EXHIBIT 10.4
Agreement Between the Shareholders
of
VHS Acquisition Subsidiary Number 5, Inc.
(a Delaware corporation)
This Agreement Between the Shareholders, made as of the ____
day of ___________, 2002, is by and between Vanguard Health
Financial Company, Inc., a Tennessee corporation ("VHFC"), and
Baptist Health System, a Texas non-profit corporation ("Baptist"
and, together with VHFC, the "Shareholders").
Recitals:
Whereas, pursuant to the Purchase and Sale Agreement, San
Antonio Partners, L.P., a Delaware limited partnership (the
"Partnership"), acquired substantially all of the assets and
properties owned by Baptist and its Affiliates constituting the
Hospitals;
Whereas, VHS Acquisition Subsidiary Number 5, Inc. (the
"Company") is the sole general partner of the Partnership; and
Whereas, the Shareholders of the Company desire to specify
and describe the rights and obligations of each of them with
respect to their interest in and the operation of the Company as
general partner of the Partnership.
Now, Therefore, in consideration of the premises and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree
as follows:
Agreement:
1. Certain Definitions.
The terms used in this Agreement with their initial letters
capitalized shall, unless the context otherwise requires, have
the meanings specified in this Article 1. The singular shall
include the plural, and each of the masculine, feminine and
neuter genders shall include the other genders, as the context
requires. References in this Agreement to articles or sections
are to be construed as references to articles or sections of this
Agreement, unless otherwise specified. Words such as "herein,"
"hereinafter," "hereof," "hereto," "hereby," and "hereunder,"
when used with reference to this Agreement, refer to this
Agreement as a whole, unless the context otherwise requires.
"Act" means the Delaware General Corporations Law, as
amended from time to time.
"Agreement" means this Agreement, as amended from time
to time pursuant to Section 5.2.
"Bankruptcy" means, as to any Person, the Person's
taking or acquiescing to the taking of any action seeking
relief under, or advantage of, any applicable debtor relief,
liquidation, receivership, conservatorship, bankruptcy,
moratorium, rearrangement, insolvency, reorganization or
similar law affecting the rights or remedies of creditors
generally, as in effect from time to time. For the purpose
of this definition, the term "acquiescing" shall include,
without limitation, the failure to file, within 30 days
after its entry, a petition, answer or motion to vacate or
to discharge any order, judgment or decree providing for any
relief under any such law.
"Baptist" means Baptist Health System, a Texas non-
profit corporation, and any successor thereto.
"Board of Directors" means the Board of Directors of
the Company.
"Capital Expenditure" means any expenditure that is
permitted to be capitalized under generally accepted
accounting principles consistently applied and under
Vanguard's policy for accounting for fixed assets.
"Cash-Out Merger" means a merger or consolidation of
Vanguard with or into, or a sale of all shares of capital
stock of Vanguard to, any Person other than a subsidiary of
Vanguard, in which the Vanguard Investment Securities are
required to be sold, converted into or exchanged for the
right to receive cash.
"Closing" means the consummation of the transactions
whereby Baptist becomes a Shareholder of the Company.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time (or any corresponding provisions
of succeeding law).
"Company" means VHS Acquisition Subsidiary Number 5,
Inc., a Delaware corporation.
"Control" means possession, directly or indirectly, of
the power to direct or cause the direction of the management
and policies of an entity whether through ownership of
voting securities, by contract or otherwise.
"Controlled Affiliate" means, with respect to any
Shareholder, any Person that directly or indirectly
controls, is controlled by, or is under common control with,
such Shareholder.
"Deemed Value" means (i) in the case of shares of
Preferred Stock, the liquidation value thereof, (ii) in the
case of Subordinated Notes, the original principal amount
thereof, (iii) in the case of shares of Vanguard common
stock issued upon conversion of any Preferred Stock, the
liquidation value of the shares of Preferred Stock so
converted, and (iv) in the case of shares of Vanguard common
stock issued upon conversion of any of the Subordinated
Notes, the original principal amount of Subordinated Notes
so converted.
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"Foundation" means Baptist Health System Foundation, a
Texas non-profit corporation [or the New Foundation].
"Hospitals" means the following hospitals located in
San Antonio, Texas: the Baptist Medical Center, a general
acute care hospital at 000 Xxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxx
00000; Northeast Baptist Hospital, a general acute care
hospital at 0000 Xxxxxxx Xxxxx, Xxx Xxxxxxx, Xxxxx 00000;
Southeast Baptist Hospital, a general acute care hospital at
0000 X. Xxxxxxxxxx, Xxx Xxxxxxx, Xxxxx 00000; North Central
Baptist Hospital, a general acute care hospital at 000
Xxxxxxx Xxx, Xxx Xxxxxxx, Xxxxx 00000; and St. Luke's
Baptist Hospital, a general acute care hospital at 0000
Xxxxx Xxxx Xxxxx, Xxx Xxxxxxx, Xxxxx 00000.
"Institute of Health Education" means an operating
division of the Company that provides allied professional
health training through its Schools of Professional Nursing,
Surgical Technology, Medical Imaging and Vocational Nursing.
"License Agreement" means the agreement between Buyer
and Seller of even date herewith, pursuant to which Baptist
has granted to the Company the right to use the name
"Baptist" and any derivatives including the word "Baptist"
in the conduct of the business of the Hospitals upon the
terms and conditions described therein.
"Minimum Investment" means the Shares issued to Baptist
at Closing and a number of Vanguard Investment Securities
having an aggregate Deemed Value of $17,641,800, provided
that if Vanguard has merged or been consolidated with or
into another Person pursuant to a Cash-Out Merger and
Baptist does not acquire replacement Vanguard Investment
Securities, then from and after the consummation of such
transaction, "Minimum Investment" means the Shares issued to
Baptist at Closing.
"Partnership" means San Antonio Partners, L.P., a
Delaware limited partnership and the owner and operator of
the Hospitals.
"Permitted Baptist Transferee" means (i) the
Foundation, (ii) any Person that acquires all or
substantially all of the membership interests of Baptist,
and (iii) any Person that acquires all or substantially all
of the assets and properties of Baptist.
"Permitted Vanguard Transferee" means any one or more
of (i) Vanguard, (ii) any Controlled Affiliate of Vanguard,
(iii) any Person that acquires all or substantially all of
the shares of capital stock of Vanguard and its Controlled
Affiliates (including without limitation by merger with or
consolidation into such other Person), (iv) any Person that
acquires all or substantially all of the assets and
properties of Vanguard and its Controlled Affiliates, and
(v) any Person who is a lender or other "Secured Creditor"
under and pursuant to the Principal Credit Agreement, as
more particularly described in the last paragraph of Section
3.5.
"Person" means any individual, partnership,
corporation, trust, limited liability company, or other
entity, or a government (domestic or foreign) or any agency
or political subdivision thereof.
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"Preferred Stock" means Vanguard Payable in Kind
Cumulative Redeemable Convertible Preferred Stock, Series B.
"Principal Credit Agreement" shall mean that certain
Credit Agreement, dated as of July 30, 2001, by and among
Vanguard, as borrower, the lenders from time to time party
thereto, Bank of America, N.A., as Administrative Agent, and
Wachovia Bank, National Association (formerly known as First
Union National Bank) and General Electric Capital
Corporation, as Co-Documentation Agents, as the same may be
amended, modified, extended, renewed, replaced, restated,
supplemented or refinanced from time to time, and includes
any agreement extending the maturity of, refinancing or
restructuring (including but not limited to including
additional borrowers or guarantors or increasing the amount
borrowed under such agreement) all or any portion of the
indebtedness under such agreement or any successor
agreements, whether or not with the same agent, trustee,
representative lenders or holders, and all notes,
guarantees, pledge agreements, security agreements,
mortgages and other instruments, agreements, certificates or
documents executed pursuant to any of the foregoing by
Vanguard or by the Company.
"Purchase and Sale Agreement" means the Purchase and
Sale Agreement dated as of October _, 2002, by and among
Baptist, The Baptist Health System Foundation, the
Partnership, and Vanguard.
"Qualified Offering" means a firm commitment
underwritten public offering of Vanguard's common stock
registered under the Securities Act of 1933, as amended,
with gross proceeds of not less than $50,000,000.
"Securities Act" means the Securities Act of 1933, as
amended.
"Shareholder" means Baptist, VHFC and any other Person
admitted as a shareholder pursuant to this Agreement, but
excluding any Person who ceases to be a shareholder of the
Company pursuant to this Agreement. "Shareholders" means all
of the Persons who are shareholders of the Company as
defined in this Section.
"Shares" means shares of the Company's common capital
stock now owned or subsequently acquired by any Shareholder.
"Subordinated Notes" means the Vanguard 8.18%
Convertible Subordinated Notes Due 2017.
"Vanguard" means Vanguard Health Systems, Inc., a
Delaware corporation, and any successor thereto.
"Vanguard Investment Securities" means the Preferred
Stock, the Subordinated Notes, any security or securities
into which either of the above instruments is converted or
for which either of the above instruments is exchanged, and
any securities issued in respect thereof in connection with
the payment of dividends or interest, or a stock split,
recapitalization or similar event, provided that if a Cash-
Out Merger occurs, then upon request of the Person to whom
Vanguard's capital stock is sold or with whom Vanguard
merges or is consolidated, Baptist shall reinvest an amount
of cash equal to the Minimum Investment in either (i)
publicly traded equity or debt securities of the Person to
whom Vanguard's capital stock is sold or with whom Vanguard
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merges or is consolidated, or (ii) if no such publicly
traded equity or debt securities are available, such other
securities that Baptist determines in its sole discretion
are a prudent investment of the Minimum Investment.
"VHFC" means Vanguard Health Financial Company, Inc., a
Delaware corporation, and any successor thereto.
2. Company Board of Directors; Hospital Board of Trustees;
Major Decisions.
2.1. Board of Directors. The Board of Directors of the Company
shall be comprised of seven members, four of whom shall be
nominated by VHFC and three of whom shall be nominated by
Baptist. Each of the Shareholders shall execute a consent, where
requested in the circumstances contemplated by this Section 2.1,
or vote its Shares at any annual or special meeting of
shareholders where action with respect to the election of
directors is to be taken, in such a manner as to give effect to
the provisions for Board of Directors' size and composition
specified above and in favor of the persons nominated by VHFC and
Baptist so as to give effect to the provisions of this Section.
Either Shareholder may revoke at any time the nomination of, and
may require the removal as a director of, a particular individual
nominated by it. If, as a result of death, disability,
retirement, resignation, removal or otherwise, there shall at any
time exist any vacancy on the Board of Directors, the Shareholder
entitled under this Section to nominate such individual whose
death, disability, retirement, resignation or removal resulted in
such vacancy may nominate another individual to fill such
capacity and serve as a director.
To effectuate the foregoing, each Shareholder further agrees
that:
(i) if, at any time, it is then entitled to vote for the
election of a director to fill a vacancy created under any of the
circumstances contemplated by the two immediately preceding
sentences, it will, promptly upon request by the Company or the
Shareholder entitled to fill such vacancy, vote all of its shares
or deliver a consent therefor, as the case may be, to elect the
individual nominated by the Shareholder entitled to fill such
vacancy under the provisions of this Section 2.1 and, for the
purposes hereof only and in consideration of the mutual promises
of the Shareholders hereunder, each such Shareholder hereby
irrevocably grants its proxy and a power of attorney to the
Shareholder entitled to fill such vacancy, or its designee, to
execute on its behalf and to deliver any ballot, proxy, consent
or other such instrument as the Shareholder entitled to fill such
vacancy under the provisions of this Section 2.1 deems necessary
or customary to fill such vacancy and effectuate such nomination
and election; and
(ii) if at any time, it is then entitled to vote for the removal
of directors of the Company, it will not vote any of its Shares
in favor of the removal of any director who shall have been
nominated pursuant to this Section unless the Shareholder
entitled to nominate such director shall have consented to such
removal in writing.
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2.2. Hospital Board of Trustees. The Company will cause the
Partnership to form one or more boards of trustees for the
Hospitals (the "Board of Trustees") composed of the Hospitals'
Chief Executive Officers and equal numbers of physicians on the
Hospitals' medical staff and community representatives, all in
accordance with Vanguard's policies and procedures and board of
trustee bylaws. Subject to applicable laws, regulations and
accreditation standards, the Board of Trustees will be
responsible for medical staff credentialing, quality assurance
and accreditation of the Hospitals. In its advisory capacity,
the Board of Trustees shall also review and advise the Board of
Directors on management's recommended capital budgets for the
Hospitals. The Board of Trustees will be comprised of between
five and 15 members appointed for terms of three years on a
staggered basis to provide continuity of leadership. Baptist or
the Foundation may nominate candidates for 50% of the seats of
each Board of Trustees up for selection in each year.
2.3. Major Decisions Requiring Approval of VHFC and Baptist.
Subject to the proviso below, so long as Baptist or any
Controlled Affiliate of Baptist owns the Minimum Investment, the
following decisions of the Company shall require the affirmative
approval of both VHFC and Baptist:
(i) The conduct of any business by the Company other than to act
as general partner of the Partnership;
(ii) The purchase or acquisition of a hospital that represents
20% or more of the fair value of the assets of the Partnership;
(iii) The sale or transfer of assets that represent 20% or
more of the fair value of the assets of the Partnership (other
than a transfer to Vanguard or any subsidiary of Vanguard,
subject to substantially similar transfer restrictions as are
provided for in this Agreement, for fair market value
consideration, as determined by a third party mutually acceptable
to the Shareholders);
(iv) The closure of any Hospital (or discontinuation of
operations as a general acute care hospital) or the Institute of
Health Education;
(v) The merger of the Company or the Partnership with or into,
or the consolidation of the Company or the Partnership with, any
other Person, or the dissolution of the Company or the
Partnership (other than a merger with or into, or consolidation
with, Vanguard or any subsidiary of Vanguard, subject to
substantially similar transfer restrictions as are provided for
in this Agreement, for fair market value consideration, as
determined by a third party mutually acceptable to the
Shareholders);
(vi) The Bankruptcy of the Company or the Partnership;
(vii) A change in the charity care policy or the policy on
therapeutic abortion and sterilization of the Hospitals;
(viii) The use of the name "Baptist" in connection with the
acquisition or development of any hospital or other healthcare
facility in Bexar County, Texas; and
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(ix) After the Closing, the issuance and sale to any Person of
Shares by the Company or of partnership interests by the
Partnership.
provided that notwithstanding the foregoing, (i) the Company may
take any action required by the Principal Credit Agreement,
including without limitation becoming a party and (as the sole
general partner of the Partnership) causing the Partnership to
become a party, to the Subsidiaries Guaranty and the Security
Documents (as such capitalized terms are defined in the Principal
Credit Agreement), without first obtaining the affirmative
approval of either VHFC or Baptist, and (ii) the board of
directors of the Company shall have the right at all times to
make all decisions necessary to ensure that Vanguard may
consolidate the financial results of the Company and the
Partnership with the other financial results of Vanguard in
accordance with generally accepted accounting principles and
applicable tax laws and regulations.
3. Restrictions on Transfer.
3.1. General Restriction. Neither Shareholder shall sell or
otherwise transfer any of the Shares held by it except in
accordance with the terms and conditions of this Agreement.
3.2. Compliance with Law. Each Shareholder shall not make any
disposition of all or any portion of the Shares unless and until
(i) there is then in effect a registration statement under the
Securities Act of 1933, as amended, covering such proposed
disposition and such disposition is made in accordance with such
registration statement, or (ii) such Shareholder shall have
notified VHFC and the Company of the proposed disposition, VHFC
shall have consented to such disposition, and if requested by the
Company, such Shareholder shall have furnished the Company with
an opinion of counsel reasonably satisfactory to the Company that
such disposition will not require registration of such Shares
under the Securities Act of 1933, as amended.
3.3. Subsequent Legislation. If Baptist is prohibited from
owning an interest in the Company or the Partnership as a result
of the enactment of any statute, regulation or other law, or the
judicial or administrative interpretation of any existing or
future statute, regulation or other law, VHFC will purchase all
Shares owned by Baptist and pay Baptist $358,200 for its Shares.
3.4. Subsequent Acts. If the rights or obligations of Baptist
under this Agreement are materially adversely affected by (X) any
decision by the Company to take or cause the Partnership to take
an action described in paragraphs (i) through (viii) of Section
2.3 without the affirmative approval of Baptist, including any
action required by the Principal Credit Agreement, other than the
granting of a mortgage or collateral security interest in the
assets of the Company, (Y) any foreclosure on or transfer of
assets that represent 20% or more of the fair value of the assets
of the Company or the Partnership as a result of the exercise by
the lenders or other "Secured Creditors" (as defined in the
Principal Credit Agreement) of their rights under the Principal
Credit Agreement, or (Z) any amendment of this Agreement
resulting from or arising out of Vanguard's need to consolidate
the financial results of the Company or the Partnership with the
other financial results of Vanguard, then Baptist may, upon
written notice to VHFC, cause VHFC to purchase all Shares owned
by Baptist and pay Baptist $358,200 for its Shares.
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3.5. Sale of VHFC Shares; Tag Along. For seven years after the
date hereof, VHFC shall not sell or otherwise transfer all or
substantially all of its Shares other than to a Permitted
Vanguard Transferee. If thereafter VHFC proposes to sell part or
all of its Shares other than to a Permitted Vanguard Transferee,
it shall so notify Baptist (specifying the identity of the
prospective purchaser, the proposed purchase price, the date of
the closing, and all other relevant information) and Baptist may
elect, by notice to VHFC given within ten days from the date of
the notice, either (i) to sell all of its Shares, in which event
VHFC shall cause the proposed purchaser to purchase all Baptist
Shares, simultaneously with the sale by VHFC, at the same price
per Share and on the same terms (the "Tag Along Right"), or (ii)
to purchase all of VHFC's Shares proposed for sale to the third
party, upon the same terms and conditions offered by the third
party (the "Preemption Right"). VHFC shall be deemed to propose a
sale of all of its Shares within the meaning of this Section upon
the proposed sale of shares of capital stock in any corporation
that, directly or indirectly, owns the capital stock of VHFC
other than pursuant to a transaction with a Permitted Vanguard
Transferee.
VHFC shall cause the third party offer to be reduced to
writing and shall give written notice (the "Sale Transfer
Notice") of such offer to Baptist. The Sale Transfer Notice
shall contain a written description of the proposed sale or
transfer of VHFC's rights pursuant to this Section, setting forth
the consideration to be paid by the third party and the other
terms and conditions of the third party offer. If Baptist
desires to exercise either the Tag Along Right or the Preemption
Right, it shall notify VHFC of its election on or before 30 days
after the Sale Transfer Notice is given.
If Baptist exercises the Tag Along Right, then on or before
ten business days prior to the expected closing date (the
"Expected Closing Date") of the transaction, Baptist shall
deliver to VHFC all documents required to be executed in
connection with such Sale Transfer Notice. In the event that
Baptist fails to deliver any of such documents, VHFC may, in
addition to any other rights or remedies available at law or in
equity, (i) consummate the transaction without Baptist's Shares
or (ii) cause the books and records of the Company to show that
the Shares of Baptist are bound by the provisions of this Section
and that such Shares shall be deemed to have been transferred to
the third party, and no consideration therefore shall be
delivered to Baptist until such documents shall be delivered.
If Baptist exercises the Preemption Right, then VHFC and
Baptist shall negotiate in good faith for 30 days thereafter the
terms and conditions of a definitive agreement containing the
principal terms and conditions described in the third party
offer, but otherwise containing substantially the same terms and
conditions as the Purchase and Sale Agreement, provided that any
representations and warranties of VHFC about the Hospitals shall
relate to VHFC's period of ownership only. If the third party
offer includes any non-cash consideration, Baptist may elect
under the definitive agreement to pay cash in an amount equal to
the fair market value of the non-cash consideration. The
definitive agreement shall provide that the closing of the
transaction shall be held within ten business days following the
date upon which the last material consent or approval of any
governmental authority required in connection with the sale of
the Shares is obtained, subject to reasonable extensions mutually
acceptable to Baptist and VHFC, provided that in no event shall
the closing be later than, and the definitive agreement shall
expire, 120 days after execution of the definitive agreement.
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If (i) Baptist and VHFC fail to execute a definitive
agreement within 30 days after Baptist's election of the
Preemption Right, or (ii) Baptist and VHFC execute a definitive
agreement, but Baptist fails to purchase the Shares prior to the
expiration of the definitive agreement, then VHFC may (but shall
not be obligated to) sell its Shares within 180 days after the
event described in clause (i) or (ii) above fails to occur, as
the case may be. If the sale to the purchaser of the Shares does
not occur pursuant to this paragraph before such 180th day, then
the provisions of this Section 3.5 shall apply anew with respect
to the sale of such Shares thereafter.
The provisions of this Section shall not apply to the
granting from time to time of pledges and collateral assignments
of the Shares by VHFC and its Controlled Affiliates to secure
indebtedness and/or guarantees to the lenders and other "Secured
Creditors" (as defined in the Principal Credit Agreement) under
the Principal Credit Agreement from time to time if and to the
extent required by such Persons, and to the full exercise by such
Persons of their rights under the agreements and instruments
constituting or relating to such pledges and collateral
assignments, provided that if the lenders and other Secured
Creditors exercise such rights under the agreements and
instruments constituting or relating to such pledges and
collateral assignments, then Baptist may, upon written notice to
the holder or holders of VHFC's Shares given within 90 days
thereafter, cause such holder to purchase all Shares owned by
Baptist and pay Baptist $358,200 for its Shares.
3.6. Purchase and Sale of Baptist Shares Upon Sale of Vanguard
Investment Securities or Termination of License Agreement. If
Baptist or its Affiliates no longer owns the Minimum Investment,
Baptist shall promptly notify VHFC of such fact, whereupon VHFC
shall buy and Baptist shall sell all of the Shares owned by
Baptist. If Baptist terminates the License Agreement pursuant to
its right to do so under section 8(c) of the License Agreement,
VHFC shall buy and Baptist and its transferees, if any, shall
sell all of the Shares owned by them. The purchase price for the
Shares pursuant to this Section shall be $358,200.
3.7. Right of First Refusal upon Sale of Baptist Shares. If
Baptist proposes to sell part or all of its Shares to a third
party other than a Permitted Baptist Transferee, it shall so
notify VHFC (specifying the identity of the prospective
purchaser, the proposed purchase price, the date of the closing,
and all other relevant information) and VHFC may elect, by notice
to Baptist given within ten days after the date of the notice, to
purchase the Shares proposed to be sold upon the terms and
conditions set forth in the third party offer, provided that if
the third party offer includes any non-cash consideration, VHFC
may pay the cash value of such non-cash consideration. If VHFC
does not exercise its right of first refusal within the ten-day
period provided above, then the privilege herein given of right
of first refusal shall thereafter be null and void as to such
offer to purchase only, and Baptist shall be at liberty to sell
the Shares to the third party on the terms and conditions offered
to VHFC, so long as such sale is completed within 90 days after
the expiration of VHFC's ten-day period to respond. Such sale,
however, shall be made subject to this Agreement and all of the
terms, covenants and conditions of this Agreement. In the event
of such a sale, or in the event of a sale of its Shares to a
Permitted Baptist Transferee, VHFC, Baptist (if it continues to
hold any Shares) and the Permitted Baptist Transferee shall
execute a new shareholders' agreement on the same terms and
conditions contained herein (or an amendment to this Agreement).
Any material change in the terms of the third party offer shall
again subject the offer to the right of first refusal described
in this Section.
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3.8. Legend. Each certificate representing Shares now or
hereafter owned by the Shareholder or issued to any Person in
connection with a transfer pursuant to this Agreement shall be
endorsed with the following legend:
THE SECURITIES REPRESENTED HEREBY (a) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (b) ARE
SUBJECT TO AN AGREEMENT BETWEEN THE SHAREHOLDERS OF THE
COMPANY DATED __________, 2002 AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED EXCEPT IN COMPLIANCE THEREWITH.
Each Shareholder acknowledges that the Company will instruct its
transfer agent to impose transfer restrictions on Shares
represented by certificates bearing the above legend to enforce
the provisions of this Agreement.
4. Subscription for Shares.
4.1. Subscription. Each Shareholder hereby subscribes for the
number of Shares set forth across from its name on the signature
page hereof and hereby tenders for payment therefor the
consideration set forth herein; the subscription by Baptist shall
be deemed satisfied as a portion of the consideration for the
sale of the Hospitals to the Company pursuant to the Purchase and
Sale Agreement. The execution and delivery by each Shareholder
of this Agreement shall be deemed to constitute the assignment to
the Company of all subscription consideration and the acceptance
by the Company of such tender.
4.2. Private Offering of Shares. The Shareholders acknowledge
that the Shares are being offered and sold without registration
under the Securities Act or any state securities laws. Each
Shareholder hereby represents, warrants and certifies that it is
an "accredited investor" under the rules promulgated under the
Securities Act and has the ability to bear the risks of an
investment in the Company, that it was solicited to invest in the
Company privately and did not become aware of, or obtain
information regarding, the offering of Shares in the Company as a
result of: any advertisement, article, notice or other
communication published in any newspaper, magazine or similar
media or broadcast over television or radio; any seminar or
meeting attended by the Shareholder or other potential investors;
or any other form of general solicitation or general advertising.
4.3. No Endorsement. Each Shareholder is aware that no federal
or state regulatory agency has made any finding or determination
as to the fairness of the Shares as an investment or any
recommendation or endorsement of the purchase of the Shares as an
investment.
4.4. Sophisticated Investor. Each Shareholder acknowledges that
it has knowledge and experience in financial and business
matters, in general, and this investment in particular, to be
capable of evaluating the risks and merits of an investment in
the Company. The Shareholders recognize the speculative nature
and risk of loss associated with this investment and that
Shareholders may suffer complete loss of their investments. The
Shareholders have an overall commitment to investments which are
not readily marketable and which are not disproportionate to the
Shareholders' net worth, and the Shareholders' investment in the
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Company will not cause such overall commitment to become
excessive. The investment in the Company constitutes an
investment which is suitable and consistent with the
Shareholders' investment programs and which enables the
Shareholders to bear the risks of this investment. Each
Shareholder represents that it has adequate resources to provide
for its current needs and contingencies and has no need for
liquidity in this investment.
4.5. No History of Operations. The Shareholders confirm that the
Company has only recently been formed and does not have any
financial or operating history, that the investment in the
Company is a speculative investment involving a high degree of
risk of loss and that there will not be now, nor may there ever
be, a public market for this investment. Accordingly, it may be
difficult or impossible to liquidate this investment in case of
an emergency.
4.6. Access to Information. The Shareholders confirm that, prior
to making their investment decision, the Company has given the
Shareholders and their advisors the opportunity to examine all
documents, including the Company's Certificate of Incorporation
and Bylaws and to ask questions of and receive answers from the
Company.
5. Miscellaneous.
5.1. Capital Contributions. Except for the consideration for
the Shares described on the signature page of this Agreement, no
Shareholder shall be obligated to make any contributions to the
capital of the Company.
5.2. Recourse. No guaranty by the Company or the Partnership of
any debt of VHFC or its Controlled Affiliates shall be recourse
to Baptist, except against and to the extent of Baptist's equity
in the Company.
5.3. Governing Law. This Agreement, and the rights of the
parties hereto, shall be governed by and construed under the laws
of the State of Delaware, without regards to the conflict of law
provisions of such state.
5.4. Amendment. This Agreement may be amended by a written
instrument duly executed by the parties hereto. The observance
of any provision of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only by the written consent of the party entitled
to the benefit of such provision. Each Shareholder shall execute
any amendment to this Agreement necessary to ensure that Vanguard
may consolidate the financial results of the Company and the
Partnership with the other financial results of Vanguard in
accordance with generally accepted accounting principles and
applicable tax laws and regulations.
5.5. Entire Agreement; Successors and Assigns. This Agreement
constitutes the entire agreement between the parties relative to
the subject matter hereof, and all prior agreements relative
hereto which are not contained herein are terminated. This
Agreement and the rights and obligations of the parties hereunder
shall inure to the benefit of and be binding upon their
respective successors, assigns and legal representatives.
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5.6. Notices. All notices required or permitted hereunder shall
be in writing and shall be deemed effectively given: (i) upon
personal delivery to the party to be notified; or (ii) one day
after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of
receipt. All communications shall be sent to a Shareholder at
the address as set forth on the signature page hereof or at such
other address as such Shareholder may designate by ten days'
advance written notice to the other Shareholder.
5.7. Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance shall, for any
reason and to any extent, be invalid or unenforceable, but the
extent of such invalidity or unenforceability does not destroy
the basis of the bargain among the Shareholders as expressed
herein, the remainder of this Agreement and the application of
such provision to other Persons or circumstances shall not be
affected thereby, but rather shall be enforced to the greatest
extent permitted by law.
5.8. Attorneys' Fees. In the event that any dispute among the
parties to this Agreement should result in litigation, the
prevailing party in such dispute shall be entitled to recover
from the losing party all fees, costs and expenses of enforcing
any right of such prevailing party under or with respect to this
Agreement, including without limitation reasonable fees and
expenses of attorneys and accountants and all fees, costs and
expenses of appeals.
5.9. Construction. Every covenant, term, and provision of this
Agreement shall be construed simply according to its fair meaning
and not strictly for or against any Shareholder. The failure by
any party to enforce any term or provision hereof specifically or
any rights of such party hereunder shall not be construed as the
waiver by that party of its rights hereunder. The waiver by any
party of a breach or violation of any provision of this Agreement
shall not operate as, or be construed to be, a waiver of any
subsequent breach of the same or other provision hereof.
5.10. Time. Time is of the essence with respect to this
Agreement.
5.11. Further Assurances. Each Shareholder shall perform all
further acts and execute, acknowledge and deliver any documents
that may be reasonably necessary, appropriate or desirable to
carry out the provisions of this Agreement.
5.12. Section Headings. The section headings appearing in
this Agreement are for convenience of reference only and are not
intended, to any extent or for any purpose, to limit or define
the text of any section.
5.13. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
5.14. Principal Credit Agreement. VHFC represents to Baptist
that the provisions of this Agreement have been approved to the
extent required, and are permitted, under the Principal Credit
Agreement as of the date hereof and agrees that, except with
Baptist's prior written consent, the provisions of any amendment,
modification, renewal, replacement, restatement or refinancing of
or supplement to the Principal Credit Agreement shall be no less
favorable to Baptist than the provisions of the Principal Credit
Agreement as in effect on the date hereof.
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In Witness Whereof, this Shareholders' Agreement is executed
as of the date above written.
Shareholder Number of Shares Consideration
Vanguard Health Financial ____________ $1,441,800
Company, Inc.
By:______________________________
Title:___________________________
Baptist Health System ____________ $358,200
By:______________________________
____________
Title:___________________________
Total ____________ $1,800,000
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