Exhibit 10.7

 

CONTRIBUTION AGREEMENT

 

This CONTRIBUTION AGREEMENT (this “Agreement”) is made as of September 25, 2013,
and is effective immediately prior to the closing of the initial public offering
of a newly formed Delaware corporation named “Premier, Inc.” (the “Public
Company”) (the “Effective Date”), and is made by and between the stockholders
listed on Schedule I hereto (“collectively, the “Stockholders” and each a
“Stockholder”) and Premier Purchasing Partners, L.P. (“Premier LP”), with
respect to the shares of common stock of Premier, Inc., an existing Delaware
corporation (“Premier, Inc.”), owned by the Stockholdes.  Premier, Inc. and
Premier LP are collectively referred to in this Agreement as “Premier.”

 

RECITALS

 

WHEREAS, each Stockholder owns the number of shares of common stock of
Premier, Inc. set forth opposite its name in Schedule A (the “Premier, Inc.
Common Stock”);

 

WHEREAS, in conjunction with the proposed reorganization of Premier and its
affiliates (the “Reorganization”) and the initial public offering of Class A
shares of the common stock of the Public Company, Premier LP will adopt an
Amended and Restated Limited Partnership Agreement, in the form approved by its
general partner and a majority of its limited partners (the “LP Agreement”),
pursuant to which Premier LP will (a) change its name to “Premier Healthcare
Alliance, L.P.” and (b) issue Class A Common Units to its general partner and
Class B Common Units to its limited partners, collectively representing a 100%
interest in Premier LP; and

 

WHEREAS, each Stockholder desires to contribute all of its Premier, Inc. Common
Stock to Premier LP in exchange for Class B Common Units of Premier LP (the
“Premier LP Class B Common Units”), upon the terms and conditions set forth in
this Agreement.

 

NOW, THEREFORE, in consideration of the premises and of the representations,
warranties, covenants and agreements set forth herein, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:

 

ARTICLE 1
CONTRIBUTION

 

SECTION 1.1                        Contribution: Closing.

 

(a)                                 Upon the terms and subject to the conditions
contained herein, and in reliance on the representations, warranties, covenants,
terms and conditions of this Agreement, each Stockholder hereby contributes to
Premier LP, and Premier LP hereby accepts, the Premier, Inc. Common Stock (the
“Contribution”) and in consideration therefor Premier LP hereby issues to each
Stockholder, and each Stockholder hereby accepts, the number of Premier LP
Class B Common Units determined as set forth in Section 1.2 below.  The
Contribution made and accepted hereunder shall be free from all pledges, liens,
security interests, charges, claims, equities or encumbrances of any kind and
from all rights exercisable by or claims by third parties and together with all
rights attached or accruing to them.  The parties shall treat the Contribution
as a tax-free transaction for applicable tax purposes.

 

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(b)                                 Subject to the approval by the general
partner and the majority of the limited partners of Premier LP of the
Reorganization and the adoption of the LP Agreement, the Contribution shall be
effective immediately prior to the closing of the initial public offering of the
Public Company without any further action on the part of Stockholder.

 

SECTION 1.2                        Exchange Formula.  The number of Premier LP
Class B Common Units to be issued to each Stockholder in consideration of the
Contribution, when added to the Class B Common Units issued to such Stockholder
based upon such Stockholder’s Premier LP capital account balance prior to giving
effect to the Contribution, shall be equal to the total number of Premier LP
Class B Common Units outstanding immediately following the Reorganization
multiplied by such Stockholder’s Percentage Interest in the Premier LP Class B
Common Units as calculated by Premier LP.  For purposes of this Agreement, the
term “Percentage Interest” means (a) the independently appraised fair market
value of Premier, Inc. prior to giving effect to the Reorganization multiplied
by such Stockholder’s percentage interest in the total issued and outstanding
common stock of Premier, Inc. as of the Effective Date (but prior to the
Reorganization) plus (b) the independently appraised fair market value of
Premier LP prior to giving effect to the Reorganization multiplied by such
Stockholder’s percentage interest in the aggregate capital accounts of all
partners as of the Effective Date (but prior to the Reorganization), divided by
(c) the sum of the independently appraised fair market value of Premier, Inc.
and the independently appraised fair market value of Premier LP, in each case
prior to giving effect to the Reorganization.  An illustrative calculation is
set forth on Annex I attached hereto.

 

ARTICLE 2

REPRESENTATIONS AND WARRANTIES

 

SECTION 2.1                        Representations and Warranties of each
Stockholder.

 

(a)                                 Stockholder represents and warrants to
Premier LP, as of the date hereof, and as of the Effective Date that
(i) Stockholder is duly incorporated or organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
and has all necessary power and authority to enter into this Agreement and to
carry out the transactions contemplated by this Agreement, without the consent,
waiver, approval or authorization of, or filing with, any other person, entity
or governmental authority or under any applicable law, and has taken all actions
necessary in order to execute, deliver and perform this Agreement and to
consummate the transactions contemplated by this Agreement, (ii) this Agreement
has been duly executed and delivered by Stockholder and constitutes the legal,
valid and binding obligation of Stockholder, enforceable against Stockholder in
accordance with its terms (subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors’ rights and to general equity principles);
(iii) neither the execution and delivery of this Agreement by Stockholder nor
the consummation of the transactions contemplated herein (including the
Reorganization) conflicts with or results in a breach of any of the terms,
conditions or provisions of the organizational documents of Stockholder, any
agreement or instrument to which Stockholder is a party or by which the material
assets of Stockholder are bound, or constitutes a default under any of the
foregoing; (iv) there are no actions, suits or proceedings pending, or, to the
knowledge of Stockholder, threatened against or affecting Stockholder or
Stockholder’s assets in any court or before or by any federal, state, municipal
or other governmental department, commission, board,

 

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bureau, agency or instrumentality which, if adversely determined, would impair
the ability of Stockholder to perform Stockholder’s obligations under this
Agreement; and (v) the performance of this Agreement will not violate any order,
writ, injunction, decree or demand of any court or federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality to which Stockholder is subject.

 

(b)                                 Stockholder (i) is solvent with assets of a
value that exceeds the amounts of its liabilities, (ii) is able to meet its
debts as they mature, and (iii) in its reasonable opinion, has adequate capital
to conduct the businesses in which it is engaged.

 

(c)                                  Stockholder represents and warrants to
Premier LP, as of the Effective Date, that (i) Stockholder has good, valid and
marketable title to the Premier, Inc. Common Stock to be contributed to Premier
LP pursuant to Article 1 hereof and has the power and authority to transfer,
sell, assign and convey to Premier LP such Premier, Inc. Common Stock, free and
clear of any pledge, lien, security interest, charge, claim, equity or
encumbrance of any kind, other than pursuant to this Agreement, and (ii) the
number of shares of Premier, Inc. Common Stock set forth on Schedule A hereto
constitutes all of the Premier, Inc. Common Stock owned by Stockholder.

 

(d)                                 All Premier LP Class B Common Units acquired
by or for Stockholder are and will be acquired solely for Stockholder’s own
account for investment purposes only and not with a present view toward the
distribution thereof or with any present intention of distributing or reselling
any such Premier LP Class B Common Units in violation of the Securities Act of
1933, as amended (the “Securities Act”) or any state securities laws. 
Irrespective of any other provisions of this Agreement, any sale of any of the
Premier LP Class B Common Units acquired by Stockholder will be made only in
compliance with all applicable federal and state securities laws, including the
Securities Act.

 

(e)                                  Stockholder is aware of the need to conduct
its own investigation of the Premier LP Class B Common Units and has had the
opportunity to ask questions and receive answers concerning the Premier LP
Class B Common Units acquired by or for Stockholder.  Stockholder has had full
access to such information and materials concerning Premier LP and its
subsidiaries as Stockholder has requested. Premier LP has answered all inquiries
that Stockholder has made to Premier LP relating to Premier LP and its
subsidiaries or the Premier LP Class B Common Units acquired by such
Stockholder.

 

(f)                                   Stockholder is able to fend for itself in
the transactions contemplated by this Agreement and has such knowledge and
experience in financial and business matters such that Stockholder is capable of
evaluating the merits and risks of an investment in the Premier LP Class B
Common Units and of making an informed investment decision with respect thereto,
or has consulted with advisors who possess such knowledge and experience.

 

(g)                                  Stockholder is able to bear the economic
risk of its investment in the Premier LP Class B Common Units for an indefinite
period of time.  Stockholder understands that the Premier LP Class B Common
Units have not been registered under the Securities Act and therefore cannot be
sold unless subsequently registered under the Securities Act or unless an
exemption from such registration is available.

 

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(h)                                 Premier LP is relying upon the truth and
accuracy of the representations, warranties and acknowledgements of Stockholder
and Stockholder agrees that if any of the representations, warranties and
acknowledgements deemed to have been made by Stockholder by its execution of
this Agreement are no longer accurate, it shall promptly notify Premier LP.
Stockholder consents to such reliance.

 

(i)                                     An investment in the Premier LP Class B
Common Units involves risk. Stockholder acknowledges and agrees that Stockholder
has reviewed and considered the risks and uncertainties described in the Private
Placement Memorandum and Information Statement Regarding Reorganization of
Premier, Inc. and Premier Purchasing Partners, L.P. and Request for Execution of
Consent, Power of Attorney and Reorganization Documents attached hereto and
incorporated herein by reference and made a part hereof before making an
investment decision with respect to the Premier LP Class B Common Units. The
risk factors described therein are not the only ones that Premier LP faces or
that may relate to an investment in the Premier LP Class B Common Units.  Any of
these risks, alone or in combination with other risks, could result in a
material and adverse impact upon the business, financial condition, results of
operations, plans or prospects of Premier LP.  In such case, the value of the
Premier LP Class B Common Units could decline, and Stockholder could lose part
or all of its investment in Premier LP.

 

SECTION 2.2                        Representations and Warranties of Premier LP.

 

(a)                                 Premier LP represents that it is a limited
partnership duly organized, validly existing and in good standing under the laws
of California and has all necessary power and authority to enter into this
Agreement and to carry out the transactions contemplated by this Agreement,
without the consent, waiver, approval or authorization of, or filing with, any
other person, entity or governmental authority or under any applicable law, and
has taken all actions necessary in order to execute, deliver and perform this
Agreement and to consummate the transactions contemplated by this Agreement.

 

(b)                                 Premier LP represents that this Agreement
has been duly executed and delivered by it and constitutes the legal, valid and
binding obligation of Premier LP enforceable in accordance with the terms hereof
(subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors’ rights and to general equity principles).

 

(c)                                  Premier LP represents, as of the Effective
Date, that (i) the Premier LP Class B Common Units have been duly authorized and
validly issued by Premier LP, (ii) no limited partner of Premier LP has any
preemptive or other subscription right to acquire any limited partnership
interests of Premier LP and (iii) Premier LP shall convey to Stockholder good
and valid title to the Premier LP Class B Common Units, in the amount determined
in accordance with Section 1.2 above, free and clear of any liens, claims,
security interests and encumbrances.

 

(d)                                 Premier LP represents that neither the
execution and delivery of this Agreement by Premier LP nor the consummation of
the transactions contemplated herein, including the Reorganization,
(i) conflicts with or results in a breach of any of the terms, conditions or
provisions of the organizational documents of Premier LP or any agreement or
instrument to which Premier LP is a party or by which the material assets of
Premier LP are

 

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bound or (ii) constitutes a default under any of the foregoing, except to the
extent that any conflict, breach or default under this subsection (d) would not
prevent or materially hinder the performance of the actions contemplated by this
Agreement.

 

(e)                                  Premier LP represents that there are no
actions, suits or proceedings pending or, to the knowledge of Premier LP,
threatened against or affecting Premier LP or assets of Premier LP in any court
or before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality which, if adversely
determined, would impair the ability of Premier LP to perform Premier LP’s
obligations under this Agreement.

 

(f)                                   Premier LP represents that its performance
of this Agreement will not violate any order, writ, injunction, decree or demand
of any court or federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality to which Premier LP is
subject.

 

ARTICLE 3
MISCELLANEOUS

 

SECTION 3.1                        Entire Agreement.  This Agreement shall
constitute the entire agreement among the parties with respect to the subject
matter hereof and shall supersede all previous negotiations, commitments and
writings with respect to such subject matter.

 

SECTION 3.2                        Amendment, Modification or Waiver.  This
Agreement may be amended, modified, waived or supplemented, in whole or in part,
as to any party hereto by a written agreement signed by each party hereto.  No
failure or delay on the part of any party in the exercise of any right hereunder
shall impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty or agreement herein, nor shall any
single or partial exercise of any such right preclude other or further exercise
thereof or of any other right.  The waiver by such parties of any breach of this
Agreement shall not be construed as a waiver of any subsequent breach.

 

SECTION 3.3                        Successors and Assigns. This Agreement and
all of the provisions hereof shall be binding upon and inure to the benefit of
the parties and their successors and permitted assigns, but neither this
Agreement nor any of the rights, interests and obligations hereunder shall be
assigned or otherwise transferred, in whole or in part, by any party without the
prior written consent of each of the parties.

 

SECTION 3.4                        Counterparts.  This Agreement may be executed
in counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

SECTION 3.5                        Governing Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of California
(other than the laws regarding choice of laws and conflicts of laws that would
apply the substantive laws of any other jurisdiction) as to all matters,
including matters of validity, construction, effect, performance and remedies.

 

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SECTION 3.6                        Interpretation.  The Article and
Section headings contained in this Agreement are solely for the purpose of
reference, are not part of the agreement of the parties and shall not in any way
affect the meaning or interpretation of this Agreement.

 

SECTION 3.7                        Severability.  If any term or other provision
of this Agreement is invalid, illegal or incapable of being enforced by any
applicable rule of law or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party.

 

SECTION 3.8                        Void Date.  If the Effective Date does not
occur prior to March 31, 2014, this Agreement shall be null and void and of no
further force or effect.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the undersigned has executed this Contribution Agreement as
of the date set forth above.

 

 

 

EACH OF THE STOCKHOLDERS LISTED ON SCHEDULE I ATTACHED HERETO

 

 

 

By:  Premier Plans, LLC, as attorney-in-fact pursuant to the Special Power of
Attorney executed by each of the Stockholders

 

 

 

 

 

By:

/s/Craig McKasson

 

 

Name:

Craig McKasson

 

 

Title:

Chief Financial Officer

 

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IN WITNESS WHEREOF, the undersigned has executed this Contribution Agreement as
of the date set forth above.

 

 

 

PREMIER PURCHASING PARTNERS, L.P.

 

 

 

By:

Premier Plans, LLC, its general partner

 

 

 

 

 

 

By:

/s/Craig McKasson

 

 

Name:

Craig McKasson

 

 

Title:

Chief Financial Officer

 

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Annex I

 

Examples of Calculation of Premier LP Class B Common Units

to be Issued to Stockholder After Giving Effect to the Contribution

 

Owner Percentage Interest Formula

 

 

 

Example
Owner
#1

 

Example
Owner
#2

 

Example
Owner
#3

Example: Fair Market Value of Premier LP

 

a

 

$3,240M

Example: Fair Market Value of Premier, Inc.

 

b

 

$360M

Example: Combined Fair Market Value

 

c

 

$3,600M

Owner Interest in Premier LP

 

d

 

1.00%

 

1.00%

 

1.00%

Owner Interest in Premier, Inc.

 

e

 

0.50%

 

1.00%

 

1.50%

Owner Combined Interest in Premier LP

 

(a*d + b*e)/c

 

0.95%

 

1.00%

 

1.05%

 

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