PURCHASE AGREEMENT dated as of June 1, 2007 by and among NOVAMED ACQUISITION COMPANY, INC., AND CATARACT AND LASER CENTER PARTNERS, L.L.C., SCOTT BECKER, DOUGLAS J. RAEDY, D.O., GEOFFREY E. CLAPP, D.P.M., JOHN R. TRITTSCHUH, M.D., MARK A. NOFFSINGER,...
Exhibit
2.1
EXECUTION
COPY
dated
as of June 1, 2007
by
and among
NOVAMED
ACQUISITION COMPANY, INC.,
AND
CATARACT
AND LASER CENTER PARTNERS, L.L.C.,
▇▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, D.O.,
▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, D.P.M.,
▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇, M.D.,
▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇, M.D.,
▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, M.D.,
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, M.D.,
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, M.D.,
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, M.D.,
RAGHURMA
▇. ▇▇▇▇▇▇, M.D.,
▇▇▇▇▇
▇. FREE, M.D.,
▇▇▇▇▇
▇. ▇▇▇▇▇▇, M.D.,
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, M.D.,
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, M.D.,
▇▇▇▇▇
▇. ▇▇▇▇▇▇, M.D.
AND
▇▇▇▇
▇. ▇▇▇▇, M.D.,
being
all of the members of
SURGERY
CENTER OF KALAMAZOO, LLC
This
PURCHASE
AGREEMENT
(this
“Agreement”)
is
dated as of 12:01 a.m. on June 1, 2007 (the
“Closing
Date”),
by
and among NovaMed
Acquisition Company, Inc., a Delaware corporation (“NovaMed”),
and
Cataract and Laser Center Partners, L.L.C., d/b/a Ambulatory Surgery Centers
of
America, a Delaware limited liability company (“ASCOA”),
▇▇▇▇▇
▇▇▇▇▇▇ (“▇▇▇▇▇▇”),
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, D.O., ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, D.P.M., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, M.D.,
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, M.D., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D., Raghura, ▇. ▇▇▇▇▇▇, M.D.,
▇▇▇▇▇ ▇. Free, M.D., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D., ▇▇▇▇▇▇
▇.
▇▇▇▇▇▇▇▇, M.D., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D. and ▇▇▇▇ ▇. ▇▇▇▇, M.D. (each of the
foregoing individuals, along with ASCOA and ▇▇▇▇▇▇, shall be collectively
referred to herein as the “Members”),
being
all of the members of Surgery Center of Kalamazoo, L.L.C., a Michigan limited
liability company (the “Company”).
Certain capitalized terms have the meanings provided in Section
13.1.
RECITALS:
A. The
Company is engaged in the business of owning and operating a Medicare-certified,
state licensed ambulatory surgery center located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the “Business”).
B. As
of the
Closing Date, the Members collectively own one hundred percent (100%) of the
issued and outstanding membership interests in the Company (the “Membership
Interests”).
C. As
a
condition precedent to Closing, the Members must satisfy certain conditions
as
described in this Agreement.
D. Contemporaneous
with the consummation of the transactions contemplated herein, the Members
desire to transfer to NovaMed, and NovaMed desires to acquire from the Members,
collectively, sixty-two and fifty hundredths of one percent (62.5%) of the
total
Membership Interests in exchange for the Purchase Price (as defined herein),
all
on the terms and conditions hereinafter set forth.
TERMS
AND CONDITIONS:
NOW,
THEREFORE,
in
consideration of the mutual covenants of the parties as hereinafter set forth
and other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties hereto hereby agree as
follows:
ARTICLE
I.
PRE-CLOSING
COVENANTS
1.1. Articles
of Organization.
The
Articles of Organization, as amended, of the Company in effect as of the Closing
Date, shall be in the form attached hereto as Exhibit
1.1.
1.2. Company
Assets. At
Closing, and as a condition precedent to the transactions contemplated herein,
the Company shall own, free and clear of all Liens (as defined herein) (other
than those set forth on Schedule
4.2),
all
of
the assets and property necessary to conduct the Business (the “Assets”),
including, without limitation, the following (except
to the extent that any of the following are designated as Excluded Assets in
Section
1.3
below):
-1-
(a) all
inventory and supplies with respect to the Business (collectively, the
“Inventory”),
including all rights to that portion of the Inventory on consignment as
designated on Schedule
1.2(a);
(b) all
of
the tangible and intangible personal property with respect to the Business,
including, without limitation, the machinery, equipment, fixtures, phone
numbers, computer hardware and software that are listed on Schedule
1.2(b)
(collectively, the “Personal
Property”);
(c) all
prepaid expenses relating to the Business set forth on Schedule
1.2(c);
(d) all
contract rights with respect to those Material Contracts (as defined herein)
identified as Assumed Contracts on Schedule
4.9,
purchase orders, licenses and leases pertaining to the Business, including
all
leasehold improvements, rights under any restrictive covenants accruing to
the
benefit of the Business and any provider agreements relating to the operation
of
the Business;
(e) all
names
and tradenames of the Company and the Business, including, without limitation,
“Surgery Center of Kalamazoo”;
(f) all
records, files and papers primarily pertaining to the Business, including
general business records, accounting records and Medical Records;
(g) all
Permits (as defined herein), licenses and certificates of need relating to
the
operation of the Business;
(h) all
causes of action, claims, warranties, guarantees, refunds, rights of recovery
and set-off of every kind and character, relating primarily to the Assets or
the
Business;
(i) all
casualty insurance and warranty proceeds of the Company received after the
Closing Date with respect to damage to, nonconformance of, or loss to, the
Assets;
(j) to
the
extent permitted by law, all accounts receivable or other rights to receive
payment owing to the Company (the “Accounts
Receivable”);
and
(k) all
of
the goodwill of, and associated with, the Business.
To
the
extent any personal property, inventory, supplies, equipment and contracts
owned
by any Member, or any of the Members’ respective Affiliates, are primarily used
in, or are necessary for the continued conduct of the Business, and would
otherwise be deemed Assets, then the applicable Member shall cause such party
to
contribute such assets and property to the Company, free and clear of all Liens,
prior to the Closing Date.
1.3. Excluded
Assets.
Notwithstanding anything to the contrary contained herein, the Assets do not
include the following which, prior to the Closing Date, shall either be
distributed out of the Company or otherwise terminated (collectively, the
“Excluded
Assets”):
(a) Employee
Benefit Plans relating to the employees of the Business and any and all rights
therein or in the assets thereof;
(b) all
contracts not identified as Assumed Contracts on Schedule
4.9;
(c) all
cash-on-hand and cash equivalents as of the Closing Date; and
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(d) all
personal effects of the Members not used in connection with the operation of
the
Business as specified in Schedule
1.3(d).
1.4. Excluded
Liabilities.
Notwithstanding anything to the contrary contained in this Agreement or in
any
Transaction Document, and regardless of whether such liability is disclosed
in
this Agreement, in any Transaction Documents or on any Schedule or Exhibit
hereto or thereto, the Company shall only be responsible for the following
liabilities and obligations: (a) those which
arose prior to the Closing Date and represent normal and current trade payables
incurred by the Company in connection with the operation of the Business in
the
ordinary course of business, consistent with past custom and practice (and
which
are not delinquent), and are specifically set forth on Schedule
1.4(a)
(“Accounts
Payable”);
(b)
the other accrued liabilities of the Company which have been incurred in the
ordinary course of business, consistent with past custom and practice and which
are specifically set forth on Schedule
1.4(b)
(“Accrued
Liabilities”);
(c)
the
Company’s external (non delinquent) bank debt and underlying Liens in the amount
of One Million Eight Hundred Twenty-Seven Thousand Three Hundred Four Dollars
($1,837,304) as of April 30, 2007, provided that such debt is consistent with
the amount set forth above (the “Bank
Debt”);
and
(d) those
first arising after the Closing Date under any Assumed Contract (except for
any
liability or obligation arising from any breach or failure to perform under
any
of the foregoing prior to the Closing Date) (collectively,
the “Permitted
Liabilities”).
From
and after the Closing Date and except for the Permitted Liabilities, the Company
shall have no responsibility or liability for any other debts, liabilities
or
obligations of the Business, the Company, the Members or any of their respective
Affiliates of any kind or nature whatsoever, arising out of, relating to,
resulting from, or caused by any transaction, status, event, condition,
occurrence or situation relating to, arising out of or in connection with the
Business, the Assets, the Company or the Members existing, arising or occurring
on or prior to the Closing Date, including, without limitation, any liabilities
or obligations relating to or arising from the Excluded Assets (the
“Excluded
Liabilities”).
1.5. Satisfaction
of Liabilities.
Excluding the Permitted Liabilities, the Members agree to satisfy all
liabilities of the Company prior to the Closing Date or as soon as is reasonably
practicable thereafter,
which
liabilities include, without limitation:
(a) all
payroll expense and other compensation due and owing the Company’s employees for
the period preceding the Closing Date (excluding any paid time off or other
employee-related accruals to the extent they are included in Accrued
Liabilities), and
(b) all
Taxes, including payroll taxes, sales taxes and income taxes accrued up to
the
Closing Date (but excluding any such Taxes to the extent they are included
in
Accrued Liabilities).
ARTICLE
II.
SALE
OF MEMBERSHIP INTERESTS BY THE MEMBERS TO NOVAMED
2.1. Sale
of Membership Interests.
In
reliance upon the representations and warranties of NovaMed contained herein,
and on the terms and conditions hereinafter set forth (including the payment
of
the Purchase Price), the Members hereby agree to collectively sell, assign,
transfer, convey and deliver to NovaMed (or its designee) at the Closing, free
and clear of all Liens, all of the Members’ right, title and interest in and to
sixty-two and fifty hundredths of one percent (62.5%) of the issued and
outstanding Membership Interests (the “Purchased
Interests”),
with
each Member’s transfer of his, her or its respective Purchased Interests to
NovaMed to be as set forth on Schedule
2.1
attached
hereto. In reliance upon the representations and warranties of the Members
contained herein, and on the terms and conditions hereinafter set forth, NovaMed
hereby agrees to purchase such Purchased Interests from the Members for the
Purchase Price set forth in Article
III
hereof
and payable to the Members in accordance with Schedule
2.1.
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2.2. Ownership
of the Company following Transactions and Payment of Purchase
Price.
As a
result of the sales described in this Article
II:
(a)
NovaMed will own sixty-two and fifty hundredths of one percent (62.5%) of the
Membership Interests in the Company, and (b) the Members, other than ASCOA
and
▇▇▇▇▇▇, will collectively own thirty-seven and fifty hundredths of one percent
(37.5%) of the Membership Interests in accordance with Schedule
2.1.
Further, the Members will each receive their respective pro-rata portion of
the
Purchase Price (“Pro-Rata
Share”),
as
set forth on Schedule
2.1
and
agreed to by the Members, with each such Pro-Rata Share being reduced by fees
related to the transactions described herein, as reflected on Schedule
2.1
(e.g.,
attorneys fees, accountant fees etc.)
ARTICLE
III.
CONSIDERATION
AND MANNER OF PAYMENT
3.1. Purchase
Price.
The
aggregate purchase price for the Purchased Interests shall be Twenty-Four
Million Six Hundred Thousand Dollars ($24,600,000) (the “Purchase
Price”).
The
Purchase Price shall be allocated among the Members in accordance with
Schedule
2.1.
3.2. Payment
of Purchase Price.
At the
Closing,
NovaMed
will pay to the Members, by wire transfer of immediately available funds to
each
Member’s designated bank account, an amount
equal to each such Member’s Pro Rata Share of the Purchase Price as set forth on
Schedule
2.1
(which
reflects the reductions described in Section
2.2
hereof),
according to the wire transfer instructions attached as Exhibit
3.2.
ARTICLE
IV.
MEMBERS’
REPRESENTATIONS AND WARRANTIES
Each
Member hereby represents and warrants, jointly and severally, to NovaMed as
of
the Closing Date, as follows:
4.1. Organization,
Good Standing and Authority.
The
Company is a limited liability company duly organized, validly existing and
in
good standing under Michigan law.
The
Company and each of the Members have full capacity, power, right and authority
to enter into and perform their respective obligations under this Agreement
and
each of the Transaction Documents to which each of them is a party. This
Agreement and each of the Transaction Documents to which each is a party have
been duly executed and delivered by each of the Company and the Members, and
constitute the valid and binding obligations of the Company and the Members,
enforceable against them in accordance with their respective terms, except
as
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of creditors generally
and
the availability of equitable remedies.
4.2. Assets.
The
Company has full power and authority to carry on the Business as it is now
being
conducted and to own and hold under lease the properties and assets it now
owns
or holds under lease. The Assets constitute all material tangible or intangible
property, rights and assets necessary for the conduct by the Company of the
Business as conducted during the twelve (12) months immediately preceding the
Closing Date and, to the knowledge of any Member, there is no need to acquire
or
replace any material assets outside of the ordinary course of business in the
next six (6) months, except as set forth on Schedule
4.2.
The
Company has good and marketable title to the Assets, in each case free and
clear
of any and all Liens other than in connection with the Permitted Liabilities.
All
of
the Assets that are personal property are in operable condition, normal wear
and
tear excepted, and repair and none of such property requires any repair or
replacement except for maintenance in the ordinary course of business. Except
as
set forth on Schedule
4.2,
none of
the Assets are held under any lease, security agreement, conditional sales
contract or other title retention or security agreement or is located other
than
at the Facility.
-4-
4.3. Approvals.
Except
as set forth on Schedule
4.3,
no
consent, approval, order or authorization of, or registration, declaration,
notice or filing with, any national, state, provincial, local, governmental,
judicial, public, quasi-public or administrative authority or agency
(collectively, “Governmental
Authority”)
or
other Person is required to be made or obtained by the Company or any Member
in
connection with the authorization, execution, delivery and performance of this
Agreement or any other Transaction Document, or the consummation of the
transactions contemplated hereby or thereby.
4.4. Membership
Interests.
(a) Immediately
prior to the Closing Date, the Members will be the only record and beneficial
holders of the Membership Interests. Each
Member has good and marketable title to the Membership Interests free and clear
of all Liens, and has full right, power and authority to transfer the Purchased
Interests to NovaMed as provided herein, without obtaining the consent of any
third party (other than the Manager of the Company (the “Manager”),
except as otherwise restricted pursuant to and in accordance with the terms
and
conditions of the existing Operating Agreement of the Company. Upon the
consummation of the transactions contemplated herein: (a) the Members shall
have
transferred to NovaMed good and marketable title to the Purchased Interests
free
and clear of all Liens;
(b)
NovaMed shall own sixty-two and fifty hundredths of one percent (62.5%) of
all
of the issued and outstanding membership interests in the Company; and (c)
the
Members, other than ASCOA and ▇▇▇▇▇▇, will collectively own thirty-seven and
fifty hundredths of one percent (37.5%) of the Membership Interests in
accordance with Schedule
2.1.
(b) There
are
no outstanding options, rights (preemptive or otherwise), warrants, calls,
convertible securities or commitments or any other arrangements to which any
Member or the Company is a party requiring the issuance, sale or transfer of
any
equity securities of, or equity interest in, the Company, or any securities
convertible directly or indirectly into equity securities of the Company, or
evidencing the right to subscribe for any equity securities of, or equity
interest in, the Company, or giving any Person (other than NovaMed) any rights
with respect to the equity of the Company. Except as set forth in the existing
Operating Agreement, there are no voting agreements, voting trusts or other
agreements (including cumulative voting rights), commitments or understandings
with respect to the Membership Interests. The Company has not previously owned,
and does not currently own or have any agreement or contract to acquire, any
equity securities, other securities or other interests in any Person or any
direct or indirect equity or ownership interest in any other
business.
(c) Upon
consummation of the transactions provided for in this Agreement and in
accordance with the terms hereof, NovaMed will be vested with good and
marketable title to the Purchased Interests, free and clear of any Liens, other
than Liens created by NovaMed.
4.5. Financial
Statements.
The
Company has previously delivered to NovaMed unaudited financial statements
of
the Company, to the extent available, for the years ending
December
31, 2005 and December 31, 2006, and interim financial statements for the four
(4) month period ending on April 30, 2007, consisting of an income statement
and
balance sheet
(collectively, the “Financial
Statements”).
Except as set forth on Schedule
4.5,
each of
the Financial Statements (a) has
been
prepared
in accordance with generally accepted accounting principles; (b) is true,
complete and correct in all material respects as of the respective dates and
for
the respective periods above stated; (c) fairly presents in all material
respects the financial position of the Company at such dates and the results
of
its operations for the periods ended on such dates; and (d) is consistent with
the Company’s books and records.
-5-
4.6. Absence
of Undisclosed Liabilities.
Neither
the Company nor any of the Members, with respect to the Business, has any
material debts, liabilities or obligations of any nature (whether accrued,
absolute, contingent, direct, indirect, perfected, inchoate, unliquidated or
otherwise and whether due or to become
due) arising out of transactions entered into at or prior to the Closing, or
any
transaction, series of transactions, action or inaction at or prior to the
Closing, or any state of facts or condition
existing at or prior to the Closing (regardless of when such liability or
obligation is asserted),
including, but in no way limited to, guarantees, liabilities or obligations
on
account of Taxes or governmental charges or penalties, interest or fines thereon
or in respect thereof, except: (a) to the extent specifically reflected and
accrued for or reserved against in the Financial Statements, or (b) for
liabilities specifically delineated on Schedule
4.6.
4.7. Inventory.
All of
the Inventory is usable in the ordinary course of business, is fully paid for
and, except as described on Schedule
1.2(a),
not
subject to consignment or conditional sales arrangements and no material portion
of the Inventory is obsolete or damaged.
4.8. Taxes.
Except
as described on Schedule
4.8,
the
Company has filed all Tax Returns on
a
timely basis that it is required to have filed in connection with the operation
of the Business, and such returns are true,
complete and correct. Except as described on Schedule
4.8,
the
Company has paid all Taxes, interest and penalties, if any, reflected on such
Tax Returns or otherwise due and payable by them. Except as set forth on
Schedule
4.8,
any
deficiencies proposed as a result of any governmental audits of such Tax Returns
have been paid or settled, and there are no present disputes as to Taxes payable
by the Company in connection with the operation of the Business. With respect
to
all amounts of Taxes imposed on the Company for which the Company is or could
be
liable, whether to taxing authorities or to other Persons, with respect to
all
taxable periods or portions of periods ending on or before the Closing Date,
all
applicable Tax laws and agreements have been complied with in all material
respects, and all such amounts required to be paid by the Company to taxing
authorities or others on or before the Closing Date have been paid, or have
been
fully accrued for or fully reserved against on the Financial Statements, except
as set forth on Schedule
4.8.
To the
knowledge of the Company, except as described on Schedule
4.8,
no
issues have been raised and are currently pending by any taxing authority in
connection with any of the Tax Returns. No waivers of statutes of limitations
with respect to the Tax Returns have been given by or requested from the Company
or any Member. There are no Liens for Taxes (other than current taxes not yet
due and payable) upon any asset of the Company. The Company is not a party
to
any Tax-indemnity, Tax-sharing, Tax allocation or other similar agreements
or
arrangements.
4.9. Material
Contracts.
Schedule
4.9
sets
forth a true, correct and complete list of every material written contract,
agreement, relationship or commitment, every material oral contract, commitment,
agreement or relationship, to which the Company or any of the Members is a
party
or by which the Company or any of the Members is bound, as they relate to the
Business (the “Material
Contracts”),
true,
correct and complete copies of which previously have been furnished to NovaMed,
including all amendments or other modifications thereto. Except as set forth
on
Schedule
4.9,
neither
the Company nor any of the Members is in default, and no event has occurred
which with the giving of notice or the passage of time or both would constitute
a default by such party, under any Material Contract,
and, to
the knowledge of the Company or any of the Members, no event has occurred which
with the giving of notice or the passage of time would constitute such a default
by any party to any such Material Contract.
4.10.
Real
Property.
The
Company does not own any real property. The Company has, and will have following
the consummation of the transactions contemplated herein, a valid leasehold
interest in the real property (the “Leased
Real Property”)
which
it holds
under
the lease described in Schedule
4.10
(the“Real
Property Lease”),
free
and clear of all Liens, except for Liens for current property taxes not yet
due
and payable. The Leased Real Property constitutes all real properties used
or
occupied by the Company.
The
Company has valid leasehold interest in the Leased Real Property, which
leasehold interest is free and clear of all Liens, except for Liens created
by
the Company. With
respect to the Leased Real Property: (a) to the Knowledge of the Company, the
Company has all easements
and rights necessary to conduct the Business; (b) no portion thereof is subject
to any pending or, to the actual knowledge of the Company, threatened
condemnation proceeding or proceeding by any public
authority; (c) the buildings, plants and structures, including
heating, ventilation
and air conditioning systems, roof, foundation and floors, are in good operating
condition and repair, subject only to ordinary wear and tear, and are not in
violation of any zoning or other Rules; (d) there are no leases, subleases,
licenses, concessions or other agreements, written or oral, granting to any
party or parties the right of use or occupancy of any portion of any parcel
of Leased
Real Property; and (e) the Leased Real Property is supplied with utilities
and
other services necessary for the operation of the Business as the Business
is
currently operated using the Leased Real Property.
-6-
4.11.
Litigation.
Except
as set forth on Schedule
4.11,
there
are no claims, counterclaims, actions, suits, orders, proceedings (arbitration,
mediation or otherwise), investigations or judgments pending or, to the
knowledge of any Member or the Company, threatened against or involving the
Company, the Business or, with respect to the Business, any Member, or relating
to the transactions contemplated hereby, at law or in equity, in any court
or
agency, or before or by any Governmental Authority nor, to the actual knowledge
of any Member, are there any facts, conditions or incidents that could
reasonably expected to result in any such actions, suits, proceedings
(arbitration, mediation or otherwise) or investigations or judgments.
Except
as
set forth on Schedule
4.11,
neither
the Company nor any Member is subject to any judgment, order or decree of any
court or Governmental Authority.
To the
Knowledge of the Company, none of the matters set forth on Schedule
4.11
could
reasonably be expected to result in any Material Adverse Effect on the Company,
the Assets or the Business.
4.12.
Compliance
with Applicable Laws; Permits.
(a) The
Company and each of the Members, in the conduct of the Business, have complied,
in all material respects, with applicable federal, state and local laws and
the
rules and regulations of all Governmental Authorities having authority over
them, including, without limitation, agencies concerned with occupational
safety, environmental protection, employment practices, Fraud and Abuse Laws
and
Medicare and Medicaid requirements applicable to the Members’
and the Company’s billing procedures (except denials of claims in the ordinary
course of business). Neither the Company nor any Member has received any notice
of the Company’s violation of any such rules or regulations, whether corrected
or not, within the last five (5) years. The Company is eligible to receive
payment under Titles XVIII (Medicare) and XIX (Medicaid) of the Social Security
Act.
The
Company has timely and accurately filed (in all material respects) all requisite
reports, returns, data, and other information required by all Governmental
Authorities which control, directly or indirectly, any of the Company’s
activities to be filed with any commissions, boards, bureaus, and agencies
and
has paid all sums heretofore due with respect to such reports and returns unless
such sums are being disputed in good faith and are set forth on Schedule
4.12(a).
No such
report or return has been inaccurate, incomplete or misleading in any material
respect. The Company has timely and accurately filed all requisite reimbursable
claims and other reports required to be filed or otherwise filed in connection
with all state and federal Medicare and Medicaid programs in which the Company
participates that are due on or before the Closing Date or which relate to
services provided on or before the Closing Date, and the Company has not billed
for any services that were not provided at the Facility. There are no claims
scheduled, pending or, to the knowledge of the Company or any of the Members,
threatened before any authority, including, without limitation, any
intermediary, carrier, or other state or federal agency with respect to any
Medicare and Medicaid claim filed by the Company on or before the Closing Date.
Except for routinely scheduled Medicare and Medicaid program participation
and
certification surveys pursuant to the Company’s Medicare and Medicaid contracts
and filings, no program integrity review related to the Company has been
conducted by any authority in connection with the Medicare or Medicaid programs
and no such review is scheduled, pending, or to the actual knowledge of the
Company or any of the Members, threatened against or affecting Company, the
Business, the Facility, or the consummation of the transactions contemplated
hereby.
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(b) The
Company holds all the permits, licenses, certificates of need and other
approvals of Governmental Authorities necessary or material for the current
conduct, ownership, use, occupancy and operation of the Business and the Leased
Real Property, including, without limitation, those identified on Schedule
4.12(b)
(“Permits”).
The
Company is in compliance with such Permits, all of which are in full force
and
effect, and the Company has not received any notices (written or oral) to the
contrary. All of the Permits are in good standing, and to the Knowledge of
the
Company, no suspension, cancellation or adverse action is threatened against
the
Permits, and there is no reasonable basis for believing that any Permits will
not be renewed upon expiration.
(c) The
Company and each of the Members, in connection with the Business, are not in
violation of any applicable fraud and abuse laws including, without limitation,
18 U.S.C. §201 (bribery of public officials); 18 U.S.C. §286 (conspiracy to
defraud government with respect to claims); 18 U.S.C. §287 (false, fictitious or
fraudulent claims); 18 U.S.C. §371 (conspiracy to commit offense or to defraud
the government); 18 U.S.C. §666 (theft or bribery concerning programs receiving
federal funds); 42 U.S.C. §1320a-7a (civil monetary penalties); 42 U.S.C.
§1320a-7b (criminal penalties); and 42 U.S.C. §1395nn (prohibited referrals),
each as they may be amended or renumbered from time to time.
4.13. Transaction
Not a Breach.
Except
as set forth on Section 4.13, the execution, delivery and performance by the
Company and each of the Members of this Agreement and the Transaction Documents
will not:
(a) Result
in
a breach of any of the terms or conditions of, or constitute a default under,
or
in any manner release any party thereto from any obligation under any mortgage,
note, bond, indenture, contract, agreement, license or other instrument or
obligation of any kind or nature by which the Company or Business may be bound
or affected;
(b) Violate
or conflict with any order, writ or injunction of any court, administrative
agency or Governmental Authority to which the Company or any Member is subject;
(c) Constitute
an event which would permit any party to terminate any agreement or accelerate
the maturity of any indebtedness or other obligation;
(d) Violate
any provision of the organizational documents of the Company, including, but
not
limited to, the Articles of Organization and existing Operating Agreement of
the
Company;
(e) Result
in
the creation or imposition of any Lien upon any property of the Company or
the
Assets; or
(f) Require
any authorization, consent, approval, exemption or other action by or notice
to
any court, Governmental Authority or any other Person.
4.14.
Conduct
of Business.
Since
the Review Date, the Company has conducted the Business in the ordinary course
of business, consistent with past custom and practice, and has incurred no
material liabilities other than in the ordinary course of business, consistent
with past custom and practice, and there has been no Material Adverse Effect
on
the Assets, financial condition, operating results, employee or patient
relations, business activities or business prospects of the Company or the
Business. Without limitation of the foregoing, since the Review Date, the
Company has not, except in the ordinary course of business, consistent with
past
custom and practice, or as otherwise set forth on Schedule
4.14:
-8-
(a) Incurred
any obligation or liability, absolute, accrued, contingent or otherwise, whether
due or to become due, whether individually or in the aggregate, that has had
or
could be reasonably expected to result in a Material Adverse Effect on the
Business, the Company or any of the Assets;
(b) Pledged
or subjected any of its assets having an aggregate value in excess of Ten
Thousand Dollars ($10,000) to any Lien;
(c) Voluntarily
or involuntarily sold, transferred, abandoned, surrendered, leased or otherwise
disposed of any of its assets having an aggregate value in excess of Twenty-Five
Thousand Dollars ($25,000);
(d) Canceled
or compromised any material debt or claim, or waived or released any right
of
substantial value;
(e) Received
any notice of termination of any contract, lease or other agreement, or suffered
any damage, destruction or loss that, individually or in the aggregate, has
had
or could be reasonably expected to result in a Material Adverse Effect on the
Business, the Company or any of the Assets;
(f) Instituted,
settled or agreed to settle any litigation, action, proceeding or arbitration;
(g) Made
any
purchase commitment other than in the ordinary course of business, consistent
with past custom and practice, exceeding Ten Thousand Dollars ($10,000) per
commitment or Twenty-Five Thousand Dollars ($25,000) in the
aggregate;
(h) Modified
the timing, course of conduct or other cash management activities with respect
to the collection of accounts receivable of the Business;
(i) Failed
to
pay any accounts or notes payable or any other obligations consistent with
past
practices, except for bona fide disputes arising in the ordinary course of
business;
(j) Entered
into any material transaction, contract or commitment other than in the ordinary
course of business, consistent with past custom and practice, other than the
transactions contemplated by the Transaction Documents;
(k) Suffered
any event or events, whether individually or in the aggregate, that has had
or
could be reasonably expected to result in a Material Adverse Effect on the
Business, the Company or any of the Assets; or
(l) Issued
any equity interests or entered into any agreement or understanding to do
so.
4.15.
Health,
Safety and Environment.
The
Company has never generated, transported, treated, stored, disposed of or
otherwise handled any Hazardous Materials at any site, location or facility
in
connection with its Business or any of its assets in violation of any applicable
Environmental and Safety Requirements (as defined herein) nor does the Leased
Real Property contain (including containment by means of any underground storage
tank) any Hazardous Materials. The Company: (a) is in material compliance with
all applicable federal, state and local laws, rules, regulations, ordinances
and
requirements relating to public health and safety, worker health and safety
and
pollution and protection of the environment, all as amended (“Environmental
and Safety Requirements”),
and
(b) possesses all required permits, licenses, certifications and approvals
and
has filed all notices or applications required thereby or pertaining thereto.
The Company has never been subject to, or received any written notice of, any
private, administrative or judicial inquiry, investigation, order or action,
or
any written notice of any intended or threatened private, administrative, or
judicial inquiry, investigation, order or action relating to the presence or
alleged presence of Hazardous Materials in, under or upon any property leased
or
owned by the Company, nor is the Company or any Member aware of any such
inquiry, investigation, order, action or notice. There are no pending, or to
the
knowledge of any Member, threatened, investigations, actions, orders or
proceedings (or written notices of potential investigations, actions, orders
or
proceedings) from any Governmental Authority or any other entity regarding
any
matter relating to Environmental and Safety Requirements.
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4.16.
Employees.
Schedule
4.16
contains
a true, complete and correct list setting forth the names, title and current
compensation rate and compensation of all individuals employed by the
Company
as of
the recent date stated thereon. There
has
been no material increase, other than in the ordinary course of business,
consistent with past custom and practice, in the compensation or rate of
compensation payable to any employees of the Company since the Review Date,
nor
since that date has there been any promise to any employee listed on
Schedule
4.16,
orally
or in writing, of any bonus or increase in compensation, except for increases
in
the ordinary course of business consistent with the Company’s past compensation
practices and listed on Schedule 4.16,
and
obligations incurred under existing bonus, insurance, pension or other Employee
Benefit Plans described on Schedule
4.19
or
Schedule
4.20.
Except
as set forth on Schedule
4.16,
there
has been no promise to any employee listed on Schedule
4.16,
orally
or in writing, of any guaranty of employment following the Closing
Date.
4.17. Insurance.
The
Company has obtained and maintained in full force and effect commercially
reasonable amounts of insurance to protect it and the Business against the
types
of liabilities, including medical malpractice, customarily insured against
by
Persons operating a business of similar size and nature to the Business, and
all
premiums due through the Closing Date on such policies have been paid. The
Company has complied in all material respects with the provisions of all such
policies. The Company has previously delivered to NovaMed complete and correct
copies of all such policies, together with all riders and amendments thereto.
Except as set forth on Schedule
4.17,
there
are no claims or asserted claims reported to insurers under such policies,
including all medical malpractice claims and similar types of claims, actions
or
proceedings asserted against any of the Company and the Members (as it may
relate to the Business) at any time within the past five (5) years. As of the
Closing Date, each of the Members have caused the Company to report any pending
or threatened claims as of the Closing Date to the Company’s insurance carrier
for coverage under the policy in place prior to the Closing Date.
4.18.
Affiliate
Transactions.
Excluding ordinary course distributions to its equity holders, there are no
transactions involving the transfer of any cash, property or rights to or from
the Company from, to or for the benefit of any Affiliate or former Affiliate
of
the Company (“Affiliate
Transactions”)
during
the period commencing two (2) years prior to the Closing Date or any existing
commitments of the Company to engage in the future in any Affiliate
Transactions.
4.19.
Employee
Benefit Plans.
Except
as
set forth in Schedule
4.19,
neither
the Company nor any Affiliate of the Company has at any time maintained,
sponsored, adopted, made contributions to, obligated itself or had any liability
with respect to: (a) any “Employee Pension Benefit Plan” (as such term is
defined in Section 3(2) of ERISA); (b) any “Employee Welfare Benefit Plan” (as
defined in Section 3(1) of ERISA); (c) any “Multi-Employer Plan” (as defined in
Section 3(37) of ERISA); (iii) any collective bargaining agreement, plan of
deferred compensation, medical plan, life insurance plan, long-term disability
plan, dental plan or other plan providing for the welfare of any of the
Company’s employees or former employees or beneficiaries thereof, personnel
policy (including, but not limited to, vacation time, holiday pay, service
award, bonus programs, moving expense reimbursement programs and sick leave)
or
material fringe benefit; and (d) any excess benefit plan, bonus or incentive
plan (including, but not limited to, stock options, restricted stock, stock
bonus and deferred bonus plans), severance agreement, top hat plan or deferred
compensation plan, salary reduction agreement, change-of-control agreement,
employment agreement, consulting agreement or any other benefit plan, policy,
program, arrangement, agreement or contract, whether or not written or
terminated, with respect to any employee, former employee, director, independent
contractor, or any beneficiary or dependent thereof (all such plans, policies,
programs, arrangements, agreements and contracts, including those that are
set
forth on Schedule
4.19
(“Scheduled
Plans”),
are
referred in this Agreement to as “Employee
Benefit Plans”).
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(a) The
Employee Benefit Plans are in compliance with governing documents and with
applicable law.
(b) Except
as
noted on Schedule
4.19,
all
Employee Benefit Plans shall be terminated or frozen as of the Closing Date
in
accordance with Section 6.3 hereof.
(c) The
Members have delivered to NovaMed a complete and accurate copy, as of the
Closing, of each written Scheduled Plan, together with a copy of financial
statements, actuarial reports and Form 5500 annual reports (including required
schedules), if any, for the three (3) most recent plan years, the most recent
Internal Revenue Service (“IRS”)
determination letter or IRS recognition of exemption; any other material letter,
ruling or notice issued by any Governmental Authority with respect to each
such
plan, a copy of each trust agreement, insurance contract or other funding
vehicle, if any, the current summary plan description or summary of material
modifications with respect to each such plan, and a copy or description of
each
other general explanation or written or oral communication which describes
any
material term of any such plan that has not previously been disclosed to NovaMed
pursuant to this Section. Schedule
4.19
contains
a description of the material terms of any unwritten Scheduled Plan as of the
Closing Date.
(d) With
respect to each Employee Benefit Plan, there are no claims or other proceedings
pending or threatened with respect to the assets thereof (other than routine
claims for benefits), and there are no facts which could reasonably give rise
to
any liability, claim or other proceeding against any Employee Benefit Plan,
any
fiduciary or plan administrator or other Person dealing with any Employee
Benefit Plan or the assets of any such plan.
(e) With
respect to each Employee Benefit Plan, no Person: (i) has entered into any
“prohibited transaction,” as such term is defined in ERISA or the Code and the
regulations, administrative rulings and case law thereunder; (ii) has breached
a
fiduciary obligation or violated Sections 402, 403, 405, 503, 510 or 511 of
ERISA; (iii) has any liability for any failure to act or comply in connection
with the administration or investment of the assets of such plans; or (iv)
engaged in any transaction or otherwise acted with respect to such plans in
such
a manner which could subject the Company or any fiduciary or plan administrator
or any other Person dealing with any such plan, to liability under Sections
409
or 502 of ERISA or Sections 4972 or 4976 through 4980B of the Code.
(f) Neither
the Company nor any Affiliate of the Company has at any time participated in,
made contributions to or had any other liability with respect to any Employee
Benefit Plan which is a “multi-employer plan” as defined in Section 4001 of
ERISA, a “multi-employer plan” within the meaning of Section 3(37) of ERISA, a
“multiple employer plan” within the meaning of Section 413(c) of the Code or a
“multiple employer welfare arrangement” within the meaning of Section 3(40) of
ERISA.
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(g) Neither
the Company nor any Affiliate of the Company has at any time maintained,
contributed to, or obligated itself or otherwise had any liability with respect
to, any funded or unfunded employee welfare plan, whether or not terminated,
which provides medical, health, life insurance or other welfare-type benefits
for current or future retirees or current or future former employees, their
spouses or dependents or any other Persons (except for limited continued medical
benefit coverage for former employees, their spouses and other dependents as
required to be provided under Section 4980B of the Code and Part 6 of Subtitle
B
of Title I of ERISA and the accompanying proposed regulations or state
continuation coverage laws (“COBRA”)).
(h) The
Company and each Employee Benefit plan which is subject to the requirements
of
COBRA has been, is, and will be as of the Closing Date, in compliance with
the
requirements of COBRA.
4.20.
Personnel
Agreements, Plans and Arrangements.
Except
as listed in Schedule
4.20,
neither
the Company nor any Member (as it may relate to the Business) is a party to
or
obligated in connection with the Business with respect to any outstanding
contracts with any current or former employees, agents, consultants,
or advisers.
4.21.
Certain
Payments.
Neither
the Company, the Members, any director, manager, officer, agent, or employee
of
the Company or, to the knowledge of the Company or any Member, any other Person
associated with or acting for or on behalf of the Company has, directly or
indirectly, made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or public, regardless
of form, whether in money, property, or services (a) for securing patients
or
referrals; (b) for patients or referrals secured; (d) to obtain special
concessions or for special concessions already
obtained, for or in respect of the Company; or (e) in violation of any
law.
4.22.
Workers
Compensation.
Schedule
4.22
sets
forth all expenses, obligations, duties and liabilities relating to any pending,
or, to the knowledge of the Company or any Member, threatened or ongoing claims
by employees and former employees (including dependents and spouses) of the
Company (or its predecessors),
and the extent of any specific accrual on or reserve therefor set forth on
the
Financial Statements, for costs, expenses and other liabilities under any
workers compensation laws, regulations, requirements or programs. Except as
set
forth on Schedule
4.22,
no
claim, injury, fact, event or condition exists which would give rise to a
material claim by any employees or
former
employees (including dependents and spouses) of the Company under any workers
compensation laws, regulations, requirements or programs.
4.23.
Accounts
Receivable/Accounts Payable.
(a) Accounts
Receivable.
Except
as set forth on Schedule
4.23(a),
the
Accounts Receivable are valid, binding and legally enforceable obligations
and
are owned by the Company free and clear of all Liens, and, except for
contractual allowances, reserves for bad debts and other adjustments that are
consistent with those adjustments made in preparing the Financial Statements
in
all material respects, and, to the Knowledge of the Company, will not be subject
to any offset, counterclaim or other adverse claim or defense. The Accounts
Receivable arose in the ordinary and usual course of business and the Accounts
Receivable are set forth on the books and records of the Company. Schedule
4.23(a)
contains
a complete and accurate list of all Accounts Receivable as of the recent date
stated thereon, which list represents the Accounts Receivable after adjusting
for contractual allowances and bad debt reserves.
Neither the Company nor the Members are guaranteeing the collectibility of
the
Accounts Receivable; provided,
however,
except
as set forth on Schedule
4.23(a),
the
Company and each of the Members do not know of any reason why the Accounts
Receivable would not be collectible according to approximately the same ratios
as accounts receivable have been historically collectible.
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(b) Accounts
Payable and Accrued Liabilities.
Schedule
1.4(a)
and
Schedule
1.4(b)
sets
forth a complete and correct list of the Accounts Payable and Accrued
Liabilities. Each of the Accounts Payable and Accrued Liabilities are valid
and
have been incurred in connection with the operation of the Business in the
ordinary course of business, consistent with the Company’s past custom and
practice.
4.24.
Brokers.
All
negotiations relating to this Agreement and the Transaction Documents, and
the
transactions contemplated hereby and thereby, have been carried on without
the
intervention of any Person acting on behalf of any of the Company or any Member
in such a manner as to give rise to any valid claim for any broker’s or finder’s
fee or similar compensation against NovaMed.
4.25.
HIPAA.
(a) All
of the Assets, including, without limitation, any computer hardware and/or
software, are in material compliance with the Health Insurance Portability
and
Accountability Act of 1996 (Public Law 104-91, 42 U.S.C. 1301 et.
seq.)
and
regulations promulgated thereunder (collectively, “HIPAA”),
and
applicable state laws having similar subject matter to HIPAA (“State
HIPAA”),
and
(b) the Company has and continues to conduct its Business and activities,
including, without limitation, its billing and collection activities, its
Medical Records management activities, and its general practice management
activities, in a manner that materially complies with HIPAA and State
HIPAA.
4.26.
Rate
Appeals.
Except
for appeals in the ordinary course of business, the Company does not have any
rate appeal currently pending before any Governmental Authority or any
administrator of any third-party payor program.
4.27.
Physicians.
None of
the physicians who utilize the Facility (including, without limitation, those
Members utilizing the Facility) (collectively, the “Physicians”)
have
to the Knowledge of the Company or any Member, threatened to discontinue or
to
terminate his or her relationship with the Company and the provision of services
at the Facility. Except as set forth in Schedule
4.27,
none of
the Physicians, to the Knowledge of the Company or any Member, has expressed
plans (i) retire from the practice of medicine in the next five (5) years,
(ii)
to be involved in the development or operations of another ambulatory surgery
center, or (iii) to relocate their residence and/or primary medical practice
outside of the Kalamazoo metropolitan area. During the three (3) years preceding
the Closing Date, each of the Physicians:
(a) Has
been
duly licensed and registered, and is in good standing by their state to engage
in the practice of medicine, and said license and registration have not been
suspended, revoked or restricted in any manner, and
(b) Has
had
valid professional liability insurance in place in amounts not less than
commercially reasonable levels and has not indicated any intent to terminate
or
reduce his or her professional liability coverage.
4.28.
Certain
Representations With Respect to the Facility.
(a) The
Facility is qualified for participation in the Medicare program. Complete and
accurate copies of the Facility’s existing Medicare contracts have been
furnished to NovaMed. The Company is presently in material compliance with
all
of the terms, conditions and provisions of such contracts.
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(b) The
Facility is qualified for participation in the Medicaid program. Complete and
accurate copies of the Company’s existing Medicaid contracts have been furnished
to NovaMed. The Company is presently in material compliance with all of the
terms, conditions and provisions of such contracts.
4.29.
Bank
Accounts.
Schedule
4.29
contains
a complete and accurate list of each bank at which the Company has an account
or
safe deposit box, the number of each such account or box, and the names of
all
Persons authorized to draw on such accounts or to have access to such
boxes.
4.30.
No
Designated Health Services.
The
Company has not provided, does not provide and has no intention of providing
any
services that constitute “designated health services” within the meaning of 42
U.S.C. § 1395nn.
4.31.
No
Misrepresentation.
None of
the representations and warranties of the Members set forth in this Agreement,
in any of the certificates, schedules, lists, documents, exhibits, or other
instruments delivered, or to be delivered, to NovaMed as contemplated by any
provision hereof
(including the Transaction Documents), contain any untrue statement of a
material fact or omit
to
state a material fact necessary to make the statements contained herein or
therein not misleading.
To the
Knowledge of any Member or the Company, there are no material facts which have
not been disclosed to NovaMed which have a Material Adverse Effect, or could
reasonably be anticipated to have a Material Adverse Effect, on the Business
or
the Company or any Member’s ability to consummate the transactions contemplated
hereby.
4.32
No
Additional Representations and Warranties.
Except
as specifically set forth in this Agreement, the Schedules to this Agreement,
or
in any Transaction Document to which any of the Members is a party, other than
that which may form the basis of fraud by NovaMed, each Member makes no
representation or warranty, express or implied (including, any implied
representation or warranty as to the condition, merchantability, suitability
or
fitness of a particular purposes of any of the Assets), (a) as to any matter
whatsoever relating to the Purchased Interests, the Assets, or the Business,
and
(b) as to the accuracy or completeness of any information regarding the Company
or the Business. For the avoidance of doubt, the provisions of this Section
4.32
shall in
no way limit the basis upon which NovaMed may assert a fraud or fraud in the
inducement claim or cause of action against any of the Members, nor shall this
Section
4.32
serve as
the basis for any defense to such fraud or fraud in the inducement claim or
cause of action asserted by NovaMed against any of the Members or any other
Person.
ARTICLE
V.
NOVAMED’S
REPRESENTATIONS AND WARRANTIES
NovaMed
hereby represents and warrants to the Members as of the Closing Date as
follows:
5.1.
Organization.
NovaMed
is a corporation duly organized, validly existing and in good standing under
the
laws of the State of Delaware.
5.2. Authorization.
NovaMed
has full power, right and authority to enter into and perform its obligations
under this Agreement and each of the Transaction Documents to which it is a
party. The execution, delivery and performance by NovaMed of this Agreement
and
each of the Transaction Documents to which it is a party have been
duly
and properly authorized by all requisite corporate action in accordance with
applicable law and with NovaMed’s Certificate of Incorporation.
This
Agreement and each of the Transaction Documents to which NovaMed is a party
have
been duly executed and delivered by NovaMed and are the valid and binding
obligation of NovaMed and are enforceable against
NovaMed in accordance with their respective terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the rights of creditors generally and the
availability of equitable remedies.
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5.3.
Transaction
Not a Breach.
The
execution, delivery and performance of this Agreement and the Transaction
Documents by NovaMed will not violate and conflict with,
or
result in the breach of any of the terms, conditions, or provisions of NovaMed’s
Certificate of Incorporation or of any contract, agreement, mortgage, or other
instrument or obligation of any nature to which NovaMed is a party or by which
NovaMed is bound.
5.4.
Acquisition
of the Purchased Interests.
(a) NovaMed
acknowledges that the Purchased Interests will be sold to NovaMed pursuant
to
Section 4(2) of the Securities Act of 1933, as amended, and applicable state
securities laws. NovaMed is acquiring the Purchased Interests for its own
account and not with a view to the distribution or resale thereof. NovaMed
has
no intention of selling the Purchased Interests in a public distribution in
violation of federal securities laws or any applicable state securities
laws.
(b) As
of the
Closing Date, NovaMed is not currently and actively engaged in any material
negotiations with any other party with respect to a pending transaction
involving the sale or assignment of a majority interest in NovaMed or other
change of control of NovaMed. This Section
5.4(b) shall
only survive the Closing for a period of three (3) months following the Closing
Date.
5.5.
Broker.
All
negotiations relating to this Agreement and the Transaction Documents, and
the
transactions contemplated hereby and thereby, have been carried on without
the
intervention of any Person acting on behalf of NovaMed in such a manner as
to
give rise to any valid claim for any broker’s or finder’s fee or similar
compensation against any of the Members.
5.6.
No
Misrepresentation.
None of
the representations and warranties of NovaMed set forth in this Agreement or
in
any of the certificates, schedules, lists, documents, exhibits, or other
instruments delivered, or to be delivered, to the Members as contemplated by
any
provision hereof (including the Transaction Documents), contain any untrue
statement of a material
fact or omit
to
state a material fact necessary to make the statements contained herein or
therein not misleading.
To the
actual knowledge of NovaMed, there are no material facts which have not been
disclosed to the Company and the Members which have a Material Adverse Effect,
or could reasonably be anticipated to have a Material Adverse Effect, on
NovaMed’s ability to consummate the transactions contemplated hereby.
5.7.
Litigations
and Proceedings.
To the
Knowledge of NovaMed, there are no claims counterclaims, actions, suits, orders,
proceedings (arbitration, mediation or otherwise), investigations or judgments
pending or, threatened, relating to the transactions contemplated hereby, at
law
or in equity, in any court or agency, or before or by any Governmental
Authority.
5.8
Financing.
On the
Closing Date, NovaMed will have sufficient cash and/or available credit
facilities to pay the Purchase Price and to make any other necessary payment
of
fees and expenses in connection with consummation of the acquisition of the
Purchased Interests as contemplated by this Agreement. On the next day
immediately following the consummation of the transactions contemplated by
this
Agreement, NovaMed will have positive net worth (calculated in accordance with
GAAP) and will not be insolvent (as defined under the U.S. Bankruptcy Code).
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ARTICLE
VI.
ADDITIONAL
AGREEMENTS
6.1.
Release
of Liens and Lien Searches.
The
Members shall procure all applicable release of liens with respect to those
Liens set forth on Schedule
4.2,
prior
to the Closing, except with respect to the Bank Debt. The Members shall use
their reasonable efforts to provide NovaMed with all information and other
assistance required for the parties to file all applicable UCC termination
statements (in a form and manner required by NovaMed or its lenders). Following
the filing of all such UCC termination statements, there shall be no remaining
financing statements, judgments, taxes or other Liens outstanding against the
Company or any of the Assets as of the Closing Date, except as it relates to
the
Bank Debt.
6.2. Employees.
The
Company shall continue to employ the employees listed on Schedule
6.2(a)
(the
“Continuing
Employees”)
as of
the Closing Date, on the terms and conditions established by the Company in
its
sole discretion. This continued employment by the Company shall not be deemed
to
create a continuing right to employment for any Continuing Employees. The
Members shall be solely responsible for all liabilities relating, directly
or
indirectly, to the Company’s termination of any other employees who are not
Continuing Employees. The Members shall be solely responsible for any
employment-related claims filed by any employees of the Company which relate
to
facts and circumstances existing on and prior to the Closing Date, or arise
from
or relate to completion of the transactions contemplated by this Agreement
or
the Transaction Documents, regardless of when filed, unless any such claims
resulted from NovaMed’s action or omission and, in such case, such claims shall
remain the obligation of NovaMed.
6.3.
Employee
Benefit Plans.
(a) COBRA.
The
Members represent that the Company has complied, in all material respects,
with
the applicable requirements of COBRA through the Closing Date and the Members
shall be responsible for all liabilities arising under COBRA with respect to
any
event occurring prior to and on the Closing Date.
(b) Plans,
Benefits and Policies.
The
Company shall adopt and provide for the Continuing Employees on or after the
Closing Date such employee plans and other conditions of employment as the
Company determines in its sole discretion, but shall not adopt or assume any
of
the obligations or liabilities with respect to any Employee Benefit Plans of
the
Company or any Plan Affiliate, except to the extent that such Employee Benefit
Plan is listed on Schedule
4.19
and the
Company otherwise agrees to assume the liabilities associated therewith.
(c) Company’s
Qualified Retirement Plans.
As of
the Closing Date, the Members shall have caused the Company to freeze, and
cease
making contributions to, all qualified retirement plans under Section 401(a)
of
the Code, and shall cause the Company to take subsequent action to merge or
terminate sponsorship of, and all responsibility for, all qualified retirement
plans so that, after the Closing Date, the Company shall not maintain any
qualified retirement plan. After Closing and after approval is received from
the
IRS, each of the Members, the Company, NovaMed and their respective Affiliates
shall take all steps reasonably necessary to distribute the net assets of the
Company’s terminated 401(k) Plan (the “401(k)
Plan Distribution”).
Between the Closing Date and the date on which the 401(k) Plan Distribution
is
completed neither the Members, the Company, NovaMed nor any of their respective
Affiliates will take any actions or permit any omissions to occur which will
materially damage, reduce, harm, or otherwise waste the net assets of the 401(k)
Plan.
6.4.
Non-Competition
Arrangements.
Each
ASCOA Party (as defined herein) hereby waives any and all rights and remedies
it
may have in connection with any and all non-competition arrangements that may
apply with respect to any of the Company’s employees, including, but not limited
to, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
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6.5.
Post-Closing
Remittances.
If,
after the Closing Date, the Members shall receive any remittance from any
account debtors with respect to the Accounts Receivable, the Members shall
forward it to the Company promptly following receipt thereof.
6.6.
Further
Assurances.
The
parties hereto shall execute such further documents, and perform such further
acts, as may be reasonably necessary to transfer and convey the Purchased
Interests to NovaMed or the Assets to the Company, all on the terms contained
herein, and to otherwise comply with the terms of this Agreement and consummate
the transactions contemplated herein.
6.7.
Taxes.
(a) Allocation
of Taxes.
(i) The
Members shall be responsible for all Taxes imposed on the Company for all
business activities through and including the Closing Date (the “Pre-Closing
Taxes”).
The
Members shall be required to pay any Pre-Closing Taxes.
(ii)
NovaMed
and the Members from and after the Closing Date shall be responsible for all
Taxes imposed on the Company for all business activities occurring after the
Closing Date (the “Post-Closing
Taxes”).
(iii)
Notwithstanding
anything to the contrary contained herein, each of the Members, on a Pro Rata
Basis, shall severally (but not jointly, as more specifically described in
Section
12.6(a)
hereof)
indemnify NovaMed for all Taxes imposed on the Company arising, directly or
indirectly, from the transactions contemplated herein to the extent that the
Company’s obligation with respect to such Taxes arose due to any action or
omission by the Company on or before the Closing Date.
(b) Returns.
The
Members shall cause to be prepared, for the period (i) beginning the day after
the final date of the period of the most-recently filed Tax Return of the
Company, and (ii) ending the day before the Closing Date (the “Stub
Period”),
true
and correct copies of all Tax Returns required to be filed by the Company,
regardless of whether such Tax Return is required to be filed for the Stub
Period (the “Stub
Tax Returns”).
The
Members shall not file any Stub Tax Returns, but shall provide all Stub Tax
Returns to NovaMed by no later than thirty (30) days prior to the applicable
filing due date. NovaMed shall review such Stub Tax Returns and notify the
Members in the event that NovaMed disagrees with any portion of the contents
thereof. In the event of such disagreement the parties shall convene and attempt
to promptly resolve all contested issues. If the parties are unable to resolve
such issues, such issues shall be submitted to the dispute resolution procedures
set forth in Section
13.12
hereof.
Upon finalization of the Stub Tax Return in accordance with the foregoing,
NovaMed shall cause to be filed all Stub Tax Returns. NovaMed shall provide
to
the Members a true copy of each Stub Tax Return as filed and evidence of the
timely filing thereof. All Stub Tax Returns shall be prepared and all elections
with respect to such Sub Tax Returns shall be made, to the extent permitted
by
law, in a manner consistent with prior practice of the Company.
(c) Cooperation
and Records Retention.
The
Members and NovaMed shall (i) each provide the other, and NovaMed shall cause
the Company to provide the Members, with such assistance as may reasonably
be
requested by any of them in connection with the preparation of any Return,
audit, or other examination by any taxing authority or judicial or
administrative proceedings relating to liability for Taxes; (ii) each retain
and
provide the other, and NovaMed shall cause the Company to retain and provide
the
Members with any records or other information that may be relevant to such
Return, audit or examination, proceeding, or determination; and (iii) each
provide the other with any final determination of any such audit or examination,
proceeding, or determination that affects any amount required to be shown on
any
Return of the other or the Company for any period. Without limiting the
generality of the foregoing, NovaMed shall retain, and shall cause the Company
to retain, until the applicable statutes of limitations (including any
extensions) have expired, copies of all Returns, supporting work schedules,
and
other records or information that may be relevant to such returns for all Tax
periods or portions thereof ending before or including the Closing Date and
shall not destroy or otherwise dispose of any such records without first
providing the Members with a reasonable opportunity to review and copy the
same.
Each party shall bear its own expenses in complying with the foregoing
provisions. NovaMed’s obligations under this subparagraph (c) are limited to the
records provided to it at Closing in accordance with Section
1.2(f)
hereof.
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(d) All
obligations of the Members set forth in this Section
6.7
shall be
determined on a Pro Rata Basis, as more specifically described in Section
12.6(a)
hereof.
6.8.
Professional
Liability Insurance.
In lieu
of the Company purchasing extended reporting (“tail”)
coverage covering acts and omissions at the Facility prior to the Closing Date,
the Company shall procure as of the Closing professional liability insurance
coverage with a retroactive date of December 13, 2004 covering acts and
omissions at the Facility from and after such retroactive date (but excluding
any pending or threatened claims as of the Closing Date) (the “Retro
Date Coverage”).
At
Closing, the Members shall pay to NovaMed the sum of Seventy-Seven Thousand
Five
Hundred Dollars ($77,500) for his or its pro rata portion of the additional
costs to be incurred by the Company as a result of the Retro Date Coverage.
6.9.
Credentialing.
As of
the Closing Date, each of the Members and the other physicians credentialed
by
the Facility immediately prior to the Closing Date shall continue to maintain
privileges to perform surgical procedures at the Facility owned and operated
by
the Company.
ARTICLE
VII.
CLOSING
7.1. Time
and Place.
The
closing of the transactions that are the subject of this Agreement shall be
consummated at a closing (the “Closing”)
simultaneous with the execution and delivery of this Agreement and the other
Transaction Documents by the applicable parties, which execution and delivery
shall be via facsimile effective as of the Closing Date, with original documents
to be exchanged by nationally recognized overnight courier for delivery on
the
next business day after the Closing Date.
7.2.
Conditions
Precedent.
As a
condition precedent to the consummation of the transactions contemplated herein,
(a) the assets and liabilities of the Company shall be in the manner set forth
in Article
I
hereof,
and (b) the
Company shall have received all necessary state licensure and Medicare approvals
to continue the ownership and operation of the Business following the
transactions contemplated herein (with the understanding that upon commencement
of operations, there may be billing delays associated with procuring third
party
payor provider numbers).
7.3.
Deliveries
of the Members.
At the
Closing, the Members will execute and deliver or cause to be executed and
delivered to NovaMed:
(a) the
Amended and Restated Operating Agreement of the Company, in the form attached
hereto as Exhibit
7.3(a)
(the
“Operating
Agreement”);
-18-
(b) an
Assignment of Limited Liability Company Interest (the “Assignment
of Purchased Interests”),
in
the form substantially in the form attached hereto as Exhibit
7.3(b),
pursuant to which each of the Members shall assign their applicable amount
of
the Purchased Interests to NovaMed.
(c) a
certificate of the Secretary of the Company as to (i) copies of resolutions
of
its Board of Manager and each of the Members authorizing the execution, delivery
and performance of this Agreement and the Transaction Documents and authorizing
and
approving the plan freeze and post-Closing termination described in Section
6.3(c)
hereof.;
(ii) a
Certificate of Good Standing issued by the Michigan Department of Labor &
Economic Growth Bureau of Commercial Services; (iii) its existing Operating
Agreement in place immediately prior to the Closing; (iv) incumbency and
specimen signatures with respect to its officers executing this Agreement and
the applicable Transaction Documents; and (v) its Articles of Organization,
as
amended, certified by the Michigan Department of Labor & Economic Growth
Bureau of Commercial Services.
(d) any
required third party consents, filings, and certificates from the Company or
any
third party (including, any Governmental Authority) relating to the transfer
of
the Purchased Interests, including without limitation, all consents from the
State of Michigan regarding the transfer of all Permits and licenses relating
to
the ownership and operation of the Facility, and copies of all written consents
obtained in connection with the Assumed Contracts;
(e) an
Estoppel and Consent Agreement between Kalamazoo Physicians Realty Company,
LLC
(the “Landlord”)
and
the Company for the Leased Real Property, substantially in the form of attached
Exhibit
7.3(e)
(“Consent
Agreement”),
duly
executed by the Landlord;
(f) a
duly
executed Termination Agreement between the Company and ASCOA, pursuant to which
the management agreement entered by and between the Company and ASCOA shall
be
terminated, substantially in the form of attached Exhibit
7.3(f);
(g) resignations
of the members of the Board of Managers and officer(s) of the
Company;
(h) all
applicable documentation releasing Liens (except with respect to the Bank Debt)
covering, concerning or relating to the Assets, in form and substance reasonably
acceptable to NovaMed;
(i) if
certificated, certificates representing the Purchased Interests, with duly
executed stock powers or, if any such certificates have been lost, stolen or
destroyed, then an affidavit of such fact by the Member claiming such
certificate to be lost, stolen or destroyed and agreeing to indemnify the
Company against any claim that may be made against either the Company or NovaMed
with respect to such certificate;
(j) a
Certificate of Amendment to the Articles of Organization of the Company and
a
Certificate of Change of Registered Office and/or Registered Agent of the
Company, providing for management of the Company by a sole manager,
post-Closing, and a new registered office and agent for the Company, duly
executed by an authorized representative of the Company, to be delivered to
the
Michigan Department of Labor & Economic Growth Bureau of Commercial
Services;
(k) all
of
the Company’s minute books, company records and tax records, in whatever form;
-19-
(l) Certificate
of the Members certifying that all representations and warranties contained
in
this Agreement are truthful, accurate and complete as of the Closing Date,
along
with an update to any of the Schedules attached hereto in a manner acceptable
to
NovaMed in its sole discretion;
(m) an
amendment to the loan agreement in connection with the Bank Debt (the
“Amendment”),
duly
executed by the lender; and
(n) such
other documents and instruments as NovaMed or its counsel reasonably shall
deem
necessary to consummate the transactions contemplated hereby.
All
documents delivered to NovaMed shall be in form and substance reasonably
satisfactory to counsel for NovaMed.
7.4.
Deliveries
of NovaMed.
At the
Closing, NovaMed will deliver to the Members simultaneously with the delivery
of
the items referred to in Section
7.3
above:
(a) the
payment of the Purchase Price;
(b) the
Operating Agreement;
(c) certificate
of the Secretary of NovaMed as to (i) copies of resolutions of its board of
directors authorizing the execution, delivery and performance of this Agreement
and the Transaction Documents, and (ii) incumbency and specimen signatures
with
respect to its officers executing this Agreement and the applicable Transaction
Documents;
(d) a
duly
executed Management Agreement (the “Management
Agreement”)
between NovaMed Management Services, LLC (“NovaMed
Management”)
and
the Company, substantially in the form of attached Exhibit
7.4(d),
pursuant to which NovaMed Management will manage the operations of the
Company;
(e) the
Consent Agreement, duly executed by the Company;
(f) the
Assignment of Purchased Interests, duly executed by NovaMed;
(g) Certificate
of NovaMed certifying that all representations and warranties contained in
this
Agreement are truthful, accurate and complete as of the Closing Date;
(h) Certification
issued by the Michigan Department of Labor & Economic Growth Bureau of
Commercial Services, evidencing NovaMed Management’s qualification to do
business in the State of Michigan;
(i) the
Amendment, duly executed by the Company; and
(j) such
other documents and instruments as the Members or their counsel reasonably
shall
deem necessary to consummate the transactions contemplated hereby.
All
documents delivered to the Members shall be in form and substance reasonably
satisfactory to the counsel for the Members.
7.5
Change
of Ownership Process.
To the
extent from and after the Closing there are any actions necessary to confirm
or
effect all reasonably necessary licensure and regulatory approvals required
in
connection with the transactions contemplated herein, the
receipt of which is a condition precedent to the Closing, each of the Members
and his or its respective agents and representatives agrees, and shall cause
the
Company to agree, to cooperate with NovaMed in connection these filings and
applications, and will use commercially reasonable efforts to respond in a
timely manner to any information or signature requests reasonably required
in
connection with these applications and notices.
-20-
ARTICLE
VIII.
INTENTIONALLY
OMITTED
ARTICLE
IX.
INTENTIONALLY
OMITTED
ARTICLE
X.
INTENTIONALLY
OMITTED
ARTICLE
XI.
COVENANT
NOT TO COMPETE
11.1.
Acknowledgment.
Each
Member acknowledges and agrees that in order to assure that the Business will
retain its value as a “going concern,” it is necessary that each of the Members
undertake not to utilize their present special knowledge of the Business to
compete with the Business during the Restricted Period after the acquisition
of
Purchased Interests; provided that
NovaMed
acknowledges that the each of the Members, other than ASCOA and ▇▇▇▇▇▇, will
continue to have an interest in the Business through their ownership of a
minority interest in the Company. Each Member further acknowledges that (a)
NovaMed has been and/or will be engaged in the Business; (b) each Member
possesses extensive knowledge and a unique understanding of the Business, as
well as (subsequent to the transactions contemplated by this Agreement) the
proprietary and confidential information
concerning the Business; (c) the agreements and covenants
contained in this Section 11.1
are
essential to protect the value of the Business and are a condition precedent
to
NovaMed’s willingness to pay for the Purchased Interests; (d) NovaMed would be
irreparably damaged if any Member were to violate the terms and conditions
of
this Article
XI;
and (e)
the geographic, temporal and business scope of the restrictive covenants in
this
Article
XI
are
reasonable.
11.2.
Non-Compete.
Each
Member hereby agrees that for the five (5) year period beginning on the Closing
Date (the “Restricted
Period”);
(provided that
in the
event that any such party is determined to have violated the covenants set
forth
in this Article
XI,
the
Restricted Period shall be extended day for day for the time period that such
party is in violation of any such covenant), he, she or it shall not, directly
or indirectly, act as a director, manager, officer, member or partner of, or
own
any equity or other financial interest in, any Person that owns and/or operates
an ambulatory surgery center, licensed surgical facility or any other outpatient
surgical facility that is located within a forty (40) mile
radius of the location of the Business
(a
“Competing
Facility”).
Notwithstanding the foregoing, and without limiting the terms of the Operating
Agreement, a
Member
may (a) be a director on the Board of Trustees of a hospital; (b) serve on
the
medical staff of any hospital; (c) own an interest in the Company in accordance
with the terms of the Operating Agreement; (d) practice medicine in his or
her
own office or the office of the professional entity in which he
or she
is an employee or owner;
provided,
however,
that a
Physician Member shall not be an employee of a hospital, except for purposes
of
providing on-call coverage, pursuant to an agreement currently in existence.
Nothing in this Section 11.2
is
intended to prevent a Member from owning up to a one percent (1%) interest
in a
business competing with the Company which is publicly traded on a national
stock
market or exchange. In addition, and notwithstanding the restrictions set forth
in this Section
11.2:
the
Members listed on Schedule
11.2
may
continue to own their equity interests in the facilities set forth across from
their names on Schedule
11.2,
provided at no time during the Restricted Period may they increase their
ownership interests in such listed facilities; provided, further that this
Section
11.2
shall
not apply to a transaction which results in a change of control or sale (by
transfer, merger, consolidation, or similar combination with any other entity)
of any ownership interest in ASCOA or the sale (by transfer, merger,
consolidation, or similar combination with any other entity) of any ASCOA assets
to an independent third-party, whereby any such sale (by transfer, merger,
consolidation, or similar combination with any other entity) would otherwise
cause ASCOA or such third-party purchaser to be in breach of this Agreement
with
respect to any existing ownership interest in a competing facility held by
the
independent third-party
purchaser. Notwithstanding
the foregoing, neither ▇▇▇▇▇▇ nor McGuireWoods LLP shall be restricted from
providing legal services to any Competing Facility.
-21-
11.3.
Property
of the Business.
All
memoranda, notes, lists, records and other documentation or papers (and all
copies thereof) of the Business, including such items stored in computer
memories, or microfiche or by any other means,
are and
shall be the Company’s property and shall be delivered to the Company promptly
on the request of NovaMed.
11.4.
Non-Solicitation.
(a) ASCOA
and
its Affiliates (the “ASCOA
Parties”)
and
▇▇▇▇▇▇ and his Affiliates (the “▇▇▇▇▇▇
Parties”) shall
not, directly or indirectly: (i) hire, engage, offer to hire, divert, entice
away, solicit or in any other manner persuade or attempt to persuade any Member
(other than the ASCOA Parties or ▇▇▇▇▇▇ Parties, as the case may be) to enter
into any relationship with the ASCOA Parties or the ▇▇▇▇▇▇ Parties, as
applicable, for any business venture located within a one hundred (100) mile
radius of the Business, or discontinue, terminate or adversely alter his or
her
relationship with the Company or any of its Affiliates; (ii) divert, entice
away, solicit or encourage, or attempt to divert, entice away, solicit or
encourage, any Member (other than the ASCOA Parties or ▇▇▇▇▇▇ Parties, as the
case may be) or any surgeon utilizing the Facility to become an owner or user
of
another surgical facility within a forty (40) mile radius of the Facility;
or
(iii) approach
any such person for any of the foregoing purposes or authorize and assist in
the
taking of any such action by any third party.
(b) No
ASCOA
Party or ▇▇▇▇▇▇ Party shall, for
the
five (5) year period beginning on the Closing Date, directly or indirectly,
for
itself or for any other Person, solicit, entice, persuade or induce or attempt
to solicit, entice, persuade or induce any employee of the Company (whether
employed or leased by the Company) to terminate such employee’s employment or
other relationship with the Center or to become employed or retained by any
Person other than the Company, or approach
any such employee for any of the foregoing purposes or authorize and assist
in
the taking of any such action by any third party.
Solicitations and advertisements in a publication of general circulation shall
not be interpreted as a violation of this Section
11.4(b).
11.5.
Blue-Pencil.
If any
court of competent jurisdiction shall at any time deem the term of this
Agreement or any particular restrictive covenant contained in this Article
XI
too
lengthy or the territory too extensive, the other provisions of this
Article
XI shall
nevertheless stand, the Restricted Period herein shall be deemed to be the
longest period permissible by law under the circumstances and the territory
described in Section
11.2
shall be
deemed to comprise the largest territory permissible by law under the
circumstances. The court in each case shall reduce the Restricted Period and/or
territory described in Section
11.2
to
permissible duration or size.
11.6.
Remedies.
(a) Each
Member acknowledges and agrees that the covenants set forth in this Article
XI
are
reasonable and necessary for the protection of NovaMed and the Company’s
business interests, that irreparable
injury will result if any Member breaches any of the terms of said restrictive
covenants,
and that in the event of actual or threatened breach of any such restrictive
covenants, NovaMed will have no adequate remedy at law. Each Member accordingly
agrees that in the event of any actual or threatened breach by any of them
of
any of the covenants set forth in this Article XI,
NovaMed
shall be entitled to immediate temporary injunctive and other equitable relief,
without bond and without the necessity of showing actual monetary damages,
subject to hearing as soon thereafter as possible. Nothing contained herein
shall be construed as prohibiting NovaMed from pursuing any other remedies
available to it for such breach or threatened breach, including the recovery
of
any damages which it is able to prove.
The
parties also agree that the existence of any claim or cause of action by any
of
the Members against NovaMed or any Affiliate, whether predicated upon this
Agreement or otherwise, shall not constitute a defense to the enforcement of
the
restrictive covenants set forth herein, but shall be litigated separately.
Notwithstanding the foregoing any breach of this Article
XI
by any
Member shall not be deemed a violation of this Article
XI
by any
non-breaching Member and shall not subject any non-breaching Member to liability
under this Agreement.
-22-
(b) To
the
extent any Member breaches a covenant set forth in this Article
XI,
then
such breach shall only create liability for such breaching Member and shall
not
create liability or responsibility for any other non-breaching Member.
11.7.
Assignment.
Each of
the Members agrees that the rights granted in this Article
XI to
NovaMed may be assigned by NovaMed at its sole and absolute discretion. All
of
the provisions of this Article
XI
shall
inure to any successors of NovaMed, all of which are specifically third party
beneficiaries of this Article
XI
with
full rights hereunder. In addition, the parties hereto agree that an assignee
of
the rights hereunder is an intended, direct third party beneficiary of
Article
XI
and may
enforce such rights in its own name in addition to or in lieu of NovaMed.
11.8.
Patient
Freedom.
The
parties hereto agree that the benefits afforded either party hereunder are
not
payment for, and are not in any way contingent upon the referral, admission
or
any other arrangement for, the provision of any item or service offered by
any
party hereto. Nothing in this Agreement shall be construed to limit the freedom
of any patient of a Member to choose the facility
or physician from whom any patient shall receive health care services or limit
or interfere with a Member’s ability to exercise professional judgment in
treating patients or his or her ability to provide medical services to
patients.
ARTICLE
XII.
POST-CLOSING
COVENANTS
12.1.
Indemnification
by the Members.
From
and after the Closing each Member agrees, on a Pro Rata Basis, to severally
(but
not jointly, as more specifically described in Section
12.6(a)
hereof)
indemnify, defend and save NovaMed and its Affiliates (including, without
limitation, the Company) and each of their respective officers, directors,
managers, employees, agents and fiduciaries (each, a “NovaMed
Indemnified Party”),
forever harmless from and against, and to pay to a NovaMed
Indemnified Party
or reimburse
a NovaMed Indemnified Party for (in either case within ten (10) business days
of
its receipt of notice in accordance with the terms of this Article from any
NovaMed Indemnified Party) any and all liabilities (whether contingent, fixed
or
unfixed, liquidated or unliquidated, or otherwise), obligations, deficiencies,
demands, claims, suits, actions, or causes of action, assessments,
losses, costs, expenses, interest, fines, penalties, actual or punitive damages
or costs or expenses of any and all investigations, proceedings, judgments,
environmental analyses, remediations,
settlements and compromises (including reasonable fees and expenses of
attorneys, accountants
and
other experts) (individually and collectively, the “Losses”)
actually sustained or incurred by any
NovaMed Indemnified Party relating to, resulting from, arising out of or
otherwise by virtue of any of the following:
-23-
(a) any
misrepresentation or breach of a representation or warranty contained in this
Agreement or in the Transaction Documents by any Member, or non-compliance
with
or breach by any Member of any of the covenants or agreements contained in
this
Agreement or the Transaction Documents to be performed by the Members or any
of
their respective Affiliates; provided,
however,
that
any misrepresentation, breach of warranty or non-fulfillment of any covenant
or
agreement that specifically relates only to a particular Member under this
Agreement shall not create liability or responsibility for any other Member
with
respect thereto, notwithstanding any joint representations contained
herein;
(b) the
operation of the Business, including the use of the Assets and the Excluded
Assets, on or prior to the Closing Date, provided that
there
shall be no indemnification obligation under this Section
12.1
relating
to the Permitted Liabilities;
(c) any
tax
liability of any of the Members, including, without limitation, any tax
liability arising as a result of the consummation of any the transactions
herein;
(d) any
tax
liability of the Company relating to acts, circumstances or conditions arising
on or prior to the Closing Date, including, without limitation, any items of
responsibility of any of the Members which are enumerated in Section
6.7
hereof,
which items of responsibility of any of the Members include, without limitation,
any tax liability arising as a result of the consummation of any of the
transactions contemplated herein;
(e) any
violations of or obligations under Environmental and Safety Requirements
relating to acts, omissions, circumstances or conditions to the extent existing
or arising on or prior to the Closing Date, if such acts, omissions,
circumstances or conditions constituted a violation of Environmental and Safety
Requirements as then in effect;
(f) any
liabilities relating to or arising from the provision of (or failure to provide)
professional medical services, including any liabilities relating to the
failure, prior to the Closing Date, to adhere to or comply with any Medicare
and
Medicaid requirements or Fraud and Abuse Laws;
(g) any
action, demand, proceeding, investigation or claim (whenever made) by any third
party (including Governmental Authorities) against or affecting NovaMed or
its
Affiliates which evidences the existence of a misrepresentation or breach of
any
of the representations, warranties or covenants contained in this Agreement
or
the Transaction Documents of the Members;
(h) the
Excluded Assets or Excluded Liabilities; or
(i) any
claim
for payment of fees and/or expenses as a broker or finder in connection with
the
origin, negotiation, execution or consummation of this Agreement based upon
any
alleged agreement between the claimant and the Company or any
Member.
12.2.
Indemnification
by NovaMed.
From
and after the Closing, NovaMed agrees to indemnify, defend and save the Members
and their respective Affiliates, and their respective employees, trustees,
agents, representatives, heirs and executors other than the Company (each,
a
“Seller
Indemnified Party”)
forever harmless from and against, and to pay to a Seller Indemnified Party
or
reimburse a Seller Indemnified Party for (in either case within ten (10)
business days of its receipt of notice in accordance to the terms of this
Article from any Seller Indemnified
Party), any and all Losses actually sustained or incurred by any Seller
Indemnified Party relating to, resulting from, arising out of or otherwise
by
virtue of any of the following:
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(j) any
misrepresentation or breach of a representation or warranty contained in this
Agreement or in the Transaction Documents by NovaMed, or non-compliance with
or
breach by NovaMed of any of the covenants or agreements contained in this
Agreement or in the Transaction Documents to be performed by
NovaMed;
(k) any
action, demand, proceeding, investigation or claim (whenever made) by any third
party (including Governmental Authorities) against or affecting the Members
or
their respective Affiliates which evidences the existence of a misrepresentation
or breach of any of the representations, warranties or covenants contained
in
this Agreement or the Transaction Documents of NovaMed;
(l) any
claim
for payment of fees and/or expenses as a broker or finder in connection with
the
origin, negotiation, execution or consummation of this Agreement based upon
any
alleged agreement between the claimant and NovaMed;
(d) with
respect to ASCOA and ▇▇▇▇▇▇ only and not with respect to any of the other
Members, the operation of the Business after the Closing Date; or
(e) any
tax
liability of NovaMed related to the transactions contemplated
hereunder.
12.3.
Indemnification
Procedure for Third Party Claims.
In
the
event that subsequent to the Closing any Person entitled to indemnification
under this Agreement (an “Indemnified
Party”)
asserts a claim for indemnification or receives notice of the assertion of
any
claim or of the
commencement of any action or proceeding by any entity that is not a party
to
this Agreement or an Affiliate of a party to this Agreement (including, but
not
limited to any domestic or foreign court or Governmental Authority, federal,
state or local) (a “Third
Party Claim”)
against such Indemnified Party, against which a party to this Agreement is
required to provide indemnification under this Agreement (an “Indemnifying
Party”),
the
Indemnified Party shall give written notice together with a statement of any
available information regarding such claim to the Indemnifying Party within
sixty (60) days after learning of such claim (or within such shorter time as
may
be necessary to give the Indemnifying Party a reasonable opportunity to respond
to such claim). The Indemnifying Party shall have the right, upon written notice
to the Indemnified Party (the “Defense
Notice”)
within
thirty (30) days after receipt from the Indemnified Party of notice of such
claim, which notice by the Indemnifying Party shall specify the counsel it
will
appoint to defend such claim (“Defense
Counsel”),
to
conduct at its expense the defense against such claim in its own name, or if
necessary in the name of the Indemnified Party; provided,
however,
that
the Indemnified Party shall have the right to approve the Defense Counsel,
which
approval shall not be unreasonably withheld, and in the event the Indemnifying
Party and the Indemnified Party cannot agree upon such counsel within ten (10)
days after the Defense Notice is provided, then the Indemnifying Party shall
propose an alternate Defense Counsel, which shall be subject again to the
Indemnified Party’s approval. If the parties still fail to agree on Defense
Counsel, then, at such time, they shall mutually agree in good faith on a
procedure to determine the Defense Counsel. The delivery of a Defense Notice
shall not constitute an admission with respect to the claim for
indemnification.
(a) In
the
event that the Indemnifying Party shall fail to give the Defense Notice, it
shall be deemed to have elected not to conduct the defense of the subject claim,
and in such event the Indemnified Party shall have the right to conduct such
defense in good faith and to compromise and settle the claim without prior
consent of the Indemnifying Party and the Indemnifying Party will be liable
for
all costs, expenses, settlement amounts or other Losses paid or incurred in
connection therewith.
(b) In
the
event that the Indemnifying Party does deliver a Defense Notice and thereby
elects to conduct the defense of the subject claim, the Indemnified Party will
cooperate with and make available to the Indemnifying Party such assistance
and
materials as it may reasonably request, all at the expense of the Indemnifying
Party, and the Indemnified Party shall have the right at its expense to
participate in the defense assisted by counsel of its own choosing; provided that
the
Indemnified Party shall have the right to compromise and settle the claim only
with the prior written consent of the Indemnifying Party, which consent shall
not be unreasonably withheld or delayed.
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(c) Without
the prior written consent of the Indemnified Party, the Indemnifying Party
will
not enter into any settlement of any Third Party Claim or cease to defend
against such claim, if pursuant to or as a result of such settlement or
cessation, (i) injunctive or other equitable relief would be imposed against
the
Indemnified Party, or (ii) such settlement or cessation would lead to liability
or create any financial or other obligation on the part of the Indemnified
Party
for which the Indemnified Party is not entitled to indemnification
hereunder.
(d) The
Indemnifying Party shall not be entitled to control, and the Indemnified Party
shall be entitled to have sole control over, the defense or settlement of any
claim to the extent that claim seeks an order, injunction or other equitable
relief against the Indemnified Party which, if successful, could materially
interfere with the business, operations, assets, condition (financial or
otherwise) or prospects of the Indemnified Party (and the cost of such defense
shall constitute an amount for which the Indemnified Party is entitled to
indemnification hereunder).
(e) If
a firm
decision is made to settle a Third Party Claim, which offer the Indemnifying
Party is permitted to settle under this Section
12.3,
and the
Indemnifying Party desires to accept and agree to such offer, the Indemnifying
Party will give written notice to the Indemnified Party to that effect. If
the
Indemnified Party fails to consent to such firm offer within fifteen (15)
calendar days after its receipt of such notice, the Indemnified Party may
continue to contest or defend such Third Party Claim and, in such event, the
maximum liability of the Indemnifying Party as to such Third Party Claim will
not exceed the amount of such settlement offer, plus costs and expenses paid
or
incurred by the Indemnified Party through the end of such fifteen (15) day
period.
(f) Any
judgment entered or settlement agreed upon in the manner provided herein shall
be binding upon the Indemnifying Party, and shall conclusively be deemed to
be
an obligation with respect to which the Indemnified Party is entitled to prompt
indemnification hereunder.
12.4.
Failure
to Give Timely Notice.
A
failure by an Indemnified Party to give timely, complete or accurate notice
as
provided in Section
12.3
will not
affect the rights or obligations of any
party
hereunder except and only to the extent that, as a result of such failure,
any
party entitled to receive such notice was deprived of its right to recover
any
payment under its applicable insurance coverage or was otherwise directly and
materially damaged as a result of such failure to give timely
notice.
12.5.
Survival.
Notwithstanding anything contained to the contrary in this Agreement, all
representations and warranties of the parties hereto contained in or arising
out
of the Transaction Documents, or in any schedule or certificate given in
connection herewith and therewith, shall survive the Closing, shall continue
in
effect until the eighteen (18) month anniversary of the Closing Date (except
for
Section
5.4(b),
which
shall survive the Closing and for a period of three (3) months thereafter)
and
all claims with respect to such representations and warranties must be asserted
in writing pursuant to this Article
XII prior
to
such anniversary date; provided,
however,
that
the representations and warranties set forth in Sections 4.2,
4.4,
4.6,
4.8,
4.12(b),
4.15
and
4.19 shall
survive until the expiration of all applicable statutes of limitation. Unless
a
specified period is set forth in this Agreement (in which event such specified
period will control),
all covenants and indemnities contained in this Agreement will survive the
Closing and remain in effect indefinitely.
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12.6.
Limitation
on Indemnification.
(a) The
aggregate amount of the Losses required to be paid by the Company and the
Members pursuant to Section
12.1
hereof
shall not exceed the amount of the Purchase Price; provided,
however,
that no
Member shall be liable for more than such Member’s Pro Rata share of any
specific Loss nor shall any Member be liable, in the aggregate, for such Losses
pursuant to Section
12.1
that are
in excess of such Member’s Pro Rata Basis of the Purchase Price.
(b) The
NovaMed Indemnified Parties shall not be entitled to indemnification under
Section
12.1(a)
and
Section
12.1(g)
until
the aggregate amount of all Losses thereunder (on a cumulative basis) exceeds
Two Hundred Thousand Dollars ($200,000) (the “Basket
Amount”),
in
which case the Company and the Members shall be obligated to indemnify the
NovaMed Indemnified Parties only for the excess of the aggregate amount of
all
such Losses over the Basket Amount.
(c) The
Seller Indemnified Parties shall be entitled to indemnification under
Section
12.2(a)
and
Section
12.2(b)
only if
the aggregate amount of all Losses thereunder (on a cumulative basis) exceeds
the Basket Amount, in which case NovaMed shall be obligated to indemnify the
Seller Indemnified Parties only for the excess of the aggregate amount of all
such Losses over the Basket Amount.
(d) The
rights set forth in this Article
XII
shall be
each party’s sole and exclusive remedy for any claim or dispute relating to any
breach of a representation, warranty or covenant by the other parties under
this
Agreement; provided,
however,
that
the limitations set forth in this Section
12.6
shall
not apply, and the aggrieved party shall have all remedies available at law
and
in equity, in the case of (i) fraud or intentional misrepresentation by a party
hereto, or (ii) any claim or dispute arising under or relating to Article
XI
hereof.
(e) Any
party
entitled to indemnification hereunder shall take all commercially reasonable
efforts to mitigate all indemnifiable Losses upon and after becoming aware
of
any event which would reasonably be expected to give rise to any Losses
hereunder.
(f) Notwithstanding
anything to the contrary herein, nothing in this Section
12.6
shall be
deemed to limit or impair NovaMed’s rights under Article
XI
hereof.
In addition, for purposes of this Section
12.6,
in no
event shall Losses be construed to include any remedies paid to NovaMed under
Article
XI.
12.7.
Right
of Offset.
12.7.1
Set-Off.
If any
Member who is the Indemnifying Party, and who is also a party to the Operating
Agreement, fails to make any payment as contemplated by this Article
XII,
or
shall fail to make any payment when due under the terms of any of the
Transaction Documents, then NovaMed may elect to offset such amount against
any
amount due and owing by the Company to such Member pursuant to the terms of
the
Operating Agreement (including, without limitation, any distributions payable
to
such Member) by following the set-off procedure set forth in this Section 12.7.
12.7.2 Set-Off
Procedure.
If a
NovaMed Indemnified Party reasonably believes it has the right to offset the
amount of any Losses against a party hereto, such NovaMed Indemnified Party
shall notify such party(ies) (the “Off-set
Party”)
of the
amount of the Losses and the dollar amount to be offset as determined by such
NovaMed Indemnified Party in good faith (such notice being deemed a “Notice
of Claim”).
Such
Notice of Claim shall be given to the Off-set Party as soon as reasonably
practicable after such NovaMed Indemnified Party incurred the Losses or learned
of its right to offset and shall include an explanation of such NovaMed
Indemnified Party’s rationale underlying such belief. The Off-set Party shall
have 30 days from his receipt of the Notice of Claim in which to accept or
dispute same, which if disputed, shall include an explanation of the Off-set
Party’s rationale underlying such belief. If the Off-set Party fails to respond
in writing within such 30-day period, the Notice of Claim shall be deemed
approved by the Off-set Party. If the Off-set Party timely disputes the Notice
of Claim in writing, the NovaMed Indemnified Party and the Off-set Party shall
attempt in good faith to agree on the rights of the respective parties with
respect to such claim. If the parties agree on the amount to be offset, then
the
NovaMed Indemnified Party shall have the right to offset or cause the Company
to
offset such amount against any amounts owed to the Off-set Party in accordance
with this Section
12.7.
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12.7.3
Set-Off
Dispute.
If the
parties cannot agree on the offset amount, the NovaMed Indemnified Party shall
have the right to deposit or cause the Company to deposit any sums owed or
to be
paid by the NovaMed Indemnified Party or the Company to the Off-set Party that
equal the offset amount into an interest-bearing escrow which shall be
established at an escrow agent (the “Escrow
Agent”)
mutually acceptable to the NovaMed Indemnified Party and the Off-set Party.
The
terms and conditions of such escrow account shall be acceptable to the NovaMed
Indemnified Party and the Off-set Party and the Escrow Agent. The Escrow Agent
shall hold such funds pending its receipt of instructions from either (i) the
NovaMed Indemnified Party and the Off-set Party, or (ii) an arbitrator or a
court of competent jurisdiction, directing it as to the disposition of such
funds.
ARTICLE
XIII.
MISCELLANEOUS
13.1.
Definitions. For
purposes of this Agreement, the following terms have the meaning set forth
below:
“Affiliate”
means
an affiliate as defined in Rule 405 under the Securities Act of 1933, as
amended, and includes any past and present Affiliate of a Person; provided that
with
respect to determining any Affiliate of NovaMed, such Affiliates shall include,
without limitation, NovaMed, Inc. and any of its subsidiaries.
“Closing”
and
“Closing
Date”
shall
have the respective meanings set forth in Section
7.1.
“Code”
means
the Internal Revenue Code of 1986, as amended.
“Employee
Benefit Plans”
shall
have the meaning set forth in Section
4.19.
“ERISA”
means
the Employee Retirement Income Security Act of 1974, as amended.
“Facility”
means
the Medicare-certified, state-licensed ambulatory surgery center located at
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
“Fraud
and Abuse Laws”
means
all fraud and abuse laws promulgated under Section 1128(b) of the Social
Security Act, 42 U.S.C. Section 1320a-7(b) and Section 1877 of the Social
Security Act, 42 U.S.C. Section 1877, and all rules and regulations promulgated
thereunder; any other federal, state or local law relating to the referral
of
patients to medical facilities owned by providers of medical services; and
all
federal statutes (whether set forth in Title XVIII of the Social Security Act
or
elsewhere) affecting the health insurance program for the aged and disabled
established by Title XVIII of the Social Security Act and any statues succeeding
thereto, together with all rules and regulations promulgated
thereunder.
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“Hazardous
Materials”
means
(a) hazardous materials, hazardous substances, extremely hazardous substances
or
hazardous wastes, as those terms are defined by the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. §9601 et seq., the Resource
Conservation and ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇ ▇.▇.▇. §▇▇▇▇ et seq., and any other
Environmental and Safety Requirements; (b) petroleum, including crude oil or
any
fraction thereof which is liquid at standard conditions of temperature and
pressure (60 degrees Fahrenheit and 14.7 pounds per square inch absolute);
(c)
any radioactive material, including any source, special nuclear, or by-product
material as defined in 42 U.S.C. §2011 et seq.; and (d) asbestos in any form or
condition.
“Knowledge”
or
“knowledge”
or
“aware”
and
all
permutations thereof - unless otherwise qualified, an individual will be deemed
to have “Knowledge” of a particular fact or other matter if: (a) such individual
is actually aware of such fact or matter, or (b) a prudent individual could
be
expected to discover or otherwise become aware of such fact or other matter
in
the ordinary course of business. A person (other than an individual) will be
deemed to have “Knowledge” of a particular fact or other matter if any
individual who is serving, or who has at any time served, as a director,
manager, or officer of such Person (or in any similar capacity) has, or at
any
time had, Knowledge of such fact or other matters.
“Liens”
means
any claims, liens, charges, restrictions, options, preemptive rights, mortgages,
hypothecations, assessments, pledges, encumbrances or security interests of
any
kind or nature whatsoever.
“Material
Adverse Effect”
means,
with respect to any Person, an adverse effect on the business, prospects,
financial condition or results of operations of such Person or any of its
subsidiaries, when taken as a whole, results in damages to said Person in excess
of Twenty-Five Thousand Dollars ($25,000).
“Medical
Records”
shall
mean all medical records of patients treated at the Facility, including, without
limitation, any and all medical charts, files, notes, transcripts, x-ray files,
lab reports, other diagnostic information or materials, insurance information,
billing and payment statements or records of any kind, explanations of benefits,
and other information of or relating to any patient treated at the Facility,
of
any kind and in any form whatsoever; provided that
Medical
Records shall be limited to the records of the Facility and will not include
records of the provider of professional medical services.
“Person”
means
any individual, sole proprietorship, partnership, joint venture, trust,
undertaking, unincorporated association, corporation, entity, organization
or
Governmental Authority.
“Pro
Rata Basis”
shall
mean each Member’s membership interest in the Company prior to the Closing Date,
as set forth on Schedule
2.1.
“Review
Date”
means
December 31, 2006.
“Tax”
means
any federal, state, local or foreign income, gross receipts, franchise,
estimated, alternative minimum, add-on minimum, sales, use, transfer,
registration, value added, excise, natural resources, severance, stamp,
occupation, premium, windfall profit, environmental, customs, duties, real
property, personal property, capital stock, social security, unemployment,
disability, payroll, license, employee or other withholding, or other tax,
of
any kind whatsoever, including any interest, penalties or additions to tax
or
additional amounts in respect of the foregoing; the foregoing shall include
any
transferee or secondary liability for a Tax and any liability assumed by
agreement or arising as a result of being (or ceasing to be) a member of any
Affiliated Group, as defined in Section 1504 of the Code (or being included,
or
required to be included, in any Tax Return relating thereto).
-29-
“Tax
Returns”
means
returns, declarations, reports, claims for refund, information returns or other
documents (including any related or supporting Schedules, statements or
information) filed or required to be filed in connection with the determination,
assessment or collection of any Taxes of any party or the administration of
any
laws, regulations or administrative requirements relating to any
Taxes.
“Transaction
Documents”
means
this Agreement and all agreements and instruments contemplated by and being
delivered pursuant to or in connection with this Agreement.
13.2.
Notices,
Consents, etc.
Any
notices, consents or other communication required to be sent or given hereunder
by any of the parties shall in every case be in writing and shall be deemed
properly served if: (a) delivered personally; (b) sent by registered or
certified mail, in all such
cases with first class postage prepaid, return receipt requested; (c) delivered
by a nationally recognized overnight courier service; or (d) sent by facsimile
transmission to the parties at the addresses as set forth below or at such
other
addresses as may be furnished in writing.
(i)
If
to
ASCOA:
Ambulatory
Surgery Centers of America
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇
▇.
▇▇▇▇▇▇▇
Tel: (▇▇▇)
▇▇▇-▇▇▇▇
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
with
a copy to:
McGuireWoods
LLP
▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇
▇▇▇▇▇▇
Tel: (▇▇▇)
▇▇▇-▇▇▇▇
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
(ii)
If
to
▇▇▇▇▇▇:
▇▇▇▇▇
▇▇▇▇▇▇
▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇)
▇▇▇-▇▇▇▇
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
(iii)
If
to any
Member, other than ASCOA or ▇▇▇▇▇▇:
Surgery
Center of Kalamazoo, LLC
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Manager
Tel: (▇▇▇)
▇▇▇-▇▇▇▇
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
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with
a copy to:
Hall,
Render, ▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, P.C.
▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
Tel:
(▇▇▇)
▇▇▇-▇▇▇▇
Fax:
(▇▇▇)
▇▇▇-▇▇▇▇
(iv)
If
to
NovaMed:
NovaMed
Acquisition Company, Inc.
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇
▇.
▇▇▇▇
▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, ▇▇.
Tel:
(▇▇▇)
▇▇▇-▇▇▇▇
Fax:
(▇▇▇)
▇▇▇-▇▇▇▇
Date
of
service of such notice shall be (A) the date such notice is personally
delivered; (B) three days after the date of mailing if sent by certified or
registered mail; (C) one (1) day after date of delivery to the overnight courier
if sent by overnight courier; or (D) the next succeeding business day after
transmission by facsimile.
13.3.
Certain
Taxes.
The
Members will (on a Pro Rata Basis) pay all transfer taxes and other taxes and
charges, if any (except for any sales taxes and income tax of NovaMed
and its Affiliates),
which may become payable in connection with the transactions contemplated by
this Agreement.
13.4.
Remedies
Not Exclusive.
Except
as set forth in Section
12.6(e),
no
remedy conferred by any of the specific provisions of this Agreement or the
Transaction Documents is intended to be exclusive of any other remedy. Each
such
remedy shall be cumulative, and in addition to every other such remedy or any
other remedy existing at law or in equity.
13.5.
Severability
and Reformation.
The
unenforceability or invalidity of any provision of this Agreement shall not
affect the enforceability or validity of any other provision. If any
of the
transactions contemplated herein or provisions hereof violates any applicable
law, then the parties
hereto agree to negotiate in good faith such changes to the structure and terms
of the transactions provided for in this Agreement or the Transaction Documents
as may be necessary to make these transactions, as restructured, lawful under
applicable laws and regulations, without materially disadvantaging either party.
The parties to this Agreement shall execute and deliver all documents or
instruments necessary to effect or evidence the provisions of this Section
13.5.
13.6.
Amendment
and Waiver.
This
Agreement may be amended, or any provision of this Agreement may be waived;
provided that
any such
amendment or waiver will be binding on a party hereto only if such amendment
or
waiver is set forth in a writing executed by such party.
The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any other breach.
13.7.
Counterparts.
This
Agreement may be executed simultaneously via facsimile or otherwise in two
(2)
or more counterparts, each of which shall be deemed an original but all of
which
together shall constitute one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the parties hereto
and
delivered to the other.
-31-
13.8.
Expenses.
Except
as otherwise specifically provided herein, each of the parties shall pay all
costs and expenses incurred or to be incurred by it,
him
or her, as the case may be, in negotiating and preparing this Agreement and
in
closing and carrying out the transactions contemplated by this
Agreement.
13.9.
Construction.
This
Agreement shall be construed and enforced in accordance with, and all questions
concerning the construction, validity, interpretation and performance
of this
Agreement shall be governed by, the laws of the State of Illinois, without
giving effect to provisions thereof regarding conflict of laws.
13.10.
Headings.
The
subject headings of Articles and Sections of this Agreement are included for
purposes of convenience only and shall not affect the construction or
interpretation of any of its provisions.
13.11. Assignment.
This
Agreement may not be assigned by any Member without the prior written consent
of
NovaMed.
13.12. Mediation
and Arbitration.
Except
as expressly set forth herein, the parties hereto agree that any and all
controversies, disputes or claims arising out of or in connection with this
Agreement shall be solely and exclusively resolved in accordance with this
Section
13.12
and not
in any court of law or equity. The parties hereto shall first try in good faith
to settle the dispute by mediation under the Commercial Mediation Rules of
the
American Arbitration Association (“AAA”)
(such
mediation session to be held in Chicago, Illinois, and to commence within thirty
(30) days after the appointment of the mediator by the AAA). If the controversy,
claim or dispute cannot be settled by mediation, then by arbitration
administered by the AAA under its Commercial Arbitration Rules (such arbitration
to be held in Chicago, Illinois before a single arbitrator mutually agreed
upon
by the Members and NovaMed and to commence within thirty (30) days after the
appointment of the arbitrator by the AAA), and judgment on the award rendered
by
the arbitrator may be entered in any court having jurisdiction thereof.
Notwithstanding the foregoing, nothing herein shall limit NovaMed’s rights to
seek and obtain injunctive relief, specific performance or other equitable
relief in any proceeding commenced in a federal or state court which may be
brought to enforce any provision in Article
XI
hereof.
13.13. Entire
Agreement.
This
Agreement, the Preamble and all the Schedules attached to this Agreement (all
of
which shall be deemed incorporated in the Agreement and made a part hereof)
set forth the entire understanding of the parties with respect to the subject
matter hereof, and shall not be modified or affected by any offer, proposal,
statement or representation, oral or written, made by or for any party in
connection with the negotiation of the terms hereof, and may be modified only
by
instruments signed by all of the parties hereto.
13.14. Third
Parties.
Nothing
herein expressed or implied is intended or shall be construed to confer upon
or
give to any Person, other than the parties to this Agreement and
their respective
permitted successors and assigns, any rights or remedies under or by reason
of
this Agreement.
13.15. No
Strict Construction.
The
language used in this Agreement will be deemed to be the language chosen by
the
parties hereto to express their mutual intent, and no rule of strict
construction will be applied against any party hereto.
-32-
13.16. Public
Announcement.
Each of
the Members acknowledges that NovaMed intends to publicly announce the
transactions contemplated herein, through both a press release and a Form 8-K
filing with the Securities and Exchange Commission.
[SIGNATURES
APPEAR ON THE FOLLOWING PAGE]
-33-
IN
WITNESS WHEREOF,
the
parties have executed this Purchase Agreement as of the Closing Date.
|
NOVAMED:
NOVAMED
ACQUISITION COMPANY, INC.,
a
Delaware corporation
By:
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇
▇. ▇▇▇▇, President
MEMBERS:
CATARACT
AND LASER CENTER PARTNERS, L.L.C.,
d/b/a Ambulatory Surgery Centers of America, a Delaware
limited liability company
By: /s/
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:
CEO
/s/
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇
/s/
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, D.O.
/s/
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, D.P.M.
/s/
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇, M.D.
/s/
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇, M.D.
/s/
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, M.D.
|
[ADDITIONAL
SIGNATURES APPEAR ON THE FOLLOWING PAGE]
MEMBERS
(cont.):
|
/s/
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, M.D.
/s/
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, M.D.
/s/
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, M.D.
/s/
▇▇▇▇▇▇▇▇ ▇. Elleru
▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, M.D.
/s/
▇▇▇▇▇ ▇. Free
▇▇▇▇▇
▇. Free, M.D.
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇
▇. ▇▇▇▇▇▇, M.D.
/s/
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, M.D.
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, M.D.
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇
▇. ▇▇▇▇▇▇, M.D.
/s/
▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇
▇. ▇▇▇▇, M.D.
|
|
EXHIBITS*
|
||||
|
Exhibit
1.1
|
Articles
of Organization
|
|||
|
Exhibit
3.2
|
Wire
Transfer Instructions
|
|||
|
Exhibit
7.3(a)
|
Operating
Agreement
|
|||
|
Exhibit
7.3(b)
|
Assignment
of Purchased Interests
|
|||
|
Exhibit
7.3(e)
|
Consent
Agreement
|
|||
|
Exhibit
7.3(f)
|
Termination
Agreement
|
|||
|
Exhibit
7.4(d)
|
Management
Agreement
|
|||
|
SCHEDULES*
|
||||
|
Schedule
1.2(a)
|
Inventory
on Consignment
|
|||
|
Schedule
1.2(b)
|
Personal
Property
|
|||
|
Schedule
1.2(c)
|
Prepaid
Expenses
|
|||
|
Schedule
1.3(d)
|
|
Excluded
Assets/Personal Effects
|
||
|
Schedule
1.4(a)
|
Accounts
Payable
|
|||
|
Schedule
1.4(b)
|
Accrued
Liabilities
|
|||
|
Schedule
2.1
|
Membership
Interests and Pro Rata Share
|
|||
|
Schedule
4.2
|
Liens
and Encumbered Assets
|
|||
|
Schedule
4.3
|
Approvals
|
|||
|
Schedule
4.5
|
Financial
Statements
|
|||
|
Schedule
4.6
|
Liabilities
|
|||
|
Schedule
4.8
|
Taxes
|
|||
|
Schedule
4.9
|
Material/Assumed
Contracts
|
|||
|
Schedule
4.10
|
Leased
Real Property
|
|||
|
Schedule
4.11
|
Litigation
|
|||
|
Schedule
4.12(a)
|
|
Disputed
Sums
|
||
|
Schedule
4.12(b)
|
|
Licenses
and Permits
|
||
|
Schedule
4.13
|
Transaction
Breaches
|
|||
|
Schedule
4.14
|
Conduct
of Business
|
|||
|
Schedule
4.16
|
Salaries
|
|||
|
Schedule
4.17
|
Insurance
|
|||
|
Schedule
4.19
|
Employee
Benefit Plans
|
|||
|
Schedule
4.20
|
Personnel
Agreements
|
|||
|
Schedule
4.22
|
Workers
Compensation
|
|||
|
Schedule
4.23(a)
|
|
Accounts
Receivable
|
||
|
Schedule
4.27
|
Physicians
|
|||
|
Schedule
4.29
|
Bank
Accounts
|
|||
|
Schedule
6.2(a)
|
Continuing
Employees
|
|||
|
Schedule
11.2
|
Interests
in Competing Facilities
|
*
NovaMed, Inc. agrees to furnish supplementally a copy of any omitted schedule
or
exhibit to the Securities and Exchange Commission upon request.