EXHIBIT 99.2
AMENDMENT TO AGREEMENT AND PLAN OF MERGER
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This AMENDMENT TO AGREEMENT AND PLAN OF MERGER (this "Amendment"),
dated as of November 30, 1996, is by and among TRANSITIONAL HOSPITALS
CORPORATION, a Nevada corporation formerly known as COMMUNITY PSYCHIATRIC
CENTERS ("THC"), COMMUNITY PSYCHIATRIC CENTERS OF PUERTO RICO, INC., a Nevada
corporation (the "Hospital Company"), CPC-PHP, INC., a Nevada corporation (the
"Partially Owned Company"), and BEHAVIORAL HEALTHCARE CORPORATION, a Delaware
corporation (the "Parent"), with respect to the following facts:
a. The parties hereto entered into that certain Agreement and
Plan of Merger, dated as of October 22, 1996 (the "Merger Agreement"), pursuant
to which the Companies (as that term is defined in the Merger Agreement) are to
be merged into two newly formed Tennessee corporations wholly-owned by the
Parent. Capitalized terms used herein within definition shall have the meanings
set forth in the Merger Agreement.
b. The parties hereto wish to modify the Hospital Company
Merger Consideration and the Partially Owned Merger Consideration as provided
below.
c. The Partially Owned Company is in the process of negotiating
the purchase of a 52% interest (the "Interest") in Integrated Health Care
Systems Corp., a Puerto Rico corporation ("IHS"), for a purchase price
(including the post-closing repayment of certain loans and obligations) of
approximately $575,000. No assurance can be given as to whether the Interest
will be purchased by the Partially Owned Company.
d. The Partially Owned Merger Consideration (as set forth below)
has been determined on the assumption that the Interest has been acquired by the
Partially Owned Company on or prior to the Closing.
e. In the event that the Interest has not been acquired by the
Partially Owned Company on or prior to the Closing, the parties wish to make
certain modifications in the Merger Agreement with respect thereto as
hereinafter set forth.
f. The parties wish to make certain additional modifications in
the Merger Agreement as set forth below.
NOW THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements, the parties hereto hereby
agree to amend the Merger Agreement as follows:
1. Section 1.1 of the Merger Agreement is hereby revised to
provide that the Hospital Company Merger Consideration shall consist of an
aggregate of 3,248,405 shares of BHC Common
Stock and an aggregate of 1,675 shares of Series B Preferred Stock (rather than
3,439,934 shares of Common Stock and 1,774 shares of Series B Preferred Stock).
2. Section 1.2 of the Merger Agreement is hereby revised to
provide that the Partially Owned Merger Consideration shall consist of an
aggregate of 246,900 shares of BHC Common Stock and 1,675 shares of Series B
Preferred Stock rather than 261,458 shares of BHC Common Stock and 1,774 shares
of BHC Preferred Stock.
3. In the event that the Interest has not been acquired by the
Partially Owned Company on or prior to the Closing, then no shares of BHC Common
Stock or BHC Preferred Stock shall be issued at the Closing in connection with
the Partially Owned Merger.
4. At such time as the Partially Owned Company acquires the
Interest, the 246,900 shares of BHC Common Stock and 1,675 shares of BHC
Preferred Stock comprising the Partially Owned Merger Consideration shall be
issued to the shareholder of CPC-PHP, Inc., provided that THC has paid to the
Partially Owned Company the purchase price for the Interest (and is obligated to
make or fund the other payments to be made by the Partially Owned Company
referred to in Exhibit A hereto).
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5. THC (as opposed to the Partially Owned Company) shall have
the right to vary the terms of the purchase of the Interest from those set forth
in Exhibit A, provided that THC is not obligated to pay more than $575,000
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pursuant to paragraph 4 above, and the Partially Owned Company shall take such
actions as THC may reasonably request to effectuate the purchase of the Interest
on terms satisfactory to THC, provided in each case that the Partially Owned
Company is not responsible (after any indemnification or payments by THC) for
significant liabilities or obligations in excess of those set forth in
Exhibit A.
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6. In the event the Interest is not purchased by the Partially
Owned Company on or before six months after the date hereof, and provided that
after the Closing the Partially Owned Company complies with its obligations set
forth in paragraph 5 above, THC will be obligated to pay the Parent $82,910.
7. Section 5.5 of the Merger Agreement is hereby amended to read
as follows: Purchaser shall treat the Hospital Company Merger as a tax-free
reorganization within the meaning of Section 368 of the Code.
8. The conditions to the obligations of the parties to consummate
the transactions contemplated by the Merger Agreement have been satisfied other
than the following: the
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Purchaser shall have received and been issued all licenses and approvals
required under the provisions of state and federal law necessary for the
Purchaser to own and operate and legally conduct all relevant operations of the
Hospitals being conducted by the Companies on the Closing Date (except for the
Controlled Substance Certificates relating to the pharmacies in the Hospitals).
All conditions (other than the aforesaid licensing condition) no longer apply to
the Merger Agreement.
9. Concurrently herewith, the parties hereto are entering into
the Management Agreement in the form attached hereto as Exhibit B (the "Puerto
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Rico Management Agreement"). For purposes of Section 5.1 of the Merger
Agreement, the Closing shall be deemed to have occurred with respect to
employees working at the Hospitals (the "Employees") as of the commencement of
the Puerto Rico Management Agreement, and the provisions of such Section shall
be deemed to apply as of such time notwithstanding anything to the contrary
contained in the Puerto Rico Management Agreement.
10. Article XII of the Merger Agreement is hereby amended to
read as follows:
"COMPETITION AND NEW PROJECTS.
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Section 12.1 Noncompetition. Sellers recognize that (i)
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Purchaser's entering into this Agreement is induced primarily
because of the covenants and assurances made by Sellers
hereunder, (ii) Sellers' covenant not to compete is necessary to
insure the continuation of the Hospital Businesses subsequent to
the Closing, and (iii) irreparable harm and damage will be done
to Purchaser in the event that Sellers, or Sellers' affiliates,
compete with Purchaser within the area or areas specified in this
Section. Therefore, in consideration of the premises and as an
inducement for Purchaser to enter into this Agreement and
consummate the transactions contemplated herein, Sellers agree
that, for a period of three (3) years from and after the Closing
Date, Sellers, their affiliates (other than affiliates which
become affiliates as a result of the acquisition of stock or
assets of THC or one or more Sellers) (collectively, the
"Regulated Persons") will not own, lease, manage or operate any
psychiatric hospitals, beds or units in the United States within
the 25-mile radiuses of the Hospitals or any facility operated by
Purchaser on the Closing Date (the "Proscribed Area").
Notwithstanding the foregoing, the Regulated Persons may own,
lease, manage and operate beds and/or units within the Proscribed
Area: (a) in any non-psychiatric hospital acquired by the
Regulated Persons,
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provided that Purchaser has been offered a right of first refusal
to manage the psychiatric services provided at such hospital on
then reasonably customary terms (provided that THC shall not
enter into any agreement to manage such psychiatric services on
terms less favorable to THC than those last offered to
Purchaser), and (b) at THC New Orleans. The parties agree that
no portion of the Hospital Company Merger Consideration or the
Partially Owned Company Merger Consideration shall be allocated
the non-competition covenant contained in this Section 12.1
Section 12.2 New Projects. In the event Sellers desire
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to pursue an opportunity to provide new mental health services in
Puerto Rico, Sellers shall first present such opportunity to the
Board of Directors of the Parent. If the Board of Directors of
the Parent determines not to pursue such opportunity, Sellers may
pursue such opportunity unless the Board of Directors has
reasonably concluded that the pursuit of such opportunity by
Sellers would be detrimental to the business of any psychiatric
hospital or facility owned, leased, managed or operated by
Purchaser in Puerto Rico.
11. In the event the Parent plans to dispose directly or
indirectly of a significant amount of its Puerto Rico operations (whether
through a sale or issuance of stock, sale of a subsidiary, merger, sale of
assets or otherwise), then before such disposition is made THC shall have the
right for a 30 day period to negotiate with the Parent with respect to a
possible purchase by THC of such operations. In the event THC and the Parent are
unable to agree upon the terms thereof, then the Parent shall have the right to
dispose of such operations to a third party for a 360 day period on terms which
are more favorable to the Parent than those last proposed by THC. In the event
of any dispute as to whether the terms to be accepted directly or indirectly by
the Parent are more favorable, the dispute shall be submitted to binding
arbitration.
12. ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall have the right (subject to the review and
oversight of the Parent's Board of Directors) to direct the Parent's business
operations in Puerto Rico to the extent set forth in that certain Services
Agreement between the Parent and ▇▇. ▇▇▇▇▇ dated as of even date herewith.
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13. The parties hereto agree to negotiate in good faith an
agreement, which shall be mutually satisfactory to both THC and the Parent,
pursuant to which BHC San ▇▇▇▇ Capestrano Hospital, Inc. will become the
exclusive provider of hospital psychiatric services to subscribers of plans
serviced by Caribbean Behavioral Health Systems, Inc.
14. Except as modified as set forth above, the Merger Agreement
shall remain in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have fully executed this
Amendment as of the day and year first above written.
ENTITIES CONSTITUTING THE "SELLERS"
TRANSITIONAL HOSPITALS CORPORATION
COMMUNITY PSYCHIATRIC CENTERS OF
PUERTO RICO, INC.
CPC-PHP, INC.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
_______________________________
Title____________________________
"PARENT"
BEHAVIORAL HEALTHCARE CORPORATION
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
_______________________________
Title CFO
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