Exhibit 10.40
FINAL EXECUTION COPY
ASSET CONTRIBUTION AND EXCHANGE AGREEMENT
dated as of August 15, 2005
by and between
NOVAMED ACQUISITION COMPANY, INC.,
CENTER FOR OUTPATIENT SURGERY
and
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, D.O.,
▇▇▇▇ ▇▇▇▇▇▇▇, M.D.,
▇▇▇▇▇ ▇▇▇▇▇▇, M.D.,
▇▇▇▇▇▇ ▇▇, M.D.,
AND
▇▇▇▇▇▇▇ ▇▇▇, M.D.
ASSET CONTRIBUTION AND EXCHANGE AGREEMENT
THIS ASSET CONTRIBUTION AND EXCHANGE AGREEMENT (this "Agreement") is
dated as of August 15, 2005 (the "Execution Date"), by and among NovaMed
Acquisition Company, Inc., a Delaware corporation ("NovaMed"), Center for
Outpatient Surgery, a California corporation ("Seller") and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
D.O., ▇▇▇▇ ▇▇▇▇▇▇▇, M.D., ▇▇▇▇▇ ▇▇▇▇▇▇, M.D., ▇▇▇▇▇▇ ▇▇, M.D. and ▇▇▇▇▇▇▇
▇▇▇, M.D. (individually a "Shareholder" and collective the "Shareholders").
Certain capitalized terms have the meanings provided in Section 13.1.
RECITALS
A. Seller is engaged in the business of owning and operating a licensed
ambulatory surgery center located at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Business").
B. Pursuant to the terms hereof, immediately prior to the Closing (as
defined herein), Seller will transfer substantially all of its assets, and
certain liabilities described herein, to a newly formed Delaware limited
liability company, NovaMed Surgery Center of Whittier, LLC (the "New LLC") in
exchange for one hundred percent (100%) of the membership interests in the New
LLC ("New LLC Interests").
C. As a condition precedent to Closing, Seller must satisfy certain
conditions as described in this Agreement.
D. Contemporaneous with the consummation of the transactions contemplated
herein, Seller desires to transfer to NovaMed, and NovaMed desires to acquire
from Seller, fifty-one percent (51%) of the total New LLC Interests in exchange
for the Purchase Price (as defined herein), all on the terms and conditions
hereinafter set forth.
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.
CONTRIBUTION OF ASSETS TO NEW LLC AND OTHER PRE-CLOSING COVENANTS
1.1. Formation of the New LLC. Prior to the Closing, the New LLC will be
formed pursuant to the Certificate of Formation in the form attached hereto as
Exhibit 1.1-1.
1.2. Transfer of Assets to New LLC. Immediately prior to the Closing, and
as a condition precedent to the transactions contemplated herein, Seller will
transfer (the "New LLC Asset Transfer") all of the Assets, free and clear of all
Liens, in exchange for one hundred percent (100%) of the New LLC Interests. As
of the Closing, the assets contributed into the New LLC as set forth herein will
consist of 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):
(a) all inventory and supplies with respect to the Business
(collectively, the "Inventory");
(b) all of the tangible and intangible personal property with
respect to the Business, including, without limitation, 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
identified as Assumed Contracts on Schedule 4.8 (collectively, the "Assumed
Contracts"), 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 Seller and the Business, including,
without limitation, "Center for Outpatient Surgery" and all derivations thereof;
(f) all records, files and papers primarily pertaining to the
Business, including general business records, accounting records and Medical
Records;
(g) all Permits, 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 Seller 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 Seller (the "Accounts Receivable");
(k) all of the goodwill of and associated with the Business; and
(l) all rights to the security deposit being held by the landlord
relating to the Leased Real Property in accordance with the terms and conditions
of the underlying real property lease.
To the extent any personal property, inventory, supplies, equipment and
contracts owned by a Shareholder or any of Seller and a Shareholder's respective
Affiliates are primarily used in, or are necessary for the continued conduct of
the Business, and would otherwise be deemed Assets, then Seller or such
Shareholder will cause such party to contribute such assets and property to
Seller for contribution to the New LLC, 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 (collectively, the "Excluded
Assets"):
(a) Seller's rights under this Agreement, including the
consideration paid to Seller pursuant to this Agreement;
(b) the tax records relating to the Business;
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(c) Employee Benefit Plans relating to the employees of the Business
and any and all rights therein or in the assets thereof;
(d) all Material Contracts not identified as Assumed Contracts on
Schedule 4.8;
(e) all cash-on-hand and cash equivalents as of the Closing Date;
and
(g) all personal effects of Seller or any Shareholder not used in
connection with the operation of the Business as specified in Schedule 1.3(g),
including, without limitation, decorative photographs located in the Facility
that are owned by one of the Shareholders, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
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 of the Transaction
Documents or on any Schedule or Exhibit hereto or thereto, the New LLC will not
assume, agree to pay, perform and discharge or in any way be responsible for any
debts, liabilities or obligations of the Business, Seller, Shareholders 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, Seller or any Shareholder 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"). Notwithstanding the foregoing, Seller will contribute
into New LLC, and New LLC will assume and thereafter pay and fully satisfy when
due, all liabilities and obligations: (a) which arose prior to the New LLC Asset
Transfer and represent normal and current trade payables incurred by Seller in
connection with the operation of the Business in the ordinary course of
business, consistent with past custom and practice, and are specifically set
forth on Schedule 1.4(a) ("Accounts Payable"); (b) the other accrued liabilities
of Seller 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"); and (c) first arising after the New LLC
Asset Transfer 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) (all such liabilities and obligations to be
so contributed into, and assumed by, the New LLC being collectively referred to
herein as the "New LLC Assumed Liabilities").
1.5. Satisfaction of Liabilities. Excluding the New LLC Assumed
Liabilities, Seller agrees to satisfy all liabilities of Seller relating to the
Business prior to the New LLC Asset Transfer or as soon as is reasonably
practicable thereafter, which liabilities include, without limitation:
(a) all payroll expense and other compensation due and owing
Seller'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 New LLC Asset Transfer (but excluding any such Taxes to the
extent they are included in Accrued Liabilities).
ARTICLE II.
SALE OF NEW LLC INTERESTS BY SELLER TO NOVAMED
In reliance upon the representations and warranties of NovaMed contained
herein, and on the terms and conditions hereinafter set forth, Seller hereby
agrees to sell, assign, transfer, convey and deliver to NovaMed (or its
designee) at the Closing, free and clear of all Liens, all of Seller's right,
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title and interest in and to fifty-one percent (51%) of the issued and
outstanding New LLC Interests. In reliance upon the representations and
warranties of Seller and Shareholders contained herein, and on the terms and
conditions hereinafter set forth, NovaMed hereby agrees to purchase such New LLC
Interests from Seller for the Purchase Price set forth in Article III hereof.
ARTICLE III.
CONSIDERATION AND MANNER OF PAYMENT
3.1. Purchase Price. The aggregate purchase price for fifty-one percent
(51%) of the issued and outstanding New LLC Interests shall be $8,100,000 (the
"Purchase Price").
3.2. Payment of Purchase Price. At the Closing, NovaMed will pay to
Seller, by wire transfer of immediately available funds to Seller's designated
bank account, an amount equal to the Purchase Price, according to the wire
transfer instructions attached as Exhibit 3.2.
ARTICLE IV.
SELLER'S AND SHAREHOLDERS' REPRESENTATIONS AND WARRANTIES
Each of Seller and Shareholders hereby represents and warrants, jointly
and severally, to NovaMed as of the Execution Date and the Closing Date, as
follows:
4.1. Seller's Organization, Good Standing and Authority. Seller is a
corporation duly organized, validly existing and in good standing under
California law. Each of Seller and Shareholders has 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 Seller and Shareholders,
and constitute the valid and binding obligations of Seller and Shareholders,
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. Seller 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 tangible or
intangible property, rights and assets necessary for the conduct by Seller of
the Business as conducted during the twelve months preceding the Closing Date
and, to the knowledge of Seller, there is no need to acquire or replace any
material assets. Seller has good and marketable title to the Assets, in each
case free and clear of any and all Liens. Upon consummation of the transactions
contemplated by this Agreement, Seller will have conveyed, and the New LLC will
be vested with, good and marketable title to the Assets, free and clear of all
Liens. All of the Assets that are personal property are in operable condition
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. Certain of the Assets are subject to one or
more capitalized leases (the "Citicorp Leases") with Citicorp Vendor Finance,
Inc., its successors and their respective affiliates (collectively, "Citicorp").
The Citicorp Leases are Assumed Contracts. Seller has not been able to produce
any copies of the Citicorp Leases to Buyer and therefore is making
representations and warranties herein as to the terms and conditions of the
Citicorp Leases. Following the Closing, New LLC's only obligations under the
Citicorp Leases shall be scheduled monthly payments of $10,198.53, plus a $1.00
buyout, with the final monthly payment and $1.00 buyout due in October 2005.
Upon the payment of the final monthly payment plus $1.00 buyout in October 2005,
the New LLC shall be vested with good and marketable title to all of the Assets
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free and clear of all Liens except for those non-Citicorp liens listed on
Schedule 4.2. New LLC is not required to give any notice to Citicorp or any
other Person with respect to the exercise of the $1.00 buyout, but rather simply
can add the $1.00 buyout price to the final scheduled monthly payment in October
2005 in order to be vested with good and marketable title to all of the
Citicorp-related Assets.
4.3. Approvals. Except as set forth on Schedule 4.3, no consent, approval,
order or authorization of, or registration, declaration 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 Seller or Shareholders 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 and thereby.
4.4. New LLC Interests. Immediately prior to the Closing Date, Seller will
be the only record and beneficial holder of the New LLC Interests. Seller has
good and marketable title to the New LLC Interests free and clear of all Liens,
and has full right, power and authority to transfer the New LLC Interests to
NovaMed as provided herein, without obtaining the consent of any third party
(other than the Manager of the New LLC (the "Manager") as set forth in the terms
and conditions of the Operating Agreement of the New LLC). Upon consummation of
the transactions contemplated herein, Seller shall have transferred good and
marketable title to the New LLC Interests free and clear of all Liens.
4.5. Financial Statements. Seller has previously delivered to NovaMed
unaudited financial statements of Seller, to the extent available for the years
ending December 31, 2002, December 31, 2003 and December 31, 2004, and interim
financial statements ending May 31, 2005, consisting of an income statement and
balance sheet ("Financial Statements"). Except as set forth on Schedule 4.5,
each of the Financial Statements (a) has been prepared in accordance with the
cash-basis method of accounting; (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 Seller at such dates and the results of its operations for the
periods ended on such dates; and (d) is consistent with Seller's books and
records.
4.6. Absence of Undisclosed Liabilities. Neither Seller nor any
Shareholder, 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 not 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 not subject to consignment or conditional sales
arrangements and no material portion of the Inventory is obsolete or damaged.
4.8. Taxes. Seller 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. Seller has paid all Taxes, interest
and penalties, if any, reflected on such Tax Returns or otherwise due and
payable by them. 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 Seller in connection with the operation of the
Business. With respect to all amounts of Taxes imposed on Seller for which
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Seller is or could be liable, whether to taxing authorities (as, for example,
under the law) 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 fully complied with, and all such amounts required
to be paid by Seller 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. 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 Shareholders or Seller. There are no Liens for Taxes (other
than current taxes not yet due and payable) upon any asset of Seller. Seller 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 is a correct and complete list of
every material written contract, agreement, relationship or commitment, every
material oral contract, commitment, agreement or relationship, to which Seller
or any Shareholder is a party or by which Seller or any Shareholder is bound, as
they relate to the Business (the "Material Contracts"), correct and complete
copies of which previously have been furnished to NovaMed. Except as set forth
on Schedule 4.9, neither Seller nor any Shareholder 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 or any
other obligation owed by Seller or any Shareholder, and, to the knowledge of
Seller or any Shareholder, no event has occurred which with the giving of notice
or the passage of time or both would constitute such a default by any party to
any such Material Contract or obligation.
4.10. Real Property. As it relates to the Business, Seller does not own
any real property. Seller has a valid leasehold interest in the real property
which it holds under the lease described in Schedule 4.10 (collectively, the
"Leased Real Property"), 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 Seller in connection with
the Business or reflected on the Financial Statements. Upon execution of the
Lease Assignment (as hereinafter defined), the New LLC will have a valid
leasehold interest in the Leased Real Property, which leasehold interest will be
free and clear of all Liens, except for Liens created by the New LLC. With
respect to the Leased Real Property: (a) Seller has all easements and rights
necessary to conduct the Business; (b) no portion thereof is subject to any
pending or, to the knowledge of Seller or any Shareholder, 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 such facilities.
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 Seller or any Shareholder, threatened against or involving Seller,
the Business or, with respect to the Business, any Shareholder, 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 knowledge of
Seller or any Shareholder, are there any facts, conditions or incidents that
could be reasonably expected to result in any such actions, suits, proceedings
(arbitration, mediation or otherwise) or investigations. Except as set forth on
Schedule 4.11, neither Seller nor any Shareholder is subject to any judgment,
order or decree of any court or Governmental Authority. None of the matters set
forth on Schedule 4.11 could result in any Material Adverse Effect on Seller,
the Assets, the Business or New LLC.
4.12. Compliance with Applicable Laws; Permits.
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(a) Each of Seller and Shareholders, in their 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 Shareholders' and Seller's billing procedures (except denials
of claims in the ordinary course of business). Neither Seller nor any
Shareholder has received any notice of Seller's violation of any such rules or
regulations, whether corrected or not, within the last five (5) years. Seller is
eligible to receive payment under Titles XVIII and XIX of the Social Security
Act. Seller has timely and accurately filed all requisite reports, returns,
data, and other information required by all Governmental Authorities which
control, directly or indirectly, any of Seller'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. No such report or return has been
inaccurate, incomplete or misleading. Seller 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 Seller participates that are due on or before the Closing Date
or which relate to services provided on or before the Closing Date, and Seller
has not billed for any services that were not provided at the Facility. There
are no claims pending or, threatened or scheduled 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 Seller
on or before the Closing Date, or program compliance matters. Except for
routinely scheduled Medicare and Medicaid program participation and
certification surveys pursuant to Seller's Medicare and Medicaid contracts and
filings, no valid program integrity review related to Seller has been conducted
by any authority in connection with the Medicare or Medicaid programs and no
such review is scheduled, pending, or to Seller's knowledge, threatened against
or affecting Seller, the Business, the Facility, or the consummation of the
transactions contemplated hereby.
(b) Seller 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"). Seller is in compliance in all material respects
with such Permits, all of which are in full force and effect, and Seller has not
received any notices (written or oral) to the contrary. All of the Permits are
in good standing, and to Seller's knowledge, no suspension, cancellation or
adverse action is threatened against the Permits, and there is no basis for
believing that any Permits will not be renewed upon expiration.
4.13. Transaction Not a Breach. The execution, delivery and performance by
Seller and Shareholders 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 Seller
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 Seller or any
Shareholder 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 Seller;
(e) Result in the creation or imposition of any Lien upon any
property of Seller; or
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(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, Seller 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 Seller or the Business. Without limitation of the foregoing, since
the Review Date, Seller has not, except in the ordinary course of business,
consistent with past custom and practice, or as otherwise set forth on Schedule
4.14:
(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;
(b) Pledged or subjected any of its assets to any Lien or
restriction;
(c) Voluntarily or involuntarily sold, transferred, abandoned,
surrendered, leased or otherwise disposed of any of its assets material to the
operation of Seller;
(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;
(f) Instituted, settled or agreed to settle any litigation, action,
proceeding or arbitration;
(g) Made a material purchase commitment other than in the ordinary
course of business, consistent with past custom and practice;
(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; or
(l) Issued any equity interests or entered into any agreement or
understanding to do so.
4.15. Health, Safety and Environment. Seller 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
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any of its assets in violation of any applicable Environmental and Safety
Requirements (as hereinafter defined). Seller: (i) 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 or
hereafter amended ("Environmental and Safety Requirements"), and (ii) possesses
all required permits, licenses, certifications and approvals and has filed all
notices or applications required thereby or pertaining thereto. Seller 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 Seller,
nor is Seller aware of any such inquiry, investigation, order, action or notice.
There are no pending, or to the knowledge of Seller or any Shareholder,
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.
4.16. Employees. Schedule 4.16 is a true, complete and correct list
setting forth as of the Review Date the names and current compensation rate and
compensation of all individuals employed by Seller. 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 Seller 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 Seller'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. Seller 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 on such policies have been paid.
Such insureds have complied in all material respects with the provisions of all
such policies. Seller has previously delivered to NovaMed complete and correct
copies of all such policies, together with all riders and amendments thereto in
the possession of Seller. 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 Seller and the Shareholders at any time
within the past five (5) years.
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 Seller from, to or for the benefit of any
Affiliate or former Affiliate of Seller ("Affiliate Transactions") during the
period commencing January 1, 2003 through the date hereof or any existing
commitments of Seller to engage in the future in any Affiliate Transactions.
4.19. Employee Benefit Plans. Except as set forth in Schedule 4.19,
neither Seller nor any Plan Affiliate has maintained, sponsored, adopted, made
contributions to or obligated itself to make contributions to or to pay any
benefits or grant rights under or with respect to any "Employee Pension Benefit
Plan" (as defined in Section 3(2) of ERISA), "Employee Welfare Benefit Plan" (as
defined in Section 3(1) of ERISA), "multi-employer plan" (as defined in Section
3(37) of ERISA), 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 Seller's employees
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or former employees or beneficiaries thereof, personnel policy (including but
not limited to vacation time, holiday pay, bonus programs, moving expense
reimbursement programs and sick leave), material fringe benefit, excess benefit
plan, bonus or incentive plan (including but not limited to stock options,
restricted stock, stock bonus and deferred bonus plans), severance agreement,
salary reduction agreement, top hat plan or deferred compensation plan,
change-of-control agreement, employment agreement, consulting agreement or any
other benefit, program, policy, arrangement, agreement or contract
(collectively, "Employee Benefit Plans"), whether or not written or terminated,
which could give rise to or result in Seller or such Plan Affiliate having any
debt, liability, claim or obligation of any kind or nature, whether accrued,
absolute, contingent, direct, indirect, known or unknown, perfected or inchoate
or otherwise and whether or not due or to become due. Correct and complete
copies of all Employee Benefit Plans previously have been furnished to NovaMed.
The Employee Benefit Plans are in compliance in all material respects with
governing documents and agreements and with applicable laws. Seller acknowledges
that it will be solely responsible for administering and/or terminating its
Employee Benefit Plans following the Closing.
4.20. Personnel Agreements, Plans and Arrangements. Except as listed in
Schedule 4.20, neither Seller nor any Shareholder is a party to or obligated in
connection with the Business with respect to any outstanding contracts with
current or former employees, agents, consultants, or advisers.
4.21. Certain Payments. None of Seller, the Shareholders, any director,
officer, agent, or employee of Seller or any other Person associated with or
acting for or on behalf of Seller 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 (i) for securing patients or referrals, (ii) for patients
or referrals secured, (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of Seller, or (iv) in violation
of any law.
4.22. Workers Compensation. Schedule 4.22 sets forth all expenses,
obligations, duties and liabilities relating to any pending, threatened or
ongoing claims by employees and former employees (including dependents and
spouses) of Seller (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
Seller under any workers compensation laws, regulations, requirements or
programs. Since the Review Date, there has been no material change, other than
in the ordinary course of business, in the information disclosed in Schedule
4.22.
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 Seller 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, will not be
subject to any offset, counterclaim or other adverse claim or defense, and may
be transferred to the New LLC to the extent permitted by law. The Accounts
Receivable arose in the ordinary and usual course of the business, and the
Accounts Receivable are set forth on the books and records of Seller. Schedule
4.23(a) contains a complete and accurate list of all Accounts Receivable as of
the date listed thereon, which list represents the Accounts Receivable after
adjusting for contractual allowances and bad debt reserves. Seller does 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 Seller'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 Seller or any Shareholder 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. Seller and Shareholders represent and warrant that (a) all of
the Purchased Assets being sold and/or provided by Seller to NovaMed under this
Agreement, including without limitation, any computer hardware and/or software,
are in 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) Seller has conducted its
business and activities, including, without limitation, its billing and
collection activities, its medical records management activities, and its
general business operations, in a manner that complied with HIPAA and State
HIPAA.
4.26. Rates and Reimbursement Policies. Seller does not have any rate
appeal currently pending before any Governmental Authority or any administrator
of any third-party payor program. Seller has no knowledge of any applicable
state or local law, which affects rates or reimbursement procedures which has
been enacted, promulgated or issued within the eighteen (18) months preceding
the Closing Date or any such legal requirement proposed or currently pending in
the applicable state or at the federal level which has resulted or may result in
any reductions in rates and reimbursement.
4.27. Physicians. None of the physicians who utilize the center
(collectively, the "Physicians") have threatened to discontinue or to terminate
his or her relationship with the Seller and the provision of services at the
Facility. To the knowledge of any of Seller and any Shareholder, none of the
Physicians have expressed plans to retire from the practice of medicine in the
next five (5) years nor to be involved in the development or operations of
another ambulatory surgery center. 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. Seller is presently in compliance with
all of the terms, conditions and provisions of such contracts.
(b) The Facility is qualified for participation in the Medicaid
program. Complete and accurate copies of Seller's existing Medicaid contracts
have been furnished to NovaMed. Seller is presently in compliance with all of
the terms, conditions and provisions of such contracts.
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4.29. No Misrepresentation. None of the representations and warranties of
Seller and Shareholders 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 Seller or any Shareholder, 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 Seller's or any Shareholder's ability to consummate
the transactions contemplated hereby.
ARTICLE V.
NOVAMED'S REPRESENTATIONS AND WARRANTIES
NovaMed hereby represents and warrants to Seller as of the Execution Date
and the Closing Date as follows:
5.1. Organization. NovaMed is 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.
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 New LLC Interests. NovaMed is acquiring the New LLC
Interests for its own account and not with a view to the distribution or resale
thereof. NovaMed has no intention of selling the New LLC Interests in a public
distribution in violation of federal securities laws or any applicable state
securities laws.
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 Seller.
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 Seller 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.
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ARTICLE VI.
ADDITIONAL AGREEMENTS
6.1. Release of Liens and Lien Searches. Seller shall procure all
applicable release of liens with respect to those Liens set forth on Schedule
4.2, prior to the New LLC Asset Transfer. Seller shall provide NovaMed with all
information and other assistance required for the parties to file all applicable
UCC termination statements (in 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 Seller or any of its assets as of the Closing Date.
6.2. Employees; Labor Relations.
(a) Leased Employees. Seller currently leases its employees from
Modern/Medical Management Consultants, Inc. ("Staffing Agency") pursuant to a
Service Subscription Agreement dated April 4, 2003 (the "Leasing Agreement"). At
Closing, the Leasing Agreement shall be assigned to New LLC as an Assumed
Contract. Seller shall be solely responsible for all liabilities arising under
the Leasing Agreement prior to Closing, as well as any employment-related claims
filed by any leased employees 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.
(b) COBRA Notice. Seller represents that it has complied, in all
material respects, with the applicable requirements of COBRA through the Closing
Date and shall be responsible for all liabilities arising under COBRA with
respect to any event occurring prior to and on the Closing Date.
(c) Noncompetition Agreements. Seller hereby waives any
noncompetition provision that may apply to the Continuing Employees with respect
to New LLC's hiring of the Continuing Employees.
6.3. Post-Closing Remittances; New LLC's Appointment as Attorney-In-Fact.
If, after the Closing Date, Seller shall receive any remittance from any account
debtors with respect to the Accounts Receivable, Seller shall endorse such
remittance to the order of the New LLC and forward it to the New LLC promptly
following receipt thereof. Seller hereby irrevocably constitutes and appoints
New LLC and any officer or agent of New LLC as Seller's true and lawful
attorney-in-fact, with full power and authority, in the place and stead of
Seller for the limited purposes of receiving, collecting, indorsing, negotiating
and cashing any and all cash, checks, drafts, payments, accounts receivable and
other instruments (collectively the "Items") which are payable to Seller and
which represent Items related to the Business or which represent payment on
Accounts Receivable related to the Business, and which in accordance with the
terms of this Agreement, have been sold, conveyed, assigned or transferred to
New LLC or are otherwise for the account of New LLC hereby. Seller further
agrees to execute all documents and take such other action as New LLC may
reasonably request to confirm the power granted to New LLC by this Section 6.3.
Notwithstanding the foregoing, in no event shall New LLC receive, collect,
indorse, negotiate or cash such Items pursuant to the above authority if to do
so would be to violate the laws, regulations or other written guidance of any
state or federal health program. In such event, New LLC and Seller agree to take
such actions as necessary to convey such payments to New LLC consistent with
applicable laws and regulations.
6.4. 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 Assets to the New LLC, and the New LLC Interests to
NovaMed, all on the terms contained herein, and to otherwise comply with the
terms of this Agreement and consummate the transactions contemplated herein.
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6.5. Professional Liability Tail Coverage. To the extent Seller's
professional liability insurance policy for the Facility is on a claims-made
basis (rather than an occurrence basis), Seller shall obtain an extended
reporting ("tail") professional liability insurance policy covering acts and
omissions occurring at the Facility prior to the Closing Date, in an amount
equal to the professional liability insurance carried immediately prior to the
Closing Date, or such other amount, and for such period of time, as determined
by mutual agreement of NovaMed and Seller. Upon NovaMed's request, Seller shall
provide New LLC with proof of such tail professional liability coverage. The
cost and expense of such tail coverage shall be borne solely by Seller.
6.6 Credentialing. As of the Closing Date, the Shareholders and other
physicians credentialed by the Facility immediately prior to the Closing Date
shall receive provisional privileges to perform surgical procedures at the
Facility that will be owned and operated by the New LLC from and after the
Closing Date. As a condition to receiving these provisional privileges, each of
the Shareholders hereby agree, and shall cause all of such other credentialed
physicians to agree, that following the Closing Date he or she will comply with
all of the New LLC's credentialing requests (including, without limitation,
providing New LLC with any reasonably requested information and completing any
applicable credentialing forms) so that the New LLC may complete its
credentialing review process for each physician by the expiration date of the
provisional privileges.
6.7 ▇▇▇▇▇▇▇▇▇ Photographs. One of the Shareholders, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, D.O.,
owns photographs hanging on the walls of the Leased Real Property but that are
Excluded Assets. ▇▇. ▇▇▇▇▇▇▇▇▇ hereby agrees to continue to allow New LLC to use
such photographs within the Leased Real Property, at no cost to the New LLC, for
a period of at least five years following the Closing Date.
6.8 Medical Records. From and after the Closing, New LLC shall have
custody of the Medical Records and shall maintain them in accordance with
applicable state and federal law. For not less than seven (7) years after the
Closing Date or the time period required by applicable state law, the New LLC
shall grant to Seller and its representatives, at Seller's request, access to,
and the right to make copies of, at Seller's sole cost and expense, those
Medical Records as may be necessary in connection with the business and affairs
of Seller after the Closing Date; provided, that Seller shall only have such
access to the extent necessary in connection with: (A) any government, state or
federal agency review of Seller or the operations of Seller and/or the Business
preceding the Closing Date (the "Pre-Closing Date Business"); (B) a request from
the Department of Health and Human Services, the Centers for Medicare and
Medicaid Services or other state or federal agency; (C) a claim or lawsuit
against Seller or relating to the Pre-Closing Date Business; (D) as required by
applicable law; or (E) otherwise pursuant to proper patient consent and/or
authorization, as applicable. Notwithstanding anything in this Agreement to the
contrary, the New LLC shall only release and copy, destroy, dispose of, sell or
transfer Medical Records to Seller or any person or entity upon proper patient
notice, consent and/or authorization (to the extent required by applicable
state, federal and local laws and regulations).
ARTICLE VII.
CLOSING
7.1. Time and Place. The closing of the transactions that are the subject
of this Agreement (the "Closing") shall occur via facsimile effective as of the
third business day following the satisfaction or waiver of all conditions set
forth in Articles VIII and IX of this Agreement (the "Closing Date") or at such
other time or place as the parties hereto shall mutually agree, with original
documents to be exchanged by nationally recognized overnight courier for
delivery on the next business day after the Closing Date.
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7.2. Contribution of Assets to New LLC. As a condition precedent to the
consummation of the transactions contemplated herein, Seller shall have
consummated the New LLC Asset Transfer in accordance with the terms and
conditions of Article I hereof.
7.3. Deliveries of Seller and Shareholders. At the Closing, Seller and
Shareholders will execute and deliver or cause to be executed and delivered to
NovaMed:
(a) a Contribution Agreement to evidence the New LLC Asset Transfer
and to effectively vest the New LLC with full, complete and marketable right,
title and interest in and to the Assets, in substantially the form of attached
Exhibit 7.3(a) (the "Contribution Agreement");
(b) the Limited Liability Company Agreement of the New LLC, in the
form attached hereto as Exhibit 7.3(b) (the "Operating Agreement");
(c) a certificate of the Secretary of Seller as to (i) copies of
resolutions of its Board of Directors and Shareholders authorizing the
execution, delivery and performance of this Agreement and the Transaction
Documents; (ii) a Certificate of Good Standing issued by the Secretary of State
of California; (iii) its By-Laws; (iv) incumbency and specimen signatures with
respect to its officers executing this Agreement and any Transaction Documents;
and (v) its Articles of Incorporation certified by the Secretary of State of
California.
(d) any required third party consents, filings, and certificates
from Seller or any third party (including, any Governmental Authority) relating
to the transfer of the Assets, including without limitation, all consents from
the State of California 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 transfer of the Material
Contracts;
(e) clearance certificates or similar documents required by any
state taxing authority in order to relieve NovaMed of any obligation to withhold
any portion of the Purchase Price;
(f) the Assignment, Acceptance and Consent to Assignment of New LLC
Interests, substantially in the form attached as Exhibit 7.3(f) (the "Assignment
of New LLC Interests"), duly executed by Seller;
(g) duly executed Lease Assignment for the Facility and other Leased
Real Property listed on Schedule 4.10 (the "Lease Assignment") between Seller,
as assignor, and the New LLC, as assignee, including the consent thereto by the
landlord;
(h) all applicable documentation releasing Liens covering,
concerning or relating to the Assets, in form and substance reasonably
acceptable to NovaMed;
(i) Redemption Agreement pursuant to which Seller redeems
Shareholder's ownership interests in Seller in exchange for Seller's membership
interests in the New LLC, effective immediately following the Closing Date;
(j) Certificate of Seller and Shareholders 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;
15
(k) a DEA Power of Attorney (the "Power of Attorney"), executed by
▇▇. ▇▇▇▇▇▇▇▇▇;
(l) Amendment to Articles of Incorporation of Seller changing its
name to enable New LLC to make an assumed name filing for such name;
(m) 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 or will
cause the New LLC to deliver to Seller 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 any Transaction Documents;
(d) the Lease Assignment, duly executed by the New LLC;
(e) the Assignment of New LLC Interests, duly executed by NovaMed;
(f) Certificate of NovaMed certifying that all representations and
warranties contained in this Agreement are truthful, accurate and complete as of
the Closing Date;
(g) the Power of Attorney, executed by the New LLC; and
(h) such other documents and instruments as Seller or its counsel
reasonably shall deem necessary to consummate the transactions contemplated
hereby.
All documents delivered to Seller shall be in form and substance reasonably
satisfactory to the counsel for Seller.
7.5 Change of Ownership Process. Between the Execution Date and Closing
Date, NovaMed and New LLC will continue with efforts to file applications and/or
notices for all reasonably necessary licensure and regulatory approvals required
in connection with the New LLC's ownership and operation of the Business, the
receipt of which is a condition precedent to the Closing. Seller, Shareholders
and their respective agents and representative agree to cooperate with NovaMed
and New LLC 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.
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ARTICLE VIII
NOVAMED'S CONDITION PRECEDENT
Unless otherwise waived by NovaMed, the obligation of NovaMed to effect
the transactions contemplated hereby shall be subject to the fulfillment at or
prior to the Closing of the following additional conditions:
8.1. Notification. Between the Execution Date and the Closing Date, each
of Seller and Shareholders will promptly notify NovaMed of the occurrence of any
breach of any covenant of Seller or any Shareholder in this Article VIII or of
the occurrence of any event that may make the satisfaction of the conditions in
this Agreement impossible or unlikely.
8.2. Efforts. Between the Execution Date and the Closing Date, Seller and
Shareholders will use all commercially reasonable efforts to cause the
conditions in this Article VIII to be satisfied.
8.3. Accuracy of Representations. Each of Seller and Shareholders'
representations and warranties in this Agreement must have been accurate as of
both the Execution Date and Closing Date, provided that Seller and Shareholders
may update any Schedule set forth in Article IV of this Agreement as of the
Closing Date in a manner acceptable to NovaMed, in its sole discretion, and
Seller and Shareholders shall each have delivered a certificate to NovaMed which
certifies the foregoing.
8.4. Change of Ownership Approvals. The New LLC shall have received all
necessary state licensure and Medicare approvals to commence the New LLC's
ownership and operation of the Business (with the understanding that upon
commencement of operations, there may be billing delays associated with
procuring third party payor provider numbers).
8.5. Satisfaction of Covenants. Each of the covenants and obligations that
Seller and Shareholders are required to perform or to comply with pursuant to
this Agreement at or prior to the Closing must have been duly performed and
complied with.
8.6. Deliveries. Seller and Shareholders must have delivered to NovaMed the
documents required to be delivered pursuant to Section 7.3.
8.7. No Material Adverse Effect. Between the Execution Date and Closing, except
for the conditions precedent set forth herein, there has not been any Material
Adverse Effect on the Business (excluding any Material Adverse Effect caused by
any actions or omissions of NovaMed).
8.8. Ordinary Course. Seller covenants and agrees that, from and after the
Execution Date through and including the Closing Date, Seller shall not: (a)
enter into any new, or modify any existing, material lease, material contract or
other material obligation with respect to the Business without the prior written
consent of NovaMed; (b) take any action which will or may adversely affect title
to the Assets; or (c) commit any act which will violate any term or provision of
the Assumed Contracts or any federal or state law, ordinance or regulation
applicable to the Business.
ARTICLE IX.
SELLER'S CONDITION PRECEDENT
Unless waived by Seller, the obligation of Seller and Shareholders to
effect the transactions contemplated hereby shall be subject to the fulfillment
at or prior to the Closing of the following additional conditions:
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9.1. Notification. Between the Execution Date and the Closing Date,
NovaMed will promptly notify Seller of the occurrence of any breach of any
covenant of NovaMed in this Article IX or of the occurrence of any event that
may make the satisfaction of the conditions in this Agreement impossible or
unlikely.
9.2. Efforts. Between the Execution Date and the Closing Date, NovaMed
will use all commercially reasonable efforts to cause the conditions in this
Article IX to be satisfied.
9.3. Accuracy of Representations. NovaMed's representations and warranties
in this Agreement must have been accurate as of both the Execution Date and
Closing Date.
9.4. Change of Ownership Approvals. The New LLC shall have received all
necessary state licensure and Medicare approvals to commence the New LLC's
ownership and operation of the Business (with the understanding that upon
commencement of operations, there may be billing delays associated with
procuring third party payor provider numbers).
9.5. Satisfaction of Covenants. Each of the covenants and obligations that
NovaMed is required to perform or to comply with pursuant to this Agreement at
or prior to the Closing must have been duly performed and complied with.
9.6. Deliveries. NovaMed must have delivered each of the items required to
be delivered by NovaMed pursuant to Section 7.4.
ARTICLE X.
TERMINATION
10.1. Termination Events. This Agreement may, by written notice given
prior to or at the Closing, be terminated:
(a) by mutual consent of NovaMed and Seller;
(b) by either NovaMed or Seller, if a material breach of any
provision of this Agreement has been committed by the other party, upon 10 days
prior written notice (during which the party in breach may cure such breach),
and such breach has not been waived;
(c) by NovaMed if any of the conditions in Article VIII have not
been satisfied as of the six (6) month anniversary of the Execution Date (the
"Termination Date") or if satisfaction of such a condition is or becomes
impossible (other than through the failure of NovaMed to comply with its
obligations under this Agreement) and NovaMed has not waived such condition on
or before the Termination Date; or
(d) by Seller, if any of the conditions in Article IX have not been
satisfied as of the Termination Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Seller and Shareholders
to comply with their respective obligations under this Agreement) and Seller has
not waived such condition on or before the Closing Date.
10.2. Effect of Termination. Each party's right of termination under
Section 10.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 10.1, all
further obligations of the parties under this Agreement will terminate;
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provided, however, that if this Agreement is terminated by a party because of
the breach of the Agreement by the other party or because one or more of the
conditions to the terminating party's obligations under this Agreement is not
satisfied as a result of the other party's failure to comply with its
obligations under this Agreement, the terminating party's right to pursue all
legal remedies will survive such termination unimpaired and such party shall be
entitled to be reimbursed for its expenses incurred prior to the date of such
termination in connection with the Transactions.
ARTICLE XI.
INTENTIONALLY OMITTED
ARTICLE XII.
POST-CLOSING COVENANTS
12.1. Indemnification by Seller and Shareholders. From and after the
Closing, each of Seller and Shareholders agrees to jointly and severally
indemnify, defend and save NovaMed and its respective Affiliates (including,
without limitation, the New LLC) and each of its respective officers, directors,
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 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:
(a) any misrepresentation or breach of a representation or warranty
contained in this Agreement or in the Transaction Documents by Seller or any
Shareholder, or non-compliance with or breach by Seller or any Shareholder of
any of the covenants or agreements contained in this Agreement or the
Transaction Documents to be performed by Seller, Shareholders or any of their
respective Affiliates;
(b) the operation of the Business, including the use of the Assets
and the Excluded Assets, on or prior to the Closing Date;
(c) any Tax liability of Seller or any Shareholder;
(d) 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, whether or not such
acts, omissions, circumstances or conditions constituted a violation of
Environmental and Safety Requirements as then in effect;
(e) 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;
(f) any action, demand, proceeding, investigation or claim (whenever
made) by any third party (including Governmental Authorities) against or
affecting NovaMed or its Affiliates which, if successful, would give rise to or
evidence the existence of or relate to a misrepresentation or breach of any of
the representations, warranties or covenants contained in this Agreement or the
Transaction Documents of Seller;
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(g) the Excluded Assets or Excluded Liabilities; or
(h) 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 Seller
or any Shareholder.
12.2. Indemnification by NovaMed. From and after the Closing, NovaMed
agrees to indemnify, defend and save Seller, Shareholders and their respective
Affiliates, and their respective employees, trustees, agents, representatives,
heirs and executors other than the New LLC (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 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:
(a) 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;
(b) any action, demand, proceeding, investigation or claim (whenever
made) by any third party (including Governmental Authorities) against or
affecting Seller, Shareholders or their respective Affiliates which, if
successful, would give rise to or evidence the existence of or relate to a
misrepresentation or breach of any of the representations, warranties or
covenants contained in this Agreement or the Transaction Documents of NovaMed;
or
(c) 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.
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 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 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 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
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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.
(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 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 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.
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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 and shall
continue in effect until the 24-month anniversary of the Closing 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.
12.6. Right of Offset. If Seller or any Shareholder is the Indemnifying
Party and 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 New LLC to Seller or any Shareholder pursuant to the
terms of the Operating Agreement (including, without limitation, any
distributions payable to Seller or such Shareholder).
12.7. Limitations on Indemnification.
(a) Seller's Basket. Notwithstanding anything in this Agreement to
the contrary, the NovaMed Indemnified Parties shall not be entitled to
indemnification under Section 12.1(a) and/or 12.1(f) until all Losses incurred
by the NovaMed Indemnified Parties exceed in the aggregate, One Hundred Thousand
and 00/100 Dollars ($100,000) (the "Seller's Basket"), in which case the NovaMed
Indemnified Parties shall be entitled to indemnification under Section 12.1(a)
and/or 12.1(f) only to the extent such Losses exceed the Seller's Basket.
(b) NovaMed's Basket. Notwithstanding anything in this Agreement to
the contrary, the Seller Indemnified Parties shall not be entitled to
indemnification under Section 12.2(a) and/or 12.2(b) until all Losses incurred
by the Seller Indemnified Parties exceed in the aggregate, One Hundred Thousand
and 00/100 Dollars ($100,000) (the "NovaMed Basket"), in which case the Seller
Indemnified Parties shall be entitled to indemnification under Section 12.2(a)
and/or 12.2(b) only to the extent such Losses exceed the NovaMed Basket.
(c) Not Applicable. The limitations set forth in this Section 12.7
shall not apply in the event of fraud or intentional misrepresentation by a
party hereto.
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.
"Code" means the Internal Revenue Code of 1986, as amended.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
22
"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.
"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. ss.9601 et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. ss.6901 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. ss.2011 et seq.; (d) asbestos in any form or condition; and
(e) any other material, substance or waste to which liability or standards of
conduct may be imposed under any Environmental and Safety Requirements.
"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, a
material adverse effect on the business, prospects, financial condition or
results of operations of such Person or any of its subsidiaries, taken as a
whole.
"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.
"Review Date" means December 31, 2004.
"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
23
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).
"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 Seller and Shareholders:
NovaMed Surgery Center of Whittier, LLC
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Seller and/or Shareholders
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ & ▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to NovaMed:
NovaMed Acquisition Company, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
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 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.
24
13.3. Certain Taxes. Seller and Shareholders will (on a joint and several
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. 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 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.
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 Seller or
Shareholders 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
25
dispute by mediation under the Commercial Mediation Rules of the American
Arbitration Association ("AAA") (such mediation session to be held in Los
Angeles, California, 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 Los
Angeles, California before a single arbitrator mutually agreed upon by Seller
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.
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.
* * *
26
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SELLER:
CENTER FOR OUTPATIENT SURGERY
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇, M.D.
----------------------
Its: President
NOVAMED:
NOVAMED ACQUISITION COMPANY, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive Vice
President
and Chief Financial Officer
SHAREHOLDERS:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, D.O.
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------
▇▇▇▇ ▇▇▇▇▇▇▇, M.D.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------
▇▇▇▇▇ ▇▇▇▇▇▇, M.D.
/s/ ▇▇▇▇▇▇ ▇▇
---------------------
▇▇▇▇▇▇ ▇▇, M.D.
/s/ ▇▇▇▇▇▇▇ ▇▇▇
---------------------
▇▇▇▇▇▇▇ ▇▇▇, M.D.
EXHIBITS
Exhibit 1.1-1 -- Certificate of Formation
Exhibit 1.1-2 -- Operating Agreement
Exhibit 3.2 -- Wire Transfer Instructions
Exhibit 7.3(a) -- Contribution Agreement
Exhibit 7.3(b) -- Operating Agreement
Exhibit 7.3(f) -- Assignment of New LLC Interests
SCHEDULES*
Schedule 1.2(b) -- Personal Property
Schedule 1.2(c) -- Prepaid Business Expenses
Schedule 1.3(g) -- Excluded Assets/Personal Effects
Schedule 1.4(a) -- Accounts Payable
Schedule 1.4(b) -- Accrued Liabilities
Schedule 4.1 -- Notifications and Approvals
Schedule 4.2 -- Liens and Encumbered Assets
Schedule 4.3 -- Approvals
Schedule 4.5 -- Financial Statements
Schedule 4.6 -- Liabilities
Schedule 4.9 -- Material Contracts/Assumed Contracts
Schedule 4.10 -- Leased Real Property
Schedule 4.11 -- Litigation
Schedule 4.12(b) -- Licenses and Permits
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 6.2(a) -- Continuing Employees
* NovaMed, Inc. agrees to furnish supplementally a copy of any omitted schedule
to the Securities and Exchange Commission upon request.
