EXHIBIT 10.14
AMENDMENT NO. 1
TO
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
(Phoenix Facilities)
THIS AMENDMENT NO. 1 TO AGREEMENT FOR PURCHASE AND SALE OF ASSETS
(this "Amendment") is made and entered into as of the 1st day of June, 2000
(the "Effective Date"), by and among VANGUARD HEALTH SYSTEMS, Inc., VHS OF
PHOENIX, INC., VHS OF ARROWHEAD, INC., and VHS OUTPATIENT CLINICS, INC., on the
one hand, and BAPTIST HOSPITALS AND HEALTH SYSTEMS, INC., PHOENIX BAPTIST
HOSPITAL AND MEDICAL CENTER, INC., ARROWHEAD COMMUNITY HOSPITAL AND MEDICAL
CENTER, INC., ARIZONA NETWORK DEVELOPMENT, INC., THE FOUNDATION FOR BAPTIST
HEALTH SYSTEMS, and PROJECT OASIS, LLC, on the other hand.
RECITALS:
WHEREAS the Parties entered into an Agreement for Purchase and Sale of
Assets (Phoenix Facilities) dated as of March 31, 2000 (the "Agreement"),
pursuant to which, among other things, Sellers agreed to sell to Purchasers,
and Purchasers agreed to purchase from Sellers, substantially all of the assets
and businesses owned or leased by Sellers and their Affiliates and used in the
conduct of the Baptist Facilities; and
WHEREAS, the Parties are prepared to close the Transaction and desire
to amend the Agreement to set forth certain understandings and agreements among
the Parties.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements set forth below, and other good and valuable
consideration, the receipt and sufficiency of which is acknowledged by the
Parties, the Parties agree as follows:
AGREEMENT
1. Certain Equipment.
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(a) Sellers acquired certain CT equipment prior to Closing and paid a
portion of the purchase price for the equipment at the time the equipment was
acquired (the portion of the purchase price so paid has been recorded by
Sellers as a prepaid expense). At Closing Sellers will pay the balance of the
purchase price for the equipment. Purchasers agreed to reimburse Sellers at
Closing for the cost of purchasing the equipment (including the prepaid
amount), as set forth on Exhibit A, and Sellers agreed to treat the amount so
reimbursed to Sellers by Purchasers (including the prepaid amount) as a capital
expenditure made by Purchasers "from and after the Closing Date of the
Transaction" within the meaning of Section 12.18 of the Agreement.
(b) Sellers have leased certain equipment pursuant to one or more
operating leases described on Exhibit A. Sellers shall terminate the leases and
purchase the equipment at Closing and Purchasers shall reimburse Sellers at
Closing for the cost of purchasing the equipment, as set forth on Exhibit A.
Sellers have agreed to treat the amount so reimbursed to Sellers by
Purchasers as a capital expenditure made by Purchasers "from and after the
Closing Date of the Transaction" within the meaning of Section 12.18 of the
Agreement.
2. PTO Accumulations. The Parties agreed that the Cash Portion of the
Purchase Price would be determined in part by reducing the Purchase Price by an
amount equal to all vacation, holiday and sick leave accumulations of the
Sellers' former employees hired by Purchasers at the Closing, and related Taxes
thereon, to the extent such accumulations are not included in Net Working
Capital. In addition, Purchasers agreed to assume, among other liabilities, all
accrued unused vacation leave, sick-leave days and paid time off with respect
to former employees of Sellers who are employed by Purchasers to the extent
included in Net Working Capital. With respect to any employees with less than
one year of service with Sellers ("New Employees"), it is Sellers' policy to
accumulate, but not accrue, the paid time off until the first anniversary of
each New Employee's hire date (provided that the New Employee is still employed
by Sellers on the first anniversary), at which time the paid time off benefit
vests for the New Employee and Sellers accrue the liability in their Financial
Statements. Because the Parties desire and intend that Purchasers provide each
New Employee credit for the paid time off that vests for the New Employee on
the first anniversary of the New Employee's hire date (provided that the New
Employee is still employed by Purchasers on the first anniversary) to the same
extent as such benefits are credited for employees who are not New Employees,
the Parties have agreed that (i) the Purchase Price shall not be reduced at
Closing by an amount equal to the accumulated but not accrued paid time off
with respect to New Employees, or related Taxes thereon, (ii) for each New
Employee who is employed by Purchasers on the first anniversary of the New
Employee's hire date with Sellers, Purchasers shall vest the New Employee with
the paid time off benefits accumulated (but not accrued) by Sellers as of the
Closing Date, and (iii) Sellers shall pay to Purchasers, within ten business
days after invoice by Purchasers, an amount equal to the paid time off benefits
so vested by Purchasers pursuant to the preceding clause (ii), plus related
Taxes thereon.
3. Assumed Contracts. Section 2.1.4 of the Agreement is amended
and restated in its entirety as follows:
2.1.4 Assumed Contracts. All Assumed Contracts identified as
such among the Contracts listed and described on Schedule 2.1.4,
Schedule 2.1.1-B and Schedule 11.5, and all Immaterial Contracts, but
with respect to Assumed Contracts that include any Excluded
Businesses, Purchasers' assumption shall be with respect to the
Purchased Assets and the Baptist Facilities only and not the Excluded
Businesses.
4. Seniors HMO/Medicare Residency Payments. PBHMC is entitled to
receive graduate medical education and indirect medical education payments from
Medicare ("GME/IME Payments") based on "Senior HMO" patients as if they were
Medicare patients. PBHMC recently discovered that amounts PBHMC has been and is
entitled to receive under this arrangement have been underreported. In
consideration of the payment at Closing of $60,000, Purchasers shall resubmit
to Medicare on behalf of Sellers "zero bills" with respect to the Senior HMO
patients. As a result, after Closing the Parties expect that Purchasers will
receive GME/IME Payments from Medicare in respect of pre-Closing periods and,
upon receipt of any
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such payments and the related remittance advices, Purchasers shall forward such
payments to PBHMC with reasonable promptness as though the same were monies in
respect of Excluded Assets.
5. Restriction on Sale/Transfer of PBHMC and ACHMC and Right of First
Refusal.
(a) Section 12.9.1 is amended and restated in its entirety as follows:
12.9.1. Restriction on Sale/Transfer. For a period of five
(5) years after the Closing Date, no Purchaser shall transfer
ownership or control of all or substantially all of the assets of
either Baptist Hospital to any Person, other than a Person wholly
owned and controlled by Vanguard.
(b) The first sentence of Section 12.9.2(a) is amended by deleting the
phrase "Purchasers or their Affiliates" and inserting in lieu thereof "Vanguard
or its Affiliates".
The last clause of Section 12.9.2(d) is amended and restated as
follows: "...it being understood and acknowledged that Purchasers shall
thereafter own and control the Baptist Assets subject to the Offer free and
clear of the restrictions set forth in this Section 12.9.2 (except for the last
three sentences of Section 12.9.2(c))."
6. Foundation. Project Oasis, LLC was formed by Sellers to receive the
proceeds of the Transaction. Since the Effective Date, however, Sellers have
determined that Project Oasis, LLC will not be the recipient of the proceeds of
the Transaction. Instead, PBHMC will be the recipient at Closing of the
proceeds of the Transaction and PBHMC and/or The Foundation for Baptist Health
Systems will apply and spend the proceeds in any manner whatsoever consistent
with the respective charitable purposes of PBHMC and the Foundation, as set
forth in their Articles and Bylaws. As a result, effective as of the Closing,
the term "Foundation" as used in the Agreement shall mean The Foundation for
Baptist Health Systems and PBHMC. From and after the execution of this
Amendment by all Parties, Project Oasis, LLC shall no longer be a Party to the
Agreement and shall no longer have any obligation or liability under the
Agreement, and any reference from and after the date of this Agreement to any
Party (including in any Closing Document) shall exclude Project Oasis, LLC.
Project Oasis, LLC joins in the execution of this Agreement for the purpose of
acknowledging the foregoing and releasing any rights, benefits and privileges
to which it is otherwise entitled by virtue of being a Party to the Agreement.
7. Title Insurance. With respect to representations and warranties of
title respecting the Real Property made by Sellers, Purchasers shall first make
claims for breach of such representations and warranties against the title
insurance policies obtained by Purchasers pursuant to Section 9.8 of the
Agreement before making any claim against Purchasers under the Agreement. Any
indemnity or other payments made to Purchasers by the title insurance company
in respect of Losses arising from such claims shall be applied to and reduce
the Losses that Purchasers may claims against and recover from Sellers in
respect of such claims.
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8. The Subsidiary and the Shares. BHHS has solicited the consent of
Farm Bureau Life Insurance Company (the "Lender") to the assignment by BHHS of
its interest in the Subsidiary. The Lender is the holder of a deed of trust of
record against Arrowhead Medical Plaza I, the medical office building owned by
the Joint Venture, and the deed of trust requires the Lender's consent to the
transfer to Purchasers of BHHS's ownership interest in the Shares. The Lender
has responded to Sellers' request for consent by setting forth certain
conditions that the Parties have determined cannot reasonably be satisfied by
Closing. Instead of deferring Closing, however, the Parties have decided to
proceed to Closing with respect to the other Baptist Facilities and to defer
Closing on the Shares until the Parties either have satisfied the Lender's
conditions and received the Lender's consent, or agreed on an alternative
course of action with respect to the Lender and its deed of trust. Therefore,
the Purchase Price shall be reduced at Closing by $3,396,075 and, within five
business days after receipt of the Lender's consent or the satisfactory
resolution of the alternative course of action, the Parties shall proceed to
Closing with respect to the Shares, at which time Sellers shall deliver to
Purchasers title to the Shares and Purchasers shall deliver to Sellers
$1,520,000 and the long-term indebtedness of the Joint Venture will remain in
place. The Parties shall proceed diligently and in good faith to obtain the
Lender's consent or agree on an alternative course of action. The Closing of
the sale of the Shares shall be conducted in the same manner as the Closing of
the sale of the other Baptist Facilities. The Subsidiary's partner in the Joint
Venture has also expressed an interest in being bought out by the Subsidiary
and the Purchasers may desire to coordinate the closing of such a buy-out with
the closing of the sale of the Shares. From and after the date of this
Amendment until the Closing of the sale of the Shares pursuant to this Section
and subject to applicable fiduciary duties, Sellers shall cause the Subsidiary
and the Joint Venture to conduct their respective businesses in the ordinary
course consistent with past practices and shall not permit or suffer the
Subsidiary or Joint Venture to take any action that would have a material
adverse effect on the Arrowhead Baptist Hospital without the prior written
consent of Purchasers. If the Lender requires Vanguard to execute and deliver
to Lender a continuing guarantee, Section 12.27 of the Agreement shall be
deleted.
9. Miscellaneous. Except as amended by this Amendment, the Agreement
shall remain in full force and effect without change. This Amendment is
incorporated into and becomes a part of the Agreement, and shall not have any
significance, or be interpreted or construed, independent of the Agreement, or
be further amended except as provided in the Agreement. Capitalized terms not
otherwise defined in this Amendment shall have the meanings ascribed to such
terms in the Agreement.
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IN WITNESS WHEREOF, the Parties to this Agreement have executed this
Agreement by their duly authorized representatives as of the Effective Date.
VHS OF PHOENIX, INC. VHS OF ARROWHEAD, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Executive Vice President Title: Executive Vice President
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VHS OUTPATIENT CLINICS, INC. VANGUARD HEALTH SYSTEMS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Executive Vice President Title: Executive Vice President
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BAPTIST HOSPITALS AND HEALTH SYSTEMS, PHOENIX BAPTIST HOSPITAL AND
INC. MEDICAL CENTER, INC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: President Title: President
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ARROWHEAD COMMUNITY HOSPITAL AND ARIZONA NETWORK DEVELOPMENT, INC.
MEDICAL CENTER, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: President Title: President
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THE FOUNDATION FOR BAPTIST HEALTH PROJECT OASIS, LLC
SYSTEMS
By: Baptist Hospitals and Health
Systems, Inc., Manager
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: President Title: President
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EXHIBIT A
CERTAIN EQUIPMENT
Equipment Lease No. Vendor Purchase Price1
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CT Tomoscan AV
Expander System None Philips Medical Systems $550,779.99
Various 7511485 Picker Financial Group 25,000.00
Various 7511488 Picker Financial Group 6,500.00
Various 7511483 Picker Financial Group 35,000.00
Various 7511489 Picker Financial Group 179,415.00
Various 7511491 Picker Financial Group 47,587.00
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Total Purchase Price/Capital Expenditures $844,281.99
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1 Purchase Price for the CT Tomoscan Expander System includes $61,200, which
has been accrued by Sellers as a prepaid expense.