Exhibit 10.1

 

 

 

STOCKHOLDERS AGREEMENT

BY AND AMONG

SURGICAL CARE AFFILIATES, INC.

AND

THE STOCKHOLDERS PARTY HERETO

DATED AS OF NOVEMBER 4, 2013

 

 

 

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TABLE OF CONTENTS

 

Article I DEFINITIONS      1   

Section 1.1

   Definitions      1   

Section 1.2

   Other Interpretive Provisions      4    Article II REPRESENTATIONS AND
WARRANTIES      5   

Section 2.1

   Existence; Authority; Enforceability      5   

Section 2.2

   Absence of Conflicts      5   

Section 2.3

   Consents      5    Article III GOVERNANCE      5   

Section 3.1

   The Board      5   

Section 3.2

   Voting Agreement      10   

Section 3.3

   The Boards of Directors of Subsidiaries      10    Article IV GENERAL
PROVISIONS      10   

Section 4.1

   Company Charter and Company Bylaws      10   

Section 4.2

   Corporate Opportunities      10   

Section 4.3

   Assignment; Benefit      12   

Section 4.4

   Confidentiality      12   

Section 4.5

   Termination      13   

Section 4.6

   Severability      13   

Section 4.7

   Entire Agreement; Amendment      14   

Section 4.8

   Counterparts      14   

Section 4.9

   Notices      14   

Section 4.10

   Governing Law      15   

Section 4.11

   Jurisdiction      16   

Section 4.12

   Waiver of Jury Trial      16   

Section 4.13

   Specific Performance      16   

Section 4.14

   Subsequent Acquisition of Shares      16   

 

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This STOCKHOLDERS AGREEMENT (as it may be amended from time to time in
accordance with the terms hereof, the “Agreement”), dated as of November 4,
2013, is made by and among:

i. Surgical Care Affiliates, Inc., a Delaware corporation (the “Company”);

ii. TPG Partners V, L.P., TPG FOF V-A, L.P. and TPG FOF V-B, L.P. (together with
their Affiliates, “TPG” or the “TPG Investors”); and

iii. such other Persons who from time to time become party hereto by executing a
counterpart signature page hereof and are designated by the Board (as defined
below) as “Other Stockholders” (the “Other Stockholders” and, together with the
TPG Investors, the “Stockholders”).

RECITALS

WHEREAS, on August 22, 2007, the TPG Investors and certain other co-investors
entered into the Second Amended and Restated Limited Liability Company Operating
Agreement of ASC Acquisition LLC, which contained certain enumerated governance
rights;

WHEREAS, on October 29, 2013, the Company priced an initial public offering (the
“IPO”) of shares of the Company’s common stock, par value $0.01 per share (the
“Common Stock”), pursuant to an Underwriting Agreement dated October 29, 2013
(the “Underwriting Agreement”);

WHEREAS, on October 30, 2013, the Company, which was previously named ASC
Acquisition LLC, converted from a limited liability company organized under the
laws of the State of Delaware to a corporation organized under the laws of the
State of Delaware, pursuant to the Delaware Limited Liability Company Act,
Section 18-216, and the General Corporation Law of the State of Delaware,
Section 265; and

WHEREAS, the parties hereto desire to provide for certain governance rights and
other matters, and to set forth the respective rights and obligations of the
Stockholders following the IPO.

NOW, THEREFORE, in consideration of the foregoing and the mutual promises,
covenants and agreements of the parties hereto, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions. As used in this Agreement, the following terms shall
have the following meanings:

“Affiliate” means, with respect to any specified Person, (a) any Person that
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under

 

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common control with, such specified Person or (b) in the event that the
specified Person is a natural Person, a Member of the Immediate Family of such
Person; provided that the Company, and each of its subsidiaries shall not be
deemed to be Affiliates of the TPG Investors. As used in this definition, the
term “control” means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities, by contract or otherwise.

“Affiliated Person” has the meaning set forth in Section 4.4(a).

“Agreement” has the meaning set forth in the Preamble.

“Acquired Knowledge” has the meaning set forth in Section 4.2(a).

“beneficially own” has the meaning set forth in Rule 13d-3 promulgated under the
Exchange Act.

“Board” means the board of directors of the Company.

“Business Day” means any day that is not a Saturday, a Sunday or other day on
which banks are required or authorized by law to be closed in the City of New
York, New York.

“Chief Executive Officer” means the chief executive officer of the Company then
in office.

“Closing” means the closing of the IPO.

“Common Stock” has the meaning set forth in the Recitals.

“Company” has the meaning set forth in the Preamble.

“Company Bylaws” means the by-laws of the Company in effect on the date hereof,
as may be amended from time to time.

“Company Charter” means the certificate of incorporation of the Company in
effect on the date hereof, as may be amended from time to time.

“Company Shares” means (i) all shares of Common Stock outstanding at the time of
determination, (ii) all shares of Common Stock issuable upon exercise,
conversion or exchange of any option, warrant or convertible security and
(iii) all shares of Common Stock directly or indirectly issued or issuable with
respect to the securities referred to in clauses (i) or (ii) above by way of
unit or stock dividend or unit or stock split, or in connection with a
combination of units or shares, recapitalization, merger, consolidation or other
reorganization.

“Corporate Opportunity” means (i) an investment or business opportunity or
activity, including without limitation those that might be considered the same
as or similar to the Company’s business or the business of any Affiliate or any
direct or indirect subsidiary of the Company, including those deemed to be
competing with the Company or any Affiliate or any direct or indirect subsidiary
of the Company, or (ii) a prospective economic or competitive

 

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advantage in which the Company or any Affiliate or any direct or indirect
subsidiary of the Company could have an interest or expectancy. In addition to
and notwithstanding the foregoing, a Corporate Opportunity shall not be deemed
to be a potential opportunity for the Company or any Affiliates or any direct or
indirect subsidiary if it is a business opportunity that (i) the Company,
Affiliate or direct or indirect subsidiary, as applicable, is not financially
able or contractually permitted or legally able to undertake, (ii) from its
nature, is not in the line of the Company’s, Affiliate’s or direct or indirect
subsidiary’s, as applicable, business or is of no practical advantage to it or
(iii) is one in which the Company, Affiliate or direct or indirect subsidiary,
as applicable, has no interest or reasonable expectancy.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any
successor thereto, and any rules and regulations promulgated thereunder, all as
the same shall be in effect from time to time.

“First Anniversary of the IPO” has the meaning set forth in Section 3.1(b).

“Fund Indemnitors” has the meaning set forth in Section 3.1(m).

“Indemnification Agreement” has the meaning set forth in Section 3.1(m).

“Indemnitee” has the meaning set forth in Section 3.1(m).

“IPO” has the meaning set forth in the Recitals.

“Majority in Interest” means, with respect to the Stockholders or any subset
thereof, Stockholders who beneficially own a majority of Company Shares held by
the Stockholders or such subset of Stockholders, as applicable.

“Member of the Immediate Family” means, with respect to an individual, (a) each
parent, spouse (but not including a former spouse or a spouse from whom such
individual is legally separated) or child (including those adopted) of such
individual and (b) each trustee, solely in his or her capacity as trustee and so
long as such trustee is reasonably satisfactory to the Company, for a trust
naming only one or more of the Persons listed in sub-clause (a) as
beneficiaries.

“Necessary Action” means, with respect to a specified result, all actions
necessary, to the fullest extent permitted by applicable law, to cause such
result, including, without limitation, (i) voting or providing a written consent
or proxy with respect to the Company Shares, (ii) causing the adoption of
stockholders’ resolutions and amendments to the organizational documents of the
Company, (iii) executing agreements and instruments, and (iv) making, or causing
to be made, with governmental, administrative or regulatory authorities, all
filings, registrations or similar actions that are required to achieve such
result.

“Other Stockholders” has the meaning set forth in the Preamble.

“Person” means any individual, partnership, limited liability company,
corporation, trust, association, estate, unincorporated organization or
government or any agency or political subdivision thereof.

 

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“Post-IPO TPG Shares” means the number of shares of Common Stock beneficially
owned, in the aggregate, by TPG as of the date of closing of all of the
transactions contemplated by the Underwriting Agreement.

“Representatives” means, with respect to any Person, any of such Person’s
officers, directors, employees, agents, attorneys, accountants, actuaries,
consultants or financial advisors or other Person associated with, or acting on
behalf of, such Person.

“Securities Act” means the Securities Act of 1933, as amended, and any successor
thereto, and any rules and regulations promulgated thereunder, all as the same
shall be in effect from time to time.

“Stockholders” has the meaning set forth in the Preamble.

“TPG” or “TPG Investors” has the meaning set forth in the Preamble.

“TPG Affiliated Person” means, each of TPG and all of its respective partners,
principals, directors, officers, members, managers, managing directors,
advisors, consultants and employees, TPG’s Affiliates, the TPG Directors, or any
officer of the Company that is an Affiliate of TPG.

“TPG Confidential Information” has the meaning set forth in Section 4.4(a).

“TPG Directors” has the meaning set forth in Section 3.1(a).

“Unaffiliated Director” has the meaning set forth in Section 3.1(a).

“Underwriting Agreement” has the meaning set forth in the Recitals.

Section 1.2 Other Interpretive Provisions. (a) The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.

(b) The words “hereof,” “herein,” “hereunder” and similar words refer to this
Agreement as a whole and not to any particular provision of this Agreement; and
any subsection and section references are to this Agreement unless otherwise
specified.

(c) The term “including” is not limiting and means “including without
limitation.”

(d) The captions and headings of this Agreement are for convenience of reference
only and shall not affect the interpretation of this Agreement.

(e) Whenever the context requires, any pronouns used herein shall include the
corresponding masculine, feminine or neuter forms.

 

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ARTICLE II

REPRESENTATIONS AND WARRANTIES

Each of the parties to this Agreement hereby represents and warrants to each
other party to this Agreement that as of the date such party executes this
Agreement:

Section 2.1 Existence; Authority; Enforceability. Such party has the power and
authority to enter into this Agreement and to carry out its obligations
hereunder. Such party is duly organized and validly existing under the laws of
its jurisdiction of organization, and the execution of this Agreement, and the
consummation of the transactions contemplated herein, have been authorized by
all necessary action on the part of its board of directors (or equivalent) and
shareholders (or other holders of equity interests), if required, and no other
act or proceeding on its part is necessary to authorize the execution of this
Agreement or the consummation of any of the transactions contemplated hereby.
This Agreement has been duly executed by such party and constitutes its legal,
valid and binding obligation, enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors’ rights generally or by equitable
principles relating to enforceability.

Section 2.2 Absence of Conflicts. The execution and delivery by such party of
this Agreement and the performance of its obligations hereunder does not and
will not (a) conflict with, or result in the breach of any provision of the
constitutive documents of such party, (b) result in any violation, breach,
conflict, default or an event of default (or an event which with notice, lapse
of time, or both, would constitute a default or an event of default), or give
rise to any right of acceleration or termination or any additional payment
obligation, under the terms of any contract, agreement or permit to which such
party is a party or by which such party’s assets or operations are bound or
affected, or (c) violate any law applicable to such party.

Section 2.3 Consents. Other than as expressly required herein or any consents
which have already been obtained, no consent, waiver, approval, authorization,
exemption, registration, license or declaration is required to be made or
obtained by such party in connection with (a) the execution, delivery or
performance of this Agreement or (b) the consummation of any of the transactions
contemplated herein.

ARTICLE III

GOVERNANCE

Section 3.1 The Board.

(a) Composition of Initial Board. Prior to Closing, the Company and the
Stockholders shall take all Necessary Action to cause the Board to be comprised
of seven (7) directors, (i) four (4) of whom shall be designated by TPG (each, a
“TPG Director”), (ii) one (1) of whom shall be the Chief Executive Officer and
(iii) two (2) of whom shall be unaffiliated directors, each of whom shall meet
the independence criteria set forth in Rule 10A-3 under the Exchange Act (each,
an “Unaffiliated Director”). At Closing, the two (2) Unaffiliated Directors
shall be Mr. Frederick A. Hessler and Mr. Curtis S. Lane. The foregoing
directors shall be divided into three classes of directors, each of whose
members shall serve for staggered three-year terms as follows:

(1) the class I directors shall include Sharad Mansukani, Jeffrey K. Rhodes and
Todd B. Sisitsky;

(2) the class II directors shall include Thomas C. Geiser and Curtis S.
Lane; and

(3) the class III directors shall include Andrew Hayek and Frederick A. Hessler.

 

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The initial term of the class I directors shall expire at the Company’s 2014
annual meeting of stockholders at which directors are elected. The initial term
of the class II directors shall expire at the Company’s 2015 annual meeting of
stockholders at which directors are elected. The initial term of the class III
directors shall expire at the Company’s 2016 annual meeting at which directors
are elected.

For the avoidance of doubt, this Section 3.1(a) is applicable solely to the
initial composition of the Board, except that (i) subject to the Company
Charter, a director shall remain a member of the class of directors to which he
or she was assigned in accordance with this Section 3.1(a) and (ii) the initial
terms of each class of directors shall expire as set forth in this
Section 3.1(a), subject to such director’s earlier death, resignation,
disqualification or removal.

(b) Addition to Board Within One Year of Effectiveness. If on or before the
first (1st) anniversary of the effectiveness of the Company’s registration
statement on Form S-1 for the IPO (the “First Anniversary of the IPO”), the
Company intends to appoint a third (3rd) Unaffiliated Director to the Board and
at the time of such appointment TPG, in the aggregate, beneficially owns less
than 50% of the Post-IPO TPG Shares, then on or prior to date of appointment,
(i) to the extent TPG has not previously caused one (1) of the TPG Directors to
tender his or her resignation from the Board as set forth in Section 3.1(c)
during the period prior to the First Anniversary of the IPO, TPG shall take all
Necessary Action to cause one (1) of the TPG Directors to tender his or her
resignation from the Board, effective immediately, and (ii) the Board shall take
all Necessary Action to fill the vacancy caused by the resignation of a TPG
Director with the Unaffiliated Director or if the Board size was reduced upon
such resignation to increase the size of the board by one (1) director and fill
such newly-created directorship with an Unaffiliated Director, as applicable.

However, if on or before the First Anniversary of the IPO, the Company intends
to appoint a third (3rd) Unaffiliated Director to the Board and at the time of
such appointment TPG, in the aggregate, beneficially owns more than 50% of the
Post-IPO TPG Shares, then on or prior to the date of appointment, the Board
shall take all Necessary Action to cause the Board to be increased in size by
two (2) directors to nine (9) directors and to fill such newly-created
directorships with (i) one (1) additional Unaffiliated Director and (ii) one
(1) additional TPG Director that shall be designated by TPG.

(c) TPG Representation. At each applicable annual or special meeting of
stockholders at which directors are to be elected, there shall be included in
the slate of nominees recommended by the Board for election as directors that
number of individuals designated by

 

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TPG (each, a “TPG Designee”) that, if elected, will result in TPG having the
number of directors serving on the Board indicated in the column titled “Number
of TPG Designees” in the applicable chart immediately below, so long as TPG, in
the aggregate, beneficially owns, as of the date that is 120 days before the
date of the annual or special meeting of stockholders, as applicable, the
percentage Post-IPO TPG Shares, as calculated by the method set forth in
Section 3.1(d) below, indicated in the column titled “Percentage of Post-IPO TPG
Shares” in the applicable chart immediately below.

From and after the Closing, the step down chart immediately below shall be
applicable:

 

Percentage of Post-IPO TPG Shares

   Number of TPG Designees  

50% or greater

     4   

Less than 50% but greater than or equal to 30%

     3   

Less than 30% but greater than or equal to 10%

     2   

Less than 10% but greater than or equal to 3%

     1   

Less than 3%

     0   

However, if, in accordance with Section 3.1(b), the size of the Board is
increased to nine (9) directors at any time prior to the date on which TPG
beneficially owns less than 50% of the Post-IPO TPG Shares, then the step down
chart immediately below shall become applicable:

 

Percentage of Post-IPO TPG Shares

   Number of TPG Designees  

50% or greater

     5   

Less than 50% but greater than or equal to 30%

     4   

Less than 30% but greater than or equal to 20%

     3   

Less than 20% but greater than or equal to 10%

     2   

Less than 10% but greater than or equal to 3%

     1   

Less than 3%

     0   

In the event that the size of the Board is increased or decreased at any time
(except as provided in Section 3.1(b)), TPG’s nomination rights under this
Section 3(c) shall be proportionately increased or decreased, respectively,
rounded up to the nearest whole number of directors.

(d) Calculation of Percentage of Post-IPO TPG Shares. For purposes of
calculating the percentage in the column titled the “Percentage of Post-IPO TPG
Shares” in the applicable chart set forth in Section 3.1(c) above, the
“Percentage of Post-IPO TPG Shares” shall be calculated as a percentage in which
(i) the numerator is the number of shares of Common Stock beneficially owned, in
the aggregate, by TPG as of the date on which the calculation is made and
(ii) the denominator shall be the number of Post-IPO TPG Shares.

The numerator and the denominator for the calculation of the “Percentage of
Post-IPO TPG Shares” as described in paragraph immediately above in this
Section 3.1(d) shall automatically be proportionately adjusted effective upon
the consummation of any transaction or series of related transactions (including
any stock dividend, distribution, pro-rata redemption or

 

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stock repurchase, recapitalization, stock split or comparable transaction but
not including any transfer or sale of shares by TPG) that effects a change in
the number of shares of Common Stock then-currently held by TPG or would have
been held by TPG as of the Closing, as applicable; provided, that no such
adjustment will restore or increase the number of TPG Designees to which TPG is
entitled.

(e) CEO Representation. Subject to the last sentence of Section 3.1(f), if the
term of the Chief Executive Officer as a director on the Board is to expire in
conjunction with any annual or special meeting of stockholders at which
directors are to be elected, the Chief Executive Officer shall be included in
the slate of nominees recommended by the Board for election.

(f) Vacancies. Except as provided for in Section 3.1(c), and to the extent not
inconsistent with Section 141(k) of the General Corporation Law of the State of
Delaware and the Company’s Charter, (i) TPG shall have the exclusive right to
remove its TPG Directors from the Board, and the Board and TPG shall take all
Necessary Action to cause the removal of any TPG Directors at the request of TPG
and (ii) TPG shall have the exclusive right to designate for election to the
Board directors to fill vacancies created by reason of death, removal or
resignation of its TPG Directors, and the Board and TPG shall take all Necessary
Action to cause any such vacancies to be filled by replacement directors
designated by TPG as promptly as reasonably practicable; provided, that, for the
avoidance of doubt and notwithstanding anything to the contrary in this
paragraph, TPG shall not have the right to designate a replacement director, and
the Board and TPG shall not be required to take any action to cause any vacancy
to be filled with any such TPG Designee, to the extent that election or
appointment of such TPG Designee to the Board would result in a number of
directors designated by TPG in excess of the number of directors that TPG is
then entitled to designate for membership on the Board pursuant to
Section 3.1(c). If the Chief Executive Officer resigns or is terminated for any
reason, the Board and TPG shall take all Necessary Action to remove the Chief
Executive Officer from the Board and fill such vacancy with the next Chief
Executive Officer in office.

(g) Additional Unaffiliated Directors. For so long as TPG has the right to
designate at least one (1) director for nomination under this Agreement, the
Company will take all Necessary Action to ensure that the number of directors
serving on the Board shall not exceed nine (9); provided, that the number of
directors may be increased if necessary to satisfy the requirements of
applicable laws and stock exchange regulations.

(h) Committees. Subject in each case to applicable laws and stock exchange
regulations, (i) TPG shall have the right to have a representative appointed to
serve on each committee of the Board for so long as TPG has the right to
designate at least one (1) director for election to the Board and (ii) for so
long as TPG beneficially owns, in the aggregate, 30% or more of the Post-IPO TPG
Shares, TPG Directors shall, to the extent requested by TPG, constitute the
majority of each committee. Subject in each case to applicable laws and stock
exchange regulations, TPG shall have the right to have a representative
appointed as an observer to any committee of the Board to which TPG (i) does not
elect to have a representative appointed or (ii) is prohibited by applicable
laws or stock exchange regulations from having a representative appointed, in
each case for so long as TPG has the right to designate at least one
(1) director for nomination under this Agreement.

 

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(i) Reimbursement of Expenses. The Company shall reimburse each TPG Director and
TPG Designee for all reasonable and documented out-of-pocket expenses incurred
in connection with such director’s or designee’s participation in the meetings
of the Board or any committee of the Board, including all reasonable and
documented travel, lodging and meal expenses.

(j) Nomination. With respect to any TPG Designee, the Company shall take all
Necessary Action to cause the Board and Nominating and Governance Committee to,
if applicable, (i) include such TPG Designee in the slate of nominees
recommended by the Board for the applicable class of directors for election by
the stockholders of the Company or (ii) appoint such TPG Designee to fill a
vacancy on the Board created by the departure of a TPG Director. The Company
agrees to take all Necessary Action to include such TPG Designee in the
applicable proxy statement for such stockholder meeting.

(k) Loss of Controlled Company Exemption. Within one (1) year (or any shorter
period that may be required by applicable law or by the applicable rules and
regulations of the Securities and Exchange Commission or the applicable stock
exchange on which the Common Stock is listed) after the Company ceases to
qualify as a “controlled company” as defined by the applicable stock exchange
rules on which the Common Stock is then-currently listed, TPG shall take all
Necessary Action to ensure that a sufficient number of the TPG Directors qualify
as “independent directors” as defined by the applicable stock exchange rules to
ensure that the Board complies with stock exchange independence requirements.

(l) D&O Insurance. The Company shall obtain customary director and officer
indemnity insurance on commercially reasonable terms for each of its directors,
and the TPG Directors shall also be provided the benefit of customary director
indemnity agreements.

(m) Indemnification Priority. The Company hereby acknowledges that, in addition
to the rights provided to each TPG Director or other indemnified person covered
by any such indemnity insurance policy (any such Person, an “Indemnitee”) or any
indemnification agreement that such Indemnitee may enter into with the Company
from time to time (the “Indemnification Agreements”), the Indemnitees, may have
certain rights to indemnification, advancement of expenses and/or insurance
provided by TPG or one or more of its respective Affiliates (collectively, the
“Fund Indemnitors”). Notwithstanding anything to the contrary in any of the
Indemnification Agreements or this Agreement, the Company hereby agrees that, to
the fullest extent permitted by law, with respect to its indemnification and
advancement obligations to the Indemnitees under the Indemnification Agreements,
this Agreement or otherwise, the Company (i) is the indemnitor of first resort
(i.e., its and its insurers’ obligations to advance expenses and to indemnify
the Indemnitees are primary and any obligation of the Fund Indemnitors or their
insurers to advance expenses or to provide indemnification for the same expenses
or liabilities incurred by any of the Indemnitees is secondary and excess),
(ii) shall be required to advance the full amount of expenses incurred by each
Indemnitee and shall be liable for the full amount of all losses of each
Indemnitee or on his, her or its behalf to the extent legally permitted and as
required by this Agreement and the Indemnification Agreements, without regard to
any rights such Indemnitees may have against the Fund Indemnitors or their
insurers, and (iii) irrevocably waives and relinquishes, and releases the Fund
Indemnitors and such insurers from, any and all claims against the Fund
Indemnitors or such insurers for

 

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contribution, subrogation or any other recovery of any kind in respect thereof.
In furtherance and not in limitation of the foregoing, the Company agrees that
in the event that any Fund Indemnitor or its insurer should advance any expenses
or make any payment to any Indemnitee for matters subject to advancement or
indemnification by the Company pursuant to this Agreement or otherwise, the
Company shall promptly reimburse such Fund Indemnitor or insurer and that such
Fund Indemnitor or insurer shall be subrogated to all of the claims or rights of
such Indemnitee under the Indemnification Agreements, this Agreement or
otherwise, including to the payment of expenses in an action to collect. The
Company agrees that any Fund Indemnitor or insurer thereof not a party hereto
shall be an express third party beneficiary of this Section 3.1(m), able to
enforce such clause according to its terms as if it were a party hereto. Nothing
contained in the Indemnification Agreements is intended to limit the scope of
this Section 3.1(m) or the other terms set forth in this Agreement or the rights
of the Fund Indemnitors or their insurers hereunder.

Section 3.2 Voting Agreement. TPG agrees to cast all votes to which it is
entitled in respect of its Company Shares, whether at any annual or special
meeting, by written consent or otherwise, so as to cause to be elected to the
Board those individuals designated in accordance with Section 3.1(a)-(g) and to
otherwise effect the intent of this Article III.

Section 3.3 The Boards of Directors of Subsidiaries. The composition of the
boards of directors and committees of all other subsidiaries of the Company
shall be as determined by the Board.

ARTICLE IV

GENERAL PROVISIONS

Section 4.1 Company Charter and Company Bylaws.

The Company, the Board and TPG agree to take all Necessary Action to amend the
Company Charter and Company Bylaws so as to avoid any conflict with the
provisions hereof.

Section 4.2 Corporate Opportunities.

In recognition and anticipation that the TPG Affiliated Persons (i) currently or
may in the future serve as directors, officers or agents of the Company or its
direct or indirect subsidiaries, (ii) currently or may in the future have access
to information about the Company and its direct or indirect subsidiaries that
may, to the fullest extent permitted by applicable law, enhance each such TPG
Affiliated Person’s knowledge and understanding of (A) the industries in which
the Company and its direct and indirect subsidiaries operate (collectively,
“Acquired Knowledge”), (B) the activities in which the Company and its direct or
indirect subsidiaries now engage, may continue to engage or may in the future
engage (which shall include, without limitation, other business activities that
overlap with or compete with those in which the Company and its Affiliates and
its direct or indirect subsidiaries may engage directly or indirectly) or
(C) related lines of business in which the Company or its direct or indirect

 

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subsidiaries may engage directly or indirectly and (iii) currently or may in the
future have an interest in the same or similar areas of corporate opportunity as
the Company or its direct or indirect subsidiaries may have an interest directly
or indirectly, the provisions of this Section 4.2 are set forth to regulate and
define, to the fullest extent permitted by applicable law, the conduct of
certain affairs of the Company and its direct or indirect subsidiaries with
respect to certain classes or categories of business opportunities as they may
involve a TPG Affiliated Person, and the powers, rights, duties and liabilities
of the Company and its direct or indirect subsidiaries and their respective
direct or indirect partners, members, and stockholders in connection therewith.

(a) Notwithstanding any provision of this Agreement to the contrary, to the
fullest extent permitted by applicable law, if any TPG Affiliated Person
acquires knowledge of a potential Corporate Opportunity or otherwise is then
exploiting any Corporate Opportunity, the Company and its Affiliates and its
direct or indirect subsidiaries shall have no interest or expectancy in such
Corporate Opportunity, or in being offered an opportunity to participate in such
Corporate Opportunity, and any interest or expectancy in any Corporate
Opportunity or any expectation in being offered the opportunity to participate
in any Corporate Opportunity is hereby renounced and waived so that, such TPG
Affiliated Person, to the fullest extent permitted by applicable law, (i) shall
have no duty (fiduciary, contractual or otherwise) to communicate or present
such Corporate Opportunity to the Company or any of its Affiliates or any of its
direct or indirect subsidiaries or any stockholder of the Company; (ii) shall
have the right to hold or pursue, directly or indirectly, any such Corporate
Opportunity for TPG’s own account and benefit or TPG may direct such Corporate
Opportunity to another person; and (iii) shall not be liable to the Company, any
of its Affiliates or any of its direct or indirect subsidiaries, their
respective Affiliates or their respective direct or indirect partners, members,
or stockholder, for breach of any duty (fiduciary, contractual or otherwise) as
a stockholder, director or officer of the Company or otherwise by reason of the
fact that it pursues or acquires such Corporate Opportunity, directs such
Corporate Opportunity to another person or does not communicate information
regarding such Corporate Opportunity to the Company or any of its Affiliates or
any of its direct or indirect subsidiaries.

(b) The Company hereby expressly acknowledges and agrees that each of TPG, its
Affiliates and affiliated investment funds and any TPG Affiliated Person, has
the right to, and shall have no duty (contractual or otherwise) not to,
(i) directly or indirectly engage in the same or similar business activities or
lines of business as the Company or any of its direct or indirect subsidiaries
engages or proposes to engage, on such Person’s own behalf, or in partnership
with, or as an employee, officer, director, member or shareholder of any other
Person, including those lines of business deemed to be competing with the
Company or any of its direct or indirect subsidiaries; (ii) do business with any
potential or actual customer or supplier of the Company or any of its Affiliates
or its direct or indirect subsidiaries; and (iii) employ or otherwise engage any
officer or employee of the Company or any of its Affiliates or direct or
indirect subsidiaries. The Company hereby expressly acknowledges and agrees that
neither the Company nor any of its Affiliates or any of its direct or indirect
subsidiaries nor any stockholder of the Company shall have any rights in and to
the business ventures of TPG, its Affiliates and affiliated investment funds, or
the income or profits derived therefrom. To the fullest extent permitted by law,
none of the TPG Affiliated Persons shall be liable to the Company, any of its
Affiliates or its direct or indirect subsidiaries, their respective Affiliates
or their respective direct or indirect partners, members, or stockholders, for
breach of any duty (fiduciary, contractual or

 

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otherwise) as a stockholder, director or officer of the Company or otherwise by
reason that such TPG Affiliated Person is engaging in any activities or lines of
business or competing with the Company or its direct or indirect subsidiaries.

(c) The Company hereby acknowledges and agrees that, to the fullest extent
permitted by applicable law, (i) in the event of any conflict of interest
between the Company or any of its direct or indirect subsidiaries, on the one
hand, and any TPG Affiliated Person, on the other hand, such TPG Affiliated
Person (including each TPG Director, acting in its capacity as a director and/or
any TPG Affiliated Person serving as an officer of the Company or any of its
direct or indirect subsidiaries, acting in its capacity as an officer) may act
in the best interest of TPG and its Affiliates and (ii) no TPG Affiliated Person
(including any TPG Director acting in its capacity as a director, or any other
TPG Affiliated Person serving as an officer of the Company or any of its direct
or indirect subsidiaries acting in its capacity as an officer), shall be
obligated to (A) reveal to the Company or any of its direct or indirect
subsidiaries confidential information belonging to or relating to the business
of TPG or its Affiliates or (B) recommend or take any action in its capacity as
stockholder, director or officer of the Company, as the case may be, that
prefers the interest of the Company or any of its Subsidiaries over the interest
of TPG and its Affiliates, or such TPG Affiliated Person, as the case may be.

(d) The Company hereby acknowledges and agrees that, to the fullest extent
permitted by applicable law, the TPG Affiliated Persons (including each TPG
Director, acting in its capacity as a director and/or any TPG Affiliated Person
serving as an officer of the Company or any of its direct or indirect
subsidiaries, acting in its capacity as an officer) are not restricted from
using Acquired Knowledge in making investment, voting, monitoring, governance or
other decisions relating to other entities or securities.

Section 4.3 Assignment; Benefit.

(a) The rights and obligations hereunder shall not be assignable without the
prior written consent of the other parties hereto. Any attempted assignment of
rights or obligations in violation of this Section 4.3 shall be null and void.

(b) This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto, and their respective successors and permitted assigns, and there
shall be no third-party beneficiaries to this Agreement other than the
Indemnitees, the Fund Indemnitors and any insurer of a Fund Indemnitor under
Section 3.1(m), and the TPG Investors, their Representatives and the TPG
Affiliated Persons under Section 4.2.

Section 4.4 Confidentiality.

(a) The Company, hereby agrees that it, and any direct or indirect partner,
manager, member, stockholder, employee, director, officer or agent thereof, with
the exception of the TPG Affiliated Persons (each, an “Affiliated Person”),
shall keep confidential, and shall not disclose to any third Person or use for
its own benefit, without prior approval of TPG, any non-public information with
respect to TPG or any of its subsidiaries or Affiliates (including any Person in
which TPG holds, or contemplates acquiring, an investment) (“TPG Confidential
Information”) that is in the Company’s or such Affiliated Persons’ possession on
the date hereof

 

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or disclosed after the date of this Agreement to the Company or such Affiliated
Persons by or on behalf of TPG or its subsidiaries or Affiliates, provided, that
the Company and the Affiliated Persons may disclose any such TPG Confidential
Information (i) as has become generally available to the public, was or has come
into the Company’s or the Affiliated Persons’ possession on a non-confidential
basis, without a breach of any confidentiality obligations by the Person
disclosing such TPG Confidential Information, or has been independently
developed by such Person, without use of the TPG Confidential Information,
(ii) to the Company’s Affiliates, directors, officers, representatives, agents
and employees and professional advisers who need to know such TPG Confidential
Information and agree to keep it confidential on terms consistent with this
Section 4.4(a), (iii) to the extent necessary in order to comply with any law,
order, regulation or ruling applicable to the Company or its Affiliates, or to a
regulatory agency with applicable jurisdiction, and (iv) as may be required in
response to any summons or subpoena or in connection with any litigation or
arbitration, it being agreed that, unless such TPG Confidential Information has
been generally available to the public, if such TPG Confidential Information is
being requested pursuant to a summons or subpoena or a discovery request in
connection with a litigation, then (x) the Company shall give TPG notice of such
request and shall cooperate with TPG at TPG’s request so that TPG may, in its
discretion, seek a protective order or other appropriate remedy, if available,
and (y) in the event that such protective order is not obtained (or sought by
TPG after notice), the Company (a) shall furnish only that portion of the TPG
Confidential Information which, in the written opinion of counsel, is legally
required to be furnished and (b) will exercise its reasonable efforts to obtain
adequate assurances that confidential treatment will be accorded such TPG
Confidential Information by its recipients.

(b) The Company grants permission to TPG to use the name and logo of the
Company, in marketing materials used by TPG and its Affiliates. TPG and its
Affiliates shall include a trademark attribution notice giving notice of the
Company’s ownership of their trademarks in any marketing materials in which the
Company’s name and logo appear.

(c) Notwithstanding anything to the contrary contained in this Agreement, the
provisions of this Section 4.4 shall survive termination of this Agreement with
respect to matters arising before or after such termination, and shall remain in
full force and effect until such time as such provisions are explicitly waived
and revoked by TPG. Such waiver and revocation shall be made in writing to the
Company and shall take effect at the time specified therein or, if no time is
specified therein, at the time of receipt thereof by the Company.

Section 4.5 Termination. If not otherwise stipulated, this Agreement shall
terminate automatically (without any action by any party hereto) as to each
Stockholder as of the later of (i) when such Stockholder no longer owns any
shares of Common Stock, or (ii) when such Stockholder no longer has the right to
nominate any directors to the Board pursuant to Article III hereof.

Section 4.6 Severability. In the event that any provision of this Agreement
shall be invalid, illegal or unenforceable such provision shall be construed by
limiting it so as to be valid, legal and enforceable to the maximum extent
provided by law and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

 

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Section 4.7 Entire Agreement; Amendment.

(a) This Agreement sets forth the entire understanding and agreement between the
parties with respect to the transactions contemplated herein and supersedes and
replaces any prior understanding, agreement or statement of intent, in each case
written or oral, of any kind and every nature with respect hereto. This
Agreement or any provision hereof may only be amended, modified or waived, in
whole or in part, at any time by an instrument in writing signed by TPG and the
Company (whose agreement to such amendment, modification or waiver shall not be
unreasonably withheld); provided that to the extent that Other Stockholders
become party hereto, the prior written consent of the holders of the Majority in
Interest of the Company Shares then held by the Other Stockholders shall be
required for any amendment, modification or waiver that would have a
disproportionate and adverse effect in any material respect on the rights of
Other Stockholders under this Agreement relative to the TPG Investors.

(b) No waiver of any breach of any of the terms of this Agreement shall be
effective unless such waiver is expressly made in writing and executed and
delivered by the party against whom such waiver is claimed. The waiver by any
party hereto of a breach of any provision of this Agreement shall not operate or
be construed as a further or continuing waiver of such breach or as a waiver of
any other or subsequent breach. Except as otherwise expressly provided herein,
no failure on the part of any party to exercise, and no delay in exercising, any
right, power or remedy hereunder, or otherwise available in respect hereof at
law or in equity, shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or remedy by such party preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.

Section 4.8 Counterparts. This Agreement may be executed in any number of
separate counterparts each of which when so executed shall be deemed to be an
original and all of which together shall constitute one and the same agreement.
Counterpart signature pages to this Agreement may be delivered by facsimile or
electronic delivery (i.e., by email of a PDF signature page) and each such
counterpart signature page will constitute an original for all purposes.

Section 4.9 Notices. Unless otherwise specified herein, all notices, consents,
approvals, reports, designations, requests, waivers, elections and other
communications authorized or required to be given pursuant to this Agreement
shall be in writing and shall be given, made or delivered by personal
hand-delivery, by facsimile transmission, by electronic mail, by mailing the
same in a sealed envelope, registered first-class mail, postage prepaid, return
receipt requested, or by air courier guaranteeing overnight delivery (and such
notice shall be deemed to have been duly given, made or delivered (a) on the
date received, if delivered by personal hand delivery, (b) on the date received,
if delivered by facsimile transmission, by electronic mail or by registered
first-class mail prior to 5:00 p.m. prevailing local time on a Business Day, or
if delivered after 5:00 p.m. prevailing local time on a Business Day or on other
than a Business Day,

 

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on the first Business Day thereafter and (c) two (2) Business Days after being
sent by air courier guaranteeing overnight delivery), at the following addresses
(or at such other address as shall be specified by like notice):

If to the Company to:

Surgical Care Affiliates, Inc.

3000 Riverchase Galleria, Suite 500

Birmingham, AL 35244

Attention:     General Counsel

Facsimile:    (205) 439-4929

E-mail:         rich.sharff@scasurgery.com

with a copy (which shall not constitute notice) to:

Cleary Gottlieb Steen & Hamilton LLP

One Liberty Plaza

New York, NY 10006

Attention:   David Lopez

                   Helena Grannis

Facsimile:   (212) 225-3999

E-mail:       dlopez@cgsh.com

                   hgrannis@cgsh.com

If to TPG to:

TPG Global, LLC

301 Commerce Street, Suite 3300

Fort Worth, TX 76102

Attention:     Ronald Cami

Facsimile:    (415) 743-1501

E-mail:         rcami@tpg.com

with a copy (which shall not constitute notice) to:

Cleary Gottlieb Steen & Hamilton LLP

One Liberty Plaza

New York, NY 10006

Attention:    David Lopez

                    Helena Grannis

Facsimile:   (212) 225-3999

E-mail:        dlopez@cgsh.com

                    hgrannis@cgsh.com

Section 4.10 Governing Law. THE CORPORATE LAWS OF THE STATE OF DELAWARE WILL
GOVERN ALL QUESTIONS CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND THE
STOCKHOLDERS HEREUNDER TO THE EXTENT SUCH LAWS ARE APPLICABLE. ALL OTHER
QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS
AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS
OF THE STATE OF NEW YORK.

 

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Section 4.11 Jurisdiction. ANY ACTION OR PROCEEDING AGAINST THE PARTIES RELATING
IN ANY WAY TO THIS AGREEMENT MAY BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE
STATE OF NEW YORK LOCATED IN THE BOROUGH OF MANHATTAN OR (TO THE EXTENT SUBJECT
MATTER JURISDICTION EXISTS THEREFORE) THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND THE PARTIES IRREVOCABLY SUBMIT TO THE
JURISDICTION OF BOTH SUCH COURTS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING.
ANY ACTIONS OR PROCEEDINGS TO ENFORCE A JUDGMENT ISSUED BY ONE OF THE FOREGOING
COURTS MAY BE ENFORCED IN ANY JURISDICTION.

Section 4.12 Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAW THAT CANNOT BE WAIVED, EACH PARTY HERETO WAIVES, AND COVENANTS THAT SUCH
PARTY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT
TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM OR PROCEEDING
ARISING OUT OF THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR IN ANY WAY
CONNECTED WITH THE DEALINGS OF ANY STOCKHOLDER IN CONNECTION WITH ANY OF THE
ABOVE, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN
CONTRACT, TORT OR OTHERWISE. EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN
INFORMED BY THE OTHER PARTIES HERETO THAT THIS SECTION 4.12 CONSTITUTES A
MATERIAL INDUCEMENT UPON WHICH IT IS RELYING AND WILL RELY IN ENTERING INTO THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY. ANY PARTY HERETO MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 4.12 WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL
BY JURY.

Section 4.13 Specific Performance. It is hereby agreed and acknowledged that it
will be impossible to measure in money the damages that would be suffered if the
parties fail to comply with any of the obligations herein imposed on them by
this Agreement and that, in the event of any such failure, an aggrieved party
will be irreparably damaged and will not have an adequate remedy at law. Any
such party shall therefore be entitled (in addition to any other remedy to which
such party may be entitled at law or in equity) to injunctive relief, including
specific performance, to enforce such obligations, without the posting of any
bond, and if any action should be brought in equity to enforce any of the
provisions of this Agreement, none of the parties hereto shall raise the defense
that there is an adequate remedy at law.

Section 4.14 Subsequent Acquisition of Shares. Any equity securities of the
Company acquired subsequent to the date hereof by a Stockholder shall be subject
to the terms and conditions of this Agreement.

[Signature pages follow]

 

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day
and year first above written.

 

SURGICAL CARE AFFILIATES, INC. By:  

/s/ Peter Clemens

Name:   Peter Clemens Title:   Executive Vice President and Chief Financial
Officer

[Signature Page to Stockholders Agreement]

 

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TPG PARTNERS V, L.P. By:   TPG GenPar V, L.P.,   its general partner By:   TPG
GenPar V Advisors, LLC,   its general partner By:  

/s/ Ronald Cami

Name:   Ronald Cami Title:   Vice President TPG FOF V-A, L.P. By:   TPG GenPar
V, L.P.,   its general partner By:   TPG GenPar V Advisors, LLC,   its general
partner By:  

/s/ Ronald Cami

Name:   Ronald Cami Title:   Vice President TPG FOF V-B, L.P. By:   TPG GenPar
V, L.P.,   its general partner By:   TPG GenPar V Advisors, LLC,   its general
partner By:  

/s/ Ronald Cami

Name:   Ronald Cami Title:   Vice President

[Signature Page to Stockholders Agreement]