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 Xxxx 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
0.xX Bay1or Center Tangible Assets
0.xX 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.
X. Xxxxxx 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
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Xxxxx Xxxxxx, Xxxxxx, Xxxxx 00000 ("Baylor Surgicare"), and (2) Texas Surgery
Center, located at 0000 Xxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000 ("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 0.xX
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
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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
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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
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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.
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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, Xxxxxxxx & Xxxxx 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;
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(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 XXXX 0F SALE. The Baylor Limited Partnership shall have executed and
delivered the Xxxx 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 XXXX OF SALE. Baylor and the Baylor Limited Partnership shall have
executed and delivered a Xxxx 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 Xxxx
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 XXXXXX XXXXXX SURGERY CENTER BY THVG1. Baylor
will use reasonable efforts to arrange for the purchase by THVGl of the assets
of Xxxxxx Xxxxxx Surgery Center from its current owner, Baylor Medical Center at
Irving (which is affiliated with Baylor), if and when Xxxxxx Xxxxxx 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, Xxxxx Xxxxxx as
Baylor's representative on the USP Parent Board of Directors.
13.9 MEDICAL DIRECTORS. The parties hereto acknowledge and agree that: (a)
Xxxxxx Xxxxxx, 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) Xxx Xxxxxxx, 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 Xx. Xxxxxx the position of Regional Medical Director for the North
Texas Region for compensation to be agreed upon by USP and Xx. Xxxxxx (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 Xx. Xxxxxx.
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.
00000 Xxxxxxx Xxxx, Xxxxx 000 Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxx X. Xxxxxxx
Executive Vice President
FAX No. (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxx
Nossaman, Guthner, Xxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
FAX No. (000) 000-0000
(b) If to Baylor:
Baylor Health Services
0000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: M. Xxxxxxx Xxxxxx
Chief Operating Officer
FAX No. (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxxxxx
Fulbright & Xxxxxxxx L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
FAX No. (000) 000-0000
(c) If to THVG1 or THVG2:
To both USP and Baylor
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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/ XXX X. XXXXXXX
Xxx X. Xxxxxxx, Vice President
BAYLOR HEALTH SERVICES
By /s/ M. XXX XXXXXX
Name M. Xxx Xxxxxx
Title EVP/COO
TEXAS HEALTH VENTURES GROUP L.L.C.
By /s/ M. XXX XXXXXX
Name M. Xxx Xxxxxx
Title Manager
THVG/HEALTHFIRST LLC
By /s/ M. XXX XXXXXX
Name M. Xxx Xxxxxx
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/ XXX X. XXXXXXX
Xxx X. Xxxxxxx
Vice President
BAYLOR HEALTH CARE SYSTEM
By /s/ M. XXX XXXXXX
Name M. Xxx Xxxxxx
Title EVP/COO
47
