EXHIBIT 10.65
================================================================================
ESCROW AGREEMENT
by and among
SYMBION, INC.,
PHYSICIANS SURGICAL CARE, INC.,
▇. ▇. ▇▇▇▇▇▇▇ EQUITY PARTNERS III, L.L.C.,
BANK OF AMERICA, N.A.
AND
THE STOCKHOLDERS NAMED HEREIN
-------------------------
Dated as of March 7, 2002
-------------------------
================================================================================
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of March 7, 2002 (this
"Agreement"), by and among SYMBION, INC., a Tennessee corporation ("Parent"),
PHYSICIANS SURGICAL CARE, INC., a Delaware corporation (the "Company"), the
stockholders of the Company listed on Schedule I attached hereto (the
"Stockholders"), ▇. ▇. ▇▇▇▇▇▇▇ EQUITY PARTNERS III, L.L.C., a Delaware limited
liability company (the "Representative"), acting in respects of the interest of
the Stockholders, and BANK OF AMERICA, N.A., a national banking association as
escrow agent (the "Escrow Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Parent, Symbion Acquisition Sub, Inc., a Delaware
corporation ("Merger Subsidiary"), and the Company have entered into an
Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), which provides for, among other things, the merger (the "Merger")
of Merger Subsidiary with and into the Company, with the Company surviving as a
wholly owned subsidiary of Parent;
WHEREAS, pursuant to the terms of Section 3.4 of the Merger
Agreement, Parent shall deliver, as soon as practicable after the effective time
of the Merger, to the Escrow Agent certificates representing ten percent (10%)
of the number of Parent Shares (as defined in the Merger Agreement) to which
each Stockholder is entitled in the Merger after giving effect to the Exchange
Ratios (as defined in the Merger Agreement) (the "Merger Shares" and, together
with all other shares of capital stock deposited by Parent with the Escrow
Agent, the "Escrow Account");
WHEREAS, Parent, the Company and the Stockholders wish to
create the Escrow Account and appoint the Escrow Agent as the escrow agent for
such Escrow Account upon the terms and subject to the conditions hereinafter set
forth, and the Escrow Agent is willing to act as escrow agent in respect of the
Escrow Account upon such terms and conditions; and
WHEREAS, pursuant to Section 2(b) below, each Stockholder
wishes to appoint the Representative as the representative of such Stockholder
to act in respect of the interests of, and in a manner such Representative
believes to be in the best interests of, such Stockholder under this Agreement,
with the powers and authority provided for herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and other valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. Defined Terms. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"Agreement" has the meaning set forth in the preamble to this
Agreement.
"Capital Change" means any stock dividend, stock split,
reverse stock split, combination of shares, reclassification, recapitalization
or other similar event affecting Escrow Shares.
"Certificate of Instruction" has the meaning set forth in
Section 8(c)(i) of this Agreement.
"Charter" means the Amended and Restated Charter of Parent as
in effect as of the effective time of the Merger.
"Claim" has the meaning set forth in Section 8(c) of this
Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Company" has the meaning set forth in the preamble to this
Agreement.
"Consolidation Loss" has the meaning set forth in Section 7.21
of the Merger Agreement.
"Escrow Account" has the meaning set forth in the recitals to
this Agreement.
"Escrow Agent" has the meaning set forth in the preamble to
this Agreement.
"Escrow Costs" has the meaning set forth in Section 12 of this
Agreement.
"Escrow Shares" shall mean the Merger Shares and any other
shares of capital stock issued by Parent (by way of a stock dividend or
otherwise) in respect of shares of Parent's capital stock held in the Escrow
Account.
"Indemnity Notice" has the meaning set forth in Section 8(c)
of this Agreement.
"Litigation Certificate" has the meaning set forth in Section
8(c)(ii) of this Agreement.
"Loss" or "Losses" means any suit, claim, action, proceeding
or investigation, losses, liabilities, damages, deficiencies, judgments,
assessments, fines, settlements, costs or expenses (including interest,
penalties and fees, expenses and disbursements of attorneys, experts, personnel
and consultants).
"Merger" has the meaning set forth in the recitals to this
Agreement.
2
"Merger Agreement" has the meaning set forth in the recitals
to this Agreement.
"Merger Subsidiary" has the meaning set forth in the recitals
to this Agreement.
"Minority Stockholder" has the meaning set forth in Section
3(i) of this Agreement.
"Objection Certificate" has the meaning set forth in Section
8(c)(ii) of this Agreement.
"Objection Period" has the meaning set forth in Section
8(c)(ii) of this Agreement.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"Parent Adjustment Amount" has the meaning set forth in
Section 8(b) of this Agreement.
"Parent Adjustment Certificate" has the meaning set forth in
Section 8(b) of this Agreement.
"Parent Cancellation Certificate" has the meaning set forth in
Section 8(c)(v) of this Agreement.
"Parent Common Share Price" means the amount of $3.13,
adjusted for stock splits, reverse stock splits and similar transactions.
"Parent Common Stock" means the common stock, no par value per
share, of Parent.
"Parent Series A Preferred Stock" means the series A
convertible preferred stock, par value $0.01 per share, of Parent.
"Parent Series B Preferred Stock" means the series B
convertible preferred stock, par value $0.01 per share, of Parent.
"Private Offering Memorandum" has the meaning set forth in
Section 7.10 of the Merger Agreement.
"Representative" has the meaning set forth in the preamble to
this Agreement.
"Representative Cancellation Certificate" has the meaning set
forth in Section 8(c)(vi) of this Agreement.
3
"Representative Fee Certificate" has the meaning set forth in
Section 3(i) of this Agreement.
"Resolution Certificate" has the meaning set forth in Section
8(c)(ii) of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Stockholder Fees" has the meaning set forth in Section 3(i)
of this Agreement.
"Stockholders" has the meaning set forth in the preamble to
this Agreement and "Stockholder" shall have the correlative meaning.
"Termination Date" means that date that is thirty (30) days
after completion of Parent's 2002 calendar year audit.
"Triggering Event" means either (a) the closing of an initial
public offering pursuant to an effective registration statement under the
Securities Act covering the offer and sale of the capital stock of Parent or any
of its subsidiaries or affiliates or (b) any consolidation or merger of Parent
or any of its subsidiaries or affiliates with or into any other corporation or
other entity or person resulting in the receipt by Parent's stockholders of cash
or capital stock (or comparable equity interests of such corporation, entity or
person) which has been registered under the Securities Act.
"Unresolved Claims" has the meaning set forth in Section 9(a)
of this Agreement.
2. Appointment of the Escrow Agent; Deposit of Escrow Shares.
Parent, the Company and each of the Stockholders hereby constitute and appoint
Bank of America, N.A., a national banking association ("Bank") as, and Bank
hereby agrees to assume and perform the duties of, the Escrow Agent under and
pursuant to this Agreement. The Escrow Agent acknowledges receipt of an executed
copy of the Merger Agreement and this Agreement. The Escrow Shares allocable to
each Stockholder shall be set forth on Schedule I (which such schedule shall
include the class or classes and number of the Escrow Shares allocable to each
Stockholder). The Escrow Shares allocable to each Stockholder shall be delivered
by Parent to the Escrow Agent within five (5) business days after such
Stockholder delivers an executed copy of this Agreement to Parent and tenders
his shares in the Company to Parent for Merger Shares. The Escrow Shares shall
be delivered in the form of duly authorized stock certificates for such shares
issued in the respective names of the Stockholders. The Escrow Agent shall
provide the Representative notice upon its receipt of the Merger Shares.
4
3. Appointment of the Representative.
(a) Each Stockholder hereby irrevocably appoints ▇.▇.
▇▇▇▇▇▇▇ Equity Partners III, L.L.C. to act as such Stockholder's agent,
attorney-in-fact and representative to do any and all things and to execute any
and all documents in such Stockholder's name, place and stead, in any way which
such Stockholder could do if personally present, in connection with this
Agreement and the transactions contemplated hereby, including, without
limitation, to amend, cancel or extend, or waive the terms of this Agreement, to
act on each such Stockholder's behalf in any dispute involving this Agreement
and to do or refrain from doing all such further acts and things and execute all
such documents as the Representative shall deem necessary or appropriate in
connection with this Agreement and the transactions contemplated hereby, in all
events in the Representative's sole and absolute discretion, including, without
limitation, the power:
(i) to act for each such Stockholder with regard to
all matters pertaining to the post-closing purchase price
adjustment referred to in Section 3.3 of the Merger Agreement
and the indemnification referred to in Article IX of the
Merger Agreement, including the power to settle any claim on
behalf of any such Stockholder and to transact matters of
litigation and arbitration;
(ii) to execute and deliver all ancillary agreements,
certificates, notices and documents, and to make
representations and warranties therein, on behalf of each such
Stockholder in connection with this Agreement and the
consummation of the transactions contemplated hereby;
(iii) to do or refrain from doing any act or deed on
behalf of each such Stockholder relating to the subject matter
of this Agreement as fully and completely as such Stockholder
could do if personally present; and
(iv) to receive all notices on behalf of each such
Stockholder in connection with any claims or matters under
this Agreement.
(b) The appointment of the Representative shall be deemed
coupled with an interest and shall be irrevocable, surviving death or disability
of any Stockholder, and shall be binding upon the executors, heirs, legal
representatives, successors and assigns of each Stockholder. All notices
delivered by Parent or Escrow Agent under this Agreement to the Representative
(whether pursuant hereto or otherwise) for the benefit of each Stockholder shall
constitute notice to each of the Stockholders, and the Representative shall use
its commercially reasonable best efforts to timely deliver to each Stockholder a
copy of each such notice delivered by Parent or Escrow Agent, as the case may
be, hereunder.
5
(c) The actions, decisions and instructions of the
Representative taken, made or given pursuant to the authority granted to the
Representative pursuant to this Section 3 shall be conclusive and binding upon
each Stockholder and each Stockholder's heirs, representatives, successors and
assigns, as applicable, and such persons or entities shall not have the right to
object, dissent, protest or otherwise contest the same.
(d) The Representative shall be entitled to rely, and
shall be fully protected in relying, upon any statements furnished to the
Representative by any Stockholder or Parent, or any other evidence deemed by the
Representative to be reliable. The Representative shall be fully justified in
failing or refusing to take any action under this Agreement. The Representative
shall be entitled to act on the advice of counsel selected by such
Representative, and the Representative shall be fully protected in respect of
any action taken, omitted or suffered by it in good faith in accordance with the
opinion of such counsel. The Representative shall be entitled to retain counsel
and to incur such expenses as the Representative deems to be necessary or
appropriate in connection with the performance of the Representative's
obligations under this Agreement, and all such fees and expenses (including
reasonable attorneys fees and expenses) incurred by the Representative shall be
borne by each of the Stockholders (pro rata based on each Stockholder's
percentage ownership determined as provided in Section 8(e)).
(e) The Representative shall not be liable for any error
of judgment, or for any act done or omitted by it, or for any mistake in fact or
law, or for anything that it may do or refrain from doing in connection
herewith; provided, however, that notwithstanding any other provision in this
Agreement, the Representative shall be liable for its willful misconduct or
gross negligence or breach of this Agreement.
(f) The Stockholders hereby agree to indemnify the
Representative (in its capacity as such) ratably according to each Stockholder's
percentage ownership (determined as provided in Section 8(e)) against, and to
hold the Representative (in its capacity as such) harmless from, any and all
Losses of whatever kind that may at any time be imposed upon, incurred by or
asserted against the Representative in such capacity in any way relating to or
arising out of the Representative's actions or failure to take action pursuant
to this Agreement or in connection herewith in such capacity; provided, that no
Stockholder shall be liable for the payment of any portion of such Losses
resulting solely from the willful misconduct or gross negligence of the
Representative.
(g) The Representative hereby accepts its appointment as
the Representative and the authorizations set forth above. The Representative
shall not have any duties or responsibilities except those expressly set forth
in this Agreement, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into this Agreement or shall
otherwise exist with respect to the Representative. No provision of this Section
3 may be amended without the consent of the Representative. The agreements in
this Section 3 shall survive the termination of this Agreement.
6
(h) Parent and Escrow Agent shall be entitled to rely, as
being binding upon each of the Stockholders, upon any document or other paper
believed by Parent or Escrow Agent to be genuine and correct and to have been
signed by the Representative, and Parent and Escrow Agent shall not be liable to
any Stockholder for any action taken or omitted to be taken by Parent or Escrow
Agent in such reliance. The Representative shall have the sole and exclusive
right on behalf of the Stockholders to take any action or provide any waiver
pursuant to this Agreement.
(i) Immediately upon the payment by the Representative of
any fees and expenses (including reasonable attorneys fees and expenses)
pursuant to the provisions of Section 3(d) hereof, the portion of such fees and
expenses (the "Stockholder Fees") owing by each of the Stockholders (other than
▇.▇. ▇▇▇▇▇▇▇ III, L.P., ▇.▇. ▇▇▇▇▇▇▇ ▇▇, L.P. and Whitney Strategic Partners
III, L.P.) (the "Minority Stockholders") as calculated pursuant to Section 3(d)
hereof will accrue interest from the date paid at the rate of 7% per annum up to
and through the date on which the Representative is reimbursed in full for such
Stockholder Fees. The Representative shall be entitled to be reimbursed for the
Stockholder Fees from the Escrow Account. From time to time following payment by
the Representative of any fees or expenses, the Representative may deliver to
the Escrow Agent a certificate substantially in the form of Annex X attached
hereto (the "Representative Fee Certificate") stating (i) the total amount of
the Stockholder Fees as of such date, if any, (ii) the number of whole Escrow
Shares (rounding to the nearest whole share) otherwise deliverable to the
Minority Stockholders to be delivered, notwithstanding any other provision of
this Agreement, to the Representative, as is equal to the quotient obtained by
dividing (x) the amount of the Stockholder Fees as of such date by (y) the
Parent Common Share Price and (iii) each Minority Stockholder's pro rata portion
of such shares (determined as provided in Section 8(e) hereof) to be delivered
pursuant to subsection (ii) immediately above. Notwithstanding anything to the
contrary set forth herein, the Escrow Agent shall deliver the number of Escrow
Shares determined pursuant to the immediately preceding sentence to the
Representative in lieu of delivery of such Escrow Shares to the Minority
Stockholders prior to any distribution to the Minority Stockholder pursuant to
this Agreement but not in lieu of or prior to any distribution required to be
made to Parent hereunder. If and to the extent that there is not a sufficient
number of Escrow Shares in the Escrow Account to pay in full the Stockholder
Fees, the Minority Stockholders shall pay to the Representative (pro rata based
on each Stockholder's percentage ownership determined as provided in Section
8(e) hereof) any such Stockholder Fees in cash up to an aggregate amount for all
such Minority Stockholders of $56,000.
4. Holding of the Escrow Shares. The Escrow Agent shall hold
the Escrow Shares in escrow in a separate account maintained for the purposes
set forth in this Agreement. The Escrow Shares shall not be subject to lien or
attachment by any creditor of any party hereto and shall be used solely for the
purpose set forth in this Agreement. The Escrow Shares or any proceeds thereof
shall not be available to, and shall not be used by, the Escrow Agent to set off
any obligations of any of the Stockholders, the Representative or Parent owing
to the Escrow Agent in any capacity. None of the Escrow Shares or any beneficial
interest therein may be pledged, sold,
7
assigned or transferred, including by operation of law or by a Stockholder,
prior to the delivery of the Escrow Shares to the Stockholders or Parent.
5. Dividends and other Distributions. Except for tax free
distributions paid in stock declared with respect to the Escrow Shares, the
Escrow Agent shall, upon receipt thereof, promptly distribute to each
Stockholder any dividends or other distributions of any kind made in respect of
such Stockholder's Escrow Shares. In the event that the Escrow Shares are
exchanged for any other securities and/or cash or other property by reason of a
merger, consolidation, recapitalization, reorganization or similar corporate
transaction, such securities and/or cash or other property shall be substituted
for the Escrow Shares for purposes of this Agreement, and the Parent and the
Representative shall agree to such equitable adjustments in the provisions of
this Agreement as may be necessary to give effect to this sentence.
6. Voting. Prior to the later of (i) the Termination Date or
(ii) the time at which all Escrow Shares have been distributed to the Parent or
the Stockholders pursuant to this Agreement, each Stockholder will have voting
rights with respect to his, her or its Escrow Shares, and the Parent shall take
commercially reasonable steps to cooperate with the exercise of such rights.
While the Escrow Shares remain in the Escrow Agent's possession pursuant to this
Agreement, the Stockholders shall retain and be able to exercise all other
incidents of ownership of the Escrow Shares that are not inconsistent with the
terms and conditions of this Agreement and the Merger Agreement.
7. Distribution of Preferred Stock Redemption Payment.
Notwithstanding anything to the contrary herein (including, without limitation,
Section 5 hereof), in the event that the Escrow Agent receives a Series A
Redemption Payment (as defined in the Charter) or a Series B Redemption Payment
(as defined in the Charter) with respect to any of the shares of Parent Series A
Preferred Stock or Parent Series B Preferred Stock held in the Escrow Account as
the result of the automatic conversion of such Parent Series A Preferred Stock
and Parent Series B Preferred Stock upon the occurrence of a Triggering Event,
the Escrow Agent shall, immediately upon its receipt, distribute to each
Stockholder who has Parent Series A Preferred Stock or Parent Series B Preferred
Stock in the Escrow Account any Series A Redemption Payment or Series B
Redemption Payment made in respect of such Stockholder's Escrow Shares.
8. Disbursement. The following procedures shall govern the
release of the Escrow Shares by the Escrow Agent.
(a) General. The Escrow Account shall be held by the
Escrow Agent (i) as the exclusive means for payment to Parent of any amounts
owing to Parent pursuant to the post-closing purchase price adjustment provided
for under Section 3.3 of the Merger Agreement and (ii) as the exclusive means of
payment to Parent of indemnity obligations pursuant to Section 9.2 of the Merger
Agreement.
(b) Post-Closing Purchase Price Adjustment and
Consolidation Loss.
8
(i) If, after the Closing Balance Sheet has been
(i) deemed accepted by the Company pursuant to Section 3.3 of the Merger
Agreement, (ii) agreed upon by Parent and the Representative or (iii) determined
by Deloitte & Touche, LLP pursuant to the terms of Section 3.3(a) of the Merger
Agreement, it is determined that a payment is due Parent pursuant to Section 3.3
of the Merger Agreement, then Parent and the Representative shall deliver to the
Escrow Agent a certificate substantially in the form of Annex I attached hereto
(the "Parent Adjustment Certificate") signed by Parent and the Representative
stating (i) the amount, including any costs payable by the Stockholders pursuant
to Section 3.3 of the Merger Agreement, if any, owed to Parent (the "Parent
Adjustment Amount"), (ii) the number of whole Escrow Shares (rounding to the
nearest whole share) to be delivered, as is equal to the quotient obtained by
dividing (x) the Parent Adjustment Amount by (y) the Parent Common Share Price
and (iii) each Stockholder's pro rata portion of such shares (determined as
provided in Section 8(e) hereof) to be delivered pursuant to the subsection (ii)
immediately above. Subject to Section 8(h), the Escrow Agent shall, within three
(3) business days of receipt of such Parent Adjustment Certificate, deliver to
Parent the Escrow Shares specified in the Parent Adjustment Certificate.
(ii) In the event there is a Consolidation Loss, as
determined pursuant to Section 7.21 of the Merger Agreement, then Parent and the
Representative shall deliver to the Escrow Agent a certificate substantially in
the form of Annex IX attached hereto (the "Consolidation Loss Certificate")
signed by Parent and the Representative stating (i) the amount of the
Consolidation Loss, (ii) the number of whole Escrow Shares (rounding to the
nearest whole share) to be delivered, as is equal to the quotient obtained by
dividing (x) the amount of the Consolidation Loss by (y) the Parent Common Share
Price and (iii) each Stockholder's pro rata portion of such shares (determined
as provided in Section 8(e) hereof) to be delivered to Parent pursuant to
subsection (ii) immediately above. Subject to Section 8(h), the Escrow Agent
shall, within three (3) business days of receipt of such Consolidation Loss
Certificate, deliver to Parent the Escrow Shares specified in the Consolidation
Loss Certificate.
(c) Claims for Indemnification and Extraordinary Escrow
Costs. If Parent suffers or incurs a Loss for which it is entitled to
indemnification pursuant to the terms of Section 9.2 of the Merger Agreement, or
pays Extraordinary Escrow Costs (as hereinafter defined) that are attributable
to claims made by or on behalf of the Stockholders with respect to which the
Stockholders are not the prevailing party, Parent may give notice (an "Indemnity
Notice") to the Representative and the Escrow Agent specifying in reasonable
detail the nature and dollar amount of Parent's claim for indemnification that
Parent may have under the Merger Agreement, or for payment of Extraordinary
Escrow Costs (the "Claim").
(i) Concurrently with the delivery of an Indemnity
Notice, the Parent will deliver to the Escrow Agent a certificate in
substantially the form of Annex II attached hereto (a "Certificate of
Instruction"). No Certificate of Instruction may be delivered by the Parent
after the close of business on the business day immediately preceding the
Termination Date. The Escrow Agent shall give written notice to the
Representative of its receipt of a Certificate of Instruction
9
not later than the fifth business day following receipt thereof, together with a
copy of such Certificate of Instruction.
(ii) If the Escrow Agent (i) shall not, within thirty
(30) calendar days following its receipt of a Certificate of Instruction (the
"Objection Period"), have received from the Representative a certificate in
substantially the form of Annex III attached hereto (an "Objection Certificate")
disputing the obligation to pay the Owed Amount referred to in such Certificate
of Instruction, or (ii) shall have received such an Objection Certificate within
the Objection Period and shall thereafter have received either (A) a certificate
from Parent and the Representative substantially in the form of Annex IV
attached hereto (a "Resolution Certificate") stating that Parent and the
Representative have agreed that the Owed Amount referred to in such Certificate
of Instruction (or a specified portion thereof) is payable to Parent or its
affiliates or (B) a correct and complete copy of an arbitral award rendered
pursuant to Section 9.4 of the Merger Agreement (certified jointly by each of
Parent and the Representative) or a final, nonappealable order of a court of
competent jurisdiction (in either case, accompanied by a certificate of Parent
substantially in the form of Annex V attached hereto (a "Litigation
Certificate")) stating that the Owed Amount referred to in such Certificate of
Instruction (or a specified portion thereof) is payable to Parent or its
affiliates by the Stockholders, then the Escrow Agent shall, subject to Section
8(h), on the business day next following (A) the expiration of the Objection
Period or (B) the Escrow Agent's receipt of a Resolution Certificate or a
Litigation Certificate, as the case may be, deliver to the Parent, from each
Stockholder's portion, of the Escrow Shares specified in such Resolution
Certificate or Litigation Certificate, as the case may be as provided in Section
8(e) hereof.
(iii) The Escrow Agent shall give written notice to
Parent of its receipt of an Objection Certificate not later than the fifth
business day following receipt thereof, together with a copy of such Objection
Certificate. The Escrow Agent shall give written notice to the Representative of
its receipt of a Litigation Certificate not later than the fifth business day
following receipt thereof, together with a copy of such Litigation Certificate.
(iv) Upon the payment by the Escrow Agent of the Owed
Amount referred to in a Certificate of Instruction, such Certificate of
Instruction shall be deemed satisfied. Upon the receipt by the Escrow Agent of a
Resolution Certificate or a Litigation Certificate and the payment by the Escrow
Agent of the Owed Amount referred to therein, the related Certificate of
Instruction shall be deemed satisfied.
(v) Upon Parent's determination that it has no claim
or has released its claim with respect to an Owed Amount referred to in a
Certificate of Instruction (or a specified portion thereof), Parent will
promptly deliver to the Escrow Agent a certificate substantially in the form of
Annex VI attached hereto (a "Parent Cancellation Certificate") canceling such
Certificate of Instruction (or such specified portion thereof, as the case may
be), and such Certificate of Instruction (or portion thereof) shall thereupon be
deemed canceled. The Escrow Agent shall give written notice
10
to the Representative of its receipt of a Parent Cancellation Certificate not
later than the fifth business day following receipt thereof, together with a
copy of such Parent Cancellation Certificate.
(vi) Upon receipt of either an arbitral award
rendered pursuant to Section 9.4 of the Merger Agreement or a final,
nonappealable order of a court of competent jurisdiction stating that less than
all of the Owed Amount referred to in a Certificate of Instruction as to which
the Representative delivered an Objection Certificate within the Objection
Period is payable to Parent or any of its affiliates by the Stockholders, the
Representative may deliver a copy of such order (accompanied by a certificate of
the Representative substantially in the form of Annex VII attached hereto (a
"Representative Cancellation Certificate")) canceling such Certificate of
Instruction, or portion thereof, to the extent the Owed Amount exceeds the
amount provided in such order, and such Certificate of Instruction shall
thereupon be deemed so canceled. The Escrow Agent shall give written notice to
the Parent of its receipt of a Representative Cancellation Certificate not later
than the business day next following receipt thereof, together with a copy of
such Representative Cancellation Certificate.
(d) Delivery of Certificates. No certificate shall be
delivered pursuant to this Section 8 unless it shall have been prepared in good
faith by the party delivering such certificate, and all certificates delivered
pursuant to this Section 8 shall represent bona fide notice for purposes of this
Agreement. Any Certificate of Instruction, Resolution Certificate or Litigation
Certificate shall (I) instruct the Escrow Agent to deliver a specific number of
Escrow Shares (rounded to the nearest whole share), which shall be equal to the
quotient of (x) the Owed Amount (or if any such Resolution Certificate or
Litigation Certificate specifies a different amount than such Owed Amount is
payable, such different amount) and (y) the Parent Common Share Price and (II)
instruct the Escrow Agent as to each Stockholder's pro rata portion of the
Escrow Shares (determined as provided in Section 8(e) hereof) to be delivered to
satisfy such Owed Amount (or if any such Resolution Certificate or Litigation
Certificate specifies a different amount than such Owed Amount is payable, such
different amount).
(e) Pro Rata Treatment. To the extent that the Escrow
Agent is required to deliver Escrow Shares to Parent hereunder, it shall deliver
to Parent (i) such shares obtained from the Escrow Account maintained for the
Stockholders on a pro rata basis based on the respective ownership of Escrow
Shares set forth on Schedule I hereto and (ii) stock transfer powers related to
such shares. For the avoidance of doubt, for the purposes of determining any
Stockholder's pro rata share of any distribution of Escrow Shares, the Parent
and Representative shall include in such calculation shares of Parent Series A
Preferred Stock and Parent Series B Preferred Stock which are releasable even
though such shares are not immediately releasable or deliverable pursuant to
Section 8(h) of this Agreement. Parent shall cause the transfer agent for the
Parent Common Stock to cooperate with the Escrow Agent in providing replacement
stock certificates for shares of Parent Common Stock in substitution for those
held by the Escrow Agent in order to enable the Escrow Agent to make the
distributions of Escrow Shares required under this Agreement. All time periods
for the delivery of Escrow Shares provided herein shall be automatically
extended to the extent necessary for the Escrow Agent to obtain any
11
replacement certificates necessary to make the distributions of Escrow Shares
required under this Agreement.
(f) Legend. Stock certificates representing the Escrow Shares
will (until they are released to the Stockholders or Parent in accordance with
this Agreement) bear the following legend indicating that they are subject to
this Agreement:
"THE SECURITIES REPRESENTED HEREBY MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED ONLY IN ACCORDANCE WITH THE TERMS
OF AN ESCROW AGREEMENT AMONG THE ISSUER, PHYSICIANS SURGICAL CARE,
INC., THE HOLDER THEREOF, ▇. ▇. ▇▇▇▇▇▇▇ EQUITY PARTNERS III, LLC (AS
REPRESENTATIVE OF THE HOLDER THEREOF) AND BANK OF AMERICA, N.A.. A COPY
OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE ISSUER."
(g) Updating. Parent and the Representative shall promptly
deliver to the Escrow Agent a revised Schedule I, certified by the Parent and
the Representative, to update the information contained therein following the
occurrence of any of the following events: (i) a Capital Change; or (ii) any
change in the information set forth in Schedule I regarding the Stockholders.
Unless and until the Escrow Agent receives such revised Schedule I, the Escrow
Agent may assume without inquiry that the last Schedule I it received remains in
effect and that such exhibit has not been, and is not required to be, modified.
(h) Limitation on Release of Shares. (i) Notwithstanding anything
herein to the contrary, prior to the occurrence of a Triggering Event, no Parent
Series A Preferred Stock or Parent Series B Preferred Stock shall be released to
Parent even though otherwise releasable pursuant to the terms of this Agreement.
Upon the date Escrow Agent is given notice by Parent or the Representative that
a Triggering Event has occurred, the Escrow Agent shall release (A) to Parent,
that number of Parent Common Shares received in exchange for shares of Parent
Series A Preferred Stock and Parent Series B Preferred Stock already payable to
Parent pursuant to a certificate delivered under Section 8 of this Agreement and
(B) to each Stockholder whose shares of Parent Series A Preferred Stock or
Parent Series B Preferred Stock, as the case may be, were held in the Escrow
Account, the redemption amount as provided in Section 7 of this Agreement in
respect of such shares of Parent Series A Preferred Stock or Parent Series B
Preferred Stock previously held in escrow on behalf of such Stockholder and
released to Parent pursuant to subsection (A) above in accordance with the terms
of this Agreement.
(ii) Notwithstanding anything contained herein to the
contrary, any indemnity payment or other release of Escrow Shares hereunder
shall only be made by the Escrow Agent in accordance with written instructions
given by Parent and/or the Representative pursuant to the terms and conditions
of this Escrow Agreement. Parent and the Representative hereby agree that all
such written instructions and any
12
other notices given to the Escrow Agent shall comply with the limitations set
forth in the Merger Agreement.
9. Release of Escrow Shares.
(a) The escrow established by this Agreement shall terminate on
the Termination Date; provided, however, that this Agreement shall continue in
effect until the resolution of the post-closing purchase price adjustments
pursuant to Section 3.3 of the Merger Agreement and the resolution of all
outstanding Claims as to which the Escrow Agent has properly received a
Certificate of Instruction in accordance with Section 8(c) hereof on or prior to
the Termination Date (the "Unresolved Claims"), and the escrow established
hereby shall continue with respect to Unresolved Claims until the Unresolved
Claims have been resolved in accordance herewith; provided, further, that this
Agreement, and the escrow established hereby, shall continue in effect until a
Triggering Event has occurred to the extent that any shares of Parent Common
Stock to be received upon the conversion of any shares of Series A Preferred
Stock or Series B Preferred Stock then held in the Escrow Account are due and
payable by any Stockholder to Parent upon such conversion as the result of
Claims previously resolved.
On the termination of this Escrow, each Stockholder shall be entitled
to receive (i) any dividends or other distributions received and not previously
distributed pursuant to Section 5, (ii) a certificate or certificates evidencing
the remaining number of each Stockholder's Escrow Shares, if any, less that
number of Escrow Shares as shall represent (at the Parent Common Share Price)
any amounts designated in Certificates of Instruction received by the Escrow
Agent prior to the Termination Date that have not been canceled in accordance
with paragraph Sections 8(c)(iv), 8(c)(v) or 8(c)(vi), and (iii) each
Stockholder's remaining executed stock transfer powers, if any; provided,
however, that if any shares of Common Stock are then owed to Parent as the
result of a previously resolved Claim but not released to Parent pursuant to the
provisions of Section 8(h), the Escrow Agent shall continue to hold that number
of shares of Series A Preferred Stock or Series B Preferred Stock that upon
conversion will yield that number of shares of Parent Common Stock which are
payable but not yet paid to Parent.
At such time on or following the Termination Date as all Certificates
of Instruction received by the Escrow Agent prior to the Termination Date have
been canceled in accordance with Sections 8(c)(iv), 8(c)(v) or 8(c)(vi), the
Escrow Agent shall promptly deliver to each Stockholder the certificate or
certificates evidencing each Stockholder's remaining Escrow Shares, if any, and
this Agreement (other than Sections 3, 10, 11 and 12) shall automatically
terminate.
(b) Notwithstanding anything to the contrary in Section 9(a) of
this Agreement, if at any time the Merger Agreement terminates pursuant to the
provisions of Article X thereof, this Agreement shall immediately terminate
(other than Sections 3, 10, 11 and 12). Parent and the Representative shall give
Escrow Agent notification of such termination.
13
(c) At any time after the Termination Date, Parent and the
Representative shall deliver with each Resolution Certificate, Litigation
Certificate or notice of a Triggering Event, a certificate (a "Termination
Certificate") substantially in the form of Annex VIII attached hereto, which
Termination Certificate shall (i) instruct the Escrow Agent to deliver a number
of Escrow Shares to the Stockholders pursuant to the terms hereof and (ii)
instruct the Escrow Agent as to each Stockholder's pro rata portion of the
Escrow Shares (determined as provided in Section 8(e) hereof) to be delivered
pursuant to subsection (i) immediately above. Upon receipt of a Termination
Notice, the Escrow Agent shall deliver the Escrow Shares as specified therein.
After the Termination Date, Escrow Agent shall have no obligation to make
distributions other than pursuant to the instructions set forth in a Termination
Notice delivered together with a Resolution Certificate, Litigation Certificate
or notice of a Triggering Event. The escrow established by this agreement shall
terminate when the entire Escrow Account has been distributed to either the
Stockholders or to Parent.
10. Duties and Obligations of the Escrow Agent. The duties and
obligations of the Escrow Agent shall be limited to and determined solely by the
provisions of this Agreement and the certificates delivered to the Escrow Agent
in accordance herewith, and the Escrow Agent is not charged with knowledge of or
any duties or responsibilities in respect of any other agreement or document. In
furtherance and not in limitation of the foregoing:
(a) The Escrow Agent will hold the Escrow Shares in accordance
with, and subject to, the provisions of this Agreement. It is expressly
understood and agreed that the obligations of the Escrow Agent in respect of the
Escrow Shares and with respect to the disposition thereof, and otherwise under
this Agreement, are only those expressly set forth in this Agreement. The Escrow
Agent's sole duty with respect to the custody, safekeeping and preservation of
the Escrow Shares in its possession shall be to deal with such Escrow Shares in
the same manner as the Escrow Agent deals with similar property for its own
account. The Escrow Agent shall have no responsibility for (i) ascertaining or
taking action with respect to calls, redemptions, conversions, exchanges,
maturities, tenders or other matters relative to any Escrow Shares, regardless
of whether the Escrow Agent has or is deemed to have knowledge of such matters,
except set forth in this Agreement, or (ii) taking any actions to preserve
rights against any third party with respect to any Escrow Shares.
(b) The Escrow Agent shall be fully protected in relying in good
faith upon any written certification, notice, direction, request, waiver,
consent, receipt or other document (including any such certification, notice,
direction, request, waiver, consent, receipt or other document delivered by the
Representative or the Parent pursuant to Section 8 of this Agreement) that the
Escrow Agent in good faith believes to be genuine and duly authorized, executed
and delivered.
(c) The Escrow Agent shall not be liable for any error of
judgment, or for any act done or omitted by it, or for any mistake in fact or
law, or for anything that it may do or refrain from doing in connection
herewith; provided, however,
14
that the Escrow Agent shall not be excused from liability hereunder for its
willful misconduct or gross negligence or breach of this Agreement;
(d) The Escrow Agent may (but shall not be obligated to) seek the
advice of legal counsel in the event of any dispute or question as to the
construction of any of the provisions of this Agreement or its duties hereunder,
and the Escrow Agent shall incur no liability and shall be fully protected in
respect of any action taken, omitted or suffered by it in good faith in
accordance with the opinion of such counsel.
(e) In the event that the Escrow Agent shall in any instance, in
good faith be uncertain as to its duties or rights hereunder, the Escrow Agent
shall be entitled to refrain from taking any action in that instance and its
sole obligation, in addition to those of its duties hereunder as to which there
is no such uncertainty, shall be to keep safely all property held in escrow
until the Escrow Agent shall be specifically directed otherwise in writing by
each party hereto; provided, however, that the Escrow Agent at any time may
interplead Parent and the Representative in any court of competent jurisdiction
and request that such court determine its rights and duties hereunder.
(f) The Escrow Agent may execute any of its powers or
responsibilities hereunder and exercise any rights hereunder either directly or
by or through agents or attorneys selected with reasonable care, nothing in this
Agreement shall be deemed to impose upon the Escrow Agent any duty to qualify to
do business or to act as fiduciary or otherwise in any jurisdiction other than
the State of Tennessee, and the Escrow Agent shall not be responsible for and
shall not be under a duty to examine or pass upon the validity, binding effect,
execution or sufficiency of this Agreement or of any agreement amendatory or
supplemental hereto.
11. Cooperation. The Parent and the Representative shall provide to the
Escrow Agent all instruments and documents within their respective powers to
provide that are necessary for the Escrow Agent to perform its duties and
responsibilities hereunder.
12. Fees and Expenses; Indemnity. The Parent shall pay the Escrow Agent
a fee of $2,500 upon delivery of the Escrow Shares to the Escrow Agent and on
each anniversary of such delivery occurring prior to the date all Escrow Shares
are released from the Escrow Account. Each fee paid to Escrow Agent shall be
deemed fully earned when paid, and no portion shall be subject to rebate or
refund if this Agreement terminates prior to the expiration of the period for
which it was paid. Additionally, the Parent shall reimburse the Escrow Agent for
its reasonable attorneys fees incurred in connection with the preparation of the
Agreement. In addition, Parent shall reimburse and indemnify the Escrow Agent
for, and hold the Escrow Agent harmless against any Loss, including reasonable
attorneys' fees, incurred by the Escrow Agent in connection with the Escrow
Agent's performance of its duties and obligations under this Agreement, as well
as the reasonable costs and expenses of defending against any claim or liability
relating to this Agreement ("Extraordinary Escrow Costs"). Notwithstanding the
foregoing, the Parent shall not be required to indemnify the Escrow Agent for
any such
15
loss, liability, cost or expense arising as a result of the Escrow
Agent's willful misconduct or gross negligence or breach of this Agreement. The
provisions of this Section 12 will survive the expiration or any termination of
this Agreement.
13. Resignation and Removal of the Escrow Agent.
(a) The Escrow Agent may resign as such not less than thirty (30)
calendar days following the giving of written notice thereof to the
Representative and the Parent. In addition, the Escrow Agent may be removed and
replaced on a date designated in a written instrument signed by the
Representative and the Parent and delivered to the Escrow Agent. Notwithstanding
the foregoing, no such resignation or removal shall be effective until a
successor escrow agent has acknowledged its appointment as such as provided in
paragraph (c) below. In either event, upon the effective date of such
resignation or removal, the Escrow Agent shall deliver the Escrow Shares, the
executed stock transfer powers relating thereto, and any dividends and other
distributions received in respect thereof and not previously distributed to the
Parent or the Stockholders, together with earnings thereon, if any, to such
successor escrow agent, together with such records maintained by the Escrow
Agent in connection with its duties hereunder and other information with respect
to the Escrow Shares as such successor may reasonably request.
(b) If a successor escrow agent shall not have acknowledged its
appointment as such as provided in paragraph (c) below, in the case of a
resignation, prior to the expiration of thirty (30) calendar days following the
date of a notice of resignation or, in the case of a removal, on the date
designated for the Escrow Agent's removal, as the case may be, because the
Representative and the Parent are unable to agree on a successor escrow agent,
or for any other reason, the Escrow Agent may, at its option (i) select a
successor escrow agent (which shall be a depositary institution or trust company
having combined capital and surplus of at least $100 million) and any such
resulting appointment shall be binding upon all of the parties to this Agreement
or (ii) interplead the Escrow Account into a court of competent jurisdiction.
(c) Upon written acknowledgment by a successor escrow agent
appointed in accordance with the foregoing provisions of this Section of its
agreement to serve as escrow agent hereunder and the receipt of the Escrow
Shares, the executed stock transfer powers relating thereto and dividends and
other distributions received in respect thereof and not previously distributed
to the Parent or the Stockholders, together with earnings thereon, if any, the
Escrow Agent shall be fully released and relieved of all duties,
responsibilities and obligations under this Agreement, subject to the proviso
contained in clause (c) of Section 10, and such successor escrow agent shall for
all purposes hereof be the Escrow Agent.
14. Notices. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given if delivered
personally or by facsimile transmission or sent by a nationally recognized
overnight courier service to the parties at the following addresses or facsimile
numbers:
16
(a) If to Parent, to:
Symbion, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy:
Attention: Chief Executive Officer
with copy to:
Waller, Lansden, ▇▇▇▇▇▇ & ▇▇▇▇▇, PLLC
Nashville City Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇▇ ▇▇▇▇
(b) If to Company, to:
Physicians Surgical Care, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
with copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
(c) If to a Stockholder, to:
its address as set forth on Schedule I attached hereto
(d) If to Representative, to:
▇. ▇. ▇▇▇▇▇▇▇ Equity Partners III, L.L.C.
c/o Whitney & Co.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇, M.D.
17
with copy to:
Paul, Weiss, Rifkind ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
1285 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
(e) If to Escrow Agent, to:
Bank of America, N.A.
Healthcare Baking (TN1-100-04-17)
Bank of America Plaza
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with copy to:
Bass, ▇▇▇▇▇ & ▇▇▇▇ PLC
27th Floor, AmSouth Center
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
All such notices, requests and other communications will (i) if
delivered personally to the address as provided in this section, be deemed given
upon delivery, (ii) if delivered by facsimile transmission to the facsimile
number as provided in this section, be deemed given upon receipt if received on
a business day during normal business hours, and if not then received, on the
next business day, and (iii) if delivered by mail in the manner described above
to the address as provided in this Section, be deemed given upon receipt (in
each case regardless of whether such notice, request or other communication is
received by any other Person to whom a copy of such notice is to be delivered
pursuant to this section). Any party from time to time may change its address,
facsimile number or other information for the purpose of notices to that party
by giving notice specifying such change to the other parties hereto.
15. Amendments, etc. This Agreement may be amended or modified, and any
of the terms hereof may be waived, only by a written instrument duly executed by
or on behalf of the Parent and Representative and, with respect to any amendment
that would adversely affect the Escrow Agent, the Escrow Agent. No waiver by any
party of any term or condition contained of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any future occasion.
18
16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY
CONFLICTS OF LAWS PRINCIPLES THEREOF THAT MIGHT INDICATE THE APPLICABILITY OF
THE LAWS OF ANY OTHER JURISDICTION.
17. JURISDICTION. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY
AGREES THAT ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY AGREEMENTS OR TRANSACTIONS CONTEMPLATED HEREBY SHALL BE BROUGHT
IN THE COURTS OF THE STATE OF TENNESSEE OR THE UNITED STATES OF AMERICA FOR THE
DISTRICT OF TENNESSEE AND HEREBY EXPRESSLY SUBMITS TO THE PERSONAL JURISDICTION
AND VENUE OF SUCH COURTS FOR THE PURPOSES THEREOF AND EXPRESSLY WAIVES ANY CLAIM
OF IMPROPER VENUE AND ANY CLAIM THAT SUCH COURTS ARE AN INCONVENIENT FORUM.
18. WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.
19. Business Day. For all purposes of this Agreement, the term
"business day" shall mean a day other than Saturday, Sunday or any day on which
banks located in the State of Tennessee are authorized or obligated to close.
20. Usage Generally. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. All
references herein to Sections, Exhibits, Schedules and Annexes shall be deemed
to be references to Sections of, and Schedules, Exhibits and Annexes to, this
Agreement unless the context shall otherwise require. All Schedules, Exhibits
and Annexes attached hereto shall be deemed incorporated herein as if set forth
in full herein and, unless otherwise defined therein, all terms used in any
Schedule, Exhibit or Annex shall have the meaning ascribed to such term in this
Agreement. The words "include," "includes" and "including" shall be deemed to be
followed by the phrase "without limitation." The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise expressly provided herein, any agreement, instrument
or statute defined or referred to herein or in any agreement or instrument that
is referred to herein means such agreement, instrument or statute as from time
to time amended, modified or supplemented, including (in the case of agreements
or instruments) by waiver or consent and (in the case of statutes) by succession
of comparable successor statutes and references to all attachments thereto and
instruments incorporated therein.
19
21. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof, except as to Parent and the Company, the
Merger Agreement and the other agreements, instruments and documents provided
for or contemplated thereby. No statement, representation, warranty, covenant or
agreement of any kind not expressly set forth in this Agreement shall affect, or
be used to interpret, change or restrict, the express terms and provisions of
this Agreement. The provisions of this Agreement shall not be construed so as to
enlarge or diminish the substantive relative rights, or obligations of the
parties to the Merger Agreement and the other agreements, instruments and
documents provided for or contemplated thereby.
22. No Third Party Beneficiaries. Nothing contained in this Agreement,
express or implied, is intended to or shall confer upon anyone other than the
parties hereto any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
23. Miscellaneous. This Agreement is binding upon and will inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. The headings used in this Agreement have been inserted for convenience
of reference only and do not define or limit the provisions hereof. This
Agreement may be executed in any number of counterparts, each of which will be
deemed an original, but all of which together will constitute one and the same
instrument.
24. Exclusive Remedy of Stockholders. Each Stockholder agrees, and each
of Parent and the Company agree, that any and all claims for breaches of
representations, warranties, covenants or agreements contained in the Merger
Agreement and any federal or state securities law claims in connection with the
Merger, the Merger Agreement, the Private Offering Memorandum or any
transactions related thereto, shall be governed by (i) this Agreement and (ii)
the Merger Agreement, including without limitation, Section 9.3 of the Merger
Agreement and Section 9.4 of the Merger Agreement, which provides for all claims
to be resolved through arbitration.
25. Banking Relationship with Parent and its Affiliates. The parties
hereto acknowledge and agree that the Bank has made or participated in, and
hereafter may move or participate in, loans extensions of credit and other
financial accommodations to Parent and its affiliates, and that Parent and its
affiliates otherwise have and will continue to have a depositary and general
banking relationship with the Bank. The parties hereto acknowledge and consent
to the foregoing, and hereby agree and confirm that the foregoing shall not
impose any duty, responsibility or obligation or the Escrow Agent that is not
expressly set forth herein. The duties, responsibilities and obligations of the
Escrow Agent with respect to the subject matter of this Agreement shall be only
those expressly set forth herein, without regard for the existence of the
banking relationship described above.
20
26. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.
21
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
SYMBION, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
PHYSICIANS SURGICAL CARE, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
---------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: President and Chief Executive Officer
▇. ▇. ▇▇▇▇▇▇▇ EQUITY PARTNERS
III, L.L.C.
By: /s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: Managing Member
BANK OF AMERICA, N.A.,
as Escrow Agent
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Senior Vice President
22
SIGNATURE PAGE TO THE ESCROW AGREEMENT
BY AND AMONG
SYMBION, INC., PHYSICIANS SURGICAL CARE, INC.,
THE STOCKHOLDERS (AS DEFINED THEREIN),
THE REPRESENTATIVE (AS DEFINED THEREIN)
AND THE ESCROW AGENT (AS DEFINED THEREIN)
Name of Stockholder:___________________________________________
Signature:_____________________________________________________
Name/Title of Signatory if Signed
in Representative Capacity:____________________________________
Address of Stockholder:________________________________________
23
SCHEDULE I
STOCKHOLDERS
NUMBER OF ESCROW SHARES
PARENT PARENT SERIES A PARENT SERIES B
COMMON PREFERRED PREFERRED
NAME OF STOCKHOLDER STOCK STOCK STOCK
------------------- ------ ------------- ----------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 51
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ 2,072
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, MD 248
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ Nail 1,383
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇ 2,227
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Will ▇▇▇▇▇▇▇ 3,056
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 281
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. 77,497
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 9,683
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Vivari, Inc. 1,140
c/o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
24
STOCKHOLDERS
NUMBER OF ESCROW SHARES
PARENT PARENT SERIES A PARENT SERIES B
COMMON PREFERRED PREFERRED
NAME OF STOCKHOLDER STOCK STOCK STOCK
------------------- ------ ------------- ----------------
▇▇▇▇▇ ▇. ▇▇▇ 3,056
Suite 2200
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 1,381
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. 2,072
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ #▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, III 828
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 2,072
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust 6,630
c/o ▇▇▇▇ ▇. ▇▇▇▇, Trustee
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust 6,630
c/o ▇▇▇▇ ▇. ▇▇▇▇ Trustee
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust 6,630
c/o ▇▇▇▇ ▇. ▇▇▇▇ Trustee
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, M.D. 828
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ 621
4420 89th
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ 173
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
25
STOCKHOLDERS
NUMBER OF ESCROW SHARES
PARENT PARENT SERIES A PARENT SERIES B
COMMON PREFERRED PREFERRED
NAME OF STOCKHOLDER STOCK STOCK STOCK
------------------- ------ ------------- ----------------
▇▇▇▇ ▇. ▇▇▇▇▇ 8,288
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ 310
▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 399
▇▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇ 399
2220 Bellefontaine
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 855
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 51
▇▇. ▇ ▇▇▇ ▇▇▇ ▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 310
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. 207
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 969
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 1,996
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. and 9,324
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Finova Mezzanine Capital Inc. 11,852
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
26
STOCKHOLDERS
NUMBER OF ESCROW SHARES
PARENT PARENT SERIES A PARENT SERIES B
COMMON PREFERRED PREFERRED
NAME OF STOCKHOLDER STOCK STOCK STOCK
------------------- ------ ------------- ----------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ 6,764 1,752
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇. ▇▇▇▇▇ Sweat as custodian for 598
▇▇▇▇▇▇▇ ▇▇▇▇▇ Sweat, Jr.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇. ▇▇▇▇▇ Sweat as custodian for ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ Sweat
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇ III as custodian for 479
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇, III 359
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇ 598
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ III 359
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Whitney Strategic Partners III, L.P. 10,145 3,953
c/o ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇▇ III, L.P. 421,033 164,112
c/o ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇▇ ▇▇, L.P. 90,640
c/o ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
27
ANNEX I
PARENT ADJUSTMENT CERTIFICATE
TO
BANK OF AMERICA, N.A.
AS ESCROW AGENT
The undersigned, Symbion, Inc. ("Parent") and ▇. ▇. ▇▇▇▇▇▇▇ Equity
Partners III, L.L.C. (the "Representative") acting in its capacity as the
representative of the Stockholders (as hereinafter defined) pursuant to Section
8(b) of the Escrow Agreement, dated as of March 7, 2002 (the "Escrow
Agreement"), by and among Parent, Physicians Surgical Care, Inc. (the
"Company"), certain stockholders of the Company named therein (the
"Stockholders"), the Representative and you (terms defined in the Escrow
Agreement have the same meanings when used herein), hereby:
(a) certify that $______________ is owed to Parent pursuant to
Section 3.3 of the Merger Agreement;
(b) certify that the Parent Common Share Price is $____________;
(c) instruct you to cause ______ Escrow Shares to be released to
Parent from the Escrow Account within three business days [and instruct
you to cause ____ shares of the Parent Common Stock received in
exchange for shares of Parent Series A Preferred Stock and Parent
Series B Preferred Stock upon a Triggering Event to be released to
Parent from the Escrow Account within three business days following
your receipt of notice of a Triggering Event];
(d) certify that each Stockholder's pro rata portion of the
Escrow Shares to be released to Parent pursuant to paragraph (c) above
is set forth on Schedule I attached hereto; and
(e) certify that the number of Escrow Shares to be released to
Parent and the number of Escrow Shares to be released from each
Stockholder's portion of the Escrow Account were determined in
accordance with provisions of Section 8(d) and Section 8(e) of the
Escrow Agreement.
Dated: __________, 20__.
SYMBION, INC.
By: __________________________________
Name: __________________________________
Title: __________________________________
▇. ▇. ▇▇▇▇▇▇▇ EQUITY PARTNERS III, L.L.C.
By: __________________________________
Name: __________________________________
Title: __________________________________
2
ANNEX II
CERTIFICATE OF INSTRUCTION
TO
BANK OF AMERICA, N.A.,
AS ESCROW AGENT
The undersigned, Symbion, Inc. ("Parent"), pursuant to section 8(c)(i)
of the Escrow Agreement, dated as of March 7, 2002 (the "Escrow Agreement"), by
and among Parent, Physicians Surgical Care, Inc. (the "Company"), certain
stockholders of the Company named therein (the "Stockholders"), ▇. ▇. ▇▇▇▇▇▇▇
Equity Partners III, L.L.C. (the "Representative"), acting in its capacity as
the representative of the Stockholders, and you (terms defined in the Escrow
Agreement have the same meanings when used herein), hereby:
(a) certifies that (i) Parent has sent to the Representative an
Indemnity Notice, a copy of which is attached hereto, and (ii) Parent
alleges that the amount of $___________, plus costs and fees payable to
Parent pursuant to Section 9.4(c) of the Merger Agreement, if such
amount is disputed and Parent is the prevailing party (the "Owed
Amount"), is payable to Parent or its affiliates by the Stockholders
pursuant to Section 9.2 or Section 9.4 of the Merger Agreement by
reason of the matter described in such Indemnity Notice [Parent alleges
that $________ of Escrow Costs is payable to Parent or its affiliates
pursuant to Section 8(c) of the Escrow Agreement (the "Owed Amount")];
and
(b) instructs you to cause _____________ Escrow Shares to be
released to Parent from the Escrow Account (i) within three business
days following the expiration of the Objection Period [and instructs
you to cause ____ shares of the Parent Common Stock received in
exchange for shares of Parent Series A Preferred Stock and Parent
Series B Preferred Stock upon a Triggering Event to be released to
Parent from the Escrow Account within three business days following
your receipt of notice of a Triggering Event],unless you receive an
Objection Certificate from the Representative prior to the expiration
of the Objection Period or (ii) if you receive an Objection Certificate
within the Objection Period, within three business days following your
receipt of a Resolution Certificate or a Litigation Certificate;
(c) certifies that the Parent Common Share Price is
$____________;
(d) certifies that each Stockholder's pro rata portion of the
Escrow Shares to be released to Parent pursuant to paragraph (b) above
is set forth on Schedule I attached hereto; and
(e) certifies that the number of Escrow Shares to be released to
Parent and the number of Escrow Shares to be released from each
Stockholder's portion of the Escrow Account were determined in
accordance with provisions of Section 8(d) and 8(e) of the Escrow
Agreement.
Dated: ___________, 20__.
SYMBION, INC.
By:
---------------------------------------
Name:
Title:
2
ANNEX III
OBJECTION CERTIFICATE
TO
BANK OF AMERICA, N.A.
AS ESCROW AGENT
The undersigned, ▇. ▇. ▇▇▇▇▇▇▇ Equity Partners III, L.L.C. (the
"Representative"), acting in its capacity as the representative of the
Stockholders (as hereinafter defined), pursuant to Section 8(c)(ii) of the
Escrow Agreement, dated as of March 7, 2002, by and among Symbion, Inc.
("Parent"), Physicians Surgical Care, Inc. (the "Company"), certain stockholders
of the Company named therein (the "Stockholders"), the Representative and you
(terms defined in the Escrow Agreement have the same meanings when used herein),
hereby:
(a) disputes that the Owed Amount referred to in the Certificate
of Instruction dated _________, ____ is owed to the Parent by the
Stockholders pursuant to Section 9.2 of the Merger Agreement;
(b) certifies that the undersigned has sent to Parent a written
statement dated ___________, ____, a copy of which is attached hereto,
disputing the liability of the Stockholders to the Parent for the Owed
Amount; and
(c) objects to your making payment to Parent as provided in such
Certificate of Instruction.
Dated: __________, 20__.
▇. ▇. ▇▇▇▇▇▇▇ EQUITY PARTNERS III, L.L.C.
By:
--------------------------------------
Name:
Title:
ANNEX IV
RESOLUTION CERTIFICATE
TO
BANK OF AMERICA, N.A.,
AS ESCROW AGENT
The undersigned, Symbion, Inc. ("Parent") and ▇. ▇. ▇▇▇▇▇▇▇ Equity
Partners III, L.L.C. (the "Representative"), acting in its capacity as the
representative of the Stockholders (as hereinafter defined), pursuant to Section
8(c)(ii) of the Escrow Agreement, dated as of March 7, 2002, by and among
Parent, Physicians Surgical Care, Inc. (the "Company"), certain stockholders of
the Company named therein (the "Stockholders"), the Representative and you
(terms defined in the Escrow Agreement have the same meanings when used herein),
hereby:
(a) certify that (i) Parent and the Representative have resolved
their dispute as to the matter described in the Certificate of
Instruction dated __________, ____ and the related Objection
Certificate dated ___________, ____ and (ii) the final Owed Amount with
respect to the matter described in such Certificates is
$______________;
(b) instruct you to cause _____________ Escrow Shares, to be
released to Parent from the Escrow Account, within three business days
following your receipt of this Certificate [and instructs you to cause
____ shares of the Parent Common Stock received in exchange for shares
of Parent Series A Preferred Stock and Parent Series B Preferred Stock
upon a Triggering Event to be released to Parent from the Escrow
Account within three business days following your receipt of notice of
a Triggering Event];
(c) certify that the Parent Common Share Price is $____________;
(d) certify that each Stockholder's pro rata of the Escrow Shares
to be released to Parent pursuant to paragraph (b) above is set forth
on Schedule I attached hereto; and
(e) certify that the number of Escrow Shares to be released to
Parent and the number of Escrow Shares to be released from each
Stockholder's portion of the Escrow Account were determined in
accordance with provisions of Section 8(d) and Section 8(e) of the
Escrow Agreement.
(f) agree that the Owed Amount designated in such Certificate of
Instruction, to the extent, if any, it exceeds the Owed Amount referred
to in clause (ii) of paragraph (a) above, shall be deemed not owed by
the Stockholders to Parent and such Certificate of Instruction is
hereby canceled.
Dated: __________, 20__.
SYMBION, INC.
By:
-------------------------------------
Name:
Title:
▇. ▇. ▇▇▇▇▇▇▇ EQUITY PARTNERS III, L.L.C.
By:
-------------------------------------
Name:
Title:
2
ANNEX V
LITIGATION CERTIFICATE
TO
BANK OF AMERICA, N.A.
AS ESCROW AGENT
The undersigned, Symbion, Inc. ("Parent"), pursuant to Section 8(c)(ii)
of the Escrow Agreement, dated as of March 7, 2002, by and among Parent,
Physicians Surgical Care, Inc. (the "Company"), certain stockholders of the
Company named therein (the "Stockholders"), ▇. ▇. ▇▇▇▇▇▇▇ Equity Partners III,
L.L.C. (the "Representative"), acting in its capacity as the representative of
the Stockholders, and you (terms defined in the Escrow Agreement have the same
meanings when used herein), hereby:
(a) certifies that (i) attached hereto is [an arbitral award
obtained pursuant to the provision of Section 9.4 of the Merger
Agreement] [a final, nonappealable order of a court of competent
jurisdiction] resolving the dispute between Parent and the
Representative (on behalf of the Stockholders) as to the matter
described in the Certificate of Instruction dated ____________, ____
and the related Objection Certificate dated ____________, ____ and (ii)
the final Owed Amount with respect to the matter described in such
Certificates, as provided in such order, is $______________;
(b) certifies that the Parent Common Share Price is
$____________;
(c) instructs you to cause ______ Escrow Shares to be released to
Parent from the Escrow Account within three business days [and
instructs you to cause ____ shares of the Parent Common Stock received
in exchange for shares of Parent Series A Preferred Stock and Parent
Series B Preferred Stock upon a Triggering Event to be released to
Parent from the Escrow Account within three business days following
your receipt of notice of a Triggering Event];
(d) certifies that each Stockholder's pro rata of the Escrow
Shares to be released to Parent pursuant to paragraph (c) above is set
forth on Schedule I attached hereto; and
(e) certifies that the number of Escrow Shares to be released to
Parent and the number of Escrow Shares to be released from each
stockholder's portion of the Escrow Account were determined in
accordance with provisions of the Escrow Agreement.
(f) agrees that the Owed Amount designated in such Certificate of
Instruction, to the extent, if any, it exceeds the Owed Amount referred
to in clause (ii) of paragraph (a) above, shall be deemed not owed by
the Stockholders to Parent and such Certificate of Instruction is
hereby canceled.
Dated: __________, 20__.
SYMBION, INC.
By:
-----------------------------------------
Name:
Title:
2
ANNEX VI
PARENT CANCELLATION CERTIFICATE
TO
BANK OF AMERICA, N.A.
AS ESCROW AGENT
The undersigned, Symbion, Inc. ("Parent"), pursuant to Section 8(c)(v)
of the Escrow Agreement, dated as of March 7, 2002, by and among Parent,
Physicians Surgical Care, Inc. (the "Company"), certain stockholders of the
Company named therein (the "Stockholders"), ▇. ▇. ▇▇▇▇▇▇▇ Equity Partners III,
L.L.C. (the "Representative"), acting in its capacity as the representative of
the Stockholders, and you (terms defined in the Escrow Agreement have the same
meanings when used herein), hereby:
(a) certifies that (i) it hereby releases its claim against the
Stockholders with respect to [all] [specify portion] of the Owed Amount
designated in the Certificate of Instruction dated _____________, ____
and (ii) as a result the Owed Amount with respect to such Certificate
of Instruction is $__________; and
(b) agrees that such Certificate of Instruction is, to the extent
released as provided in clause (i) of paragraph (a) above, canceled.
Dated: __________, 20__.
SYMBION, INC.
By:
--------------------------------------
Name:
Title:
ANNEX VII
REPRESENTATIVE CANCELLATION CERTIFICATE
TO
BANK OF AMERICA, N.A.
AS ESCROW AGENT
The undersigned, ▇. ▇. ▇▇▇▇▇▇▇ Equity Partners III, L.L.C. (the
"Representative"), acting in its capacity as the representative of the
Stockholders (as hereinafter defined), pursuant to Section 8(c)(vi) of the
Escrow Agreement, dated as of March 7, 2002, by and among Symbion, Inc.
("Parent"), Physicians Surgical Care, Inc. (the "Company"), certain stockholders
of the Company named therein (the "Stockholders"), the Representative and you
(terms defined in the Escrow Agreement have the same meanings when used herein),
hereby:
(a) certifies that attached hereto is [an arbitral award obtained
pursuant to the provision of Section 9.4 of the Merger Agreement] [a
final, nonappealable order of a court of competent jurisdiction]
resolving the dispute between Parent and the Representative (on behalf
of the Stockholders) as to the matter described in the Certificate of
Instruction dated ____________, ____ and the related Objection
Certificate dated ____________, ____ and
(b) agrees that the final Owed Amount with respect to the matter
described in such Certificates, as provided in such order, is
$______________;
(c) certifies that the Owed Amount designated in such Certificate
of Instruction, to the extent, if any, it exceeds the Owed Amount
referred to in clause (b) above is not owed by the Stockholders to
Parent and to such extent such Certificate of Instruction is hereby
canceled.
Dated: __________, 20__.
▇. ▇. ▇▇▇▇▇▇▇ EQUITY PARTNERS III, L.L.C.
By:
--------------------------------------
Name:
Title:
ANNEX VIII
TERMINATION CERTIFICATE
TO
BANK OF AMERICA, N.A.,
AS ESCROW AGENT
The undersigned, Symbion, Inc. ("Parent") and ▇. ▇. ▇▇▇▇▇▇▇ Equity
Partners III, L.L.C. (the "Representative"), acting in its capacity as the
representative of the Stockholders (as hereinafter defined), pursuant to Section
8(c)(ii) of the Escrow Agreement, dated as of March 7, 2002, by and among
Parent, Physicians Surgical Care, Inc.. (the "Company"), certain stockholders of
the Company named therein (the "Stockholders"), the Representative and you
(terms defined in the Escrow Agreement have the same meanings when used herein),
hereby:
(a) instruct you to cause _____ Escrow Shares to be released to
the Stockholders from the Escrow Account, within three business days
following your receipt of this Certificate; and
(b) certify that the number of Escrow Shares to be released to
each Stockholder is set forth on Schedule I attached hereto.
Dated: __________, 20__.
SYMBION, INC.
By: __________________________________
Name: __________________________________
Title: __________________________________
▇. ▇. ▇▇▇▇▇▇▇ EQUITY PARTNERS III, L.L.C.
By: __________________________________
Name: __________________________________
Title: __________________________________
2
ANNEX IX
CONSOLIDATION LOSS CERTIFICATE
TO
BANK OF AMERICA, N.A.
AS ESCROW AGENT
The undersigned, Symbion, Inc. ("Parent") and ▇. ▇. ▇▇▇▇▇▇▇ Equity
Partners III, L.L.C. (the "Representative") acting in its capacity as the
representative of the Stockholders (as hereinafter defined) pursuant to Section
8(b) of the Escrow Agreement, dated as of March 7, 2002 (the "Escrow
Agreement"), by and among Parent, Physicians Surgical Care, Inc. (the
"Company"), certain stockholders of the Company named therein (the
"Stockholders"), the Representative and you (terms defined in the Escrow
Agreement have the same meanings when used herein), hereby:
(a) certify that $______ is owed to Parent pursuant to Section
7.21 of the Merger Agreement as a Consolidation Loss;
(b) certify that the Parent Common Share Price is $____________;
(c) instruct you to cause ______ Escrow Shares to be released to
Parent from the Escrow Account within three business days [and instruct
you to cause ____ shares of the Parent Common Stock received in
exchange for shares of Parent Series A Preferred Stock and Parent
Series B Preferred Stock upon a Triggering Event to be released to
Parent from the Escrow Account within three business days following
your receipt of notice of a Triggering Event];
(d) certify that each Stockholder's pro rata portion of the
Escrow Shares to be released to Parent pursuant to paragraph (c) above
is set forth on Schedule I attached hereto; and
3
(e) certify that the number of Escrow Shares to be released to
Parent and the number of Escrow Shares to be released from each
Stockholder's portion of the Escrow Account were determined in
accordance with provisions of Section 8(d) and Section 8(e) of the
Escrow Agreement.
Dated: __________, 20__.
SYMBION, INC.
By: __________________________________
Name: __________________________________
Title: __________________________________
▇. ▇. ▇▇▇▇▇▇▇ EQUITY PARTNERS III, L.L.C.
By: __________________________________
Name: __________________________________
Title: __________________________________
4
ANNEX X
REPRESENTATIVE FEE CERTIFICATE
TO
BANK OF AMERICA, N.A.
AS ESCROW AGENT
The undersigned, ▇. ▇. ▇▇▇▇▇▇▇ Equity Partners III, L.L.C. (the
"Representative") acting in its capacity as the representative of the
Stockholders (as hereinafter defined) pursuant to Section 3(i) of the Escrow
Agreement, dated as of March 7, 2002 (the "Escrow Agreement"), by and among
Symbion, Inc., Physicians Surgical Care, Inc. (the "Company"), certain
stockholders of the Company named therein (the "Stockholders"), the
Representative and you (terms defined in the Escrow Agreement have the same
meanings when used herein), hereby:
(a) certify that $______ is owed to the Representative as
reimbursement for the fees and expenses (including reasonable attorneys
fees and expenses) due and owing by certain of the Stockholders;
(b) certify that the Parent Common Share Price is $3.13;
(c) instruct you to cause ______ Escrow Shares to be released to
the Representative from the Escrow Account immediately prior to the
scheduled distribution of Escrow Shares to the Stockholders;
(d) certify that each Stockholder's pro rata portion of the
Escrow Shares to be released to the Representative pursuant to
paragraph (c) above is set forth on Schedule I attached hereto;
(e) certify that the number of Escrow Shares to be released to
the Representative and the number of Escrow Shares to be released from
each Stockholder's portion of the Escrow Account were determined in
accordance with provisions of the Escrow Agreement.
Dated: __________, 20__.
▇. ▇. ▇▇▇▇▇▇▇ EQUITY PARTNERS IIII, L.L.C.
By:
-------------------------------------
Name:
Title:
EXHIBIT A
FORM OF STOCK POWER
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and
transfer to Symbion, Inc., a Tennessee corporation (the "Company") _____ shares
of the __________ Stock of the Company, represented by Certificate No.(s)
__________, standing in the name of the undersigned on the books of said
Company. The undersigned does hereby irrevocably constitute and appoint ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, or either of them, as attorney to transfer said
stock on the books of said Company, with full power of substitution in the
premises.
This Irrevocable Stock Power is executed in connection with that
certain Escrow Agreement dated as of March 7, 2002, by and among the Company,
Physicians Surgical Care, Inc., a Delaware corporation ("PSC"), certain
stockholders of PSC, ▇. ▇. ▇▇▇▇▇▇▇ Equity Partners III, L.L.C. and Bank of
America, N.A., a national banking association, as escrow agent.
Dated __________, 200__.
__________________________________________
Stockholder
EXHIBIT B
CERTAIN PROVISIONS OF THE MERGER AGREEMENT
Section 9.2 Company Indemnification. Parent and its affiliates shall be
compensated as provided herein for any claim, loss, expense, liability or other
damage, including reasonable attorneys' fees that Parent or any of its
affiliates has incurred by reason of the breach by Company of any
representation, warranty, covenant or agreement of Company contained herein
(collectively, "Losses"); provided however, that, notwithstanding anything
contained herein to the contrary, Parent and its affiliates shall not be
compensated under this Section 9.2 until the aggregate of all Losses exceeds
$550,000 (the "Threshold Amount") in which case Parent or its affiliates shall
be compensated for the amount of all Losses including the Threshold Amount;
provided, however, that the compensation of Parent or its affiliates for
Shut-Down Costs in excess of the Shut-Down Amount shall not be subject to the
Threshold Amount; and provided, further, that Parent's right to be compensated
with respect to any Losses pursuant to this Section 9.2 shall not in the
aggregate exceed the Escrow Fund. Parent and Company each acknowledge that such
Losses, if any, would, if known at the Effective Time, have led to a reduction
in the valuation of Company and the amount of the Merger Consideration issued in
connection with the Merger. Nothing herein shall limit the liability of Company
for any breach of any representation, warranty or covenant if the Merger does
not close.
