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EXHIBIT 10.10
TRANSITION SERVICES AGREEMENT
This TRANSITION SERVICES AGREEMENT (this "Agreement") is made
as of October 8, 1999, by and between PARACELSUS HEALTHCARE CORPORATION, a
California corporation ("PHC"), and PHC/PSYCHIATRIC HEALTHCARE CORPORATION, a
Delaware corporation ("HOLDCO").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Recapitalization Agreement,
dated as of August 13, 1999, by and among PHC, PHC/CHC HOLDINGS, INC., a
California corporation, HOLDCO, PHC-SALT LAKE CITY, INC., a Utah corporation,
PARACELSUS PIONEER VALLEY HOSPITAL, INC., a Utah corporation, PIONEER VALLEY
HEALTH PLAN, INC., a Utah corporation, PHC-JORDAN VALLEY, INC., a Utah
corporation, PARACELSUS PHC REGIONAL MEDICAL CENTER, INC., a Utah corporation,
PARACELSUS DAVIS HOSPITAL, INC., a Utah corporation, PHC UTAH, INC., a Delaware
corporation, CLINICARE OF UTAH INC., a Utah corporation, and JLL HOSPITAL LLC, a
Delaware limited liability company ("JLL") (the "Recapitalization Agreement"),
the parties agreed to recapitalize Holdco following the contribution of the
Assets to Holdco and the assumption of the Assumed Liabilities by Holdco; and
WHEREAS, capitalized terms used herein and not otherwise
defined herein have the meanings given to such terms in the Recapitalization
Agreement; and
WHEREAS, PHC utilizes certain licensed software and other
products and services pursuant to (i) an agreement with the Health Services
Division of Keane, Inc. dated April 13, 1998 as amended and supplemented (the
"Keane Agreement"), (ii) an agreement with CompuLab System Corporation dated
April 30, 1998 (the "CompuLab Agreement"), and (iii) an agreement with Lawson
Software dated May 30, 1997 (the "Lawson Agreement") (the Keane Agreement,
Lawson Agreement and CompuLab Agreement, as the same may be amended,
supplemented or replaced, are collectively referred to herein as the "Services
Agreements"); and
WHEREAS, prior to the consummation of the transactions
contemplated by the Recapitalization Agreement, PHC provided and made available
certain data processing services and systems to the Business pursuant to the
Service Agreements; and
WHEREAS, Holdco desires PHC to continue to provide such data
processing services and systems in support of the Business as provided herein
and PHC is willing to continue to provide the Services on the terms and
conditions set forth herein.
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NOW, THEREFORE, in consideration of the premises and covenants
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, PHC and Holdco agree as follows:
1. Transition Services. During the term of this Agreement as
set forth in Section 5 below (the "Transition Period"), PHC shall provide, or
cause its Affiliates to provide, to Holdco and its subsidiaries the services set
forth on such Annex A (the "Services"), in the manner, at the locations and at a
relative level of service consistent with that provided by PHC or its Affiliates
to or for the benefit of the Business immediately prior to the date hereof. The
Services shall be provided from PHC's data processing center (the "Data Center")
in Houston, Texas using PHC's computer processing equipment at such site, with
the exception of the CompuLab Clinical Lab System which is operated at the
Paracelsus Davis Hospital, Inc. facility. Holdco or its Subsidiaries operating
the Business shall be responsible for (i) coding and transmitting the data (the
"Facilities Data") to be processed hereunder to the Data Center, (ii)
supervising the conversion of the Facilities Data, including financial data,
into a form that can be processed by PHC, (iii) determining whether the
Facilities have complied with applicable accounting practices, (iv) determining
whether the Facilities have complied with applicable state and federal
regulations governing financial reporting obligations; (v) verifying the
accounting of data generated by the Facilities or by PHC from other data
generated by the Facilities; (vi) maintaining prudent internal controls of
reports and data generated by the Facilities and (vii) maintaining all equipment
and all communication lines at the Facilities to the extent reasonably necessary
in connection with providing the Services. The Services used by Holdco and its
subsidiaries shall be provided, and Holdco shall pay for such Services (i) an
amount equal to actual costs to PHC (including third-party out-of-pocket costs
and PHC's reasonable internal overhead and administrative costs) of providing
such Services plus two percent (2%) (the "Service Fee") and (ii) those charges
set forth in Annex B hereto (the "Charges").
PHC will provide to Holdco and its subsidiaries operating the
Business, for the term of this Agreement, and to the extent necessary to utilize
the Services, a non-transferable and non-exclusive right to use the computer
software systems (the "Software") set forth in Annex A to the extent permitted
by and in accordance with the terms and conditions of the applicable Service
Agreements.
Holdco and its subsidiaries operating the Business shall have
no rights in the Software not expressly granted hereby, including, but not
limited to any right to: alter the Software; create derivative works; distribute
or sublicense the Software to third parties; incorporate additional software
into the Software at the operating system level; incorporate the Software into
any publicly available database; reproduce the Software; or use the software for
any purpose other than as specified by this Agreement.
From time to time PHC may, but is not obligated to, update the
Software at no additional charge to Holdco. In such event, Holdco will
discontinue use of the
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then-current version of the Software within 60 days after its receipt of the
updated Software and substitute the updated version of such Software in
accordance with any installation guidelines provided by PHC.
2. Billing and Payment. At the end of each calendar month
during the Transition Period, PHC shall submit to Holdco a bill or invoice
setting forth the Service Fees and Charges for Services provided by PHC or its
Affiliates during the immediately preceding month. Holdco shall pay all bills
and invoices that it receives from PHC or its Affiliates for the Services
provided under or pursuant to this Agreement within thirty (30) calendar days of
receipt of such bill or invoice. All payments will be made by wire transfer or
by check in accordance with the instructions provided in writing by PHC.
3. General Intent. PHC shall use its reasonable best efforts
to provide the Services it is to provide that are set forth on Annex A attached
hereto and such other transition services and assistance as the parties may
otherwise agree (with respect to such additional services, at a cost and for
such period as is mutually agreed). Holdco agrees to use its reasonable best
efforts to end its need to use such assistance as soon as reasonably possible
and (unless the parties otherwise agree) in all events to end such need with
respect to each Service specified in Annex A attached hereto not later than the
first anniversary of the date hereof; provided, however, that if PHC is not
permitted, by the terms of its Agreements with third parties relating to the
Services, to provide any of the Services hereunder for the entire Term, then
such Service or Services shall only be provided by PHC to the extent, and for
the period of time permitted by, such Agreement.
4. Validity of Documents. The parties hereto shall be entitled
to rely upon the genuineness, validity or truthfulness of any document,
instrument or other writing presented in connection with this Agreement unless
such document, instrument or other writing appears on its face to be fraudulent,
false or forged.
5. Term of Agreement. The term of this Agreement (the "Term")
shall commence on the date hereof and shall continue (unless sooner terminated
pursuant to the terms of Section 6 hereof) for a period of one year or, with
respect to any of the Services, such shorter period as may be permitted under
the terms of third-party agreements relating to such Services. It is understood
that Services provided in accordance with the Keane Agreement may not exceed a
period of six months under the terms of the Keane Agreement unless otherwise
agreed upon by Keane.
6. Partial Termination. The provision of one or more of the
Services provided by PHC and/or its Affiliates hereunder may be terminated by
Holdco earlier than the first anniversary of the date hereof, on not less than
sixty (60) days' prior written notice to PHC. Such termination shall be final as
of such sixtieth day or other later date specified in the applicable notices
only with respect to the Service(s) so terminated and the remainder of the
Services shall continue to be provided in accordance
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with the terms of this Agreement, including Annex A hereto, for the remainder of
the Term.
7. Assignment. This Agreement shall not be assignable or
otherwise transferable by any party hereto, other than to its affiliates,
without the prior written consent of the other party hereto provided that Holdco
shall be permitted to assign its rights hereunder to the financing sources of
Holdco with respect to the financing of the transactions contemplated by the
Recapitalization Agreement and provided that PHC shall be permitted to assign
its rights and obligations hereunder to any person or entity that acquires
substantially all the business and assets of PHC, whether by merger,
consolidation, sale of stock or assets or otherwise.
8. Confidentiality. Each party shall, and shall cause each of
its Affiliates and each of their officers, directors and employees to, hold all
confidential or proprietary information relating to (i) the Services or (ii) the
business of the other party disclosed to it by reason of this Agreement
confidential and will not disclose any of such information to any party unless
legally compelled to disclose such information; provided, however, that to the
extent that any of them may become so legally compelled they may only disclose
such information if they shall first have used reasonable efforts, to have
afforded the other party the opportunity to obtain an appropriate protective
order or other satisfactory assurance of confidential treatment for the
information required to be so disclosed.
9. Limitation of Liability. PHC shall not be liable to Holdco
or any third party (including specifically affiliates or employees of Holdco)
and Holdco shall not be liable to PHC or any third party (including specifically
affiliates or employees of PHC) for any special, punitive, consequential,
incidental or exemplary damages (including lost or anticipated revenues or
profits relating to the same) arising from any claim relating to this Agreement
or any of the services provided hereunder, whether such claim is based on
warranty, contract, tort (including negligence or strict liability) or
otherwise, even if an authorized representative of PHC or Holdco, as applicable,
is advised of the possibility or likelihood of the same. In addition, PHC shall
not be liable to Holdco or any third party (including specifically employees of
Holdco) for any damages arising from any claim relating to this Agreement or any
of the Services provided hereunder or required to be provided hereunder, except
to the extent that such damages are caused by the willful misconduct or gross
negligence of PHC or its Affiliates, as applicable.
10. Indemnification.
(a) To the fullest extent permitted by law, from and
after the date hereof Holdco shall indemnify and hold PHC harmless, including
PHC's Affiliates, shareholders, directors, officers, employees, agents, and
other representatives (collectively, the "PHC Indemnitees"), from and against
any and all damages (including exemplary damages and penalties, losses,
deficiencies, costs, expenses, obligations,
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fines, expenditures, claims and liabilities, reasonable counsel fees and
reasonable expenses of investigation, defending and prosecuting litigation
(collectively, the "Damages") suffered by any PHC Indemnitee, arising out of,
resulting from, or related to this Agreement, the Services provided hereunder,
or its actions in relation thereto, including Damages alleged or caused to third
parties, unless such Damages are the result of PHC's gross negligence or willful
misconduct.
(b) To the fullest extent permitted by law, from and
after the date hereof PHC shall indemnify and hold Holdco harmless, including
Holdco's Affiliates, shareholders, directors, officers, employees, agents, and
other representatives (collectively, the "Holdco Indemnitees"), from and against
any and all Damages suffered by a Holdco Indemnitee arising out of, resulting
from, or related to this Agreement, the Services provided hereunder, or its
actions in relation thereto, including Damages alleged or caused to third
parties, but only to the extent such Damages are caused by PHC's gross
negligence or willful misconduct.
11. Notices. All notices, reports and receipts shall be in
writing and shall be deemed duly given on (i) the date of personal or courier
delivery; (ii) the date of transmission by telecopy or other electronic
transmission service, provided a confirmation copy is also sent no later than
the next business day by postage paid, return receipt requested first-class
mail; or (iii) three (3) business days after the date of deposit in the United
States mails, by postage paid, return receipt requested first-class mail,
addressed as follows:
if to Holdco, to:
c/o: Joseph, Littlejohn & Levy
450 Lexington Avenue
New York, NY 10017
Attention: Jeffrey Lightcap
Facsimile: (212) 286-8686
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899
Attention: Robert B. Pincus, Esq.
Facsimile: (302) 651-3001
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if to PHC, to:
Paracelsus Healthcare Corporation
515 W. Greens Road
Suite 800
Houston, TX 77067
Attention: James VanDevender
Facsimile: (281) 774-5200
with a copy to:
Mayor, Day, Caldwell, Keeton, LLP
700 Louisiana, Suite 1900
Houston, TX 77002-2778
Attention: Diana M. Hudson, Esq.
Facsimile: (713) 225-7047
Either party may change its address by written notice to the
other party in accordance with this Section 11.
12. Modification; Nonwaiver. No alleged waiver, modification
or amendment to this Agreement or to Annex A or Annex B attached hereto shall be
effective against either party hereto, unless in writing, signed by the party
against which such waiver, modification or amendment is asserted, and referring
specifically to the provision hereof alleged to be waived, modified or amended.
The failure or delay of either party to insist upon the other party's strict
performance of the provisions in this Agreement or to exercise in any respect
any right, power, privilege or remedy provided for under this Agreement shall
not operate as a waiver or relinquishment thereof, nor shall any single or
partial exercise of any right, power, privilege or remedy preclude other or
further exercise thereof, or the exercise of any other right, power, privilege
or remedy; provided, however, that the obligations and duties of either party
with respect to the performance of any term or condition in this Agreement shall
continue in full force and effect.
13. Relationship of Parties. Except as specifically provided
herein, none of the parties shall act or represent or hold itself out as having
authority to act as an agent or partner of the other parties, or in any way bind
or commit the other party to any obligations. Nothing contained in this
Agreement shall be construed as creating a partnership, joint venture, agency,
trust or other association of any kind, each party being individually
responsible only for its obligations as set forth in this Agreement.
14. Force Majeure. If PHC or Holdco is prevented from
complying, either totally or in part, with any of the terms or provisions of
this Agreement by reason of fire, flood, storm, strike, lockout or other labor
trouble, any law, order, proclamation,
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regulation, ordinance, demand or requirement of any governmental authority,
riot, war, rebellion or other causes beyond the reasonable control of PHC or
Holdco, or other acts of God, then upon written notice to PHC or Holdco, as
applicable, the affected provisions and/or other requirements of this Agreement
shall be suspended during the period of such disability and PHC shall have no
liability to Holdco and Holdco shall have no liability to PHC, as applicable, or
any other party in connection therewith. PHC or Holdco, as applicable, shall
make all commercially reasonable efforts to remove such disability within thirty
(30) days of giving notice of such disability.
15. Interpretation. The headings and captions contained in
this Agreement and in Annex A and Annex B attached hereto are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. The use of the word "including" herein shall mean "including
without limitation."
16. Counterparts. This Agreement may be executed in one or
more counterparts (including by means of telecopied signature pages), all of
which shall be considered one and the same agreement, and shall become effective
when one or more such counterparts have been signed by each of the parties and
delivered to the other party.
17. Entire Agreement. This Agreement (including the Annex
attached hereto) and the Recapitalization Agreement and the Collateral
Agreements constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, between the parties with respect to
the subject matter hereof.
18. Severability. If any provision of this Agreement,
including any phrase, sentence, clause, section or subsection is inoperative or
unenforceable for any reason, such circumstances shall not have the effect of
rendering the provision in question inoperative or unenforceable in any other
case or circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative, or unenforceable to any extent whatsoever.
19. Governing Law. This Agreement shall be governed in all
respects, including as to validity, interpretation and effect, by the internal
laws of the State of Delaware, without regard to the conflicts of law principles
therein.
20. Annexes. Each of Annex A and Annex B attached hereto and
referred to herein is hereby incorporated in and made a part of this Agreement
as if set forth in full herein.
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IN WITNESS WHEREOF, the parties have caused this Transition
Services Agreement to be executed by their duly authorized representatives as of
the date and year first set forth above.
PARACELSUS HEALTHCARE CORPORATION
By: /s/ James G. VanDevender
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Name: James G. VanDevender
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Title: Chief Executive Officer
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PHC/PSYCHIATRIC HEALTHCARE CORPORATION
By: /s/ Frank Coyle
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Name: Frank Coyle
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Title: Secretary
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Annex A
SERVICES
"Services" shall mean the computer and data processing
services provided to the Business by PHC immediately prior to the date hereof
pursuant to the following software products, systems and services, in accordance
with the applicable Service Agreements:
A. Computer Software Systems/Services
- PATCOM Plus Patient Accounting Systems
- Patient Accounting
- ADT / Census
- Master Patient Index
- Patient Billing
- All Payor Logs
- Accounts Receivable Management System
- Medibase
- MediData
- Interface between CompuLAB and 3M Encoding
System (PC)
- LAWSON Financial Management System
- Accounts Payable
- General Ledger
- Payroll
- Human Resources
- Benefits
- Materials Management
- CompuLAB Clinical Lab Systems (Davis only)
- Network
- Utilize existing MCI Worldcom Frame
Relay Network necessary to access
the PATCOM Plus and LAWSON Systems.
B. Holdco and its subsidiaries operating the Business
will be granted access to PHC's computer hardware at
the Data Center for the purposes of utilizing the
Services.
C. PHC shall also provide Back-up Tape and Media and
Off-Site Storage for the Facilities Data processed.
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Annex B
Summary of Charges
In addition to the Service Fee, the following charges shall
apply in connection with the Services.
1. SYSTEM INITIALIZATION FEE. Holdco shall pay a one time
initialization fee of $2,000 per Facility promptly upon invoice.
2. TRAINING, SUPPORT AND ADDITIONAL FEES.
a) Reruns: Dayend $1,000.00
Monthend 2,000.00
b) Special Reports - PATCOM Plus 500.00
- LAWSON 500.00
c) Deinstallation Fee (per site) 1,500.00
d) Hourly Rate. The agreed hourly rate is $95.00 per hour.
e) Training and Support. PHC will provide training and
onsite support as requested by Holdco, at the agreed
hourly rate plus expenses.
3. ADDITIONAL USER DOCUMENTATION AND SUPPLIES. Additional user
documentation or supplies requested by Holdco will be provided at the current
cost to PHC to the extent such documentation or supplies are available.
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EXHIBIT 3.4
AMENDED AND RESTATED
BY-LAWS
OF
IASIS HEALTHCARE CORPORATION
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the
Corporation shall be in the City of Wilmington, County of New Castle, State of
Delaware.
Section 2. Other Offices. The Corporation may also have
offices at such other places both within and without the State of Delaware as
the Board of Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for
the election of directors or for any other purpose shall be held at such time
and place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors.
Section 2. Annual Meetings. The Annual Meetings of
Stockholders for the election of directors shall be held on such date and at
such time as shall be