EXHIBIT 4.8
LETTER AGREEMENT
LETTER AGREEMENT dated as of June 1, 1998 among Vanguard Health Systems,
Inc. (the "Issuer"), Xxxxxxx X. Xxxxxx, Xx., Xxxxxxxx Xxxxx, Xxxxxx X. Xxxxx
and Xxxxxx Xxxxxxx (each, an "Executive Manager"), Xxxxxx Xxxxxxx Capital
Partners III, L.P. ("MSCP III") and the other persons listed on the signature
pages hereof (each such person, together with MSCP III and the Executive
Managers are herein referred to individually as an "Investor" and collectively
as the "Investors").
WHEREAS, reference is made to the Shareholders Agreement dated as of the
date hereof among the parties hereto (the "Shareholders Agreement");
capitalized terms used but not defined herein shall have the meaning set forth
in the Shareholders Agreement.
NOW, THEREFORE, in consideration of the parties entering into the other
Transaction Agreements, the parties hereto agree as follows:
1. Certain Financing Opportunities. If, prior to December 31, 1999, any
Executive Manager or any of his Affiliates (each, a "Financing Offeror") seeks
to raise, in connection with the proposed formation, capitalization or
acquisition of control of any Person (other than the Issuer or any of its
Subsidiaries) that is principally engaged in the healthcare industry, private
equity capital of at least $10 million from Persons other than an Executive
Manager, an Affiliate of an Executive Manager or any officer, director or
employee of the Issuer or any such Affiliate, such Financing Offeror shall
notify MSCP III promptly after becoming aware of such business opportunity and
shall provide MSCP III with all material available information concerning such
business opportunity, including the identity of the Persons involved in such
business opportunity and the material terms and conditions of any proposed
financing for such business opportunity (the "Proposed Financing"). Within 30
days of such notification, MSCP III shall notify the Financing Offeror whether
or not it or its Affiliates have elected to provide the Proposed Financing on
the terms described to MSCP III. If MSCP III and its Affiliates have elected
not to exercise their option to provide the Proposed Financing, the Financing
Offeror may offer the opportunity to provide the Proposed Financing to any
other Person on terms no more favorable to the Financing Offeror than the terms
proposed to MSCP III.
2. Certain Tax Benefits. If, in connection with a Management Investor's
ownership of the Initial Shares, the Issuer becomes entitled to any tax
deduction in respect of such Initial Shares, the Issuer shall pay to such
Management Investor, at
such time or times as the Issuer actually receives the economic benefit of such
deduction, an amount equal to the amount of such benefit to the Issuer. For
purposes of the foregoing sentence, the Issuer shall be considered to have
actually received the economic benefit of such deduction in the year (or years)
in which either (i) such deduction (or the portion of any net operating loss
attributable to such deduction) reduces the cash amount of tax which the Issuer
would otherwise be obligated to pay, or (ii) the Issuer receives a cash refund
of tax attributable to such deduction (or the portion of any net operating loss
attributable to such deduction), and in computing the timing and amount of any
such economic benefit, the Issuer shall be deemed to recognize all other items
of income, gain, loss, deduction or credit before recognizing such deduction
based upon the tax attributes ordering rules set forth in the Internal Revenue
Code of 1986, as amended (the "Code"). The chief financial officer of the
Issuer shall make the initial calculation of the time at which the Issuer
actually receives such economic benefit and the value of such deduction and
shall provide a written calculation of such determination to MSCP III; provided
that if MSCP ceases to be a shareholder of the Issuer, the same shall be
provided to the Compensation Committee. If MSCP III or the Compensation
Committee, as the case may be, notifies the Issuer within 30 days after receipt
of such calculation that it disagrees with such calculation, then the
determination shall be referred to the Issuer's independent auditor whose
determination shall be final and binding on the parties, absent manifest error.
3. Certain Other Compensation. The parties hereto acknowledge and agree
that, in lieu of a purchase by Xxxxxx X. Ways of founders shares, Mr. Ways
shall receive a grant by the Issuer on the date hereof of 695 stock options
under the Vanguard Health Systems, Inc. 1998 Nonqualified Initial Option Plan
and a bonus in the amount and at the time(s) contemplated by Annex I hereto.
4. Termination of Prior Shareholder Arrangements. The parties hereto who
are parties to the following agreements hereby terminate such agreements as of
the date hereof: (A) the Stockholders' Agreement dated as of August 15, 1997,
as amended, by and among the Issuer and the other persons listed therein, (B)
the Voting Agreement (the "Voting Agreement") dated as of August 15, 1997, as
amended, by and among the Issuer and the other persons listed therein, and (C)
the Investors' Rights Agreement dated as of August 15, 1997, as amended, by and
among the Issuer and the other persons listed therein. As required by Section
2.3 of the Voting Agreement, MSCP III hereby consents to the termination of the
Voting Agreement pursuant to this letter agreement.
5. Additional Stockholder Approval. Immediately prior to the consummation
of any Liquidity Event that would constitute a change in control or effective
control of the Issuer or a change in ownership of a substantial portion of
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the assets of the Issuer, each party agrees that, upon the request of the
Issuer, such party will vote all of the Common Shares then held by such party
to adopt a stockholder resolution authorizing and approving in all respects any
payment in the nature of compensation to any employee of the Issuer arising
under any of the Option Plans, Employment Agreements, Severance Protection
Agreements, the Shareholders Agreement and/or the Surviving Shareholders
Agreement, as such agreements may be hereafter amended. This Section 5 shall
terminate upon the consummation of the IPO.
6. Certain Shareholder Restrictions. If the IPO has not occurred on or
prior to the fifth anniversary of the date hereof, MSCP III, the Executive
Managers and the Issuer agree to hold discussions regarding certain of the
rights and obligations with respect to the transfer of Common Shares set forth
in Article 2 of the Shareholders Agreement.
7. Certain Shareholder Approvals. By their execution hereof, the Investors
(who as of the First Closing will be all of the Issuer's stockholders)
specifically approve all of the provisions hereof, including, without
limitation, the provisions of Sections 2. and 3. hereof.
8. Governing Law. This Agreement shall be governed by the internal laws of
the State of New York.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
XXXXXX XXXXXXX CAPITAL PARTNERS, L.P.
By: MSCP III, L.P., as general partner
By: XXXXXX XXXXXXX CAPITAL PARTNERS
III, INC., as General Partner
By: /s/ Xxxx Xxxxxxxx
------------------------------------------
Name: Xxxx Xxxxxxxx
Title: Managing Director
By: /s/ Xxxxxxx Xxxxxx
------------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Managing Director
Address: 1221 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
MSCP III 892 INVESTORS, L.P.
By: MSCP III, L.P., as General Partner
By: XXXXXX XXXXXXX CAPITAL PARTNERS
III, INC., as General Partner
By: /s/ Xxxx Xxxxxxxx
------------------------------------------
Name: Xxxx Xxxxxxxx
Title: Managing Director
Address: 1221 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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XXXXXX XXXXXXX CAPITAL INVESTORS, L.P.
By: MSCP III, L.P., as General Partner
By: XXXXXX XXXXXXX CAPITAL PARTNERS
III, INC., as General Partner
By: /s/ Xxxx Xxxxxxxx
------------------------------------------
Name: Xxxx Xxxxxxxx
Title: Managing Director
Address: 1221 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
VANGUARD HEALTH SYSTEMS, INC.
By: /s/ Xxxxxxx X. Xxxxxx, Xx.
------------------------------------------
Name: Xxxxxxx X. Xxxxxx, Xx.
Title: Chairman, President and Chief
Executive Officer
Address: 00 Xxxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
/s/ Xxxxxxx X. Xxxxxx, Xx.
------------------------------------------
Name: Xxxxxxx X. Xxxxxx, Xx.
Address: 00 Xxxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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/s/ W. Xxxxxxxx Xxxxx
------------------------------------------
Name: W. Xxxxxxxx Xxxxx
Address: 00 Xxxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
/s/ Xxxxxx X. Xxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxx
Address: 00 Xxxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
/s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Address: 00 Xxxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
/s/ Xxxxx Xxxxxx
------------------------------------------
Name: Xxxxx Xxxxxx
Address: 0000 Xxx Xxxx Xxxxxx, X.X.
Suite 400
District of Columbia 20005
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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/s/ Xxxxxx X. Xxxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Address: 00 Xxxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
/s/ Xxxx X. Xxxx
------------------------------------------
Name: Xxxx X. Xxxx
Address: 00 Xxxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
/s/ Xxxxx Xxxxxxxx
------------------------------------------
Name: Xxxxx Xxxxxxxx
Address: 00 Xxxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
/s/ Xxxxxxx X. Xxx
------------------------------------------
Name: Xxxxxxx X. Xxx
Address: 00 Xxxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
7
/s/ Xxxxxx Xxxxxx
------------------------------------------
Name: Xxxxxx Xxxxxx
Address: 00 Xxxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
/s/ Xxxx X. Xxxxxxx
------------------------------------------
Name: Xxxx X. Xxxxxxx
Address: 00 Xxxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
/s/ Xxxx X. Xxxxxxx
------------------------------------------
Name: Xxxx X. Xxxxxxx
Address: 00 Xxxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
/s/ Xxxxx X. Xxxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Address: 00 Xxxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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/s/ Xxxx X. Xxxxxx
------------------------------------------
Name: Xxxx X. Xxxxxx
Address: 00 Xxxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
/s/ Xxxxxx X. Ways
------------------------------------------
Name: Xxxxxx X. Ways
Address: 00 Xxxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
/s/ Xxxxxxxx Xxxxxx
------------------------------------------
Name: Xxxxxxxx Xxxxxx
Address: 0000 Xxxx Xxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
/s/ Xxx Xxxxxx
------------------------------------------
Name: Xxx Xxxxxx
Address: 00 Xxxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
9
/s/ Xxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxx
Address: 00 Xxxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
/s/ Xxxxx X. Xxxxx
------------------------------------------
Name: Xxxxx X. Xxxxx
Address: 00 Xxxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
/s/ Xxxxxxx Xxxxxxx
------------------------------------------
Name: Xxxxxxx Xxxxxxx
Address: 0000 Xxxx Xxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
/s/ Xxxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Address: 000 Xxxx Xxxxxxxx Xxx
Xxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
10
/s/ Xxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxx
Address: 00 Xxxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
/s/ Xxxxx X. Xxxxx
------------------------------------------
Name: Xxxxx X. Xxxxx
Address: c/o Paragon Health Network, Inc.
Xxx Xxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
MPSW PARTNERS
By: /s/ Xxxxxx Xxxxxx
------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Managing Partner
Address: 0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
/s/ Xxxx X. Xxxxxx
------------------------------------------
Name: Xxxx X. Xxxxxx
Address: 00000 Xxxxxxxx Xx.
Xxxxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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/s/ Xxxx Xxxxx
------------------------------------------
Name: Xxxx Xxxxx
Address: 00 Xxxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
/s/ Xxxxxxx X.X. Xxxx
------------------------------------------
Name: Xxxxxxx X.X. Xxxx
Address: 00 Xxxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
/s/ Xxxx X. Xxxxxx
------------------------------------------
Name: Xxxx X. Xxxxxx
Address: 00000 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
/s/ Xxxxxx X. Xxxxxxx, Xx.
------------------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Address: 0000 Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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XXXXXXX XXXXXXXX XXXXX
GRANTOR RETAINED ANNUITY TRUST
By: /s/ Xxxxxx X. Xxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Trustee
Address: 00 Xxxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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