Exhibit 2.1
ASSET PURCHASE AGREEMENT
By and Between
SAN JACINTO SURGERY CENTER, LTD,
as Seller
and
SAN JACINTO METHODIST HOSPITAL,
as Buyer
Dated as of March 1, 2006
TABLE OF CONTENTS
Page
I. SALE OF ASSETS AND CERTAIN RELATED MATTERS................................1
1.1 Sale and Transfer of the Assets....................................1
1.2 Excluded Assets....................................................2
1.3 Interpretation.....................................................2
1.4 Definitions........................................................3
II. FINANCIAL ARRANGEMENTS....................................................5
2.1 Purchase Price.....................................................5
2.2 Allocation of the Purchase Price...................................5
2.3 Assumed Liabilities................................................6
2.4 Excluded Liabilities...............................................6
2.5 Proration..........................................................8
2.6 Good Faith Deposit.................................................8
III. CLOSING...................................................................8
3.1 The Closing........................................................8
3.2 Actions of Seller at the Closing...................................8
3.3 Actions of Buyer at the Closing...................................10
IV. REPRESENTATIONS AND WARRANTIES OF SELLER.................................10
4.1 Corporate Capacity................................................10
4.2 Authorization of the Transaction..................................11
4.3 Noncontravention..................................................11
4.4 Binding Effect....................................................11
4.5 Brokers and Finders Fees..........................................11
4.6 No Subsidiaries/Beneficial Owner..................................11
4.7 Financial Statements..............................................12
4.8 Licenses and Permits..............................................12
4.9 Medicare and Medicaid Participation/Accreditation.................13
4.10 Agreements and Commitments........................................14
4.11 Equipment.........................................................14
4.12 Leased Premises...................................................14
4.13 Other Property....................................................15
4.14 Insurance.........................................................15
4.15 Litigation or Proceedings.........................................16
4.16 Taxes and Tax Status..............................................16
4.17 Employee Relations................................................16
4.18 Employee Benefit Plans............................................17
4.19 Post-Balance Sheet Results........................................18
4.20 Payments..........................................................19
4.21 Certain Affiliate Transactions....................................19
4.22 Environmental Matters.............................................19
4.23 Computer Software, Etc............................................20
4.24 Immigration Act...................................................21
4.25 Regulatory Compliance.............................................21
4.26 HIPAA Compliance..................................................22
4.27 Legal and Regulatory Compliance...................................22
4.28 Inventory and Supplies............................................23
4.29 Medical Staff Matters.............................................23
4.30 CMS 855B Applications.............................................24
4.31 Value of Accrued PTO..............................................24
4.32 Full Disclosure...................................................24
V. REPRESENTATIONS AND WARRANTIES OF BUYER..................................24
5.1 Corporate Capacity................................................24
5.2 Noncontravention..................................................24
5.3 Binding Effect....................................................25
5.4 Brokers and Finders Fees..........................................25
VI. COVENANTS OF SELLER......................................................25
6.1 Full Access.......................................................25
6.2 Preservation of Operations........................................25
6.3 Negative Covenants................................................26
6.4 Notices and Consents..............................................27
6.5 Additional Financial Information..................................27
6.6 No-Shop Clause....................................................27
6.7 Interim Operating Reporting.......................................28
6.8 Closing Conditions................................................28
6.9 Further Acts and Assurances.......................................28
6.10 Supplemental Reporting Endorsement................................28
6.11 Termination of Supplier Status....................................28
VII. COVENANTS OF BUYER.......................................................29
7.1 Notices and Consents..............................................29
7.2 Closing Conditions................................................29
VIII.CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER.............................29
8.1 Representations and Warranties/Covenants..........................29
8.2 Pre-Closing Confirmations.........................................29
8.3 Action/Proceeding.................................................30
8.4 Vesting/Recordation...............................................30
8.5 Adverse Change....................................................30
8.6 Extraordinary Liabilities/Obligations.............................30
8.7 Consents..........................................................30
8.8 Recent Agreements and Commitments.................................30
8.9 Lease Agreement...................................................30
8.10 Environmental Report..............................................30
8.11 Release of Liens/Bills of Sales...................................30
8.12 Closing Documents.................................................31
8.13 Wages and Salaries................................................31
8.14 Tail Insurance....................................................31
ii
8.15 Non-Competition Agreements........................................31
8.16 Minimum Annual Earnings of Seller.................................31
IX. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER............................31
9.1 Representations and Warranties/Covenants..........................31
9.2 Action/Proceeding.................................................31
9.3 The Purchase Price/Closing Documents..............................31
X. ADDITIONAL AGREEMENTS....................................................32
10.1 Employees.........................................................32
10.2 Termination Prior to Closing......................................32
10.3 Cooperation on Tax Matters........................................33
10.4 Misdirected Payments, Etc.........................................33
10.5 Guarantees........................................................33
10.6 Seller's Tax Returns..............................................34
10.7 Tax and Medicare Advice/Reliance..................................34
10.8 Press Releases....................................................34
10.9 Non-Competition Agreement.........................................34
10.10 Casualty..........................................................35
10.11 Payment Direction.................................................36
10.12 Collection Services...............................................36
XI. INDEMNIFICATION..........................................................36
11.1 Indemnification by Seller.........................................36
11.2 Indemnification by Buyer..........................................37
11.3 Notice and Procedure..............................................37
11.4 Interest..........................................................40
11.5 Right to Offset...................................................40
11.6 Survival of Representations.......................................40
XII. GENERAL..................................................................41
12.1 Schedules.........................................................41
12.2 Consented Assignment..............................................41
12.3 Consents, Approvals and Discretion................................41
12.4 Expenses; Legal Fees and Costs....................................41
12.5 Choice of Law.....................................................42
12.6 Arbitration.......................................................42
12.7 Benefit/Assignment................................................42
12.8 Accounting Date...................................................43
12.9 No Third Party Beneficiary........................................43
12.10 Waiver of Breach..................................................43
12.11 Notices...........................................................43
12.12 Severability......................................................44
12.13 Gender and Number.................................................44
12.14 Divisions and Headings............................................44
12.15 Time of Essence...................................................44
12.16 Confidentiality...................................................44
iii
12.17 Drafting 45
12.18 Entire Agreement/Amendment........................................45
iv
LIST OF SCHEDULES
Schedule 1.2(vii) Excluded Assets
Schedule 2.2 Purchase Price Allocation
Schedule 3.2.9 Capitalized Leases
Schedule 4.6.2 Beneficial Owners
Schedule 4.7 Financial Statements
Schedule 4.8 Licenses and Permits
Schedule 4.10 Contracts
Schedule 4.11 Equipment
Schedule 4.12 Leased Premises
Schedule 4.14 Insurance
Schedule 4.15 Litigation
Schedule 4.16.1 Taxes and Tax Status
Schedule 4.17.1 Seller Employees
Schedule 4.17.2 Employee Relations
Schedule 4.18.1 Employee Benefit Plans
Schedule 4.22.2 Environmental Matters
Schedule 4.23 Computer Software
Schedule 4.27 Legal and Regulatory Compliance
Schedule 4.29 Medical Staff Matters
Schedule 8.8 Recent Agreements and Commitments
Schedule 10.9.1 Seller Entities Signing Non-Competition Agreements
EXHIBITS
Exhibit A Escrow Agreement
Exhibit B Form of Non-Competition Agreement
Exhibit C Form of Guaranty
Exhibit D Form of Methodist Guaranty
v
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of the
1st day of March, 2006, by and between SAN JACINTO METHODIST HOSPITAL, a Texas
non-profit corporation ("Buyer"), and SAN JACINTO SURGERY CENTER, LTD., a Texas
limited partnership ("Seller"). Buyer and Seller are referred to collectively
herein as the "parties" or singularly as a "party."
W I T N E S S E T H:
WHEREAS, Seller owns and operates an ambulatory surgery center located at
0000 Xxxxxxxx, Xxxxxxx, Xxxxx (the "Surgery Center"); and
WHEREAS, Buyer desires to purchase from Seller substantially all of the
assets of Seller or Seller's affiliates that are associated with or used in the
operation of the Surgery Center in accordance with the terms and conditions of
this Agreement.
NOW, THEREFORE, for and in consideration of the mutual agreements,
covenants, representations and warranties herein contained, and for other good
and valuable consideration, the receipt and adequacy of which are forever
acknowledged, the parties agree as follows:
I. SALE OF ASSETS AND CERTAIN RELATED MATTERS
1.1 Sale and Transfer of the Assets. Upon the terms and subject to the
conditions of this Agreement, Seller agrees to sell, convey, transfer, assign
and deliver to Buyer, and Buyer agrees to purchase and accept from Seller at the
Closing (as hereinafter defined), all assets, real, personal and mixed, tangible
and intangible, other than the Excluded Assets (as hereinafter defined), owned,
leased or used by Seller or any affiliate thereof and associated with or
employed in the operation of the Surgery Center, including, without limitation,
the following items (collectively, the "Assets"): (i) leasehold title to, or
interest in, the real property described in Schedule 4.12 hereto, together with
all improvements, buildings, and fixtures located thereon or therein
(collectively, the "Leased Premises"); (ii) all major, minor or other equipment
(whether movable or attached to the Leased Premises), all computer equipment and
hardware, vehicles, furniture and furnishings, including, without limitation,
the equipment listed on Schedule 4.11 hereto, together with any and all rights
in and to all warranties of any manufacturer or vendor with respect thereto;
(iii) all inventory and supplies; (iv) current financial, patient, credentialing
and personnel records (including, without limitation, all equipment records,
medical/ administrative libraries, medical records, documents, catalogs, books,
records, files and operating manuals); (v) the interest of Seller in all
commitments, contracts, leases, and agreements outstanding in respect of the
Surgery Center which are described in Schedule 4.10 hereto and specifically
designated therein to be assumed by Buyer (collectively, the "Contracts"); (vi)
to the extent assignable, all licenses and permits held by Seller relating to
the ownership, development and operations of the Surgery Center that Buyer
determines are necessary; (vii) all patents and patent applications and all
logos, names, trade names, trademarks and service marks (or variations thereof)
associated with the Surgery Center, including, without limitation, the name "San
Jacinto Surgery Center" and all variants thereof; (viii) all computer software,
programs and similar systems owned by or licensed to Seller or its affiliates or
used in the operation of the Surgery Center; (ix) all insurance proceeds arising
in connection with damage to the Assets occurring prior to the Closing; (x)
Seller's goodwill in the Surgery Center; and (xi) Seller's interest in all
property, real, personal and mixed, tangible and intangible, arising or acquired
between the date hereof and Closing (other than the Excluded Assets). At
Closing, Seller shall convey good and marketable title to the Assets and all
parts thereof to Buyer free and clear of all liens, pledges, rights of first
refusal, options, restrictions, encumbrances, liabilities, claims, assessments,
security interests and defects in title.
1.2 Excluded Assets. Notwithstanding anything herein to the contrary, the
following assets that are associated with Seller's operation of the Surgery
Center are not intended by the parties to be a part of the Assets that are being
purchased by Buyer hereunder and shall be excluded from such purchase and the
definition of Assets (collectively, the "Excluded Assets"): (i) restricted and
unrestricted cash and cash equivalents, including, without limitation,
investments in marketable securities, certificates of deposit and bank accounts;
(ii) temporary investments; (iii) accounts receivable; (iv) all notes
receivable; (v) all intercompany accounts of Seller and any affiliate thereof;
(vi) all commitments, contracts, leases and agreements that are not listed on
Schedule 4.10 or that are listed on Schedule 4.10 and that are designated
therein as agreements that Buyer is not assuming, including, without limitation,
any and all agreements, whether oral or written, between Seller and third party
payers, including, without limitation, commercial managed care payers, under
which Seller receives payment from such payers (collectively, the "Excluded
Contracts"), (vii) Seller's Medicare and Medicaid supplier agreements and
supplier numbers associated therewith; and (viii) such other assets as are set
forth in Schedule 1.2(viii) hereto. All other assets owned, leased or used by
Seller or its affiliates and associated with or employed in the operation of the
Surgery Center, whether or not scheduled or described herein, are and shall be
included in the Assets to be conveyed to Buyer pursuant to this Agreement.
1.3 Interpretation. In this Agreement, unless the context otherwise
requires:
1.3.1 References to this Agreement are references to this Agreement and
to the Schedules and Exhibits hereto;
1.3.2 References to Articles and Sections are references to articles and
sections of this Agreement;
1.3.3 References to either party to this Agreement include references to
the respective successors and permitted assigns of such parties;
1.3.4 References to a judgment include references to any order, writ,
injunction, decree, determination or award of any court or tribunal;
1.3.5 References to a "Person" means any individual, corporation, body
corporate, association, partnership, limited liability company, firm, joint
venture, trust and governmental agency;
1.3.6 The terms "hereof," "herein," "hereby" and derivative or similar
words refer to this entire Agreement;
2
1.3.7 References to any document (including this Agreement) are
references to that document as amended, consolidated, supplemented, novated or
replaced by the parties from time to time;
1.3.8 References to any law are references to that law as of the Closing
Date, unless clearly indicated otherwise, and shall also refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise;
1.3.9 The word "including" means including, without limitation;
1.3.10 Nothing in the Schedules shall be deemed adequate to disclose an
exception to a representation or warranty herein unless the Schedule identifies
the exception with reasonable particularity and describes the relevant facts in
reasonable detail. Without limiting the generality of the foregoing, the mere
listing (or inclusion of a copy) of a document or other item shall not be deemed
adequate to disclose an exception to a representation or warranty made herein
(unless the representation or warranty has to do with the existence of the
document or other item itself);
1.3.11 Each representation, warranty and covenant contained herein has
independent significance. If any party hereto has breached any representation,
warranty or covenant contained herein in any respect, the fact that there exists
another representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which such party has not
breached shall not detract from or mitigate the fact that the party is in breach
of the first representation, warranty or covenant;
1.3.12 References to time are references to Central Standard or Daylight
time (as in effect on the applicable day) unless otherwise specified herein;
1.3.13 The word "affiliate" means, as to the Person in question, any
Person that directly or indirectly controls, is controlled by, or is under
common control with, the Person in question and any successors or assigns of
such Person; and
1.3.14 The term "control" means possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person whether through ownership of voting securities, by contract or otherwise.
1.4 Definitions. The terms listed below are defined elsewhere in this
Agreement and, for ease of reference, the Section containing the definition of
each such term set forth opposite such term.
Term Section
---- -------
AAAHC.................................................................4.9.3
affiliate............................................................1.3.13
Agreement.................................................Opening Paragraph
Assets..................................................................1.1
Assumed Liabilities.....................................................2.3
Balance Sheet Date....................................................4.7.1
3
Buyer.....................................................Opening Paragraph
Buyer's Indemnified Persons............................................11.1
CERCLA............................................................4.22.1(2)
Claim Notice.........................................................11.3.6
Closing.................................................................3.1
Closing Date............................................................3.1
CMS.....................................................................4.9
COBRA coverage.......................................................10.1.3
Code....................................................................2.2
Commonly Controlled Entity...........................................4.18.2
Confidentiality Agreement.............................................12.16
Contracts...............................................................1.1
control..............................................................1.3.14
disposal...............................................4.22.1(2). 4.22.1(2)
disposed..........................................................4.22.1(2)
Effective Time..........................................................3.1
Employee...............................................................10.5
Employee Benefit Plan.....................................................0
Environmental Condition...........................................4.22.1(4)
Environmental Law.................................................4.22.1(1)
ERISA.....................................................................0
Escrow Agreement........................................................2.6
Excluded Assets.........................................................1.2
Excluded Contracts......................................................1.2
Excluded Liabilities....................................................2.4
Family Member........................................................4.21.1
Financial Statements....................................................4.7
GAAP....................................................................4.7
General Partner.........................................................4.1
Good Faith Deposit......................................................2.6
Governmental Authority............................................4.22.1(3)
Guaranty...............................................................10.5
hazardous substance...............................................4.22.1(2)
Hazardous Substances..............................................4.22.1(2)
hereby................................................................1.3.6
herein................................................................1.3.6
hereof................................................................1.3.6
HIPAA..................................................................4.26
including.............................................................1.3.9
Indemnified Party....................................................11.3.1
Indemnifying Party.....................................................11.3
Indemnity Notice.....................................................11.3.7
Interested Person....................................................4.21.1
Leased Premises........................................................4.12
Losses.................................................................11.1
Methodist Guaranty.....................................................10.5
4
Notice Period........................................................11.3.1
parties...................................................Opening Paragraph
party.....................................................Opening Paragraph
Permits.................................................................4.8
Person................................................................1.3.5
Programs................................................................4.9
Purchase Price..........................................................2.1
RCRA..............................................................4.22.1(2)
Seller....................................................Opening Paragraph
Seller Employee Benefit Plan.........................................10.1.2
Seller Entities........................................................10.9
Seller's Indemnified Persons...........................................11.2
supplier................................................................4.9
Surgery Center.....................................................Recitals
tail end...............................................................6.10
Tax..................................................................4.16.1
Tax Returns..........................................................4.16.1
Taxes................................................................4.16.1
Third Party Claim....................................................11.3.1
Value of Accrued PTO....................................................2.1
II. FINANCIAL ARRANGEMENTS
2.1 Purchase Price. Subject to the terms and conditions hereof, in reliance
upon the representations and warranties of Seller herein set forth and as
consideration for the sale and purchase of the Assets as herein contemplated,
Buyer agrees to pay Seller an amount equal to Five Million Five Hundred Thousand
and No/100 Dollars ($5,500,000) (the "Purchase Price"). The Purchase Price shall
be paid as follows: (i) One Million Four Hundred Forty Thousand and No/100
Dollars ($1,440,000), which includes One Hundred Thousand and No/100 ($100,000)
of the Good Faith Deposit (as hereinafter defined), shall be paid at the
Closing; (ii) Eight Hundred Twelve Thousand and No/100 Dollars ($812,000) shall
be paid on the first, second, third, fourth and fifth anniversaries of the
Closing. At least five (5) business days prior to the Closing Date, Seller shall
deliver to Buyer a schedule that reflects sick leave benefits and accrued paid
time off and accrued vacation benefits of Seller's employees as of the Closing
Date. The amounts reflected in such schedule will be adjusted to eliminate any
such obligations in respect of employees of Seller who are not hired by Buyer as
of Closing (as adjusted, the "Value of Accrued PTO"). To the extent the Value of
Accrued PTO exceeds Ten Thousand and No/100 Dollars ($10,000), the Purchase
Price shall be reduced by the amount the Value of Accrued PTO exceeds Ten
Thousand and No/100 Dollars ($10,000). The Purchase Price represents the fair
market value of the Surgery Center as a going concern and the fair market value
of the Non-Compete Agreements, all as determined by the Value Management Group,
LLC, an independent third party appraiser, in its report dated January 13, 2006.
2.2 Allocation of the Purchase Price. The Purchase Price shall be allocated
among the various classes of Assets in accordance with and as provided by
Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code"), as
set forth in Schedule 2.2 hereto. The parties agree that any tax returns or
other tax information they may file or cause to be filed with any governmental
agency shall be prepared and filed consistently with such agreed upon
allocation. In this regard, the parties agree that, to the extent required, they
will each properly prepare and timely file a Form 8594 in accordance with
Section 1060 of the Code.
5
2.3 Assumed Liabilities. As of Closing, Buyer shall assume and agree to
pay, perform and discharge in accordance with their respective terms the
following liabilities of Seller in respect of the Surgery Center (collectively,
the "Assumed Liabilities"): (i) the obligations of Seller under the Contracts
(which shall include (a) that certain Anesthesia Services Agreement dated as of
March 14, 1997, by and between Xxxxx Xxxxxx, M.D., and Seller; (b) that certain
Equipment Lease Agreement dated as of May 6, 2003, by and between Xxxxx and
Nephew Capital and Seller; and (c) including, without limitation, that certain
Lease Agreement, originally dated as of January 27, 1997 (the "Lease Agreement")
by and between The Broadmoor at Chelsea Company, L.P. ("Landlord") and Seller
arising subsequent to the Closing Date, as amended to the satisfaction of Buyer;
(ii) obligations and liabilities of Seller as of Closing in respect of accrued
paid time off of employees of Seller or any affiliate thereof at the Surgery
Center who are hired by Buyer, but only to the extent included in Value of
Accrued PTO; (iii) obligations and liabilities of Seller as of Closing in
respect of sick leave or extended illness bank for employees of Seller or any
affiliate thereof at the Surgery Center who are hired by Buyer, but only to the
extent included in the Value of Accrued PTO; and (iv) ad valorem and personal
property or other taxes for the year in which the Closing occurs that are
prorated as of Closing.
2.4 Excluded Liabilities. Except as expressly provided to the contrary in
Section 2.3 hereof, Buyer shall not assume or be liable for and under no
circumstance shall Buyer be obligated to pay or assume, and none of the Assets
shall be or become liable for or subject to, any liability, whether fixed or
contingent, recorded or unrecorded, known or unknown, currently existing or
hereafter arising, including, without limitation, the following (collectively,
the "Excluded Liabilities"):
2.4.1 current liabilities or accounts payable, long-term liabilities and
all indebtedness and obligations or guarantees of Seller;
2.4.2 liabilities or obligations arising under the terms of the Medicare,
Medicaid, TRICARE, Blue Cross or other third party payor programs, including,
without limitation, any retroactive denial of claims and civil monetary
penalties;
2.4.3 liabilities or obligations arising from or in respect of any
claims alleging violations of the False Claims Act or qui tam actions
(regardless of whether the federal government has intervened) alleging
violations of federal law;
2.4.4 any obligation or liability accruing, arising out of, or relating
to any federal, state or local investigations of, or claims or actions against,
Seller or any of its affiliates or employees, medical staff, agents, vendors or
representatives with respect to acts or omissions occurring on or prior to the
Closing Date;
2.4.5 any federal, state or local tax liabilities or obligations,
including, without limitation, any income tax, any franchise tax, any tax
recapture, any sales and/or use tax, any real or personal property tax, any
state and local recording fees and taxes that may arise upon the consummation of
the transactions set forth herein, any FICA, FUTA or workers' compensation taxes
and any and all other taxes or amounts due and payable as a result of the
exercise by any of Seller's employees of such employees' right to vacation, sick
leave and holiday benefits (except to the extent included in the Value of
Accrued PTO);
6
2.4.6 liability for any and all claims by or on behalf of employees,
liabilities or obligations arising out of or associated with any Employee
Benefit Plan (as hereinafter defined), liability of or for any EEOC claim, wage
and hour claim, unemployment compensation claim or workers' compensation claim
and liability for all employee wages and benefits, including, without
limitation, accrued vacation, sick leave, holiday pay, severance pay and related
taxes or other liability related thereto (except to the extent included in the
Value of Accrued PTO);
2.4.7 liabilities or obligations arising out of any breach of any
contract, commitment or agreement;
2.4.8 liabilities or obligations arising under the Excluded Contracts;
2.4.9 liabilities arising from or related to any assignment of any
Contract to Buyer;
2.4.10 any liability arising out of or in connection with the operation
of the Surgery Center prior to and including the Closing Date;
2.4.11 any liability arising out of or in connection with claims for
acts or omissions which allegedly occurred on or prior to the Closing Date,
including, without limitation, all malpractice and general liability claims,
whether or not same are disclosed in Schedule 4.15 hereto, pending, threatened,
known or unknown;
2.4.12 liabilities or obligations in respect of any credit balance
accounts or to refund amounts previously collected to any patient, third party
payor or the State of Texas;
2.4.13 liabilities arising from or in connection with (i) any
administrative ruling or other order, stipulation or decree of any federal,
state or local agency or (ii) the violation of any federal, state or local act,
statute, rule or regulation, decree or ordinance, Medicare or Medicaid program
integrity or compliance agreement either involving Seller or relating to or
arising in connection with the use, operation, ownership or possession of any of
the Surgery Center or the use, operation, ownership or possession of any of the
Assets prior to and including the Closing Date;
2.4.14 any violation of an Environmental Law (as hereinafter defined)
with respect to the operation of the Surgery Center that occurred prior to
Closing; and
2.4.15 any debt, obligation, expense or liability arising out of or
incurred as a result of any transaction in respect of the Surgery Center which
occurred prior to Closing or for any violation by Seller of any law, regulation
or ordinance at any time.
7
2.5 Proration. Seller and Buyer shall prorate as of the Closing Date, any
amounts which become due and payable after the Closing Date which are
attributable to services received or taxes associated with the period prior to
Closing and any amounts which were paid prior to the Closing Date which are
attributable to services to be received or taxes associated with the period
subsequent to Closing with respect to (i) the Contracts; (ii) ad valorem or
personal property taxes on the Assets; (iii) rent due under the Lease Agreement;
and (iv) all utilities servicing any of the Assets, including, without
limitation, water, sewer, telephone, electricity and gas service.
2.6 Good Faith Deposit. Buyer has previously deposited with Amegy Bank (the
"Escrow Agent") a good faith deposit in the amount of One Hundred Thousand and
No/100 Dollars ($100,000) (the "Good Faith Deposit"), which amount is being held
by the Escrow Agent in accordance with that certain Escrow Agreement dated as of
December 22, 2005, between and among Seller, Buyer and the Escrow Agent ("Escrow
Agreement"), a copy of which is attached hereto as Exhibit A. Upon consummation
of the transactions described herein, Seller and Buyer will instruct the Escrow
Agent to disburse the Good Faith Deposit to Seller at Closing. If the
transaction set forth in this Agreement is not consummated, Seller and Buyer
will instruct the Escrow Agent to disburse the Good Faith Deposit to Seller,
unless the transaction is not consummated due to the non-fulfillment of the
conditions set forth in the following Sections of this Agreement: 8.1, 8.3, 8.5,
8.6, 8.9, 8.15, or 8.16, in which event Buyer shall have the right to instruct
the Escrow Agent to disburse the Good Faith Deposit to Buyer.
III. CLOSING
3.1 The Closing. Subject to the satisfaction or waiver by the appropriate
party of all of the conditions precedent to Closing specified in Articles VIII
and IX hereof, the consummation of transactions contemplated by and described in
this Agreement (the "Closing") shall take place at the offices of Xxxxxx &
Xxxxxx L.L.P., 0000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxx, at 10:00 a.m. local time on
February 28, 2006, or at such later date or at such other location as the
parties may mutually designate in writing (the "Closing Date"). The Closing
shall be effective as of 12:00:01 a.m. on the day after the Closing Date (the
"Effective Time"). If the conditions precedent to the obligations of Buyer
specified in Article VIII hereof have not been satisfied on or prior to February
28, 2006, the Closing Date shall be on the next business day after the last of
all conditions precedent specified in Article VIII hereof have been satisfied,
to be effective as of 12:00:01 a.m. on the following day; provided, however,
that the Closing Date shall not be later than March 31, 2006.
3.2 Actions of Seller at the Closing. At the Closing and unless otherwise
waived in writing by Buyer, Seller shall deliver to Buyer the following:
3.2.1 An Assignment and Assumption of Lease Agreement, fully executed by
Seller, assigning Seller's Interest under the Lease Agreement to Buyer;
3.2.2 An Amendment to the Lease Agreement, fully executed by the
Landlord, amending, inter alia, the rental amount due under the Lease Agreement
and providing Buyer with an option to purchase the Leased Premises;
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3.2.3 A Consent and Estoppel Certificate, in form and substance
reasonably satisfactory to Buyer, fully executed by the Landlord, pursuant to
which, inter alia, the Landlord consents to the assignment of the Lease
Agreement to Buyer and Buyer's assumption of same;
3.2.4 A Subordination and Non-Disturbance Agreement, in form and
substance satisfactory to Buyer, fully executed by the Landlord's mortgagee;
3.2.5 A Power of Attorney, fully executed by Seller, authorizing Buyer
to utilize Seller's federal and state controlled substances permits;
3.2.6 A Xxxx of Sale, fully executed by Seller, transferring good and
marketable title to all tangible and intangible assets constituting the Assets,
including, without limitation, any leasehold improvements;
3.2.7 An Assignment of Contracts and Assumption of Liabilities, fully
executed by Seller, assigning all right, title and interest of Seller in and to
the Contracts to Buyer;
3.2.8 A Non-Competition Agreement, fully executed by each of the equity
holders of Seller (or, if appropriate, each individual who controls an equity
holder of Seller), in substantially the form attached hereto as Exhibit B;
3.2.9 Termination of security interests held by, and bills of sale from,
the lessors under all capitalized leases to which Seller is a party (all of
which capitalized leases are described in Schedule 3.2.9 hereof);
3.2.10 Copies of the Certificate of Limited Partnership and Limited
Partnership Agreement of Seller, certified as true and of full force as of the
Closing Date by an appropriate officer of the General Partner (as hereinafter
defined);
3.2.11 Copies of resolutions duly adopted by the partners of Seller
authorizing and approving Seller's performance of the transactions contemplated
hereby and the execution, delivery and performance of this Agreement and the
documents described herein to which it is a party, certified as true and of full
force as of the Closing Date by an appropriate officer of the General Partner;
3.2.12 Copies of resolutions duly adopted by the partners of Seller
authorizing Seller's instructions to Buyer with respect to payment of the
Purchase Price and in accordance with Section 10.11 herein, certified as true
and of full force as of the Closing Date by an appropriate office of the General
Partner;
3.2.13 Certificates of incumbency for the respective officers of the
General Partner executing this Agreement or executing and delivering documents
or making certifications at Closing dated as of Closing;
3.2.14 Certificates of existence and good standing of Seller and Orion
HealthCorp, Inc., from the States of Texas and Delaware, each dated the most
recent practical date prior to the Closing Date; and
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3.2.15 Such other instruments and documents as Buyer or Buyer's counsel
reasonably deems necessary to effect the transactions contemplated hereby,
including, without limitation, consents to assignment and estoppel certificates
from such parties as Buyer may require.
3.3 Actions of Buyer at the Closing. At the Closing and unless otherwise
waived in writing by Seller, Buyer shall deliver to Seller the following:
3.3.1 The portion of the Purchase Price specified in Section 2.1 above;
3.3.2 An Assignment and Assumption of Lease Agreement, fully executed by
Buyer, pursuant to which Buyer shall assume Seller's future obligations under
the Lease Agreement;
3.3.3 An Amendment to the Lease Agreement, fully executed by Buyer,
amending, inter alia, the rental amount due under the Lease Agreement and
providing Buyer with an option to purchase the Leased Premises;
3.3.4 An Assignment of Contracts and Assumption of Liabilities, fully
executed by Buyer, pursuant to which Buyer shall assume the Assumed Liabilities;
3.3.5 Copies of resolutions duly adopted by the board of directors of
Buyer authorizing and approving its performance of the transactions contemplated
hereby and the execution, delivery and performance of this Agreement and the
documents described herein to which it is a party, certified as true and of full
force as of the Closing Date by an appropriate officer of Buyer;
3.3.6 Certificates of incumbency for the respective officers of Buyer
executing this Agreement or executing and delivering documents or making
certifications at Closing dated as of Closing;
3.3.7 Certificates of existence and good standing of Buyer from the
State of Texas, each dated the most recent practical date prior to the Closing
Date; and
3.3.8 Such other instruments and documents as Seller or Seller's counsel
reasonably deems necessary to effect the transactions contemplated hereby.
IV. REPRESENTATIONS AND WARRANTIES OF SELLER
As of the date hereof and as of the Closing Date, Seller hereby represents
and warrants to Buyer that the following facts and circumstances are and, except
as contemplated hereby, at all times up to the Closing Date will be true and
correct, and hereby acknowledges that such facts and circumstances constitute
the basis upon which Buyer has been induced to enter into and perform its
obligations under this Agreement:
4.1 Corporate Capacity. Seller is a limited partnership duly organized and
validly existing under the laws of the State of Texas. The general partner of
Seller, Baytown SurgiCare, Inc. (the "General Partner"), is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas. Each of Seller and the General Partner is duly authorized, qualified and
licensed under all applicable laws, regulations, ordinances and orders of
governmental authorities having jurisdiction over the operations of the Surgery
Center, to own its properties and conduct its business in the place and in the
manner now conducted.
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4.2 Authorization of the Transaction. Seller has requisite power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder, and to conduct its business as now being conducted.
4.3 Noncontravention. The execution, delivery and performance of this
Agreement by Seller and all other agreements referenced herein to which Seller
is to become a party at Closing, and the consummation of the transactions
contemplated hereby:
4.3.1 are within the limited partnership power of Seller, do not
contravene the terms of the Certificate of Limited Partnership or the Limited
Partnership Agreement, as amended, of Seller and have been approved by all
requisite partner action;
4.3.2 do not require Seller to obtain any approval or consent of, or
make any filing with, any governmental agency or authority bearing on the
validity of this Agreement which is required by law or the regulations of any
such agency or authority;
4.3.3 will neither conflict with, nor result in any breach or
contravention of, nor permit the acceleration of the maturity of the Assumed
Liabilities, or the creation of any lien under, any commitment, contract, lease,
indenture, agreement or understanding to which Seller is a party or by which
Seller is bound;
4.3.4 will not violate any statute, law, rule or regulation of any
governmental authority to which Seller, the Surgery Center or the Assets may be
subject; and
4.3.5 will not violate any judgment of any court or governmental
authority to which Seller or the Assets may be subject.
4.4 Binding Effect. This Agreement and all other agreements to which Seller
will become a party hereunder are and will constitute the valid and legally
binding obligation of Seller and are and will be enforceable against Seller in
accordance with the respective terms hereof and thereof, except as
enforceability against Seller may be restricted, limited or delayed by
applicable bankruptcy, insolvency or other laws affecting creditors' rights and
debtors' relief generally and except as enforceability may be subject to general
principles of equity.
4.5 Brokers and Finders Fees. Seller has no liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which Buyer could become liable
or obligated.
4.6 No Subsidiaries/Beneficial Owner.
4.6.1 Seller does not have any subsidiaries or any investment in any
other entity.
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4.6.2 Set forth in Schedule 4.6.2 hereof is a list of the equity holders
of Seller and a list of each individual who holds, directly or indirectly, any
interest in each equity holder of Seller or the General Partner. There are no
contracts, commitments, understandings or arrangements relating to the issuance,
sale or transfer of any securities of Seller or any partner of Seller. There are
no options, warrants, preemptive rights, calls, subscriptions, convertible
securities or other rights agreements or commitments that obligate Seller or any
partner of Seller to issue, transfer or sell any securities of any Seller or any
partner of Seller.
4.7 Financial Statements. Seller has delivered to Buyer copies of the
following financial statements (and together with the financial statement
described in Section 6.5 hereof, collectively, the "Financial Statements"),
which Financial Statements are maintained on an accrual basis, copies of which
are attached hereto as Schedule 4.7:
4.7.1 Unaudited Balance Sheet dated as of December 31, 2005 (the
"Balance Sheet Date");
4.7.2 Unaudited Income Statement for the twelve (12) month period ended
on the Balance Sheet Date;
4.7.3 Statement of Cash Flows for the twelve (12) month period ended on
the Balance Sheet Date; and
4.7.4 Unaudited Balance Sheet and Income Statement for the fiscal year
ended on December 31, 2004.
The Financial Statements dated as of November 30, 2005, were delivered to
Value Management Group, LLC, for use in its fair market value appraisal of the
Surgery Center. The Financial Statements have been prepared in accordance with
generally accepted accounting principles ("GAAP"), applied on a consistent basis
throughout the periods indicated. The Financial Statements are true, complete
and accurate. The Balance Sheets present fairly the financial condition of
Seller as of the dates indicated thereon, and the Income Statements and
Statements of Cash Flows present fairly the results of operations and cash flow
of Seller for the periods indicated thereon. Since the Balance Sheet Date, there
have occurred no material adverse changes in the financial condition, results of
operations or business of Seller as reflected in such Financial Statements,
other than changes in the ordinary and regular course of business that have not
had any material adverse affect on the financial condition, results of
operations or business of Seller.
4.8 Licenses and Permits. Seller holds all licenses, permits and approvals
(collectively, the "Permits") granted by any governmental entity that are
necessary or required by law, including Environmental Laws (as hereinafter
defined), for the ownership, use and operation of the Surgery Center, the
business of the Surgery Center and the ownership or occupation of the Leased
Premises. The Surgery Center is licensed by the Texas Department of State Health
Services as an ambulatory surgical center and is authorized to operate four (4)
surgical suites and two (2) procedure rooms by the Texas Department of State
Health Services. The Surgery Center's pharmacies, laboratories and all other
ancillary departments located at the Surgery Center or operated for the benefit
of the Surgery Center which are required to be specially licensed are duly
licensed by the appropriate licensing agencies. There are no provisions in, or
agreements relating to, any of the Permits that would preclude or limit Seller
from continuing to operate the Surgery Center as currently operated. Each of the
Permits is in full force and effect and no event has occurred that constitutes,
or that with the giving of notice or the passage of time or both would
constitute, a default by Seller or, to the best of Seller's knowledge, any other
Person under any of such Permits. All fees and other payments due and owing in
connection with such Permits have been paid in full and in a timely manner so as
to prevent any lapse or revocation thereof. Attached hereto as Schedule 4.8 is
an accurate list and summary description of all Permits, all of which are now
and as of Closing will be in good standing and not subject to meritorious
challenge. Seller has no knowledge of any fire code violations in the Surgery
Center. Seller has cured all deficiencies noted in the most recent state
licensing report and the most recent fire marshal survey for the Surgery Center.
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4.9 Medicare and Medicaid Participation/Accreditation.
4.9.1 Seller is eligible to receive payment under Titles XVIII and XIX
of the Social Security Act and is a "supplier" under existing supplier
agreements with the Medicare and Medicaid programs (the "Programs") through the
applicable intermediaries. Seller is in compliance with the conditions of
participation in the Programs, and Seller has received all approvals or
qualifications necessary for capital reimbursement on the Assets. There is not
pending, nor to the best of Seller's knowledge threatened, any proceeding or
investigation under the Programs involving Seller or the Surgery Center. There
are no claims, actions or appeals pending (and Seller has not filed any claims
or reports that should result in any such claims, actions or appeals) before any
commission, board or agency, including, without limitation, any fiscal
intermediary or carrier or the Administrator of the Centers for Medicare &
Medicaid Services ("CMS"), with respect to any state or federal Medicare or
Medicaid claims filed on behalf of Seller on or before the date hereof. No
validation review or program integrity review related to the Surgery Center, the
operation thereof, or the consummation of the transactions contemplated herein,
has been conducted by any commission, board or agency in connection with the
Programs, and to the best of Seller's knowledge, no such reviews are scheduled,
pending or threatened against or affecting the Surgery Center, or any of the
Assets, or the consummation of the transactions contemplated hereby.
4.9.2 All billing practices of Seller with all third party payors,
including the Programs, the TRICARE program and private insurance companies, are
and have been in material compliance with all applicable laws and/or billing
guidelines of the Programs, the TRICARE program and all other third party
payors. Seller has not knowingly billed or received any payment or reimbursement
in excess of amounts allowed by law or contract.
4.9.3 The Surgery Center is duly accredited, with no contingencies, by
the American Association of Ambulatory Health Care ("AAAHC") for the three (3)
year period ending on September 7, 2007. Seller has previously provided Buyer
with true and correct copies of the most recent state licensure, Medicare,
Medicaid, AAAHC or other accreditation survey reports and licensing reports and
all plans of correction which Seller was required to submit in response to such
survey and licensing reports. Seller has corrected any deficiencies noted
therein.
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4.10 Agreements and Commitments. Attached hereto as Schedule 4.10 is a true
and complete list of all commitments, contracts, leases and agreements, whether
written or oral, that relate to or may affect the Surgery Center or the
operation thereof, to which Seller is a party or by which Seller or the Assets
are bound (including, without limitation, agreements with physicians or
physician groups, agreements with health maintenance organizations, preferred
provider organizations or other alternative delivery systems, joint venture or
partnership agreements, employment agreements, contracts, tenant leases,
equipment leases, equipment maintenance agreements, agreements with
municipalities and labor organizations, loan agreements, bonds, mortgages, liens
or other security agreements). Seller has delivered true and correct copies of
all such commitments, contracts, leases and agreements to Buyer. Schedule 4.10:
(i) conspicuously identifies all such commitments, contracts, leases and
agreements that contain a noncompetition covenant or an exclusive arrangement
and a description of such covenant or arrangement; (ii) accurately identifies
all parties to all such commitments, contracts, leases and agreements and, where
applicable, specifies the relationship of each such party to Seller and the
General Partner and each of their respective partners, directors, officers, or
other affiliates; (iii) clearly describes all such commitments, contracts,
leases and agreements that require consent to the assignment to and assumption
by Buyer; and (iv) conspicuously identifies those commitments, contracts, leases
and agreements that Buyer will assume and those that Buyer will not assume. The
Contracts constitute valid and legally binding obligations of the parties
thereto and are enforceable in accordance with their terms. All obligations
required to be performed under the terms of the Contracts have been performed,
no act or omission has occurred or failed to occur which, with the giving of
notice, the lapse of time or both would constitute a default under or breach of
any Contract and each of such Contracts is now, and will be upon and immediately
after the Closing, in full force and effect without default or breach on the
part of any party thereto. Seller has not received notice to the effect that,
nor does Seller have any knowledge that, any party to any of the Contracts
intends to cancel, terminate or amend any of the Contracts or to exercise or not
exercise any outstanding options under any of the Contracts.
4.11 Equipment. Attached as Schedule 4.11 hereto is a depreciation schedule
as of the Balance Sheet Date, which lists all the equipment associated with, or
constituting any part of, the Surgery Center. Such equipment constitutes all
equipment necessary for Seller to operate the Surgery Center in the manner
currently operated. Since the Balance Sheet Date, Seller has not sold or
otherwise disposed of any item of equipment having a replacement cost in excess
of $500.00 associated with, or constituting any part of, the Surgery Center
except in the ordinary course of business with comparable replacement. All of
the equipment, whether reflected in the Financial Statements or otherwise, is
well maintained and in good operating condition, except for reasonable wear and
tear, has been operated and maintained in the ordinary course of business
consistent with manufacturers' warranties and prudent industry standards and is
in suitable and adequate condition for use consistent with past practices and
prudent industry standards. Seller holds good and marketable title to the
equipment listed on Schedule 4.11 and all of such equipment is, or as of Closing
will be, free and clear of any lien or security interest or other encumbrance.
No Person other than Seller owns any equipment or other tangible assets situated
on the Leased Premises except for items leased to Seller and disclosed in
Schedule 4.10.
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4.12 Leased Premises. Attached hereto as Schedule 4.12 is a true and
complete copy of the Lease Agreement. Except as provided in Schedule 4.12, the
Lease Agreement has not been amended or modified. The Lease Agreement
constitutes a valid and legally binding obligation of Seller (and to Seller's
knowledge, the Landlord) and is enforceable against Seller (and to Seller's
knowledge, the Landlord) in accordance with its terms. All obligations required
to be performed by Seller, and to Seller's knowledge, the Landlord, under the
Lease Agreement, have been performed in all material respects, and to Seller's
knowledge, no act or omission has occurred or failed to occur which, with the
giving of notice, the lapse of time or both would constitute a default under or
breach of the Lease Agreement. The Lease Agreement is in full force and effect
without default or breach on the part of the Seller, or to Seller's knowledge,
the Landlord. Attached hereto as Schedule 4.12 is a description of the building
and premises that Seller occupies under the Existing Lease Agreement. Except as
provided in Schedule 4.12, all leasehold improvements and build-out of the
Leased Premises have been made and are in compliance with all applicable law,
including, without limitation, the Americans with Disabilities Act of 1990, as
amended, and all rules and regulations promulgated thereunder. There are no
claims outstanding with respect to the labor or materials furnished with respect
to any such improvements. The build-out of the Leased Premises, and the manner
in which the equipment is housed within the Leased Premises, satisfies the
technical specifications required or suggested by the manufacturer of any
equipment located within the Surgery Center that are necessary for such
equipment to perform the functions for which it is intended, at the levels,
capacity and technical efficiency and competency for which it is designed,
without distortion or ambiguity. The Leased Premises are in good condition and
working order, and adequate for the continuation of operations of the Surgery
Center as presently conducted therein.
4.13 Other Property. Seller owns and holds good and marketable title to all
tangible assets, personal or mixed and valid title to all intangible assets
associated with or employed in the operation of the Surgery Center or located on
the Leased Premises, and at Closing, Seller will convey to Buyer good and
marketable title to the Assets, subject to no mortgage, lien, pledge, security
interest, conditional sales agreement, right of first refusal, option,
restriction, liability, encumbrance, charge or defect, except for taxes not yet
due and payable.
4.14 Insurance. Schedule 4.14 sets forth a true and complete list of all
insurance policies or self-insurance funds of any nature whatsoever maintained
by Seller as of the date hereof covering the ownership and operation of the
Surgery Center, which Schedule reflects the policy numbers, terms, identity of
insurers, amounts and coverage. All of such policies are now and will be until
Closing in full force and effect on a claims made basis with no premium
arrearages. Except as set forth in Schedule 4.14, there is not outstanding any
requirement or recommendation by any insurance company that issued any such
policy or by any Board of Fire Underwriters or other similar body exercising
similar functions or by any governmental authority exercising similar functions
that requires or recommends any repairs or other work to be done or with respect
to the Surgery Center. Seller has given to its insurer in a timely manner all
notices required to be given under its insurance policies with respect to all
claims and actions covered by insurance, and no insurer has denied coverage of
any such claims or actions or reserved its rights in respect of or rejected any
with such claims. Except as set forth in Schedule 4.14, Seller has not as of the
date hereof (i) received any notice or other communication from any such
insurance company canceling or materially amending any of said insurance
policies, and no such cancellation or amendment is threatened, or (ii) failed to
give any required notice or present any claim that is still outstanding under
any of said policies.
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4.15 Litigation or Proceedings. Attached hereto as Schedule 4.15 is an
accurate list of all litigation or proceedings relating to or involving the
Surgery Center or to which Seller is a party. Except to the extent set forth in
Schedule 4.15 hereto, there are no claims, actions, suits, proceedings or
investigations pending or affecting or, to the best of Seller's knowledge,
threatened against, Seller or the Surgery Center, at law or in equity, or before
or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality wherever located. No event
has occurred or circumstance exists that would reasonably be expected to give
rise to or serve as the basis for the commencement of any action, suit or
proceeding against Seller or the Surgery Center. Seller has not received any
notice that Seller or any partner of Seller or any individual who holds a direct
or indirect equity interest in a partner of Seller is the target of any
investigation or proceeding by any federal, state or local governmental
authority. To the knowledge of Seller no such investigation or proceeding is
pending or threatened.
4.16 Taxes and Tax Status.
4.16.1 Seller has within the time and in the manner prescribed by law,
filed or properly requested extensions for all federal, state and local tax and
other information returns and reports ("Tax Returns") required to be filed by it
and has collected and remitted all payroll taxes required by federal and state
law, and, if required, has paid in full or made adequate provisions for the
payment of all taxes (including, without limitation, income, franchise, sales
and use, excise, severance, property, gross receipts and payroll taxes, together
with any interest, penalties, assessments or deficiencies, hereinafter referred
to collectively as "Taxes" or singularly as a "Tax"), for all periods ending on
or before the date hereof and on or before the Closing Date. All such Tax
Returns are and will be true, correct and complete in all material respects and
in compliance in all material respects with the laws, rules and regulations
applicable to such Tax Returns. Except as disclosed in Schedule 4.16.1 hereto,
Seller is not a party to, or as of the Closing Date will not be a party to, any
action or proceeding by a government authority for the assessment or collection
of Taxes that may adversely affect the Surgery Center or affect future rights in
or use of the Surgery Center, and no such claim against Seller for additional
Taxes, penalties or interest is or, as of the Closing Date will be, pending or
threatened.
4.16.2 Seller has provided Buyer with copies of Seller's federal and
state income Tax Returns and information statements for each of the three (3)
fiscal years ended December 31, 2002, 2003 and 2004.
4.16.3 There are no state or local Taxes on real or personal property
due and payable with respect to Assets.
4.17 Employee Relations.
4.17.1 Schedule 4.17.1 attached to this Agreement contains a current,
correct and complete list of the names and current hourly wage, monthly salary
and other compensation of all employees who provide services in respect of the
Surgery Center, together with a summary (containing estimates to the extent
necessary) of each individual's existing bonuses, additional compensation and
other benefits (whether current or deferred), if any, accrued, paid or payable
to each such person for services rendered or to be rendered through the fiscal
period ending January 31, 2006. Except as set forth in Schedule 4.17.1, all of
Seller's employees are "at will" employees. Except as set forth in Schedule
4.17.1, Seller is not a party to any written: (i) employment agreement; or (ii)
agreement that contains any severance or termination pay obligations, with any
employee. Seller has delivered true and correct copies (or, if not written,
accurate descriptions of the parties and terms) of such employment agreements to
Buyer prior to the Closing.
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4.17.2 The employee relations of Seller are good and there is no pending
or, to the best of Seller's knowledge, threatened employee strike, work stoppage
or labor dispute. No union representation question exists respecting any
employees of Seller, no collective bargaining agreement exists or is currently
being negotiated by Seller, no demand has been made for recognition by a labor
organization by or with respect to any employees of Seller and to the best of
Seller's knowledge, no union organizing activities by or with respect to any
employees of Seller are taking place, and none of the employees of Seller is
represented by any labor union or organization. There is no unfair practice
claim against Seller before the National Labor Relations Board. Seller is in
compliance with all federal and state laws respecting employment and employment
practices, terms and conditions of employment, wages and hours. Seller is not
engaged in any unfair labor practices. Except as set forth in Schedule 4.17.2
hereto, there are no pending or, to the best of Seller's knowledge, threatened
EEOC claims, wage and hour claims, unemployment compensation claims, workers'
compensation claims or the like.
4.18 Employee Benefit Plans.
4.18.1 For purposes of this Agreement, "Employee Benefit Plan" shall
mean (i) each employee benefit plan within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
including, without limitation, any such employee benefit plan that is exempt
from some or all of the provisions of ERISA; and (ii) each (a) personnel policy,
(b) stock option plan, (c) collective bargaining agreement, (d) bonus plan or
arrangement, (e) workers' compensation arrangement, (f) incentive award plan or
arrangement, (g) vacation policy, (h) severance pay plan, policy, or agreement,
(i) deferred compensation agreement or arrangement, (j) executive compensation
or supplemental income arrangement, (k) consulting agreement, (l) employment
agreement and (m) other employee benefit plan, agreement, arrangement, program,
practice or understanding, that is sponsored, maintained, agreed to, or
contributed to by Seller or any Commonly Controlled Entity (as hereinafter
defined) for the benefit of the employees, former employees, independent
contractors, or agents of Seller or any Commonly Controlled Entity or has been
so sponsored, maintained, agreed to, or contributed to at any time within six
(6) years prior to Closing. Schedule 4.18.1 provides a list of each current
Employee Benefit Plan.
4.18.2 Neither Seller, the General Partner nor any corporation, trade,
business or entity under common control with Seller or the General Partner
within the meaning of Section 414(b), (c), (m) or (o) of the Code or Section
4001 of ERISA (a "Commonly Controlled Entity") contributes to or has an
obligation to contribute to, nor has Seller, the General Partner or any Commonly
Controlled Entity at any time within six (6) years prior to the Closing Date
contributed to or had an obligation to contribute to, either (i) a
multi-employer plan within the meaning of Section 3(37) of ERISA, (ii) any plan
subject to Title IV of ERISA or (iii) any defined benefit pension plan.
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4.18.3 All obligations, whether arising by operation of law or by
contract, required to be performed with respect to the Employee Benefit Plans
have been timely performed, and there have been no defaults, omissions, or
violations by any party with respect to the Employee Benefit Plans, and each
Employee Benefit Plan has been administered in compliance with its governing
documents and all applicable law.
4.19 Post-Balance Sheet Results. Since the Balance Sheet Date, there has
not been:
4.19.1 Any material adverse change in the financial condition, assets,
liabilities (contingent or otherwise), working capital reserves, income or
business of Seller or the Surgery Center;
4.19.2 Any damage, destruction or loss (whether or not covered by
insurance) affecting the Surgery Center;
4.19.3 Any increase in the compensation payable or to become payable by
Seller to any of its employees or agents, or any bonus payment or arrangement
made to or with any employees or agents, except in the ordinary and regular
course of the business of Seller in accordance with existing personnel policies;
4.19.4 Any labor dispute, law or regulation or any event or condition of
any character adversely affecting the business of Seller;
4.19.5 Any sale, assignment, transfer or disposition of any of the
Assets having a value in excess of $500.00, except in the ordinary and regular
course of the business of Seller with comparable replacement thereof;
4.19.6 Any capital expenditures made having a value in excess of
$500.00, except in the ordinary and regular course of the business of Seller;
4.19.7 The incurrence of any liability or obligation of any nature
(whether absolute, accrued, contingent or otherwise), except in the ordinary and
regular course of the business of Seller;
4.19.8 The payment, discharge or satisfaction of any liability or
obligation (whether absolute, accrued, contingent or otherwise), other than by
payment, discharge or satisfaction in the ordinary and regular course of the
business of Seller;
4.19.9 The imposition of any mortgage, pledge, lien, security interest,
encumbrance or restriction on the Assets;
4.19.10 The cancellation or waiver of any rights in respect of the
Assets, except in the ordinary and regular course of the business of Seller;
4.19.11 Any change in any method of accounting or accounting practice;
4.19.12 Other than compensation paid in the ordinary and regular course
of employment, the payment of any amount to, or the payment of any amount on
behalf of, or the sale of any Assets to, or the entering into of any agreement
or arrangement with, any Interested Person (as hereinafter defined) or Family
Member (as hereinafter defined);
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4.19.13 Any incurring or assumption of indebtedness by Seller for
borrowed money, any guarantee of Seller, directly or indirectly, of indebtedness
or others, except in the ordinary and regular course of the business of Seller;
4.19.14 Payment of any amount to any federal, state or local government
or authority or any other third party for any claim, obligation, liability,
loss, damage or expenses, of whatever kind or nature, incurred or imposed or
based upon any provision of federal, state or local law or regulations or common
law pertaining to environmental protection; or
4.19.15 The initiation or prosecution of any transaction by Seller
outside the ordinary and regular course of business that may cause a liability
or obligation in excess of $5,000.00.
4.20 Payments. Neither Seller, the General Partner nor anyone acting on
behalf of any of them, has, directly or indirectly, paid or delivered or agreed
to pay or deliver any fee, commission or other sum of money or item of property,
however characterized, to any Person, government official or other party that is
in any manner related to the businesses of the Surgery Center that is illegal or
improper under any federal, state or local law.
4.21 Certain Affiliate Transactions. Except as conspicuously disclosed in
Schedule 4.10 hereto, Seller represents and warrants the following:
4.21.1 No partner, officer, director, member or employee or other
affiliates of either Seller, any partner of Seller, any equity holder of a
partner of Seller ("Interested Person") and no member of the immediate family of
an Interested Person ("Family Member"), directly or indirectly: (i) owns any
interest in any corporation, partnership, proprietorship or other entity that
sells to or purchases from Seller or the Surgery Center products or services;
(ii) has any cause of action or claim whatsoever against Seller or the Surgery
Center; or (iii) holds a beneficial interest in any contract or agreement
relating to the Surgery Center to which Seller is a party or by which Seller may
be bound;
4.21.2 Seller is not indebted, either directly or indirectly, to any
Interested Person or Family Member in any amount whatsoever relating to the
Surgery Center, other than current obligations for payments of salaries, bonuses
and other fringe benefits for past services rendered; and
4.21.3 No Interested Person or Family Member is indebted to Seller.
4.22 Environmental Matters
4.22.1 For purposes of this Agreement, the terms listed below shall have
the following meanings:
(1) "Environmental Law" shall mean any and all laws, statutes,
ordinances, rules, regulations, orders or determinations of any Governmental
Authority pertaining to health or the environment, whether now in existence or
hereafter enacted and in effect at the time of Closing.
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(2) "Hazardous Substances" has the meaning specified in the federal
Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA")
and shall include, without limitation, infectious waste material, medical waste,
human tissue, syringes, needles and any materials contaminated with bodily
fluids of any type, character or nature, and the term "disposal" (or "disposed")
has the meaning specified in the federal Resource Conservation Recovery Act
("RCRA"); provided, however, that to the extent the applicable laws, ordinances,
rules, regulations or common law of the State of Texas establish a meaning for
"hazardous substance," or "disposal" that is broader than that specified in
either CERCLA or RCRA, such broader meaning shall apply.
(3) "Governmental Authority" includes the United States, the state,
county, city and political subdivisions in which the Surgery Center is located
or that exercise jurisdiction over the Surgery Center, and any agency, court,
department, commission, board, bureau or instrumentality of any of them that
exercises jurisdiction over the Surgery Center.
(4) "Environmental Condition" shall mean any violation of any
Environmental Law relating to the transportation, storage, use, handling, or
disposal of Hazardous Substances by or in connection with the operation of the
Surgery Center.
4.22.2 Except as disclosed in Schedule 4.22.2 hereto, Seller represents
and warrants the following:
(1) The operations of the Surgery Center are and have been in
compliance in all material respects with applicable Environmental Law;
(2) Neither Seller nor the Surgery Center is subject to any existing,
pending, or to the best of Seller's knowledge, threatened action, suit,
investigation, inquiry or proceeding by or before any Governmental Authority
under any Environmental Law;
(3) All notices, permits, licenses or similar authorizations, if any,
required to be obtained or filed by Seller under any Environmental Law in
connection with the operations of the Surgery Center, including, without
limitation, those relating to the transportation, storage, use, handling, or
disposal of a Hazardous Substance, have been duly obtained or filed and Seller
is in compliance in all material respects with the terms and conditions of all
such notices, permits, licenses and similar authorizations; and
(4) Seller has not: (a) entered into or been subject to any consent
decree, compliance order or administrative order with respect to the operation
of the Surgery Center; or (b) received any request for information, notice,
demand letter, administrative inquiry or formal or informal complaint or claim
or suit with respect to any Environmental Condition relating to operation of the
Surgery Center; and Seller has no reason to believe that any of the above will
be forthcoming.
4.23 Computer Software, Etc. Seller has the right to use, free and clear of
any royalty or other payment obligations, claims of infringement or other liens,
all computer software, programs and similar systems owned by or licensed to
Seller or used in the conduct of the business of the Surgery Center, including,
without limitation, those intellectual properties and computer software,
programs and similar systems disclosed in Schedule 4.23 hereto; and Seller is
not in conflict with or in violation or infringement of, nor has Seller received
any notice of any conflict with or violation or infringement of or any claims of
conflict with, any asserted rights of any other Person with respect to any
intellectual property or any computer software, programs or similar systems,
including, without limitation, any of such items disclosed in Schedule 4.23, and
to the best of Seller's knowledge, no other Person is in conflict with or in
violation or infringement of any such items of intellectual property or computer
software, programs or similar systems.
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4.24 Immigration Act. Seller is in compliance with the terms and provisions
of the Immigration Act in all material respects. For each employee (as defined
in 8 C.F.R. 274a.1(f)) of Seller for whom compliance with the Immigration Act by
Seller is required, Seller has obtained and retained a complete and true copy of
each such employee's Form I9 (Employment Eligibility Verification Form) and all
other records or documents prepared, procured or retained by Seller pursuant to
the Immigration Act. Seller has not been cited, fined, served with a Notice of
Intent to Fine or with a Cease and Desist Order, nor, to the best of Seller's
knowledge, has any action or administrative proceeding been initiated or
threatened against Seller, by reasons of any actual or alleged failure to comply
with the Immigration Act.
4.25 Regulatory Compliance.
4.25.1 Seller has no notice that (i) any Person providing services under
the Contracts or (ii) any employee or contractor, in either case of (i) or (ii),
is charged with or has been convicted of a criminal offense related to the
Medicare, Medicaid or TRICARE programs, or the provision of health care items or
services but has not yet been excluded, debarred or otherwise declared
ineligible to participate in such programs or is proposed for exclusion
therefrom. To Seller's knowledge, neither Seller, nor any equity holder of
Seller, nor any of their respective directors, officers or employees is (x)
currently excluded, debarred or otherwise ineligible to participate in the
Medicare, Medicaid or TRICARE programs; (y) convicted of a criminal offense
related to the provision of health care items or services but has not yet been
excluded, debarred or otherwise declared ineligible to participate in the
Medicare, Medicaid or TRICARE programs; or (z) to the knowledge of Seller, under
investigation by, or otherwise aware of any circumstances that may result in
Seller being excluded from participation in, the Medicare, Medicaid or TRICARE
programs. Seller is not aware of any potential violations of any criminal, civil
or administrative statute or regulation applicable to the Medicare, Medicaid or
TRICARE programs for which criminal penalties, civil monetary penalties or
exclusion may be authorized.
4.25.2 Seller (i) is not a party to a corporate integrity agreement with
the Office of the Inspector General of the Department of Health and Human
Services, (ii) does not have reporting obligations pursuant to any settlement
agreement entered into with any governmental authority, (iii) to the knowledge
of Seller, has not been the subject of any government payor program
investigation conducted by any governmental authority, (iv) has not been a
defendant in any qui tam/False Claims Act litigation, (v) has not been served
with or received any search warrant, subpoena, civil investigation demand,
contact letter, or, to the knowledge of Seller, telephone or personal contact by
or from any federal or state enforcement agency, and (vi) has not received any
complaints from employees, independent contractors, vendors, physicians, or any
other Person that would indicate, after due inquiry by Seller, that Seller has
violated any law.
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4.26 HIPAA Compliance. Seller (i) has undertaken all necessary surveys,
audits, inventories, reviews, analyses and/or assessments (including any
necessary risk assessments) of all areas of its business and operations required
by Title II, Subtitle F, of the federal Health Insurance Portability and
Accountability Act of 1996 (Pub. Law 104-191) ("HIPAA"), and (ii) is in
compliance in all material respects with HIPAA and all rules and regulations
promulgated thereunder, including the electronic data interchange regulations,
the health care privacy regulations and the healthcare security regulations.
4.27 Legal and Regulatory Compliance.
4.27.1 Except as previously disclosed to Buyer in writing and as set
forth in Schedule 4.27 hereto, Seller and the operations of Surgery Center are
in compliance in all material respects with all applicable laws of federal,
state and local authorities, including, without limitation, 42 U.S.C.
ss.1320a-7b, and all applicable rules, regulations and requirements of all
federal, state and local commissions, boards, bureaus and agencies having
jurisdiction over the Surgery Center and of the operations thereof, including,
without limitation, the Internal Revenue Service, the Department of Health and
Human Services and the Texas Department of State Health Services; and Seller has
timely filed all reports, data and other information required to be filed on
behalf of the Surgery Center with such commissions, boards, bureaus and
agencies. Except as previously disclosed to Buyer in writing and as set forth in
Schedule 4.27 hereto, neither Seller nor any affiliate thereof has, with respect
to the operation of the Surgery Center, received written notice of, and to the
best of Seller's knowledge, Seller is not under investigation with respect to,
any violation or alleged violation of, or any obligation to take remedial action
under, any applicable (i) law, statute, ordinance, rule, regulation, policy or
guideline promulgated, (ii) license or certificate issued or (iii) order,
judgment or decree entered, by any federal, state or local court or governmental
authority relating to Seller or the operations of the Surgery Center.
4.27.2 To the best of its knowledge, except to the extent permitted by
applicable law, none of (i) Seller, (ii) any equity holder of Seller, (iii) any
director, officer or employee of Seller or any equity holder of Seller, or (iv)
any agent acting on behalf of or for the benefit of any of the foregoing, has
knowingly directly or indirectly (A) offered, paid or received any remuneration,
in cash or in kind, to or from, or made any financial arrangements with, any
past, present or potential customers, suppliers, patients, physicians,
contractors, third party payors or any other Person in exchange for business or
payments from such Person, (B) given or agreed to give, received or agreed to
receive, or is aware that there has been made or that there is any agreement to
make, any gift or gratuitous payment of any kind, nature or description (whether
in money, property or services) to any past, present or potential customers,
suppliers, physicians, contractors, third party payors or any other Person in
exchange for business or payments from such Person, (C) made or agreed to make,
or is aware that there has been made or that there is any agreement to make, any
contribution, payment or gift of funds or property to, or for the private use
of, any governmental official, employee or agent, (D) established or maintained
any unrecorded fund or asset for any improper purpose or made any misleading,
false, or artificial entries on any of its books or records for any reason, (E)
made, or agreed to make, or is aware that there has been made or that there is
any agreement to make, any improper payment to any Person; (F) made any payment
for or agreed to make any payment for any goods, services, or property in excess
of fair market value; (G) made or caused to be made a false statement or
representation of a material fact in any application for any benefit or payment;
(H) made or caused to be made any false statement or representation of a
material fact for use in determining rights to any benefit or payment; (I)
presented or caused to be presented a claim for reimbursement for services under
the Programs or other healthcare programs that is for an item or service that is
known or should be known to be: (i) not provided as claimed, (ii) not provided
in accordance with applicable Law, or (iii) false or fraudulent; (J) failed to
disclose knowledge by a claimant of the occurrence of any event affecting the
initial or continued right to any benefit or payment; (K) offered, paid,
solicited, or received any remuneration (including any kickback, bribe or
rebate), overtly or covertly, in cash or in kind: (i) in return for referring an
individual to a Person for the furnishing or arranging for the furnishing of any
item or service for which payment may be made in whole or in part by the
Programs or other healthcare programs or (ii) in return for purchasing, leasing
or ordering any good, facility, service, or item for which payment may be made
in whole or in part by the Programs or other healthcare programs; (L) made or
caused to be made or induced or sought to induce the making of any false
statement or representation (or omitted to state a material fact required to be
stated therein) in order that the Surgery Center may qualify for Program or
other healthcare program certification; or (M) sought payment for any Program
service, money or other consideration in excess of the rates established by law.
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4.27.3 To the best of its knowledge, except as permitted by applicable
law, none of (i) Seller, (ii) any partner of Seller, any equity holder of a
partner of Seller or (iii) any director, officer, employee or agent of Seller,
any partner of Seller or any equity holder of a partner of Seller is a party to
any contract, lease agreement or other arrangement (including but not limited to
any joint venture or consulting agreement) related to Seller with any physician,
physical or occupation therapist, health care facility, hospital, nursing
facility, home health agency or other Person who is in a position to make or
influence referrals to or otherwise generate business for Seller, to provide
services, lease space, lease equipment or engage in any other venture or
activity.
4.28 Inventory and Supplies. All the inventory and supplies constituting
any part of the Assets are of a quality and quantity usable and salable in the
ordinary course of business of the Surgery Center. Inventory and supplies are
carried at the lower of cost or market on a first in, first out basis and are
properly stated in the Financial Statements. The Surgery Center's inventory
level is and at Closing will be maintained at normal levels for a surgery center
of comparable size and utilization.
4.29 Medical Staff Matters. Seller has heretofore delivered to Buyer
correct and complete copies of the bylaws and rules and regulations of the
medical staff of the Surgery Center. With regard to the medical staff of the
Surgery Center and except as set forth on Schedule 4.29 hereto, there are no
pending or, to the best of Seller's knowledge, threatened disputes with
applicants, staff members or allied health professional and all appeal periods
in respect of any medical staff member or applicant against whom an adverse
action has been taken have expired. Seller has provided Buyer with a written
description of all adverse actions taken against medical staff members or
applicants which could result in claims or actions against Seller.
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4.30 CMS 855B Applications. The information provided by Seller and its
partners and the equity owners, directors and officers of its partners for
inclusion in the CMS 855B applications, including the attachments and exhibits
thereto, is true and correct in all material respects and does not omit any
material fact or statement.
4.31 Value of Accrued PTO. The Value of Accrued PTO as of the Closing Date
shall not exceed Ten Thousand and No/100 Dollars ($10,000). If the Value of
Accrued PTO does exceed Ten Thousand and No/100 Dollars ($10,000), the Purchase
Price shall be reduced in accordance with Section 2.1 above.
4.32 Full Disclosure. This Agreement and the Schedules hereto and all other
documents and information furnished to Buyer and its respective representatives
by Seller pursuant hereto do not and will not include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made and to be made herein and therein not misleading.
V. REPRESENTATIONS AND WARRANTIES OF BUYER
As of the date hereof and as of the Closing Date, Buyer represents and
warrants to Seller that the following facts and circumstances are and, except as
contemplated hereby, at all times up to the Closing Date will be true and
correct, and hereby acknowledges that such facts and circumstances constitute
the basis upon which Seller have been induced to enter into and perform its
obligations under this Agreement:
5.1 Corporate Capacity. Buyer is a non-profit corporation duly organized,
validly existing and in good standing under the laws of the State of Texas.
Buyer has requisite power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to conduct its business as now being
conducted.
5.2 Noncontravention. The execution, delivery and performance of this
Agreement by Buyer and the consummation of the transactions contemplated hereby:
5.2.1 are within the power of Buyer, does not contravene the terms of
the Articles of Incorporation or Bylaws of Buyer and have been approved by all
requisite corporate action;
5.2.2 except for matters pertaining to the licensure of the Surgery
Center or any of its Assets by appropriate State agencies, does not require any
approval or consent of, or filing with, any governmental agency or authority
bearing on the validity of this Agreement that is required by law or the
regulations of any such agency or authority;
5.2.3 will neither conflict with, nor result in any breach or
contravention of, or the creation of any lien under, any indenture, agreement,
lease, instrument or understanding to which Buyer is a party or by which Buyer
is bound;
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5.2.4 will not violate any statute, law, rule or regulation of any
governmental authority to which Buyer may be subject and that would affect
Buyer's ability to consummate the transactions described herein; and
5.2.5 will not violate any judgment of any court or governmental
authority to which Buyer may be subject and that would affect Buyer's ability to
consummate the transactions described herein.
5.3 Binding Effect. This Agreement and all other agreements to which Buyer
will become a party hereunder are and will constitute the valid and legally
binding obligation of Buyer and are and will be enforceable against Buyer in
accordance with the respective terms hereof and thereof, except as
enforceability against Buyer may be restricted, limited or delayed by applicable
bankruptcy, insolvency or other laws affecting creditors' rights and debtors'
relief generally and except as enforceability may be subject to general
principles of equity.
5.4 Brokers and Finders Fees. Buyer has no liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which Seller could become liable
or obligated.
VI. COVENANTS OF SELLER
6.1 Full Access. Between the date of this Agreement and the Closing Date,
Seller will permit representatives of Buyer to have full and complete access to
and the right to inspect all premises, properties, books and records of Seller
and the Surgery Center, and will furnish Buyer with such additional financial
and operating data and other information as to the business and properties of
Seller and the Surgery Center as Buyer may from time to time reasonably request
without regard to where such information may be located. Seller will furnish to
Buyer's officers, directors, employees, agents, counsel, accountants, financial
advisors, consultants and other representatives full access, upon reasonable
prior notice and during normal business hours, to the officers, employees and
agents of Seller who have responsibility for the operations of the Surgery
Center. Buyer's right of access and inspection shall be made in such a manner as
not to unreasonably interfere with the operations of the Surgery Center or
Seller.
6.2 Preservation of Operations. From the date hereof until the Closing
Date, Seller will:
6.2.1 carry on its business in substantially the same manner as its has
heretofore and not make any material changes in personnel, operations, finance,
accounting policies or real or personal property of the Surgery Center;
6.2.2 maintains the Assets and all parts thereof in as good working
order and condition as at present, ordinary wear and tear excepted, and make all
customary and planned capital expenditures;
6.2.3 perform all of its obligations under agreements relating to or
affecting the Surgery Center;
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6.2.4 take all actions necessary and appropriate to render title to the
Assets free and clear of all liens, security agreements, claims, charges and
encumbrances and to obtain appropriate releases, bills of sale, consents,
estoppels and other instruments as Buyer may reasonably request;
6.2.5 keep in full force and effect present insurance policies or other
comparable insurance;
6.2.6 take all actions necessary or appropriate to cure any deficiencies
cited by the Texas Department of State Health Services, the Programs or AAAHC in
the most recent surveys conducted by each and timely implement a plan of
correction that is acceptable to the Texas Department of State Health Services,
the Programs and AAAHC;
6.2.7 maintain and preserve its business organization intact, retain its
present employees and maintain its relationships with physicians, suppliers,
customers and others having business relations with Seller, and take such
actions as are necessary to cause the smooth, efficient and successful
transition of such business operations and employee and other relations to Buyer
as of Closing; and
6.2.8 permit and allow reasonable access by Buyer to make offers of
post-Closing employment to all of Seller's personnel, which personnel shall be
allowed to accept such offers without penalty, competing offer or interference,
and to establish relationships with physicians and others having business
relations with Seller.
6.3 Negative Covenants. Seller, in respect of the Surgery Center, will not
without the prior written consent of Buyer (which shall not be unreasonably
withheld):
6.3.1 enter into any contract or commitment, or amend, terminate or fail
to renew any Contract or Permit, or incur or agree to incur any liability,
except in the ordinary and regular course of the business of Seller consistent
with past practices on commercially reasonable terms and in no event greater
than Five Thousand Dollars ($5,000.00) per item or which is not terminable
without cause or penalty within ninety (90) days following Closing and does not
involve a financial obligation in excess of Five Thousand Dollars ($5,000.00);
6.3.2 make offers of post-Closing employment to any employees of Seller
at the Surgery Center for employment with Seller or any of its affiliates for
periods subsequent to Closing, other than those employees who are not offered or
do not accept offers of post-Closing employment from Buyer;
6.3.3 increase compensation payable or to become payable or make a bonus
payment to or otherwise enter into one (1) or more bonus agreements with any
employee or agent, except in the ordinary and regular course of the business of
Seller;
6.3.4 create, assume or permit to exist any new and material mortgage,
pledge or other lien or encumbrance upon any of the Assets;
26
6.3.5 sell, assign or otherwise transfer or dispose property, plant or
equipment (other than supplies), except in the ordinary and regular course of
the business of Seller with comparable replacement thereof; or
6.3.6 take any action outside the ordinary and regular course of the
business of Seller.
6.4 Notices and Consents. Between the date of this Agreement and the
Closing Date, Seller will (i) give any notices to third parties and use
commercially reasonable efforts to obtain any third party consents that Buyer
may reasonably request; (ii) use commercially reasonable efforts to obtain, as
promptly as practicable, all approvals, authorizations and clearances of
governmental and regulatory authorities required of Seller to consummate the
transactions set forth herein; (iii) provide such other notices, information and
communications to governmental and regulatory authorities as Buyer or such
authorities may reasonably request; and (iv) cooperate with Buyer in obtaining,
as soon as practicable, all approvals, authorizations and clearances of
governmental and regulatory authorities required of Buyer to consummate the
transactions set forth herein and to operate the Surgery Center.
6.5 Additional Financial Information. Concurrently with the execution of
this Agreement, Seller shall deliver to Buyer true and complete copies of
Seller's unaudited balance sheets and related unaudited income statements for
the month of December, 2005. Additionally, within twenty (20) days following the
end of each calendar month prior to the Closing Date, Seller will deliver to
Buyer true and complete copies of Seller's unaudited balance sheets and the
related unaudited income statements and statements of cash flows of Seller for
each such month, together with a year-to-date compilation and notes, if any,
related thereto, all of which shall be true, correct and complete in all
material respects, shall have been prepared from and in accordance with the
books and records of Seller and shall fairly present the financial position,
results of operations and cash flows of Seller as of the date and for the period
indicated, all in accordance with GAAP consistently applied.
6.6 No-Shop Clause. From and after the date of the execution and delivery
of this Agreement by Seller until the earlier of Closing or the termination of
this Agreement, Seller shall not (and will not permit any affiliate thereof or
any other Person acting for or on behalf of Seller or any affiliate thereof),
without the prior written consent of Buyer: (i) offer for sale or lease the
Assets (or any material portion thereof), or any ownership interest of any
entity owning the Surgery Center; (ii) solicit offers to buy or lease all or any
material portion of the Assets or any ownership interest of any entity owning
the Surgery Center; (iii) hold discussions with any party (other than Buyer)
looking toward such an offer or solicitation or looking toward a merger or
consolidation of any entity owning the Surgery Center; (iv) enter into any
agreement with any party (other than Buyer) with respect to the lease, sale or
other disposition of the Assets (or any material portion thereof) or any
ownership interest in any entity owning the Surgery Center or with respect to
any merger, consolidation or similar transaction involving any entity owning the
Surgery Center; or (v) furnish or cause to be furnished any information with
respect to the Assets to any Person that Seller or any affiliate thereof or
Person acting for or on their behalf knows or has reason to believe is in the
process of considering any such acquisition, merger, consolidation, combination
or reorganization. If Seller or any affiliate thereof or Person acting for or on
their behalf receives from any Person (other than from Buyer or a representative
thereof) any offer, inquiry or informational request referred to above, Seller
will promptly advise such Person, by written notice, of the terms of this
Section 6.6 and will promptly advise Buyer of such offer, inquiry or request and
deliver a copy of such notice to Buyer together with a copy of all documents
that constitute, relate or refer to any and all responses to such offer, inquiry
or request.
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6.7 Interim Operating Reporting. During the period from the date of this
Agreement to the Closing, Seller shall confer on a regular and frequent basis
with one (1) or more representatives of Buyer to report material operational
matters in respect of the Surgery Center and to report the general status of
on-going operations. Seller shall notify Buyer in writing of any material
adverse change in the financial position or earnings of the Surgery Center after
the date hereof and prior to the Closing and any unexpected emergency or other
unanticipated change in the Surgery Center and of any governmental complaints,
investigations or hearings or adjudicatory proceedings (or communications
indicating that the same may be contemplated) or of any other such matter and
shall keep Buyer fully informed of such events and permit its representatives to
participate in all discussions relating thereto.
6.8 Closing Conditions. Seller will use commercially reasonable efforts to
take all action and to do all things necessary, proper and advisable in order to
cause the conditions specified in Articles VIII and IX hereof over which Seller
has control to be satisfied as soon as reasonably practicable, but in all events
before the Closing Date.
6.9 Further Acts and Assurances. Seller shall, at any time and from time to
time at and after the Closing, upon request of Buyer, take any and all steps
necessary to place Buyer in possession and operating control of the Assets and
the business or businesses to be transferred hereunder and will do, execute,
acknowledge and deliver, or will cause to be done, executed, acknowledged and
delivered, all such further acts, assignments, transfers, conveyances, powers of
attorney and assurances as may be required or requested to more effectively
transfer and assign to Buyer, or to its successors or assigns, or to reduce to
possession, any or all of the Assets and to carry out the purposes and intent of
this Agreement.
6.10 Supplemental Reporting Endorsement. Seller will obtain a supplemental
insurance policy providing for extended reporting periods for claims made after
Closing in respect of events occurring prior to or as of Closing, in form and
substance acceptable to Buyer and naming Buyer as a named insured, to insure
against professional and general liabilities of Seller relating to all periods
prior to the Closing and to have the effect of converting such prior liability
insurance into occurrence coverage, the cost thereof to be paid for by Seller.
The minimum coverage under such "tail end" insurance shall be $1,000,000 per
occurrence and $3,000,000 in the aggregate.
6.11 Termination of Supplier Status. Seller shall affirmatively terminate
its status as a participant and supplier in the Medicare program effective as of
the Effective Time. To this end and within three (3) days after Closing, Seller
shall deliver correspondence, in form and substance reasonably satisfactory to
Buyer, to the Centers for Medicare and Medicaid Services - Dallas Region
notifying the Centers for Medicare and Medicaid Services of the voluntary
termination of Seller's status as a participant and supplier in the Medicare
program effective as of the Effective Time. This Section shall not limit
Seller's ability to make any other filings or notify any other entities that
Seller deems appropriate in connection with the termination of its status as a
supplier in the Medicare program.
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VII. COVENANTS OF BUYER
7.1 Notices and Consents. Between the date of this Agreement and the
Closing Date, Buyer will (i) use commercially reasonable efforts to obtain, as
promptly as practicable, all approvals, authorizations and clearances of
governmental and regulatory authorities required of Buyer to consummate the
transactions set forth herein and to operate the Surgery Center; (ii) provide
such other notices, information and communications to governmental and
regulatory authorities as Seller or such authorities may reasonably request; and
(iii) cooperate with Seller in obtaining, as soon as practicable, all approvals,
authorizations and clearances of governmental and regulatory authorities
required of Seller to consummate the transactions set forth herein.
7.2 Closing Conditions. Between the date hereof and the Closing Date, Buyer
will use commercially reasonable efforts to cause the conditions specified in
Articles VIII and IX hereof over which Buyer has control to be satisfied as soon
as reasonably practicable, but in all events before the Closing Date.
VIII. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
Notwithstanding anything herein to the contrary, the obligations of Buyer
to consummate the transactions described herein are subject to the fulfillment,
on or prior to the Closing Date, of the following conditions precedent unless
(but only to the extent) waived in writing by Buyer at Closing:
8.1 Representations and Warranties/Covenants. The representations and
warranties of Seller contained in this Agreement shall be true when made and, on
and as of the Closing Date as though such representations and warranties had
been made on and as of such Closing Date. Each and all of the terms, covenants
and conditions of this Agreement to be complied with or performed by Seller on
or before the Closing Date pursuant to the terms hereof shall have been duly
complied with and performed.
8.2 Pre-Closing Confirmations. Buyer shall have:
8.2.1 received all approvals of governmental and regulatory authorities
whose approval is required to complete the transactions herein contemplated;
8.2.2 obtained reasonable assurances from all applicable licensure
agencies that upon Closing all licenses required by law to operate the Surgery
Center under Buyer's hospital license will be obtained;
8.2.3 obtained reasonable assurances that the Medicare and Medicaid
certification and enrollment of Buyer's hospital will be expanded to include
Buyer's operation of the Surgery Center; and
8.2.4 obtained such other consents and approvals as may be legally or
contractually required for the consummation of the transactions described
herein.
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8.3 Action/Proceeding. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the transactions herein contemplated, and no governmental agency or
body shall have taken any other action or made any request of any party hereto
as a result of which Buyer reasonably and in good xxxxx xxxxx it inadvisable to
proceed with the transactions hereunder.
8.4 Vesting/Recordation. Seller shall have furnished to Buyer in form
reasonably acceptable to Buyer assignments of lease, bills of sale and
assignments or other instruments of transfer necessary or appropriate to
transfer to and effectively vest in Buyer all of Seller's right, title and
interest in and to the Assets, in proper statutory form for recording if such
recording is necessary or appropriate.
8.5 Adverse Change. No material adverse change in the results of
operations, financial condition or business of Seller or the Surgery Center (or
the prospects for the continuation thereof) shall have occurred, and Seller
shall not have suffered any material change, loss or damage to the Surgery
Center, whether or not covered by insurance.
8.6 Extraordinary Liabilities/Obligations. Seller shall not have incurred
any liability or obligation outside its ordinary and regular course of business
since the date hereof. Seller shall not (i) be in receivership or dissolution,
(ii) have made any assignment for the benefit of creditors, (iii) admitted in
writing its inability to pay its debts as they mature, (iv) have been
adjudicated as bankrupt or (v) have filed a petition in voluntary bankruptcy, a
petition or answer seeking reorganization, or an arrangement with creditors
under the federal bankruptcy law or any other similar law or statute of the
United States or any state, nor shall any such petition have been filed against
Seller.
8.7 Consents. All material consents, waivers and estoppels of third parties
that are reasonably necessary, in the opinion of Buyer or Buyer's counsel, to
effectively complete the transactions herein contemplated shall have been
obtained and will be in form and substance reasonably satisfactory to Buyer.
8.8 Recent Agreements and Commitments. Seller shall have delivered to Buyer
an accurate list and substantially complete description (Schedule 8.8) of all
contracts and commitments relating to the Surgery Center entered into by Seller
between the date hereof and the Closing Date.
8.9 Lease Agreement. Buyer shall have entered into a Lease Agreement with
Landlord at a fair market rental rate as determined by an independent appraiser
and on terms mutually acceptable to Buyer and Landlord.
8.10 Environmental Report. An environmental engineering firm acceptable to
Buyer shall have delivered to Buyer a Phase I Environmental Site Assessment with
respect to the Surgery Center and the Leased Premises, and the scope, findings
and conclusions of such report shall be satisfactory to Buyer. All costs and
expenses associated with the Phase I Site Assessment shall be borne by Seller.
8.11 Release of Liens/Bills of Sales. The lessors under the capitalized
leases described on Schedule 3.2.6 shall have delivered to Buyer, or made
arrangement satisfactory to Buyer for the delivery of, releases of all liens and
security interests held by such lessors and bills of sale transferring title to
the leased equipment to Buyer.
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8.12 Closing Documents. Seller shall have executed or delivered to Buyer
all of the documents, agreements and certificates required to be executed or
delivered by Seller or its General Partner pursuant to any term or provision of
this Agreement.
8.13 Wages and Salaries. Seller shall have paid or made arrangements
satisfactory to Buyer for the payment of all wages, salaries and associated
taxes accrued to all employees of Seller as of Closing. Seller shall be
responsible for wage information reports (Form W-2 reports) for wages paid to
its employees.
8.14 Tail Insurance. Seller shall have purchased the supplemental insurance
policy in accordance with Section 6.10 hereof and provided Buyer with evidence
that such insurance is in place as of Closing.
8.15 Non-Competition Agreements. Seller shall have delivered to Buyer fully
executed Non-Competition Agreements from each Seller Entity (as hereinafter
defined) listed on Schedule 10.9.1.
8.16 Minimum Annual Earnings of Seller. Buyer shall have determined to its
satisfaction that Seller's annual earnings, for the twelve (12) month period
prior to Closing, before depreciation, interest, taxes and amortization and the
management fee paid to the general partner of Seller is at least Eight Hundred
Thousand and No/100 Dollars ($800,000).
IX. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
Notwithstanding anything herein to the contrary, the obligations of Seller
to consummate the transactions described herein are, subject to the fulfillment,
on or prior to the Closing Date, of the following conditions precedent unless
(but only to the extent) waived in writing by Seller at Closing:
9.1 Representations and Warranties/Covenants. The representations and
warranties of Buyer contained in this Agreement shall be true when made and as
of the Closing Date as though such representations and warranties had been made
on and as of such Closing Date. Each and all of the terms, covenants and
conditions of this Agreement to be complied with or performed by Buyer on or
before the Closing Date pursuant to the terms hereof shall have been duly
complied with and performed.
9.2 Action/Proceeding. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the transaction herein contemplated, and no governmental agency or
body shall have taken any other action or made any request of any party hereto
as a result of which Seller reasonably and in good xxxxx xxxxx it inadvisable to
proceed with the transactions hereunder.
9.3 The Purchase Price/Closing Documents. Buyer shall have paid the portion
of the Purchase Price, subject to adjustments, that is due at Closing, and shall
have executed and delivered to Seller all of the documents, agreements and
certificates required to be executed or delivered by Buyer pursuant to any terms
or provision of this Agreement.
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X. ADDITIONAL AGREEMENTS
10.1 Employees.
10.1.1 As of the Closing Date, Seller shall terminate all employees of
Seller or any affiliate thereof at the Surgery Center, and, as of the Closing
Date and in order to assure continuity of patient care at the Surgery Center,
Buyer shall offer employment to substantially all employees of Seller or any of
its affiliates who are engaged exclusively in the operation of the Surgery
Center immediately prior to the Closing, reserving the right to not hire any
individual employee consistent with the policies of Buyer. The term "Employee"
(the "Employee") as used in this Agreement shall mean all employees of Seller or
any affiliate thereof who accept employment offered by Buyer pursuant to this
Section 10.1.1 as of the Closing Date.
10.1.2 Notwithstanding any other provision of this Agreement to the
contrary, effective as of the Closing Date, Seller shall (i) retain or assume
each Employee Benefit Plan and each related contract and trust ("Seller Employee
Benefit Plan") and all associated assets, liabilities, and obligations, and
Buyer shall not assume or be liable for any of the obligations or liabilities
under any Seller Employee Benefit Plan, (ii) make or cause to be made on behalf
of all the Employees all contributions due to be made under each Seller Employee
Benefit Plan for all periods prior to the Closing Date, and (iii) cause all
Employees to be 100% vested in their accrued benefits under each Seller Employee
Benefit Plan that is intended to be qualified within the meaning of section
401(a) of the Code. Additionally, Seller, at its sole cost and expense, shall
take such actions as are necessary to make, or cause each Seller Employee
Benefit Plan to make, appropriate distributions to Employees in accordance with
such Seller Employee Benefit Plan and applicable law.
10.1.3 Seller shall timely perform, or shall cause to be timely
performed, all obligations under the continuation of coverage provisions
described in Section 4980B of the Code and Sections 601 through 608 of ERISA and
any similar continuation of health coverage provisions under applicable state
law ("COBRA coverage") with respect to all employees, independent contractors,
and directors who were employed by, or performed services for, Seller at any
time prior to the Closing Date (and their respective dependents). Buyer shall
not be obligated to offer or provide health coverage, or continued health
coverage, to any individual who became entitled to COBRA coverage under any
Seller Employee Benefit Plan by virtue of any event occurring on or prior to the
Closing Date.
10.2 Termination Prior to Closing. Notwithstanding anything herein to the
contrary, this Agreement may be terminated at any time: (i) on or prior to the
Closing Date by mutual consent of Buyer and Seller; (ii) on or prior to the
Closing Date by Buyer if there has been a material and adverse change in the
financial condition or prospects for future results of operations of the Surgery
Center since the date hereof; (iii) on the Closing Date by Buyer if any of the
conditions specified in Article VIII of this Agreement have not been satisfied
and satisfaction of such condition shall not have been waived by Buyer; (iv) on
the Closing Date by Seller if any of the conditions specified in Article IX of
this Agreement have not been satisfied and satisfaction of such condition shall
not have been waived by Seller; and (v) by Buyer or Seller if the Closing shall
not have taken place on or before 11:59 p.m. on March 31, 2006 (which date may
be extended by mutual agreement of Buyer and Seller), unless the party desiring
to terminate as above provided is in default hereunder.
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If this Agreement is validly terminated pursuant to this Section 10.2, this
Agreement (other than Sections 12.4 and 12.16) will immediately become null and
void, and there will be no liability or obligation on the part of the parties
(or any of their respective officers, directors, partners, employees, agents or
other representatives or affiliates); provided, however, that if this Agreement
is terminated due to the breach of one of the parties to this Agreement then
such breaching party shall remain liable to the non-breaching party for such
breach existing at the time of such termination and such non-breaching party may
seek any remedies, including damages and attorneys fees, against the breaching
party with respect to such breach as are provided in this Agreement or as are
otherwise available at law or in equity.
10.3 Cooperation on Tax Matters. Following the Closing, the parties shall
cooperate fully with each other and shall make available to the other, as
reasonably requested and at the expense of the requesting party, and to any
taxing authority, all information, records or documents relating to tax
liabilities or potential tax liabilities of such parties for all periods on or
prior to the Closing, and shall preserve all such information, records and
documents (to the extent a part of the Assets delivered by Seller at Closing) at
least until the expiration of any applicable statute of limitations or
extensions thereof.
10.4 Misdirected Payments, Etc. Seller and Buyer covenant and agree to
remit, with reasonable promptness, to the other any payments received, which
payments are or have become the property of the other pursuant to the terms of
this Agreement. In addition, and without limitation, in the event of a
determination by any governmental or third-party payor that payments to Seller
resulted in an overpayment or other determination that funds previously paid by
any program or plan to Seller should be recovered or repaid to such program or
plan, Seller shall be responsible for repayment of said monies (or defense of
such actions). In the event that, following Closing, Buyer suffers any offsets
against reimbursement under any third-party payor or reimbursement programs due
to Buyer, relating to amounts owing under any such programs by Seller or any of
its affiliates, Seller shall immediately upon demand from Buyer pay to Buyer the
amounts so billed or offset.
10.5 Guarantees.
10.5.1 Orion HealthCorp, Inc., the ultimate parent entity of the General
Partner of Seller, shall execute and deliver a Guaranty, substantially in the
form of Exhibit C hereto (the "Guaranty"), contemporaneously with Seller's
execution and delivery of this Agreement, pursuant to which Orion HealthCorp,
Inc., shall unconditionally guaranty Seller's performance under this Agreement.
10.5.2 The Methodist Hospital, the sole member of Buyer, shall execute
and deliver a Guaranty, substantially in the form of Exhibit D hereto (the
"Methodist Guaranty"), contemporaneously with Buyer's execution and delivery of
this Agreement, pursuant to which The Methodist Hospital shall unconditionally
guaranty Buyer's performance under this Agreement.
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10.6 Seller's Tax Returns. Seller shall prepare and file on a timely basis
(or seek appropriate extensions as permitted) all returns required to be filed
by Seller relating to the Surgery Center or the Assets by any federal, state or
local taxing authority with respect to all periods through and including the
Closing Date and shall timely remit any taxes reflected to be due and payable on
such returns.
10.7 Tax and Medicare Advice/Reliance. Neither of the parties (nor such
parties' counsel or accountants) has made or is making any representations to
any other party (nor such party's counsel or accountant) concerning any of the
tax or Medicare effects of the transactions provided for in this Agreement. Each
party hereto represents that it has obtained, or may obtain, independent tax and
Medicare advice with respect thereto and upon which it, if so obtained, has
solely relied.
10.8 Press Releases. Seller and Buyer will obtain the approval of the other
party before issuing or making any reports, statements or releases to the public
with respect to this Agreement or the transactions contemplated hereby. If
either party hereto is unable to obtain the approval of its public report,
statement or release from the other party and such report, statement or release
is, in the opinion of legal counsel to such party, required by law in order to
discharge such party's disclosure obligations, then the party may make or issue
the legally required report, statement, or release and promptly furnish the
other party with a copy thereof.
10.9 Non-Competition Agreement.
10.9.1 Seller recognizes that (i) Buyer's entering into this Agreement
is induced primarily because of the covenants and assurances made by Seller
hereunder, (ii) the covenant not to compete of Seller, the General Partner of
Seller, the equity holders of Seller (including, without limitation, the Class A
Limited Partners of Seller and the equity owners of any entities that are Class
A Limited Partners of Seller), and their respective affiliates as listed on
Schedule 10.9.1 (collectively, the "Seller Entities") is necessary to insure the
continuation of the business of Buyer in respect of the Surgery Center
subsequent to Closing, and (iii) irreparable harm and damage will be done to
Buyer in the event that any of the Seller Entities competes with Buyer within
the area or areas specified in this Section 10.9. Therefore, in consideration of
the premises and as a necessary inducement for Buyer to enter into this
Agreement and consummate the transactions set forth herein, each of the Seller
Entities agrees that for a period of five (5) years from and after the Closing
Date, none of the Seller Entities shall, directly or indirectly, in any capacity
develop, own any interest in, manage, operate, control, participate in the
development, management or control of, be employed by, provide consulting
services to, lend money to or maintain or continue any interest whatsoever
(financial or otherwise) in any entity that owns, operates, manages, intends to
develop or begins the development of any general acute care hospital, specialty
hospital, specialty outpatient facility, ambulatory or other type of surgery
center, imaging center, cardiac catheterization center, or any business that
provides health care of a kind now provided by the Surgery Center that is
located within a twenty (20) mile radius of the Surgery Center.
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10.9.2 The parties hereto acknowledge and agree that any remedy at law
for any breach of the provisions of this Section 10.9 would be inadequate, and
the Seller Entities hereby consent to the granting by any court of competent
jurisdiction of an injunction or other equitable relief restraining any breach
or threatened breach hereof, without the necessity of posting a bond, cash or
otherwise, and without the necessity of actual monetary loss being proved or
Buyer's establishing the inadequacy of any remedy at law. To the extent that a
court of competent jurisdiction determines that this Section 10.9 is illegal,
invalid or unenforceable in any respect, the illegal, invalid or unenforceable
provision shall be reformed in accordance with Section 12.12 hereof. Such
injunctive relief shall be in addition to any other remedies that may be
available to Buyer.
10.9.3 As of Closing each of the Seller Entities listed on Schedule
10.9.1 shall execute and deliver to Buyer a Non-Competition Agreement in
substantially the form of Exhibit B hereto. If any Seller Entity does not
execute and deliver its Non-Competition Agreement to Buyer as of Closing, such
Seller Entity shall not receive its portion of the Purchase Price that is
allocated to such Seller's Non-Competition Agreement ("Non-Competition Amount")
on the Closing Date. If such Seller Entity executes and delivers its
Non-Competition Agreement to Buyer within thirty (30) days after the Closing
Date, such Seller Entity shall receive its Non-Competition Amount upon execution
and delivery of the Non-Competition Agreement to Buyer. If such Seller Entity
does not execute and deliver its Non-Competition Agreement to Buyer within
thirty (30) days after the Closing Date, such Seller Entity shall not be
entitled to receive its Non-Competition Amount at any time, and Buyer shall have
the right to retain the Non-Competition Amount.
10.9.4 Nothing in this Section 10.9 shall prevent any physician that is
a Seller Entity from engaging in the practice of medicine or admitting patients
to any healthcare facility.
10.9.5 Nothing in this Section 10.9 shall prevent Orion HealthCorp,
Inc., from providing billing and collection services on behalf of health care
providers.
10.10 Casualty. If any part of the Assets is damaged, lost or destroyed
(whether by fire, theft, vandalism or other cause or casualty) in whole or in
part prior to Closing, and the fair market value of such damage, loss or
destruction is less than Two Million and No/100 Dollars ($2,000,000.00), Seller
shall transfer the proceeds (or the right to the proceeds) of applicable
insurance to Buyer at Closing, Buyer may replace or restore the damaged, lost or
destroyed property, and Seller shall pay Buyer an amount equal to the amount by
which all costs and expenses incurred by Buyer in replacing or restoring the
damaged, lost or destroyed property exceeds the amount of insurance proceeds
transferred to Buyer. If any part of the Assets is damaged, lost or destroyed
(whether by fire, theft, vandalism or other cause or casualty) in whole or in
part prior to Closing, and either the fair market value of such damage, loss or
destruction is greater than Two Million and No/100 Dollars ($2,000,000.00), or
the building housing the Surgery Center has suffered material damage, Buyer may,
at its option, either (i) require Seller to transfer the proceeds (or the right
to the proceeds) of applicable insurance to Buyer at Closing, and Buyer may
restore or replace the damaged, lost or destroyed property, (ii) terminate this
Agreement in its entirety, or (iii) reduce the Purchase Price by the fair market
value of the Assets damaged, lost or destroyed, such value to be determined as
of the date immediately prior to such damage, loss or destruction or, as the
case may be, by the estimated cost to replace or restore the damaged, lost or
destroyed Assets. The reduction in the Purchase Price shall be determined by an
MAI appraiser to be mutually selected and paid equally by Seller and Buyer.
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10.11 Payment Direction. As of Closing, Seller shall instruct Buyer in
writing to pay the amount set forth in Section 2.1(i) herein to Seller at
Closing, and to pay the amounts set forth in Section 2.1(ii) directly to the
partners of Seller that are entitled to receive such amounts (in the amounts and
to the partners as are specified in such written instructions) on the
anniversary dates of Closing as set forth in Section 2.1 herein. Seller shall
provide Buyer with evidence that Seller has taken all partnership action
necessary to authorize and permit Buyer to distribute the Purchase Price
pursuant to the written instructions of Seller.
10.12 Collection Services. As of Closing, Buyer shall, on behalf of and for
the account of Seller, provide collection services for claims submitted to
payors and/or patients for services provided by Seller to Seller's patients
prior to Closing ("Patient Services"). Any amounts collected by Buyer shall be
deposited into an account designated by Seller ("Seller's Account"). Upon
receipt by Buyer of any funds from patients or third party payors, Buyer shall
immediately deposit same into Seller's Account. Buyer makes no guaranty and
gives no assurances as to the amount of funds that will be collected for Patient
Services. Buyer is not obligated to make any extraordinary efforts to collect
such funds. Buyer shall, at the written direction of Seller, assist Seller with
processing Seller's payables when due, but Buyer shall have no liability with
respect to payments made on behalf of Seller, nor shall Buyer be expected to
provide any additional funds to Seller's Account in the case of any deficiency.
As payment for Buyer's services under this Section 10.12, Seller shall pay Buyer
an amount equal to six percent (6%) of collections by Buyer for Patient Services
("Collections Fee"). Buyer shall have the right to pay itself the Collections
Fee directly from Seller's Account at the end of every month. Buyer shall
provide Seller with an accounting of such payments within ten (10) days after
the end of every month for so long as Buyer provides collection services under
this Section 10.12. Buyer and Seller agree that Buyer does not make any
representations or guarantees with respect to amounts to be collected pursuant
to this Section 10.12, and Seller hereby presently, generally, fully, finally,
and forever releases, acquits, and discharges Buyer from any actions arising out
of or in connection with Buyer's obligations or actions under this Section
10.12. Seller agrees to provide Buyer with all information, records or documents
necessary for Buyer to meet its obligations under this Section 10.12. Seller or
Buyer may terminate the services to be provided by Buyer under this Section
10.12 upon written notice to the other party provided such termination does not
occur within one hundred twenty (120) days after the Closing. Buyer shall
reconcile Seller's Account as of one hundred twenty (120) days after the Closing
and distribute any remaining funds in Seller's Account to the partners of the
Seller in accordance with their respective percentage interest in the Seller.
Upon termination of the arrangement set forth in this Section 10.12, Buyer shall
deliver any documentation that it holds with respect to uncollected amounts to
Orion HealthCorp, Inc., the ultimate parent entity of the General Partner of
Seller.
XI. INDEMNIFICATION
11.1 Indemnification by Seller. Subject to and to the extent provided in
this Article XI, Seller shall indemnify and hold harmless Buyer and its
subsidiaries, affiliates, officers, directors, employees, agents, successors and
assigns (collectively, the "Buyer's Indemnified Persons") from and against any
damages, claims, costs, losses (which shall include diminution in value),
liabilities, expenses or obligations (including, without limitation, interest,
penalties, costs of preparation and investigation, reasonable attorneys',
accountants' and other professional advisors' fees and associated expenses)
(collectively, "Losses") incurred or suffered by Buyer's Indemnified Persons,
directly or indirectly, as a result of or arising from:
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11.1.1 any inaccuracy in any respect in any representation or warranty
of Seller, whether or not Buyer's Indemnified Persons relied thereon or had
knowledge thereof, set forth in this Agreement, any Schedule hereto or any
certificate or other agreement or document delivered or to be delivered pursuant
thereto;
11.1.2 the breach or nonfulfillment of any covenant, agreement or other
obligation of Seller set forth in this Agreement, any Schedule hereto or any
certificate or other agreement or document delivered or to be delivered pursuant
hereto;
11.1.3 the Excluded Liabilities;
11.1.4 any Environmental Condition relevant to the operations of the
Surgery Center, existing as of and/or prior to the Closing Date, even if not
discovered until after the Closing Date;
11.1.5 any violation of an Environmental Law with respect to the
operations of the Surgery Center, existing as of and/or prior to the Closing
Date, even if not discovered until after the Closing Date; and
11.1.6 any audit or investigation by representatives of the Medicare or
Medicaid programs, or any third-party payor or federal or state agencies
concerning the operation of the Surgery Center prior to the Closing Date or any
assessments, adjustments or offsets made against the Assets or any part of the
Surgery Center as a consequence of any such audit or investigation.
11.2 Indemnification by Buyer. Subject to and to the extent provided in
this Article XI, Buyer shall indemnify and hold harmless Seller and any
affiliate thereof and assigns (collectively, the "Seller's Indemnified Persons")
from and against any Losses incurred or suffered by Seller's Indemnified
Persons, directly or indirectly, as a result of or arising from:
11.2.1 any inaccuracy in any respect in any representation or warranty
of Buyer, whether or not Seller's Indemnified Persons relied thereon or had
knowledge thereof, set forth in this Agreement, any Schedule hereto or any
certificate or other document or agreement delivered or to be delivered pursuant
thereto;
11.2.2 the breach or nonfulfillment of any covenant, agreement or other
obligation of Buyer set forth in this Agreement, any Schedule hereto or any
certificate or other agreement or document delivered or to be delivered pursuant
hereto; and
11.2.3 the Assumed Liabilities.
11.3 Notice and Procedure. All claims for indemnification by any Person
against whom claims of indemnification are being asserted (an "Indemnifying
Party") under any provision of this Article XI hereof shall be asserted and
resolved as follows:
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11.3.1 In the event of any claim or demand for which an Indemnifying
Party would be liable for Losses to a Person claiming indemnification (an
"Indemnified Party") under any provision of this Article XI is asserted against
or sought to be collected from such Indemnified Party by a Person other than
Buyer or Seller or any affiliate thereof ("Third Party Claim"), the Indemnified
Party shall deliver a Claim Notice with reasonable promptness to the
Indemnifying Party. If the Indemnified Party fails to provide the Indemnifying
Party with the Claim Notice required by the preceding sentence within a
reasonable period after the Indemnified Party receives notice of such Third
Party Claim, the Indemnifying Party will not be obligated to indemnify the
Indemnified Party to the extent that the Indemnifying Party's ability to defend
has been irreparably prejudiced by such failure of notice by the Indemnified
Party. The Indemnifying Party will notify the Indemnified Party within 10 days
of receipt of the Claim Notice ("Notice Period") whether the Indemnifying Party
desires, at the sole cost and expense of the Indemnifying Party, to defend the
Indemnified Party against such Third Party Claim.
11.3.2 If the Indemnifying Party notifies the Indemnified Party within
the Notice Period that the Indemnifying Party desires to defend the Indemnified
Party with respect to the Third Party Claim pursuant to this Section 11.3.2,
then the Indemnifying Party will have the right to defend, at its sole cost and
expense, such Third Party Claim by all appropriate proceedings, which
proceedings will be diligently prosecuted by the Indemnifying Party to a final
conclusion or will be settled at the discretion of the Indemnifying Party (with
the consent of the Indemnified Party, which consent will not be unreasonably
withheld). Assumption by the Indemnifying Party of the defense of such Third
Party Claim constitutes an admission by the Indemnifying Party that the
litigation is one for which the Indemnifying Party is required to indemnify the
Indemnified Party under this Article XI. The Indemnifying Party will have full
control of such defense and proceedings including any compromise or settlement
thereof; provided, however, that the Indemnified Party may, at the sole cost and
expense of the Indemnifying Party, file during the Notice Period any motion,
answer, or other pleadings that the Indemnified Party may deem necessary or
appropriate to protect its interests and that is not irrevocably prejudicial to
the Indemnifying Party (it being understood and agreed that, except as provided
in this Section 11.3.2, if an Indemnified Party takes any such action that is
irrevocably prejudicial and conclusively causes a final adjudication that is
materially adverse to the Indemnifying Party, the Indemnifying Party will be
relieved of its obligations hereunder with respect to the portion of such Third
Party Claim prejudiced by the Indemnified Party's action); and provided further,
that if requested by the Indemnifying Party, the Indemnified Party agrees, at
the sole cost and expense of the Indemnifying Party, to cooperate with the
Indemnifying Party and its counsel in contesting any Third Party Claim that the
Indemnifying Party elects to contest, or, if appropriate in the judgment of the
Indemnified Party and related to the Third Party Claim in question, in making
any counterclaim against the Person asserting the Third Party Claim or any
cross-complaint against any Person (other than the Indemnified Party or any of
any affiliate thereof). The Indemnified Party may participate in, but not
control, any defense or settlement of any Third Party Claim controlled by the
Indemnifying Party pursuant to this Section 11.3.2, and except as provided in
the preceding sentence, the Indemnified Party will bear its own costs and
expenses with respect to such participation. Notwithstanding the foregoing, (i)
the Indemnifying Party may not assume the defense if the named parties to the
Third Party Claim (including any impleaded parties) include both the
Indemnifying Party and any Indemnified Party and representation of both such
parties by the same counsel would be inappropriate due to an actual or potential
differing interests between them, in which case any Indemnified Party shall have
the right to defend the Third Party Claim and to employ counsel at the expense
of the Indemnifying Party; (ii) if there is a reasonable probability that a
Third Party Claim may materially and adversely affect the Indemnified Party and
such damage will either be irreparable, or not compensable by money payments, or
if compensable by money damages, such money damages will be difficult or
impossible to calculate, the Indemnified Party shall have the right, at its own
cost and expense, to defend, compromise and settle such claim; and (iii) the
Indemnifying Party shall not, without the written consent of the Indemnified
Party, settle or compromise any Third Party Claim or consent to the entry of any
judgment that does not include as an unconditional term thereof the giving by
the claimant to the Indemnified Party of a release from all liability in respect
of such Third Party Claim.
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11.3.3 If the Indemnifying Party fails to notify the Indemnified Party
within the Notice Period that the Indemnifying Party desires to defend the
Indemnified Party pursuant to this Article XI, or if the Indemnifying Party
gives such notice but fails to prosecute diligently or settle the Third Party
Claim, or if the Indemnifying Party fails to give any notice whatsoever within
the Notice Period, then the Indemnified Party will have the right (but not the
obligation) to defend, at the sole cost and expense of the Indemnifying Party,
the Third Party Claim by all appropriate proceedings, which proceedings will be
promptly and vigorously prosecuted by the Indemnified Party to a final
conclusion or will be settled at the discretion of the Indemnified Party. The
Indemnified Party will have full control of such defense and proceedings,
including any compromise or settlement thereof; provided, however, that if
requested by the Indemnified Party, the Indemnifying Party agrees, at the sole
cost and expense of the Indemnifying Party, to cooperate with the Indemnified
Party and its counsel in contesting any Third Party Claim that the Indemnified
Party is contesting, or, if appropriate and relating to the Third Party Claim in
question, in making any counterclaim against the Person asserting the Third
Party Claim, or any cross-complaint against any Person (other then the
Indemnifying Party or any of any affiliate thereof). Notwithstanding the
foregoing provisions of this Section 11.3.3, if the Indemnifying Party has
notified the Indemnified Party with reasonable promptness that the Indemnifying
Party disputes its liability to the Indemnified Party with respect to such Third
Party Claim and if such dispute is resolved in favor of the Indemnifying Party,
the Indemnifying Party will not be required to bear the costs and expenses of
the Indemnified Party's defense pursuant to this Section 11.3.3 or of the
Indemnifying Party's participation therein at the Indemnified Party's request,
and the Indemnified Party will reimburse the Indemnifying Party in full for all
costs and expenses incurred by the Indemnifying Party in connection with such
litigation. The Indemnifying Party may participate in, but not control, any
defense or settlement controlled by the Indemnified Party pursuant to this
Section 11.3.3, but the Indemnifying Party will bear its own costs and expenses
with respect to such participation.
11.3.4 In the event any Indemnified Party should have a claim against
any Indemnifying Party hereunder that does not involve a Third Party Claim being
asserted against or sought to be collected from the Indemnified Party, the
Indemnified Party shall deliver an Indemnity Notice with reasonable promptness
to the Indemnifying Party. The failure by any Indemnified Party to give the
notice referred to in the preceding sentence shall not impair such party's
rights hereunder except to the extent that an Indemnifying Party demonstrates
that it has been irreparably prejudiced thereby.
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11.3.5 If the Indemnifying Party does not notify the Indemnified Party
within 10 days following its receipt of a Claim Notice or an Indemnity Notice
that the Indemnifying Party disputes its liability to the Indemnified Party
hereunder, such claim specified by the Indemnified Party will be conclusively
deemed an indemnification liability of the Indemnifying Party hereunder and the
Indemnifying Party shall pay the amount of such liability to the Indemnified
Party within 30 days following its receipt of a Claim Notice or an Indemnity
Notice, or on such later date (i) in the case of a Third Party Claim, as the
Indemnified Party suffers Losses in respect of such Third Party Claim, or (ii)
in the case of an Indemnity Notice in which the amount of the claim is
estimated, promptly after the amount of such claim becomes finally determined.
If the Indemnifying Party has timely disputed its liability with respect to such
claim, as provided above, the Indemnifying Party and the Indemnified Party agree
to proceed in good faith to negotiate a resolution of such dispute within 60
days following receipt of a Claim Notice or an Indemnity Notice. In the event
the Indemnified Party is not paid in full for its claim in a timely manner after
the Indemnifying Party's obligation to indemnify has been determined in
accordance herewith, the Indemnified Party shall have the right, notwithstanding
any other rights that it may have against the Indemnifying Party, to set-off the
unpaid amount of any such claim against any amounts owed by it to the
Indemnifying Party.
11.3.6 The term "Claim Notice" shall mean written notification of a
Third Party Claim by an Indemnified Party to an Indemnifying Party pursuant to
this Article XI, enclosing a copy of all papers served, if any, and specifying
the nature of and alleged basis for such Third Party Claim and, to the extent
then feasible, the alleged amount or the estimated amount of such Third Party
Claim.
11.3.7 The term "Indemnity Notice" shall mean written notification of a
claim for indemnity under this Article XI hereof which claim does not involve a
Third Party Claim by an Indemnified Party to an Indemnifying Party, specifying
the nature of and specific basis for such claim and, to the extent then
feasible, the amount or the estimated amount of such claim.
11.3.8 Any estimated amount of a claim submitted in a Claim Notice or an
Indemnity Notice shall not be conclusive of the final amount of such claim.
11.4 Interest. Any indemnification amount due to the Indemnified Party from
the Indemnifying Party that is not paid by the 60th day after the date of the
Indemnifying Party's receipt of a Claim Notice or an Indemnity Notice shall bear
interest from the date that the Indemnifying Party received the Claim Notice or
the Indemnity Notice until paid at a rate equal to the prime rate of interest,
as published from time to time in The Wall Street Journal, plus 2%.
11.5 Right to Offset. To the extent that Buyer has any claim for
indemnification against Seller, Buyer shall be entitled to offset and retain any
amounts of the Purchase Price that would otherwise be payable to Seller up to
the amount of the indemnification claim.
11.6 Survival of Representations. Notwithstanding any right of either party
hereto (whether or not exercised) to investigate the accuracy of the
representations and warranties of the other party contained in this Agreement,
Seller and Buyer have the right to rely fully upon the representations and
warranties of the other contained in this Agreement. Except as provided below,
the representations and warranties made by Seller and Buyer in this Agreement or
in any Schedule or certificate hereto will survive the Closing for a period of
three (3) years. Notwithstanding the foregoing, the representations and
warranties of Seller set forth in Sections 4.9, 4.12, 4.13, 4.16, 4.18 and 4.22
hereof shall survive the Closing until ninety (90) days after expiration of the
applicable statute of limitations (including all periods of extension, whether
automatic or permissive).
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XII. GENERAL
12.1 Schedules. The Schedules and all Exhibits and documents referred to in
or attached to this Agreement are integral parts of this Agreement as if fully
set forth herein and all statements appearing therein shall be deemed to be
representations. To the extent necessary, each Schedule hereto shall be updated
by Seller and approved by Buyer prior to Closing. Any other provision herein to
the contrary notwithstanding, all Schedules described herein and not delivered
at the time of execution of this Agreement or that are incomplete at the time of
execution of this Agreement or that are updated subsequent to the execution of
this Agreement shall be delivered, completed or updated on or before Closing;
and it shall be deemed a condition precedent to the obligations of Buyer
hereunder that each such Schedule or update shall meet with Buyer's approval.
12.2 Consented Assignment. Anything contained herein to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign any
claim, right, contract, license, lease, commitment, sales order or purchase
order if an attempted assignment thereof without the consent of another party
thereto would constitute a breach thereof or in any material way affect the
rights of Seller thereunder, or if an attempted assignment would be ineffective
or would materially affect Seller's rights thereunder so that Buyer would not in
fact receive all such rights. Seller shall cooperate in any reasonable
arrangement designed to provide for Buyer the benefits under any such claim,
right, contract, license, lease, commitment, sales order or purchase order,
including, without limitation, enforcement of any and all rights of Seller
against the other party or parties thereto arising out of the breach or
cancellation by such other party or otherwise.
12.3 Consents, Approvals and Discretion. Except as herein expressly
provided to the contrary, whenever this Agreement requires any consent or
approval to be given by either party or either party must or may exercise
discretion, the parties agree that such consent or approval shall not be
unreasonably withheld or delayed and such discretion shall be reasonably
exercised.
12.4 Expenses; Legal Fees and Costs.
12.4.1 Except as otherwise expressly set forth in this Agreement, all
expenses of the preparation of this Agreement and of the consummation of the
transactions set forth herein, including, without limitation, counsel fees,
accounting fees, investment advisor's fees and disbursements, and costs incurred
in connection with obtaining regulatory approvals shall be borne by the
respective parties incurring such expense, whether or not such transactions are
consummated. Notwithstanding the foregoing, (i) Seller shall be responsible for
the timely payment of all costs and expenses associated with the Title Policy,
the Survey, documentary stamps, transfer taxes, recording fees and similar costs
attendant to the consummation of the transactions contemplated herein and the
transfer and assignment of the Assets to Buyer and (ii) Buyer shall be
responsible for the timely payment of any inspections or environmental surveys
that it orders.
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12.4.2 In the event either party elects to incur legal expenses to
enforce or interpret any provision of this Agreement by judicial means, the
prevailing party will be entitled to recover such legal expenses, including,
without limitation, attorneys' fees, costs and necessary disbursements, in
addition to any other relief to which such party shall be entitled.
12.5 Choice of Law. The parties agree that this Agreement shall be governed
by and construed in accordance with the laws of the State of Texas without
regard to such state's conflicts of laws rules.
12.6 Arbitration. Except for any claims for injunctive relief, any
disagreement, dispute or claim arising out of or relating to this Agreement that
cannot be settled by the parties shall be settled by arbitration in accordance
with the following provisions:
12.6.1 Forum. The forum for arbitration shall be Houston, Texas. -----
12.6.2 Law. The governing law shall be the law of the State of Texas.
12.6.3 Selection. The number of arbitrators shall be three (3), unless
the parties are able to agree on a single arbitrator. In the absence of such
agreement, within ten (10) business days after the initiation of an arbitration
proceeding, Seller shall select one (1) arbitrator and Buyer shall select one
(1) arbitrator, and those two (2) arbitrators shall then select, within ten (10)
business days, a third arbitrator. If those two (2) arbitrators are unable to
select a third arbitrator within such ten (10) business day period, a third
arbitrator shall be appointed by the commercial panel of the American
Arbitration Association. The decision in writing of at least two (2) of the
three (3) arbitrators shall be final and binding upon the parties.
12.6.4 Administration. The American Arbitration Association shall
administer the arbitration.
12.6.5 Rules. The rules of arbitration shall be the Commercial
Arbitration Rules of the American Arbitration Association, as modified by any
other instructions that the parties may agree upon at the time, except that each
party hereto shall have the right to conduct discovery in any manner and to the
extent authorized by the federal Rules of Civil Procedure as interpreted by the
federal courts in Houston, Texas. The arbitrators shall not modify the terms of
this Agreement.
12.6.6 Award. The award rendered by arbitration shall be final and
binding upon the parties, and judgment upon the award may be entered in any
court of competent jurisdiction of the United States. The arbitrators shall have
authority to award legal fees and associated costs to the party that
substantially prevails in any arbitration proceeding.
12.7 Benefit/Assignment. Subject to provisions herein to the contrary, this
Agreement shall inure to the benefit of and be binding upon the parties and
their respective legal representatives, successors and permitted assigns;
provided, however, that no party hereto may assign this Agreement without the
prior written consent of the other party, which consent shall be not
unreasonably withheld. Notwithstanding the foregoing, Buyer may assign its
rights under this Agreement to one or more of its affiliates.
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12.8 Accounting Date. The transactions contemplated hereby shall be
effective for accounting purposes as of 12:00:01 a.m. on the first business day
of the calendar month following the Closing Date, unless otherwise agreed in
writing by Buyer and Seller.
12.9 No Third Party Beneficiary. The terms and provisions of this Agreement
are intended solely for the benefit of Seller and Buyer and their respective
permitted successors or assigns, and it is not the intention of the parties to
confer third-party beneficiary rights upon any other person or entity.
12.10 Waiver of Breach. The waiver by either party hereto of a breach or
violation of any provision of this Agreement shall not operate as, or be
construed to constitute, a waiver of any subsequent breach of the same or any
other provision hereof. All remedies, either under this Agreement, or by law or
otherwise afforded, will be cumulative and not alternative.
12.11 Notices. Any notice, demand or communication required, permitted, or
desired to be given hereunder shall be deemed effectively given when personally
delivered, when received by telegraphic or other electronic means (including
facsimile and telex), when delivered by overnight courier or five (5) days after
being deposited in the United States mail, with postage prepaid thereon,
certified or registered mail, return receipt requested, addressed as follows:
If to Seller: Orion HealthCorp, Inc., d/b/a Baytown
SurgiCare, Inc., as general partner
0000 Xxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: President
Facsimile: (000)000-0000
With simultaneous copy
(which shall not constitute
notice) to: Xxxxxxxxxxx & Price, LLP
0000 XxXxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxxxx Xxxxxx
Facsimile: (000) 000-0000
If to Buyer: San Jacinto Methodist Hospital
0000 Xxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attn: President
Facsimile: (000) 000-0000
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With simultaneous copy
(which shall not constitute
notice) to: The Methodist Hospital
0000 Xxxxxx, Xxxxx X000
Xxxxxxx, Xxxxx 00000
Attn: Chief Legal Officer
Facsimile: (000) 000-0000
or to such other address or number, and to the attention of such other person or
officer, as any party hereto may designate, at any time, in writing in
conformity with these notice provisions.
12.12 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of Seller or Buyer under this Agreement will not be
materially and adversely affected thereby, (i) such provision will be fully
severable; (ii) this Agreement will be construed and enforced as if the illegal,
invalid or unenforceable provision had never comprised a part hereof; (iii) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance here from; and (iv) in lieu of the illegal, invalid or
unenforceable provision, there will be added automatically as a part of this
agreement a legal, valid and enforceable provision as similar in terms to the
illegal, invalid or unenforceable provision as may be possible.
12.13 Gender and Number. Whenever the context of this Agreement requires,
the gender of all words herein shall include the masculine, feminine and neuter,
and the number of all words herein shall include the singular and plural.
12.14 Divisions and Headings. The Table of Contents, the divisions of this
Agreement into sections and subsections and the use of captions and headings in
connection therewith are solely for convenience and shall have no legal effect
in construing the provisions of this Agreement.
12.15 Time of Essence. Time is of the essence in the performance of this
Agreement.
12.16 Confidentiality. The Confidentiality Agreement dated as of June 15,
2005 (the "Confidentiality Agreement") by and between Seller and Buyer shall
remain in effect. It is understood by the parties that the information,
documents and instruments delivered to Buyer by Seller or Seller's agents and
the information, including, without limitation, this Agreement and all
agreements and documents referenced herein or executed and delivered by the
parties at Closing, are of a confidential and proprietary nature. Each of the
parties agrees that both prior and subsequent to Closing it will maintain the
confidentiality of all such confidential information, documents or instruments
delivered to it by the other party hereto or its agents in connection with the
negotiation of this Agreement or in compliance with the terms, conditions and
covenants hereof and only disclose such information, documents and instruments
to its duly authorized officers, directors, representatives and agents unless
(i) compelled to disclose by judicial or administrative process (including,
without limitation, in connection with obtaining governmental approvals
necessary to consummate the transactions contemplated hereby) or by other
requirements of law or (ii) disclosed in an action or proceeding brought by a
party hereto in pursuit of its rights or in the exercise of its remedies
hereunder. Each of the parties further agrees that if the transactions
contemplated hereby are not consummated, it will return all such documents and
instruments and all copies thereof in its possession to the other party hereto.
Each of the parties recognizes that any breach of this Section 12.16 would
result in irreparable harm to the other party hereto and any affiliate thereof
and that therefore either Buyer or Seller shall be entitled to an injunction to
prohibit any such breach or anticipated breach, without the necessity of proving
actual damages or posting a bond, cash or otherwise, in addition to all of the
other legal and equitable remedies available to it. Nothing in this Section
12.16 shall prohibit the use of such confidential information, documents or
information for such governmental filings as in the mutual opinion of Buyer's
counsel and Seller's counsel are (i) required by law or governmental regulations
or (ii) otherwise appropriate.
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12.17 Drafting. No provision of this Agreement shall be interpreted for or
against either party hereto on the basis that such party was the draftsman of
such provision, each party having participated equally in the drafting hereof,
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any of the provisions of this Agreement.
12.18 Entire Agreement/Amendment. This Agreement supersedes all previous
contracts (other than the Confidentiality Agreement), and constitutes the entire
agreement of every kind or nature existing between or among the parties in
respect of the within subject matter and no party hereto shall be entitled to
benefits other than those specified herein. As between the parties, no oral
statement or prior written material not specifically incorporated herein shall
be of any force and effect. The parties specifically acknowledge that in
entering into and executing this Agreement, the parties rely solely upon the
representations and agreements contained in this Agreement and the agreements
referenced herein, and no others. All prior representations or agreements,
whether written or oral, not expressly incorporated herein are superseded unless
and until made in writing and signed by all parties. The representations and
warranties set forth in this Agreement shall survive the Closing and remain of
full force and effect as provided in Section 11.6 hereof, and shall survive the
execution and delivery of all other agreements described, referenced or
contemplated herein and shall not be merged herewith or therewith. This
Agreement may be executed in two (2) or more counterparts, each of which shall
be deemed an original and all of which together shall constitute but one and the
same instrument. No terms, conditions, warranties, or representations, other
than those contained herein and no amendments or modifications hereto, shall be
binding unless made in writing and signed by the party to be charged.
[Signature page follows]
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IN WITNESS WHEREOF, the parties have caused this Asset Purchase Agreement
to be executed in multiple originals by their duly authorized officers, all as
of the day and year first above written.
SELLER: SAN JACINTO SURGERY CENTER, LTD.
By: Orion HealthCorp, Inc., parent company of
Baytown SurgiCare, Inc., its general partner
By: /s/ Xxxxxxxx X. Xxxxx
----------------------------------------
Xxxxxxxx X. Xxxxx, CEO
BUYER: SAN JACINTO METHODIST HOSPITAL
By: /s/ S. Xxxxxxx Xxxxxxxx
--------------------------------------------
S. Xxxxxxx Xxxxxxxx, M.D.
President and CEO
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