EXHIBIT 10.11
CONTRIBUTION AND PURCHASE AGREEMENT
AMONG
USP NORTH TEXAS, INC.
BAYLOR HEALTH SERVICES
TEXAS HEALTH VENTURES GROUP L.L.C. AND
TBVG/HEALTHFIRST LLC
MAY 11, 1999
TABLE OF CONTENTS
RECITALS ................................................................ 1
1. Contribution of Baylor Center Assets to THVG1 ........................ 3
2. Contribution of USP Assets to THVG2 ................................. 7
3. Capital Contribution Obligations ..................................... 9
4. Annual Reconciliation of Capital Contribution Obligations ............ 10
5. Sales Tax and Filing Fees ............................................ 14
6. Closing and Effective Date ........................................... 14
7. [Intentionally Omitted] .............................................. 14
8. Representations and Warranties of USP ................................ 14
9. Representations and Warranties of Baylor ............................. 23
10. Covenants ........................................................... 29
11. Conditions Precedent to Obligations of Baylor ....................... 31
12. Conditions Precedent to Obligations of USP .......................... 33
13. Additional Covenants ................................................ 36
14. Termination ......................................................... 41
15. Confidentiality ..................................................... 42
16. Notices ............................................................. 42
17. Governing Law; Interpretation; Section Headings ..................... 43
18. General ............................................................. 43
19. Further Assurances .................................................. 44
20. Counterparts......................................................... 44
21. Attorneys' Fees ..................................................... 44
22. Dispute Resolution Mechanisms ....................................... 45
23. Interpretation of Agreement ......................................... 46
EXHIBITS
A HealthFirst Purchase Agreement
B Regulations of THVG2
C Convertible Subordinated Promissory Note
D [Intentionally Omitted]
E Assignment and Assumption Agreement
F ▇▇▇▇ of Sale and Assumption of Liabilities
G Lease Agreement
H Amendment to USP Parent's Stockholders Agreement
I Amendment to USP Parent's Registration Rights Agreement
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SCHEDULES
▇.▇▇ Bay1or Center Tangible Assets
▇.▇▇ Excluded Tangible Assets
1.2 Calculation of EBITDAM
4 Sample Reconciliation Statement
8.4 DeSoto and Metroplex Balance Sheets
8.6 DeSoto and Metroplex Contracts
8.10 Changes in DeSoto and Metroplex
8.16 USP'S Consents and Approvals
9.4 Baylor Center Balance Sheets
9.6 Baylor Center Contracts
9.7 Litigation
9.10 Changes in Baylor Centers
9.15 Baylor's Consents and Approvals
ii
CONTRIBUTION AND PURCHASE AGREEMENT
This Contribution and Purchase Agreement is entered into as of the 11th
day of May, 1999, by and among USP North Texas, Inc., a Texas corporation
("USP"), Baylor Health Services, a Texas non-profit corporation ("Baylor"),
Texas Health Ventures Group LLC, a Texas limited liability company ("THVGl"),
and THVG/HealthFirst L.L.C., a Texas limited liability company ("THVG2"), with
reference to the following facts:
RECITALS
A. Pursuant to the terms of the Amended and Restated Regulations of THVGl
(the "THVGl Regulations") and those certain Transfer Agreements and Consents,
all of which were effective as of February 1, 1999 and have been executed and
delivered by USP, Baylor and certain other parties, USP and Baylor are each
members of and each owns a 50% Ownership Interest (as such term is defined in
the THVGl Regulations) in THVGl.
B. USP's parent company, United Surgical Partners International, Inc., a
Delaware corporation ("USP Parent"), is a party to that certain Asset Purchase
Agreement, dated as of December 18, 1998, as modified and supplemented by that
certain Option and Amendment Agreement, dated as of December 22, 1998
(collectively, the "HealthFirst Purchase Agreement"), with HealthFirst
Management, L.L.C., a Texas limited liability company ("HealthFirst"), and
certain other parties. The HealthFirst Purchase Agreement is attached hereto as
EXHIBIT A. Prior to the consummation of the transactions provided for in the
HealthFirst purchase Agreement, USP Parent assigned all of its rights and
interests in the HealthFirst Purchase Agreement to USP and, accordingly, upon
the consummation of the transactions provided for therein, USP acquired the
"Transferred Assets" (as such term is defined in the HealthFirst Purchase
Agreement).
C. Unless otherwise defined in this Agreement, the capitalized terms used
in this Agreement shall have the meanings ascribed to them in the HealthFirst
Purchase Agreement. Any capitalized terms used in this Agreement that are not
defined either in this Agreement or in the HealthFirst Purchase Agreement shall
have the meanings ascribed to them in the THVGl Regulations.
▇. ▇▇▇▇▇▇ currently owns and operates, either directly or through a
partnership that is 100% owned by Baylor and its Subsidiaries, both (1) Baylor
Surgicare, located at 3920
▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("Baylor Surgicare"), and (2) Texas Surgery
Center, located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("Texas
Surgery Center"). Baylor Surgicare and Texas Surgery Center are sometimes
hereinafter collectively referred to as the "Baylor Centers."
E. Pursuant to the terms of the HealthFirst Purchase Agreement, USP has
acquired (1) a 20% general partner interest in both DeSoto Surgicare Partners,
Ltd., a Texas limited partnership ("DeSoto") , and Metroplex Surgicare Partners,
Ltd., a Texas limited partnership ("Metroplex"), (2) options (the "HealthFirst
Options") to purchase the partnership interests formerly held by HealthFirst in
Irving Surgery Center, Ltd., a Texas limited partnership ("Irving"), Dallas
Surgery Partners, a Texas general partnership ("DSP"), and Forth Worth Surgicare
Partners, Ltd., a Texas limited partnership ("Fort Worth"), and (3) all rights
and interests of HealthFirst and the Management Sellers in and to the respective
HealthFirst Management Agreements with DeSoto, Metroplex, Irving, DSP and Fort
Worth.
F. The purpose of this Agreement is to set forth the terms and conditions
of the following transactions:
(1) Baylor will contribute to THVGl all of the assets (other than land and
buildings), subject to certain designated liabilities, of the Baylor Centers in
exchange for an additional Ownership Interest in THVGl. USP shall concurrently
purchase one-half of such additional Ownership Interest from Baylor.
(2) THVGl has formed a wholly owned limited liability company, known as
Texas Health Venture VII L.L.C. (the "Baylor Center General Partner"), which in
turn has formed Dallas Surgical Partners L.P., a Texas limited partnership (the
"Baylor Limited Partnership"), and THVGl shall contribute to the Baylor Center
General Partner, which in turn shall contribute to the Baylor Limited
Partnership, all of the assets (subject to all assumed liabilities) of the
Baylor Centers acquired by THVGl from Baylor.
(3) The Baylor Limited Partnership will (a) obtain a loan that is secured
by the assets of the Baylor Centers, which loan shall be in an amount and on
terms approved by the Managers of THVGl, and (b) syndicate to local
physician/investors limited partnership interests in the Baylor Limited
Partnership representing up to a 25% interest in the Baylor Limited Partnership.
The proceeds of said loan and said syndication of limited partnership interests
shall be distributed by the Baylor Limited Partnership to the Baylor Center
General Partner and, in
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turn, to THVGl and to Baylor and USP (subject to any retention by THVGl approved
by its members).
(4) USP and Baylor have organized THVG2 by entering into Regulations (the
"THVG2 Regulations") substantially in the form of Exhibit D attached hereto. USP
shall contribute the Transferred Assets to THVG2 in exchange for a 51% interest
in THVG2 and the cash contribution to be made by Baylor for its 49% interest in
THVG2.
(5) THVG2, Baylor and USP shall enter into a Management Agreement (the
"THVG2 Management Agreement") substantially in the form of Exhibit D attached to
the THVG2 Regulations, and Baylor shall pay to USP a pro rata share (based on
Baylor's share of the management fees payable to Baylor under the THVG2
Management Agreement) of USP's cost of acquiring the HealthFirst Management
Agreements that are included in the Transferred Assets.
(6) Baylor Health Care System, a Texas non-profit corporation ("BHCS"),
and Baylor (each as landlord) shall enter into a Lease Agreement with the Baylor
Limited Partnership for the real property used by each of the Baylor Centers
(collectively, the "Baylor Real Property").
THEREFORE, in consideration of the foregoing premises and the mutual
covenants contained herein, the parties hereto agree as follows:
1. CONTRIBUTION OF BAYLOR CENTER ASSETS TO THVG1.
1.1 BAYLOR AGREEMENT TO CONTRIBUTE ASSETS. Subject to the terms and
conditions of this Agreement, at the Closing (as defined below), Baylor shall
contribute to THVG1 all tangible and intangible assets owned by Baylor that are
primarily used in the operations of the business of the Baylor Centers (other
than the Excluded Assets, as defined below), including without limitation cash
in an amount equal to $100,000 (the "Transferred Baylor Center Cash"), all
accounts receivable, prepaid expenses (other than prepaid insurance expenses),
deposits, inventory and supplies, contract rights, other current assets,
licenses (to the extent transferable), computer software, equipment, fixtures,
furniture, surgical instruments (including without limitation the equipment,
fixtures, furniture and instruments described in Schedule 1.1A attached hereto),
books and records (including without limitation computer stored records) and
goodwill (collectively, the "Baylor Center Assets") ; provided, however,
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that with respect to such books and records that are integrated with the books
and records of Baylor or its Affiliates and cannot be readily separated for
transfer to THVG1, Baylor shall instead provide THVG1 with access to and the
right to copy (at no expense to THVG1) the portion of such books and records
that are Baylor Center Assets. Notwithstanding the foregoing, the following
assets shall not be part of the Baylor Center Assets (the "Excluded Baylor
Assets"): (a) cash and cash equivalents in excess of the Transferred Baylor
Center Cash; (b) Baylor's rights under this Agreement; (c) all rights under
insurance policies and self-insurance programs; (d) leasehold improvements; (e)
assets that are not owned by Baylor or are not used primarily in the business of
the Baylor Centers; and (f) managed care contracts not listed in SCHEDULE 9.6. A
list of all material items used in the business of the Baylor Centers that are
owned by a Baylor Affiliate (and not Baylor) is set forth in SCHEDULE ▇.▇▇
attached hereto; Baylor will use reasonable efforts to cause its Affiliates to
provide these items to the Baylor Limited Partnership in accordance with past
practices for a fair market use or rental charge so long as they are needed by
the Baylor Limited Partnership and they are available for such use.
1.2 ISSUANCE OF OWNERSHIP INTEREST; PARTIAL BY USP. In consideration for
Baylor's contribution and transfer of the Baylor Center Assets to THVG1, Baylor
shall be issued a 97% Ownership Interest in THVG1. Immediately after such
issuance, Baylor shall sell to USP, and USP agrees to purchase from Baylor, one
half of such Ownership Interest for the following consideration:
(a) CLOSING DATE PAYMENT. At the Closing, USP shall pay to Baylor cash in
the aggregate amount of $6,503,080.
(b) CONTINGENT POST-CLOSING PAYMENTS. In addition to the payments to be
made pursuant to Section 1.2(a) above and as additional consideration for the
sale of such Ownership Interest, USP shall pay to Baylor 50% of the following
additional amounts:
(i) An amount equal to four times the excess (if any) of (A) the
aggregate net earnings before interest, taxes, depreciation, amortization
and management fees earned by the Baylor Limited Partnership (the total of
which is hereinafter collectively referred to as the "EBITDAM"), for the
12 month period beginning on the "Effective Date" (as defined in Section 6
below) (the "First Year") over (B) $1,858,023 (the "Base Amount"); plus
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(ii) Three times the amount by which EBITDAM for the 12 month period
beginning on the first anniversary of the Effective Date (the "Second
Year") exceeds the greater of the Base Amount or the EBITDAM for the First
Year; plus
(iii) Three times the amount by which EBITDAM for the 12 month
period beginning on the second anniversary of the Effective Date (the
"Third Year") exceeds the greatest of (A) the Base Amount, (B) the EBITDAM
for the First Year or (C) the EBITDAM for the Second Year;
provided, however, that the total amount payable pursuant to this Section 1.2(b)
shall not exceed $2,601,232.
For purposes of this Section 1.2(b), EBITDAM shall be determined in
accordance with generally accepted accounting principles applied in a manner
consistent with the attached SCHEDULE 1.2 ("GAAP"); provided, however, that (1)
extraordinary items (as determined in accordance with GAAP) shall be excluded,
(2) if the EBITDAM for the First Year or the Second Year is a negative amount,
such negative amount shall carryover and be treated as an expense in the next 12
month period, (3) the calculation shall not include reserves or contingencies
for expenses as to which any party has an indemnification obligation to the
other party under this Agreement and (4) there shall be no charge for
professional services (including without limitation legal expenses) incurred by
any party in connection with this Agreement or the transactions provided for
herein. Baylor and USP each shall have access to all books and records and (at
their expense) the right to review and audit all financial statements relating
to the Baylor Centers and/or the Baylor Limited Partnership.
The calculation of EBITDAM for each of the First, Second and Third Years
shall initially be made by USP and a statement (the "Statement") reflecting each
such calculation in reasonable detail shall be provided to Baylor within 60 days
after the end of the respective periods for which such calculations are to be
made. If Baylor does not notify USP of any objection to a Statement within 60
days after the receipt of such Statement, the Statement shall be deemed accepted
on behalf of each of the parties hereto. If Baylor provides notice of any
objection to a Statement (which notice shall include a description of such
objections) within such 60 day period, USP and Baylor shall use their
commercially reasonable efforts to resolve any differences relating to the
Statement within 15 days after such objection is delivered to USP. If the
disagreement is
5
not resolved by that date, however, either Baylor or USP may submit the matter
for a binding determination of the calculation of EBITDAM set forth in the
Statement to THVG1's outside accounting firm or another nationally recognized
accounting firm approved by USP and Baylor, which firm shall act as an expert
and not as an arbitrator in making such determination; the fees of such
accounting firm, which shall be billed separately and independently from any
other services provided by such firm, shall be paid 50% by USP and 50% by
Baylor.
1.3. ASSUMPTION OF CERTAIN LIABILITIES; EXCLUDED LIABILITIES. THVG1 shall
assume and be responsible for all of the obligations, duties and liabilities
relating to the Baylor Centers (i) that are current trade payables incurred in
the ordinary course of business of the Baylor Centers and are outstanding on the
Effective Date, (ii) that are accrued employee vacation or sick leave benefits
for employees of the Baylor Centers who are hired by USP on or immediately
following the Closing Date or (iii) that arise due to acts or omissions
occurring on or after the Effective Date, including without limitation
obligations under the contracts, leases and other instruments or commitments
that either (A) are described in SCHEDULE 9.6 attached hereto or (B) relate to
the Baylor Centers, do not involve a non-cancellable financial obligation of
more than $25,000 and are cancellable without cost or penalty no later than 12
months after the Closing Date. It is understood and agreed, however, that THVG1
shall not assume, pay or be responsible for any other liability, duty or
obligation of Baylor or any of its Affiliates (except for THVG1 and its
Subsidiaries) arising due to any act or omission occurring prior to the
Effective Date, including without limitation: (a) any trade payable that is more
than 60 days past due; (b) any obligation under any of Baylor's current real
property leases relating to any Baylor Center (which shall be replaced at the
Closing as provided in Section 12.8) or any other outstanding contract, lease,
instrument or commitment not described in clause (iii) (A) or (8) above; (c) any
claim or contingent liability arising from the operations of any Baylor Center
prior to the Effective Date, or based upon any acts or omissions of Baylor or
its Affiliates, employees, agents or independent contractors, or any other event
that has occurred, prior to the Effective Date, including without limitation any
malpractice claim, EEOC claim, workers' compensation claim or other claim by any
present or former employee; (d) liabilities or obligations of Baylor or its
Affiliates arising under the Medicare or Medicaid program or any other third
party payor program; (e) the costs and expenses associated with this Agreement
that, as provided in Section 10.4, are to be borne by Baylor; (f) any obligation
or liability under any employee benefit plan (including without limitation any
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bonus, retirement, pension, profit sharing or similar plan) in which any
employee of a Baylor Center participates, other than accrued employee vacation
and sick time as described in subsection (ii) above; (g) any obligation relating
to any professional liability insurance policy, including without limitation
premiums, assessments and charges for underpayments, for any period prior to the
Effective Date; (h) any indebtedness or payment obligation to Baylor or any
Affiliate of Baylor; (i) any federal, state or local income taxes or
liabilities; or (j) any obligation, liability or claim as to which Baylor would
have an indemnity obligation under Section 13.1 hereof (collectively, the
"Excluded Liabilities").
2. CONTRIBUTION OF USP ASSETS TO THVG2.
2.1 USP'S .AGREEMENT TO TRANSFER ASSETS. Subject to the terms and
conditions of this Agreement, at the Closing, USP shall transfer to THVG2 the
Transferred Assets (as that term is defined in HealthFirst Purchase Agreement),
all rights and interest of USP in and under the HealthFirst Purchase Agreement
and the HealthFirst Management Agreements, all books and records, computer
hardware and software and other assets of USP or its Affiliates that are
primarily used in the operations of the business of DeSoto or Metroplex or used
primarily in performing the HealthFirst Management Agreements (collectively, the
"USP assets"). Not withstanding the foregoing, the following assets shall not
be part of the USP Assets: (a) USP's share of cash and cash equivalent assets of
DeSoto that are in excess of the $50,000 as of the Effective Date; (b) USP's
share of cash and cash equivalent assets of Metroplex that are in excess of
$50,000 as of the Effective Date; (c) all earned but unpaid management fees
under the HealthFirst Management Agreements as of the effective Date; and (d)
USP's rights under this Agreement.
2.2 CONSIDERATION. In full consideration for USP's contribution of the USP
Assets to THVG2:
(a) CLOSING DATE CONSIDERATION. At the Closing, (i) THVG2 shall issue to
USP membership interests in THVG2 representing a 51% ownership interest in THVG2
and (ii) THVG2 shall pay to USP cash in the amount of $1,287,275.
(b) ASSUMPTION OF FURTHER PAYMENT OBLIGATIONS. In addition, THVG2 hereby
assumes the obligation to make any and all payments that become due to the
Partnership Sellers pursuant to Sections l(c) and 8(e)(iv) of the HealthFirst
Purchase Agreement. To the extent that USP is obligated to deliver shares of the
Class A Common Stock, par value $.01 per share, of USP
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Parent (the "USP Common Stock") in connection with any such payment obligation
(as provided in Section l(d). of the HealthFirst Purchase Agreement), USP shall
deliver such USP Common Stock to the parties entitled to receive such shares and
THVG2 shall pay cash to USP equal to the fair market value of such USP Common
Stock, determined in accordance with the provisions of said Section l(d) of the
HealthFirst Purchase Agreement.
(c) MANAGEMENT AGREEMENTS. Concurrently with USP's contribution of the USP
Assets to THVG2, which assets include the HealthFirst Management Agreements,
THVG2, USP and Baylor shall enter into the THVG2 Management Agreement. Since the
THVG2 Management Agreement provides for the payment of management fees to USP
and Baylor that total 100% of all management fees that THVG2 will earn under the
Management Agreements, the parties hereto agree that, for capital account
purposes, the Management Agreements contributed by USP as part of the USP Assets
shall have a value of zero. Accordingly, the value of the USP Assets to be
credited to USP's capital account in THVG2 shall be $2,627,092 (less the payment
made to USP pursuant to Section 2.2(a)(ii) above). In consideration for USP's
execution of the THVG2 Management Agreement, Baylor agrees to pay to USP, at the
Closing, cash in the amount of $1,928,571.
2.3 ASSUMPTION OF CERTAIN OTHER LIABILITIES. THVG2 shall assume and shall
perform and discharge the liabilities and obligations (a) that were assumed by
USP pursuant to Section l(e) of the HealthFirst Purchase Agreement, as and to
the extent any such liability or obligation arises due to acts or omissions
occurring on or after the Effective Date, and (b) that arise on or after the
Effective Date under Sections l(c), l(d) (ii) (subject to Section 2.2(b) above),
2 (penultimate sentence only), 8(a)(iii) and (iv) (but only to the extent THVG2
is the indemnified party thereunder), 8(b) (subject to Section 8.8 hereof),
8(d), 8(e), 8(f) (if THVG2 exercises the HealthFirst Option included therein),
8(f)(iv) (if THVG2 does not exercise the HealthFirst Option included therein,
but only as to management fees accrued on and after the Effective Date of this
Agreement), 8(g) (if THVG2 exercises the HealthFirst Option included therein),
8(i)(iii), 8(k), 8(1) and 10 through 16, 18 and 19 of the HealthFirst Purchase
Agreement and Sections 1 and 2 through 5 (if THVG2 exercises the HealthFirst
Option included in Section 2) of the Option and Amendment Agreement included
therein, including without limitation all payment obligations arising under
Section 8(e) of the HealthFirst Purchase Agreement or resulting from any
exercise of a HealthFirst Option. In addition, THVG2 shall be subject to all
other relevant provisions of the HealthFirst Purchase Agreement in connection
with any
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exercise of THVG2's rights and benefits thereunder. Except for the liabilities
and obligations described in this Section 2.3, THVG2 will not assume or be
liable for any other obligation or liability of USP, HealthFirst or any other
party to the HealthFirst Purchase Agreement due to any act or omission occurring
prior to the Effective Date, including without limitation: (i) any trade payable
that is more than 60 days past due; (ii) any claim or contingent liability
arising from the operations of DeSoto or Metroplex, or based upon any acts or
omissions of USP or its Affiliates, employees, agents or independent
contractors, or any other event that has occurred prior to the Effective Date,
including without limitation any malpractice claim, EEOC claim, workers'
compensation claim or other claim by any present or former employee; (iii)
liabilities or obligations of DeSoto or Metroplex arising under the Medicare or
Medicaid program or any other third party payor program; (iv) the costs and
expenses associated with this Agreement that, as provided in Section 10.4, are
to be borne by USP; (v) any federal, state or local income taxes or liabilities;
or (vi) any obligation, liability or claim as to which USP would have an
indemnity obligation under Section 13.1 hereof.
3. CAPITAL CONTRIBUTION OBLIGATIONS. In order to provide the funds needed
by THVG2 to make the payments called for by Section 2 hereof (but subject to
Section 4 hereof), USP and Baylor agree as follows:
(a) In consideration for the issuance to Baylor of a 49% membership
interest in THVG2, Baylor agrees to contribute to THVG2 on the Closing Date the
amount that THVG2 is required to pay to USP pursuant to Section 2.2(a) (ii).
(b) USP and Baylor each agrees to contribute to THVG2 its pro rata share
(based upon their respective ownership interests in THVG2 at the time such
payment is due) of the amount needed by THVG2 to make any payment it is required
to make under the HealthFirst Purchase Agreement pursuant to Section 2.2(b)
hereof or Section 8(e) of the HealthFirst Purchase Agreement; provided, however,
that the parties acknowledge that Baylor's obligations under this Section 3(b)
and Section 3(c) are subject to its rights under Sections 4(b) and (d).
(c) Subject to Sections 4(b) and (d), USP and Baylor each agrees to
contribute to THVG2 its pro rata share (based upon their respective ownership
interests in THVG2 as of the date any such payment IS due) of the amount needed
by THVG2 to make any payment that results from an exercise of a HealthFirst
Option by THVG2.
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4. ANNUAL RECONCILIATION 0F CAPITAL CONTRIBUTION OBLIGATIONS. Anything
herein or in the THVG1 Regulations or the THVG2 Regulations to the contrary
notwithstanding, the parties agree that, for their convenience, USP and Baylor
will prepare an annual reconciliation of their respective payment and capital
contribution obligations described in Sections 1, 2 and 3 hereof, upon the
following terms:
(a) On the Closing Date and on each date that a payment called for by
subsection (i), (ii) or (iii) of Section 1.2(b) hereof is to be made, and on
each anniversary of the date the payment called for by Section 1.2(b) (iii)
hereof is made (each, a "Reconciliation Date"), USP and Baylor shall
reconcile all payment and capital contributions that they are required to have
made pursuant to this Agreement since the prior Reconciliation Date (or, with
respect to the first Reconciliation Date, that they are required to make on the
Closing Date).
(b) THVG2 shall immediately give Baylor and USP notice if a payment
obligation of THVG2 referred to in Section 2.2(b) or 2.3(b) arises. Unless
Baylor elects otherwise within 10 days of such notice, USP shall fund 100% of
the payment obligations of THVG2 referred to in Sections 2.2(b) and 2.3(b) that
are due between Reconciliation Dates, which payments shall be treated for
accounting purposes as capital contributions made by USP. In such event, the
Ownership Interest of Baylor in THVG2 shall be diluted as of the date of each
such payment by USP and until the next Reconciliation Date for purposes of
allocations of profits and losses of THVG2 during such period (but not for
purposes of capital transactions, including additional capital contribution
obligations), all as provided in the THVG2 Regulations.
(c) The following calculations shall be made on the Reconciliation Dates:
(i) On the Closing Date, the amount due to Baylor pursuant to
Section 1.2(a) shall be reduced by the amounts due from Baylor to USP
pursuant to Section 2.2(c) and from Baylor to THVG2 pursuant to Section
3(a), resulting in an amount due to Baylor from USP equal to $3,287,234
(the "Closing Date Baylor Payment") Such payment shall satisfy the parties
respective obligations under Sections 1.2(a), 2.2(a) (ii) , 2.2(c) and
3(a) hereof.
(ii) On each subsequent Reconciliation Date, USP and Baylor shall
prepare an accounting (a "Reconciliation Statement") showing all of the
payment
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obligations of USP and Baylor to and from each other, THVGl and THVG2
pursuant to this Agreement. Each Reconciliation Statement shall show the
amount that is necessary for USP to pay Baylor or for Baylor to pay USP
(as the case may be) in order to fully satisfy all such payment
obligations. For purposes of this Section 4(c), the payment due from USP
to Baylor or from Baylor to USP is hereinafter referred to as the
"Reconciliation Payment," the party that owes the Reconciliation Payment
is referred to the "Shortfall Party" and the party that is to receive the
Reconciliation Payment is referred to as the "Compensated Party." If
Baylor is the Compensated Party, USP will cause the Reconciliation
Statement to include a statement of the fair market value of USP Common
Stock as of the date of the Reconciliation Statement. A sample
Reconciliation Statement is attached hereto as SCHEDULE 4.
(iii) Any dispute between USP and Baylor relating to a
Reconciliation Statement shall be submitted to and resolved by THVG1's
independent accounting firm, acting as an expert and not as an arbitrator.
(d) The following shall apply to the Closing Date Baylor Payment and to
each Reconciliation Payment:
(i) USP shall pay the Closing Date Baylor Payment by the issuance and
delivery to Baylor of a USP Parent Convertible Subordinated Promissory Note
("Convertible Note") in the amount of the Closing Date Baylor Payment, which
Convertible Note shall be convertible into USP Common Stock at an initial
conversion price of $3.50 per share and will be substantially in the form of
EXHIBIT C attached hereto.
(ii) The Shortfall Party may elect, by giving written notice to the
Compensated Party within five business days after a Reconciliation Statement is
finalized, to make the Reconciliation Payment by suffering a dilution in its
ownership interest in either THVGl or THVG2 (as elected by the Shortfall Party)
in accordance with the procedures for such dilution set forth in the THVGl
Regulations or the THVG2 Regulations (as the case may be). In such event, the
Compensated Party shall be deemed to have made a capital contribution on the
Reconciliation Date to THVGl or THVG2 (as the case may be) in an amount equal to
the Reconciliation Payment.
(iii) If the Shortfall Party does not make the election described in
subsection (ii) above, the Reconciliation Payment shall be paid promptly by the
Shortfall
11
Party to the Compensated Party; provided, however, that: (A) in the event that
Baylor is the Compensated Party with respect to a Reconciliation Statement
relating to the First Year, the Second Year or the Third Year, and if USP does
not elect to make the Reconciliation Payment by suffering dilution pursuant to
subsection (ii) above, Baylor shall have the right to elect, by giving written
notice to USP within five business days after the date that such Reconciliation
Statement is finalized, to receive all or any portion of the Reconciliation
Payment in the form of a USP Parent Convertible Note substantially in the form
of EXHIBIT C attached hereto, which Convertible Note shall be convertible into
USP Common Stock at an initial conversion price of $3.50 per share (subject to
adjustment as provided in the anti-dilution provisions of the Convertible Note
as if such Convertible Note had been issued on the Closing Date) with respect to
any Convertible Note issued on the Reconciliation Date relating to the First
Year and, for the Second and Third Years, at a conversion price equal to greater
of $3.50 per share (subject to such adjustment) or the fair market value of the
USP Common Stock as of the date such Convertible Note is issued (as determined
in good faith by the Board of Directors of USP Parent); (B) in the event that
Baylor is the Shortfall Party, Baylor shall have the further option (exercisable
by giving written notice of its election under this subsection (B) on the date
that the Reconciliation Payment is to be paid by Baylor) to pay the
Reconciliation Payment by reducing the outstanding principal amount of any
Convertible Note of USP Parent then held by Baylor; and (C) if Baylor is the
Shortfall Party, to the extent the Reconciliation Payment is created by Baylor's
election under Section 4(b) not to make a capital contribution to THVG2 that was
otherwise required in connection with an exercise of a HealthFirst Option or the
purchase by THVG2 of additional partnership interests in any partnership as to
which THVG2 (or any of its Subsidiaries) is then the general partner, then
Baylor shall be entitled to pay all or a portion of the Reconciliation Payment
by causing THVG2 to distribute to Baylor and USP (in accordance with their
respective Ownership Interests in THVG2 as of the prior Reconciliation Date) an
appropriate portion of such additional partnership interests that were so
acquired (as designated by USP) and then transferring the partnership interests
so acquired by Baylor through such distribution to USP, with the additional
partnership interests so transferred valued at the purchase price paid by THVG2
therefor; provided, further, that subsection (C) shall not apply if any such
transfers of partnership interests by THVG2 would (in the reasonable opinion of
USP) prevent USP from consolidating for financial accounting purposes with the
affected partnerships. In the event any such partnership interests are
transferred to USP pursuant to subsection (C), USP shall be entitled to hold,
vote, sell and otherwise deal with such additional partnership interests in its
12
sole discretion notwithstanding any contrary provisions set forth in any other
agreement or in the THVG2 Regulations (but, in any event, subject to any
restrictions set forth in the partnership agreement applicable to such
partnership interests).
An example of the potential application of subsection (C) above is as
follows*.
Assume that:
First Year purchase of Metroplex LP interests: $1,500,000**
First Year HealthFirst Option exercise price: $1,500,000**
First Year HealthFirst earn-outs: $1,200,000**
First Year Baylor earn-out owed by USP: $l,000,000
---------------------------
* For simplicity of presentation, this example assumes that the Ownership
Percentages in THVG2 are 50/50 rather than 51/49. ** 100% funded by USP pursuant
to Section 4(b).
Then:
Reconciliation Payment owed by Baylor (50% of [$1,500,000 + $1,500,000 +
$1,200,000] minus $1,000,000) = $1,100,000
Baylor can elect to require THVG2 to distribute all of the $l,500,000 of
the additional Metroplex limited partnership interests acquired during the year
and satisfy $750,000 of its Reconciliation Payment by transferring its share of
those limited partner interests to asp. The remaining $350,000 can be paid
either in cash, by dilution in THVG2 or THVG1 or by reducing the Convertible
Note.
(e) Notwithstanding any provisions of this Section 4 to the contrary, for
accounting and tax purposes, once a Reconciliation Payment is made or satisfied
in accordance with this Section 4: (i)USP and Baylor shall be deemed to have
made all payments to each other and capital contributions to THVG1 and THVG2
that were included in the Reconciliation Statement (except to the extent the
Shortfall Party has elected to suffer dilution pursuant to Section 4(d) (iii)
above); and (ii) THVG1 and THVG2 shall be deemed to have made the payments to
Baylor and USP required by this Agreement that were included in such
Reconciliation Statement.
13
5. SALES TAX AND FILING FEES. THVGl and THVG2 (as the case may be) shall
pay any sales tax, filing fee or other similar tax or fee associated the sale of
the Baylor Center Assets to THVG1, the transfer of the USP Assets to THVG2 or
the assumption of liabilities pursuant to Sections 1.3, 2.2(b) and 2.3. It is
not anticipated that the transactions contemplated by this Agreement will result
in the imposition of any such tax or fee.
6. CLOSING AND EFFECTIVE DATE. The "Closing" referred to herein will take
place at the offices of Baylor at 2:00 p.m., local time, on June 1, 1999, or on
the fifth business day following the satisfaction of the conditions to the
Closing described in Sections 11 and 12 hereof, whichever is later, or at such
other place or at such other date and time as the parties hereto shall agree.
Such time and date are referred to herein as the "Closing Date. " Regardless of
when the Closing occurs, it shall be effective as of 12:01 a.m. June 1, 1999
(the "Effective Date"). The parties hereto agree to acknowledge and use said
Effective Date for all purposes, including for accounting and federal and state
tax reporting purposes. Except as provided in Section 14 hereof, failure to
consummate the Closing on the date and time and at the place selected pursuant
to this Section 6 shall not result in the termination of this Agreement and
shall not relieve any party to this Agreement of any obligation hereunder.
7. [INTENTIONALLY OMITTED.]
8. REPRESENTATIONS AND WARRANTIES 0F USP. USP represents and warrants to
Baylor as follows:
8.1. EXISTENCE. USP and USP Parent are corporations that are duly
organized, validly existing and in good standing under the laws of the States of
Texas and Delaware, respectively. Each of Desoto, Metroplex, Irving and Fort
Worth is a limited partnership that is duly organized and validly existing under
the laws of the State of Texas. DSP is a general partnership that is duly
organized and validly existing under the laws of the State of Texas. USP is not
a party to any partnership or joint venture arrangement that owns a USP Asset.
USP has delivered true and complete copies of the Limited Partnership Agreements
of DeSoto and Metroplex to Baylor or its counsel.
8.2. AUTHORITY AND COMPLIANCE WITH INSTRUMENTS. This Agreement has been
duly and validly approved by all necessary actions of the boards of directors
and the shareholders
14
of USP and USP Parent and constitutes the valid and binding obligation of USP
and USP Parent. No provisions exist in any agreement to which USP or USP Parent
or any of their Restricted Affiliates (including without limitation the
Partnerships) is a party or by which any of their assets are bound which would
be violated by the execution, delivery or consummation of this Agreement or the
transactions contemplated hereby.
8.3. TITLE TO THE USP ASSETS.
(a) USP has good title to all of the USP Assets, subject to no mortgage,
pledge, lien, security interest, encumbrance or other charge other than (i)
restrictions on the Transferred Assets set forth in the respective Partnership
Agreements and HealthFirst Management Agreements, (ii) restrictions imposed by
applicable federal and state securities laws, (iii) the terms of the HealthFirst
Purchase Agreement, (iv) liens for taxes not yet due or that are being contested
in good faith, (v) liens pursuant to agreements listed in the Schedules to this
Agreement and (vi) other liens, the existence of which, in the aggregate, do not
have a material adverse effect on DeSoto, Metroplex or the HealthFirst
Management Agreements. The USP Assets constitute all interests owned by USP in
the Partnerships, the Surgery Centers and the HealthFirst Management Agreements.
(b) All outstanding partnership interests in DeSoto and Metroplex are
currently held as set forth in Schedule 7 to the HealthFirst Purchase Agreement.
USP is not subject to any options or other rights to purchase or sell any
partnership interest in Metroplex or DeSoto (other than as set forth in Section
8(e) of the HealthFirst Purchase Agreement), and neither Metroplex nor DeSoto
has any binding obligation to issue or sell any partnership interest. USP is
currently the sole general partner of both DeSoto and Metroplex, and the
partnership interests in DeSoto and Metroplex owned by USP are duly authorized
and validly issued Partnership Interests. USP has not breached and, to the
knowledge of USP, no other partner of either DeSoto or Metroplex has breached
any provision of, and there are no facts or circumstances which would reasonably
indicate that USP or (to the knowledge of USP) any other partner of DeSoto or
Metroplex will or may be in default or breach under, the respective Limited
Partnership Agreements of DeSoto and Metroplex, which breach or default would
have a material adverse effect on USP, Metroplex or DeSoto.
(c) DeSoto and Metroplex each has good title to its respective assets
shown on its balance sheet included in
15
SCHEDULE 8.4 (including title to leasehold interests as to any such assets that
are leased by DeSoto or Metroplex), subject to no mortgage, pledge, lien,
security, encumbrance or other charge or lien other than (i) the interests of
lessors in leased assets, (ii) liens for taxes not yet due or that are being
contested in good faith, (iii) liens pursuant to the agreements listed on
Schedules to this Agreement and (iv) other liens, the existence of which, in the
aggregate, do not have a material adverse effect on DeSoto or Metroplex. The
assets owned or leased by DeSoto and Metroplex, respectively, constitute all of
the assets currently in existence that are being used in their respective
businesses, other than assets held by USP that it uses to provide services under
the respective HealthFirst Management Agreements with DeSoto and Metroplex or to
provide other services to DeSoto and/or Metroplex (which services USP will
continue to provide pursuant to the THVG2 Management Agreement).
8.4 FINANCIAL STATEMENTS. USP has delivered to Baylor copies of the
following financial statements of DeSoto and Metroplex (copies of which are
attached hereto as SCHEDULE 8.4): (a)unaudited balance sheet as of February 28,
1999 (the "Balance Sheet Date"); (b) unaudited statement of operations for the
two month period ended on the Balance Sheet Date; and (c) unaudited balance
sheet as of December 31, 1998. Such financial statements have been prepared in
accordance with generally accepted accounting principles consistently applied
(except such financial statements are not audited and do not include footnotes
and the interim statements are subject to normal year end adjustments) and
present fairly the financial condition of DeSoto and Metroplex, respectively, as
of the Balance Sheet Date. Except for (i) the liabilities reflected in the above
referenced balance sheets, (ii) liabilities created by the agreements described
in SCHEDULE 8.6 attached hereto and (iii) other obligations incurred in the
ordinary course of business since the Balance Sheet Date, neither DeSoto nor
Metroplex is subject to any liability of any nature, whether accrued, absolute,
contingent or otherwise, including without limitation any liability or
obligation of the types described in Sections 2.3(i)-(iii) and (v). Each of
DeSoto and Metroplex is and as of the Closing Date will be current in all
payment obligations to which it is subject, other than trade payables that are
not more than 60 days past due.
8.5 LICENSING 0F SURGERY CENTERS. The Surgery Centers owned and operated
by DeSoto and Metroplex, respectively, are licensed by the Texas Department of
Health Services ("TDH") as freestanding facilities. Subject to obtaining the
approval of TDH with respect to the change of ownership of the Transferred
Partnership Interests contemplated by this Agreement and the other approvals
listed in SCHEDULE 8.16, USP is not aware of any
16
reason that DeSoto and Metroplex will not be able to continue to operate such
Surgery Centers upon transfer of the Transferred Partnership Interests to THVG2
as contemplated hereby.
8.6 CONTRACTS. USP has delivered to Baylor an accurate list (attached
hereto as SCHEDULE 8.6) of all material contracts, leases and instruments to
which DeSoto, Metroplex or USP or any of its Affiliates is a party and which
relate to or affect DeSoto, Metroplex or the HealthFirst Management Agreements,
or by which any assets of DeSoto or Metroplex are bound, including without
limitation the following: (a) all real estate leases, equipment leases and
rental arrangements; (b) all executory purchase agreements relating to the
purchase of equipment; (c) all agreements with any physician or other health
care provider who either provides services or refers patients to either DeSoto
or Metroplex (other than the Limited Partnership Agreements of DeSoto and
Metroplex); (d) all employment and consulting agreements; (e) all agreements
with employers, health maintenance organizations, insurance companies, preferred
provider organizations and other managed care entities whereunder DeSoto or
Metroplex provides surgery center services; and (f) contracts to which USP is a
party that are material to the performance of USP's obligations under the
HealthFirst Management Agreements or by which any assets of USP material to such
performance are bound; provided, however, that SCHEDULE 8.6 need not include
contracts that do not involve a non-cancellable financial commitment of more
than $25,000 and are cancellable without cost or penalty no later than 12 months
after the Closing Date. No Partnership is (i) obligated to take any action that
would violate the THVG2 Regulations or (ii) obligated to not take any action
that is required by the THVG2 Regulations. USP has delivered or made available
to Baylor or its counsel true and complete copies of the documents described in
SCHEDULE 8.6. All of the agreements, contracts, leases and instruments listed in
SCHEDULE 8.6 are valid and binding, and neither DeSoto, Metroplex, USP nor any
of USP's Affiliates has breached and, to the knowledge of USP, no other party
thereto has breached any provision of, and there are no facts or circumstances
known to USP which would reasonably indicate that DeSoto, Metroplex, USP or any
of USP's Affiliates will or may be in such breach under, any such agreement,
contract, lease or instrument, which invalidity or breach would have a material
adverse effect on DeSoto, Metroplex or USP (with respect to USP's operation of
the HealthFirst Management Agreements). Each of the HealthFirst Management
Agreements is in full force and effect and represents the binding obligations of
the parties thereto. USP is the sole manager or similar party under each of the
HealthFirst Management Agreements. Except as described in SCHEDULE 8.6, neither
USP, any USP Affiliate nor any Partnership is in breach of the terms
17
of, and there are no facts or circumstances known to USP which would reasonably
indicate that USP, any USP Affiliate or any Partnership will or may be in breach
of its obligations under, any HealthFirst Management Agreement.
8.7 LITIGATION AND PROCEEDINGS. Except for malpractice claims arising
before the Effective Date covered by insurance policies, there are no legal
claims, actions, suits, arbitrations or other legal, administrative or
governmental proceedings pending or, to USP's knowledge, threatened against
DeSoto or Metroplex or their respective properties, assets or business, and to
USP's knowledge no facts exist which might form the basis for any such claim,
action, suit or other proceeding, other than claims, actions, suits or other
proceedings that, in the aggregate, will not have a material adverse effect on
DeSoto or Metroplex. The operations of DeSoto and Metroplex have not caused
DeSoto or Metroplex to be in default with respect to any judgment, order or
decree of any court, governmental agency or instrumentality. Neither USP nor any
of its Affiliates is a party to any litigation that would materially affect the
HealthFirst Management Agreements.
8.8 COMPLIANCE WITH LAW AND INSTRUMENTS. The business and operations of
DeSoto and Metroplex each have been and are being conducted in material
compliance with all applicable laws, rules, regulations and licensing
requirements of all authorities, the violation of which, individually or in the
aggregate, would materially affect in any way the business of DeSoto or
Metroplex. USP is unaware of any facts which might form the basis for a claim
that any such violation exists. USP is in compliance in all material respects
with all of its material obligations that have arisen to date under the
HealthFirst Purchase Agreement. The business and operations of USP in performing
its obligations under the HealthFirst Management Agreements have been and are
being conducted in material compliance with all applicable laws, rules,
regulations and licensing requirements of all authorities, the violation of
which, individually or in the aggregate, would materially affect USP's ability
to receive the benefits of the HealthFirst Management Agreements in any way.
DeSoto and Metroplex each meets in all material respects the conditions for
participation in the Medicare and Medicaid programs. Neither the U.S. Department
of Health and Human Services nor any state agency has conducted, or has given
USP, DeSoto or Metroplex any notice that it intends to conduct, any audit or
other review of the participation of DeSoto or Metroplex in the Medicare and
Medicaid programs (other than annual surveys, reviews and audits), and no such
audit or review would result in any material liability by DeSoto or Metroplex
for any reimbursement, penalty or interest
18
with respect to payments received by DeSoto or Metroplex thereunder.
8.9 ACCOUNTS RECEIVABLE. All of the accounts receivable of DeSoto and
Metroplex are and will be valid and enforceable claims and are not subject to
any defenses, offsets, claims or counterclaims. Notwithstanding the foregoing,
USP expressly makes no warranty or guaranty as to the collectibility of such
accounts receivable.
8.10 ABSENCE OF SPECIFIED CHANGES. Except as provided on SCHEDULE 8.10 and
except for the transactions provided for herein, since the Balance Sheet Date
there has not been (a) any transaction by DeSoto or Metroplex relating to or
affecting DeSoto or Metroplex in any material respect, except in the ordinary
course of business as conducted in 1999; (b) any liability incurred, except
liabilities incurred in the ordinary course of business; (c) any capital
expenditure exceeding $25,000; (d) any cancellation of any debt or claim or
waiver of any right of substantial value (except as provided for in this
Agreement); (e) any destruction, damage to or loss of any material asset of
DeSoto or Metroplex, whether or not covered by insurance; (f) any new mortgage,
pledge or other encumbrance of any asset of DeSoto or Metroplex; (g) any
agreement by DeSoto, Metroplex or USP to do any of the things described in this
Section 8.10; or (h) any material adverse change in the business or prospects of
DeSoto or Metroplex.
8.11 LABOR MATTERS. Neither DeSoto, Metroplex nor USP is a party to any
labor union agreement, and the relationship of USP with its employees is
adequate for the current needs of DeSoto and Metroplex. There are no threats of
strike or work stoppages by any employees of DeSoto, Metroplex or USP.
8.12 INSURANCE POLICIES. USP has policies of insurance in effect for
DeSoto and Metroplex, and each of Irving and DSP has policies of insurance in
effect, in such amounts and insuring against such losses and risks as are normal
for their business, including without limitation medical malpractice insurance
coverage.
8.13 NO BROKERS OR FINDERS. As a result of any act or failure to act by
USP, USP Parent or any of their agents, no person or entity has, or as a result
of the transactions contemplated hereby will have, any right, interest or valid
claim against or upon THVG1, THVG2 or Baylor or any of its Affiliates for any
commission, fee or other compensation as a broker, finder or any similar
capacity.
19
8.14 ISSUANCE 0F ADDITIONAL PARTNERSHIP INTERESTS. Since the Closing Date
of the HealthFirst Purchase Agreement, (a) there has been no amendment of any
HealthFirst Management Agreement, the partnership agreement of either DeSoto or
Metroplex or, to USP's knowledge, the partnership agreement of Irving, Fort
Worth or DSP, and (b) neither DeSoto nor Metroplex has issued any general,
limited or other partnership interest.
8.15 CORPORATE DOCUMENTS. USP has provided Baylor with true and complete
copies of USP Parent's Stockholders Agreement and Registration Rights Agreements
referred to in Section 11.10 and of USP Parent's Certificate of Incorporation.
8.16 CONSENTS AND APPROVALS. Attached hereto as SCHEDULE 8.16 is a list of
the consents and approvals that will be required to satisfy the conditions set
forth in Sections 11.4 (with respect to THVG2) and 11.6.
8.17 NONCOMPETITION COVENANTS. Neither DeSoto nor Metroplex is subject to
any noncompetition covenant or other similar agreement restricting its ability
to engage in competitive businesses. Following the Closing, THVG2 and its
Affiliates will not be subject to any such noncompetition covenant or
restrictive agreement by virtue of THVG2's acquisition of the USP Assets.
8.18 THE REAL PROPERTY
(a) USP has not received written notice of either a violation of any
applicable ordinance or other law, order, regulation or requirement, or any
condemnation, lien, assessment or the like, relating to any part of the real
property used by DeSoto and/or Metroplex (collectively, the "HealthFirst Real
Property") or the operation thereof and, to the best knowledge of USP, there is
not presently contemplated or proposed any condemnation or similar action or
zoning action or proceeding with respect to any HealthFirst Real Property or the
operation thereof;
(b) To the best knowledge of USP, the HealthFirst Real Property and its
operation are in compliance with all applicable zoning ordinances (including
without limitation parking requirements) and building codes, and the
consummation of the transactions contemplated herein will not result in the
termination of any current zoning variance;
20
(c) The HealthFirst Real Property and all buildings, improvements and
fixtures thereon or therein, and all parts thereof and appurtenances thereto,
including without limitation the plumbing, electrical, mechanical, heating,
ventilation and air conditioning systems, are in good operating condition and in
a reasonable state of maintenance and repair, except for normal wear and tear;
(d) To the best knowledge of USP, no person or entity other than DeSoto or
Metroplex has any option or right of first refusal to purchase, lease or rent
any HealthFirst Real Property;
(e) None of the HealthFirst Real Property is located in a state or
federally designated flood hazard area; and
(f) The Surgery Centers owned by DeSoto and Metroplex have adequate
parking available to satisfy their respective current needs.
8.19 ENVIRONMENTAL MATTERS.
(a) Each of DeSoto and Metroplex is in compliance with all Environmental
Laws (as defined below) in all material respects, which compliance includes,
without limitation, the possession by DeSoto and Metroplex of all permits and
other governmental authorizations required under applicable Environmental Laws
to operate their respective Surgery Centers as currently operated, and DeSoto
and Metroplex each is in compliance in all material respects with the terms and
conditions thereof;
(b) No Hazardous Substances (as defined below) have been generated or
stored on, at or adjacent to any HealthFirst Real Property by USP, DeSoto or
Metroplex, except in compliance with applicable Environmental Laws;
(c) No Hazardous Substances have been disposed of or released on, from or
adjacent to any Real Property by USP, DeSoto or Metroplex, except in compliance
with applicable Environmental Laws;
(d) USP has not received any written communication, whether from a
governmental authority, citizen's group, employee or otherwise, that alleges
that any HealthFirst Real Property is not in material compliance with
Environmental Laws, and there is no Environmental Claim (as defined below)
21
pending or, to the best knowledge of USP, threatened against any party hereto;
and
(e) To the best knowledge of USP, no HealthFirst Real Property contains
asbestos in any form.
"Environmental Claim" means any claim, action, cause of action,
investigation or notice by any person or entity alleging potential liability
(including without limitation potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries or penalties) arising out of, based on or resulting
from (A) the presence, or release on or from any Real Property or any Surgery
Center, of Hazardous Substances or (B) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means the federal, state, regional, county or local
environmental, health or safety laws, regulations, ordinances, rules and
regulations and common law in effect on the date hereof and the Closing Date
relating to the use, refinement, handling, treatment, removal, storage,
production, manufacture, transportation or disposal, emissions, discharges,
releases or threatened releases of Hazardous Substances, or otherwise relating
to protection of human health or the environment (including without limitation
ambient air, surface water, ground water, land surface or subsurface strata), as
the same may be amended or modified to the date hereof and the Closing Date.
"Hazardous Substances" means any toxic or hazardous waste, pollutants or
substances, including without limitation asbestos containing materials or
substances, any substance defined or listed as a "hazardous substance," "toxic
substance," "toxic pollutant" or similarly identified substances or mixture, in
or pursuant to any Environmental Law and medical or infectious wastes.
8.20 CAPITAL STOCK. The authorized capital stock of USP Parent consists
of: (i) 30,000,000 shares of USP Common Stock, of which 21,981,429 shares are
outstanding on the date hereof; (ii) 40,000,000 shares of Common Stock, par
value $0.01 per share (the "Common Stock"), none of which are outstanding;
(iii) 31,200 shares of Series A Redeemable Preferred Stock, par value $0.01 per
share, all of which are outstanding; and (iv) 2,716 shares of Series B
Convertible Preferred Stock, par value $0.01 per share, all of which are
outstanding. All of the outstanding shares of USP Common Stock, Series A
Redeemable
22
Preferred Stock and Series B Convertible Preferred Stock have been validly
issued and are fully paid and nonassessable. As of the date hereof, Buyer had
reserved 3,250,000 shares of Common Stock for issuance pursuant to its Stock
Option and Restricted Stock Purchase Plan, 2,608,300 of which are subject to
outstanding options granted by Buyer pursuant to said Plan. In addition,
pursuant to that certain Securities Purchase Agreement, dated as of October 26,
1998, among Buyer and certain of its current stockholders, Buyer has issued and
sold, or is obligated to issue and sell, an aggregate of $20,120,000 of Buyer's
7% Senior Subordinated Notes. Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VII, L.P.
currently is the record holder of shares of USP Common Stock.
9. REPRESENTATIONS AND WARRANTIES OF BAYLOR. Baylor represents and
warrants to USP as follows:
9.1 EXISTENCE. Baylor is a non-profit corporation that is duly organized,
validly existing and in good standing under the laws of the State of Texas.
Baylor is not a party to any partnership or joint venture arrangement that in
any way affects or relates to any Baylor Center, other than partnerships that
are 100% owned by Baylor and its Affiliates.
9.2 AUTHORITY AND COMPLIANCE WITH INSTRUMENTS. This Agreement has been
duly and validly approved by all necessary action of the board of directors,
members and other governing bodies of Baylor and constitutes the valid and
binding obligation of Baylor. No provisions exist in any agreement to which
Baylor or any of its Restricted Affiliates is a party or by which any of the
Baylor Center Assets is bound which would be violated by the execution, delivery
or consummation of this Agreement or the transactions contemplated hereby.
9.3 TITLE TO THE BAYLOR CENTER ASSETS. Baylor has good title to the Baylor
Center Assets (including title to leasehold interests as to any such assets that
are leased by Baylor), subject to no mortgage, pledge, lien, security interest,
encumbrance or other charge other than (a) the interests of lessors in leased
assets, (b) liens for taxes not yet due or that are being contested in good
faith, (c) liens pursuant to agreements listed on the Schedules to this
Agreement and (d) other liens, the existence of which, in the aggregate, do not
have a material adverse effect on any Baylor Center. Upon consummation of the
transactions contemplated by this Agreement, THVG1 will receive good title to
the Baylor Center Assets. The Baylor Center Assets (including leased assets) and
the Excluded
23
Assets constitute all of the properties and assets used by Baylor in connection
with the Baylor Centers.
9.4 FINANCIAL STATEMENTS. Baylor has delivered to USP COPIES of the
following financial statements of each of the Baylor Centers (copies of which
are attached hereto as SCHEDULE 9.4): (a) unaudited balance sheet as of March
31, 1999; (b) unaudited statement of operations for the three month period ended
on March 31, 1999; and (c) unaudited balance sheet as of December 31, 1998 and
statement of operations for the 12 month period then ended. Such financial
statements have been prepared in accordance with generally accepted accounting
principles consistently applied (except such financial statements are not
audited and do not include footnotes and the interim statements are subject to
normal year end adjustments) and present fairly the financial condition of the
Baylor Centers as of the Balance Sheet Date. Except for (i) the liabilities
reflected in the above referenced balance sheets, (ii) liabilities created by
the agreements described in SCHEDULE 9.6 attached hereto and (iii) other
obligations incurred in the ordinary course of business since March 31, 1999,
neither Baylor Center is subject to any liability of any nature, whether
accrued, absolute, contingent or otherwise, including without limitation any
liability or obligation of the types described in Sections 1.3(a), (c), (d) and
(j). Each Baylor Center is and as of the Closing Date will be current in all
payment obligations to which it is subject, other than trade payables that are
not more than 60 days past due.
9.5 LICENSING OF BAYLOR CENTERS. Each Baylor Center is licensed by the TDH
as a freestanding facility, which license is independent of any license for any
hospital or other facility affiliated with Baylor. Subject to obtaining the
approval of the TDH with respect to the change of ownership of the Baylor
Centers contemplated by this Agreement and the other approvals listed in
Schedule 9.15, Baylor is not aware of any reason that the Baylor Limited
Partnership will not be able to continue to operate the Baylor Centers upon
transfer of the Baylor Center Assets to THVG1, and by THVG1 to the Baylor
Limited Partnership, as contemplated hereby.
9.6. CONTRACTS. Baylor has delivered to USP an accurate list (attached
hereto as SCHEDULE 9.6) of all material contracts, leases (excluding the current
real property leases relating to the facilities in which the Baylor Centers are
located and managed care contracts or arrangements covering services provided by
a Baylor Center and one or more facilities other than the Baylor Centers, as to
which Baylor has provided to
24
USP an accurate list of the payors and the payment rates for outpatient surgical
services applicable to the Baylor Centers) and instruments to which Baylor is a
party and which relate to or affect either of the Baylor Centers or by which any
Baylor Center Assets are bound, including without limitation the following: (a)
all equipment leases and rental arrangements; (b) all executory purchase
agreements relating to the purchase of equipment; (c) all agreements with any
physician or other health care provider who either provides services or refers
patients to such Baylor Center; (d) all employment and consulting agreements
(each of which is terminable by Baylor and will be terminated at or prior to the
Closing); and (e) all agreements with employers, health maintenance
organizations, insurance companies, preferred provider organizations and other
managed care entities whereunder a Baylor Center (and only one or both Baylor
Centers) provides surgery center services; provided, however, that SCHEDULE 9.6
need not include contracts that do not involve a non-cancellable financial
commitment of more than $25,000 and are cancellable without cost or penalty no
later than 12 months after the Closing Date. There are no managed care contracts
that relate only to services provided by the Baylor Centers. Baylor has
delivered to USP or its counsel true and complete copies of the documents
described in SCHEDULE 9.6. All of the agreements, contracts, leases and
instruments listed in SCHEDULE 9.6 are valid and binding, and neither Baylor nor
any of its Affiliates has breached and, to the knowledge of Baylor, no other
party thereto has breached any provision of, and there are no facts or
circumstances known to Baylor which would reasonably indicate that Baylor or any
of its Affiliates will or may be in such breach under, any such agreement,
contract, lease or instrument, which invalidity or breach would have a material
adverse effect on any Baylor Center.
9.7 LITIGATION AND PROCEEDINGS. Except for malpractice claims arising
before the Effective Date covered by self-insurance programs of Baylor and its
Affiliates or insurance policies (the responsibility for which shall be retained
by Baylor) and as described in SCHEDULE 9.7, there are no legal claims, actions,
suits, arbitrations or other legal, administrative or governmental proceedings
pending or, to Baylor's knowledge, threatened against Baylor relating to or
affecting either of the Baylor Centers or the Baylor Center Assets, and to
Baylor's knowledge no facts exist which might form the basis for any such claim,
action, suit or other proceeding, other than claims, actions, suits or other
proceedings that, in the aggregate, will not have a material adverse effect on
any Baylor Center. Baylor's operation of the Baylor Centers has not caused
Baylor to default with respect to any judgment, order or decree of any court,
governmental agency or instrumentality.
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9.8 COMPLIANCE WITH LAW AND INSTRUMENTS. The business and operations of
the Baylor Centers have been and are being conducted in material compliance with
all applicable laws, rules, regulations and licensing requirements of all
authorities, the violation of which, individually or in the aggregate, would
materially affect in any way the business of either of the Baylor Centers.
Baylor is unaware of any facts which might form the basis for a claim that any
such violation exists. Each Baylor Center meets in all material respects the
conditions for participation in the Medicare and Medicaid programs. Neither the
U.S. Department of Health and Human Services nor any state agency has conducted,
or has given Baylor or its Affiliates any notice that it intends to conduct, any
audit or other review of a Baylor Center's participation in the Medicare and
Medicaid programs (other than annual surveys, reviews and audits), and no such
audit or review would result in any material liability by Baylor or its
Affiliates for any reimbursement, penalty or interest with respect to payments
received by Baylor or its Affiliates thereunder.
9.9 ACCOUNTS RECEIVABLE. All of the accounts receivable of the Baylor
Centers are and will be valid and enforceable claims and are not subject to any
defenses, offsets, claims or counterclaims. Notwithstanding the foregoing,
Baylor expressly makes no warranty or guaranty as to the collectibility of such
accounts receivable.
9.10 ABSENCE OF SPECIFIED CHANGES. Except as provided on SCHEDULE 9.10 and
except for the transactions provided for herein, since March 31, 1999 there has
not been (a) any transaction by Baylor relating to or affecting any Baylor
Center in any material respect, except in the ordinary course of business as
conducted in 1999; (b) any liability incurred, except liabilities incurred in
the ordinary course of business; (c) any capital expenditure at any Baylor
Center exceeding $25,000; (d) any cancellation of any debt or claim or waiver of
any right of substantial value (except as provided for in this Agreement) by
Baylor relating to or affecting any Baylor Center; (e) any destruction, damage
to or loss of any material Baylor Center Asset, whether or not covered by
insurance; (f) any mortgage, pledge or other encumbrance of any Baylor Center
Asset; (g) any agreement by Baylor or any of its Affiliates to do any of the
things described in this Section 9.10; or (h) any material adverse change in the
business or prospects of any Baylor Center.
9.11 LABOR MATTERS. Neither Baylor nor any of its Affiliates is a party to
any labor union agreement that affects any Baylor Center, and the relationship
of Baylor and its
26
Affiliates with their employees is adequate for the current needs of the Baylor
Centers. There are no threats of strike or work stoppages by any Baylor Center
employees.
9.12 INSURANCE POLICIES. Baylor has programs of self-insurance and
policies of insurance in effect in such amounts and insuring against such losses
and risks as are normal for the business of the Baylor Centers, including
without limitation medical malpractice insurance or self-insurance coverage.
9.13 NO BROKERS OR FINDERS. As a result of any act or failure to act by
Baylor or any of its Affiliates or agents, no person or entity has, or as a
result of the transactions contemplated hereby will have, any right, interest or
valid claim against or upon THVG1, THVG2, USP or USP Parent for any commission,
fee or other compensation as a broker, finder or in any similar capacity.
9.14 INVESTMENT INTENT. THVG2 acknowledges that the Transferred
Partnership Interests have been offered and will be transferred to THVG2
pursuant to an exemption from registration under the Securities Act of 1933, as
amended (the "1933 Act"), and all applicable state securities laws. THVG2 is
acquiring the Transferred Partnership Interests for investment purposes only and
it has no present intent to distribute, resell, pledge or otherwise dispose of
any of the Transferred Partnership Interests. With respect to each Convertible
Note acquired by Baylor pursuant to Section 4(d) and any USP Common Stock
acquired by Baylor upon the conversion of any Convertible Note, Baylor
acknowledges that such Convertible Note and USP Common Stock have been offered
and will be issued to Baylor pursuant to an exemption from registration under
the 1933 Act and all applicable state securities laws, and Baylor will acquire
each such Convertible Note and all such USP Common Stock for investment purposes
only and without any intent to distribute, resell, pledge or otherwise dispose
of any such Convertible Note or USP Common Stock.
9.15 CONSENTS AND APPROVALS. Attached hereto as SCHEDULE 9.15 is a list of
the consents and approvals that will be required to satisfy the conditions set
forth in Sections 12.4 (with respect to THVG1) and 12.5.
9.16 NONCOMPETITION COVENANTS. Following the Closing, THVG1 and its
Affiliates (including the Baylor Limited Partnership) will not be subject to any
noncompetition covenant
27
or other similar agreement by virtue of the Baylor Limited Partnership's
acquisition of the Baylor Center Assets.
9.17 THE REAL PROPERTY.
(a) Baylor has not received written notice of either a violation of any
applicable ordinance or other law, order, regulation or requirement, or any
condemnation, lien, assessment or the like, relating to any part of the Baylor
Real Property or the operation thereof and, to the best knowledge of Baylor,
there is not presently contemplated or proposed any condemnation or similar
action or zoning action or proceeding with respect to any Baylor Real Property
or the operation thereof;
(b) To the best knowledge of Baylor, the Baylor Real Property and its
operation are in compliance with all applicable zoning ordinances (including
without limitation parking requirements) and building codes, and the
consummation of the transactions contemplated herein will not result in the
termination of any current zoning variance;
(c) The Baylor Real Property and all buildings, improvements and fixtures
thereon or therein, and all parts thereof and appurtenances thereto, including
without limitation the plumbing, electrical, mechanical, heating, ventilation
and air conditioning systems, are in good operating condition and in a
reasonable state of maintenance and repair, except for normal wear and tear;
(d) To the best knowledge of Baylor, no person or entity other than Baylor
and its Affiliates has any option or right of first refusal to purchase, lease
or rent any Baylor Real Property;
(e) None of the Baylor Real Property is located in a state or federally
designated flood hazard area; and
(f) The Baylor Centers have adequate parking available to satisfy their
respective current needs.
9.18 ENVIRONMENTAL MATTERS.
(a) Each of the Baylor Centers is in compliance with all Environmental
Laws in all material respects, which compliance includes, without limitation,
the possession by Baylor
28
and its Affiliates of all permits and other governmental authorizations required
under applicable Environmental Laws to operate the Baylor Centers as currently
operated, and Baylor and its Affiliates are in compliance in all material
respects with the terms and conditions thereof;
(b) No Hazardous Substances have been generated or stored on, at or
adjacent to any Baylor Real Property by Baylor or its Affiliates, except in
compliance with applicable Environmental Laws;
(c) No Hazardous Substances have been disposed of or released on, from or
adjacent to any Real Property by Baylor or its Affiliates, except in compliance
with applicable Environmental Laws;
(d) Baylor has not received any written communication, whether from a
governmental authority, citizen's group, employee or otherwise, that alleges
that any Baylor Real Property is not in material compliance with Environmental
Laws, and there is no Environmental Claim pending or, to the best knowledge of
Baylor, threatened against any party hereto; and
(e) To the best knowledge of Baylor, no Baylor Real Property contains
asbestos in any form.
10. COVENANTS.
10.1 CONTINUATION 0F BUSINESSES. From the date hereof until the Closing
Date, USP (as to DeSoto, Metroplex and the HealthFirst Management Agreements)
and Baylor (as to the Baylor Centers) each shall:
(a) conduct its business only in the usual and ordinary course as it has
previously been conducted, including without limitation its policies and
practices relating to the collection of accounts receivable and the payment of
all trade payables and other liabilities, and not introduce any new methods of
management, operations or accounting;
(b) maintain their respective assets in as good working order and
condition as at present, ordinary wear and tear excepted;
(c) perform all of their respective material obligations under all
material contracts and leases;
29
(d) keep in full force and effect present insurance policies or other
comparable insurance coverage; and
(e) use its commercially reasonable efforts to maintain and preserve its
business organizations intact, retain its present employees and maintain its
relationship with its employees, suppliers, customers, clients and others having
business relations with it.
10.2 TRANSACTIONS REQUIRING CONSENT. From the date hereof until the
Closing Date, neither USP (as to DeSoto, Metroplex and the HealthFirst
Management Agreements) nor Baylor (as to the Baylor Centers) shall:
(a) create or assume any mortgage, pledge or other lien or encumbrance
upon any of its assets, whether now owned or hereafter acquired;
(b) incur any debt other than normal trade payables and employee
compensation obligations; or
(c) change any employee or professional consultant compensation, except in
the ordinary course of business.
10.3 PERFORMANCE COVENANT. Each of the parties hereto covenants and agrees
that it will take all actions reasonably within its power and authority to duly
and timely carry out all of its obligations hereunder, to perform and comply
with all of the covenants, agreements, representations and warranties hereunder
applicable to it and to cause all conditions to the obligations of the other
party to close the transactions provided for herein to be satisfied as promptly
as possible.
10.4 COSTS 0F AGREEMENT. Except as otherwise expressly provided herein,
each of the parties hereto agrees to bear all of its own expenses incurred in
preparing or complying with this Agreement, including without limitation all
legal and accounting expenses and fees. THVG1 and THVG2 shall not bear any such
expenses, other than the costs of the syndication referred to in Section 13.3,
which shall be borne by the Baylor Limited Partnership. Notwithstanding any
provision of this Agreement to the contrary, THVG1 or the Baylor Limited
Partnership, and not Baylor, will bear the expenses associated with the
transactions described in Recitals F(2) and F(3).
30
10.5 DUE DILIGENCE. From the date hereof until the Closing or the
termination of this Agreement, USP and Baylor (as to the Baylor Centers) shall
each afford authorized representatives of the other with. reasonable access to
its financial, operational and statistical books and records and shall permit
such representatives to conduct physical inspections of their respective
businesses at such time or times as will not disrupt customary delivery of care
to patients.
10.6 SECURITIES LAW COMPLIANCE. Subject to the accuracy of the
representations and warranties made by THVG2 and Baylor in Section 9.14, if USP,
USP Parent or any Partnership issues any securities to THVG2 or Baylor pursuant
to the terms of this Agreement, USP will take all necessary actions to ensure
such issuances comply with all applicable securities laws.
10.7 ACCESS TO BOOKS AND RECORDS. THVG1 will allow Baylor access to the
books and records that are included in the Baylor Center Assets for a period
ending five years from the Closing Date.
11. CONDITIONS PRECEDENT TO OBLIGATIONS OF BAYLOR. The obligations of
Baylor hereunder are, at the option of Baylor, subject to the satisfaction, on
or prior to the Closing Date, of the following conditions:
11.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES OF USP. The
representations and warranties of the USP contained in this Agreement shall be
true on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date (subject to
any changes resulting from the transactions contemplated hereby). All of the
agreements of USP to be performed on or before the Closing Date pursuant to the
terms hereof shall have been performed in all material respects. USP shall have
delivered to Baylor at the Closing a certificate regarding the matters described
in this Section 11.1 and in Section 11.3.
11.2 ACTION RESTRAINING OR AFFECTINQ TRANSACTION. No action or proceeding
before a court or any other governmental agency or body shall have been
instituted or threatened to restrain or prohibit the transfer of any of the
Baylor Center Assets to THVG1 or any of the USP Assets to THVG2, or which in the
opinion of Baylor may otherwise materially affect THVG1 or THVG2, and no third
party or governmental agency or body shall have taken or threatened any action
with respect to the transactions provided for herein as a result of which Baylor
31
deems it inadvisable to proceed with the transactions contemplated hereunder.
11.3 MATERIAL CHANGES. The financial condition, business or prospects of
DeSoto and Metroplex shall not have suffered any material adverse change, loss
or damage since the Balance Sheet Date.
11.4 GOVERNMENTAL PERMITS. THVGl and THVG2 shall have obtained all
licenses, certificates, permits and rulings of, and made all notices to, all
governmental authorities that may be required prior to the acquisition and the
operation of the Baylor Centers by the Baylor Limited Partnership or for the
acquisition of the USP Assets by THVG2.
11.5 CONSENTS, APPROVALS OR AUTHORIZATIONS. THVGl shall have obtained all
consents, approvals or authorizations with respect to any lease, contract,
agreement or other instrument listed in SCHEDULE 9.6 which may be necessary (a)
for the Baylor Limited Partnership to receive all of the rights and benefits of
Baylor thereunder and (b) to vest THVGl with good title to the Baylor Center
Assets; provided, however, that the parties hereto acknowledge and agree that it
will not be necessary to seek the consent of any health maintenance
organization, insurance company, managed care organization or other third party
payor (the "Plans") with respect to the assignment of contracts with the Plans,
or the assignment or subcontracting of Baylor's contracts with the Plans for
outpatient surgery services, to the Baylor Limited Partnership, and the parties
shall determine whether it is in their best interests either to retain such
contractual arrangements in the name of Baylor (with the benefits thereof being
assigned to the Baylor Limited Partnership) or to assign such contracts to the
Baylor Limited Partnership.
11.6 CONSENTS TO ASSIGMENTS OF USP ASSETS. USP shall have obtained and
delivered to Baylor all consents, approvals and authorizations that are required
in connection with the transfer of the USP Assets to THVG2 and necessary to vest
THVG2 with good title to the USP Assets, including without limitation the
consent of the Principals, HealthFirst and the Sellers to the assignment of the
HealthFirst Purchase Agreement to THVG2.
11.7 ASSIGMENT AND ASSUMPTION AGREEMENT. USP and THVG2 shall have executed
and delivered to THVG2 an Assignment and Assumption Agreement transferring title
to the USP Assets to
32
THVG2, which Assignment and Assumption Agreement shall be in the form attached
hereto as EXHIBIT E.
11.8 RECEIPT 0F CONSIDERATION. USP shall have delivered to Baylor a
Convertible Note as provided in Section 4 (d) (i).
11.9 THVG2 MANAGEMENT AGREEMENTS THVG2 and USP shall have executed and
delivered to Baylor the THVG2 Management Agreement.
11.10 AMENDED AND RESTATED STOCKHOLDERS AGREEMENT AND AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT. USP Parent and the requisite number of USP Parent
capital stock holders shall have executed and delivered to Baylor (a) an
amendment, in the form attached hereto as EXHIBIT H, to USP Parent's Amended and
Restated Stockholders Agreement and (b) an amendment, in the form attached
hereto as EXHIBIT I, to USP Parent's Amended and Restated Registration Rights
Agreement.
11.11 ▇▇▇▇ 0F SALE. The Baylor Limited Partnership shall have executed and
delivered the ▇▇▇▇ of Sale and Assumption of Liabilities as described in Section
12.7.
12 CONDITIONS PRECEDENT TO OBLIGATIONS OF USP. The obligations of USP
hereunder are, at the option of USP, subject to the satisfaction, on or prior to
the Closing Date, of the following conditions:
12.1 ACCURACY 0F REPRESENTATIONS AND WARRANTIES 0F BAYLOR. The
representations and warranties of Baylor contained in this Agreement shall be
true as of the Closing Date as though such representations and warranties had
been made at and as of such date (subject to any changes resulting from the
transactions contemplated hereby). All of the agreements of Baylor to be
performed by Baylor on or before the Closing Date shall have been duly performed
in all material respects. Baylor shall have delivered to USP at the Closing a
certificate with respect to the matters set forth in this Section 12.1 and in
Section 12.3.
12.2 ACTION RESTRAINING OR AFFECTING TRANSACTION. No action or proceeding
before a court or any other governmental agency or body shall have been
instituted or threatened to restrain or prohibit the transfer of any of the USP
Assets to THVG2 or any of the Baylor Center Assets to THVGl, or which in the
opinion of USP may otherwise materially affect THVGl or THVG2, and no third
party or governmental agency or body shall
33
have taken or threatened any action with respect to the transactions provided
for herein as a result of which USP deems it inadvisable to proceed with the
transactions contemplated hereunder.
12.3 MATERIAL CHANGES. Neither the Baylor Center Assets nor the financial
condition, business or prospects of the Baylor Centers shall have suffered any
material adverse change, loss or damage since the Balance Sheet Date.
12.4 GOVERNMENTAL PERMITS. THVGl and THVG2 shall
have obtained all licenses, certificates, permits and rulings of, and made all
notices to, all governmental authorities that may be required prior to the
acquisition and operation of the Baylor Centers by the Baylor Limited
Partnership or for the acquisition of the USP Assets by THVG2.
12.5 CONSENTS, APPROVALS OR AUTHORIZATIONS THVGl shall have obtained all
consents, approvals or authorizations with respect to any equipment lease,
contract, agreement or other ; instrument listed in SCHEDULE 9.6 which may be
necessary (a) for the Baylor Limited Partnership to receive all of the rights
and benefits of Baylor thereunder and (b) to vest THVGl with good title to the
Baylor Center Assets; provided, however, that the parties hereto acknowledge and
agree that it will not be necessary to seek the consent of the Plans with
respect to the assignment of the Baylor Center's contracts with the Plans, or
the assignment or subcontracting of Baylor's contracts with the Plans for
outpatient surgery services, to the Baylor Limited Partnership, and the parties
shall determine whether it is in their best interests either to retain such
contractual arrangements in the name of Baylor (with the benefits thereof being
assigned to the Baylor Limited Partnership) or to assign such contracts to the
Baylor Limited Partnership.
12.6 CONSENTS TO ASSIGNMENTS 0F USP ASSETS. USP shall have obtained and
delivered to Baylor all consents, approvals and authorizations that are required
in connection with the transfer of the USP Assets to THVG2 and necessary to vest
THVG2 with good title to the USP Assets, including without limitation the
consent of the Principals, HealthFirst and the Sellers to the assignment of the
HealthFirst Purchase Agreement to THVG2.
12.7 ▇▇▇▇ OF SALE. Baylor and the Baylor Limited Partnership shall have
executed and delivered a ▇▇▇▇ of Sale and Assumption of Liabilities pursuant to
which Baylor transfers title to the Baylor Center Assets to the Baylor Limited
34
Partnership on behalf of THVG1 and the Baylor Center General Partner, which ▇▇▇▇
of Sale and Assumptions of Liabilities shall be in the form attached hereto as
EXHIBIT F. In addition, Baylor shall have executed and delivered to USP an
instrument of assignment in form and substance reasonably satisfactory to USP
transferring to USP one-half of the Ownership Interest in THVG1 issued to Baylor
pursuant to Section 1.2.
12.8 NEW LEASES. BHCS and the Baylor Limited Partnership shall have
entered into a new Lease Agreement, which shall be substantially in the form of
EXHIBIT G attached hereto, whereunder BHCS shall lease the Baylor Real Property
associated with Baylor Surgicare to the Baylor Limited Partnership. In addition,
Baylor shall have entered into a new Lease Agreement, which shall be
substantially in the form of EXHIBIT G attached hereto, whereunder Baylor shall
lease the Baylor Real Property associated with Texas Surgery Center to the
Baylor Limited Partnership.
12.9 THVG2 MANAGEMENT AGREEMENT. THVG2 and Baylor shall have executed and
delivered to USP the THVG2 Management Agreement.
12.10 AMENDED AND RESTATED STOCKHOLDERS AGREEMENT AND AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT. USP Parent and the requisite number of USP Parent
capital stock holders shall have executed and delivered to Baylor (a) an
amendment, in the form attached hereto as EXHIBIT H, to USP Parent's Amended and
Restated Stockholders Agreement and (b) an amendment, in the form attached
hereto as EXHIBIT I, to USP Parent's Amended and Restated Registration Rights
Agreement.
12.11 ASSIGNMENT AND ASSUMPTION AGREEMENT. THVG2 shall have executed and
delivered to USP an Assignment and Assumption Agreement as described in Section
11.7.
13. ADDITIONAL COVENANTS.
13.1 INDEMNIFICATION.
(a) USP hereby covenant and agrees that it will indemnify and hold Baylor
at all times harmless from and against any loss, damage and expense (including
reasonable attorneys' fees and other costs of defense) caused by or arising out
of or in connection with (i) any liability or obligation arising out of the
business of USP as conducted on or before the Effective Date that is not
expressly assumed by THVG2 pursuant to Section 2.3 or
35
(ii) any misrepresentation, breach of warranty or nonfulfillment of any covenant
made by USP under or pursuant to this Agreement.
(b) Baylor hereby covenants and agrees that it will indemnify and hold USP
at all times harmless from and against any loss, damage and expense (including
reasonable attorneys' fees and other costs of defense) caused by or arising out
of or in connection with (i) any liability or obligation arising out of the
business of the Baylor Centers as conducted on or before the Effective Date that
is not expressly assumed by the THVG1 pursuant to Section 1.3 or (ii) any
misrepresentation, breach of warranty or nonfulfillment of any covenant made by
Baylor under or pursuant to this Agreement.
(c) Any party that intends to enforce an indemnity obligation shall give
the indemnifying party notice of any claim as soon as possible, but the failure
to give such notice shall not constitute a waiver or release of the indemnifying
party and shall not affect the rights of the indemnified party to recover under
this indemnity, except to the extent the indemnifying party is prejudiced
thereby.
(d) In connection with any claim giving rise to indemnity under this
Section 13.1 resulting from or arising out of any claim or legal proceeding by a
person who is not a party to this Agreement, the indemnifying party, at its sole
cost and expense, may, upon written notice to the indemnified party, assume
control of the defense of such claim or legal proceeding, to the extent that the
indemnifying party admits in writing its indemnification liability to the
indemnified party with respect to all material elements thereof. If the
indemnifying party assumes the defense of any such claim or legal proceeding,
the obligations of the indemnifying party hereunder as to such claim or legal
proceeding shall be to take all steps necessary in the defense or settlement
thereof and to hold the indemnified party harmless from and against any losses,
damages, expenses or liability caused by or arising out of any settlement
approved by the indemnifying party and the indemnified party or any judgment in
connection with such claim or legal proceeding. Each indemnified party agrees
that it will cooperate with the indemnifying party in the defense of any such
action, the defense of which is assumed by the Indemnifying Party. Except with
the consent of the indemnified party, which consent may be withheld at the
indemnified party's sole discretion, the indemnifying party shall not consent to
any settlement or the entry of any judgment arising from any such claim or legal
proceeding which, in each case, does not include as an unconditional term
thereof the delivery by the claimant or the plaintiff to the indemnified party
of a release from all liability in respect thereof. The
36
indemnified party shall be entitled to settle any claim without the consent of
the indemnifying party where the settlement does not obligate the indemnifying
party to pay any monetary damages or obligate or restrict the Indemnifying Party
in any way. If the indemnifying party does not assume the defense of any claim
or litigation, any indemnified party may defend against such claim or litigation
in such manner as it may deem appropriate, including but not limited to settling
such claim or litigation, after giving notice of the same to the indemnifying
party, on such terms as the indemnified party may deem appropriate. The
indemnifying party will, promptly after any of the same is incurred, reimburse
the indemnified party in accordance with the provisions hereof for all damages,
losses, liabilities, costs and expenses incurred by the indemnified party.
13.2 NO-SHOP CLAUSE. Unless and until this Agreement is terminated in
accordance with Section 14, neither USP nor Baylor will, without the approval of
the other, (a) offer for sale the USP Assets or the Baylor Center Assets (or any
material portion thereof), (b) solicit offers to buy all or any material portion
of such assets, (c) hold discussions with any other party looking toward such an
offer or solicitation or, looking toward a merger or consolidation of any
entity that directly owns any such assets or (d) enter into any agreement with
any other party with respect to the sale or other disposition of the USP Assets
or the Baylor Center Assets or any material portion thereof or with respect to
any merger, consolidation or similar transaction involving any entity that
directly owns any of such assets.
13.3 PROPOSED SYNDICATION 0F BAYLOR LIMITED PARTNERSHIP. USP, Baylor and
THVGl acknowledge and agree that it is their intention to conduct a syndication
of limited partnership interests in the Baylor Limited Partnership on
substantially the following terms and conditions: (a) the Baylor limited
Partnership will offer Limited Partnership Units representing up to a 25%
interest in the Baylor Limited Partnership; (b) all of the proposed offerees
will be physicians who are on the medical staff of one or both of the Baylor
Centers or who have agreed to apply to join the medical staff of one or both of
the Baylor Centers; (c) the investors in the offering will be subject to the
mutual approval of USP and Baylor; (d) the offering price for the Limited
Partnership Units will be based upon an evaluation of the Baylor Limited
Partnership that is mutually acceptable to Baylor and USP; and (e) the proceeds
of this syndication shall be distributed by the Baylor Limited Partnership to
the Baylor Center General Partner and to Baylor and USP (subject to any
retention by THVG1 approved by its members).
37
13.4 EXERCISE OF HEALTHFIRST OPTIONS. In the event that Baylor elects to
cause THVG2 not to exercise any HealthFirst Option, or if Baylor does not
consent to allow THVG2 to exercise any HealthFirst Option within 30 days prior
to the expiration of such HealthFirst Option, such HealthFirst Option shall be
deemed to have been conveyed to USP and USP shall be free to exercise such
HealthFirst Option and to own the assets acquired thereby (and any other
partnership interest in the partnership that is the subject of such HealthFirst
Option thereafter acquired by USP) independent of THVG1, THVG2, Baylor and its
affiliates notwithstanding any contrary provisions set forth in the THVGl
Regulations, the THVG2 Regulations or any other agreement that may otherwise be
applicable. USP shall not be obligated to pay any consideration to THVG2 or
Baylor for the transfer of any such HealthFirst Option to USP pursuant to this
Section 13.4. Nothing in this Section 13.4, or any transfer of a HealthFirst
Option to USP pursuant hereto, shall affect any Management Agreement between
THVG2 and the partnership that is the subject of such HealthFirst Option or the
THVG2 Management Agreement as it relates to Baylor and USP providing services to
THVG2 in connection with such Management Agreement between THVG2 and such
partnership.
13.5 GUARANTEES 0F USP PARENT AND BHCS. By their execution of this
Agreement as set forth on the signature pages hereof, (a) USP Parent hereby
guarantees the performance of the obligations of USP that arise under this
Agreement and (b) BHCS hereby guarantees the performance of the obligations of
Baylor that arise under this Agreement. The guarantees set forth herein are
intended to be guarantees of performance and not merely of collection. If the
proposed Southwest Health System transaction closes, BHCS may assign its
obligations under this Section 13.5 to Baylor University Medical Center, a Texas
non-profit corporation ("BUMC"). Notwithstanding the foregoing, however, the
obligations guaranteed by USP Parent and BHCS pursuant hereto are limited to
those that arise under this Agreement and shall not include the obligations of
USP and Baylor, respectively, that arise under the THVGl Regulations or the
THVG2 Regulations or any other obligations that arise outside of this Agreement.
13.6 POSSIBLE ACQUISITION 0F ▇▇▇▇▇▇ ▇▇▇▇▇▇ SURGERY CENTER BY THVG1. Baylor
will use reasonable efforts to arrange for the purchase by THVGl of the assets
of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Surgery Center from its current owner, Baylor Medical Center at
Irving (which is affiliated with Baylor), if and when ▇▇▇▇▇▇ ▇▇▇▇▇▇ Surgery
Center is licensed as a freestanding surgery center. The purchase price will be
negotiated between USP and said owner and will be subject to approval of the
Managers of THVGl in accordance with the THVGl Regulations. The terms of
purchase
38
shall otherwise be substantially similar to those set forth herein relating to
the acquisition of the Baylor Center Assets by THVG1.
13.7 USP PARENT STOCKHOLDERS AGREEMENT AND REGISTRATION RIGHTS AGREEMENT.
On the Closing Date, Baylor, USP Parent and certain other Persons will enter
into (a) an amendment, in the form of EXHIBIT H attached hereto, to USP Parent's
Amended and Restated Stockholders Agreement, and (b) an amendment, in the form
of EXHIBIT I attached hereto, to USP Parent's Amended and Restated Registration
Rights Agreement.
13.8 USP BOARD OF DIRECTORS REPRESENTATIVE. At all times prior to the
earlier of (a) the initial sale by USP Parent of any class of its equity
securities pursuant to a registration statement filed under the Securities Act
of 1933, as amended, or (b) the registration of the USP Common Stock under the
Securities Exchange Act of 1934, as amended, and so long as Baylor and its
Affiliates own at least a 30 percent interest in THVG1, Baylor shall have the
right to designate, subject to the reasonable approval of the Board of Directors
of USP Parent, an officer of BHCS who is at the Senior Vice President level or
above to the Board of Directors of USP Parent. USP and USP Parent will use
reasonable efforts to cause such designee to be elected to USP Parent's Board of
Directors. The parties acknowledge and agree that Baylor has initially
designated, and the USP Parent Board of Directors has approved, ▇▇▇▇▇ ▇▇▇▇▇▇ as
Baylor's representative on the USP Parent Board of Directors.
13.9 MEDICAL DIRECTORS. The parties hereto acknowledge and agree that: (a)
▇▇▇▇▇▇ ▇▇▇▇▇▇, M.D. will be offered the position of Medical Director of Baylor
Surgicare at his current rate of compensation for a minimum term of three years
from the Effective Date; (b) ▇▇▇ ▇▇▇▇▇▇▇, M.D. will be offered the position of
Medical Director of Texas Surgery Center at his current level of compensation
for a minimum period of three years from the Effective Date; and (c) USP will
offer to ▇▇. ▇▇▇▇▇▇ the position of Regional Medical Director for the North
Texas Region for compensation to be agreed upon by USP and ▇▇. ▇▇▇▇▇▇ (which
shall include stock options in USP Parent in accordance with the polices and
procedures of USP Parent with respect to the grant of stock options to
equivalent officers), but such employment shall not be subject to an employment
agreement and shall be terminable at will by either USP or ▇▇. ▇▇▇▇▇▇.
13.10 DEVELOPMENTS OUTSIDE OF NORTH TEXAS. USP and Baylor acknowledge and
agree that the THVG1 Regulations and
39
the THVG2 Regulations include certain restrictions on their ability to own and
operate outpatient surgical facilities within the North Texas Region. In
addition, from time to time during the period beginning on the date hereof and
ending on June 1, 2002, Baylor and its Affiliates may (but shall not be
obligated to) make introductions and otherwise assist USP and its Affiliates in
locating potential development or acquisition opportunities for outpatient
surgical facilities outside of the North Texas Region. If USP or any of its
Affiliates develops or acquires an outpatient surgical facility as a result of
or in connection with an opportunity so presented to USP by Baylor or its
Affiliates, and if USP or any Affiliate was not already involved in sharing
information related to the opportunity prior to such presentation to USP, USP
will pay Baylor a fee equal to the lesser of $100,000 or 3% of the capital cost
incurred by USP and its Affiliates in acquiring or developing such outpatient
surgical facility. Any such fee shall be payable in cash concurrently with the
acquisition of or, in the case of a development, the opening of such surgical
facility. In order for Baylor to receive credit for this fee, Baylor must
present the opportunity in writing and disclose Baylor's relationship (if any)
with the project. USP will respond in writing to all such opportunities
presented by Baylor within 30 days after the receipt of such written
information. If Baylor has or acquires any ownership interest in, or is to
receive any other fee with respect to, the acquisition or development of the
proposed outpatient surgical facility, no fee shall be payable to Baylor
pursuant to this Section 13.10.
13.11 POTENTIAL CONSOLIDATION 0F USP WITH THVG1 AND/OR THVG2. Baylor
acknowledges that an important element of the transactions provided for in this
Agreement is that USP intends to consolidate with THVG2 for financial accounting
purposes. In addition, USP would like to explore opportunities in the future to
consolidate with THVG1. To the extent that any of the proposed terms set forth
in this Agreement or in the THVG2 Regulations would prevent or significantly
impair USP's ability to so consolidate with THVG2, Baylor will negotiate in good
faith with USP to modify such terms so as to allow such consolidation. In
addition, if future interpretations of accounting guidelines have the effect of
permitting USP to consolidate with THVG1 for financial accounting purposes while
still allowing Baylor to retain its required control of THVG1 under applicable
federal tax laws and regulations (as interpreted by Baylor) then the parties
will agree to negotiate in good faith to modify such terms so as to allow such
consolidation.
13.12 USE 0F BAYLOR NAME AND LOGO. Subject to the approval of Baylor
University and execution of an acceptable
40
sublicense agreement, the Baylor Limited Partnership shall be entitled to
continue to use the name "Baylor" with respect to the Baylor Center currently
known as "Baylor Surgicare. "Baylor agrees to use reasonable efforts to obtain
such approval of Baylor University. However, the approval is in Baylor
University's sole discretion, and Baylor can not guarantee that the approval
will be obtained. In any event, the Baylor Limited Partnership shall be
entitled, subject to the execution of an acceptable license or sublicense
agreement, as applicable, to state that the Baylor Centers are "affiliated with
Baylor" and to use Baylor's "flame" logo in connection with the business of the
Baylor Centers. Baylor and THVG1 will prepare and enter into a related
sublicensing agreement (which agreement will not require THVG1 or the Baylor
Limited Partnership to pay any additional fee or other charge).
14. TERMINATION.
14.1 BY MUTUAL CONSENT. This Agreement may be terminated without further
obligation of the parties at any time prior to Closing by mutual consent of the
parties hereto.
14.2 DAMAGES. No party shall be liable in damages to any other party as a
result of the failure to consummate the transactions contemplated by this
Agreement unless such failure is caused by the material breach by such party of
any of the terms of this Agreement.
14.3 UNILATERAL TERMINATION. If, through no fault of or breach by a party
hereto, the transactions contemplated hereby have not been consummated on or
before June 2, 1999, this Agreement may be terminated by written notice given by
any such non-breaching party to the other parties without further obligation of
the parties.
15. CONFIDENTIALITY. In the event that this Agreement is terminated
pursuant to Section 14 hereof, or otherwise, or the Closing does not occur by
reason of failure of one of the conditions to the Closing, the parties hereto
agree (a) to return to the other parties all originals and copies of all
documents, financial statements and other information furnished or copied in
connection with the transactions contemplated by this Agreement and (b) not to
disclose without the prior written consent of the disclosing party any
information obtained with respect to the business or operations of the
disclosing party or any affiliate of such party.
41
16. NOTICES. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given when received if delivered personally, given by
prepaid telegram, mailed first class, postage prepaid, registered or certified
mail, delivered by Federal Express or other courier service, or sent by
telefacsimile or other online transmission system, as follows:
(a) If to USP:
USP North Texas, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
FAX No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Nossaman, Guthner, ▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
FAX No. (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Baylor:
Baylor Health Services
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Chief Operating Officer
FAX No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fulbright & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
FAX No. (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to THVG1 or THVG2:
To both USP and Baylor
42
17. GOVERNING LAW; INTERPRETATION; SECTION HEADINGS. This Agreement shall
be governed by and construed and enforced in accordance with the laws of the
State of Texas. The section headings contained herein are for purposes of
convenience only, and shall not be deemed to constitute a part of this Agreement
or to affect the meaning or interpretation of this Agreement in any way.
18. GENERAL. This Agreement (including the Exhibits and Schedules attached
hereto and the other documents and agreements referred to herein) sets forth the
entire agreement and understanding of the parties with respect to the
transactions contemplated hereby, and supersedes all prior agreements,
arrangements and understandings related to the subject matter hereof. No
representation, promise, inducement or statement of intention has been made by
any party hereto which is not embodied in this Agreement, or in the Exhibits and
Schedules attached hereto or the written statements, certificates or other
documents delivered pursuant hereto. All of the terms, provisions, covenants,
representations, warranties and conditions of this Agreement shall survive the
Closing and shall be binding upon and inure to the benefit of and be enforceable
by the parties hereto and their respective successors and assigns. This
Agreement may be amended, modified, superseded or canceled, and any of the
terms, provisions, covenants, representations, warranties or conditions hereof
may be waived, only by a written instrument executed by all parties hereto or,
in the case of a waiver, by the party waiving compliance. The failure of any
party at any time or times to require performance of any provision hereof shall
in no manner affect the right to enforce the same. No waiver by any party of any
condition, or of the breach of any term, provision, covenant, representation or
warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be deemed to be or construed as a further 0f
continuing waiver of any such condition or breach or a waiver of any other
condition or of the breach of any other term, provision, covenant,
representation or warranty. In the event that any one or more of the provisions
of this Agreement shall be held or otherwise found to be invalid, illegal or
unenforceable, all other provisions hereof shall be given effect separately
therefrom and shall not be affected thereby. No party hereto shall assign any of
its rights or obligations hereunder without the prior written consent of the
other parties; provided, however, that without such consent, Baylor may assign
its rights and obligations under Section 1.2(b) hereof to a Person to which
Baylor may assign its membership interests in THVGl under Section 4.1(a) of the
THVGl Regulations, as amended. This Agreement is for the sole benefit of the
undersigned parties hereto and is not for the benefit of any third party.
43
19. FURTHER ASSURANCES. USP and Baylor each agrees to execute and deliver
such other documents and instruments and take such other actions as any party
hereto may reasonably request in order more fully to vest in THVGl and THVG2,
and to perfect their title and interest in and to, the Baylor Center Assets and
the USP Assets, respectively.
20. COUNTERPARTS. Separate copies of this Agreement may be signed by the
parties hereto, with the same effect as though all parties had signed one copy
of this Agreement. Signatures received by facsimile shall be accepted as
original signatures.
21. ATTORNEYS' FEES. In any action at law or equity to enforce any of the
provisions or rights under this Agreement, the unsuccessful party to such
litigation, as determined by the court in any final judgment or decree, shall
pay the successful party or parties all costs, expenses and reasonable
attorneys' fees incurred therein by such party or parties (including without
limitation such costs, expenses and fees on any appeal or in connection with any
bankruptcy proceeding), and if the successful party recovers judgment in any
such action or proceeding, such costs, expenses and attorneys' fees shall be
included in and as a part of such judgment.
22. DISPUTE RESOLUTION MECHANISMS. The parties have agreed on the
following mechanisms in order to obtain prompt and expeditious resolution of
disputes hereunder (other than a dispute relating to any calculation of EBITDAM
pursuant to Section 1.2(b), which shall be resolved as provided therein):
22.1 BINDING ARBITRATION. If any dispute arises between the parties with
respect to the interpretation or enforcement of this Agreement, the parties
agree to work in good faith to resolve such dispute or disagreement in good
faith and, if they are unable to resolve the dispute, they shall submit it to
binding arbitration.
22.2 CHOICE 0F ARBITRATOR. If the parties can agree to a single arbitrator
within 30 days of one party receiving notice from the other party of the dispute
or disagreement, such arbitrator shall be chosen. The arbitrator(s) shall not be
required to have qualifications other than a reasonable amount of experience and
specialty in the area which is the subject of the dispute.
44
22.3 FAILURE TO CHOOSE ARBITRATOR. If the parties do not agree as to the
choice of an arbitrator, each party shall choose an arbitrator within 10 days
after the expiration of the 30 day period referred to in Section 22.2 and those
chosen arbitrators shall choose an additional arbitrator within 20 days of the
date in which the last arbitrator is chosen. If at the end of said 20 days the
parties' designated arbitrators cannot agree on the selection of the third
arbitrator, such selection shall be made by the American Arbitration Association
upon the application of either party.
22.4 CONDUCT. The arbitration shall be conducted pursuant to the
Commercial Rules of the American Arbitration Association.
22.5 RESOLUTION 0F DISPUTE. The dispute between the parties shall be heard
by the arbitrator(s) within 30 days after the date on which the arbitrator(s)
have been chosen. The arbitrator(s) shall, by a majority vote, resolve any
dispute or disagreement within 30 days of hearing the dispute.
22.6 EFFECT 0F ARBITRATION. The decision of the arbitrator(s) shall be
final and binding on the parties.
23. INTERPRETATION 0F AGREEMENT. The parties hereto acknowledge and agree
that this Agreement has been negotiated at arm's length and between parties
equally sophisticated and knowledgeable in the matters dealt with in this
Agreement. Accordingly, any rule of law or legal decision that would require
interpretation of any ambiguities in this Agreement against the party that has
drafted it is not applicable and is waived. The provisions of this Agreement
shall be interpreted in a reasonable manner to effect the intent of the parties
as set forth in this Agreement.
45
IN WITNESS WHEREOF, the parties hereto have executed this Contribution and
Purchase Agreement as of the day and year first above written.
USP NORTH TEXAS, INC.
By /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
BAYLOR HEALTH SERVICES
By /s/ M. ▇▇▇ ▇▇▇▇▇▇
Name M. ▇▇▇ ▇▇▇▇▇▇
Title EVP/COO
TEXAS HEALTH VENTURES GROUP L.L.C.
By /s/ M. ▇▇▇ ▇▇▇▇▇▇
Name M. ▇▇▇ ▇▇▇▇▇▇
Title Manager
THVG/HEALTHFIRST LLC
By /s/ M. ▇▇▇ ▇▇▇▇▇▇
Name M. ▇▇▇ ▇▇▇▇▇▇
Title Manager
46
The undersigned agree to be bound by Section 13.5 of the foregoing Contribution
and Purchase Agreement:
UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
By /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
BAYLOR HEALTH CARE SYSTEM
By /s/ M. ▇▇▇ ▇▇▇▇▇▇
Name M. ▇▇▇ ▇▇▇▇▇▇
Title EVP/COO
47
EXHIBIT A
[HealthFirst Purchase Agreement]
ASSET PURCHASE AGREEMENT
relating to the acquisition of the
HEALTHFIRST MANAGEMENT GROUP
by
UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
December 18, 1998
TABLE OF CONTENTS
Page
----
1. Purchase and Sale of Transferred Assets.................................3
2. The Closing and the Effective Date......................................7
3. Representations and Warranties by HealthFirst, Sellers and Principals...8
4. Buyer's Representations and Warranties.................................17
5. Pre-Closing Covenants..................................................19
6. Conditions Precedent to Obligations of Buyer...........................22
7. Conditions Precedent to Obligations of Sellers.........................24
8. Post-Closing Covenants.................................................25
9. Termination............................................................37
10. Assignment.............................................................37
11. Notices................................................................37
12. Governing Law; Interpretation; Section Headings........................38
13. General................................................................38
14. Further Assurances.....................................................39
15. Counterparts; Facsimile Signatures.....................................39
16. Attorneys' Fees........................................................39
17. Confidentiality........................................................39
18. Dispute Resolution Mechanisms..........................................39
19. Remedies...............................................................41
20. Interpretation of Agreement............................................41
i
EXHIBITS
Exhibit A Matters to be Covered by Opinion of HealthFirst's Counsel
Exhibit B Employment Agreement
Exhibit C Matters to be Covered by Opinion of Buyer's Counsel
Exhibit D Assignment and Assumption Agreement
SCHEDULES
Schedule 1 Partnerships
Schedule 2 Real Property Ownership and Leases
Schedule 3 List of Tangible Personal Property
Schedule 4 Other Excluded Assets
Schedule 5 Allocation of Closing Date Payments
Schedule 5A Other Assumed Obligations
Schedule 6 Exceptions to Representations and Warranties
Schedule 7 List of Other Partners and Principals
Schedule 8 Balance Sheets
Schedule 8A Indebtedness
Schedule 9 Material Contracts
Schedule 10 Litigation and Proceedings
Schedule 11 Required Consents and Notices
Schedule 12 Description of Insurance
Schedule 13 Compensation and Benefits of Employees and Consultants
Schedule 14 Medical Staff Actions
Schedule 15 Sample Calculation of Net Working Capital
ii
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into as of the 18th day of
December, 1998, by and among United Surgical Partners International, Inc., a
Delaware corporation ("Buyer"); ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (who are
hereinafter collectively referred to as the "Principals" and, individually, as a
"Principal"); HealthFirst Management, L.L.C., a Texas limited liability company
("HealthFirst"); Valley View Surgery Center, Inc a Texas corporation ("VVSC");
▇▇▇▇▇▇▇ Management, L.P., a Texas limited partnership ("▇▇▇▇▇▇▇ Management");
Disney Management, L.P., a Texas limited partnership ("Disney Management");
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇.▇,▇., a Texas limited liability partnership ("Forest
Edge"); and Disney Oak Mount, L.L.P., a Texas limited liability partnership
("Oak Mount"), with reference to the following facts:
R E C I T A L S
▇. ▇▇▇▇▇▇▇ Management, Disney Management, Forest Edge, Oak Mount and
VVSC which are hereinafter collectively referred to as the "Sellers" and,
individually, as a "Seller") have acquired certain assets from HealthFirst,
HFMA, Inc., a Texas corporation ("HFMA"), HFMB, Inc., a Texas corporation
("HFMB"), HFMD, Inc., a Texas corporation ("HFMD"), and HFMFW, L,L.C., a Texas
limited liability company ("HFMFW"). Prior to such transactions the following
parties were general partners in the following partnerships:
SELLER PARTNERSHIP
------ -----------
HFMA DeSoto Surgicare Partners, Ltd.,
a Texas limited partnership
("DeSoto")
HFMB Metroplex Surgicare Partners,
Ltd., a Texas limited
partnership ("Metroplex")
HFMD Irving Surgery Center, Ltd., a
Texas limited partnership
("Irving")
VVSC Dallas Surgery Partners, a Texas
general partnership ("DSP")
HFMFW Fort Worth Surgicare Partners,
Ltd., a Texas limited
partnership ("Fort Worth")
The above named partnerships are sometimes hereinafter collectively referred to
as the "Partnerships" and, individually, as a "Partnership". DeSoto, Metroplex
and Irving are sometimes hereinafter collectively referred to as the "Initial
Partnerships". The partnership agreements of the Partnerships, which are more
fully described in Schedule 9 attached hereto, are sometimes hereinafter
collectively referred to as the "Partnership Agreements". HFMA, HFMB, HFMD and
1
HFMFW (which are hereinafter collectively referred to as the "Former Owners"
and, individually, as a "Former Owner") have assigned the ownership interests
held by each such Former Owner in the Partnership in which such Former Owner was
a general partner (the "Associated Partnership") to Forest Edge and Oak Mount,
whose current ownership interests in the Partnerships are set forth in Schedule
1 attached hereto.
B. The Principals are the sole members of HealthFirst and HFMFW and
own 100% of the issued and outstanding stock of HFMA, HFMB and HFMD. The
Principals own the percentage of the issued and outstanding stock of VVSC
described in Schedule 1.
C. Each of the Partnerships owns and operates an ambulatory surgery
center in the Dallas/Ft. Worth area. The outpatient surgery centers owned and
operated by the Partnerships are sometimes hereinafter referred to collectively
as the "Surgery Centers" and, individually, as a "Surgery Center".
D. Prior to the formation of ▇▇▇▇▇▇▇ Management and Disney
Management (the "Management Sellers"), HealthFirst provided management services
to each of the Partnerships pursuant to either a direct Management Agreement
between HealthFirst and such Partnership or through the assignment of a
Management Agreement entered into by a Former Owner or VVSC with its Associated
Partnership. All of HealthFirst's rights, interests and obligations under such
Management Agreements have been assigned to and assumed by the Management
Sellers, Such Management Agreements are hereinafter collectively referred to as
the "HealthFirst Management Agreements".
E. Certain of the Partnerships lease the real property associated
with their respective Surgery Centers. Schedule 2 attached hereto identifies the
real property (if any) that is owned by each Partnership and, where applicable,
the lessor, lessee and each of the real property lease agreements (including all
amendments) to which each of the Partnerships is a party. The lease agreements
identified in Schedule 2 are sometimes hereinafter collectively referred to as
the "Real Property Leases", and the real property covered thereby, together with
real property that is owned by any of the Partnerships, is sometimes hereinafter
collectively referred to as the "Real Property".
F. Subject to the terms and conditions set forth herein, Sellers
have agreed to sell and Buyer (either directly or through a wholly owned
subsidiary that it may form for purposes of such acquisitions) has agreed to
purchase (1) the Management Sellers' interests in the HealthFirst Management
Agreements and all books, records, computer hardware and software and other
assets of HealthFirst and/or Sellers associated with the Surgery Centers or used
in performing the HealthFirst Management Agreements, including without
limitation the tangible personal property listed in Schedule 3 attached hereto
(collectively, the "HealthFirst Transferred Assets"), and (2) all of the
interests in the Partnerships held by Forest Edge and Oak Mount (the
"Partnership Sellers") in DeSoto, Metroplex and Irving.
G. The Partnership Sellers will grant Buyer an option to purchase
all of their interests in Fort Worth, and VVSC will grant Buyer an option to
Purchase all of the interest in DSP indirectly owned by the Principals and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (and the proceeds of such sale by VVSC shall be used to redeem
the shares in VVSC held by the Principals and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇).
2
H. The percentage interest in the Partnerships owned by each
Partnership Seller is set forth in Schedule 1 attached hereto. The Partnership
interests owned by the Partnership Sellers in the Initial Partnerships and all
of their respective right, title and interest in and to the Initial
Partnerships, including all rights and interests under the respective
Partnership Agreements and all related assets (the "Transferred Partnership
Interests"), together with the "HealthFirst Transferred Assets," are hereinafter
collectively referred to as The "Transferred Assets."
I. The Transferred Assets shall not include (1) any cash or cash
equivalent assets of any Seller, (2) any interest in Texas Health Ventures
Group, L.L.C., a Texas limited liability company ("THVG"), (3) assets of
HealthFirst or any Seller used exclusively in connection with the business of
THVG or (4) any of the other assets listed in Schedule 4 attached hereto
(collectively, the "Excluded Assets")
THEREFORE, the parties hereto agree as follows:
A G R E E M E N T
1. Purchase and Sale of Transferred Assets. Subject to the terms and
conditions of this Agreement, Sellers agree to sell, transfer and deliver the
Transferred Assets to Buyer, and Buyer agrees to purchase and accept their
respective Transferred Assets from Sellers, at the Closing on the Closing Date
(as those terms are defined in Section 2). In full consideration for the sale,
transfer and delivery to Buyer of the Transferred Assets at the Closing:
(a) Closing Date Payment. At the Closing, Buyer shall pay to
Sellers cash in the aggregate amount of $8,001,047, subject to post-Closing
adjustment in accordance with Section 8(b). Such Closing Date payment shall be
allocated among Sellers as provided in Schedule 5 attached hereto, which shall
be prepared by Principals and submitted to Buyer at least three business days
prior to the Closing Date and, if accepted by Buyer, shall be attached hereto
and shall be used for purposes of this Section 1(a). (Schedule 5 shall also
include the information described in Sections 1(d)(i), 1(f) and 8(e)(iv)
hereof.)
(b) Intentionally omitted.
(c) Contingent Post-Closing Payments. In addition to the
payments to be made pursuant to Sections 1(a) and (b) above and as additional
consideration for the sale of the Transferred Partnership Interests, Buyer shall
pay to the Partnership Sellers, in the aggregate, the following additional
amounts:
(i) An amount equal to four times the excess (if any) of
the aggregate net earnings before interest, taxes, depreciation and
amortization allocated to Buyer by the Initial Partnerships on the
Transferred Partnership Interests (not including any management fees
earned by Buyer from the Partnerships) (the total of which is
hereinafter collectively referred to as the "EBITDA"), for the 12
month period beginning on the Effective Date ("Year One") over (B)
$620,900 (the "Base Amount"); plus
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(ii) Three times the amount by which EBITDA for the 12
month period beginning on the first anniversary of the Effective
Date ("Year Two") exceeds the greater of the Base Amount or the
EBITDA for Year One; plus
(iii) Three times the amount by which EBITDA for the 12
month period beginning on the second anniversary of the Effective
Date ("Year Three") exceeds the greatest of (A) the Base Amount, (B)
the EBITDA for Year Two or (C) the EBITDA for Year One;
provided, however, that the total amount payable pursuant to this Section 1(c)
shall not exceed 25% of the sum of (x) the Closing Date payments to the
Partnership Sellers pursuant to Section 1(a) and (y) plus or minus any
adjustment to such payments pursuant to Section 8(b).
For purposes of this Section 1(c), EBITDA shall be determined in
accordance with generally accepted accounting principles in effect on the date
of this Agreement applied in a manner consistent with the calculation of the
Base Amount ("GAAP"); provided, however, that (1) extraordinary items (as
determined in accordance with GAAP) shall be excluded, (2) if the EBITDA for
Year One or Year Two is a negative amount, such negative amount shall carry over
and be treated as an expense in the next 12 month period, (3) Buyer shall
allocate the expenses of the Center Support Organization acquired by Buyer from
the Management Sellers substantially in the same manner as HealthFirst has
heretofore allocated such expenses to the Surgery Centers, which Center Support
Organization shall include Buyer's regional surgery center management personnel
(other than the Principals) that have responsibility for the Surgery Centers
(who initially will be ▇▇▇▇▇▇▇ ▇▇▇▇▇) and other personnel whose services are
devoted to the Surgery Centers (provided that, in the event Buyer otherwise
significantly modifies the "Center Support Organization" structure used by
HealthFirst, the manner of allocating the equivalent expenses in the new format
shall be agreed upon in good faith by the Principals and Buyer, but such costs
shall in any event be allocated only for the portion of such time that is
directly spent on the Surgery Centers), (4) each Surgery Center shall be treated
as a separate accounting unit of Buyer that is unaffected by acquisitions or
sales by Buyer that do not relate to the Surgery Centers, (5) the calculation
shall not include reserves or contingencies for expenses which any party has an
indemnification obligation to the other party under this Agreement, (6) there
shall be no charge for professional services (including legal expenses) incurred
by Buyer in connection with this Agreement or the transactions provided for
herein, including without limitation any costs of obtaining funding to pay the
purchase price for the Transferred Assets, (7) the calculation shall not include
any adverse consequence of Buyer refinancing any Partnership debt (other than
any such refinancing that is done at the time of, or within six months prior to,
the maturity date of any such debt) and (8) if a Surgery Center does not have
sufficient cash to operate in accordance with past practices, and if Buyer
elects not to provide such funds itself, then Sellers or the Principals shall be
entitled to provide loans to the Partnership that owns such Surgery Center to
cover such cash shortfalls, which loans shall be made on reasonable terms that
are acceptable to Sellers or the Principals (as the case may be), including a
provision that liability for such loan shall be limited to the assets of the
Partnership - i.e., there shall no recourse to the general partner of the
Partnership with respect to any such loan. The Principals shall have access to
appropriate books and records, and (at their expense) the right to review and
audit the financial statements, relating to the Surgery Centers and/or the
Partnerships.
4
The calculation of EBITDA for each of Year One, Two and Three, and
of the Partnership EBITDA for each "Base Year" pursuant to Section 8(e)(ii)(A),
and the EBITDA calculations pursuant to Sections 8(f)(ii) or 8(g)(ii), shall
initially be made by Buyer and a statement (the "Statement") reflecting each
such calculation in reasonable detail shall be provided to the Principals within
60 days after the end of the respective periods for which such calculations are
to be made. If neither of the Principals notifies Buyer of any objection to a
Statement within 60 days after the receipt of such Statement, the Statement
shall be deemed accepted on behalf of each of the Sellers. If either Principal
provides notice of any objection to a Statement (which notice shall include a
description of such objections) within such 60 day period, the Principals and
Buyer shall use their best efforts to resolve any differences relating to the
Statement within 15 days after such objection is delivered to Buyer. If the
disagreement is not resolved by that date, however, either Buyer or any
Principal may submit the matter for a binding determination of the calculation
of EBITDA or Partnership EBITDA (as the case may be) set forth in the Statement
to KPMG Peat Marwick LLP or another nationally recognized accounting firm
approved by Buyer and the Principals, which firm shall act as an expert and not
as an arbitrator in making such determination; the fees of such accounting firm,
which shall be billed separately and independently from any other services
provided by such firm, shall be paid by Buyer if the final determination of the
amount payable pursuant to subsection (i), (ii) or (iii) above or Section 8(e),
8(f) or (g), as the case may be, based upon such Statement is at least 10% over
the amount shown to be payable by the Statement as initially submitted by Buyer
and, otherwise, such expenses shall be paid by the Principals as a reduction of
any consideration then due pursuant to this Section 1(c) or Section 8(e), 8(f)
or (g) or if no such consideration is then due or the amount of such
consideration is less than the amount of such fees, such shortfall shall be paid
by Principals.
Each Statement delivered by Buyer pursuant to subsection (i), (ii)
or (iii) or Section 8(e), 8(f) or (g), as the case may be, shall be accompanied
by payment of the amount (if any) that is shown to be due based upon such
Statement. In the event of any dispute regarding a Statement, the balance (if
any) that is due as a result of the resolution of such dispute shall be paid by
Buyer within five business days after a final determination of the EBITDA in
accordance with the foregoing procedures.
Any payments made pursuant to this Section 1(c) shall be paid in
cash and stock as provided in Section 1(d) and shall be allocated one-half to
each of the Partnership Sellers.
(d) Form of Consideration. The consideration to be delivered
by Buyer to Sellers pursuant to Sections 1(a) and 1(c) hereof shall be paid as
follows:
(i) The consideration due to Sellers pursuant to Section
1(a) shall be paid by Buyer's check or, if a Seller so requests and
provides appropriate instructions at least three business day prior
to the Closing Date, by wire transfer of immediately available
funds. The allocation of such cash payment among Sellers shall be as
set forth in Schedule 5 to be attached hereto.
(ii) Each payment obligation that arises pursuant to
Section 1(c) shall be made either (A) all in cash by Buyer's check
or, in the event the recipient of such payment provides wire
transfer instructions at least three
5
business days prior to the date such payment is to be made, by wire
transfer of immediately available funds, or (B) if the party that is
to receive such payment so elects by giving written notice to Buyer
at least 10 business days prior to the date such payment is to be
made, at least 80% of such payment shall be made in cash (as
described in clause (A) above) and up to 20% of such amount shall be
payable by the issuance of shares of Buyer's Class A Common Stock,
par value $0.01 per share (the "Buyer Stock"), valued at the greater
of $4.00 per share or the fair market value per share of Buyer Stock
at the time such payment is due, as determined in good faith by the
Board of Directors of Buyer; provided, however, that in the event
Buyer is required to make any such payment in cash but is unable to
do so (as a result of not having either sufficient cash or cash
equivalent assets or the ability to draw on available lines of
credit in order to obtain such cash), the following shall apply to
the extent of such cash shortfall:
(x) If the Buyer Stock is then registered under the Securities
Exchange Act of 1934, and if Buyer delivers shares of Buyer Stock that are
registered and freely tradable under the Securities Act of 1933, then
Buyer shall be entitled to make such payment in Buyer Stock, valued at the
average closing sales price on the primary stock exchange (or NASDAQ) on
which the Buyer Stock is then traded over the ten trading days ended three
business days prior to the date that such Buyer Stock is issued;
(y) If the Buyer Stock is then registered under the Securities
Exchange Act of 1934, but Buyer does not deliver shares of Buyer Stock
that are registered and freely tradable under the Securities Act of 1933,
then Buyer shall be entitled to make such payment through the issuance of
shares of Buyer Stock valued at 80% of the average closing sales price on
the primary stock exchange (or NASDAQ) on which such shares are then
traded over the ten trading days ended three business days prior to the
issuance of such shares; and
(z) If the Buyer Stock is not then registered under the
Securities Exchange Act of 1934, Buyer shall be entitled to make such
payment in shares of Buyer Stock valued at the fair market value per share
of Buyer Stock at the time such payment is due, (i) as determined by the
Board of Directors of Buyer in good faith based upon one or more issuances
of Buyer Stock in arm's length transactions within six months prior to the
date of the issuance pursuant hereto, or (ii) if no such issuance has
occurred within said six month period, as agreed upon by Buyer and the
Principals, but if Buyer and the Principals are not able to agree on such
fair market value, then they shall agree upon an independent appraiser to
appraise the Buyer Stock or, if they cannot agree on an appraiser, they
shall each select an independent appraiser who shall appraise the Buyer
Stock. If the two appraisers agree on an appraised price, such price shall
be the fair market value of the Buyer Stock for purposes hereof. If the
two appraisers cannot so agree, then the average of the two appraisals
shall govern if the higher appraisal is no greater than 120% of the lower
appraisal and, if there is greater than such a 20% variance, the two
appraisers shall select a third appraiser who shall determine the final
fair market value of Buyer Stock for purposes of such payment. The dollar
amount of any payment that is made pursuant to this subsection (z) shall
be increased to 125% of the amount that would otherwise be payable
pursuant to this subsection (ii).
6
(iii) Anything herein to the contrary notwithstanding,
the right to receive shares of Buyer Stock hereunder shall apply
only to those Sellers that are owned 100% by the Principals and/or
their immediate families (or trusts for their benefit), except that
VVSC shall be entitled to receive Buyer Stock only if there is a
binding agreement among the Principals and VVSC to concurrently
retransfer such shares of Buyer Stock to the Principals and ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ in connection with the redemption of their shares in VVSC.
(iv) Each Principal and Seller acknowledges and agrees
that any shares of Buyer Stock to be issued pursuant to this
Agreement (other than shares issued pursuant to subsection (ii)(ii)
(x) above) (A) will be "restricted stock" under federal and state
securities laws, (B) are being acquired for investment purposes only
and without any view toward the resale or distribution thereof
(other than a transfer by any Seller to the Principals) and (C)
shall be subject to the provisions of Buyer's Amended and Restated
Registration Rights Agreements and its Amended and Restated
Stockholders Agreement pursuant to the Amendments to be entered into
in accordance with Section 6 (k).
(e) Assumption of Obligations. Buyer shall assume and shall
perform and discharge (i) the obligations of Sellers set forth on Schedule 5A
attached hereto, (ii) the liabilities and obligations of the Management Sellers
under the HealthFirst Management Agreements and of the Partnership Sellers under
the Partnership Agreements of the Initial Partnerships that come into existence
or are to be performed on or after the Effective Date and the accrued employee
benefit obligations (if any) of Sellers to those employees of Sellers who are
not Surgery Center employees (it being understood that the accrued employee
benefits of all such employees shall be accounted for as part of the working
capital adjustment to the purchase price pursuant to Section 8(b) hereof).
Except for the liabilities and obligations described in this Section 1(e), and
subject to Section 8(a), Buyer will not assume or be liable for any other
obligation or liability of HealthFirst or any Seller.
(f) Allocation of Purchase Price. Schedule 5 shall also
include an allocation of the amounts payable to the Sellers among the categories
of the Transferred Assets and the noncompetition covenants being given by
HealthFirst, Sellers and the Principals pursuant hereto.
2. The Closing and the Effective Date. The closing of the
transactions referred to in Section 1 hereof (the "Closing") will take place at
the offices of Buyer in Dallas, Texas, at 2:00 p.m., local time, on December 22,
1998, or at such other place or at such other date and time as the parties
hereto shall agree. Such time and date are referred to herein as the "Closing
Date." Regardless of when the Closing occurs, it shall be effective as of 12:01
a.m. on the first day of the calendar month in which the Closing occurs (the
"Effective Date"), and each of the parties hereto agrees to acknowledge and use,
and to cause the Partnerships to acknowledge and use, said Effective Date for
all purposes, including for accounting and federal and state tax reporting
purposes. Except as provided in Section 9, failure to consummate the Closing on
the date and time and at the place selected pursuant to this Section 2 shall not
result in any termination of this Agreement and shall not relieve any party to
this Agreement of any obligation hereunder.
7
3. Representations and Warranties by HealthFirst, Sellers and
Principals. Except as specifically set forth in Schedule 6 attached hereto,
HealthFirst and the Principals, jointly and severally, and each Seller (as to
its own Transferred Assets, contracts, liabilities and other operations),
represent and warrant to Buyer as follows:
(a) Organization, Standing, etc. The information set forth in
Schedule 1 and the information relating to Sellers, the Former Owners and
Principals set forth in Recitals A and B is accurate and complete with respect
to the matters purported to be covered thereby. HealthFirst and HFMFW each is a
duly and validly organized and existing limited liability company, and each
other Former Owner is a duly and validly organized and existing corporation, in
good standing under the laws of the State of Texas, with full power and
authority to carry on its business as presently conducted. Each Seller is a duly
and validly organized and existing limited liability partnership or limited
partnership (as the case may be) in good standing under the laws of the State of
Texas and has full power and authority to carry on its business as presently
conducted. The Partnerships have no direct or indirect interest of any kind in
any other corporation, partnership, association or business. Each of the
Partnerships is duly organized and validly existing under the laws of the State
of Texas, with all requisite power and authority to carry on its business as
presently conducted. None of the Partnerships has conducted any business or
engaged in any activity outside of the State of Texas, except where such conduct
or activities will not have a material adverse effect on the business,
properties, operations, condition, financial or otherwise, or results of
operations of the Partnerships taken as a whole (a "Material Adverse Effect").
(b) Due Authorization. The execution, delivery and performance
of this Agreement by HealthFirst and Sellers have been duly and validly approved
by the members and managers of HealthFirst and by the partners of each Seller
and no further action is necessary to make this Agreement valid and binding upon
HealthFirst and Sellers in accordance with its terms.
(c) Compliance with Instruments and Agreements. The
transactions whereby any or all of the Transferred Assets were contributed or
otherwise transferred by HealthFirst and the Former Owners to Sellers: (i) were
effective to transfer good title to the Transferred Assets to Sellers; (ii) were
conducted in compliance with the charter documents (including without limitation
shareholders agreements, regulations or operating agreements) of HealthFirst and
the Former Owners; (iii) were approved by all requisite action of the owners and
the governing bodies of HealthFirst and each Former Owner; (iv) did not result
in any breach of any term or provision of, or constitute a default under, any
order, judgment, injunction, decree, indenture, mortgage, lease, lien, agreement
or other instrument to which HealthFirst or any Former Owner is a party or by
which any of the Transferred Assets is bound; and (v) were in compliance with
all applicable laws and did not constitute a "fraudulent conveyance" under state
law or federal bankruptcy law. The performance of this Agreement and the
consummation of the transactions contemplated hereby will not result in any
breach or violation of any of the terms or provisions of, or constitute a
default under, (i) the articles of organization, regulations or operating
agreement of either HealthFirst or HFMFW, (ii) the partnership certificate or
partnership agreement or any Seller, (iii) articles of incorporation, bylaws or
any shareholders agreement of VVSC or any Former Owner, (iv) any Partnership
Agreement, (v) any statute, order, rule or regulation of any court or
governmental agency or
8
body having jurisdiction over HealthFirst or any Seller, Former Owner or
Partnership or (vi) assuming that the required consents referred to in Schedule
11 attached hereto are obtained at or prior to the Closing Date, any agreement,
instrument or commitment to which HealthFirst or any Principal, Seller, Former
Owner or Partnership is a party, by which any of them is bound or to which any
of their property is subject.
(d) Capitalization and Indebtedness for Borrowed Moneys.
(i) Capitalization. Schedule 7 attached hereto is a true
and complete list of the names, types of equity interests owned and
percentage interests held by each person or entity who has any legal
or beneficial ownership interest in each of the Partnerships and in
VVSC. HealthFirst has delivered to Buyer true and complete copies of
the articles of organization, regulations, partnership certificates,
partnership agreements, articles of incorporation and bylaws (as
applicable) of HealthFirst and each of the Former Owners and
Sellers, each shareholders agreement among the shareholders of any
Seller and each of the Partnership Agreements and certificates of
partnership of each of the Partnerships, which certificates of
partnership have been filed with all appropriate state and local
government authorities.
(ii) Indebtedness for Borrowed Moneys. The Partnerships
have no outstanding indebtedness for borrowed moneys, indebtedness
to any Seller, HealthFirst, Former Owner or Principal, long term
leases or other obligations required by GAAP to be shown on a
balance sheet as long term liabilities (collectively,
"Indebtedness"), except for the Indebtedness described in Schedule
8A attached hereto. True and complete copies of every instrument,
agreement and other document relating to any such Indebtedness have
been delivered to Buyer. Immediately following the Closing, no
Partnership will be indebted to or have any obligation to
HealthFirst or any Seller, Principal or Former Owner, or any partner
or shareholder of any Seller or Former Owner or any of their
respective relatives or affiliates other than the Indebtedness
described in Schedule 8k attached hereto.
(iii) Options or Rights. Except for the rights of first
refusal provided for in the Partnership Agreements, there are no
outstanding agreements, rights, subscriptions, options, warrants,
convertible securities, commitments, arrangements or understandings
of any character under which any of the Partnerships or any Seller
is or may be obligated to issue or purchase any interest in any of
the Partnerships or any Seller.
(e) Financial Statements. Attached hereto as Schedule 8 are
true and complete copies of unaudited balance sheets (the "Balance Sheets") of
HealthFirst and each of the Partnerships as of July 31, 1998 (the "Balance Sheet
Date"). HealthFirst has also provided to Buyer unaudited statements of
operations for the fiscal year ended December 31, 1997 and the seven month
period ended on the Balance Sheet Date for HealthFirst and each of the
Partnerships and all other financial information requested by Buyer and its
professional advisors, all of which has been reviewed by Buyer. The Balance
Sheets and such statements of operations
9
(i) are in accordance with the books and records of HealthFirst and the
respective Partnerships to which they relate, (ii) fairly present the financial
condition of HealthFirst and the Partnerships to which they relate at the
Balance Sheet Date and the results of operations for the entities and periods
therein specified and (iii) except as stated in the notes to such financial
statements, have been prepared in accordance with GAAP consistently applied
(excluding footnotes and normal year end adjustments). Except for the
liabilities reflected in the Balance Sheets, the documents described in
Schedules 8A and 9 and other obligations incurred in the ordinary course of
business since the Balance Sheet Date (none of which will have a Material
Adverse Effect), none of the Partnerships has or is subject to any liability of
any nature, whether accrued, absolute, contingent or otherwise. Each Partnership
is and as of the Closing Date will be current in all payment obligations to
which it is subject, other than payment obligations to HealthFirst or a Seller,
Former Owner or Principal described in Schedule 8A.
(f) Title to Transferred Assets. Each Partnership Seller has
good and marketable title to the interest in the Partnerships identified in
Schedule 1, free and clear of all liens, claims, encumbrances and restrictions,
legal or equitable, of every kind, except for restrictions on transfer imposed
by federal or state securities laws or the applicable Partnership Agreement of
the Associated Partnership. Each Management Seller has good and marketable title
to the HealthFirst Transferred Assets, free and clear of all liens, claims,
encumbrances and restrictions, legal or equitable, of every kind, except for
restrictions on transfer identified in Schedule 11 that are set forth in any
HealthFirst Management Agreement. Each Seller has full and unrestricted legal
right, power and authority to sell, assign and transfer the Transferred Assets
without obtaining the consent or approval of any other person, entity or
governmental authority (other than the consents described in Schedule 9), and
the delivery of the Transferred Assets to Buyer pursuant to this Agreement will
transfer valid title thereto, free and clear of all liens, encumbrances, claims
and restrictions of every kind, except for restrictions on transferability
imposed by federal and state securities laws or said partnership agreements.
(g) Partnerships' Assets. Each Partnership has good and
marketable title to all of the properties and assets used in its business
(including leasehold interests as to such assets that are leased by a
Partnership), subject to no mortgage, pledge, lien, security interest,
encumbrance or other charge, other than (i) the interests of equipment lessors
with respect to leased equipment under the equipment leases identified in
Schedule 9, (ii) liens in favor of lenders with respect to the loans reflected
on the Balance Sheets, (iii) liens for taxes not yet due or being contested in
good faith, (iv) liens created pursuant to the contracts listed on Schedule 9
and (v) other liens that will not have a Material Adverse Effect. The assets
owned or leased by the Partnerships constitute all of the assets currently in
existence which are being used in the Surgery Centers.
(h) Non-Competition Covenants. Except for the noncompetition
covenant contained herein and in each Principal's Employment Agreement entered
into pursuant to Sections 6(j)and 7(e), neither HealthFirst nor any of the
Sellers or the Partnerships is subject to any non-competition covenant or other
similar agreement restricting its ability to engage in competitive businesses.
Following the Closing, Buyer and its affiliates will not be subject to any such
non-competition covenant or restrictive agreement by virtue of Buyer's
acquisition of the Transferred Assets.
10
(i) Accounts Receivable. True and complete lists of all
outstanding accounts receivable of the Partnerships as of the Balance Sheet Date
(including agings) have been delivered to Buyer. All of the accounts receivable
held by any Partnership are valid and enforceable claims and are not subject to
any defenses, offsets, claims or counterclaims. Although the Principals know of
no reason why such accounts will not be collected on a timely basis, no
representation is made hereby that such accounts will be collected and,
notwithstanding any of the provisions of this Agreement, no party hereto
guarantees collection of any such accounts receivable. The allowances for
doubtful accounts and contractual adjustments reflected in the Balance Sheets
are based upon historic collection activities of the Partnerships and have been
determined in accordance with GAAP.
(j) Real Property Leases. HealthFirst has provided to Buyer
true and complete copies of each of the Real Property Leases Except as shown in
Schedule 2, none of the lessees under any of the Real Property Leases have
assigned, subleased or conveyed any interest in any of the Real Property Leases
or the premises covered thereby. Each of the Real Property Leases is in full
force and effect and constitutes the valid and binding agreement of the tenant
and (to the best knowledge of the Principals) the landlord named therein. No
Partnership or (to the best knowledge of the Principals) other party is in
default under any of the Real Property Leases and no event or condition has
occurred or exists which, with the passage of time, the giving of notice or
both, would cause either a Partnership or (to the best knowledge of the
Principals) any other party under any Real Property Lease to be in default
thereunder,
(k) Material Contracts. HealthFirst has delivered to Buyer an
accurate list and brief description (attached hereto as Schedule 9) as of the
date hereof of all material contracts, leases (other than the Real Property
Leases) and instruments to which any of the Partnerships is a party or by which
it or any of its assets are bound. For purposes hereof, the term "material
contracts" shall mean the following: (i) all equipment leases where the
aggregate rent required to be paid on or after the Effective Date under the
terms of such lease (excluding rent payments that could be avoided by exercising
cancellation or non-renewal rights) is at least $10,000; (ii) all executory
purchase agreements relating to the purchase of equipment, supplies or other
goods where the non-cancellable amount that is payable after the Effective Date
is at least $10,000; (iii) all agreements to which any Partnership (on the one
hand) and any partner of any Partnership, any partner or shareholder of any
Seller or Former Owner or any physician or any member of the medical staff of
any of the Surgery Centers, or any of their relatives or affiliates (on the
other hand), is a party; (iv) all employment and consulting agreements; (v) all
agreements with health maintenance organizations, insurance companies, provider
organizations and other managed care entities, or other contract whereunder any
Surgery Center is committed to provide Surgery Center services; and (vi) all
other agreements and commitments in which the non-cancellable financial
obligation of the Partnership as of the Effective Date is at least $25,000. Also
included in Schedule 9 is a list of all material contracts to which HealthFirst
or any Seller is a party, including without limitation any commitment or
proposal to acquire, develop or affiliate with any ambulatory surgery center or
any health facility (but not including debt instruments not involving a
Partnership). HealthFirst has delivered to Buyer or its counsel true and
complete copies of documents and instruments (if any) described in Schedules 2
and 9. To the best knowledge of Principals, all of the agreements, contracts,
leases and instruments listed in Schedule 9 are valid and binding. Neither
HealthFirst nor any Seller, Former Owner or Partnership has breached and, to the
knowledge of the Principals, no other party thereto has
11
breached any provision of, or is in default under the terms of, and there are no
facts or circumstances which would reasonably indicate that HealthFirst or any
Seller, Former Owner or Partnership will or may be in such breach or default
under, any such agreement, contract, lease or instrument, which invalidity,
breach or default could have a Material Adverse Effect.
(l) Tax Returns and Audits. HealthFirst and the Partnerships
have accurately prepared and filed all federal, state and local income,
withholding, sales and property tax returns and all information statements
required to be filed prior to the date of this Agreement (subject to any
extensions available without penalty). True and complete copies of each of the
two most recent of each such return or statement have been provided to Buyer.
All federal, state and local taxes required to be paid or withheld with respect
to the periods covered by such returns and statements have been paid or
withheld. Except for Buyer's share of federal and state income tax liabilities
with respect to income for the Partnership's tax years ending on December 31,
1998 (as provided in Section 8(i) below), Buyer shall not be liable for any tax
obligation of HealthFirst or any Seller, Former Owner, Principal or Partnership
resulting from the business of HealthFirst or any Seller, Former Owner or
Partnership prior to the Effective Date. No tax liability will be incurred by
any of the Partnerships as a result of the transactions contemplated by this
Agreement. Neither HealthFirst nor any Seller or Partnership has been delinquent
in any withholding of employee taxes or in the payment of any tax, assessment or
governmental charge. No Partnership has ever had any tax deficiency proposed or
assessed against it and has not executed any waiver of any statute of
limitations on the assessment or collection of any tax. Neither the federal
income tax returns nor the state income or franchise tax returns (if any) of
HealthFirst or any Partnership have ever been audited by any governmental
authority.
(m) Litigation and Proceedings. Except as described in
Schedule 10, there are no legal claims, actions, suits, medical staff disputes,
arbitrations or other legal, administrative or governmental proceedings pending
or, to the knowledge of the Principals, threatened against any Partnership or
any properties, assets or business of any Partnership, and to the Principal's
knowledge no facts exist which would form the basis for any such action or which
have been or should be reported under any professional liability insurance
policy covering any Surgery Center. Neither HealthFirst nor any Seller, Former
Owner or Partnership is involved in any material dispute with any shareholder or
partner of a Seller or any partner of a Partnership. No Seller, Former Owner or
Partnership is in default with respect to any judgment, order or decree of any
court, governmental agency or instrumentality. Schedule 10 contains a complete
and accurate description of the status of any matter covered thereby and Sellers
and the Partnerships carry adequate insurance to cover the cost, expenses and
damages of each of the matters described therein. Except for normal collection
efforts relating to accounts receivable, none of the Partnerships is engaged in
any legal action to recover money due to or damages sustained by any of them.
(n) Compliance with Law and Instruments. The business and
operations of HealthFirst and each Seller and Partnership have been and are
being conducted in compliance in all material respects with all applicable laws,
rules and regulations and licensing requirements of all authorities, the
violation of which could have a Material Adverse Effect HealthFirst and each
Principal, Former Owner, Seller and Partnership has complied with all applicable
federal and state securities laws in connection with the sale or resale of any
equity
12
interest in any Partnership. Each of the Surgery Centers meets (i) the
conditions for participation in the Medicare program and (ii) the requirements
for accreditation of ambulatory surgical centers of, and each Surgery Center is
accredited by, the Joint Commission on Accreditation of Healthcare
Organizations. No certificates of need were required for the construction or
operation of the Surgery Centers. Except for the consents and notice
requirements described in Schedule 11, the execution and delivery of this
Agreement and the consummation of the transactions provided herein will not
require any governmental consent, review or other process or the consent of any
party to any material lease, contract, agreement or instrument to which
HealthFirst or any of the Partnerships or Sellers is a party or by which any of
their respective assets is subject. Each of the Surgery Centers is authorized to
receive (and has received) payments for procedures covered by the Medicare
program. Neither the U.S. Department of Health and Human Services nor any state
agency has conducted, or has given HealthFirst or any Seller, Former Owner,
Principal or Partnership written notice that it intends to conduct, any audit or
other review of any Surgery Center's participation in the Medicare or Medicaid
programs (other than routine annual surveys, reviews and audits), and no such
audit or review would result in any material liability by HealthFirst or any
Seller, Former Owner or Partnership for any reimbursement, penalty or interest
with respect to payments received by HealthFirst or any Seller, Former Owner or
Partnership thereunder. The Principals do not know of any reason why the
Partnerships will not or may not be able to continue their respective
businesses, as presently conducted, after the Closing.
(o) Absence of Specified Changes. Except for the transactions
and agreements provided for herein, since the Balance Sheet Date there have not
been: (i) any transactions by any Partnership except in the ordinary course of
business as conducted on the Balance Sheet Date; (ii) any capital expenditure by
any Partnership exceeding $25,000; (iii) any cancellation of any debt or claim
or waiver of any right of substantial value; (iv) any material change in the
quantity or quality of the equipment, surgical instruments and supplies of any
of the Surgery Centers, except for changes due to ordinary wear and tear and
changes in quantities of supplies in the ordinary course of business; (v) any
destruction, damage to or loss of any material asset of any of the Partnerships,
whether or not covered by insurance; (vi) the creation or imposition of any
mortgage, pledge or other encumbrance on any asset of any Partnership, other
than purchase money liens on newly acquired assets; (vii) any increase in
salaries or benefits to employees or independent contractors of any Partnership
other than annual increases implemented in accordance with the past practices of
such Partnership; (viii) any material amendment to any of the material contracts
listed in Schedule 9, other than in the ordinary course of business of any
Partnership; (ix) any material adverse change in the financial condition,
business or prospects of any Partnership; (x) any sale, transfer or disposition
of any equipment that is material to such Partnership; or (xi) any agreement by
HealthFirst or any Seller, Former Owner or Partnership to do any of the things
described in this subsection (o).
(p) Insurance Policies. Each Partnership maintains in full
force and effect, and has maintained at all times since its inception, insurance
coverage on its assets, properties, operations and personnel in such amounts and
against such risks and losses as are described in Schedule 12 attached hereto,
which includes a brief description of all outstanding insurance policies in
effect as of the date hereof covering HealthFirst or any of the Partnerships or
any of their respective properties, employees, partners or businesses.
HealthFirst has provided to Buyer complete and accurate copies of all insurance
policies or certificates of insurance under
13
which any of the Partnerships is insured, including the coverage limits and
deductibles applicable thereto. HealthFirst, Sellers, the Former Owners and the
Partnerships are in compliance in all material respects with all of their
respective obligations under such insurance policies. All such policies are now
and will be through the Closing Date in full force and effect.
(q) Compensation and Benefits. Schedule 13 is an accurate and
complete list setting forth the names, salaries or other remuneration, bonuses
and employee benefits (including all severance benefits) of all current
employees whose annual base salary is in excess of $30,000 and of all
consultants (other than accountants and attorneys) of HealthFirst, Sellers and
each of the Partnerships. Neither HealthFirst nor any Seller or Partnership has
any collective bargaining agreement with any labor union and is not currently
negotiating with a labor union and no employee of HealthFirst or any Seller or
Partnership or has ever petitioned for a representation election. No employee of
HealthFirst or any Partnership, Former Owner or Seller has ever filed with any
governmental authority any claim asserting sexual harassment, age, racial or
other employment discrimination or violation of OSHA or any similar state law
against HealthFirst or any Principal, Seller, Former Owner or Partnership.
Neither HealthFirst nor any Seller, Former Owner or Partnership has received any
"right to ▇▇▇" letter relating to any of their respective employees or former
employees from any federal or state agency.
(r) Retirement Plans. Except as set forth in Schedule 13, none
of the Partnerships has ever maintained or participated in any pension, profit
sharing or other retirement plan, nor have they ever participated in, any
multi-employer plan as defined in Section 4001(a) (3) of the Employee Retirement
Income Security Act of 1974 ("ERISA") . Neither Buyer nor any Partnership will
incur any obligation or liability under or relating to the Plan as a result of
the transactions contemplated by this Agreement, or otherwise.
(s) No Brokers or Finders. As a result of any act or failure
to act by HealthFirst, any Seller, any Former Owner, any Principal or any
Partnership, no person or entity has, or as a result of the transactions
contemplated hereby will have, any right, interest or valid claim against or
upon Buyer or any Partnership for any commission, fee or other compensation as a
broker, finder or any similar capacity.
(t) Contracts with Affiliates. Except as described in Schedule
9, there are no contracts, agreements, understandings or other relationships
between any of the Partnerships, on the one hand, and any person or entity that
owns any equity interest in any Seller or Partnership, on the other hand, except
as expressly described or provided for in this Agreement.
(u) The Real Property.
(i) Neither HealthFirst nor any Seller, Former Owner,
Principal or Partnership has received written notice of either a
violation of any applicable ordinance or other law, order,
regulation or requirement, or any condemnation, lien, assessment or
the like, relating to any part of the Real Property or the operation
thereof and, to the best knowledge of the Principals, there is not
presently contemplated or proposed any condemnation or similar
14
action or zoning action or proceeding with respect to any Real
Property or the operation thereof;
(ii) To the best knowledge of the Principals, the Real
Property and its operation are in compliance with all applicable
zoning ordinances (including without limitation parking
requirements) and building codes, and the consummation of the
transactions contemplated herein will not result in the termination
of any current zoning variance;
(iii) The Real Property and all buildings, improvements
and fixtures thereon or therein, and all parts thereof and
appurtenances thereto, including without limitation the plumbing,
electrical, mechanical, heating, ventilation and air conditioning
systems, are in good operating condition and in a reasonable state
of maintenance and repair, except for normal wear and tear;
(iv) To the best knowledge of the Principals, no person
or entity other than a Partnership has any option or right of first
refusal to purchase, lease or rent any Real Property.
(v) None of the Real Property is located in a state or
federally designated flood hazard area;
(vi) Each Surgery Center has adequate parking available
to satisfy its current needs; and
(vii) With respect to the Real Property that is owned by
any Partnership, such Partnership has and has provided Buyer with
true and complete copies of title insurance policies, surveys,
environmental reports and studies, engineering reports and plans and
specifications relating to the improvements on such Real Property,
including all of the same that are in the possession of or available
to any of the parties hereto.
(v) Equipment. The equipment used in the Surgery Centers is
adequate in all material respects to fully equip and operate the Surgery Centers
at their present levels of operation. Each material item of equipment is in good
operating condition, normal wear and tear excepted.
(w) Supplies. All of the inventory and supplies which are
carried on the Balance Sheets and which are still held by any Partnership on the
date hereof are of a quality and quantity usable in the ordinary course of
business of the Surgery Centers. Inventory and supplies are carried at cost on a
first-in, first-out basis and are properly stated in the Balance Sheets.
(x) Environmental Matters.
(i) Each Partnership is in compliance with all
Environmental Laws (as defined below) in all material respects,
which compliance includes, without limitation, the possession by
each Partnership of all permits and other
15
governmental authorizations required under applicable Environmental
Laws to operate the Surgery Centers as currently operated, and each
Partnership is in compliance in all material respects with the terms
and conditions thereof;
(ii) No Hazardous Substances (as defined below) have
been generated or stored on, at or adjacent to any Real Property by
any Seller, Former Owner or Partnership, except in compliance with
applicable Environmental Laws;
(iii) No Hazardous Substances have been disposed of or
released on, from or adjacent to any Real Property by any Seller,
Former Owner or Partnership, except in compliance with applicable
Environmental Laws;
(iv) No party hereto has received any written
communication, whether from a governmental authority, citizen's
group, employee or otherwise, that alleges that any such party or
any Real Property is not in material compliance with Environmental
Laws, and there is no Environmental Claim (as defined below) pending
or, to the best knowledge of the Principals, threatened against any
party hereto; and
(v) To the best knowledge of the Principals, no Surgery
Center contains asbestos in any form.
"Environmental Claim" means any claim, action, cause of action,
investigation or notice by any person or entity alleging potential liability
(including without limitation potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries or penalties) arising out of, based on or resulting
from (A) the presence, or release on or from any Real Property or any Surgery
Center, of Hazardous Substances or (B) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means the federal, state, regional, county or
local environmental, health or safety laws, regulations, ordinances, rules and
regulations and common law in effect on the date hereof and the Closing Date
relating to the use, refinement, handling, treatment, removal, storage,
production, manufacture, transportation or disposal, emissions, discharges,
releases or threatened releases of Hazardous Substances, or otherwise relating
to protection of human health or the environment (including without limitation
ambient air, surface water, ground water, land surface or subsurface strata), as
the same may be amended or modified to the date hereof and the Closing Date.
"Hazardous Substances" means any toxic or hazardous waste,
pollutants or substances, including without limitation asbestos containing
materials or substances, any substance oaf med or listed as a "hazardous
substance," "toxic substance," "toxic pollutant" or similarly identified
substances or mixture, or pursuant to any Environmental Law and medical or
infectious wastes.
(y) Medical Staff Matters. HealthFirst has heretofore
delivered to Buyer true and complete copies of the bylaws and rules and
regulations of the medical staffs of each of toe Surgery Centers. With regard to
such medical staffs, there are no pending or, to the
16
best knowledge of the Principals, threatened disputes with applicants or staff
members, and all appeal periods in respect of any medical staff member or
applicant against whom an adverse action has been taken have expired. Attached
hereto as Schedule 14 is a complete and accurate description of all adverse
actions taken against medical staff members or applicants within the past two
years.
(z) Partnership Records. The minutes of all Partnership
meetings are in HealthFirst's possession and are complete and accurate in all
material respects.
(aa) Management Agreements. Each of the Partnerships is a
party to a HealthFirst Management Agreement, as described in Schedule 9. Each
such HealthFirst Management Agreement has been duly and validly executed by the
parties thereto, has been duly and validly assigned to the Management Sellers by
HealthFirst or any Former Owner that is a party thereto, is in full force and
effect and constitutes the valid and binding obligations of the parties thereto.
(bb) Investment Representations. Any and all Buyer Stock to be
issued to the Principals or any Seller pursuant to this Agreement (other than
any such issuance pursuant to Section 1(d) (x) above): (i) will not be
registered under the Securities Act of 1933, as amended (the "1933 Act"), or any
state securities laws; (ii) will be "restricted securities" within the meaning
of Securities and Exchange Commission Rule 144; (iii) will be acquired for
investment purposes only without any view to the resale or redistribution
thereof (other than a distribution by one or more Sellers to the Principals);
and (iv) will be subject to the restrictions on transfer set forth in Buyer's
Amended and Restated Registration Rights Agreement and its Amended and Restated
Stockholders Agreement, to which each issuee of Buyer Stock shall become a party
pursuant to Section 6(k). Each Principal is an "accredited investor" within the
meaning of Regulation D under the 1933 Act.
(cc) Full Disclosure. None of the representations, warranties
or disclosures made by HealthFirst or any Seller or Principal herein, or in any
exhibit, schedule, list, certificate or memorandum furnished or to be furnished
to Buyer in connection herewith, contains or will contain any untrue statement
that makes the statements made herein or therein misleading in any material
respect.
As used in this Agreement, "to the Principals' knowledge," "to the
best knowledge of Principals" and similar phrases shall mean all matters
reflected in any documents or files in the possession of HealthFirst or any
Seller, Former Owner or Partnership and the actual knowledge as of the date of
this Agreement and as of the Closing Date of any Principal, any other officer of
any Former Owner or Seller or any administrator of any of the Surgery Centers.
4. Buyer's Representations and Warranties. Buyer hereby represents
and warrants to HealthFirst, the Principals and Sellers as follows:
(a) Organization and Good Standing. Buyer has been duly
organized and is validly existing and in good standing under the laws of the
State of Delaware, with all requisite power and authority to carry on its
businesses as presently conducted.
17
(b) Due Authorization. The execution, delivery and performance
of this Agreement by Buyer have been duly authorized by all requisite board of
director and shareholder action and no further action is necessary to make this
Agreement valid and binding upon Buyer in accordance with its terms.
(c) Compliance with Instruments and Agreements. The
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in any breach or violation of any of the
terms or provisions of, or constitute a default under, the certificate of
incorporation, bylaws or shareholders agreement of Buyer, any statute, order,
rule or regulation of any court or governmental agency or body having
jurisdiction over Buyer, or any agreement, instrument or commitment to which
Buyer is a party or by which it is bound or to which any of its property is
subject.
(d) Capital Stock. The authorized capital stock of Buyer
consists of: (i) 30,000,000 shares of Buyer Stock, of which 21,938,929 shares
are outstanding on the date hereof; (ii) 40,000,000 shares of Common Stock, par
value $0.01 per share (the "Common Stock"), none of which are outstanding; (iii)
31,200 shares of Series A Redeemable Preferred Stock, par value $0.01 per share,
all of which are outstanding; and (iv) 2,716 shares of Series B Convertible
Preferred Stock, par value $0.01 per share, all of which are outstanding. All of
the outstanding shares of Buyer Stock, Series A Redeemable Preferred Stock and
Series B Convertible Preferred Stock have been validly issued and are fully paid
and nonassessable. As of the date hereof, Buyer had reserved 3,250,000 shares of
Common Stock for issuance pursuant to its Stock Option and Restricted Stock
Purchase Plan, 2,283,300 of which are subject to outstanding options granted by
Buyer pursuant to said Plan. In addition, pursuant to that certain Securities
Purchase Agreement, dated as of October 26, 1998 (the "Funding Agreement"),
among Buyer and certain of its current stockholders, Buyer has issued and sold,
or is obligated to issue and sell, an aggregate of $20,120,000 of Buyer's 7%
Senior Subordinated Notes. Except for such shares and the shares reserved for
issuance in connection with this Agreement, Buyer does not have any outstanding
subscriptions, options, warrants, rights or other agreements obligating Buyer to
issue or sell shares of its capital stock or any securities or obligations
convertible into or exchangeable for any shares of its capital stock.
(e) Financial Statements. Buyer has previously furnished to
Sellers an unaudited consolidated balance sheet of Buyer and its subsidiaries at
September 30, 1998 and an unaudited consolidated statement of operations for the
period from inception to September 30, 1998. Such balance sheet and statement of
operations fairly present the consolidated financial position of Buyer as of its
date and its results of operations for such period in accordance with GAAP (as
such principles apply to interim, unaudited financial statements) Except as
reflected or disclosed in said balance sheet or a Schedule attached hereto,
other than liabilities incurred since the date of such balance sheet in the
ordinary course of their respective businesses (including without limitation
letters of intent and commitments to acquire or develop other health care
facilities) and liabilities incurred in connection with the this Agreement or
otherwise contemplated or permitted by this Agreement, neither Buyer nor any of
its subsidiaries is as of the date hereof subject to any material liability,
including without limitation contingent liabilities.
18
(f) Status of Buyer Stock. Each share of Buyer Stock issued to
pursuant to the this Agreement will be, when so issued, duly authorized, validly
issued, fully paid and nonassessable.
(g) Compliance with Applicable Laws. The businesses of Buyer
and its subsidiaries are not being conducted in material violation of any
applicable law, ordinance, regulation, decree or order of any governmental
entity, except for violations which either singly or in the aggregate do not and
are not expected to have a material adverse effect on the financial condition,
business, assets or operations of Buyer and its subsidiaries taken as a whole.
(h) Litigation. There are no legal claims, actions, suits,
medical staff disputes, arbitrations or other legal, administrative or
governmental proceedings or investigations pending or, to the knowledge of
Buyer, threatened against Buyer or any of its properties, assets, subsidiaries
or businesses, and to the knowledge of Buyer no facts exist which would form the
basis for any such action or which have been or should be reported under any
professional liability insurance policy and which could have a material adverse
affect on Buyer or any of its properties, assets, subsidiaries or businesses
Neither Buyer or any of its domestic subsidiaries or businesses is involved in
any material dispute with any shareholder of Buyer or any partner of any
partnership or other entity Neither Buyer nor any of its domestic subsidiaries
or businesses is in default with respect to any judgment, order or decree of any
court, governmental agency or instrumentality.
(i) Absence of Material Adverse Changes. Except as disclosed
in writing to HealthFirst or Sellers prior to the date of this Agreement, since
September 30, 1998 neither Buyer nor any of its subsidiaries has undergone any
change in its financial condition, business or operations except as contemplated
by this Agreement and other than changes in the ordinary course of business
which have not been, either in any case or in the aggregate, materially adverse
to Buyer and its subsidiaries taken as a whole.
(j) No Finders or Brokers. As a result of any act or failure
to act by Buyer or any of its affiliates, no person, firm or corporation has, or
as a result of the transactions contemplated hereby will have, any right,
interest or valid claim upon HealthFirst or any Principal, Former Owner or
Seller or for any commission, fee or other compensation as a finder, broker or
in any similar capacity.
(k) Investment Intent. Buyer acknowledges that the Transferred
Partnership Interests have been offered and will be sold to Buyer pursuant to an
exemption from registration under the 1933 Act and all applicable state
securities laws, Buyer is purchasing the Transferred Partnership Interests for
investment purposes and has no present intent to distribute, resell, pledge or
otherwise dispose of any of the Transferred Partnership Interests.
5. Pre-Closing Covenants. The parties agree that from the date
hereof until the Closing Date or the termination of this Agreement:
(a) Due Diligence. Sellers will afford officers and authorized
representatives of Buyer with reasonable access to the financial, operational
and statistical books and records of Sellers and each of the Partnerships and
shall permit Buyer to conduct physical
19
inspections of the Real Property and the Surgery Centers at such time or times
as will not disrupt customary delivery of care to patients. Buyer will afford
the Principals and their authorized representatives with reasonable access to
the financial, operational and statistical books and records of Buyer and shall
permit the Principals to conduct physical inspections of any and all domestic
health care facilities in which Buyer has an interest at such time or times as
will not disrupt customary delivery of care to patients.
(b) Continuation of Business. Sellers shall cause each of the
Partnerships to:
(i) conduct its business only in the usual and ordinary
course as it has previously been conducted, including without
limitation its policies and practices relating to the collection of
accounts receivable and the payment of trade payables and other
liabilities, and not introduce any new methods of management,
operations or accounting, without Buyer's prior written consent
(which shall not be unreasonably withheld);
(ii) maintain the assets of the Surgery Centers in as
good working order and condition as at present, ordinary wear and
tear excepted;
(iii) perform all material obligations under material
contracts and leases relating to or affecting the Surgery Centers;
(iv) keep in full force and effect present insurance
policies;
(v) confer on a regular basis with representatives of
Buyer relating to any material decisions relating to their
respective business or their relationships with their partners and
medical staffs; and
(vi) use its reasonable best efforts to maintain and
preserve the business organizations of each Partnership, retain
their present employees and maintain their relationships with
employees, suppliers, patients, payors and others having business
relations with them.
(c) Transactions Requiring Consent. From the date hereof until
the Closing Date, without Buyer's prior written consent (which shall not be
unreasonably withheld), except as required or permitted by this Agreement,
Sellers shall not permit any Partnership to:
(i) prepay any debt in excess of $25,000 prior to its
stated maturity (except pursuant to an existing amortization payment
schedule), make any payment on any Indebtedness owed to any Seller,
Former Owner or Principal or HealthFirst or enter into any contract
or commitment or incur or agree to incur any debt or make any
capital expenditure requiring the payment in excess of $25,000;
(ii) create or assume any mortgage, pledge or other lien
or encumbrance upon any of its assets, whether now owned or
hereafter acquired;
20
(iii) make any loan;
(iv) incur any debt in excess of $25,000, other than
normal trade payables;
(v) amend any material contract listed in Schedule 9
(except changes made in the ordinary course of business) or change
any employee compensation (except normal annual salary increases
implemented in accordance with past practices);
(vi) fail to pay any obligation in a timely manner prior
to delinquency;
(vii) issue any equity interest; or
(viii) declare, set aside or pay any distribution to its
partners, or directly or indirectly purchase, redeem or otherwise
acquire any outstanding equity interest in any Partnership, except
for distributions made prior to the Closing Date of available cash
on hand immediately prior to the Effective Date to the Partnerships'
partners, subject to the requirement that each of the Partnerships
shall have at least $50,000 of cash as of the Effective Date, as
provided in Section 8(b)(iv).
(d) Performance Covenant. Each of the parties hereto covenants
and agrees that it will take all action reasonably within its power and
authority to duly and timely carry out all of its obligations hereunder, to
perform and comply with all of the covenants, agreements, representations and
warranties hereunder applicable to it and to cause all conditions to the
obligations of the other parties to close the purchase and sale of the
Transferred Assets pursuant hereto to be satisfied as promptly as possible.
(e) Costs of Agreement. Each of the parties hereto agrees to
bear all of its own expenses incurred in preparing or complying with this
Agreement, including without limitation all legal and accounting expenses and
fees. None of such expenses shall be charged to any Partnership. Sellers agree
to bear and, to the extent paid by any other party hereto or any Partnership, to
reimburse for the cost of all documentary stamps, transfer taxes, sales taxes,
recording fees and similar closing costs incurred in connection with the
transactions provided for herein. Sellers shall also bear all reasonable
premiums for any endorsement of any title insurance property relating to any
Real Property owned by any of the Partnerships that is reasonably requested by
Buyer in connection with such transactions.
(f) Governmental Approvals. The parties hereto shall assist
and cooperate with each other and their respective counsel (i) in obtaining all
governmental consents, approvals and licenses described in Schedule 11 or which
Buyer reasonably deems necessary or appropriate and (ii) in the preparation of
any document or other materials which may be required by any governmental agency
in connection with the transactions contemplated herein.
(g) No-Shop Clause. Neither HealthFirst nor any Seller or
Partnership will, without the prior written consent of Buyer, (a) offer for sale
any of the
21
Transferred Assets, all or substantially all of the assets of any Partnership or
any ownership interest in HealthFirst or any Seller, (b) solicit offers to buy
any of the Transferred Assets, all or substantially all of the assets of any
Partnership or any ownership interest in HealthFirst or Seller, (c) hold
discussions with any party (other than Buyer) looking toward such an offer or
solicitation or looking toward a merger or consolidation of HealthFirst or any
Seller or Partnership, or (d) enter into any letter of intent or agreement with
any party (other than Buyer) with respect to the sale or other disposition of
any of the Transferred Assets, all or substantially all of the assets of any
Partnership or any ownership interest in HealthFirst or Seller or with respect
to any merger, consolidation or similar transaction involving HealthFirst or any
Seller or any Partnership.
6. Conditions Precedent to Obligations of Buyer. The obligations of
Buyer hereunder are subject to the satisfaction, on or prior to the Closing
Date, of the following conditions (unless waived by Buyer):
(a) Accuracy of Representations and Warranties. The
representations and warranties of HealthFirst, the Principals and Sellers
contained in this Agreement shall be true in all material respects on and as of
the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date. All of the agreements of
HealthFirst, the Principals and Sellers to be performed on or before the Closing
Date pursuant to the terms hereof shall have been performed in all material
respects. Sellers shall deliver to Buyer certified copies of all resolutions of
the boards of directors or managers (as the case may be) and the shareholders,
partners or members (as the case may be) of Sellers, and (to the extent
required) the consents and resolutions of the general and limited partners (as
the case may be) of each Partnership, approving or otherwise relating to this
Agreement and the transactions contemplated hereby. Sellers shall have delivered
an officer's certificate executed by the Principals (in their capacity as
officers or partners of Sellers) attesting to compliance with this Section 6(a)
and the incumbency of the officers or partners of Sellers executing any document
or instrument contemplated herein.
(b) Action Restraining or Affecting Transaction. No action or
proceeding before a court or any other governmental agency or body shall have
been instituted or threatened to restrain or prohibit the transfer of any of the
Transferred Assets, or which in the opinion of Buyer may otherwise materially
and adversely affect any of the Partnerships, and no third party or governmental
agency or body shall have taken or threatened any action with respect this
Agreement or any of the Surgery Centers as a result of which Buyer deems it
inadvisable to proceed with the transactions contemplated hereunder,
(c) Material Changes. None of the Surgery Centers shall have
suffered any change, loss or damage since the Balance Sheet Date which
materially and adversely affects or impairs the operations or prospects of the
Surgery Center. The case load and revenue levels of each of the Surgery Centers
shall not have materially deteriorated from the average levels achieved during
the seven month period ended on the Balance Sheet Date.
(d) Governmental Permits. Buyer shall have obtained all
licenses, certificates, permits and rulings of, and made all notices to, all
governmental authorities that may be required in connection with the acquisition
of the Transferred Assets and the continuation of
22
the operation of the businesses of the Surgery Centers by the Partnerships
following the Closing, including without limitation compliance with any
applicable licensure, notification and approval procedures of the state agencies
that regulate the Surgery Centers that are required to be completed at or prior
to the Closing.
(e) Consents, Approvals or Authorizations. Sellers shall have
obtained all consents, approvals and authorizations and given all notices
required in connection with the transactions provided for herein, including the
consents and notices described in Schedule 11.
(f) Intentionally omitted.
(g) Lega1 Opinion. Sellers shall have delivered to Buyer an
opinion of counsel to HealthFirst, the Principals and Sellers, dated the Closing
Date, in form and substance satisfactory to Buyer and its counsel and covering
the matters described in Exhibit A attached hereto. In rendering such opinion,
such counsel may rely as to factual matters upon certificates of public
officials and upon certificates of the Principals and other officers of Sellers.
(h) Partnership Actions. The transfer of the Transferred
Assets to Buyer (or a wholly owned subsidiary of Buyer) pursuant hereto shall
have been approved by the requisite percentage of the partners of each
Partnership and by the requisite percentage of the shareholders of VVSC in
accordance the terms of any Partnership Agreement, any shareholders agreement
applicable to the shareholders of VVSC or applicable law. In addition, each of
the Partnership Agreements shall have been amended (to the extent required) (i)
to admit Buyer (or its designated subsidiary) as a general partner of such
Partnership, (ii) to authorize Buyer to acquire the HealthFirst Management
Agreement with such Partnership, (iii) to authorize Buyer to transfer its
interest in and Management Agreement with such Partnership to THVG on or after
the date Buyer acquires HealthFirst's interest in THVG and to substitute THVG
(or its designated affiliate) as the general partner of such Partnership and
(iv) to waive any concompetition covenant therein that would otherwise be
applicable to Buyer or THVG.
(i) Transfer of Transferred Assets. Sellers shall have
delivered to Buyer assignments, which shall be in form and substance
satisfactory to Buyer, transferring the Transferred Assets to Buyer (or one or
more of its designated subsidiaries). Sellers shall also have delivered (or made
arrangements satisfactory to Buyer to deliver) to Buyer all of the books and
records of each of the Partnerships.
(j) Employment Agreements with Principals. Each Principal
shall have executed and delivered an Employment Agreement substantially in the
form of Exhibit B attached hereto.
(k) Amendment of Buyer's Stockholders and Registration Rights
Agreements. Each of the parties to which any Buyer Stock is to be issued
pursuant to Section 1(d) shall have executed and delivered Amendments to Buyer's
Amended and Restated Stockholders Agreement and its Amended and Restated
Registration Rights Agreement, each dated as of April 30, 1998, in order to add
such issuees as parties to such Agreements, which Amendments shall be in form
and substance reasonably satisfactory to Buyer and such issuees.
23
(l) THVG Purchase Agreement. Buyer, Disney THVG, L.L.P.,
▇▇▇▇▇▇▇ THVG, L.L.P. and HealthFirst shall have entered into a binding agreement
providing for the purchase by Buyer of the interest in THVG held by Disney THVG,
L.L.P and ▇▇▇▇▇▇▇ THVG, L.L.P., which agreement shall be subject to completion
of satisfactory due diligence by Buyer and to the receipt of all necessary
consents and approvals from Baylor Health Care System. To the extent deemed
necessary or appropriate by the Principals, Baylor Health Care System shall have
acknowledged that the execution of such binding agreement shall not breach any
obligations of HealthFirst, Disney THVG, L.L.P or ▇▇▇▇▇▇▇ THVG, L.L.P. with
respect to THVG or cause any rights of first refusal or other similar provisions
to be applicable with respect to their respective interests in THVG.
(m) Insurance Coverage for Pre-Effective Date Malpractice
Claims. Each Partnership shall have obtained (at its expense) "tail" or "prior
acts" malpractice insurance coverage for any potential claims for pre-Effective
Date business conducted by any Partnership (including any claims that are
described in Schedule 10).
7. Conditions Precedent to Obligations of Sellers. The obligations
of HealthFirst, the Principals and Sellers hereunder are subject to the
satisfaction, on or prior to the Closing Date, of the following conditions
(unless waived by Sellers):
(a) Accuracy of Representations and Warranties of Buyer. The
representations and warranties of Buyer contained in this Agreement shall be
true in all material respects as of the Closing Date as though such
representations and warranties had been made at and as of that time, All of the
agreements of Buyer to be performed by Buyer on or before the Closing Date shall
have been duly performed in all material respects. Buyer shall deliver to
Sellers certified copies of all resolutions of Buyer's board of directors
approving or otherwise relating to this Agreement and the transactions
contemplated hereby. Buyer shall have delivered an officer's certificate
attesting to compliance with this Section 7(a) and the incumbency of the
officers of Buyer executing any document or instrument contemplated herein.
(b) Action Restraining or Affecting Transaction. No action or
proceeding before a court or any other governmental agency or body shall have
been instituted or threatened to restrain or prohibit the transfer of any of the
Transferred Assets, or which in the opinion of Sellers may otherwise materially
and adversely affect Sellers, and no third party or governmental agency or body
shall have taken or threatened any action with respect to this Agreement as a
result of which Sellers deem it inadvisable to proceed with the transactions
contemplated hereunder.
(c) Receipt of Consideration. Buyer shall have delivered to
Sellers the consideration described in Section 1(a).
(d) Legal Opinion. Buyer shall have delivered to Sellers an
opinion of Nossaman, Guthner, ▇▇▇▇ & ▇▇▇▇▇▇▇, LLP, dated the Closing Date, in
form and substance satisfactory to HealthFirst and its counsel and covering the
matters described in Exhibit C attached hereto. In rendering such opinion, such
counsel may rely as to factual matters upon certificates of public officials and
upon certificates of officers of Buyer.
24
(e) Employment Agreements with Principals. Buyer shall have
executed and delivered to each Principal an Employment Agreement substantially
in the form of Exhibit S attached hereto.
(f) Assignment and Assumption Agreement. Buyer shall have
executed and delivered to Sellers, and any other parties designated by Sellers,
an Assignment and Assumption Agreement in the form of Exhibit D attached hereto
in connection with Buyer's assumption of certain liabilities and obligations of
Sellers pursuant to Section 1(e).
8. Post-Closing Covenants.
(a) Indemnification.
(i) Buyer covenants and agrees that it will indemnify
and hold HealthFirst, Sellers and Principals, and their respective
successors and assigns and their respective officers, directors,
employees, stockholders and agents at all times harmless from and
against any loss, liability, damage and expense (including
reasonable attorneys' fees and other costs of defense) caused by or
arising out of or in connection with (A) any liability or obligation
expressly assumed by Buyer pursuant to Section 1(e) or (B) any
misrepresentation, breach of warranty or nonfulfillment of any
agreement on the part of Buyer under this Agreement. Without
limiting the generality of the foregoing, HealthFirst, Sellers and
Principals shall have the right to be put in the same financial
position as they would have been in had each of the representations
and warranties of Buyer been true and correct and had each of the
covenants of Buyer been performed in full.
(ii) HealthFirst, Sellers and the Principals jointly and
severally covenant and agree that they will indemnify and hold Buyer
and its successors and assigns and their respective officers,
directors, employees, stockholders and agents at all times harmless
from and against any loss, liability, damage and expense (including
reasonable attorneys' fees and other costs of defense) caused by or
arising out of or in connection with (A) any liability of
HealthFirst or any Seller or Former Owner not expressly assumed by
Buyer pursuant to Section 1(e) hereof, (B) any dispute between or
among any partner or former partner of a Partnership (on the one
hand) and HealthFirst and/or any Seller, Former Owner, Principal
and/or Partnership (on the other hand) relating to any obligation
that was to be performed, or action that was taken, on or before the
Effective Date or any misrepresentation, breach of warranty or
nonfulfillment of any agreement on the part of HealthFirst or any
Seller or Principal under this Agreement, provided, however, that
Buyer shall not be entitled to make any claim for indemnification
pursuant to clause (C) above (I) with respect to any such breach of
representations and warranties unless and until the monetary value
of all such breaches (on a cumulative basis) exceeds $50,000, in
which event HealthFirst, Sellers and the Principals shall be liable
for the full monetary value of all such breaches (including the
initial $50,000), (II) at any time after the second anniversary of
the Closing Date, except for (x) claims asserted in writing pursuant
to this Section 8(a) (ii) prior to such second anniversary, (y)
claims made with respect to any
25
breach of Section 3(a), (b), (f), (g), (h), (l), (s), (x) or (bb) or
Section 8(c), (d), (e), (f), (g), (i) or (l) hereof and (z) claims
relating to any liability of HealthFirst or any Seller or Former
Owner not assumed by Buyer, which shall remain the obligation of
HealthFirst, Sellers, the Former Owners and the Principals at all
times, or (III) that, when aggregated with all other claims made
pursuant to clause (C), would cause the total liability of
HealthFirst, Sellers and Principals thereunder to exceed $5,000,000.
Notwithstanding the foregoing, clauses (I), (II) and (III) above
shall not apply to Section 8(n), which shall be an independent
covenant that is not subject to any such limitations. In addition,
with respect to any claim under this subsection (ii) that arises out
of a liability or obligation of a Partnership, the indemnity
obligation of Sellers, HealthFirst and the Principals hereunder (1)
shall relate only to their direct or indirect percentage interest in
such Partnership represented by the Transferred Partnership Interest
in such Partnership and (2) shall be owing directly to Buyer and not
such Partnership. Without limiting the generality of the foregoing,
but subject to the limitations set forth above, Buyer shall have the
right to be out in the same financial position as it would have been
had each of the representations and warranties of HealthFirst,
Sellers and the Principals been true and correct and had each of the
covenants of HealthFirst, Sellers and the Principals been performed
in full.
(iii) Any party that intends to enforce an indemnity
obligation (the "Indemnified Party") shall give the party from whom
indemnification is sought (the "Indemnifying Party") notice of any
claim as soon as possible, but the failure to give such notice shall
not relieve the Indemnifying Party of any of its obligations
hereunder unless and only to the extent that the Indemnifying Party
shall have been prejudiced thereby.
(iv) In the event such indemnification involves a claim
by a third party (a "Third Party Claim"), the Indemnifying Party may
elect to assume the defense of the Third Party Claim at its own
expense with counsel selected by the Indemnifying Party and approved
by the Indemnified Party (which approval shall not be unreasonably
withheld), and the assertion of such right shall constitute an
acknowledgment by the Indemnifying Party that such Third Party Claim
is an indemnifiable claim for which the Indemnifying Party is
responsible under this Section 8(a). If the Indemnifying Party
assumes the defense of a Third Party Claim, (A) the Indemnifying
Party shall not thereafter be liable for any fees or expenses of
counsel for the Indemnified Party, (B) the Indemnified Party shall
make available to the Indemnifying Party or its representatives all
records and other materials reasonably required by the Indemnifying
Party for use in contesting such Third Party Claim and shall
cooperate fully with the Indemnifying Party in the defense thereof,
(C) the Indemnified Party shall have the right to participate in the
handling of such Third Party claim at its expense and (D) the
Indemnified Party shall not voluntarily settle any such Third Party
Claim without the prior written approval of the Indemnifying Party,
which approval shall not be unreasonably withheld. If the
Indemnifying Party does not assume such defense, the Indemnifying
Party shall be liable for all costs and expenses incurred
26
by the Indemnified Party in defending the Third Party Claim,
including reasonable fees and disbursements of counsel.
(v) If, after having first provided the Indemnifying
Party an opportunity to fulfill its obligations to the Indemnified
Party hereunder, the Indemnified Party then brings an action against
the Indemnifying Party upon any claim under this Section 8(a), the
Indemnifying Party shall be liable to the Indemnified Party for its
reasonable fees and disbursements of counsel in connection therewith
if the Indemnified Party prevails in the action.
(vi) In case any event shall occur which would otherwise
entitle any party to assert a claim for indemnification hereunder,
no loss, damage or expense shall be deemed to have been sustained by
such party to the extent of any proceeds received by such party from
any insurance policies with respect thereto.
(vii) In order to secure any valid claim for
indemnification that Buyer may have against HealthFirst or any
Seller or Principal hereunder (but not as a sole source for the
payment of any such claim), (A) HealthFirst and each Seller and
Principal hereby grants to Buyer a security interest in any and all
shares of Buyer Stock issued to any Seller or Principal pursuant to
this Agreement or transferred by a Seller to any of its partners and
(B) Buyer is authorized to retain any consideration that would
otherwise be due to any Seller or Principal pursuant to this
Agreement as to and to the extent necessary to pay any such valid
claim for indemnification for which such party is liable and which
has not been paid at the time Buyer is obligated to deliver such
consideration under the terms of this Agreement. Buyer shall have no
obligation to exercise its rights under this subsection (vii) in
order to obtain payment of any indemnification obligation under this
Section 8(a).
(b) Working Capital Requirements and Post-Closing Adjustment
of Purchase Price.
(i) Within 90 days after the Closing Date Buyer shall
prepare and deliver to the Principals unaudited balance sheets and
any other appropriate statements (the "Effective Date Balance
Sheets") necessary to establish, as of the Effective Date: (A) 20%
of the net working capital (defined in accordance with GAAP, but
excluding cash and cash equivalent assets and excluding all
Indebtedness that was outstanding on November 30, 1998 and included
in the calculation of the amount payable pursuant to Section 1(a)
above) of the Initial Partnerships; (B) 20% of the Initial
Partnerships' outstanding Indebtedness (other than the November 30,
1998 Indebtedness that is included in the calculation of the amount
payable pursuant to Section 1(a) above), if any; (C) 20% of all
employee benefit obligations with respect to employees whose costs
are allocated to the Surgery Centers operated by the Initial
Partnerships through the Center Support Organization and that are
not included in the computation of net working capital pursuant to
Clause (A) above; and (D) 100% of all employee benefit obligations
of other employees of HealthFirst or any Seller, and other current
liabilities (if
27
any) of HealthFirst or any Seller not included in such net working
capital calculation, that are assumed by Buyer pursuant to Section
1(e)(iii). The amount obtained by subtracting the amounts described
in clauses (B), (C) and (D) from the amount described in clause (A)
is hereinafter referred to as the "Effective Date Working Capital".
An example of the methodology used to calculate the Effective Date
Working Capital of the Initial Partnerships as of July 31, 1998 is
attached hereto as Schedule 15.
(ii) If the Effective Date Working Capital is less than
$528,923, then Sellers shall pay to Buyer an amount equal to such
shortfall.
(iii) If the Effective Date Working Capital is greater
than $528,923, then Buyer shall pay Sellers an amount equal to such
excess.
(iv) Each of the Initial Partnerships must have at least
$50,000 in cash and cash equivalent assets as of the Effective Date.
All cash assets in excess of $50,000 held by any Initial Partnership
as of. the Effective Date shall be distributed to the partners of
such Initial Partnership at or prior to the Closing Date.
(v) The payment, if any, required to be made under this
Section 8(b) by Buyer to Sellers, or by Sellers to Buyer, as the
case may be, shall be made based upon the Effective Date Balance
Sheets unless a Principal notifies Buyer in writing of any objection
thereto (which objection shall be specifically described therein)
within 30 days after the Principals' receipt thereof. If a Principal
notifies Buyer of any such objection, the Principals and Buyer shall
use their best efforts to resolve such objection, but if they are
not able to reach a resolution within 15 days after the date notice
of such objection is delivered to Buyer, the matter shall be
submitted to KPMG Peat Marwick LLP or, at the request of the
Principals, to Ernst and Young, which accounting firm shall act as
an expert and not as an arbitrator, for a final and binding
determination of the Effective Date Working Capital. The expenses of
such accounting firm in resolving any dispute shall be paid by Buyer
if the final determination of the amount due under this Section 8(b)
is changed in a manner that is favorable to Sellers by at least
$25,000 as compared to the amount determined pursuant to the
Effective Date Balance Sheets prepared by Buyer and, otherwise, such
expenses shall be paid by Sellers.
(vi) The payment required by either Sellers or Buyer
pursuant to this Section 8(b) shall be made promptly after the
expiration of the 30 day period following Buyer's delivery of the
Effective Data Balance Sheets to the Principals or, if a Principal
notifies Buyer of an objection to the Effective Date Balance Sheets
as described in subsection (v) above within such 30 day period, the
payment shall be made promptly after resolution of such dispute as
provided in subsection (v) above.
(c) Termination of Partnerships' Participation in Retirement
Plans. Subject to compliance with the current agreements between Administaff
Companies, Inc.
28
and either HealthFirst, Sellers or the Partnerships, upon termination of said
agreements with Administaff Companies, Inc., employees of HealthFirst, Sellers
and the Partnerships shall cease to participate in or accrue benefits under any
current pension, profit sharing or similar plan (the "Plans"). HealthFirst and
Sellers agree that, to the extent allowed by applicable laws and regulations, as
soon as practicable following the Closing, at the expense of HealthFirst and/or
Sellers (or, if applicable, their employee leasing company), they (or, if
applicable, their employee leasing company) will take all steps and make all
filings necessary or appropriate in order to terminate the participation of the
employees of HealthFirst, Sellers and the Partnerships in the Plans, and
HealthFirst and Sellers shall take any and all action necessary to authorize and
direct the administrator of the Plans to take such actions. HealthFirst
acknowledges and agrees that it and the Sellers (or, if applicable, their
employee leasing company) will retain responsibility for the funding,
administration and distribution of benefits under the Plans. Buyer agrees to use
its best efforts to facilitate the rollover of any and all funds and accounts
held for the participating employees of HealthFirst, Sellers and the
Partnerships who voluntarily elect to make such rollovers into one or more of
the pension and/or profit sharing plans maintained by Buyer or its affiliates,
as and to the extent such rollovers are permissible under applicable laws and
regulations.
(d) Books and Records; Personnel. For a period of seven years
from the Closing Date:
(i) Buyer shall not dispose of or destroy any of the
material books and records of the Partnerships, Sellers or
HealthFirst relating to periods prior to the Effective Date ("Books
and Records") without first offering to turn over possession thereof
to Sellers by written notice to Sellers at least 15 days prior to
the proposed date of such disposition or destruction.
(ii) Buyer shall allow Sellers and their agents access
to all Books and Records during normal working hours at Buyer's
principal place of business or at any location where any Books and
Records are stored, and Sellers shall have the right, at their
expense, to make copies of any Books and Records; provided, however,
that any such access or copying shall be had or done in such a
manner so as not to interfere with the normal conduct of the
Partnerships' businesses.
(iii) Buyer shall make available to Sellers upon written
notice copies of any Books and Records, (B) Buyer's and the
Partnerships' personnel to assist HealthFirst in locating and
obtaining any Books and Records and (C) any of Buyer's or the
Partnerships' personnel whose assistance or participation is
reasonably required by Sellers or any of their affiliates in
anticipation of, or preparation for, any investigation, inquiry,
pending or threatened litigation, tax or other matters in which
Sellers or any of their affiliates is involved; provided, however,
that any such copying or assistance shall be had or done in such a
manner so as not to interfere with the normal conduct of Buyer's and
the Partnerships' businesses. Sellers shall reimburse Buyer for the
reasonable direct and indirect expenses incurred by Buyer in
performing the covenants contained in this Section 8(d)(iii).
29
(e) Offer to Purchase Additional Limited Partner Interests.
(i) Within 60 days following the Closing Date, and
continuing until the first anniversary of the Closing Date, Buyer
(or the wholly owned subsidiary to which Buyer has assigned its
rights to acquire the Transferred Partnership Interests hereunder,
all of which are for convenience referred to in this Section 8(e) as
"Buyer") shall offer to purchase from each Initial Partnership newly
authorized limited partnership interests that would, upon the issue
and sale thereof, represent 50% of the total outstanding interests
in such Partnership, subject to approval by the requisite percentage
of the partners in such Partnership of an amendment to its
Partnership Agreement (A) to authorize such issuance and sale, (B)
to approve the use of the proceeds of such sale first to pay off any
outstanding Indebtedness shown in Schedule 8A that is owing to
HealthFirst or any Seller, Former Owner or Principal and then to
distribute the balance to the partners in the Partnership according
to their ownership interests in the Partnership following the
issuance and sale of such new partnership interests and (C) to add a
noncompetition covenant that is applicable to the limited partners
(other than Buyer or any of its affiliates).
(ii) The purchase price offered to each Initial
Partnership shall be seven times the earnings before interest,
taxes, depreciation and amortization of such Partnership (the
"Partnership EBITDA") for the 12 calendar months (the "Base Year")
ended prior to the date of the closing of such sale, less the
Partnership's outstanding debt as of the last day of the Base Year,
plus three times the increase (if any) in the average 12 month
Partnership EBITDA for the period from the end of the Base Year to
the end of Year Two (as defined in Section 1(c)(i)(A) above) over
the Partnership EBITDA for the Base Year, plus three times any
increase in the Partnership EBITDA for Year Three over the greater
of the Partnership EBITDA for the Base Year or the average 12 month
Partnership EBITDA for the period from the end of the Base Year to
the end of Year Two, provided, however, that the aggregate amount
payable to any Partnership pursuant to clauses (B) and (C) shall not
exceed 25% of the amount payable pursuant to clause (A).
(iii) The purchases provided for in this Section 8(e)
shall be consummated as soon as practicable following Buyer's
calculation of the Partnership EBITDA of each Initial Partnership
for the Base Year (and, if applicable, the resolution of any dispute
between Buyer and the Principals relating to Base Year Partnership
EBITDA calculation pursuant to the third paragraph of Section 1(c)
above), at which time the portion of the purchase price calculated
pursuant to subsection 8(e)(ii)(A) above shall be paid. The payments
to be made pursuant to subsections 8(e)(ii)(B) and 8(e)(ii)(C) above
shall be made within 60 days after the end of Year Two and Year
Three, respectively.
(iv) If Buyer is successful in purchasing additional
limited partnership interests in any Initial Partnership pursuant to
this Section 8(e), then (A) Buyer shall be obligated to pay to the
Partnership Sellers an additional
30
amount equal to (in the aggregate) (I) seven times the percentage
interest in such Initial Partnership represented by the Transferred
Partnership Interest therein sold to Buyer pursuant to Section 1
multiplied by the Base Year Partnership EBITDA minus (II) the
allocation of the payment made by Buyer to Sellers pursuant to
Section 1(a) that is attributable to such Initial Partnership (as
adjusted pursuant to Section 8(b) above), as identified in Schedule
5, which payment shall be made concurrently with the payment to the
Initial Partnership of the initial installment of the purchase price
pursuant to subsection (ii)(A) above, and (B) no payment shall be
due to the Partnership Sellers with respect to the Year One EBITDA
attributable to such Initial Partnership pursuant to Section
1(c)(i).
(v) All payments made pursuant to this Section 8(e)
shall be payable one-half to each Partnership Seller in cash by
Buyer's checks or, if wire transfer instructions are given to Buyer
at least three business days prior to the payment date, by wire
transfer of immediately available funds.
(f) Management and Option to Purchase Fort Worth Surgery
Center. The Partnership Sellers are the sole general partners of Fort Worth
Surgicare Partners, Ltd. (the "Fort Worth Partnership"). The Fort Worth
Partnership has been formed for the purpose of developing, owning and operating
an outpatient surgery center in Fort Worth, Texas (the "Fort Worth Surgery
Center") and has concluded the syndication of its limited partnership interests
to local investors (the "Other Fort Worth Partners") . The Principals represent
and warrant that the foregoing facts are true and correct and anticipate that
the Fort Worth Surgery Center should be completed and opened on or about March
31, 1999, and Principals know of no reason why such completion and opening
schedule will not be met, it being understood by Buyer that construction
projects are subject to circumstances beyond the Principals' control and acts of
God. Sellers agree that, if the Closing occurs, the Fort Worth Partnership will
engage Buyer (or its designated subsidiary) to manage the Fort Worth Surgery
Center and Buyer will have an option to purchase Sellers' interests in the Fort
Worth Partnership, as follows:
(i) At the Closing the Management Sellers will assign to
Buyer (or a designated wholly owned subsidiary of Buyer) the
HealthFirst Management Agreement with the Fort Worth Partnership
whereunder Buyer (or its subsidiary) will provide day-to-day
management services to the Fort Worth Surgery Center for a
management fee equal to 7% of the net revenues of the Fort Worth
Surgery Center.
(ii) The Partnership Sellers hereby grant to Buyer an
option to purchase their respective general partner interests and
any limited partner interest in the Fort Worth Partnership held by
the Partnership Sellers, which option shall be exercisable by Buyer
giving written notice of exercise to the Partnership Sellers or any
Principal at any time during the 60 day period that begins 18 months
after the date that the Fort Worth Surgery Center receives Medicare
certification, which date shall be identified by a written notice to
be given by a Principal to Buyer following receipt of said
certification and is hereinafter referred to as the "Medicare
Certification Date." If Buyer properly exercises such option to
purchase the Partnership Sellers' interests in the Fort Worth
Partnership,
31
the purchase price shall be equal to six times the EBITDA (defined
and calculated as described in Section 1(c)(i)(A) and subject to the
dispute resolution provisions set forth in the third paragraph of
Section 1(c) above) attributable to management fees from and the
percentage interest in the Fort Worth Partnership to be purchased
for the most recent 12 calendar month period ended on or immediately
prior to the date that is 18 months after the Medicare Certification
Date, less such percentage of the outstanding debt of the Fort Worth
Partnership as of the end of such 18 calendar month period.
(iii) If Buyer exercises its option to acquire the
Partnership Sellers' interests in the Fort Worth Partnership
pursuant to subsection (ii) above, Buyer shall thereupon make an
offer to the Other Fort Worth Partners to acquire additional
interests in the Fort Worth Partnership, which offer shall be on the
terms described in Section 8(e)(i) and shall remain outstanding
until the second anniversary of the Medicare Certification Date. The
purchase price to be offered to the Other Fort Worth Partners shall
be the same as the price paid to the Partnership Sellers, except
that the multiple of EBITDA shall increase to seven and, if the
requisite percentage of the Other Fort Worth Limited Partners vote
to approve the sale of such interests in the Fort Worth Partnership,
the purchase price payable to the Partnership Sellers for their
interests in the Fort Worth Partnership pursuant to subsection (ii)
shall also be increased to be based upon a seven times multiple. Any
such additional amount payable to the Partnership Sellers pursuant
hereto shall be paid concurrently with Buyer's completion of its
purchase of the additional interests in the Fort Worth Partnership.
(iv) Prior to the closing of any purchase of interests
in the Fort Worth Partnership pursuant to subsection (ii) or (iii)
above, the Fort Worth Partnership shall distribute to its partners
all cash assets in excess of $50,000 held as of the effective date
of such purchase.
(v) If Buyer does not exercise its option to purchase
the Partnership Sellers' partnership interests in the Fort Worth
Partnership pursuant to subsection (ii) above, the Management
Agreement assigned to Buyer pursuant to subsection (i) above shall
be reassigned to the Management Sellers on the date that is 21
months after the Medicare Certification Date, whereupon Buyer shall
be obligated to pay to the Management Sellers an amount equal to
5/7ths of the total management fees paid by the Fort Worth
Partnership to Buyer pursuant to said Management Agreement.
(vi) All payments made pursuant this Section 8(f) shall
be payable in cash by Buyer's checks or, if wire transfer
instructions are given to Buyer at least three business days prior
to the payment date, by wire transfer of immediately available
funds.
(g) Management and Option to Purchase Valley View Surgery
Center. As indicated in Recitals B and G above, the Principals and ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ own certain of the issued and outstanding stock of VVSC, which is the
managing general partner of DSP.
32
The Principals and VVSC agree that, if the Closing occurs, DSP will engage Buyer
(or its designated subsidiary) to manage the Valley View Surgery Center and
Buyer will have an option to purchase a portion of VVSC's interest in DSP, as
follows:
(i) Pursuant to Section 1, at the Closing the Management
Sellers will assign to Buyer the existing Management Agreement with
DSP whereunder Buyer (or its subsidiary) will provide day-to-day
management services to DSP for a management fee equal to 6% of the
net revenues of the valley View Surgery Center (where "net revenues"
are defined as gross revenues less contractual allowances and
adjustments for uncollectible accounts and charity work, all
determined in accordance with GAAP).
(ii) VVSC hereby grants to Buyer an option to purchase
the percentage interest in DSP held by VVSC equal to the percentage
interest in VVSC held by the Principals and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (as
reflected in Schedule 1) multiplied by the percentage interest in
DSP held by VVSC (as reflected in Schedule 1), which option shall be
exercisable by Buyer giving written notice of exercise to VVSC or
any Principal at any time during the 60 day period that beings 12
months after the Closing Date or, with the consent of the VVSC and
the Principals, at any time during the initial 12 months following
the Closing Date. If Buyer properly exercises such option to
purchase said portion of VVSC's interest in DSP, the purchase price
shall be equal to six times the EBITDA (defined and calculated as
described in Section 1(c)(i)(A) and subject to the dispute
resolution escrows set forth in the third paragraph of Section 1(c)
above) attributable to the percentage interest in DSP to be
purchased for the most recent 12 calendar month period ended on or
immediately prior to the date on which the notice of exercise is
given, less said percentage of the outstanding debt of DSP as of the
end of such 12 month period. In addition, the completion of the
purchase of said portion of VVSC's interest in DSP shall be subject
to satisfaction of the following conditions: (A) the requisite
percentage of the partners of DSP shall have approved an amendment
of the Partnership Agreement of DSP to designate Buyer (or its
subsidiary) as the managing partner of DSP (having powers and
authority similar to the sole general partner of a Texas limited
partnership); and (B) VVSC and the Principals and shall have agreed
to a redemption of the shares in VVSC held by the Principals and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, using the proceeds of the sale of the partnership
interest in DSP pursuant hereto.
(iii) The Principals and VVSC will use their best
efforts as soon as is reasonably practicable following the Closing
Date (A) to cause DSP to issue and sell to new investors who are
approved by both VVSC and Buyer newly authorized and issued
partnership interests in DSP representing up to a 12% interest in
DSP, and (B) to amend the existing lease agreement between DSP and
Valley View MOB, a Texas general partnership that owns the building
in which Valley View Surgery Center conducts business, which
amendment shall be in form and substance reasonably satisfactory to
Buyer, provide for the elimination of any "percentage rent" and set
the rental rate thereunder at the current fair market rental value
of the leased premises.
33
(iv) If Buyer exercises its option to acquire a portion
of VVSC's interest in DSP pursuant to subsection (ii) above, Buyer
shall thereupon make an offer to VVSC and the other partners (as of
the Closing Date) in DSP (the "Other Valley View Partners") to
purchase one-half of their respective interests in DSP, which offer
shall remain outstanding until the first anniversary of the Closing
Date. The purchase price offered to the Other Valley View Partners
shall be the same as the price paid to VVSC pursuant subsection
(ii), except that the multiple of EBITDA shall increase to seven if
all of the Other Valley View Partners accept such offer and agree to
sell one-half of their respective interests in DSP, in which event
the purchase price payable to VVSC for its interest in DSP pursuant
to subsection (ii) shall also be increased to be based upon a seven
times multiple. Any such additional amount payable to VVSC pursuant
hereto shall be paid concurrently with Buyer's completion of its
purchase of one-half of the interest of the Other Valley View
Partners.
(v) Prior to the closing of any purchase of interests in
DSP pursuant to subsection (iii) or (iv) above, DSP shall distribute
to its partners all cash assets in excess of $50,000 held as of the
effective date of such purchase.
(vi) All payments made pursuant to this Section 8(g)
shall be made, pursuant to the Principal's written instructions, in
cash by Buyer's checks or, if wire transfer instructions are given
to Buyer at least three business prior to the payment date, by wire
transfer of immediately available funds.
(h) Tax Election. If requested by Buyer, each Seller shall,
either at the Closing or thereafter, cause the Partnerships to make the election
permitted under Section 754 of the Code.
(i) Certain Tax Matters.
(i) Buyer and Sellers acknowledge and agree that the
taxable income, losses, deductions, credits and similar items
generated by the Partnerships during the Partnerships' tax years
ending December 31, 1998 shall be allocated among Sellers and Buyer
based on the number of days in 1998 before and after the Effective
Date, except that for DeSoto such allocation shall be based on an
interim closing of DeSoto's books on the Effective Date.
(ii) Buyer shall prepare or cause to be prepared, and
shall file or cause to be filed, the 1998 partnership income tax
returns for the Partnerships Buyer shall permit Sellers to review
and comment on each such partnership tax return prior to filing
Buyer shall follow Sellers' requests for any changes in such returns
as and to the extent such change, in the reasonable judgment of
Buyer's independent accountants who are responsible for preparing
such tax returns, (A) constitutes a reasonable filing position and
(B) either (I) is consistent with the past practices of the
Partnership or (II) relates to a matter that will not have any
effect on the Partnership's returns for calendar years 1999 and
thereafter.
34
(iii) Buyer and Sellers shall cooperate fully, as and to
the extent reasonably requested by the other party, in connection
with the filing of tax returns pursuant to this Section 8(i) and any
audit, litigation or other proceeding with respect to federal, state
or local taxes of the Partnerships for 1998. Such cooperation shall
include the retention and (upon the other party's request) the
provision of records and information which are reasonably relevant
to any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide
additional information and explanation of any material provided
hereunder.
(j) Texas Health Ventures Group. HealthFirst, Sellers and the
Principals agree to assist Buyer in its current discussions with Baylor Health
Care System regarding Buyer's proposed acquisition of the interest in THVG held
by ▇▇▇▇▇▇▇ THVG, L.L.P. and Disney THVG, L.L.P. and the expansion of THVG to
include the Surgery Centers and certain outpatient surgery centers currently
owned by Baylor Health Care System.
(k) Assignment of Surgery Center Personnel. Until three years
after the Closing Date or the date on which the maximum payments have been made
pursuant to Section 1(c), whichever is sooner, Buyer must obtain the approval of
a Principal before assigning a task to any person who is an employee of a
Surgery Center or HealthFirst on or before the Closing Date if such task does
not relate to the business of that employee's Surgery Center, provided, however,
that (i) such approval shall not be unreasonably withheld and (ii) the
Principals acknowledge that certain services will be required of Surgery Center
personnel in order to integrate the operations and financial reporting of the
Surgery Centers into Buyer's overall operations and financial reporting system.
(l) Payment of Certain Indebtedness. Payments on the
Indebtedness described in Schedule 8A that is owing to HealthFirst or any
Seller, Former Owner or Principal (the "HealthFirst Debt") shall be due by the
Partnerships only as follows: (i) the proceeds of any sale of interests in a
Partnership pursuant to Section 8(e) or 8(f)(iii) shall be used first to pay off
the HealthFirst Debt owing by such Partnership, and (ii) to the extent the
proceeds of any such sale of Partnership interests by a Partnership are not
sufficient to pay that Partnership's HealthFirst Debt in full, or if no such
sale is made, the unpaid portion of the HealthFirst Debt shall be due and
payable in 36 equal monthly installments beginning on the first day of the
calendar month following the date of the sale of Partnership interests (if
applicable) or the date that Buyer's offer to purchase Partnership interests
expires pursuant to Section 8(e)(i) or 8(f)(iii), as the case may be.
(m) Effective Date of Employment Agreements. The Employment
Agreements to be entered into by Buyer and the Principals pursuant to Sections
6(j) and 7(e) are not effective until January 1, 1999 and, accordingly, the
Principals shall continue to be employed by Administaff Companies, Inc. through
December 31, 1998 and shall be entitled to all employee benefits in effect under
such arrangement. During the period from the Effective Date through December 31,
1998, however, the Principals' base salaries under such arrangement shall be as
set forth in their respective Employment Agreements.
35
(n) Noncompetition Covenants. The Sellers, HealthFirst and the
Principals (who are collectively referred to in this Section 8(n) as the
"Covenantors" and, individually, as a "Covenantor") each hereby agrees, as to
himself or itself and not as to any other Covenantor, as follows:
(i) For a period of five years from and after the
Closing Date, such Covenantor will not own, acquire or have any
ownership interest, direct or indirect (including without limitation
ownership interests held by immediate family members of any
Principal or trusts for the benefit of any Principal's immediate
family members), in any outpatient surgery center or in any hospital
with surgical facilities located within a 30 mile radius of any of
the Surgery Centers or any of the hospitals or outpatient surgery
centers owned or operated by THVG or Baylor Health Care System
(collectively, the "Non-Compete Areas"), including an operating room
or rooms in doctors' offices where surgical procedures are performed
that are customarily performed in hospitals or outpatient surgical
centers or for which a facility fee is charged, or in any other firm
or entity that owns or operates such a surgical center or hospital
within any Non-Compete Area; provided, however, that this subsection
(i) shall not apply to (A) any direct or indirect ownership interest
held by any Covenantor in THVG, (B) the ownership interest of the
Principals or their family members in HealthFirst or any Seller, (C)
any ownership interest with Prime Medical or an affiliate in an
entity that provides lithotripsy services, provided that the
aggregate amount so invested by Covenantors is not more than
$100,000, (D) the ownership by any Principal of shares of a publicly
held corporation purchased through a broker on an established stock
exchange or the Nasdaq national market system at an original cost of
not more than $100,000 or (E) investments in or with hospitals that
are unrelated to surgical services.
(ii) During the five year period referred to in
subsection (i) above, such Covenantor shall not (A) be engaged as an
employee, officer, director, agent, manager or consultant, or in any
similar capacity, with any firm or entity in which Covenantor would
not be permitted to have a financial interest pursuant to the
provisions of subsection (i) above; (B) influence or attempt to
influence, either directly or indirectly, any physician, supplier,
health care facility, preferred provider organization, health
maintenance organization or other third party payor not to continue
such person's or entity's relationship with Buyer or its domestic
affiliates; (C) knowingly solicit any patient of Buyer or its
domestic affiliates to obtain medical services in outpatient surgery
centers; or (D) solicit (other than solicitations in the form of
general employment advertisements placed in newspapers or other
publications of general circulation), induce or attempt to induce
any employee, independent contractor, consultant, physician or any
other person associated with Buyer or any of its domestic affiliates
to leave the employment of, or to otherwise discontinue his, her or
its association with, Buyer or such domestic affiliate.
(iii) If this Section 8(n) is declared unenforceable in
any judicial proceeding for being of too long a duration or covering
too large a geographic
36
area, then this Section 8(n) shall still be enforceable for such
maximum period of time and within such geographic area as will make
the provisions hereof enforceable.
(iv) The Covenantors acknowledge that the rights and
privileges granted to Buyer herein are of special and unique
character, which gives them a peculiar value, the loss of which may
not be reasonably or adequately compensated for by damages in an
action at law, and that a breach by any Covenantor of this Section
8(n) will cause Buyer great and irreparable injury and damage.
Accordingly, the Covenantors hereby agree that Buyer, together with
its affiliates or any of them, shall be entitled to remedies of
injunction, specific performance or other equitable relief to
prevent a breach of this Section 8(n). This provision shall not be
construed as a waiver of any other rights or remedies which Buyer
may have for damages or otherwise.
9. Termination.
(a) By Mutual Consent. This Agreement may be terminated
without further obligation of the parties at any time prior to Closing by mutual
consent of the parties hereto.
(b) Damages. No party shall be liable in damages to any other
party as a result of the failure to consummate the Closing transactions
contemplated by this Agreement unless such failure is caused by the material
breach of such party of any of the terms of this Agreement.
(c) Unilateral Termination. If, through no fault of or breach
by a party hereto, the Closing is not consummated on or before December 31,
1998, this Agreement may be unilaterally terminated by written notice given by
such party to the other parties If the Closing has not occurred by December 31,
1998, but the parties do not terminate this Agreement pursuant to this Section
9(c), either party may require that the purchase price for the Transferred
Assets be recalculated as described in paragraph 2(i) of the letter of intent,
dated as of August 6, 1998, between HealthFirst and Buyer.
10. Assignment. None of the parties hereto shall assign any of its
rights or obligations hereunder without the prior written consent of the other
parties hereto, provided, however, that at or prior to the Closing Buyer may
assign its rights hereunder to one or more wholly owned subsidiaries of Buyer.
11. Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given when received if delivered personally, given by
prepaid telegram, mailed first class, postage prepaid, registered or certified
mail, delivered by Federal Express or other courier service, or sent by
facsimile or other online transmission system, as follows:
If to Buyer:
37
United Surgical Partners International, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Nossaman, Guthner, ▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
FAX No. (▇▇▇) ▇▇▇-▇▇▇▇
If to HealthFirst or any Seller or Principal:
c/o HealthFirst Management, L.L.C.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention:▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
FAX No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Husch & Eppenberger, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
FAX No. (▇▇▇) ▇▇▇-▇▇▇▇
12. Governing Law; Interpretation; Section Headings. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF TEXAS. The section headings contained herein are for
purposes of convenience only and shall not be deemed to constitute a part of
this Agreement or to affect the meaning or interpretation of this Agreement in
any way.
13. General. This Agreement (including the Schedules and Exhibits
referred to herein) sets forth the entire agreement and understanding of the
parties with respect to the transactions contemplated hereby and supersedes all
prior agreements, arrangements and understandings related to the subject matter
hereof, including without limitation the letter of intent, dated as of August 6,
1998, between HealthFirst and Buyer. No representation, promise, inducement or
statement of intention has been made by any party hereto which is not embodied
in this Agreement, or in the Exhibits hereto or the written statements,
certificates or other documents delivered pursuant hereto. All the terms,
provisions, covenants, representations, warranties and conditions of this
Agreement shall survive the Closing and shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and assigns. This Agreement may be amended, modified, superseded or
canceled,
38
and any of the terms, provisions, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by all
parties hereto, or, in the case of a waiver, by the party waiving compliance.
The failure of any party at any time or times to require performance of any
provision hereof shall in no manner affect the right to enforce the same. No
waiver by any party of any condition, or of the breach of any term, provision,
covenant, representation or warranty contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such condition or breach or a
waiver of any other condition or of the breach of any other term, provision,
covenant, representation or warranty. In the event that any one or more of the
provisions of this Agreement shall be held or otherwise found to be invalid,
illegal or unenforceable, all other provisions hereof shall be given effect
separately therefrom and shall not be affected thereby. This Agreement is for
the sole benefit of the undersigned parties hereto and is not for the benefit of
any third party.
14. Further Assurances. HealthFirst, Sellers and Principals shall
execute and deliver such other documents and instruments, and take such other
actions, as Buyer may reasonably request in order more fully to vest and perfect
in Buyer all right, title and interest in and to the Transferred Assets. Buyer
shall execute and deliver such documents and instruments, and take such other
actions, as HealthFirst or any Principal may reasonably request in order to more
fully provide to HealthFirst, Sellers and Principals the intended benefits of
this Agreement.
15. Counterparts; Facsimile Signatures. This Agreement may be
executed in one or more counterparts, all of which together shall constitute one
and the same instrument. It shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart. A facsimile
copy of a signature hereto shall be effective as if an original.
16. Attorneys' Fees. In any action at law or equity to enforce any
of the provisions or rights under this Agreement, the unsuccessful party to such
litigation, as determined by the court in any final judgment or decree, shall
pay the successful party or parties all costs, expenses and reasonable
attorneys' fees incurred therein by such party or parties (including without
limitation such costs, expenses and fees on any appeal or in connection with any
bankruptcy proceeding), and if the successful party recovers judgment in any
such action or proceeding, such costs, expenses and attorneys' fees shall be
included in and as a part of such judgment.
17. Confidentiality. In the event that this Agreement is terminated
pursuant to Section 9 hereof, or otherwise, or the Closing does not occur by
reason of failure of one of the conditions to the Closing, each of the parties
hereto agrees (a) to return to the other parties all documents, financial
statements and other information furnished or copied in connection with the
transactions contemplated by this Agreement and (b) not to disclose without the
prior written consent of the disclosing party any information obtained with
respect to the business or operations of such other party or any affiliate of
such party.
18. Dispute Resolution Mechanisms. The parties have agreed on the
following mechanisms in order to obtain prompt and expeditious resolution of
disputes hereunder:
39
(a) Binding Arbitration. If any dispute arises between the
parties with respect to the interpretation or enforcement of this Agreement, the
parties agree to work in good faith to resolve such dispute or disagreement in
good faith and, if they are unable to resolve the dispute within 15 days, they
shall submit it to binding arbitration.
(b) Choice of Arbitrator. If the parties can agree to a single
arbitrator within 30 days of one party receiving notice from the other party of
the dispute or disagreement, such arbitrator shall be chosen. The arbitrator(s)
shall not be required to have qualifications other than a reasonable amount of
experience and specialty in the area which is the subject of the dispute.
(c) Failure to Choose Arbitrator. If the parties do not agree
as to the choice of an arbitrator, each party shall choose an arbitrator within
10 days after the expiration of the 30 day period referred to in Section 18(b)
and those chosen arbitrators shall choose an additional arbitrator within 20
days of the date in which the last arbitrator is chosen. If at the end of said
20 days the parties' designated arbitrators cannot agree on the selection of the
third arbitrator, such selection shall be made by the American Arbitration
Association office located nearest to Buyer's headquarters office in Dallas,
Texas upon the application of either party.
(d) Conduct. The arbitration shall be conducted pursuant to
the Commercial Rules of the American Arbitration Association; provided, however,
that the federal rules of civil procedure, evidence and discovery shall be
applicable to such arbitration proceeding (including without limitation the
requirement that all witnesses may be deposed under oath). The parties shall
diligently cooperate with one another and the arbitrator(s), and shall perform
such acts as may be necessary to obtain a prompt and expeditious resolution of
the dispute. If either party refuses to diligently cooperate and the other
party, after first giving notice of its intent to rely on the provisions of this
Section 18(d), incurs additional expenses or attorneys' fees as a result of such
failure to diligently cooperate, the arbitrator(s) may award such additional
expenses and attorneys' fees to the party giving such notice, even if such party
is not the prevailing party in the dispute.
(e) Resolution of Dispute. The dispute between the parties
shall be heard by the arbitrator(s) within 90 days after the date on which the
arbitrator(s) have been chosen. The arbitrator(s) shall, by a majority vote,
resolve any dispute or disagreement within 30 days of hearing the dispute The
arbitrator(s) shall render a reasoned, written opinion, citing applicable case
law and statutes.
(f) Effect of Arbitration. The decision of the arbitrator(s)
shall be final and binding on the parties.
(g) Allocation of Costs. The cost of the arbitration shall
initially be borne equally by the parties to the dispute, but the prevailing
party in such arbitration shall be entitled to recover, in addition to
reasonable attorneys' fees and all other costs, its contribution for the
reasonable cost of the arbitrator(s) as an item of recoverable costs. If either
party refuses to pay its share of the costs of the proceeding at the time(s)
required, the other party may do so, in which event that party will be entitled
to recover (or offset) the amount advanced, with interest
40
at the maximum rate permitted by law, even if that party is not the prevailing
party. The arbitrator(s) shall include such costs in the judgment or award.
19. Remedies. Except as otherwise expressly provided in this
Agreement, following the Closing, the indemnification provisions set forth in
Section 8(a) of this Agreement shall be the sole and exclusive remedy of the
parties hereto for breaches of representations and warranties, covenants and
other agreements.
20. Interpretation of Agreement. The parties hereto acknowledge and
agree that this Agreement has been negotiated at arm's length and between
parties equally sophisticated and Knowledgeable in the matters dealt with in
this Agreement Accordingly, any rule of law or legal decision that would require
interpretation of any ambiguities in this Agreement against the party that has
drafted it is not applicable and is waived. The provisions of this Agreement
shall be interpreted in a reasonable manner to effect the intent of the parties
as set forth in this Agreement.
41
IN WITNESS WHEREOF, the parties hereto have executed this Asset
Purchase Agreement as of the day and year first above written.
BUYER: UNITED SURGICAL PARTNERS
INTERNATIONAL, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
PRINCIPALS: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
HEALTHFIRST: HEALTHFIRST MANAGEMENT, L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Manager
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Manager
SELLERS: DISNEY OAK MOUNT, L.L.P.
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Living Trust, Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee
By: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Living Trust, Partner
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Trustee
By: HFMA, Inc., Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
42
By: HFMB, INC., Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
By: HFMD, INC., Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
By: Valley View Surgery Center, Inc., Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
By: HFMFW, L.L.C. Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Member
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Member
43
▇▇▇▇▇▇▇ FOREST EDGE, L.L.P.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Living Trust, Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Trustee
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇ Living Trust, Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇, Trustee
By: HFMA, Inc., Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
E.V.P. and Secretary
By: HFMB, Inc, Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
E.V.P. and Secretary
By: HFMD, Inc., Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
E.V.P. and Secretary
By: HFMFW, L.L.C. Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Manager
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Manager
44
By: Valley View Surgery Center, Inc., Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
E.V.P. and Secretary
DISNEY MANAGEMENT, L.P.
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Living Trust,
its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Trustee
▇▇▇▇▇▇▇ MANAGEMENT, L.P.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Living Trust,
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Trustee
VALLEY VIEW SURGERY CENTER, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
45
Exhibit B
[Regulations of THVG2]
REGULATIONS
OF
THVG/HEALTHFIRST LLC
A Texas Limited Liability Company
Adopted as of June 1, 1999
THE MEMBERSHIP INTERESTS REFERENCED IN THESE REGULATIONS HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR QUALIFIED UNDER APPLICABLE STATE
SECURITIES LAWS. SUCH MEMBERSHIP INTERESTS MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED IN ABSENCE OF SUCH REGISTRATION OR QUALIFICATION WITHOUT (1) AN
OPINION OF COUNSEL FOR THE HOLDER, WHICH OPINION AND COUNSEL SHALL BE REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT
REQUIRED, OR (II) OAR EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION
AND QUALIFICATION ARE REQUIRED.
CERTAIN RESTRICTIONS ON TRANSFERS OF MEMBERSHIP INTERESTS ARE SET FORTH IN THESE
REGULATIONS.
REGULATIONS
OF
THYG/HEALTHFIRST
A Texas Limited Liability Company
TABLE OF CONTENTS
Article I DEFINITIONS..........................................................1
1.1 Definitions......................................................1
1.2 Construction.....................................................8
Article II ORGANIZATION........................................................8
2.1 Formation........................................................8
2.2 Name.............................................................8
2.3 Registered Office, Registered Agent; Principal Office in
tire United States; Other Offices..............................8
2.4 Purposes.........................................................9
2.5 Term.............................................................9
2.6 No State-Law Partnership.........................................9
Article III MEMBERS............................................................9
3.1 Initial Members and Membership Interests.........................9
3.2 Meetings.........................................................9
3.3 Proxies.........................................................10
3.4 Conduct of Meetings.............................................10
3.5 Action by Written Consent or Telephone Conference...............10
3.6 Member Reserved Powers..........................................11
3.7 Annual Budget...................................................11
Article IV DISPOSITIONS OF MEMBERSHIP INTERESTS...............................12
4.1 Restrictions ore the Issuance and Disposition of a Membership
Interest......................................................12
4.2 Right of First Refusal..........................................13
4.3 Compliance with Section 17.2....................................14
4.4 Admission of New and Successor Members..........................14
4.5 Basis Adjustment................................................14
4.6 Transfer Procedures.............................................14
4.7 Invalid Transfer................................................15
4.8 Distributions and Allocations in Respect of a Transferred
Membership Interest...........................................15
4.9 Amendment to Exhibit A..........................................15
4.10 Evidence of Membership Interest.................................15
4.11 Information.....................................................16
4.12 Lack of Authority...............................................16
Article V CAPITAL CONTRIBUTIONS...............................................16
5.1 Initial Contributions...........................................16
5.2 Subsequent Contributions........................................16
5.3 Issuance of Additional Membership Interests.....................17
5.4 Catch-up Rights.................................................17
5.5 Return of Contributions.........................................17
5.6 Advances by Members.............................................17
5.7 Capital Accounts................................................17
ii
5.8 Special Dilution Provision......................................18
5.9 Contribution Agreement..........................................19
Article VI ALLOCATIONS AND DISTRIBUTIONS......................................19
6.1 Allocations for Capital Accounts................................19
6.2 Gains and Losses on Dispositions................................19
6.3 Tax Allocations.................................................20
6.4 Reliance on Tax Advisors........................................20
6.5 Distributions...................................................20
Article VII MANAGERS..........................................................21
7.1 Management by Managers..........................................21
7.2 Limitations on Company Action...................................22
7.3 Number..........................................................23
7.4 Election of Managers and Advisory Managers......................24
7.5 Election........................................................24
7.6 Tenure..........................................................24
7.7 Removal; Vacancies; Resignations................................24
7.8 Meetings........................................................24
7.9 Action by Written Consent or Telephone Conference...............25
7.10 Compensation....................................................26
Article VIII STANDING AND SPECIAL COMMITTEES..................................26
8.1 Committees......................................................26
8.2 Quorum and Voting...............................................26
8.3 Meetings and Notices............................................26
8.4 Resignations and Removals.......................................26
8.5 Vacancies.......................................................26
Article IX OFFICERS...........................................................26
9.1 Designation and Tenure..........................................26
9.2 Resignation; Removal; Vacancies.................................27
9.3 Chair...........................................................27
9.4 Vice Chair......................................................27
9.5 President.......................................................27
9.6 Vice Presidents.................................................27
9.7 Secretary; Assistant Secretaries................................27
9.8 Treasurer; Assistant Treasurers.................................28
Article X INDEMNIFICATION.....................................................28
10.1 Right to Indemnification........................................28
10.2 Appearance as a Witness.........................................28
10.3 Nonexclusivity of Rights........................................28
10.4 Insurance.......................................................29
10.5 Savings Clause..................................................29
Article XI TAXES..............................................................29
11.1 Tax Returns.....................................................29
11.2 Tax Elections...................................................29
11.3 Tax Matters Partner.............................................30
Article XII BOOKS, RECORDS, REPORTS AND BANK ACCOUNTS.........................30
iii
12.1 Maintenance of Books............................................30
12.2 Reports.........................................................30
12.3 Accounts........................................................30
Article XIII DISSOLUTION, LIQUIDATION AND TERMINATION.........................31
13.1 Dissolution.....................................................31
13.2 Liquidation and Termination.....................................31
13.3 Deficit Capital Account.........................................33
13.4 Articles of Dissolution.........................................33
Article XIV IMPASSE...........................................................33
14.1 Impasse Defined.................................................33
14.2 Negotiation.....................................................33
14.3 Mediation.......................................................33
14.4 Interim Measures................................................34
14.5 CEO Meeting.....................................................34
14.6 Unresolved Impasse..............................................34
14.7 Impasse Issues..................................................34
Article XV COMPLIANCE WITH LAW................................................34
15.1 Corporate Practice of Medicine..................................34
15.2 Fraud and Abuse Law and Texas Health and Safety Code............35
15.3 Referral Policy.................................................35
15.4 Tax Exempt .Status of Affiliate.................................35
15.5 Reformation Upon Change in or Violation of Health Laws..........35
15.6 ASC Operating Covenants.........................................36
Article XVI RIGHT OF FIRST REFUSAL/EXCLUSIVITY................................37
16.1 Initial Notice..................................................37
16.2 USP and BIAS Carve-outs.........................................37
16.3 Company Response; Restrictions on Participation.................37
16.4 Breaches by Affiliates..........................................38
16.5 Material Changes................................................38
16.6 Carve-Out and Termination.......................................38
16.7 Baylor Campus Restriction.......................................38
16.8 ▇▇▇▇ ▇▇▇▇▇ Requirement..........................................38
Article XVII INTERESTS IN SURGERY CENTERS.....................................38
17.1 Baylor Right of First Refusal...................................38
17.2 Membership Interest Transfer....................................39
17.3 Fair Price of the ASC Interests.................................39
Article XVIII GENERAL PROVISIONS..............................................39
18.1 Offset..........................................................39
18.2 Notices.........................................................39
18.3 Entire Agreement; Supersedure...................................40
18.4 Effect of Waiver or Consent.....................................40
18.5 Amendment or Modification.......................................40
18.6 Binding Effect..................................................41
18.7 Governing Law; Severability.....................................41
18.8 Further Assurances..............................................41
iv
18.9 Waiver of Certain Rights........................................41
18.10 Notice to Members of Provisions of this Agreement..............41
18.11 Counterparts...................................................41
EXHIBIT A: Names, Addresses, Membership Interests and initial contributions of
Members
EXHIBIT B: Contribution Agreement
EXHIBIT C: North Texas Region
EXHIBIT D: Management Agreement Form
v
REGULATIONS
OF
THYG/HEALTHFIRST LLC
A Texas Limited Liability Company
These Regulations of THVG/HealthFirst LLC ("Regulations"), dated as of June 1,
1999, have been approved by the Managers (as defined below) and are adopted,
executed and agreed to by the Members (as defined below).
Article I
DEFINITIONS
1.1 Definitions
. As used in these Regulations, the following terms have the
following meanings (unless otherwise expressly provided herein):
"AAA " means the American Arbitration Association.
"AAAIIC" has the meaning set forth in Section 7.1(a).
"Acceptable Firm" has the meaning set forth in Section 11.1.
"Act" means the Texas Limited Liability Company Act and any
successor statute, as amended from time to time.
"Adjustment Date" has the meaning set forth in Section 5.2(c).
"Affiliate" means, with respect to any Person, any other Person
Controlling, Controlled by or under common Control with that first Person.
"Agreed Value" has the meaning set forth in Section 4.2(c).
"Articles of Organization" has the meaning set forth in Section 2.1.
"ASC" has the meaning set forth in Section 15.6.
"ASC Interests" has the meaning set forth in Section 13.2(b).
"Baylor" means Baylor Health Services, a Texas nonprofit
corporation, and any Person acquiring Membership Interest from Baylor
under Section 4.1(a).
"Baylor Competitor" means a Person (or affiliated group of Persons)
that (i) operate or own one or more facilities that include an aggregate
of more than two hundred (200) licensed hospital beds in the North Texas
Region or (ii) is an Affiliate of (or one or more of the affiliated group
of Persons are an Affiliate of) a Person that operates or owns one or more
facilities that include an aggregate of more than two hundred (200)
licensed hospital beds in the North Texas Region; provided, however, that
licensed hospital beds in which the Company owns a direct or indirect
interest will not be included in the determination of whether USP Parent
or a Restricted Affiliate of USP Parent is a Baylor Competitor.
1
"Baylor Earn-Out Amount," for any Contribution Agreement Year, is
the payment due to Baylor pursuant to Section 1.2(b) of the Contribution
Agreement.
"Baylor Hospital or Similar Facility" means
(i) a hospital or a facility that Baylor or a Baylor Affiliate
(other than the Company or THVG #1 or one of their Subsidiaries) owns or
operates and through which Baylor or a Baylor Affiliate (other than the
Company or THVG #1 or one of their Subsidiaries) provides healthcare
services, other than a facility that is either (a) principally an office
building for third-party providers or (b) a facility with net revenue of
less than $2 million, or
(ii) any facility that Baylor and USP designate as a Baylor Hospital
or Similar Facility.
"Baylor Interests" has the meaning set forth in Section 13.2(a).
"Baylor Manager" has the meaning set forth in Section 7.4.
"Baylor Offer" has the meaning set forth in Section 17.2.
"BHCS" means Baylor Health Care System, a Texas non-profit
corporation.
"Beneficial Owner" means a Person that is a beneficial owner of a
security for purposes of Section 13(d) of the Exchange Act of 1934, as
amended.
"Business Day" means any day other than a Saturday, a Sunday or a
holiday on which national banking associations in the State of Texas are
closed.
"Calculation Year" means the Contribution Agreement Year in which a
FMV Capital Account calculation occurs.
"Capital Account" means the account of each Member established and
maintained on the books of the Company in accordance with Section 5.7.
"Capital Call" has the meaning set forth in Section 5.2(a).
"Capital Contribution" means any contribution by a Member to the
capital of the Company.
"Carrying Value" means, with respect to any Capital Contribution of
property, the Initial Value of such property reduced as of the time of
determination by all depreciation, cost recovery and amortization
deductions charged to the Capital Accounts with respect to such property
and an appropriate amount to reflect any sales, retirements or other
dispositions of assets included in such property and, with respect to any
other property, the adjusted basis of such property for federal income tax
purposes as of the time of determination. The Carrying Values shall be
further adjusted as provided in the Treasury Regulations.
"CEO Meeting" has the meaning set forth in Section 14.5.
"Code" means the Internal Revenue Code of 1986 and any successor
statute, as amended from time to time.
"Company" means THVG/HealthFirst LLC, a Texas limited liability
company.
"Company Response" has the meaning set forth in Section 16.3.
2
"Contributing Member(s)" has the meaning set forth in Section
5.2(a).
"Contribution Agreement" means that certain Contribution and
Purchase Agreement dated as of May 11, 1999, among the Company, THVG #1,
Baylor and USP, a copy of which (without exhibits and schedules) is
attached as Exhibit B.
"Contribution Agreement Year" means the one-year period beginning on
a Reconciliation Date (including the "Closing Date," as defined in the
Contribution Agreement) and ending on the next Reconciliation Date.
"Contribution Date" has the meaning set forth in Section 5.2(a).
"Control," "Controlled by" and "under common Control with" refer to
the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through
the ownership of voting securities or any equity interest, by contract, by
power granted in bylaws or similar governing documents or otherwise.
"Current Year Section 5.8 Adjustments" means adjustments under
Section 5.8 that have occurred in the current Contribution Agreement Year
(not the current fiscal year), but excludes adjustments under Section 5.8
that occurred (i) in a previous Contribution Agreement Year and (ii)
effective as of the Reconciliation Date concluding the previous
Contribution Agreement Year.
"Determination Notice" has the meaning set forth in Section 15.(b).
"Dilution" has the meaning set forth in Section 5.4.
"Dilution Date" has the meaning set forth in Section 5.4.
"Dispose," "Disposing" or "Disposition" refers to a sale,
assignment, transfer, conveyance, gift, lease, exchange, mortgage, pledge,
grant of a security interest, or other disposition or encumbrance
(including, without limitation, by operation of law), and the acts
thereof.
"Event of Dissolution" has the meaning set forth in Section 13.1.
"Fair Market Value" has the meaning set forth in Section 4.2(c).
"FMV Capital Accounts" means the following:
In Sections 5.2 and 5.3, "FMV Capital Accounts" means, in connection with
a Capital Call (the "Subject Capital Call"), the Capital Accounts that would
result if the following were to occur:
(i) All Capital Contributions a Member has made during the Calculation Year
were subtracted from such Member's Capital Account.
(ii) (x) all of the assets of the Company were sold for the Company's Fair
Market Value (measured as of the date immediately before any Capital
Contributions are made in response to the Subject Capital Call, but after
any adjustment that is then pending but not yet made (pursuant to Section
5.2(c)) in connection with prior Capital Calls or prior Capital
Contributions), and
(y) the resulting gain or loss was allocated to the Members
3
(A) first (if necessary) to bring the Members' Capital Account
balances into proportion with their Ownership Interests
(before any adjustment resulting from the Subject Capital Call
and without regard to Current Year Section 5.8 Adjustments),
and
(B) thereafter to the Members in accordance with their Ownership
Interests (before any adjustment resulting from the Subject
Capital Call and without regard to Current Year Section 5.8
Adjustments).
(iii) Member's Capital Account was increased by an amount equal to
(x) all Capital Contributions such a Member has made during the
Calculation Year (including Capital Contributions made in response
to a Capital Call under Section 5.8(a), and
(y) the Capital Contribution such Member makes in response to the
Subject Capital Call (including Shortfall Contributions).
In Section 5.4, the term "FMV Capital Accounts" means, at the time a
Member exercises its rights under Section 5.4 to make a Capital Contribution (a
"Subject Capital Contribution"), the Capital Accounts that would result if the
following were to occur:
(a) All Capital Contributions a Member has made during the Calculation Year
were subtracted from such Member's Capital Account.
(b)
(1) all of the assets of the Company were sold for the Company's Fair
Market Value (measured as of the date immediately before the Subject
Capital Contribution, but after any adjustment that is then pending but
not yet made (pursuant to Section 5.2(c)) in connection with prior Capital
Calls or prior Capital Contributions).
(2) the resulting gain or loss was allocated to the Members
(A) first (if necessary) to bring the Members' Capital Account
balances into proportion with their Ownership Interests
(before any adjustment resulting from the Subject Capital
Contributions and without regard to any Current Year Section
5.8 Adjustments), and
(B) thereafter to the Members in accordance with their Ownership
Interests (before any adjustment resulting from the Subject
Capital Contributions and without regard to any Current Year
Section 5.8 Adjustments).
(c) Each Member's Capital Account was increased by
(1) an amount equal to all Capital Contributions such a Member has made
during the Calculation Year (including Capital Contributions made in
response to a Capital Call under Section 5.8(a), and
(2) in the case of a Member that makes the Subject Capital Contribution,
the amount of the Subject Capital Contribution.
"Fair Price" has the meaning set forth in Section 17.3.
4
"First Refusal Offer" has the meaning set forth in Section 17.1.
"General Interest Rate" means a rate per annum equal to the lesser
of (a) the sum of the Prime Rate plus one percent (1.0%) and (b) the
Maximum Rate.
"HealthFirst Purchase Agreement" has the meaning given that term in
the Contribution Agreement.
"Health Laws" means applicable provisions of the Federal Social
Security Act (including Federal Medicare and Medicaid Anti-Fraud and Abuse
Amendments [42 U..C. ss. 1320a-7a and -7b] and the Federal Physician
Anti-SelfReferral Law [42 U.S.C. ss. 1395nn]), the Texas Medical Practice
Act [Article 4495b of the Texas Revised Civil Statutes] the Texas Illegal
Remuneration Law [Texas Health & Safety Code ss. 161.091 ] and the Code,
as these laws may now exist or hereafter be amended.
"Impasse" has the meaning set forth in Section 14.1.
"Impasse Deadline" has the meaning set forth in Section 13.1(x).
"Initial Notice" has the meaning set forth in Section 16.1.
"Initial Value" means in the case of any contributions or
distributions of property, the fair market value of the property net of
any indebtedness or other liability either assumed or to which the
property is subject, determined by the Board of Managers using a
reasonable method of valuation.
"JCAHO" has the meaning set forth in Section 7.l(a).
"Manager" means any individual Person named in the Articles of
Organization as an initial Manager of the Company and any individual
Person thereafter elected as a Manager of the Company as provided in these
Regulations, but does not include any Person who has ceased to be a
Manager of the Company.
"Manager Restricted Action" has the meaning set forth in
"Maximum Rate" means the maximum lawful rate which may be contracted
for, charged, taken or reserved by a Member in accordance with the
applicable laws of the State of Texas (or applicable United States federal
law to the extent that it permits a Member to contract for, charge, take,
or receive a greater amount of interest than under Texas law).
"Mediation Initiation Date" has the meaning set forth in Section
14.2.
"Member" means Baylor and USP and any Person hereafter admitted to
the Company as a Member as provided in these Regulations, but does not
include any Person who has ceased to be a Member in the Company.
"Member Restricted Action" has the meaning set forth in Section 3.6.
"Membership Interest" or "Membership Interests" means the interest
of a Member in the Company, including, without limitation, rights to
distributions (liquidating or otherwise), allocations and information,
rights to vote, rights to consent to or approve certain actions specified
herein and rights accorded to "members" under the Act, as evidenced by the
certificates of ownership described herein.
5
"Net Earn Out Amount" means the portion of any calculation set forth
in a Reconciliation Statement determined by reducing any payment due to
Baylor pursuant to section 1.2(b) of the Contribution Agreement included
in such Reconciliation Statement by Baylor's pro rata share of any payment
(based on its Ownership Interest at the date of such payment) made to
HealthFirst pursuant to section 1(e) of the HealthFirst Purchase Agreement
during the Contribution Agreement Year covered by the Reconciliation
Statement.
"Non-contributing member" has the meaning set forth in Section
5.2(a).
"North Texas Region" means the 82 Texas counties shown on Exhibit C
hereto.
"Notice partner" has the meaning set forth in Section 11.3.
"Offered Interest" has the meaning set forth in Section 4.2.
"Offered Price" has the meaning set forth in Section 4.2.
"Offering Holder" has the meaning set forth in Section 4.2.
"Offering Notice" has the meaning set forth in Section 4.2.
"Old Budget" has the meaning set forth in Section 3.7.
"On or Adjacent to the Campus of a Baylor Hospital or Similar
Facility" means located within one quarter (1/4) mile of the real property
that Baylor or a Baylor Affiliate owns or leases and on which a Baylor
Hospital or Similar Facility is situated.
"Original Regulations" has the meaning set forth in the Recitals.
"Ownership Interest" means the percentage of outstanding Membership
Interests owned by a Member.
"Other Interests" has the meaning set forth in Section 13.2(b).
"Person" includes an individual, partnership, limited partnership,
limited liability company, trust, estate, corporation, or other entity,
and a custodian, trustee, executor, administrator, nominee or individual
or entity in a representative capacity.
"Prime Rate" means the "prime rate" (or "base rate") reported in the
Money Rates column or section of The Wall Street Journal published on the
second business day of the month preceding the month in which a payment of
interest and/or principal is due on a loan made by a Member hereunder (the
"Interest Determination Date"). In the event The Wall Street Journal
ceases publication of the Prime Rate, then "Prime Rate" shall mean the
"prime rate" or "base rate" announced by Texas Commerce Bank, National
Association, Dallas, Texas (whether or not such rate has been charged by
such bank) on the Interest Determination Date. In the event such bank
discontinues the practice of announcing its prime rate, the "Prime Rate"
shall mean the highest rate being charged by such bank on short-term,
unsecured loans to its most credit worthy, large corporate borrowers on
the Interest Determination Date. In the event The Wall Street Journal
publishes more than one Prime Rate, the highest of such rates shall apply.
In the event The Wall Street Journal publishes a retraction or correction
of any such rate, the rate reported in such retraction or correction shall
apply.
6
"Proposing Member" has the meaning set forth in Section 16.3.
"Purchaser(s)" has the meaning set forth in Section 4.2(c).
"Recalculation Date" has the meaning set forth in Section 5.3(b).
"Reconciliation Date" has the meaning given that term in the
Contribution Agreement.
"Reconciliation Statement" has the meaning given that term in the
Contribution Agreement.
"Regulations" mean these Regulations of the Company, dated as of
June 1, 1999.
"Required Interest" means one or more Members having among them more
than , percent (50%) of the Ownership Interest.
"Restricted Affiliate" means, with respect to any Person, any other
Person the first Person directly or indirectly Controls.
"Restricted Persons" has the meaning set forth in Section 16.1.
"Response Period" has the meaning set forth in Section 16.3.
"Securities Act" means the Securities Act of 1933, as amended.
"Shortfall Contribution" has the meaning set forth in Section
5.2(a).
"Southwest Health System Entity" means Southwest Health System, or
any of its Restricted Affiliates, or any other Person (or a Restricted
Affiliate of such Person) formed by the proposed transaction or
affiliation among BHCS and one or more of ▇▇▇▇▇▇ Methodist Health System,
Presbyterian Healthcare Resources and Arlington Memorial Hospital
Foundation, Inc.
"Subject Capital Call" has the meaning set forth in the definition
to FMV Capital Accounts.
"Subject Capital Contribution" has the meaning set forth in the
definition to FMV Capital Accounts.
"Subsidiary," with respect to a Person, means any entity in an
unbroken chain of entities beginning with the Person if, at the time of
the action or transaction, each of the entities other than the last entity
in the unbroken chain (i) owns equity interests possessing 50% or more of
the total combined voting power of all equity interests in one of the
other entities in the chain or (ii) is a general partner or managing
member of or Person acting in a similar control capacity for one of the
other entities in the chain.
"Successor Member" means a person who has been admitted as a
Successor Member in accordance with Section 4.4.
"TBCA" means the Texas Business Corporation Act and any successor
statute, as amended from time to time.
"Tax Matters Partner" means any Member designated under Section "tax
matters partner" of the Company pursuant to section 6231(a)(7) of the
Code, but does not include any Member who has ceased to be such "tax
matters partner" of the Company.
7
"Third Party Purchaser" has the meaning set forth in Section 4.2.
"THVG #1" means Texas Health Ventures Group L.L.C., a Texas limited
company in which USP and Baylor are currently the sole members.
"Treasury Regulations" means the income tax regulations, including
temporary regulations, promulgated under the Code, as they may be amended
from time to time (including corresponding provisions of succeeding
regulations).
"Unresolved Impasse" has the meaning set forth in Section 14.6.
"USP" means USP North Texas, Inc., a Texas corporation, and any
Person acquiring Membership Interest from USP under Section 4.1(a).
"USP IPO Date" means the closing date of the initial offering of
equity securities of USP Parent (or any Person of which USP is a
Subsidiary) that is registered pursuant to a registration statement that
has been declared effective under the Securities Act of 1933, as amended.
"USP Managers" has the meaning set forth in Section 7.4.
"USP Parent" means United Surgical Partners International, Inc., a
Delaware corporation, and any Person of which USP becomes a Subsidiary.
"Venture" means the ownership, operation, management, development,
construction or provision of other services to an ambulatory surgery
center.
Other terms defined herein have the meanings so given them.
1.2 Construction. Whenever the context requires, the gender of all words
used in these Regulations includes the masculine, feminine and neuter. Unless
otherwise expressly provided herein, all references to Articles and Sections
refer to articles and sections of these Regulations, and all references to
Exhibits are to Exhibits attached hereto, each of which is made a part hereof
for all purposes. The words herein and hereof refer to these Regulations unless
specified otherwise.
Article II
ORGANIZATION
2.1 Formation. The Company has been organized as a Texas limited liability
company by the filing of Articles of Organization (the "Articles of
Organization") under and pursuant to the Act and the issuance of a certificate
of organization for the Company by the Secretary of State of Texas.
2.2 Name. The name of the Company is THVG/HealthFirst LLC. All Company
business must be conducted in such name or other names that comply with
applicable law as the Managers may select from time to time.
2.3 Registered Office, Registered Agent; Principal Office in tire United
States; Other Offices. The registered office of the Company required by the Act
to be maintained in the State of Texas shall be at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ or such other office (which need not be a place of
business of the Company) as the Managers may designate from time to time in the
manner provided by law. The registered agent of the Company in the State of
Texas shall be ▇▇▇ ▇▇▇▇▇▇▇ or such other Person or Persons as the Managers may
designate from time to time in the manner provided by law. The principal office
of the Company in the United States shall be at such place as the Managers may
designate from time
8
to time, and the Company shall maintain records at the principal office as
required by Article 2.22 of the Act. The Company may have such other offices as
the Managers may designate from time to time.
2.4 Purposes. The purposes for which the Company is organized are, (i)
directly or indirectly, to develop, acquire, own, operate, manage and sell
outpatient centers and ambulatory surgery centers and related ventures, and (ii)
to do anything reasonably necessary in connection with the matters described in
(i).
2.5 Term. The existence of the Company commenced on the date the Secretary
of State of Texas issued a certificate of organization for the Company and shall
continue for a term of forty (40) years from such date.
2.6 No State-Law Partnership. The Members intend that the Company not be a
partnership (including, without limitation, a limited partnership) or joint
venture, and that no Member or Manager be a partner or joint venturer of any
other Member or Manager, for any purposes other than for federal and state tax
purposes, and these Regulations may not be construed to suggest otherwise.
Article III
MEMBERS
3.1 Initial Members and Membership Interests. The initial Members
("Initial Members") of the Company are Baylor and USP. Baylor and USP are
admitted to the Company as Members with the Ownership Interests set forth on
Exhibit A effective contemporaneously with the execution by such Persons of
these Regulations. The total number of Membership Interests in the Company that
the Company is authorized to issue is 100,000 Membership Interests. Upon
execution of these Regulations and receipt of the initial capital contributions,
the Company will issue to Baylor a certificate evidencing the ownership of 9,800
Membership Interests in the Company and will issue to USP a certificate
evidencing ownership of 10,200 Membership Interests in the Company.
3.2 Meetings.
(a) A quorum shall be present at a meeting of Members if the Members
owning a Required Interest are represented at the meeting in person or by proxy.
A duly authorized individual representative or officer of each Member shall act
on behalf of each Member other than a Member who is an individual. With respect
to any matter other than the election of and removal of Managers (governed by
Article VII), Member Restricted Actions (governed by Section 3.6), as provided
in Section 4.1, Section 15.5, Section 18.5 and Article XVI and matters for which
the affirmative vote of the holders of a specified portion of the Membership
Interests is required elsewhere in these Regulations or by the Act, the
affirmative vote of a Required Interest at a meeting of Members at which a
quorum is present shall be required to be and shall be the act of the Members.
Except as otherwise provided in these Regulations or the Act, on any matter on
which the Members are entitled to vote other than the election and removal of
Managers (governed by Article VIII). Member Restricted Actions (governed by
Section 3.6), and as provided in Section 4.1. Section 15.5, Section 18.5 and
Article XVI, each Member shall have a vote equal to that Member's Ownership
Interest; provided, however, that, for purposes of this sentence, Ownership
Interests will not be adjusted to account for any dilution that occurs under
Section 5.8 until the Reconciliation Date that follows such dilution.
(b) All meetings of the Members shall be held at the principal place
of business of the Company or at such other place within or without the State of
Texas as shall be specified or fixed in the notices or waivers of notice
thereof; provided that Members may participate in any such meeting by means of
conference telephone or similar communications equipment pursuant to Section
3.5.
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(c) Upon the approval of the Member(s) present, the chair of the
meeting shall have the power to adjourn such meeting from time to time, without
any notice other than announcement at the meeting of the time and place of the
holding of the adjourned meeting. Upon the approval of the Members, a meeting
may be adjourned, and if such meeting is so adjourned by the Members, the time
and place of the holding of the adjourned meeting shall be determined by the
approval of a Required Interest. Upon the resumption of any adjourned meeting,
any business may be transacted that may have been transacted at the meeting as
originally called.
(d) An annual meeting of the Members, for the election of the
Managers and for the transaction of such other business as may properly come
before the meeting, shall be held at such place, within or without the State of
Texas, on such date and at such time as the Managers shall fix and set forth in
the notice of the meeting, which date shall be within thirteen (13) months after
the date of organization of the Company or the last annual meeting of Members,
whichever most recently occurred.
(e) Special meetings of the Members for any proper purpose or
purposes may be called at any time by the Managers or any Member. If not
otherwise stated in or fixed in accordance with the remaining provisions hereof,
the record date for determining Members entitled to call a special meeting is
the date any Member first signs the notice of that meeting. Only business within
the purpose or purposes described in the notice (or waiver thereof) required by
these Regulations may be conducted at a special meeting of the Members.
(f) Written or printed notice stating the place, day and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered in accordance with Section 18.2 not
less than ten (10) nor more than sixty (60) days before the date of the meeting
by or at the direction of the Managers or Person calling the meeting, to each
Member entitled to vote at such meeting.
(g) The date on which notice of a meeting of Members is given or the
date on which the resolution of the Managers declaring a distribution is
adopted, as the case may be, shall be the record date for the determination of
the Members entitled to notice of or to vote at such meeting, including any
adjournment thereof, or the Members entitled to receive such distribution.
3.3 Proxies. A Member may vote either in person or by proxy executed in
writing by the Member. A telegram, telex, cablegram or similar transmission by
the Member, or a photographic, photostatic, facsimile or similar reproduction of
a writing executed by the Member shall be treated as an execution in writing for
purposes of this Section 3.3. Proxies for use at any meeting of Members or in
connection with the taking of any action by written consent shall be filed with
the Managers, before or at the time of the meeting or execution of the written
consent, as the case may be. A proxy shall only be effective for the meeting for
which it has been given, as must be specified in the proxy.
3.4 Conduct of Meetings. All meetings of the Members shall be presided
over by the chair of the meeting, who shall be the president of the Company. The
chair of any meeting of Members shall determine the order of business and the
procedure at the meeting, including such regulation of the manner of voting and
the conduct of discussion as seem to him or her in order.
3.5 Action by Written Consent or Telephone Conference.
(a) Any action required or permitted to be taken at any meeting of
Members may be taken without a meeting, without prior notice and without a vote,
if a consent or consents in writing, setting forth the action so taken, shall be
signed by the holder or holders of more than eighty percent (80%) of the
Ownership Interest. A telegram, telex, cablegram or similar transmission by a
Member, or a photographic,
10
photostatic, facsimile or similar reproduction of a writing signed by a Member,
shall be regarded as signed by the Member for purposes of this Section 3.5.
Prompt notice of the taking of any action by Members without a meeting by less
than unanimous written consent shall be given to those Members who did not
consent in writing to the action.
(b) The record date for determining Members entitled to consent to
action in writing without a meeting shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Company by delivery to its registered office, its principal
place of business or the Managers.
(c) Members may participate in and hold a meeting by means of
conference telephone or similar communications equipment by means of which all
Persons participating in the meeting can speak to and hear each other.
Participation in such meeting shall constitute attendance and presence in person
at such meeting, except where a Person participates in the meeting for the
express purpose of objecting to the transaction of any business on the ground
that the meeting is not lawfully called or convened.
3.6 Member Reserved Powers. Without the prior written consent or approval
of all of the Members, the Company may not do, and will prevent its Subsidiaries
from doing, any of the following (each a "Member Restricted Action"):
(a) amend or restate the Articles of Organization or these
Regulations or the organizational documents of any Subsidiary of the Company;
(b) dissolve the Company or sell, lease, exchange or otherwise
dispose of all or substantially all the property and assets the Company directly
or indirectly owns;
(c) be a party to (i) a merger or (ii) an exchange or acquisition of
the type described in Article 10.06 of the Act;
(d) enter into, modify or renew any contract to manage the Company,
a Subsidiary or any portion of the business operations of the Company or a
Subsidiary or to develop any surgery center or similar outpatient center;
(e) cause or allow the Company or any of its Subsidiaries to
"HealthFirst Options" (as defined in the Contribution Agreement);
(f) enter into any agreement with any Member or any Affiliate of any
Member; provided, however, if a Member or any Affiliate of such Member (other
than the Company or a Restricted Affiliate of the Company) enters into an
agreement, such Member will be deemed to have approved such agreement;
(g) directly or indirectly participate in a Venture unless Baylor or
UP has proposed such Venture (i) to THVG # 1 under article XVI of the THVG #I
regulations and (ii) to the Company as a Proposed Venture; provided, however,
that this Section 3.6(g) does not apply to Ventures related to the assets
acquired under the Contribution Agreement; or
(h) purchase any interest in any Subsidiary, other than purchases of
interests directly from the Subsidiary or purchases required by the terms of the
HealthFirst Purchase Agreement.
3.7 Annual Budget
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(a) With respect to each fiscal year, the Managers will, within
forty-five (4) days prior to the beginning of the fiscal year, cause to be
prepared a proposed Annual Budget. Also, any officer, Member or Manager may from
time to time during a fiscal year present proposed amendments to the Annual
Budget to the Managers. The Managers will promptly consider any proposed dual
Budget or amendment thereto. No Annual Budget or amendment thereto will be
effective without the approval of the Managers.
(b) If an Annual Budget has not been approved in accordance with
this Section 3 7(a) with respect to any fiscal year by the start of the fiscal
year, the Annual Budget in effect for the immediately preceding fiscal year (the
"Old Budget") will (subject to the proviso at the end of this sentence) continue
to be the Annual Budget until a new Annual Budget is so approved; provided,
however, that the Old Budget will be deemed to include appropriate adjustments
to permit (i) all increases in amounts payable with respect to the Company's
then-existing business operations for items the cost of which is outside the
control of the Company (including, but not limited to, taxes and insurance
renewals), (ii) a reasonable inflation adjustment for items other than those
referred to in (i), above, and (iii) additional amounts the Company reasonably
believes are necessary to preserve the value of the Company's assets.
(c) No sum shall be expended on any matter unless such matter has
been made part Annual Budget or is included within an approved variance from the
Annual Budget.
Article IV
DISPOSITIONS OF MEMBERSHIP INTERESTS
4.1 Restrictions ore the Issuance and Disposition of a Membership
Interest. No Membership Interest nor any interest therein may be issued, sold,
transferred, pledged or otherwise Disposed of except in accordance with this
Article IV.
(a) USP may sell, transfer, pledge or otherwise Dispose of
Membership Interest or interests therein to USP Parent or any Restricted
Affiliate of USP Parent; provided, however, before the time the transferee
ceases to be a Restricted Affiliate of USP Parent, the transferee must transfer
all of the transferee's interest in the Company to USP Parent or a Restricted
Affiliate of UP Parent. Baylor may sell, transfer, pledge or otherwise Dispose
of Membership Interest or interests therein to any Person that is, at the time
of the Disposition, subject to Section 16.1. After any Disposition made under
this Section 4.1(a), the transferor will remain subject to the provisions of the
Regulations.
(b) Subject to Section 4.1(a), no Membership Interest may be sold,
transferred, pledged or otherwise Disposed of, before the fifth anniversary of
these Regulations, without the consent of all Members.
(c) Subject to Section 4.1(a), no Membership Interest nor any
interest therein may be issued, sold, transferred, pledged or otherwise Disposed
of, after the fifth anniversary of these Regulations, (i) except to a bona fide
third-party purchaser, the Company or another Member in accordance with Section
4.2 or (ii) with the consent of all Members.
(d) No Membership Interest, nor any interests therein may be issued,
sold, transferred, pledged or otherwise Disposed of in the absence of a
registration of the offer and sale of such Membership Interests under the
Securities Act and applicable state securities laws and the rules and
regulations thereunder or an exemption therefrom. The Company and the Members
each agree that they will not take any action to issue, sell, transfer, pledge,
solicit offers to purchase or otherwise Dispose of any Membership Interests in
the Company without first seeking the advice of legal counsel.
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4.2 Right of First Refusal. After the fifth anniversary of these
Regulations and subject to this Section 4.2, any Member (the "Offering Holder")
who desires to Dispose of Membership Interests to a bona fide prospective
third-party purchaser independent of the Offering Holder ("Third-Party
Purchaser") for value shall give a written notice ("Offering Notice") signed by
the Offering Holder to the Company and the other Member(s) of such Offering
Holder's desire to do so. The Notice shall be sent in accordance with Section
18.2 and shall set forth in reasonable detail the terms and provisions of the
proposed Disposition, including, without limitation, (i) the Membership
Interest(s) to be Disposed of (the "Offered Interest"), (ii) the identity and
address of the Third-Party Purchaser to whom the Offering Holder proposes to
Dispose of the Offered Interest and (iii) the price (the "Offered Price"), terms
and conditions of the proposed Disposition. The Offering Holder may Dispose of
the Offered Interest only as follows:
(a) The non-selling Member(s) shall have the option, but not the
obligation, for thirty (30) Business Days following receipt of the Offering
Notice, to purchase all, but not less than all, of the Offered Interest at a
price established pursuant to Section 4.2(c) (which if there are more than one
non-selling Members that desire to purchase the Offered Interest shall be in
proportion to their Membership Interests).
(b) If the non-selling Member(s) does not exercise its option with
respect to the Offered Interest, the Offering Holder shall, in accordance with
Section 18.2, notify the Company of the Offered Interest, and the Company shall
have the option, but not the obligation, for thirty (30) Business Days following
the expiration of the non-selling Member's(s') option, to purchase not less than
all of the Offered Interest at a price established pursuant to Section 4.2(c).
(c) The price that the Member(s) or the Company (the "Purchaser(s)")
will pay to the Offering Holder under Section 4.2(a) or (b), as appropriate,
will be the lower of (i) the Offered Price and (ii) a price per Membership
Interest based on a Membership Interest's Agreed Value (defined herein). The
"Agreed Value" of each Membership Interest will equal (x) the Fair Market Value
of the Company (as determined pursuant to this Section 4.2(c)) (y) divided by
the number of Membership Interests issued and outstanding at the time of the
Offering Notice. For purposes of this Article IV and Articles V and XV only, the
"Fair Market Value" of the Company shall be determined as follows:
If the Purchaser(s) give notice to the Offering Holder that the
Purchaser(s) intend to purchase the Offered Interest, a qualified appraiser
agreed upon by the Purchaser(s) and the Offering Holder will determine the
Company's Fair Market Value. If the Purchaser(s) and the Offering Holder cannot
agree on an appraiser within thirty (30) days after the giving of the Offering
Notice, the Purchasers) will name one (1) qualified appraiser and the Offering
Holder will name one (1) qualified appraiser, in each case by notice delivered
in accordance with Section 18.2 to the other parties, within ten (10) days after
such 30-day period elapses. If only one party delivers the name of a qualified
appraiser within such l0-day period, then such appraiser shall be deemed to be
the agreed upon appraiser for purposes of this Section 4.2(c). If both the
Purchaser(s) and the Offering Holder name a qualified appraiser in accordance
with this Section 4.2(c), these appraisers shall select a third appraiser and
all three appraisers shall independently and promptly appraise the Fair Market
Value of the Company and deliver written reports of such appraisals to all
parties. These appraisals shall be averaged, the appraisal that differs most
from the average shall be disregarded, and the average of the remaining
appraisals shall be the Fair Market Value of the Company for purposes of this
Section 4.2(c). If one appraiser is used under this Section 4.2(e), then the
Purchaser(s) will pay one-half (1/2) of appraisal cost and the Offering Holder
will pay one-half (1/2) of the appraisal cost. If more than one appraiser is
used under this Section 4.2(c), then each party will pay the cost of the
appraiser it selects and the Purchaser(s) will pay one-half (1/2) of the cost of
the third appraiser and the Offering Holder will pay one-half (1/2) of the cost
of the third appraiser.
13
(d) The closing of the purchase of the Offered Interest shall be
within ninety (90) days from the date of the Offering Notice. Payment of the
purchase price shall be made by certified car cashier's check at the Closing.
(e) The Purchaser(s) shall exercise their options to purchase the
Offered Interests hereunder by actual delivery to the Offering Holder of a
written notice of intent to purchase such Offered Interest given in accordance
with Section 18.2. Upon the exercise of an option, the Purchaser(s) shall be
obligated to make payment at the closing as provided in Section 4.2(d).
(f) If neither the non-selling Member(s) nor the Company elects to
purchase all of the Offered Interest during the option periods, the options to
purchase the Offered Interest shall be deemed to be lapsed without exercise by
the non-selling Member(s) or the Company, and the Offering Holder shall be
permitted, at any time or times within, but not after, thirty (30) days after
the expiration of the option periods to sell the Offered Interest which was the
subject of the Offering Notice; provided, however, that no such sale shall be
made at a lower price or to any Third-Party Purchaser other than as specified in
the Offering Notice. Any Third-Party Purchaser purchasing the Offered Interest
in accordance with the terms of this Section 4.2(f) shall comply with the
provisions of Section 4.4.
4.3 Compliance with Section 17.2. On the occurrence of any event that
causes Baylor to cease to own a 20% or higher Ownership Interest, the Company
must comply with Section 17.2.
4.4 Admission of New and Successor Members. No Person (other than Baylor
and USP) may become a Member without the consent of all existing Members. No
assignee, other than Baylor and UP, taking or acquiring, by whatever means, the
Membership Interest of any Member shall be admitted as a Successor Member unless
such admission is approved by all of the existing Members; provided, however,
that a Person acquiring Membership Interest pursuant to Section 4.1(a), Section
4.2(f) or Article V may be admitted as a Member with respect to such Membership
Interest without the consent of any Member. To become a Member, an assignee of
Membership Interest and a Person to whom the Company has issued Membership
Interest must
(a) Elect to become a Member by delivering notice of such election
to the Company;
(b) Execute, acknowledge and deliver to the Company such instruments
as the president may deem necessary or advisable to effect the admission of such
Person as a new Member or a Successor Member (with all the rights of a member
under the Act), including, without limitation, the written acceptance and
adoption by such Person of the provisions of these Regulations; and
(c) Pay a fee to the Company in an amount sufficient to cover all
reasonable expenses connected with the admission of such person as a Successor
Member or a new Member; provided, however, that a Member that is issued
Membership Interest under Article V need not comply with this Section 4.4 with
respect to such Membership Interest.
4.5 Basis Adjustment. Upon the transfer of all or part of an interest in
the Company, at the request of the transferee of the interest the president may,
upon approval of all of the Members, cause the Company to elect, pursuant to
section 754 of the Code or the corresponding provisions of subsequent law, to
adjust the basis of the Company properties as provided by sections 754 and 743
of the Code.
4.6 Transfer Procedures. A Member may sell his or her Membership Interest
only if the following conditions are satisfied:
(a) The requirements of these Regulations are satisfied;
14
(b) The transferor and transferee execute, acknowledge, and deliver
to the president such instruments of transfer and assignment with respect to
such transaction which are in form and substance satisfactory to the president
of the Company;
(c) Unless waived in writing by the president based on the advice of
the Company's legal counsel, the transferor delivers to the president an opinion
of counsel satisfactory to the resident, covering such securities and tax laws
and other aspects of the proposed transfer as the president may reasonably
request;
(d) The transferor furnishes to the Company a written statement
showing the name and taxpayer identification number of the transferee and the
transferor in such form and together with such other information as may be
required under Section 6050K of the Code;
(e) The transferor pays the Company a transfer fee that is
sufficient to pay all reasonable expenses of the Company in connection with such
transaction.
The Company shall establish transfer procedures consistent with this Article IV
to ensure that all conditions precedent to the transfer and, if applicable, to
the admission of a Successor Member have been complied with.
4.7 Invalid Transfer. No transfer of an interest in the Company that is in
violation of this Article IV shall be valid or effective, and the Company shall
not recognize any improper transfer for the purposes of making allocations,
payments of profits, return of capital contributions or other distributions with
respect to such Company interest, or part thereof. The Company may enforce the
provisions of this Article IV either directly or indirectly or through its
agents by entering an appropriate stop transfer order on its books or otherwise
refusing to register or transfer or permit the registration or transfer on its
books of any proposed transfers not in accordance with this Article IV.
4.8 Distributions and Allocations in Respect of a Transferred Membership
Interest. If any Member sells, assigns or transfers any part of his or her
Membership Interest in the Company during any accounting period in compliance
with the provisions of this Article IV, Company income, gain, deductions and
losses attributable to such interest for the respective period shall be divided
and allocated between the transferor and the transferee by taking into account
their varying interests during the applicable accounting period in accordance
with Code section 706(d). All Company distributions on or before the effective
date of such transfer shall be made to the transferor, and all such Company
distributions thereafter shall be made to the transferee. Neither the Company
nor any Member shall incur any liability for making Company allocations and
distributions in accordance with the provisions of this Section 4.8.
4.9 Amendment to Exhibit A. Exhibit A attached to these Regulations shall
be amended from time to time to reflect the admission of any new Member, any
Successor Member, the termination of any Member's Membership Interests in the
Company and the change in the Ownership Interests.
4.10 Evidence of Membership Interest. All Membership Interests shall be
evidenced by membership certificates. All such membership certificates of the
Company now outstanding or that may hereafter be issued shall be endorsed on the
back thereof as follows:
UNDER THE REGULATIONS CAF THE COMPANY, RESTRICTIONS HAVE BEEN PLACED UPON
THE TRANSFER OF THE MEMBERSHIP INTEREST REPRESENTED BY THIS MEMBERSHIP
CERTIFICATE. IN ADDITION, THE REGULATIONS OF THE COMPANY HAVE LIMITED THE
RIGHTS OF ASSIGNEES OR TRANSFEREES OF MEMBERSHIP INTERESTS HESS SUCH
PERSONS HAVE BEEN ADMITTED AS SUCCESSOR MEMBERS
15
IN ACCORDANCE WITH THE REGULATIONS OF THE COMP. THE COMPS WILL FURNISH A
COPY OF THE REGULATIONS OF THE COMPS TO THE RECORD HOLDER OF THIS
MEMBERSHIP CERTIFICATE WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPS AT
ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE.
The membership certificates shall be endorsed on the front thereof as
follows:
"SEE RESTRICTIONS ON TRANSFER HEREOF ON REVERSE SIDE."
4.11 Information. In addition to any other rights specifically set forth
in these Regulations, each Member is entitled to all information to which that
Member is entitled to have access pursuant to Article 2.22 of the Act under the
circumstances and subject to the conditions therein stated.
4.12 Lack of Authority. No Member (other than a Manager or an officer of
the Company, acting in such capacity) has the authority or power to act for or
on behalf of the Company, to do any act that would be binding on the Company, or
to incur any expenditures on behalf of the Company.
Article V
CAPITAL CONTRIBUTIONS
5.1 Initial Contributions. Each initial member made an initial Capital
Contribution to the Company equal to the amount set forth on Exhibit A to these
Regulations, opposite the initial member's name. In addition, each initial
Member shall make the contributions required by the Contribution Agreement.
5.2 Subsequent Contributions.
(a) Without creating any rights in favor of any third party, each
Member may be asked by the Managers to contribute to the Company in cash, on or
before a date approved by the Managers (the "Contribution Date"),that Member's
share (as determined by the Member's Ownership Interest, without regard to any
Current Year Section 5.8 Adjustments) of all monies that, in the judgment of the
Managers, are necessary to enable the Company to cause the business of the
Company to be properly operated and maintained and to discharge its costs,
expenses, obligations and liabilities. The Managers shall notify each Member (a
"Capital Call") of the need for Capital Contributions pursuant to this Section
5.2 when appropriate. This notice must include a statement in reasonable detail
of the current financial condition of the Company, the reasons) for the Capital
Call and the proposed uses of the Capital Contributions. To the extent a Member
(a "Non-Contributing Member") cannot or elects not to contribute Capital
Contributions requested pursuant to this Section 5.2, the Managers shall notify
the other Member(s) (the "Contributing Member(s)") of such fact and shall
request that additional Capital Contributions be made by one or more of the
Contributing Member(s) in an amount equal to the amount originally requested of
the Non-Contributing Member, and a Contributing Member may make an additional
Capital Contribution (a "Shortfall Contribution") of a portion or all of such
amount.
(b) Subject to Section 5.2(c), to the extent a Non-Contributing
Member cannot or elects not to make Capital Contributions requested pursuant to
this Section 5.2, the Non-Contributing Member's Ownership Interest will be
decreased proportionately (and the Contributing Member's Ownership Interest
increased proportionately) so that Ownership Interests are proportionate to the
FMV Capital Accounts after the Capital Contributions. Subject to Section 5.2(c),
to the extent that any Contributing Member(s) makes a Shortfall Contribution,
such Contributing Member's(s') Ownership Interests) will be increased
proportionately (and the Non-contributing Member's Ownership Interest decreased
proportionately) so that Ownership Interests are proportionate to the FMV
Capital Accounts after the Capital Contributions. The
16
proportionate increase and decrease in Ownership Interest under this Section
5.2(b) will be made in accordance with Section.
(c) The proportionate increases and decreases in Ownership Interests
required under Section 5.2(b) will not occur until the date (the "Adjustment
Date") that is ninety (90) days from the Contribution Date. During this 90-day
period, the Non-Contributing Member will have the right to make a Capital
Contribution equal to the amount originally requested of the Non-Contributing
Member. If the Non-Contributing Member makes such a Capital Contribution, (i)
the Ownership Interests will not be adjusted as a result of the Capital Call
related to such Contribution Date and (ii) the Company will distribute to the
Contributing Member(s) that made Shortfall Contributions (if any) an amount
equal to the Shortfall Contribution such Contributing Member made.
5.3 Issuance of Additional Membership Interests. If there is a
Non-Contributing Member with respect to any Capital Call (unless such
Non-Contributing Member executes its rights under Section 5.2(c)), the
Contributing Members will be issued additional Membership Interests on the
Adjustment Date in an amount, determined by the Managers, necessary to cause the
Ownership Interests to be proportional to the FMV Capital Accounts.
5.4 Catch-up Rights. If an adjustment of Ownership Interests occurs under
Section 5.2(b) (a "Dilution") (and not as a result of the application of this
Section 5.4) (the date of such adjustment being referred to as the "Dilution
Date"), the party whose Ownership Interest was reduced in the Dilution will have
the right, subject to this Section 5.4, for a period ending one (1) year from
the Dilution Date, to make Capital Contributions to the Company sufficient to
reverse the Dilution (based on the Members' respective FMV Capital Accounts). If
any Member makes a Capital Contribution under this Section 5.4, such Member will
be issued additional Membership Interests, effective as of the date of such
Capital Contribution, sufficient to reverse the Dilution. No Member will have
any rights under this Section 5.4 if, after a Dilution Date, such Member either
(i) has less than 40% Ownership Interest or (ii) has greater than 50% Ownership
Interest.
5.5 Return of Contributions. A Member is not entitled to the return of any
part of its Capital Contributions or to be paid interest in respect of either
its Capital Account or its Capital Contributions. An unrepaid Capital
Contribution is not a liability of the Company or of any Member. A Member is not
required to contribute or to lend any cash or property to the Company to enable
the Company to return any Member's(s') Capital Contributions.
5.6 Advances by Members. If the Company does not have sufficient cash to
pay its obligations reasonably timely, any Member that may agree to do so with
the Managers' consent may advance all or part of the needed funds to or on
behalf of the Company. An advance described in this Section 5.6 constitutes a
loan from the Member to the Company, bears interest at the General Interest Rate
from the date of the advance until the date of payment, and is not a Capital
Contribution.
5.7 Capital Accounts.
(a) A Capital Account shall be established and maintained for each
Member in accordance with the rules set forth in Treas.
Reg,ss.1.704-1(b)(2)(iv).
(b) If any additional Membership Interests are to be issued in
consideration for a contribution of property or cash or if any Company property
is to be distributed in liquidation of the Company or a Membership Interest, the
Capital Accounts of the Members (and the amounts at which all Company properties
are carried on its books and records) shall, immediately prior to the issuance
or distribution, as the case may be, be adjusted (consistent with the provisions
of section 704(b) of the Code
17
and the Treasury Regulations promulgated thereunder) upward or downward to
reflect any unrealized gain or unrealized loss attributable to all Company
properties (as if such unrealized gain or unrealized loss had been recognized
upon the actual sale of the properties upon a liquidation of the Company
immediately prior to the issuance). If the Carrying Value of any property of the
Company is properly reflected on the books of the Company at a value that
differs from the adjusted tax basis of such property, this Section 5.7 shall be
applied with reference to that different value.
5.8 Special Dilution Provision.
(a) If
(i) the Managers make a Capital Call in connection with a
payment the Company is permitted or obligated to make under
the HealthFirst Purchase Agreement (including payments under
sections 1(c) and 8(e)-(g) of the HealthFirst Purchase
Agreement), and
(ii) a Member fails to make the Capital Contribution requested
of such Member in connection with a Capital Call referenced in
Section 5.8(a)(i),
then such Member will be diluted pursuant to Section 5.2(b); provided, however,
not apply to such dilution.
(b) If, during any Contribution Agreement Year,
(i) Baylor is diluted under Section 5.8(a) in connection with
a Capital Call necessary in connection with a payment the
Company is obligated to make pursuant to section 1(e) of the
HealthFirst Purchase Agreement (i.e., the HealthFirst earn-out
payments), and,
(ii) On the Reconciliation Date that concludes such
Contribution Agreement Year, Baylor is owed a Baylor Earn-Out
Amount (as shown on the Reconciliation Statement related to
such Contribution Year),
then, on the Reconciliation Date that concludes such Contribution Agreement ear,
Baylor must use the Baylor Earn-Out Amount to reverse Baylor's dilution (to the
extent (x) of such Baylor Earn-Out Amount and (y) necessary to reverse any
dilution occurring under Section 5.8(b) during such Contribution Agreement
Year). Such reversal will occur in accordance with Section 5.2(b) (with "USP
deemed to be the "Non-Contributing Member" with respect to the calculation
related to such reversal); provided, however, Section 5.2(c) and Section 5.4
will not apply to such reversal.
(c) If, during any Contribution Agreement Year,
(i) Baylor is diluted under Section 5.8(a) as a result of a
Capital Call necessary in connection with a payment the
Company is obligated or permitted to make pursuant to any
provision of the HealthFirst Purchase Agreement other than
Section 1(c), and
(ii) Baylor is credited with a Net Earn-Out Amount in the
Reconciliation Statement related to such Contribution
Agreement Year,
then, on the Reconciliation Date that concludes such Contribution Agreement
Year, Baylor must use the credit associated with such Net Earn-Out Amount to
reverse Baylor's dilution (to the extent (x) of such credit and (y) necessary to
reverse any dilution Baylor has suffered under Section 5.8(a) during such
Contribution Agreement Year). Such reversal will occur in accordance with
Section 5.2(b) (with USP
18
deemed to be the "Non-Contributing Member" with respect to the calculation
related to such reversal); provided, however, Section 5.2(c) and Section 5.4
will not apply to such reversal.
(d) Any Capital Contribution made or deemed made in connection with
a Reconciliation Statement will be deemed to have been made during the
Contribution Agreement Year to which such Reconciliation Statement relates.
5.9 Contribution Agreement. There are additional provisions in the
Agreement relating to adjustments to the Ownership Interests, which provisions
are incorporated herein by reference.
Article VI
ALLOCATIONS AND DISTRIBUTIONS
6.1 Allocations for Capital Accounts. Except as otherwise provided in
these Regulations or unless another allocation is required by the Treasury
Regulations issued under section 704(b) of the Code, all items of Company
income, gain, loss, deduction and credit shall be allocated among the Members
and charged or credited to their respective Capital Accounts pro rata in
accordance with their Ownership Interests in effect for the period during which
the items accrue as the same may be adjusted from time to time pursuant to the
terms hereof For purposes of computing the amount of each item of income, gain,
deduction or loss to be charged or credited to the Members" Capital Accounts,
the determination, recognition and classification of each item shall be the same
as its determination, recognition and classification for federal income tax
purposes, provided that:
(a) Any deductions for depreciation, cost recovery, or amortization
attributable to any Company property shall be determined as if the adjusted
basis of the property were equal to the Carrying Value of the property. Upon an
adjustment to the Carrying Value of any Company property subject to
depreciation, cost recovery, or amortization pursuant to Section 5.7(b), any
further deductions for the depreciation, cost recovery, or amortization
attributable to the property shall be determined as if the adjusted basis of
such property were equal to the Carrying Value of the property immediately
following the adjustment.
(b) Any income, gain or loss attributable to the taxable disposition
of any Company property shall be determined by the Company as if the adjusted
basis of the property as of the date of disposition were equal in amount to the
Carrying Value of the property as of the date of disposition.
(c) All fees and other expenses incurred by the Company to promote
the sale of Membership Interests that can neither be deducted nor amortized
under Section 7(3) of the Code shall be treated as an item of deduction.
(d) Computation of all items of income, gain, loss and deduction
shall be made without regard to any election under section 754 of the Code which
will be made by the Company and, as to those items described in section
705(a)(I)(B) or section 705(a)(2)(B) of the Code, without regard to the fact
that such items are not includable in gross income or are neither currently
deductible nor capitalizable for federal income tax purposes.
6.2 Gains and Losses on Dispositions. Upon the sale or other taxable
disposition of all, car substantially all, of the Company's assets, the gain or
loss resulting therefrom shall be allocated as follows:
(a) If the balances in the Members' respective Capital Accounts are
not in proportion to their Ownership Interests, the items of Company income,
gain, loss or deduction resulting from the sale of the Company assets shall
first be allocated, to the extent possible, among each of the Members in such
19
amounts as will bring the positive balances in the Members' Capital Accounts
into proportion with their Ownership Interests.
(b) All remaining items of Company income, gain, loss or deduction
shall be credited or charged to the Capital Accounts of the Members pro rata in
accordance with their Ownership Interests.
6.3 Tax Allocations.
(a) The Company shall, except to the extent an item is subject to
allocation pursuant to subsection (b) below, allocate each item of income, gain,
loss, deduction and credit, as determined for federal and other income tax
purposes, in the same manner as the item was allocated for Capital Account
purposes.
(b) The Company, for federal and other income tax purposes, shall,
in the case of contributed properties, allocate items of income, gain, loss,
depreciation and cost recovery deductions attributable to those properties
pursuant to section 704(c) of the Code using the traditional method described in
Treas. Reg. ss. 1.704-3(b). Similar allocations shall be made in the event that
the Carrying Value of Company properties subject to depreciation, cost recovery
or amortization are adjusted pursuant to Section 5.7(b) upon the issuance of
additional Membership Interests for cash. If an existing Member acquires
additional Membership Interests, such allocations shall apply only to the extent
of his or its additional Membership Interests. No allocation under section
704(c) of the Code shall be charged or credited to a Member's Capital Account.
6.4 Reliance on Tax Advisors. The Managers may rely upon, and shall have
no liability to the Members or the Company if they rely upon, the written
opinion of tax counsel or accountants retained by the Company from time to time
with respect to all matters (including disputes with respect thereto) relating
to computations and determinations required to be made under this Article VI or
other provisions of these Regulations.
6.5 Distributions.
(a) From time to time (but at least once each calendar quarter) the
Managers shall determine in their reasonable judgment to what extent (if any)
the Company's cash on hand exceeds its current and anticipated needs, including,
without limitation, for operating expenses, debt service, acquisitions and a
reasonable contingency reserve. If the Managers determine that an excess exists,
the Managers may cause the Company to make such distributions to the Members as
they deem appropriate. The distribution shall be made to the Members in
accordance with their Ownership interests as the same may be adjusted from time
to time pursuant to the terms hereof
(b) From time to time, upon the approval of Managers elected by
Members with greater than 66?% Ownership Interest, the Managers may cause
property of the Company other than cash to be distributed to the Members, which
distribution must be made in accordance with their Ownership Interests and may
be made subject to existing liabilities and obligations. Immediately before a
distribution of non-cash property, the Capital Accounts of the Members shall be
adjusted as provided in Treas. Reg. ss. 1.704-1(b)(2)(iv)(f).
(c) The date on which the resolution of the Managers declaring a
distribution is adopted shall be the record date for the determination of the
Members entitled to receive the distribution. The Company must give the Members
at least 10 days notice of a distribution, in accordance with Section 18.2. in
advance of any record date of such distribution; provided, however, no such
notice need be given to a Member if a Manager that Member elected votes in favor
of such distribution.
20
Article VII
MANAGERS
7.1 Management by Managers. The Company, Baylor and USP intend to enter
into a management agreement, in the form attached as Exhibit D, under which USP
will manage the assets and businesses of the Company and certain of the
Company's Subsidiaries and Baylor will provide managed care contractual services
as provided therein. Except for situations in which the approval of the Members
is required by these Regulations or by applicable law, the powers of the Company
shall be exercised by or under the authority of, and the business and affairs of
the Company shall be managed under the direction of, the Managers in accordance
with the provisions of this Article VII. Subject to Section 3.6, the Managers
may make all decisions and take all actions for the Company not otherwise
provided for in these Regulations, including, without limitation, the following:
(a) entering into, making and performing contracts, agreements and
other undertakings binding the Company that may be necessary, appropriate or
advisable in furtherance of the purposes of the Company and making all decisions
and waivers thereunder;
(b) opening and maintaining bank and investment accounts and
arrangements, drawing checks and other orders for the payment of money, and
designating individuals with authority to sign or give instructions with respect
to those accounts and arrangements;
(c) maintaining the assets of the Company in good order;
(d) collecting sums due the Company;
(e) to the extent that funds of the Company are available therefor,
paying debts and obligations of the Company;
(f) acquiring, utilizing for Company purposes, and Disposing of any
asset of the Company;
(g) borrowing money or otherwise committing the credit of the
Company for Company activities and voluntary prepayments or extensions of debt
consistent with Annual Budgets that have been approved by the Managers pursuant
to Section 3.7;
(h) selecting, removing and changing the authority and
responsibility of lawyers, accountants and other advisers and consultants;
(i) obtaining insurance for the Company;
(j) subject to Section 6.5, determining distributions of Company
cash and other property as provided in Section 6.5;
(k) approving a president and other officers of the Company;
(l) preparing strategic plans or business plans, including Annual
Budgets and long-range financial plans, annual operating plans or capital
expenditure plans of the Company;
(m) Subject to Section 15.6(a), causing the Company to elect or
remove any director, Manager, officer, trustee or equivalent individual in any
Subsidiary. In connection with any such election or removal, the Managers shall
notify the president of the Company of the identity of the individuals to be
21
elected or removed in such capacity and, if applicable, the designation or
classification of such individuals in such capacity, and instruct the president
to cause such election or removal; and
(n) performing such other functions; such as, subject to Section
15.6, the formulation and adoption of a quality of care assessment program, the
formulation and adoption of professional staff bylaws and the appointment,
reappointment and disciplining of professional staff of any health care provider
for which the Company has operating responsibility; as may be required of a
governing board by applicable standards for accreditation, such as for
ambulatory health care organizations of the Joint Commission on Accreditation of
Healthcare Organizations ("JCAHO")or the Accreditation Association for
Ambulatory Health Care ("AAAHC").
7.2 Limitations on Company Action. Without the prior written consent or
approval of the Managers or the Members, the Company may not do, and will
prevent its Subsidiaries from doing, any of the following (each a "Manager
Restricted Action"):
(a) incur any indebtedness that requires the guarantee thereof by
any Member;
(b) create, own or otherwise acquire or hold any Subsidiary;
(c) conduct business, or qualify as a foreign limited liability
company to conduct business, in any jurisdiction other than Texas;
(d) approve the admission of a new Member or a Successor Member;
(e) enter into, extend, renew or modify any material contract, other
than in the ordinary course of the Company's business, the term of which
contract exceeds one (1) year;
(f) furnish any suretyship or guarantee for the obligations of any
third party;
(g) change the fiscal year end of the Company;
(h) confess a judgment against the Company;
(i) allow a judgment by default to be rendered against the Company
without engaging legal counsel to provide the Company with an opportunity to
defend against such judgment;
(j) pay, or loan money for the payment of, debts of any other
person, firm or entity; provided, however that any inter-company transfer of
money among the Company and its wholly-owned Subsidiaries ▇▇▇▇ not constitute a
Manager Restricted Action;
(k) release or compromise any debt or obligation owed the Company in
excess of $100,000 in the aggregate, other than in the ordinary course of the
Company's business;
(l) issue Membership Interests, capital stock,, debt instruments or
securities or other instruments convertible into or exchangeable for capital
stock or Membership Interests of the Company to any Person, except as provided
in the Annual Budget or an approved variance therefrom;
(m) change the nature of the business of the Company or carry on any
other business which is not directly related to the business of the Company;
22
(n) subscribe for or purchase shares, debentures or other
instruments or securities issued by any other Person or make any investment in a
Person, in any case, other than (i) securities of Subsidiaries of the Company
and (ii) cash equivalent investments;
(o) change the basis of the Company's accounting policies, other
than as required by generally accepted accounting principles;
(p) subject to Article XIII, reorganize, windup or dissolve the
Company;
(q) declare or pay any distributions with respect to the Membership
Interests or capital stock of the Company;
(r) file a voluntary petition for relief by the Company under any
provisions of the United States Bankruptcy Code, Title II of the United States
Code, as amended or recodified from time to time, or under any similar or other
law relating to bankruptcy, insolvency, reorganization or other relief or
appoint a receiver for or liquidator of or for any part of the assets or
property of the Company or make a general assignment for the benefit of
creditors of the Company;
(s) make, or commit to make, any payment in excess of $100,000 per
transaction or contract (or series of related transactions or contracts),
whether as or in connection with a capital expenditure, asset purchase,
investment, rental, settlement, equity contribution, loan, guaranty or
otherwise, other than pursuant to transaction(s) or contract(s) included in the
dual Budget or an approved variance therefrom;
(t) borrow any amount in excess of $100,000 per transaction or
contract (or series of related transactions or contracts) other than pursuant to
transaction(s) or contract(s) included in the Annual Budget or an approved
variance therefrom;
(u) enter into any contract or transaction (or series of contracts
or transactions) pursuant to which the Company or any Subsidiary is to receive
or pay more than $100,000 other than pursuant to contract(s) or transaction(s)
included in the Annual Budget or an approved variance therefrom;
(v) enter into any standstill agreement;
(w) indemnify any Person except as specifically provided in these
Regulations;
(x) execute or otherwise enter into any employment agreement,
appoint or remove (with or without cause) any officer of the Company or hire or
fire (with or without cause) any officer of the Company or other similarly
compensated Person;
(y) set or amend the compensation level of any officer of the
Company or other similarly compensated Person;
(z) (A) file any claim or lawsuit against any Person except where
the amount claimed is for less than $ 100,000 or (B) settle any claim or lawsuit
except where the fair market value of the settlement amount is less than
$100,000; or
(aa) approve any financial statements for any fiscal year.
7.3 Number. The number of Managers of the Company shall be eight (8). The
number of Managers may be increased or decreased from time to time by amendment
to these Regulations; provided
23
however, that no decrease in the number of Managers shall have the effect of
shortening the terra of an incumbent Manager.
7.4 Election of Managers and Advisory Managers. Four (4) of the Managers
shall be elected by Baylor (collectively, the "Baylor Managers") and four (4) of
the Managers shall be elected by USP (collectively, the "USP Managers"). In
addition, the Members may from time to time appoint one or more advisory
managers (who shall not be deemed "Managers" for purposes of these Regulations
or under the Act). Advisory managers may attend meetings of the Managers, but
shall not have the power or authority to vote on any matters brought before the
meeting. The advisory managers shall serve at the pleasure of the Members and be
removed, with or without cause, and with or without replacement, as the Members
deem appropriate.
7.5 Election. Subsequent to the appointment of the initial Managers, each
successor to a Manager whose term shall have expired shall be appointed by the
Member(s) responsible for electing the Manager whose term has expired.
7.6 Tenure. The term of office for each Manager shall commence upon the
date of his or her election and end upon the date of the next annual meeting of
the Members or Managers following the date of his or her election. Each Manager
shall serve for his or her term of office and until his or her successor shall
have been duly elected and qualified unless he or she is sooner removed in the
manner specified in Section 7.7 of these Regulations or until his or her death
or resignation. Each successor to a Manager whose term has expired shall be
elected in the manner specified in Section of these Regulations and each such
successor shall hold office for a term commencing upon the date of his or her
election and ending upon the date of the next annual meeting of the Members or
Managers following the date of his or her election, except that, in the case of
an election to fill a vacancy in a seat on the Managers, the term of the
successor shall be for the unexpired term of the former Manager.
7.7 Removal; Vacancies; Resignations.
(a) By written notice to the Company in accordance with Section
18.2, any Member may at any time remove a Manager that Member has elected.
(b) If a Baylor Manager dies, retires or is removed, Baylor will
have the right to replace this Manager by naming a replacement in a written
notice to the Company in accordance with Section 18.2. If a USP Manager dies,
resigns or is removed, USP will have the right to replace this Manager by naming
a replacement in a written notice to the Company in accordance with Section
18.2. A Manager elected to fill a vacancy occurring other than by reason of an
increase in the number of Managers shall be elected for the unexpired term of
his or her predecessor in office.
(c) Any Manager may resign at any time. Such resignation may be in
writing and shall take effect at the time specified therein, or if no time is
specified, at the time of its receipt by the remaining Managers. The acceptance
of a resignation shall not be necessary to make it effective, unless expressly
so provided in the resignation.
7.8 Meetings.
(a) (i) The presence of at least four (4) Managers will constitute
a quorum for the transaction of business of the Managers.
(ii) The Baylor Managers present at the meeting, in aggregate,
will have a vote equal to the total Baylor Ownership Interest as of the day of
the vote (divided equally among the Baylor
24
Managers present at the meeting. The USP Managers present at the meeting, in
aggregate, will have a vote equal to the total USP Ownership Interest as of the
day of vote {divided equally among the LJSP Managers present at the Meeting. The
act of Managers who have a vote equal to more than 50% of the Ownership Interest
will be the act of the Managers.
(iii) The chair of the Managers, if one has been designated by
the Managers, shall preside when present at meetings of the Managers. A Manager
who is present at a meeting of the Managers at which action on any Company
matter is taken shall be presumed to have assented to the action unless he or
she shall either voice his or her dissent at the meeting or unless he or she
shall file a written dissent to such action with the Person acting as secretary
of the meeting before the adjournment thereof Such right to dissent shall not
apply to a Manager who voted in favor of such action.
(b) Meetings of the Managers may be held at such place or places as
shall be determined from time to time by resolution of the Managers. At all
meetings of the Managers, business shall be transacted in such order as shall
from time to time be determined by resolution of the Managers. Attendance of a
Manager at a meeting shall be presumed to constitute a waiver of notice of such
meeting, except where a Manager attends a meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened or unless he or she shall file a written
objection to such action with the Person acting as secretary of the meeting
before the adjournment thereof on the ground that the meeting is not lawfully
called or convened.
(c) In connection with any annual meeting of Members at which
Managers were elected, the Managers may, if a quorum is present, hold its first
meeting for the transaction of business immediately after and at the same place
as such annual meeting of the Members. Notice of such meeting at such time and
place shall not be required.
(d) Regular meetings of the Managers shall be held at such times and
places as shall be designated from time to time by resolution of the Managers.
Notice of such regular meetings shall not be required after the initial notice
of the schedule of meetings.
(e) Special meetings of the Managers may be called by any Manager on
at least forty-eight (48) hours notice to each other Manager. Such notice need
not state the purpose or purposes of, nor the business to be transacted at, such
meeting, except as may otherwise be required by law or provided for by the these
Regulations.
7.9 Action by Written Consent or Telephone Conference.
(a) Any action permitted or required to be taken at a meeting of the
Managers or of any committee designated by the Managers may be taken without a
meeting, without prior notice and without a vote if a consent or consents in
writing, setting forth the action so taken, is signed by all of the Managers or
members of such committee. Such consent shall have the same force and effect as
a vote taken at a meeting and may be stated as such in any document or
instrument filed with the Secretary of State of Texas, and the execution of such
consent or consents shall constitute attendance car presence in person at a
meeting of the Managers or any such committee, as the case may be. A telegram,
telex, cablegram or similar transmission by a Person, or a photographic,
photostatic, facsimile or similar reproduction of a writing signed by a Person,
shall be regarded as signed by that Person for the purposes of this Section
7.9(a).
(b) Subject to the requirements of the Act, the Articles of
Organization or these Regulations, Managers, or members of any committee
designated by the Managers, may participate in and hold a meeting of the
Managers or any committee of Managers, as the case may be, by means of a
conference telephone or similar communications equipment by means of which all
Persons participating in
25
the meeting can speak to and hear each other, and participation in such meeting
shall constitute attendance and presence in person at such meeting, except where
a Person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
7.10 Compensation. If approved by the Managers and all of the Members, one
or more Managers, or members of any committee designated by the Managers, may be
reasonably compensated for services rendered and reimbursed for actual expenses
incurred in attending meetings. Notwithstanding the foregoing, any such
compensation or reimbursement otherwise payable to a Manager or committee member
who has been elected by Baylor pursuant to these Regulations or who is an
officer of Baylor or a Person controlled by Baylor shall be paid directly to
Baylor.
Article VIII
STANDING AND SPECIAL COMMITTEES
8.1 Committees. The Managers may, from time to time, create special, ad
hoc or standing committees and designate individuals to serve on committees. The
duties of any such committee shall be prescribed by the Managers upon its
designation. Each such standing committee shall consist of two (2) or more
individuals, and at least one committee member must be a Manager of the Company.
Unless otherwise designated by the Managers, constituted as required in the Act
and approved by the Members, no committee shall have or exercise any power or
authority of the Managers over the business and affairs of the Company.
8.2 Quorum and Voting. A majority of the members of a committee shall
constitute a quorum for the transaction of business at any meeting of such
committee and the act of a majority of the committee members present at a
meeting at which a quorum is present shall be the act of the committee.
8.3 Meetings and Notices. Meetings of a committee may be called by the
president or the chairman of the committee. Each committee shall meet as often
as is necessary to perform its duties. Notice may be given at any time and in
any manner reasonably designed to inform the members of the time and place of
the meetings. Each committee shall keep minutes of its proceedings.
8.4 Resignations and Removals. Any member of a committee may resign at any
time by giving notice to the chairman of the committee or the secretary of the
Company. Unless otherwise specified in the notice, such resignation shall take
effect upon receipt thereof, and the acceptance of such resignation shall not be
necessary to make it effective. The Managers may remove at any time with or
without cause any member of any committee who was originally appointed thereto
by the Managers as provided in these Regulations.
8.5 Vacancies. A vacancy on a committee shall be filled for the unexpired
portion of the term of the former occupant in the same manner in which an
original appointment to such committee is made.
Article IX
OFFICERS
9.1 Designation and Tenure.
(a) Subject to the provisions of this Article IX, the Managers may
from time to time designate officers of the Company. The officers of the Company
shall be comprised of one or more individuals designated from time to time by
the Managers. No officer need be a resident of the State of Texas, a Member or a
Manager. Each officer shall hold office until his or her successor shall be duly
26
designated and shall qualify or until his or her death or until he or she shall
resign or shall have been removed in the manner hereinafter provided. Any number
of offices may be held by the same individual. The salaries or other
compensation, if any, of the officers and agents of the Company shall be fixed
from time to time by the Managers.
(b) If designated, the officers of the Company shall consist of a
president, a secretary and a treasurer. The Managers may also designate a chair
of the Managers, a vice chair of the Managers, and one or more vice presidents,
assistant secretaries and assistant treasurers. The Managers may designate such
assistant officers and agents as it shall deem necessary, who shall hold their
offices for such terms and shall have such authority and exercise such powers
and perform such duties as shall be determined from time to time by the Managers
by resolution not inconsistent with these Regulations.
(c) The president of the Company shall be approved by the Managers
in accordance with Section 7.2. Any other officers of the Company shall be
nominated by the president of the Company for the approval and designation of
the Managers.
9.2 Resignation; Removal; Vacancies. Any officer may resign as such at any
time. Such resignation shall be made in writing and shall take effect at the
time specified therein, or if no time be specified, at the time of its receipt
by the Managers. The acceptance of a resignation shall not be necessary to make
it effective, unless expressly so provided in the resignation. Any officer may
be removed from office at any time by the Managers in the discretion of the
Managers; provided, however, that such removal shall be without prejudice to the
contract rights, if any, of the Person so removed. Designation of an officer
shall not of itself create contract rights. Any vacancy occurring in any office
of the Company shall be filled by individuals nominated, approved and designated
in a manner consistent with these Regulations.
9.3 Chair. The chair of the Managers, if one is designated, shall preside
at all meetings of the Managers and Members and shall have such other powers and
duties as may from time to time be prescribed by the Managers, upon written
directions given to him or her pursuant to resolutions duly adopted by the
Managers.
9.4 Vice Chair. The vice chair of the Managers, if one is designated,
shall, in the absence or disability of the chair of the Managers, perform the
duties and have the authority and exercise the powers of the chair of the
Managers. He or she shall perform such other duties and have such other
authority and powers as the Managers may from time to time prescribe or as the
chair of the Managers may from time to time delegate.
9.5 President. The president shall be the chief executive officer of the
Company, shall have responsibility to oversee and carry out the general and
active management of the day-to-day business of the Company, shall have such
particular duties as may be prescribed by the Managers and shall see that all
orders and resolutions of the Managers are carried into effect.
9.6 Vice Presidents. The vice presidents, if any are designated, in the
order of their seniority, unless otherwise determined by the Managers, shall, in
the absence or disability of the president, perform the duties and have the
authority and exercise the powers of the president. They shall perform such
other duties and have such other authority and powers as the Managers may from
time to time prescribe or as the president may from time to time delegate.
9.7 Secretary; Assistant Secretaries. The secretary, or in his or her
absence an assistant secretary, shall attend all meetings of the Managers and
record all of the proceedings of the meetings of the Managers in a minute book
to be kept for that purpose and shall perform or arrange for another Person to
perform like duties for the committees of Managers when required. He or she
shall give, or cause to be
27
given, notice of all meetings of the Members and special meetings of the
Managers, and shall perform such other duties as may be prescribed by the
Managers or president, under whose supervision he or she shall be. He or she
shall keep in safe custody the seal (if one is established) of the Company and,
when authorized by the Managers, shall affix the same to any instrument
requiring it and, when so affixed, it shall be attested by his or her signature
or by the signature of an assistant secretary or of the treasurer. The secretary
shall perform such other duties and have such other powers as the Managers may
from time to time prescribe or as the president may from time to time delegate.
The assistant secretaries, if any are designated, in the order of their
seniority, unless otherwise determined by the Managers, shall, in the absence or
disability of the secretary, perform the duties and exercise the powers of the
Secretary. They shall perform such other duties and have such other powers as
the Managers may from time to time prescribe or as the president may from time
to time delegate.
9.8 Treasurer; Assistant Treasurers. The treasurer shall have or arrange
for custody of the funds and securities of the Company and shall keep or arrange
for the keeping of full and accurate accounts and records of receipts,
disbursements and other transactions in books belonging to the Company, and
shall deposit all moneys and other valuable effects in the name and to the
credit of the Company in such depositories as maybe designated from time to time
by the Managers. The treasurer shall disburse the funds of the Company as may be
ordered by the Managers, taking proper vouchers for such disbursements, and
shall render to the president and the Managers, when so directed, an account of
all his or her transactions as treasurer and of the financial condition of the
Company. The treasurer shall perform such other duties and have such other
powers as the Managers may from time to time prescribe or as the president may
from time to time delegate. If required by the Managers, the treasurer shall
give the Company a bond of such type, character and amount as the Managers may
require. The assistant treasurers, if any are designated, in the order of their
seniority, unless otherwise determined by the Managers, shall, in the absence or
disability of the treasurer, perform the duties and exercise the powers of the
treasurer. They shall perform such other duties and have such other powers as
the Managers may from time to time prescribe or the president may from time to
time delegate.
Article X
INDEMNIFICATION
10.1 Right to Indemnification. The Company shall indemnify Managers,
officers, employees, agents, members of committees and others acting for and on
behalf of the Company to the same extent a corporation may indemnify directors,
employees, agents and others under the TBCA and shall, to the extent
indemnification is required under the TBCA for directors, employees, agents,
members of committees and others, indemnify Managers, officers, employees,
agents and others to the same extent. Further, the Company shall pay or
reimburse the reasonable expenses of Managers, officers, employees, agents,
members of committees and others covered hereby in advance of the final
disposition of any proceeding to the same extent a corporation may so pay or
reimburse directors, employees, agents, members of committees and others under
the TBCA and subject to the conditions thereof.
10.2 Appearance as a Witness. Notwithstanding any other provisions of this
Article X, the Company may pay or reimburse expenses incurred by a Manager or
others in connection with his or her appearance as a witness or other
participation in a proceeding at a time when he or she is not a named defendant
or respondent in the proceeding.
10.3 Nonexclusivity of Rights. The right to indemnification and the
advancement and payment of expenses conferred in this Article X shall not be
exclusive of any other right which a Manager or other Person indemnified
pursuant to Section 10.1 may have or hereafter acquire under any law (common or
statutory), provision of the Articles of Organization or these Regulations,
agreement, vote of Members or disinterested Managers or otherwise.
28
10.4 Insurance. The Company may purchase and maintain insurance, at its
expense, to protect itself and any Person who is or was serving as a Manager,
officer, employee or agent of the Company or is or was serving at the request of
the Company as a manager, director, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of another foreign or domestic
limited liability company, corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise against any
expense, liability or loss, whether or not the Company would have the power to
indemnify such Person against such expense, liability or loss under this Article
X.
10.5 Savings Clause. If this Article X or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless index and hold harmless each Manager or any other
Person indemnified pursuant to this Article X as to costs, charges and expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
with respect to any action, suit or proceeding, whether civil, criminal,
administrative or investigative to the full extent permitted by any applicable
portion of this Article X that shall not have been invalidated and to the
fullest extent permitted by applicable law.
Article XI
TAXES
11.1 Tax Returns. Subject to the next sentence, the Managers shall cause
to be prepared and filed all necessary federal and state income tax returns for
the Company. These returns will be prepared either (i) by KPMG Peat Marwick LLP
or such other accounting firm of similar national reputation that is acceptable
to all Members (an "Acceptable Firm") or (ii) by a Company or USP employee. If a
Company or USP employee prepares such returns, an Acceptable Firm will review
and formally indicate its approval of such returns before they are filed. Each
Member shall furnish to the Managers all pertinent information in its possession
relating to Company operations that is necessary to enable the Company's income
tax returns to be prepared and filed in a timely manner.
11.2 Tax Elections. The Company shall make the following elections on the
appropriate tax returns:
(a) to adopt the year ending December 31 as the Company's fiscal
year;
(b) to adopt the accrual method of accounting and to keep the
Company's books and records on the income-tax method;
(c) if a distribution of Company property as described in section
734 of the Code occurs or if a transfer of a Membership Interest as described in
section 743 of the Code occurs, on the approval of all of the Members, to elect,
pursuant to section 754 of the Code, to adjust the basis of Company properties;
(d) to elect to amortize the organizational expenses of the Company
and the start-up expenditures of the Company under section 195 of the Code
ratably over a period of 60 months as permitted by section 709(b) of the Code;
and
(e) any other election the Managers may deem appropriate and in the
best interests of the Members.
Neither the Company nor any Manager or Member may make an election for the
Company to be excluded from the application of the provisions of subchapter K of
chapter 1 of subtitle A of the Code or any similar provisions of applicable
state law, and no provision of these Regulations (including, without limitation,
Section 2.6) shall be construed to sanction or approve such an election.
29
11.3 Tax Matters Partner." USP is hereby designated as the Tax Matters
Partner. The Tax Matters Partner shall take such action as may be necessary to
cause Baylor to become a "notice partner" within the meaning of section 6223 of
the Code. USP shall inform the Members of all significant matters that may come
to its attention in its capacity as "tax matters partner" by giving notice
thereof on or before the 30th Business Day after becoming aware thereof and,
within that time, shall forward copies of all significant written communications
it may receive in that capacity. The Tax Matters Partner may take any action
contemplated by sections 6222 through 6232 of the Code, but this sentence does
not authorize USP to take any action left to the determination of an individual
Member under sections 6222 through 6232 of the Code.
Article XII
BOOKS, RECORDS, REPORTS AND BANK ACCOUNTS
12.1 Maintenance of Books. The Company shall keep books and records of
accounts and shall keep minutes of the proceedings of its Members, its Managers
and each committee of the Managers. The books of accounts for the Company shall
be maintained on an accrual basis in accordance with the terms of these
Regulations, except that the capital accounts of the Members shall be maintained
in accordance with Section 5.7. The year ending December 31 shall be the
accounting year of the Company.
12.2 Reports. On or before the seventy-fifth (75th) day following the end
of each fiscal year during the term of the Company, the Managers shall cause
each Member to be furnished with the following:
(a) For the Company, audited (unless the Managers elect otherwise)
(by an Acceptable Firm) balance sheet and statement of operations, Members'
equity and changes in financial position, all of which shall be prepared in
accordance with accounting principles generally employed for accrual-basis
records consistently applied (except as therein noted). Subject to the next
sentence, for any audit of financial statements relating to fiscal years ending
after January 1, 2000, if the Company must pay an Acceptable Firm a fee that
exceeds twenty-thousand dollars ($20,000) for such audit, Baylor, rather than
the Company, will pay the amount of such fee that exceeds twenty-thousand
dollars ($20,000). Baylor will not be obligated to pay such excess for any
fiscal year if (i) a Baylor Manager voted against the Company doing an audit for
that fiscal year and (ii) no Baylor Manager voted in favor of the Company doing
an audit for that fiscal year.
(b) For each Subsidiary, unaudited balance sheet and statement of
operations, members' or stockholders' or partners' (as applicable) equity, and
changes in financial position, all of which shall be prepared in accordance with
accounting principles generally employed for accrual-basis records consistently
applied (except as therein noted). The Managers may, in their discretion, cause
such financial statements to be audited by an Acceptable Firm.
(c) (i) U.S. federal income tax Form K-1 and any similar forms
required by any state or local taxing authority and (ii) any other information
concerning the Company reasonably necessary for the preparation of the Members'
federal and state income tax returns.
Upon showing good cause (which shall be determined without regard to
the foreseeability of such cause), the Managers shall be entitled to a
reasonable extension of the 75-day period applicable to the items described in
Section 12.2(b). The Managers also may cause to be prepared or delivered such
other reports as they may deem appropriate. The Company shall bear the costs of
all these reports.
12.3 Accounts. The Managers shall establish and maintain one or more
separate bank and investment accounts and arrangements for Company funds in the
Company name with financial institutions and firms that the Managers determine.
The Managers may not commingle the Company's funds with the
30
funds of any Member; provided, however, subject to Section 7.2 and Section 3.6.
Company funds may be invested in a manner the same as or similar to the
Managers' investment of their own funds or investments by their Affiliates.
Article XIII
DISSOLUTION, LIQUIDATION AND TERMINATION
13.1 Dissolution. The Company shall dissolve and its affairs shall be
wound up on the first to occur of the following (each, an "Event of
Dissolution"):
(a) subject to Section 3.6, the written consent of the Members;
(b) an entry of a decree of judicial dissolution of the Company
under article 6.02 of the Act;
(c) the determination by Baylor or the Managers (in reliance on the
advice of legal counsel) under Section 15.5 that the ownership of a Membership
Interest in the Company by one or more Members or the referrals, items or
services furnished, or business otherwise generated from the Members has caused
the violation of a law to occur or has caused the risk that a violation of a law
will occur, and Baylor's or the Managers decision not to cause the Company to
purchase such Member's Membership Interest in accordance with Section 15.5;
(d) At Baylor's option, if. (i) before the USP IPO Date, a Baylor
Competitor becomes able, directly or indirectly, to elect a majority of the
board of directors or similar governing body of UP, USP Parent or any Person of
which USP is a Subsidiary, (ii) after the USP IPO Date, a Baylor Competitor
becomes the Beneficial Owner of more than 25% of the outstanding voting
securities of USP, USP Parent or any Person of which USP is a Subsidiary or,
(iii) at any time, UP, USP Parent, any Restricted Affiliate of USP Parent or any
Person of which USP is a Subsidiary becomes a Baylor Competitor;
(e) After notice to the Company in accordance with Section 18.2 and
a 30-day cure period, at Baylor's option, if the Company breaches Article XV;
(f) At Baylor's option, if USP Parent dissolves or sells all or
substantially all of its assets;
(g) If any Member declares an Unresolved Impasse in accordance with
Section 14.6, the Members are unable to resolve the Unresolved Impasse within
twenty (20) days of its declaration (the "Impasse Deadline") and, within thirty
(30) days after the Impasse Deadline, any Member gives notice to the Company in
accordance with Section 18.2 that the Company should be dissolved; or
(h) Any other event causing or requiring the Company's dissolution
under the Act.
13.2 Liquidation and Termination. On occurrence of an Event of
Dissolution, the Managers shall act as liquidator or may appoint a liquidator.
The liquidator shall proceed diligently to wind up the affairs of the Company
and make final distributions as provided herein and in the Act. The costs of
liquidation shall be borne as a Company expense. Until final distribution, the
liquidator shall continue to operate the Company properties with all of the
power and authority of the Managers. The steps to be accomplished by the
liquidator are as follows:
(a) As promptly as possible after an Event of Dissolution, the
liquidator shall cause the Company to offer to Baylor all interests (the "Baylor
Interests") the Company directly or indirectly owns in all ambulatory surgery
centers or other outpatient centers located On or Adjacent to the Campus of a
Baylor
31
Hospital or Similar Facility (including interests in the relevant management
contracts) at the Fair Price of the Baylor Interests (to be determined by Baylor
and USP pursuant to Section 17.3).
(b) If necessary, as promptly as possible after an Event of
Dissolution, the liquidator, USP and Baylor will cooperate pursuant to Section
17.3 to appraise the interests the Company owns other than Baylor Interests
(including interests in the relevant management contracts) (the "Other
Interests," and, with the Baylor Interests, the "ASC Interests"). Baylor or USP
may offer to purchase the Other Interests from the Company at a price equal to
or higher than the Fair Price of the Other Interests (determined under Section
17.3). If Baylor does not purchase all of the Baylor Interests, USP may offer to
purchase the remaining Baylor interests at a price equal to or higher than the
Fair Price of the Baylor Interests. Subject to Section 13.2(a), if Baylor or USP
offers a price higher than or equal to the Fair Price of an ASC Interest, the
liquidator will cause the Company to sell such ASC Interest to the higher
bidder. If neither Baylor or USP offers a price for an ASC Interest that is
equal to or higher than the Fair Price of such ASC Interest, the liquidator will
market the Centers to third parties and will sell the ASC Interests at the
highest available price; provided however, that Baylor and USP shall each have
the opportunity to match or exceed the highest third-party bid, and, in the
event Baylor's or USP's bid for an ASC Interest is equal to a third-party bid,
the liquidator will sell such ASC Interest to Baylor or USP. The liquidator
will, at a minimum, observe commercially reasonable standards when marketing the
Centers to third parties.
(c) As promptly as possible after an Event of Dissolution and again
after final liquidation, the liquidator shall cause a proper accounting to be
made by an Acceptable Firm of the Company's assets, liabilities and operations
through the last day of the calendar month in which the dissolution occurs or
the final liquidation is completed, as applicable;
(d) The liquidator shall cause the notice described in article
6.05A(2) of the Act to be mailed to each known creditor of and claimant against
the Company in the manner described in such article 6.05A(2);
(e) The liquidator shall pay, satisfy or discharge from Company
funds all of the debts, liabilities and obligations of the Company (including
without limitation, all expenses incurred in liquidation and any advances
described in Section 5.6) or otherwise make adequate provision for payment and
discharge thereof (including, without limitation., the establishment of a cash
escrow fund for contingent liabilities in such amount and for such term as the
liquidator may reasonably determine); and
(f) All remaining assets of the Company shall be distributed to
the Members as follows:
(i) The liquidator may sell any or all Company property,
including to Members, and any resulting gain or loss from each
sale shall be computed and allocated to the Capital Accounts
of the Members;
(ii) With respect to all Company property that has not been
sold, the fair market value of that property shall be
determined and the Capital Accounts of the Members shall be
adjusted to reflect the manner in which the unrealized income,
gain, loss and deduction inherent in property that has not
been reflected in the Capital Accounts previously would be
allocated among the Members if there were a taxable
disposition of that property for the fair market value of that
property on the date of distribution; and
(iii) Company property shall be distributed among the Members
in accordance with the positive Capital Account balances of
the Members, as determined after taking into account all
Capital Account adjustments for the taxable year of the
Company
32
during which the liquidation occurs (other than those made by
reason of this clause (iii)); and those distributions shall be
made by the end of the taxable year of the Company during
which the liquidation of the Company occurs (or, if later, 90
days after the date of the liquidation).
All distributions in kind to the Members shall be made subject to the liability
of each distributee for costs, expenses and liabilities theretofore incurred or
for which the Company has committed prior to the date of termination and those
costs, expenses and liabilities shall be allocated to the distributee pursuant
to this Section 13.2. The distribution of cash or property to a Member in
accordance with the provisions of this Section 13.2 constitutes a complete
return to the Member of its Capital Contributions and a complete distribution to
the Member of its Membership Interest and all the Company's property. To the
extent that a Member returns funds to the Company, it has no claim against the
other Member for those funds.
13.3 Deficit Capital Account. Notwithstanding anything to the contrary
contained in these Regulations, and notwithstanding any custom or rule of law to
the contrary, to the extent that the deficit, if any, in the Capital Account of
any Member results from or is attributable to deductions and losses of the
Company (including non-cash items such as depreciation), or distributions of
money pursuant to these Regulations to both Members in proportion to their
respective Ownership Interests, upon dissolution of the Company such deficit
shall not be an asset of the Company and such Members shall not be obligated to
contribute such amount to the Company to bring the balance of such Member's
Capital Account to zero.
13.4 Articles of Dissolution. On completion of the distribution of Company
assets as provided herein, the Company is terminated, and the Managers (or such
other Person or Persons as the Act may require or permit) shall file articles of
dissolution with the Secretary of State of Texas and take such other actions as
may be necessary to terminate the Company.
Article XIV
IMPASSE
14.1 Impasse Defined. An "Impasse" will be deemed to exist if (a) a matter
is brought to the Managers or the Members for their approval, (b) the Managers
or the Members, as the case may be, fail to approve this matter, and (c) Members
owning 20% or higher Ownership Interest authorize, in writing, a Member to give
notice of an Impasse with respect to this matter and that Member gives notice,
in accordance with Section 18.2, to the other Members and the Company that the
Member considers the failure of the Members or the Managers to approve the
matter to have caused an Impasse. An Impasse shall occur on the date the Member
gives the other Member(s) notice under this Section 14.1.
14.2 Negotiation. In the event of an Impasse, the Members and the Company
shall promptly, amicably and in good faith attempt to resolve the Impasse
through negotiation. If the Members and the Company are unable to resolve the
Impasse within thirty (30) days of the occurrence of the Impasse (the date such
30-day period elapses is referred to as the "Mediation Initiation Date"), any
Member may submit the Impasse to mediation as set forth in Section 14.3.
14.3 Mediation. The mediation of any Impasse hereunder shall be conducted
in accordance with the Commercial Mediation Rules and Procedures of the American
Arbitration Association ("AAA"). The Members shall attempt to agree upon an
impartial mediator to mediate the Impasse, but if they are unable or fail to
appoint a mediator within ten (10) days of the filing of a written request for
mediation with the AAA, the AAA will appoint a qualified mediator to mediate the
Impasse. The mediation shall be held in Dallas, Texas, within thirty (30) days
of appointment of the mediator. In connection with the mediation, the parties
will instruct the mediator to take into account the provisions of Article XV.
33
14.4 Interim Measures. At any time after an Impasse occurs, any Member may
request a court of competent jurisdiction to grant interim measures of
protection (1) to preserve the status quo pending resolution of the Impasse, (2)
to prevent the destruction of documents and other information or things related
to the Impasse or (3) to prevent the transfer, dissipation or hiding of Company
assets. A request for such interim measures to a judicial authority shall not be
deemed incompatible with the provisions of this Article V or a waiver of a
Member's right to mediate the Impasse.
14.5 CEO Meeting. In the event the Members and the Company are unable to
resolve the Impasse under Section 14.2 or 14.3 or the mediation does not occur
within sixty (60) days of the Mediation Initiation Date, any Member that has
made a good faith effort to comply with Sections 14.2 and 14.3 (which good faith
cannot be shown unless a written request for mediation has been filed with the
AAA) may, by written notice to the Company and the other Members in accordance
with Section 18.2, convene a meeting (a "CEO Meeting") to resolve the Impasse
between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇., or their respective successors as
chief executive officers (or individuals serving in a similar capacity) of USP
Parent and BRCS.
14.6 Unresolved Impasse. In the event (i) the Members and the Company are
unable to resolve the Impasse under Section 14.2, 14.3 or 14.5 or (ii) a Member
has convened a CEO Meeting under Section 14.5 and the CEO Meeting did not occur
within sixty (60) days of the date the Member sends notice to the other Member
to convene the CEO Meeting, any Member that has made a good faith effort to
comply with Sections 14.2, 14.3 and 14.5 (which good faith can not be shown
unless a written request for mediation has been filed with the AAA and a notice
convening a CEO Meeting has been sent) may, by written notice to the Company and
the other Members in accordance with Section 18.2, declare an unresolved impasse
(an "Unresolved Impasse"); provided, however, that no Member may declare a
Unresolved Impasse with respect to an Impasse unless the Impasse concerns an
issue listed in Section 14.7. An Unresolved Impasse may become an Event of
Dissolution under Section 13.1(x). The right under this Section 14.6 to declare
an Unresolved Impasse related to an Impasse will expire if the Impasse is
resolved before a Member declares an Unresolved Impasse related to the Impasse.
14.7 Impasse Issues. A Member may declare an Unresolved Impasse only with
respect to an Impasse concerning one or more of the following items.
(a) whether to sell, alienate, mortgage, pledge or otherwise
encumber all or substantially all of the assets of the Company or the rights
belonging thereto or connected therewith;
(b) whether to renew any management or development contract between
the Company and USP or Baylor-,
(c) whether to merge or consolidate with any Person; or
(d) whether to file a voluntary petition for relief by the Company
under any provisions of the United States Bankruptcy Code, Title II of the
United States Code, as amended or recodified from time to time, or under any
similar or other law relating to bankruptcy, insolvency, reorganization or other
relief, or appoint a receiver for or liquidator of or for any part of the assets
or property of the Company or make a general assignment for the benefit of
creditors of the Company.
Article XV
COMPLIANCE WITH LAW
15.1 Corporate Practice of Medicine. Nothing contained in these
Regulations is intended to constitute the use of a medical license for the
practice of medicine by anyone other than a licensed
34
physician, aid the Company or any other entity in the practice of medicine when
in fact such entity is not authorized to practice medicine or do any other act
or create any other arrangements in violation of the Texas Medical Practice Act.
15.2 Fraud and Abuse Law and Texas Health and Safety Code. The Members
enter into these Regulations with the intent of conducting the relationship in
full compliance with applicable state, local and federal law, including, but not
limited to, the Health Laws. Notwithstanding any unanticipated effect of any of
the provisions hereof, no Member or any Manager or other Person acting for or on
behalf of the Company will intentionally conduct itself under the terms of these
Regulations in a manner that constitutes a violation of the Health Laws.
15.3 Referral Policy. Nothing contained in these Regulations shall require
(directly or indirectly, explicitly or implicitly) any Member to refer or direct
any patients or other business to the Company or to use the Company's
facility(ies) as a pre-condition to receiving the benefits set forth herein or
distributions under these Regulations nor will the assumption that requirement
exists be used in establishing the valuation of a Membership Interest.
15.4 Tax Exempt .Status of Affiliate. For so long as an organization mated
with the Company is tax-exempt under section 501(c)(3) of the Code, the health
care facilities in which the Company directly or indirectly own an interest
shall be operated and managed in a manner that furthers charitable purposes by
promoting health for a broad cross section of the community. Specifically, the
Company and such health care facility shall be operated and managed in a manner:
(a) That provides access to patient care services based on medical
necessity, without regard to the patient's ability to pay;
(b) That provides access to patient care services to individuals
covered by Medicare or Medicaid;
(c) That will not, in the reasonable opinion of the tax-exempt
organization on advice of the tax-exempt organization's legal and/or tax
counsel, cause such affiliated tax-exempt organization to act other than
exclusively in furtherance of its tax-exempt purposes or adversely affect its
tax-exempt status under section 501(e)(3) of the Code; or
(d) That would not require such facility to offer or provide
services of a nature that are contrary to the expressed religious tenets of the
tax-exempt organization upon request.
The duty of the Managers to operate and manage such health care facilities
in a manner that furthers charitable purposes by promoting health for a broad
cross section of the community overrides any duty the Managers may have to
operate and manage such health care facilities for the financial benefit of its
owners.
The Company shall cause the organizational documents of all Subsidiaries
to include a provision similar to this Section 15.4.
15.5 Reformation Upon Change in or Violation of Health Laws.
(a) Reformation. In the event that the contents or validity of these
Regulations or the operations of the Company or any of its Subsidiaries are
successfully challenged by any governmental authority under applicable law,
particularly a Health Law, or any Member determines, based upon advice received
from legal counsel, that a violation of a Health Law has occurred as a result of
these Regulations or the operations of the Company or any of its Subsidiaries,
or that a violation of a law, particularly a Health Law, will occur as a result
of these Regulations or the operations of the Company or any of its
35
Subsidiaries, the Person who learns of a challenge by a governmental authority
of the contents or validity of these Regulations or the operations of the
Company or any of its Subsidiaries or the Member that determines that a
violation of a law has occurred or may occur, as applicable, shall promptly
notify the Members and the Managers. The Managers shall promptly use reasonable
efforts to analyze, revise, reform and, to the extent necessary, restructure the
relationship among the Members or the operations of the Company or any of its
Subsidiaries in order to fully comply with applicable law in a manner that is
equitable to all Members in light of the intent of the Members regarding the
operations of the Company and its Subsidiaries as contemplated by these
Regulations. The Managers shall recommend its reformation plan for accomplishing
the desired results to the Members for approval. As long as Baylor is a Member,
unless Baylor approves a reformation plan, a reformation plan will not be deemed
to be approved by the Members.
(b) Failure to Reform. In the event the Managers are unable to
formulate a plan to revise, reform and restructure these Regulations and the
operations of the Company and its Subsidiaries in order to fully comply with all
applicable laws or the reformation plan fails to receive the necessary
affirmative vote of the Members, the Managers will do as follows: if Baylor
determines in good faith that it is the ownership of a Membership Interest in
the Company by one or more of the Member(s) other than Baylor or the referrals,
items or services furnished, or business otherwise generated from such Members
that has caused the violation of a law to occur or that has caused the risk that
a violation of a law will occur, Baylor may, at its option, direct the Managers
to (A) cause the Company to purchase the Membership Interest(s) of one or more
of such Members at a purchase price equal to the Fair Market Value of such
Member's(s) Membership Interest calculated in accordance with Section 4.2(c); or
(B) cause the Company to be dissolved in accordance with Article XIII; or if
Baylor determines in good faith that it is the ownership of a Membership
Interest in the Company by Baylor that has caused the violation of a Health Law
to occur or that has caused the risk that a violation of a law will occur and
Baylor gives the other Member(s) written notice of its determination to that
effect (the "Determination Notice"), then Baylor may direct the Managers to
cause the Company to be dissolved in accordance with Article III hereof.
15.6 ASC Operating Covenants. The Company will cause all ambulatory
surgery centers in which the Company owns a direct or indirect interest (the
"ASCs") to operate in accordance with the following guidelines:
(a) Baylor will have the right to approve the medical director of
each AC located On or Adjacent to the Campus of a Baylor Hospital or Similar
Facility.
(b) Standards of quality patient care at the ASC will be
commensurable with the standards of quality patient care at BHCS.
(c) Each ASC will have a conflict-of-interest policy acceptable to
Baylor.
(d) Each ASC will have a charity care, Medicare and Medicaid policy
acceptable to Baylor and
(e) Physician credentialing for the ASCs must meet or exceed NCQA
requirements.
(f) The ASCs must follow Baylor's policies in effect from time to
time regarding prohibited medical procedures (for example abortions).
(g) The ASCs must maintain all necessary licenses and must maintain
accreditation in good standing with JCAHO or ABC, or comparable accrediting
organizations for free standing and ambulatory surgery centers.
36
(h) If an ASC is On or Adjacent to the Campus of a Baylor Hospital
or Similar Facility affiliated with Baylor, that ASC's medical staff bylaws must
require that physicians be on staff with such Hospital or Similar Facility or in
the process of being admitted on staff before joining the staff of the ASC,
except as otherwise agreed by USP and Baylor in consultation with such ASC's
medical director.
Article XVI
RIGHT OF FIRST REFUSAL/EXCLUSIVITY
16.1 Initial Notice. As more fully described in this Article XVI. the
Company will have a right of first refusal on all ambulatory surgery center
projects within the North Texas Region in which any Member or Restricted Person
(as defined in this Section 16.1) proposes to participate. The parties intend
for the Company's right of first refusal to be subject to and secondary in right
to the right of first refusal included in article XVI of the THVG #1
regulations. Subject to Section 16.2, before a Member, UP Parent (or any
Restricted Affiliate of USP Parent) or BHC(or Person that is, as of the date of
these Regulations, an existing Restricted Affiliate of BHCS) (collectively, the
"Restricted Persons") may participate in a Venture in the North Texas Region,
the Member affiliated with the Restricted Person (the "Proposing Member") must
first give the Company and the other Members a notice, in accordance with
Section 18.2, that describes in reasonable detail sufficient to male an informed
decision the Venture and the proposed participation therein (the "Initial
Notice"). No Member will be deemed to be a Proposing Member with respect to a
Venture unless such Member has given an Initial Notice regarding such Venture.
Any initial notice USP gives under article XVI of the THVG 4 1 regulations will
constitute an Initial Notice under this Section 16.1. No Member may propose a
Venture to the Company unless such Member has previously been deemed to be a
"proposing member" with respect to such Venture under article XVI of the THVG #1
regulations.
16.2 USP and BIAS Carve-outs. This Article XVI does not apply to Ventures
related to ambulatory surgery centers in which the entire interest of each
Member is owned through THVG #1 or any of its Subsidiaries. This Article XVI
does not apply to the participation of Baylor and any Restricted Person
affiliated with Baylor in Ventures related to ambulatory surgery centers that
are located tin or Adjacent to the Campus of a Baylor Hospital or Similar
Facility. After the closing of the proposed transaction or affiliation among
BRCS and one or more of ▇▇▇▇▇▇ Methodist Health System, Presbyterian Healthcare
Resources and Arlington Memorial Hospital Foundation, Inc., BHCS and all
Southwest Health System Entities (other than existing Restricted Affiliates of
BHCS as of the date of these Regulations) will not be subject to this Article
XVI. After the date of such closing, without first complying with this Article
XVI, USP, USP Parent or any Restricted Affiliate of USP Parent may participate
in Ventures related to an ambulatory surgery center if any Southwest Health
System Entity (other than the Company, THVG # 1 and their Subsidiaries) owns a
direct interest in that ambulatory surgery center.
16.3 Company Response; Restrictions on Participation.
(a) Within sixty (60) days of receipt of an Initial Notice (the
"Response Period"), the Company will elect, if so directed by all Members other
than the Proposing Member by written notice given in accordance with Section
18.2 (the "Company Response"), to participate in the Venture that is the subject
of such Initial Notice.
(b) If the Company elects to participate in such Venture, subject to
Section 16.2, no Restricted Person may participate in such Venture without
approval of all of the Members. Subject to Sections 16.5 and 16.7, if all other
Member(s) give notice to the Proposing Member that such Member(s) will not cause
the Company to give a Company Response, or if the Company does not send a
Company Response within the Response Period, the Proposing Member and the
Restricted Persons affiliated with the Proposing Member may participate in such
Venture so long as the terms of such Venture are not materially more favorable
than the terms described in the Initial Notice and the Proposing Member provides
a
37
certificate to this effect, executed by an executive officer of the Proposing
Member, and, in the case of USP, the USP Parent, to the Company.
(c) If USP proposes a Venture to THVG #1 and THVG #1 chooses not to
participate in such Venture, USP must propose such Venture to the Company
pursuant to this Article XVI.
(d) If Baylor proposes a Venture to THVG #1, THVG #1 chooses not to
participate in such Venture and such Venture is not related to an ambulatory
surgery center located (in or Adjacent to the Campus of a Baylor Hospital or
Similar Facility, Baylor must propose such Venture to the Company pursuant to
this Article XVI. Baylor need not propose such Venture to the Company if such
Venture is related to an ambulatory surgery center located On or Adjacent to the
Campus of a Baylor Hospital or Similar Facility.
16.4 Breaches by Affiliates. Subject to Section 16.2, if a Restricted
Person affiliated with a Member breaches this Article XVI, that Member will be
deemed to have breached this Article XVI.
16.5 Material Changes. If any significant detail of a Venture materially
changes after a Member gives an Initial Notice describing such Venture, and such
change would reasonably be expected to affect a decision whether to participate
in such Venture, a Member must again comply with this Article XVI before such
Member or any Restricted Person mated with such Member may participate in such
Venture
16.6 Carve-Out and Termination. This Article XVI will not apply to (i) a
Venture of BHCS or a Person that is, as of the date of these Regulations, an
existing Restricted Affiliate of BHCS or (ii) the participation of BHCS or such
Person in such Venture if, in either case, in the reasonable opinion of BHCS's
or such Person's national health care or tax counsel (which at the request of UP
shall be a nationally-recognized law firm with expertise in the field of
tax-exempt organizations that does not regularly represent Baylor or its
Affiliates), the application of this Article 2M, or the Company's participation
in such Venture, would result in a violation of Health Laws or adversely affect
the tax-exempt status of BHCS or such Person. In the event BHCS or such Person
obtains such an opinion, this Article XVI will terminate and be of no force and
effect as of the date of such opinion, unless both UP and Baylor waive this
provision in writing. This Article XVI will terminate and be of no force and
effect as of the earlier to occur of the following: (x) either Baylor or USP
cease to own Membership Interest or (y) either Baylor or USP (A) terminates
article XVI of the THVG #1 regulations in accordance with the last sentence of
section 16.6 of the THVG #1 regulations and, (B) within sixty (60) days of such
termination, gives the other Member(s) and the Company notice, in accordance
with Section 18.2, that Article XVI of these Regulations is also terminating.
16.7 Baylor Campus Restriction. USP and the Restricted Persons affiliated
with USP may not participate in a Venture related to an ambulatory surgery
center located Can or Adjacent to the Campus of a Baylor Hospital without
Baylor's consent.
16.8 ▇▇▇▇ ▇▇▇▇▇ Requirement. Each Member will use good faith efforts to
cause the terms of each Venture such Member proposes to the Company to be such
that, if the Company elects to participate in such Venture, such participation
will not violate these Regulations.
Article XVII
INTERESTS IN SURGERY CENTERS
17.1 Baylor Right of First Refusal. Without Baylor's written consent,
before the Company may Dispose of any Baylor Interest, (i) the Company must
first offer to sell Baylor such Baylor Interest (the
38
"First Refusal Offer") at the Fair Price of the Baylor Interest (to be
determined by Baylor and USP in accordance with Section 17.3) and (ii) Baylor
must reject the First Refusal Offer.
17.2 Membership Interest Transfer. On the occurrence of any event that
causes Baylor to cease to own a 20% or higher Ownership Interest, the Company
must offer to sell Baylor the Baylor Interests (the "Baylor Offer") at the Fair
Price of the Baylor Interests (to be determined by Baylor and UP in accordance
with Section 17.3). Baylor will have an option expiring ninety (90) days from
the determination of the Fair Price of Baylor Interests to purchase the Baylor
Interests from the Company.
17.3 Fair Price of the ASC Interests. For purposes of this Agreement,
including this Article XVII and Section 13.2 the "Fair Price" of ASC Interests
(including Baylor Interests) will be determined as follows:
A qualified appraiser agreed upon by Baylor and USP will determine the
Fair Price of the relevant AC Interests. If Baylor and USP cannot agree on an
appraiser within thirty (30) days of (i) the notice delivering a First Refusal
Offer under Section 17.1, (ii) the notice delivering a Baylor Offer under
Section 17.2 or (iii) an Event of Dissolution, as applicable, Baylor will name
one qualified appraiser and USP will name one qualified appraiser, in each case
by notice delivered in accordance with Section 18.2 to the other party, within
ten (10) days after such 30-day period elapses. If only one party delivers the
name of a qualified appraiser within such 10-day period, then such appraiser
shall be deemed to be the agreed upon appraiser for purposes of this Section
17.3. If both Baylor and USP name a qualified appraiser in accordance with this
Section 17.3. these appraisers shall select a third appraiser and all three
appraisers shall independently and promptly appraise the Pair Price of the ASC
Interests and deliver written reports of such appraisals to all parties. These
appraisals shall be averaged, the appraisal that differs most from the average
shall be disregarded, and the average of the remaining appraisals shall be the
Fair Price of the ASC Interests for purposes of this Section 17.3. If one
appraiser is used under this Section 17.3, then Baylor will pay one-half (1/2)
of appraisal cost and USP will pay one-half (1/2) of the appraisal cost, If more
than one appraiser is used under this Section 17.3, then each party will pay the
cost of the appraiser it selects and one-half (1/2) of the cost of the third
appraiser.
Article XVIII
GENERAL PROVISIONS
18.1 Offset. Whenever the Company is to pay any sum to a Member, any
amounts that Member owes the Company may be deducted from that sum before
payment.
18.2 Notices. Except as expressly set forth to the contrary in these
Regulations, all notices, requests, approvals or consents provided for or
permitted to be given under these Regulations must be in writing and must be
given either by depositing that writing in the United States mail, addressed to
the recipient, postage paid, and registered or certified with return receipt
requested or by delivering that writing to the recipient in person, by courier
or by facsimile transmission; and a notice, request or consent given under these
Regulations is effective on receipt by the Person to receive it. All notices,
requests and consents to be sent to a Member must be sent to or made at the
addresses given for that Member on Exhibit A, or such other address as that
Member may specify by notice to the other Member. Any notice, request, or
consent to the Managers must be given both to the Managers at the addresses
shown for the Managers on the records of the Company and to the following
addresses:
USP North Texas, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
39
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
With a Copy to:
Baylor Health Services
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Executive Vice President and Chief Operating Officer
Any notice, request or consent to the Company must be given to both of the
following addresses:
USP North Texas, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
With a Copy to:
Baylor Health Services
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Executive Vice President and Chief Operating Officer
Whenever any notice is required to be given by law, the Articles of Organization
or these Regulations, a written waiver thereof, signed by the Person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
18.3 Entire Agreement; Supersedure. Subject to the provisions of these
Regulations that reference or incorporate other documents or agreements, these
Regulations constitute the entire agreement of the Members relating to
governance of the Company and supersede all prior contracts or agreements with
respect to the governance of Company, whether oral or written.
18.4 Effect of Waiver or Consent. A waiver or consent, express or implied,
to or of any breach or default by any Person in the performance by that Person
of its obligations with respect to the Company is not a consent or waiver to or
of any other breach or default in the performance by that Person of the same or
any other obligations of that Person with respect to the Company. Failure on the
part of a Person to complain of any act of any Person or to declare any Person
in default with respect to the Company, irrespective of how long that failure
continues, does not constitute a waiver by that Person of its rights with
respect to that default until the applicable statute of limitations period has
run.
18.5 Amendment or Modification. These Regulations maybe amended or
modified from time to time only by a written instrument approved by Baylor and
USP; provided, however, if either Baylor or USP ceases to be a Member of the
Company, its approval will not be necessary to amend these Regulations.
40
18.6 Binding Effect. Subject to the restrictions on Dispositions set forth
in these Regulations, these Regulations are binding on and inure to the benefit
of the Members and their respective legal representatives, successors and
assigns.
18.7 Governing Law; Severability. THESE REGULATIONSARE GOVERNED BY AND
SHALL HE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF TEXAS, EXCLUDING
ANY CONFLICT-Off'-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THESE REGULATIONS TO THE LAW OF ANOTHER JURISDICTION. In the
event of a direct conflict between the provisions of these Regulations and (a)
any provision of the Articles of Organization or (b) any mandatory provision of
the Act or, to the extent such statutes are incorporated into the Act, the TBCA
or the Texas Miscellaneous Corporation Laws Act, the applicable provision of the
Articles of Organization, the Act, the TBCA or the Texas Miscellaneous
Corporation Laws Act shall control. If any provision of these Regulations or the
application thereof to any Person or circumstance is held invalid or
unenforceable to any extent, the remainder of these Regulations and the
application of that provision to other Persons or circumstances root affected
thereby and that provision shall be enforced to the greatest extent permitted by
law.
18.8 Further Assurances. In connection with these Regulations and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of these
Regulations and those transactions.
18.9 Waiver of Certain Rights. Subject to Article MR, each Member
irrevocably waives any right it may have to maintain any action for dissolution
of the Company or for partition of the property of the Company.
18.10 Notice to Members of Provisions of this Agreement. By executing
these Regulations, each Member acknowledges that it has actual notice of (a) all
of the provisions of this Agreement, including, without limitation, the
restrictions on the transfer of Membership Interests set forth in Article IV
herein, and (b) all of the provisions of the Articles of Organization. Each
Member hereby Regulations constitute adequate notice of all such provisions.
18.11 Counterparts. These Regulations maybe executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.
[SIGNATURE PAGES FOLLOW]
41
IN WITNESS WHEREOF, following adoption of these Regulations by the Managers of
the Company, the Members have executed these Regulations as of the date first
set forth above.
MEMBERS:
BAYLOR HEALTH SERVICES
By:
------------------------------------
Name:
---------------------------------
Title:
---------------------------------
USP NORTH TEXAS, INC.
By:
------------------------------------
Name:
---------------------------------
Title:
---------------------------------
EXHIBIT A
Membership Initial Capital
Name and Address of Each Member Interests Owned Contribution
------------------------------- --------------- ------------
Baylor Health Services 9,800 $490.00
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Vice President and COO
USP North Texas, Inc. 10,200 $510.00
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
------ -------
20,000 total $1,000
======
42
EXHIBIT B
CONTRIBUTION AGREEMENT
▇▇
▇▇▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇▇ REGION
44
EXHIBIT D
MANAGEMENT AGREEMENT FORM
45
EXHIBIT C
[Convertible Subordinated Promissory Note]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. NEITHER THE SECURITIES EVIDENCED
HEREBY, NOR ANY INTEREST THEREIN, MAY BE OFFERED, SOLD, TRANSFERRED,
ENCUMBERED OR OTHERWISE DISPOSED OF UNLESS EITHER (I) THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND LAWS RELATING THERETO
OR (II) THE CORPORATION HAS RECEIVED AN OPINION OF COUNSEL OR OTHER
EVIDENCE, REASONABLY SATISFACTORY INFORM AND SUBSTANCE TO THE CORPORATION,
STATING THAT SUCH REGISTRATION IS NOT REQUIRED.
UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
Convertible Subordinated Promissory Note
$3,287,234 June 1, 1999
UNITED SURGICAL PARTNERS INTERNATIONAL, INC., a Delaware corporation
(hereinafter called the "Corporation"), for value received, hereby promises to
pay to Baylor Health Services, a Texas non-profit corporation, the principal sum
of Three Million Two Hundred Eighty Seven Thousand Two Hundred Thirty Four
Dollars ($3,287,234) on June 1, 2007 (subject to applicable restrictions set
forth in Section 12 hereof), and to pay interest (computed on the basis of a
365-day year) from the date hereof on the unpaid principal amount hereof at the
rate of __ per annum, payable quarterly in arrears on the first day of January,
April, July and October of each year (each said day being an "Interest Payment
Date"), commencing on July 1, 1999, and until the date the outstanding principal
amount hereof shall have become due and payable in full, whether at maturity or
by acceleration or otherwise. If the principal amount hereof shall not be paid
when the same shall have become due and payable in full, whether at maturity or
by acceleration or otherwise, then such overdue principal amount and (to the
extent permitted by applicable law) any overdue interest shall thereupon bear
interest until paid in full at a floating rate per annum equal to the lesser of
(a) 2% plus the "prime rate" from time to time published in the Wall Street
Journal or (b) the maximum rate permitted under applicable law, as and when
amended from time to time.
All payments of principal and interest on this Convertible
Subordinated Promissory Note ("Note") shall be in such coin or currency of the
United States of America as at the time of payment shall be legal tender for
payment of public and
1
private debts, and shall be made at the offices of the person deemed the holder
hereof in accordance with Section 4 below.
1. Conversion of the Note.
(a) The holder of this Note shall have the right, at such
holder's option, at any time to convert, subject to the terms and provisions of
this Section 1, the principal of this Note or any portion hereof into shares of
Class A Common Stock, par value $.01 per share (the "Common Stock"), of the
Corporation at a price of $3.50 per share or, in case of an adjustment of such
price has taken place pursuant to the provisions of paragraph (d) below, then at
the price as last adjusted (referred to herein as the "Conversion Price"), upon
surrender of the Note to the Corporation at any time during normal business
hours together with written notice (hereinafter referred to as the "Conversion
Notice") that the holder elects to convert this Note into such Common Stock in
accordance with the provisions of this Section 1, and specifying the name or
names in which the shares of stock issuable upon conversion shall be registered,
together with the addresses of the persons so named, and, if any such name is
different from the holder's name, shall be accompanied by a written instrument
or instruments of transfer in form satisfactory to the Corporation duly executed
by the registered holder and the documents described in Section 2. Upon
surrender of any Note which is to be converted in part only, the Corporation
shall execute and deliver to the holder thereof, at the expense of the
Corporation, a new Note in principal amount equal to the unconverted portion of
the Note so surrendered.
(b) As promptly as practicable after the surrender, as herein
provided, of this Note for conversion and the receipt of the Conversion Notice
relating thereto, the Corporation shall deliver to or upon the written order of
the holder of the Note so surrendered certificates representing the number of
fully paid and non-assessable shares of Common Stock of the Corporation into
which this Note may be converted in accordance with the provisions of this
Section 1 and a new Note for any unconverted portion of the principal amount.
Such conversion shall be deemed to have been made at the close of business on
the date that such Note shall have been surrendered for conversion together with
the Conversion Notice, so that the rights of the holder of the portion of this
Note that is so converted shall cease at such time (with respect to such
converted portion) and the person or persons entitled to receive the shares of
Common Stock upon conversion of such Note shall be treated for all purposes as
having become the record holder or holders of such shares of Common Stock at
such time, and such conversion shall be at the Conversion Price in effect at
such time.
2
(c) Except as provided in paragraph (d) below, no adjustments
in respect of dividends shall be made upon the conversion of any Note,
(d) The Conversion Price shall be adjusted as follows:
(i) In case the Corporation shall at any time (A) make a
subdivision of shares of Common Stock outstanding or (B) pay a dividend in
shares of Common Stock or make a distribution in shares of Common Stock. In any
such case the Conversion Price in effect immediately prior to such action shall
be proportionately decreased, and in case the Corporation shall at any time
combine the shares of Common Stock outstanding, the Conversion Price in effect
immediately prior to such combination shall be proportionately increased. An
adjustment made pursuant to this clause (i) of paragraph (d) shall, in the case
of a subdivision or combination, become effective retroactively on the effective
date thereof and shall, in the case of such a dividend or distribution, become
effective retroactively immediately on the record date for the determination of
stockholders entitled thereto.
(ii) In case the Corporation shall, by dividend or
otherwise, distribute to all holders of its Common Stock, or to all holders of
the Corporation's Common Stock, par value $.01 per share (the "Conversion
Common"), evidences of its indebtedness, shares of any class of capital stock
(other than Common Stock), cash or assets (including securities, but excluding
(A) any rights or warrants entitling the holders thereof to subscribe for or
purchase shares of Common Stock or other securities at a price per share less
than the fair market value thereof at the time such rights or warrants are
issued, (B) any dividend or distribution paid exclusively in cash out of the
retained earnings of the Corporation and (C) any dividend or distribution
referred to in clause (i) above). In any such case the Conversion Price shall be
reduced by multiplying the Conversion Price in effect immediately prior to the
effectiveness of such distribution by a fraction, (x) the numerator of which
shall be the current fair market price per share of the Common Stock on such
date less the fair market value of the portion of the evidences of indebtedness,
shares of capital stock, cash and assets so distributed that is directly or
indirectly applicable to one share of Common Stock, and (y) the denominator of
which shall be the current fair market price per share on such date. Any
reduction in the Conversion Price pursuant to this clause (ii) shall become
effective immediately prior to the opening of business on the day following the
date fixed for the determination of stockholders entitled to receive such
distribution.
(iii) In case the Corporation shall issue capital stock
at a net price per share or unit less than the fair market value per share of
such capital stock or unit on the date
3
the Corporation fixes the offering price of such additional shares or units. In
any such case the Conversion Price shall be reduced immediately thereafter so
that it shall be equal to the price determined by multiplying the Conversion
Price in effect immediately prior thereto by a fraction, (x) the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to the issuance of such additional capital stock or units plus the number
of shares of Common Stock that would be purchased (at the then current fair
market value per share of the Common Stock) with the aggregate sales price of
the shares of additional capital stock or units so issued, and (y) the
denominator of which shall be the number of shares of Common Stock outstanding
immediately prior to the issuance of such additional shares or units plus the
number of shares of Common Stock that would be purchased (at the then current
fair market value per share of the Common Stock) with the aggregate sales price
that would have been received by the Corporation for such shares of additional
shares of capital stock or units if they had been offered and sold at their fair
market value, Such adjustment shall be made successively whenever such an
issuance is made. For purposes of this clause (iii) the number of shares of
stock at any time outstanding shall not include shares held in the treasury of
the Corporation, but shall include shares issuable in respect of script
certificates issued in lieu of fractions of shares of Common Stock. This clause
(iii) shall not apply to (A) Common Stock issued under bona fide benefit plans
adopted by the Board of Directors for the benefit of the Corporation's
directors, employees, consultants and advisors and, to the extent required by
law, approved by the holders of Common Stock, (B) issuances of shares of stock
upon the exercise of rights or options or the conversion of convertible
securities where the exercise price of such rights or options or the conversion
price of such convertible securities was at or above the fair market price per
share of such securities at the time such rights, options or convertible
securities were initially issued, (C) issuances of equity securities (including
options for and securities convertible into equity securities) at a price
committed to (whether such commitment is legally binding or not) in connection
with a proposed transaction where the price so committed to was at or above the
fair market price of such securities at the time of such commitment and the
securities are actually issued within six months after the date of such
commitment.
Until such time as the Common Stock is publicly traded, the fair
market price of the Corporation's securities, and all other determinations of
fair market value required by this paragraph (d), shall be as determined by the
Board of Directors of the Corporation in good faith, which determination shall
be described in a resolution of the Board of Directors.
(e) Whenever the Conversion Price is adjusted, pursuant to paragraph (d)
above, the Corporation shall promptly cause a notice to be given to the holder
of this Note at its
4
address appearing on the Note registry books, which notice will state the
adjusted Conversion Price, the number of shares of Common Stock or other
securities, cash or property issuable upon conversion of this Note resulting
from such adjustment, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
(f) No fractional shares or script representing fractional shares shall be
issued upon the conversion of this Note and, if the conversion of the Note
results in a fraction, in lieu of any such fractional share the Company shall
pay cash equal to such fraction multiplied by the then effective Conversion
Price.
(g) In case of any reorganization, reclassification or change of
outstanding shares of Common Stock issuable upon conversion of the Notes
(including any conversion of Common Stock into the Conversion Common pursuant to
the Corporation's Certificate of Incorporation) or in case of any consolidation
or merger of the Corporation with or into another corporation (other than a
merger in which the Corporation is the continuing corporation and which does not
result in any reclassification or change of outstanding shares of Common Stock)
or in case of any sale or conveyance to another corporation of the property of
the Corporation as an entirety or substantially as an entirety, then prior to
and as a condition to any such reorganization, reclassification, consolidation,
merger or sale, lawful and adequate provision shall be made whereby the holder
of this Note shall have the right thereafter to convert this Note into the kind
and amount of shares of stock and other securities and property receivable upon
such reorganization, reclassification, change, consolidation, merger, sale or
conveyance by a holder of the number of shares of Common Stock of the
Corporation into which such Note might have been converted immediately prior to
such reorganization, reclassification, change, consolidation, merger, sale or
conveyance and in any such case appropriate provision shall be made with respect
to the rights and interest of the holder of this Note to the end that the
provisions hereof shall thereafter be applicable, as nearly as may be, in
relation to any such shares of stock, securities or assets thereafter
deliverable upon the exercise of such conversion rights. In the event of a
merger or consolidation of the Corporation as a result of which a greater or
lesser number of shares of Common Stock of the surviving corporation are
issuable to holders of Common Stock outstanding immediately prior to such merger
or consolidation, the Conversion Price shall be adjusted in the same manner as
though there were a subdivision or combination of the outstanding shares of
Common Stock of the Corporation. The Company shall not effect any such
consolidation, merger or sale unless prior to or simultaneously with the
consummation thereof the survivor or successor corporation (if other than the
Corporation) resulting from such consolidation or merger or the corporation
purchasing such assets shall assume, by written instrument executed and sent to
the
5
holder of this Note, the obligation to deliver to such holder shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to receive, and containing the express assumption by such
successor corporation of the due and punctual performance and observance of
every provision of this Note to be performed and observed by the Corporation and
of all liabilities and obligations of the Corporation hereunder. The provisions
of this paragraph (g) shall apply to successive reorganizations,
reclassifications, consolidations, mergers and sales.
(h) The Corporation covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of issuance
upon conversion of this Note as herein provided, such number of shares of Common
Stock as shall then be issuable upon the conversion of this Note. The
Corporation covenants that all shares of Common Stock which shall be so issuable
shall be duly and validly issued, fully paid and non-assessable.
(i) The issuance of certificates for shares of Common Stock upon the
conversion of this Note shall be made without charge to the converting holder
for any tax in respect of the issuance of such certificates; provided, however,
that the Corporation shall not be required to pay any tax which may be payable
in respect of any transfer involved in the issuance and delivery of any such
certificate in a name other than that of the holder of the Note converted.
(j) In the event that this Note is assigned, the provisions of this
Section 1 shall terminate and be of no further force or effect, but the
termination of this Section 1 shall not affect the other obligations of the
Corporation under this Note; provided, however that this paragraph (j) shall not
apply to an assignment to Baylor Health Care System Foundation or to any party
to which the initial holder is entitled to assign its membership interest in
Texas Health Ventures Group L.L.C. pursuant to the terms of said entity's Second
Amended and Restated Regulations, dated as of June 1, 1999 (as hereinafter
amended).
(k) The Corporation will at no time close its transfer books against the
transfer of any Common Stock or any other securities issued or issuable upon the
conversion of this Note in any manner which interferes with the timely
conversion of this Note.
(l) So long as this Note is outstanding, the Corporation shall give to the
holder of this Note written notice at. least 15 days prior to the proposed
record or effective date of (i) any dividend to be paid with respect to any of
the Corporation's shares of capital stock, (ii) any proposed initial public
offering (as described in paragraph (a) in Section 5
6
below), and (iii) any consolidation, merger, sale of assets or similar
transaction by the Corporation with or in to another entity (other than such a
transaction in which the stockholders of the Corporation immediately prior to
such transaction own in excess of 50% of the voting capital stock of the
Corporation outstanding immediately after the effective date of such transaction
in the same proportions in which such shares were held immediately prior to such
transaction).
2. Transfer, Etc. of Notes. The Corporation shall keep at its office
or agency maintained as provided in paragraph (a) of Section 6 a register in
which the Corporation shall provide for the registration of this Note and for
the registration of transfer and exchange of this Note. The holder of this Note
may, at its option, and either in person or by duly authorized attorney,
surrender the same for registration of transfer or exchange at the office or
agency of the Corporation maintained as provided in paragraph (a) of Section 6
and, without expense to such holder (except for transfer taxes, if any, imposed
in connection therewith), receive in exchange therefor a Note or Notes each in
such denomination or denominations as such holder may request (which
denominations shall be $100,000 or an integral multiple thereof, except for any
balance which may be less than $100,000), dated as of the date to which interest
has been paid on the Note or Notes so surrendered for transfer or exchange, for
the same aggregate principal amount as the then unpaid principal amount of the
Note or Notes so surrendered for transfer or exchange, and registered in the
name of such person or persons as may be designated by such holder, This Note,
when presented or surrendered for registration of transfer or exchange, shall be
duly endorsed, or shall be accompanied by a written instrument of transfer,
satisfactory in form to the Corporation, duly executed by the holder of such
Note or his attorney duly authorized in writing. Every Note so made and
delivered in exchange for this Note shall in all other respects be in the same
form and have the same terms as this Note. No transfer or exchange of any Note
shall be valid unless made in the foregoing manner at such office or agency.
3. Loss, Theft, Destruction or Mutilation of Note. Upon receipt of
evidence satisfactory to the Corporation of the loss, theft, destruction or
mutilation of this Note and, in the case of any such loss, theft or destruction,
upon receipt of an affidavit of loss and indemnity from the holder hereof
reasonably satisfactory to the Corporation or, in the case of any such
mutilation, upon surrender and cancellation of this Note, the Corporation will
make and deliver, in lieu of this Note, a new Note of like tenor and unpaid
principal amount and dated as of the date to which interest has been paid on
this Note.
4. Persons Deemed Owners; Ho1ders. The Corporation may deem and
treat the person or entity in whose name this Note
7
is registered as the owner and holder of this Note for the purpose of receiving
payment of principal of and interest on this Note and for all other purposes
whatsoever, whether or not this Note shall be overdue. With respect to any Note
at any time outstanding, the term "holder" as used herein shall be deemed to
mean the person or entity in whose name such Note is registered as aforesaid at
such time.
5. Prepayments. The Corporation may prepay this Note as follows:
(a) Mandatory Prepayment. Except as and to the extent expressly prohibited
by applicable law, the Corporation shall prepay the principal amount, plus
accrued and unpaid interest, of all Notes which shall then be outstanding upon
the consummation by the Corporation of an initial public offering of its Common
Stock, par value $.01 per share, registered under the Securities Act of 1933, as
amended.
(b) Optional Prepayment. At any time after the occurrence of an "Event of
Dissolution" as such term is defined in the Second Amended and Restated
Regulations, dated as of June 1, 1999 of Texas Health Ventures Group L.L.C., a
Texas limited liability company, the Corporation may, at its option, prepay this
Note, without penalty, in whole or in part, by paying the principal amount to be
prepaid plus all accrued but unpaid interest thereon. If such Event of
Dissolution occurred pursuant to Section 13.1(d) of said Second Amended and
Restated Regulations (or any successor provision), the holder of this Note may,
at its option (and regardless of whether the Corporation exercises its option
pursuant to the preceding sentence), require the Corporation to prepay this
Note, without penalty, in whole or in part, by paying the principal amount to be
prepaid plus all accrued but unpaid interest thereon. Any date on which the
Corporation elects or is required to prepay any of the Notes as provided in this
paragraph (b) and each date on which the Corporation shall be required to prepay
the Notes as provide in paragraph (a) above shall be referred to as a
"Prepayment Date."
(c) Notice of Prepayment. Not less than 30 days prior to a Prepayment
Date, written notice shall be given by registered or certified mail or by
overnight courier to the holders of record of the Notes to be prepaid, such
notice to be addressed to each such holder at his post office address as shown
by the records of the Corporation, specifying the dollar amount to be prepaid,
the paragraph or paragraphs of this Note pursuant to which such prepayment shall
be made, and the date of such prepayment, which date shall not be a day on which
the banks of New York are required or authorized to be closed. Upon notice of
prepayment being given as aforesaid, the Corporation covenants and agrees that
it will prepay, on the date therein fixed for
8
prepayment, this Note or the portion hereof, as the case may be, so called for
prepayment, at the prepayment price determined in accordance with paragraph (a)
or (b) above. A prepayment of less than all of the outstanding principal amount
of this Note shall not relieve the Corporation of its obligation to make
scheduled payments of interest payable in respect of the principal remaining
outstanding on the Interest Payment Dates.
(d) Allocation of All Payments. In the event of any partial payment of
less than all of the interest then due on the Notes then outstanding or any
prepayment, purchase, redemption or retirement of less than all of the
outstanding principal amount of the Notes, the Corporation will allocate the
amount of interest so to be paid and the principal amount so to be prepaid,
purchased, redeemed or retired to each Note in proportion, as nearly as may be,
to the aggregate principal amount of all Notes then outstanding.
(e) Interest After Date Fixed for Prepayment. If this Note or a portion
hereof is called for prepayment as herein provided, this Note or such portion
shall cease to bear interest on and after the date fixed for such prepayment
unless, upon presentation for such purpose, the Corporation shall fail to pay
this Note or such portion, as the case may be, in which event this Note or such
portion, as the case may be, and, so far as may be lawful, any overdue
installment of interest, shall bear interest on and after the date fixed for
such prepayment and until paid at the rate per annum provided herein.
(f) Surrender of Note; Notation Thereon. Upon any prepayment of a portion
of the principal amount of this Note, the holder hereof, at its option, may
require the Corporation to execute and deliver at the expense of the Corporation
(other than for transfer taxes, if any), upon surrender of this Note, a new Note
registered in the name of such person or persons as may be designated by such
holder for the principal amount of this Note then remaining unpaid, dated as of
the date to which the interest has been paid on the principal amount of this
Note then remaining unpaid, or may present this Note to the Corporation for
notation hereon of the payment of the portion of the principal amount of this
Note so prepaid.
6. Covenants. The Corporation covenants and agrees that, so long as
this Note shall be outstanding:
(a) Maintenance of Office. The Corporation will maintain an office or
agency in such place in the United States of America as the Corporation may
designate in writing to the registered holder hereof, where this Note may be
presented for registration of transfer and exchange as herein provided, where
9
notices and demands to or upon the Corporation in respect of this Note may be
served and where, at the option of the holder thereof, this Note may be
presented for payment. Until the Corporation otherwise notifies the holder of
this Note, said office shall be the principal office of the Corporation at ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
(b) Corporate Existence. The Corporation will do or cause to be done all
things necessary and lawful to preserve and keep in full force and effect its
corporate existence, rights and franchises and the corporate or partnership
existence, rights and franchises of each of its subsidiaries; provided, however,
that nothing in this paragraph (b) shall prevent (1) a consolidation or merger
of, or a sale, transfer or disposition of all or any substantial part of the
property and assets of, the Corporation or (ii) the abandonment or termination
of any rights or franchises of the Corporation, or the liquidation or
dissolution of, or a sale, transfer or disposition (whether through merger,
consolidation, sale or otherwise) of all or any substantial part of the property
and assets of, any subsidiary or the abandonment or termination of the corporate
or partnership existence, rights and franchises of any subsidiary if such
abandonment, termination, liquidation, dissolution, sale, transfer or
disposition is, in the good faith business judgment of the Corporation, in the
best interests of the Corporation and is not disadvantageous in any material
respect to the holder of this Note.
(c) Notice of Default. If any one or more events which constitute, or
which with notice or lapse of time or both would constitute, an Event of Default
under Section 8 of this Note shall occur, or if any holder of the Notes shall
demand payment or take any other action permitted upon the occurrence of any
such Event of Default, the Corporation shall, immediately after it becomes aware
that any such event has occurred or that such demand has been made or that any
such action has been taken, give notice to all holders of the Notes, specifying
the nature of such event or of such demand or action, as the case may be;
provided, however, that if such event, in the good faith judgment of the
Corporation, will be cured within ten days after the Corporation has knowledge
that such event would, with or without notice or lapse of time or both,
constitute such an Event of Default, no such notice need be given if such Event
of Default shall be cured within such ten day period.
(d) Merger or Consolidation. If the Corporation shall effect a merger or
consolidation in which it is not the surviving entity, then the Corporation
shall take such action as may be necessary, as a condition to consummating such
transaction, to cause the surviving entity to assume all of the Corporation's
obligations under this Note, as if such entity had
10
been the original issuer thereof, and such entity shall acknowledge in writing
its obligation to fully and timely honor the Corporation's obligations under
this Note.
7. Modification; Waiver. The Corporation may, with the written
consent of the holders of not less than 66 2/3% in principal amount of the Notes
then outstanding, modify the terms and provisions of the Notes or the rights of
the holders of the Notes or the obligations of the Corporation thereunder, and
the observance by the Corporation of any term or provision of the Notes may be
waived with the written consent of the holders of not less than 66 2/3% in
principal amount of the Notes then outstanding, provided, however, that no such
modification or waiver shall:
(a) change the maturity of any Note or reduce the principal amount thereof
or reduce the rate or extend the time of payment of interest thereon or reduce
the amount or change the time of payment of premium payable on any prepayment
thereof without the consent of the holder of each Note so affected; or
(b) give any Note any preference over any other Note; or
(c) reduce the aforesaid percentage of Notes, the consent of the holders
of which is required for any such modification.
Any such modification or waiver shall apply equally to all the
holders of the Notes and shall be binding upon them, upon each future holder of
any Note and upon the Corporation, whether or not such Note shall have been
marked to indicate such modification or waiver, but any Note issued thereafter
shall bear a notation referring to any such modification or waiver. Promptly
after obtaining the written consent of the holders as herein provided, the
Corporation shall transmit a copy of such modification or waiver to all the
holders of the Notes at the time outstanding.
8. Events of Default. If any one or more of the following events
(herein called "Events of Default"), shall occur, for any reason whatsoever, and
whether such occurrence shall, on the part of the Corporation or any subsidiary,
be voluntary or involuntary or come about or be effected by operation of law or
pursuant to or in compliance with any judgment, decree or order of a court of
competent jurisdiction or any order, rule or regulation of any administrative or
11
other governmental authority, and such Event of Default shall be continuing:
(a) default shall be made in the payment of the principal when
and as the same shall become due and payable, whether on demand or at a date
fixed for prepayment or by acceleration or otherwise; or
(b) default shall be made in the payment of any installment of
interest when and as the same shall become due and payable or at a date fixed
for prepayment or by acceleration or otherwise and such default shall continue
for a period of 5 days; or
(c) default shall be made in the due observance or performance
of any other covenant, condition or agreement on the part of the Corporation to
be observed or performed pursuant to the terms hereof and such default shall
continue for 30 days after the occurrence thereof; or
(d) the entry of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Corporation or any
subsidiary in an involuntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or any other applicable federal or state
bankruptcy, insolvency or other similar laws, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar official) of
the Corporation or any subsidiary or for any substantial part of any of their
property, or ordering the winding-up or liquidation of any of their affairs and
the continuance of any such decree or order unstayed and in effect for a period
of 60 consecutive days; or
(e) the commencement by the Corporation or any subsidiary of a
voluntary case under the federal bankruptcy laws, as now constituted or
hereafter amended, or any other applicable federal or state bankruptcy,
insolvency or other similar laws, or the consent by any of them to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) of the Corporation
or any subsidiary or for any substantial part of their property, or the making
by any of them of any assignment for the benefit of creditors, or the failure of
the Corporation or any subsidiary generally to pay its debts as such debts
become due;
then, the holder or holders of at least 25% in aggregate principal amount of the
Notes at the time outstanding may, at its or their option, by notice to the
Corporation, declare all the Notes to be, and all the Notes shall thereupon be
and become, forthwith
12
due and payable together with interest accrued thereon without presentment,
demand, protest or further notice of any kind, all of which are expressly waived
to the extent permitted by law; provided, however, that, upon the occurrence and
during the continuance of any of the events specified in paragraph (a) or (b) of
this Section 8, the holder of any Note at the time outstanding may, at its
option by notice in writing to the Corporation, declare any Note or Notes then
held by it to be, and such Note or Notes shall thereupon be and become,
forthwith due and payable together with interest accrued thereon without
presentment, demand, protest or further notice of any kind, all of which are
expressly waived to the extent permitted by law.
At any time after any declaration of acceleration has been made as
provided in this Section 8, the holders of at least 66 2/3% in principal amount
of the Notes then outstanding may, by notice to the Corporation, rescind such
declaration and its consequences, provided, however, that no such rescission
shall extend to or affect any subsequent default or Event of Default or impair
any right consequent thereon.
Without limiting the foregoing, the Corporation hereby waives any
right to trial by jury in any legal proceeding related in any way to this Note
or the Notes and agrees that any such proceeding may, if the holder so elects,
be brought and enforced in the courts in the State of Texas and the Corporation
hereby waives any objection to jurisdiction or venue in any such proceeding
commenced in such courts. The Corporation further agrees that any process
required to be served on it for purposes of any such proceeding may be served on
it, with the same effect as personal service by registered mail addressed to it
at its office or agency set forth in paragraph (a) of Section 6 for purposes of
notices hereunder.
9. Suits for Enforcement. Subject to the provisions of Section 12 of
this Note, in case any one or more of the Events of Default specified in Section
8 of this Note shall occur and be continuing, the holder of this Note may
proceed to protect and enforce its rights by suit in equity, action at law
and/or by other appropriate proceeding, whether for the specific performance of
any covenant or agreement contained in this Note or in aid of the exercise of
any power granted in this Note, or may proceed to enforce the payment of this
Note or to enforce any other ~1egal or equitable right of the holder of this
Note.
In case of any default under this Note, the Corporation will pay to
the holder thereof such amounts as shall be sufficient to cover the reasonable
costs and expenses of such holder due to said default, including without
limitation collection
13
costs and reasonable attorneys' fees, to the extent actually incurred.
10. Remedies Cumulative. No remedy herein conferred upon the holder
of this Note is intended to be exclusive of any other remedy and each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or otherwise.
11. Remedies Not Waived. No course of dealing between the
Corporation and the holder of this Note or any delay on the part of the holder
hereof in exercising any rights hereunder shall operate as a waiver of any right
of any holder of this Note.
12. Subordination. (a) Anything contained in this Note to the
contrary notwithstanding, the indebtedness evidenced by this Note shall be
subordinate and junior, to the extent set forth in the following paragraphs (A),
(B), (C) and (D), to all Senior Indebtedness of the Corporation. "Senior
Indebtedness" shall mean the principal of, premium, if any, and interest
~including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law and
including any loans made to the Corporation as a debtor in possession in any
bankruptcy proceeding by any persons who were the holders of any Senior
Indebtedness on the date such bankruptcy proceeding was commenced) on all
indebtedness to a bank or banks for borrowed money now existing or hereinafter
incurred which by its terms is not subordinated to any other indebtedness of the
Corporation.
(A) In the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceedings, or any receivership proceedings in
connection therewith, relative to the Corporation or its creditors or its
property, and in the event of any proceedings for voluntary liquidation,
dissolution or other winding up of the Corporation, whether or not involving
insolvency or bankruptcy proceedings, then all Senior Indebtedness shall first
be paid in full before any payment, whether on account of principal, interest or
otherwise, is made upon the Notes.
(B) In any of the proceedings referred to in paragraph (A) above,
any payment or distribution of any kind or character, whether in cash, property,
stock or obligations which may be payable or deliverable in respect of the Notes
shall be paid or delivered directly to the holders of Senior Indebtedness for
14
application in payment thereof, unless and until all Senior Indebtedness shall
have been paid in full.
(C) No payment shall be made, directly or indirectly, on account of
the Notes (i) upon maturity of any Senior Indebtedness obligation, by lapse of
time, acceleration (unless waived) , or otherwise, unless and until all
principal thereof and interest thereon and all other obligations in respect
thereof shall first be paid in full and have terminated, or (ii) upon the
happening of any default in payment of any principal of, premium, if any, or
interest on or any other amounts payable in respect of Senior Indebtedness when
the same becomes due and payable whether at maturity or at a date fixed for
prepayment or by declaration or otherwise (a "Senior Payment Default"), unless
and until such Senior Payment Default shall have been cured or waived or shall
have ceased to exist.
(D) Upon the happening of an event of default (other than as
described in clause (A), (B) or (C) above) with respect to any Senior
Indebtedness permitting (after notice or lapse of time or both) one or more
holders of such Senior Indebtedness to declare such Senior Indebtedness due and
payable prior to the date on which it is otherwise due and payable (a
"Nonmonetary Default"), upon the occurrence of (i) receipt by the holder of this
Note of written notice from a holder of said Senior Indebtedness of a
Nonmonetary Default (any such notice, a "Blockage Notice") , or (ii) if such
Nonmonetary Default results from the acceleration of this Note, the date of such
acceleration; then (x) the Corporation will not make, directly or indirectly, to
the holder of this Note any payment of any kind of or on account of this Note,
(y) the holder of this Note will not accept from the Corporation any payment of
any kind of or on account of this Note and (z) the holder of this Note may not
take, demand, receive, ▇▇▇ for, accelerate or commence any remedial proceedings
with respect to any amount payable under this Note, unless and until in each
case described in clauses (x), (y) and (z) all such Senior Indebtedness shall
have been paid in full; provided, however, that if such Nonmonetary Default
shall have occurred and be continuing for a period (a "Blockage Period")
commencing on the earlier of the date of receipt of such Blockage Notice or the
date of the acceleration of this Note and ending 179 days thereafter (it being
understood that not more than one Blockage Period may be commenced with respect
to this Note during any period of 360 consecutive days), and during such
Blockage Period (i) such Nonmonetary Default shall not have been cured or
waived, (ii) the holder of such Senior Indebtedness shall not have made a demand
for payment and commenced an action, suit or other proceeding against the
Corporation and (iii) none of the events described in subsection (A) above shall
have occurred, then (to the extent not otherwise prohibited by subsections (A),
(B) or (C) above) the Corporation may, not less than 10 days after receipt by
the holders of such Senior Indebtedness of written
15
notice to such effect from the holder of this Note, make and the holder of this
Note may accept from the Corporation all past due and current payments of any
kind of or on account of this Note, and such holder may demand, receive, retain,
▇▇▇ for or otherwise seek enforcement or collection of all amounts payable on
account of principal of or interest on this Note.
(b) Subject to the payment in full of all Senior Indebtedness
as aforesaid, the holder of this Note shall be subrogated to the rights of the
holders of Senior Indebtedness to receive payments or distributions of any kind
or character, whether in cash, property, stock or obligations, which may be
payable or deliverable to the holders of Senior Indebtedness, until the
principal of, and interest on, this Note shall be paid in full in cash, and, as
between the Corporation, its creditors other than the holders of Senior
Indebtedness, and the holders of this Note, no such payment or distribution made
to the holders of Senior Indebtedness by virtue of this Section 12 which
otherwise would have been made to the holder of this Note shall be deemed a
payment by the Corporation on account of the Senior Indebtedness, it being
understood that the provisions of this Section 12 are and are intended solely
for the purposes of defining the relative rights of the holder of this Note, on
the one hand, and the holders of the Senior Indebtedness, on the other hand,
Subject to the rights, if any, under this Section 12 of holders of Senior
Indebtedness to receive cash, property, stock or obligations otherwise payable
or deliverable to the holder of this Note, nothing herein shall either impair,
as between the Corporation and the holder of this Note, the obligation of the
Corporation, which is unconditional and absolute, to pay to the holder of this
Note the principal hereof and interest hereon in accordance with its terms or
prevent (except as otherwise specified herein) the holder of this Note from
exercising all remedies otherwise permitted by applicable law or hereunder upon
default hereunder.
(c) If any payment or distribution of any character or any
security, whether in cash, securities or other property, shall be received by
any holder of this Note in contravention of any of the terms hereof or before
all the Senior Indebtedness obligations have been paid in full, such payment or
distribution or security shall be received in trust for the benefit of, and
shall be paid over or delivered and transferred to, the holders of the Senior
Indebtedness at the time outstanding in accordance with the priorities then
existing among such holders for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all such Senior
Indebtedness in full in cash, In the event of the failure of any such holder to
endorse or assign any such payment, distribution or security, each holder of any
Senior Indebtedness is hereby irrevocably authorized to endorse or assign the
name.
16
13. Covenants Bind Successors and Assigns. All the covenants,
stipulations, promises and agreements in this Note contained by or on behalf of
the Corporation shall bind its successors and assigns, whether so expressed or
not.
14. Governing Law. This Note shall be governed and construed in
accordance with the laws of the State of Delaware.
15. Headings. The headings of the Sections and paragraphs of this
Note are inserted for convenience only and do not constitute a part of this
Note.
IN WITNESS WHEREOF, UNITED SURGICAL PARTNERS INTERNATIONAL, INC has
caused this Note to be signed in its corporate name by one of its officers
thereunto duly authorized and to be dated as of the day and year first above
written.
UNITED SURGICAL PARTNERS
INTERNATIONAL, INC.
By _________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
17
TRANSFER OF CONVERTIBLE NOTE
FOR VALUE RECEIVED, Baylor Health Services, a Texas non-profit corporation
("Assignor"), hereby sells, assigns, grants, sets over, transfers and delivers
unto Baylor Health Care System Foundation, a Texas non-profit corporation
("Assignee"), all of Assignor's right, title, interest, power and privilege in
and to, including the right to receive all interest payments under (including
the interest payment due July 1, 1999), the following: the Convertible
Subordinated Promissory Note made by United Surgical Partners International,
Inc., a Delaware corporation ("USP"). in favor of Assignor, dated June 1, 1999,
with a face amount of three million two hundred and eighty seven thousand and
two hundred and thirty four dollars and No/100 ($3,287,234.00) (the "Note").
Assignee hereby accepts the foregoing assignment of the Note.
This Transfer of Convertible Note shall bind and inure to the benefit of
the parties hereto and their respective successors, legal representatives and
assigns.
EXECUTED to be effective as of June 1, 1999.
BAYLOR HEALTH SERVICES
a Texas non profit corporation
By: _________________________________
Name: _________________________________
Title: _________________________________
BAYLOR HEALTH CARE SYSTEM FOUNDATION
a Texas non profit corporation
By: _________________________________
Name: _________________________________
Title: _________________________________
USP is executing this Transfer of Convertible Note to evidence its
agreement that the assignment effected by this Transfer of Convertible Note
complies with the legend on the face of the Note.
UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
a Texas non profit corporation
By: _________________________________
Name: _________________________________
Title: _________________________________
EXHIBIT D
[Intentionally Omitted]
EXHIBIT E
[Assignment and Assumption Agreement]
ASSIGNMENT AND ASSUMPTION AGREEMENT
Pursuant to and in accordance Section 11.7 of the Contribution and
Purchase Agreement, dated as of May 11, 1999 (the "Agreement"), entered into by
(among others) USP North Texas, Inc., a Texas corporation ("Assignor"), and
TI-IVG/HealthFirst LLC, a Texas limited liability company ("Assignee"), and for
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Assignor hereby assigns, transfers, grants, sets over and delivers
unto Assignee, all of Assignor's right, title, interest, power and privilege in
and to the following property, whether real, personal or mixed, tangible or
intangible:
All USP Assets, as such term is defined in Section 2.1 of the Agreement;
excluding, however, the following: (a) Assignor's share of cash and cash
equivalent assets of DeSoto that are in excess of $50,000 as of the effective
date of this Assignment and Assumption Agreement set forth below (the "Effective
Date"); (b) Assignor's share of cash and cash equivalent assets of Metroplex
that are in excess of $50,000 as of said Effective Date; (c) all earned but
unpaid management fees under the HealthFirst Management Agreements as of the
Effective Date; and (d) Assignor's rights under the Agreement.
Assignee hereby accepts the foregoing assignments and assumes and agrees
to be responsible for the liabilities and obligations (a) that were assumed by
Assignor pursuant to Section 1(e) of the HealthFirst Purchase Agreement, as and
to the extent any such liability or obligation arises due to acts or omissions
occurring on or after the Effective Date, and (b) that arise on or after the
Effective Date under Sections 1(c), 1(d) (ii) (subject to Section 2.2(b) of the
Agreement), 2 (penultimate sentence only), 8(a)(iii) and (iv) (but only to the
extent Assignee is the indemnified party thereunder), 8(b) (subject to Section
8.8 of the Agreement), 8(d), 8(e), 8(f) (if Assignee exercises the HealthFirst
Option included therein), 8(f)(iv) (if Assignee does not exercise the
HealthFirst Option included therein, but only as to management fees accrued on
and after the Effective Date), 8(g) (if Assignee exercises the HealthFirst
Option included therein), 8(i)(iii). 8(k), 8(1) and 10 through 16, 18 and 19 of
the HealthFirst Purchase Agreement and Sections 1 and 2 through 5 (if Assignee
exercises the HealthFirst Option included in Section 2) of the Option and
Amendment Agreement included therein, including without limitation all payment
obligations arising under Section 8(e) of the HealthFirst Purchase Agreement or
resulting from any exercise of a HealthFirst Option. In addition, Assignee shall
be subject to all other relevant provisions of the HealthFirst Purchase
Agreement in connection with any exercise of Assignee's rights and benefits
thereunder. It is understood and agreed, however, that Assignee does not hereby
assume or agree to pay or be responsible for any other obligations, debts,
liabilities or duties of Assignor, including without limitation the obligations
and liabilities described in clauses (i) through (vi) of Section 2.3 of the
Agreement.
This Assignment and Assumption Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors, legal
representatives and assigns.
This Assignment and Assumption Agreement is effective as of 12:01 a.m. on
the 1st day of June, 1999.
IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment and
Assumption Agreement to be executed by their duly authorized representatives.
USP NORTH TEXAS, INC.
By:
---------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
THVG/HEALTHFIRST LLC
By:
---------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
2
EXHIBIT F
[▇▇▇▇ of Sale and Assumption of Liabilities]
▇▇▇▇ OF SALE AND ASSUMPTION OF LIABILITIES
Pursuant to and in accordance Section 12.7 of the Contribution and
Purchase Agreement, dated as of May 11, 1999 (the "Agreement"), entered into by
(among others) Baylor Health Services, a Texas non-profit corporation
("Assignor"), and Texas Health Ventures Group L.L.C., a Texas limited liability
company, and for valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Assignor hereby assigns, transfers, grants, sets over and
delivers unto Dallas Surgical Partners, L.P., a Texas limited partnership
("Assignee"), all of Assignor's right, title, interest, power and privilege in
and to the following property, whether real, personal or mixed, tangible or
intangible, relating to either or both of the Baylor Centers (as defined in the
Agreement):
All Baylor Center Assets, as such term is defined in Section 1.1 of the
Agreement;
excluding, however, the Excluded Baylor Assets, as such term is defined in
Section 1.1 of the Agreement.
Assignee hereby accepts the foregoing assignments and assumes and agrees
to be responsible for the obligations, duties and liabilities relating to the
Baylor Centers (i) that are current trade payables incurred in the ordinary
course of business of the Baylor Centers and are outstanding on the effective
date of this ▇▇▇▇ of Sale and Assumption of Liabilities (the "Effective Date"),
(ii) that are accrued employee vacation or sick leave benefits for employees of
the Baylor Centers who are hired by USP North Texas, Inc. on or immediately
following the Effective Date or (iii) that arise due to acts or omissions
occurring on or after said Effective Date, including without limitation
obligations under the contracts, leases and other instruments or commitments
that either (A) are described in Schedule 9.6 attached to the Agreement or (B)
relate to the Baylor Centers, do not involve a non-cancellable financial
obligation of more than $25,000 and are cancellable without cost or penalty no
later than 12 months after the Effective Date. It is understood and agreed,
however, that Assignee does not hereby assume or agree to pay or be responsible
for any other obligations, debts, liabilities or duties of Assignor, including
without limitation the Excluded Liabilities (as defined in Section 1.3 of the
Agreement).
This ▇▇▇▇ of Sale and Assumption of Liabilities shall bind and inure to
the benefit of the parties hereto and their respective successors, legal
representatives and assigns.
This ▇▇▇▇ of Sale and Assumption of Liabilities is effective as of 12:01
a.m. on the 1st day of June, 1999.
IN WITNESS WHEREOF, Assignor and Assignee have caused this ▇▇▇▇ of Sale
and Assumption of Liabilities to be executed by their duly authorized
representatives.
BAYLOR HEALTH SERVICES
By:
---------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
DALLAS SURGICAL PARTNERS, L.P., a Texas limited
partnership
By: Texas Health Venture VII L.L.C., its genera
partner
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
2
EXHIBIT G
[Lease Agreement]
LEASE AGREEMENT
between
BAYLOR HEALTH SERVICES,
as Landlord
and
DALLAS SURGICAL PARTNERS, LP,
Tenant
Premises:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
TABLE OF CONTENTS
1. Lease of Premises .................................................. 1
2. Term ............................................................... 1
3. Use ................................................................ 1
4. Services ........................................................... 1
5. Peaceful Enjoyment ................................................. 2
6. Rent ............................................................... 2
7. Security Deposit ................................................... 2
8. Maintenance and Repairs ............................................ 2
9. Taxes .............................................................. 3
10. Compliance with Laws ............................................... 3
11. Alterations and Improvements ....................................... 3
12. Status of Tenant ................................................... 3
13. Assignment and Subletting .......................................... 3
14. Indemnification .................................................... 4
15. Insurance .......................................................... 4
16. Mutual Waivers of Recovery ......................................... 4
17. Hazardous Materials ................................................ 4
18. Rules and Regulations .............................................. 5
19. Acceptance of Premises ............................................. 5
20. Entry and Inspection ............................................... 5
21. Tenant's Risk ...................................................... 5
22. Damage or Destruction .............................................. 5
23. Condemnation ....................................................... 6
24. Mechanic's Liens ................................................... 6
25. Holding Over ....................................................... 6
26. Default and Remedies ............................................... 7
27. Transfer of Landlord's Interest .................................... 8
28. Waiver ............................................................. 8
29. Subordination of Lease ............................................. 9
30. Possession ......................................................... 9
31. Death, Disability or Retirement .................................... 9
32. Relocation ......................................................... 9
33. Renewal Option ..................................................... 10
34. Sales Tax .......................................................... 10
35. Independence and Purpose of Relationship ........................... 10
36. Miscellaneous ...................................................... ▇▇-▇▇
▇▇▇▇▇▇▇ "▇" - ▇▇▇▇▇ Plan of Premises
Exhibit "B" - Rules and Regulations
Exhibit "C" - Parking Services
-i-
LEASE AGREEMENT
THIS LEASE AGREEMENT (the "Lease"), is made and entered into as of the 1st
day of June 1999, by and between Baylor Health Services, a Texas Corporation
domiciled in Dallas, Dallas County (hereinafter called "Landlord"), and Dallas
Surgical Partners, LP (hereinafter called "Tenant").
W I T N E S S E T H:
1. Lease of Premises. For and in consideration of the covenants and
agreements hereinafter set forth, to be paid, kept and performed by Tenant,
Landlord has leased, demised and rented, and by these presents, does hereby
lease, demise and rent to Tenant and Tenant does hereby accept, lease and rent
from Landlord, that certain space situated at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ in the City of
Dallas, Dallas County, Texas, containing approximately 17,477 rentable square
feet, and being delineated on the floor plan attached hereto as Exhibit "A"
attached hereto and made a part hereof (the "Premises"). The Building is located
on that certain real property having the address ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ in Dallas,
Dallas County, Texas (the "Land"). For purposes of determining "rentable square
feet" of the Premises, measurements will be from the inside of the corridor wall
to the inside of the exterior wall and from center to center of partition walls
between suites in the Building.
2. Term. The term of this Lease shall commence on the earlier of: (a) the
date of June 1, 1999 or (b) the date the Premises are substantially completed
and Tenant takes possession of the Premises (the "Commencement Date") and shall
continue for ten (10) years ending on May 31, 2009, unless sooner terminated in
accordance with the provisions of this Lease. Tenant shall execute and deliver
to Landlord, within ten (10) days after Landlord's request and following the
Commencement Date, a notice confirming the Commencement Date and the date of
expiration of the term of this Lease.
3. Use. The Premises may be used and occupied by Tenant during the term of
this Lease, for Physician's Office and Surgery Center and administrative offices
related thereto and for no other purpose.
4. Services. Landlord agrees to furnish at Tenant's expense, the following
services to the Leased Space.
(i) hot and cold water *;
(ii) water for fire sprinkler system, if any;
(iii) heating and air conditioning, in season; and
(iv) electric power and energy at standard alternating current voltages,
and gas available in the building.
(v) security and parking lot maintenance
(vi) repairs and maintenance
-1-
(vii) housekeeping
5. Peaceful Enjoyment. Tenant shall peacefully hold and enjoy the
Premises, subject to the other terms hereof, and provided Tenant pays the rent
herein recited and performs all of its covenants and agreements herein
contained.
6. Rent.
(a) Tenant shall pay to Landlord the monthly rent provided for
herein without demand, deduction or offset. During the first year of the term of
this Lease, monthly rent shall be the sum of Twenty thousand three hundred
ninety dollars ($20,390.00), being $14.00 per rentable square foot. During the
second year of the term of the Lease, effective May 1, 2000, monthly rent shall
be the sum of Twenty thousand seven hundred fifty four dollars ($20,754.00),
being $14.25 per rentable square foot. During the third year of the term of the
Lease, effective May 1, 2001, monthly rent shall be the sum of Twenty one
thousand one hundred eighteen dollars ($21,118.00), being $14.50 per rentable
square foot. During the fourth year of the term of this Lease, effective May 1,
2002, monthly rent shall be the sum of Twenty one thousand four hundred eighty
two dollars ($21,482.00), being $14.75 per rentable square foot. During the
fifth year of the term of the Lease, effective May 1, 2003, monthly rent shall
be the sum of Twenty one thousand eight hundred forty six dollars ($21,846.00),
being $15.00 per rentable square foot. During the sixth year of the term of the
Lease, effective May 1, 2004, monthly rent shall be the sum of Twenty two
thousand two hundred ten dollars ($22,210.00), being $15.25 per rentable square
foot. During the seventh year of the term of this Lease, effective May 1, 2005,
monthly rent shall be the sum of Twenty two thousand five hundred seventy four
dollars ($22,574.00), being $15.50 per rentable square foot. During the eighth
year of the term of the Lease, effective May 1, 2006, monthly rent shall be the
sum of Twenty two thousand nine hundred thirty nine dollars ($22,939.00), being
$15.75 per rentable square foot. During the ninth year of the term of the Lease,
effective May 1, 2007, monthly rent shall be the sum of Twenty three thousand
three hundred three dollars ($23,303.00), being $16.00 per rentable square foot.
During the tenth year of the term of the Lease, effective May 1, 2008, monthly
rent shall be the sum of Twenty three thousand six hundred sixty seven dollars
($23,667.00), being $16.25 per rentable square foot.
(b) All rent and other payments which are due hereunder shall be
made payable to Landlord, at the address for Landlord's notices set forth in
this Lease, or at such other place as may from time to time be designated in
writing by Landlord. Monthly rent shall be paid by Tenant to Landlord in advance
on or before the first day of each calendar month during the term of this Lease.
The first monthly installment of rent shall be payable contemporaneously with
the execution of this Lease, and a like monthly installment of rent shall be due
on the first day of the second full calendar month of the term of this Lease and
continuing thereafter on the first day of each succeeding calendar month during
the term. If the term of this Lease commences on a day other than the first day
of a calendar month or terminates on a day other than the last day of a calendar
month, the rent for the partial month shall be prorated.
(c) All sums payable by Tenant to Landlord under the Lease may for
purposes hereunder be deemed to constitute "rent."
*
-2-
*
8. Maintenance and Repairs. Tenant shall keep and maintain the Premises in
good condition and repair. Tenant shall repair or replace, subject to Landlord's
direction and supervision, any damage to the Building caused by Tenant or
Tenant's agents, employees, contractors, or invitees. If Tenant fails to make
such repairs or replacements within fifteen (15) days after the occurrence of
such damage, or longer period if reasonably necessary to complete the repair or
replacement, then Landlord may make such repairs or replacements at Tenant's
cost, in which event the sums paid by Landlord shall be reimbursed by Tenant
within ten (10) days after Landlord has delivered to Tenant an invoice therefor.
Tenant shall surrender to Landlord immediate possession of the Premises and all
keys thereto at the expiration of this Lease, in as good condition as when
received, ordinary wear and tear excepted.
9. Taxes. Landlord shall pay the real estate taxes on the Property during
the Lease Term.
(i) Tenant shall pay Landlord, as Additional Rent, Tenant's Share of the
ad valorem taxes on the Property for any year during the Lease Term. Tenant
shall be responsible for the pro rata portion of such Additional Rent for any
fractional part of a calendar year at the beginning, or preceding the end, of
the Lease Term. If the termination of this Lease occurs before the tax rate is
fixed for the particular year, the proration shall be upon the basis of the tax
rate for the preceding year applied to the latest assessed valuation, and,
notwithstanding the termination of this Lease, any difference in the actual real
estate taxes for such year shall be adjusted between the parties upon receipt of
written evidence of the payment thereof.
(ii) In the event the real estate taxes levied against the Property for
any calendar year during the Lease Term are increased as a result of any
alterations, additions or improvements made by Tenant or by Landlord at the
request of Tenant, Tenant shall pay to Landlord the amount of such increase
within fifteen (15) days after Landlord's billing therefor. Landlord shall
obtain from the tax assessor or assessors a written statement of the total
amount of such increase.
(iii) Tenant shall pay all taxes charged against trade fixtures,
furnishings, equipment or any other personal property belonging to Tenant.
Tenant shall try to have its personal property taxed separately from the
Property, but if any of Tenant's personal property is taxed with the Property,
Tenant shall pay the taxes for the personal property within fifteen (15) days
after Tenant receives a written statement for such personal property taxes.
10. Compliance With Laws. Tenant shall comply with all laws, ordinances,
orders, rules and regulations of all governmental bodies (federal, state,
municipal and other agencies or bodies having any jurisdiction) pertaining to
the use, condition, or occupancy of the Premises. Tenant will not occupy or use,
or permit any portion of the Premises to be occupied or used, for any business
or purpose which is illegal or disreputable in any manner, or extra hazardous on
account of fire, or permit anything to be done which will in any way increase
the rate of fire insurance on the Building or its contents, and in the event
that there shall be any increase in the rate of the insurance on the Building or
its contents created by Tenant's acts or the conduct of its business therein,
Tenant agrees to pay such increase.
-3-
11. Alterations and Improvements. Tenant shall make no alterations,
changes or improvements to the Premises without the prior written consent of
Landlord, not to be unreasonably withheld or delayed, and without first
submitting to Landlord plans and specifications for such work. All work done by
Tenant shall be performed in a good and workmanlike manner, in compliance with
all applicable laws and at such times and in such manner as not to cause
interference with any work of Landlord or with other tenants in the Building.
Any alterations, additions, or improvements (whether temporary or permanent in
character) made in or upon the Premises, either by Landlord or Tenant (including
but not be limited to, wall covering, carpeting or other floor covering,
paneling, built-in trac moveable file systems, nurses call systems, built-in
book shelves and built-in cabinet work), shall be deemed a part of the property
of Landlord and shall be surrendered with the Premises at termination of this
Lease and shall remain on the Premises without compensation to Tenant. All other
furniture, movable trade fixtures (including but not be limited to, x-ray
equipment, audio booths and laboratory equipment) and equipment installed by
Tenant may (and shall at Landlord's option) be removed by Tenant at the
termination of this Lease. Landlord reserves the right to prescribe that all
improvements by Tenant shall be the same as or shall conform with Building
standard items, materials and types of construction. All alterations, physical
additions or improvements must be constructed by a contractor and workmen
approved by Landlord, which approval shall not be unreasonably withheld or
delayed. All furniture, movable trade and equipment installed by Tenant not
removed from the Premises within fifteen (15) days of the termination of the
Lease shall be conclusively presumed to have been abandoned by Tenant and
Landlord may, at its option, take over the possession of such property and
either (a) declare same to be property of Landlord by written notice thereof to
Tenant or (b) at the sole risk, cost, and expense of Tenant, remove the same or
any part thereof in any manner that Landlord shall choose and dispose of or
store the same without incurring liability to Tenant or to any other person.
*
13. Assignment and Subletting. Tenant shall not sublet the Premises in
whole or in part, nor assign or transfer this Lease or any interest herein in
any manner whatsoever, directly or indirectly, voluntarily or by operation of
law without Landlord's prior written consent, which consent shall not be
unreasonably withheld or delayed.
14. Indemnification. Landlord shall not be liable to Tenant or to Tenant's
employees, agents, subtenants, guests or invitees, or to any other person
whomsoever, for any injury to persons or damage to the property on or about the
Premises or any other part of the Building or Land from any cause, including,
any injury or damages caused by or arising out of the negligence or misconduct
of any person entering upon the Land, the Premises or the Building. Tenant shall
indemnify and hold Landlord harmless from and against any and all claims,
demands, losses, fines, assessments, penalties, damages to persons (including
damages for personal injury and death), damages to property, causes of action
and costs (including, without limitation, costs of reasonable attorneys' fees)
caused by or arising out of (i) the negligence or misconduct of Tenant or its
employees, agents, subtenants, guests or invitees, or any other person entering
the Premises or Building under the express or implied invitation of Tenant; (ii)
the use or occupancy of the Premises by Tenant and the conduct of its business
therein; or (iii) any breach or default by Tenant in the performance of its
obligations hereunder. Tenant's obligations hereunder shall survive the
termination of this Lease. Tenant shall have no obligation to indemnify Landlord
for Landlord's negligence, willful misconduct or breach of this Lease.
-4-
15. Insurance. Tenant shall at all times during the term of this Lease, at
its own expense, keep in full force and effect (a) all risk insurance insuring
all property of Tenant located in the Premises at its full replacement value,
(b) commercial general liability insurance covering personal injury, including
death, and contractual liability, and broad form property damage with combined
single limits of not less than $1,000,000 to one or more than one person as the
result of any one accident or occurrence, and (C) workmen's compensation and
employer's liability insurance in form and amount as required by law. Landlord
shall be named an additional insured on all such policies. The policies or duly
executed certificates for the same, together with satisfactory evidence of the
payment of the premiums therefor, shall be delivered to Landlord prior to
Tenant's occupancy of the Premises and upon renewals of such policies not less
than fifteen (15) days prior to the expiration of the term of such coverage. All
such policies and certificates shall be in form and issued by companies
reasonably satisfactory to Landlord.
(i) During the Lease Term, Landlord shall maintain policies of insurance
covering loss of or damage to the Property in such amount or percentage of
replacement value as Landlord may determine, in its sole discretion. Such
policies shall provide protection against all perils included within
classification of fire and extended coverage and any other perils which Landlord
deems necessary. Landlord may obtain insurance coverage for building
improvements installed by Tenant in or on the Leased Space. Tenant shall, at
Tenant's expense, maintain such primary or additional insurance on its fixtures,
equipment and building improvements as Tenant deems necessary to protect its
interest and its obligations hereunder. Tenant shall not do or permit to be done
anything which invalidates any such insurance policies. Any casualty insurance
which may be carried by Landlord or Tenant shall be for the sole benefit of the
party carrying such insurance and under its sole control.
(ii) Tenant shall not permit any operation or activity to be conducted or
storage or use of any volatile or any other materials on the Property that would
cause suspension or cancellation of any fire and extended coverage insurance
policy carried by Landlord, or increase the premiums therefor, without the prior
written consent of Landlord. If Tenant's use and occupancy of the Leased Space
causes an increase in the premiums for any fire and extended coverage insurance
policy carried by Landlord on the day before Tenant shall have first gone into
possession of the Leased Space under this Lease, Tenant shall pay the amount of
such increase to Landlord within fifteen (15) days after billing and
presentation of written evidence of the increase by Landlord.
(iii) Tenant shall pay Landlord, as Additional Rent, Tenant's Share of the
excess, if any, of the costs of insurance maintained by Landlord pursuant to
Section 14(i) for any calendar year during the Lease Term over the costs for
such insurance for the calendar year in which the Commencement Date occurs; if
the Commencement Date is not the first day of a calendar year, the insurance
costs for the first calendar year of the Lease Term shall be annualized. Such
Additional Rent shall be due and payable as provided in Section 6.
16. Mutual Waivers of Recovery. Landlord, Tenant and all parties claiming
under them each mutually release and discharge each other from all claims and
liabilities arising from or caused by fire or other casualty or hazard which is
covered or could be covered by fire and extended coverage or all-risk property
insurance in respect of the Building, the Premises and the personal property
situated therein, or in connection with activities conducted in the Premises or
in the Building, no matter how caused, including negligence, and each waives any
right of recovery which might otherwise exist on account thereof; provided, the
provisions of this paragraph shall not prevent any action by Landlord against
Tenant or by Tenant against Landlord for the amount of any deductible.
17. Hazardous Materials. Tenant shall not permit within the Premises, or
cause within the Building or Land, the storage, use, discharge, escape, disposal
or release of any biologically
-5-
or chemically active or other hazardous substances or materials (collectively
"Hazardous Substances") in any manner not permitted by law or by the highest
standards prevailing in the industry for the storage and use of Hazardous
Substances, nor allow to be brought into the Premises any such Hazardous
Substances except for use in the ordinary course of Tenant's business, and then
only after written notice is given to Landlord of the identity of such Hazardous
Substances. Without limitation, Hazardous Substances shall include those
substances defined as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or other similar classifications described in the
Comprehensive Environmental Response Compensation and Liability Act of 1960, as
amended, 42 U.S.C. ss. 9601 et seq., the Resource Conservation and Recovery Act,
as amended, 42 U.S.C. ss. 6901 et seq., and any other applicable federal, state
or local laws and regulations. Tenant shall indemnify and hold Landlord harmless
from any and all claims, demands, losses, fines, assessments, penalties and
damages arising from any discharge or release of any Hazardous Substances on or
about the Premises during the period Tenant is in possession of the Premises or
arising out of Tenant's use or occupancy of the Premises or breach of the terms
of this paragraph. The covenants contained in this paragraph shall survive the
expiration or earlier termination of the Lease.
18. Rules and Regulations. Tenant covenants and agrees that Tenant will
comply fully with all of the rules and regulations of the Building, a copy of
which are attached hereto as Exhibit "D" and made a part hereof for all
purposes. Landlord shall at all times have the right to change or amend such
rules and regulations or to make such other rules and regulations as may be
deemed advisable by Landlord for the safety, care and cleanliness of the
Building and for preservation of good order therein, all of which changes and
amendments will be sent by Landlord to Tenant in writing and thereafter carried
out and observed by Tenant. Tenant shall be responsible for the compliance with
the rules and regulations by Tenant's agents, employees, guests, visitors and
invitees.
19. Acceptance of Premises. Tenant accepts the Premises as suitable for
the purposes for which same are leased, and accepts the Building and each and
every appurtenance thereof and waives visible defects therein.
20. Entry and Inspection. Tenant will permit Landlord and its agents and
representatives to enter the Premises, at all reasonable hours and with 24 hours
prior notice (or at any time in the event of an emergency), to inspect the
Premises or to clean or make repairs, alterations, or additions as Landlord may
deem necessary or desirable to the Premises or to other portions of the Building
or to show the Premises to prospective purchasers, tenants or lenders. Tenant
shall not be entitled to any abatement or reduction of rent by reason of such
entry.
21. Tenant's Risk. All personal property of Tenant, its employees and
invitees shall remain in the Premises at the sole risk of the owners thereof,
and Landlord shall not be liable for burglary, theft, damage or loss thereto.
Landlord shall not be liable for any losses to Tenant, its employees and
invitees due to fire, windstorm, hail, water, explosion, aircraft or other means
of locomotion, leaking gas, other physical causes. Tenant shall maintain all
equipment and appliances installed by Tenant in the Premises so that the same
will not cause damage to the Building or other tenants therein.
22. Damage or Destruction. If the Premises or other improvements situated
on the Property should be in part or in whole damaged or destroyed by fire,
tornado or other casualty, Tenant shall immediately give written notice thereof
to Landlord. If the Premises or other improvements situated on the Property
should be damaged by fire, tornado or other casualty but to such an extent that
rebuilding or repairs can reasonably be completed within one hundred eighty
(180) days from the date Tenant delivers written notification to Landlord of the
happening of the damage, this Lease shall not terminate, but Landlord shall, at
its sole cost and expense, proceed
-6-
forthwith and use reasonable diligence to rebuild or repair such Premises and
other improvements on the Property to substantially the condition in which they
existed prior to such damage; provided, however, if the casualty occurs during
the final six (6) months of the Lease Term, Landlord shall not be required to
rebuild or repair such damage unless Tenant shall exercise its renewal option
within fifteen (15) days after the date of receipt by Tenant of the notification
of the occurrence of the damage. If Tenant does not elect to exercise its
renewal option or if there is no renewal option contained herein or previously
unexercised at such time, this Lease shall terminate at the option of Landlord
and rent shall be abated for the unexpired portion of the Lease, effective from
the date of actual receipt by Landlord of the written notification of the
damage. If the Premises and other improvements are to be rebuilt or repaired and
are untenable in whole or in part following such damage, the rent payable
hereunder during the period in which they are untenable shall be abated with
respect to that portion of the Premises rendered untenable during such period.
If the Premises or other improvements situated on the Property should be
substantially or totally destroyed by fire, tornado or other casualty, or so
damaged that rebuilding or repairs cannot reasonably be completed within one
hundred eighty (180) days from the date Tenant delivers written notification to
Landlord of the happening of the damage, this Lease shall terminate at the
option either of the Landlord or Tenant and rent shall be abated for the
unexpired portion of this Lease, effective from the date of receipt by Landlord
of such written notification. If this Lease is not terminated, the Premises and
the improvements shall be rebuilt or repaired and rent abated to the extent
provided above.
23. Condemnation. If, during the term of this Lease or any renewal
thereof, all or a substantial part of the Premises should be taken for any
public or quasi-public use under any governmental law, ordinance or regulation
or by right of eminent domain, or should be sold to the condemning authority
under threat of condemnation, this Lease shall terminate and the rent shall be
abated during the unexpired portion of this Lease, effective from the date of
taking of the Premises by the condemning authority. If less than a substantial
part of the Premises is taken for public or quasi-public use under any
governmental law, ordinance or regulation, or by right of eminent domain, or is
sold to the condemning authority under threat of condemnation, Landlord, at its
option, may by written notice terminate this Lease or shall forthwith at its
sole expense restore and reconstruct the Premises and improvements therein, and
in the event Landlord fails to complete the restoration and construction within
one hundred eighty (180) days of its notice to Tenant advising of its intention
to restore and reconstruct the Premises, Tenant shall have the right to
terminate this Lease. The rent payable hereunder during the unexpired portion of
this Lease shall be adjusted proportionately taking into account such portion of
the Premises taken by the condemning authority. If any condemnation occurs,
Landlord shall receive the entire award or other compensation for the Land, and
all or any portion of the Building, and other improvements taken, and Tenant may
separately pursue a claim against the condemnor for the value of Tenant's
personal property which Tenant is entitled to remove under the Lease, moving
costs, loss of business, and other claims it may have.
24. Mechanic's Liens. Tenant shall not permit any mechanic's liens to be
filed against the Premises or the Building for any work performed, materials
furnished, or obligation incurred by or at the request of Tenant. If such a lien
is filed, then Tenant shall, within ten (10) days after Landlord has delivered
notice of the fling to Tenant, either pay the amount of the lien or diligently
contest such lien and deliver to Landlord a bond or other security reasonably
satisfactory to Landlord. If Tenant fails to timely take either such action,
then Landlord may pay the lien claim without inquiry as to the validity thereof,
and any amounts so paid, including expenses and interest, shall be paid by
Tenant to Landlord within ten (10) days after Landlord has delivered to Tenant
an invoice therefor.
25. Holding Over. No holding over by Tenant after the term of this Lease,
either with or without consent and acquiescence of Landlord, shall operate to
extend this Lease for a period
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longer than one month and any holding over with the consent of Landlord in
writing shall constitute a lease from month to month at a monthly rental equal
to 125% of the then applicable monthly rent and other sums provided herein, and
subject to ail of the other terms, provisions, covenants and agreements on the
part of Tenant hereunder.
26. Default and Remedies. (a) The following events shall be deemed to be
defaults or events of default by Tenant under this Lease:
(i) Tenant shall fail to pay when due any installment of rent or
any other sum of money payable by Tenant to Landlord and such
failure shall continue for a period of ten (10) days following
written notice thereof from Landlord to Tenant, provided,
Landlord shall not be required to deliver to Tenant more than
two (2) such notices in any calendar year.
(ii) Tenant shall fail to comply with any term, provision, or
covenant of this Lease, other than the payment of rent, and
shall not cure such failure within thirty (30) days after
written notice from Landlord to Tenant of the occurrence of
such failure; however, if such failure cannot be cured within
such 30-day period and Tenant commences to cure such failure
within such 30-day period and thereafter diligently pursues
such cure to completion, then such failure shall not be a
default or an event of default unless it is not fully cured
within an additional sixty (60) days following the expiration
of the 30-day period.
(iii) Any petition shall be filed by or against Tenant under the
United States Bankruptcy Code, as amended, or under any
similar law or statute of the United States or any state
thereof, and such petition shall not be dismissed within sixty
(60) days of filing, or Tenant shall be adjudged bankrupt or
insolvent in any proceedings filed thereunder.
(iv) A receiver or trustee shall be appointed for all or
substantially all of the assets of Tenant, and such
appointment shall not be vacated or otherwise terminated, and
the action in which such appointment was ordered dismissed,
within sixty (60) days of filing.
(v) Tenant shall make a general assignment for the benefit of
creditors.
(vi) Tenant shall fail to take possession of or shall desert,
abandon or vacate the Premises.
(b) If any default or event of default shall have occurred, Landlord shall
have the right at its election, then or any time thereafter while such default
or event of default shall continue, to pursue any one or more of the following
remedies:
(i) Terminate this Lease by giving notice thereof to Tenant, in
which event Tenant shall immediately surrender the Premises to
Landlord and if Tenant fails to do so, Landlord may without
prejudice to any other remedy which it may have for possession
or arrearages in rent, enter upon and take possession of the
Premises and expel or remove Tenant and any other person who
may be occupying said Premises, or any part thereof, without
being liable for prosecution or any claim of damages therefor
and Tenant hereby agrees to pay to Landlord on demand the
amount of all loss and damage which Landlord may suffer by
reason of such termination, whether through inability to relet
the Premises on satisfactory terms or otherwise, specifically
including but not
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limited to (1) all reasonable expenses necessary to relet the
Premises which shall include the cost of renovating,
repairing, and altering the Premises for a new tenant or
tenants, and all leasing costs associated therewith; and (2)
any increase in insurance premiums caused by the vacancy of
the Premises.
(ii) Enter upon and take possession of the Premises and expel or
remove Tenant or any other person who may be occupying said
Premises, or any part thereof, without terminating this Lease.
Landlord may (but shall be under no obligation to) relet the
Premises or any part thereof for the account of Tenant, in the
name of Tenant or Landlord or otherwise, without notice to
Tenant for such term or terms and on such conditions and for
such uses as Landlord in its absolute discretion may determine
and Landlord may collect and receive any rents payable by
reason of such reletting; and Tenant agrees to pay Landlord on
demand ail reasonable expenses necessary to relet the Premises
which shall include the cost of renovating, repairing, and
altering the Premises for a new tenant or tenants and all
leasing costs associated therewith and Tenant further agrees
to pay Landlord on demand any deficiency that may arise by
reason of such reletting. Landlord shall not be responsible or
liable for any failure to relet the Premises or any part
thereof or for any failure to collect any rent due upon any
such reletting. No such re-entry or taking of possession of
the Premises by Landlord shall be construed as an election on
Landlord's part to terminate this Lease unless a written
notice of such termination is given to Tenant pursuant to
subparagraph (b)(1) above.
(iii) No repossession or re-entering on the Premises or any part
thereof pursuant to subparagraphs (b)(i) and (ii) above or
otherwise and no reletting of the Premises or any part thereof
pursuant to subparagraph (b)(ii) shall relieve Tenant of its
liabilities and obligations hereunder, all of which shall
survive such repossession or re-entering, except if the
Premises are re-let, Tenant shall only be responsible for the
difference in rent if the Premises are re-let at a lower
rental rate, and Tenant shall have no indemnity obligations
related to the use of the Premises by the new tenant.
(iv) In the event Landlord elects to re-enter or take possession of
the Premises after Tenant's default, with or without
terminating this Lease, Landlord may change locks or alter
security devices and lock out, expel or remove Tenant and any
other person who may be occupying all or any part of the
Premises without being liable for any claim for damages.
(v) Nothing contained in this Lease shall be construed as imposing
any enforceable duty upon Landlord to relet the Premises and
Landlord shall have no duty to mitigate or minimize Landlord's
damages by virtue of Tenant's default.
(vi) No right or remedy herein conferred upon Landlord is intended
to be exclusive of any other right or remedy, and each and
every right and remedy shall be cumulative and in addition to
any other right or remedy given hereunder or now or hereafter
existing at law or in equity or by statute.
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27 Transfer of Landlord's Interest. Landlord may transfer, in whole or in
part, the Building and any of its rights under this Lease. If Landlord transfers
or assigns its rights under this Lease, then Landlord shall be released from any
further obligations arising from and after the date of such transfer.
28. Waiver. The failure of Landlord to insist at any time upon the strict
performance of any covenant or agreement or to exercise any right, power, or
remedy contained in this Lease shall not be construed as a waiver or a
relinquishment thereof for the future. The waiver of any violation of any term,
covenant, agreement, or condition contained in this Lease shall not prevent a
subsequent act, which would have originally constituted a violation from having
all the force and effect of an original violation. A receipt by Landlord of any
rent with knowledge of the breach of any covenant or agreement contained in this
Lease shall not be deemed a waiver of such breach, and no waiver by Landlord of
any provision of this Lease shall be deemed to have been made unless expressed
in writing and signed by Landlord.
29. Subordination of Lease. This Lease shall be subordinate to any and all
deeds of trust and ground leases now or hereafter encumbering the Building, and
all refinancings, renewals, modifications, extensions or consolidations thereof.
Tenant agrees to attorn to any mortgagee or trustee under a deed of trust or
purchaser at a foreclosure sale or trustee's sale as Landlord under this Lease
provided such mortgagee, trustee or purchaser delivers to Tenant a
nondisturbance agreement whereby it agrees to honor the Lease (including all
renewal options) so long as Tenant is not in default under the Lease. Tenant
covenants and agrees that Tenant shall, within five (b) days after Landlord's
request, execute and deliver to Landlord whatever instruments may be reasonably
required to acknowledge and further evidence the subordination of this Lease
and/or the attornment by Tenant to such mortgagee, trustee or purchaser, if the
nondisturbance agreement described above is provided. Any holder of a deed of
trust covering all or any part of the Building may at any time elect to have
this Lease have priority over its deed of trust by executing an instrument of
subordination or placing a clause of such subordination in any pleadings or in
its deed of trust and recording the same.
30. Possession. Landlord shall use reasonable diligence to complete the
Premises by the Commencement Date; however, if for any reason the Premises shall
not be ready for occupancy by Tenant at such time, this Lease shall not be
affected thereby except that the Commencement Date of this Lease shall be
deferred to and begin upon the date that the Premises shall be ready for
occupancy and this Lease shall run for the full term thereafter, and Tenant
shall have no claim against Landlord by reason thereof.
*
-10-
*
33. Renewal Option. So long as Tenant is not then in default under this
Lease, then Tenant shall have the option to renew this Lease for six additional
five-year terms, by delivering Landlord written notice of its election to
exercise such option not later than ninety (90) days prior to the expiration
date of this Lease or applicable option term. If such option is exercised,
Tenant shall have the right to renew this Lease for a second three-year renewal
term, by delivering Landlord written notice not later than ninety (90) days
prior to the expiration of the first renewal term. Any renewal of this Lease
shall be on the terms and conditions set forth in this Lease and at a monthly
rental equal to the prevailing rate then being charged by Landlord for
comparable space in the Building to tenants that are not affiliated with
Landlord, taking into account the quality, size, utility and location of the
Premises, and subject to increase or adjustment as provided in Section 6 above,
provided Landlord shall not be obligated for any allowances or improvements to
the Premises and Tenant shall have no further renewal rights hereunder.
34. Sales Tax. In the event that any sales, use or revenue tax is levied
or imposed by any governmental authority upon the rent paid by Tenant herein or
for the use or occupancy of the Premises try Tenant, then Tenant agrees to pay
such tax monthly to the Landlord, as an additional consideration and rent for
the use and occupancy of the Premises, unless such tax results from the actions
of Landlord.
35. Independence and Purpose of Relationship. Tenant and Landlord each
represent and warrant to the other that the transactions contemplated by this
Lease are lease transactions only and that the only relationship between the
parties hereto is that of landlord and tenant. Notwithstanding the foregoing,
Tenant and Landlord recognize that the Tenant may have patients who require
services offered by the Landlord or its affiliates. Landlord and Tenant hereby
represent and warrant that nothing in this Lease is intended to require or
involve in any manner whatsoever the referral of patients to the Landlord or its
affiliates and no payments made under any terms or conditions of this Lease are
in exchange for or conditioned upon any referral of patients. Any referral of
patients for medical services by Landlord or its affiliates or Tenant shall be
based solely on the medical needs and wishes of such patients, and nothing in
this Lease prohibits Tenant or Landlord from referring patients to other
healthcare providers or physicians. It is expressly the intent of Landlord and
Tenant to comply with all federal and state laws limiting, prohibiting, or
otherwise pertaining to referrals or remuneration for the furnishing of health
services, including, but not limited to, 42 U.S.C. ss. 1320a-7(b), et seq., 42
U.S.C. ss. 1395nn, et seq., and 161.091 of the Texas Health and Safety Code.
36. Miscellaneous.
(e) Force Mejeure. Other than for Tenant's monetary obligations under this
Lease, whenever a period of time is herein prescribed for action to be taken by
either party hereto, such
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party shall not be liable or responsible for, and there shall be excluded from
the computation for any such period of time, any delays due to strikes, riots,
acts of God, shortages of labor or materials, war or governmental laws beyond
the control of such party.
(f) Brokers. Landlord and Tenant each warrant to the other that it has not
dealt with any broker or agent in connection with the negotiation or execution
of this Lease. Tenant and Landlord shall each indemnify the other against all
costs, expenses, attorneys' fees, and other liability for commissions or other
compensation claimed by any broker or agent claiming the same by, through, or
under the indemnifying party.
(g) Notices. Notices hereunder must be hand-delivered or sent by certified
mail, return receipt requested, postage prepaid, addressed, if to Landlord, at
the address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attn:
▇▇▇▇ ▇▇▇▇▇▇▇, and if to Tenant, at the address of the Premises, or to such other
addresses as may be specified by written notice delivered to the other party.
Notice shall be deemed given upon tender of delivery (in the case of a
hand-delivered notice) or two (2) days following mailing of same (in the case of
certified or registered mail), provided that no notice of either party's change
of address shall be effective until ten (10) days after the notice of change is
given.
(h) Estoppel Certificates. From time to time, Tenant shall furnish to any
party designated by Landlord, within ten (10) days after Landlord has made a
request therefor, a certificate signed by Tenant confirming and containing such
factual certifications and representations as to this Lease as Landlord may
reasonably request.
*
(j) Severability. If any clause or provision of this Lease is illegal,
invalid, or unenforceable under present or future laws, then the remainder of
this Lease shall not be affected thereby and in lieu of such clause or
provision, there shall be added as a part of this Lease a clause or provision as
similar in terms to such illegal, invalid, or unenforceable clause or provision
as may be possible and be legal, valid, and enforceable.
(k) Late Payment Charge and Interest Payable. Landlord may impose a late
payment charge equal to five percent (5%) of any amount due under this Lease if
not paid within five (5) days from the date required to be paid hereunder. In
addition, any payment due under this Lease not paid within ten (10) days from
the date herein specified to be paid shall bear interest from the date such
payment is due to the date of actual payment at the rate of eighteen percent
(18%) per annum or the highest lawful rate of interest permitted by Texas or
federal law, whichever rate of interest is lower.
(l) Personal Liability. The liability of Landlord to Tenant for any
default by Landlord under the terms of this Lease shall be limited to the
interest of Landlord in the Building and Landlord shall not be personally liable
for any deficiency. This clause shall not be deemed to limit or deny any
remedies which Tenant may have in the event of default by Landlord hereunder
which do not involve the personal liability of Landlord.
(m) Building Name. Landlord shall have the exclusive right at all times
during the term of this Lease to change, modify, add to or otherwise alter the
name of the Building, and Landlord shall not be liable for claims or damages of
any kind which may be attributed thereto or result therefrom.
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(n) Time is of the Essence. Time is of the essence in the performance of
all of the covenants, conditions and agreements in this Lease.
(o) Attorneys' Fees, Costs and Expenses. If on account of any breach or
default by any party hereto in its obligations to any party hereto, it shall
become necessary for the non-defaulting party to employ an attorney to enforce
or defend any of its rights or remedies hereunder, the defaulting party agrees
to pay the non-defaulting party its reasonable attorneys' fees, whether or not
suit is instituted in connection therewith, together with all court costs, if
any, incurred in connection therewith.
(p) Entire Agreement and Amendments. This Lease is the only agreement
between the parties hereto and their representatives and agents with respect to
the Premises. There are no representations or warranties between the parties
with respect to the Premises, the Building, or this Lease, other than the
representations and agreements contained in this document. No agreement shall be
effective to change, modify or terminate this Lease in whole or in part unless
such agreement is in writing and duly executed by the parties.
(q) Binding Effect. The terms and conditions contained in this Lease shall
inure to the benefit of and be binding upon the parties hereto, and their
respective successors, legal representatives and assigns, except as otherwise
herein expressly provided.
(r) Gender. Words of any gender used in this Lease shall be held and
construed to include any other gender and words in the singular number shall be
held to include the plural, unless the context requires otherwise.
(s) Exhibits. The following exhibits and attachments are hereby
incorporated in this Lease by reference.
Exhibit "A" - Floor Plan of Premises
Exhibit "B" - Rules and Regulations
Exhibit "C" - Parking Services
(t) Captions. The captions contained in this Lease are for convenience of
reference only, and do not alter the terms and conditions of this Lease.
-13-
EXECUTED to be effective as of the date first hereinabove written.
LANDLORD:
BAYLOR HEALTH CARE SYSTEM
By. /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: Managing Director
Date: 6/1/99
TENANT:
DALLAS SURGICAL PARTNERS, LP
By: ▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title:
------------------------------
Date:
-------------------------------
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EXHIBIT "A"
EXHIBIT "B"
RULES AND REGULATIONS
The following rules and regulations shall apply to the Premises, the Land,
the Building, any parking garage associated therewith, and the appurtenances
thereto.
1. Sidewalks, doorways, vestibules, halls, stairways and similar areas
shall not be obstructed nor shall refuse, furniture, boxes or other items be
placed therein by Tenant or its officers, agents, servants, and employees, or
used for any purpose other than ingress and egress to and from the Premises, or
for going from one part of the Building to another part of the Building.
2. Canvassing, soliciting and peddling in the Building are prohibited.
3. Underwriters Laboratories approved "plug-in" electrical appliances may
be installed without Landlord approval if done under safe conditions and without
overloading circuits. No space heaters shall be permitted in the Premises. No
wiring may be done and no heavy electrical equipment may be installed except
with Landlord approval and by persons approved by Landlord.
4. Plumbing, fixtures and appliances shall be used only for purposes for
which constructed, and no unsuitable material shall be placed therein. Any
stoppage or damage resulting to any such fixtures or appliances from misuse on
the part of Tenant or Tenant's agents, employees, or invitees shall be paid by
Tenant.
5. Tenant shall not do or cause anything to be done in or about the
Building, or bring or keep anything therein, that will in any way increase the
rate of fire or other insurance on the Building, or on property kept therein or
otherwise increase the possibility of fire or other casualty.
6. Landlord shall have the right to prescribe the weight and position of
heavy equipment or objects which may cause excessive stress any portion of the
floor. All damage done to the Building by the improper placing of such heavy
items will be repaired at the sole expense of the responsible tenant.
7. Tenant shall notify the Building manager when its furniture or
equipment is to be taken in or out of the Building, and the moving shall be done
after written permission is obtained from Landlord on such conditions as
Landlord shall reasonably prescribe.
8. All deliveries must be made via the service entrance and service
elevator, during normal working hours. Landlord's written approval must be
obtained for any delivery after normal working hours. Tenant shall make advance
arrangements with Landlord to schedule move-ins or move-outs and to reserve
service elevator access. Move-in and move-out must be done before 8:00 a.m. or
after 5:00 p.m. or on weekends.
9. Corridor doors, when not in use, shall be kept closed.
10. Tenant shall cooperate with Landlord's employees in keeping the
Premises neat and clean.
11. Tenant shall not cause any improper noises in the Building, or allow
any unpleasant odors to emanate from the Premises, or otherwise interfere,
injure or annoy in any way other tenants or such tenant's guests or invitees.
12. No animals (other than for handicapped persons) or birds shall be
brought into or kept in or about the Building.
13. When conditions are such that Tenant must dispose of crates, boxes, or
similar materials, it will be the responsibility of Tenant to dispose of same
prior to 8:00 a.m., or after 5:00 p.m., unless Tenant makes other arrangements
for such disposal with Landlord.
14. No machinery of any kind, other than ordinary office machines such as
typewriters, calculators, desktop computers, facsimile machines, photo copies,
x-ray and laboratory equipment, shall be operated in, on or about the Premises
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld, nor shall a Tenant use or keep in the Building any
inflammable or explosive fluid or substance or any illuminating materials,
except candles. No space heaters or fans shall be operated in the Building.
15. No bicycles, motorcycles or similar vehicles will be allowed in the
Building.
16. Landlord has the right to evacuate the Building in the event of an
emergency or catastrophe.
17. No food or beverages shall be distributed from Tenant's office without
the prior written approval of the Landlord.
18. If Landlord provides janitorial service to the Premises, the janitor
or janitors, or other cleaning persons employed by the Landlord will be provided
with pass keys to offices in the Building. Such janitor or janitors, or other
cleaning persons, and no one else shall be looked to by Tenant to clean and care
for the Premises, except by written permission of Landlord or its authorized
agent.
19. No sign or advertisement shall be painted on or attached to the
Building without the written consent of Landlord, and all lettering or other
characters thereon shall be of the style adopted by Landlord, and at the expense
of Tenant, and shall be made so as to be acceptable to Landlord. All pictures,
diplomas, decorative items, or other such objects shall be installed, mounted,
or hung only by the superintendent of the Building, or others as approved by
Landlord, and only with consent of Landlord. No nails, screws, hooks, or
stickers shall be placed in or on the woodwork, partitions, or walls without the
written consent of the Landlord.
*
21. Landlord shall be authorized to take all such reasonable measures as
Landlord may deem advisable for the security of the Building and its occupants,
however, Landlord shall have no liability to Tenant or its employees, agents,
invitees or licensees for losses due to theft or burglary, or for damage done by
unauthorized persons in or about the Building or Premises. For safety of persons
and protection of tenant property, Landlord reserves the right to close and keep
locked all entrance and exit doors of the Building for any interval of time
deemed appropriate. All persons entering or leaving the Building at times when
it is so locked may be required to sign a Building register and may be refused
admission except by satisfactory identification and/or other evidence of their
right of access to the Building. Landlord assumes no responsibility and shall
not be liable for any damage resulting from any error in regard to any such pass
or identification, or from the admission of any unauthorized person to the
Building.
22. Tenant will receive a reasonable number of keys for the Premises at
the time of its occupancy of the Premises. Thereafter, Tenant may obtain
additional or replacement keys or have locks changed at a reasonable charge;
provided, Tenant shall not change or allow any locks to be changed in the
Premises without
2
Landlord's consent. No duplication or copy of such keys shall be made by any
person other than Landlord or its agents. All such keys shall at all times be
the property of Landlord and shall be surrendered by Tenant upon request.
Landlord may at any time change, alter, or re-key any door lock in the Premises
without prior consent of Tenant.
23. Tenant must register all physician and employee vehicles with Parking
Services. Tenant physician parking is included in the rental rate. The rental
rate does not include Tenant employee parking. Each physician occupying the
premises shall receive a parking card to park in an assigned lot on the Baylor
campus. Tenant shall be charged for employee parking cards at a rate determined
by Parking Services (see Exhibit "C").
Tenant must notify Parking Services of any changes in cardholders
and is responsible for any lost or stolen cards. Any car illegally parked in a
garage, lot or patient/visitor space is subject to a citation and/or towing by
Landlord at the expense of the car owner. Landlord is not responsible for any
theft or damage to vehicle.
24. Tenant will not locate furnishings or cabinets adjacent to mechanical
or electrical access panels or over air conditioning outlets so as to prevent
operating personnel from servicing such units as routine or emergency access may
require. Cost of moving such furnishings for Landlord's access will be paid by
Tenant. The lighting and air conditioning equipment of the Building will remain
the exclusive charge of the Building designated personnel.
25. Vending machines or dispensing machines of any kind will not be placed
in the Premises by Tenant.
26. Prior written approval, which shall be at Landlord's sole discretion,
must be obtained for installation of window shades, blinds, drapes, or any other
window treatment of any kind whatsoever. Landlord will control all internal
lighting that may be visible from the exterior of the Building and shall have
the right to change any unapproved lighting, without notice to Tenant, at
Tenant's expense.
27. Tenant will refer all contractors, contractor's representatives, and
installation technicians rendering any service on or to the Premises for Tenant
to Landlord, for Landlord's approval and supervision for performance of any
contractual service. This provision shall apply to all work performed in the
Building, including installation of telephones, telegraph equipment, electrical
devices, and attachments and installations of any nature affecting floors,
walls, woodwork, trim, windows, ceiling, equipment, or any other physical
portion of the Building.
28. Landlord reserves the right to amend or rescind any of these rules and
to make such other and further rules and regulations as in its reasonable
judgment shall from time to time be needed for the safety, care and cleanliness
of the Building and for the preservation of good order therein, which rules
shall be binding upon Tenant upon delivery to Tenant of notice thereof in
writing.
3
EXHIBIT "C"
PARKING SERVICES
The charge for a Tenant employee parking card is $16.00 per month.
A lost or stolen parking card may be replaced for $25.00.
These rates will be assessed annually by Parking Services at which time they may
be increased, not to exceed 10% per month each year. Tenant shall be notified
thirty (30) days prior to a new rate being effective.
Rent includes parking for physicians, but not for employees of Tenant.
Physicians will be given a card free of charge allowing them to park in an
assigned lot on the Baylor campus. Tenant shall be charged for employee parking
cards at the general rates determined by Baylor Health Care System Parking
Services.
LEASE AGREEMENT
between
BAYLOR HEALTH CARE SYSTEM,
as Landlord
and
DALLAS SURGICAL PARTNER, LP
as Tenant
Premises:
Suite No. 700, ▇▇▇▇▇▇▇ Building
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
TABLE OF CONTENTS
1. Lease of Premises ................................................. 1
2. Term .............................................................. 1
3. Use ............................................................... 1
4. Services .......................................................... 1
5. Peaceful Enjoyment ................................................ 2
6. Rent .............................................................. 2
7. Security Deposit .................................................. 2
8. Maintenance and Repairs ........................................... 2
9. Compliance with Laws .............................................. 3
10. Alterations and Improvements ...................................... 3
11. Status of Tenant .................................................. 3
12. Assignment and Subletting ......................................... 3
13. Indemnification ................................................... 4
14. Insurance ......................................................... 4
15. Mutual Waivers of Recovery ........................................ 4
16. Hazardous Materials ............................................... 4
17. Rules and Regulations ............................................. 5
18. Acceptance of Premises ............................................ 5
19. Entry and Inspection .............................................. 5
20. Tenant's Risk ..................................................... 5
21. Damage or Destruction ............................................. 5
22. Condemnation ...................................................... 6
23. Mechanic's Liens .................................................. 6
24. Holding Over ...................................................... 6
25. Default and Remedies .............................................. 7
26. Transfer of Landlord's Interest ................................... 8
27. Waiver ............................................................ 8
28. Subordination of Lease ............................................ 9
29. Possession ........................................................ 9
30. Death, Disability or Retirement ................................... 9
31. Relocation ........................................................ 9
32. Renewal Option .................................................... 10
33. Sales Tax ......................................................... 10
34. Independence and Purpose of Relationship .......................... 10
35. Miscellaneous ..................................................... ▇▇-▇▇
▇▇▇▇▇▇▇ "▇" - ▇▇▇▇▇ Plan of Premises
Exhibit "B" - Legal Description of Real Property
Exhibit "C" - Rules and Regulations
Exhibit "D" - Parking Services
LEASE AGREEMENT
THIS LEASE AGREEMENT (the "Lease"), is made and entered into as of the 1st
day of June, 1999, by and between Baylor Health Care System, a Texas Corporation
domiciled in Dallas, Dallas County (hereinafter called "Landlord"), and Dallas
Surgical Partners, LP (hereinafter called "Tenant").
W I T N E S S E T H:
1. Lease of Premises. For and in consideration of the covenants and
agreements hereinafter set forth, to be paid, kept and performed by Tenant,
Landlord has leased, demised and rented, and by these presents, does hereby
lease, demise and rent to Tenant and Tenant does hereby accept, lease and rent
from Landlord, that certain space, in the ▇▇▇▇▇▇▇ Building (the "Building")
situated at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ in the City of Dallas, Dallas County, Texas, such
space being described as: ▇▇▇▇▇ ▇▇▇ containing approximately 17,355 rentable
square feet, and being delineated on the floor plan attached hereto as Exhibit
"A" attached hereto and made a part hereof (the "Premises'"). The Building is
located on that certain real property described on Exhibit "B" attached hereto
and made a part hereof (the "Land"). For purposes of determining "rentable
square feet" of the Premises, measurements will be from the inside of the
corridor wall to the inside of the exterior wall and from center to center of
partition walls between suites in the Building.
2. Term. The term of this Lease shall commence on the earlier of: (a) the
date of June 1, 1999 or (b) the date the Premises are substantially completed
and Tenant takes possession of the Premises (the "Commencement Date") and shall
continue for ten (10) years ending on May 31, 2003, unless sooner terminated in
accordance with the provisions of this Lease. Tenant shall execute and deliver
to Landlord, within ten (10) days after Landlord's request and following the
Commencement Date, a notice confirming the Commencement Date and the date of
expiration of the term of this Lease.
3. Use. The Premises may be used and occupied by Tenant during the term of
this Lease, for medical and surgical center and administrative offices related
thereto and for no other purpose.
4. Services. Landlord agrees to furnish to the Building water,
electricity, gas, elevator service, janitorial service and air conditioning and
heating as in Landlord's reasonable judgment are customary and necessary for the
comfortable use and occupancy of the Premises on all generally recognized
business days and on nonrecognized business days, provided, Tenant shall be
responsible for any actual costs attributable to Landlord's furnishing services
to Tenant on nonbusiness days. Landlord shall not be liable for the interruption
of any or all of said services incident to making repairs, adjustments or
improvements to the Building or Premises nor shall Landlord be liable for
failure to furnish any of the foregoing services, except as the result of the
gross negligence or willful neglect of Landlord, nor shall such failure or
interruption be construed as an eviction of Tenant except to the extent the
Premises are rendered untenantable) or cause an abatement of rent or in any way
render Landlord liable for damages either to person or property suffered by
Tenant, its employees, licensees or invitees, by reason of any such failure, or
release Tenant from the prompt fulfillment of any of its covenants under this
Lease except as may be otherwise expressly provided herein. Should any equipment
or machinery break down or cease to function properly, Landlord shall use
reasonable diligence to repair the same promptly, but Tenant shall have no claim
for rebate of rent or damages on account of such interruption of service.
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5. Peaceful Enjoyment. Tenant shall peacefully hold and enjoy the
Premises, subject to the other terms hereof, and provided Tenant pays the rent
herein recited and performs all of its covenants and agreements herein
contained.
6. Rent.
(a) Tenant shall pay to Landlord the monthly rent provided for
herein without demand, deduction or offset. During the first year of the term of
this Lease, monthly rent shall be the sum of Twenty eight thousand nine hundred
forty two dollars ($28,942.00), being $20.00 per rentable square foot. During
the second year of the term of the Lease, effective May 1, 2000, monthly rent
shall be the sum of Twenty nine thousand six hundred sixty five dollars
($29,868.00), being $20.60 per rentable square foot. During the third year of
the term of the Lease, effective May 1, 2001, monthly rent shall be the sum of
Thirty thousand three hundred eighty nine dollars ($30,389.00), being $21.00 per
rentable square foot. During the fourth year of the term of the Lease, effective
May 1, 2002, monthly rent shall be the sum of Thirty one thousand one hundred
twelve dollars ($31,112.00), being $21.50 per rentable square foot. During the
fifth year of the term of the Lease, effective May 1, 2003, monthly rent shall
be the sum of Thirty one thousand eight hundred thirty six dollars ($31,836.00),
being $22.00 per rentable square foot. During the sixth year of the term of the
lease, effective May 1, 2004, monthly rent shall be the sum of Thirty two
thousand five hundred fifty nine dollars ($32,559.00), being $22.50 per rentable
square foot. During the seventh year of the term of the lease, effective May 1,
2005, monthly rent shall be the sum of Thirty three thousand two hundred eighty
three dollars ($33,283.00), being $23.00 per rentable square foot. During the
eighth year of the term of the lease, effective May 1, 2006, monthly rent shall
be the sum of Thirty four thousand six dollars ($34,006.00), being $23.50 per
rentable square foot. During the ninth year of the term of the lease, effective
May 1, 200?, monthly rent shall be the sum of Thirty four thousand seven hundred
thirty dollars ($34,730.00), being $24.00 per rentable square foot. During the
tenth year of the term of the lease, effective May 1, 2008, monthly rent shall
be the sum of Thirty five thousand four hundred fifty four dollars ($35,454.00),
being $24.50 per rentable square foot.
(b) All rent and other payments which are due hereunder shall be
made payable to Landlord, at the address for Landlord's notices set forth in
this Lease, or at such other place as may from time to time be designated in
writing by Landlord. Monthly rent shall be paid by Tenant to Landlord in advance
on or before the first day of each calendar month during the term of this Lease.
The first monthly installment of rent shall be payable contemporaneously with
the execution of this Lease, and a like monthly installment of rent shall be due
on the first day of the second full calendar month of the term of this Lease and
continuing thereafter on the first day of each succeeding calendar month during
the term. If the term of this Lease commences on a day other than the first day
of a calendar month or terminates on a day other than the last day of a calendar
month, the rent for the partial month shall be prorated.
(c) All sums payable by Tenant to Landlord under the Lease may for
purposes hereunder be deemed to constitute "rent."
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8. Maintenance and Repairs. Tenant shall keep and maintain the Premises in
good condition and repair. Tenant shall repair or replace, subject to Landlord's
direction and supervision, any damage to the Building caused by Tenant or
Tenant's agents, employees, contractors, or invitees. If Tenant fails to make
such repairs or replacements within fifteen (1) days after the occurrence of
such damage, or longer period if reasonably necessary to complete the repair or
replacement, then Landlord may make such repairs or replacements at Tenant's
cost, in which event the sums paid by Landlord shall be reimbursed by Tenant
within ten (1fl) days after Landlord has delivered to Tenant an invoice
therefor. Tenant shall surrender to Landlord immediate possession of the
Premises and all keys thereto at the expiration of this Lease, in as good
condition as when received, ordinary wear and tear excepted.
9. Compliance with Laws. Tenant shall comply with all laws, ordinances,
orders, rules and regulations of all governmental bodies (federal, state,
municipal and other agencies or bodies having any jurisdiction) pertaining to
the use, condition, or occupancy of the Premises. Tenant will not occupy or use,
or permit any portion of the Premises to be occupied or used, for any business
or purpose which is illegal or disreputable in any manner, or extra hazardous on
account of fire, or permit anything to be done which will in any way increase
the rate of fire insurance on the Building or its contents, and in the event
that there shall be any increase in the rate of the insurance on the Building or
its contents created by Tenant's acts or the conduct of its business therein,
Tenant agrees to pay such increase.
10. Alterations and Improvements. Tenant shall make no alterations,
changes or improvements to the Premises without the prior written consent of
Landlord, not to be unreasonably withheld or delayed, and without first
submitting to Landlord plans and specifications for such work. All work done by
Tenant shall be performed in a good and workmanlike manner, in compliance with
all applicable laws and at such times and in such manner as not to cause
interference with any work of Landlord or with other tenants in the Building.
Any alterations, additions, or improvements (whether temporary or permanent in
character) made in or upon the Premises, either by Landlord or Tenant (including
but not be limited to, wall covering, carpeting or other floor covering,
paneling, built-in trac moveable file systems, nurses call systems, built-in
book shelves and built-in cabinet work), shall be deemed a part of the property
of Landlord and shall be surrendered with the Premises at termination of this
Lease and shall remain on the Premises without compensation to Tenant. All other
furniture, movable trade fixtures (including but not be limited to, x-ray
equipment, audio booths and laboratory equipment) and equipment installed by
Tenant may (and shall at Landlord's option) be removed by Tenant at the
termination of this Lease. Landlord reserves the right to prescribe that all
improvements by Tenant shall be the same as or shall conform with Building
standard items, materials and types of construction. All alterations, physical
additions or improvements must be constructed by a contractor and workmen
approved by Landlord, not to be unreasonably withheld or delayed. All furniture,
movable trade and equipment installed by Tenant not removed from the Premises
within fifteen (15) days of the termination of the Lease shall be conclusively
presumed to have been abandoned by Tenant and Landlord may, at its option, take
over the possession of such property and either (a) declare same to be property
of Landlord by written notice thereof to Tenant or (b) at the sole risk, cost,
and expense of Tenant, remove the same or any part thereof in any manner that
Landlord shall choose and dispose of or store the same without incurring
liability to Tenant or to any other person.
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12. Assignment and Subletting. Tenant shall not sublet the Premises in
whole or in part, nor assign or transfer this Lease or any interest herein in
any manner whatsoever, directly or indirectly, voluntarily or by operation of
law without Landlord's prior written consent, which consent shall not be
unreasonably withheld or delayed.
13. Indemnification. Landlord shall not be liable to Tenant or to Tenant's
employees, agents, subtenants, guests or invitees, or to any other person
whomsoever, for any injury to persons or damage to the property on or about the
Premises or any other part of the Building or land from any cause, including,
any injury or damages caused by or arising out of the negligence or misconduct
of any person entering upon the Land, the Premises or the Building. Tenant shall
indemnify and hold Landlord harmless from and against any and all claims,
demands, losses, fines, assessments, penalties, damages to persons (including
damages for personal injury and death), damages to property, causes of action
and costs (including, without limitation, costs of reasonable attorneys' fees)
caused by or arising out of (i) the negligence or misconduct of Tenant or its
employees, agents, subtenants, guests or invitees, or any other person entering
the Premises or Building under the express or implied invitation of Tenant; (ii)
the use or occupancy of the Premises by Tenant and the conduct of its business
therein; or (iii) any breach or default by Tenant in the performance of its
obligations hereunder. Tenant's obligations hereunder shall survive the
termination of this Lease. Tenant shall have no obligation to indemnify Landlord
for Landlord's negligence, willful misconduct or breach of this Lease.
14. Insurance. Tenant shall at all times during the term of this Lease, at
its own expense, keep in full force and effect (a) all risk insurance insuring
all property of Tenant located in the Premises at its full replacement value,
(b) commercial general liability insurance covering personal injury, including
death, and contractual liability, and broad form property damage with combined
single limits of not less than $1,000,000 to one or more than one person as the
result of any one accident or occurrence, and (c) workmen's compensation and
employer's liability insurance in form and amount as required by law. Landlord
shall be named an additional insured on all such policies. The policies or duly
executed certificates for the same, together with satisfactory evidence of the
payment of the premiums therefor, shall be delivered to Landlord prior to
Tenant's occupancy of the Premises and upon renewals of such policies not less
than fifteen (15) days prior to the expiration of the term of such coverage. All
such policies and certificates shall be in form and issued by companies
reasonably satisfactory to Landlord.
15. Mutual Waivers of Recovery. Landlord, Tenant and all parties claiming
under them each mutually release and discharge each other from all claims and
liabilities arising from or caused by fire or other casualty or hazard which is
covered or could be covered by fire and extended coverage or all-risk property
insurance in respect of the Building, the Premises and the personal property
situated therein, or in connection with activities conducted in the Premises or
in the Building, no matter how caused, including negligence, and each waives any
right of recovery which might otherwise exist on account thereof; provided, the
provisions of this paragraph shall not prevent any action by Landlord against
Tenant or by Tenant against Landlord for the amount of any deductible.
16. Hazardous Materials. Tenant shall not permit within the Premises, or
cause within the Building or Land, the storage, use, discharge, escape, disposal
or release of any biologically or chemically active or other hazardous
substances or materials (collectively "Hazardous Substances") in any manner not
permitted by law or by the highest standards prevailing in the industry for the
storage and use of Hazardous
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Substances, nor allow to be brought into the Premises any such Hazardous
Substances except for use in the ordinary course of Tenant's business, and then
only after written notice is given to Landlord of the identity of such Hazardous
Substances. Without limitation, Hazardous Substances shall include those
substances defined as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or other similar classifications described in the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended, 42 U.S.C. ss. 9601 et seq., the Resource Conservation and Recovery Act,
as amended, 42 U.S.C. ss. 6901 et seq., and any other applicable federal, state
or local laws and regulations. Tenant shall indemnify and hold Landlord harmless
from any and all claims, demands, losses, fines, assessments, penalties and
damages arising from any discharge or release of any Hazardous Substances on or
about the Premises during the period Tenant is in possession of the Premises or
arising out of Tenant's use or occupancy of the Premises or breach of the terms
of this paragraph. The covenants contained in this paragraph shall survive the
expiration or earlier termination of the Lease.
17. Rules and Regulations. Tenant covenants and agrees that Tenant will
comply fully with all of the rules and regulations of the Building, a copy of
which are attached hereto as Exhibit "D" and made a part hereof for all
purposes. Landlord shall at all times have the right to change or amend such
rules and regulations or to make such other rules and regulations as may be
deemed advisable by Landlord for the safety, care and cleanliness of the
Building and for preservation of good order therein, all of which changes and
amendments will be sent by Landlord to Tenant in writing and thereafter carried
out and observed by Tenant. Tenant shall be responsible for the compliance with
the rules and regulations by Tenant's agents, employees, guests, visitors and
invitees.
18. Acceptance of Premises. Tenant accepts the Premises as suitable for
the purposes for which same are leased, and accepts the Building and each and
every appurtenance thereof and waives visible defects therein.
19. Entry and Inspection. Tenant will permit Landlord and its agents and
representatives to enter the Premises, at all reasonable hours, and with 24
hours prior notice (or at any time in the event of an emergency), to inspect the
Premises or to clean or make repairs, alterations, or additions as Landlord may
deem necessary or desirable to the Premises or to other portions of the Building
or to show the Premises to prospective purchasers, tenants or lenders. Tenant
shall not be entitled to any abatement or reduction of rent by reason of such
entry.
20. Tenant's Risk. All personal property of Tenant, its employees and
invitees shall remain in the Premises at the sole risk of the owners thereof,
and Landlord shall not be liable for burglary, theft, damage or loss thereto.
Landlord shall not be liable for any losses to Tenant, its employees and
invitees due to fire, windstorm, hail, water, explosion, aircraft or other means
of locomotion, leaking gas, other physical causes. Tenant shall maintain all
equipment and appliances installed by Tenant in the Premises so that the same
will not cause damage to the Building or other tenants therein.
21. Damage or Destruction. If the Premises or other improvements situated
on the Property should be in part or in whole damaged or destroyed by fire,
tornado or other casualty, Tenant shall immediately give written notice thereof
to Landlord. If the Premises or other improvements situated on the Property
should be damaged by fire, tornado or other casualty but to such an extent that
rebuilding or repairs can reasonably be completed within one hundred eighty
(180) days from the date Tenant delivers written notification to Landlord of the
happening of the damage, this Lease shall not terminate, but Landlord shall, at
its sole cost and expense, proceed forthwith and use reasonable diligence to
rebuild or repair such Premises and other improvements on the Property to
substantially the condition in which they existed prior to such damage;
provided,
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however, if the casualty occurs during the final six (6) months of the Lease
Term, Landlord shall not be required to rebuild or repair such damage unless
Tenant shall exercise its renewal option within fifteen (15) days after the date
of receipt by Tenant of the notification of the occurrence of the damage. If
Tenant does not elect to exercise its renewal option or if there is no renewal
option contained herein or previously unexercised at such time, this Lease shall
terminate at the option of Landlord and rent shall be abated for the unexpired
portion of the Lease, effective from the date of actual receipt by Landlord of
the written notification of the damage. If the Premises and other improvements
are to be rebuilt or repaired and are untenable in whole or in part following
such damage, the rent payable hereunder during the period in which they are
untenable shall be abated with respect to that portion of the Premises rendered
untenable during such period. If the Premises or other improvements situated on
the Property should be substantially or totally destroyed by fire, tornado or
other casualty, or so damaged that rebuilding or repairs cannot reasonably be
completed within one hundred eighty (180) days from the date Tenant delivers
written notification to Landlord of the happening of the damage, this Lease
shall terminate at the option either of the Landlord or Tenant and rent shall be
abated for the unexpired portion of this Lease, effective from the date of
receipt by Landlord of such written notification. If this Lease is not
terminated, the Premises and the improvements shall be rebuilt or repaired and
rent abated to the extent provided above.
22. Condemnation. If, during the term of this Lease or any renewal
thereof, all or a substantial part of the Premises should be taken for any
public or quasi-public use under any governmental law, ordinance or regulation
or by right of eminent domain, or should be sold to the condemning authority
under threat of condemnation, this Lease shall terminate and the rent shall be
abated during the unexpired portion of this Lease, effective from the date of
taking of the Premises by the condemning authority. If less than a substantial
part of the Premises is taken for public or quasi-public use under any
governmental law, ordinance or regulation, or by right of eminent domain, or is
sold to the condemning authority under threat of condemnation, Landlord, at its
option, may by written notice terminate this Lease or shall forthwith at its
sole expense restore and reconstruct the Premises and improvements therein, and
in the event Landlord fails to complete the restoration and construction within
one hundred eighty (180) days of its notice to Tenant advising of its intention
to restore and reconstruct the Premises, Tenant shall have the right to
terminate this Lease. The rent payable hereunder during the unexpired portion of
this Lease shall be adjusted proportionately taking into account such portion of
the Premises taken by the condemning authority. If any condemnation occurs,
Landlord shall receive the entire award or other compensation for the Land, and
all or any portion of the Building, and other improvements taken, and Tenant may
separately pursue a claim against the condemnor for the value of Tenant's
personal property which Tenant is entitled to remove under the Lease, moving
costs, loss of business, and other claims it may have.
23. Mechanic's Liens. Tenant shall not permit any mechanic's liens to be
filed against the Premises or the Building for any work performed, materials
furnished, or obligation incurred by or at the request of Tenant. If such a lien
is filed, then Tenant shall, within ten (10) days after Landlord has delivered
notice of the filing to Tenant, either pay the amount of the lien or diligently
contest such lien and deliver to Landlord a bond or other security reasonably
satisfactory' to Landlord. If Tenant fails to timely take either such action,
then Landlord may pay the lien clam without inquiry as to the validity thereof,
and any amounts so paid, including expenses and interest, shall be paid by
Tenant to Landlord within ten (10) days after Landlord has delivered to Tenant
an invoice therefor.
24. Holding Over. No holding over by Tenant after the term of this Lease,
either with or without consent and acquiescence of Landlord, shall operate to
extend this Lease for a period longer than one month and any holding over with
the consent of Landlord in writing shall constitute a lease from month to month
at a
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monthly rental equal to 125% of the then applicable monthly rent and other sums
provided herein, and subject to all of the other terms, provisions, covenants
and agreements on the part of Tenant hereunder.
25. Default and Remedies. (a) The following events shall be deemed to be
defaults or events of default by Tenant under this Lease:
(i) Tenant shall fail to pay when due any installment of rent or
any other sum of money payable by Tenant to Landlord and such
failure shall continue for a period of ten (10) days following
written notice thereof from Landlord to Tenant, provided,
Landlord shall not be required to deliver to Tenant more than
two (2) such notices in any calendar year.
(ii) Tenant shall fail to comply with any term, provision, or
covenant of this Lease, other than the payment of rent, and
shall not cure such failure within thirty (30) days after
written notice from Landlord to Tenant of the occurrence of
such failure; however, if such failure cannot be cured within
such 30-day period and Tenant commences to cure such failure
within such 0-day period and thereafter diligently pursues
such cure to completion, then such failure shall not be a
default or an event of default unless it is not fully cured
within an additional sixty (60) days following the expiration
of the 30-day period.
(iii) Any petition shall be filed by or against Tenant under the
United States Bankruptcy Code, as amended, or under any
similar law or statute of the United States or any state
thereof, and such petition shall not be dismissed within sixty
(60) days of filing, or Tenant shall be adjudged bankrupt or
insolvent in any proceedings filed thereunder.
(iv) A receiver or trustee shall be appointed for all or
substantially all of the assets of Tenant, and such
appointment shall not be vacated or otherwise terminated, and
the action in which such appointment was ordered dismissed,
within sixty (60) days of filing.
(v) Tenant shall make a general assignment for the benefit of
creditors.
(vi) Tenant shall fail to take possession of or shall desert,
abandon or vacate the Premises.
(b) If any default or event of default shall have occurred, Landlord shall
have the right at its election, then or any time thereafter while such default
or event of default shall continue, to pursue any one or more of the following
remedies:
(i) Terminate this Lease by giving notice thereof to Tenant, in
which event Tenant shall immediately surrender the Premises to
Landlord and if Tenant fails to do so, Landlord may without
prejudice to any other remedy which it may have for possession
or arrearages in rent, enter upon and take possession of the
Premises and expel or remove Tenant and any other person who
may be occupying said Premises, or any part thereof, without
being liable for prosecution or any claim of damages therefor
and Tenant hereby agrees to pay to Landlord on demand the
amount of all loss and damage which Landlord may suffer by
reason of such termination, whether through inability to relet
the Premises on satisfactory terms or otherwise, specifically
including but not limited to (1) all reasonable expenses
necessary to relet the Premises which shall include the cost
of renovating, repairing, and altering the Premises for a new
tenant or tenants, and all
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leasing costs associated therewith; and (2) any increase in
insurance premiums caused by the vacancy of the Premises.
(ii) Enter upon and take possession of the Premises and expel or
remove Tenant or any other person who may be occupying said
Premises, or any part thereof, without terminating this Lease.
Landlord may (but shall be under no obligation to) relet the
Premises or any part thereof for the account of Tenant, in the
name of Tenant or Landlord or otherwise, without notice to
Tenant for such term or terms and on such conditions and for
such uses as Landlord in its absolute discretion may determine
and Landlord may collect and receive any rents payable by
reason of such reletting; and Tenant agrees to pay Landlord on
demand all reasonable expenses necessary to relet the Premises
which shall include the cost of renovating, repairing, and
altering the Premises for a new tenant or tenants and all
leasing costs associated therewith and Tenant further agrees
to pay Landlord on demand any deficiency that may arise by
reason of such reletting. Landlord shall not be responsible or
liable for any failure to relet the Premises or any part
thereof or for any failure to collect any rent due upon any
such reletting. No such re-entry or taking of possession of
the Premises by Landlord shall be construed as an election on
Landlord's part to terminate this Lease unless a written
notice of such termination is given to Tenant pursuant to
subparagraph (b)(i) above.
(iii) No repossession or re-entering on the Premises or any part
thereof pursuant to subparagraphs (b)(i) and (ii) above or
otherwise and no reletting of the Premises or any part thereof
pursuant to subparagraph (b)(ii) shall relieve Tenant of its
liabilities and obligations hereunder, all of which shall
survive such repossession or re-entering, except if the
Premises are re-let, Tenant shall only be responsible for the
difference in rent if the Premise are re-let at a lower rental
rate, and Tenant shall have no indemnity obligations related
to the use of the Premises by the new tenant.
(iv) In the event Landlord elects to re-enter or take possession of
the Premises after Tenant's default, with or without
terminating this Lease, Landlord may change locks or alter
security devices and lock out, expel or remove Tenant and any
other person who may be occupying all or any part of the
Premises without being liable for any claim for damages.
(v) Nothing contained in this Lease shall be construed as imposing
any enforceable duty upon Landlord to relet the Premises and
Landlord shall have no duty to mitigate or minimize Landlord's
damages by virtue of Tenant's default.
(vi) No right or remedy herein conferred upon Landlord is intended
to be exclusive of any other right or remedy, and each and
every right and remedy shall be cumulative and in addition to
any other right or remedy given hereunder or now or hereafter
existing at law or in equity or by statute.
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26. Transfer of Landlord's Interest. Landlord may transfer, in whole or in
part, the Building and any of its rights under this Lease. If Landlord transfers
or assigns its rights under this Lease, then Landlord shall be released from any
further obligations arising from and after the date of such transfer.
27. Waiver. The failure of Landlord to insist at any time upon the strict
performance of any covenant or agreement or to exercise any right, power, or
remedy contained in this Lease shall not be construed as a waiver or a
relinquishment thereof for the future. The waiver of any violation of any term,
covenant, agreement, or condition contained in this Lease shall not prevent a
subsequent act, which would have originally constituted a violation from having
all the force and effect of an original violation. A receipt by Landlord of any
rent with knowledge of the breach of any covenant or agreement contained in this
Lease shall not be deemed a waiver of such breach, and no waiver by Landlord of
any provision of this Lease shall be deemed to have been made unless expressed
in writing and signed by Landlord.
28. Subordination of Lease. This Lease shall be subordinate to any and all
deeds of trust and ground leases now or hereafter encumbering the Building, and
ail refinancings, renewals, modifications, extensions or consolidations thereof.
Tenant agrees to attorn to any mortgagee or trustee under a deed of trust or
purchaser at a foreclosure sale or trustee's sale as Landlord under this Lease,
provided such mortgagee, trustee or purchaser delivers to Tenant a
nondisturbance agreement whereby it agrees to honor the Lease (including all
renewal options) so long as Tenant is not in default under the Lease. Tenant
covenants and agrees that Tenant shall, within five (5) stays after Landlord's
request, execute and deliver to Landlord whatever instruments may be reasonably
required to acknowledge and further evidence the subordination of this Lease
and/or the attornment by Tenant to such mortgagee, trustee or purchaser, if the
nondisturbance agreement describe above is provided. Any holder of a deed of
trust covering all or any part of the Building may at any time elect to have
this Lease have priority over its deed of trust by executing an instrument of
subordination or placing a clause of such subordination in any pleadings or in
its deed of trust and recording the same.
29. Possession. Landlord shall use reasonable diligence to complete the
Premises by the Commencement Date; however, if for any reason the Premises shall
not be ready for occupancy by Tenant at such time, this Lease shall not be
affected thereby except that the Commencement Date of this Lease shall be
deferred to and begin upon the date that the Premises shall be ready for
occupancy and this Lease shall run for the full term thereafter, and Tenant
shall have no claim against Landlord by reason thereof.
*
-9-
*
32. Renewal Option. So long as Tenant is not then in default under this
Lease, then Tenant shall have the option to renew this Lease for six additional
five-year terms, by delivering Landlord written notice of its election to
exercise such option not later than ninety (90) days prior to the expiration
date of this Lease or applicable option term. Any renewal of this Lease shall be
on the terms and conditions set forth in this Lease and at a monthly rental
equal to the prevailing rate then being charged by Landlord for comparable space
in the Building, to tenants that are not affiliated with Landlord, taking into
account the quality, size, utility and location of the Premises, and subject to
increase or adjustment as provided in Section 6 above, provided Landlord shall
not be obligated for any allowances or improvements to the Premises and Tenant
shall have no further renewal rights hereunder.
33. Sales Tax. In the event that any sales, use or revenue tax is levied
or imposed by any governmental authority upon the rent paid by Tenant herein or
for the use or occupancy of the Premises by Tenant, then Tenant agrees to pay
such tax monthly to the Landlord, as an additional consideration and rent for
the use and occupancy of the Premises, unless such tax results from the actions
of Landlord.
34. Independence and Purpose of Relationship. Tenant and Landlord each
represent and warrant to the other that the transactions contemplated by this
Lease are lease transactions only and that the only relationship between the
parties hereto is that of landlord and tenant. Notwithstanding the foregoing,
Tenant and Landlord recognize that the Tenant may have patients who require
services offered by the Landlord or its affiliates. Landlord and Tenant hereby
represent and warrant that nothing in this Lease is intended to require or
involve in any manner whatsoever the referral of patients to the Landlord or its
affiliates and no payments made under any terms or conditions of this Lease are
in exchange for or conditioned upon any referral of patients. Any referral of
patients for medical services by Landlord or its affiliates or Tenant shall be
based solely on the medical needs and wishes of such patients, and nothing in
this Lease prohibits Tenant or Landlord from referring patients to other
healthcare providers or physicians. It is expressly the intent of Landlord and
Tenant to comply with all federal and state laws limiting, prohibiting, or
otherwise pertaining to referrals or remuneration for the furnishing of health
services, including, but not limited to, 42 U.S.C. ss. 1320a-7(b), et seq., 42
U.S.C. ss. 1395nn, et seq., and ss. 161.091 of the Texas Health and Safety Code.
35. Miscellaneous.
(a) Force Majeure. Other than for Tenant's monetary obligations under this
Lease, whenever a period of time is herein prescribed for action to be taken by
either party hereto, such party shall not be liable or responsible for, and
there shall be excluded from the computation for any such period of time, any
delays due to strikes, riots, acts of God, shortages of labor or materials, war
or governmental laws beyond the control of such party.
-10-
(b) Brokers. Landlord and Tenant each warrant to the other that it has not
dealt with any broker or agent in connection with the negotiation or execution
of this Lease. Tenant and Landlord shall each indemnify the other against all
costs, expenses, attorneys' fees, and other liability for commissions or other
compensation claimed by any broker or agent claiming the same by, through, or
under the indemnifying party.
(c) Notices. Notices hereunder must be hand-delivered or sent by certified
mail, return receipt requested, postage prepaid, addressed, if to Landlord, at
the address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attn:
▇▇▇▇ ▇▇▇▇▇▇▇, and if to Tenant, at the address of the Premises, or to such other
addresses as may be specified by written notice delivered to the other party.
Notice shall be deemed given upon tender of delivery (in the case of a
hand-delivered notice) or two (2) days following mailing of same (in the case of
certified or registered mail), provided that no notice of either party's change
of address shall be effective until ten (10) days after the notice of change is
given.
(d) Estoppel Certificates. From time to time, Tenant shall furnish to any
party designated by Landlord, within ten (10) days after Landlord has made a
request therefor, a certificate signed by Tenant confirming and containing such
factual certifications and representations as to this Lease as Landlord may
reasonably request.
*
(f) Severability. If any clause or provision of this Lease is illegal,
invalid, or unenforceable under present or future laws, then the remainder of
this Lease shall not be affected thereby and in lieu of such clause or
provision, there shall be added as a part of this Lease a clause or provision as
similar in terms to such illegal, invalid, or unenforceable clause or provision
as may be possible and be legal, valid, and enforceable.
(g) Late Payment Charge and Interest Payable. Landlord may impose a late
payment charge equal to five percent (5%) of any amount due under this Lease if
not paid within five (5) days from the date required to be paid hereunder. In
addition, any payment due under this Lease not paid within ten (10) days from
the date herein specified to be paid shall bear interest from the date such
payment is due to the date of actual payment at the rate of eighteen percent
(18%) per annum or the highest lawful rate of interest permitted by Texas or
federal law, whichever rate of interest is lower.
(h) Personal Liability. The liability of Landlord to Tenant for any
default by Landlord under the terms of this Lease shall be limited to the
interest of Landlord in the Building and Landlord shall not be personally liable
for any deficiency. This clause shall not be deemed to limit or deny any
remedies which Tenant may have in the event of default by Landlord hereunder
which do not involve the personal liability of Landlord.
(i) Building Name. Landlord shall have the exclusive right at all times
during the term of this Lease to change, modify, add to or otherwise alter the
name of the Building, and Landlord shall not be liable for claims or damages of
any kind which may be attributed thereto or result therefrom.
(j) Time Is of the Essence. Time is of the essence in the performance of
all of the covenants, conditions and agreements in this Lease.
-11-
(k) Attorneys' Fees Costs and Expenses. If on account of any breach or
default by any party hereto in its obligations to any party hereto, it shall
become necessary for the non. defaulting party to employ an attorney to enforce
or defend any of its rights or remedies hereunder, the defaulting party agrees
to pay the non-defaulting party its reasonable attorneys' fees, whether or not
suit is instituted in connection therewith, together with ail court coat, if
any, incurred in connection therewith.
(1) Entire Agreement and Amendments. This Lease is the only agreement
between the parties hereto and their representatives and agents with respect to
the Premises. There are no representations or warranties between the parties
with respect to the Premises, the Building, or this Lease, other than the
representations and agreements contained in this document. No agreement shall be
effective to change, modify or terminate this Lease in whole or in part unless
such agreement is in writing and duly executed by the parties.
(m) Binding Effect. The terms and conditions contained in this Lease shall
inure to the benefit of and be binding upon the parties hereto, and their
respective successors, legal representatives and assigns, except as otherwise
herein expressly provided.
(n) Gender. Words of any gender used in this Lease shall be held and
construed to include any other gender and words in the singular number shall be
held to include the plural, unless the context requires otherwise.
(o) Exhibits. The following exhibits and attachments are hereby
incorporated in this Lease by reference.
Exhibit "A" - Floor Plan of Premises
Exhibit "B" - Legal Description of Real Property
Exhibit "C" - Rules and Regulations
Exhibit "D" - Parking Services
(p) Captions. The captions contained in this Lease are for convenience of
reference only, and do not alter the terms and conditions of this Lease.
-12-
EXECUTED to be effective as of the date first hereinabove written.
LANDLORD:
BAYLOR HEALTH CARE SYSTEM l
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Title: Managing Director
Date: 6/1/99
TENANT:
DALLAS SURGICAL PARTNERS, LP
By: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:
--------------------------------
Date:
--------------------------------
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EXHIBIT A
EXHIBIT B
▇▇▇ ▇, ▇▇▇▇▇ ▇/▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ MEDICAL CENTER
DALLAS, TEXAS
Being a tract or parcel of land situated in the ▇. ▇▇▇▇▇▇▇ Survey, Abstract 485
in the City of Dallas, Dallas, County, Texas and being all of ▇▇▇ ▇, ▇▇▇▇▇ ▇/▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Medical Center Campus Dallas, Texas, an addition to the
City of Dallas as recorded In Volume 83230, Page 1964 of the Deed Records of
Dallas County, Texas and being more particularly described as follows:
BEGINNING at a point for ▇▇▇▇▇ at the intersection of the southeasterly line of
▇▇▇▇▇▇ Avenue (35 feet from centerline) with the cut-off line between the said
southeasterly line of ▇▇▇▇▇▇ Avenue (35 feet from centerline) and the
northeasterly line of Hall Street (47.5 feet from centerline);
THENCE North 44(degree)49'00" East along the southeasterly line of ▇▇▇▇▇▇ Avenue
(35 feet from centerline) a distance of 955.05 feet to a chisel ▇▇▇▇ for corner
in the southwesterly line of ▇▇▇▇▇▇ Street (15 feet right-of-way);
THENCE South 45(degree)05'00" East along the southwesterly, line of a 15 feet
wide alley (formerly ▇▇▇▇▇▇ Street) a distance of 390.00 feet to a chisel ▇▇▇▇
for corner;
THENCE North 49(degree)49'00" East along then northwesterly tine of a utility,
ingress end egress easement (formerly ▇▇▇▇▇▇ Street) a distance of 188.19 feet
to an iron rod in the southwesterly line of North Washington Street (variable
width);
THENCE South 44(degree)40'40" East along the southwesterly line of said ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ a distance of 250.77 feet to an angle point;
THENCE South 46(degree)42'50" East along the southwesterly line of ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ a distance of 189.25 feet to a point for ▇▇▇▇▇;
THENCE South 00(degree)58'06" East along the cut-off line between the
southwesterly nine, of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and the northwesterly line of
Worth Street (variable width right-of-way) a distance of 13.95 feet to a point
for corner to the northwesterly line of Worth Street;
THENCE South 44(degree)50'37" West along the northwesterly line of Worth Street
a distance of 378.93 feet to an iron rod found for corner;
THENCE South 40(degree)20'50" West along the northwesterly line of Worth Street
a distance of 35.14 feet to an 1/2" iron rod found for corner;
THENCE South 45(degree)00'00"' West along trio northwesterly line of Worth
Street a distance of 735.97 feet to a point for corner:
THENCE North 89(degree)44'30" West along the cut-off line between the
northwesterly line of Worth Street (50 feet right-of-way) and the northeasterly
line of Hall Street (95 feet right -of-way) a distance of 8.45 feet to a point
for corner in the northeasterly line of Hall Street;
THENCE North 49(degree)29'00" West along the northeasterly line ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ a
distance of 824.18 foot to a point for corner;
THENCE North 00(degree)10'00" between the northeasterly line of Hall Street
(47.5 feet from centerline) and the southwesterly line of ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ feet
from centerline a distance of 14.23 feet to the POINT OF BEGINNING and
containing 899,842 square feet or 20.658 acres more or less.
EXHIBIT "C"
RULES AND REGULATIONS
The following rules and regulations shall apply to the Premises, the Land,
the Building, any parking garage associated therewith, and the appurtenances
thereto.
A. Sidewalks, doorways, vestibules, halls, stairways and similar areas shall not
be obstructed nor shall refuse, furniture, boxes or other items be placed
therein by Tenant or its officers, agents, servants, and employees, or used for
any purpose other than ingress and egress to and from the Premises, or for going
from one part of the Building to another part of the Building.
1. Canvassing, soliciting and peddling in the Building are prohibited.
2. Underwriters Laboratories approved "plug-in" electrical appliances may
be installed without Landlord approval if done under safe conditions and without
overloading circuits. No space heaters shall be permitted in the Premises. No
wiring may be done and no heavy electrical equipment may be installed except
with Landlord approval and by persons approved by Landlord.
3. Plumbing, fixtures and appliances shall be used only for purposes for
which constructed, and no unsuitable material shall be placed therein. Any
stoppage or damage resulting to any such fixtures or appliances from misuse on
the part of Tenant or Tenant's agents, employees, or invitees shall be paid by
Tenant.
4. Tenant shall not do or cause anything to be done in or about the
Building, or bring or keep anything therein, that will in any way increase the
rate of fire or other insurance on the Building, or on property kept therein or
otherwise increase the possibility of fire or other casualty.
5. Landlord shall have the right to prescribe the weight and position of
heavy equipment or objects which may cause excessive stress any portion of the
floor. All damage done to the Building by the improper placing of such heavy
items will be repaired at the sole expense of the responsible tenant.
6. Tenant shall notify the Building manager when its furniture or
equipment is to be taken in or out of the Building, and the moving shall be done
after written permission is obtained from Landlord on such conditions as
Landlord shall reasonably prescribe.
7. All deliveries must be made via the service entrance and service
elevator, during normal working hours. Landlord's written approval must be
obtained for any delivery after normal working hours. Tenant shall make advance
arrangements with Landlord to schedule move-ins or move-outs and to reserve
service elevator access. Move-in and move-out must be done before 8:00 a.m. or
after 5:00 p.m. or on weekends.
8. Corridor doors, when not in use, shall be kept closed.
9. Tenant shall cooperate with Landlord's employees in keeping the
Premises neat and clean.
10. Tenant shall not cause any improper noises in the Building, or allow
any unpleasant odors to emanate from the Premises, or otherwise interfere,
injure or annoy in any way other tenants or such tenant's guests or invitees.
1
11. No animals (other than for handicapped persons) or birds shall be
brought into or kept in or about the Building
12. When conditions are such that Tenant must dispose of crates, boxes, or
similar materials, it will be the responsibility of Tenant to dispose of same
prior to 8:Oa am., or after 5:OD p.m., unless Tenant makes other arrangements
for such disposal with Landlord.
13. No machinery of any kind, other than ordinary office machines such as
typewriters, calculators, desktop computers, facsimile machines, photo copies,
x-ray and laboratory equipment, shall be operated in, on or about the Premises
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld, nor shall a Tenant use or keep in the Building any
inflammable or explosive fluid or substance or any illuminating materials,
except candles. No space heaters or fans shall be operated in the Building.
14. No bicycles, motorcycles or similar vehicles will be allowed in the
Building.
15. Landlord has the right to evacuate the Building in the event of an
emergency or catastrophe.
16. No food or beverages shall be distributed from Tenant's office without
the prior written approval of the Landlord.
17. If Landlord provides janitorial service to the Premises, the janitor
or janitors, or other cleaning persons employed by the Landlord will be provided
with pass keys to offices in the Building. Such janitor or janitors, or other
cleaning persons, and no one else shall be looked to by Tenant to clean and care
for the Premises, except by written permission of Landlord or its authorized
agent.
18. No sign or advertisement shall be painted on or attached to the
Building without the written consent of Landlord, and all lettering or other
characters thereon shall be of the style adopted by Landlord, and at the expense
of Tenant, and shall be made so as to be acceptable to Landlord. All pictures,
diplomas, decorative items, or other such objects shall be installed, mounted,
or hung only by the superintendent of the Building, or others as approved by
Landlord, and only with consent of Landlord. No nails, screws, hooks, or
stickers shall be placed in or on the woodwork, partitions, or walls without the
written consent of the Landlord.
*
20. Landlord shall be authorized to take all such reasonable measures as
Landlord may deem advisable for the security of the Building and its occupants,
however, Landlord shall have no liability to Tenant or its employees, agents,
invitees or licensees for losses due to theft or burglary, or for damage done by
unauthorized persons in or about the Building or Premises. For safety of persons
and protection of tenant property, Landlord reserves the right to close and keep
locked all entrance and exit doors of the Building for any interval of time
deemed appropriate. All persons entering or leaving the Building at times when
it is so locked maybe required to sign a Building register and may be refused
admission except by satisfactory identification and/or other evidence of their
right of access to the Building. Landlord assumes no responsibility and shall
not be liable for any damage resulting from any error in regard to any such pass
or identification, or from the admission of any unauthorized person to the
Building.
21. Tenant will receive a reasonable number of keys for the Premises at
the time of its occupancy of the Premises. Thereafter, Tenant may obtain
additional or replacement keys or have locks changed at a reasonable charge;
provided, Tenant shall not change or allow any locks to be changed in the
Premises without
2
Landlord's consent. No duplication or copy of such keys shall be made by any
person other than Landlord or its agents. All such keys shall at all times be
the property of Landlord and shall be surrendered by Tenant upon request.
Landlord may at any time change, alter, or re-key any door lock in the Premises
without prior consent of Tenant.
23. Tenant must register all physician and employee vehicles with Parking
Services. Tenant physician parking is included in the rental rate. The rental
rate does not include Tenant employee parking. Each physician occupying the
premises shall receive a parking card to park in an assigned lot on the Baylor
campus. Tenant shall be charged for employee parking cards at a rate determined
by Parking Services (see Exhibit "D").
Tenant must notify Parking Services of any changes in cardholders and is
responsible for any lost or stolen cards. Any car illegally parked in a garage,
lot or patient/visitor space is subject to a citation and/or towing by Landlord
at the expense of the car owner. Landlord is not responsible for any theft or
damage to vehicle.
24. Tenant will not locate furnishings or cabinets adjacent to mechanical
or electrical access panels or over air conditioning outlets so as to prevent
operating personnel from servicing such units as routine or emergency access may
require. Cost of moving such furnishings for Landlord's access will be paid by
Tenant. The lighting and air conditioning equipment of the Building will remain
the exclusive charge of the Building designated personnel.
25. Vending machines or dispensing machines of any kind will not be placed
in=the Premises by Tenant.
26. Prior written approval, which shall be at Landlord's sole discretion,
must be obtained for installation of window shades, blinds, drapes, or any other
window treatment of any kind whatsoever. Landlord will control all internal
lighting that may be visible from the exterior of the Building and shall have
the right to change any unapproved lighting, without notice to Tenant, at
Tenant's expense.
27. Tenant will refer all contractors, contractors representatives, and
installation technicians rendering any service on or to the Premises for Tenant
to Landlord, for Landlord's approval and supervision for performance of any
contractual service. This provision shall apply to all work performed in the
Building, including installation of telephones, telegraph equipment, electrical
devices, and attachments and installations of any nature affecting floors,
walls, woodwork, trim, windows, ceiling, equipment, or any other physical
portion of the Building.
28. Landlord reserves the right to amend or rescind any of these rules and
to make such other and further rules and regulations as in its reasonable
judgment shall from time to time be needed for the safety, care and cleanliness
of the Building and for the preservation of good order therein, which rules
shall be binding upon Tenant upon delivery to Tenant of notice thereof in
writing.
3
EXHIBIT H
[Amendment to USP Parent's Stockholders Agreement]
1
AMENDMENT NO. 5
TO
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
AMENDMENT NO. 5 to the Amended and Restated Stockholders Agreement. dated
as of June 1. 1999 (the Amendment"), among United Surgical Partners
International. Inc.. a Delaware corporation (the "Company"), and the several
other parties named at the foot hereof, amending the Amended and Restated
Stockholders Agreement dated as of April 30. 1998 among the Company and the
several signatories thereto (the "Stockholders Agreement"). All capitalized
terms used and not defined herein shall have the meaning set forth in the
Contribution and Purchase Agreement dated as of May 11, 1999 (the "Contribution
Agreement") among USP North Texas, Inc., Baylor Health Services, Texas Health
Ventures Group L.L.C. and THVG/HealthFirst L.L.C.
On the date hereof, USP, Baylor, THVGI and THVG2 are consummating the
transactions contemplated by the Contribution Agreement pursuant to which the
Company has agreed to issue to Baylor a Convertible Subordinated Promissory Note
(the "Note") convertible into shares of the Company's Class A Common Stock, S.01
par value (the "Class A Common Stock").
It is a condition to the closing of the transactions contemplated by the
Contribution Agreement that the Company and the parties hereto execute this
Amendment.
Pursuant to Section 13 of the Stockholders Agreement, the Stockholders
Agreement is hereby amended as follows:
1. Baylor is hereby made a party to the Stockholders Agreement with the
same rights and obligations as the "Investors" and "Stockholders" as set forth
in the Stockholders Agreement: provided, however, that the obligations and
restrictions under Sections 1-4 applicable to "Investors" and "Stockholders"
will apply to Baylor, or its assignee, only to the extent that Baylor, or its
assignee, has converted the Note into shares of the Class A Common Stock.
2. The Stockholders Agreement is hereby amended by deleting Section 1(a)
thereto in its entirety and replacing it with the following language:
"Section 1. Voting Agreement. (a) At each annual or special stockholders
meeting called for such purpose, and whenever the stockholders of the
Company act by written consent with respect to the election of directors,
each Stockholder agrees to vote or otherwise give such Stockholder's
consent in respect of all shares of capital stock of the Company (whether
now or hereafter acquired) owned by such Stockholder or as to which such
Stockholder is entitled to vote, and the Company shall take all necessary
and desirable actions within its control, in order to cause the election
to the Board of Directors of the Company of:
2
(i) the Chief Executive Officer of the Company, which individual will
initially be ▇▇▇▇▇▇ ▇▇▇▇▇,
(ii) for so long as Health Care Capital Partners, L.P. and Health Care
Executive Partners, L.P. (together, "HC Partners") collectively
maintain ownership of not less than 50% of the securities purchased
by HC Partners under the Securities Purchase Agreement dated as of
October 26, 1998 among the Company and the several other parties
named therein (or securities into which such securities are
converted, exchanged or reclassified), one individual designated by
HC Partners and which individual shall be acceptable to WCAS in its
reasonable discretion. Such individual shall be appointed to the
Board of Directors on or before October 30, 1998 and ▇▇▇▇▇▇ ▇▇▇▇▇▇
shall be HC Partners' initial designee, and
(iii) for so long as Baylor Health Services ("Baylor") and entities to
which Baylor may transfer its membership interest in Texas Health
Ventures Group L.L.C. ("THVG1") under Section 4.1(a) of the Second
Amended and Restated~ Regulations of THVG1 dated as of June 1, 1999
(each such entity being a "Permitted Baylor Transferee"),
collectively maintain ownership of not less than 50% of the
outstanding principal amount of the Convertible Subordinated
Promissory Note (the "Note") issued to Baylor under the Contribution
and Purchase Agreement dated as of May 11, 1999 among Baylor and the
several other parties named therein (or 50% of the aggregate
securities into which the Note, directly or indirectly, is
converted, exchanged or reclassified), one individual designated by
Baylor who is an officer of Baylor Health Care System at or above
the level of senior vice president. Such individual shall be
appointed to the Board of Directors on or before June 2, 1999 and
▇▇▇▇▇ ▇▇▇▇▇▇ shall be Baylor's initial designee."
3. The Stockholders Agreement is hereby amended by deleting Section 13 in
its entirety and replacing it with the following language:
"SECTION 13. Modification. Except as otherwise provided herein, neither
this Agreement nor any provision hereof may be modified, changed,
discharged or terminated except by an instrument in writing signed by the
Company, WCAS, HC Partners and the holders of the majority of the
aggregate voting power of shares of capital stock (on an as-converted
basis) of the Company held by the Management Stockholders; provided,
however, that no modification or amendment shall be effective to reduce
the percentage of the shares of capital stock of the Company the consent
of the holders of which is required under this Section 13; provided
further, that no such amendment or modification shall be effective without
Baylor's consent if such amendment or modification affects Baylor any
differently than it affects other holders of Investor Shares.
Notwithstanding the foregoing, the Company may amend this Agreement
without the consent of the Stockholders solely to add stockholders to
Schedule I hereto (which stockholders shall be included in the definition
of "Investors" hereunder)."
4. The Stockholders Agreement is hereby amended by deleting Section 2 in
its entirety and replacing it with the following language:
3
"SECTION 2. Investor Transfer Restrictions. (a) Each of the Stockholders
listed on Schedule I hereto under the heading "Investors" (the
"Investors") shall be entitled at any time to transfer (x) the shares of
capital stock of the Company owned by such Investor by will or by the laws
of descent and distribution, (y) up to 10% of the shares of capital stock
of the Company owned by such Investor by gift to such Investor's spouse,
lineal descendants, parents or siblings (or to a trust for the benefit of
any of the foregoing) or (z) in the case of Baylor, the shares of capital
stock of the Company owned by Baylor to any Permitted Baylor Transferee;
provided that any such transferee shall agree in writing with the Company
to be bound by, and to comply with, all applicable provisions of this
Agreement and to be deemed to be an Investor for purposes of this
Agreement. Except for such transfers by will or by the laws of descent and
distribution or by gift as described in clauses (x) and (y) above or such
transfers to a Permitted Baylor Transferee as described in clause (z)
above, each Investor shall not be entitled to sell, pledge or otherwise
transfer shares of capital stock of the Company unless such Investor
complies with the provisions. of Sections 3 and 4 below."
5. Schedule I of the Stockholders Agreement is hereby amended by adding
the following Baylor notice information under the heading of "Investors":
Baylor Health Services
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Chief Operating Officer
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
6. The Stockholders Agreement, as amended by this Amendment, is hereby in
all respects confirmed.
7. This Amendment shall be governed by and construed in accordance with
the laws of the State of Delaware.
8. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
[SIGNATURE PAGES FOLLOW]
4
UNITED SURGICAL PARTNERS
INTERNATIONAL, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Executive Vice President
---------------------------------
BAYLOR HEALTH SERVICES
By: /s/ M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Title: Executive Vice Prsident
---------------------------------
WELSH, CARSON, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
VII, L.P.
By: WCAS VII Partners, L.P.
General Partner
By /s/ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
-----------------------------
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
-----------------------------
General Partner
-----------------------------
HEALTH CARE CAPITAL PARTNERS, L.P.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., LLC
General Partner
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Title General Partner
-----------------------------
HEALTH CARE EXECUTIVE PARTNERS, L.P.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., LLC
General Partner
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Title General Partner
-----------------------------
The undersigned, as the holder of in excess of a majority of the outstanding
shares of capital stock of the Company held by the Management Stockholders,
consents to the foregoing Amendment.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
EXHIBIT I
(Amendment to USP Parent's Registration Rights Agreement)
AMENDMENT NO. 5
TO
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
AMENDMENT NO. 5 to the Amended and Restated Registration Rights Agreement,
dated as of June 1, 1999 (the "Amendment"), among United Surgical Partners
International, Inc., a Delaware corporation (the "Company"), and the several
other parties named at the foot hereof, amending the Amended and Restated
Registration Rights Agreement dated as of April 30, 1998 among the Company and
the several signatories thereto (the "Registration Rights Agreement"). All
capitalized terms used and not defined herein shall have the meaning set forth
in the Contribution and Purchase Agreement dated as of May 11, 1999 (the
"Contribution Agreement") among USP North Texas, Inc., Baylor Health Services,
Texas Health Ventures Group LLC and THVG/HealthFirst L.L.C.
On the date hereof, USP, Baylor, THVGI and THVG2 are consummating the
transactions contemplated by the Contribution Agreement pursuant to which the
Company has agreed to issue to Baylor a Convertible Subordinated Promissory Note
(the "Note") convertible into shares of the Company's Class A Common Stock, $.01
par value ("Class A Common Stock").
It is a condition to the closing of the transactions contemplated by the
Contribution Agreement that the Company and the parties hereto execute this
Amendment.
Pursuant to Section 13(d) of the Registration Rights Agreement, the
Registration Rights Agreement is hereby amended as follows:
1. Baylor is hereby made a party to the Registration Rights
Agreement with the same rights (including the right to receive notices under
Sections 4, 5 and 6 of the Registration Rights Agreement) and obligations as a
holder of "Restricted Stock" (with respect to the shares of Class A Common Stock
into which the Note is convertible) as set forth in the Registration Rights
Agreement. Baylor is hereby deemed to be a holder of "Restricted Stock" with all
the rights and, with respect to the shares of Class A Common Stock into which
the Note is convertible, obligations of such a holder as set forth in the
Registration Rights Agreement. Baylor, or its assignee, shall continue to be
deemed such a holder of Restricted Stock for so long as Baylor, or its assignee
holds the Note. Upon any conversion of the Note, the converted shares held by
Baylor or its assignee, will be "Restricted Stock" and Baylor, or its assignee,
will be a holder of "Restricted Stock" with respect to such converted shares and
will have all the rights and obligations of a holder of "Restricted Stock."
2. Section 13(d) of the Registration Rights Agreement is hereby
amended and restated in its entirety as follows:
"(d) This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and may be
modified or amended except in writing signed by the Company
and the holders of not less than two thirds of the Restricted
Stock and Investor
1
Shares then outstanding; provided that no such modification or
amendment shall deprive any holder of Restricted Stock
(including Baylor or its assignee) or Investor Shares of any
material right under this Agreement without such holder's
consent. The Company will not grant any registration rights to
any other person without the written consent of the holders of
at least two-thirds of the Restricted Stock and Investor
Shares then outstanding if such rights could reasonably be
expected to conflict with, or be an a party with, the rights
of holders of Restricted Stock or Investor Shares granted
under this Agreement; provided, however, that notwithstanding
the foregoing, any amendment solely to grant registration
rights to additional holders of the capital stock of the
Company may be effected in a writing executed solely by the
Company and such additional holders if such registration
rights are no more favorable than the registration rights
granted to any holder of Investor Shares. Any amendment to
this Agreement to grant such registration rights to such
additional holders of the capital stock of the Company shall
not be deemed to be an amendment that adversely affects the
rights of any holder hereunder."
3. The first paragraph of Section 3 of the Registration Rights
Agreement is hereby amended and restated in its entirety as follows:
"3. Notice of Proposed Transfer. Prior to any proposed
transfer of any Restricted Stock or Investor Shares, as the
case may be, (other than under the circumstances described in
Section 4, 5 or 6 hereof), the holder thereof shall give
written notice to the Company of its intention to effect such
transfer. Each such notice shall describe the manner of the
proposed transfer and, if requested by the Company, shall be
accompanied by an opinion of counsel reasonably satisfactory
to the Company (it being agreed that Nossaman, Guthner, ▇▇▇▇ &
▇▇▇▇▇▇▇, ▇▇" shall be satisfactory) to the effect that the
proposed transfer of the Restricted Stock or Investor Shares,
as the case may be, may be effected without registration under
the Securities Act, whereupon the holder of such Restricted
Stock or Investor Shares, as the case may be, shall be
entitled to transfer such Restricted Stock or Investor Shares,
as the case may be, in accordance with the terms of its
notice; provided, however, that no such opinion or other
documentation shall be required if such notice shall cover a
distribution by Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VII, L.P.
("WCAS VII") or WCAS Healthcare Partners, L.P. to their
respective partners; and further provided, that no such
opinion or documentation shall be required if such notice
shall cover a transfer by Baylor Health Services ("Baylor") to
an entity to which Baylor may transfer its membership interest
in Texas Health Ventures Group L.L.C. ("THVG I") under Section
4.1(a) of the Second Amended and Restated Regulations of THVG
I dated as of June 1,
2
1999, so long as Baylor delivers other evidence, reasonably
acceptable to the Company to the effect that the proposed
transfer may be effected without registration under the
Securities Act. Each certificate for Restricted Stock or
Investor Shares as the case may be, transferred as above
provided shall bear the legend set forth in Section 2 unless
(i) such transfer is in accordance with the provisions of Rule
144 (or any other rule permitting public sale without
registration under the Securities Act) or (ii) the opinion of
counsel referred to above is to the further effect that the
transferee and any subsequent transferee (other than an
affiliate of the Company) would be entitled to transfer such
securities in a public sale without registration under the
Securities Act."
4. Schedule I to the Registration Rights Agreement is hereby amended
by adding the following Baylor notice information under the heading of
"Restricted Stockholders":
Baylor Health Services
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Chief Operating Officer
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
5. The Registration Rights Agreement, as amended by this Amendment,
is hereby in all respects confirmed.
6. This Amendment shall be governed by and construed in accordance
with the laws of the State of Delaware.
7. This Amendment may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
[SIGNATURE PAGES FOLLOW]
3
UNITED SURGICAL PARTNERS
INTERNATIONAL, INC.
By /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
BAYLOR HEALTH SERVICES
By /s/ M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title Executive Vice President
WELSH, CARSON, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
VII, L.P.
By: WCAS VII Partners, L.P.
General Partner
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
General Partner
WCAS HEALTHCARE PARTNERS, L.P.
By: WCAS HC Partners
General Partner
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Attorney-in-Fact
4
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By /s/ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Attorney-in-Fact
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
D. ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
HEALTH CARE CAPITAL PARTNERS, L.P.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., LLC
General Partner
By
Name
----------------------------------
Title
----------------------------------
HEALTHCARE CAPITAL PARTNERS, LP
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., LLC
General Partner
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title General Partner
5
HEALTH CARE EXECUTIVE PARTNERS, L.P.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., LLC
General Partner
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title General Partner
Management Purchasers
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ FBO ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
6
SCHEDULE 1.1
[Baylor Center Tangible Assets]
Surgicare Furniture and Equipment Ledger
As of October 1, 1998
804 Fixed Asset tram M&D Download "FMA,B04,▇▇▇▇▇▇" 01/29/99
------------------------------------------------------------------------------------------------------------------------------------
Acq. Bk
Corp. Item No. Description Date DeprLife Reserve BkInstCost CurrDegr
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ COMPAFQ DESKPRO EN, ALLSTAR SYSTEM 10/1/98 5/1 661.97 13239.5 661.97
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ COMPAFO DESKPRO ETN, ALLSTAR SYSTEM 10/1/98 5/1 661.97 13239.5 661.97
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ COMPAFQ DESKPRO EN, ALLSTAR SYSTEM 10/1/98 5/1 661.97 13239.5 661.97
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ COMPAFQ DESKPRO EN, ALLSTAR SYSTEM 10/1/98 5/1 661.97 13239.5 661.97
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ COLOR PRINTER, ALLSTAR SYSTEMS 10/1/98 5/1 112.55 2251 112.55
------------------------------------------------------------------------------------------------------------------------------------
B04 7-4800005 FLEX SERIES GANGED, FURNISHING.
AGI INDUSTRIES 5/2/98 15/00 1297.74 29199.09 162.22
------------------------------------------------------------------------------------------------------------------------------------
B04 7-4800014 STORAGE OF ▇▇▇▇▇ SYSTEM INSTALL,
▇▇▇▇▇▇ ▇▇ & CO 5/2/98 15/00 1141.1 1058.26 17.64
------------------------------------------------------------------------------------------------------------------------------------
B04 7-4800010 FURNISHING, F F & E 4/2/98 10/1 127.8 2556 14.2
------------------------------------------------------------------------------------------------------------------------------------
B04 7-48000111 FURNISHING, ▇▇▇▇▇ FURNITURE 4/2/98 5/1 496.34 9926.75 55.15
------------------------------------------------------------------------------------------------------------------------------------
B04 7-4800004 DESK UNITS W/ PANEL SYSTEM 3/2/98 5/1 4753.57 57042.81 475.36
------------------------------------------------------------------------------------------------------------------------------------
B04 7-4800008 FABRIC 3/2/98 5/1 188.42 1130.53 18.84
------------------------------------------------------------------------------------------------------------------------------------
B04 7-4800012 VIDEO PROCESSOR 2/2/98 10/1 0 14850 0
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ CABLE, OLYMPUS 1/2/98 10/1 44.82 224.1 3.73
------------------------------------------------------------------------------------------------------------------------------------
B04 7-4800001 FABRIC 12/2/97 10/1 277.29 2559.62 21.33
------------------------------------------------------------------------------------------------------------------------------------
B04 7-4800002 FABRIC 12/2/97 10/1 128.37 1184.97 9.87
------------------------------------------------------------------------------------------------------------------------------------
B04 7-4800006 CHAIRS, TASK QTY 33 12/2/97 7/1 1048.45 9678 80.65
------------------------------------------------------------------------------------------------------------------------------------
B04 7-4800007 FABRIC 12/2/97 7/1 114.56 1057.49 8.81
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ SERIES TWENTY THOUSAND LE 4/2/97 7/1 7500 30000 357.14
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ SERIES TWENTY THOUSAND LE 4/2/97 7/1 7500 30000 357.14
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ SERIES TWENTY THOUSAND LE 4/2/97 10/1 7500 30000 357.14
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4700009 ANALYZER, PORTABLE CLINICAL 4/2/97 10/1 2477.37 9909.5 117.97
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ HAUSTED EYE STRETCHER 2/2/97 5/1 1011.77 5278.79 43.99
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ HAUSTED EYE STRETCHER 2/2/97 5/1 1011.77 5278.79 43.99
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4700001 INSTRUMENTS 1/2/97 5/1 612.5 1531.25 25.52
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4700002 INSTRUMENTS 1/2/97 5/1 997.88 2494.7 41.58
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4700003 INSTRUMENTS 1/2/97 5/1 1141.98 2854.94 47.59
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4700004 INSTRUMENTS 1/2/97 5/1 10640.7 26601.75 443.36
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4700005 INSTRUMENTS 1/2/97 5/1 3261.54 8153.84 135.9
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4700006 INSTRUMENTS 12/2/96 5/1 605.63 1453.5 24.23
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ INSTRUMENTS 11/1/96 5/1 263.84 608.86 10.15
------------------------------------------------------------------------------------------------------------------------------------
B04 6-46110014-0B RECLINER WITH IV POLE 9/1/96 5/1 151.99 325.69 5.43
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ RECLINER WITH IV POLE 7/2/96 5/1 71.58 143.16 2.39
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4600011 INSTRUMENTS 5/1/96 5/1 821.5 1540.32 25.67
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4600012 INSTRUMENTS 5/1/96 5/1 3486.44 6537.8 108.95
------------------------------------------------------------------------------------------------------------------------------------
B04 6.4600014-01 RECLINER WITH IV POLE 5/1/96 5/1 402.17 754.06 12.57
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ RECLINER WITH IV POLE 5/1/96 5/1 402.17 754.06 12.57
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ RECLINER WITH IV POLE 5/1/96 5/1 402.17 754.06 12.57
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ RECLINER WITH IV POLE 5/1/96 5/1 402.17 754.06 12.57
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ RECLINER WITH IV POLE 5/1/96 5/1 402.17 754.06 12.57
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ RECLINER WITH IV POLE 5/1/96 5/1 402.17 754.06 12.57
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4600016 COMPUTER, COMPACT DESKPRO 5/1/96 5/1 1677.33 3145 52.41
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
B04 -4600009-15 OBTRUATOR, BLUNT X4 4/1/96 5/1 334.71 608.57 10.14
------------------------------------------------------------------------------------------------------------------------------------
B04 -4600015-01 INSTRUMENTS 4/1/96 5/1 843.74 1534.07 25.57
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4600008 TELESCOPE, ▇▇▇▇▇▇▇ 11 3/1/96 10/1 832.79 2939.25 24.5
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ ARLTHROSCOPE,WIDE ANGEL 2/1/96 3/1 1944.44 2000 55.55
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇-▇▇ ARLTHROSCOPE, WIDE ANGEL 2/1/96 3/1 1944.44 2000 55.55
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ ARLTHROSCOPE, WIDE ANGEL 2/1/96 3/1 1944 44 2000 55.55
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ ARLTHROSCOPE, WIDE ANGEL 2/1/96 3/1 1944.44 2000 55.55
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ LAPROSOPE, 10MM 0 DEG 2/1/96 3/1 2406.25 2475 68.75
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ LAPROSOPE, 10MM 0 DEG 2/1/96 3/1 2406.25 2475 68.15
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ VIDEO CAMER 3 CHIP 2/196 5/1 3208.33 5500 91.66
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ VIDEO CAMER 3 CHIP 2/196 5/1 3208.33 5500 91.66
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ COUPLER, C-MT 2/1/96 5/1 438.67 752 12.54
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ COUPLER, C-MT 2/1/96 5/1 438.67 752 12.54
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ DIAGNOSTIC INSTRUMENT SET 2/1/96 5/1 233.33 400 6.66
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ DIAGNOSTIC INSTRUMENT SET 2/1/96 5/1 233.33 400 6.66
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ DIAGNOSTIC INSTRUMENT SET 2/1/96 5/1 233.33 400 6.66
------------------------------------------------------------------------------------------------------------------------------------
B04 ▇-▇▇▇▇▇▇▇-▇▇ DIAGNOSTIC INSTRUMENT SET 2/1/96 5/1 233.33 400 6.66
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4600010 PUMP DEPRIVAN 2/1/96 5/1 1063.78 1857.91 30.96
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4600013 INSTRUMENTS 2/1/96 5/1 118.33 202.85 3.38
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4500008A TELECOPE. ▇▇▇▇▇▇▇ & INSTRUMENTS 11/1/95 10/1 1680.28 5306.15 44.22
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4500008B TELECOPE, ▇▇▇▇▇▇▇ & INSTRUMENTS 11/1/95 10/1 1680.28 5306.14 44.22
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4500008C TELECOPE. ▇▇▇▇▇▇▇ & INSTRUMENTS 11/1/95 10/1 1680.28 5306.14 44.22
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4500008D TELECOPE. ▇▇▇▇▇▇▇ b INSTRUMENTS 11/1/95 10/1 1680.28 5306.14 44.22
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4600001 SOFTWARE (MEDICAL SOFTWARE) 9/1/95 5/1 7074.22 10611.33 176.86
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4600006 INSTRUMENTS MINI COMBINED 9/1/95 5/1 4394.67 6592 109.87
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4600002 STIRRUPS, SELF ADJUSTING 8/1/95 5/1 2865.9 4194 69.9
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4600003 ELECTROSURGICAL FORCE 40 8/1/95 5/1 4370.38 6395.68 106.59
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4600004 INSTUMENTS 8/1/95 5/1 4762.83 6970 116.16
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4600005 INSTUMENTS 8/1/95 5/1 222.49 325.6 5.42
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4500015 IMAGE INTENSIFIER 7/1/95 5/1 13996.5 19995 333.25
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4500014 VIDEO IMAGER 6/1/95 5/1 2282.58 3185 53.08
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4500016 KNIFE SYSTEM, CRTOCUT 5/1/95 10/1 4963.75 13537.5 112.81
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4500012 INSTRUMENTS 4/1/95 5/1 3211.93 4282.57 71.38
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4500013 X-RAY SHETLD 4/1/95 5/1 1530 2040 34
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4500009 EAGLE 2000 SERIES GRAVITY 3/1/95 5/1 2106.33 2750 45.83
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4500009A EAGLE 2000 SERIES GRAVITY 3/1/95 5/1 2106.33 2750 45.83
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4500009B EAGLE 2000 SERIES GRAVITY 3/1/95 5/1 2106.33 2750 45.83
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4500011 ▇▇▇▇▇ IRRIGATION TOWER 3/1/95 5/1 1523.33 1986.95 33.12
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4500008 DYOPNEUMATIC MODEL 15 WITH VIDEO 2/1/95 5/1 84508.56 107883.27 1798.05
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4500003 COMPUTER, 486 1/1/95 5/1 2750.56 3438.2 57.3
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4500006 FACSIMILE MACHINE 1/1/95 5/1 2324 2905 48.42
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4500007 LAPROSCOPIC COUPLER 1/1/95 5/1 2200 2750 45.83
------------------------------------------------------------------------------------------------------------------------------------
B04 6-1500051 PRINTER, LASER JET 9/1/94 5/1 2502.07 2887 48.12
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4500001 LIGHTSOURCE XENON 9/1/94 10/1 3957.05 9131.65 76.1
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4400016 ENDO-SCRUB SYSTEM 6/1/94 5/1 3181.99 3471.26 57.86
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Corp. Item No. Description Acq. Date DeprLife Bk Reserve BkInstCost CurrDegr
----- -------- ----------- --------- --------- ---------- ---------- --------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4400013A INSTRUMENTS SET 4/1/94 8/1 434.43 731.67 7.62
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4400014 INSTRUMENTS 4/1/94 5/1 3773.26 3971.85 66.2
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4400015 MICROCASSET POCKET SCE 25 4/1/94 5/1 2325.6 2448 40.8
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4400004 MOUNTAIN MODEL FS7250 250 3/1/94 5/1 941.53 974 16.23
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4400005 I-STAT SYSTEM CONFIGURATION 3/1/94 5/1 8603.33 8900 148.33
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
B04 440006, FLUOROSCAN IMAGING SYSTEM 3/1/94 8/1 27278.13 45150 470.32
------------------------------------------------------------------------------------------------------------------------------------
B04 400007 IRRIGATING HANDLE ZERO DEGREE SCOPE 3/1/94 8/1 8287.35 13717 142.88
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4400008 SAW OSCILLATION 3/1/94 8/1 5853.65 9688.8 100.92
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4400008A DRILL / SYNTHES ▇▇▇▇▇ 3/1/94 8/1 7599.78 12578.95 131.03
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4400009 DRILL SYSTEM 2000 3/1/94 8/1 5942.97 98:16.64 102.46
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4400012 INSTRUMENTS SET 3/1/94 8/1 1322.12 2188.33 22.8
------------------------------------------------------------------------------------------------------------------------------------
B04 6-4400013 INSTRUMENTS SET 3/1/94 8/1 125854 2083.1 21.7
------------------------------------------------------------------------------------------------------------------------------------
B04 6-44000062 STERILIZER, GAS 12/1/93 15/00 15731.55 46420.96 257.9
------------------------------------------------------------------------------------------------------------------------------------
B04 70088 ELECTROCARDIOGRAPH 9/1/93 7/1 4044.19 5308 63.19
------------------------------------------------------------------------------------------------------------------------------------
B04 61192 MONITOR COLOR 611/93 6/1/93 5/1 2450 2450 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61150 CABOT IRRIGATION SYSTEM 12/1/92 5/1 3664.19 3664.19 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61151 ENOSCOPIC BABCOCKSX4 12/1/92 5/1 1598 1598 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61152 HI FLOW PL INSUFFLOTOR 12/1/92 5/1 7554.08 7554.08 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61153 ENOSCOPIC ETHICON 12/1/92 5/1 7047.11 7047.11 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61154 RATCHET GRASPING FORCEP X2 12/1/92 5/1 5175 5175 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61155 AUTOBRITE ILLUMINATOR 11 12/1/92 5/1 5443.5 5443.5 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61156 DYOCAM 750 DUAL HEAD VIDEO SONY 12/1/92 5/1 18640 18640 0
------------------------------------------------------------------------------------------------------------------------------------
B04 69121 PHACOEMULSIFIER ALCON SERIES 10/1/92 10/1 33996.08 55128.78 459.41
------------------------------------------------------------------------------------------------------------------------------------
B04 61062 PNEUMATIC MOTOR 3/1/92 5/1 1701 1701 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61063 DRILL 3/1/92 5/1 1295 1295 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61064 CRESENT BLADE SAW OSCILLATING 3/1/92 5/1 1690 1690 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61065 OSCILLATING SAW 3/1/92 5/1 1695 1695 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61066 A.D. SYNTHES DRILL 3/1/92 5/1 1495 1495 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61067 STERILIZATION CASE 3/1/92 5/1 500 500 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61061 ENDOSCOPIC SINUS 2/1/92 10/1 9979.68 14428.45 120.24
------------------------------------------------------------------------------------------------------------------------------------
B04 400001 CHAIR ▇▇▇▇▇▇'▇ HIGHBACK OPERATIONAL 12/1/91 5/1 3720 3720 0
------------------------------------------------------------------------------------------------------------------------------------
B04 400002 CAMERA SYSTEM DYOCAM 750 12/1/91 8/1 26238.66 29634.25 308.69
------------------------------------------------------------------------------------------------------------------------------------
B04 400003 CART LINEN TRANSPORT 12/1/91 5/1 1153.76 1153.76 0
------------------------------------------------------------------------------------------------------------------------------------
B04 40004 PRINTER HP LASERJET II 12/1/91 5/1 2765 2765 0
------------------------------------------------------------------------------------------------------------------------------------
B04 6-920400001 STIRRUPS/CLAMPS 10/1/91 7/1 2495 2495 0
------------------------------------------------------------------------------------------------------------------------------------
B04 66462 HI-FLOW INSUFFLATOR 10/1/91 7/1 4680 4680 0
------------------------------------------------------------------------------------------------------------------------------------
B04 66463 HI-FLOW INSUFFLATOR 10/1/91 7/1 4680 4680 0
------------------------------------------------------------------------------------------------------------------------------------
B04 KNO73815PO INSTRUMENTS SURGICAL SET 4/1/91 5/1 2768 2768 0
------------------------------------------------------------------------------------------------------------------------------------
B04 64260 LASER CANDELA 4/1/91 7/1 1694.14 1694.14 0
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇ COMPUTER AND SOFTWARE 10/1/91 5/1 24668.75 24668.75 0
------------------------------------------------------------------------------------------------------------------------------------
B04 64689 COPIER FT5590 10/1/91 5l/1 11902 11902 0
------------------------------------------------------------------------------------------------------------------------------------
B04 64697 IRRIGATION PUMP 8/1/90 5/1 2552.97 2552.97 0
------------------------------------------------------------------------------------------------------------------------------------
B04 64228 MONITOR SIX TRACE MPAC 5/1/90 5/1 15974.59 15974.59 0
------------------------------------------------------------------------------------------------------------------------------------
B04 64229 MONITOR SIX TRACE MPAC 5/1/90 5/1 15974.59 15974.59 0
------------------------------------------------------------------------------------------------------------------------------------
B04 64230 MONITOR SIX TRACE MPAC 5/1/90 5/1 15974.59 15974.59 0
------------------------------------------------------------------------------------------------------------------------------------
B04 64231 MONITOR SIX TRACE MPAC 5/1/90 5/1 15974.59 15974.59 0
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Corp. Item No. Description Acq. Date DeprLife Bk Reserve BkInstCost CurrDegr
----- -------- ----------- --------- --------- ---------- ---------- --------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
B04 64232 DIGITAL WRITER 5/1/90 5/1 5900 5900 0
------------------------------------------------------------------------------------------------------------------------------------
B04 64311 MICROSCOPE OPTIC CARRIER 5/1/90 10/1 23064.13 26612.46 221.77
------------------------------------------------------------------------------------------------------------------------------------
B04 64444 FACSIMILE, FUJITSU 5/1/90 5/1 1249 1249 0
------------------------------------------------------------------------------------------------------------------------------------
B04 73344 MONITOR,OHMEDA P073344 5/1/90 5/1 496.19 496.19 0
------------------------------------------------------------------------------------------------------------------------------------
B04 73344A MONITOR,OHMEDA P073344 5/1/90 5/1 496.19 496.19 0
------------------------------------------------------------------------------------------------------------------------------------
B04 73344B MONITOR,OHMEDA P073344 5/1/90 5/1 496.19 496.19 0
------------------------------------------------------------------------------------------------------------------------------------
B04 773344C MONITOR,OHMEDA P073344 5/1/90 5/1 496.19 496.19 0
------------------------------------------------------------------------------------------------------------------------------------
B04 73344D MONITOR,OHMEDA P073344 5/1/90 5/1 496.19 496.19 0
------------------------------------------------------------------------------------------------------------------------------------
B04 73344E MONITOR,OHMEDA P073344 5/1/90 5/1 496.19 496.17 0
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
B04 4260A CONDALA LASER 9/1/92 5/1 153995.97 153995.97 0
------------------------------------------------------------------------------------------------------------------------------------
B04 63936 MARQUETTE MONITOR SYSTEM 2/1/90 7/1 110446.5 110446.5 0
------------------------------------------------------------------------------------------------------------------------------------
B04 63718 SUCTION UNIT CRAFT MODEL R33-100 11/1/89 5/1 647.71 847.71 0
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ FOR PUNCTURE MINI 11/1/89 5/1 2887.85 2887.65 0
------------------------------------------------------------------------------------------------------------------------------------
B04 80005 ARCHITECTURAL CHARGES FOR FY 89 6/1/89 10/1 1548.53 1630.03 13.59
------------------------------------------------------------------------------------------------------------------------------------
B04 63082 VIDEO SYSTEM DYOCAM 650 5/1/89 7/1 8995 8996 0
------------------------------------------------------------------------------------------------------------------------------------
B04 63083 VIDEO SYSTEM DYOCAM 650 5/1/89 7/1 1995 8995 0
------------------------------------------------------------------------------------------------------------------------------------
B04 63084 AUTOBRITE ILLUMEATOR 111 5/1/89 7/1 2501.2 2501.2 0
------------------------------------------------------------------------------------------------------------------------------------
B04 63085 AUTOBRITE ILLUMENATOR 111 5/1/89 7/1 2501.2 2501.2 0
------------------------------------------------------------------------------------------------------------------------------------
B04 80001 ARTHOPLASTY INSTRUMENTS 6/1/86 5/1 1769.28 1769.26 0
------------------------------------------------------------------------------------------------------------------------------------
B04 2209 WORK TABLE 24 X 48 6/1/88 10/1 360.29 360.29 0
------------------------------------------------------------------------------------------------------------------------------------
B04 2210 WORK TABLE 16 X 20 6/1/88 10/1 193.21 193.21 0
------------------------------------------------------------------------------------------------------------------------------------
B04 2211 WORKTABLE 16 X 20 6/1/88 10/1 193.21 193.21 0
------------------------------------------------------------------------------------------------------------------------------------
B04 2215 WORK TABLE 16 X 20 6/1/88 10/1 193.21 193.21 0
------------------------------------------------------------------------------------------------------------------------------------
B04 60593 C02 LASER 6/1/88 7/1 24635.5 24635.5 0
------------------------------------------------------------------------------------------------------------------------------------
B04 60594 COLPSCOPE 6/1/88 7/1 7000 7000 0
------------------------------------------------------------------------------------------------------------------------------------
B04 60641 STRETCHERS, MIDMARK 6/1/88 15/00 2154.9 3054.19 16.97
------------------------------------------------------------------------------------------------------------------------------------
B04 60642 STRETCHERS, MIDMARK 6/1/88 15/00 2154.9 3064.19 16.97
------------------------------------------------------------------------------------------------------------------------------------
B04 60643 STRETCHERS, MIDMARK 6/1/88 15/00 2154.9 3054.19 16.97
------------------------------------------------------------------------------------------------------------------------------------
B04 60644 STRETCHERS, MIDMARK 6/1/88 15/00 2154.9 3054.19 16.97
------------------------------------------------------------------------------------------------------------------------------------
B04 60645 STRETCHERS, MIDMARK 6/1/88 15/00 2154.9 3054.19 16.97
------------------------------------------------------------------------------------------------------------------------------------
B04 60646 STRETCHERS. MIDMARK 6/1/88 15/00 2154.9 3054.19 16.97
------------------------------------------------------------------------------------------------------------------------------------
B04 60647 STRETCHERS, MIDMARK 6/1/88 15/00 2154.9 3054.19 16.97
------------------------------------------------------------------------------------------------------------------------------------
B04 60648 STRETCHERS, MIDMARK 6/1/88 15/00 2154.9 3054.19 16.97
------------------------------------------------------------------------------------------------------------------------------------
B04 61032 SPECTROMETER 6/1/88 8/1 86108.14 86108.14 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61220 PULSE OXIMETERS 6/1/88 10/1 2880.86 2880.86 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61294 TELESCOPE LASERS 6/1/88 7/1 1176 1176 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61295 TELESCOPE LASERS 6/1/88 7/1 1176 1176 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61296 TELESCOPE PART OF LASER 6/1/88 7/1 1143 1143 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61297 TELESCOPE PART OF LASER 6/1/88 7/1 1143 1143 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61298 C02 LASERCOUPLER W/FOCUS 6/1/88 7/1 1710 1710 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61299 C02 LASERCOUPLER W/FOCUS 6/1/88 7/1 1710 1710 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61300 CAMERA, ENDOSCOPIC VIDEO 6/1/88 7/1 5100 5100 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61301 CAMERA, ENDOSCOPIC VIDEO 6/1/88 7/1 5100 5100 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61302 BEAMSPLITTER 6/1/88 7/1 990 990 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61303 BEAMSPLITTER 6/1/88 7/1 990 990 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61304 LIGHT SOURCE 6/1/88 7/1 4218 4216 0
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Corp. Item No. Description Acq. Date DeprLife Bk Reserve BkInstCost CurrDegr
----- -------- ----------- --------- --------- ---------- ---------- --------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
B04 61305 LIGHT SOURCE 6/1/88 7/1 4218 4218 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61540 ARTHOSCOPE SURD SYSTEMS 6/1/88 10/1 8789.65 8789.65 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61541 ARTHOSCOPE SURD SYSTEMS 6/1/88 10/1 8789.65 8789.65 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61626 PULSE OXIMETERS 6/1/88 10/1 2880.86 2880.86 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61716 PULSE OXIMETERS 6/1/88 10/1 2880.86 2880.86 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61717 PULSE OXIMETERS 6/1/88 10/1 2880.86 2880.86 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61718 PULSE OXIMETERS 6/1/88 10/1 2880.86 2880.86 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61719 PULSE OXIMETERS 6/1/88 10/1 2880.86 2880.86 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61736 COMPUTER ADDITION (TI) 6/1/88 5/1 16393.14 16393.14 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61737 TERMINAL 6/1/88 5/1 600 600 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61738 TERMINAL 6/1/88 5/1 6110 600 0
------------------------------------------------------------------------------------------------------------------------------------
B04 62535 ARGON LASER 6/1/88 7/1 86025 86025 0
------------------------------------------------------------------------------------------------------------------------------------
B04 80000 ARCHITECTURE, BUILDING 6/1/88 10/1 12138.11 12138.11 0
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 6/1/88 5/1 2600 2600 0
------------------------------------------------------------------------------------------------------------------------------------
B04 80003 SURGISTOOL STOOL 6/1/88 15/00 935.83 1326.37 7.37
------------------------------------------------------------------------------------------------------------------------------------
B04 9070 MONITORS (X2) 6/1/88 7/1 529.85 529.85 0
------------------------------------------------------------------------------------------------------------------------------------
B04 9262 C-WIRE INSERTER KIT 6/1/88 1/1 001 0.01 0
------------------------------------------------------------------------------------------------------------------------------------
B04 9271 MOBILE LAPAROSCOPY CART 6/1/88 10/1 18835 188.35 0
------------------------------------------------------------------------------------------------------------------------------------
B04 9272 MONITORS (X2) SEE MJ 9270 6/1/88 7/1 16095 160.95 0
------------------------------------------------------------------------------------------------------------------------------------
B04 9314 HEADLIGHT SYSTEM 24-3012 6/1/88 10/1 729.36 729.38 0
------------------------------------------------------------------------------------------------------------------------------------
B04 9420 ARTHROSCOPIC LEG HOLDER 6/1/88 10/1 1220.55 1220.55 0
------------------------------------------------------------------------------------------------------------------------------------
B04 9435 TV MONITOR PVM 6/1/88 7/1 479.19 479.19 0
------------------------------------------------------------------------------------------------------------------------------------
B04 9484 LITHOTOMY STIRRUPS 6/1/88 5/1 1842.72 1842.72 0
------------------------------------------------------------------------------------------------------------------------------------
B04 61572 TOURNIQUET 5/1/88 8/1 1730.02 1730.02 0
------------------------------------------------------------------------------------------------------------------------------------
B04 80004 TERMINAL, 931 T1 7/1/87 5/1 1036 1036 0
------------------------------------------------------------------------------------------------------------------------------------
B04 58744 STIRRUPS 6/1/86 5/1 1880 1880 0
------------------------------------------------------------------------------------------------------------------------------------
B04 58741A MONITOR 4/1/86 7/1 1450 1450 0
------------------------------------------------------------------------------------------------------------------------------------
B04 58742A MONITOR 4/1/86 7/1 1450 1450 0
------------------------------------------------------------------------------------------------------------------------------------
B04 58743A MONITOR 4/1/86 7/1 1450 1450 0
------------------------------------------------------------------------------------------------------------------------------------
B04 58671 MICRO ELECTRIC ARTHIPLASTY 3/1/86 10/1 6441.25 6441.25 0
------------------------------------------------------------------------------------------------------------------------------------
B04 5867A0 MICRO ELECTRIC ARTHIPLASTY 3/1/86 10/ 7020 7020 0
------------------------------------------------------------------------------------------------------------------------------------
B04 58672 MICRO ELECTRIC ARTHIPLASTY 3/1/86 10/1 7020 7020 0
------------------------------------------------------------------------------------------------------------------------------------
B04 58694 RESETOSCOPE 3/1/86 5/ 875 875 0
------------------------------------------------------------------------------------------------------------------------------------
B04 58695 INSUFFLATOR 3/1/86 10/1 1175 1175 0
------------------------------------------------------------------------------------------------------------------------------------
B04 58509A MIOROTOME CRYPSTAT MINOTOME 1/1/86 10/1 5869 5869 0
------------------------------------------------------------------------------------------------------------------------------------
B04 58431 DIFRIBRILLATOR 12/1/85 8/1 2640 2640 0
------------------------------------------------------------------------------------------------------------------------------------
B04 58508 MICROTOME CRYOSTAT MINOTOME 12/1/85 10/1 5869 5869 0
------------------------------------------------------------------------------------------------------------------------------------
B04 58109 STOOL RELIANCE 10/1/85 15/00 486.72 551 3.06
------------------------------------------------------------------------------------------------------------------------------------
B04 58110 STOOL RELIANCE 10/1/85 15/00 486.72 551 3.06
------------------------------------------------------------------------------------------------------------------------------------
B04 58313 X-RAY SYSTEM 10/1/85 8/1 11693 11693 0
------------------------------------------------------------------------------------------------------------------------------------
B04 57667 LIFEPAK - DEFIBIRILLATOR 9/1/85 8/1 8832 8832 0
------------------------------------------------------------------------------------------------------------------------------------
B04 56199 COMPUTER BUSINESS SYSTEM TI 8/1/85 5/1 3318 3318 0
------------------------------------------------------------------------------------------------------------------------------------
B04 56199C SOFTWARE - MEDICAL 8/1/85 5/1 11075 11075 0
------------------------------------------------------------------------------------------------------------------------------------
B04 56199D SOFTWARE 8/1/85 5/1 12000 12000 0
------------------------------------------------------------------------------------------------------------------------------------
B04 56884 COPIER FP 1520 8/1/85 5/1 1970 1970 0
------------------------------------------------------------------------------------------------------------------------------------
B04 57012 HUMIDIFIER DUAL SERV 8/1/85 10/1 1332.88 1332.88 0
------------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Corp. Item No. Description Acq. Date DeprLife Bk Reserve BkInstCost CurrDegr
----- -------- ----------- --------- --------- ---------- ---------- --------
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
B04 56842 CAMERA SYSTEM 543 7/1/85 8/1 10003.5 10003.5 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56:845 CAMERA SYSTEM 543 7/1/85 8/1 10003.5 10003.5 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56880 MICROSCOPE OPERATING WILD 7/1/85 l0/1 39689 39689 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56891 TABLE, EXAMINATION 7/1/85 15/00 4318.2 4798 26.68
----------------------------------------------------------------------------------------------------------------------------------
B04 56892 TABLE, EXAMINATION 7/1/85 15/00 4318.2 4798 26.66
----------------------------------------------------------------------------------------------------------------------------------
B04 58741 MINI HOHMANNRETR WIDE 7/1/85 15/00 1309.33 1454.81 8.08
----------------------------------------------------------------------------------------------------------------------------------
B04 58742 MINI HOHMANNRETR WIDE 7/1/85 15/00 130,9.33 1454.81 8.08
----------------------------------------------------------------------------------------------------------------------------------
B04 58743 MINI HOHMANNRETR WIDE 7/1/85 15/00 1309.33 1454.81 8.08
----------------------------------------------------------------------------------------------------------------------------------
B04 99999 START-UP EQUIPMENT 7/1/85 5/1 262392.93 262392.93 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56199A SOFTWARE SYSTEM 6/1/85 7/1 15000 15000 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56199B MODEM 6/1/85 5/1 1044.5 1044.5 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56487 STERILIZER, GRAVITY 6/1/85 15/00 1126.43 1243.91 6.91
----------------------------------------------------------------------------------------------------------------------------------
B04 56488 STERILIZER, GRAVITY 6/1/85 15/00 1126.43 1243.91 8.91
----------------------------------------------------------------------------------------------------------------------------------
B04 56489 STERILIZER, GRAVITY 6/1/85 15/00 1126.43 1243.91 6.91
----------------------------------------------------------------------------------------------------------------------------------
B04 56541 STERILIZER. WASHER 6/1/85 15/00 68683.45 75846.75 421.38
----------------------------------------------------------------------------------------------------------------------------------
B04 56614 DERMATONE 6/1/85 10/1 1195 1135 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56631 CRIB, PEDIATRIC 6/1/85 15/00 686.28 757.85 4.21
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
B04 56632 CRIB, PEDIATRIC 6/1/85 15/00 686.28 757.85 4.21
----------------------------------------------------------------------------------------------------------------------------------
B04 56633 CRIB, PEDIATRIC 6/1/85 15/00 686.28 757.85 4.21
----------------------------------------------------------------------------------------------------------------------------------
B04 566,34 CRIB, PEDIATRIC 6/1/85 15/00 686.28 757.85 4.21
----------------------------------------------------------------------------------------------------------------------------------
B04 56643 STERILIZER, GRAVITY 6/1/85 15/00 1126.43 1243.91 691
----------------------------------------------------------------------------------------------------------------------------------
B04 56644 STERILIZER, GRAVITY 6/1/85 15/00 1126.43 1243.91 6.91
----------------------------------------------------------------------------------------------------------------------------------
B04 56646 PROJECTOR, VIDIO 6/1/85 10/1 2705.15 2706.15 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56647 PROJECTOR, VIDIO 6/1/85 10/1 2705.15 2705.15 0
----------------------------------------------------------------------------------------------------------------------------------
B04 566'48 CABINET BRETFORD 6/1/85 10/1 875.93 675.93 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56649 CABINET BRETFORD 4/1/85 10/1 875,93 875.93 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56660 LASER, C02 SYSTEM 6/1/85 5/1 61287 64287 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56661 COLONOSSCOPE CF-101. 6/1/85 10/1 9400 9400 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56662 ANESTHSIA MACHINE 6/1/85 10/1 18718.58 18716.58 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56663 ANESTHISA MACHINE 6/1/85 10/1 18716.58 18716.58 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56664 ANESTHISA MACHINE 6/1/85 10/1 18716.58 18716.58 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56665 ANESSTHISA MACHINE 6/1/85 10/1 18716.58 18716.58 0
----------------------------------------------------------------------------------------------------------------------------------
B04 561766 ANESTHISA MACHINE 6/1/85 10/1 18716.58 18716.58 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56667 ANESTHISA MACHINE 6/1/85 10/1 18716.58 18716.58 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56669 RESPIROMETER. HALOSCALE 6/1/85 10/1 577.2 577.2 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56670 MONITOR, BLOOD PRESSURE 6/1/85 7/1 1652 10
----------------------------------------------------------------------------------------------------------------------------------
B04 56671 MONITOR. BLOOD PRESSURE 6/1/85 7/1 1662 16` "2 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56672 MONITOR. BLOOD PRESSURE 6/1/85 7/1 1652 1652 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56673 MONITOR. BLOOD PRESSURE 6/1/85 7/1 1952 115 2 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56674 MONITOR, BLOOD PRESSURE 6/1/85 7/1 1652 1652 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56675 MONITOR. BLOOD PRESSURE 6/1/85 7/1 1652 1652 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56676 MONITOR, BLOOD PRESSURE 6/1/85 7/1 1652 1652 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56682 CENTRIFUGE 6/1/85 10/1 890 890 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56699 COMPUTER, TI BUSINESS SYSTEM 6/1/85 7/1 29266 29266 0
----------------------------------------------------------------------------------------------------------------------------------
B04 541703 LASESMOKE EVACUATION SYSTEM 6/1/85 5/1 4172.91 4172.91 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56717 TYPEWRITER, WHEELWRITER 6/1/85 5/1 872.85 872.85 0
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Corp. Item No. Description Acq. Date DeprLife Bk Reserve BkInstCost CurrDegr
----- -------- ----------- --------- --------- ---------- ---------- --------
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
B04 541719 POWER SUPPLY MINUTEMAN 500 6/1/85 10/1 699 699 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56727 VACUUM, ▇▇▇▇▇ TDM 50 6/1/85 10/1 102.0 102D 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56728 VACUUM, ▇▇▇▇▇ ▇▇▇ 50 6/1/85 10/1 1020 1020 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56913 FLUOURSCOPE SYSTEM BU 25 6/1/85 10/1 827410 82760 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56989 IGHT SOURCE 6/1/85 10/1 law law 0
----------------------------------------------------------------------------------------------------------------------------------
B04 57368 LAPAROSCOPIC DELIVERY SYSTEM 6/1/85 10/1 64702 64702 0
----------------------------------------------------------------------------------------------------------------------------------
B04 73684 LAPROSCOPY DELIVERY SYSTEM 6/1/85 10/1 6012 6012 0
----------------------------------------------------------------------------------------------------------------------------------
B04 87418 SMOKE EVACUATION SYSTEM 6/1/85 10/1 4065 4065 0
----------------------------------------------------------------------------------------------------------------------------------
B04 90905 ▇▇▇▇. SUPER ERECTRA 6/1/85 20/00 11849.42 17447 72.7
----------------------------------------------------------------------------------------------------------------------------------
B04 90912 ▇▇▇▇▇ WITH ▇▇▇▇▇▇ 6/1/85 15/00 30067.18 33203.02 184.46
----------------------------------------------------------------------------------------------------------------------------------
B04 46378 CRUBSIK (3 PLACE) 5/1/85 20/00 1121.08 1640.6 8.84
----------------------------------------------------------------------------------------------------------------------------------
B04 46379 CRUBSINK (3 PLACE) 5/1/85 20/00 1121.08 1640.6 6.84
----------------------------------------------------------------------------------------------------------------------------------
B04 56522 SATELITE WISTRAIGHT ARM LIGHT 5/1/85 15/00 5725.07 6283.61 34.91
----------------------------------------------------------------------------------------------------------------------------------
B04 56523 SATELITE WISTRAIGHT ARM LIGHT 5/1/85 15/00 5725.07 6283.61 34.91
----------------------------------------------------------------------------------------------------------------------------------
B04 56524 SATELITE WISTRAIGHT ARM LIGHT 5/1/85 15/00 5725.07 6283.431 34.91
----------------------------------------------------------------------------------------------------------------------------------
B04 565125 SATELITE W/STRAIGHT ARM LIGHT 5/1/85 15/00 5725.07 62283.61 34.91
----------------------------------------------------------------------------------------------------------------------------------
B04 56526 SATELITE WISTRAIGHT ARM LIGHT 5/1/85 15/00 5#'25.07 6283.61 34.91
----------------------------------------------------------------------------------------------------------------------------------
B04 56527 SATELITE WISTRAIGHT ARM LIGHT 5/1/85 15/00 5725.07 628161 34.91
----------------------------------------------------------------------------------------------------------------------------------
B04 56573 TABLE, SURGERY 5/1/85 15/110 10570.56 11801.83 64.46
----------------------------------------------------------------------------------------------------------------------------------
B04 56574 TABLE, SURGERY 5/1/85 15/00 9840.80 10800.09 60
----------------------------------------------------------------------------------------------------------------------------------
B04 56575 TABLE, SURGERY 5/1/85 15/00 9840.80 10800.09 60
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
B04 56576 TABLE, SURGERY 5/1/85 15/00 9940.08 10800.09 60
----------------------------------------------------------------------------------------------------------------------------------
B04 56578 MONITOR, RECEIVER 0585069-P 5/1/85 5/1 908-16 908.16 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56579 MONITOR, RECEIVER 0585069-P 5/1/85 5/1 908.16 908.16 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56584 ASPIRATOR IRRIGATION 5/1/85 10/1 24103.5 24103.5 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56718 TERMINAL, VIDEO DISPLAY 5/1/85 5/1 1036 1036 0
----------------------------------------------------------------------------------------------------------------------------------
B04 46380 SCRUBSINK (3 PLACE) 7/1/85 20/00 1121.08 1640.6 6.84
----------------------------------------------------------------------------------------------------------------------------------
B04 56263 ELETROSUROICAL UNIT 4/1/85 8/1 2845.655 2645.65 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56280 ELECTROURGICAL UNIT 4/1/85 8/1 2845.65 2845.65 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56281 ELECTROSURGICAL UNIT 4/1/85 8/1 2845.65 2845.65 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56282 ELETROSURICAL UNIT 4/1/85 8/1 2845.65 2845.65 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56463 STERILIZER, GAS 4/1/85 15/00 18241.67 19900 110.56
----------------------------------------------------------------------------------------------------------------------------------
B04 56498 CABINET AERATOR 4/1/85 10/1 3686 365 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56514 LARYCOFI6ERSCOPE LF -1 4/1/85 10/1 3950 3960 0
----------------------------------------------------------------------------------------------------------------------------------
B04 56170 BED, MEDICARE 2/1/85 15/00 1780.41 1919 10.67
----------------------------------------------------------------------------------------------------------------------------------
B04 56171 BED, MEDICARE 2/1/85 15/00 1780.41 1919 10.67
----------------------------------------------------------------------------------------------------------------------------------
B04 56172 BED, MEDICARE 2/1/85 15/00 1780.41 1919 10.67
----------------------------------------------------------------------------------------------------------------------------------
B04 56173 BED. MEDICARE 2/1/85 15/00 1780.41 1919 10.67
----------------------------------------------------------------------------------------------------------------------------------
B04 56174 BED, MEDICARE 2/1/85 15/00 1780.41 1919 10.67
----------------------------------------------------------------------------------------------------------------------------------
B04 56175 BED, MEDICARE 2/1/85 15/00 1780.41 1919 10.67
----------------------------------------------------------------------------------------------------------------------------------
B04 56176 BED, MEDICARE 2/1/85 15/00 1780.41 1919 10.67
----------------------------------------------------------------------------------------------------------------------------------
B04 56177 BED, MEDICARE 2/1/85 15/00 1790.41 1919 10.67
----------------------------------------------------------------------------------------------------------------------------------
B04 56178 BED. MEDICARE 2/1/85 15/00 1790.41 1919 10.67
----------------------------------------------------------------------------------------------------------------------------------
B04 56179 BED. MEDICARE 2/1/85 15/00 178D.41 1919 10.67
----------------------------------------------------------------------------------------------------------------------------------
B04 56180 BED. MEDICARE 2/1/85 15/00 1780.41 1919 10.67
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Corp. Item No. Description Acq. Date DeprLife Bk Reserve BkInstCost CurrDegr
----- -------- ----------- --------- --------- ---------- ---------- --------
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
B04 56181 BED, MEDICARE 2/1/85 15/00 1780.41 1919 10.67
----------------------------------------------------------------------------------------------------------------------------------
B04 56182 BED, MEDICARE 2/1/85 15/00 1780.41 1919 10.67
----------------------------------------------------------------------------------------------------------------------------------
B04 56183 BED, MEDICARE 2/1/85 15/00 1780.41 1919 10.67
----------------------------------------------------------------------------------------------------------------------------------
B04 56184 BED. MEDICARE 2/1/85 15/00 1780.41 1919 10.67
----------------------------------------------------------------------------------------------------------------------------------
B04 56678 X-RAY UNIT, MOBILE 2/1/85 8/1 1639 1639 000
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Download ham M&D FA Q0112311999 2,397,2311.09 3,916.990.19 14,679.63
----------------------------------------------------------------------------------------------------------------------------------
Balances From Report
FAOSOAGOIJOI11999 4L433,1109.b4 6,000,710.66 40,371.61
----------------------------------------------------------------------------------------------------------------------------------
Difference in the Surgicare
Building and LH1 Schedule (2,038,650.45) (3,083,720.09) (25,697.66)
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Book value of the Furniture and Equipment 519,731,70
Note:
This is provided for Informational purposes only.
Surgicare
PP&E Identified by ▇▇▇▇▇ ▇▇▇▇▇ as no longer to use
As of March 31,1989
B04 Fixed Asset from MILD Download "FMA,804,▇▇▇▇▇▇" 01/29/99
Description AcqDate DeprLife BkReserve BkInst Cost CurrDepr YTDDepr
----------- ------- -------- --------- ----------- -------- -------
X-▇▇▇ ▇▇▇▇▇▇ 4/1/95 5/1 1530 2040 34 204
CABOT IRRIGATION SYSTEM 12/1/95 5111 3664.19 3664.19 0 0
PHACOEMULSIFIER ALCON SERIES 10/1/95 1011 33996.08 55128.78 459.41 2756.44
LASER CANDELA 4/1/95 7I1 1694.14 1694.14 0 0
COPIER FT5590 10/1/95 Sit 11902 11902 0 0
IRRIGATION PUMP 8/1/90 511 2552.97 2552.97 0 0
CONDALA LASER 9/1192 511 153995.97 153995.97 0 0
EXPANSION - MEDCO JOB 302 211190 1011 292377.34 327899.82 2732.5 16394.99
VIDEO SYSTEM OYOCAM 650 511189 711 8995 8995 0 0
VIDEO SYSTEM DYOCAM 650 511189 711 8995 8995 0 0
C02 LASER &1/88 711 24635.5 24635.5 0 0
TELESCOPE LASERS 6/1188 711 1176 1176 0 0
TELESCOPE LASERS 611188 7/11 1176 1176 0 0
TELESCOPE PART OF LASER 611/88 7/1 1143 1143 0 0
TELESCOPE PART OF LASER 611188 7/1 1143 1143 0 0
CAMERA, ENDOSCOPIC VIDEO &11/88 711 5100 5100 0 0
CAMERA, ENDOSCOPIC VIDEO 611!88 7/1 5100 5100 0 0
TERMINAL &1/88 511 600 600 0 0
TERMINAL 611188 5/1 600 600 0 0
ARGON LASER 611188 711 86025 86025 0 0
C-WIRE INSERTER KIT 611!88 ill 0.01 0.01 0 0
MOBILE LAPAROSCOPY CART 611/88 1011 188.35 188.35 0 0
ARTHROSCOPIC LEG HOLDER &1188 it/1 1220.55 1220.55 0 0
TERMINAL, 931 Ti 711/87 5/1 1036 1036 0 0
MONITOR 411186 711 1450 1450 0 0
MONITOR 411/86 7/1 1450 1450 0 0
MONITOR 411166 711 1450 1450 0 0
MICRO ELECTRIC ARTHIPLASTY 311/86 1011 6441.25 6441.25 0 0
MICRO ELECTRIC ARTHIPLASTY 311186 10/1 7020 7020 0 0
MICRO ELECTRIC ARTHIPLASTY 311186 1011 7020 7020 0 0
INSUFFLATOR 311/86 1011 1175 1175 0 0
MICROTOME CRYPSTAT MINOTOME 111186 10/1 5869 5869 0 0
MICROTOME CRYOSTAT MINOTOME 1211/85 1011 5869 5869 0 0
COPIER FP 1520 allies 511 1970 '1970 0 0
HUMIDIFIER DUAL SERV 811185 10/1 1332 88 1332 88 0 0
CAMERA SYSTEM 543 711185 811 10003.5 1011703.5 0 0
CAMERA SYSTEM 543 711185 8/1 1011113.5 10003.5 0 0
Description AcqDate DeprLife BkReserve BkInst Cost CurrDepr YTDDepr
----------- ------- -------- --------- ----------- -------- -------
STERILIZER. WASHER 6/1/85 151011 68683.45 75846.75 421.38 2528.23
PROJECTOR. VIDIO 611185 10/1 2705.15 2705.15 0 0
PROJECTOR, VIDIO 6/1185 111/1 2705.15 27115.15 0 0
CABINET BRETFORD 611185 1011 875.93 875.93 0 0
CABINET BRETFORD 611/85 1011 875.93 875.93 0 0
COMPUTER, TI BUSINESS SYSTEM 6/1!85 711 29266 29266 0 0
LASESMOKE EVACUATION SYSTEM 6!1!85 511 4172.91 4172.91 0 0
POWER SUPPLY MINUTEMAN 500 611185 10/1 699 699 0 0
lAPAROSCOPIC DELIVERY SYSTEM 611185 101/1 64702 647112 0 0
LAPROSCOPY DELIVERY SYSTEM 6X1/85 10/1 6/112 6412 0 0
SMOKE EVACUATION SYSTEM 6X1!85 10/1 4065 4065 0 0
MONITOR, RECEIVER 0585069-P 511185 511 908.16 908.16 0 0
MONITOR, RECEIVER 0585069-P 511185 511 908.16 908.16 0 0
ASPIRATOR IRRIGATION 511185 1011 24103.5 24103.5 0 0
STERILIZER. GAS 411/85 15100 18241.67 19900 110.56 663.34
CABINET AERATOR 411/65 10/1 3695 3695 0 0
BED, MEDICARE 2X1/85 15X00 1780.41 1919 10.67 63.97
BED, MEDICARE 211185 15100 1780.41 1919 10.67 63.97
BED. MEDICARE 211/85 15100 1780.41 1919 10.67 63.97
BED, MEDICARE 211185 15100 1780.41 1919 10.67 63.97
BED, MEDICARE 211X85 15100 1780.41 1919 10.67 63.97
BED, MEDICARE 211/85 15!00 1780.41 1919 10.67 63.97
BED. MEDICARE 2X1/85 15100 1780.41 1919 10.67 63.97
BED, MEDICARE 211185 15X00 1780.41 1919 10.67 63.97
BED, MEDICARE 2(1/85 15X00 1780.41 1919 10.67 63.97
BED, MEDICARE 211185 16!00 1780.41 1919 10.67 63.97
BED, MEDICARE 2X1/85 1500 1780.41 1919 10.67 63.97
BED. MEDICARE 211185 15X00 1780.41 1919 10.67 63.97
BED. MEDICARE 211185 15100 1780.41 1919 10.67 63.97
BED, MEDICARE 2X1/85 15/00 1780.41 1919 10.67 63.97
Download from M&D FA@01/23/9999 967,444.98 1,036,372.06 3,907.23 23,442.68
-------------------------------------------------------------
67,927.07
-------------------------------------------------------------
TSC Property Fixed Asset Ledger
As of October 31, 1998
P01 Fixed Asset from M& D Download FMAP01LAWSON 01/07/99
LTD Accum
Newco# New Ctr ItemNo Description 30 New AcqDt Yrs Months BkReserve BkinstCost Type Sub
2066 80102 10000 WATER FILTER 06021996 05 60 69.07 133.69 151400 1
2066 80102 10001 DISPOSER FOR TSCL 06021996 05 60 46.98 90.93 151400 1
2066 80102 10002 DISHWASHER FOR TSCL 06021996 05 60 238.82 462.23 151400 1
2066 80102 10003 MICROWAVE OVEN FOR TSCL 06021996 05 60 143.18 277.12 151400 1
2066 80102 10004 REFRIGERATOR FOR TSCL 06021996 05 60 345.64 668.99 151400 1
2066 80102 10005 REFRIG/FREEZER FOR TSCL 06021996 05 60 387.59 750.17 151400 1
2066 80102 10006 COPIER FOR TSCL 06021996 05 60 774.62 1499.27 151400 1
2066 80102 10007 AUTO DOCUMENT FEEDER FOR TSCL 06021996 05 60 1884.82 3648.03 151400 1
2066 80102 10008 SORTER/STAPLER FOR TSCL 06021996 05 60 637.59 1234.05 151400 1
2066 80102 10009 SORTER/STAPLER FOR TSCL 06021996 05 60 520.14 1006.73 151400 1
2066 80102 10010 CONSOLE FOR TSCL 06021996 05 60 425.05 822.68 151400 1
2066 80102 10011 WASTE BASKETS FOR TSCL 06021996 05 60 1153.11 2231.83 151400 1
2066 80102 10012 PANEL AND BINS FOR TSCL 06021996 05 60 45.10 87.29 151400 1
2066 80102 10013 STORAGE BINS FOR TSCL 06021996 05 60 23.74 45.94 151400 1
2066 80102 10014 NURSE CALL SYSTEM FOR TSCL 06021996 05 60 1773.99 3433.53 151400 1
2066 80102 10015 ZENITH REMOTES FOR TSCL 06021996 05 60 71.30 138.00 151400 1
2066 80102 10016 6 STOOLS FOR TSCL 06021996 05 60 261.75 506.61 151400 1
2066 80102 10017 ONLINE REMDIAGHOST FOR TSCL 06021996 05 60 363.05 702.68 151400 1
2066 80102 10018 CABLE FOR CALL SYSTEM - TSCL 06021996 05 60 1113.35 2154.87 151400 1
2066 80102 10019 MICROWAVE FOR TSCL 06021996 05 60 81.08 156.92 151400 1
2066 80102 10020 CD PLAYERS FOR TSCL 06021996 05 60 134.18 259.71 151400 1
2066 80102 10021 OFFICE FURNITURE FOR TSCL 06021996 05 60 13032.62 25224.42 151400 1
2066 80102 10022 SHELVING/CART SUPPLIES - TSCL 06021996 05 60 4745.86 9185.53 151400 1
2066 80102 10023 4 TELEVISIONS FOR TSCL 06021996 05 60 853.34 1651.63 151400 1
2066 80102 10024 OCEANIC AQUARIUM FOR TSCL 06021996 05 60 1347.22 2607.52 151400 1
2066 80102 10025 ARTWORK, FRAMING AT TSCL 06021996 05 60 2823.43 5464.71 151400 1
2066 80102 10026 4PORT 10 HR SYSTEM FOR TSCL 06021996 05 60 3042.02 5887.79 151400 1
2066 80102 10027 ASSEMBLY & INSTALLATION - TSCL 06021996 05 60 568.33 1100.00 151400 1
2066 80102 10028 UTILITY CART & SHELF FOR TSCL 06021996 05 60 72.05 139.46 151400 1
2066 80102 10029 QUARTZLINE LAMP FOR TSCL 06021996 05 60 45.14 87.36 151400 1
2066 80102 10030 COMM. NTWK. CABLING FOR TSCL 06021996 05 60 9167.57 17743.6 151400 1
2066 80102 10031 FURNITURE FOR TSCL 06021996 05 60 574.37 1111.68 151400 1
2066 80102 10032 METRO SUPPLY BINS FOR TSCL 06021996 05 60 218.44 422.78 151400 1
2066 80102 10033 4/8 PORT SYS PLAT FOR TSCL 06021996 05 60 2626.77 5084.07 151400 1
1
LTD Accum
Newco# New Ctr ItemNo Description 30 New AcqDt Yrs Months BkReserve BkinstCost Type Sub
2066 80102 10034 CABLE FOR TSCL 06021996 05 60 598.44 1158.28 151400 1
2066 80102 10035 SPACESAVE SYSTEM FOR TSCL 06021996 05 60 2193.14 4244.79 151400 1
2066 80102 10036 PLANTS FOR TSCL 06021996 05 60 1408.91 2726.92 151400 1
2066 80102 10037 WIRE RACKS FOR TSCL 06021996 05 60 257.27 497.95 151400 1
2066 80102 10038 TWO DRAWER LATERAL FILE - TSCL 06021996 05 60 213.12 412.49 151400 1
2066 80102 10039 SUPPLY BINS FOR TSCL 06021996 05 60 2085.09 4035.66 151400 1
2066 80102 10040 SUPPLY BINS FOR TSCL 06021996 05 60 53.94 104.40 151400 1
2066 80102 10041 FURN FOR RECOVERY, WAIT RNS - TSC 06021996 05 60 5980.03 11574.25 151400 1
2066 80102 10042 FURNISHINGS/23 HR STAY - TSCL 06021996 05 60 295.14 571.24 151400 1
2066 80102 10043 FURNISHINGS/MED DIRECTOR - TSCL 06021996 05 60 330.91 640.47 151400 1
2066 80102 10044 DISPLAY DICT STAT - TSCL 06021996 05 60 416.43 806.00 151400 1
2066 80102 10045 PAGING SYSTEM - TSCL 06021996 05 60 1447.70 2802.00 151400 1
2066 80102 10046 RACK, COAT DIN - TSCL 06021996 05 60 97.15 188.03 151400 1
2066 80102 10047 FURN & OFFICE EQUIP - TSCL 06021996 05 60 7518.36 14551.66 151400 1
2066 80102 10048 FURN & OFFICE EQUIP - TSCL 06021996 05 60 6192.68 11985 83 151400 1
152321.88
2066 80102 20000 INFUSION PUMP FOR TSCL 06021996 05 60 1347.35 2607.77 151400 1
2066 80102 20001 WARNING CABNT FOR TSCL 06021996 05 60 2158.27 4177.30 151400 1
2066 80102 20002 SURGICAL LIGHT FOR TSCL 06021996 05 60 2562.98 4960.61 151400 1
2066 80102 20003 STERILIZER FOR TSCL 06021996 05 60 9150.13 17709.92 151400 1
2066 80102 20004 ILLUMINATOR FOR TSCL 06021996 05 60 287.84 557.10 151400 1
2066 80102 20005 STERILIZER FOR TSCL 06021996 05 60 28075.90 54340.45 151400 1
2066 80102 20006 SALES TAX FOR ASSET 4603 06021996 05 60 130.28 252.16 151400 1
2066 80102 20007 VACUUM STERILIZER FOR TSCL 06021996 05 60 12397.63 23995.41 151400 1
2066 80102 20008 ELECTROCARDIOGRAM FOR TSCL 06021996 05 60 1096.06 2121.40 151400 1
2066 80102 20009 LAMP EXAM FLOOR MODEL FOR TSCL 06021996 05 60 37.61 72.80 151400 1
2066 80102 20010 SPHYGOMANOMETER FOR TSCL 06021996 05 60 597.17 1155.82 151400 1
2066 80102 20011 OHTHALNOSCOPE FOR TSCL 06021996 05 60 239.73 463.99 151400 1
2066 80102 20012 HOSPITAL MATTRESS FOR TSCL 06021996 05 60 186.00 360.00 151400 1
2066 80102 20013 SINK FOR ULTRASONIC CLEAN - TSCL 06021996 05 60 926.57 1793.36 151400 1
2066 80102 20014 KIT FOR CHANGING CABINET - TSCL 06021996 05 60 391.50 757.75 151400 1
2066 80102 20015 FIBEROPTIC HEADLIGHT SYS - TSCL 06021996 05 60 2133.99 4130.30 151400 1
2066 80102 20016 SUCTION UNIT FOR TSCL 06021996 05 60 251.68 487.13 151400 1
2066 80102 20017 CUBICLE TRACK FOR TSCL 06021996 05 60 557.69 1079.40 151400 1
2066 80102 20018 FLUOROSCAN IMAGING SYSTEM - TSCL 06021996 05 60 23658.17 45790.00 151400 1
2066 80102 20019 PATHOLOGY GROSSLAB FOR TSCL 06021996 05 60 25457.22 49272.03 151400 1
2066 80102 20020 STIRRUPS, TABLE FOR TSCL 06021996 05 60 2666.10 5160.19 151400 1
2066 80102 20021 SMOKE EVACUATION SYSTEM - TSCL 06021996 05 60 1960.75 3795.00 151400 1
2
LTD Accum
Newco# New Ctr ItemNo Description 30 New AcqDt Yrs Months BkReserve BkinstCost Type Sub
2066 80102 20022 MICROSCOPE, LABORATORY - TSCL 06021996 05 60 3394.50 6570.00 151400 1
2066 80102 20023 REGULATORS FOR TSCL 06021996 05 60 1182.30 2288.32 151400 1
2066 80102 20024 OXYGEN FLOWMETER FOR TSCL 06021996 05 60 427.11 826.66 151400 1
2066 80102 20025 HAMPERS FOR TSCL 06021996 05 60 554.82 1073.84 151400 1
2066 80102 20026 SHARPLAN LASER FOR TSCL 06021996 05 60 30679.39 59379.47 151400 1
2066 80102 20027 CHEMO CHAIR FOR TSCL 06021996 05 60 2345 67 4540.01 151400 1
2066 80102 20028 VIROSAFE FILTER FOR TSCL 06021996 05 60 455.70 882.00 151400 1
2066 80102 20029 EYE SHIELD FOR TSCL 06021996 05 60 81.67 158.08 151400 1
2066 80102 20030 OFFICE FURN FOR TREATMENT - TSCL 0602199 05 60 83.25 161.12 151400 1
2066 80102 20031 2 WHEELCHAIRS FOR TSCL 06021996 05 60 301.14 582.86 151400 1
2066 80102 20032 WHEELCHAIR FOR TSCL 06021996 05 60 173.05 334.94 151400 1
2066 80102 20033 MICROTONE/CRYOSTAT FOR TSCL 06021996 05 60 8155.66 15785.14 151400 1
2066 80102 20034 MINOR TRAY FOR TSCL 06021996 05 60 671.18 1299.05 151400 1
2066 80102 20035 PLASTIC BREAST TRAY FOR TSCL 06021996 05 60 273.06 528.50 151400 1
2066 80102 20036 PLASTIC BREAST TRAY FOR TSCL 06021996 05 60 204.73 396.25 151400 1
2066 80102 20037 DOPPLER STETHOSCOPE FOR TSCL 06021996 05 60 315.06 609.80 151400 1
2066 80102 20038 STRETCHER FLUOROSCOPY FOR TSCL 06021996 05 60 2111.81 4087.38 151400 1
2066 80102 20039 STRETCHERS FOR TSCL 06021996 05 60 18256.07 35334.32 151400 1
2066 80102 20040 BED AND OVERBED TABLE FOR TSCL 06021996 05 60 1958.68 3791.00 151400 1
2066 80102 20041 SURGERY TABLE FOR TSCL 06021996 05 60 7370.51 14265.50 151400 1
2066 80102 20042 SURGERY TABLE FOR TSCL 06021996 05 60 7370.51 14265.50 151400 1
2066 80102 20043 CART COVERS FOR TSCL 06021996 05 60 238.39 461.40 151400 1
2066 80102 20044 ELECTRO DERATOME MODEL - TSCL 06021996 05 60 1510.25 2923.07 151400 1
2066 80102 20045 ▇▇▇▇▇▇▇ SKIN GRAFT - TSCL 06021996 05 60 2491.01 4821.31 151400 1
2066 80102 20046 SURGICAL MICROSCOPE FOR TSCL 06021996 05 60 3668.19 7099.73 151400 1
2066 80102 20047 4 UTILITY CHAIRS FOR TSCL 06021996 05 60 3732.19 7223.59 151400 1
2066 80102 20048 HYDRAULIC STOOL FOR TSCL 06021996 05 60 446.99 865.15 151400 1
2066 80102 20049 HYDRAULIC STOOL FOR TSCL 06021996 05 60 446.99 865.15 151400 1
2066 80102 20050 HYDRAULIC STOOL FOR TSCL 06021996 05 60 446.99 865.15 151400 1
2066 80102 20051 HYDRAULIC STOOL FOR TSCL 06021996 05 60 446.99 865.15 151400 1
2066 80102 20052 EMERGENCY CART FOR TSCL 06021996 05 60 393.11 760.85 151400 1
2066 80102 20053 STERILIZER FOR TSCL 06021996 05 60 57.53 111.35 151400 1
2066 80102 20054 ELECTROSURGICAL GENERATOR - TSCL 0602199 05 60 17552.73 33973.02 151400 1
2066 80102 20055 CHICK ROLLER FOR TSCL 06021996 05 60 305.87 592.00 151400 1
2066 80102 20056 TOSHIBA VCR FOR TSCL 06021396 05 60 388.71 752.34 151400 1
2066 80102 20057 COLOR MONITOR 19" FOR TSCL 06021996 05 60 982.12 1900.87 151400 1
2066 80102 20058 CAMERA CONTROL UNIT FOR TSCL 06021996 05 60 3740.26 7239.22 151400 1
3
LTD Accum
Newco# New Ctr ItemNo Description 30 New AcqDt Yrs Months BkReserve BkinstCost Type Sub
2066 80102 20059 3-CHIP VIDEO CAM C-MNT - TSCL 06021996 05 60 5257.34 10175.50 151400 1
2066 80102 20060 SONY PRINTER FOR TSCL 06021996 05 60 3299.83 6386.76 151400 1
2066 80102 20061 ARTHROSCOPY SYSTEM FOR TSCL 06021996 05 60 8633.23 16709.48 151400 1
2066 80102 20062 HEART CARE EQUIPMENT FOR TSCL 06021996 05 60 38684.07 74872.40 151400 1
2066 80102 20063 CART VIDEO LEPAROSCOPY - TSCL 06021996 05 60 3439.64 6657.37 151400 1
2066 80102 20064 ARTHOSCOPIC PUMP FOR TSCL 06021996 05 60 6019.46 11650.57 151400 1
2066 80102 20065 VAC PAC FOR TSCL 06021996 05 60 273.06 528.50 151400 1
2066 80102 20066 .IARIT HAND INSTRUMENTS - TSCL 06021996 05 60 757.70 1466.52 151400 1
2066 80102 20067 ▇▇▇▇▇▇ FLUDOPLICATION SET FOR TSCL 06021996 05 60 2885.02 5583.91 151400 1
2066 80102 20068 GENERAL LAP CHOLE SET FOR TSCL 06021996 05 60 1687.08 3265.31 151400 1
2066 80102 20069 LAPAROSCOPC SETS I and II TSCL 06021996 05 60 4796.91 9284.35 151400 1
2066 80102 20070 ▇▇▇▇▇▇▇▇ KNEE SLIP. ASBLY - TSCL 06021996 05 60 528.35 1022.61 151400 1
2066 80102 20071 OSTEOTOME FOR TSCL 06021996 05 60 867.57 1679.16 151400 1
2066 80102 20072 SMALL BONE SYS. INSTRUMTS. - TSCL 06021996 05 60 552.65 1069.64 151400 1
2066 80102 20073 CABLE/CONNECTOR FOR TSCL 06021996 05 60 1139.52 2205.52 151400 1
2066 80102 20074 UNIVERSAL STRESS POST FOR TSCL 06021996 05 60 392.33 759.35 151400 1
2066 80102 20075 UNIVERSAL STRESS POST FOR TSCL 06021996 05 60 63.36 122 64 151400 1
2066 80102 20076 REPLACEMENT TROCAR FOR TSCL 06021996 05 60 63.36 122.64 151400 1
2066 80102 20077 HAND INSTRUMENTS FOR TSCL 06021996 05 60 7578.37 14667.81 151400 1
2066 80102 20078 OPERATIVE LAPAROSCOPE FOR TSCL 06021996 05 60 1859.21 3598.47 151400 1
2066 80102 20079 PORT-DELRIN W/KIT FOR TSCL 06021996 05 60 838.03 1622.00 151400 1
2066 80102 20080 DEFIBRILLATOR FOR TSCL 06021996 05 60 310.00 600.00 151400 1
2066 80102 20081 ELECTROSURGERY SYSTEM FOR TSCL 06021996 05 60 6472.88 12528.15 151400 1
2066 80102 20082 PHOTOMETERIMICROCUVETTES - TSCL 06021996 05 60 443.52 858.42 151400 1
2066 80102 20083 SURGICAL ASST. LEG HOLDER - TSCL 06021996 05 60 1710.17 3310.00 151400 1
2066 80102 20084 ACUPCL RECONST INSTRUMTS - TSCL 06021996 05 60 4210.83 8150.00 151400 1
2066 80102 20085 HAND INSTRUMENTS FOR TSCL 06021996 05 60 2270.49 4394.50 151400 1
2066 80102 20086 MRI HRD B FOR TSCL 06021996 05 60 531.13 1028.00 151400 1
2066 80102 20087 JARIT HAND INSTRUMENTS - TSCL 06021996 05 60 519.61 1005.70 151400 1
2066 80102 20088 COMPLETE BREAST/PLAS SET - TSCL 0602`1996 05 60 440.53 852.63 151400 1
4
LTD Accum
Newco# New Ctr ItemNo Description 30 New AcqDt Yrs Months BkReserve BkinstCost Type Sub
2066 80102 20089 T & A HAND INSTRUMENT SET - TSCL 06021996 05 60 435.07 842.08 151400 1
2066 80102 20090 COMPLETE LONG INSTRUMENTS - TSCL 06021996 05 60 201.48 389.97 151400 1
2066 80102 20091 COMPLETE MAJOR SET FOR TSCL 06021996 05 60 572.83 1108.70 151400 1
2066 80102 20092 SMALL VASCULAR SET FOR TSCL 06021996 05 60 912.82 1766.75 151400 1
2066 80102 20093 COMPLETE COOPERS KNEE SET - TSCL 06021996 05 60 226.55 438.49 151400 1
2066 80102 20094 ACCESSORY SET FOR TSCL 06021996 05 60 236.11 456.98 151400 1
2066 80102 20095 COMPLETE SHOULDER SET FOR TSCL 06021996 05 60 500.85 969.38 151400 1
2066 80102 20096 COMPLETE TRACK TRAY FOR TSCL 06021996 05 60 144.02 278.74 151400 1
2066 80102 20097 COMP PLASTIC HAND SET FOR TSCL 06021996 05 60 388.68 752.28 151400 1
2066 80102 20098 COMPLETE D & C SET FOR TSCL 06021996 05 60 213.65 413.52 151400 1
2066 80102 20099 INDIVIDUAL INSTRUMENTS - TSCL 06021996 05 60 457.19 884.89 151400 1
2066 80102 20100 BREAST/PLAS HAND INSTRUMENT - TSC 06021996 05 60 1265.96 2450.24 151400 1
2066 80102 20101 EXTRAS JARIT HAND INSTRUM. - TSCL 06021996 05 60 263.79 510.56 151400 1
2066 80102 20102 MINOR BREAST HAND INSTRUM. - TSCL 06021996 05 60 21.67 49.95 151400 1
2066 80102 20103 ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇ FOR TSCL 06021996 05 60 21.67 41.95 151400 1
2066 80102 20104 ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇ FOR TSCL 06021996 05 60 21.67 41.95 151400 1
2066 80102 20105 ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇ FOR TSCL 06021996 05 60 21.67 41.95 151400 1
2066 80102 20106 ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇ FOR TSCL 06021996 05 60 21.67 41.95 151400 1
2066 80102 20107 ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇ FOR TSCL 06021996 05 60 21.67 41.95 151400 1
2066 80102 20108 ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇ FOR TSCL 06021996 05 60 21.67 41.95 151400 1
2066 80102 20109 MICRO SHARP HANDLE FOR TSCL 06021996 05 60 18.43 35.68 151400 1
2066 80102 20110 GRADUATED MEDICINE CUP - TSCL 06021996 05 60 89.76 173.73 151400 1
2066 80102 20111 MINOR/BREAST BIOPSY SET - TSCL 06021996 05 60 816.23 1579.80 151400 1
2066 80102 20112 SMALL VASC SET FOR TSCL 06021996 05 60 22.29 43.14 151400 1
2066 80102 20113 ▇-▇ ▇▇▇▇▇▇ NH 8.25 FOR TSCL 06021996 05 60 80.82 156.42 151400 1
2066 80102 20114 ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇ FOR TSCL 06021996 05 60 64.85 125.52 151400 1
2066 80102 20115 EXTRA JARIT HAND INSTRUMENT 06021996 05 60 2010.55 3891.39 151400 1
5
LTD Accum
Newco# New Ctr ItemNo Description 30 New AcqDt Yrs Months BkReserve BkinstCost Type Sub
2066 80102 20116 ABD GYN HAND INSTRUMENTS - TSCL 06021996 05 60 1010.47 1955.75 151400 1
2066 80102 20117 MINOR SET JARIT HAND FOR TSCL 06021996 05 60 115.33 223.21 151400 1
2066 80102 20118 REYN SCR NAR TIP FOR TSCL 06021996 05 60 879.81 1702.85 151400 1
2066 80102 20119 MISC SURGICAL INSTRUMENTS - TSCL 06021996 05 60 43.32 83.85 151400 1
2066 80102 20120 ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇ FOR TSCL 06021996 05 60 21.67 41.95 151400 1
2066 80102 20121 MINOR BREAST BX FOR TSCL 06021996 05 60 36.44 70.52 151400 1
2066 80102 20122 MISC SURGICAL INSTRUMENTS - TSCL 06021996 05 60 129.22 250.11 151400 1
2066 80102 20123 MISC SURGICAL INSTRUMENTS - TSCL 06021996 05 60 693.66 1342.57 151400 1
2066 80102 20124 MISC SURGICAL INSTRUMENTS - TSCL 06021996 05 60 183.31 354.79 151400 1
2066 80102 20125 MISC SURGICAL INSTRUMENTS - TSCL 06021996 05 60 6223.60 12045.68 151400 1
2066 80102 20126 JARIT HAND INSTRUMENTS - TSCL 06021996 05 60 1105.95 2140.54 151400 1
2066 80102 20127 SURGICAL INSTRUMENTS FOR TSCL 06021996 05 60 858.15 1660.93 151400 1
2066 80102 20128 CARE EDGE WIRE CUTTERS - TSCL 06021996 05 60 204.11 395.06 151400 1
2066 80102 20129 PERIO. ELEV FOR TSCL 06021996 05 60 107.75 208.54 151400 1
2066 80102 20130 MISC SURGICAL INSTRUMENTS - TSCL 06021996 05 60 915.95 1772.81 151400 1
2066 80102 20131 SOFT TISSUE SET FOR TSCL 06021996 05 60 1398.23 2706.25 151400 1
2066 80102 20132 WIZARD SYSTEM FOR TSCL 06021996 05 60 2129.80 4122.19 151400 1
2066 80102 20133 LARYNGOSCOPE SET FOR TSCL 06021996 05 60 441.65 854.80 151400 1
2066 80102 20134 CART AND ACCESSORIES FOR TSCL 06021996 05 60 1248.46 2416.38 151400 1
2066 80102 20135 ULTRACUT OSTEOTONE FOR TSCL 06021996 05 60 73.15 141.59 151400 1
2066 80102 20136 PERCUTANEOUS KNOT PUSHER - TSCL 06021996 05 60 192.46 372.50 151400 1
2066 80102 20137 HOOK PROBE FOR TSCL 06021996 05 60 67.39 130.43 151400 1
2066 80102 20138 STERILE DRAPES FOR TSCL 06021996 05 60 242.70 469.75 151400 1
2066 80102 20139 ETHOX PRESSURE INFUS. FOR TSCL 06021996 05 60 135.35 261.97 151400 1
2066 80102 20140 FINGER PROBE FOR TSCL 06021996 05 60 293.18 567.44 151400 1
2066 80102 20141 CLEAR TRAC THD CAN BX/10 - TSCL 06021996 05 60 90.33 174.84 151400 1
2066 80102 20142 LINEAR GRASPER, SCISSORS - TSCL 06021996 05 60 1791.28 3466.99 151400 1
2066 80102 20143 MEDIA, COLOR PRINT FOR TSCL 06021996 05 60 295.45 571.83 151400 1
2066 80102 ▇▇▇▇▇ ▇▇▇ CUTTING BOR FOR TSCL 06021996 05 60 39.47 76.39 151400 1
2066 80102 20145 MISC INSTRUMENTS FOR TSCL 06021996 05 60 419.56 812.05 151400 1
2066 80102 20146 MISC EQUIP. FOR TSCL 06021996 05 60 1768.57 3423.04 151400 1
6
LTD Accum
Newco# New Ctr ItemNo Description 30 New AcqDt Yrs Months BkReserve BkinstCost Type Sub
2066 80102 20147 SHEATHED CAN INTF. SCREW - TSCL 06021996 05 60 1692.47 3275.75 151400 1
2066 80102 20148 PIN SIMULATOR TIBIAL FOR TSCL 06021996 05 60 205.38 397.50 151400 1
2066 80102 20149 ARTHROSCOPIC ROHGEUR FOR TSCL 06021996 05 60 201.76 390.50 151400 1
2066 80102 20150 CANNULATED HEADED REAMER - TSCL 06021996 05 60 411.01 795.50 151400 1
2066 80102 20151 PAC TRAY II FOR TSCL 06021996 05 60 191.17 370.00 151400 1
2066 80102 20152 PAC TRAY II FOR TSCL 06021996 05 60 129.17 250.00 151400 1
2066 80102 20153 CULTERETT STRL, ANAER SPEC - TSCL 06021996 05 60 1275.16 2468.06 151400 1
2066 80102 20154 ARTHROSCO-CANYAISHLDR PACK - TSCL 06021996 05 60 1507.33 2917.42 151400 1
2066 80102 20155 3000/200 CC CANISTER FOR TSCL 06021996 05 60 202.62 392.17 151400 1
2066 80102 20156 DRAPE, ARTHROSCOPY LIMB - TSCL 06021996 05 60 368.29 712.81 151400 1
2066 80102 20157 GOUGES AND OSTEOTOMES FOR TSCL 06021996 05 60 1775.25 3435.96 151400 1
2066 80102 20158 ▇▇▇▇▇▇▇ RETRACTOR SET FOR TSCL 06021996 05 60 219.61 425.06 151400 1
2066 80102 20159 SILASTIC HOSE WITH L/L - TSCL 06021996 05 60 28.74 55.63 151400 1
2066 80102 20160 ROC DELIVERY HANDLE/DRILL - TSCL 06021996 05 60 199.18 385.50 151400 1
2066 80102 20161 ASIP SYSTEM-SHOULDER SURD. - TSCL 06021996 05 60 3704.50 7170.00 151400 1
2066 80102 20162 BEACH CHAIR POSITION SYS - TSCL 06021996 05 60 2004.67 3880.00 151400 1
2066 80102 20163 MAYO INSTRUMENT CHROME - TSCL 06021996 05 60 81.14 157.04 151400 1
2066 80102 20164 ADAPTER, FEXISENSOR FOR TSCL 06021996 05 60 236.95 458.61 151400 1
2066 80102 ▇▇▇▇▇ ▇▇▇▇ MOBILE C-ARM FOR TSCL 06021996 05 60 49721.29 96234.75 151400 1
2066 80102 20166 ▇▇▇▇▇▇-▇▇▇▇▇▇ SMOKEVAC FOR TSCL 06021996 05 60 815.22 1577.85 151400 1
2066 80102 20167 SHEATHED INTERFERENCE SCREW - TSCL 06021996 05 60 118.83 230.00 151400 1
2066 80102 20168 GATOR BASKET FORCEPS FOR TSCL 06021996 05 60 312.07 604.00 151400 1
2066 80102 20169 KOLBEL GELNOID RETRACTORS - TSCL 06021996 05 60 162.16 313.85 151400 1
2066 80102 20170 FASC. GUIDE/SUTURE PASSER - TSCL 06021996 05 60 455.86 882.30 151400 1
2066 80102 20171 ARGON LASER WITH CART - TSCL 06021996 05 60 8389.38 16237.50 151400 1
2066 80102 20172 COMM2 BIDIRECT FOOTSW ITCH - TSCL 06021996 05 60 837.61 1621.19 151400 1
2066 80102 20173 MRI HRD 8 AT OPEN 9.6P - TSCL 06021996 05 60 268.15 519.00 151400 1
2066 80102 20174 KIT CLS INT MRI 9.6FR FOR TSCL 06021996 05 60 183.42 355.00 151400 1
7
LTD Accum
Newco# New Ctr ItemNo Description 30 New AcqDt Yrs Months BkReserve BkinstCost Type Sub
2066 80102 20175 ▇▇▇▇▇▇▇ SEPTUM DISPLACER - TSCL 06021996 05 60 50.95 98.62 151400 1
2066 80102 20176 ETHER SCREEN WILOCKS FOR TSCL 06021996 05 60 717.80 1389.29 151400 1
2066 80102 20177 CAMERA COUPLER, C-MOUNT - TSCL 06021996 05 60 1024.91 1983.69 151400 1
2066 80102 20178 AUTOBRITE ILLUM FOR TSCL 06021996 05 60 1923.96 3723.80 151400 1
2066 80102 20179 PNEUMATIC MODEL FOR TSCL 06021996 05 60 3355.75 6495.00 151400 1
2066 80102 20180 LAPARASCOPE FOR TSCL 06021996 05 60 1230.44 2381.50 151400 1
2066 80102 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇. TROCAR - TSCL 06021996 05 60 1398.23 2706.26 151400 1
2066 80102 20182 DYONICS 3-CHIP CAM FOR TSCL 06021996 05 60 3674.83 7112.57 151400 1
2066 80102 20183 DYONICS DIG 3-CHIP CAM FOR TSCL 06021996 05 60 5257.34 10175.50 151400 1
2066 80102 20184 SONY PRINTER FOR TSCL 06021996 05 60 3299.83 6386.76 151400 1
2066 80102 20185 A'SCOPE, 4MMX30 FOR TSCL 06021996 05 60 1230.44 2381.50 151400 1
2066 80102 20186 A'SCOPE, 4MMX70 FOR TSCL 06021996 05 60 1230.44 2381.50 151400 1
2066 80102 20187 VIDEO ARTHROSCOPE FOR TSCL 06021996 05 60 3224.32 6240.62 151400 1
2066 80102 20188 MONITOR. COLOR 19" FOR TSCL 06021996 05 60 1032.09 1997.60 151400 1
2066 80102 20189 MONITOR, COLOR 19" FOR TSCL 06021996 05 60 1026.86 1987.47 151400 1
2066 80102 20190 CANNULA. 2.9 GRADUATED FOR TSCL 06021996 05 60 16.22 31.39 151400 1
2066 80102 20191 HOOK PROBE, 2.2 MM FOR TSCL 06021996 05 60 66.72 129.13 151400 1
2066 80102 20192 ELMED STOOL W/O BACKREST - TSCL 06021996 05 60 360.74 698.21 151400 1
2066 80102 20193 COVER AND PANELS FOR CART - TSCL 06021996 05 60 148.78 287.96 151400 1
2066 80102 20194 SHOULDER SET LINK INSTRUM. - TSCL 06021996 05 60 226.61 438.60 151400 1
2066 80102 20195 SATIN R-PEAN FCP FOR TSCL] 06021996 05 60 151.06 292.38 151400 1
2066 80102 20196 WISC #2 BLADE FOR TSCL 06021996 05 60 236.05 456.87 151400 1
2066 80102 20197 SEMM RETRACTOR FOR TSCL 06021996 05 60 77.91 150.90 151400 1
2066 80102 20198 HIGH TRAY FOR TSCL 06021996 05 60 37.22 72.04 151400 1
2066 80102 20199 SUPRCUT JAMISN SCS FOR TSCL 06021996 05 60 56.52 109.39 151400 1
2056 80102 20200 GRADUATED MEASURES FOR TSCL 06021996 05 60 178.97 346.40 151400 1
2066 80102 20201 INSTRUMENT TABLE FOR TSCL 06021996 05 60 237.00 458.71 151400 1
2066 80102 20202 FILTERING APPARATUS FOR TSCL 06021996 05 60 96.19 186.17 151400 1
2066 80102 20203 SHLOR RETRACTOR FRAME - TSCL 06021996 05 60 1124.65 2176.75 151400 1
2066 80102 20204 RELOADING UNIT FOR APPLIER - TSCL 06021996 05 60 658.34 1274.20 151400 1
2066 80102 20205 ▇▇▇▇▇▇ NEEDLE HOLDER - TSCL 06021996 05 60 18.09 35.02 151400 1
2066 80102 20206 GATOR GRASPING FORCEPS FOR TSCL 06021996 05 60 312.07 604.00 151400 1
2066 80102 20207 CAMERA COUPLER, C-MOUNT - TSCL 06021996 05 60 2120.83 4104.84 151400 1
8
LTD Accum
Newco# New Ctr ItemNo Description 30 New AcqDt Yrs Months BkReserve BkinstCost Type Sub
2066 80102 20208 A SCOPE, 2.7MMX30 DEG - TSCL 06021996 05 60 1573.84 3046.15 151400 1
2066 80102 20209 SELF RETAINING RETRACTOR - TSCL 06021996 05 60 46.99 90.95 151400 1
2066 80102 20210 HEADSTRAP, ADULT FOR TSCL 06021996 05 60 34.11 66.01 151400 1
2066 80102 20211 ACROMIONIZER, 4.0, DISP - TSCL 06021996 05 60 197.57 382.39 151400 1
2066 80102 20212 LAUFE UTER POLYP FCP 8CV - TSCL 06021996 05 60 38.80 75.09 151400 1
2066 80102 20213 TOURNIQUET SYSTEM FOR TSCL 06021996 05 60 7192.83 13921.60 151400 1
2066 80102 20214 ▇▇▇▇▇▇ ▇▇▇▇▇ 06021996 05 60 553.70 1071.68 151400 1
2066 80102 20215 SYSTEM 2000 SAGITIAL SAW - TSCL 06021996 05 60 2129.24 4121.10 151400 1
2066 80102 20216 SYSTEM 2000 SAGITIAL SAW - TSCL 06021996 05 60 2134.78 4131.84 151400 1
2066 80102 20217 120V 2STN CHARGER - TSCL 06021996 05 60 853.72 1652.37 151400 1
2066 80102 20218 ▇▇▇▇▇▇ 1/4" ▇▇▇▇▇ - TSCL 06021996 05 60 176.20 341.03 151400 1
2066 80102 20219 BATTERY PACK - TSCL 06021996 05 60 244.66 473.53 151400 1
2066 80102 20220 SYSTEM 2 CONSOLE - TSCL 06021996 05 60 655.63 1268.96 151400 1
2066 80102 20221 COMM2 BIDIRECT FOOTSW ITCH - TSCL 06021996 05 60 388.85 752.61 151400 1
2066 80102 20222 CABLE/CONNECTOR - 10FT - TSCL 06021996 05 60 232.80 450.59 151400 1
2066 80102 20223 50K H.S. DRILL (FT.SWITCH) - TSCL 06021996 05 60 1184.16 2291.92 151400 1
2066 80102 20224 COMMAND II SAG SAW F/S - TSCL 06021996 05 60 1440.87 2788.79 151400 1
2066 80102 20225 1:1 HEAD - TSCL 06021996 05 60 101.93 197.29 151400 1
2066 80102 20226 1:1 REDUCER - TSCL 06021996 05 60 200.08 387.26 151400 1
2066 80102 20227 UNIVERSAL DRILL - TSCL 06021996 05 60 429.12 830.55 151400 1
2066 80102 20228 50K DRILL HAND SWITCH - TSCL 06021996 05 60 12111.59 2499.86 151400 1
2066 80102 20229 50K DRILL HAND SWITCH - TSCL 06021996 05 60 1291.59 2499.86 151400 1
2066 80102 20230 CMND 11 SAG SAW - HSW - TSCL 06021996 05 60 1548.30 2996.70 151400 1
2066 80102 20231 CMND 11 SAG SAW - HSW - TSCL 06021996 05 60 1548.30 2996.70 151400 1
2066 80102 20232 CMND 11 OSC SAW - HSW - TSCL 06021996 05 60 1548.30 2996.71 151400 1
2066 80102 20233 CMND 11 OSC SAW - HSW - TSCL 06021996 05 60 1548.30 2996.71 151400 1
2066 80102 20234 OSCILL. ADAPTER W/WRENCH - TSCL 06021996 05 60 257.64 498.65 151400 1
2066 80102 20235 MICRO DRIVER - TSCL 06021996 05 60 2076.83 4019.68 151400 1
2066 80102 20236 MICRO DRIVER - TSCL 06021996 05 60 2076.83 4019.68 151400 1
2066 80102 20237 PLATE & WIRE CUT FORCEPS - TSCL 06021996 05 60 140.53 272.00 151400 1
2066 80102 20238 ▇▇▇▇▇▇ DBLE PALATAL RET, 2 - TSCL 06021996 05 60 202.82 392.55 151400 1
2066 80102 20239 FLEX IT RS 15CM TRAY - TSCL 06021996 05 60 95.93 185.68 151400 1
2066 80102 20240 ADSON DRESS FCP 4.75 DEL - TSCL 06021996 05 60 17.84 34.53 151400 1
2066 80102 20241 ORG OBWGSR PTERYGOID OSTE - TSC 06021996 05 60 109.02 211.00 151400 1
9
LTD Accum
Newco# New Ctr ItemNo Description 30 New AcqDt Yrs Months BkReserve BkinstCost Type Sub
2066 80102 20242 ▇▇▇▇▇▇▇ NERVE HOOK, SML - TSCL 06021996 05 60 26.87 52.00 151400 1
2066 80102 20243 HTR - MFI - MEDIUM CHIN - TSCL 06021996 05 60 70.78 137.00 151400 1
2066 80102 20244 HTR - MFI - MEDIUM CHIN - TSCL 06021996 05 60 70.78 137.00 151400 1
2066 80102 20245 HTR - MFI - LARGE CHIN - TSCL 06021996 05 60 70.78 137.00 151400 1
2066 80102 20246 SMALL ▇▇▇▇ ▇▇▇▇▇ - TSCL 06021996 05 60 11.88 23.00 151400 1
2066 80102 20247 MEDIUM ▇▇▇▇ ▇▇▇▇▇ - TCL 06021996 05 60 11.88 23.00 151400 1
2066 80102 20248 LARGE ▇▇▇▇ ▇▇▇▇▇ - TSCL 06021996 05 60 11.88 23.00 151400 1
2066 80102 20249 HEMOCLIP TITANIUM SMALL - TSCL 06021996 05 60 58.88 113.97 151400 1
2066 80102 20250 SELF SPAN RET W/OUT HLDR - TSCL 06021996 05 60 9.57 18.53 151400 1
2066 80102 20251 SELF SPAN RET W/HLDR - TSCL 06021996 05 60 8.71 16.97 151400 1
2066 80102 20252 8.0 FRW/4VITACUFFPERCTR - TSCL 06021996 05 60 737.38 1427.19 151400 1
2066 80102 20253 ACCESSORY KIT 8FR - TSCL 06021996 05 60 97.49 188.69 151400 1
2066 80102 20254 CHAIR CARRIER - TSCL 06021996 05 60 95.64 185.11 151400 1
2066 80102 20255 UNIMATIC II SINK - DOUBLE - TSCL 06021996 05 60 3311.01 6408.40 151400 1
2066 80102 20256 ▇▇▇▇▇ BAG SEPARATOR - TSCL 06021996 05 60 101.27 196.00 151400 1
2066 80102 20257 SPATULA OSTEOTOME - TSCL 06021996 05 60 33.58 65.00 151400 1
2066 80102 20258 STETHOSCOPE, ESOPH W/SEN - TSCL 06021996 05 60 330.13 638.96 151400 1
2066 80102 20259 SURGICAL INSTRM. - TSCL 06021996 05 60 1351.83 2616.44 151400 1
2066 80102 20260 SURGICAL INSTRM. - TSCL 06021996 05 60 773.06 1496.24 151400 1
2066 80102 20261 SURGICAL INSTRM. - TSCL 06021996 05 60 91.51 171.11 151400 1
2066 80102 20262 ▇▇▇▇▇ WIRE TWSTR, CRS, 18.5 - TSCL 06021996 05 60 94.03 182.00 151400 1
2066 80102 20263 MISC EQUIPMENT FOR TSCL 06021996 05 60 2341.76 4532.43 151400 1
2066 80102 20264 MINOR SET 8 - TSCL 06021996 05 60 205.32 397.39 151400 1
2066 80102 20265 JARIT HAND INSTRUM. - TSCL 06021996 05 60 205.32 397.39 151400 1
2066 80102 20266 JARIT HAND INSTRUM. - TSCL 06021996 05 60 693.91 1343.06 151400 1
2066 80102 20267 D&C TRAY INSTRUM. - TSCL 06021996 05 60 372.80 721.54 151400 1
2066 80102 20268 JARIT HAND INSTRUM. - TSCL 06021996 05 60 695.45 1346.03 151400 1
2066 80102 20269 JARIT HAND INSTRUM. - TSCL 06021996 05 60 1113.20 2154.58 151400 1
2066 80102 20270 HAND & FOOT SET - ▇▇ ▇▇▇▇▇▇ - TSCL 06021996 05 60 1049.62 2031.53 151400 1
2066 80102 20271 KEY ELEV1/4WX6.75L - TSCL 06021996 05 60 17.76 34.37 151400 1
2066 80102 20272 DANDY NERVE HOOK 9 STR - TSCL 06021996 05 60 12.47 24.14 151400 1
2066 80102 20273 JARIT OSTEO FOR TSCL 06021996 05 60 42.44 82.14 151400 1
2066 80102 20274 JARIT OSTEO FOR TSCL 06021996 05 60 44.49 86.11 151400 1
2166 80102 20275 JARIT OSTEO FOR TSCL 06021996 05 60 33.39 64.63 151400 1
2066 80102 20276 CAR EDGE 6.75 STR - TSCL 06021996 05 60 21.03 40.70 151400 1
2066 80102 20277 CAR EDGE 6.75 STR - TSCL 06021996 05 60 21.03 40.70 151400 1
2066 80102 20278 CAR EDGE 6.75 STR - TSCL 06021996 05 60 21.03 40.10 151400 1
2066 80102 20279 NYRINGOGOTOMY SET 06021996 05 60 231.30 447.67 151400 1
2066 80102 20280 SHOULDER SET FOR TSCL 06021996 05 60 925.91 1792.08 151400 1
10
LTD Accum
Newco# New Ctr ItemNo Description 30 New AcqDt Yrs Months BkReserve BkinstCost Type Sub
2066 80102 20281 CAR EDGE 6.75 STR - TSCL 06021996 05 60 211.03 40.70 151400 1
2066 80102 20282 KEY ELEV 1/4WX6.75L - TSCL 06021996 05 60 117.76 34.37 151400 1
2066 80102 20283 JARIT OSTEO 5 STR 8MM FOR TSCL 06021996 05 60 26.65 51.58 151400 1
2066 80102 20284 JARIT OSTEO 5 STR 8MM FOR TSCL 06021996 05 60 17.76 34.37 151400 1
2066 80102 20285 JARIT OSTEO 5 STR 8MM FOR TSCL 06021996 05 60 11.19 21.65 151400 1
2066 80102 20286 JARIT OSTEO 5 STR 8MM FOR TSCL 06021996 05 60 20.00 38.70 151400 1
2066 80102 20287 JARIT OSTEO 5 STR 8MM FOR TSCL 06021996 05 60 11.19 21.65 151400 1
2066 80102 20288 RUSSIAN TISS FCP 8 - TSCL 06021996 05 60 8.73 16.89 151400 1
2066 80102 20289 PET - PT MEXTR FCP 5.25 - TSCL 06021996 05 60 16.72 32 37 151400 1
2066 80102 20290 PET - PT MEXTR FCP 5.25 - TSCL 06021996 05 60 16.72 32.37 151400 1
2066 80102 20291 JARIT HAND INSTRUM. - TSCL 06021996 05 60 481.02 931.00 151400 1
2066 80102 20292 CAR EDGE 6.75 STIR - TSCL 06021996 05 60 21.03 40.70 151400 1
2066 80102 20293 CAR EDGE 6.75 STIR - TSCL 06021996 05 60 29.84 57.75 151400 1
2066 80102 20294 JARIT HAND INSTRUM. - TSCL 06021996 05 60 162.95 315.39 151400 1
2066 80102 20295 JARIT HAND INSTRUM. - TSCL 06021996 05 60 42.76 82.76 151400 1
2066 80102 20296 GREEN RETR 8.5 - TSCL 06021996 05 60 37.14 71.88 151400 1
2066 80102 20297 JARIT HAND INTRUM. - TSCL 06021996 05 60 109.29 211.52 151400 1
2066 80102 20298 JARIT HAND INSTRUM. - TSCL 06021996 05 60 47.73 92.39 151400 1
2066 80102 20299 HAND INSTRUM. FOR TSCL 06021996 05 60 91.33 176.77 151400 1
2066 80102 20300 YANKAUER SUCTION TUBE - TSCL 06021996 05 60 900.57 1743.04 151400 1
2066 80102 20301 JARIT HAND INSTRUM. - TSCL 06021996 05 60 822.38 1591.71 151400 1
2066 80102 20302 JARIT HAND INSTRUM. - TSCL 06021996 05 60 110.73 214.32 151400 1
2066 80102 20303 JARIT HAND INSTRUM. - TSCL 06021996 05 60 36.83 71.28 151400 1
2066 80102 20304 JARIT HAND INSTRUM. - TSCL 06021996 05 60 430.68 833.58 151400 1
2066 80102 20305 JARIT HAND INSTRUM. - TSCL 06021996 05 60 349.08 675.64 151400 1
2066 80102 20306 JARIT HAND INSTRUM. - TSCL 06021996 05 60 256.52 496.49 151400 1
2066 80102 20307 JARIT HAND INSTRUM. - TSCL 06021996 05 60 179.76 347.92 151400 1
2066 80102 20308 JARIT HAND INSTRUM. - TSCL 06021996 05 60 485.72 940.10 151400 1
2066 80102 20309 JARIT HAND INSTRUM. - TSCL 06021996 05 60 65.16 126.11 151400 1
2066 80102 20310 JARIT HAND INSTRUM. - TSCL 06021996 05 60 269.72 522.04 151400 1
2066 80102 20311 JARIT HAND INSTRUM. - TSCL 06021996 05 60 709.63 1373.48 151400 1
2066 80102 20312 JARIT HAND INSTRUM. - TSCL 06021996 05 60 2143.43 4148.57 151400 1
2066 80102 20313 JARIT HAND INSTRUM. - TSCL 06021996 05 60 361.58 699.84 151400 1
2066 80102 20314 JARIT HAND INSTRUM. - TSCL 06021996 05 60 410.84 795.17 151400 1
2066 80102 20315 JARIT HAND INSTRUM. - TSCL 06021996 05 60 58.31 112.85 151400 1
2066 80102 20316 JARIT HAND INSTRUM. - TSCL 06021996 05 60 489.97 948.32 151400 1
2066 80102 20317 REUSABLE CUSTOM PADS - TSCL 06021996 05 60 115.03 222.63 151400 1
2066 80102 20318 DONUT HEAD PAD LARGE - TSCL 06021996 05 60 45.31 87.69 151400 1
2066 80102 20319 COLLAR, THYROID, RADIAT. - TSCL 06021996 05 60 36.89 71.40 151400 1
2066 80102 20320 MED. EQUIP. & ACCESSORIES - TSCL 06021996 05 60 374.72 725.26 151400 1
11
LTD Accum
Newco# New Ctr ItemNo Description 30 New AcqDt Yrs Months BkReserve BkinstCost Type Sub
2066 80102 20321 BIOLOGICAL INCUBATOR - TSCL 06021996 05 60 129.17 250.00 151400 1
2066 80102 20322 ▇▇▇▇▇▇-▇▇▇▇▇ TENACULUM - TSCL 06021996 05 60 43.01 83.25 151400 1
PENCIL, ABC, TRPLE, OPT. DISP -
2066 80102 20323 TSCL 06021996 05 60 258.43 500.18 151400 1
2066 80102 20324 MRI HARD B ATT GIRDS 8 P - TSCL 06021996 05 60 913.85 1768.75 151400 1
2066 80102 20325 STORZ ADAPTER - TSCL 06021996 05 60 26.37 51.03 151400 1
2066 80102 20326 SAND WT. BAG & STEEL WT. - TSCL 06021996 05 60 225.16 435.80 151400 1
2066 80102 20327 ▇▇▇▇▇▇ INSTRUMENTS - TSCL 06021996 05 60 485.77 940.20 151400 1
2066 80102 20328 SURGICAL EQUIP. - TSCL 06021996 05 60 461.61 893.44 151400 1
2066 80102 20329 HEMOCLIPS FOR TSCL 06021996 05 60 1849.67 3580.00 151400 1
2066 80102 20330 SURGICAL EQUIP. - TSCL 06021996 05 60 61.70 119.42 151400 1
2066 80102 20331 SURGICAL EQUIP. - TSCL 06021996 05 60 102.88 199.12 151400 1
2066 80102 20332 SIZING TUBE FOR TSCL 06021996 05 60 251.14 480.07 151400 1
2066 80102 20333 SURGICAL EQUIP. - TSCL 06021996 05 60 213.82 413.85 151400 1
2066 80102 20334 SURGICAL EQUIP. - TSCL 06021996 05 60 963.54 1864.91 151400 1
21166 80102 20335 GRIPPER FOR TSCL 06021996 05 60 88.35 171.00 151400 1
2066 80102 20336 COND. ARTHRO. POSITIOER - TSCL 06021996 05 60 78.43 151.80 151400 1
2066 80102 20337 GLU. ANALYZER MICR & C/UV - TSCL 06021996 05 60 269.74 522.07 151400 1
2066 80102 20338 SURGICAL INSTRUM. - TSCL 06021996 05 60 897.36 1736.83 151400 1
2066 80102 20339 BONE TUNNUL PLUGS - TSCL 06021996 05 60 32.30 62.52 151400 1
2066 80102 20340 ▇▇▇▇▇▇ 1/4" ▇▇▇▇▇ - TSCL 06021996 05 60 450.30 871.54 151400 1
2066 80102 20341 MISC SURGICAL INSTRUMENTS - TSCL 06021996 05 60 601.35 1163.90 151400 1
2066 80102 20342 3000A FIRSTTEMP GENIUS - TSCL 06021996 05 60 441.84 855.18 151400 1
2066 80102 20343 OMEGAPORT - TSCL 06021996 05 60 100.88 195.26 151400 1
2066 80102 20344 ▇▇▇▇▇▇▇ CANNULA - TSCL 06021996 05 60 201.50 390.00 151400 1
2066 80102 20345 SURGICAL EQUIP. - TSCL 06021996 05 60 1286.25 2489.52 151400 1
2066 80102 20346 MEDICAL INSTRUMENTS - TSCL 06021996 05 60 582.93 1128.25 151400 1
2066 80102 20347 ASPIRATOR II +3/4 HP SYS. - TSCL 06021996 05 60 1254.11 2427.30 151400 1
2066 80102 20348 NURSE CALL SYSTEM - TSCL 06021996 05 60 3746.87 7252.00 151400 1
2066 80102 20349 TABLE. INSTRUMENT - TSCL 06021996 05 60 449.76 870.50 151400 1
2066 80102 20350 ULTRACUT HAND OSTEOTOMES - TSCL 06021996 05 60 70.63 136.71 151400 1
2066 80102 20351 ALLIS TISSUE - TSCL 06021996 05 60 68.54 132.66 151400 1
2066 80102 20352 ALLIS TISSUE - TSCL 06021996 05 60 57.05 110.42 151400 1
2066 80102 20353 ALLIS TISSUE - TSCL 06021996 05 60 45.72 88.49 151400 1
2066 80102 20354 BLADE UPSHER - TSCL 06021996 05 60 448.34 867.75 151400 1
2066 80102 20355 JARIT HAND INSTRUM. - TSCL 06021996 05 60 550.09 1064.69 151400 1
2066 80102 20356 JARIT HAND INSTRUM. - TSCL 06021996 05 60 550.09 1064.69 151400 1
2066 80102 20357 JARIT HAND INSTRUM. - TSCL 06021996 05 60 854.74 1654.33 151400 1
2066 80102 20358 JARIT HAND INSTRUM. - TSCL 06021996 05 60 853.65 1652.22 151400 1
2066 80102 20359 STORZ HAND INSTRUM. - TSCL 06021996 05 60 3079.58 5960.48 151400 1
12
LTD Accum
Newco# New Ctr ItemNo Description 30 New AcqDt Yrs Months BkReserve BkinstCost Type Sub
2066 80102 20360 EAR SET A INSTRUM. FOR TSCL 06021996 05 60 45.11 87.30 151400 1
2066 80102 20361 EAR SET A INSTRUM. FOR TSCL 06021996 05 60 145.79 282.17 151400 1
2066 80102 20362 EAR SET A INSTRUM. FOR TSCL 06021996 05 60 1348.71 2610.41 151400 1
2066 80102 20363 LIGHT SURGICAL TRACK - TSCL 06021996 05 60 5033.63 9742.50 151400 1
2066 80102 20364 SURGICAL INSTRUM/EQUIP. - TSCL 06021996 05 60 2965.37 5739.42 151400 1
2066 80102 20365 STORZ HAND INSTRUM. - TSCL 06021996 05 60 299.28 579.26 151400 1
2066 80102 20366 PEDIATRIC SINUS INSTRUM. - TSCL 06021996 05 60 375.98 727.71 151400 1
2066 80102 20367 EMT TONSIL FOR TSCL 06021996 05 60 165.47 320.26 151400 1
2066 80102 20368 MYRINGTOMY FOR TSCL 06021996 05 60 154.10 298.25 151400 1
2066 80102 20369 EAR SET B FOR TSCL 06021996 05 60 328.83 636.44 151400 1
2066 80102 20370 PEDIATRIC SINUS INSTRUM. - TSCL 06021996 05 60 520.84 1008.08 151400 1
2066 80102 20371 GUIDE PIN W/SUTURE EYE - TSCL 06021996 05 60 186.00 360.00 151400 1
2066 80102 20372 PLUS ADAPTER FOR TSCL 06021996 05 60 678.61 1313.44 151400 1
2066 80102 20373 SURGICAL INSTRUM. FOR TSCL 06021996 05 60 577.63 1118.00 151400 1
2066 80102 20374 ▇▇▇▇▇-▇▇▇▇▇ TISS FCP 6 FOR TSCL 06021996 05 60 811.15 1569.97 151400 1
2066 80102 20375 SURGICAL INSTRUMENTS FOR TSCL 06021996 05 60 1344.73 2602.70 151400 1
2066 80102 20376 KNF & DIS. TONSIL ▇▇▇▇▇▇ - TSCL 06021996 05 60 36.88 71.39 151400 1
2066 80102 20377 KNEE RETRACTOR FOR TSCL 06021996 05 60 246.10 476.33 151400 1
2066 80102 20378 SURGICAL INSTRUM. - TSCL 06021996 05 60 780.68 1511.00 151400 1
2066 80102 20379 SURGICAL INSTRUM. - TSL 06021996 05 60 1576.87 3052.00 151400 1
2066 80102 20380 STORZ HAND INSTRUM. - TSCL 06021996 05 60 142.45 275.70 151400 1
2066 80102 20381 STORZ HAND INSTRUM. - TSCL 06021996 05 60 2037.44 3943.44 151400 1
2066 80102 20382 STORZ HAND INSTRUM. - TSCL 06021996 05 60 196.45 380.22 151400 1
2066 80102 20383 FORCEPS ▇▇▇▇▇▇▇▇▇ - TSCL 06021996 05 60 169.33 327.73 151400 1
2066 80102 20384 STORZ HAND INSTRUM. - TSCL 06021996 05 60 1227.21 2375.25 151400 1
2066 80102 20385 SPEC SEPTUM STORZ MDL - TSCL 06021996 05 60 32.36 62.63 151400 1
2066 80102 20386 MALLET MASTOID LD - FILLED FOR TSC 06021996 05 60 44.32 85.79 151400 1
2066 80102 20387 PEDIATRIC SINUS INSTRUM. - TSCL 06021996 05 60 3288.65 6365.12 151400 1
2066 80102 20388 JARIT HAND INSTRUM. - TSCL 06021996 05 60 91.72 177.53 151400 1
2066 80102 20389 LARYNG SET. PEDI FOR TSCL 06021996 05 60 186.59 361.15 151400 1
2066 80102 20390 JARIT HAND INSTRUM. - TSCL 06021996 05 60 358.03 692.96 151400 1
2066 80102 20391 SYSTEM 2 CONSOLE FOR TSCL 06021996 05 60 823.21 1593.31 151400 1
2066 80102 20392 STORZ HAND INSTRUM. - TSCL 06021996 05 60 982.62 1901.84 151400 1
2066 80102 20393 STORZ HAND INSTRUM. - TSCL 06021996 05 60 256.71 496.86 151400 1
2066 80102 20394 RETRACTOR PAPRELLA - TSCL 06021996 05 60 97.74 189.17 151400 1
2066 80102 20395 ARTHREX ACC INSTRUMENT - TSCL 06021996 05 60 2897.98 5609.00 151400 1
2066 80102 20396 RIGID ENDOSCOPE 4MM 70DG - TSCL 06021996 05 60 1115.65 2159.32 151400 1
13
LTD Accum
Newco# New Ctr ItemNo Description 30 New AcqDt Yrs Months BkReserve BkinstCost Type Sub
2066 80102 20397 RIGID ENDOSCOPE 4MM 30DG - TSCL 06021996 05 60 2338.96 4527.02 151400 1
2066 80102 20398 PRESTIGE ATRA GRASPER - TSCL 06021996 05 60 971.49 1880.30 151400 1
2066 80102 20399 FOMON RASP FINE TIN COATED - TSCL 06021996 05 60 72.22 139.78 151400 1
2066 80102 20400 SURG CUT ▇▇▇▇ SCISSORS TIN - TSCL 06021996 05 60 57.12 110.56 151400 1
2066 80102 20401 SURGICAL INSTRUM. - TSCL 06021996 05 60 158.88 307.50 151400 1
2066 80102 20402 HOOK ▇▇▇▇ ▇▇▇▇▇ - TSCL 06021996 05 60 30.62 59.27 151400 1
2066 80102 20403 TUNG CARS RASP 3 & 4 FOR TSCL 06021996 05 60 157.58 305.00 151400 1
2066 80102 20404 SPEC FAR ORIG. MDL RND FOR TSCL 06021996 05 60 109.24 211.44 151400 1
2066 80102 20405 CUTTING ▇▇▇▇▇▇▇▇▇ PED. FOR TSCL 06021996 05 60 144.72 280.10 151400 1
2066 80102 20406 CUTTING ▇▇▇▇▇▇▇▇▇ 45DG UP FOR TSCL 06021996 05 60 144.72 280.10 151400 1
2066 80102 20407 SCS SINUS STR - TSCL 06021996 05 60 148.08 286.60 151400 1
2066 80102 20408 KNIFE SEPTUM ▇▇▇▇▇ D MODEL - TSCL 06021996 05 60 23.06 44.64 151400 1
2066 80102 20409 KNIFE SICKLE POINTED - TSCL 06021996 05 60 87.83 170.00 151400 1
2066 80102 20410 SUCT TUBE SHORT CRUD 3MM - TSCL 06021996 05 60 23.74 45.94 151400 1
2066 80102 20411 FRONTAL SINUS FCP 45 HOR - TSCL 06021996 05 60 201.92 390.82 151400 1
2066 80102 20412 NH ▇▇▇▇▇▇▇ 3/4 IN SPEC FOR TSCL 06021996 05 60 22.39 43.34 151400 1
2066 80102 20413 CUTTING ▇▇▇▇▇▇▇▇▇ NO 1 - TSCL 06021996 05 60 141.52 273.91 151400 1
2066 80102 20414 PUNCH ▇▇▇▇▇-▇▇▇▇▇▇ REV - TSCL 06021996 05 60 178.44 345.36 151400 1
2066 80102 20415 SCS SINUS LEFT - TSCL 06021996 05 60 146.19 282.94 151400 1
2066 80102 20416 SCS SINUS RIGHT - TSCL 06021996 05 60 146.19 282.95 151400 1
2066 80102 20417 SUCT TUBE SHORT CRUD 4MM - TSCL 06021996 05 60 26.93 52.12 151400 1
2066 80102 20418 TB SUCT ▇▇▇▇-▇▇▇▇▇▇▇ 6 FR - TSCL 06021996 05 60 19.27 37.29 151400 1
2066 80102 20419 FCP ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ 3MM - TSCL 06021996 05 60 104.11 201.50 151400 1
2066 80102 20420 SCS ALLIGATOR HOUSE BELLU - TSCL 06021996 05 60 106.97 207.03 151400 1
2066 80102 20421 CURETTE ▇▇▇▇▇▇▇ ▇▇ LGT - TSCL 06021996 05 60 34 82 67.39 151400 1
2066 80102 20422 HOOK CONVERSE SMALL - TSCL 06021996 05 60 39.51 76.48 151400 1
2066 80102 20423 SURD CUT PLASTIC SCISSORS - TSCL 06021996 05 60 50.76 98.24 151400 1
2066 80102 20424 TB SUCT ▇▇▇▇-▇▇▇▇▇▇▇ 6 FR - TSCL 06021996 05 60 19.27 37.29 151400 1
14
LTD Accum
Newco# New Ctr ItemNo Description 30 New AcqDt Yrs Months BkReserve BkinstCost Type Sub
2066 80102 20425 ▇▇▇▇▇▇ TMJ CONDYLAR HEAD - TSCL 06021996 05 60 652.55 1263.00 151400 1
2066 80102 20426 1.5 2/2 HOLE LEFT LONG Z - TSCL 06021996 05 60 55.28 107.00 151400 1
2066 80102 20421 CROSS-DRV SCREW - TSCL 06021996 05 60 618.45 1197.00 151400 1
2066 80102 20428 CURETTE ADENOID ▇▇▇▇▇▇▇▇ - TSCL 06021996 05 60 47.13 91.21 151400 1
2066 80102 20429 HAND CONTROL & CORD - TSCL 06021996 05 60 392.35 759.38 151400 1
2066 80102 20430 SYRINGE INFUSION PUMP - TSCL 06021996 05 60 2539.75 4915.65 151400 1
2066 80102 20431 SUPPORT - TSCL 06021996 05 60 840.97 1627.69 151400 1
2066 80102 20432 OSTEOTOME 2M - TSCL 06021996 05 60 790.00 1529.04 151400 1
2066 80102 20433 ROTO-CAM HOOK SCS MONO 5 - TSCL 06021996 05 60 33820 654.58 151400 1
2066 80102 20434 DUCKING UPBITER HAND - TSCL 06021996 05 60 384.92 145.00 151400 1
2066 80102 20435 PRESTIGE ATRA GRASPER - TSCL 06021996 05 60 485.74 940.15 151400 1
2066 80102 20436 BIOPSY FORCEPS WINEEDLE - TSCL 06021996 05 60 662.76 1282.76 151400 1
2066 80102 20437 VECTOR PACKAGED ASSEMBLY - TSCL 06021996 05 60 2240.51 4336.58 151400 1
2066 80102 20438 PRESTIGE ATRA GRASPER - TSCL 06021996 05 60 485.74 940.15 151400 1
2066 80102 20439 TSCL SUPPLIES - TSCL 06021996 05 60 57879.58 112025.00 151400 1
2066 80102 20440 OUTLET DOUBLE DIAMONY - TSCL 06021996 05 60 124.58 241.13 151400 1
2066 80102 20441 O.R. INSTRUM. TABLE - TSCL 06021996 05 60 196.53 380.39 151400 1
2066 80102 20442 SURGICAL INSTRUM. - TSCL 06021996 05 60 436.08 844.03 151400 1
2066 80102 20443 SURGICAL EQUIP. - TSCL 06021996 05 60 312.76 605.34 151400 1
2066 80102 20444 TABLE & MAYO STAND - TSCL 06021996 05 60 965.67 1869.03 151400 1
2066 80102 20445 MISC. EQUIPMENT - TSCL 06021996 05 60 118.01 228.41 151400 1
2066 80102 20446 SURGICAL INSTRUM. - TSCL 06021996 05 60 2025.40 3920.12 151400 1
2066 80102 20447 DEDD MICRO-LARYNGOSCOPE - TSCL 06021996 05 60 891.13 1736.38 151400 1
2066 80102 20448 ▇▇▇▇▇▇▇ LARYNANT COM ADULT - TSC 06021996 05 60 559.48 1082.86 151400 1
2066 80102 20449 ENDOSCOPY EQUIP. - TSCL 06021996 05 60 71946.85 139251.96 151400 1
2066 80102 20450 MARQUETTE MM-INVAS. MOD - TSCL 06021996 05 60 783.01 1515.50 151400 1
2066 80102 20451 JAKO FINE BALL TIP HOOK - TSCL 06021996 05 60 85.68 165.83 151400 1
2066 80102 20452 MEDICAL EQUIP. FOR TSCL 06021996 05 60 408.58 790.80 151400 1
2066 80102 20453 ZOLL PD1200A - TSCL 06021996 05 60 937.93 1815.34 151400 1
2066 80102 20454 SUCTION REGULATORS - TSCL 06021996 05 60 1744.39 3376.24 151400 1
1466122.53
2066 80102 30000 FAXITRON CABINET X-RAY SYS - TSCL 06021996 05 60 10369.09 20069.20 151400 1
2066 80102 30001 PROCESSOR WITH STAND FOR TSCL 06021996 05 60 4874.23 9433.99 151400 1
2066 80102 30002 X-RAY UNIT FOR TSCL 06021996 05 60 8526.96 16503.80 151400 1
15
LTD Accum
Newco# New Ctr ItemNo Description 30 New AcqDt Yrs Months BkReserve BkinstCost Type Sub
2066 80102 30003 CASSETTE, X-RAY FILM - TSCL 06021996 05 60 3285.84 6359.69 151400 1
52366.68
2066 80102 40000 TELEPHONE EQUIP. FOR TSCL 06021996 05 60 7444.78 14409.25 151400 1
2066 80102 50000 COMPUTER FOR TSCL 06021996 05 60 1134.22 2195.26 151400 1
2066 80102 50001 SYSTEM INSTALLATION AT TSCL 06021936 05 60 1046.64 2025.76 151400 1
2066 80102 50002 COMPUTER FOR TSCL 06021996 05 60 988.83 1913.86 151400 1
2066 80102 50003 COMPUTER FOR TSCL 06021996 05 60 988.83 1913.86 151400 1
2066 80102 50004 COMPUTER FOR TSCL 06021996 05 60 988.83 1913.86 151400 1
2066 80102 50005 COMPUTER FOR TSCL 06021996 05 60 988.83 1913.86 151400 1
2066 80102 50006 COMPUTER FOR TSCL 06021996 05 60 988.83 1913.86 151400 1
2066 80102 50007 COMPUTER FOR TSCL 06021996 05 60 1090.62 2110.88 151400 1
2066 80102 50008 COMPUTER FOR TSCL 06021996 05 60 1090.62 2110.87 151400 1
2066 80102 50009 COMPUTER FOR TSCL 06021396 05 60 1377.54 2666.20 151400 1
2066 80102 50010 PRINTER FOR TSCL 06021996 05 60 1810.34 3503.89 151400 1
2066 80102 50011 COMP. ACCESS. FOR TSCL 06021996 05 60 140.36 271.66 151400 1
2066 80102 50012 SVGA MONITOR FOR TSCL 06021996 05 60 170.58 330.16 151400 1
2066 80102 50013 VE2, P75, N640, 8 MB FOR TSCL 06021996 05 60 782.45 1514.42 151400 1
HP, 14 ▇▇, ▇▇▇▇, COLOR MON, FOR
2066 80102 50014 TSCL 06021996 05 60 170.58 330.16 151400 1
2066 80102 50015 OFFICE PROF/WIN V4.3 - TSCL 06021996 05 60 313.20 606.20 151400 1
27234.76
2066 80102 60000 SYSTEM SOFTWARE FOR TSCL 06021996 05 60 1012.67 1960.00 151400 1
2066 80102 60001 SYSTEM SOFTWARE 2ND FOR TSCL 06021996 05 60 1012.67 3920.00 151400 1
2066 80102 70000 MILLWORK & INSTALLATION 06021996 10 120 1016.80 3936.00 151200 2
2066 80102 70001 LEASEHOLD IMPROVEMENTS 06021996 10 120 221544.34 857591.00 151200 2
2066 80102 70002 LEASEHOLD IMPROVEMENTS 06021996 10 120 51665.38 199995.00 151200 2
2066 80102 70003 LEASEHOLD IMPROVEMENTS 06021996 10 120 25886.40 100205.42 151200 2
2066 80102 70004 LEASEHOLD IMPROVEMENTS 06021996 10 120 180.32 698.00 151200 2
2066 80102 70005 LEASEHOLD IMPROVEMENTS 06021996 10 120 674.51 2611.00 151200 2
2066 80102 70006 LEASEHOLD IMPROVEMENTS 02061997 10 120 1321.91 5117.09 151200 2
1166678.51 1170153.51
2066 80102 CIP12 LITHO ▇▇▇▇▇▇▇ TRANSFER FROM BU 06021998 10 120 962.30 23095.21 151200 2
2066 80102 7-5900001 STD CUFF ▇▇▇▇▇ CUFF DEPUY ORT 08021998 05 60 230.25 2763.00 151400 1
2066 80102 7-5900001B STD CUFF DEPUY ORTHOTECH 09021998 05 60 173.85 2607.82 151400 1
1,191,797.27 2,917,602.41
▇▇▇▇▇▇ A M AM260 Asset Report
16
Note
This is provided for information purposes only
Texas Surgery Center
PP&E Identified by ▇▇▇▇▇ ▇▇▇▇▇ as no longer in use
as of March 31, 1999
P01 Fixed Asset from M&D Download FMAP01LAWSON 01/07/99
New New LTD Accum
Conv# NewCo# Ctr ItemNo Description 30 AcqDt Yrs Months BkReserve BkinstCost
----- ------ --- ------ -------------- ----- --- ------ --------- ----------
55015 2066 80102 10014 NURSE CALL SYSTEM FOR TSCL 06021996 05 60 1773.99 3433.53
55045 2066 80102 10044 DISPLAY DICT STAT - TSCL 06021996 05 60 416.43 806.00
55076 2066 80102 20026 SHARPLAN LASER FOR TSCL 06021996 05 60 30679.39 59379.47
55182 2066 80102 20132 WIZARD SYSTEM FOR TSCL 06021996 05 60 2129.80 4122.19
55188 2066 80102 20138 STERILE DRAPES FOR TSCL 06021996 05 60 242.70 469.75
55189 2066 80102 20139 ETHOX PRESSURE INFUS. FOR TSCL 06021996 05 60 135.35 261.97
55193 2066 80102 20143 MEDIA, COLOR PRINT FOR TSCL 06021996 05 60 295.45 571.83
55201 2066 80102 20151 PAC TRAY II FOR TSCL 06021996 05 60 191.17 370.00
55202 2066 80102 20152 PAC TRAY II FOR TSCL 06021996 05 60 129.17 250.00
55203 2066 80102 20153 CULTERETT STRL. ANAER SPEC - TSCL 06021996 05 60 1275.16 2468.06
55205 2066 80102 20155 3000/200 CC CANISTER FOR TSCL 06021996 05 60 202.62 392.17
55206 2066 80102 20156 DRAPE, ARTHROSCOPY LIMB - TSCL 06021996 05 60 368.29 712.81
55209 2066 80102 20159 SILASTIC HOSE WITH UL - TSCL 06021996 05 60 28 74 55.63
55217 2066 80102 20167 SHEATHED INTERFERENCE SCREW - TSCL 06021996 05 60 118.83 230.00
55221 2066 80102 20171 ARGON LASER WITH CART - TSCL 06021996 05 60 8389.38 16237.50
55223 2066 80102 20173 MRI HRD 8 AT OPEN 9.6P - TSCL 06021896 05 60 268.15 519.00
55224 2066 80102 20174 KIT CLS INT MRI 9.6FR FOR TSCL 06021996 05 60 183.42 355.00
55240 2066 80102 ▇▇▇▇▇ ▇▇▇▇▇▇▇. 2.9 GRADUATED FOR TSCL 06021996 05 60 16.22 31.39
55246 2066 80102 20196 WISC #2 BLADE FOR TSCL 06021996 05 60 236.05 456.87
55260 2066 80102 20210 HEADSTRAP, ADULT FOR TSCL 06021996 05 60 34.11 66.01
55263 2066 80102 20213 TOURNIQUET SYSTEM FOR TSCL 06021996 05 60 7192.83 13921.60
55299 2066 80102 20249 HEMOCLIP TITANIUM SMALL - TSCL 06021996 05 60 58.88 113.97
55308 2066 80102 20258 STETHOSCOPE. ESOPH ▇▇▇▇▇ - TSCL 06021996 05 60 330.13 638.98
55371 2066 80102 20321 BIOLOGICAL INCUBATOR - TSCL 06021996 05 60 129.17 250.00
55373 2066 80102 20323 PENCIL, ABC, TRPLE. OPT. DISP - TSCL 06021996 05 60 258.43 500.18
55379 2066 80102 20329 HEMOCLIPS FOR TSCL 06021996 05 60 1849.67 3580.00
55387 2066 80102 20337 GLU. ANALYZER & MICROCUV - TSCL 06021996 05 60 289.74 522.07
55392 2066 80102 20342 3000A FIRSTTEMP GENIUS - TSCL 06021996 05 60 441.84 855.18
55398 2066 80102 20348 NURSE CALL SYSTEM - TSCL 06021996 05 60 3746.87 7252.00
55421 2066 80102 20371 GUIDE PIN W/SUTURE EYE - TSCL 06021996 05 60 186.00 360.00
▇▇▇▇▇▇ A M AM260 Asset Report 61,617.45 119,259.53
---------------------
NET BOOK VALUE 57,642.08
New
Conv# NewCo# Ctr ItemNo Description 30 Type Sub CurrDepr YTDDepr
----- ------ --- ------ -------------- ---- --- -------- -------
55015 2066 80102 10014 NURSE CALL SYSTEM FOR TSCL 151400 1 57.23 343.35
55045 2066 80102 10044 ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇ 1 13.43 80.60
55076 2066 80102 20026 SHARPLAN LASER FOR TSCL 151400 1 989.66 5937.94
55182 2066 80102 20132 WIZARD SYSTEM FOR TSCL 151400 1 68.70 412.22
55188 2066 80102 20138 STERILE DRAPES FOR TSCL 151400 1 7.83 46.97
55189 2066 80102 20139 ETHOX PRESSURE INFUS. FOR TSCL 151400 1 4.37 26.20
55193 2066 80102 20143 MEDIA, COLOR PRINT FOR TSCL 151400 1 9.53 57.19
55201 2066 80102 ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 1 6.17 37.00
55202 2066 80102 ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 1 4.17 25.00
55203 2066 80102 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇ ▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇ 1 41.13 246.80
55205 2066 80102 20155 ▇▇▇▇/▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 1 6.54 39.22
55206 2066 80102 20156 DRAPE, ARTHROSCOPY ▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇ 1 11.88 71.29
55209 2066 80102 20159 SILASTIC HOSE WITH ▇▇ - ▇▇▇▇ ▇▇▇▇▇▇ 1 0.93 5.56
55217 2066 80102 20167 SHEATHED INTERFERENCE SCREW - TSCL 151400 1 3.83 23.00
55221 2066 80102 20171 ARGON LASER WITH CART - TSCL 151400 1 270.63 1623.75
55223 2066 80102 20173 ▇▇▇ ▇▇▇ ▇ ▇▇ ▇▇▇▇ ▇.▇▇ - ▇▇▇▇ ▇▇▇▇▇▇ 1 8.65 51.90
55224 2066 80102 20174 KIT CLS INT MRI 9.6FR FOR TSCL 151400 1 5.92 35.50
55240 2066 80102 ▇▇▇▇▇ ▇▇▇▇▇▇▇. 2.9 GRADUATED FOR TSCL 151400 1 0.52 3.14
55246 2066 80102 20196 WISC #2 BLADE FOR TSCL 151400 1 7.61 45.69
55260 2066 80102 20210 HEADSTRAP, ADULT FOR TSCL 151400 1 1.10 6.61
55263 2066 80102 20213 TOURNIQUET SYSTEM FOR TSCL 151400 1 232.03 1392.16
55299 2066 80102 20249 HEMOCLIP TITANIUM SMALL - TSCL 151400 1 1.90 11.39
55308 2066 80102 20258 STETHOSCOPE. ESOPH ▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇ 1 10.65 63.90
55371 2066 80102 20321 BIOLOGICAL INCUBATOR - TSCL 151400 1 4.17 25.00
55373 2066 80102 20323 PENCIL, ABC, TRPLE. OPT. DISP - TSCL 151400 1 8.34 50.02
55379 2066 80102 20329 HEMOCLIPS FOR TSCL 151400 1 59.67 358.00
55387 2066 80102 20337 GLU. ANALYZER & ▇▇▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇ 1 8.70 52.21
55392 2066 80102 20342 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇ 1 14.25 85.51
55398 2066 80102 20348 NURSE CALL SYSTEM - TSCL 151400 1 120.87 725.20
55421 2066 80102 20371 GUIDE PIN W/SUTURE EYE - TSCL 151400 1 6.00 36.00
▇▇▇▇▇▇ A M AM260 Asset Report 1,987.66 11,925.96
---------------------
NET BOOK VALUE
17
SCHEDULE 1.1B
[Excluded Tangible Assets]
Baylor SurgiCare/Texas Surgery Center
================================================================================
Capital Budget
--------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Number
Center Item Needed Reason Cost Usage
-------------------------------------------------------------------------------------------------------------------------
Texas Surgery Electric Stryker Saw & 2 Borrowed $15,758.64 1 day/week
Drill
-------------------------------------------------------------------------------------------------------------------------
Texas Surgery ENT Microscope 1 Borrowed $40,980.00 1 time/month (new MD's to
increase usage)
-------------------------------------------------------------------------------------------------------------------------
Texas Surgery Endoscopic Sinus Set 1 Borrowed $21,757.00 1 time/month (new MD's to
increase usage)
-------------------------------------------------------------------------------------------------------------------------
Texas Surgery Pediatric Sinus Inst. 1 Borrowed $3,000.00 1 time/month (new MD's to
Set increase usage)
-------------------------------------------------------------------------------------------------------------------------
Texas Surgery Frontal Sinus Inst. Set 1 Borrowed $5,250.00 1 time/month (new MD's)
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1
--------------------------------------------------------------------------------
Capital Budget: Baylor SurgiCare/Texas Surgery Center
--------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Center Item Number Reason Cost Usage
Needed
---------------------------------------------------------------------------------------------------------------------
Baylor SurgiCare Laser 1 Borrowed $71,000.00 Every day
---------------------------------------------------------------------------------------------------------------------
Baylor SurgiCare ▇▇▇▇▇▇ Dermatome 1 Borrowed $4,954.95 20 times/year
---------------------------------------------------------------------------------------------------------------------
Baylor SurgiCare 4.0 Cannulated Screw Set 1 Borrowed $7,454.09 2 time/month
---------------------------------------------------------------------------------------------------------------------
Baylor SurgiCare 7.0 Cannulated Screw Set 1 Borrowed $8,207.80 6 times/year
---------------------------------------------------------------------------------------------------------------------
Baylor SurgiCare Occuloplasty Inst. 1 Borrowed $4,848.92 1 time/month (new MD's)
---------------------------------------------------------------------------------------------------------------------
Baylor SurgiCare Electric Stryker Saw & 2 Borrowed $15,758.64 1 day/week
Drill
---------------------------------------------------------------------------------------------------------------------
Baylor SurgiCare Ophthalmic Microscope 1 Borrowed $48,250.00 Every day
---------------------------------------------------------------------------------------------------------------------
Baylor SurgiCare Eye bed 2 Borrowed $5,567.50 1 day every week
---------------------------------------------------------------------------------------------------------------------
Baylor SurgiCare Small joint Arthroscopy 1 Borrowed $14,430.00 6 times/year
set
---------------------------------------------------------------------------------------------------------------------
Baylor SurgiCare Snap-On Hardware 1 Borrowed $1,569.25 2 times/week
Extraction Set
---------------------------------------------------------------------------------------------------------------------
Baylor SurgiCare ▇▇▇▇▇▇▇ ▇▇▇▇ Screw 1 Borrowed $4,756.80 2 times/week
System
---------------------------------------------------------------------------------------------------------------------
Baylor SurgiCare ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Bone 1 Borrowed $8,499.00 2 times/week
Screw System
---------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2
SCHEDULE 1.2
[Calculation of EBITDAM]
United Surgical Partners
Combined Surgery Centers
BASE YEAR INCOME STATEMENT
BSC TSC Combined
Base Base Base
Year Year Year
------------------- ------------------ -----------------
Cases 5,617 3,233 8,850
------------------- ------------------ -----------------
Net Revenue 6,281,198 2,852,309 9,133,507
Salaries 1,719,169 965,954 2,685,123
Contract Labor 0 0 0
Employee Benefits 323,192 157,163 480,355
Drugs & Medical Supplies 1,553,629 657,291 2,210,920
Other Supplies 150,000 100,000 250,000
Professional Fees 49,000 0 49,000
Contract Services 192,736 147,048 339,784
Repairs & Maintenance 123,730 63,219 186,949
Rents & Leases 245,776 426,137 671,913
Utilities 92,359 2,000 94,359
Insurance 70,039 35,000 105,039
Bad Debt 96,500 105,450 201,950
Interest Income 0 0 0
Non-Income Taxes 45,000 42,000 87,000
Other Operating Expenses 157,715 72,000 229,715
------------------- ------------------ -----------------
Total Operating Expenses 4,818,845 2,773,262 7,592,107
------------------- ------------------ -----------------
EBITDA 1,462,353 79,047 1,541,400
EBITDA % 23.3% 2.8% 16.9%
Depreciation 250,000 345,620 595,620
Goodwill Amortization 0 0 0
Other Amortization 47,880 118,848 166,728
Interest Expense 0 0 0
Management Fee Expense 432,928 204,595 637,524
------------------- ------------------ -----------------
Net Income Before Taxes $731,544 ($590,016) $141,528
------------------- ------------------ -----------------
STATISTICS
Net Revenue per Case $1,118 $882 $1,032
Personnel Cost per Case $364 $347 $358
Drugs & Medical per Case $277 $203 $250
Other Operating Expense per Case $218 $307 $250
Total Operating Expense per Case (without depr) $858 $858 $858
United Surgical Partners
Baylor Surgicare
PROFORMA INCOME STATEMENT
12 Mos Adjustments to Adjusted
12/31/98 12/31/98 12/31/98
------------------- ------------------ -----------------
Cases 5,617 5,617
------------------- ------------------ -----------------
Net Revenue 6,473,569 (192,371) (1) 6,281,198
Salaries 1,719,169 1,719,169
Contract Labor 0
Employee Benefits 258,011 65,181 (2) 323,192
Drugs & Medical Supplies 751,376 802,253 (3) 1,553,629
Other Supplies 826,058 (676,058) (3) 150,000
Professional Fees (50,364) 99,364 (11) 49,000
Contract Services 192,736 192,736
Repairs & Maintenance 123,730 123,730
Rents & Leases 0 245,776 (4) 245,776
Utilities 92,359 92,359
Insurance 45,039 25,000 (8) 70,039
Bad Debt 96,500 96,500
Interest Income 0
Non-Income Taxes 45,000 (5) 45,000
Other Operating Expenses 106,968 50,747 (6) 157,715
------------------- ------------------ -----------------
Total Operating Expenses 4,161,582 657,263 4,818,845
------------------- ------------------ -----------------
EBITDA 2,311,987 (849,634) 1,462,353
EBITDA % 35.7% 23.3%
Depreciation 455,991 (205,991) (9) 250,000
Goodwill Amortization 0 0
Other Amortization 47,880 47,880
Interest Expense (2,301) 2,301 (10) 0
Management Fee Expense 1,978 430,951 (7) 432,929
------------------- ------------------ -----------------
Net Income Before Taxes $1,808,439 ($1,076,895) $731,544
------------------- ------------------ -----------------
STATISTICS
Net Revenue per Case $1,152 $1,118
Personnel Cost per Case $352 $364
Drugs & Medical per Case $134 $277
Other Operating Expense per Case $255 $218
Total Operating Expense per Case (without depr $741 $858
Assumptions
(1) Net Revenue was decreased by investment income of $192,371
(2) Benefits adjusted for negative health insurance for 6/30/98 and
annualized for 3 mos. Ended 9/30/98
(3) Supplies increased by 8% for sales tax and part of storeroom
allocated to drugs and Medical Supplies
(4) Rents & Leases based upon $14.00 per foot for 17,144 sq. ft.
(5) Non-Income taxes property tax.
(6) Increase in Other Operating Expenses based upon backing out existing
expenses and base the laundry upon $16 per case.
(7) Management Fee based upon 7% of Net Revenue less Bad Debt Expense.
(8) Insurance is estimate based on other Tem centers, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ to
estimate.
(9) Depreciation is estimated to be $150,000/yr for equipment and
5200,000/yr for Leasehold Improvements
(10) Deducted Interest Expense/Add buck (Interest Income)
United Surgical Partners
Texas Surgery Center
PROFORMA INCOME STATEMENT
12 Mos. Base
12/31/98 Adjustments Year
--------------------- -------------------- ---------------------
Cases 3,233 3,233
--------------------- -------------------- ---------------------
Net Revenue 3,117,313 (265,004) (8) 2,852,309
Salaries 965,954 965,954
Contract Labor 0
Employee Benefits 157,163 157,163
Drugs & Medical Supplies 357,768 299,523 (7) 657,291
Other Supplies 399,523 (299,523) (7) 100,000
Professional Fees 0 0
Contract Services 147,048 147,048
Repairs & Maintenance 63,219 63,219
Rents & Leases 372,620 53,517 426,137
Utilities 5,907 (3,907) (6) 2,000
Insurance 17,268 17,732 (4) 35,000
Bad Debt . 194,524 (89,074) (9) 105,450
Interest Income 0
Non-Income Taxes 42,000 (3) 42,000
Other Operating Expenses (16,004) 88,004 (2) 72,000
--------------------- -------------------- ---------------------
Total Operating Expenses 2,664,990 108,272 2,773,262
--------------------- -------------------- ---------------------
EBITDA 452,323 (373,276) 79,047
EBITDA % 14.5% 2.8%
Depreciation 345,620 345,620
Goodwill Amortization 0 0
Other Amortization 118,848 118,848
Interest Expense 0 0
Management Fee Expense 83,454 121,141 (5) 204,595
--------------------- -------------------- ---------------------
Net Income Before Taxes ($95,599 ($494,417) ($590,016)
--------------------- -------------------- ---------------------
STATISTICS
Net Revenue per Case $964 $882
Personnel Cost per Case $347 $347
Drugs & Medical per Case $111 $203
Other Operating Expense per Case $366 $307
Total Operating Expense per Case (without depr $824 $858
Adjustments
(1) Rents and Leases were increased by $364,655 based upon the ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Study. Rent is $21.00 per foot; Full Service; Rental Space is
17,365 sq. feet. Old rate was $18.25/ft.
(1) Rents and Leases were reduced by old rate of $18.25/ft.
(1) Rents and Leases include panting costs of 30 employees at S 16 per month.
(2) Other Operating Expenses are assumed to be S 18,000 per quarter.
(3) Taxes other than income are for property taxes (2ole) on the equipment and
leasehold improvement Real estate Taxes are assumed to be in the rent and
leases under a full service lease.
(4) Insurance is estimate based on other Texas ASCs, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ to
estimate insurance cost.
(5) Management pee based upon 7% of net Revenue less Bad Debt Expense.
(6) Assume phone charges to be approximately $2,000 per year.
(7) Moved a portion of Supplies Storeroom to Drugs and Medical Supplies.
Texas Surgery Center
P&L Statement
Monthly Operating Report
12 Mos.
12/31/98
--------
Income
Surgery Procedures 5,272,515 Net Revenue
Misc. income 707 Net Revenue
Medicare Contractuals (337,520) Net Revenue
Medicaid Contractuals (37,230) Net Revenue
Workers Comp Contractuals (6,362) Net Revenue
Managed Care Contractuals (1,429,215) Net Revenue
Lithotripsy Contract. Adj. (320,796) Net Revenue
Charity (26,156) Net Revenue
Bad Debt Exp. (246,060) Bad Debt Expense
Bad Debt Recovery 51,538 Net Revenue
Misc, Revenue 1,370 Net Revenue
---------------------
Total Income 2,922,789
Expense
Regular Salaries and Wages 940,390 Salaries
Other Salaries 25,564 Salaries
Fica 65,694 Employee Benefits
Retirement Annuity 23,257 Employee Benefits
Health Insurance 26,733 Employee Benefits
Baylor Flex 416,479 Employee Benefits
Supplies - Storeroom 399,523 Other Supplies
Supplies - Drugs 109,984 Drugs & Medical
Supplies
Supplies o Medical Gases 475 Drugs & Medical
Supplies
Supplies - Special Order 216,447 Drugs & Medical
Supplies
Purchased Svc. . Radiology 6,975 Contract Services
Purchased Svc. - Lab 20,737 Contract Services
Purchased Svc. - Billing 31,532 Contract Services
Purchased Svc, o Other 44,640 Contract Services
Repairs - Equipment 63,219 Repairs & Maintenance
Other Travel 158 Other Operating
Expenses
Transportation 19 Other Operating
Expenses
Training & Seminars 85 Other Operating
Expenses
Lodging 95 Other Operating
Expenses
Meals & Entertain (45) Other Operating
Expenses
Credit Card Discount 2,679 Other Operating
Expenses
Collection Fees 61,665 Other Operating
Expenses
Books and Periodicals 491 Other Operating
Expenses
Dues & Membership 15,648 Other Operating
Expenses
Insurance Liability 17,268 Insurance
Space Rental 316,908 Rents & Leases
Equipment Rental 55,712 Rents & Leases
Laundry 56,661 Other Operating
Expenses
Marketing 221 Other Operating
Expenses
Miscellaneous (153,1381) Other Operating
Expenses
Corp Svc. - Risk Mgt. 312 Contract Services
Corp Svc. - Acctg. & Payroll 9,560 Contract Services
I/C - Consult Pharmacy --- Contract Services
I/C - Drugs 3,055 Drugs & Medical
Supplies
I/C - Telephone 5,907 Utilities
IC - Rad Purchase 30,741 Contract Services
I/C - Lab Purchase 2,551 Contract Services
Depreciation 345,620 Depreciation
Minor Equipment 1,194 Drugs & Medical
Supplies
Instruments 26,613 Drugs & Medical
Supplies
Corporate Overhead 83,454 Management Fee Expense
Amortization 118,848 Goodwill Amortization
Total Operating Expenses 3,018,388
---------------------
Revenue over Expense (95,599)
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇&▇ Statement
Monthly Operating Report
12 Mos.
12/31/98
Income
Surgery Procedures 9,946,004 Net Revenue
Misc- income 192.371 Net Revenue
Medicare Contractuals (627,380) Net Revenue
Medicaid Contractuals (156,963) Net Revenue
Workers Comp Contractuals (40,701) Net Revenue
Managed Care Contractuals (2,859.317) Net Revenue
Other C/A Adjustment (5,250) Net Revenue
Chanty (14,253) Net Revenue
Bad Debt Exp (96,500) Bad Debt Expense
Bad Debt Recovery 24,976 Net Revenue
Misc Revenue 14,082 Net Revenue
----------------
Total income 6,377,069
Expense
Regular Salaries and wages 1,713,867 Salaries
Other Salaries 5,302 Salaries
Fica 123,890 Employee Benefits
Retirement Annuity 44.965 Employee Benefits
Health Insurance 4,559 Employee Benefits
Baylor Flex 81.879 Employee Benefits
Child Care Subsidy 1,178 Employee Benefits
Life Insurance 1,492 Employee Benefits
Workers Comp 48 Employee Benefits
Professional Fees (50,364) Professional Fees
Supplies - Storeroom 826,058 Other Supplies
Supplies - Drugs 371,093 Drugs and Medical Supplies
Supplies - Medical Oases 4.158 Drugs and Medical Supplies
Supplies - Special Order 339.796 Drugs and Medical Supplies
Purchased Svc, - Contract 39,360 Contract Services
Purchased Svc, - Radiology --- Contract Services
Purchased Svc. - Lab 10.019 Contract Services
Purchased Svc, - Sitting - Contract Services
Purchased Svc, - Other 66,912 Contract Services
Repairs - Equipment 101,462 Repairs & Maintenance
Other Travel 7,886 Other Operating Expenses
Transportation 3.331 Other Operating Expenses
Training & Seminars 1,575 Other Operating Expenses
Lodging 2,623 Other Operating Expenses
Meals & Entertain 619 Other Operating Expenses
Natural Gas/Fuel 13,711 Utilities
Water & Sewage 9.966 Utilities
Electricity 42.216 Utilities
Refuse Disposal 4,573 Utilities
Credit Card Discount 4,919 Other Operating Expenses
Collection Fees 3,847 Other Operating Expenses
Books and Periodicals 5,520 Other Operating Expenses
Dues & Membership 18,903 Other Operating Expenses
Property Insurance 1.323 Insurance
Insurance Liability --- Insurance
Space Rental --- Rents & Leases
Equipment Rental --- Rents & Leases
Laundry 39,125 Other Operating Expenses
Marketing 1.621 Other Operating Expenses
Miscellaneous 16,999 Other Operating Expenses
Corp Svc. - Risk Mgt. 2,742 Contract Services
Corp Svc. - Acctg. & Payroll 23,172 Contract Services
I/C - Consult Pharmacy 1,333 Contract Services
I!C - Drugs 5.930 Drugs and Medical Supplies
I/C - Liability Insurance 43,716 Insurance
I/C - Telephone 21,893 Utilities
VC - Rad Purchase 9,371 Contract Services
I/C - Lab Purchase 14,810 Contract Services
I/C - Extended Care 8.343 Contract Services
I/C - Equipment Repair --- Repairs & Maintenance
I/C - Building Repair 22,268 Repairs & Maintenance
I/C - Security 16,874 Contract Services
Depreciation 455,991 Depreciation
Minor Equipment 1,737 Drugs and Medical Supplies
Instruments 28,682 Drugs and Medical Supplies
Interest Other (2.301) Interest Expense
Corporate Overhead 1,978 Management Fee Expense
Amortization 47,880 Goodwill Amortization
----------------
Total Operating Expenses 4,568,630
Revenue over Expense 1,808,439
================
SCHEDULE 4
[Sample Reconciliation Statement]
Schedule 4
Reconciliation Statement
THVG1 and THVG/HealthFirst
Baylor Centers Year 1
EBITDAM 2,204,501
Prior Year EBITDAM (or 1st year hurdle) 1,858,023
---------
Incremental EBITDAM 346,478
Contingent Purchase Price Multiple 4
---------
Contingent Purchase Price (before Debt) 1,385,912
Less Debt 0
---------
Contingent Purchase Price (after Debt) 1,385,912
Times Percentage Owed per Section 1.2(b) 50%
---------
Contingent Purchase Price 692,956
Cumulative Contingent Purchase Price 692,956
Maximum Contingent Purchase Price 2,601,232
Amount Attributed to Baylor Reconciliation (1) 692,956
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇)
(Assumes USP funds all interim payments)
EBITDA 3,331,511
Prior Year EBITDA (or 1st year hurdle) 3,104,500
---------
Incremental EBITDA 227,011
Contingent Purchase Price Multiple 4
---------
Contingent Purchase Price (before Debt) 908,042
Less Debt
Contingent Purchase Price (after Debt) 908,042
Times Percentage Owned 20.0%
---------
Contingent Purchase Price 181,608
Cumulative Contingent Purchase Price 181,608
Maximum Contingent Purchase Price 2,000,262
Contingent Purchase Price Per Agreement 181,608
Times Percentage owned by Baylor 49.0%
---------
Amount Attributed to USP Reconciliation (2) 88,988
Buy Up Provision 2,263,026
Times Percentage owned by Baylor 49%
---------
Amount Attributed to USP Reconciliation (3) 1,108,883
ANNUAL RECONCILIATION [(1) - (2) - (3)] (504,915)
SCHEDULE 8.4
[DeSoto and Metroplex Balance Sheets]
Metroplex Surgicare
Restated Balance Sheet
December 31, 1998
Restated
12/31/98 Debit Credit 12/31/98
CURRENT ASSETS
Cash 171,337 64,364 (1) 235,701
Accounts Receivable 1,861,621 960,862 (2) 135,001 (1) 1,688,332
999,150 (3)
Allowance for Doubtful Accounts (153,420) 10,782 (1) 8,008 (5) (150,646)
Allowance - Contractuals (785,345) 429,345 (3) 247,720 (4) (603,721)
Due from Healthfirst 182 (1) 182
Inventory 110,158 12,592 (6) 122,750
Prepaid Payroll 0 6,206 (9) 6,206 (1) 0
Prepaid Expenses 1,036 1,151 (11) 1,385 (1) 802
--------- ------- --------- ---------
Total Current Assets 1,205,387 460,258 1,397,470 1,293,400
PROPERTY AND EQUIPMENT
Office Equipment 163,890 163,890
Computer System 46,370 46,370
Medical Equipment 1,425,044 3,067 (1) 1,248,111
Leasehold Improvements 66,566 66,566
Accumulated Depreciation (338,512) 18,558 (1) (357,070)
--------- ---------
1,363,358 1,347,867
OTHER ASSETS
Deposits 26,849 26,849
Organization Costs, Net 2,665 515 (1) 2,150
Set-up Fees, Net 22,452 222 (1) 22,230
--------- ---------
51,966 51,229
--------- ------- --------- ---------
Total Assets 2,620,711 463,325 1,416,765 2,692,496
========= ======= ========= =========
CURRENT LIABILITIES
Accounts Payable 59,566 20,322 (1) 79,888
Accrued Payroll 60,889 1,944 (7) 16,365 (1) 30,934
44,376 (10)
Due to Healthfirst 42,140 4,567 (1) 46,707
Note Payable - IIFMD 19,374 (1) 19,374
Note Payable - IIFMD 12,659 (1) 12,659
Accrued Expenses 2,207 12,825 (1) 15,032
Accrued Management Fees 61,493 35,336 (1) 8,165 (8) 34,322
Accrued Rent 31,422 3,612 (1) 27,810
Accrued Bonuses 11,053 11,053 (1)
Accrued Property Taxes 11,250 3,750 (1) 15,000
Current Maturities of Debt 211,065 211,065
--------- ------- --------- ---------
Total Current Liabilities 491,085 77,705 492,791
LONG-TERM LIABILIITES
DVI Leases 1,054,040 16,469 (1) 1,037,571
Landmark Bank-Van 16,919 365 (1) 16,554
Less Current Maturities (211,065) (211,065)
--------- ---------
859,894 843,060
CAPITAL
Partners Capital 468,750 468,750
Retained Earnings (118,595) (118,595)
1,151 (11)
8,165 (8) 44,376 (10)
8,008 (5) 6,206 (9)
247,720 (4) 1,944 (7)
569,806 (3) 12,592 (6)
Current Income 919,577 106,520 (1) 960,862 (2) 1,006,489
--------- ---------
1,269,732 1,356,644
--------- ---------
Total Liabilities and Capital 2,620,711 940,219 1,104,836 2,692,496
========= ======= ========= =========
(1) December activity.
(2) Reverse original provision entry
(3) Record write-offs
(4) Record contractual provisions
(5) Adjust bad debt expense recorded to equal 2% of
gross revenue
(6) Record inventory adjustment
(7) Adjust PTO accrual
(8) Adjust management fee to equal 6% of net income
(9) Reverse prepaid payroll related to July
(10) Reverse November payroll paid in December
(11) Reverse expense of prepaid interest related to
prior months
Metroplex Surgicare Partners
Income Statement
For the Month Ending February 28, 1999
February
--------
ASC Cases 392
REVENUE
Gross Patient revenue $1,072,379
---------------------
Total gross revenue 1,072,379
Provision for contractuals 568,121
Other revenue deductions 10,760
---------------------
Total revenue deductions 578,881
Net revenue 493,498
EXPENSES
Personnel costs 101,081
Drugs and medical 58,780
Repair and maintenance 10,287
Purchased services 47,256
Minor equipment and instruments 2,677
Utilities 3,795
Non-medical supplies and expenses 5,102
Professional fees 1,600
Sales expense 343
Provision for bad debts 21,448
Lease and rent expense 35,654
Non-income taxes 1,250
Management fee expense 33,018
---------------------
Total operating expenses 322,291
EBITDAM 204,225
EBITDAM% 41.4%
EBITDA 171,207
EBITDA% 34.7%
Depreciation expense 14,601
Amortization expense 737
Interest expense (income) 7,559
Other expense (income) (30)
Total non-operating expenses 22,867
Pretax income (Loss) 148,340
Pretax income % 30.1%
Net income $148,340
=====================
Ratio Analysis:
Net revenue/case $1,259
Salaries and benefits/case 258
D&M/case $150
Other operating expense/case $414
Total operating expense/case $822
EBITDA/case $437
Bad debt % of gross revenue 2.0%
Management fee % of net revenue less bad 7.0%
Metroplex Surgicare Partners
Balance Sheet
February 28, 1999
February
--------
ASSETS
Current assets
Cash and cash equivalents 378,831
Accounts receivable - trade 1,416,824
Allowance for doubtful accounts (166,900)
Allowance for contractual adjustments (331,286)
Accounts receivable - other 132
Inventories 141,708
Prepaid expenses 880
---------------------
Total current assets 1,440,189
Property, plant and equipment
Medical equipment 1,457,305
Accum. dept. - medical equipment (323,135)
Leasehold improvements 66,566
Accum depr - leasehold improvements (14,203)
Furniture & fixtures 210,259
Accum depr - furniture & fixtures (48,934)
---------------------
Total property, plant and equipment 1,347,858
Other noncurrent assets
Offering costs 60,912
Accum amort - offering costs (38,006)
Deposits 26,849
---------------------
Total other noncurrent assets 49,755
---------------------
Total assets 2,837,802
=====================
LIABILITIES AND EQUITY
Current liabilities
Accounts payable 70,338
Curr. portion long-term debt 288,079
Accrued salaries 36,247
Accrued liability other 39,451
---------------------
Total current liabilities 434,115
Noncurrent liabilities
Affiliates payable 101,400
Long term debt 15,815
Long term intercompany debt 802,196
---------------------
Total noncurrent liabilities 919,411
Equity
Partners capital - LP 309,092
Current period earnings 287,290
Retained earnings 887,894
---------------------
Total equity 1,484,276
---------------------
Total liabilities and equity 2,837,802
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ Surgery Center
Restated Balance Sheet
December 31, 1998
12/31/98 Debit Credit Restated
12/31/98
CURRENT ASSETS
Cash 8,477 75,588 (1) 12,889
Accounts Receivable 1,408,313 107,112 (1) 609,873 (3) 1,568,569
663,018 (2)
Allowance for Doubtful Accounts (147,492) 17,193 (1) (165,754)
1,069 (5)
Allowance - Contractuals (357,292) 274,959 (3) 311,070 (4) (393,403)
Inventory 107,521 5,490 (6) 102,031
Prepaid Payroll -- 4,254 (9) 4,254 (1) 0
Prepaid Expenses 7,435 1,124 (11) 7,939 (1) 620
--------- --------- ------- ---------
Total Current Assets 1,106,962 1,050,466 956,887 1,124,953
PROPERTY AND EQUIPMENT
Office Equipment 113,878 113,878
Medical Equipment 1,689,299 3,470 (1) 1,692,769
Leasehold Improvements 1,948,584 1,948,584
Accumulated Depreciation (359,218) 9,925 (1) (369,143)
--------- ---------
3,392,543 3,386,088
OTHER ASSETS
Deposits 118,300 118,300
Organization Costs, Net 488 13 (1) 475
Set-up Fees, Net 21,600 400 (1) 21,200
--------- ---------
140,388 139,975
--------- --------- ------- ---------
Total Assets 4,639,893 1,053,936 967,225 4,651,016
========= ========= ======= =========
CURRENT LIABILITIES
Accounts Payable 80,262 6,884 (1) 73,378
Accrued Payroll 51,123 35,713 (10) 13,298 (1) 29,336
628 (7)
Due to Landmark Bank 466,035 3,104 (1) 469,139
Due to HFMA, Inc. 75,000 75,000
Accrued Expenses 1,174 2,834 (1) 4,008
Accrued Management Fees 290,172 304 (8) 32,270 (1) 322,138
Accrued Property Taxes 15,000 15,000 (1) 30,000
Current Maturities of Debt 629,158 629,158
--------- --------- ------- ---------
Total Current Liabilities 1,607,924 42,901 67,134 1,632,157
LONG-TERM LIABILIITES
GE Capital 3,550 261 (1) 3,289
Equipment Leases 3,099,412 50,625 (1) 3,048,787
Less Current Maturities 629,158 (629,158)
--------- ---------
2,473,804 2,422,918
CAPITAL
Partners Capital 453,025 453,025
Retained Earnings (202,671) (202,671)
628 (7)
5,490 (6) 4,254 (9)
1,069 (5) 1,124 (11)
311,070 (4) 35,713 (10)
334,915 (3) 304 (8)
Current Income 307,813 13,466 (1) 663,018 (2) 345,589
--------- ---------
558,16732 595,943
--------- --------- ------- ---------
Total Liabilities and Capital 4,639,893 760,424 771,547 4,651,016
========= ========= ======= =========
(1) December activity.
(2) Reverse original provision entry
(3) Record write-offs
(4) Record contractual provisions
(5) Adjust bad debt expense recorded to equal 2% of
gross revenue
(6) Record inventory adjustment
(7) Adjust PTO accrual
(8) Adjust management fee to equal 6% of net income
(9) Reverse prepaid payroll related to July
(10) Reverse November payroll paid in December
(11) Reverse expense of prepaid interest related to
prior months
DeSoto Surgicare Partners, Ltd.
Income Statement
For the Month Ending February 28, 1999
February
--------
ASC Cases 230
REVENUE
Gross Patient revenue $741,234
---------------------
Total gross revenue 741,234
Provision for contractuals 431,125
Other revenue deductions 8,026
---------------------
Total revenue deductions 439,151
Net revenue 302,083
EXPENSES
Personnel costs 70,824
Drugs and medical 72,005
Repair and maintenance 5,585
Purchased services 34,608
Utilities 5,474
Non-medical supplies and expenses 3,913
Sales expense 199
Insurance (440)
Provision for bad debts 14,825
Lease and rent expense 2,856
Non-income taxes 6,600
Management fee expense 20,105
---------------------
Total operating expenses 236,554
EBITDAM 85,634
EBITDAM% 28.3%
EBITDA 65,529
EBITDA% 21.7%
Depreciation expense 19,684
Amortization expense 413
Interest expense (income) 29,373
Other expense (income) 1,344
---------------------
Total non-operating expenses 50,814
Pretax income (Loss) 14,715
Pretax income % 4.9%
Net income $14,715
=====================
Ratio Analysis:
Net revenue/case $1,313
Salaries and benefits/case $308
D&M/case $313
Other operating expense/case $408
Total operating expense/case $1,028
EBITDA/case $285
Bad debt % of gross revenue 2.0%
Management fee % of net revenue less bad 7.0%
DeSoto Surgicare Partners, Ltd.
Balance Sheet
February 28, 1999
February
--------
ASSETS
Current assets
Cash and cash equivalents 33,987
Accounts receivable - trade 1,222,614
Allowance for doubtful accounts (159,714)
Allowance for contractual adjustments (151,016)
Inventories 122,437
Prepaid expenses 735
---------------------
Total current assets 1,069,043
Property, plant and equipment
Medical equipment 1,701,436
Accum. dept. - medical equipment (192,794)
Leasehold improvements 1,948,584
Accum depr - leasehold improvements (199,826)
Furniture & fixtures 111,627
Accum depr - furniture & fixtures (13,638)
---------------------
Total property, plant and equipment 3,355,389
Other noncurrent assets
Offering costs 30,750
Accum amort - offering costs (9,900)
Deposits 118,300
---------------------
Total other noncurrent assets 139,150
---------------------
Total assets 4,563,582
=====================
LIABILITIES AND EQUITY
Current liabilities
Accounts payable 60,279
Curr. portion long-term debt 1,468,370
Accrued salaries 31,719
Accrued liability other 42,902
---------------------
Total current liabilities 1,603,270
Noncurrent liabilities
Affiliates payable 67,886
Long term intercompany debt 2,305,749
---------------------
Total noncurrent liabilities 2,373,635
Equity
Partners capital - LP 453,025
Current period earnings (9,266)
Retained earnings 142,918
---------------------
Total equity 586,677
---------------------
Total liabilities and equity 4,563,582
=====================
Metroplex Surgicare Partners
Income Statement
For the Two Months Ending February 28, 1999
February YTD
--------------------- ---------------------
ASC Cases 392 784
REVENUE
Gross revenue - other 1,072,379 2,151,733
--------------------- ---------------------
Total gross patient revenue 1,072,379 2,151,733
--------------------- ---------------------
Total revenue 1,072,379 2,151,733
Prov for cont - other 568,121 1,094,140
--------------------- ---------------------
Total provision for contractual 568,121 1,094,140
Courtesy discounts 11,124 56,459
Payable discounts (364) (518)
--------------------- ---------------------
Total other revenue deductions 10,760 55,941
Net revenue 493,498 1,001,652
EXPENSES
Salaries - administration 11,303 23,367
Salaries - patient care 65,437 129,959
Fica - administration 854 1,708
Fica - patient care 4,835 9,590
Group ins - administration 1,691 3,382
Group ins - patient care 11,149 22,291
Other personnel expense 5,812 11,477
--------------------- ---------------------
Total personnel costs 101,081 201,774
Drugs & medical supplies 55,240 112,080
Intraocular lens 333 1,306
Other prosthesis 3,207 9,164
--------------------- ---------------------
Total drugs and medical 58,780 122,550
Rep. & maint. - contracts 880 880
Rep. & maint. - buildings 3,311 3,311
Rep. & maint - med equipment 6,095 15,612
Rep. maint. - office equip. 0 226
--------------------- ---------------------
Total repairs and maintenance 10,286 20,029
Other medical fees 2,870 7,282
Laundry & linen 4,681 9,196
Contract services 32,683 82,450
Dictation/transcription 5,227 9,217
Lab fees 130 162
Computer Support services 1,664 2,072
--------------------- ---------------------
Total purchased services 47,255 110,379
--------------------- ---------------------
Surgical instruments 2,677 7,840
--------------------- ---------------------
Total minor equipment and instruments 2,677 7,840
Electric 951 2,169
Telephone 1,869 3,643
Other utilities 975 2,229
--------------------- ---------------------
Total utilities 3,795 8,041
Automobile expense 236 592
Bank service charges 0 3
Books, dues, & subscriptions 121 2,654
Employee relations 210 210
Office supplies 2,751 3,538
Kitchen supplies 1,369 2,392
Postage & courier 415 886
--------------------- ---------------------
Metroplex Surgicare Partners
Income Statement
For the Two Months Ending February 28, 1999
February YTD
--------------------- ---------------------
Total non-medical supplies and expense 5,102 10,275
Legal fees 1,600 1,763
Accounting fees 0 394
--------------------- ---------------------
Total professional fees 1,600 2,157
Direct advertising 343 343
--------------------- ---------------------
Total sales expense 343 343
--------------------- ---------------------
Insurance - general liability 0 90
Insurance - professional liability 0 4,114
--------------------- ---------------------
Total insurance 0 4,204
Lease & rent expense - bldg 27,962 55,772
Lease & rent expense - medical equip 7,692 12,573
--------------------- ---------------------
Total lease and rent expense 35,654 68,345
Provision for bad debts 21,448 43,035
Property tax 1,250 2,500
--------------------- ---------------------
Total non-income taxes 1,250 2,500
Management fee expense 33,018 67,078
--------------------- ---------------------
Total management fee expense (income) 33,018 67,078
--------------------- ---------------------
Total operating expenses 322,289 668,550
EBITDAM 204,227 400,180
EBITDAM% 41.4% 40.0%
EBITDA 171,209 333,102
EBITDA% 34.7% 33.3%
Amort. - offering costs 737 1,474
--------------------- ---------------------
Total amortization 737 1,474
Depr - leaseholds 139 277
Depr - medical equip - 10 years 12,134 24,267
Depr - furn & fixtures 2,071 4,142
Depr - furn & fixtures - computers 258 515
--------------------- ---------------------
Total depreciation 14,602 29,201
Interest expense 8,469 17,076
Interest income (910) (1,765)
--------------------- ---------------------
Total interest expense (income) 7,559 15,311
Other expense (income) (30) (175)
--------------------- ---------------------
Total other expense (income) (30) (175)
--------------------- ---------------------
Total non-operating expenses 22,868 45,811
--------------------- ---------------------
Pretax income 148,341 287,291
--------------------- ---------------------
--------------------- ---------------------
Net income $148,341 $287,291
===================== =====================
Metroplex Surgicare Partners
Income Statement
For the Two Months Ending February 28, 1999
February YTD
--------------------- ---------------------
Ratio analysis:
Net revenue/case $1,259 $1,278
Salaries and benefits/case $258 $257
D&M/case $150 $156
Other operating expense/case $272 $295
Total operating expense/case $822 $853
EBITDA/case $437 $425
Bad debt % of gross revenue 2% 2%
Management fee % of net revenue less bad d 7% 7%
SCHEDULE 8.6
[DeSoto and Metroplex Contracts]
Schedule 8.6
Material Leases/Contracts
Real Property Ownership and Leases
1. Net Ground Lease between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, 11, as lessor, and Desoto
Surgicare Partners, Ltd., as lessee, dated June 7, 1996 for premises
located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. Desoto
Surgicare owns the building located on the premises.
2. Lease Agreement between ▇▇▇▇▇ ▇▇▇▇▇▇▇, as lessor, and Metroplex
Surgicare Partners, Ltd., as lessee, dated May 4, 1994, as amended
on April 4, 1995 and June 7, 1995, for the premises located at ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ and 1$0, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and certain
other property adjacent thereto.
3. Lease Arrangement between Metroplex Sports Care, as lessor, and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as lessee, dated June 1, 1998 for premises located
at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
Schedule 8.6 (Continued)
Material Contracts
1. Commercial Security Agreement from Metroplex Surgicare Partners,
Ltd. in favor of Landmark Bank Mid-Cities dated May 6, 1997 securing
that certain Fixed Rate Demand Commercial Promissory Note from
Metroplex Surgicare Partners, Ltd. in favor of Landmark Bank
Mid-Cities dated May 6, 1997 in the initial principal amount of
$23,463.29.
2. Commercial Loan Agreement between Desoto Surgicare Partners, Ltd.
and Landmark Bank Mid-Cities dated June 6, 1998.
3. Commercial Security Agreement from Desoto Surgicare Partners, Ltd.
in favor of Landmark Bank Mid-Cities dated June 6, 1998 securing
that certain Variable Rate Demand Commercial Revolving or Draw Note
from Desoto Surgicare Partners, Ltd. in favor of Landmark Bank
Mid-Cities dated May 6, 1997.
4. Commercial Loan Agreement between HealthFirst and Landmark Bank
Mid-Cities dated October 8, 1998.
5. Commercial Security Agreement from HealthFirst in favor of Landmark
Bank Mid-Cities dated October 8, 1998 securing that certain Variable
Rate Demand Commercial Promissory Note from HealthFirst in favor of
Landmark Bank Mid-Cities dated May 6, 1997 in the original principal
amount of $43,698.37.
6. Limited Commercial Continuing Guaranty by HFMA, Inc. in favor of
Landmark Bank MidCities dated October 8, 1998 guaranteeing the
obligations of HealthFirst under that certain Variable Rate Demand
Commercial Promissory Note from HealthFirst in favor of Landmark
Bank Mid-Cities dated October 8, 1998 in the original principal
amount of $43,698.37.
7. Limited Commercial Continuing Guaranty by HFMB, Inc. in favor of
Landmark Bank MidCities dated October 8, 1998 guaranteeing the
obligations of HealthFirst under that certain Variable Rate Demand
Commercial Promissory Note from HealthFirst in favor of Landmark
Bank Mid-Cities dated October 8, 1998 in the original principal
amount of $43,698.37.
8. Limited Commercial Continuing Guaranty by HFMD, Inc. in favor of
Landmark Bank MidCities dated October 8, 1998 guaranteeing the
obligations of HealthFirst under that certain Variable Rate Demand
Commercial Promissory Note from HealthFirst in favor of Landmark
Bank Mid-Cities dated October 8, 1998 in the original principal
amount of $43,698.37.
9. Management Agreement between Disney Management, L.P., ▇▇▇▇▇▇▇
Management, L.P. and Dallas Surgery Partners dated December 17,1990,
as amended (assigned from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ to HealthFirst December
7, 1998 and assigned from HealthFirst to Disney Management, L.P. and
▇▇▇▇▇▇▇ Management, L.P. December 4,1998). As of March 31, 1999,
Valley View Surgery Center was delinquent $72,946.26 on its payment
of Management Fees.
2
10. Management Agreement between Disney Management, L.P., ▇▇▇▇▇▇▇
Management, L.P. and Desoto Surgicare Partners, Ltd. dated May 22,
1995 (assigned from HFMA, Inc. to HealthFirst July 1, 1997 and
assigned from HealthFirst to Disney Management, L.P. and ▇▇▇▇▇▇▇
Management, L.P. December 4, 1998). As of March 31, 1999, DeSoto
Surgicare Partners, Ltd. was delinquent $87,296.85 on its payment of
Management Fees.
11. Management Agreement between Disney Management, L.P., ▇▇▇▇▇▇▇
Management, L.P. and Metroplex Surgicare Partners, Ltd. dated
January 2, 1995 (assigned from HFMB, Inc. to HealthFirst July 1,
1997 and assigned from HealthFirst to Disney Management, L.P. and
▇▇▇▇▇▇▇ Management, L.P. December 4,1998).
12. Management Agreement between Disney Management, L.P., ▇▇▇▇▇▇▇
Management, L.P. and Irving Surgery Center, Ltd. dated May 1, 1994
(assigned from HFMD, Inc. to HealthFirst July 1, 199'7 and assigned
from HealthFirst to Disney Management, L.P. and ▇▇▇▇▇▇▇ Management,
L.P. December 4,1998). As of March 31, 1999, Irving Surgery Center
was delinquent $18,588 on its payment of Management Fees.
13. Management Agreement between Disney Management, L.P., ▇▇▇▇▇▇▇
Management, L.L.P and Fort Worth Surgicare Partners, Ltd. dated
November 1, 1998 (assigned from HFMFW, L.L.C. to HealthFirst
November 1, 1998 and assigned from HealthFirst to Disney Management,
L.P. and ▇▇▇▇▇▇▇ Management, L.P. December 4, 1998).
14. Limited Partnership Agreement of Metroplex Surgicare Partners, Ltd.
dated January 2, 1995.
15. Limited Partnership Agreement of Desoto Surgicare Partners, Ltd.
dated May 22, 1995.
16. Partnership Agreement of Disney Oak Mount, L.L.P. dated November 20,
1998.
17. Partnership Agreement of ▇▇▇▇▇▇▇ Forest Edge, L.L.P. dated November
20, 1998.
18. Limited Partnership Agreement of ▇▇▇▇▇▇▇ Management, L.P. dated
November 20, 1998.
19. Limited Partnership Agreement of Disney Management, L.P. dated
November 20, 1998.
20. Property Tax Agreement between ▇▇▇▇ Group, Inc. and Metroplex
Surgicare Partners, Ltd. dated April 15, 1997, as amended on
September 16, 1997, pursuant to which Metroplex Surgicare Partners,
Ltd. is obligated to pay ▇▇▇▇ Group, Inc. a certain percentage of
its property tax savings.
21. Property Tax Agreement between ▇▇▇▇ Group, Inc. and Desoto Surgicare
Partners, Ltd. dated September 16, 1997 pursuant to which Desoto
Surgicare Partners, Ltd. is obligated to pay ▇▇▇▇ Group, Inc. a
certain percentage of its property tax savings.
22. Client Service Agreement between Administaff Companies, Inc. and
Metroplex Surgicare Partners, Ltd. dated June 30, 1997 pursuant to
which Administaff Companies, Inc. furnishes certain employees to
Metroplex Surgicare Partners, Ltd.
3
23. Client Service Agreement between Administaff Companies, Inc. and
Desoto Surgicare Partners, Ltd. dated June 30, 1997 pursuant to
which Administaff Companies, Inc. furnishes certain employees to
Desoto Surgicare Partners, Ltd.
24. Agreement between Health Services Corporation of America and
HealthFirst dated July 30, 1997 pursuant to which Health Services
Corporation of America provides its Group Purchasing Program on
behalf of the membership of HealthFirst.
25. Personnel Management Agreement between Administaff Companies, Inc.
and HealthFirst dated January 1, 1998 pursuant to which Administaff
Companies, Inc. provides worksite employees for HealthFirst.
26. Letter Employment Agreement between HFMA, Inc., HFMB, Inc., HFMD,
Inc. and VVSC, Inc., collectively as employers, and ▇▇▇▇▇ ▇▇▇▇▇▇▇,
as employee, dated June 27, 1997.
27. Letter Employment Agreement between HealthFirst, as employer, and
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, as employee, dated September 9, 199'7.
28. Network Support arrangement between ▇▇▇'▇ Computer Solutions and
HealthFirst and each Partnership whereby ▇▇▇'▇ Computer Solutions
provides consulting services to each Partnership on an as-needed
basis.
29. Patient Transfer Agreement between ▇▇▇▇▇▇ Methodist H-E-B and
Metroplex Surgicare Partners, Ltd. dated December 12, 1995 setting
forth the responsibilities of each party regarding the transfer of
patients between the facilities of each party.
30. Consultant Pharmacist Agreement between Metroplex Surgicare
Partners, Ltd. and ▇▇▇▇▇ ▇▇▇▇▇▇▇ dated November 15, 1996, as amended
on January 21, 1998.
31. Consultant Pharmacist Agreement between Desoto Surgicare Partners,
Ltd. and ▇▇▇▇▇ ▇▇▇▇▇▇▇ dated November 15, 1996, as amended January
21, 1998.
32. Services Agreement between Texas Lithotripsy Limited Partnership II
and Metroplex Surgicare Partners, Ltd. dated June 6, 1995.
33. Personnel Management Service Agreement between Metroplex Pain
Management and Metroplex Surgicare Partners, Ltd. dated January 1,
1998 for the provision of pain management services.
34. Ketorolac Individual Requirements Contract between ▇▇▇▇▇▇
Laboratories and Desoto Surgicare Piers, Ltd. dated August 22, 1997
pursuant to which Desoto Surgicare Partners, Ltd. agrees to purchase
from ▇▇▇▇▇▇ Laboratories its requirements of the same through June
30, 2000.
35. Atracurium Besylate Individual Requirements Contract between ▇▇▇▇▇▇
Laboratories and Desoto Surgicare Partners, Ltd. dated August 22,
1997 pursuant to which Desoto Surgicare Partners, Ltd. agrees to
purchase from ▇▇▇▇▇▇ Laboratories its requirements of the same
through January 31, 2000.
4
36. Sufentanil Individual Requirements Contract between ▇▇▇▇▇▇
Laboratories and Desoto Surgicare Partners, Ltd. dated August 22,
1997 pursuant to which Desoto Surgicare Partners, Ltd. agrees to
purchase from ▇▇▇▇▇▇ Laboratories its requirements of the same
through January 31, 2000.
37. Committed Contract between Health Services Corporation of America,
OHMEDA Pharmaceutical Products Division and Desoto Surgicare
Partners, Ltd. dated January 1997 pursuant to which Desoto Surgicare
Partners, Ltd. agrees to purchase is requirements of certain
pharmaceutical products through September 30, 2000.
38. Transfer Agreement between Charlton Methodist Hospital and Desoto
Surgicare Partners, Ltd. dated November 30, 1996 setting forth the
responsibilities of each party regarding the transfer of patients
between the facilities of each party.
39. Lithotripsy Services Agreement between Texas ESWL/Laser
Lithotriptor, Ltd. and Desoto Surgicare Partners, Ltd. dated April
29, 1997.
40. Product Sale Agreement between Trinity Airgas, Inc. and Desoto
Surgicare Partners, Ltd. dated July 30, 1996 pursuant to which
Desoto Surgicare Partners, Ltd. agrees to purchase its requirements
of certain industrial and/or medical gases from Trinity Airgas, Inc.
through August 2003.
41. Endoscopy Cost Per Procedure Agreement between Olympus Financial
Services and Desoto Surgicare Partners, Ltd. dated August 9, 1996,
as amended November 25, 1996, pursuant to which Desoto Surgicare
Partners, Ltd. rents certain equipment from Olympus Financial
Services for a term of three years.
42. Subordination Agreement between HFMB, Inc., Metroplex Surgicare
Partners, Ltd. and DVI Financial Services Inc, dated December 1,
1997 and related to that certain Loan and Security Agreement No.
0001718 between DVI Financial Services Inc. and Metroplex Surgicare
Partners, Ltd. dated as of even date therewith.
43. Subordination Agreement between HFMB, Inc., Metroplex Surgicare
Partners, Ltd. and DVI Financial Services Inc. dated Mach 30, 1998
and related to that certain Loan and Security Agreement No. 0001718
between DVI Financial Services Inc. and Metroplex Surgicare
Partners, Ltd. dated December 1, 1997.
44. Subordination Agreement between HealthFirst Management, L.L.C. and
DVI Financial Services Inc. dated March 30, 1998 and related to that
certain Loan and Security Agreement No. 0001718 between DVI
Financial Services Inc. and Metroplex Surgicare Partners, Ltd. dated
December 1, 1997.
45. Unconditional Continuing Guaranty from HealthFirst in favor of DVI
Financial Services Inc. dated March 30, 1998 guaranteeing the
obligations of Metroplex Surgicare Partners, Ltd. Pursuant to that
certain Loan and Security Agreement No. 0001718 between DVI
Financial Services Inc. and Metroplex Surgicare Partners, Ltd. dated
December 1, 1997.
46. Unconditional Continuing Guaranty from HealthFirst in favor of DVI
Financial Services Inc. dated June 19, 1998 relating to that certain
Loan and Security
5
Agreement No. 0001718 between DVI Financial Services Inc. and
Metroplex Surgicare Partners, Ltd. dated December 1,1997.
47. Unconditional Continuing Guaranty from HFMB, Inc. in favor of DVI
Financial Services Inc. dated October 29, 1998 guaranteeing the
obligations of Metroplex Surgicare Partners, Ltd. Pursuant to that
certain Loan and Security Agreement No. 0001718 between DVI
Financial Services Inc. and Metroplex Surgicare Partners, Ltd. dated
December 1, 1997.
48. Unconditional Continuing Guaranty from HealthFirst in favor of DVI
Financial Services Inc. dated July 10, 1998 relating to that certain
Loan and Security Agreement No. 0001718 between DVI Financial
Services Inc. and Metroplex Surgicare Partners, Ltd. dated December
1,1997.
49. Unconditional Continuing Guaranty from HFMB, Inc. in favor of DVI
Financial Services Inc. dated July 10, 1998 relating to that certain
Loan and Security Agreement No. 0001718 between DVI Financial
Services Inc. and Metroplex Surgicare Partners, Ltd, dated December
1,1997.
50. Unconditional Continuing Guaranty from HFMA, Inc. in favor of DVI
Financial Services Inc dated April 2, 1997 relating to that certain
Loan and Security Agreement No. 0001464 and related schedules
between DVI Financial Services Inc. and Desoto Surgicare Partners,
Ltd. dated April 2, 1997 for the purpose of purchasing various
equipment.
51. Unconditional Continuing Guaranty from HFMA, Inc. in favor of DVI
Financial Services Inc dated March 2, 1998 relating to that certain
Loan and Security Agreement No. 0001464 and related schedules
between DVI Financial Services Inc. and Desoto Surgicare Partners,
Ltd. dated April 2, 1997 for the purpose of purchasing various
equipment.
52. Subordination Agreement between HFMA, Inc. and DVI Financial
Services Inc. dated March 27, 1998 and related to that certain Loan
and Security Agreement ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ Financial Services
Inc. and Desoto Surgicare Partners, Ltd. dated April 2, 1997.
53. Subordination Agreement between HealthFirst Management, L.L.C. and
DVI Financial Services Inc. dated March 27, 1998 and related to that
certain Loan and Security Agreement ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
Financial Services Inc. and Desoto Surgicare Partners, Ltd. dated
April 2, 1997.
54. Unconditional Continuing Guaranty from HealthFirst Management,
L.L.C. in favor of DVI Financial Services Inc dated March 27, 1998
relating to that certain Loan and Security Agreement No. 0001464 and
related schedules between DVI Financial Services Inc. and Desoto
Surgicare Partners, Ltd. dated April 2, 1997 for the purpose of
purchasing various equipment.
55. Subordination Agreement between HFMA, Inc. and DVI Financial
Services Inc. dated March 30, 1938 and related to that certain Loan
and Security Agreement ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ Financial Services
Inc. and Desoto Surgicare Partners, Ltd. dated April 2, 1997.
6
56. Subordination Agreement between HealthFirst. Management, L.L.C. and
DVI Financial Services Inc. dated March 30, 1998 and related to that
certain Loan and Security Agreement No. 0001464 between VI Financial
Services Inc. and Desoto Surgicare Partners, Ltd. dated April 2,
1997.
57. Unconditional Continuing Guaranty from HFMA, Inc. in favor of DVI
Financial Services Inc dated March 30, 1998 relating to that certain
Loan and Security Agreement No. 0001464 and related schedules
between DVI Financial Services Inc. and Desoto Surgicare Partners,
Ltd. dated April 2, 1997 for the purpose of purchasing various
equipment.
58. Unconditional Continuing Guaranty from HFMA, Inc. in favor of DVI
Financial Services Inc dated May 29, 1998 relating to that certain
Loan and Security Agreement No. 0001464 and related schedules
between DVI Financial Services Inc. and Desoto Surgicare Partners,
Ltd. dated April 2, 1997 for the purpose of purchasing various
equipment.
59. Subordination Agreement between HealthFirst Management, L.L.C. and
DVI Financial Services Inc. dated June 16, 1998 and related to that
certain Loan and Security Agreement ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
Financial Services Inc. and Desoto Surgicare Partners, Ltd. dated
April 2, 1997.
60. Unconditional Continuing Guaranty from HFMA, Inc. in favor of DVI
Financial Services Inc dated June 16, 1998 relating to that certain
Loan and Security Agreement No. 0001464 and related schedules
between DVI Financial Services Inc. and Desoto Surgicare Partners,
Ltd. dated April 2, 1997 for the purpose of purchasing various
equipment.
61. Promissory Note from HFMB, Inc. in favor of Dallas Surgery Partners
in the principal amount of $120,000.00 dated June 30, 1998.
62. Asset Purchase Agreement Relating to the acquisition of the
HealthFirst Management Group by United Surgical Partners
International, Inc. dated December 18, 1998.
63. Schedule 8.6(a) lists the Managed Care Contracts in place at North
Texas Surgery Center.
64. Schedule 8.6(b) lists the Managed Care Contracts in place at
Metroplex Surgicare.
65. Schedule 8.6(c) lists the Indebtedness related to Metroplex
Surgicare Partners, Ltd. and DeSoto Surgicare Partners, Ltd.
66. Employment Agreement between United Surgical Partners International,
Inc. and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ dated January 1, 1999.
67. Employment Agreement between United Surgical Partners International,
Inc. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ dated January 1, 1999.
68. Amendment of Limited Partnership Agreement and Consent of Limited
Partner for DeSoto Surgicare Partners, Ltd. dated December 11, 1998.
7
69. Amendment of Limited Partnership Agreement and Consent of Limited
Partner for Metroplex Surgicare Partners, Ltd. dated December 11,
1998.
8
Schedule 8.6 (a)
NORTH TEXAS SURGERY CENTER
Managed Care Contracts
Accountable Health Plans
Aetna US Healthcare (All products)
Affordable / Healthcare Compare / First Health
Augnet/Managed Care Inc. (PPO-W/C)
BC/BS of TX
Blue Choice PPO
BC/BS HMO Blue (1-15-99)
Beech Street of Texas (PPO, W/C)
ChoiceOne, Inc. (PPO, EPO/POS, W/C)
Cigna (HMO & PPO)
CorVel/CorCare
Family Healthcare Associates
Foreign Missions Board - Southern Baptist Convention (FNM)
Health Payors Organization (HPO)
Heritage Southwest Medical Group (HSWMG)
If the patient is an HSWMG member we can provide services under these
networks:
NYLCare & NYLCare 65
PCA
Pacificare/Secure Horizons
Humana Health Plans
Foundation Health
Humana Health Plan of Texas
Inova HMO, PPO, Medicare
▇▇▇▇ ▇▇▇▇▇▇▇ Mutual/Cost Care (Preferred Provider Network)
Medical Control / NetOne PPO / CompCare
National Association Preferred Providers (NAPP)
National Preferred Providers Network, Inc. (NPPN)
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇
Pacificare Health Plan of Texas
ProNet
Prudential Healthcare Systems
SPA / PhyCor
Southwest Preferred Health Network (SPHN)
UniCare (all products)
United Healthcare HMO & PPO
United Payors & United Providers (UP & UP)
Negotiating:
AmeriHealth
Schedule 8.6 (b)
METROPLEX SURGICARE
Managed Care Contracts
Accountable Health Plans Pending/Negotiating
Admar/Admar Med Network AmeriHealth
Aetna US Healthcare (All products)
Affordable/Healthcare Compare (First Health)
Augnet/Managed Care Inc.
BC/BS of Texas
BC/BS Blue Choice PPO
BC/BS HMO Blue
Beech Street of Texas
ChoiceOne Inc. (PPO-EPO-POS-W/C)
Cigna HealthCare of Texas (HMO & PPO)
CorVel/CorCare
Family Health Care Associates
Foreign Missions Board - Southern Baptist Convention (FMB)
Health Payors Organization
Heritage Southwest Medical Group (HSWMG)
If the patient is a HSWMG member we can provide services under these
networks:
NYLCare & NLYCare 65
PCA
Pacificare/Secure Horizons
Humana Health Plans
Foundation Health
Humana Health Plan of Texas (all plans)
Inova Health Care
▇▇▇▇ ▇▇▇▇▇▇▇ Mutural / Cost Care (Preferred Provide Network)
Managed Care, Inc.
Medical Contral / NetOne PPO
National Association of Preferred Providers (NAPP)
National Preferred Provider Network, Inc. (NAPPN)
North Texas Healthcare Network
One Health Plan
PacifiCare / Secure Horizons (all plans)
PCA Health Plans of Texas (all plans)
Principal Health Care (all plans)
Private Health Care Systems (PHCS)
Preferred Health Network (PHN)
ProNet
Prudential Health Plans of Texas (all plans)
SPA / PhyCor IPA Network
Southwest Preferred Health Network (SPHN)
UniCare (all plans)
United Healthcare (HMO, PPO, Medicare HMO)
United Payors & United Providers (UP & UP)
Schedule 8.6 ( c )
Indebtedness
1. Promissory Note from Metroplex Surgicare Partners, Ltd. in favor of
HealthFirst in the original principal amount of $42,139.91 dated
November 30, 1998.
2. Promissory Note from Desoto Surgicare Partners, Ltd. in favor of
HFMA, Inc. in the original principal amount of $70,049.09 dated
November 30, 1998.
3. Promissory Note from Metroplex Surgicare Partners, Ltd. in favor of
HealthFirst in the original principal amount of $42,119.47 dated
November 30, 1998.
4. Promissory Note from Desoto Surgicare Partners, Ltd. in favor of
HFMA, Inc. in the original principal amount of $75,000.00 dated
March 31, 1997
5. Promissory Note from Desoto Surgicare Partners, Ltd. in favor of
HealthFirst in the original principal amount of $220,122.56 dated
November 30, 1998.
6. Promissory Note from Metroplex Surgicare Partners, Ltd. in favor of
HFMB, Inc. in the original principal amount of $19,373.50 dated
November 30, 1998.
7. Fixed Rate Demand Commercial Promissory Note from Metroplex
Surgicare Partners, Ltd. in favor of Landmark Bank Mid-Cities dated
May 6, 1997 in the initial principal amount of $23,463.29 and
maturing on May 6, 2002.
8. Variable Rate Demand Commercial Revolving or Draw Note from Desoto
Surgicare Partners, Ltd. in favor of Landmark Bank Mid-Cities dated
June 6, 1998 and maturing on December 6, 1998 with a maximum
borrowing facility of $500,000.00.
9. Equipment Financing Agreement between Datascope Corp., as lessor,
and Desoto Surgicare Partners, Ltd., as lessee, dated March 10,
1997, as amended, for a term of three years pursuant to which Desoto
Surgicare Partners, Ltd. leases various equipment.
10. Equipment Financing Agreement between Datascope Corp., as lessor,
and Desoto Surgicare Partners, Ltd., as lessee, dated December 10,
1997, as amended, for a tern of three years pursuant to which Desoto
Surgicare Partners, Ltd. leases various equipment.
11. Equipment Financing Agreement between Datascope Corp., as lessor,
and Metroplex Surgicare Partners, Ltd., as lessee, dated September
10, 1997 for a term of three years pursuant to which Metroplex
Surgicare Partners, Ltd. leases various equipment.
12. Equipment Financing Agreement between Datascope Corp., as lessor,
and Metroplex Surgicare Partners, Ltd., as lessee, dated December
10, 1997 for a term of three years pursuant to which Metroplex
Surgicare Partners, Ltd. leases various equipment (assigned from
Datascope Corp. to DVI Financial Services Inc.).
13. Loan and Security Agreement No. 0001718 and related schedules
between DVI Financial Services, Inc. and Metroplex Surgicare
Partners, Ltd. dated December 1, 1997 for the purpose of purchasing
various equipment.
14. Procedural Financing Statement between Alcon Surgical and Desoto
Surgical Partners, Ltd. dated April 21, 1998 setting forth various
equipment purchased by Desoto Surgicare Partners, Ltd. and financed
by Alcon Surgical.
15. Procedural Financing Statement between Alcon Surgical and Desoto
Surgical Partners, Ltd. dated December 21, 1996 setting forth
various equipment purchased by Desoto Surgicare Partners, Ltd. and
financed by Alcon Surgical.
16. Master Lease Agreement No. ▇▇▇▇▇-▇▇▇▇▇-▇▇▇ between Rockford
Industries, Inc. and Desoto Surgicare Partners, Ltd. dated December
23, 1997 setting forth various equipment leased by Rockford
Industries, Inc. to Desoto Surgicare Partners, Ltd.
17. Endoscopy Cost Per Procedure Agreement between Olympus Financial
Services and Desoto Surgicare Partners, Ltd. dated August 9, 1996,
as amended November 25, 1996, pursuant to which Desoto Surgicare
Partners, Ltd. rents certain equipment from Olympus Financial
Services for a term of three years.
18. Loan and Security Agreement No. 0001464 and related schedules
between DVI Financial Services, Inc. and Desoto Surgicare Partners,
Ltd. dated April 2, 1997 for the purpose of purchasing various
equipment.
19. Prepayment Option Agreement between DVI Financial Services Inc. and
Desoto Surgicare Partners, Ltd. dated April 21, 1997 relating to
that certain Loan and Security Agreement No. 0001464 and related
schedules between DVI Financial Services Inc. and Desoto Surgicare
Partners, Ltd. dated April 2, 1997 for the purpose of purchasing
various equipment.
SCHEDULE 8.10
[Changes in DeSoto and Metroplex]
Schedule 8.10
Absence of Specified Changes
None.
SCHEDULE 8.16
[USPs Consents and Approvals]
SCHEDULE 8.16
1. Change of ownership licensing notifications and applications:
o TDH - ASC License and Medicare
o Medicaid certification (HCFA)
o Pharmacy license (State Board of Pharmacy)
o DEA controlled substances registration
o Department of Public Safety controlled substance registration
o Radiology registration (TDH Bureau of Radiation Control)
o Radioactive materials license (TDH)
o Laser registration (TDH)
o CLIA laboratory registration (TDH)
o JCAHO notification
o Boiler registration (Texas Department of Licensing and
Regulation)
2. Consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, personally and on
behalf of HealthFirst, ▇▇▇▇▇▇▇ Management, Disney Management, Forest Edge and
Oak Mount, is required for the assignment of the HealthFirst Purchase Agreement.
3. Consent is required from DVI Financial Services, Inc. under the
outstanding Unconditional Continuing Guarantees from HealthFirst with respect to
loans made by DVI to Metroplex and DeSoto.
4. Consent is required from Health Services Corporation of America for the
assignment of the Agreement, dated July 30, 1997, relating to a group purchasing
program administered by Health Services Corporation of America.
SCHEDULE 9.6
[Baylor Center Contracts]
SurgiCare/TxSurgery
"Standalone" Managed Care ▇▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇ ▇▇▇▇▇▇
2. USA Health Network
MANAGED CARE CONTRACTS
------------------------ --------------- --------------------------
Carrier Name Part SURGICARE TEXAS SURGERY CENTER
of
BHCS
cont.
------------------------ --------------- --------------------------
Accountable x X same X
Admer x X same X
sep.
agmt
from
Aetna BHCS X same X
Aetna T.I. Ortho x X
TSC
rates
Affordable X better X
(First Health)
Beech Street X
BSC
rates
Blue Cross Indemnity X better X
Blue Choice X Pending
▇▇▇▇ Care x X same X
CHAMPUS x x
BSC
Cigna X better X
Corvell ?? X
Equifax (CENTRA) terminated terminated 12/31
(same groups) 12/31
▇▇▇▇▇▇ Health Plan x HMO ONLY
▇▇▇▇▇▇▇ County x X
BSC
better
Humane x X contr X (sep. agreement)
▇▇▇▇ ▇▇▇▇▇▇▇ ?? X
BSC
Medical Control x X better X
Mega Life x X
(Students only)
BSC
better
MetraHealth X ?? X
(United Healthcare)
Mut.Exclusive
Healthcare HMO Terminates 4/30/99
Terminates 4/30/99
North Texas Healthcare X same X
------------------------ ------------ ------------------------
Carrier Name Part SURGICARE TEXAS SURGERY CENTER
of
BHCS
contract Same
------------------------ ------------ ------------------------
NYLCare No X BSC X
better
NYLCare 65 x X X
OCCUNET (WC) X
ONE HEALTH PLAN x X x X
PACIFICARE/COMMERCIAL x X x X
SECURE HORIZONS x X x X
PARKLAND HMO x X x X
PCA X X
PHCS x X x X
BSC
PRO AMERICA x X better X
PROVIDER NETWORKS x X x X
PRONET
PRU Medicare Select x X
PRUDENTIAL ancillary X BSC X
agreement better
SW PREF HEALTH NETWORK X same X
Texarkana Regional x X same X
Health Network
THE SENIOR HEALTH PLAN x (risk) X same X
Texas Podiatry X X
TX REHAB X
UNICARE X X same
BSC
UNITED HEALTHCARE x? X better X
USA HEALTH NETWORK X
▇▇▇▇▇▇ ▇▇▇▇▇ PHO x X
CONTRACT COMPARISON
-----------------------------------------------------------------------------------------------------------------------------
PAYOR TSC BSC
-----------------------------------------------------------------------------------------------------------------------------
ACCOUNTABLE As of 8/1/97 same as BSC Currently pays 77% of billed
-----------------------------------------------------------------------------------------------------------------------------
Contract states "Day Surgery"=
-----------------------------------------------------------------------------------------------------------------------------
PPO = Case Rate $1250.00
-----------------------------------------------------------------------------------------------------------------------------
Exceptions:
-----------------------------------------------------------------------------------------------------------------------------
Implants = 70% of billed
-----------------------------------------------------------------------------------------------------------------------------
Litho = 4900
-----------------------------------------------------------------------------------------------------------------------------
Lap Choly = 2000
-----------------------------------------------------------------------------------------------------------------------------
Lap Hyst = 2000
-----------------------------------------------------------------------------------------------------------------------------
ASK = 1500
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
EPO = Case Rate 1150.00
-----------------------------------------------------------------------------------------------------------------------------
or billed charges-whichever is less.
-----------------------------------------------------------------------------------------------------------------------------
Exceptions:
-----------------------------------------------------------------------------------------------------------------------------
Implants =68% of billed
-----------------------------------------------------------------------------------------------------------------------------
Litho = 4900
-----------------------------------------------------------------------------------------------------------------------------
Lap Choly = 2000
-----------------------------------------------------------------------------------------------------------------------------
Lap Hyst = 2000
-----------------------------------------------------------------------------------------------------------------------------
ASK = 1500
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Admar Corporation 25% Discount 25% Discount
-----------------------------------------------------------------------------------------------------------------------------
PPO/EPO
-----------------------------------------------------------------------------------------------------------------------------
(Merged with
-----------------------------------------------------------------------------------------------------------------------------
Principal Healthcare
-----------------------------------------------------------------------------------------------------------------------------
9/1/97)
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Page 1 5/11/99
CONTRACT COMPARISON
-----------------------------------------------------------------------------------------------------------------------------
PAYOR TSC BSC
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
AETNA Added to SurgiCare's contract 10/1/97. HMO & SR CHOICE = Case rate = $900.00
-----------------------------------------------------------------------------------------------------------------------------
Prosthetics, Implants, Orthotics
-----------------------------------------------------------------------------------------------------------------------------
will be reimbursed @ 70% of billed
-----------------------------------------------------------------------------------------------------------------------------
charges.
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
PPO (Open Choice)
-----------------------------------------------------------------------------------------------------------------------------
Grp. 1=393.00 Grp. 5= 848.00
-----------------------------------------------------------------------------------------------------------------------------
Grp. 2=527.00 Grp. 6= 994.00
-----------------------------------------------------------------------------------------------------------------------------
Grp. 3=603.00 Grp. 7=1176.00
-----------------------------------------------------------------------------------------------------------------------------
Grp. 4=744.00 Grp. 8=1167.00
-----------------------------------------------------------------------------------------------------------------------------
Ungrouped procedures =75% to max 1200
-----------------------------------------------------------------------------------------------------------------------------
Multiples = 100%, 50%, 25%
-----------------------------------------------------------------------------------------------------------------------------
Orthotic & prosthetics & tissue >450.00
-----------------------------------------------------------------------------------------------------------------------------
reimbursed vendor's cost + 5%.
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
MANAGED CHOICE & ELECT CHOICE
-----------------------------------------------------------------------------------------------------------------------------
Grp. 1=332.00 Grp. 5= 718.00
-----------------------------------------------------------------------------------------------------------------------------
Grp. 2=446.00 Grp. 6= 841.00
-----------------------------------------------------------------------------------------------------------------------------
Grp. 3=510.00 Grp. 7= 995.00
-----------------------------------------------------------------------------------------------------------------------------
Grp. 4=629.00 Grp. 8= 998.00
-----------------------------------------------------------------------------------------------------------------------------
Ungrouped = 75% to max 1200.00
-----------------------------------------------------------------------------------------------------------------------------
Multiples = 100%, 50%, 25%
-----------------------------------------------------------------------------------------------------------------------------
Orthotic & prosthetic: same as PPO
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
AETNA T.I. ORTHO N/A For SurgiCare, contract applies only to
-----------------------------------------------------------------------------------------------------------------------------
ASK's and Carpal Tunnels
-----------------------------------------------------------------------------------------------------------------------------
ASK-Basic, Intermediate = 2756
-----------------------------------------------------------------------------------------------------------------------------
Complex = 3638
-----------------------------------------------------------------------------------------------------------------------------
Carpal Tunnel = 882
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Approved Carpal Tunnel Codes:
-----------------------------------------------------------------------------------------------------------------------------
64719, 64721, 2115, 29848
-----------------------------------------------------------------------------------------------------------------------------
Approved ASK Codes:
-----------------------------------------------------------------------------------------------------------------------------
29850, 29851, 19855, 29856, 29870, 29871,
-----------------------------------------------------------------------------------------------------------------------------
29875, 29876, 29877, 29879, 29880 through
-----------------------------------------------------------------------------------------------------------------------------
29823, 29825, 29856, 29894, 29895, 29897
-----------------------------------------------------------------------------------------------------------------------------
29898, 29830, 29834, 29835, 29836, 29837,
-----------------------------------------------------------------------------------------------------------------------------
29838
-----------------------------------------------------------------------------------------------------------------------------
SPECIFIC PHYSICIAN LIST APPLIES
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Page 2 5/11/99
CONTRACT COMPARISON
-----------------------------------------------------------------------------------------------------------------------------
PAYOR TSC BSC
-----------------------------------------------------------------------------------------------------------------------------
AFFORDABLE Affordable Grouping System(Medicare + their Affordable Grouping Sys. (Medicare+theirs)
own)
-----------------------------------------------------------------------------------------------------------------------------
PPO & WC Group 1 = $580.00 Group 1 = $500.00
-----------------------------------------------------------------------------------------------------------------------------
Now called Group 2 = $696.00 Group 2 = $600.00
-----------------------------------------------------------------------------------------------------------------------------
FIRST HEALTH Group 3 = $812.00 Group 3 = $700.00
-----------------------------------------------------------------------------------------------------------------------------
Group 4 = $928.00 Group 4 = $800.00
-----------------------------------------------------------------------------------------------------------------------------
IOL procedures: CPT 66983, 66984, IOL Procedures (CPT 66983
-----------------------------------------------------------------------------------------------------------------------------
66985 = $1392.00 66984, 66985 = $1,200.00
-----------------------------------------------------------------------------------------------------------------------------
Unlisted proc. = 80% of billed chgs. Ungrouped procedures = 95% of
-----------------------------------------------------------------------------------------------------------------------------
Multiple proc. 100%, 50%, 25% Multiple proc. = 100%, 50%, 25%
-----------------------------------------------------------------------------------------------------------------------------
If any procedure in a multi-proc.
-----------------------------------------------------------------------------------------------------------------------------
entire charges will revert to 85% billed.
-----------------------------------------------------------------------------------------------------------------------------
Implants & prosthetics @ cost = 10%.
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
ANTHEM HEALTH N/A N/A
-----------------------------------------------------------------------------------------------------------------------------
PLAN OF TEXAS
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Page 3 5/11/99
CONTRACT COMPARISON
-----------------------------------------------------------------------------------------------------------------------------
PAYOR TSC BSC
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
BEECH STREET ASC Groupings - The LESSER OF N/A
-----------------------------------------------------------------------------------------------------------------------------
PPO CASE RATES OR REG. BILLED CHGS.
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Group 1 = $403.62
-----------------------------------------------------------------------------------------------------------------------------
Group 2 = $541.71
-----------------------------------------------------------------------------------------------------------------------------
Group 3 = $620.04
-----------------------------------------------------------------------------------------------------------------------------
Group 4 = $764.78
-----------------------------------------------------------------------------------------------------------------------------
Group 5 = $872.32
-----------------------------------------------------------------------------------------------------------------------------
Group 6 = $1024.37
-----------------------------------------------------------------------------------------------------------------------------
Group 7 = $1007.06
-----------------------------------------------------------------------------------------------------------------------------
Group 8 = $1202.27
-----------------------------------------------------------------------------------------------------------------------------
Unlisted = 30% Discount
-----------------------------------------------------------------------------------------------------------------------------
Multiple proc. 100%, 50%, 25%, 10% all others
-----------------------------------------------------------------------------------------------------------------------------
ACL 29888, 29889 = $1007.06
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
BLUE CROSS INDEMNITY ONLY AT THIS TIME Indemnity = 10% discount off billed chgs.
-----------------------------------------------------------------------------------------------------------------------------
Based on list of prices agreed upon by PPO = 15%
discount.
-----------------------------------------------------------------------------------------------------------------------------
Proc. not on list = 100% billed charges
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Multiple proc. = 100%, 50% all others
-----------------------------------------------------------------------------------------------------------------------------
IOL is included in list of prices in price
list
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Prosthetics costing > $500. reimbursement
-----------------------------------------------------------------------------------------------------------------------------
based on attached formula. (No attachment)
-----------------------------------------------------------------------------------------------------------------------------
Invoice must be attached to billing.
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Page 4 5/11/99
CONTRACT COMPARISON
-----------------------------------------------------------------------------------------------------------------------------
PAYOR TSC BSC
-----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ CARE SAME AS BSC SPECIFIC EMPLOYER GROUPS ONLY!!
-----------------------------------------------------------------------------------------------------------------------------
Grp 1 = 720 Grp 5 = 1980
-----------------------------------------------------------------------------------------------------------------------------
Grp 2 = 690 Grp 6 = 2160
-----------------------------------------------------------------------------------------------------------------------------
Grp 3 = 1665 Grp 7 = 2160
-----------------------------------------------------------------------------------------------------------------------------
Grp 4 = 1935 Grp 8 = 2070
-----------------------------------------------------------------------------------------------------------------------------
Grp 9 = 3150
-----------------------------------------------------------------------------------------------------------------------------
Ungrouped - 25% Discount
-----------------------------------------------------------------------------------------------------------------------------
EXCEPTIONS: The following CPT codes
-----------------------------------------------------------------------------------------------------------------------------
will be reimbursed at 1800.00:
-----------------------------------------------------------------------------------------------------------------------------
CPT's 29888, 29889, 56340, 56341, 56342,
-----------------------------------------------------------------------------------------------------------------------------
56316, 56317, 19240, 49310, 56308
-----------------------------------------------------------------------------------------------------------------------------
Implants pd at 20% discount off billed chgs.
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Page 5 5/11/99
CONTRACT COMPARISON
-----------------------------------------------------------------------------------------------------------------------------
PAYOR TSC BSC
-----------------------------------------------------------------------------------------------------------------------------
CIGNA ALL PRODUCTS SAME RATES 25% Discount for PPO
-----------------------------------------------------------------------------------------------------------------------------
PPO/Flexcare Inquiry on claims must be within 90 days
-----------------------------------------------------------------------------------------------------------------------------
PPO Appeals within 30 days of EOB date Groupings for POS (FLEXCARE)
-----------------------------------------------------------------------------------------------------------------------------
FLEXCARE POS Claims must be submitted in 60 days HMO
-----------------------------------------------------------------------------------------------------------------------------
Medicare ASC Groupings Implants, prosthetics: 1st at 100%
-----------------------------------------------------------------------------------------------------------------------------
Group 1 = $370.00 be billed separately at cot + 10%
-----------------------------------------------------------------------------------------------------------------------------
Group 2 = $495.00
-----------------------------------------------------------------------------------------------------------------------------
Group 3 = $570.00 Multiple procedures: 1st at 100%,
-----------------------------------------------------------------------------------------------------------------------------
Group 4 = $700.00 2nd at 50%, each additional 25%
-----------------------------------------------------------------------------------------------------------------------------
Group 5 = $800.00
-----------------------------------------------------------------------------------------------------------------------------
Group 6 = $1015.00 Procedures requiring longer than
-----------------------------------------------------------------------------------------------------------------------------
Group 7 = $1105.00 8 postsurgical hours may also
-----------------------------------------------------------------------------------------------------------------------------
Group 8 = $1175.00 receive additional $60.00/hr to max
-----------------------------------------------------------------------------------------------------------------------------
Unlisted = $0.00 (Cigna must be notified of $300.00
-----------------------------------------------------------------------------------------------------------------------------
and a grouper established by Cigna)
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Recovery > 8hrs. = $60./hr to max $300 GRP 1 = 370.00 GRP 5 = 800.00
-----------------------------------------------------------------------------------------------------------------------------
GRP 2 = 495.00 GRP 6 = 1015.00
-----------------------------------------------------------------------------------------------------------------------------
Multiple proc. =100%, 50%, 25% GRP 3 = 570.00 GRP 7 = 1105.00
-----------------------------------------------------------------------------------------------------------------------------
GRP 4 = 700.00 GRP 8 = 1175.00
-----------------------------------------------------------------------------------------------------------------------------
POS only: GRP 9 = UNGROUPED/
-----------------------------------------------------------------------------------------------------------------------------
UNIDENTIFIED = 65% of billed
-----------------------------------------------------------------------------------------------------------------------------
charges; not to exceed 1,500.00.
-----------------------------------------------------------------------------------------------------------------------------
NOTE: For the HMO product,
-----------------------------------------------------------------------------------------------------------------------------
unlisted CPT codes will receive a
-----------------------------------------------------------------------------------------------------------------------------
"0" benefit. If a CPT code does
-----------------------------------------------------------------------------------------------------------------------------
not belong to a specific grouper,
-----------------------------------------------------------------------------------------------------------------------------
CIGNA must be notified and it will be added
-----------------------------------------------------------------------------------------------------------------------------
to the appropriate grouper.
-----------------------------------------------------------------------------------------------------------------------------
If procedure requires longer than 8
-----------------------------------------------------------------------------------------------------------------------------
hrs in recovery, can ▇▇▇▇ $60.00 per
-----------------------------------------------------------------------------------------------------------------------------
hr. to a max. of $300.00
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Page 6 5/11/99
CONTRACT COMPARISON
-----------------------------------------------------------------------------------------------------------------------------
PAYOR TSC BSC
-----------------------------------------------------------------------------------------------------------------------------
CorVel / CorCare N/A WC only Discount = 10% off billed chgs.
-----------------------------------------------------------------------------------------------------------------------------
PPO, Managed Care
-----------------------------------------------------------------------------------------------------------------------------
W/C
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Family Healthcare N/A N/A
-----------------------------------------------------------------------------------------------------------------------------
Associates
-----------------------------------------------------------------------------------------------------------------------------
Ass. of PCPs network
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Page 7 5/11/99
CONTRACT COMPARISON
-----------------------------------------------------------------------------------------------------------------------------
PAYOR TSC BSC
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Foreign Mission Board N/A N/A
-----------------------------------------------------------------------------------------------------------------------------
HMO/PPO
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ Methodist Not on PPO or HMO contract at this time. Not on PPO at this time.
-----------------------------------------------------------------------------------------------------------------------------
Health Plan
-----------------------------------------------------------------------------------------------------------------------------
PPO/HMO & Self-
-----------------------------------------------------------------------------------------------------------------------------
funded payor.
-----------------------------------------------------------------------------------------------------------------------------
HMO =
-----------------------------------------------------------------------------------------------------------------------------
Grp 1 = 462 Grp 5 = 1000
-----------------------------------------------------------------------------------------------------------------------------
Grp 2 = 618 Grp 6 = 1268
-----------------------------------------------------------------------------------------------------------------------------
Grp 3 = 712 Grp 7 = 1443
-----------------------------------------------------------------------------------------------------------------------------
Grp 4 = 875 Grp 8 = 1587
-----------------------------------------------------------------------------------------------------------------------------
Unlisted = 75%.
-----------------------------------------------------------------------------------------------------------------------------
Prosthetics & Implants = 75% of billed.
-----------------------------------------------------------------------------------------------------------------------------
100%, 50%, 25%
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ SENIOR SAME AS BSC Grp 1 = 314 Grp 5 = 678
-----------------------------------------------------------------------------------------------------------------------------
HEALTH PLAN Grp 2 = 422 Grp 6 = 789
-----------------------------------------------------------------------------------------------------------------------------
Grp 3 = 482 Grp 7 = 941
-----------------------------------------------------------------------------------------------------------------------------
Grp 4 = 595 Grp 8 = 928
-----------------------------------------------------------------------------------------------------------------------------
Ungrouped = 60% of charges
-----------------------------------------------------------------------------------------------------------------------------
Implants = 60% of charges
-----------------------------------------------------------------------------------------------------------------------------
100%, 50%, 25%
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Page 8 5/11/99
CONTRACT COMPARISON
-----------------------------------------------------------------------------------------------------------------------------
PAYOR TSC BSC
-----------------------------------------------------------------------------------------------------------------------------
Health Payors Org. N/A N/A
-----------------------------------------------------------------------------------------------------------------------------
PPO Network
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Heritage ▇▇▇▇▇▇▇▇▇ ▇/▇ ▇/▇
-----------------------------------------------------------------------------------------------------------------------------
Medical Group
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ COUNTY N/A 25% Discount
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Page 9 5/11/99
CONTRACT COMPARISON
-----------------------------------------------------------------------------------------------------------------------------
PAYOR TSC BSC
-----------------------------------------------------------------------------------------------------------------------------
HUMANA Medicare ASC Groupings HMO & PPO Discount=25%
-----------------------------------------------------------------------------------------------------------------------------
Group 1 = $304.00 Implants & prosthetics at invoice
-----------------------------------------------------------------------------------------------------------------------------
Group 2 = $408.00 cost. Invoice must be sent.
-----------------------------------------------------------------------------------------------------------------------------
Group 3 = $467.00
-----------------------------------------------------------------------------------------------------------------------------
Group 4 = $576.00
-----------------------------------------------------------------------------------------------------------------------------
Group 5 = $657.00
-----------------------------------------------------------------------------------------------------------------------------
Group 6 = $769.00
-----------------------------------------------------------------------------------------------------------------------------
Group 7 = $911.00
-----------------------------------------------------------------------------------------------------------------------------
Group 8 = $903.00
-----------------------------------------------------------------------------------------------------------------------------
Group 9 = $1200.00
-----------------------------------------------------------------------------------------------------------------------------
Group 9 includes the following:
-----------------------------------------------------------------------------------------------------------------------------
ACL(29888), Lap Hyst(5308?)
-----------------------------------------------------------------------------------------------------------------------------
Bone Marrow Asp.(38230)
-----------------------------------------------------------------------------------------------------------------------------
Mastectomy, Modified Radical(19240)
-----------------------------------------------------------------------------------------------------------------------------
Lap Choly(56340)
-----------------------------------------------------------------------------------------------------------------------------
Unlisted = $775.00
-----------------------------------------------------------------------------------------------------------------------------
23 Hr. Stay = $450.00/night
-----------------------------------------------------------------------------------------------------------------------------
Implants,prosthetics&DME = cost+7%
-----------------------------------------------------------------------------------------------------------------------------
Multiple Proc. 100%,50%,25%
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇ Mutual N/A PPO=3% Discount
-----------------------------------------------------------------------------------------------------------------------------
Life Ins.
-----------------------------------------------------------------------------------------------------------------------------
▇. ▇▇▇▇▇▇▇/Cost Care
-----------------------------------------------------------------------------------------------------------------------------
Payor Plan Network
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Managed Care, Inc. N/A N/A
-----------------------------------------------------------------------------------------------------------------------------
AUGNET
-----------------------------------------------------------------------------------------------------------------------------
PPO
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
MEDICAL CONTROL Discount Procedures not listed on the fee
-----------------------------------------------------------------------------------------------------------------------------
NetOne (PPO) = 35% discount schedule will be discounted at
-----------------------------------------------------------------------------------------------------------------------------
NetOne SELECT (PPO) = 40% discount 97% of billed charges.
-----------------------------------------------------------------------------------------------------------------------------
Fee list consists of 24 procedures.
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Page 10 5/11/99
CONTRACT COMPARISON
-----------------------------------------------------------------------------------------------------------------------------
PAYOR TSC BSC
-----------------------------------------------------------------------------------------------------------------------------
MEGA LIFE Flat rate = $1200.00
-----------------------------------------------------------------------------------------------------------------------------
Implants at invoice cost.
-----------------------------------------------------------------------------------------------------------------------------
applies to students only
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
MUTUAL OF HMO HMO
-----------------------------------------------------------------------------------------------------------------------------
OMAHA 125% of Medicare rates 125% Of Medicare Rates
-----------------------------------------------------------------------------------------------------------------------------
Termes 4/30/99 Termes
-----------------------------------------------------------------------------------------------------------------------------
PPO PPO
-----------------------------------------------------------------------------------------------------------------------------
95% of billed charges 95% of billed charges
-----------------------------------------------------------------------------------------------------------------------------
Termed 1/31/99 Termed 4/30/99
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
MULITPLAN N/A N/A
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
National Assoc. N/A N/A
-----------------------------------------------------------------------------------------------------------------------------
Preferred Providers
-----------------------------------------------------------------------------------------------------------------------------
PPO Network
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
National Assoc. N/A N/A
-----------------------------------------------------------------------------------------------------------------------------
Preferred Providers
-----------------------------------------------------------------------------------------------------------------------------
PPO Network
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
NTHC Discount = 20% Discount = 20%
-----------------------------------------------------------------------------------------------------------------------------
23 Hr. Observation = $485. per stay. 23 Hr. Observation = $485. per stay.
-----------------------------------------------------------------------------------------------------------------------------
Multiple proc. 100%,50%,25% Multiple proc. 100%,50%,25%
-----------------------------------------------------------------------------------------------------------------------------
Implants, prosthetics, DME = 80% of billed Implants, prosthetics, DME = 80% of billed charges.
charges.
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Page 11 5/11/99
CONTRACT COMPARISON
-----------------------------------------------------------------------------------------------------------------------------
PAYOR TSC BSC
-----------------------------------------------------------------------------------------------------------------------------
NYLCARE ASC Groups
-----------------------------------------------------------------------------------------------------------------------------
& NYLCARE 65 NYLCARE NYLCARE65 NYLCARE &NYLCARE65
-----------------------------------------------------------------------------------------------------------------------------
Group 1 = $332.15 $301.95 GRP 1 = 350.00
-----------------------------------------------------------------------------------------------------------------------------
Group 2 = $445.78 $405.25 GRP 2 = 478.00
-----------------------------------------------------------------------------------------------------------------------------
Group 3 = $510.24 $463.85 GRP 3 = 550.00
-----------------------------------------------------------------------------------------------------------------------------
Group 4 = $629.32 $572.11 GRP 4 = 685.00
-----------------------------------------------------------------------------------------------------------------------------
Group 5 = $717.82 $652.56 GRP 5 = 775.00
-----------------------------------------------------------------------------------------------------------------------------
Group 6 = $841.30 $764.82 GRP 6 = 937.00
-----------------------------------------------------------------------------------------------------------------------------
Group 7 = $995.34 $904.85 GRP 7 = 1050.00
-----------------------------------------------------------------------------------------------------------------------------
Group 8 = $987.71 $897.92 GRP 8 = 1151.00
-----------------------------------------------------------------------------------------------------------------------------
ACL Group = Group 7 Group 7 GRP 9 = 1400.00
-----------------------------------------------------------------------------------------------------------------------------
Lap Vag Hyst Grp 5 Group 5
-----------------------------------------------------------------------------------------------------------------------------
Mast Mod Rad Grp 5 Group 5 Implants, prosthetic devices will be
-----------------------------------------------------------------------------------------------------------------------------
Lap Choly Grp 7 Group 7 reimbursed at cost + 10%.
-----------------------------------------------------------------------------------------------------------------------------
Some ungrouped procedures grouped by NYLCARE
-----------------------------------------------------------------------------------------------------------------------------
Implants,prosthetics,DME = invoice+5% must notify Nylcare to establish rate prior
-----------------------------------------------------------------------------------------------------------------------------
Multiple proc. 100%,50%,25% to billing for service.
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
List of CPT's and groupings as grouped by NYLCARE
-----------------------------------------------------------------------------------------------------------------------------
for CPT's not on Medicare list. Any not grouped by
-----------------------------------------------------------------------------------------------------------------------------
Medicare or NYLCARE will be assigned a group by the
-----------------------------------------------------------------------------------------------------------------------------
medical director of NYLCARE.
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
OCCUNET N/A Work Comp
-----------------------------------------------------------------------------------------------------------------------------
80% of billed charges
-----------------------------------------------------------------------------------------------------------------------------
Implants at cost + 10%
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
ONE HEALTH PLAN Added to BSC PPO/POS HMO
-----------------------------------------------------------------------------------------------------------------------------
Grp 1 = 462 Grp 1 = 395
-----------------------------------------------------------------------------------------------------------------------------
Grp 2 = 618 Grp 2 = 530
-----------------------------------------------------------------------------------------------------------------------------
Grp 3 = 718 Grp 3 = 607
-----------------------------------------------------------------------------------------------------------------------------
Grp 4 = 875 Grp 4 = 749
-----------------------------------------------------------------------------------------------------------------------------
Grp 5 = 1000 Grp 5 = 854
-----------------------------------------------------------------------------------------------------------------------------
Grp 6 = 1268 Grp 6 = 1000
-----------------------------------------------------------------------------------------------------------------------------
Grp 7 = 1443 Grp 7 = 1184
-----------------------------------------------------------------------------------------------------------------------------
Grp 8 = 1587 Grp 8 = 1174
-----------------------------------------------------------------------------------------------------------------------------
Grp 9 = 1650 Grp 9 = 1187
-----------------------------------------------------------------------------------------------------------------------------
All others 20% discount All others 30% discount
-----------------------------------------------------------------------------------------------------------------------------
100%, 50%, 25%
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Page 12 5/11/99
CONTRACT COMPARISON
-----------------------------------------------------------------------------------------------------------------------------
PAYOR TSC BSC
-----------------------------------------------------------------------------------------------------------------------------
PACIFICARE Same as BSC Pacificare commercial:
-----------------------------------------------------------------------------------------------------------------------------
SECURE HORIZONS Pays 60% of billed charges
-----------------------------------------------------------------------------------------------------------------------------
Implants pd @ 70% of billed charges
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Secure Horizons:
-----------------------------------------------------------------------------------------------------------------------------
30% discount off billed charges
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Page 13 5/11/99
CONTRACT COMPARISON
-----------------------------------------------------------------------------------------------------------------------------
PAYOR TSC BSC
-----------------------------------------------------------------------------------------------------------------------------
PACIFICARE/SECURE
-----------------------------------------------------------------------------------------------------------------------------
SECURE HORIZONS
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
PARKLAND HMO Same as BSC 90% of billed charges
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
PHCS 2/1/99-ADDED TO BAYLOR CONTRACT-SAME AS BSC ASPB-Ambulatory Groups (Theirs)
-----------------------------------------------------------------------------------------------------------------------------
Grp 1 = 540.00
-----------------------------------------------------------------------------------------------------------------------------
Grp 2 = 580.00
-----------------------------------------------------------------------------------------------------------------------------
Grp 3 = 1165
-----------------------------------------------------------------------------------------------------------------------------
Grp 4 = 1350
-----------------------------------------------------------------------------------------------------------------------------
Grp 5 = 1380
-----------------------------------------------------------------------------------------------------------------------------
Grp 6 = 1510
-----------------------------------------------------------------------------------------------------------------------------
Grp 7 = 1510
-----------------------------------------------------------------------------------------------------------------------------
Grp 8 = 1450
-----------------------------------------------------------------------------------------------------------------------------
Grp 9 = 2205
-----------------------------------------------------------------------------------------------------------------------------
Grp 10 = All others not grouped =
-----------------------------------------------------------------------------------------------------------------------------
25% discount
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Payment will be the lesser of the
-----------------------------------------------------------------------------------------------------------------------------
preferred rate, OR regular billing
-----------------------------------------------------------------------------------------------------------------------------
rates reduced by 25%.
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
EXCEPTIONS:
-----------------------------------------------------------------------------------------------------------------------------
CPT 29888 ACL = 1700
-----------------------------------------------------------------------------------------------------------------------------
CPT 29889 ACL = 1700
-----------------------------------------------------------------------------------------------------------------------------
CPT 56340 LAP CHOLY = 1700
-----------------------------------------------------------------------------------------------------------------------------
CPT 56341 LAP CHOLY = 1700
-----------------------------------------------------------------------------------------------------------------------------
CPT 56342 LAP CHOLY = 1700
-----------------------------------------------------------------------------------------------------------------------------
CPT 56316 LAP HERNIA = 1700
-----------------------------------------------------------------------------------------------------------------------------
CPT 56317 LAP HERNIA = 1700
-----------------------------------------------------------------------------------------------------------------------------
Page 14 5/11/99
CONTRACT COMPARISON
----------------------------------------------------------------------------------------------------------------------------
PAYOR TSC BSC
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Preferred Health Net- N/A N/A
----------------------------------------------------------------------------------------------------------------------------
work (PHN)
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
PRO AMERICA ASC Groupings Discount = 12%
----------------------------------------------------------------------------------------------------------------------------
MANAGED CARE Group 1 = $575 PPO & WC
----------------------------------------------------------------------------------------------------------------------------
Group 2 = $650
----------------------------------------------------------------------------------------------------------------------------
Group 3 = $1000 Medicare Select pays balance after
----------------------------------------------------------------------------------------------------------------------------
Group 4 = $1225 Medicare pays.
----------------------------------------------------------------------------------------------------------------------------
Group 5 = $1325
----------------------------------------------------------------------------------------------------------------------------
Group 6 = $1700
----------------------------------------------------------------------------------------------------------------------------
Group 7 = $1800
----------------------------------------------------------------------------------------------------------------------------
Group 8 = $1850
----------------------------------------------------------------------------------------------------------------------------
Unlisted = 80% of billed charges
----------------------------------------------------------------------------------------------------------------------------
Exceptions:
----------------------------------------------------------------------------------------------------------------------------
Arthroscopies $1800
----------------------------------------------------------------------------------------------------------------------------
Laparoscopies $1850
----------------------------------------------------------------------------------------------------------------------------
ACL (29888) $2950
----------------------------------------------------------------------------------------------------------------------------
Lap Vag Hyst (56308) $2950
----------------------------------------------------------------------------------------------------------------------------
Bone Marrow Aspiration (38230) $2033
----------------------------------------------------------------------------------------------------------------------------
Mast Mod Rad (19240) $2491
----------------------------------------------------------------------------------------------------------------------------
Lap Choly (49310) $2800
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Observation after 6 hrs up to 24 hrs. = $550
----------------------------------------------------------------------------------------------------------------------------
Implants, prosthetics, DME pd at 80% of billed
charges.
----------------------------------------------------------------------------------------------------------------------------
Multiples 100%, 50% each additional.
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
If the payment calculation in above rates is
greater than billed charges, reimbursement will be pd at 90%.
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
PRONET Same as BSC Discount = 20%
----------------------------------------------------------------------------------------------------------------------------
(Provider Networks Implants, Prosthetics pd at 5% discount
----------------------------------------------------------------------------------------------------------------------------
of America) off billed charges.
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Page 15 5/11/99
CONTRACT COMPARISON
----------------------------------------------------------------------------------------------------------------------------
PAYOR TSC BSC
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
PRUDENTIAL Prudential Fee Schedule by CPT code Prudential Fee Schedule by CPT Code
----------------------------------------------------------------------------------------------------------------------------
Unlisted pd at 75% of billed charges Unlisted pd at 75% of billed charges
----------------------------------------------------------------------------------------------------------------------------
Multiple proc. 100%, 50%, 50% Multiple proc. 100%, 50%, 50%
----------------------------------------------------------------------------------------------------------------------------
No provision in contract for 23 hr. stay.
----------------------------------------------------------------------------------------------------------------------------
No provision in contract for implants. Observation between 4-23 hrs. (no
----------------------------------------------------------------------------------------------------------------------------
Fee list is slightly lower than SurgiCare's overnight), bill code 99217 = $375.00
----------------------------------------------------------------------------------------------------------------------------
LANDRY care = $665.00
----------------------------------------------------------------------------------------------------------------------------
Implants cost + 10%
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Southwest Preferred Same contract as SurgiCare ▇▇▇▇▇▇ Employees = 80% (actually pays 100%)
----------------------------------------------------------------------------------------------------------------------------
Health Network ▇▇▇▇▇▇ Richardson = termed
----------------------------------------------------------------------------------------------------------------------------
Tyler Refrigeration =5% discount
----------------------------------------------------------------------------------------------------------------------------
Tx Municiple League = 20% discount
----------------------------------------------------------------------------------------------------------------------------
Texoma Medical = 20% discount
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
EDS = Groupings
----------------------------------------------------------------------------------------------------------------------------
Grp 1 = 625 Grp 5 = 1350
----------------------------------------------------------------------------------------------------------------------------
Grp 2 = 790 Grp 6 = 1550
----------------------------------------------------------------------------------------------------------------------------
Grp 3 = ▇▇▇▇ ▇▇▇ 7 = 1720
----------------------------------------------------------------------------------------------------------------------------
Grp 4 = ▇▇▇▇ ▇▇▇ 8 = 2000
----------------------------------------------------------------------------------------------------------------------------
Ungrouped pd at 75% of billed chgs.
----------------------------------------------------------------------------------------------------------------------------
Implants, prosthetics pd at 80% of billed
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
TEXARKANA Same as BSC 80% of billed charges
----------------------------------------------------------------------------------------------------------------------------
REGIONAL HEALTH
----------------------------------------------------------------------------------------------------------------------------
NETWORK
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
TEXAS PODIATRY N/A Grp 1 = 366 Grp 5 = 792
----------------------------------------------------------------------------------------------------------------------------
Grp 2 = 491 Grp 6 = 999
----------------------------------------------------------------------------------------------------------------------------
Grp 3 = 564 Grp 7 = 1098
----------------------------------------------------------------------------------------------------------------------------
Grp 4 = 694 Grp 8 = 1160
----------------------------------------------------------------------------------------------------------------------------
Grp 9 = 1250
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
TEXAS REHAB N/A 71% of billed charges
----------------------------------------------------------------------------------------------------------------------------
Page 16 5/11/99
CONTRACT COMPARISON
----------------------------------------------------------------------------------------------------------------------------
PAYOR TSC BSC
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
UNICARE Same as BSC Payment = 80% of billed charges.
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Prosthetics, including IOL's, corneal
----------------------------------------------------------------------------------------------------------------------------
tissue, implantables pd at 80%.
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Multiples = 100%, 50%, 25%
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
United Payors & N/A N/A
----------------------------------------------------------------------------------------------------------------------------
United Providers
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
UNITED ASC Medicare Groupings
----------------------------------------------------------------------------------------------------------------------------
HEALTHCARE HMO NPP/EPO/POS HMO HMO/HMO+ PPO,POS,EPO,NPP
Medicare
----------------------------------------------------------------------------------------------------------------------------
(MetraHealth) Rate PPO,WC Rate Rate
----------------------------------------------------------------------------------------------------------------------------
Group 1 = $302 $332 $281 Grp 1 347 377
----------------------------------------------------------------------------------------------------------------------------
Group 2 = $405 $446 $377 Grp 2 466 507
----------------------------------------------------------------------------------------------------------------------------
Group 3 = $464 $510 $431 Grp 3 533 580
----------------------------------------------------------------------------------------------------------------------------
Group 4 = $563 $619 $524 Grp 4 648 704
----------------------------------------------------------------------------------------------------------------------------
Group 5 = $653 $718 $607 Grp 5 750 816
----------------------------------------------------------------------------------------------------------------------------
Group 6 = $766 $842 $712 Grp 6 881 957
----------------------------------------------------------------------------------------------------------------------------
Group 7 = $905 $995 $842 Grp 7 1041 1131
----------------------------------------------------------------------------------------------------------------------------
Group 8 = $898 $988 $835 Grp 8 1031 1122
----------------------------------------------------------------------------------------------------------------------------
Group 9 = $1142 $1256 $1062 Grp 9 1314 1428
----------------------------------------------------------------------------------------------------------------------------
Undefined $563 $619 $524 Undefined 648 676
----------------------------------------------------------------------------------------------------------------------------
23 hr. $350 $350 $300 23 hr. 350 375
----------------------------------------------------------------------------------------------------------------------------
Implants/Pros.65%POC 65%POC 60% POC Implants = 80% POC
----------------------------------------------------------------------------------------------------------------------------
Lap Choly $1275 $1365 100%, 50%, 25%
----------------------------------------------------------------------------------------------------------------------------
Lap Hyst. $1275 $1365
----------------------------------------------------------------------------------------------------------------------------
ACL $1275 $1365
----------------------------------------------------------------------------------------------------------------------------
Posterior CL $1275 $1365
----------------------------------------------------------------------------------------------------------------------------
Multiple proc. 100%, 50%, 25%
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Page 17 5/11/99
CONTRACT COMPARISON
-----------------------------------------------------------------------------------------------------------------------------
PAYOR TSC BSC
-----------------------------------------------------------------------------------------------------------------------------
USA HEALTH Grp 1 = 450 Grp 5 = 1000
-----------------------------------------------------------------------------------------------------------------------------
NETWORK Grp 2 = 560 Grp 6 = 1200
-----------------------------------------------------------------------------------------------------------------------------
Grp 3 = 750 Grp 7 = 1300
-----------------------------------------------------------------------------------------------------------------------------
Grp 4 = 875 Grp 8 = 1460
-----------------------------------------------------------------------------------------------------------------------------
Arthroscopies = Grp 6
-----------------------------------------------------------------------------------------------------------------------------
Multiples pd at 100%, 50%, 25%
-----------------------------------------------------------------------------------------------------------------------------
Prosthetics, implants, orthotics pd at 50% of
billed
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Work comp = lesser 80% of state allowable
-----------------------------------------------------------------------------------------------------------------------------
or negotiated rates, or billed charges.
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ PHO N/A 85% of billed charges
-----------------------------------------------------------------------------------------------------------------------------
Implants cost + 10%
-----------------------------------------------------------------------------------------------------------------------------
Page 18 5/11/99
SCHEDULE 9.7
[Litigation]
Schedule 9.7
(Litigation)
▇▇▇▇▇▇ SurgiCare has received notification by letter of a potential claim
against ▇▇▇▇▇▇ SurgiCare arising from a third degree thigh burn from a bovie pad
on February 18, 1998.
SCHEDULE 9.10
[Changes in ▇▇▇▇▇▇ Centers]
SurgiCare/TxSurgery
Equipment Purchased Since October 31, 1998
1. Cardiac/Gas Analysis
Monitors
o SurgiCare $164,764.62
o TxSurgery $107,372.19
2. GammaProbe $ 23,460.00
-----------
TOTAL $295,600.81
Note: Items are not included in SurgiCare/TxSurgery Furniture and Equipment
Ledgers
SCHEDULE 9.15
[Baylor's Consents and Approvals]
SCHEDULE 9.15
o Change of ownership licensing reapplication
-- TDH (ASC License (Medicare)
-- National Heritage Insurance Company (Medicaid)
-- Pharmacy license (State Board of Pharmacy)
-- DEA controlled substances registration
-- DPS controlled substance registration (Dept. of Public Safety)
-- Radiology registration (TDH)
-- Radioactive materials license (TDH) (may be unnecessary)
-- Laser registration (TDH)
-- Laboratory CLIA registration (TDH)
-- Joint commission
-- Boiler registration (Tx. Dept. of licensing & regulation)
o Olympus Endoscopic Equipment Lease. Status: expired, currently
renegotiating lease.