
less than the Section 2.2 Company Sale Number, the remaining shares to
be included in such registration shall be allocated on a pro rata
basis among all Holders of Registrable Securities requesting that
Registrable Securities be included in such registration, based on the
number of Registrable Securities then owned by each Holder requesting
inclusion in relation to the number of Registrable Securities owned by
all Holders requesting inclusion; and
(iii) to the extent the number of Company Securities plus
the number of Registrable Securities requested to be included by all
Holders is less than the Section 2.2 Company Sale Number, any other
securities that the Holders thereof propose to register pursuant to
the exercise of Additional Piggyback Rights.
(c) If any registration pursuant to Section 2.2 involves an
underwritten offering that was initially proposed by holders of securities
of the Company other than the Holders or the Company (the "Registering
Stockholders") and the Manager shall advise such Registering Stockholders
that, in its view, the number of securities requested to be included in
such registration (the "Stockholder Securities") exceeds the number (the
"Section 2.2 Stockholder Sale Number") that can be sold in an orderly
manner in such registration within a price range acceptable to the Company,
the Company shall include in such registration:
(i) all Stockholder Securities requested to be included in
such registration by the Registering Stockholders; provided, however,
that, if the number of such Stockholder Securities exceeds the Section
2.2 Stockholder Sale Number, the number of such Stockholder Securities
(not to exceed the Section 2.2 Stockholder Sale Number) to be included
in such registration shall be allocated on a pro rata basis among all
Registering Stockholders requesting that Stockholder Securities be
included in such registration, based on the number of Stockholder
Securities then owned by each Registering Stockholder requesting
inclusion in relation to the number of Stockholder Securities owned by
all Registering Stockholders requesting inclusion;
(ii) to the extent that the number of Stockholder Securities
to be included by all Registering Stockholders pursuant to clause (i)
of this Section 2.3(c) is less than the Section 2.2 Stockholder Sale
Number, Company Securities that the Company proposes to register; and
(iii) to the extent that the number of Stockholder
Securities plus the number of Company Securities is less than the
Section 2.2 Stockholder Sale Number, the remaining shares to be
included in such registration shall be allocated on a pro rata basis
among all Holders of Registrable Securities requesting that
Registrable Securities be included in such registration, based on the
number of Registrable Securities then owned by each Holder requesting
inclusion in relation to the number of Registrable Securities owned by
all Holders requesting inclusion.
2.4. Registration Procedures. If and whenever the Company is required
by the provisions of this Agreement to use its best efforts to effect or
cause the registration of any Registrable Securities under the Securities
Act as provided in this Agreement, the Company shall, as expeditiously as
possible:
(a) prepare and file with the SEC a registration statement on an
appropriate registration form of the SEC for the disposition of such
Registrable Securities in accordance with the intended method of
disposition thereof, which form (i) shall be selected by the Company and
(ii) shall, in the case of a shelf registration, be available for the sale
of the Registrable Securities by the selling Holders thereof and such
registration statement shall comply as to form in all material respects
with the requirements of the applicable form and include all financial
statements required by the SEC to be filed therewith, and the Company shall
use its best efforts to cause such registration statement to become and
remain effective (provided, however, that before filing a registration
statement or prospectus or any amendments or supplements thereto, or
comparable statements under securities or blue sky laws of any
jurisdiction, the Company will furnish to one counsel for the Holders
participating in the planned offering (selected by the Major Holder) and
the underwriters, if any, copies of all such documents proposed to be filed
(including all exhibits thereto), which documents will be subject to the
reasonable review and reasonable comment of such counsel, and the Company
shall not file any registration statement or amendment thereto or any
prospectus or supplement thereto to which the Holders of a majority of the
Registrable Securities covered by such registration statement or the
underwriters, if any, shall reasonably object in writing on the basis that
the registration statement fails to comply in any material respect with the
requirements of the Securities Act and the rules and regulations
promulgated thereunder);
(b) prepare and file with the SEC 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 such period (which shall not be required to exceed 180 days in the case
of a registration pursuant to Section 2.1 or 120 days in the case of a
registration pursuant to Section 2.2) as any seller of Registrable
Securities pursuant to such registration statement shall request and to
comply with the provisions of the Securities Act with respect to the sale
or other disposition of all Registrable Securities covered by such
registration statement in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement;
(c) furnish, without charge, to each seller of such Registrable
Securities and each underwriter, if any, of the securities covered by such
registration statement such number of copies of such registration
statement, each amendment and supplement thereto (in each case including
all exhibits), and the prospectus included in such registration statement
(including each preliminary prospectus) in conformity with the requirements
of the Securities Act, and other documents, as such seller and underwriter
may reasonably request in order to facilitate the public sale or other
disposition of the Registrable Securities owned by such seller (the Company
hereby consenting to the use in accordance with all applicable law of each
such registration statement (or amendment or post-effective amendment
thereto) and each such prospectus (or preliminary prospectus or supplement
thereto) by each such seller of Registrable Securities and the
underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by such registration statement or
prospectus);
(d) use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under such other
securities or "blue sky" laws of such jurisdictions as any sellers of
Registrable Securities or any managing underwriter, if any, shall
reasonably request, and do any and all other acts and things which may be
reasonably necessary or advisable to enable such sellers or underwriter, if
any, to consummate the disposition of the Registrable Securities in such
jurisdictions, except that in no event shall the Company be required to
qualify to do business as a foreign corporation in any jurisdiction where
it would not, but for the requirements of this paragraph (d), be required
to be so qualified, to subject itself to taxation in any such jurisdiction
or to consent to general service of process in any such jurisdiction;
(e) promptly notify each Holder selling Registrable Securities
covered by such registration statement and each managing underwriter, if
any: (i) when the registration statement, any pre-effective amendment, the
prospectus or any prospectus supplement related thereto or post-effective
amendment to the registration statement has been filed and, with respect to
the registration statement or any post-effective amendment, when the same
has become effective; (ii) of any request by the SEC or state securities
authority for amendments or supplements to the registration statement or
the prospectus related thereto or for additional information; (iii) of the
issuance by the SEC of any stop order suspending the effectiveness of the
registration statement or the initiation of any proceedings for that
purpose; (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any Registrable
Securities for sale under the securities or blue sky laws of any
jurisdiction or the initiation of any proceeding for such purpose; (v) of
the existence of any fact of which the Company becomes aware which results
in the registration statement, the prospectus related thereto or any
document incorporated therein by reference containing an untrue statement
of a material fact or omitting to state a material fact required to be
stated therein or necessary to make any statement therein not misleading;
and (vi) if at any time the representations and warranties contemplated by
any underwriting agreement, securities sale agreement, or other similar
agreement, relating to the offering shall cease to be true and correct in
all material respects; and, if the notification relates to an event
described in clause (v), the Company shall promptly prepare and furnish to
each such seller and each underwriter, if any, a reasonable number of
copies of a prospectus supplemented or amended so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not include an 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 the light of the circumstances under which they were
made not misleading;
(f) comply with all applicable rules and regulations of the SEC,
and make generally available to its security holders, as soon as reasonably
practicable after the effective date of the registration statement (and in
any event within 17 months thereafter), an earnings statement (which need
not be audited) covering the period of at least twelve consecutive months
beginning with the first day of the Company's first calendar quarter after
the effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder;
(g) (i) cause all such Registrable Securities covered by such
registration statement to be listed on the principal securities exchange on
which similar securities issued by the Company are then listed (if any), if
the listing of such Registrable Securities is then permitted under the
rules of such exchange, or (ii) if no similar securities are then so
listed, to either cause all such Registrable Securities to be listed on a
national securities exchange or to secure designation of all such
Registrable Securities as a Nasdaq National Market "national market system
security" within the meaning of Rule 11Aa2-1 of the Exchange Act or,
failing that, secure Nasdaq National Market authorization for such shares
and, without limiting the generality of the foregoing, take all actions
that may be required by the Company as the issuer of such Registrable
Securities in order to facilitate the managing underwriter's arranging for
the registration of at least two market makers as such with respect to such
shares with the National Association of Securities Dealers, Inc. (the
"NASD");
(h) provide and cause to be maintained a transfer agent and
registrar for all such Registrable Securities covered by such registration
statement not later than the effective date of such registration statement;
(i) in connection with an underwritten offering, enter into such
customary agreements (including, if applicable, an underwriting agreement)
and take such other actions as the Holders of a majority of the Registrable
Securities or the Major Holder participating in such offering shall
reasonably request in order to expedite or facilitate the disposition of
such Registrable Securities. The Holders of the Registrable Securities
which are to be distributed by such underwriters shall be parties to such
underwriting agreement and may, at their option, require that the Company
make to and for the benefit of such Holders the representations, warranties
and covenants of the Company which are being made to and for the benefit of
such underwriters and which are of the type customarily provided to
institutional investors in secondary offerings;
(j) use its best efforts to obtain an opinion from the Company's
counsel and a "cold comfort" letter from the Company's independent public
accountants in customary form and covering such matters as are customarily
covered by such opinions and "cold comfort" letters delivered to
underwriters in underwritten public offerings, which opinion and letter
shall be reasonably satisfactory to the underwriter, if any, and to the
Major Holder participating in such offering, and furnish to each Holder
participating in the offering and to each underwriter, if any, a copy of
such opinion and letter addressed to such Holder or underwriter;
(k) deliver promptly to each Holder participating in the offering
and each underwriter, if any, copies of all correspondence between the SEC
and the Company, its counsel or auditors and all memoranda relating to
discussions with the SEC or its staff with respect to the registration
statement, other than those portions of any such memoranda which contain
information subject to attorney-client privilege with respect to the
Company, and, upon receipt of such confidentiality agreements as the
Company may reasonably request, make reasonably available for inspection by
any seller of such Registrable Securities covered by such registration
statement, by any underwriter, if any, participating in any disposition to
be effected pursuant to such registration statement and by any attorney,
accountant or other agent retained by any such seller or any such
underwriter, all pertinent financial and other records, pertinent corporate
documents and properties of the Company, and cause all of 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 only for the purpose of
conducting reasonable due diligence in connection with such disposition;
(l) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of the registration statement;
(m) provide a CUSIP number for all Registrable Securities, not
later than the effective date of the registration statement;
(n) make reasonably available its employees and personnel and
otherwise provide reasonable assistance to the underwriters (taking into
account the needs of the Company's businesses and the requirements of the
marketing process) in the marketing of Registrable Securities in any
underwritten offering;
(o) promptly prior to the filing of any document which is to be
incorporated by reference into the registration statement or the prospectus
(after the initial filing of such registration statement and prior to the
effectiveness thereof) provide copies of such document to counsel for the
selling Holders of Registrable Securities and to each managing underwriter,
if any, and make the Company's representatives reasonably available for
discussion of such document and make such changes in such document
concerning the selling holders prior to the filing thereof as counsel for
such selling Holders or underwriters may reasonably request;
(p) furnish to the Major Holder participating in the offering and
the managing underwriter, without charge, at least one signed copy, and to
each other Holder participating in the offering, without charge, at least
one photocopy of a signed copy, of the registration statement and any
post-effective amendments thereto, including financial statements and
schedules, all documents incorporated therein by reference and all exhibits
(including those incorporated by reference);
(q) cooperate with the selling Holders of Registrable Securities
and the managing underwriter, if any, to facilitate the timely preparation
and delivery of certificates not bearing any restrictive legends
representing the Registrable Securities to be sold, and cause such
Registrable Securities to be issued in such denominations and registered in
such names in accordance with the underwriting agreement prior to any sale
of Registrable Securities to the underwriters or, if not an underwritten
offering, in accordance with the instructions of the selling Holders of
Registrable Securities at least three business days prior to any sale of
Registrable Securities and instruct any transfer agent and registrar of
Registrable Securities to release any stop transfer orders in respect
thereof;
(r) take all such other commercially reasonable actions as are
necessary or advisable in order to expedite or facilitate the disposition
of such Registrable Securities; and
(s) take no direct or indirect action prohibited by Regulation M
under the Exchange Act; provided, however, that to the extent that any
prohibition is applicable to the Company, the Company will take such action
as is necessary to make any such prohibition inapplicable.
The Company may require as a condition precedent to the Company's
obligations under this Section 2.4 that each seller of Registrable
Securities as to which any registration is being effected furnish the
Company such information regarding such seller and the distribution of such
securities as the Company may from time to time reasonably request provided
that such information is necessary for the Company to consummate such
registration and shall be used only in connection with such registration.
Each Holder of Registrable Securities agrees that upon receipt of
any notice from the Company of the happening of any event of the kind
described in clause (v) of paragraph (e) of this Section 2.4, such Holder
will discontinue such Holder's disposition of Registrable Securities
pursuant to the registration statement covering such Registrable Securities
until such Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by paragraph (e) of this Section 2.4 and, if so
directed by the Company, will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in such
Holder's possession of the prospectus covering such Registrable Securities
that was in effect at the time of receipt of such notice. In the event the
Company shall give any such notice, the applicable period mentioned in
paragraph (b) of this Section 2.4 shall be extended by the number of days
during such period from and including the date of the giving of such notice
to and including the date when each seller of any Registrable Securities
covered by such registration statement shall have received the copies of
the supplemented or amended prospectus contemplated by paragraph (e) of
this Section 2.4.
If any such registration statement or comparable statement under
"blue sky" laws refers to any Holder by name or otherwise as the Holder of
any securities of the Company, then such Holder shall have the right to
require (i) the insertion therein of language, in form and substance
reasonably satisfactory to such Holder and the Company, to the effect that
the holding by such Holder of such securities is not to be construed as a
recommendation by such Holder of the investment quality of the Company's
securities covered thereby and that such holding does not imply that such
Holder will assist in meeting any future financial requirements of the
Company, or (ii) in the event that such reference to such Holder by name or
otherwise is not in the judgment of the Company, as advised by counsel,
required by the Securities Act or any similar federal statute or any state
"blue sky" or securities law then in force, the deletion of the reference
to such Holder.
2.5. Registration Expenses.
---------------------
(a) "Expenses" shall mean any and all fees and expenses incident
to the Company's performance of or compliance with this Article 2,
including, without limitation: (i) SEC, stock exchange or NASD registration
and filing fees and all listing fees and fees with respect to the inclusion
of securities in Nasdaq National Market, (ii) fees and expenses of
compliance with state securities or "blue sky" laws and in connection with
the preparation of a "blue sky" survey, including without limitation,
reasonable fees and expenses of blue sky counsel, (iii) printing and
copying expenses, (iv) messenger and delivery expenses, (v) expenses
incurred in connection with any road show, (vi) fees and disbursements of
counsel for the Company, (vii) with respect to each registration, the fees
and disbursements of one counsel for the selling Holder(s) (selected by the
Major Holder), (viii) fees and disbursements of all independent public
accountants (including the expenses of any audit and/or "cold comfort"
letter) and fees and expenses of other persons, including special experts,
retained by the Company, (ix) fees and expenses payable to a Qualified
Independent Underwriter (as such term is defined in Schedule E to the
By-Laws of the NASD) and (x) any other fees and disbursements of
underwriters, if any, customarily paid by issuers or sellers of securities
(collectively, "Expenses").
(b) The Company shall pay all Expenses with respect to any Demand
Registration.
(c) Notwithstanding the foregoing, (x) the provisions of this
Section 2.5 shall be deemed amended to the extent necessary to cause these
expense provisions to comply with "blue sky" laws of each state in which
the offering is made and (y) in connection with any registration hereunder,
each Holder of Registrable Securities being registered shall pay all
underwriting discounts and commissions and any transfer taxes, if any,
attributable to the sale of such Registrable Securities, pro rata with
respect to payments of discounts and commissions in accordance with the
number of shares sold in the offering by such Holder, and (z) the Company
shall, in the case of all registrations under this Article 2, be
responsible for all its internal expenses (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties).
2.6. Certain Limitations on Registration Rights. In the case of any
registration under Section 2.1 pursuant to an underwritten offering, or in
the case of a registration under Section 2.2 if the Company has determined
to enter into an underwriting agreement in connection therewith, all
securities to be included in such registration shall be subject to an
underwriting agreement and no person may participate in such registration
unless such person agrees to sell such person's securities on the basis
provided therein and completes and executes all reasonable questionnaires,
and other documents (including custody agreements and powers of attorney)
which must be executed in connection therewith, and provides such other
information to the Company or the underwriter as may be necessary to
register such Person's securities.
2.7. Limitations on Sale or Distribution of Other Securities. (a) Each
Holder of Registrable Securities agrees that, to the extent requested in
writing by a managing underwriter of any underwritten public offering
effected by the Company for its own account it will not sell any Common
Stock (other than as part of such underwritten public offering) during the
time period reasonably requested by the managing underwriter, which period
shall not exceed 90 days.
(b) The Company hereby agrees that, if it shall previously have
received a request for registration pursuant to Section 2.1 or 2.2, and if
such previous registration shall not have been withdrawn or abandoned, the
Company shall not sell, transfer, or otherwise dispose of, any Common
Stock, or any other equity security of the Company or any security
convertible into or exchangeable or exercisable for any equity security of
the Company (other than as part of such underwritten public offering, a
registration on Form S-4 or Form S-8 or any successor or similar form which
is then in effect or upon the conversion, exchange or exercise of any then
outstanding Common Stock Equivalent), until a period of 180 days shall have
elapsed from the effective date of such previous registration; and the
Company shall so provide in any registration rights agreements hereafter
entered into with respect to any of its securities.
2.8. No Required Sale. Nothing in this Agreement shall be deemed to
create an independent obligation on the part of any Holder to sell any
Registrable Securities pursuant to any effective registration statement.
2.9. Indemnification. (a) In the event of any registration of any
securities of the Company under the Securities Act pursuant to this Article
2, the Company will, and hereby does, indemnify and hold harmless, to the
fullest extent permitted by law, each Holder of Registrable Securities, its
directors, officers, fiduciaries, employees and stockholders or general and
limited partners (and the directors, officers, employees and stockholders
thereof), each other Person who participates as an underwriter or a
Qualified Independent Underwriter, if any, in the offering or sale of such
securities, each officer, director, employee, stockholder, fiduciary,
managing director, agent, affiliates, consultants, representatives,
successors, assigns or partner of such underwriter or Qualified Independent
Underwriter, and each other Person, if any, who controls such seller or any
such underwriter within the meaning of the Securities Act, against any and
all losses, claims, damages or liabilities, joint or several, actions or
proceedings (whether commenced or threatened) and expenses (including
reasonable fees of counsel and any amounts paid in any settlement effected
with the Company's consent, which consent shall not be unreasonably
withheld or delayed) to which each such indemnified party may become
subject under the Securities Act or otherwise in respect thereof
(collectively, "Claims"), insofar as such Claims arise out of or are based
upon (i) any untrue statement or alleged untrue statement of a material
fact contained in any registration statement under which such securities
were registered under the Securities Act or 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, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary, final or summary prospectus or any amendment or supplement
thereto, together with the documents incorporated by reference therein, or
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, or (iii) any violation by the Company of any federal, state or
common law rule or regulation applicable to the Company and relating to
action required of or inaction by the Company in connection with any such
registration, and the Company will reimburse any such indemnified party for
any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such Claim as such
expenses are incurred; provided, however, that the Company shall not be
liable to any such indemnified party in any such case to the extent such
Claim arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact or omission or alleged omission of a material
fact made in such registration statement or amendment thereof or supplement
thereto or in any such prospectus or any preliminary, final or summary
prospectus in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such indemnified party
specifically for use therein. Such indemnity and reimbursement of expenses
shall remain in full force and effect regardless of any investigation made
by or on behalf of such indemnified party and shall survive the transfer of
such securities by such seller.
(b) Each Holder of Registrable Securities that are included in
the securities as to which any registration under Section 2.1 or 2.2 is
being effected (and, if the Company requires as a condition to including
any Registrable Securities in any registration statement filed in
accordance with Section 2.1 or 2.2, any underwriter and Qualified
Independent Underwriter, if any) shall, severally and not jointly,
indemnify and hold harmless (in the same manner and to the same extent as
set forth in paragraph (a) of this Section 2.9) to the fullest extent
permitted by law the Company, its officers and directors, each Person
controlling the Company within the meaning of the Securities Act and all
other prospective sellers and their respective directors, officers,
fiduciaries, managing directors, employees, agents, affiliates,
consultants, representatives, successors, assigns, general and limited
partners, stockholders and respective controlling Persons with respect to
any untrue statement or alleged untrue statement of any material fact in,
or omission or alleged omission of any material fact from, such
registration statement, any preliminary, final or summary prospectus
contained therein, or any amendment or supplement thereto, if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company or its representatives by or on behalf of such Holder or
underwriter or Qualified Independent Underwriter, if any, specifically for
use therein and reimburse such indemnified party for any legal or other
expenses reasonably incurred in connection with investigating or defending
any such Claim as such expenses are incurred; provided, however, that the
aggregate amount which any such Holder shall be required to pay pursuant to
this Section 2.9(b) and Sections 2.9(c) and (e) shall in no case be greater
than the amount of the net proceeds received by such person upon the sale
of the Registrable Securities pursuant to the registration statement giving
rise to such claim. Such indemnity and reimbursement of expenses shall
remain in full force and effect regardless of any investigation made by or
on behalf of such indemnified party and shall survive the transfer of such
securities by such Holder.
(c) Indemnification similar to that specified in the preceding
paragraphs (a) and (b) of this Section 2.9 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities
with respect to any required registration or other qualification of
securities under any state securities and "blue sky" laws.
(d) Any person entitled to indemnification under this Agreement
shall notify promptly the indemnifying party in writing of the commencement
of any action or proceeding with respect to which a claim for
indemnification may be made pursuant to this Section 2.9, but the failure
of any indemnified party to provide such notice shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of
this Section 2.9, except to the extent the indemnifying party is materially
prejudiced thereby and shall not relieve the indemnifying party from any
liability which it may have to any indemnified party otherwise than under
this Article 2. In case any action or proceeding is brought against an
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, unless in the reasonable opinion of outside
counsel to the indemnified party a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, to
assume the defense thereof jointly with any other indemnifying party
similarly notified, to the extent that it chooses, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party that it so chooses, the
indemnifying party shall not be liable to such indemnified party for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that (i) if the indemnifying party fails
to take reasonable steps necessary to defend diligently the action or
proceeding within 20 days after receiving notice from such indemnified
party that the indemnified party believes it has failed to do so; or (ii)
if such indemnified party who is a defendant in any action or proceeding
which is also brought against the indemnifying party reasonably shall have
concluded that there may be one or more legal defenses available to such
indemnified party which are not available to the indemnifying party; or
(iii) if representation of both parties by the same counsel is otherwise
inappropriate under applicable standards of professional conduct, then, in
any such case, the indemnified party shall have the right to assume or
continue its own defense as set forth above (but with no more than one firm
of counsel for all indemnified parties in each jurisdiction, except to the
extent any indemnified party or parties reasonably shall have concluded
that there may be legal defenses available to such party or parties which
are not available to the other indemnified parties or to the extent
representation of all indemnified parties by the same counsel is otherwise
inappropriate under applicable standards of professional conduct) and the
indemnifying party shall be liable for any expenses therefor. No
indemnifying party shall, without the written consent of the indemnified
party, effect the settlement or compromise of, or consent to the entry of
any judgment with respect to, any pending or threatened action or claim in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to
such action or claim) unless such settlement, compromise or judgment (A)
includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (B) does not include a
statement as to or an admission of fault, culpability or a failure to act,
by or on behalf of any indemnified party.
(e) If for any reason the foregoing indemnity is unavailable or
is insufficient to hold harmless an indemnified party under Sections
2.9(a), (b) or (c), then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of any Claim
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party, on the one hand, and the indemnified party, on the
other hand, with respect to such offering of securities. The relative fault
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party or the indemnified party and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. If, however, the allocation
provided in the second preceding sentence is not permitted by applicable
law, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative faults but also the relative benefits of the
indemnifying party and the indemnified party as well as any other relevant
equitable considerations. The parties hereto agree that it would not be
just and equitable if contributions pursuant to this Section 2.9(e) were to
be determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in
the preceding sentences of this Section 2.9(e). The amount paid or payable
in respect of any Claim shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such Claim. No person guilty of fraudulent
misrepresentation (within the meaning of section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. Notwithstanding anything in this
Section 2.9(e) to the contrary, no indemnifying party (other than the
Company) shall be required pursuant to this Section 2.9(e) to contribute
any amount in excess of the net proceeds received by such indemnifying
party from the sale of Registrable Securities in the offering to which the
losses, claims, damages or liabilities of the indemnified parties relate,
less the amount of any indemnification payment made by such indemnifying
party pursuant to Sections 2.9(b) and (c).
(f) The indemnity agreements contained herein shall be in
addition to any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract and shall remain
operative and in full force and effect regardless of any investigation made
or omitted by or on behalf of any indemnified party and shall survive the
transfer of the Registrable Securities by any such party.
(g) The indemnification and contribution required by this Section
2.9 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
3. Underwritten Offerings.
----------------------
3.1. Requested Underwritten Offerings. If requested by the
underwriters for any underwritten offering by the Holders pursuant to a
registration requested under Section 2.1, the Company shall enter into a
customary underwriting agreement with the underwriters. Such underwriting
agreement shall be satisfactory in form and substance to the Major Holder
and shall contain such representations and warranties by, and such other
agreements on the part of, the Company and such other terms as are
generally prevailing in agreements of that type, including, without
limitation, indemnities and contribution agreements on substantially the
same terms as those contained herein. Any Holder participating in the
offering shall be a party to such underwriting agreement and may, at its
option, require that any or all of the representations and warranties by,
and the other agreements on the part of, the Company to and for the benefit
of such underwriters shall also be made to and for the benefit of such
Holder and that any or all of the conditions precedent to the obligations
of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such Holder; provided, however, that the
Company shall not be required to make any representations or warranties
with respect to written information specifically provided by a selling
Holder for inclusion in the registration statement. Such underwriting
agreement shall also contain such representations and warranties by the
participating Holders with respect to title and ownership of shares as are
customary in agreements of that type.
3.2. Piggyback Underwritten Offerings. In the case of a registration
pursuant to Section 2.2 hereof, if the Company shall have determined to
enter into an underwriting agreement in connection therewith, all of the
Holders' Registrable Securities to be included in such registration shall
be subject to such underwriting agreement. Any Holder participating in such
registration may, at its option, require that any or all of the
representations and warranties by, and the other agreements on the part of,
the Company to and for the benefit of such underwriters shall also be made
to and for the benefit of such Holder and that any or all of the conditions
precedent to the obligations of such underwriters under such underwriting
agreement be conditions precedent to the obligations of such Holder. Such
underwriting agreement shall also contain such representations and
warranties by the participating Holders as are customary in agreements of
that type, on substantially the same terms as those contained herein.
3.3. Underwriting Services. Notwithstanding anything contained herein
to the contrary, in connection with a Demand Registration pursuant to
Section 2.1, GS & Co. shall have the right to act as the lead managing
underwriter in any registration including Registrable Securities. If GS &
Co. acts as a managing underwriter in any such registered offering, to the
extent required by applicable law, a Qualified Independent Underwriter
shall be retained by the Company and shall be acceptable to GS & Co. (which
consent shall not be unreasonably withheld), and the Company shall pay all
fees and expenses (other than underwriting discounts and commissions) of
such Qualified Independent Underwriter.
4. General.
-------
4.1. Adjustments Affecting Registrable Securities. The Company agrees
that it shall not effect or permit to occur any combination or subdivision
of shares which would adversely affect the ability of the Holder of any
Registrable Securities to include such Registrable Securities in any
registration contemplated by this Agreement or the marketability of such
Registrable Securities in any such registration. The Company agrees that it
will take all reasonable steps necessary to effect a subdivision of shares
if in the reasonable judgment of (a) the Initiating Holder of a Demand
Registration Request, (b) the Major Holder or (c) the managing underwriter
for the offering in respect of such Demand Registration Request, such
subdivision would enhance the marketability of the Registrable Securities.
Each Holder agrees to vote all of its shares of capital stock in a manner,
and to take all other actions necessary, to permit the Company to carry out
the intent of the preceding sentence including, without limitation, voting
in favor of an amendment to the Company's Certificate of Incorporation in
order to increase the number of authorized shares of capital stock of the
Company.
4.2. Rule 144. If the Company shall have filed a registration
statement pursuant to the requirements of Section 12 of the Exchange Act or
a registration statement pursuant to the requirements of the Securities Act
in respect of the Common Stock or securities of the Company convertible
into or exchangeable or exercisable for Common Stock, the Company covenants
that (i) so long as it remains subject to the reporting provisions of the
Exchange Act, it will timely file the reports required to be filed by it
under the Securities Act or the Exchange Act (including, but not limited
to, the reports under Sections 13 and 15(d) of the Exchange Act referred to
in subparagraph (c)(1) of Rule 144 under the Securities Act), and (ii) will
take such further action as any Holder of Registrable Securities may
reasonably request, all to the extent required from time to time to enable
such Holder to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (A) Rule
144 under the Securities Act, as such Rule may be amended from time to
time, or (B) any similar rule or regulation hereafter adopted by the SEC.
Upon the request of any Holder of Registrable Securities, the Company will
deliver to such Holder a written statement as to whether it has complied
with such requirements.
4.3. Nominees for Beneficial Owners. If Registrable Securities are
held by a nominee for the beneficial owner thereof, the beneficial owner
thereof may, at its option, be treated as the Holder of such Registrable
Securities for purposes of any request or other action by any Holder or
Holders of Registrable Securities pursuant to this Agreement (or any
determination of any number or percentage of shares constituting
Registrable Securities held by any Holder or Holders of Registrable
Securities contemplated by this Agreement), provided that the Company shall
have received assurances reasonably satisfactory to it of such beneficial
ownership.
4.4 Amendments and Waivers. The terms and provisions of this Agreement
may be modified or amended, or any of the provisions hereof waived,
temporarily or permanently, pursuant to the written consent of the Company
and GSCP.
4.5. Notices. Except as otherwise provided in this Agreement, all
notices, requests, consents and other communications hereunder to any party
shall be deemed to be sufficient if contained in a written instrument
delivered in person or by telecopy, nationally recognized overnight courier
or first class registered or certified mail, return receipt requested,
postage prepaid, addressed to such party at the address set forth below or
such other address as may hereafter be designated in writing by such party
to the other parties:
(i) if to the Company, to:
ProMedCo Management Company
801 Cherry Street, Suite 1450
Fort Worth, Texas 76102
Facsimile: (817) 335-8321
Attention: Robert Smith
Chief Financial Officer
with a copy to (which shall not constitute notice):
Dyer, Ellis & Joseph
600 New Hampshire, NW
Washington, DC 20037
Telecopy: (202) 944-3068
Attention: Michael Joseph, Esq.
(ii) if to the Investors, to:
GS Capital Partners III, L.P.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Telecopy: (212) 357-5505
Attention: Mr. Sanjeev Mehra
Attention: Ben Adler, Esq.
with copies to (which shall not constitute notice):
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Telecopy: (212) 859-8587
Attention: Robert C. Schwenkel, Esq.
All such notices, requests, consents and other communications shall be
deemed to have been given when received.
4.6. Miscellaneous. (a) This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and the
respective successors, personal representatives and assigns of the parties
hereto, whether so expressed or not. If any Person shall acquire
Registrable Securities from any Holder, in any manner, whether by operation
of law or otherwise, such transferee shall promptly notify the Company and
such Registrable Securities acquired from such Holder shall be held subject
to all of the terms of this Agreement, and by taking and holding such
Registrable Securities such Person shall be entitled to receive the
benefits of and be conclusively deemed to have agreed to be bound by and to
perform all of the terms and provisions of this Agreement. If the Company
shall so request, any such successor or assign shall agree in writing to
acquire and hold the Registrable Securities acquired from such Holder
subject to all of the terms hereof. If any Holder shall acquire additional
Registrable Securities, such Registrable Securities shall be subject to all
of the terms, and entitled to all the benefits, of this Agreement.
(b) This Agreement and the other Transaction Documents and the
Confidentiality Agreement contain the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior and
contemporaneous arrangements or understandings with respect thereto.
(c) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
THE PRINCIPLES OF CONFLICTS OF LAW.
(d) The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be a
part of this Agreement.
(e) This Agreement may be executed in any number of counterparts,
and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(f) Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid, but if any
provision of this Agreement is held to be invalid or unenforceable in any
respect, such invalidity or unenforceability shall not render invalid or
unenforceable any other provision of this Agreement.
(g) The parties hereto acknowledge that there would be no
adequate remedy at law if any party fails to perform any of its obligations
hereunder, and accordingly agree that each party, in addition to any other
remedy to which it may be entitled at law or in equity, shall be entitled
to injunctive relief, including specific performance, to enforce such
obligations without the posting of any bond, and, if any action should be
brought in equity to enforce any of the provisions of this Agreement, none
of the parties hereto shall raise the defense that there is an adequate
remedy at law.
(h) The parties hereto agree to cooperate with each other, and at
the request of the other party, to execute and deliver any further
instruments or documents and to take all such further action as the other
party may reasonably request in order to evidence or effectuate the
consummation of the transactions contemplated hereby and to otherwise carry
out the intent of the parties hereunder.
4.7. Prior Agreements. Each of the Holders and the Company hereby
agrees that any agreement previously entered into by it pursuant to which
the Company granted to it any registration rights shall be superseded by
this Agreement and each such agreement (and any rights such Holder has
pursuant to such agreement) shall be terminated, null and void and no
longer in effect.
4.8. No Inconsistent Agreements. The rights granted to the Holders of
Registrable Securities hereunder do not in any way conflict with and are
not inconsistent with any other agreements to which the Company is a party
or by which it is bound. Without the prior written consent of GSCP, neither
the Company nor any Holder will, on or after the date of this Agreement,
enter into any agreement with respect to its securities which is
inconsistent with the rights granted in this Agreement or otherwise
conflicts with the provisions hereof, other than any lock-up agreement with
the underwriters in connection with any registered offering effected
hereunder, pursuant to which the Company shall agree not to register for
sale, and the Company shall agree not to sell or otherwise dispose of,
Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, for a specified period following the
registered offering. The Company further agrees that if any other
registration rights agreement entered into after the date of this Agreement
with respect to any of its securities contains terms which are more
favorable to, or less restrictive on, the other party thereto than the
terms and conditions contained in this Agreement are (insofar as they are
applicable) to the GSCP Parties, then the terms and conditions of this
Agreement shall immediately be deemed to have been amended without further
action by the Company or any of the Holders of Registrable Securities so
that the GSCP Parties shall be entitled to the benefit of any such more
favorable or less restrictive terms or conditions.
IN WITNESS WHEREOF, the parties hereto have duly executed this
agreement as of the date first above written.
PROMEDCO MANAGEMENT COMPANY
By: /s/ Robert D. Smith
-----------------------------------
Name: Robert D. Smith
Title: Chief Financial Officer
GS CAPITAL PARTNERS III, L.P.
By: GS ADVISORS III, L.P.,
its general partner
By: GS ADVISORS III, INC.,
its general partner
By: /s/ Katherine L. Nissenbaun
------------------------------
Name: Katherine L. Nissenbaun
Title: Vice President
GS CAPITAL PARTNERS III OFFSHORE, L.P.
By: GS ADVISORS III (CAYMAN), L.P.,
its general partner
By: GS ADVISORS III, INC.,
its general partner
By: /s/ Katherine L. Nissenbaun
------------------------------
Name: Katherine L. Nissenbaun
Title: Vice President
GOLDMAN, SACHS & CO.VERWALTUNGS GMBH
By: /s/ Joseph H. Gleberman
/s/ Katherine L. Nissenbaun
------------------------------
Name: Joseph H. Gleberman
Title: Managing Director
Name: Katherine L. Nissenbaun
Title: Registered Agent
STONE STREET FUND 2000, LLC
By: /s/ Katherine L. Nissenbaun
------------------------------
Name: Katherine L. Nissenbaun
Title: Vice President
POWER OF ATTORNEY
This power of attorney will expire on December 31, 2000.
KNOW ALL PERSONS BY THESE PRESENTS that GOLDMAN, SACHS & CO. (the
"Company") does hereby make, constitute and appoint each of Hans L. Reich
and Roger S. Begelman, acting individually, its true and lawful attorney,
to execute and deliver in its name and on its behalf whether the Company is
acting individually or as representative of others, any and all filings
required to be made by the Company under the Securities Exchange Act of
1934, as amended, giving and granting unto each said attorney-in-fact power
and authority to act in the premises as fully and to all intents and
purposes as the Company might or could do if personally present by one of
its authorized signatories, hereby ratifying and confirming all that said
attorney-in-fact shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has duly subscribed these presents
as of December 21, 1998.
GOLDMAN, SACHS & CO.
By: The Goldman, Sachs & Co. L.L.C.
By: /s/ Robert J. Katz
- ---------------------------------
Name: Robert J. Katz
Title: Executive Vice President
POWER OF ATTORNEY
This power of attorney will expire on May 31, 2001.
KNOW ALL PERSONS BY THESE PRESENTS that THE GOLDMAN SACHS GROUP, INC.
(the "Company") does hereby make, constitute and appoint each of Hans L.
Reich and Roger S. Begelman, acting individually, its true and lawful
attorney, to execute and deliver in its name and on its behalf whether the
Company is acting individually or as representative of others, any and all
filings required to be made by the Company under the Securities Exchange
Act of 1934, as amended, giving and granting unto each said
attorney-in-fact power and authority to act in the premises as fully and to
all intents and purposes as the Company might or could do if personally
present by one of its authorized signatories, hereby ratifying and
confirming all that said attorney-in-fact shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has duly subscribed these presents
as of May 7, 1999.
THE GOLDMAN SACHS GROUP, INC.
By: /s/ Robert J. Katz
- ---------------------------------
Name: Robert J. Katz
Title: Executive Vice President and General Counsel
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that GS CAPITAL PARTNERS III, L.P.
(the "Company") does hereby make, constitute and appoint each of Hans L.
Reich and Roger S. Begelman, acting individually, its true and lawful
attorney, to execute and deliver in its name and on its behalf whether the
Company is acting individually or as representative of others, any and all
filings required to be made by the Company under the Securities Exchange
Act of 1934, as amended, giving and granting unto each said
attorney-in-fact power and authority to act in the premises as fully and to
all intents and purposes as the Company might or could do if personally
present by one of its authorized signatories, hereby ratifying and
confirming all that said attorney-in-fact shall lawfully do or cause to be
done by virtue hereof.
THIS POWER OF ATTORNEY shall remain in full force and effect until
either revoked in writing by the undersigned or until such time as the
person or persons to whom power of attorney has been hereby granted
cease(s) to be an employee of The Goldman Sachs Group, Inc. or one of its
affiliates.
IN WITNESS WHEREOF, the undersigned has duly subscribed these presents
as of September 22, 1999.
GS CAPITAL PARTNERS III, L.P.
By: GS Advisors III, L.P.
By: GS Advisors III, L.L.C.
By: /s/ Kaca B. Enquist
- ---------------------------------
Name: Kaca B. Enquist
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that GS CAPITAL PARTNERS III
OFFSHORE, L.P. (the "Company") does hereby make, constitute and appoint
each of Hans L. Reich and Roger S. Begelman, acting individually, its true
and lawful attorney, to execute and deliver in its name and on its behalf
whether the Company is acting individually or as representative of others,
any and all filings required to be made by the Company under the Securities
Exchange Act of 1934, as amended, giving and granting unto each said
attorney-in-fact power and authority to act in the premises as fully and to
all intents and purposes as the Company might or could do if personally
present by one of its authorized signatories, hereby ratifying and
confirming all that said attorney-in-fact shall lawfully do or cause to be
done by virtue hereof.
THIS POWER OF ATTORNEY shall remain in full force and effect until
either revoked in writing by the undersigned or until such time as the
person or persons to whom power of attorney has been hereby granted
cease(s) to be an employee of The Goldman Sachs Group, Inc. or one of its
affiliates.
IN WITNESS WHEREOF, the undersigned has duly subscribed these presents
as of September 22, 1999.
GS CAPITAL PARTNERS III OFFSHORE, L.P.
By: GS Advisors III (CAYMAN), L.P.
By: GS Advisors III, L.L.C.
By: /s/ Kaca B. Enquist
- ---------------------------------
Name: Kaca B. Enquist
Title: Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that GS CAPITAL PARTNERS III
GERMANY CIVIL LAW PARTNERSHIP (the "Company") does hereby make, constitute
and appoint each of Hans L. Reich and Roger S. Begelman, acting
individually, its true and lawful attorney, to execute and deliver in its
name and on its behalf whether the Company is acting individually or as
representative of others, any and all filings required to be made by the
Company under the Securities Exchange Act of 1934, as amended, giving and
granting unto each said attorney-in-fact power and authority to act in the
premises as fully and to all intents and purposes as the Company might or
could do if personally present by one of its authorized signatories, hereby
ratifying and confirming all that said attorney-in-fact shall lawfully do
or cause to be done by virtue hereof.
THIS POWER OF ATTORNEY shall remain in full force and effect until
either revoked in writing by the undersigned or until such time as the
person or persons to whom power of attorney has been hereby granted
cease(s) to be an employee of The Goldman Sachs Group, Inc. or one of its
affiliates.
IN WITNESS WHEREOF, the undersigned has duly subscribed these presents
as of October 7, 1999.
GS CAPITAL PARTNERS III GERMANY CIVIL LAW PARTNERSHIP
By: Goldman, Sachs & Co. oHG
By: Goldman, Sachs & Co. Finanz GmbH
By: /s/ Andreas Kornlein
- ---------------------------------
Name: Andreas Kornlein
Title: Executive Director
By: /s/ Sabine Mock
- ---------------------------------
Name: Sabine Mock
Title: Executive Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that GS ADVISORS III, L.L.C.
(the "Company") does hereby make, constitute and appoint each of Hans L.
Reich and Roger S. Begelman, acting individually, its true and lawful
attorney, to execute and deliver in its name and on its behalf whether the
Company is acting individually or as representative of others, any and all
filings required to be made by the Company under the Securities Exchange
Act of 1934, as amended, giving and granting unto each said
attorney-in-fact power and authority to act in the premises as fully and to
all intents and purposes as the Company might or could do if personally
present by one of its authorized signatories, hereby ratifying and
confirming all that said attorney-in-fact shall lawfully do or cause to be
done by virtue hereof.
THIS POWER OF ATTORNEY shall remain in full force and effect
until either revoked in writing by the undersigned or until such time as
the person or persons to whom power of attorney has been hereby granted
cease(s) to be an employee of The Goldman Sachs Group, Inc. or one of its
affiliates.
IN WITNESS WHEREOF, the undersigned has duly subscribed these
presents as of January 21, 2000.
GS ADVISORS III, L.L.C.
By:/s/ Kaca B. Enquist
- ---------------------------------
Name: Kaca B. Enquist
Title: Vice President
POWER OF ATTORNEY
This power of attorney will expire on December 31, 2001.
KNOW ALL PERSONS BY THESE PRESENTS that GOLDMAN, SACHS & CO. oHG, (the
"Company") does hereby make, constitute and appoint each of Hans-Linhard
Reich and Roger S. Begelman, acting individually, its true and lawful
attorney, to execute and deliver in its name and on its behalf whether the
Company is acting individually or as representative of others, any and all
filings required to be made by the Company under the Securities Exchange
Act of 1934, as amended, giving and granting unto each said
attorney-in-fact power and authority to act in the premises as fully and to
all intents and purposes as the Company might or could do if personally
present by one of its authorized signatories, hereby ratifying and
confirming all that said attorney-in-fact shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has duly subscribed these presents
as of May 26, 1999.
GOLDMAN, SACHS & CO. oHG
By: /s/ Andreas Kornlein By: /s/ Sabine Mock
- --------------------------------- -----------------------------------
Name: Andreas Kornlein Name: Sabine Mock
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that STONE STREET FUND 2000, L.L.C.
(the "Company") does hereby make, constitute and appoint each of Hans L.
Reich and Roger S. Begelman, acting individually, its true and lawful
attorney, to execute and deliver in its name and on its behalf whether the
Company is acting individually or as representative of others, any and all
filings required to be made by the Company under the Securities Exchange
Act of 1934, as amended, giving and granting unto each said
attorney-in-fact power and authority to act in the premises as fully and to
all intents and purposes as the Company might or could do if personally
present by one of its authorized signatories, hereby ratifying and
confirming all that said attorney-in-fact shall lawfully do or cause to be
done by virtue hereof.
THIS POWER OF ATTORNEY shall remain in full force and effect until
either revoked in writing by the undersigned or until such time as the
person or persons to whom power of attorney has been hereby granted
cease(s) to be an employee of The Goldman Sachs Group, Inc. or one of its
affiliates.
IN WITNESS WHEREOF, the undersigned has duly subscribed these presents
as of January 19, 2000.
STONE STREET FUND 2000, L.L.C.
By: /s/ Kaca B. Enquist
- ----------------------------------
Name: Kaca B. Enquist
Title: Vice President
