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EXHIBIT 4.7.3
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT dated as of August 31, 1999, by and
among QUORUM HEALTH GROUP, INC., a Delaware corporation (the "Company"), WELSH,
CARSON, ANDERSON & STOWE VIII, L.P. ("WCAS VIII") and the several other persons
named in Schedule I hereto (collectively with WCAS VIII, the "Stockholders").
WHEREAS, the Company and the Stockholders have entered into a
Securities Purchase Agreement dated as of August 18, 1999 (the "WCAS Purchase
Agreement"), pursuant to which and on the terms and subject to the conditions
set forth therein, such Stockholders shall purchase $150,000,000 aggregate
principal amount of the Company's 6% Convertible Subordinated Debentures due
August 31, 2009 ("Debentures"), which are convertible under certain
circumstances into shares (the "Conversion Shares") of Common Stock, $.01 par
value ("Common Stock"), of the Company; and
WHEREAS, the Company and each of the Stockholders desire to
make certain arrangements among themselves with respect to the matters set forth
herein;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties hereto hereby
agree as follows:
Section 1. Voting Agreement. During the term of this
Agreement, at each annual or special stockholders' meeting, and whenever the
stockholders of the Company act by written consent with respect to the election
of directors, each Stockholder, severally and not jointly, agrees to vote or
otherwise give such Stockholder's consent in respect of all shares of capital
stock of the Company (whether now or hereafter acquired) owned by such
Stockholder as follows:
(a) for the election to the Company's Board of Directors of
the candidates nominated by the Company's Board of Directors at such
meeting, if any, each to serve in accordance with the provisions of the
Company's Bylaws and applicable corporate law until his or her
successor shall have been elected and shall have qualified, and
(b) as directed by the Company's Board of Directors with
respect to any proposed transaction that would constitute a Change of
Control (as hereinafter defined) of the Company.
For purposes of this Section 1, "Change of Control" means (i)
the sale, lease or transfer, whether direct or indirect (other than by way of
merger or consolidation), of all or substantially all of the assets of the
Company and its subsidiaries, taken as a whole, in one transaction or a series
of related transactions, to any "person" or "group," (ii) the liquidation or
dissolution of the Company or the adoption of a plan of liquidation or
dissolution of the Company, (iii) the acquisition of "beneficial ownership" by
any "person" or "group" of securities
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of the Company which when aggregated with all other securities of the Company
then owned by such person or group would permit such person or group to elect a
majority of the directors of the Company or any successor entity (such
securities entitled to so vote being referred to as "Voting Stock") by way of
sale, transfer or issuance of, or a series of sales, transfers and/or issuances
of, Voting Stock or otherwise, or (iv) any merger or consolidation to which the
Company is a party, except for a merger or consolidation in which the holders of
the Company's outstanding Voting Stock entitled to elect a majority of the
members of the Company's Board of Directors immediately prior to the merger or
consolidation shall continue to own directly or beneficially the outstanding
Voting Stock of the surviving corporation entitled to elect a majority of the
Board of Directors of the surviving corporation after giving effect to the
merger or consolidation.
For purposes of this Agreement, (i) the terms "person" and
"group" shall have the meanings set forth in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), whether or not
applicable, and (ii) the term "beneficial owner" shall have the meaning set
forth in Rules 13d-3 and 13d-5 under the Exchange Act, whether or not
applicable.
Section 2. Transfer Restrictions. Each of the Stockholders
hereby covenants and agrees, severally and not jointly, that, (i) during the
term of this Agreement, with respect to the Debentures, and (ii) during a period
of two years from the date hereof, with respect to the Conversion Shares, it
will not, directly or indirectly, offer, transfer, sell, assign, pledge,
hypothecate or otherwise dispose of (any such act being referred to herein as a
"transfer") any of the Debentures or Conversion Shares, other than (x) a
transfer to any other Stockholder, (y) a transfer by a Stockholder to his or her
spouse or lineal descendants, or any trust or other entity owned by or for the
benefit of any such person, or (z) a transfer pursuant to a transaction that
would constitute a Change of Control that is approved by the Board of Directors
of the Company as provided in Section 1(b) above. Thereafter, each Stockholder
hereby covenants and agrees, severally and not jointly, that it will not,
directly or indirectly, transfer any of the Debentures or Conversion Shares,
other than (i) in the case of WCAS VIII, to its partners, (ii) in compliance
with Rule 144 of the Exchange Act, (iii) pursuant to the Registration Rights
Agreement entered into in connection with the WCAS Purchase Agreement, or (iv)
as permitted by clauses (x), (y) or (z) of the immediately preceding sentence.
Any such transferee pursuant to clause (y) of the first sentence of this Section
2 and clause (i) of the second sentence of this Section 2 shall agree in writing
with the parties hereto to be bound by, and to comply with, all applicable
provisions of this Agreement and to be deemed to be a Stockholder for purposes
of this Agreement.
Section 3. Limitation on Beneficial Ownership. Each of the
Stockholders hereby covenants and agrees, severally and not jointly, that
without the prior approval of the Company's Board of Directors (it being
understood that no director who is an affiliate of any of the Stockholders shall
participate in granting such approval) for the term of this Agreement, it shall
not purchase or otherwise acquire shares of Common Stock or other securities
convertible into, or exercisable or exchangeable for, Common Stock, which
shares, when aggregated with all shares of Common Stock beneficially owned by
the Stockholders immediately prior to such transaction, would constitute greater
than 30% of the outstanding shares of Common Stock on a fully-diluted basis.
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Section 4. Certain Other Limitations. Each of the Stockholders
hereby covenants and agrees, severally and not jointly, that during the term of
this Agreement it will not, without the prior approval of the Board of Directors
of the Company (it being understood that no director that is an affiliate of any
of the Stockholders shall participate in granting such approval), either alone
or as part of a group:
(a) make, or in any way participate, directly or indirectly,
in any "solicitation" of "proxies" (as such terms are defined or used
in Regulation 14A under the Exchange Act) or become a "participant" in
any "election contest" (as such terms are defined or used in Rule
14a-11 under the Exchange Act) to vote, or seek to advise or influence
any person or entity with respect to the voting of, any voting
securities of the Company or any of its affiliates;
(b) initiate or propose any stockholder proposals for
submission to a vote of stockholders, whether by action at a
stockholder meeting or by written consent, with respect to the Company
or any of its affiliates, or propose any person for election to the
Board of Directors of the Company or any of its affiliates, or propose
the removal of any member of the Board of Directors of the Company or
any of its affiliates;
(c) make any offer or proposal to the Board of Directors of
the Company or publicly announce any offer or proposal (or publicly
announce its interest in making any such offer or proposal) to enter
into any transaction of merger, consolidation, sale of substantial
assets or any other business combination involving the Company or any
of its affiliates, whether or not any parties other than the
Stockholders and their affiliates are involved (it being understood
that this clause (c) shall not apply if a third party not acting in
concert with any of the Stockholders or their affiliates publicly
announces any offer or proposal (or publicly announces its interest in
making any such offer or proposal) to enter into any such transaction,
sale or combination); or
(d) form, join or in any way participate in a group to take
any actions otherwise prohibited by the terms of this Agreement.
Section 5. Legend. Each WCAS Debenture and each certificate
representing Conversion Shares shall conspicuously bear the following legend
until such time as the shares represented thereby are no longer subject to the
provisions hereof:
THIS SECURITY MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER,
SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
COMPLIES WITH THE PROVISIONS OF THE STOCKHOLDERS AGREEMENT
DATED AS OF AUGUST 31, 1999 BETWEEN QUORUM HEALTH GROUP, INC.
AND THE STOCKHOLDER NAMED ON THE FACE HEREOF, A COPY
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OF WHICH IS ON FILE WITH THE SECRETARY OF THE
CORPORATION.
The Company covenants that it shall keep a copy of this
Agreement on file at the address listed in Section 10 for the purpose of
furnishing copies to the parties hereto.
Section 6. Duration of Agreement. This Agreement shall
terminate upon the earliest to occur of (a) the sale, lease or transfer, whether
direct or indirect, of all or substantially all of the assets of the Company and
its subsidiaries, taken as a whole, in one transaction or a series of related
transactions, to any person or persons, or (b) with respect to any Stockholder,
the date on which such Stockholder no longer beneficially owns any Debentures or
Conversion Shares, or (c) the fifth anniversary of the date hereof.
Section 7. Headings. Headings of articles, sections and
paragraphs of this Agreement are inserted for convenience of reference only and
shall not affect the interpretation or be deemed to constitute a part hereof.
Section 8. Severability. In the event that any one or more of
the provisions contained in this Agreement or in any other instrument referred
to herein shall, for any reason, be held to be invalid, illegal or
unenforceable, such illegality, invalidity or unenforceability shall not affect
any other provisions of this Agreement; provided that in such event the parties
shall negotiate in good faith in an attempt to agree to another provision (in
lieu of the provision held to be invalid or unenforceable) that will be valid
and enforceable and that will carry out the parties' intentions hereunder.
Section 9. Benefits of Agreement. Nothing expressed by or
mentioned in this Agreement is intended or shall be construed to give any person
other than the parties hereto and their respective successors and permitted
assigns any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision herein contained, this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and
exclusive benefit of the parties hereto and their respective successors and
permitted assigns.
Section 10. Notices. Any notice or other communications
required or permitted hereunder shall be deemed to be sufficient if contained in
a written instrument delivered in person or by courier or duly sent by first
class certified mail, postage prepaid, by nationally recognized courier, or by
facsimile addressed to such party at the address or facsimile number set forth
below:
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(1) if to the Company, to it at:
Quorum Health Group, Inc.
103 Continental Place
Brentwood, Tennessee 37027
Attention: Ashby Q. Burks, Esq.
Fax: (615) 371-4788
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Jeffrey Bagner, Esq.
Fax: (212) 859-4000
(2) if to a Stockholder, to such Stockholder at:
Welsh, Carson, Anderson & Stowe
320 Park Avenue, Suite 2500
New York, New York 10022
Fax: (212) 893-9575
with a copy to:
Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10111
Attention: Robert A. Schwed, Esq.
Fax: (212) 841-5725
or, in any case, at such other address or facsimile number as shall have been
furnished in writing by such party to the other parties hereto. All such
notices, requests, consents and other communications shall be deemed to have
been received (a) in the case of personal delivery, on the date of such
delivery, (b) in the case of mailing, on the fifth business day following the
date of such mailing (c) in the case of delivery by overnight courier, on the
business day following the date of delivery to such courier and (d) in the case
of facsimile, when received.
Section 10. Modification. Neither this Agreement nor any
provision hereof may be modified, changed, discharged or terminated except by an
instrument in writing signed by the parties hereto.
Section 11. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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SECTION 12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES.
Section 13. Injunctive Relief. Each of the parties hereto
acknowledges that in the event of a breach by any of them of the provisions of
this Agreement, the aggrieved party may be without an adequate remedy at law.
Each of the parties therefore agrees that in the event of such a breach hereof,
the aggrieved party may elect to institute and prosecute proceedings in any
court of competent jurisdiction to enforce specific performance or to enjoin the
continuing breach hereof. By seeking or obtaining any such relief, the aggrieved
party shall not be precluded from seeking or obtaining any other relief to which
it may be entitled.
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IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement as a sealed instrument, all as of the day and year first above
written.
QUORUM HEALTH GROUP, INC.
By: _________________________________
Name:
Title:
WELSH, CARSON, ANDERSON &
STOWE VIII, L.P.
By WCAS VIII Associates LLC,
General Partner
By: _________________________________
Managing Member
WCA MANAGEMENT CORPORATION
By: _________________________________
Name:
Title:
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SCHEDULE I
STOCKHOLDERS
Welsh, Carson, Anderson & Stowe VIII, L.P.
WCA Management Corporation