AMENDMENT TO ASSET PURCHASE AGREEMENT
Exhibit 2.3
AMENDMENT TO
THIS AMENDMENT TO ASSET PURCHASE AGREEMENT (this “Amendment”) is made and entered into
as of October 29, 2010 by and between ST. DAVID’S HEALTHCARE PARTNERSHIP, L.P., LLP, a Texas
limited liability limited partnership (“St. David’s”), and HEART HOSPITAL IV, L.P., a Texas
limited partnership (“MedCath Party”).
RECITALS:
WHEREAS, St. David’s and MedCath Party, are parties to that certain Asset Purchase Agreement,
dated as of February 16, 2010, as amended (as amended, the “Purchase Agreement”);
WHEREAS, Section 13.17 of the Purchase Agreement provides that the Purchase Agreement may be
amended only by a written instrument signed by all parties to the Purchase Agreement; and
WHEREAS, St. David’s and MedCath Party desire to amend the Purchase Agreement in accordance
with Section 13.17 therein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises,
representations, warranties, and covenants hereinafter set forth 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. Capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Purchase Agreement.
2. Article 1. Article 1 of the Purchase Agreement is hereby amended by adding the
following defined terms:
“Fundamental Representations” has the meaning set forth in Section 12.3(b)
“Indemnification Provisions” has the meaning set forth in Section 12.10(a).
3. Section 5.14. The third sentence of Section 5.14 is hereby deleted and replaced
with the following sentence:
“All of such policies are now and will be until the Closing in full force and
effect with no premium arrearages. All of such policies are maintained on an
occurrence basis (with the exception of the Hospital’s professional liability
insurance, pollution liability insurance, employment practices liability
insurance, directors and officers liability insurance and fiduciary liability
insurance, all of which are on a claims made basis, and crime liability insurance
which is on a discovery basis).”
4. Section 10.3(c). Section 10.3(c) of the Purchase Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
(i) Any applicable employee of MedCath Party and its Affiliates identified as
a current or former participant (and any eligible dependent thereof) who is
eligible to receive continuation coverage (within the meaning of Code Section 4980B
and Part 6 of Subtitle B of Title 1 of ERISA, “Continuation Coverage”) will
remain covered through MedCath Party’s COBRA provider.
(ii) MedCath Party and its Affiliates shall offer Continuation Coverage
effective as of the Closing for health (which includes vision) and dental to all
MedCath Party Continuing Employees (and all eligible dependents thereof). St.
David’s shall pay to MedCath Party, on behalf of the Continuing MedCath Party
Employees who elect Continuation Coverage (the “Electing Employees”), one
hundred percent of the premiums (the “Premiums”) for such Continuation
Coverage for the months of November 2010 and December 2010 (the “COBRA
Transition Period”). The amount of the Premiums shall be determined in
accordance with applicable Law except the permissible 2% COBRA administrative fee
shall be excluded. Additionally, St. David’s shall pay to MedCath Party (a) an
amount equal to the benefits paid by MedCath Party for Continuation Coverage claims
incurred by the Electing Employees during the COBRA Transition Period in excess of
the aggregate amount of (x) Premiums paid by St. David’s on behalf of the Electing
Employees for the COBRA Transition Period and (y) stop-loss reimbursements received
by MedCath Party in respect of such paid claims, (b) the stop-loss indemnity
premiums (not to exceed $13,500 per month) paid by MedCath Party during the COBRA
Transition Period with respect to Continuation Coverage for the Electing Employees
and (c) an administrative fee in the amount of Ten Thousand Dollars ($10,000) per
month for the months of November 2010 through and including the month of June 2011.
The stop-loss indemnity premiums shall not be taken into consideration in the
determination of the Premiums. The stop-loss indemnity coverage to be maintained
by MedCath Party is described in Schedule 1 hereto.
(iii) MedCath Party shall deliver to St. David’s an invoice for the monthly
administrative fee and the aggregate amount of Premiums payable in respect of the
Electing Employees for the month of November 2010 after MedCath Party has
determined the number of MedCath Party Continuing Employees who have elected to
become Electing Employees. St. David’s shall pay such invoice within five (5) days
after receipt of same. In addition, MedCath Party shall deliver to St. David’s an
invoice for the monthly administrative fee and the aggregate amount of Premiums
payable in respect of the Electing
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Employees for the month of December 2010 on December 1, 2010. St. David’s
shall pay such invoice within five (5) days after receipt of same. MedCath Party
shall deliver to St. David’s an invoice for its administrative fee for the months
of January 2011 through June 2011 on the first day of each month and St. David’s
shall pay such invoice within five (5) days after receipt of same.
(iv) On or before the end of each calendar month from and after the Closing
Date commencing in December 2010 through and including June 2011 MedCath Party
shall provide St. David’s with a schedule of all benefits paid by MedCath Party
during the immediately preceding month for claims incurred by the Electing
Employees during the COBRA Transition Period. Concurrently therewith, MedCath
Party shall deliver to St. David’s an invoice reflecting the amount, if any, by
which the aggregate amount of benefits paid by MedCath Party for claims incurred by
the Electing Employees during the COBRA Transition Period exceeds the aggregate
amount of (a) the Premiums paid by St. David’s on behalf of the Electing Employees
and (b) stop-loss reimbursements received by MedCath Party in respect of such paid
claims. Except as provided below, St. David’s shall pay MedCath Party the amount
reflected on such invoice on or before the fifth (5th) day after such
invoice is received by St. David’s. If St. David’s disputes any amounts reflected
on such invoice, St. David’s shall pay the undisputed amount to MedCath Party, and
the disputed amount shall be resolved as provided in Section 10.3(c)(v) hereof. In
the event that the aggregate amount of (c) the Premiums paid by St. David’s on
behalf of the Electing Employees and (d) stop-loss reimbursement received by
MedCath Party relating to claims paid in respect of the Electing Employees exceeds
the aggregate amount of benefits paid by MedCath Party through and including the
month of May 2011 for claims incurred by the Electing Employees during the COBRA
Transition Period, MedCath Party shall tender an amount equal to such excess to St.
David’s on or before June 30, 2011. In the event MedCath Party pays after June 30,
2011 any claims incurred by the Electing Employees during the COBRA Transition
Period that are not reimbursed by stop-loss coverage, St. David’s shall pay such
amount within twenty (20) days after receipt of an invoice and supporting
documentation for such amount.
(v) In the event that St. David’s disputes or questions any of MedCath Party’s
amounts reflected to be due on an invoice received from MedCath Party, St. David’s
shall so notify MedCath Party in writing (with particularity as to the amounts in
dispute and the reasons therefor) within twenty (20) days after receiving the
corresponding MedCath Party invoice. If St. David’s does not so notify MedCath
Party in writing of a dispute within such twenty (20) day period, St. David’s may
not thereafter dispute such invoice and shall be deemed to have agreed to and
accepted such invoice. Subject to compliance with applicable law regarding the
confidentiality of medical records and protected health information, MedCath Party
shall, upon written notice by St. David’s, promptly grant St. David’s or its
representatives access to the documentation supporting the amounts reflected on
MedCath Party’s invoices and the schedule of claims paid. Within thirty (30) days
after the receipt of such access, St. David’s shall
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notify MedCath Party of the amounts, if any, still in dispute, and the parties
shall work in good faith to resolve any such disputes informally. If St. David’s
does not so notify MedCath Party in writing within such thirty (30) day period, St.
David’s may not thereafter dispute the invoice in question and shall be deemed to
have agreed to and accepted such invoice. Any disputes that cannot be resolved
within such thirty (30) day period shall be addressed pursuant to Section 13.3(b)
of this Agreement.
(vi) Payments due from St. David’s shall be made by wire transfer to MedCath
Party’s bank account, as follows:
Bank Name:
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Bank of America, N.A. | |
ABA Number:
|
XXXX | |
Account Name:
|
MedCath Incorporated | |
Account Number:
|
XXXX | |
Contact Information:
|
Xxxxxxx Xxxxx Assistant Corporate Controller MedCath Incorported 00000 Xxxxx Xxxxx, Xxxxx 000 Xxxxxxxxx, XX 00000 Telephone: (000) 000-0000 Facsimile: (000) 000-0000 Email: xxxxxxx.xxxxx@xxxxxxx.xxx |
(vii) MedCath Party shall cause the applicable claims administrators providing
health and dental coverage (a) to treat the MedCath Party Continuing Employees as
“paid-in-full” COBRA participants for purposes of coverage during the months of
November and December and (b) not to terminate coverage after the Closing Date on
any of the MedCath Party Continuing Employees who remain employed with an affiliate
of St. David’s through the end of the COBRA Transition Period.
5. Section 11.2(a)(ii). Subclause (ii) of Section 11.2(a) of the Purchase Agreement
is hereby amended by deleting it in its entirety and replacing it with the following:
“(ii) by St. David’s or MedCath Party at any time after December 31, 2010 (the
“Drop Dead Date”), if the Closing shall not have occurred by such date; provided,
that the right to terminate this Agreement under this Section 11.2(a)(ii) shall not be
available to any party whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of the Closing to occur by such date;”
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6. Section 12.1. Section 12.1 of the Purchase Agreement is hereby amended by deleting
the word “and” as it appears after the word “Liabilities,” on the ninth line of Section 12.1 and
adding the following after the word “hereunder” on the last line of Section 12.1:
“, and (v) the absence of either an assignment by the MedCath Party to St.
David’s of that certain Participation Agreement between United Healthcare Insurance
Company (“United”) and Heart Hospital of Austin effective June 1, 2009 (the “United
Agreement”), or United’s refusal, after written notice from the MedCath Party, to
terminate the United Agreement as of the Closing Date.”
7. Section 11.14. Section 11.14 of the Purchase Agreement is hereby amended by
deleting the third sentence of Section 11.14 and replacing it with the following:
“The term of each MedCath Transition Services Agreement shall be through March
31, 2011; provided that St. David’s and its Affiliates shall have the right to
terminate each such agreement without cause at any time by providing written notice
to MedCath Party at least sixty (60) days in advance of the desired termination
date.”
8. Section 12.3(b). Section 12.3(b) of the Purchase Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
“(b) The liability of MedCath Party for indemnification (i) under Section
12.2(i) shall be limited to an amount equal to Twelve Million One Hundred Fifty
Thousand Dollars ($12,150,000) provided such limitation shall not apply to a breach
of a representation or warranty set forth in the last sentence of Section 5.1, in
the first two sentences of Section 5.12(a) or in Section 5.13 (such representations
and warranties, the “Fundamental Representations”) and (ii) under all of
Section 12.2 (including any inaccuracy or breach of any of the Fundamental
Representations) shall be limited to an amount equal to the Final Cash Payment. The
limitations in this Section 12.3(b) shall not apply in respect of any claims
relating to fraud by MedCath Party.”
9. Section 12.5. Section 12.5 of the Purchase Agreement is hereby amended by deleting
it in its entirety and replacing it with the following:
“12.5 Survival. The representations and warranties contained in or
made pursuant to this Agreement (other than those set forth in the last sentence of
Section 4.1 and other than the Fundamental Representations, each of which shall
survive until the expiration of the applicable statute of limitations) shall survive
the Closing until May 1, 2011 (the “Survival Period”). The parties intend
to shorten the statute of limitations and agree that no claims or causes of action
(other than those (A) relating to fraud by a party, (B) that are permitted by
Section 12.10 or (C) relating to breaches of Section 4.1 or any Fundamental
Representation) may be brought against St. David’s or MedCath Party based upon,
directly or indirectly, any of the representations or warranties contained in this
Agreement or any agreements contained in Article 6 or Article 7 after the
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expiration of Survival Period. For avoidance of doubt, (i) the covenants and
agreements of MedCath Party and St. David’s herein (other than those set forth in
Articles 6 or 7) and claims or causes of action for fraud or breaches of any
covenants and agreements hereunder (other than those set forth in Articles 6 or 7)
shall survive beyond the Survival Period until the expiration of the applicable
statute of limitations and (ii) claims or causes of action for breaches of any of
the Fundamental Representations shall survive beyond the Survival Period until the
expiration of the applicable statute of limitations, and the parties shall be
entitled to assert claims and bring causes of actions against each other in respect
of any of the foregoing subsequent to the expiration of the Survival Period.
10. Section 12.6. Section 12.6 of the Purchase Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
“12.6 Exclusive Remedy. Except as expressly set forth in Sections
11.2(b), 12.5 and 12.10, the representations, warranties and covenants contained in
or made pursuant to this Agreement shall be terminated and extinguished upon the
earlier of the end of the Survival Period or any termination of this Agreement.
Except as provided in Sections 12.5 and 12.10, after the Survival Period none of St.
David’s, MedCath Party or any shareholder, partner, officer, director, principal or
Affiliate of any of the preceding shall be subject to any liability of any nature
whatsoever with respect to any such representation, warranty, or covenant.
Moreover, each party’s sole and exclusive remedy for any claim by it for
Indemnifiable Losses arising under this Agreement or in connection with or as a
result of the transactions contemplated by this Agreement (whether any such claim
shall be made in contract, breach of warranty, tort or otherwise), shall be the
remedies provided by, and subject to, this Article 12 and Sections 11.2(b), 13.3(b)
and 13.3(c), except such limitation shall not apply in claims for fraud.”
11. Article 12. Article 12 of the Purchase Agreement is hereby amended by adding the
following as a new Section 12.10:
“12.10 Termination of Indemnification Obligations; Claims After the Survival
Period.
(a) Effectively immediately upon the expiration of the Survival Period, the
terms and conditions set forth in Sections 12.1 – 12.4 (inclusive) hereof, Sections
12.6 – 12.9 (inclusive) hereof and the definitions of “Basket Amount,”
“Indemnifiable Losses,” “Indemnified MedCath Party Parties,” “Indemnified St.
David’s Parties,” “Indemnified Party,” and “Indemnifying Party” (collectively, the
“Indemnification Provisions”) shall terminate, be automatically deleted from
this Agreement and be of no further force or effect, other than in respect of any
unresolved indemnification claims that have been properly asserted by an Indemnified
Party against an Indemnifying Party prior to the expiration of the Survival Period,
in which case all of the Indemnification Provisions shall continue to be effective
solely with respect to each such
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unresolved indemnification claim until such
unresolved indemnification claim is finally resolved or settled. For avoidance of doubt, the provisions of this
Section 12.10(a) shall not be operative as to the representations and warranties set
forth in the last sentence of Section 4.1 or the Fundamental Representations until
the expiration of the applicable statute of limitations, and the Indemnification
Provisions shall continue to be effective in respect of such representations and
warranties until the expiration of the applicable statute of limitations.
(b) After the expiration of the Survival Period, either party shall be entitled
to seek to recover damages and to recover damages from the other party hereto
relating to or arising under this Agreement and the transactions contemplated hereby
if, but only if, any of the following is applicable:
(i) The claim is permitted under the terms of Section 12.5,
(ii) The claim relates to or arises out of the other party’s failure to fulfill
its obligations under any covenant or other agreement set forth in this Agreement
which by its terms is intended to be performed after Closing,
(iii) In the case of St. David’s, the claim relates to or arises out of MedCath
Party’s failure to pay or satisfy Excluded Liabilities, and in the case of MedCath
Party, St. David’s failure to pay or satisfy Assumed MedCath Party Liabilities, it
being acknowledged that MedCath Party shall retain liability for the Excluded
Liabilities and covenants and agrees that MedCath Party shall be solely responsible
and liable therefore and, further, that St. David’s shall not assume the Excluded
Liabilities or any obligation or responsibility relating thereto, or
(iv) In the case of St. David’s, the claim relates to or arises out of MedCath
Party’s failure to convey to St. David’s at Closing good and marketable title to the
MedCath Party Assets subject to no Encumbrances other than Permitted Encumbrances.
(c) Limitation on Damages. NOTWITHSTANDING ANYTHING TO THE CONTRARY
ELSEWHERE IN THIS AGREEMENT AND WITHOUT IMPAIRING THE LIMITATIONS SET FORTH IN
SECTION 12.3(B), NO PARTY TO THIS AGREEMENT (OR ANY OF ITS AFFILIATES) SHALL, IN ANY
EVENT, BE LIABLE (A) TO ANY OTHER PARTY (OR ANY OF ITS AFFILIATES) FOR SPECIAL,
CONSEQUENTIAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, COSTS, EXPENSES, CHARGES OR
CLAIMS (EXCEPT IN THE CASE OF FRAUD) OR (B) FOR CLAIMS MADE UNDER THIS AGREEMENT
(WHETHER PURSUANT TO CLAIMS MADE UNDER THE INDEMNIFICATION PROVISIONS AND/OR CLAIMS
MADE PURSUANT TO SECTIONS 12.5 OR 12.10) IN AN AGGREGATE AMOUNT IN EXCESS OF THE
FINAL CASH PAYMENT (EXCEPT IN THE CASE OF FRAUD BY SUCH PARTY).”
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12. Article 13. Article 13 of the Purchase Agreement is hereby amended by adding the
following as a new Section 13.23:
“13.23 Right to Take Action. Without waiving any rights Buyer may have
under applicable law, notwithstanding anything in this Agreement to the contrary,
nothing herein shall prevent or limit, and St. David’s shall not take actions to
prevent or limit, (a) MedCath Party at any time after the Effective Time from being
dissolved or liquidated, making payments to its creditors or distributions to its
partners, otherwise terminating its existence and/or taking any other action, in
each case, as and to the extent permitted by applicable law, or (b) MedCath
Corporation and its Affiliates (other than MedCath Party) from engaging in or
agreeing to a Change in Control Transaction or making payments to its creditors or
distributions to its stockholders (or equity holders) at any time or, after the
Effective Time, from being dissolved or liquidated, and/ or otherwise terminating
its existence, in each case, as and to the extent permitted by the General
Corporation Law of Delaware (or other applicable Law). This Section 13.23 is not
intended to preclude, and shall not preclude, St. David’s from exercising any rights
and pursuing any remedies it might have under this Agreement. To this end, St.
David’s shall be entitled to initiate actions and proceedings and pursue claims
against MedCath Party, MedCath Corporation and others in accordance with applicable
law to enforce its rights and seek remedies available under this Agreement that are
not satisfied by MedCath Party or MedCath Corporation. Any action or proceeding
initiated or commenced by St. David’s against MedCath Party or MedCath Corporation
or their Affiliates asserting a right set forth in this Agreement shall not be
deemed to be an action to prevent or limit MedCath Party or MedCath Corporation or
their Affiliates from being dissolved or liquidated.”
13. Full Force and Effect. Other than as modified in accordance with the foregoing
provisions, the terms of the Purchase Agreement remain in full force and effect. This Amendment
shall be effective upon all parties to the Purchase Agreement upon execution by St. David’s and
MedCath Party.
14. Multiple Counterparts. This Amendment may be executed in two or more
counterparts, each and all of which shall be deemed an original and all of which together shall
constitute but one and the same instrument. The facsimile signature of any party to this Amendment
or a PDF copy of the signature of any party to this Amendment delivered by electronic mail for
purposes of execution or otherwise, is to be considered to have the same binding effect as the
delivery of an original signature on an original Contract.
15. Governing Law. The parties agree that this Amendment shall be governed by and
construed in accordance with the Laws of the State of Texas without giving effect to any choice or
conflict of law provision or rule thereof.
16. Captions. The captions herein are for convenience of reference only and shall not
be construed as a part of this Amendment.
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IN WITNESS WHEREOF, each of the undersigned has caused this Amendment to be executed as of the
date first written above.
ST. DAVID’S:
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ST. DAVID’S HEALTHCARE PARTNERSHIP, L.P., LLP | |||||
By: | Round Rock Hospital, Inc., general partner |
|||||
/s/ Xxx Xxxxxx | ||||||
Xxx Xxxxxx Vice President |
||||||
MEDCATH PARTY:
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HEART HOSPITAL IV, L.P. | |||||
By: | Hospital Management IV, Inc., its general partner |
|||||
/s/ Xxxxx Xxxxxx | ||||||
Name: | Xxxxx X. Xxxxxx | |||||
Title: | Treasurer | |||||
Schedule 1
Description of Stop -Loss Coverage for the COBRA Transition Period
Specific only; $175,000 deductible.
Policy
period is July 1, 2010 – June 30, 2011.
Claims must be incurred and paid within the policy period.
Premiums: $29.02/single and $74.23/family (total monthly premium based on headcount).