Exhibit 2.1(1)
PURCHASE AGREEMENT RELATING TO
TUSCARAWAS AMBULATORY SURGERY CENTER, L.L.C.
THIS PURCHASE AGREEMENT is made as of September 30, 2005 by and among
TUSCARAWAS AMBULATORY SURGERY CENTER, L.L.C., an Ohio limited liability company
("TASC"), ORION HEALTHCORP, INC. (formerly known as SurgiCare, Inc.), a Delaware
corporation ("ORION"), each of the undersigned physicians identified on the
signature page hereof (the "SELLING INVESTORS" and together with Orion, the
"SELLERS"), and UNION HOSPITAL, an Ohio nonprofit corporation (the "PURCHASER").
WITNESSETH:
WHEREAS, the Sellers own units in TASC, which is organized as an Ohio
limited liability corporation, with authority to issue units to evidence
ownership of TASC, all pursuant to its Operating Agreement dated May 1, 1998, as
amended by that certain First Amendment effective May 31, 2002 (the "OPERATING
AGREEMENT"); and
WHEREAS, the Selling Investors will collectively sell 19% of the units
to the Purchaser and Orion will sell 51% of the units to the Purchaser, such
that upon the Closing Date (as defined below) the Purchaser will own 70% of the
units of TASC (collectively, the "UNITS"); and
NOW, THEREFORE, it is mutually understood, agreed and represented as
follows:
ARTICLE 1
TRANSACTION TERMS
1.1 SALE. The Sellers agree to sell, and the Purchaser agrees to buy,
the Units at a price of $12,666.67 per Unit, and each of the Selling Investors
shall sell such amount of his or her Units to the Purchaser as is set forth on
the signature page hereof.
1.2 PAYMENT AND DELIVERY. The purchase price for the Units, shall be
paid by the Purchaser (as set forth in SECTION 2.3 below). At the Closing, the
Units being sold shall be delivered by the Sellers to TASC, which shall then
re-issue them to the Purchaser.
1.3 AGREEMENT TO INDEMNIFY.
a. The Purchaser agrees to indemnify and hold harmless the Sellers from
any and all damages, losses, costs, and expenses (including reasonable
attorneys' fees) that any one Seller may incur (i) by reason of the Purchaser's
failure to fulfill any of the terms and conditions of this Agreement, or (ii) by
reason of breach of any of the Purchaser's representations, warranties, or
agreements contained herein. The Purchaser further agrees and acknowledges that
these indemnifications shall survive any sale or transfer, or attempted sale or
transfer, of any portion of the Units.
b. Each Seller agrees to indemnify severally (and not jointly and
severally) and hold harmless the Purchaser from any and all damages, losses,
costs, and expenses (including reasonable attorneys' fees) that it may incur (i)
by reason of the Seller's failure to fulfill any of the terms and conditions of
this Agreement, and (ii) by reason of breach of any of the Seller's
representations, warranties, or agreements contained herein. Each Seller further
agrees and acknowledges that these indemnifications shall survive any sale or
transfer, or attempted sale or transfer, of any portion of the Units.
1.4 ACKNOWLEDGEMENTS. The Purchaser agrees, acknowledges and
understands that:
a. No federal or state agency has made any finding or determination as
to the fairness of the sale of the Units for investment or any recommendation or
endorsement of the Units.
b. The Units have not been registered under the Securities Act of 1933,
as amended, or any similar law then in effect (the "SECURITIES ACT") and,
therefore, Purchaser bears the economic risk of the investment indefinitely
because the Units may not be sold unless subsequently registered under the Act
or an exemption from such registration is available; registration under the Act
is extremely unlikely at any time in the future and the Sellers have not
represented or covenanted to take any action necessary to make available any
rules or any exemption for sale of the Units without registration.
c. Neither the Units nor this Agreement has been registered under the
securities laws of any state. The Purchaser agrees that a legend to the
foregoing effect may be placed upon any and all certificates and other documents
issued to represent the Units.
d. To prevent the illegal sale of the Units, TASC will not recognize
the transfer of the Units on its records unless sold pursuant to an effective
registration statement, pursuant to an exemption under the Act, or in accordance
with the Operating Agreement.
ARTICLE 2
CLOSING
2.1 THE CLOSING. The consummation of the transactions contemplated by
this Agreement (the "CLOSING") shall take place at the offices of Xxxxxx & Xxxxx
commencing at 9:00 a.m. local time on the date of this Agreement, or such other
place and date as is agreed to by the parties hereto. Following the satisfaction
or waiver of all conditions to the obligations of the parties hereto to
consummate the transactions contemplated hereby (other than conditions with
respect to actions the respective parties hereto will take at the Closing
itself), the transactions contemplated by this Agreement to occur upon Closing
shall be effective as of 12:01 a.m. on October 1, 2005 (the "CLOSING DATE").
2.2 DELIVERIES BY SELLERS AND TASC AT THE CLOSING. At the Closing,
Sellers will deliver to Purchaser, duly executed by Sellers where appropriate:
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a. Original certificates evidencing the good standing of TASC, issued
as of a recent date prior to the Closing Date, by the Secretary of State of
Ohio;
b. A release agreement in substantially the form attached hereto at
EXHIBIT A (the "RELEASE AGREEMENT"); and
c. Such other instruments of title, certificates, consents,
endorsements, assignments, assumptions and other documents or instruments, in a
form reasonably satisfactory to the Purchaser and its counsel, as set forth
herein or as may be reasonably requested by the Purchaser in order to transfer
the Units to the Purchaser, to carry out the transaction contemplated by this
Agreement and to comply with the terms hereof.
2.3 CLOSING DELIVERIES OF THE PURCHASER. At the Closing, the Purchaser
will deliver to Sellers, duly executed by Purchaser where appropriate:
a. Payment of seventy percent (70%) of the purchase price payable to
Orion in the amount set forth on the signature page hereof in immediately
available funds;
b. A note payable to Orion for the remaining thirty percent (30%) of
the purchase price payable to Orion in the amount set forth on the signature
page hereof, in substantially the form attached hereto at EXHIBIT B (the
"HOSPITAL NOTE");
c. Payment of 100% of the purchase price to each of the Selling
Investors in the amount set forth on the signature page hereof, such amount to
be by cashier's or certified check;
d. Original Certificate evidencing the good standing of the Purchaser
issued as of a recent date prior to the Closing Date by the Secretary of State
of Ohio;
e. the Release Agreement; and
f. Such other instruments, certificates, consents or other documents as
set forth herein or as may be reasonably necessary to carry out the transactions
contemplated hereby.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 PURCHASER'S REPRESENTATIONS, WARRANTIES, AND COVENANTS. The
Purchaser represents, warrants, and covenants to the Sellers that as of the date
hereof and the Closing Date:
a. The Purchaser is acquiring the Units for the Purchaser's own
account, solely for investment, and not with a view to resale or distribution.
b. The Purchaser is acquiring the Units without having been furnished
any offering literature or prospectus.
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c. The Purchaser and/or the Purchaser's advisors have received all
documents that the Purchaser has requested relating to an investment in TASC and
has provided answers to all of the Purchaser's questions concerning such an
investment. In evaluating the suitability of an investment in TASC, the
Purchaser has not relied upon any representations or other information (whether
oral or written) other than those contained in documents executed by Sellers.
d. The execution, delivery and performance of this Agreement are within
the powers of the Purchaser, have been duly authorized by all necessary action,
and do not and will not (i) violate any provision of the governing documents of
the Purchaser or of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to the Purchaser; (ii) require the consent or approval of, or
filing or registration with, any governmental body, agency or authority or any
other third party; or (iii) result in a breach of or constitute a default under,
or result in the imposition of any lien, charge or encumbrance upon any property
of the Purchaser pursuant to, any indenture or other agreement or instrument
under which the Purchaser is a party hereto or by which it or its properties may
be bound or affected. This Agreement constitutes the legal, valid and binding
obligation of the Purchaser in accordance with its terms, except as such
enforceability may be limited by bankruptcy or similar laws affecting the
enforceability of creditors' rights generally.
3.2 SELLERS' REPRESENTATIONS, WARRANTIES, AND COVENANTS. Each Seller,
as applicable, represents, warrants, and covenants severally (and not jointly
and severally) to the Purchaser that as of the date hereof and the Closing Date
(it being understood and agreed that none of the Selling Investors but only
Orion makes the representation and warranty in Section 3.2.c.):
a. He, she or it has good and marketable title to the Units being sold
to the Purchaser, subject to no encumbrance or restraint on transfer, except as
set forth in the Operating Agreement and the securities laws of Ohio and the
Securities Act.
b. The execution, delivery and performance of this Agreement are within
the powers of each Seller, have been duly authorized by all necessary action,
and this Agreement constitutes the legal, valid and binding obligation of each
Seller in accordance with its terms, except as such enforceability may be
limited by bankruptcy or similar laws affecting the enforceability of creditors'
rights generally
c. The execution, delivery and performance of this Agreement by Orion
does not and will not (i) violate any provision of the governing documents of
Orion or of any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect having applicability to
Orion; (ii) require the consent or approval of, or filing or registration with,
any governmental body, agency or authority by Orion; or (iii) result in a breach
of or constitute a default under, or result in the imposition of any lien,
charge or encumbrance upon any property of Orion pursuant to, any indenture or
other agreement or instrument under which Orion is a party hereto or by which it
or its properties may be bound or affected.
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3.3 TASC'S REPRESENTATIONS AND WARRANTIES. In order to induce the
Purchaser to purchase the Units as provided herein, TASC represents and warrants
to the Purchaser as follows as of the Closing Date:
a. ORGANIZATION. TASC is a limited liability company duly organized and
existing in good standing or active status under the laws of the State of Ohio,
and has all requisite power and authority, to conduct its business and to own
its properties. TASC is duly licensed or qualified to do business in all
jurisdictions in which such qualification is required, and failure to so qualify
could have a material adverse effect on the property, financial condition or
business operations of TASC.
b. AUTHORITY. The execution, delivery and performance of this Agreement
are within the powers of TASC, have been duly authorized by all necessary
action, and do not and will not (i) violate any provision of the governing
documents of TASC or of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to TASC; (ii) require the consent or approval of, or filing or
registration with, any governmental body, agency or authority; or (iii) result
in a breach of or constitute a default under, or result in the imposition of any
lien, charge or encumbrance upon any property of TASC pursuant to, any indenture
or other agreement or instrument under which TASC is a party hereto or by which
it or its properties may be bound or affected. This Agreement constitutes the
legal, valid and binding obligation of TASC in accordance with its terms, except
as such enforceability may be limited by bankruptcy or similar laws affecting
the enforceability of creditors' rights generally.
c. FINANCIAL STATEMENTS. The financial statements furnished to the
Purchaser in connection with this Agreement and prior thereto, as set forth on
SCHEDULE 3.3.C., were prepared in accordance with generally accepted accounting
principles and fairly present the financial condition and results of operations
at all dates and for all periods covered thereby. To the best of TASC's
knowledge, TASC has no material liability, contingent or otherwise, not
disclosed in such statements. To the best of TASC's knowledge, since the date of
such statements, there has been no material adverse change in the business,
prospects, assets or financial condition of TASC and TASC has not engaged in any
material transaction outside the ordinary course of business. d. LIENS. TASC has
good and marketable title to all of its assets, free and clear of all material
liens, security interests, mortgages and encumbrances of any kind, except for
Permitted Liens as set forth on SCHEDULE 3.3.D. hereto. All owned and leased
equipment of TASC is, subject to ordinary wear and tear, in good condition,
repair and working order and, to the best of TASC's knowledge and belief,
conforms in all material respects to all applicable laws, regulations and
ordinances.
e. TAXES. Except as expressly disclosed in the financial statements,
TASC does not have any outstanding unpaid tax liability (except for taxes which
are currently accruing from current operations and ownership of property, which
are not delinquent), and to the best of TASC's knowledge, no tax deficiencies
have been proposed or assessed against TASC.
f. ABSENCE OF LITIGATION. Except as set forth on SCHEDULE 3.3.F hereto,
TASC is not a party to any litigation or administrative proceeding, nor so far
as is known by TASC is any litigation or administrative proceeding threatened
against it.
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ARTICLE 4
CONDITIONS TO OBLIGATION TO CLOSE
4.1 CONDITIONS TO OBLIGATION OF THE PURCHASER TO CLOSE. The obligation
of the Purchaser to consummate the transactions to be performed by it in
connection with this Agreement is subject to satisfaction (or written waiver on
or prior to the Closing Date) of the following conditions:
a. the representations and warranties of Sellers and TASC set forth in
ARTICLE 3 shall be true and correct at and as of the Closing Date;
x. Xxxxxxx shall have performed and complied with all of their
covenants and agreements hereunder through the Closing Date;
x. Xxxxxxx and Purchaser shall have received all authorizations,
consents, and approvals required to be obtained prior to consummation of the
transactions contemplated herein;
d. the approval of an amended and restated Operating Agreement to be
effective as of the Closing Date, in substantially the form attached hereto as
EXHIBIT C (the "AMENDED AND RESTATED OPERATING AGREEMENT");
e. on or prior to the Closing Date, Oxford Capital Enterprises Two, LLC
shall enter into a binding agreement to sell the real property and the building
used by TASC and located at 000 Xxxxxx Xxxxxx, Xxxxx, Xxxx, to either the
Purchaser or The Xxxxxxx Trust, LLC ("XXXXXXX"), upon substantially similar
terms contained in the offer letter from Xxxxxxx, attached hereto as EXHIBIT D
(the "PROPERTY SALE AGREEMENT");
x. Xxxxxxx and TASC shall have delivered to the Purchaser all documents
and other items specified in SECTION 2.2; and
g. all actions to be taken by Sellers and TASC in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to the
Purchaser.
4.2 CONDITIONS TO OBLIGATION OF SELLERS TO CLOSE. The obligation of
Sellers to consummate the transactions to be performed by them in connection
with this Agreement is subject to satisfaction (or written waiver by Sellers, as
applicable, on or prior to the Closing Date) of the following conditions:
a. the representations and warranties of the Purchaser set forth in
ARTICLE 3 above shall be true and correct at and as of the Closing Date;
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b. the Purchaser shall have performed and complied with all of its
covenants and agreements hereunder through the Closing Date;
x. Xxxxxxx and Purchaser shall have received all approvals,
authorizations and consents required to be obtained prior to consummation of the
transactions contemplated herein, which includes the prior written consent of
Orion's lender, Health Care Business Credit Corporation;
d. approval of an Amended and Restated Operating Agreement;
e. approval of a Management Services Agreement between Orion and TASC,
in substantially the form attached hereto as EXHIBIT E (the "MANAGEMENT
AGREEMENT");
f. on prior to the Closing Date, the Property Sale Agreement shall have
been entered into by the applicable parties;
g. on or prior to the Closing Date, the parties hereto shall have
finalized satisfactory agreements for the sale of substantially all of the
assets of TASC Anesthesia, LLC to the Purchaser and the provision of anesthesia
services to TASC;
h. on or prior to the Closing Date, Orion shall have received a note
from TASC, in substantially the form attached hereto at EXHIBIT F (the "TASC
NOTE");
i. the Purchaser shall have delivered to Sellers all documents and
other items specified in SECTION 2.3; and
j. all actions to be taken by the Purchaser in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
Sellers.
ARTICLE 5
POST-CLOSING COVENANTS OF PURCHASER
5.1 POST-CLOSING COVENANTS OF PURCHASER. The Purchaser agrees to the
following post-closing covenants:
a. the Purchaser shall cause TASC to operate at the existing location
for a period of at least ten (10) years following the Closing Date, so long as
such operation remains economically feasible and any actions taken related to
the location of TASC shall be in accordance with the Amended and Restated
Operating Agreement;
b. the Purchaser shall cause TASC's Board of Managers to implement a
policy which requires a 60-day probationary period for new physicians on the
Medical Staff of TASC prior to such physicians becoming eligible to purchase
Units in TASC; and
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c. the Purchaser shall use its best efforts to include TASC in third
party payor contracts, including Aultcare, Inc. (to the extent permitted by the
payor), and shall agree to negotiate managed care contracts on behalf of TASC
within guidelines established by the Purchaser, TASC and Orion, in its
management capacity.
ARTICLE 6
MISCELLANEOUS
6.1 ENTIRE AGREEMENT. This Agreement (including all Schedules and
Exhibits) constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes any prior understandings or
agreements of the parties hereto, written or oral, with respect to such subject
matter.
6.2 NOTICES. All notices, requests, demands, claims, and other
communications of the parties hereto pursuant to this Agreement will be in
writing. Any such notice or other communication shall be deemed duly given one
(1) business day after it is sent by overnight courier, or three (3) business
days after it is sent by registered or certified mail, return receipt requested,
postage prepaid, and addressed to the intended recipient as set forth below:
If to Purchaser: Union Hospital
000 Xxxxxxxxx
Xxxxx, Xxxx 00000
Attn: President and
Chief Executive Officer
Facsimile: 330.365.3850
with a copy to: Xxxxxxx X. Xxxxx
Xxxxxx & Xxxxx
X.X. Xxx 000 Xxx Xxxxxxxxxxxx, Xxxx
00000 Facsimile: 330.343.7977
If to Orion: Orion HealthCorp, Inc.
0000 Xxx Xxxxxxx Xxxx, Xxxxx000
Xxxxxxx, XX 00000
Attn: President
Facsimile:
with a copy to: XxXxxxxxx Will & Xxxxx LLP
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx Xxxxxxxx
Facsimile: 312.984.7700
If to Selling Investors: To each Selling Investor at his
or her address listed in
the Operating Agreement
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Any party hereto may send any notice or other communication hereunder to the
intended recipient at the address set forth above using any other means
(including personal delivery, two-day courier service, messenger service,
facsimile, ordinary mail, or electronic mail), but no such notice or other
communication shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any party hereto may change the
address to which notices and other communications hereunder are to be delivered
by giving the other parties hereto notice in the manner herein set forth.
6.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, including any other Affiliates. No party hereto may assign
either this Agreement or any of its rights, interests, or obligations hereunder
without the prior written approval of the other parties hereto. Purchaser shall
ensure that any successor or assign shall fulfill Purchaser's post-Closing
operating covenants set forth in ARTICLE 5.
6.4 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the parties hereto and their
respective successors and permitted assigns.
6.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
6.6 HEADINGS. The Articles and Section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
6.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Ohio, without giving effect to
any choice or conflict of law provision or rule (whether of the State of Ohio or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Ohio.
6.8 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
6.9 EXPENSES. Each of the Purchaser and the Sellers will bear its own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby, except as
otherwise set forth herein.
6.10 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
[Signatures on the following page]
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IN WITNESS WHEREOF, the Purchaser and the Sellers have executed this
Agreement as of the day and date first above written.
UNION HOSPITAL
By: /S/ XXXXXX X. XXXXX
-----------------------------------------------------------
Its: VP FINANCE
----------------------------------------------------------
TUSCARAWAS AMBULATORY SURGERY CENTER, L.L.C.
By: /S/ XXXXX XXXXXXX
-----------------------------------------------------------
Its: CEO
----------------------------------------------------------
ORION HEALTHCORP, INC. (FORMERLY KNOWN AS SURGICARE, INC.)
By: /S/ XXXXX XXXXXXX
-----------------------------------------------------------
Its: PRESIDENT
----------------------------------------------------------
Units: 54.60 Purchase Price: $697,959.18
SELLING INVESTORS:
/S/ XXX XXXXXXX, M.D. /S/ XXXXX XXXXXX, M.D.
------------------------------------ ----------------------
Xxx Xxxxxxx, M.D. Xxxxx Xxxxxx, M.D.
Units sold: 2.68 Units sold: 2.10
Purchase Price: $34,593.84 Purchase Price: $27,180.87
/S/ XXXXX XXXXXX, M.D. /S/ XXXXXX XXXXXX, M.D.
------------------------------------ -----------------------
Xxxxx Xxxxxx, M.D. Xxxxxx Xxxxxx, M.D.
Units sold: .96 Units sold: 1.82
Purchase Price: $12,354.94 Purchase Price: $23,474.39
/S/ XXXXXXX XXX, M.D. /S/ XXXXX XXXXXXXXX, M.D.
------------------------------------ -------------------------
Xxxxxxx Xxx, M.D. Xxxxx XxXxxxxxx, M.D.
Units sold: 2.68 Units sold: .96
Purchase Price: $34,593.84 Purchase Price: $12,354.94$
/S/ XXXXXXX XXXXXXXX, M.D. /S/ XXXXXXX XXXXXX, D.P.M.
------------------------------------ --------------------------
Xxxxxxx Xxxxxxxx, M.D. Xxxxxxx Xxxxxx, D.P.M.
Units sold: 5.54 Units sold: 1.82
Purchase Price: $71,658.66 Purchase Price: $23,474.39
/S/ XXXXXX XXXXXX, M.D.
------------------------------------
Xxxxxx Xxxxxx, M.D.
Units sold: .96
Purchase Price: $12,354.94
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EXHIBIT A
RELEASE AGREEMENT
A-1
EXHIBIT B
HOSPITAL NOTE
B-1
EXHIBIT C
AMENDED AND RESTATED OPERATING AGREEMENT
C-1
EXHIBIT D
PROPERTY SALE
D-1
EXHIBIT E
MANAGEMENT AGREEMENT
E-1
EXHIBIT F
TASC NOTE
F-1
SCHEDULE 3.3.C.
FINANCIAL STATEMENTS
Unaudited financial statements for fiscal years ending 2004, 2003, and 2002 and
year-to-date through August 31, 2005.
SCHEDULE 3.3.D.
PERMITTED LIENS
SEE ATTACHED.
SCHEDULE 3.3.F
LITIGATION
None.
