CUSIP No. 0005840501 Page 1 of 46 Pages
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 1)
MedCath Incorporated
____________________________________________________________
(Name of Issuer)
Common Stock, $.01 par value
____________________________________________________________
(Title of Class of Securities)
0005840501
____________________________________________________________
(CUSIP Number)
Paul B. Queally Karen C. Wiedemann, Esq.
Welsh, Carson, Anderson Reboul, MacMurray, Hewitt,
& Stowe Maynard & Kristol
320 Park Avenue 45 Rockefeller Plaza
New York, NY 10022 New York, NY 10111
Tel. (212) 893-9500 Tel. (212) 841-5700
____________________________________________________________
(Persons Authorized to Receive Notices and Communications)
March 12, 1998
____________________________________________________________
(Date of Event Which Requires Filing of This Statement)
CUSIP No. 0005840501 Page 2 of 46 Pages
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(b)(3) or (4), check the
following: [ ].
<PAGE>
CUSIP No. 0005840501 Page 3 of 46 Pages
_________________________________________________________________
1) Name of Reporting Person Welsh, Carson,
S.S. or I.R.S. Identification Anderson & Stowe
No. of Above Person V, L.P.
_________________________________________________________________
2) Check the Appropriate Box (a) [ ]
if a Member of a Group (b) [ ]
_________________________________________________________________
3) SEC Use Only
_________________________________________________________________
4) Source of Funds Not Applicable
_________________________________________________________________
5) Check if Disclosure of Not Applicable
Legal Proceedings is
Required Pursuant to
Item 2(d) or 2(e)
_________________________________________________________________
6) Citizenship or Place Delaware
of Organization
_________________________________________________________________
Number of 7) Sole Voting 884,829 shares of
Shares Beneficially Power Common Stock, $.01
Owned by Each par value ("Common
Reporting Person Stock")
With:
_________________________________________
8) Shared Voting
Power -0-
________________________________________
9) Sole Disposi- 884,829 shares of
tive Power Common Stock
________________________________________
10) Shared Dis-
positive Power -0-
________________________________________
11) Aggregate Amount Beneficially 884,829 shares of
Owned by Each Reporting Person Common Stock
<PAGE>
CUSIP No. 0005840501 Page 4 of 46 Pages
_________________________________________________________________
12) Check if the Aggregate
Amount in Row (11)
Excludes Certain Shares
_________________________________________________________________
13) Percent of Class
Represented by 7.6%
Amount in Row (11)
_________________________________________________________________
14) Type of Reporting
Person PN
<PAGE>
CUSIP No. 0005840501 Page 5 of 46 Pages
_________________________________________________________________
1) Name of Reporting Person WCAS V Partners
S.S. or I.R.S. Identification
No. of Above Person
_________________________________________________________________
2) Check the Appropriate Box (a) [ ]
if a Member of a Group (b) [ ]
_________________________________________________________________
3) SEC Use Only
_________________________________________________________________
4) Source of Funds Not Applicable
_________________________________________________________________
5) Check if Disclosure of Not Applicable
Legal Proceedings is
Required Pursuant to
Item 2(d) or 2(e)
_________________________________________________________________
6) Citizenship or Place New Jersey
of Organization
_________________________________________________________________
Number of 7) Sole Voting 884,829 shares of
Shares Beneficially Power Common Stock
Owned by Each
Reporting Person
With:
________________________________________
8) Shared Voting
Power -0-
________________________________________
9) Sole Disposi- 884,829 shares of
tive Power Common Stock
________________________________________
10) Shared Dis-
positive Power -0-
________________________________________
11) Aggregate Amount Beneficially 884,829 shares of
Owned by Each Reporting Person Common Stock
_________________________________________________________________
12) Check if the Aggregate
Amount in Row (11)
<PAGE>
CUSIP No. 0005840501 Page 6 of 46 Pages
Excludes Certain Shares
_________________________________________________________________
13) Percent of Class
Represented by 7.6%
Amount in Row (11)
_________________________________________________________________
14) Type of Reporting
Person PN
<PAGE>
CUSIP No. 0005840501 Page 7 of 46 Pages
_________________________________________________________________
1) Name of Reporting Person Welsh, Carson,
S.S. or I.R.S. Identification Anderson &
No. of Above Person Stowe VII, L.P.
_________________________________________________________________
2) Check the Appropriate Box (a) [ ]
if a Member of a Group (b) [ ]
_________________________________________________________________
3) SEC Use Only
_________________________________________________________________
4) Source of Funds Not Applicable
_________________________________________________________________
5) Check if Disclosure of Not Applicable
Legal Proceedings is
Required Pursuant to
Item 2(d) or 2(e)
_________________________________________________________________
6) Citizenship or Place Delaware
of Organization
_________________________________________________________________
Number of 7) Sole Voting -0-
Shares Beneficially Power
Owned by Each
Reporting Person
With:
________________________________________
8) Shared Voting
Power -0-
________________________________________
9) Sole Disposi- -0-
tive Power
________________________________________
10) Shared Dis-
positive Power -0-
________________________________________
11) Aggregate Amount Beneficially -0-
Owned by Each Reporting Person
_________________________________________________________________
12) Check if the Aggregate
Amount in Row (11)
Excludes Certain Shares
_________________________________________________________________
13) Percent of Class
Represented by -0-
Amount in Row (11)
_________________________________________________________________
14) Type of Reporting
Person PN
<PAGE>
CUSIP No. 0005840501 Page 8 of 46 Pages
_________________________________________________________________
1) Name of Reporting Person WCAS VII Partners, L.P.
S.S. or I.R.S. Identification
No. of Above Person
_________________________________________________________________
2) Check the Appropriate Box (a) [ ]
if a Member of a Group (b) [ ]
_________________________________________________________________
3) SEC Use Only
_________________________________________________________________
4) Source of Funds Not Applicable
_________________________________________________________________
5) Check if Disclosure of Not Applicable
Legal Proceedings is
Required Pursuant to
Item 2(d) or 2(e)
_________________________________________________________________
6) Citizenship or Place Delaware
of Organization
_________________________________________________________________
Number of 7) Sole Voting -0-
Shares Beneficially Power
Owned by Each
Reporting Person
With:
________________________________________
8) Shared Voting
Power -0-
________________________________________
9) Sole Disposi- -0-
tive Power
________________________________________
10) Shared Dis-
positive Power -0-
________________________________________
11) Aggregate Amount Beneficially -0-
Owned by Each Reporting Person
_________________________________________________________________
12) Check if the Aggregate
Amount in Row (11)
Excludes Certain Shares
_________________________________________________________________
13) Percent of Class
Represented by -0-
Amount in Row (11)
_________________________________________________________________
14) Type of Reporting
Person PN
<PAGE>
CUSIP No. 0005840501 Page 9 of 46 Pages
_________________________________________________________________
1) Name of Reporting Person WCAS Capital
S.S. or I.R.S. Identification Partners II, L.P.
No. of Above Person
_________________________________________________________________
2) Check the Appropriate Box (a) [ ]
if a Member of a Group (b) [ ]
_________________________________________________________________
3) SEC Use Only
_________________________________________________________________
4) Source of Funds Not Applicable
_________________________________________________________________
5) Check if Disclosure of Not Applicable
Legal Proceedings is
Required Pursuant to
Item 2(d) or 2(e)
_________________________________________________________________
6) Citizenship or Place Delaware
of Organization
_________________________________________________________________
Number of Shares 7) Sole Voting -0-
Beneficially Power
Owned by Each
Reporting Person
With:
________________________________________
8) Shared Voting
Power -0-
________________________________________
9) Sole Disposi- -0-
tive Power
________________________________________
10) Shared Dis-
positive Power -0-
________________________________________
11) Aggregate Amount Beneficially -0-
Owned by Each Reporting Person
_________________________________________________________________
12) Check if the Aggregate
Amount in Row (11)
Excludes Certain Shares
_________________________________________________________________
13) Percent of Class
Represented by -0-
Amount in Row (11)
_________________________________________________________________
14) Type of Reporting
Person PN
CUSIP No. 0005840501 Page 10 of 46 Pages
_________________________________________________________________
1) Name of Reporting Person WCAS CP II
S.S. or I.R.S. Identification Partners
No. of Above Person
_________________________________________________________________
2) Check the Appropriate Box (a) [ ]
if a Member of a Group (b) [ ]
_________________________________________________________________
3) SEC Use Only
_________________________________________________________________
4) Source of Funds Not Applicable
_________________________________________________________________
5) Check if Disclosure of Not Applicable
Legal Proceedings is
Required Pursuant to
Item 2(d) or 2(e)
_________________________________________________________________
6) Citizenship or Place New Jersey
of Organization
_________________________________________________________________
Number of Shares 7) Sole Voting -0-
Beneficially Power
Owned by Each
Reporting Person
With:
________________________________________
8) Shared Voting
Power -0-
________________________________________
9) Sole Disposi- -0-
tive Power
________________________________________
10) Shared Dis-
positive Power -0-
________________________________________
11) Aggregate Amount Beneficially -0-
Owned by Each Reporting Person
_________________________________________________________________
12) Check if the Aggregate
Amount in Row (11)
Excludes Certain Shares
_________________________________________________________________
13) Percent of Class
Represented by -0-
Amount in Row (11)
_________________________________________________________________
14) Type of Reporting
Person PN
CUSIP No. 0005840501 Page 11 of 46 Pages
_________________________________________________________________
1) Name of Reporting Person WCAS Healthcare
S.S. or I.R.S. Identification Partners, L.P.
No. of Above Person
_________________________________________________________________
2) Check the Appropriate Box (a) [ ]
if a Member of a Group (b) [ ]
_________________________________________________________________
3) SEC Use Only
_________________________________________________________________
4) Source of Funds Not Applicable
_________________________________________________________________
5) Check if Disclosure of Not Applicable
Legal Proceedings is
Required Pursuant to
Item 2(d) or 2(e)
_________________________________________________________________
6) Citizenship or Place Delaware
of Organization
_________________________________________________________________
Number of Shares 7) Sole Voting -0-
Beneficially Power
Owned by Each
Reporting Person
With:
________________________________________
8) Shared Voting
Power -0-
________________________________________
9) Sole Disposi- -0-
tive Power
________________________________________
10) Shared Dis-
positive Power -0-
________________________________________
11) Aggregate Amount Beneficially -0-
Owned by Each Reporting Person
_________________________________________________________________
12) Check if the Aggregate
Amount in Row (11)
Excludes Certain Shares
_________________________________________________________________
13) Percent of Class
Represented by -0-
Amount in Row (11)
_________________________________________________________________
14) Type of Reporting
Person PN
CUSIP No. 0005840501 Page 12 of 46 Pages
_________________________________________________________________
1) Name of Reporting Person WCAS HP Partners
S.S. or I.R.S. Identification
No. of Above Person
_________________________________________________________________
2) Check the Appropriate Box (a) [ ]
if a Member of a Group (b) [ ]
_________________________________________________________________
3) SEC Use Only
_________________________________________________________________
4) Source of Funds Not Applicable
_________________________________________________________________
5) Check if Disclosure of Not Applicable
Legal Proceedings is
Required Pursuant to
Item 2(d) or 2(e)
_________________________________________________________________
6) Citizenship or Place Delaware
of Organization
_________________________________________________________________
Number of Shares 7) Sole Voting -0-
Beneficially Power
Owned by Each
Reporting Person
With:
________________________________________
8) Shared Voting
Power -0-
________________________________________
9) Sole Disposi- -0-
tive Power
________________________________________
10) Shared Dis-
positive Power -0-
________________________________________
11) Aggregate Amount Beneficially -0-
Owned by Each Reporting Person
_________________________________________________________________
12) Check if the Aggregate
Amount in Row (11)
Excludes Certain Shares
_________________________________________________________________
13) Percent of Class
Represented by -0-
Amount in Row (11)
_________________________________________________________________
14) Type of Reporting
Person PN
<PAGE>
CUSIP No. 0005840501 Page 13 of 46 Pages
_________________________________________________________________
1) Name of Reporting Person KKR 1996 Fund L.P.
S.S. or I.R.S. Identification
No. of Above Person
_________________________________________________________________
2) Check the Appropriate Box (a) [ ]
if a Member of a Group (b) [ ]
_________________________________________________________________
3) SEC Use Only
_________________________________________________________________
4) Source of Funds Not Applicable
_________________________________________________________________
5) Check if Disclosure of Not Applicable
Legal Proceedings is
Required Pursuant to
Item 2(d) or 2(e)
_________________________________________________________________
6) Citizenship or Place Delaware
of Organization
_________________________________________________________________
Number of Shares 7) Sole Voting -0-
Beneficially Power
Owned by Each
Reporting Person
With:
________________________________________
8) Shared Voting
Power -0-
________________________________________
9) Sole Disposi- -0-
tive Power
________________________________________
10) Shared Dis-
positive Power -0-
________________________________________
11) Aggregate Amount Beneficially -0-
Owned by Each Reporting Person
_________________________________________________________________
12) Check if the Aggregate
Amount in Row (11)
Excludes Certain Shares
_________________________________________________________________
13) Percent of Class
Represented by -0-
Amount in Row (11)
_________________________________________________________________
14) Type of Reporting
Person PN
<PAGE>
CUSIP No. 0005840501 Page 14 of 46 Pages
_________________________________________________________________
1) Name of Reporting Person KKR Associates
S.S. or I.R.S. Identification 1996 L.P.
No. of Above Person
_________________________________________________________________
2) Check the Appropriate Box (a) [ ]
if a Member of a Group (b) [ ]
_________________________________________________________________
3) SEC Use Only
_________________________________________________________________
4) Source of Funds Not Applicable
_________________________________________________________________
5) Check if Disclosure of Not Applicable
Legal Proceedings is
Required Pursuant to
Item 2(d) or 2(e)
_________________________________________________________________
6) Citizenship or Place Delaware
of Organization
_________________________________________________________________
Number of Shares 7) Sole Voting -0-
Beneficially Power
Owned by Each
Reporting Person
With:
________________________________________
8) Shared Voting
Power -0-
________________________________________
9) Sole Disposi- -0-
tive Power
________________________________________
10) Shared Dis-
positive Power -0-
________________________________________
11) Aggregate Amount Beneficially -0-
Owned by Each Reporting Person
_________________________________________________________________
12) Check if the Aggregate
Amount in Row (11)
Excludes Certain Shares
_________________________________________________________________
13) Percent of Class
Represented by -0-
Amount in Row (11)
_________________________________________________________________
14) Type of Reporting
Person PN
<PAGE>
CUSIP No. 0005840501 Page 15 of 46 Pages
_________________________________________________________________
1) Name of Reporting Person KKR 1996 GP LLC
S.S. or I.R.S. Identification
No. of Above Person
_________________________________________________________________
2) Check the Appropriate Box (a) [ ]
if a Member of a Group (b) [ ]
_________________________________________________________________
3) SEC Use Only
_________________________________________________________________
4) Source of Funds Not Applicable
_________________________________________________________________
5) Check if Disclosure of Not Applicable
Legal Proceedings is
Required Pursuant to
Item 2(d) or 2(e)
_________________________________________________________________
6) Citizenship or Place Delaware
of Organization
_________________________________________________________________
Number of Shares 7) Sole Voting -0-
Beneficially Power
Owned by Each
Reporting Person
With:
________________________________________
8) Shared Voting
Power -0-
________________________________________
9) Sole Disposi- -0-
tive Power
________________________________________
10) Shared Dis-
positive Power -0-
________________________________________
11) Aggregate Amount Beneficially -0-
Owned by Each Reporting Person
_________________________________________________________________
12) Check if the Aggregate
Amount in Row (11)
Excludes Certain Shares
_________________________________________________________________
13) Percent of Class
Represented by -0-
Amount in Row (11)
_________________________________________________________________
14) Type of Reporting
Person OO
CUSIP No. 0005840501 Page 16 of 46 Pages
_________________________________________________________________
1) Name of Reporting Person Stephen R. Puckett
S.S. or I.R.S. Identification
No. of Above Person
_________________________________________________________________
2) Check the Appropriate Box (a) [ ]
if a Member of a Group (b) [ ]
_________________________________________________________________
3) SEC Use Only
_________________________________________________________________
4) Source of Funds Not Applicable
_________________________________________________________________
5) Check if Disclosure of Not Applicable
Legal Proceedings is
Required Pursuant to
Item 2(d) or 2(e)
_________________________________________________________________
6) Citizenship or Place U.S. Citizen
of Organization
_________________________________________________________________
Number of 7) Sole Voting 1,251,353 shares of
Shares Beneficially Power Common Stock
Owned by Each (including 59,301
Reporting Person shares and 26,402
With: shares issuable
upon exercise of
options currently
exercisable or
exercisable within
60 days,
respectively)
________________________________________
8) Shared Voting
Power -0-
________________________________________
9) Sole Disposi- 1,251,353 shares of
tive Power Common Stock
(including 59,301
shares and 26,402
shares issuable
upon exercise of
options currently
exercisable or
exercisable within
60 days,
respectively)
<PAGE>
CUSIP No. 0005840501 Page 17 of 46 Pages
________________________________________
10) Shared Dis-
positive Power -0-
________________________________________
11) Aggregate Amount Beneficially 1,251,353 shares of
Owned by Each Reporting Person Common Stock
(including 59,301
shares and 26,402
shares issuable
upon exercise of
options currently
exercisable or
exercisable within
60 days,
respectively)
_________________________________________________________________
12) Check if the Aggregate
Amount in Row (11)
Excludes Certain Shares
_________________________________________________________________
13) Percent of Class
Represented by 10.7%
Amount in Row (11)
_________________________________________________________________
14) Type of Reporting
Person IN
_________________________________________________________________
<PAGE>
CUSIP No. 0005840501 Page 18 of 46 Pages
_________________________________________________________________
1) Name of Reporting Person David Crane
S.S. or I.R.S. Identification
No. of Above Person
_________________________________________________________________
2) Check the Appropriate Box (a) [ ]
if a Member of a Group (b) [ ]
_________________________________________________________________
3) SEC Use Only
_________________________________________________________________
4) Source of Funds Not Applicable
_________________________________________________________________
5) Check if Disclosure of Not Applicable
Legal Proceedings is
Required Pursuant to
Item 2(d) or 2(e)
_________________________________________________________________
6) Citizenship or Place U.S. Citizen
of Organization
_________________________________________________________________
Number of 7) Sole Voting 250,517 shares of
Shares Beneficially Power Common Stock
Owned by Each (including 130,105
Reporting Person shares and 18,295
With: shares issuable
upon exercise of
options currently
exercisable or
exercisable within
60 days,
respectively)
________________________________________
8) Shared Voting
Power -0-
________________________________________
9) Sole Disposi-250,517 shares of
tive PowerCommon Stock
(including 130,105
shares and 18,295
shares issuable
upon exercise of
options currently
exercisable or
exercisable within
60 days,
respectively)
CUSIP No. 0005840501 Page 19 of 46 Pages
________________________________________
10) Shared Dis-
positive Power -0-
________________________________________
11) Aggregate Amount Beneficially 250,517 shares of
Owned by Each Reporting Person Common Stock
(including 130,105
shares and 18,295
shares issuable
upon exercise of
options currently
exercisable or
exercisable within
60 days,
respectively)
_________________________________________________________________
12) Check if the Aggregate
Amount in Row (11)
Excludes Certain Shares
_________________________________________________________________
13) Percent of Class
Represented by 2.1%
Amount in Row (11)
_________________________________________________________________
14) Type of Reporting
Person IN
_________________________________________________________________
<PAGE>
CUSIP No. 0005840501 Page 20 of 46 Pages
_________________________________________________________________
1) Name of Reporting Person Charles W. Johnson
S.S. or I.R.S. Identification
No. of Above Person
_________________________________________________________________
2) Check the Appropriate Box (a) [ ]
if a Member of a Group (b) [ ]
_________________________________________________________________
3) SEC Use Only
_________________________________________________________________
4) Source of Funds Not Applicable
_________________________________________________________________
5) Check if Disclosure of Not Applicable
Legal Proceedings is
Required Pursuant to
Item 2(d) or 2(e)
_________________________________________________________________
6) Citizenship or Place U.S. Citizen
of Organization
_________________________________________________________________
Number of 7) Sole Voting 262,458 shares of
Shares Beneficially Power Common Stock
Owned by Each (including 15,851
Reporting Person shares and 9,737
With: shares issuable
upon exercise of
options currently
exercisable or
exercisable within
60 days,
respectively)
________________________________________
8) Shared Voting
Power -0-
________________________________________
9) Sole Disposi- 262,458 shares of
tive Power Common Stock
(including 15,851
shares and 9,737
shares issuable
upon exercise of
options currently
exercisable or
exercisable within
60 days,
respectively)
CUSIP No. 0005840501 Page 21 of 46 Pages
________________________________________
10) Shared Dis-
positive Power -0-
________________________________________
11) Aggregate Amount Beneficially 262,458 shares of
Owned by Each Reporting Person Common Stock
(including 15,851
shares and 9,737
shares issuable
upon exercise of
options currently
exercisable or
exercisable within
60 days,
respectively)
_________________________________________________________________
12) Check if the Aggregate
Amount in Row (11)
Excludes Certain Shares
_________________________________________________________________
13) Percent of Class
Represented by 2.2%
Amount in Row (11)
_________________________________________________________________
14) Type of Reporting
Person IN
_________________________________________________________________
<PAGE>
CUSIP No. 0005840501 Page 22 of 46 Pages
_________________________________________________________________
1) Name of Reporting Person Richard J. Post
S.S. or I.R.S. Identification
No. of Above Person
_________________________________________________________________
2) Check the Appropriate Box (a) [ ]
if a Member of a Group (b) [ ]
_________________________________________________________________
3) SEC Use Only
_________________________________________________________________
4) Source of Funds Not Applicable
_________________________________________________________________
5) Check if Disclosure of Not Applicable
Legal Proceedings is
Required Pursuant to
Item 2(d) or 2(e)
_________________________________________________________________
6) Citizenship or Place U.S. Citizen
of Organization
_________________________________________________________________
Number of 7) Sole Voting 17,085 shares of
Shares Beneficially Power Common Stock
Owned by Each (including 14,376
Reporting Person shares and 2,709
With: shares issuable
upon exercise of
options currently
exercisable or
exercisable within
60 days,
respectively)
________________________________________
8) Shared Voting
Power -0-
________________________________________
9) Sole Disposi- 17,085 shares of
tive Power Common Stock
(including 14,376
shares and 2,709
shares issuable
upon exercise of
options currently
exercisable or
exercisable within
60 days,
respectively)
CUSIP No. 0005840501 Page 23 of 46 Pages
________________________________________
10) Shared Dis-
positive Power -0-
________________________________________
11) Aggregate Amount Beneficially 17,085 shares of
Owned by Each Reporting Person Common Stock
(including 14,376
shares and 2,709
shares issuable
upon exercise of
options currently
exercisable or
exercisable within
60 days,
respectively)
_________________________________________________________________
12) Check if the Aggregate
Amount in Row (11)
Excludes Certain Shares
_________________________________________________________________
13) Percent of Class
Represented by 0.1%
Amount in Row (11)
_________________________________________________________________
14) Type of Reporting
Person IN
_________________________________________________________________
<PAGE>
CUSIP No. 0005840501 Page 24 of 46 Pages
Amendment No. 1 to
Schedule 13D
____________
The items of the statement on Schedule 13D dated March 23, 1998 (the
"Statement") relating to Common Stock, $.01 par value (the "Common Stock"),
of MedCath Incorporated (the "Issuer") are incorporated herein by
reference, except as amended and restated below.
Item 2 of the Statement is hereby amended and restated as follows:
"Item 2. Identity and Background.
_______________________
(a) Pursuant to Rule 13d-1(f)(1)-(2) of Regulation 13D-G of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended (the "Act"), the undersigned hereby file this statement on Schedule
13D on behalf of Welsh, Carson, Anderson & Stowe V, L.P., a Delaware
limited partnership ("WCAS V"), WCAS V Partners, a New Jersey general
partnership ("V Partners"), Welsh, Carson, Anderson & Stowe VII, L.P., a
Delaware limited partnership ("WCAS VII"), WCAS VII Partners, L.P., a
Delaware limited partnership ("VII Partners"), WCAS Capital Partners II,
L.P., a Delaware limited partnership ("WCAS CP II"), WCAS CP II Partners, a
New Jersey general partnership ("CP II Partners"), WCAS Healthcare
Partners, L.P., a Delaware limited partnership ("WCAS HP"), WCAS HP
Partners, a Delaware general partnership ("HP Partners"), KKR 1996 Fund
L.P., a Delaware limited partnership ("KKR 1996"), KKR Associates 1996
L.P., a Delaware limited partnership ("KKR Associates"), KKR 1996 GP LLC, a
Delaware limited liability company ("KKR LLC"), Stephen R. Puckett, David
Crane, Charles W. Johnson and Richard J. Post (hereinafter collectively
referred to as the "Reporting Persons").
The Reporting Persons are making this single, joint filing
because they may be deemed to constitute a "group" within the meaning of
Section 13(d)(3) of the Act. The Agreement among the Reporting Persons to
file as a group (the "Group Agreement") is attached hereto as Exhibit A.
Each Reporting Person disclaims beneficial ownership of all shares of
Common Stock other than those reported herein as being owned by him or it.
WCAS V and V Partners
_____________________
(b)-(c) The principal business of WCAS V is that of a private
investment partnership. WCAS V's principal business and
CUSIP No. 0005840501 Page 25 of 46 Pages
principal office address is 320 Park Avenue, Suite 2500, New York, New York
10022. The sole general partner of WCAS V is WCAS V Partners, a New Jersey
general partnership ("V Partners"). The principal business of V Partners
is that of acting as the general partner of WCAS V. V Partners' principal
business and principal office address is 320 Park Avenue, Suite 2500, New
York, New York 10022. The general partners of V Partners are citizens of
the United States, and their respective principal business addresses and
principal occupations are set forth below.
WCAS VII and VII Partners
_________________________
(b)-(c) The principal business of WCAS VII is that of a private
investment partnership. WCAS VII's principal business and principal office
address is 320 Park Avenue, Suite 2500, New York, New York 10022. The
sole general partner of WCAS VII is VII Partners. The principal business
of VII Partners is that of acting as the general partner of WCAS VII. VII
Partners' principal business and principal office address is 320 Park
Avenue, Suite 2500, New York, New York 10022. The general partners of VII
Partners are citizens of the United States, and their respective principal
business addresses and principal occupations are set forth below.
WCAS CP II and CP II Partners
_____________________________
(b)-(c) The principal business of WCAS CP II is that of a
private investment partnership. WCAS CP II's principal business and
principal office address is 320 Park Avenue, Suite 2500, New York, New York
10022. The sole general partner of WCAS CP II is CP II Partners. The
principal business of CP II Partners is that of acting as the general
partner of WCAS CP II. CP II Partners' principal business and principal
office address is 320 Park Avenue, Suite 2500, New York, New York 10022.
The general partners of CP II Partners are citizens of the United States,
and their respective principal business addresses and principal occupations
are set forth below.
WCAS HP and HP Partners
_______________________
(b)-(c) WCAS HP is a Delaware limited partnership. The
principal business of WCAS HP is that of a private investment partnership.
WCAS HP's principal business and principal office address is 320 Park
Avenue, Suite 2500, New York, New York 10022. The sole general partner of
WCAS HP is HP Partners. The principal business of HP Partners is that of
acting as the general partner of WCAS HP. HP Partners' principal business
and principal office address
CUSIP No. 0005840501 Page 26 of 46 Pages
is 320 Park Avenue, Suite 2500, New York, New York 10022. The general
partners of HP Partners are citizens of the United States, and their
respective principal business addresses and principal occupations are set
forth below.
General Partners Address Occupation
_________________________________
Patrick J. Welsh Welsh, Carson, Ander- General Partner,
son & Stowe V Partners, VII
320 Park Avenue Partners, CP II
Suite 2500 Partners, and
New York, NY 10022 HP Partners
Russell L. Carson Welsh, Carson, Ander- General Partner,
son & Stowe V Partners, VII
320 Park Avenue Partners, CP II
Suite 2500 Partners, and
New York, NY 10022 HP Partners
Bruce K. Anderson Welsh, Carson, Ander- General Partner,
son & Stowe V Partners, VII
320 Park Avenue Partners, CP II
Suite 2500 Partners
New York, NY 10022
Richard H. Stowe Welsh, Carson, Ander- General Partner,
son & Stowe V Partners,
320 Park Avenue Partners, CP II
Suite 2500 Partners
New York, NY 10022
Charles G. Moore, III Welsh, Carson, Ander- General Partner,
son & Stowe V Partners and
320 Park Avenue CP II Partners
Suite 2500
New York, NY 10022
Andrew M. Paul Welsh, Carson, Ander- General Partner,
son & Stowe V Partners, VII
320 Park Avenue Partners, CP II
Suite 2500 Partners
New York, NY 10022
Thomas E. McInerney Welsh, Carson, Ander- General Partner,
son & Stowe V Partners, VII
320 Park Avenue Partners, CP II
Suite 2500 Partners
New York, NY 10022
<PAGE>
CUSIP No. 0005840501 Page 27 of 46 Pages
Laura VanBuren Welsh, Carson, Ander- General Partner,
son & Stowe V Partners, VII
320 Park Avenue Partners, CP II
Suite 2500 Partners
New York, NY 10022
Robert A. Minicucci Welsh, Carson, Ander- General Partner,
son & Stowe V Partners, VII
320 Park Avenue Partners, CP II
Suite 2500 Partners
New York, NY 10022
Anthony J. deNicola Welsh, Carson, Ander- General Partner,
son & Stowe VII Partners
320 Park Avenue and CP II
Suite 2500 Partners
New York, NY 10022
Paul B. Queally Welsh, Carson, Ander- General Partner,
son & Stowe VII Partners
320 Park Avenue
Suite 2500
New York, NY 10022
KKR 1996, KKR Associates and KKR LLC
____________________________________
(b)-(c) KKR 1996 is principally engaged in the business of
investing in other companies. KKR 1996's principal business and principal
office address is 9 West 57th Street, New York, New York 10019. The sole
general partner of KKR 1996 is KKR Associates. KKR Associates is
principally engaged in the business of investing through partnerships in
other companies. KKR Associates' principal business and principal office
address is 9 West 57th Street, New York, New York 10019. The sole general
partner of KKR Associates is KKR LLC. KKR LLC is principally engaged in
the business of investing through partnerships in other companies. KKR
LLC's principal business and principal office address is 9 West 57th
Street, New York, New York 10019. The managing members of KKR LLC are
Messrs. Henry R. Kravis and George R. Roberts. The other members of KKR
LLC are Messrs. Robert I. MacDonnell, Paul E. Raether, Michael W.
Michelson, James H. Greene, Jr., Michael T. Tokarz, Perry Golkin, Clifton
S. Robbins, Scott M. Stuart and Edward A. Gilhuly. Each such individual is
a citizen of the United States, and the principal occupation of each is as
a managing member or member of KKR & Co. L.L.C., which is the general
partner of Kohlberg Kravis Roberts & Co. L.P. ("KKR"), a private investment
firm. The principal business address of each of Messrs. Kravis, Raether,
Golkin, Tokarz, Robbins and Stuart is 9 West
CUSIP No. 0005840501 Page 28 of 46 Pages
57th Street, New York, New York 10019. The principal business address of
each of Messrs. Roberts, MacDonnell, Michelson, Greene and Gilhuly is 2800
Sand Hill Road, Suite 200, Menlo Park, California 94025.
Stephen R. Puckett
__________________
(b)-(c) Stephen R. Puckett is President, Chief Executive Officer
and Chairman of the Board of Directors of the Issuer. His business address
and the principal business address of the Issuer is 7621 Little Avenue,
Suite 106, Charlotte, North Caroline 28226.
David Crane
___________
(b)-(c) David Crane is Executive Vice President, Chief Operating
Officer and Director of the Issuer. His business address and the principal
business address of the Issuer is 7621 Little Avenue, Suite 106, Charlotte,
North Caroline 28226.
Charles W. Johnson
__________________
(b)-(c) Charles W. Johnson is Senior Vice President -
Development and Managed Care of the Issuer. His business address and the
principal business address of the Issuer is 7621 Little Avenue, Suite 106,
Charlotte, North Caroline 28226.
Richard J. Post
_______________
(b)-(c) Richard J. Post is Chief Financial Officer, Secretary
and Treasurer of the Issuer. His business address and the principal
business address of the Issuer is 7621 Little Avenue, Suite 106, Charlotte,
North Caroline 28226.
(d) None of the entities or persons identified in this Item 2
has, during the last five years, been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors).
(e) None of the entities or persons identified in this Item 2
has, during the last five years, been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws."
<PAGE>
CUSIP No. 0005840501 Page 29 of 46 Pages
Item 5 of the Statement is hereby amended and restated as follows:
"Item 5. Interest in Securities of the Issuer.
____________________________________
The following information is based on a total of 11,669,359
shares of Common Stock outstanding as of February 10, 1998, as reported in
the Issuer's Quarterly Report on Form 10-Q for the period ended December
31, 1997, which was filed on February 11, 1998:
(a)
WCAS V and V Partners
_____________________
WCAS VI owns 884,829 shares of Common Stock, or approximately
7.6% of the Common Stock outstanding. V Partners, as the general
partner of WCAS V, may be deemed to beneficially own the securities
owned by WCAS V.
WCAS VII and VII Partners
_________________________
WCAS VII and VII Partners own no shares of Common Stock.
WCAS CP II and CP II Partners
_____________________________
WCAS CP II and CP II Partners own no shares of Common Stock.
WCAS HP and HP Partners
_______________________
WCAS HP and HP Partners own no shares of Common Stock.
General Partners of V Partners, VII Partners, CP
II Partners and HP Partners
________________________________________________
(i) Patrick J. Welsh owns 81,348 shares of Common Stock, or
approximately 0.7% of the Common Stock outstanding.
(ii) Russell L. Carson owns 81,171 shares of Common Stock, or
approximately 0.7% of the Common Stock outstanding.
(iii) Bruce K. Anderson owns 81,171 shares of Common Stock, or
approximately 0.7% of the Common Stock outstanding.
<PAGE>
CUSIP No. 0005840501 Page 30 of 46 Pages
(iv) Richard H. Stowe owns 22,317 shares of Common Stock, or
approximately 0.2% of the Common Stock outstanding.
(v) Charles G. Moore, III owns 13,459 shares of Common Stock, or
less than 0.1% of the Common Stock outstanding.
(vi) Andrew M. Paul beneficially owns an aggregate 23,438 shares
of Common Stock (including 1,088 shares held in trust accounts for the
benefit of his minor children), or approximately 0.2% of the Common
Stock outstanding.
(vii) Thomas E. McInerney owns 20,275 shares of Common Stock, or
approximately 0.2% of the Common Stock outstanding.
(viii) Laura VanBuren owns 1,889 shares of Common Stock, or less
than 0.1% of the Common Stock outstanding.
(ix) Robert A. Minicucci owns 8,618 shares of Common Stock, or
less than 0.1% of the Common Stock outstanding.
(x) Anthony J. deNicola owns 1,227 shares of Common Stock, or
less than 0.1% of the Common Stock outstanding.
KKR 1996, KKR Associates and KKR LLC
____________________________________
KKR 1996, KKR Associates and KKR LLC own no shares of Common
Stock.
Stephen R. Puckett
__________________
Stephen R. Puckett owns 1,251,353 shares of Common Stock
(including 59,301 shares and 26,402 shares issuable upon exercise of
options currently exercisable or exercisable within 60 days, respectively),
or approximately 10.7% of the Common Stock outstanding.
David Crane
___________
David Crane owns 250,517 shares of Common Stock (including
130,105 shares and 18,295 shares issuable upon exercise of options
currently exercisable or exercisable within 60 days, respectively), or
approximately 2.1% of the Common Stock outstanding.
Charles W. Johnson
__________________
<PAGE>
CUSIP No. 0005840501 Page 31 of 46 Pages
Charles W. Johnson owns 262,458 shares of Common Stock (including
15,851 shares and 9,737 shares issuable upon exercise of options currently
exercisable or exercisable within 60 days, respectively), or approximately
2.2% of the Common Stock outstanding.
Richard J. Post
_______________
Richard J. Post owns 17,085 shares of Common Stock (including
14,376 shares and 2,709 shares issuable upon exercise of options currently
exercisable or exercisable within 60 days, respectively), or approximately
0.1% of the Common Stock outstanding.
(b) The general partners of V Partners may be deemed to share
the power to vote or direct the voting of and to dispose or direct the
disposition of the shares owned by WCAS V. Each of the general partners of
V Partners disclaim beneficial ownership of all shares other than the
shares he or she owns directly or by virtue of his or her indirect pro rata
interest, as a partner of V Partners in the shares owned by WCAS V.
(c) Except as described in this statement, none of the entities
or persons named in Item 2 has effected any transaction in the Issuer's
securities in the past 60 days.
(d) Except as described in this statement, no person has the
power to direct the receipt of dividends on or the proceeds of sales of the
shares of Common Stock owned by WCAS V.
(e)Not Applicable."
Item 6 of the Statement is hereby amended and restated in its entirety
as follows:
"Item 6.Contracts, Arrangements, Understandings or
Relationships with Respect to Securities
of the Issuer.
__________________________________________
Messrs. Stephen R. Puckett, David Crane, Charles W. Johnson and
Richard J. Post (the "Management Investors"), WCAS VII, WCAS CP II, WCAS HP
and KKR 1996 have entered into an understanding pursuant to which they have
made a joint commitment to fund MedCath Holdings, Inc., a newly-formed
Delaware corporation ("Parent"), utilizing, in the case of the Management
Investors, up to 50% of their respective holdings of shares of the Issuer.
The Issuer has entered into an Agreement and Plan of Merger dated as of
March 12, 1998 by and among
CUSIP No. 0005840501 Page 32 of 46 Pages
the Issuer, Parent and MCTH Acquisition Inc., a North Carolina Corporation
("Acquiror") (the "Merger Agreement"). The Merger Agreement is attached
hereto as Exhibit B, and any description thereof is qualified in its
entirety by reference thereto. Parent is the sole shareholder of Acquiror.
The Merger Agreement provides for, among other things, the merger of
Aquiror with and into the Issuer (the "Merger"). Pursuant to the terms of
the Merger Agreement, each issued and outstanding share of the Issuer's
Common Stock will be cancelled, extinguished and converted automatically
into the right to receive $19.00 in cash, payable by Parent or Acquiror to
the holder thereof. Upon effectiveness of the Merger the separate
corporate existence of Acquiror will cease, and the Issuer is to be its
successor and the surviving corporation.
The Management Investors have entered into a Stockholders
Agreement (the "Stockholders Agreement") dated as of March 12, 1998 among
Parent, Acquiror and the Management Investors pursuant to which each of the
Management Investors has agreed to vote his shares of the Issuer in favor
of adoption and approval of the Merger Agreement and the transactions
contemplated thereby and, except with the consent of Parent, against (i)
certain other transactions, (ii) sales, leases or transfers of a material
amount of assets of the Issuer, (iii) changes to the Issuer's Board of
Directors, Articles of Incorporation or Bylaws, or (iv) other actions
involving the Issuer that have the effect of impeding or delaying the
ability of the Issuer to consummate the Merger or the transactions
contemplated by the Stockholders Agreement or thibit C, and any description
thereof is qualified in its entirety by reference thereto."
Item 7 of the Statement is hereby amended and restated in its entirety
as follows:
"Item 7. Material to Be Filed as Exhibits.
________________________________
Exhibit A - Joint Filing Agreement (appears at page 35)
Exhibit B - Merger Agreement (previously filed as Exhibit B to
the Schedule)
Exhibit C - Form of Stockholders Agreement (appears at page
37)"
<PAGE>
CUSIP No. 0005840501 Page 33 of 46 Pages
Signature:
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this Statement is true,
complete and correct.
WELSH, CARSON, ANDERSON & STOWE V, L.P.
By: WCAS V Partners, General Partner
By___/s/_Laura_VanBuren_________________
General Partner
WCAS V PARTNERS
By___/s/_Laura_VanBuren_________________
General Partner
WELSH, CARSON, ANDERSON & STOWE VII, L.P.
By: WCAS VII Partners, L.P., General Partner
By___/s/_Laura_VanBuren_________________
General Partner
WCAS VII PARTNERS, L.P.
By___/s/_Laura_VanBuren_________________
General Partner
WCAS CAPITAL PARTNERS II, L.P.
By: WCAS CP II Partners, General Partner
By____/s/_Laura_VanBuren_______________
General Partner
WCAS CP II PARTNERS
By____/s/_Laura_VanBuren_______________
General Partner
WCAS HEALTHCARE PARTNERS, L.P.
By: WCAS HP Partners, General Partner
By_____/s/_Laura_VanBuren______________
Attorney-in-Fact
WCAS HP PARTNERS
By_____/s/_Laura_VanBuren______________
Attorney-in-Fact
CUSIP No. 0005840501 Page 34 of 46 Pages
KKR 1996 FUND L.P.
By: KKR Associates 1996 L.P., General Partner
By: KKR 1996 GP LLC, General Partner
By____/s/_Edward_A._Gilhuly___________________
Member
KKR Associates 1996 L.P.
By: KKR 1996 GP LLC, General Partner
By___/s/_Edward_A._Gilhuly____________________
Member
KKR 1996 GP LLC
By___/s/_Edward_A._Gilhuly____________________
Member
__/s/_Stephen_R._Puckett______________________
Stephen R. Puckett
__/s/_David_Crane_____________________________
David Crane
__/s/_Charles_W._Johnson______________________
Charles W. Johnson
__/s/_Richard_J._Post_________________________
Richard J. Post
Dated: April 6, 1998
<PAGE>
CUSIP No. 0005840501 Page 35 of 46 Pages
EXHIBIT A
JOINT FILING AGREEMENT
The undersigned hereby agree that the statement on Schedule 13D
to which this Agreement is annexed as Exhibit A is filed on behalf of each
of them in accordance with the provisions of Rule 13d-1(f) under the
Securities Exchange Act of 1934, as amended.
WELSH, CARSON, ANDERSON & STOWE V, L.P.
By: WCAS V Partners, General Partner
By___/s/_Laura_VanBuren__________________
General Partner
WCAS V PARTNERS
By___/s/_Laura_VanBuren__________________
General Partner
WELSH, CARSON, ANDERSON & STOWE VII, L.P.
By: WCAS VII Partners, L.P., General Partner
By___/s/_Laura_VanBuren_________________
General Partner
WCAS VII PARTNERS, L.P.
By___/s/_Laura_VanBuren_________________
General Partner
WCAS CAPITAL PARTNERS II, L.P.
By: WCAS CP II Partners, General Partner
By____/s/_Laura_VanBuren_______________
General Partner
WCAS CP II PARTNERS
By____/s/_Laura_VanBuren_______________
General Partner
WCAS HEALTHCARE PARTNERS, L.P.
By: WCAS HP Partners, General Partner
By_____/s/_Laura_VanBuren______________
Attorney-in-Fact
WCAS HP PARTNERS
By_____/s/_Laura_VanBuren______________
Attorney-in-Fact
CUSIP No. 0005840501 Page 36 of 46 Pages
KKR 1996 FUND L.P.
By: KKR Associates 1996 L.P., General Partner
By: KKR 1996 GP LLC, General Partner
By___/s/_Edward_A._Gilhuly____________________
Member
KKR Associates 1996 L.P.
By: KKR 1996 GP LLC, General Partner
By___/s/_Edward_A._Gilhuly____________________
Member
KKR 1996 GP LLC
By___/s/_Edward_A._Gilhuly____________________
Member
__/s/_Stephen_R._Puckett______________________
Stephen R. Puckett
__/s/_David_Crane_____________________________
David Crane
__/s/_Charles W. Johnson______________________
Charles W. Johnson
__/s/_Richard_J._Post_________________________
Richard J. Post
Dated: April 6, 1998
<PAGE>
CUSIP No. 0005840501 Page 37 of 46 Pages
EXHIBIT C
FORM OF STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of March 12, 1998 (this
"Agreement"), among MedCath Holdings, Inc., a Delaware corporation
("Parent"), MCTH Acquisition, Inc., a North Carolina corporation and a
wholly owned subsidiary of Parent ("Sub"), and the several stockholders of
MedCath Incorporated, a North Carolina corporation ("MedCath"), that are
parties hereto (each, a "Stockholder" and, collectively, the
"Stockholders").
RECITALS
Parent, Sub and MedCath propose to enter into an Agreement and
Plan of Merger dated as of the date hereof (as the same may be amended or
supplemented, the "Merger Agreement"; capitalized terms used but not
defined herein shall have the meanings set forth in the Merger Agreement as
entered into on the date hereof) providing for the merger of Sub with and
into MedCath (the "Merger"), upon the terms and subject to the conditions
set forth in the Merger Agreement.
As of the date hereof, each Stockholder is the record and
beneficial owner of the number of shares of MedCath Common Stock set forth
on the signature page hereof beneath such Stockholder's name (with respect
to each Stockholder, such Stockholder's "Existing Shares" and, together
with any shares of MedCath Common Stock acquired after the date hereof,
whether upon the exercise of warrants, options, conversion of convertible
securities or otherwise, such Stockholder's "Shares").
As an inducement and a condition to entering into the Merger
Agreement, Parent and Sub have required that the Stockholders agree, and
the Stockholders have agreed, to enter into this Agreement.
The Stockholders, Parent and Sub desire to set forth their
agreement with respect to the voting of the Shares in connection with the
Merger upon the terms and subject to the conditions set forth herein.
AGREEMENT
To implement the foregoing and in consideration of the mutual
agreements contained herein, the parties agree as follows:
1. Agreement to Vote. Each Stockholder, severally and not
jointly, hereby agrees that, from and after the date hereof and until this
Agreement shall have been terminated in accordance with Section 6, at any
meeting of the holders of MedCath Common Stock, however called, or in
connection with any written consent of the holders of MedCath Common Stock,
such Stockholder shall vote (or cause to be voted) such Stockholder's
Shares (i) in favor of adoption and approval of the terms thereof and each
of the other actions
CUSIP No. 0005840501 Page 38 of 46 Pages
contemplated by the Merger Agreement and the Merger and the approval of the
terms thereof and each of the other actions contemplated by the Merger
Agreement and this Agreement and (ii) except as otherwise agreed to in
writing in advance by Parent, against the following actions (other than the
Merger and the transactions contemplated by the Merger Agreement): (A) any
extraordinary corporate transaction, such as a merger, consolidation or
other business combination involving MedCath or its subsidiaries; (B) a
sale, lease or transfer of a material amount of assets of MedCath or its
subsidiaries, or a reorganization, recapitalization, dissolution or
liquidation of MedCath or its subsidiaries; (C) (1) any change in a
majority of the persons who constitute the Board of Directors of MedCath;
(2) any material amendment of MedCath's Articles of Incorporation or By-
laws; or (3) any other action involving MedCath or its subsidiaries which
has the effect of impeding, interfering with, delaying, postponing, or
impairing (A) the ability of MedCath to consummate the Merger or (B) the
transactions contemplated by this Agreement and the Merger Agreement. Such
Stockholder shall not enter into any agreement or understanding with any
person or entity prior to the termination of this Agreement to vote in any
manner inconsistent herewith.
2. Representations and Warranties of Each Stockholder. Each
Stockholder hereby, severally and not jointly, represents and warrants to
Parent and Sub as of the date hereof in respect of itself as follows:
(a) Authorization; Validity of Agreement; Necessary Action. Such
Stockholder has full power and authority to execute and deliver this
Agreement, to perform such Stockholder's obligations hereunder and to
consummate the transactions contemplated hereby. This Agreement has
been duly executed and delivered by such Stockholder, and, assuming
this Agreement constitutes a valid and binding obligation of Parent
and Sub, constitutes a valid and binding obligation of such
Stockholder, enforceable against it in accordance with its terms,
except that (i) such enforcement may be subject to applicable
bankruptcy, insolvency or other similar laws, now or hereafter in
effect, affecting creditors' rights generally, and (ii) the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(b) Consents and Approvals; No Violations. Neither the execution,
delivery or performance of this Agreement by such Stockholder nor the
consummation by it of the transactions contemplated hereby nor
compliance by it with any of the provisions hereof will (i) require
any filing with, or permit, authorization, consent or approval of, any
Governmental Entity (except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings would
not materially impair the ability of such Stockholder to consummate
the transactions
CUSIP No. 0005840501 Page 39 of 46 Pages
contemplated hereby), (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, guarantee, other
evidence of indebtedness, lease, license, contract, agreement or other
instrument or obligation to which such Stockholder is a party or by
which it or any of its properties or assets may be bound or (iii)
violate any order, writ, injunction, decree, statute, rule or
regulation applicable to it or any of its properties or assets, except
in the case of clauses (ii) and (iii) for violations, breaches or
defaults, or rights of termination, amendment, cancellation or
acceleration, which would not materially impair the ability of such
Stockholder to consummate the transactions contemplated hereby.
(c) Shares. Such Stockholder's Existing Shares are, and its
Shares at the Effective Time will be, owned beneficially and of record
by such Stockholder. Such Stockholder's Existing Shares constitute all
of the shares of MedCath Common Stock owned of record or beneficially
by such Stockholder. All of such Stockholder's Existing Shares are
issued and outstanding. Such Stockholder has sole voting power, sole
power of disposition, sole power to issue instructions with respect to
the matters set forth in Section 1 hereof, sole power of conversion,
sole power to demand appraisal rights and sole power to agree to all
of the matters set forth in this Agreement, in each case with respect
to all of such Stockholder's Existing Shares and will have sole voting
power, sole power of disposition, sole power to issue instructions
with respect to the matters set forth in Section 1, sole power of
conversion, sole power to demand appraisal rights and sole power to
agree to all of the matters set forth in this Agreement, with respect
to all of such Stockholder's Shares on the Closing, with no
limitations, qualifications or restrictions on such rights, subject to
applicable federal securities laws and the terms of this Agreement.
Such Stockholder has good and valid title to its Existing Shares and
at all times during the term hereof and on the Closing Date will have
good and valid title to its Shares, free and clear of all liens,
claims, security interests or other charges or encumbrances.
(d) No Finder's Fees. Except as disclosed in the Merger
Agreement, no broker, investment banker, financial advisor or other
person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of
such Stockholder.
3. Representations and Warranties of Parent. Parent and Sub
hereby represent and warrant to each Stockholder as of the date hereof as
follows:
<PAGE>
CUSIP No. 0005840501 Page 40 of 46 Pages
(a) Organization. Each of Parent and Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation.
(b) Corporate Authorization; Validity of Agreement; Necessary
Action. Each of Parent and Sub has full corporate power and authority
to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and
performance by Parent and Sub of this Agreement and the consummation
by Parent and Sub of the transactions contemplated hereby have been
duly and validly authorized by their respective boards of directors,
and no other corporate action or proceedings on the part of Parent or
Sub are necessary to authorize the execution and delivery by Parent or
Sub of this Agreement, and the consummation by Parent or Sub of the
transactions contemplated hereby. This Agreement has been duly
executed and delivered by Parent and Sub, and, assuming this Agreement
constitutes a valid and binding obligation of the Stockholders,
constitutes valid and binding obligations of Parent and Sub,
nforceable against them in accordance with its terms, except that (i)
such enforcement may be subject to applicable bankruptcy, insolvency
or other similar laws, now or hereafter in effect, affecting
creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(c) Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the HSR Act, any
applicable state takeover laws and applicable state insurance laws and
regulations, neither the execution, delivery or performance of this
Agreement by Parent or Sub nor the consummation by Parent or Sub of
the transactions contemplated hereby nor compliance by Parent or Sub
with any of the provisions hereof will (i) conflict with or result in
any breach of any provision of the certificate of incorporation or by-
laws of Parent or any of its Subsidiaries, (ii) require any filing
with, or permit, authorization, consent or approval of, any
governmental entity, (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, guarantee, other
evidence of indebtedness, lease, license, contract, agreement or other
instrument or obligation to which Parent or Sub is a party or by which
it or any of its properties or assets may be bound or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation
applicable to Parent, any of its Subsidiaries or any of their
properties or assets.
<PAGE>
CUSIP No. 0005840501 Page 41 of 46 Pages
4. Further Agreements of Stockholders. (a) Each Stockholder,
severally and not jointly, hereby agrees, while this Agreement is in
effect, and except as contemplated hereby, not to (i) sell, transfer,
pledge, encumber, assign or otherwise dispose of, enforce or permit the
execution of the provisions of any redemption agreement with MedCath or
enter into any contract, option or other arrangement or understanding with
respect to or consent to the offer for sale, sale, transfer, pledge,
encumbrance, assignment or other disposition of, any of its Existing
Shares, or any Shares acquired after the date hereof, or any interest in
any of the foregoing, except to Parent; (ii) grant any proxies or powers of
attorney, deposit any Shares into a voting trust or enter into a voting
agreement with respect to any Shares, or any interest in any of the
foregoing, except to Parent or Sub; or (iii) take any action that would
make any representation or warranty of such Stockholder contained herein
untrue or incorrect or have the effect of preventing or disabling the
Stockholder from performing such Stockholder's obbly waives any rights of
appraisal or rights to dissent from the Merger that the Stockholder may
have.
(c) Each Stockholder agrees with, and covenants to, Parent that
the Stockholder shall not request that MedCath register the transfer (book-
entry or otherwise) of any certificate or uncertificated interest
representing any of such Stockholder's Shares, unless such transfer is made
in compliance with this Agreement. In the event of a stock dividend or
distribution, or any change in MedCath Common Stock by reason of any stock
dividend or distribution, or any change in MedCath Common Stock by reason
of any stock dividend, split-up, recapitalization, combination, exchange of
shares or the like, the term "Shares" shall be deemed to refer to and
include the Shares as well as all such stock dividends and distributions
and any shares into which or for which any or all of the Shares may be
changed or exchanged. Each Stockholder shall be entitled to receive any
cash dividend paid by MedCath during the term of this Agreement until the
Shares are cancelled in the Merger.
(d) Each Stockholder, severally and not jointly, shall not, nor
shall it authorize or permit any investment banker, attorney or other
advisor or representative of, such Stockholder to, directly or indirectly,
except as expressly permitted pursuant to the Merger Agreement (a) take any
action to solicit, initiate or, knowingly encourage any Acquisition
Proposal, or (b) participate in any discussions or negotiations with or
encourage any effort or attempt by any other person or entity or take any
other action to facilitate an Acquisition Proposal. Notwithstanding
anything in this Agreement to the contrary, from and after the date hereof,
each Stockholder, severally and jointly, shall promptly and within not more
than 12 hours advise Parent orally and in writing of the receipt by it (or
any of the other entities or person referred to above) of any Acquisition
Proposal, or any inquiry which is likely to lead to any Acquisition
Proposal, the material terms and conditions of such Acquisition Proposal or
inquiry, and the identity of the person making any such Acquisition
Proposal or inquiry. Each Stockholder will keep Parent fully informed of
the status and details of any such Acquisition Proposal or inquiry.
CUSIP No. 0005840501 Page 42 of 46 Pages
5. Further Assurances. From time to time prior to the Closing, at
any other party's request and without further consideration, each party
hereto shall execute and deliver such additional documents and take all
such further lawful action as may br practicable, the transactions
contemplated by this Agreement.
6. Termination. This Agreement shall terminate, and no party
shall have any rights or obligations hereunder and this Agreement shall
become null and void and have no further effect upon the earliest of (a)
the Effective Time and (b) termination of the Merger Agreement pursuant to
Article 7 thereof. Nothing in this Section 6 shall relieve any party of
liability for breach of this Agreement.
7. Costs and Expenses. All costs and expenses incurred in
connection with this Agreement and the consummation of the transactions
contemplated hereby shall be paid by the party incurring such expenses.
8. Amendment and Modification. This Agreement may be amended,
modified and supplemented in any and all respects only by written agreement
of the parties hereto.
9. Several Obligations. The representations, warranties,
covenants, agreements and conditions of this Agreement applicable to the
Stockholders are several and not joint.
10. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(which is confirmed) or sent by an overnight courier service to the parties
at the following addresses (or at such other address for a party as shall
be specified by like notice):
(a)If to Parent or Sub:
c/o Kohlberg Kravis Roberts & Co.
2800 Sand Hill Road, Suite 200
Menlo Park, California 94025
Attention: Edward A. Gilhuly
Facsimile No.: (415) 233-6561
and
c/o Welsh, Carson, Anderson & Stowe VII, L.P.
320 Park Avenue
Suite 2500
New York, New York 10022-6815
Attention: Paul B. Queally
Facsimile No.:
CUSIP No. 0005840501 Page 43 of 46 Pages
with copies to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Gary I. Horowitz
Facsimile No.: (212) 455-2502
and
Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, N.Y. 10111
Attention: Karen C. Wiedemann
Facsimile No.: (212) 841-5725
(b)if to the Stockholders, to:
c/o MedCath Incorporated
7621 Little Avenue, Suite 106
Charlotte, North Carolina 28226
Attention: Stephen R. Puckett
Facsimile No.: (704) 541-2615
with copies to:
Wilmer, Cutler & Rikering
2445 M. Street, N.W.
Washington, D.C. 20037-1420
Facsimile No.: (202) 663-6363
11. Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", "includes" or
"including" are used in this Agreement they shall be deemed to be followed
by the words "without limitation".
12. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed
by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
13. Entire Agreement; No Third Party Beneficiaries. This
Agreement constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, and is not intended to confer
upon any person other than the parties hereto any rights or remedies
hereunder.
CUSIP No. 0005840501 Page 44 of 46 Pages
14. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order
that the transactions contemplated hereby may be consummated as originally
contemplated to the fullest extent possible.
15. Specific Peeement was not performed in accordance with the
terms hereof and that the parties shall be entitled to the remedy of
specific performance of the terms hereof, in addition to any other remedy
at law or equity.
(b) Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise
of any other such right, power or remedy by such party.
16. Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of North Carolina without giving
effect to the principles of conflicts of law thereof.
17. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Parent may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder
to any direct or indirect wholly owned subsidiary of Parent; provided,
however, that no such assignment shall relieve Parent from any of its
obligations hereunder. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the
parties and their respective successors and assigns.
18. Arbitration. (a) If any dispute, claim or difference arises
out of or relates to this Agreement (a "Dispute"), such Dispute shall be
finally settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association ("AAA") effective
as of the commencement of the arbitration (the "Rules"), except as such
Rules may be modified as provided herein. The arbitration shall be held in
Charlotte, North Carolina, unless the parties mutually agree to have the
arbitration held elsewhere, and judgment upon the award made therein may be
entered by any court having jurisdiction thereof. The arbitral tribunal
shall be
CUSIP No. 0005840501 Page 45 of 46 Pages
composed of three arbitrators, who shall be experienced commercial
litigators admitted to practice law in the State of New York or the State
of North Carolina. Parent, on the other hand, and the Stockholders, on the
other hand, shall each appoint one arbitrator. If such parties fail to
nominate an arbitrator in accordance with the preceding 6 of the Rules (the
"Commencement Notice") has been received by the Respondent (as defined in
the Rules) such appointment shall, upon written request by either party to
the AAA, be made in accordance with Rule 14 of the Rules. The two
arbitrators thus appointed shall attempt to agree upon the third arbitrator
to act as chairperson of the arbitration tribunal. If said two arbitrators
fail to appoint the chairperson within thirty days from the date of
appointment of the second arbitrator, upon written request of either party
to the AAA, such appointment shall be made in accordance with Rule 15 of
the Rules. The arbitrators shall have no power to waive, alter, amend,
revoke or suspend any of the provisions of this Agreement, provided,
however, that the arbitrators shall have the power to decide all questions
with respect to the interpretation and validity of this Section 18. The
arbitration shall be conducted, and the award shall be rendered, in the
English language. An arbitrator may not act as an advocate for the party
nominating him, and all three arbitrators shall be impartial and unbiased.
A majority vote by the three arbitrators shall be required on any decision
made by them. The arbitrators shall permit such discovery as they shall
determine is appropriate in the circumstances, taking into account the
needs of the parties and the desirability of making discovery expeditious
and cost-effective. Any such discovery shall be limited to information
directly relevant to the controversy or claim in arbitration and shall be
concluded within thirty days after the appointment of the arbitration
panel. This agreement to arbitrate shall be binding upon the heirs,
successors and assigns and any trustee, receiver or executor of any party
hereto. Except to the extent required by law or court or administrative
order, no party, arbitrator, representative, counsel or witness shall
disclose or confirm to any person not present at the arbitration hearings
any information about the arbitration proceeding or hearings, including the
names of the parties and arbitrators, the nature and amount of the claims,
the financial condition of any party, the expected date of hearing or the
award made.
(b) Subject to and not in any way limiting the preceding Section
18(a), each of the parties hereto irrevocably consents and submits to the
jurisdiction in any action brought in connection with this Agreement in the
United States District Court for the Southern District of New York or for
the District of North Carolina, including, but not limited to, any action
to enforce an award rendered pursuant to the preceding. Section 18(a).
Parent hereby appoints CT Corporation System as their agent for service of
process in New York.
<PAGE>
CUSIP No. 0005840501 Page 46 of 46 Pages
IN WITNESS WHEREOF, Parent, Sub and each of the Stockholders
have caused this Agreement to be signed by their respective officers or
other authorized person thereunto duly authorized as of the date first
written above.
MCTH ACQUISITION INC.,a North Carolina
corporation
By:
Name:
Title:
MEDCATH HOLDINGS, INC., a Delaware
corporation
By:
Name:
Date:
____________________________________
Number of Existing Shares:
____________________________________
Number of Existing Shares:
____________________________________
Number of Existing Shares:
____________________________________
Number of Existing Shares:
