ASSET CONTRIBUTION AND EXCHANGE AGREEMENT dated as of July 19, 2006 by and among NOVAMED ACQUISITION COMPANY, INC., NOVAMED OF LAREDO, INC., CLEARVIEW SURGICAL INSTITUTE, LTD., CLEARVIEW SURGICAL INSTITUTE MANAGEMENT LLC AND MICHAEL A. HOCHMAN, M.D.
EXECUTION
COPY
dated
as of July 19, 2006
by
and among
NOVAMED
ACQUISITION COMPANY, INC.,
NOVAMED
OF LAREDO, INC.,
CLEARVIEW
SURGICAL INSTITUTE, LTD.,
CLEARVIEW
SURGICAL INSTITUTE MANAGEMENT LLC
AND
XXXXXXX
X. XXXXXXX, M.D.
This
ASSET
CONTRIBUTION AND EXCHANGE AGREEMENT
(this
“Agreement”)
is
dated effective as of 12:01 a.m. on July 19, 2006 (the
“Closing
Date”),
by
and among NovaMed
Acquisition Company, Inc., a Delaware corporation (“NovaMed”),
NovaMed of Laredo, Inc., a Delaware corporation (“NovaMed
Laredo,”
and
together with NovaMed, “Buyer”),
Clearview Surgical Institute, Ltd., a Texas limited
partnership (“Clearview”),
Clearview Surgical Institute Management LLC, a Texas limited liability company
and the general partner of Clearview (“CSIM”),
and
Xxxxxxx X. Xxxxxxx, M.D. (“Seller”).
Clearview, CSIM and Seller shall sometimes be individually referred to herein
as
a “Selling
Party”
and
collectively as the “Selling
Parties.”
Certain capitalized terms have the meanings provided in Section
13.1.
RECITALS
A.
Clearview is engaged in the business of owning and operating a licensed
ambulatory surgery center located at 0000
XxXxxxxxx Xxxx, Xxxxxx, Xxxxx 00000 (the
“Business”).
B. Pursuant
to the terms hereof, prior to the date of Closing (as defined herein), Clearview
will transfer substantially all of its assets, and certain liabilities described
herein, to a newly formed Delaware limited partnership, NovaMed Surgery Center
of Laredo, LP (the “New
LP”)
in
exchange for ninety-nine percent (99%) of the partnership interests in the
New
LP, as a limited partner, and CSIM contributing assets into New LP in exchange
for one percent (1%) of the partnership interests in the New LP, as the general
partner (hereinafter defined as the New LP Asset Transfer). All such partnership
interests in the New LP, both general and limited, shall be collectively
referred to herein as the “Partnership
Interests”).
C. Clearview
will then distribute its ninety-nine percent (99%) Partnership Interests in
New
LP as a limited partner to its individual partners, Seller and Xxxx
Xxxxxx-Xxxxxxx, M.D. (“Xxxxxxx”),
as
provided below in a non-liquidation distribution (the “Distribution
Transactions”).
Following the New LP Asset Transfer and the Distribution Transactions, the
New
LP Partnership Interests shall be held as follows: (i) CSIM shall own a one
percent (1%) Partnership Interest in New LP as the general partner; (ii) Xxxxxxx
shall own a four and ninety-five one hundredths of one percent (4.95%)
Partnership Interest in New LP as a limited partner; and (iii) Seller shall
own
a ninety-four and five one hundredths of one percent (94.05%) Partnership
Interest in New LP as a limited partner.
D. Following
the consummation of the New LP Asset Transfer and the Distribution Transactions,
(i) Seller desires to transfer to NovaMed, and NovaMed desires to acquire from
Seller, fifty-nine percent and five one hundredths of one percent (59.05%)
of
the New LP’s Partnership Interests as a limited partner in exchange for the LP
Purchase Price (as defined herein), and (ii) CSIM desires to transfer to NovaMed
Laredo, and NovaMed Laredo desires to acquire from CSIM, CSIM’s one percent (1%)
Partnership Interest as general partner in exchange for the GP Purchase Price
(as defined herein), all on the terms and conditions hereinafter set forth.
E. Contemporaneous
with the Closing, Seller shall contribute his remaining thirty-five percent
(35%) Partnership Interests in the New LP into Xxxxxxx X. Xxxxxxx Family Limited
Partnership, a Texas family limited partnership (the “Family
Limited Partnership”),
of
which Seller controls the general partner and is also a limited partner (the
“FLP
Contribution”).
F. Contemporaneous
with the purchase of a collective sixty and five one hundredths of one percent
(60.05%) Partnership Interest from the Selling Parties, NovaMed shall also
be
acquiring a ninety-five one hundredths of one percent (0.95%) Partnership
Interest from Xxxxxxx (the “Xxxxxxx
Purchase Transaction”).
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 LP AND OTHER
PRE-CLOSING COVENANTS
1.1. Formation
of the New LP.
Prior
to the Closing, the New LP shall be: (a) formed pursuant to the Certificate
of
Limited Partnership in the form attached hereto as Exhibit
1.1,
and (b)
qualified to conduct business in the State of Texas.
1.2. Transfer
of Assets to New LP. Prior
to
or contemporaneously with the Closing, and as a condition precedent to the
transactions contemplated herein (collectively, the “New
LP Asset Transfer”):
(i)
Clearview will transfer to New LP substantially all of the Assets (as
hereinafter defined), free and clear of all Liens, in exchange for its
ninety-nine percent (99%) Partnership Interest as a limited partner, and (ii)
CSIM will transfer to New LP the remaining Assets, free and clear of all Liens,
in exchange for its one percent (1%) Partnership Interest as a general partner.
The New LP Asset Transfer shall be evidenced by a Contribution Agreement which
shall effectively vest the New LP with full, complete and marketable right,
title and interest in and to the Assets, in the form attached hereto as
Exhibit
1.2 (the
“Contribution
Agreement”).
As of
the Closing, the assets
contributed into the New LP 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”),
including all rights to that portion of the Inventory on consignment as
designated on Schedule
1.2(a);
(b) all
of
the tangible and intangible personal property with respect to the Business,
including, without limitation, the machinery, equipment, fixtures, phone
numbers, computer hardware and software that are listed on Schedule
1.2(b)
(collectively, the “Personal
Property”);
(c) all
prepaid expenses relating to the Business set forth on Schedule
1.2(c);
(d) all
contract rights with respect to those Material Contracts (as defined herein)
identified as Assumed Contracts on Schedule
4.9
(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 Clearview and the Business, including, without limitation,
“Clearview Surgical Institute” and all derivations thereof;
(f) all
records, files and papers primarily pertaining to the Business, including
general business records, accounting records and Medical Records;
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(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 Clearview 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 Clearview (the “Accounts
Receivable”);
and
(k) all
of
the goodwill of and associated with the Business.
To
the
extent any personal property, inventory, supplies, equipment and contracts
owned
by any Selling Parties’ respective Affiliates (including, without limitation,
Xxxxx Holdings, Ltd. (“AHL”))
are
primarily used in, or are necessary for the continued conduct of the Business,
and would otherwise be deemed Assets, then such Selling Party or such Affiliate
(including, without limitation, AHL) will cause such party to transfer such
assets and property to Clearview for contribution to the New LP, free and clear
of all Liens, prior to the Closing Date. In this regard, the Selling Parties
agree to cause AHL to transfer all such personal property, inventory, supplies,
equipment and contracts to Clearview prior to the New LP Asset Transfer such
that such Assets are owned by New LP as of the Closing Date, free and clear
of
all Liens.
1.3. -Excluded
Assets.
Notwithstanding anything to the contrary contained herein, the Assets do not
include the following (collectively, the “Excluded
Assets”):
(a) the
Selling Parties’ rights under this Agreement, including the consideration paid
to Seller pursuant to this Agreement;
(b) the
tax
records relating to the Business;
(c) Employee
Benefit Plans relating to the employees of the Business and any and all rights
therein or in the assets thereof;
(e) all
contracts not identified as Assumed Contracts on Schedule
4.9;
(f) all
cash-on-hand and cash equivalents as of the Closing Date;
(g) all
personal effects of Seller not used in connection with the operation of the
Business as specified in Schedule
1.3(g);
and
(h) the
retinal laser and related ancillary equipment as described on Schedule
1.3(h).
3
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 LP will not assume, agree to pay, perform
and
discharge or in any way be responsible for any debts, liabilities or obligations
of the Business, the Selling Parties 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
or
the Selling Parties, 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, Clearview will contribute into New LP, and New
LP
will assume and thereafter pay and fully satisfy when due, all liabilities
and
obligations: (a) which arose prior to the New LP Asset Transfer and represent
normal and current trade payables incurred by Clearview 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 Clearview (including, but not limited to,
the
personal property or real estate taxes, associated with the Real Property Lease
for the Facility for the period from January 1, 2006 through the date of
Closing), all of which have been incurred in the ordinary course of business,
consistent with past custom and practice (including, without limitation, accrued
but unpaid paid time off for the Continuing Employees), which do not
collectively exceed, together with the aggregate amount of the Accounts Payable,
One Hundred Thousand and No/Dollars ($100,000) (“Accrued
Liabilities”);
and
(c) first arising after the New LP 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
LP being collectively referred to herein as the “New
LP Assumed Liabilities”).
1.5 Satisfaction
of Liabilities.
Excluding the New LP Assumed Liabilities, the Selling Parties agree to satisfy
all liabilities of Clearview relating to the Business prior to the New LP 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; and
(b) all
Taxes, including payroll taxes, sales taxes and income taxes accrued up to
the
New LP Asset Transfer.
1.6 Distribution
Transaction.
The
Distribution Transactions shall have been consummated on or prior to the Closing
Date in accordance with the Distribution Agreement in the form attached hereto
as Exhibit
1.6
(the
“Clearview
Distribution Agreement”).
1.7 FLP
Contribution.
The FLP
Contribution shall be consummated contemporaneously with the Closing in
accordance with the FLP Contribution Agreement in the form attached hereto
as
Exhibit
1.7
(the
“FLP
Contribution Agreement”).
1.8 Xxxxxxx
Consent.
As a
partner in Clearview, Xxxxxxx shall have consented in writing to each of the
New
LP Asset Transfer, Clearview Distribution Agreement and FLP Contribution
Agreement (collectively, the “Xxxxxxx
Consents”).
ARTICLE
II.
SALE
OF CLEARVIEW INTERESTS TO NOVAMED
AND NOVAMED LAREDO
2.1 Sale
of Limited Partnership Interests.
The
Partnership Interests held by Seller are as a limited partner of New LP. 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 at the Closing, free
and
clear of all Liens, all of Seller’s right, title and interest in and to
fifty-nine percent and five one hundredths of one percent (59.05%) of the New
LP’s issued and outstanding Partnership Interests (the “Transferred
LP Interests”).
In
reliance upon the representations and warranties of the Selling Parties
contained herein, and on the terms and conditions hereinafter set forth, NovaMed
hereby agrees to purchase the Transferred LP Interests from Seller for the
LP
Purchase Price set forth in Section
3.1
hereof.
4
2.2 Sale
of General Partnership Interests.
The
Partnership Interests held by CSIM are as a general partner of New LP. In
reliance on the representations and warranties of NovaMed Laredo contained
herein, and on the terms and conditions hereinafter set forth, CSIM hereby
agrees to sell, assign, transfer, convey and deliver to NovaMed Laredo at the
Closing, free and clear of all Liens, all of its right, title and interest
in
and to one percent (1%) of the New LP’s issued and outstanding Partnership
Interests (the “Transferred
GP Interests,” and
together with the Transferred LP Interests, the “Transferred
Interests”).
In
reliance upon the representations and warranties of the Selling
Parties contained
herein, and on the terms and conditions hereinafter set forth, NovaMed hereby
agrees to purchase the Transferred GP Interests from CSIM for the GP Purchase
Price set forth in Section
3.1
hereof.
2.3 Ownership
of New LP following Transactions.
As a
result of the sales described in this Article
II and
following the consummation of the Xxxxxxx Purchase Transaction and the FLP
Contribution: (a) NovaMed will own sixty percent (60%) percent of the
Partnership Interests in the New LP, as a limited partner; (b) the Family
Limited Partnership will own thirty-five percent (35%) of the Partnership
Interests, as a limited partner; (c) Xxxxxxx will own four percent (4%) of
the
Partnership Interests, as a limited partner; and (d) NovaMed Laredo will own
one
percent (1%) of the Partnership Interests, as the general partner of the New
LP.
ARTICLE
III.
CONSIDERATION
AND MANNER OF PAYMENT
3.1. -Purchase
Price.
The
aggregate purchase price for the Transferred LP Interests (the “LP
Purchase Price”)
shall
be Eight Million Eight Hundred Fifty Seven Thousand Five Hundred and No/Dollars
($8,857,500), and the aggregate purchase price for Transferred GP Interests
shall be One Hundred Fifty Thousand and No/100 Dollars ($150,000) (the
“GP
Purchase Price,” and
together with the LP Purchase Price, the “Purchase
Price”).
3.2. -Payment
of Purchase Price.
At the
Closing: (a) NovaMed will pay to Seller an amount equal to the LP Purchase
Price; and (b) NovaMed Laredo will pay to CSIM an amount equal to the GP
Purchase Price, all by wire transfer of immediately available funds to Seller
and CSIM’s respective designated bank accounts, according to the wire transfer
instructions attached as Exhibit
3.2.
ARTICLE
IV.
SELLING
PARTIES’ REPRESENTATIONS AND WARRANTIES
Each
of
the Selling Parties hereby
represents and warrants, jointly and severally, to Buyer as of the Closing
Date,
as follows
4.1. Organization,
Good Standing and Authority.
Clearview is a limited partnership duly organized, validly existing and in
good
standing under Texas law.
CSIM is
a limited liability company duly organized validly existing and in good standing
under Texas law. Each Selling Party 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
Selling Party is a party have been duly executed and delivered by each Selling
Party, and constitute the valid and binding obligations of each Selling Party,
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.
5
4.2. Assets.
Clearview 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 of the Business as
conducted during the twelve (12) months preceding the Closing Date and, to
the
knowledge of any Selling Party, there is no need to acquire or replace any
material assets. Clearview has good and marketable title to the Assets, in
each
case free and clear of any and all Liens. Upon the consummation of the
transactions contemplated by this Agreement, Clearview will have conveyed,
and
the New LP 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.
4.3. Approvals.
Except
as set forth on Schedule
4.3,
no
consent, approval, order or authorization of, or registration, declaration,
notice or filing with, any national, state, provincial, local, governmental,
judicial, public, quasi-public or administrative authority or agency
(collectively, “Governmental
Authority”)
or
other Person is required to be made or obtained by any Selling Party in
connection with the authorization, execution, delivery and performance of this
Agreement or any other Transaction Document, or the consummation of the
transactions contemplated hereby or thereby.
4.4. Partnership
Interests.
(a) Transferred
LP Interests.
Prior
to the Closing Date, Seller will be the only record and beneficial holder of
the
Transferred LP Interests. Seller has good and marketable title to the
Transferred LP Interests free and clear of all Liens, and has full right, power
and authority to transfer the Transferred LP Interests to NovaMed as provided
herein, without obtaining the consent of any third party (other than the general
partner of the New LP, pursuant to and in accordance with the terms of the
Partnership Agreement (as hereinafter defined)). Upon the consummation of the
transactions contemplated herein, Seller shall have transferred good and
marketable title to the Transferred LP Interests to NovaMed free and clear
of
all Liens. Immediately prior to Closing, Seller, CSIM and Xxxxxxx will own
one
hundred percent (100%) of the equity interests of Clearview.
(b) Transferred
GP Interests.
Prior
to the Closing Date, CSIM will be the only record and beneficial holder of
the
Transferred GP Interests. CSIM has good and marketable title to the Transferred
GP Interests free and clear of all Liens, and has full right, power and
authority to transfer the Transferred GP Interests to NovaMed Laredo as provided
herein, without obtaining the consent of any third party (other than the general
partner of the New LP, pursuant to and in accordance with the terms of the
Partnership Agreement). Upon the consummation of the transactions contemplated
herein, CSIM shall have transferred good and marketable title to the Transferred
GP Interests to NovaMed Laredo free and clear of all Liens.
4.5. Financial
Statements.
Clearview has previously delivered to Buyer unaudited financial statements
of
Clearview for the years ending
December
31, 2003, December 31, 2004 and December 31, 2005, consisting of an income
statement and balance sheet, and the profit and loss statements for the months
ended January 31, 2006, February 28, 2006, March 31, 2006 and April 30,
2006
(collectively, the “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 Clearview at such dates and the results
of
its operations for the periods ended on such dates; and (d) is consistent with
Clearview’s books and records.
6
4.6. -Absence
of Undisclosed Liabilities.
None of
the Selling Parties, with respect to the Business, has any material debts,
liabilities or obligations of any nature (whether accrued, absolute, contingent,
direct, indirect, perfected, inchoate, unliquidated or otherwise and whether
due
or to become
due) arising out of transactions entered into at or prior to the Closing, or
any
transaction, series of transactions, action or inaction at or prior to the
Closing, or any state of facts or condition
existing at or prior to the Closing (regardless of when such liability or
obligation is asserted),
including, but in no way limited to, guarantees, liabilities or obligations
on
account of Taxes or governmental charges or penalties, interest or fines thereon
or in respect thereof, except: (a) to the extent specifically reflected and
accrued for or reserved against in the Financial Statements, or (b) for
liabilities specifically delineated on Schedule
4.6.
4.7. Inventory.
All of
the Inventory is usable in the ordinary course of business, is fully paid for
and, except as described on Schedule
1.2(a),
is not
subject to consignment or conditional sales arrangements and no material portion
of the Inventory is obsolete or damaged.
4.8. Taxes.
Clearview and Seller have 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. Clearview
and Seller have 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 Clearview
in
connection with the operation of the Business. With respect to all amounts
of
Taxes imposed on Clearview for which Clearview 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 Clearview 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 CSIM, Seller or Clearview. There are no
Liens for Taxes (other than current taxes not yet due and payable) upon any
asset of Clearview. Clearview 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 any Selling Party is a party or by which any Selling
Party is bound, as they relate to the Business (the “Material
Contracts”),
correct and complete copies of which previously have been furnished to Buyer.
Except as set forth on Schedule
4.9,
no
Selling Party 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 a Selling Party, and, to the knowledge of any Selling Party,
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, Clearview does not own any real property. Clearview
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 Clearview in connection with the Business or reflected on the
Financial Statements.
Upon
execution of the Lease Agreement (as hereinafter defined), the New LP 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 LP.
With respect to the Leased Real Property: (a) Clearview has all easements
and rights necessary to conduct the Business; (b) no portion thereof is subject
to any pending or, to the knowledge of any Selling Party, 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.
7
4.11. -Litigation.
Except
as set forth on Schedule
4.11,
there
are no claims, counterclaims, actions, suits, orders, proceedings (arbitration,
mediation or otherwise), investigations or judgments pending or, to the
knowledge of any Selling Party, threatened against or involving Clearview,
the
Business or, with respect to the Business, any other Selling Party, 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
any
Selling Party, 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 or
judgments.
Except
as set forth on Schedule
4.11,
no
Selling Party 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
LP.
4.12. -Compliance
with Applicable Laws; Permits.
(a) Each
of
the Selling Parties, in their conduct of the Business, has complied 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 Selling Parties’ billing procedures (except
denials of claims in the ordinary course of business). No Selling Party has
received any notice of Clearview’s violation of any such rules or regulations,
whether corrected or not, within the last five (5) years. Clearview is eligible
to receive payment under Titles XVIII and XIX of the Social Security
Act.
Clearview 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 Clearview’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. Clearview 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 Clearview participates that are due on or before the Closing
Date or which relate to services provided on or before the Closing Date, and
Clearview has not billed for any services that were not provided at the
Facility. There are no claims pending, 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
Clearview on or before the Closing Date, or program compliance matters. Except
for routinely scheduled Medicare and Medicaid program participation and
certification surveys pursuant to Clearview’s Medicare and Medicaid contracts
and filings, no valid program integrity review related to Clearview has been
conducted by any authority in connection with the Medicare or Medicaid programs
and no such review is scheduled, pending, or to any Selling Party’s knowledge,
threatened against or affecting Clearview, the Business, the Facility, or the
consummation of the transactions contemplated hereby.
(b) Clearview
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”).
Clearview is in compliance with such Permits, all of which are in full force
and
effect, and Clearview has not received any notices (written or oral) to the
contrary. All of the Permits are in good standing, and to the knowledge of
any
Selling Party, 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.
8
(c) The
Selling Parties are not in violation of any applicable Fraud and Abuse Laws
including, without limitation, 18 U.S.C. §201 (bribery of public officials); 18
U.S.C. §286 (conspiracy to defraud government with respect to claims); 18 U.S.C.
§287 (false, fictitious or fraudulent claims); 18 U.S.C. §371 (conspiracy to
commit offense or to defraud the government); 18 U.S.C. §666 (theft or bribery
concerning programs receiving federal funds); 42 U.S.C. §1320a-7a (civil
monetary penalties); 42 U.S.C. §1320a-7b (criminal penalties); and 42 U.S.C.
§1395nn (prohibited referrals), each as they may be amended or renumbered from
time to time.
4.13. -Transaction
Not a Breach.
The
execution, delivery and performance by the Selling Parties 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 a Selling Party or the 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 a Selling Party 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 any Selling Party;
(e) Result
in
the creation or imposition of any Lien upon any property of Clearview or the
Assets; or
(f) Require
any authorization, consent, approval, exemption or other action by or notice
to
any court, Governmental Authority or any other Person.
4.14. -Conduct
of Business.
Since
the Review Date, Clearview 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 Clearview or the Business. Without
limitation of the foregoing, since the Review Date, Clearview 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;
9
(c) Voluntarily
or involuntarily sold, transferred, abandoned, surrendered, leased or otherwise
disposed of any of its assets material to the operation of
Clearview;
(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.
Clearview has never generated, transported, treated, stored, disposed of or
otherwise handled any Hazardous Materials at any site, location or facility
in
connection with its business or any of its assets in violation of any applicable
Environmental and Safety Requirements (as hereinafter defined). Clearview:
(a)
is in material compliance with all applicable federal, state and local laws,
rules, regulations, ordinances and requirements relating to public health and
safety, worker health and safety and pollution and protection of the
environment, all as amended or hereafter amended (“Environmental
and Safety Requirements”),
and
(b) possesses all required permits, licenses, certifications and approvals
and
has filed all notices or applications required thereby or pertaining thereto.
Clearview 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 Clearview, nor is any Selling Party aware of any such inquiry,
investigation, order, action or notice. There are no pending, or to the
knowledge of any Selling Party, 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.
10
4.16. -Employees.
Schedule
4.16
is a
true, complete and correct list setting forth as of the Closing Date the names
and current compensation rate and compensation of all individuals employed
by
Clearview. 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 Clearview 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 Clearview’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.
Clearview 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. Clearview has
previously delivered to Buyer complete and correct copies of all such policies,
together with all riders and amendments thereto in the possession of Clearview.
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 Selling Party at any time within the past
five
(5) years.
4.18. Affiliate
Transactions.
Excluding ordinary course distributions to its equity holders and except as
set
forth on Schedule
4.18,
there
are no transactions involving the transfer of any cash, property or rights
to or
from Clearview from, to or for the benefit of any Affiliate or former Affiliate
of Clearview or any other Selling Party (“Affiliate
Transactions”)
during
the period commencing two (2) years prior to the Closing Date and continuing
through the Closing Date or any existing commitments of Clearview to engage
in
the future in any Affiliate Transactions.
4.19. -Employee
Benefit Plans.
Except
as set forth in Schedule
4.19,
neither
Clearview 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 Clearview’s
employees 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
Clearview 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 Buyer. The Employee
Benefit Plans are in compliance in all material respects with governing
documents and agreements and with applicable laws.
Clearview acknowledges that it will be solely responsible for administering
and/or terminating its Employee Benefit Plans following the
Closing.
11
4.20. Personnel
Agreements, Plans and Arrangements.
Except
as listed in Schedule
4.20,
no
Selling Party 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.
No
Selling Party or any of their respective officers, agents, or employees or
any
other Person associated with or acting for or on behalf of Clearview has,
directly or indirectly, made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any Person, private or public,
regardless of form, whether in money, property, or services: (a) for securing
patients or referrals; (b) for patients or referrals secured; (c) to obtain
special concessions or for special concessions already
obtained, for or in respect of Clearview; or (d) 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 Clearview (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 Clearview 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 Clearview 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 LP 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
Clearview. Schedule
4.23(a)
contains
a complete and accurate list of all Accounts Receivable as of the date stated
thereon, which list represents the Accounts Receivable before 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.
(b) Accounts
Payable and Accrued Liabilities.
Schedule
1.4(a)
sets
forth a complete and correct list of the Accounts Payable. The collective amount
of the Accrued Liabilities, together with the aggregate amount of the Accounts
Payable, does not exceed One Hundred Thousand and No/Dollars ($100,000). 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 Clearview’s past custom and practice.
4.24. Brokers.
Except
as set forth on Schedule
5.5,
with
respect to a broker representing Seller, and for which Buyer shall be
responsible for paying, 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 Selling Party in such a manner as to give rise to any valid claim for any
broker’s or finder’s fee or similar compensation against Buyer.
4.25. HIPAA.
(a) All
of the Assets being sold and/or provided to New LP 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) Clearview has conducted its business and activities, including, without
limitation, its billing and collection activities, its Medical Records
management activities, and its general practice management activities, in a
manner that complied with HIPAA and State HIPAA.
12
4.26. Rates
and Reimbursement Policies.
Except
as set forth on Schedule
4.26,
Clearview does not have any rate appeal currently pending before any
Governmental Authority or any administrator of any third-party payor program.
Except for the YAG laser capsulotomy reimbursement rate issue previously
disclosed by Buyer to Seller, no Selling Party has any 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.
Except
as set forth on Schedule
4.14,
none of
the physicians who utilize the Facility (collectively, the “Physicians”)
have
threatened to discontinue or to terminate his or her relationship with Clearview
and the provision of services at the Facility. To the knowledge of any Selling
Party, none of the Physicians have expressed plans to retire from the practice
of medicine in the next five (5) years or 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 Buyer. Clearview 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 Clearview’s existing Medicaid contracts have been furnished
to Buyer. Clearview is presently in compliance with all of the terms, conditions
and provisions of such contracts.
4.29. No
Designated Health Services.
Clearview has not provided, does not provide and has no intention of providing
any services that constitute “designated health services” with the meaning of 42
U.S.C. § 1395nn.
4.30. No
Misrepresentation.
None of
the representations and warranties of the Selling Parties set forth in this
Agreement, in any of the certificates, schedules, lists, documents, exhibits,
or
other instruments delivered, or to be delivered, to Buyer as contemplated by
any
provision hereof
(including the Transaction Documents), contain any untrue statement of a
material fact or omit
to
state a material fact necessary to make the statements contained herein or
therein not misleading.
To the
knowledge of any Selling Party, there are no material facts which have not
been
disclosed to Buyer which have a Material Adverse Effect, or could reasonably
be
anticipated to have a Material Adverse Effect, on the Business or any Selling
Party’s ability to consummate the transactions contemplated hereby.
13
ARTICLE
V.
BUYER’S
REPRESENTATIONS AND WARRANTIES
Each
of
NovaMed and NovaMed Laredo hereby represents and warrants, jointly and
severally, to the Selling Parties as of the Closing Date as
follows:
5.1. -Organization.
Each of
NovaMed and NovaMed Laredo is a corporation duly organized, validly existing
and
in good standing under the laws of the State of Delaware.
5.2. -Authorization.
Each of
NovaMed and NovaMed Laredo 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
each of NovaMed and NovaMed Laredo 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 each of NovaMed’s and NovaMed Laredo’s Certificate of
Incorporation.
This
Agreement and each of the Transaction Documents to which NovaMed and NovaMed
Laredo are a party have been duly executed and delivered by them and are the
valid and binding obligation of Buyer and are enforceable against
Buyer 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 and NovaMed Laredo will not violate and
conflict with,
or
result in the breach of any of the terms, conditions, or provisions of NovaMed’s
and NovaMed Laredo’s Certificate of Incorporation or of any contract, agreement,
mortgage, or other instrument or obligation of any nature to which NovaMed
or
NovaMed Laredo is a party or by which NovaMed or NovaMed Laredo is
bound.
5.4. Acquisition
of Transferred Interests.
NovaMed
and NovaMed Laredo are acquiring the Transferred Interests for their own
respective accounts and not with a view to the distribution or resale thereof.
Each of NovaMed and NovaMed Laredo has no intention of selling the Transferred
Interests in a public distribution in violation of federal securities laws
or
any applicable state securities laws.
5.5. Broker.
Except
as set forth on Schedule
5.5
with
respect to a broker retained by Buyer and for which Buyer shall be responsible
for paying, 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 Buyer
in
such a manner as to give rise to any valid claim for any broker’s or finder’s
fee or similar compensation against a Selling Party.
5.6. No
Misrepresentation.
None of
the representations and warranties of Buyer set forth in this Agreement or
in
any of the certificates, schedules, lists, documents, exhibits, or other
instruments delivered, or to be delivered, to the Selling Parties 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.
14
ARTICLE
VI.
ADDITIONAL
AGREEMENTS
6.1. Liens.
Other
than the sole lien set forth on Schedule
4.2,
there
shall be no financing
statements, judgments, taxes or other Liens outstanding against Clearview or
any
of the Assets as of the Closing Date.
6.2. -Employees;
Labor Relations.
(a) -Continuing
Employees.
New LP
shall offer to employ the employees of Clearview listed on Schedule
6.2(a)
(the
“Continuing
Employees”)
as of
the Closing Date, on the terms and conditions established by New LP in its
sole
discretion, provided that New LP shall offer such employment at the salary
or
wage levels for such Continuing Employees as are set forth on Schedule
6.2(a).
Such
offer of employment by New LP shall not be deemed to create a continuing right
to employment for any Continuing Employees. Clearview shall be solely
responsible for all liabilities relating, directly or indirectly, to any of
Clearview’s employees who do not accept New LP’s offer of
employment. Clearview shall
be
solely responsible for any employment-related claims filed by any employees
of
Clearview 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.
Clearview 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.
The
Selling Parties hereby waive any noncompetition provision that may apply to
the
Continuing Employees with
respect to New LP’s hiring and employment of the Continuing
Employees.
6.3. Post-Closing
Remittances; New LP’s Appointment as Attorney-In-Fact.
If,
after the Closing Date, a Selling Party shall receive any remittance from any
account debtors with respect to the Accounts Receivable, such Selling Party
shall cause Clearview to endorse such remittance to the order of the New LP
and
forward it to the New LP promptly following receipt thereof.
Clearview hereby irrevocably constitutes and appoints New LP and any officer
or
agent of New LP as Clearview’s true and lawful attorney-in-fact, with full power
and authority, in the place and stead of Clearview 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 Clearview 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 LP or are otherwise for the account of New LP
hereby. Clearview further agrees to execute all documents and take such other
action as New LP may reasonably request to confirm the power granted to New
LP
by this Section
6.3.
Notwithstanding the foregoing, in no event shall New LP 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 LP and Clearview agree
to
take such actions as necessary to convey such payments to New LP 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 LP and the Transferred Interests to Buyer, all on the terms contained
herein, and to otherwise comply with the terms of this Agreement and consummate
the transactions contemplated herein.
15
6.5. Professional
Liability Tail Coverage.
To the
extent Clearview’s professional liability insurance policy for the Facility is
on a claims-made basis (rather than an occurrence basis), Clearview 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 Buyer
and Clearview. Clearview shall provide New LP with proof of such tail
professional liability coverage and the cost and expense thereof. Buyer agrees
to reimburse Clearview for the cost of such tail professional liability
coverage.
6.6 Credentialing.
As of
the Closing Date, Seller and the 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 LP from and after the Closing Date. As a condition to receiving these
provisional privileges, Seller hereby agrees that he will comply with all of
the
New LP’s credentialing requests (including, without limitation, providing New LP
with any reasonably requested information and completing any applicable
credentialing forms) so that the New LP may complete its credentialing review
process for by the expiration date of the provisional privileges.
6.7 Admitting
Privileges.
As of
the Closing Date, Seller and the other physicians credentialed by the Facility
shall have admitting privileges at a local hospital in accordance with all
applicable federal laws and Texas Administrative Code Section 135.4 and Seller
shall maintain such privileges and will use his best efforts to cause the other
physicians credentialed by the Facility to maintain such privileges from and
after the Closing Date. From and after the Closing Date, the Selling Parties
shall use their commercially reasonable efforts to assist the New LP in entering
into a patient transfer agreement with Doctors Hospital of Laredo or other
local
hospital, pursuant to which the Facility may immediately transfer to a hospital
patients requiring emergency medical care beyond the capabilities of the
Facility.
ARTICLE
VII.
CLOSING
7.1. -Time
and Place.
The
transactions that are the subject of this Agreement shall be consummated at
a
closing (the “Closing”)
simultaneous with the execution and delivery of this Agreement and the other
Transaction Documents by the applicable parties, which execution and delivery
shall be via facsimile effective as of the Closing Date, with original documents
to be exchanged by nationally recognized overnight courier for delivery on
the
next business day after the Closing Date.
7.2. -Transactions
Precedent to Closing.
As a
condition precedent to the consummation of the transactions contemplated herein,
the applicable Selling Parties shall have consummated the New LP Asset Transfer,
the Distribution Transactions and the FLP Contribution, and shall also have
procured the Xxxxxxx Consents, all in accordance with the terms and conditions
of Article
I
hereof.
7.3. -Deliveries
of the Selling Parties.
At the
Closing, the Selling Parties shall execute and deliver, or cause to be executed
and delivered, to Buyer:
(a) the
Contribution Agreement, duly executed by the Selling Parties and including
the
Xxxxxxx Consent thereto;
16
(b) the
Limited Partnership Agreement of the New LP, in the form attached hereto as
Exhibit
7.3(b)
(the
“Partnership
Agreement”),
duly
executed by the Family Limited Partnership and Seller;
(c) (i)
amended and restated certificate of limited partnership of New LP reflecting
CSIM as general partner, executed by CSIM, and (ii) second amended and restated
certificate of limited partnership evidencing change in general partner from
CSIM to NovaMed Laredo, to be filed with the Secretary of States of Delaware
and
Texas immediately following the Closing;
(d) any
required third party consents, filings, and certificates from Clearview or
any
third party (including, any Governmental Authority) relating to the transfer
of
the Assets, including, without limitation, all consents from the State of Texas
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 Buyer of any obligation to withhold any portion of the Purchase
Price;
(f) the
Assignment of Partnership Interests, substantially in the form attached as
Exhibit
7.3(f) (the
“Assignment
of Partnership Interests”),
duly
executed by Seller and CSIM;
(g) the
Real
Property Lease for the Facility and other Leased Real Property listed on
Schedule
4.10
(the
“Lease
Agreement”)
between AHL, an Affiliate of Seller, as landlord and the New LP, as tenant,
duly
executed by AHL;
(h) a
certificate of the Secretary of Clearview as to:
(i)
copies of resolutions of its general partner and limited partners authorizing
the execution, delivery and performance of this Agreement and the Transaction
Documents; (ii) its limited partnership agreement; (iii) incumbency and specimen
signatures with respect to its authorized representatives executing this
Agreement and any Transaction Documents; and (iv) its certificate of limited
partnership certified by the Secretary of State of Texas.
(i) all
applicable documentation releasing Liens covering, concerning or relating to
the
Assets, in form and substance reasonably
acceptable to Buyer;
(j) intentionally
omitted;
(k) the
Clearview Distribution Agreement, duly executed by Clearview, Seller and
Xxxxxxx;
(l) the
FLP
Contribution Agreement, duly executed by Clearview and Seller, and the Xxxxxxx
Consent related thereto;
(m) a
certificate of the Secretary of CSIM as to: (i) copies of resolutions of its
manager and the members authorizing the execution, delivery and performance
of
this Agreement and the Transaction Documents; (ii) its operating agreement;
(iii) incumbency and specimen signatures with respect to its authorized
representatives executing this Agreement and any Transaction Documents; and
(iv)
its certificate of formation certified by the Secretary of State of
Texas.
17
(n) the
Assignment of Partnership Interests between NovaMed and Xxxxxxx (the
“Xxxxxxx
Purchase Agreement”)
consummating the Xxxxxxx Purchase Transaction contemporaneous with the Closing,
duly executed by Xxxxxxx;
(o) evidence
satisfactory to Buyer that all of the Assets previously owned by AHL that were
used in the conduct of the Business have been transferred to Clearview prior
to
the New LP Asset Transfer such that such Assets are owned by New LP as of the
Closing Date, free and clear of all Liens;
(p) the
Excimer Laser Sublease in the form attached hereto as Exhibit
7.3(p)
(the
“Laser
Sublease”),
duly
executed by Xxxxxxx X. Xxxxxxx, M.D., P.A. (“Practice”);
(q) Billing
and Collection Agreement in the form attached hereto as Exhibit 7.3(q) (the
“Billing
Agreement”),
duly
executed by Practice; and
(r) such
other documents and instruments as Buyer or its counsel reasonably shall deem
necessary to consummate the transactions contemplated hereby.
All
documents delivered to Buyer shall be in form and substance reasonably
satisfactory to counsel for Buyer.
7.4. -Deliveries
of Buyer.
At the
Closing, Buyer will deliver or will cause the New LP to deliver to the
applicable Selling Party simultaneously with the delivery of the items referred
to in Section
7.3
above:
(a) the
payment of the Purchase Price to the applicable Selling Parties;
(b) the
Partnership Agreement, duly executed by NovaMed and NovaMed Laredo;
(c) certificate
of the Secretary of each of NovaMed and NovaMed Laredo 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
Agreement, duly
executed by the New LP;
(e) a
duly
executed Management Agreement (the “Management
Agreement”)
between NovaMed Management Services, LLC, a Delaware limited liability company,
and the New LP, substantially in the form attached hereto as Exhibit
7.4(e).
(f) the
Assignment of Partnership Interests, duly executed by NovaMed and NovaMed
Laredo;
(g) intentionally
omitted;
(h) the
Xxxxxxx Purchase Agreement, duly executed by NovaMed;
(i) the
Laser
Sublease, duly executed by New LP; and
(j) such
other documents and instruments as the Selling Parties or their counsel
reasonably shall deem necessary to consummate the transactions contemplated
hereby.
18
All
documents delivered to the Selling Parties shall be in form and substance
reasonably satisfactory to the counsel for the Selling Parties.
7.5 Change
of Ownership Process.
To the
extent from and after the Closing there are any actions necessary to confirm
or
effect all reasonably necessary licensure and regulatory approvals required
in
connection with the New LP’s ownership and operation of the Business, the
Selling Parties and their respective agents and representatives agree to
cooperate with Buyer and New LP in connection these approvals, and will use
commercially reasonable efforts to respond in a timely manner to any information
or signature requests reasonably required in connection with these
approvals.
ARTICLE
VIII
INTENTIONALLY
OMITTED
ARTICLE
IX
INTENTIONALLY
OMITTED
ARTICLE
X
INTENTIONALLY
OMITTED
ARTICLE
XI.
COVENANT
NOT TO COMPETE
11.1. Acknowledgment.
Each of
the Selling Parties acknowledges and agrees that in order to assure that the
Business will retain its value as a “going concern,” it is necessary that the
Selling Parties undertake not to utilize their present special knowledge of
the
Business to compete with New LP, Buyer and the Business during the Restricted
Period after the acquisition of Transferred Interests; provided that
Buyer
acknowledges that Seller (through the Family Limited Partnership) will continue
to have an interest in the Business through its ownership of a minority interest
in the New LP. Each of the parties hereto further acknowledges that: (a) Buyer
has been and/or will be engaged in the Business; (b) each of the Selling Parties
possesses extensive knowledge and a unique understanding of the Business, as
well as (subsequent to the transactions contemplated by this Agreement) the
proprietary and confidential information
concerning the Business; (c) the agreements and covenants
contained in this Section 11.1
are
essential to protect Buyer and the value of the Business and are a condition
precedent to Buyer’s willingness to pay for the Transferred Interests; (d) Buyer
would be irreparably damaged if any Selling Party were to violate the terms
and
conditions of this Article
XI;
and (e)
the
geographic, temporal and business scope of the restrictive covenants in this
Article
XI
are
reasonable.
11.2. Non-Compete.
Each of
the Selling Parties hereby agrees that for the five (5) year period beginning
on
the Closing Date (the “Restricted
Period”);
provided that
in the
event that any such party is determined to have violated the covenants set
forth
in this Article
XI,
the
Restricted Period shall be extended day for day for the time period that such
party is in violation of any such covenant), he, she or it shall not, directly
or indirectly, act
as a
director, officer, member, manager, or partner of, or own any equity or other
financial interest in, any Person that owns and/or operates an ambulatory
surgery center, hospital, licensed surgical facility or any other outpatient
surgical facility, that is located within a thirty-five (35) mile radius of
the
location of the Business.
Notwithstanding
the foregoing, and without limiting the terms of the Partnership Agreement,
any
Selling Party may:
(a)
be a director on the Board of Trustees of a hospital; (b) serve on the medical
staff of any hospital; (c) own an interest in the New LP in accordance with
the
terms of the Partnership Agreement; and (d) practice medicine in his or her
own
office or the office of the professional entity in which he
or she
is an employee or owner;
provided,
however,
that
Seller shall not be an employee of a hospital.
19
11.3. Property
of the Business.
All
memoranda, notes, lists, records and other documentation or papers (and all
copies thereof), including such items stored in computer memories, or microfiche
or by any other means, which will become the New LP’s property (after
the consummation
of transactions contemplated by this Agreement), are and shall be the New LP’s
property and shall be delivered to the New LP promptly on the request of
Buyer.
11.4. Blue-Pencil.
If any
court of competent jurisdiction shall at any time deem the term of this
Agreement or any particular restrictive covenant contained in this Article
XI
too
lengthy or the territory too extensive, the other provisions of this
Article
XI shall
nevertheless stand, the Restricted Period herein shall be deemed to be the
longest period permissible by law under the circumstances and the territory
described in Section
11.2
shall be
deemed to comprise the largest territory permissible by law under the
circumstances. The court in each case shall reduce the Restricted Period and/or
territory described in Section
11.2
to
permissible duration or size.
11.5. Remedies.
Each of
the Selling Parties acknowledges and agrees that the covenants set forth in
this
Article
XI
are
reasonable and necessary for the protection of Buyer and the New LP’s business
interests, that irreparable
injury will result if any Selling Party breaches any of the terms of said
restrictive covenants,
and that in the event of actual or threatened breach of any such restrictive
covenants, Buyer will have no adequate remedy at law. Each of the Selling
Parties accordingly agrees that in the event of any actual or threatened breach
by any of them of any of the covenants set forth in this Article XI,
Buyer
shall be entitled to immediate temporary injunctive and other equitable relief,
without bond and without the necessity of showing actual monetary damages,
subject to hearing as soon thereafter as possible. Nothing contained herein
shall be construed as prohibiting Buyer from pursuing any other remedies
available to it for such breach or threatened breach, including the recovery
of
any damages which it is able to prove.
The
parties also agree that the existence of any claim or cause of action by a
Selling Party against Buyer, whether predicated upon this Agreement or
otherwise, shall not constitute a defense to the enforcement of the restrictive
covenants set forth herein, but shall be litigated separately.
11.6. Assignment.
The
Selling Parties agree that the rights granted in this Article
XI
may be
assigned by Buyer at its sole and absolute discretion. All of the provisions
of
this Article
XI
shall
inure to any successors of Buyer, all of which are specifically third-party
beneficiaries of this Article
XI
with
full rights hereunder. In addition, the parties hereto agree that any assignee
of the rights hereunder is an intended, direct third-party beneficiary of this
Article
XI
and may
enforce such rights in its own name in addition to or in lieu of
Buyer.
11.7. Patient
Freedom.
The
parties hereto agree that the benefits afforded either party hereunder are
not
payment for, and are not in any way contingent upon the referral, admission
or
any other arrangement for, the provision of any item or service offered by
any
party hereto. Nothing in this Agreement shall be construed to limit the freedom
of any patient of Seller to choose the facility
or physician from whom any patient shall receive health care services or limit
or interfere with Seller’s ability to exercise professional judgment in treating
patients or their ability to provide medical services to patients.
11.8. Texas
Business and Commerce Code Section 15.50.
The
parties hereto agree that Seller is free to provide professional services at
any
facility Seller or his patients or payors select, and Seller is able to maintain
a professional physician practice (but not an ambulatory surgery center or
any
other outpatient surgical facility) at any location, including within the
geographic radius prescribed in Section
11.2
hereof.
Accordingly, the parties hereto acknowledge and agree that Section 15.50(b)
of
the Texas Business and Commerce Code should not apply to the restrictive
covenants set forth in this Agreement. As such, Seller hereby agrees to waive
any rights to challenge the restrictive covenants set forth herein on the basis
that such covenants are subject to Section 15.50(b) of the Texas Business and
Commerce Code, and neither Seller nor any of his agents or representatives
shall
commence, participate in or be a party to any litigation or any other type
of
action which challenges, directly or indirectly, the restrictive covenants
set
forth herein on the basis that such covenants are subject to Section 15.50(b)
of
the Texas Business and Commerce Code.
20
ARTICLE
XII.
POST-CLOSING
COVENANTS
12.1 Indemnification
by Selling Parties.
From
and after the Closing, each Selling Party agrees to jointly and severally
indemnify, defend and save Buyer and its respective Affiliates (including,
without limitation, the New LP) and each of their respective officers,
directors, managers, employees, agents and fiduciaries (each, a “Buyer
Indemnified Party”),
forever harmless from and against, and to pay to a Buyer Indemnified Party
or reimburse
a Buyer Indemnified Party for (in either case within ten business days of its
receipt of notice in accordance with the terms of this Article
XII
from any
Buyer 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
Buyer
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 any Selling Party, or
non-compliance with or breach by any Selling Party of any of the covenants
or
agreements contained in this Agreement or the Transaction Documents to be
performed by any Selling Party or any of their respective
Affiliates;
(b) the
operation of the Business prior to the Closing Date, including the use of the
Assets and the Excluded Assets prior to the Closing Date;
(c) any
Tax
liability of any Selling Party whatsoever, including, without limitation, any
Tax liability with respect to or arising from the transactions contemplated
hereby or the structuring of the transactions contemplated hereby, or any Tax
liability under Texas bulk sales laws;
(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 prior to the Closing Date, 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 Buyer 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 any Selling Party;
(g) the
Excluded Assets or Excluded Liabilities;
21
(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 any Selling Party;
(i) any
claim
by Xxxxxxx with respect to the transactions contemplated herein, including,
without limitation, the New LP Asset Transfer, the Distribution Transactions
and
the Selling Parties’ sale of the Transferred Interests to Buyer; or
(j) any
claim
relating to, arising out of, or in connection with, the failure of Clearview
to
maintain either a Pharmacy Board Permit or a CLIA Certificate at any time prior
to the Closing Date.
12.2. Indemnification
by Buyer.
From
and after the Closing, each of NovaMed and NovaMed Laredo agrees to indemnify,
defend and save the Selling Parties and their respective Affiliates, and their
respective employees, trustees, agents, representatives, heirs and executors
other than the New LP (each, a “Seller
Indemnified Party”)
forever harmless from and against, and to pay to a Seller Indemnified Party
or
reimburse a Seller Indemnified Party for (in either case within ten (10)
business days of its receipt of notice in accordance to the terms of this
Article
XII
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 Buyer, or non-compliance with
or
breach by Buyer of any of the covenants or agreements contained in this
Agreement or in the Transaction Documents to be performed by Buyer;
(b) any
action, demand, proceeding, investigation or claim (whenever made) by any third
party (including Governmental Authorities) against or affecting the Selling
Parties 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 Buyer; 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 Buyer.
12.3. Indemnification
Procedure for Third Party Claims.
In the
event that subsequent to the Closing any Person entitled to indemnification
under this Agreement (an “Indemnified Party”)
asserts a claim for indemnification or receives notice of the assertion of
any
claim or of the
commencement of any action or proceeding by any entity that is not a party
to
this Agreement or an Affiliate of a party to this Agreement (including, but
not
limited to any domestic or foreign court or Governmental Authority, federal,
state or local) (a “Third
Party Claim”)
against such Indemnified Party, against which a party to this Agreement is
required to provide indemnification under this Agreement (an “Indemnifying
Party”),
the
Indemnified Party shall give written notice together with a statement of any
available information regarding such claim to the Indemnifying Party within
sixty (60) days after learning of such claim (or within such shorter time as
may
be necessary to give the Indemnifying Party a reasonable opportunity to respond
to such claim). The Indemnifying Party shall have the right, upon written notice
to the Indemnified Party (the “Defense
Notice”)
within
thirty (30) days after receipt from the Indemnified Party of notice of such
claim, which notice by the Indemnifying Party shall specify the counsel
it will
appoint to defend such claim (“Defense
Counsel”),
to
conduct at its expense the defense against such claim in its own name, or if
necessary in the name of the Indemnified Party; provided,
however,
that
the Indemnified Party shall have the right to approve the Defense Counsel,
which
approval shall not be unreasonably withheld, and in the event the Indemnifying
Party and the Indemnified Party cannot agree upon such counsel within ten (10)
days after the Defense Notice is provided, then the Indemnifying Party shall
propose an alternate Defense Counsel, which shall be subject again to the
Indemnified Party’s approval. If the parties still fail to agree on Defense
Counsel, then, at such time, they shall mutually agree in good faith on a
procedure to determine the Defense Counsel. The delivery of a Defense Notice
shall not constitute an admission with respect to the claim for
indemnification.
22
(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 fifteen (15)
calendar days after its receipt of such notice, the Indemnified Party may
continue to contest or defend such Third Party Claim and, in such event, the
maximum liability of the Indemnifying Party as to such Third Party Claim will
not exceed the amount of such settlement offer, plus costs and expenses paid
or
incurred by the Indemnified Party through the end of such fifteen (15) day
period.
(f) Any
judgment entered or settlement agreed upon in the manner provided herein shall
be binding upon the Indemnifying Party, and shall conclusively be deemed to
be
an obligation with respect to which the Indemnified Party is entitled to prompt
indemnification hereunder.
23
12.4. -Failure
to Give Timely Notice.
A
failure by an Indemnified Party to give timely, complete or accurate notice
as
provided in Section
12.3
will not
affect the rights or obligations of any
party
hereunder except and only to the extent that, as a result of such failure,
any
party entitled to receive such notice was deprived of its right to recover
any
payment under its applicable insurance coverage or was otherwise directly and
materially damaged as a result of such failure to give timely
notice.
12.5. Survival.
Notwithstanding anything contained to the contrary in this Agreement, all
representations and warranties of the parties hereto contained in or arising
out
of the Transaction Documents, or in any schedule or certificate given in
connection herewith and therewith, shall survive the Closing and shall continue
in effect until the twenty-four (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, 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 any
Selling Party 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 Buyer may elect to offset such amount against any
amount due and owing by the New LP to Seller or the Family Limited Partnership
pursuant to the terms of the Partnership Agreement
(including, without limitation, any distributions payable to Seller or the
Family Limited Partnership).
12.7 Limitations.
Notwithstanding anything in Article
XI to
the
contrary, the following shall apply:
(a) The
aggregate amount of the Losses required to be paid by the Selling Parties
pursuant to Section
12.1(a)
and
Section
12.1(f)
hereof
shall not exceed the Purchase Price.
(b) The
Buyer
Indemnified Parties shall be entitled to indemnification under Section
12.1(a)
and
Section
12.1(f)
only if
the aggregate amount of all Losses thereunder (on a cumulative basis) exceeds
Fifty Thousand and No/Dollars ($50,000) (the “Basket
Amount”),
in
which case the Selling Parties shall be obligated to indemnify the Buyer
Indemnified Parties only for the excess of the aggregate amount of all such
Losses over the Basket Amount.
(c) The
Seller Indemnified Parties shall be entitled to indemnification under
Section
12.2(a)
and
Section
12.2(b)
only if
the aggregate amount of all Losses thereunder (on a cumulative basis) exceeds
the Basket Amount, in which case Buyer shall be obligated to indemnify the
Seller Indemnified Parties only for the excess of the aggregate amount of all
such Losses over the Basket Amount.
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 Buyer, such Affiliates shall include,
without limitation, NovaMed, Inc. and any of its subsidiaries.
“Closing”
and
“Closing
Date”
shall
have the respective meanings set forth in Section
7.1.
24
“Code”
means
the Internal Revenue Code of 1986, as amended.
“Employee
Benefit Plans”
shall
have the meaning set forth in Section
4.19.
“ERISA”
means
the Employee Retirement Income Security Act of 1974, as amended.
“Facility”
means
the Medicare-certified, state-licensed ambulatory surgery center located at
0000
XxXxxxxxx Xxxx, Xxxxxx, Xxxxx 00000.
“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. §9601 et seq., the Resource
Conservation and Xxxxxxxx Xxx, 00 X.X.X. §0000 et seq., and any other
Environmental and Safety Requirements; (b) petroleum, including crude oil or
any
fraction thereof which is liquid at standard conditions of temperature and
pressure (60 degrees Fahrenheit and 14.7 pounds per square inch absolute);
(c)
any radioactive material, including any source, special nuclear, or by-product
material as defined in 42 U.S.C. §2011 et seq.; (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”
shall
mean December 31, 2005.
“Tax”
means
any federal, state, local or foreign income, gross receipts, franchise,
estimated, alternative minimum, add-on minimum, sales, use, transfer,
registration, value added, excise, natural resources, severance, stamp,
occupation, premium, windfall profit, environmental, customs, duties, real
property, personal property, capital stock, social security, unemployment,
disability, payroll, license, employee or other withholding, or other tax,
of
any kind whatsoever, including any interest, penalties or additions to tax
or
additional amounts in respect of the foregoing; the foregoing shall include
any
transferee or secondary liability for a Tax and any liability assumed by
agreement or arising as a result of being (or ceasing to be) a member of any
Affiliated Group, as defined in Section 1504 of the Code (or being included,
or
required to be included, in any Tax Return relating thereto).
25
“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 the Selling Parties:
|
Clearview
Surgical Institute, Ltd.
0000
XxXxxxxxx Xxxx
Xxxxxx,
Xxxxx 00000
Attention: Xxxxxxx
X. Xxxxxxx, M.D.
Tel: (000)
000-0000
Fax: (000)
000-0000
Clearview
Surgical Institute Management LLC
0000
XxXxxxxxx Xxxx
Xxxxxx,
Xxxxx 00000
Attention: Xxxxxxx
X. Xxxxxxx, M.D.
Tel: (000)
000-0000
Fax: (000)
000-0000
Xxxxxxx
X. Xxxxxxx, M.D.
000
Xxxxxxx Xxxx Xxxxx
Xxxxxx,
Xxxxx 00000
Tel: (000)
000-0000
Fax: (000)
000-0000
26
with
a
copy to:
Xxxxx
X.
Xxxxxx
Davidson
& Xxxxxx
0000
XX-00 Xxxx, Xxxxx 000
Xxx
Xxxxxxx, Xxxxx 00000
Tel:
(000)
000-0000
Fax: (000)
000-0000
| (ii) |
If
to Buyer:
|
NovaMed
Acquisition Company, Inc.
NovaMed
of Laredo, Inc.
000
Xxxxx
Xxxxxxxx Xxxxxx
Xxxxx
0000
Xxxxxxx,
Xxxxxxxx 00000
Attention: Xxxxxx
X.
Xxxx
Xxxx
X.
Xxxxxxxx, Xx.
Tel: (000)
000-0000
Fax: (000)
000-0000
Date
of
service of such notice shall be: (A) the date such notice is personally
delivered; (B) three (3) days after the date of mailing if sent by certified
or
registered mail; (C) one (1) day after date of delivery to the overnight courier
if sent by overnight courier; or (D) the next succeeding business day after
transmission by facsimile.
13.3. Certain
Taxes.
The
Selling Parties 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
Buyer 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.
27
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 any Selling Party without the prior written
consent of Buyer.
13.12. Mediation
and Arbitration.
Except
as expressly set forth herein, the parties hereto agree that any and all
controversies, disputes or claims arising out of or in connection with this
Agreement shall be solely and exclusively resolved in accordance with this
Section
13.12
and not
in any court of law or equity. The parties hereto shall first try in good faith
to settle the dispute by mediation under the Commercial Mediation Rules of
the
American Arbitration Association (“AAA”)
(such
mediation session to be held in San Antonio, Texas, 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 San Antonio, Texas before a single arbitrator mutually
agreed upon by Buyer and Seller and to commence within thirty (30) days after
the appointment of the arbitrator by the AAA), and judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. Notwithstanding the foregoing, nothing herein shall limit Buyer’s
rights to seek and obtain injunctive relief, specific performance or other
equitable relief in any proceeding commenced in a federal or state court which
may be brought to enforce any provision in Article
XI
hereof.
13.13. -Entire
Agreement.
This
Agreement, the Preamble and all the Schedules attached to this Agreement (all
of
which shall be deemed incorporated in the Agreement and made a part hereof)
set forth the entire understanding of the parties with respect to the subject
matter hereof, and shall not be modified or affected by any offer, proposal,
statement or representation, oral or written, made by or for any party in
connection with the negotiation of the terms hereof, and may be modified only
by
instruments signed by all of the parties hereto.
13.14. Third
Parties.
Nothing
herein expressed or implied is intended or shall be construed to confer upon
or
give to any Person, other than the parties to this Agreement and
their respective
permitted successors and assigns, any rights or remedies under or by reason
of
this Agreement.
13.15. No
Strict Construction.
The
language used in this Agreement will be deemed to be the language chosen by
the
parties hereto to express their mutual intent, and no rule of strict
construction will be applied against any party hereto.
13.16 Public
Announcement.
The
Selling Parties acknowledge that Buyer intends to publicly announce the
transactions contemplated herein, whether through a press release, a filing
with
the Securities and Exchange Commission, or some other form or medium selected
by
Buyer.
[SIGNATURES
APPEAR ON THE FOLLOWING PAGE]
28
IN
WITNESS WHEREOF,
the
parties have executed this Asset Contribution and Exchange Agreement as of
the
date first written above.
| BUYER: | |
| NOVAMED ACQUISITION COMPANY, INC., | NOVAMED OF LAREDO, INC., |
| a Delaware corporation | a Delaware corporation |
| By:/s/ Xxxxxx X. Xxxx | By:/s/ Xxxxxx X. Xxxx |
|
Xxxxxx
X. Xxxx, President
|
Xxxxxx
X. Xxxx, President
|
| SELLING PARTIES: | |
| CLEARVIEW SURGICAL INSTITUTE, LTD., | CLEARVIEW SURGICAL INSTITUTE MANAGEMENT, LLC, |
| a Texas limited partnership | a Texas limited liability company |
| By its General Partner: | |
|
CLEARVIEW
SURGICAL INSTITUTE MANAGEMENT
LLC.,
|
By:/s/ Xxxxxxx X. Xxxxxxx |
|
a
Texas limited liability
company
|
Its:
President
|
|
By:/s/
Xxxxxxx X. Xxxxxxx
|
|
|
Its:
President
|
|
| /s/ Xxxxxxx X. Xxxxxxx | |
|
XXXXXXX
X. XXXXXXX, M.D., Individually
|
| EXHIBITS | ||
| Exhibit 1.1 |
—
|
Certificate of Limited Partnership |
| Exhibit 1.2 |
—
|
Contribution Agreement |
| Exhibit 1.6 |
—
|
Clearview Distribution Agreement |
| Exhibit 1.7 |
—
|
FLP Contribution Agreement |
| Exhibit 3.2 |
—
|
Wire Transfer Instructions |
| Exhibit 7.3(b) |
—
|
Partnership Agreement |
| Exhibit 7.3(f) |
—
|
Assignment of Partnership Interests |
| Exhibit 7.3(p) |
—
|
Excimer Laser Sublease |
| Exhibit 7.3(q) |
—
|
Billing Agreement |
| Exhibit 7.4(e) |
—
|
Management Agreement |
| SCHEDULES* | ||
| Schedule 1.2(a) |
—
|
Inventory on Consignment |
| Schedule 1.2(b) |
—
|
Personal Property |
| Schedule 1.2(c) |
—
|
Prepaid Expenses |
| Schedule 1.3(g) |
—
|
Excluded Assets/Personal Effects |
| Schedule 1.3(h) |
—
|
Retinal Laser |
| Schedule 1.4(a) |
—
|
Accounts Payable |
| Schedule 4.2 |
—
|
Liens and Encumbered Assets |
| Schedule 4.3 |
—
|
Approvals |
| Schedule 4.5 |
—
|
Financial Statements |
| Schedule 4.6 |
—
|
Undisclosed 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 |
—
|
Employee Names and Compensation |
| Schedule 4.17 |
—
|
Insurance
|
| Schedule 4.18 |
—
|
Affiliate
Transactions
|
| Schedule 4.19 |
—
|
Employee Benefit Plans |
| Schedule 4.20 |
—
|
Personnel Agreements, Plans and Arrangements |
| Schedule 4.22 |
—
|
Workers Compensation |
| Schedule 4.23(a) |
—
|
Accounts Receivable |
| Schedule 4.26 |
—
|
Rates and Reimbursement Policies |
| Schedule 5.5 |
—
|
Broker |
| 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.
