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EXHIBIT 2
MEMBERSHIP PURCHASE AGREEMENT
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THIS MEMBERSHIP PURCHASE AGREEMENT (the "Agreement"), dated June 15, 1999, is by
and among AmSurg Holdings, Inc., a Tennessee corporation ("AmSurg"), AmSurg
Corp., a Tennessee corporation and the owner of all the outstanding capital
stock of AmSurg ("ASC"), Northside Gastroenterology Endoscopy Center, LLC, an
Indiana limited liability company ("Seller"), and the individuals set forth on
the signature pages attached hereto (individually "Doctor" and collectively
"Doctors").
WHEREAS, AmSurg desires to purchase and Seller desires to issue and sell a
membership interest in Seller, as more fully described herein, upon and subject
to the terms and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual representations,
warranties and covenants of the parties hereinafter set forth, the parties agree
as follows:
ARTICLE 1. PURCHASE AND SALE OF MEMBERSHIP INTEREST
Subject to the terms and conditions of this Agreement, at the Closing, Seller
shall issue, sell, transfer, convey, assign and deliver to AmSurg and AmSurg
shall purchase, acquire and accept from Seller one thousand forty one (1,041)
Units of Membership Interests in Seller (as defined in Seller's Operating
Agreement) (the "Purchased Interest").
ARTICLE 2. PURCHASE PRICE
The initial purchase price ("Initial Purchase Price") for the Purchased Interest
shall be (a) $2,126,330 cash and (b) 40,515 shares of the Class A common stock
(the "AmSurg Common Stock") of ASC. The Initial Purchase Price was determined
based on an assumption that the current expenses of operating the Northside
Gastroenterology Endoscopy Center (the "Center") and on a going forward basis
are and will be as set forth on Exhibit 2, and the number of shares of AmSurg
Common Stock was determined by dividing $236,259 by an amount equal to ninety
percent (90%) of the average closing bid price of AmSurg Common Stock during the
three (3) trading days immediately preceding the Closing Date.
AmSurg and Seller acknowledge that the rule proposed in June 1998 by
the Health Care Financing Administration ("HCFA") providing in part for a change
in the payment methodology and payment rates utilized by HCFA to reimburse
ambulatory surgery centers as it may be adopted or amended (the "Proposed
Rule"), could have a negative effect on the future revenues and earnings of the
Center. In order to address the uncertainty regarding the Proposed Rule and its
effect on the Center, the Initial Purchase Price has been calculated based on
the annualized income for Medicare cases performed in the Center from July 1,
1998 through December 31, 1998. The potential percentage reduction in Medicare
reimbursement rate changes are set forth in Exhibit 2(a). Exhibit 2(b) sets
forth what the purchase price would have been without any adjustment for the
proposed Medicare reimbursement rate changes (the "Potential Purchase Price"),
and the difference between the Initial Purchase Price and the Potential Purchase
Price (the "Purchase Price Differential").
Of the Purchase Price Differential on the Closing Date AmSurg will pay
to Seller $25,345, payable in cash. During the six (6) years following the
Closing, commencing January 1, 2000, at the end of each six (6) month period
thereafter, if a final version of the Proposed Rule has not been adopted during
such period, then AmSurg will pay as additional consideration ("Additional
Purchase Price") an amount in cash equal to one twelfth (1/12) of the Purchase
Price Differential, as reduced by the $25,345 payment made to the Seller on the
Closing Date pursuant to the immediately preceding sentence, together with
interest thereon at the rate equal to the prime rate as published from time to
time by SunTrust Bank in Nashville, Tennessee, accruing from the Closing Date.
In the event that a final version of the Proposed Rule is adopted during the six
(6) years following the Closing, then the purchase price will be recalculated
and adjusted utilizing the formula set forth on Exhibits 2(a) and 2(b) and
substituting the final Medicare reimbursement rates for the proposed Medicare
reimbursement rates set forth therein (the "Adjusted Purchase Price"). If the
Adjusted Purchase Price exceeds the sum of (a) the Initial Purchase Price and
(b) any Additional Purchase Price previously paid by AmSurg (including the
payment made at Closing out of the Purchase Price Differential), AmSurg will pay
in cash to Seller such amount as additional consideration within sixty (60) days
after such determination. In no event will the purchase price recalculation
cause (x) Seller to return any portion of the purchase price previously paid to
Seller by AmSurg or (y) the aggregate consideration paid by AmSurg to exceed the
Potential Purchase Price. AmSurg's obligation to make the payments to Seller
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which are required to be made following the Closing Date pursuant to this
paragraph shall survive the Closing.
ARTICLE 3. CLOSING
3.1. CLOSING. The closing ("Closing") of the sale and purchase of the
Purchased Interest shall take place at the offices of Seller or its attorneys,
XxXxxx, Xxxx and Xxxxx, P.C., within 10 business days after the satisfaction of
all conditions to the parties' obligations to consummate the transactions
contemplated hereby, which shall in no event be later than June 24, 1999, or at
such other time as shall be agreed upon by all the parties hereto (the "Closing
Date").
3.2. OBLIGATIONS OF THE PARTIES AT THE CLOSING.
(a) At the Closing, AmSurg shall deliver to Seller:
(i) to the Initial Purchase Price comprised of cash in the
amount of $2,126,330 and 40,515 shares of AmSurg Common Stock and the
initial installment of the Purchase Price Differential; provided,
however, the parties acknowledge and agree that the stock certificate
representing such shares of AmSurg Common Stock will be delivered
following Closing pursuant to Section 3.4;
(ii) a certificate of existence with respect to AmSurg issued
by the Tennessee Secretary of State's office within ten (10) days prior
to the Closing Date;
(iii) a copy of resolutions of the Board of Directors of
AmSurg, certified by its Secretary, authorizing the execution, delivery
and performance of this Agreement and the other documents referred to
herein to be executed by AmSurg, and the consummation of the
transactions contemplated hereby;
(iv) a certificate of AmSurg certifying as to the accuracy of
the representations and warranties of AmSurg at and as of the Closing
and that AmSurg has performed or complied with all of the covenants,
agreements, terms, provisions and conditions to be performed or
complied with by AmSurg at or before the Closing;
(v) a counterpart of the Amended and Restated Operating
Agreement of Seller in the form attached hereto as Exhibit 3(a)
executed on behalf of AmSurg;
(vi) a copy of resolutions of the Board of Directors of ASC,
certified by its Secretary, authorizing the issuance of the AmSurg
Common Stock to Seller;
(vii) the opinion of Bass, Xxxxx & Xxxx PLC, legal counsel for
AmSurg, the terms of which are substantially as set forth in Exhibit
11.4; and
(viii) such other certificates and documents as Seller or its
counsel may reasonably request.
(b) At the Closing, Seller and the Doctors will deliver to AmSurg:
(i) a copy of resolutions of the Members of Seller, certified
by its Executive Director, authorizing the execution, delivery and
performance of this Agreement and the other documents referred to
herein to be executed by Seller, and the consummation of the
transactions contemplated hereby;
(ii) a counterpart of the Amended and Restated Operating
Agreement of Seller in the form attached hereto as Exhibit 3(a)
executed by the Doctors;
(iii) an Amended and Restated Articles of Organization of
Seller in the form attached hereto as Exhibit 3(b);
(iv) a certificate of the Seller certifying as to the accuracy
of Seller's representations and warranties at and as of the Closing and
that it has performed or complied with all of the covenants,
agreements, terms, provisions and conditions to be performed or
complied with by Seller at or before the Closing;
(v) a certificate of each of the Doctors certifying as to the
accuracy of the Doctors' representations and warranties at and
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as of the Closing and that they have performed or complied with all of
the covenants, agreements, terms, provisions and conditions to be
performed or complied with by each of them at or before the Closing;
(vi) a release or such other evidence as AmSurg may reasonably
require which evidences the fact that the obligations of Seller to
First Merchants Bank with respect to the loan from First Merchants Bank
to Seller in the original principal amount of $340,681.29 has been
repaid in full;
(vii) the opinion of XxXxxx, Xxxx and Xxxxx, P.C., legal
counsel to Seller and the Doctors, in substantially the form of Exhibit
10.6; and
(viii) such other certificates and documents as AmSurg or its
counsel may reasonably request.
3.3. ACTIONS PRIOR TO CLOSING. The parties hereto acknowledge and agree that
prior to Closing all cash then held by the Seller will be distributed to the
Doctors.
3.4. ACTIONS FOLLOWING CLOSING.
(a) As soon as practicable following the Closing, Seller will cause the
Amended and Restated Articles of Organization of Seller to be filed with the
Indiana Secretary of State's office.
(b) As soon as practical following the Closing, AmSurg shall deliver to
Seller the stock certificate representing the shares of AmSurg Common Stock to
be paid to Seller pursuant to Section 3.2(a)(i).
(c) Following the Closing, the AmSurg Common Stock and cash paid to
Seller pursuant to the terms hereof which comprises the Initial Purchase Price,
will be distributed to the Doctors.
(d) AmSurg shall pay the installments of the Additional Purchase Price
as required pursuant to Article 2 hereof.
(e) AmSurg acknowledges that following the Closing, Xxxxxxxxx X.
X'Xxxxxx, M.D. will withdraw from the Physician Entity, and the restrictions
contained in Section 5.4 shall apply to her following such withdrawal for the
applicable time period specified in such Section.
(f) As soon as practicable following the Closing, the Doctors shall pay
and satisfy in full (or, in the event AmSurg or Seller pays such amount,
reimburse AmSurg upon request) any and all (i) operating expenses and trade
payables which relate to the operation of the Center or Seller on or prior to
the Closing Date, (ii) compensation payable to any employees of Seller which
relates to any period on or before the Closing Date, and (iii) any taxes payable
with respect to the operation of the Center and/or Seller on or prior to the
Closing Date, to the extent not previously paid. Operating expenses and trade
payables will be considered to relate to the operation of Seller or the Center
on or prior to the Closing Date if the date of the invoice for such expenses are
payable is on or prior to the Closing Date.
(f) The cash and AmSurg Common Stock paid to Seller as the Initial
Purchase Price and Additional Purchase Price shall be distributed to the
Physician Entity promptly following receipt by Seller.
(g) As soon as practicable following the Closing, the Doctors shall
transfer all of the Units then held by them to a newly formed entity (the
"Physician Entity"), each in exchange for a twenty percent (20%) interest in the
Physician Entity.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES BY SELLER
Seller represents and warrants as follows:
4.1. ORGANIZATION. Seller is a limited liability company, validly existing
and in good standing under the laws of the State of Indiana with full power and
authority to conduct its business as now conducted and to own, lease or operate
its properties and assets as now owned, leased or operated.
4.2. AUTHORIZATION. Seller has full power and authority to enter into this
Agreement and perform its obligations hereunder and carry out the transactions
contemplated hereby. The execution, delivery and performance by Seller of this
Agreement and the consummation of the transactions contemplated hereby,
including the issuance, conveyance, assignment, transfer and
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delivery of the Purchased Interest, have been duly authorized and approved by
all necessary limited liability company and member action, and this Agreement,
when executed, will constitute a valid and binding obligation of Seller
enforceable against Seller in accordance with its terms.
4.3. NO VIOLATION. The execution and delivery of this Agreement by Seller
does not, and the consummation of the transactions contemplated hereby will not,
(a) violate any provision of, or result in the creation of any lien or security
interest under, any agreement, indenture, instrument, lease, security agreement,
mortgage or lien to which Seller is a party or by which any of Seller's assets
or properties are bound which violation or lien would have a material adverse
effect on the business or operations of Seller or the Center; (b) violate any
provision of the Articles of Organization or Operating Agreement of Seller; (c)
violate any order, arbitration award, judgment, writ, injunction, decree,
statute, rule or regulation applicable to Seller which violation would have a
material adverse effect on the business or operations of Seller or the Center;
or (d) violate any other contractual or legal obligation or restriction to which
Seller is subject which violation would have a material adverse effect on the
business or operations of Seller or the Center.
4.4. FINANCIAL INFORMATION. Seller has delivered to AmSurg: (a) statements
of Center charges and cash receipts by month for the year ended December 31,
1998 and the three (3) months ended Xxxxx 00, 0000, (x) cash basis unaudited
statements of income for Seller for the year ended December 31, 1998 and the
three (3) months ended March 31, 1999, (c) a cash basis unaudited balance sheet
of the Seller at March 31, 1999, and (d) details of patient accounts receivable
for Seller at the Closing (hereinafter collectively referred to as "Financial
Information"), all of which are attached as Schedule 4.4. The Financial
Information fairly presents the assets, liabilities, financial condition and
results of operation of the Center as at the respective dates thereof and for
the periods therein referred to, prepared on a cash basis and accurately
reflects the revenues and expenses of the Center for the periods covered thereby
and, in particular, reflects all expenses reasonably necessary for the operation
of the Center as a stand-alone entity. The Financial Information reflects the
consistent application of such accounting principles throughout the periods
involved.
4.5. OWNERSHIP OF ASSETS. Seller owns and possesses and has good title, free
of defects, to all of the properties and assets used by it, located at the
Center and/or shown in the balance sheet of Seller at March 31, 1999 provided
to AmSurg pursuant to Section 4.4, including but not limited to the assets
listed on Schedule 4.5 attached hereto, free and clear of all mortgages,
pledges, liens, security interests, conditional sale agreements, defects,
charges, encumbrances and rights of third parties, and no conditions exist which
could give rise to any such mortgage, pledge, lien, security interest, defect,
charge, encumbrance on, or right of any such third party to, Seller's assets.
4.6. NO LIABILITIES OR ADVERSE CONDITIONS. Except as and to the extent of
the amounts specifically reflected in the Financial Information, Seller has not
acted as a guarantor with respect to the obligations of any party and does not
have any material liabilities or obligations of any nature, whether, absolute,
accrued, contingent or otherwise and whether due or to become due (including,
without limitation, liabilities for taxes and interest, penalties and other
charges payable with respect thereto).
Furthermore, Seller does not know or have reason to know of any basis for the
assertion against Seller of any such liability or obligation of any nature not
fully reflected in the Financial Information. To Seller's knowledge, there are
no conditions existing with respect to any of Seller's facilities, properties,
assets or personnel, which might materially and adversely affect any of the
Seller's properties, business or prospects.
4.7. ABSENCE OF CERTAIN CHANGES. Since March 31, 1999, Seller has not:
(a) suffered any material adverse change in its working capital,
financial condition, assets, liabilities, or, to the best of Seller's knowledge,
Seller's business or prospects or suffered any material casualty loss (whether
or not insured);
(b) made any change in its business or operations or in the manner of
conducting its business, other than changes in the ordinary course of business;
(c) incurred any obligations or liabilities (whether absolute, accrued,
contingent or otherwise and whether due or to become due), except items incurred
in the ordinary course of business and consistent with past
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practice, or made any change in any assumptions or methods of calculating any
bad debt, contingency or other reserve;
(d) paid, discharged or satisfied any claim, lien, encumbrance or
liability (whether absolute, accrued, contingent or otherwise and whether due or
to become due), other than claims, liens, encumbrances, or liabilities:
(i) which are reflected in the Financial Information and which
were paid, discharged or satisfied since the date thereof in the
ordinary course of business consistent with past practice, or
(ii) which were incurred and paid, discharged or satisfied
since March 31, 1999 in the ordinary course of business consistent with
past practice;
(e) written off as uncollectible any notes or accounts receivable or
any portion thereof, except for immaterial write-offs made in the ordinary
course of business consistent with past practice;
(f) canceled any other debts or claims, or waived any rights, of
substantial value;
(g) sold, transferred or conveyed any of its properties or assets,
except in the ordinary course of business consistent with past practice;
(h) made any capital expenditures or commitments in excess of $10,000
in the aggregate for replacements or additions to property, plant, equipment or
intangible capital assets;
(i) except for the distribution described in Section 3.3, declared,
paid or made or set aside for payment of, any distribution in respect of its
outstanding membership interests, other than distributions made in the ordinary
course of business consistent with past practice, or directly or indirectly
redeemed, purchased or otherwise acquired any of its membership interests;
(j) made any change in any method of accounting or accounting practice;
(k) modified the terms of employment or granted any increase in the
compensation of any officer, employee or agent of Seller (including without
limitation any increase pursuant to any bonus, pension, profit sharing or other
plan or commitment), other than increases in the ordinary course of business
consistent with past practice, or adopted any such plan or other arrangement;
and no such increase or the adoption of any such plan or arrangement, is planned
or required;
(l) agreed, whether in writing or otherwise, to take any action
described in this Section 4.7;
(m) issued, sold or otherwise disposed of any membership interest in
Seller, or granted any options, warrants or other rights to purchase or obtain
any such membership interest (other than such rights which may have been granted
under this Agreement);
(n) except as contemplated by Section 3.2, made or authorized any
change in its Articles of Organization or Operating Agreement;
(o) delayed or postponed the payment of accounts payable or other
liabilities other than in the ordinary course of business consistent with past
practices;
(p) entered into any agreement, contract, lease or license other than
in the ordinary course of business consistent with past practices; or
(q) made any loans to or guaranteed any indebtedness on behalf of any
party, including but not limited to any employee, officer or member of Seller.
4.8. TAXES. Seller has filed all federal, state and local tax returns
required to be filed by it through the date hereof (or has obtained an extension
for such filing) and has paid all taxes and assessments (including, without
limitation, income, excise, unemployment, social security, occupation,
franchise, property, sales and use taxes, services taxes, import duties or
charges, and all penalties and interest with respect thereto) due and payable
therefrom. Seller knows of no open or questionable matters for any prior
periods. All taxes and assessments relating to or affecting the operations of
Seller and/or the Center which are due through the date hereof have been paid or
an extension has been obtained for the payment of such taxes.
4.9. LITIGATION. There is no claim filed, litigation, investigation or
proceeding pending or, to Seller's
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knowledge, threatened against Seller at law or in equity or before any court,
legislative or administrative tribunal or governmental agency which questions
the validity of this Agreement or which, if adversely determined or publicly
disclosed, would have a material adverse effect on the business or operations of
Seller or the Center. Schedule 4.9 sets forth a true and accurate description of
all claims, actions, investigations or proceedings relating to Seller and/or the
Center and their operations initiated since April 15, 1996.
4.10. COMPLIANCE WITH LAWS AND OTHER REGULATIONS. Seller is currently and
shall remain through the Closing Date in compliance in all material respects
with all requirements of applicable laws, rules, regulations, orders,
ordinances, judgments and decrees of all governmental bodies or agencies
(federal, state or local) (collectively, "Laws") relating to or affecting its
operations. Seller has not received any notice of, or notice of any
investigation of, a possible violation of any applicable Laws, or any other Law
or requirement relating to or affecting the operations of Seller.
Seller has all required licenses, permits, certificates, authorizations and
agreements needed for the ownership and operation of the Center, all of which
are listed on Schedule 4.10. Seller knows of no act or omission occurring on or
before the date hereof which would subject Seller or the Center to any
reasonable likelihood of any fine or suspension of any license, permit,
certificate, authorization or agreement.
4.11. CONTRACTS; SIGNIFICANT PAYORS. Schedule 4.11 is a complete and
accurate list of all individual payors, or group of affiliated payors, that
accounted for more than 5% of the Center's revenues in the previous calendar
year or is expected to account for more than 5% of the Center's revenues in the
current calendar year or the next calendar year ("Significant Payors").
All third party provider agreements and agreements with Significant Payors, to
which Seller is a party and, to Seller's knowledge, all other contracts,
agreements and instruments which are necessary for the operation of the Center,
to which Seller is a party and are in full force and effect; there have been no
threatened cancellations thereof nor outstanding disputes thereunder, and Seller
has not breached any provision of, nor does there exist any default in any
material respect under, or event (including the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby) which
is, or with the giving of notice or the passage of time or both would become, a
breach or default in any material respect under the terms of any such contract,
instrument or agreement. Seller has no reason to believe that any Significant
Payor intends to terminate any such contract, instrument or agreement as a
result of the transactions contemplated hereby or any other reason.
4.12. ACCOUNTS RECEIVABLE. All accounts and notes receivable of the Seller,
whether reflected in the Financial Information or otherwise, represent services
actually provided in the ordinary course of business; and none of such
receivables is subject to any counterclaim or set-off, other than normal
discounts, allowances and bad debts consistent with past practice.
4.13. REPORTS AND RETURNS. Except as expressly provided in Section 4.8, all
reports and returns heretofore required by federal, state or municipal
authorities with respect to the operations of Seller and the Center and all
reports and returns to the various governmental authorities which control,
directly or indirectly, any of Seller's or the Center's activities, have been
filed and all sums heretofore due with respect to such reports and returns have
been paid.
4.14. DEFAULTS. Seller is not in default under, and no event has occurred
which, with the giving of notice or the passage of time, or both, would result
in a default under, any outstanding indenture, mortgage, contract, agreement or
other instrument to which Seller is a party which default would have a material
adverse effect on the business or operations of Seller. The execution, delivery
and performance by Seller of this Agreement and the transactions contemplated
hereby will not violate any provision of, or result in the breach of, or
constitute a default under, or require any consent under, any law, or any order,
writ, injunction or decree of any court, governmental agency or arbitration
tribunal, or any material contract, agreement or instrument to which Seller is a
party or by which Seller is bound.
4.15. EMPLOYEES; INDEPENDENT CONTRACTORS.
(a) Schedule 4.15(a) sets forth the names and titles of all employees
of Seller, and the annual rate of compensation (including bonuses) being paid to
each such employee as of the most recent practicable date. The employees listed
on Schedule 4.15(a), constitute all of the employees who are reasonably
necessary to the
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continued operation of the Center as it is now being conducted.
(b) Schedule 4.15(b) hereto contains a list of each employment, bonus,
deferred compensation, pension, stock option, stock appreciation right, profit
sharing or retirement plan, arrangement or practice and each other agreement or
fringe benefit plan, arrangement or practice of Seller, whether formal or
informal, whether legally binding or not and whether affecting one or more of
its employees. Copies of each such agreement or plan have hereto been delivered
to AmSurg. Seller does not have any commitment, whether formal or informal, and
whether legally binding or not (i) to create any additional such agreement,
plan, arrangement or practice; (ii) to modify or change any such agreement,
arrangement, plan or practice; or (iii) to maintain for any period of time any
such agreement, arrangement, plan or practice, except as described on Schedule
4.15(b).
(c) Schedule 4.15(c) hereto contains a list of all services for which
Seller contracts with third parties. Copies of each such agreement previously
have been provided to AmSurg. Schedule 4.15(c) contains a description of each
such oral agreement.
4.16. CONSENTS AND APPROVALS. Seller has obtained all consents, approvals,
authorizations and orders of third parties, including governmental authorities,
necessary for the authorization, execution and performance of this Agreement by
Seller, which consents, approvals, authorizations and orders are listed on
Schedule 4.16.
4.17. YEAR 2000 COMPLIANCE. To the best of Seller's knowledge, each system,
comprised of software, hardware, databases or embedded control systems
(microprocessor controlled or controlled by any robotic or other device)
(collectively, a "System") that constitutes any material part of, or is used in
connection with the business operations of Seller or the Center will not be
materially adversely affected by the advent of the year 2000, the advent of the
twenty-first century or the transition from the twentieth century through the
year 2000 and into the twenty-first century, and will not malfunction, cease to
function or provide invalid or incorrect results as a result of date data, to
the extent that other information technology used in combination with the
information technology being acquired, properly exchanges data with it. Seller
has no reason to believe that it may incur material expenses arising from or
relating to the failure of any of its Systems as a result of the advent of the
year 2000, the advent to the twenty-first century or the transition from the
twentieth century through the year 2000 and into the twenty-first century. Each
System of the Seller is able to accurately process date data, including, but not
limited to, calculating, comparing and sequencing from, into and between the
twentieth century (though year 1999), the year 2000 and the twenty-first
century, including leap year calculations.
4.18. SUITABILITY OF INVESTMENT. Seller has carefully considered and has,
to the extent it believes necessary, obtained professional legal, tax and
financial advice concerning the suitability of its acquisition of the AmSurg
Common Stock for its particular tax and financial situation. Seller is capable
of evaluating and has evaluated carefully the merits and risks of its purchase
of the AmSurg Common Stock and is able to bear the economic risk of an
investment therein.
4.19. ACCESS TO INFORMATION. Seller has had access during the course of this
transaction and prior to its purchase of the AmSurg Common Stock to such
information relating to AmSurg and ASC as it has desired. It has had the
opportunity to ask questions of and receive answers from AmSurg and ASC and
their representatives concerning the terms and conditions of the acquisition of
the AmSurg Common Stock and to obtain such additional information about the
business and financial condition of AmSurg and ASC as Seller has requested (to
the extent that AmSurg or ASC possessed such information or could acquire it
without unreasonable effort or expense).
4.20. RESTRICTIONS ON TRANSFER OF THE AMSURG COMMON STOCK. Seller understands
that the AmSurg Common Stock has not been registered under the Securities Act or
any applicable state securities law, and may not be transferred or sold unless
it is subsequently registered under the Securities Act or an exemption from such
registration is available.
4.21. LEGEND ON CERTIFICATES. Seller is aware that the certificates
representing the AmSurg Common Stock shall bear the following legend and that
appropriate stop transfer instructions will be entered in the stock records of
ASC:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AS AMENDED (THE
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"SECURITIES ACT") OR ANY APPLICABLE STATE SECURITIES LAW. THE SHARES
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO OR FOR RESALE
IN CONNECTION WITH THE DISTRIBUTION THEREOF. NO DISPOSITION OF THE
SHARES MAY BE MADE IN THE ABSENCE OF (i) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR (ii) AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH DISPOSITION WITHOUT REGISTRATION IS
IN COMPLIANCE WITH THE SECURITIES ACT.
4.22. FULL DISCLOSURE. Neither this Agreement, nor any schedule, exhibit,
list, certificate or other instrument or document delivered to AmSurg pursuant
to this Agreement by or on behalf of Seller, contains any untrue statement of a
material fact or omits to state any material fact required to be stated herein
or therein or necessary to make the statements, representations or warranties
and information contained herein or therein not misleading. Seller has not
withheld from AmSurg disclosure of any event, condition or fact which Seller
knows, or has reasonable grounds to know, may materially adversely affect the
Purchased Interest or the operations of Seller or the Center.
4.23. NO BROKER'S FEES. Seller has not done anything to cause or incur any
liability or obligation for investment banking, brokerage, finder's, agent's or
other fees, commissions, expenses or charges in connection with the negotiation,
preparation, execution or performance of this Agreement or the consummation of
the transactions contemplated hereby, and Seller does not know of any claim by
anyone for such a fee, commission, expense or charge.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE DOCTORS
Each of the Doctors, severally and not jointly, represents and warrants as
follows:
5.1. AUTHORITY. Such Doctor has full authority to enter into and carry out
the provisions of this Agreement, and this Agreement, when executed, will
constitute a valid and binding legal obligation enforceable against him in
accordance with its terms.
5.2. NO VIOLATION. The execution and delivery of this Agreement by the
Doctors does not, and the consummation of the transactions contemplated hereby
will not, (a) violate any provision of, or result in the creation of any lien or
security interest under, any agreement, indenture, instrument, lease, security
agreement, mortgage or lien to which such Doctor is a party or by which any of
such Doctors's assets or properties are bound; (b) violate any provision of the
Articles of Organization or Operating Agreement of Seller; (c) violate any
order, arbitration award, judgment, writ, injunction, decree, statute, rule or
regulation applicable to such Doctor; or (d) violate any other contractual or
legal obligation or restriction to which such Doctor is subject.
5.3. CAPITALIZATION OF SELLER. The Seller currently has only 1,000 Units of
Membership Interests ("Units") issued and outstanding, and the Doctors own all
such Units. The Units are the exclusive form of ownership of Seller. There are
no outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights or other contracts or commitments
that could require Seller to issue, sell or cause to become outstanding any
additional Units or other ownership interests in Seller. There are no voting
trusts, proxies or other arrangements or understandings with respect to the
voting of the Units of Seller.
5.4. RESTRICTIVE COVENANTS; CONFIDENTIALITY. Each Doctor agrees that he will
not be an officer, director or employee or consultant of or have any direct or
indirect ownership interest in, or manage, lease, develop or otherwise have any
financial interest in, or receive any compensation from any business or entity
competing with the Seller within five (5) miles of the Center until the later of
(a) one (1) year after the Doctor ceases to be a member of the Physician Entity
or the Physician Entity ceases to be a member of Seller, whichever occurs first
or (b) five (5) years after the Closing Date. The foregoing shall not prohibit
the Doctors from owning the AmSurg Common Stock or shares of capital stock
constituting less than 1% of the outstanding capital stock of any other
corporation whose common stock is traded on a national securities exchange or on
The Nasdaq Stock Market. Each Doctor recognizes and acknowledges that the
ascertainment of damages in the event of a breach of this Section 5.4 would be
difficult, and agree that
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AmSurg, in addition to all other remedies it may have, shall have the right to
injunctive relief if there is such a breach.
Notwithstanding the foregoing, the parties acknowledge and agree that Section
5.4 does not require the Doctors to perform endoscopy procedures at the Center
or to refer patients to the Center, and imposes no restrictions on where such
procedures are performed or where referrals are made.
5.5. NO BROKER'S FEES. Such Doctor has not done anything to cause or incur
any liability or obligation for investment banking, brokerage, finder's, agent's
or other fees, commissions, expenses or charges in connection with the
negotiation, preparation, execution or performance of this agreement or the
consummation of the transactions contemplated hereby, and Doctor does not know
of any claim by anyone for such a fee, commission, expense or charge.
5.6. ACQUISITION FOR INVESTMENT. The Doctors each hereby represent that
he/she is acquiring the AmSurg Common Stock for his/her own account for
investment with no present intention of reselling any such AmSurg Common Stock,
and not with a view to the resale or distribution in whole or in part thereof in
violation of the Securities Act of 1933, as amended (the "Securities Act").
5.7. SUITABILITY OF INVESTMENT. Each Doctor has carefully considered and
has, to the extent he/she believes necessary, obtained professional legal, tax
and financial advice concerning the suitability of its acquisition of the AmSurg
Common Stock for his/her particular tax and financial situation. Each Doctor is
capable of evaluating and has evaluated carefully the merits and risks of
his/her purchase of the AmSurg Common Stock and is able to bear the economic
risk of an investment therein.
5.8. ACCESS TO INFORMATION. Each Doctor has had access during the course of
this transaction and prior to his/her purchase of the AmSurg Common Stock to
such information relating to AmSurg and ASC as he/she has desired. Each Doctor
has had the opportunity to ask questions of and receive answers from AmSurg and
ASC and their representatives concerning the terms and conditions of the
acquisition of the AmSurg Common Stock and to obtain such additional information
about the business and financial condition of AmSurg and ASC as he/she has
requested (to the extent that AmSurg or ASC possessed such information or could
acquire it without unreasonable effort or expense).
5.9. RESTRICTIONS ON TRANSFER OF THE AMSURG COMMON STOCK. Each Doctor
understands that the AmSurg Common Stock has not been registered under the
Securities Act or any applicable state securities law, and may not be
transferred or sold unless it is subsequently registered under the Securities
Act or an exemption from such registration is available.
5.10. LEGEND ON CERTIFICATES. Each Doctor is aware that the certificates
representing the AmSurg Common Stock shall bear the following legend and that
appropriate stop transfer instructions will be entered in the stock records of
ASC:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AS AMENDED (THE "SECURITIES ACT") OR
ANY APPLICABLE STATE SECURITIES LAW. THE SHARES HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO OR FOR RESALE IN CONNECTION WITH THE
DISTRIBUTION THEREOF. NO DISPOSITION OF THE SHARES MAY BE MADE IN THE
ABSENCE OF (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR (ii) AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
DISPOSITION WITHOUT REGISTRATION IS IN COMPLIANCE WITH THE SECURITIES
ACT.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF AMSURG
AmSurg represents and warrants as follows:
6.1. ORGANIZATION. AmSurg is a corporation duly organized, validly existing
and in good standing under the laws of the state of Tennessee. AmSurg has full
corporate power and corporate authority to carry on its business as now
conducted and to own, lease or operate its properties and assets as now owned,
leased or operated.
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6.2. AUTHORIZATION. AmSurg has full corporate power and corporate authority
to enter into this Agreement and perform its obligations hereunder and carry out
the transactions contemplated hereby. The execution, delivery and performance by
AmSurg of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized and approved by all necessary corporate action.
This Agreement, when executed, will constitute a legal, valid and binding
obligation of AmSurg enforceable against it in accordance with its terms.
6.3. NO VIOLATION. The execution and delivery of this Agreement by AmSurg
does not, and the consummation of the transactions contemplated hereby will not,
(a) violate any provision of, or result in the creation of any lien or security
interest under, any material agreement, indenture, instrument, lease, security
agreement, mortgage or lien to which AmSurg is a party or by which any of
AmSurg's assets or properties are bound which violation or lien would have a
material adverse effect on the business or operations of AmSurg; (b) violate any
provision of the Charter or Bylaws of AmSurg; (c) violate any order, arbitration
award, judgment, writ, injunction, decree, statute, rule or regulation
applicable to AmSurg which violation would have a material adverse effect on the
business or operations of AmSurg; or (d) violate any other contractual or legal
obligation or restriction to which AmSurg is subject which violation would have
a material adverse effect on the business or operations of AmSurg.
6.4. TAXES. AmSurg has filed all federal, state and local tax returns
required to be filed by it through the date hereof (or has obtained an extension
for such filing) and has paid all taxes and assessments (including without
limitation income, excise, unemployment, social security, occupation, franchise,
property, sales and use taxes, service taxes, import duties or charges, and all
penalties and interest in respect thereof) due and payable therefrom.
6.5. LITIGATION. There is no claim, litigation, investigation or proceeding
pending or, to AmSurg's knowledge, threatened against AmSurg at law or in equity
or before any court, legislative or administrative tribunal or governmental
agency which questions the validity of this Agreement or which, if adversely
determined or publicly disclosed, would have a material adverse effect on the
business or operations of AmSurg.
6.6. COMPLIANCE WITH LAW AND OTHER REGULATIONS. AmSurg is in compliance in
all material respects with all requirements of applicable Laws. AmSurg possesses
all required licenses, permits, certificates, authorizations and agreements
needed for the conduct of its business as presently conducted the failure of
which to have would have a material adverse effect on the business or operations
of AmSurg. AmSurg knows of no act or omission occurring on or before the date
hereof which would subject AmSurg to the likelihood of any material fine or
suspension of any material license, permit, certificate authorization or
agreement.
6.7. REPORTS AND RETURNS. AmSurg has filed all material reports and returns
heretofore required by federal, state or municipal authorities and all material
reports and returns to the various governmental authorities which control,
directly or indirectly, any of its activities, and has paid all sums heretofore
due with respect to such reports and returns.
6.8. DEFAULTS. AmSurg is not in default under, and no event has occurred
which, with the giving of notice or the passage of time, or both, would result
in a default under, any outstanding indenture, mortgage, contract, agreement or
other instrument to which AmSurg is a party, which default would have a material
adverse effect on the business or operations of AmSurg.
The execution, delivery and performance by AmSurg of this Agreement and the
transactions contemplated hereby will not violate any provision of, or result in
the breach of, or constitute a default under, or require any consent under, any
law, or any order, writ, injunction or decree of any court, governmental agency
or arbitration tribunal, or any material contract, agreement or instrument to
which AmSurg is a party or by which AmSurg is bound.
6.9. CORPORATE DOCUMENTS. AmSurg has made available to Seller and the
Doctors for inspection by Seller and its authorized representatives, a copy of
its Charter, as amended to the date hereof, certified to be a true and correct
copy thereof by the Secretary of State of Tennessee, and the minute books of
AmSurg containing the bylaws and all records of the proceedings, meeting,
actions and consents of the shareholders and the board of directors (and any
committees thereof) of AmSurg.
6.10. FULL DISCLOSURE. Neither this Agreement, nor any Schedule, exhibit,
list, certificate or other instrument or document delivered to Seller and the
Doctors pursuant
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to this Agreement by or on behalf of AmSurg contains any untrue statement of a
material fact or omits to state any material fact required to be stated herein
or therein in order to make the statements, representations or warranties and
information contained herein or therein not misleading.
6.11. NO BROKER'S FEES. AmSurg has not done anything to cause or incur any
liability or obligation for investment banking, brokerage, finder's, agent's or
other fees, commissions, expenses or charges in connection with the negotiation,
preparation, execution or performance of this Agreement or the consummation of
the transactions contemplated hereby, and AmSurg does not know of any claim by
anyone for such a fee, commission, expense or charge.
6.12. ACQUISITION FOR INVESTMENT. AmSurg represents that it is acquiring the
Purchased Interest for its own account for investment with no present intention
of reselling the Purchased Interest, and not with a view to the resale or
distribution in whole or in part thereof in violation of the Securities Act of
1933, as amended (the "Securities Act").
6.13. SUITABILITY OF INVESTMENT. AmSurg has carefully considered and has, to
the extent it believes necessary, obtained professional legal, tax and financial
advice concerning the suitability of its acquisition of the Purchased Interest
for its particular tax and financial situation. Purchased Interest is capable of
evaluating and has evaluated carefully the merits and risks of its purchase of
the Purchased Interest and is able to bear the economic risk of an investment
therein.
6.14. ACCESS TO INFORMATION. AmSurg has had access during the course of this
transaction and prior to its purchase of the Purchased Interest to such
information relating to Seller as it has desired. It has had the opportunity to
ask questions of and received answers from Seller and its representatives
concerning the terms and conditions of the acquisition of the Purchased Interest
and to obtain such additional information about the business and financial
condition of Seller as AmSurg has requested (to the extent that Seller possessed
such information or could acquire it without unreasonable effort or expense).
6.15. RESTRICTIONS ON TRANSFER OF THE PURCHASED INTEREST. AmSurg understands
that the Purchased Interest has not been registered under the Securities Act or
any applicable state securities law, and may not be transferred or sold unless
it is subsequently registered under the Securities Act or an exemption from such
registration is available.
6.16. LEGEND ON CERTIFICATES. AmSurg is aware that the certificates
representing the Purchased Interest, if any are issued, shall bear the following
legend and that appropriate stop transfer instructions will be entered in the
records of Seller:
THE MEMBERSHIP INTEREST REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED (THE "SECURITIES
ACT") OR ANY APPLICABLE STATE SECURITIES LAW. THE MEMBERSHIP INTEREST
HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO OR FOR RESALE
IN CONNECTION WITH THE DISTRIBUTION THEREOF. NO DISPOSITION OF THE
MEMBERSHIP INTEREST MAY BE MADE IN THE ABSENCE OF (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (ii) AN OPINION OF
COUNSEL APPLICABLE TO THE COMPANY THAT SUCH DISPOSITION WITHOUT
REGISTRATION IS IN COMPLIANCE WITH THE SECURITIES ACT.
ARTICLE 7. REPRESENTATIONS AND WARRANTIES OF ASC
ASC represents and warrants as follows:
7.1. ORGANIZATION. ASC is a corporation duly organized, validly existing and
in good standing under the laws of the State of Tennessee. ASC has full
corporate power and corporate authority to carry on its business as now
conducted and to own, lease or operate its properties and assets as now owned,
leased or operated.
7.2. AUTHORIZATION. ASC has full corporate power and corporate authority to
enter into this Agreement and perform its obligations hereunder and carry out
the transactions contemplated hereby. The execution, delivery and performance by
ASC of this Agreement and the consummation of the transactions contemplated
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hereby have been duly authorized and approved by all necessary corporate action.
The Agreement, when executed, will constitute a legal, valid and binding
obligation of ASC enforceable against it in accordance with its terms.
7.3. CORPORATE DOCUMENTS. ASC has made available to Seller and the Doctors
for inspection by Seller and its authorized representatives, a copy of its
Charter, as amended to the date hereof, certified to be a true and correct
thereof by the Secretary of State of Tennessee, and the minute books of ASC
containing the Bylaws and all records of the proceedings, minutes, actions and
consents of the shareholders and the board of directors (and any committees
thereof) of ASC.
7.4. FULL DISCLOSURE. Neither this Agreement, nor any exhibit, list,
certificate or other instrument or document delivered to Seller and the Doctors
pursuant to this Agreement, by or on behalf of ASC, contains any untrue
statement of a material fact or omits to state any material fact required to be
stated herein or therein in order to make the statements, representations or
warranties and information contained herein or therein not misleading.
7.5. VALID ISSUANCE. All shares of AmSurg Common Stock issued to Seller on
the Closing Date will be validly authorized, issued and outstanding, fully paid
and nonassessable. In addition, none of such shares shall have been issued in
violation of any preemptive rights of the shareholders of ASC, and such shares
are free and clear of any liens, encumbrances, charges or claims, other than the
restrictions and requirements of the Securities Act.
7.6. CONSENTS AND APPROVALS. ASC has obtained all consents, approvals,
authorizations and orders of third parties, including governmental authorities,
necessary for the authorization, execution and performance of this Agreement by
ASC which consents, approvals, authorizations and orders are listed on Schedule
7.6.
ARTICLE 8. COVENANTS AND AGREEMENTS OF SELLER AND THE DOCTORS
Seller and the Doctors further covenant and agree that from the date hereof
until the Closing, and thereafter if so specified, they will fulfill the
following covenants and agreements unless otherwise consented to by AmSurg in
writing:
8.1. ACCESS; FURTHER ASSURANCES.
(a) Seller will accord to AmSurg, its counsel, accountants, and other
representatives, from the date hereof until Closing, full access to all of the
properties, books, contracts, commitments, financial information and records of
Seller and the Center, and will furnish AmSurg during such period with all such
infor mation concerning the business and operations of Seller and the Center, as
AmSurg reasonably may request. At any time and from time to time after the
Closing, at AmSurg's request and without further consideration, Seller and the
Doctors agree to execute and deliver such certificates and documents as may be
reasonably and lawfully required in connection with any audit by Deloitte &
Touche LLP of Seller or the Center or their operations.
(b) From the date hereof until the Closing, as soon as reasonably
practicable after the end of each quarter, but not later than the 15th day of
the next succeeding month, Seller will deliver to AmSurg an unaudited statement
of income for Seller for the quarter and the period then ended, and an unaudited
balance sheet and a detail of patient accounts receivable for Seller as at the
quarter then ended ("Ongoing Quarterly Financial Information"). In addition, as
soon as reasonably practicable after the end of each month, but not later than
the 15th day of the next succeeding month, Seller will deliver to AmSurg a
statement of (i) the number of procedures performed, (ii) the billed charges,
and (iii) the cash collections, all with respect to the prior month ("Ongoing
Monthly Operating Information"). All such Ongoing Quarterly Financial
Information shall be prepared in accordance with generally accepted accounting
principles consistent with prior practice.
(c) At any time and from time to time after the Closing, at AmSurg's
reasonable request and without further consideration, Seller will execute and
deliver such other instruments of sale, transfer, conveyance, assignment and
delivery and confirmation and take such action as AmSurg may reasonably deem
necessary or desirable in order more effectively to transfer, convey and assign
to AmSurg and to place AmSurg in possession and control of and to confirm
AmSurg's title to, the Purchased Interest.
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(d) At any time and from time to time after the Closing, at AmSurg's
reasonable request and without further consideration, the Doctors will execute
and deliver such other instruments of sale, transfer, conveyance, assignment and
delivery and confirmation and take such action as AmSurg may reasonably deem
necessary or desirable in order more effectively to issue, transfer, convey and
assign to AmSurg and to place AmSurg in possession and control of and to confirm
AmSurg's title to, the Purchased Interest.
8.2. CONFIDENTIALITY.
(a) In the event the transactions contemplated by this Agreement are
not consummated for any reason, Seller and the Doctors promptly will return to
AmSurg and ASC all records and information provided to Seller from AmSurg and
ASC, and Seller and the Doctors will treat all such records and information as
confidential.
(b) Except as otherwise required by law, Seller and the Doctors will
not disclose at any time to any other person not an employee of AmSurg, ASC or
Seller (or a person otherwise involved in the carrying out of the transactions
contemplated by this Agreement), nor make any public announcement of, the
transactions or terms of the transactions contemplated by this Agreement.
8.3. CONDUCT OF BUSINESS PENDING THE CLOSING. From the date hereof until the
Closing, and except as otherwise consented to by AmSurg in writing, Seller shall
not:
(a) fail to maintain in effect adequate insurance coverage of its
assets; or
(b) fail to use its best efforts to (i) maintain its assets in their
present condition, (ii) comply with all applicable laws, rules and regulations
of governmental agencies or authorities, and (iii) operate its business in the
manner in which it is currently operated.
8.4. INSURANCE. Seller will use its best efforts to include AmSurg as of the
Closing Date as an additional insured on Seller's professional liability,
general property and workers' compensation insurance policies, and will provide
AmSurg with written evidence of such coverage. AmSurg and ASC will pay the
additional cost, if any, for such insurance coverage.
8.5. NOTICE OF ADVERSE CHANGE. Seller will notify AmSurg in writing of any
material adverse change in the business, assets, operations, conditions or
properties of Seller or the Center from the date of this Agreement to the
Closing Date.
8.6. SCHEDULES. Seller shall have the continuing obligation until Closing to
supplement or amend promptly the Schedules being delivered by Seller pursuant to
this Agreement with respect to any matter hereafter arising or discovered which,
if existing or known at the date of this Agreement, would have been required to
be set forth or described in these Schedules.
ARTICLE 9. COVENANTS AND AGREEMENTS OF AMSURG AND ASC
AmSurg and ASC further covenant and agree that from the date hereof until the
Closing, unless otherwise consented to by Seller in writing, they will fulfill
the following covenants and agreements:
9.1. CONFIDENTIALITY.
(a) In the event the transactions contemplated by this Agreement are
not consummated for any reason, AmSurg and ASC promptly will return to Seller
all records and information provided to AmSurg and ASC from Seller or the
Doctor, and AmSurg and ASC will treat all such records and information as
confidential.
(b) Except as otherwise required by law, AmSurg and ASC will not
disclose at any time to any other person not an employee of AmSurg, ASC or
Seller (or a person otherwise involved in the carrying out of the transactions
contemplated by this Agreement), nor make any public announcement of, the
transactions or terms of the transactions contemplated by this Agreement.
9.2. NOTICE OF ADVERSE CHANGE. AmSurg and ASC each will notify Seller and
the Doctors in writing of any material adverse change in the business, assets,
operations, conditions or prospects of AmSurg or ASC, as the case may be, from
the date of this Agreement to the Closing Date.
9.3. SCHEDULES. AmSurg shall have the continuing obligation to supplement or
amend promptly the Schedules being delivered by AmSurg pursuant to this
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Agreement with respect to any matter hereafter arising or discovered which, if
existing or known at the date of this Agreement, would have been required to be
set forth or described in these Schedules.
9.4. FURTHER ASSURANCES. ASC agrees that at any time and from time to time
after the Closing, at Seller's and/or the Doctors' reasonable request and
without further consideration, ASC will execute and deliver such other
instruments of sale, transfer, conveyance, assignment and delivery and
confirmation and take such action as Seller or the Doctors may reasonably deem
necessary or desirable in order more effectively to transfer, convey and assign
to Seller or the Doctors, as applicable, and to place Seller in possession and
control of and to confirm Sellers title to the AmSurg Common Stock.
9.5. REMOVAL OF TRANSFER RESTRICTIONS. AmSurg and/or ASC agree to: (i) on
and after the date that is one (1) year from the Closing, to assist in
compliance with Rule 145 and Rule 144 promulgated by the SEC, as applicable,
with respect to any sale of any AmSurg Common Stock acquired by the Seller
and/or the Doctors, and (ii), assuming no change in Rule 144 as in effect on the
date hereof, on and after the date that is two (2) years from the Closing, to
use their best efforts to cause any restrictive legend or stop transfer
instructions applicable to the AmSurg Common Stock to be removed upon the
request of the Doctors, in each case so long as the Doctors are not then
affiliates of ASC as defined in such Rules and as permitted under other
applicable federal securities laws; and (iii) to use their best efforts to cause
the AmSurg Common Stock to be promptly listed and/or approved for listing on
NASDAQ (provided that the class of stock of which the AmSurg Common Stock is a
part is then listed and/or approved for trading on NASDAQ), or on any other
exchange upon which ASC's common stock is then listed and/or approved for
trading.
ARTICLE 10. CONDITIONS TO AMSURG'S AND ASC'S OBLIGATIONS
AmSurg and ASC shall not be obligated to consummate the transactions
contemplated hereby, unless each of the following conditions is fulfilled or
performed (unless expressly waived in writing by AmSurg and ASC) prior to or at
the Closing:
10.1. COMPLIANCE. The representations and warranties made by Seller and the
Doctors in this Agreement and the statements contained in the Schedules attached
hereto or in any instrument, list, certificate or writing delivered by Seller or
the Doctors pursuant to this Agreement shall be true when made and at and as of
the time of the Closing as though such representations and warranties were made
at and as of the Closing.
10.2. PERFORMANCE BY SELLER AND THE DOCTORS. Seller and the Doctors shall
have performed and complied with all covenants, agreements, obligations and
conditions required by this Agreement to be so complied with or performed by
each of them.
10.3. CERTIFICATE OF SELLER. Seller shall have delivered to AmSurg a
certificate, dated the Closing Date, certifying as to the fulfillment by Seller
of the conditions specified in Sections 10.1 and 10.2 hereof.
10.4. CERTIFICATE OF DOCTORS. Each of the Doctors shall have delivered to
AmSurg a certificate, dated the Closing Date, certifying as to the fulfillment
by such Doctor of the conditions specified in Sections 10.1 and 10.2 hereof.
10.5. CONSENTS AND LICENSES. All necessary consents, licenses, permits,
approvals, authorizations, orders and agreements from federal, state and local
governmental units and any other entity which are listed on Schedule 4.16,
including approval by the Indiana Department of Health and by applicable
Medicare and state Medicaid agencies, for the continued operation and
third-party reimbursement of the Center by the LLC following the consummation of
the transactions con templated hereby, shall have been issued to the LLC or
notice of issuance shall have been provided.
10.6. OPINION OF COUNSEL. AmSurg shall have been furnished with the opinion
of XxXxxx, Xxxx and Xxxxx, p.c., counsel to Seller and the Doctors, in
substantially the form of Exhibit 10.6.
10.7. OFFERING MEMORANDUM. Seller and the Doctors shall have received an
offering memorandum relating to the AmSurg Common Stock. Seller and the Doctors
each shall have executed and delivered to ASC an offeree questionnaire in form
and substance reasonably satisfactory to ASC and its counsel.
10.8. SIGNIFICANT PAYOR AGREEMENTS. AmSurg shall have reasonably determined
that the consummation of the transaction contemplated by this Agreement will not
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result in the termination of any Significant Payor Agreement.
10.9. MEMBER APPROVAL. All of the members of Seller shall have approved the
transactions contemplated by this Agreement, and Seller shall have furnished
AmSurg with a certificate of the Executive Director of Seller evidencing such
approval.
ARTICLE 11. CONDITIONS TO SELLER'S AND THE DOCTORS' OBLIGATIONS
Seller and the Doctors shall not be obligated to consummate the transactions
contemplated hereby unless each of the following conditions is fulfilled or
performed (unless expressly waived in writing by Seller) prior to or at the
Closing:
11.1. COMPLIANCE. The representations and warranties made by AmSurg and ASC
in this Agreement and the statements contained in the Schedules attached hereto
or in any instrument, list, certificate or writing delivered by AmSurg or ASC
pursuant to this Agreement shall be true when made and at and as of the time of
the Closing as though such representations and warranties were made at and as of
the Closing.
11.2. PERFORMANCE BY AMSURG AND ASC. AmSurg and ASC shall have performed and
complied with all covenants, agreements, obligations and conditions required by
this Agreement to be so complied with or performed by AmSurg and ASC.
11.3. CERTIFICATE OF AMSURG AND ASC. AmSurg and ASC each shall have delivered
to Seller and the Doctors a certificate, dated the Closing Date, certifying as
to the fulfillment of the conditions specified in Sections 11.1 and 11.2 hereof.
11.4. OPINION OF COUNSEL. Seller and the Doctors shall have been furnished
the opinion of Bass, Xxxxx & Xxxx PLC, counsel to AmSurg and ASC, in
substantially the form of Exhibit 11.4.
11.5. CONSENTS AND APPROVALS. All necessary consents, approvals,
authorizations and orders of third parties, including governmental authorities,
necessary for the authorization, execution and performance of this Agreement by
ASC listed on Schedule 7.6 shall have been issued to ASC or notice of issuance
shall have been provided.
ARTICLE 12. INDEMNIFICATION
12.1. INDEMNIFICATION BY THE DOCTORS. The Doctors, jointly and severally,
hereby agree to defend, indemnify and hold harmless AmSurg and ASC and shall
reimburse AmSurg and ASC for, from and against each claim, loss, liability, cost
and expense (including without limitation, interest, penalties, costs of
preparation and investigation, and the reasonable fees, disbursements and
expenses of attorneys, accountants and other professional advisors)
(collectively, "Losses"), directly or indirectly relating to, resulting from or
arising out of:
(a) Any untrue representation, misrepresentation, breach of warranty or
nonfulfillment of any covenant, agreement or other obligation by or of Seller or
any Doctor contained herein, any Schedule hereto or in any certificate, document
or instrument delivered to AmSurg and ASC pursuant hereto.
(b) Any tax liability of Seller or the Center not previously paid,
which may at any time be asserted or assessed against Seller or the center for
any event or period prior to the Closing Date (regardless of whether the
possibility of the assertion or presentment of any such tax liability shall have
been disclosed to AmSurg at or prior to the Closing).
(c) Liability for any amounts owed by Seller or the Center to any
governmental third party or private payors because of overpayments to Seller or
the Center prior to the Closing for service rendered to patients, which
liability is due to a recomputation of rates, field audit adjustments,
overpayments or otherwise.
(d) Any other Loss incidental to any of the foregoing.
For purposes of calculating Losses to AmSurg and ASC, in the event Seller
suffers a Loss arising out of any of the items described in (a) through (d)
above, AmSurg and ASC will be deemed to suffer a Loss equal to fifty-one percent
(51%) of the Loss suffered by Seller.
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12.2. INDEMNIFICATION BY AMSURG AND ASC. AmSurg and ASC, jointly and
severally, hereby agree to defend, indemnify and hold harmless Seller, the
Physician Entity and the Doctors, and shall reimburse Seller, the Physician
Entity and the Doctors for, from and against Losses directly or indirectly
relating to, resulting from or arising out of:
(a) Any untrue representation, misrepresentation, breach of warranty or
nonfulfillment of any covenant, agreement or other obligation by AmSurg or ASC,
as the case may be, contained herein or in any certificate, document or
instrument delivered to Seller and the Doctors pursuant hereto.
(b) Any other Loss incidental to the foregoing.
12.3. PROCEDURE.
(a) The indemnified party shall promptly notify the indemnifying party
of any claim, demand, action or proceeding for which indemnification will be
sought under Sections 12.1 or 12.2 of this Agreement, and, if such claim,
demand, action or proceeding is a third party claim, demand, action or
proceeding, the indemnifying party will have the right at its expense to assume
the defense thereof using counsel reasonably acceptable to the indemnified
party. The indemnified party shall have the right to participate, at its own
expense, with respect to any such third party claim, demand, action or
proceeding. In connection with any such third party claim, demand, action or
proceeding, AmSurg, ASC, Seller, the Physician Entity and the Doctors shall
cooperate with each other and provide each other with access to relevant books
and records in their possession. No such third party claim, demand, action or
proceeding shall be settled without the prior written consent of the indemnified
party. If a firm written offer is made to settle any such third party claim,
demand, action or proceeding and the indemnifying party proposes to accept such
settlement and the indemnified party refuses to consent to such settlement,
then: (i) the indemnifying party shall be excused from, and the indemnified
party shall be solely responsible for, all further defense of such third party
claim, demand, action or proceeding; and (ii) the maximum liability of the
indemnifying party relating to such third party claim, demand, action or
proceeding shall be the amount of the proposed settlement if the amount
thereafter recovered from the indemnified party on such third party claim,
demand, action or proceeding is greater than the amount of the proposed
settlement.
(b) In the event the Doctors are required to indemnify AmSurg or ASC
with respect to any indemnity obligation arising under Section 12.1 hereof,
which shall only occur if and to the extent the aggregate losses for which the
Doctors are required to indemnify AmSurg exceed the amount of the Basket (as
hereinafter defined), the Doctors' indemnity obligation may in AmSurg's
discretion be discharged by setoff against any amounts owed or owing to the
Physician Entity or any affiliate thereof under the Operating Agreement between
the Physician Entity and AmSurg.
(c) In the event AmSurg or ASC is required to indemnify the Doctors or
the Physician Entity with respect to any indemnity obligation arising under
Section 12.2 hereof, the indemnity obligation of AmSurg or ASC may in the
Doctors' discretion be discharged by setoff against any amounts owed or owing to
AmSurg under the Amended and Restated Operating Agreement between the Physician
Entity and AmSurg.
(d) Notwithstanding the foregoing, no Doctor shall be required to
indemnify AmSurg or ASC for any amount in excess of his or her pro rata portion
of the Purchase Price.
(e) Notwithstanding the foregoing, the Doctors shall not be obligated
to make any indemnification under Section 12.1 unless the aggregate amount of
Losses exceeds $25,000 (the "Basket"), and such indemnification with respect to
such Losses shall be made by the Doctors only to the extent of such excess over
the Basket.
ARTICLE 13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
13.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained herein shall survive the Closing Date and any investigation
made by or on behalf of any party hereto but, except as expressly provided in
the immediately following parenthetical, no representation or warranty shall
survive beyond the date that is 24 months after the Closing Date (except for any
Losses described in Section 12.1(b), which shall survive for the applicable
statute of limitations, including any waivers thereof, Section 12.1(c), which
shall not
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terminate, and any breach of the representations and warranties contained in
Sections 4.6 and 4.9 to the extent they relate to professional malpractice
claims arising before the Closing Date, which shall not terminate).
In addition, in the event that (a) all of Seller, AmSurg, ASC, or their
successors or assigns, dissolves, liquidates or otherwise ceases to exist, or
(b) the non-competition provisions of Section 8.2 of the Amended and Restated
Operating Agreement of Seller cease to apply to the Physician Entity and its
members pursuant to the terms of Section 8.3 of such Amended and Restated
Operating Agreement, the provisions of Section 5.4 hereof shall terminate and be
of no further force or effect.
13.2. REMEDIES CUMULATIVE. The remedies provided herein shall be cumulative
and shall not preclude the assertion by any party hereto of any other rights or
the seeking of any other remedies against the other party hereto.
ARTICLE 14. TERMINATION OF AGREEMENT
This Agreement may be terminated at any time prior to the Closing:
(a) by mutual agreement of Seller and AmSurg;
(b) by AmSurg, if there has been a material violation or breach by
Seller or the Doctors of any of the agreements, representations or warranties
contained in this Agreement which has not been waived in writing, or if any of
the conditions set forth in Article 10 hereof have not been satisfied by the
Closing or have not been waived in writing by AmSurg;
(c) by Seller, if there has been a material violation or breach by
AmSurg or ASC of any of the agreements, representations or warranties contained
in this Agreement which has not been waived in writing, or if any of the
conditions set forth in Article 11 hereof have not been satisfied by the Closing
or have not been waived in writing by Seller;
(d) By either AmSurg or Seller if the transactions contemplated by this
Agreement shall not have been consummated on or before June 30, 1999; or
(e) By either AmSurg or Seller if the other makes an assignment for the
benefit of creditors, files a voluntary petition in bankruptcy or seeks or
consents to any reorganization or similar relief under any present or future
bankruptcy act or similar law, or is adjudicated a bankrupt or insolvent, or if
a third party commences any bankruptcy, insolvency, reorganization or similar
proceeding involving the other.
ARTICLE 15. MISCELLANEOUS
15.1. EXPENSES. All fees and expenses incurred by Seller and the Doctors,
including without limitation, legal fees and expenses, in connection with this
Agreement will be borne by Seller and the Doctors and all fees and expenses
incurred by AmSurg and ASC, including without limitation, legal fees and
expenses, in connection with this Agreement will be borne by AmSurg and ASC.
15.2. ASSIGNABILITY; PARTIES IN INTEREST.
(a) AmSurg may assign any or all of its rights hereunder to any
affiliate or any direct or indirect subsidiary of AmSurg, and AmSurg shall
advise Seller of any such assignment and shall designate such party as the
assignee and transferee of the Purchased Assets; provided, however, that no such
assignment shall be without the Seller's prior written approval, which shall not
be unreasonably withheld or delayed. Any such assignee shall assume all of
AmSurg's duties, obligations and undertakings hereunder.
(b) Seller and the Doctors may not assign, transfer or otherwise
dispose of any of their respective rights hereunder without the prior written
consent of AmSurg.
(c) All the terms and provisions of this Agreement shall be binding
upon, shall inure to the benefit of and shall be enforceable by the respective
heirs, successors, assigns and legal or personal representatives of the parties
hereto.
15.3. ENTIRE AGREEMENT; AMENDMENTS. This Agreement, including the exhibits,
Schedules, lists and other documents and writings referred to herein or
delivered pursuant hereto, which form a part hereof, contains the entire
understanding of the parties with respect to its subject matter and supersedes
any prior agreements or undertaking of the parties with respect to such subject
matter, including the Letter of Intent
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previously executed by the parties with respect to the transaction contemplated
by this Agreement. There are no restrictions, agreements, promises, warranties,
covenants or undertakings other than those expressly set forth herein or
therein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to its subject matter. This Agreement may be
amended only by a written instrument duly executed by all parties or their
respective heirs, successors, assigns or legal personal representatives. Any
condition to a party's obligations hereunder may be waived but only by a written
instrument signed by the party entitled to the benefits thereof. The failure or
delay of any party at any time or times to require performance of any provision
or to exercise its rights with respect to any provision hereof, shall in no
manner operate as a waiver of or affect such party's right at a later time to
enforce the same.
15.4. SEVERABILITY. The invalidity of any term or terms of this Agreement
shall not affect any other term of this Agreement, which shall remain in full
force and effect.
15.5. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered or mailed (registered or certified mail, postage
prepaid, return receipt requested or by overnight courier service) as follows:
If to Seller:
Northside Gastroenterology Endoscopy Center, LLC
0000 Xxxx Xxxx, Xxxxx 0X
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: Galinton Xxxxx
with a copy to:
XxXxxx, Xxxx & Xxxxx, p.c.
Chamber of Commerce Building
Suite 1100
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
If to AmSurg or ASC:
AmSurg Holdings, Inc.
Xxx Xxxxxx Xxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
with a copy to:
Bass, Xxxxx & Xxxx PLC
First American Center
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt.
15.6. SECTION AND OTHER HEADINGS. The section and other headings contained in
this Agreement are for reference purposes only and shall not in any way affect
the meaning or interpretation of this Agreement.
15.7. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, provided, however, that
the several executed counterparts shall together have been signed by AmSurg,
ASC, Seller and each of the Doctors. All of such executed counterparts shall
constitute one and the same instrument.
15.8. PARTIES IN INTEREST. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns. The parties acknowledge that they have
independently negotiated the provisions of this Agreement, that they have relied
upon their own counsel as to matters of law and application and that neither
party has relied on the other party with regard to such matters.
The parties expressly agree that there shall be no presumption created as a
result of either party having prepared in whole or in part any provisions of
this Agreement.
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15.9. APPLICABLE LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Tennessee, without regard
to its conflict of laws rules.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first above written.
AMSURG CORP.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Title: Secretary
--------------------------------
AMSURG HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Title: Secretary
--------------------------------
NORTHSIDE GASTROENTEROLOGY ENDOSCOPY CENTER, LLC
By: /s/ Galinton X. Xxxxx
-----------------------------------
Title: Executive Director
--------------------------------
By their execution of this Agreement, the Doctors hereby consent to the
execution hereof by Seller and agree to be bound by the provisions of Section
5.4 hereof:
DOCTORS:
/s/ Xxxxxx X. Xxxxxx, M.D.
-----------------------------------
Xxxxxx X. Xxxxxx, M.D.
/s/ Xxxxxx X. Xxxxxx, Xx., M.D.
-----------------------------------
Xxxxxx X. Xxxxxx, Xx., M.D.
/s/ Xxxxx X. Xxxxxxxxx, M.D.
-----------------------------------
Xxxxx X. Xxxxxxxxx, M.D.
/s/ Xxxxxxxxx X. Xxxxxx III, M.D.
-----------------------------------
Xxxxxxxxx X. Xxxxxx III, M.D.
/s/ Xxxxxxxxx X. X'Xxxxxx, M.D.
-----------------------------------
Xxxxxxxxx X. X'Xxxxxx, M.D.
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The Schedules and Exhibits to the Membership Purchase Agreement have been
omitted in accordance with Item 601(b)(2) of Regulation S-K, but will be
furnished to the Commission supplementally upon request. The contents of the
omitted Schedules and Exhibits are described in the Membership Purchase
Agreement.
