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EXHIBIT 2.3
AMENDMENT NO. 1 TO ASSET SALE AGREEMENT
This Amendment No. 1 to Asset Sale Agreement (the "Amendment") is made
and entered into as of October 15, 1999, by and between Tenet Healthcare
Corporation, a Nevada corporation ("Seller") and Iasis Healthcare Corporation, a
Delaware corporation ("Purchaser") as successor in interest to JLL Hospital,
LLC, a Delaware limited liability company.
RECITALS
A. Seller and JLL Hospital, LLC entered into that certain Asset Sale
Agreement dated as of August 15, 1999 (the "Agreement") pursuant to which
Purchaser's permitted designees or assignees are acquiring substantially all of
the assets with respect to the operation of the Hospitals from the Subsidiaries.
B. Seller and Purchaser desire to amend the Agreement to address
certain matters that have arisen since the effective date of the Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises and covenants contained in this Amendment, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Defined Terms. Except to the extent it is specifically indicated to
the contrary in this Amendment, defined terms used in this Amendment shall have
the same meanings ascribed to them in the Agreement.
2. Items to be Delivered by Purchaser at Closing.
(a) Section 1.7.1 of the Agreement is hereby deleted in its
entirety and replaced with the following:
1.7.1 payment of the Cash Purchase Price based upon the Interim
Balance Sheet (subject to adjustment as described in Section 1.4),
less Fifty Million Dollars ($50,000,000) (the "Escrow Amount"), as
adjusted to reflect the prorations provided in Section 1.8 of this
Agreement.
(b) A new Section 1.7.1.1 of the Agreement is hereby added as
follows after Section 1.7.1 of the Agreement:
1.7.1.1 payment of the Escrow Amount to the Chase Manhattan Bank,
as the Escrow Agent (the "Escrow Agent") by wire transfer of
immediately available funds, to be held in escrow subject to the
terms of the Escrow
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Agreement, dated the date hereof, by and among Seller, Purchaser
and the Escrow Agent;
3. Transfer of Seller Assets. Section 1.9(f) of the Agreement is
hereby deleted in its entirety and is replaced with the following:
(f) all of such Subsidiary's interest in and to all contracts and
agreements (including, but not limited to, purchase orders) with
respect to the operation of any Hospital (the "Contracts")
including, without limitation, those Contracts described in
Schedule 1.9(f); provided, however, that, subject to Section 9.3,
multi-hospital contracts as to which one or more of the Acute Care
Hospitals and one or more of Seller's other acute care hospitals
participate ("Multi-Facility Contracts") shall not be transferred
and conveyed at Closing and shall constitute Assets and Contracts
only to the extent attributable to the Acute Care Hospitals.
4. Excluded Assets.
(a) Section 1.10(p) of the Agreement is hereby deleted in its
entirety and replaced with the following:
(p) [Intentionally omitted];
(b) A new Section 1.10(q) of the Agreement is hereby added to
read as follows:
(q) those Contracts set forth in Schedule 1.10(q).
5. Assumed Obligations. Section 1.11(b) of the Agreement is hereby
deleted in its entirety and replaced with the following:
(b) the Contracts, but only to the extent of the
obligations arising thereunder with respect to events or periods
after the Closing Date; provided, however, that, subject to Section
9.3, Multi-Facility Contracts shall give rise to Assumed
Obligations only to the extent attributable to the Acute Care
Hospitals.
6. Excluded Liabilities. A new Section 1.12(o) of the Agreement is
hereby added to read as follows:
(o) all liabilities or obligations arising at any time
under those Contracts set forth in Schedule 1.10(q);
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7. Title; Sufficiency.
(a) The phrase "which are not otherwise marked with two stars
and (iv) the UCC Liens" is hereby inserted immediately after the
phrase "(iii) other such encumbrances as are set forth in Schedule
2.7(b)" contained in Section 2.7(b) of the Agreement.
(b) The phrase "and (v) the judgments as are set forth in
Schedule 2.7(b) which are marked with two stars therein" is hereby
inserted immediately after the phrase "(collectively, "Permitted
Liens")" contained in Section 2.7(b) of the Agreement.
8. Representations and Warranties of Seller. A new Section 2.21 of the
Agreement is hereby added to the Agreement to read as follows:
2.21 Managed Care Contracts To the best knowledge of the Tenet
Representatives (as defined below), no payor under any managed care
Contract has notified or otherwise informed Seller or the
Subsidiaries that it does not intend to, or will not, consent to
the transfer of such Contract to Purchaser as a result of the
transactions contemplated by the Agreement, as amended. For
purposes hereof, the term "Tenet Representatives" shall mean
Michael Murphy, Peggy Sanborne, William Barrett and Paul O'Neill.
9. Covenants of Seller.
(a) A new Section 4.21 of the Agreement is hereby added to read
as follows:
4.21 Certain Owned Real Property. Notwithstanding Section 1.9 of
this Agreement, the Owned Real Property listed on Schedule 4.21(a) (the
"6103 Webb Property"), Schedule 4.21(b) (the "Town & Country Condo
Property"), Schedule 4.21(c) (the "Memorial Condo Property"), Schedule
4.21(d) (the "Southwest Real Property"), and the Leased Real Property
listed on Schedule 4.21(e) (the "La Mesa Leased Real Property") shall
not be transferred and conveyed to Purchaser as of the Closing Date.
Instead, Seller shall transfer such Owned Real Property and Leased Real
Property to Purchaser after Closing in accordance with this Section
4.21.
(a) 6103 Webb Property. Seller and Purchaser shall agree on
the value of the 6103 Webb Property within thirty (30) days following
the Closing. If the Seller and Purchaser fail to agree on a value
within such thirty-day period, the parties shall retain an MAI
certified appraiser promptly thereafter to perform an appraisal of such
value with the cost of obtaining such appraisal to be split equally
between Seller and Purchaser. The appraisal shall be conducted using a
MAI or other valuation methodology that is mutually acceptable to the
parties. Following the determination of the value of the property in
such manner (the "Webb Property Value"), Seller shall use commercially
reasonable and expeditious efforts to either
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(i) acquire all of the partnership interests in that certain limited
partnership known as 6103 Webb Road, Ltd. or (ii) obtain the written
consent of Robert G. Sherrill, Jr., M.D. to the transfer of the 6103
Webb Property to Purchaser or Purchaser's designated affiliate. Seller
shall offer to acquire the partnership interest, or obtain the consent,
from Dr. Sherrill based on the Webb Property Value. Within ten (10)
days after the occurrence of either event set forth in clause (i) or
(ii) contained in the previous sentence, or as otherwise agreed to by
the parties to this Agreement, Seller shall cause fee title to the 6103
Webb Property to be conveyed to Purchaser or Purchaser's designated
affiliate and Seller shall cause the Title Company to issue a Title
Policy to Purchaser or Purchaser's designated affiliate with respect to
the 6103 Webb Property in the amount of the Webb Property Value. Such
Title Policy shall be issued consistent with the requirements set forth
in Section 7.10. If Seller, despite its commercially reasonable
efforts, is unable to transfer the 6103 Webb Property to Purchaser or
Purchaser's designated affiliate by December 15, 1999, Seller shall
have no obligation to transfer to Purchaser and Purchaser shall have no
obligation to acquire from Seller the 6103 Webb Property. In such
event, no later than December 31, 1999, Seller shall return to
Purchaser an amount equal to the Webb Property Value, which Seller and
Purchaser agree is the portion of the Purchase Price allocable to the
6103 Webb Property.
(b) Town & Country Condo Property and the Memorial Condo
Property. Promptly after the Closing Date, Seller shall use
commercially reasonable and expeditious efforts to obtain the
applicable condominium association's waiver of, or expiration of the
time period applicable to, its right of first refusal regarding the
conveyance of the Town & Country Condo Property and the Memorial Condo
Property to Purchaser or Purchaser's designated affiliate. Within ten
(10) days after the waiver of, or expiration of, each such applicable
right of first refusal, Seller shall cause fee title to the Town &
Country Condo Property and the Memorial Condo Property, respectively,
to be conveyed to Purchaser or Purchaser's designated affiliate. Seller
shall cause fee title to the Town & Country Condo Property and the
Memorial Condo Property, respectively, to be conveyed to Purchaser or
Purchaser's designated affiliate and Seller shall cause the Title
Company to issue a Title Policy to Purchaser or Purchaser's designated
affiliate with respect to the Town & Country Condo Property and the
Memorial Condo Property in the amount of (i) Sixty-Eight Dollars ($68),
multiplied by (ii) the square footage of the space at issue (the "Condo
Value"). Such Title Policy shall be issued consistent with the
requirements set forth in Section 7.10. If Seller, despite its
commercially reasonable efforts, is unable to transfer the Town &
Country Condo Property or the Memorial Condo Property to Purchaser or
Purchaser's designated affiliate by January 15, 2000, Seller shall have
no obligation to transfer to Purchaser and Purchaser shall have no
obligation to acquire from Seller the Town & Country Condo Property or
Memorial Condo Property, as the case may be. In such event no later
than January 31, 2000, Seller shall return to Purchaser (i) if the Town
& Country Condo Property or the Memorial Condo Property is not
conveyed, the Condo Value, which Seller and Purchaser agree is the
portion of the Purchase Price allocable to such properties.
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(c) (i) Southwest Real Property and La Mesa Leased Real
Property. Promptly after the Closing Date, Seller shall use
commercially reasonable and expeditious efforts to obtain a Survey and
Title Commitment with respect to the Southwest Real Property and the La
Mesa Leased Real Property. Within ten (10) business days after
Purchaser's receipt of the last of the Survey and Title Commitment with
respect to the Southwest Real Property and the La Mesa Leased Real
Property, respectively, Purchaser shall advise Seller in writing of any
matter disclosed in such Survey or Title Commitment that is
unacceptable to Purchaser in its reasonable discretion. Failure of
Purchaser to timely deliver to Seller such written notification shall
be deemed Purchaser's approval of the Survey and Title Commitment. For
purposes of this Section 4.21(c), "Permitted Exceptions" shall mean any
and all matters disclosed in a Survey and/or Title Commitment which are
reasonably approved or deemed approved by Purchaser. Subject to subpart
(c)(ii) next below, transfer of the Southwest Real Property or La Mesa
to Purchaser shall occur no later than forty five (45) business days
after the last of the Survey and Title Commitment with respect to the
applicable property have been delivered to Purchaser (each, a "Real
Property Closing Date").
(ii) In the event that Purchaser timely provides written
notice to Seller of any disapproved matter in the Survey or the Title
Commitment, Seller shall, by written notice to Purchaser (the "Seller
Title Notice"), which Seller shall give within ten (10) business days
of receipt of such notice from Purchaser, either (A) agree to use
reasonable commercial efforts to remove any such disapproved matter(s)
affecting title to the Southwest Real Property or La Mesa Leased Real
Property, or (B) refuse to remove such matter(s). If Seller refuses to
remove any such disapproved matter or if, despite reasonable commercial
efforts, is unable to remove any such disapproved matter by the
applicable Real Property Closing Date, Seller shall not be in default
hereunder and Purchaser shall elect either (Y) to acquire the Southwest
Real Property or La Mesa Leased Real Property, as applicable, subject
to such disapproved matter or (Z) not to acquire such Southwest Real
Property or La Mesa Leased Real Property. Purchaser shall by written
notice advise Seller of such election no later than ten (10) business
days after receipt of the Seller Title Notice with respect to
disapproved matters that Seller refuses or is deemed to have refused to
remove and ten (10) business days after Purchaser has been advised in
writing that Seller is unable to remove disapproved matters that Seller
has agreed to use commercially reasonable efforts to remove. Failure by
Purchaser to provide timely such written notice shall be deemed
Purchaser's election to acquire the Southwest Real Property or La Mesa
Leased Real Property, as applicable, subject to disapproved matters. If
Purchaser elects not to acquire the Southwest Real Property or La Mesa
Leased Real Property as provided in this clause (c), then Seller shall
no later than the date which is fifteen (15) business after such
written election by Purchaser has been delivered to Seller, return to
Purchaser the portion of the Purchase Price allocable to the Southwest
Real Property or La Mesa Leased Real Property, respectively, which
amount shall be determined pursuant to the MAI appraisal methodology
set forth at Section 4.21(a) above.
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(d) Subject to Section 4.21(a) hereof, Purchaser will succeed
to fee simple ownership of the 6103 Webb Property, the Town & Country
Condo Property, the Memorial Condo Property, the Southwest Real
Property, and a leasehold interest in the La Mesa Leased Real Property
at no additional cost or expense to Purchaser. Each such conveyance
shall occur in accordance with the terms and conditions of the
Agreement, except that the Closing Date shall be defined, for purposes
of the sale of the 6103 Webb Property, the Town & Country Condo
Property, the Memorial Condo Property and the Southwest Real Property
and assignment of the leasehold of the La Mesa Leased Real Property, as
the date of Purchaser's or Purchaser's designated affiliate's
acquisition of fee title or leasehold interest to each such property,
respectively.
10. UCC Termination Statements. A new Section 4.22 of the Agreement is
hereby added to read as follows:
4.22 UCC Terminations.After the Closing Date, Seller shall use
its reasonable commercial efforts to (a) obtain executed UCC
termination statements for the financing statements set forth on
Schedule 4.22 which are attached hereto (the "UCC Liens"), (b) file
such executed UCC termination statements with the appropriate
governmental agencies or authorities with respect to the UCC Liens
and (c) deliver such executed and filed UCC termination statements
to Purchaser. Seller's obligations under this Section 4.22 shall
continue to be fully effective and enforceable with respect to any
particular financing statement until the expiration of such
applicable financing statement set forth on Schedule 4.22.
11. Cooperation in Obtaining Consents. A new Section 4.23 of the
Agreement is hereby added to read as follows:
4.23 Cooperation on Obtaining Consents. For two (2) years after
the Closing Date, Seller and Purchaser shall each use reasonable
commercial efforts to obtain the consent to assignment from the
applicable third parties to any Contract or Lease, or to enter into
new contracts with respect to Multi-Facility Contracts for which
such consent was not obtained as of the Closing Date.
12. Misdirected Payments. A new Section 4.24 of the Agreement is
hereby added to read as follows:
4.24 Misdirected Payments. To the extent there are any
misdirected funds forwarded to Seller (or one of its subsidiaries)
by any third parties, which misdirected funds are paid in respect
of the performance of services by or on behalf of the Hospitals
from and after the Closing, including without limitation in respect
of any services provided by any of the physicians
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providing services at the Hospitals, Seller shall remit such
misdirected funds to Iasis Healthcare Corporation within ten (10)
business days after receipt thereof, to the account(s) designated
by Purchaser. Each of Seller and Purchaser further agree that, to
the extent that Purchaser has not obtained a provider number with
respect to any Hospital on or prior to the Closing Date, Purchaser
(or a subsidiary of Purchaser) shall be entitled to use the
provider number obtained by Hospital (or a Subsidiary of Seller)
prior to the Closing Date with respect to such Hospital.
Furthermore, Seller and Purchaser understand and agree that all
payments by third party payors in respect of such Licensed Provider
Numbers for goods and services provided after the Closing Date
("Post-Closing Payments") shall be solely for the account of
Purchaser. Seller (on its behalf and on behalf of its subsidiaries)
hereby irrevocably assigns to Purchaser all right, title and
interest it may have in respect of such Post-Closing Payments and
hereby agrees to remit to Purchaser such Post-Closing payments
within ten (10) business days after its receipt thereof.
13. Covenants of Purchaser. Purchaser agrees and acknowledges that the
Owned Real Property described in Section 4.21 of this Agreement shall not be
transferred and conveyed to Purchaser at the Closing, but shall be transferred
and conveyed to Purchaser, if at all, in accordance with Section 4.21.
14. Provision of Benefits. A new Section 9.3 of the Agreement is
hereby added to read as follows:
9.3 Provision of Benefits. If Seller is unable to obtain any
consent to the assignment of Seller's or any Subsidiary's interest
in a Contract or a Lease, or if Purchaser is unable to enter into a
new contract with respect to a Multi-Facility Contract, until such
consent or new contract is obtained, Seller shall use reasonable
commercial efforts to provide Purchaser the benefits of any such
Contract or Lease (including with respect to the Acute Care
Hospital portion of Multi-Facility Contracts), cooperate in any
reasonable and lawful arrangement designed to provide such benefits
to Purchaser, and allow Purchaser to directly enforce such
Contracts or Leases against third parties thereto. Purchaser shall
use reasonable commercial efforts to perform, on behalf of Seller,
the obligations of Seller thereunder or in connection therewith,
limited in the case of Multi-Facility Contracts to the Acute Care
Hospitals thereunder, but only to the extent that such action would
not result in a material default thereunder or in connection
therewith and such obligation would have been (a) an obligation of
Purchaser had it entered into a new contract on substantially
similar terms with respect to a Multi-Facility Contract or (b) an
Assumed Obligation but for the failure to obtain a consent.
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15. Indemnification of Purchaser by Seller. The following is hereby
inserted at the end of the first sentence of Section 10.2.1 of the Agreement:
and (ix) Seller's failure to comply with Section 4.22..
16. Change of Corporate and Fictitious Names. Within ten (10) business
days following the Closing Date, Seller shall change the corporate names of the
following entities owned by Seller, as well as any and all fictitious business
names used by any Subsidiary which is the same as or similar to the name of any
Hospital or other business sold to Purchaser. The changed names shall not use
the word or words uniquely related to the Hospital or other business so sold,
e.g., the name of Mesa General Hospital Medical Center, Inc. shall be changed to
eliminate at least the word "Mesa" and replace it (them) with a word or words
not the same as or confusingly similar to "Mesa". The actual names to be changed
are as follows:
(a) Mesa General Hospital Medical Center, Inc.;
(b) Health Choice Arizona, Inc.;
(c) Metro Surgery Center Limited Partnership;
(d) Memorial Hospital of Town & Country, Ltd.;
(e) Center for Quality Care, Inc.; and
(f) Pain Management Center of Town & Country, Inc.
17. Patient Scheduling. For a period of sixty (60) days after the
Closing Date, Seller shall cause Tenet Physician Services and/or all other
applicable affiliates or subsidiaries of Seller, by and through Seller's four
(4) dedicated employees as of the Closing Date, to continue to provide patient
scheduling services on behalf of Purchaser and its applicable affiliates for all
of Purchaser's and its affiliates employed physicians transferred to Purchaser
or its affiliates in connection with this Agreement who practice medicine in the
State of Arizona consistent with prior practices. Purchaser shall, and shall
cause its affiliates to, reasonably cooperate with Seller and its affiliates in
connection with the provision of such patient scheduling services. Seller shall
maintain and use during this sixty (60) day period all communication systems
that, prior to Closing, Seller used to support such patient scheduling services.
Seller and its affiliates shall perform such services for the benefit of
Purchaser without the payment to Seller or its affiliates of any fee by
Purchaser or its affiliates.
18. Collection Services. For a period of ninety (90) days after the
Closing Date, Purchaser shall, and shall cause its affiliates to, use their
reasonable commercial efforts to collect the Accounts Receivable of Seller and
its affiliates with respect to services rendered by the three (3) physician
practices located in Town & Country, Florida of Dr. Norris, Dr. Long and Dr.
Rosenberg which on or prior to the Closing Date were not managed by Tenet
Physician Services through its centralized computer billing and collection
systems located in Phoenix, Arizona. Seller shall, and shall cause its
affiliates to, reasonably cooperate with Purchaser and its affiliates in
connection with the provision of such collection services. Purchaser and its
affiliates shall perform such services without the payment to Purchaser or its
affiliates of any fee by Seller or its affiliates. Within ten (10) business days
after the collection of any Accounts Receivable that relate to services rendered
at such
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practices on or prior to the Closing Date, Purchaser shall, and shall cause its
affiliates to, remit such collected amounts to Seller at the following address:
Tenet HealthSystem, 14001 Dallas Parkway, Dallas, Texas 75240, Attention:
Violetta Mazella.
19. Schedules. Attached as Annex I hereto is Amendment No. 1 to the
Schedules to the Asset Sale Agreement dated as of the Closing Date. Except as
set forth therein, the Schedules attached to the Agreement remain in full force
and effect.
20. Osteomy Center. Seller hereby agrees to license to Purchaser and
its subsidiaries the right to distribute marketing materials relating to the
Osteomy Center at Palms of Pasadena (the "Center") for a period of one (1) year
commencing on the Closing Date, pursuant to the terms of the License Agreement
for Policy and Procedures Manuals; provided, however, that Purchaser shall be
entitled to terminate such license at any time upon thirty days' prior written
notice. Purchaser and its subsidiaries shall have access to the Center's Call
Center and database for one (1) year so long as Purchaser and its subsidiaries
enter into the standard form of contract which Seller utilizes in connection
with the Call Center.
21. Effect on Agreement; General Provisions. Except as set forth in
this Amendment, the terms and provisions of the Agreement are hereby ratified
and declared to be in full force and effect. This Amendment shall be governed by
the provisions of the Agreement regarding choice of law, attorneys' fees, and
successors and assigns. This Amendment shall become effective upon its
execution, which may occur in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. Captions and paragraph headings are used herein for convenience
only, are not a part of this Amendment or the Agreement as amended by this
Amendment and shall not be used in construing either document. Other than the
reference to the Agreement contained in the first recital of this Amendment,
each reference to the Agreement and any agreement contemplated thereby or
executed in connection therewith, whether or not accompanied by reference to
this Amendment, shall be deemed a reference to the Agreement as amended by this
Amendment.
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IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed in multiple originals by their authorized officers, all as of the day
and year first above written.
PURCHASER:
IASIS HEALTHCARE CORPORATION, a
Delaware corporation, as successor in interest
to JLL Hospital, LLC
By: /s/ Frank Coyle
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Name: Frank Coyle
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Title: Secretary
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SELLER:
TENET HEALTHCARE CORPORATION, a
Nevada corporation
By: /s/ Paul O'Neill
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Name: Paul O'Neill
Title: Vice President
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