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ASSET PURCHASE AGREEMENT

Asset Purchase Agreement

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PAINCARE HOLDINGS INC | PAINCARE SURGERY CENTERS III, INC., | LESTER A. ZUCKERMAN, M.D.

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Title: ASSET PURCHASE AGREEMENT
Governing Law: Florida     Date: 6/29/2006
Industry: HTHFAC     Law Firm: McDermott Will & Emery LLP; Crowell & Moring, LLP    

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pexh102.pdf -- Converted by SECPublisher 4.0, created by BCL Technologies Inc., for SEC Filing

EXHIBIT 10.02

ASSET PURCHASE AGREEMENT

BY AND AMONG

     PAINCARE HOLDINGS, INC., PAINCARE SURGERY CENTERS III, INC.,

CENTER FOR PAIN MANAGEMENT ASC, LLC,
AND ITS

MEMBERS

Dated as of September 26, 2005


 



TABLE OF CONTENTS

 

 

 

 

 

Page 

 

 

1. 

PURCHASE AND SALE OF ASSETS 

 

1.1 

Assets to be Transferred 

 

 

1.2 

Excluded Assets 

 

 

2. 

ASSUMPTION OF LIABILITIES 

 

2.1 

Liabilities to be Assumed 

 

2.2 

Liabilities Not to be Assumed 

 

2.3 

Taxes Arising from Transaction 

 

2.4 

Income and Franchise Taxes 

 

2.5 

Product, Medical Malpractice and Service Liability 

 

2.6 

Litigation Matters 

 

 

2.7 

Infringements 

 

 

2.8 

Transaction Expenses 

 

 

2.9 

Liability For Breach 

 

 

2.10 

Liabilities to Affiliates 

 

 

2.11 

Violation of Laws or Orders 

 

3. 

PURCHASE PRICE - PAYMENT 

 

3.1 

Purchase Price Consideration 

 

3.2 

Closing Consideration 

 

 

3.3 

Payment of Closing Consideration 

 

3.4 

Closing Time Adjustments 

 

3.5 

Promissory Note and Guaranty 

 

3.6 

Allocation of Purchase Price 

 

3.7 

Escrow Agreement and Transition Management Services 

 

4. 

REPRESENTATIONS AND WARRANTIES OF SELLERS 

10 

 

4.1 

Organization; Authority 

 

10 

 

4.2 

No Violation 

 

10 

 

4.3 

Appraisal Reports 

 

11 

 

4.4 

Compliance With Laws and Orders 

11 

 

4.5 

Title to and Condition of Properties 

12 

 

4.6 

Insurance 

 

13 

 

4.7 

Contracts and Commitments 

14 

 

4.8 

Employee Benefit Plans 

 

16 

 

4.9 

Intellectual Property 

 

16 

 

4.10 

Product Warranty and Product Liability 

16 

 

4.11 

Assets Necessary to Business 

17 

 

4.12 

No Brokers or Finders 

 

17 

 

4.13 

Financial Statements 

 

17 

 

4.14 

Conduct Since Date of Recent Balance Sheet 

17 

 

4.15 

Company and Affiliates 

 

18 

 

 MIA 300140-7.064049.0030 

-i- 

 




TABLE OF CONTENTS

(continued)

 

 

 

 

Page 

 

 

 

4.16 

Liabilities 

 

18 

 

4.17 

Accounts Receivable 

 

19 

 

4.18 

Environmental Matters 

 

19 

 

4.19 

Personnel 

 

20 

 

4.20 

Bank Accounts 

 

21 

 

4.21 

Tax Matters 

 

21 

 

4.22 

Litigation 

 

22 

 

4.23 

Health Care Compliance 

 

22 

 

4.24 

Fraud and Abuse 

 

22 

 

4.25 

Rates and Reimbursement Policies 

23 

 

4.26 

Medical Staff 

 

23 

 

4.27 

Medical Providers 

 

24 

 

4.28 

Third-party Payors 

 

25 

 

4.29 

Disclosure 

 

25 

 

4.30 

Corporate Practice or Fee Splitting 

25 

 

4.31 

Staff Privileges 

 

25 

 

4.32 

Securities Representation 

25 

 

4.33 

HIPAA 

 

27 

 

4.34 

Improper and Other Payments 

27 

 

4.35 

Medical Waste 

 

27 

 

4.36 

Transfer of Custody of Patient Medical Records 

28 

 

4.37 

Certain Representations with respect to the Centers 

28 

 

5. 

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER 

28 

 

5.1 

Organization of PainCare and Subsidiary 

29 

 

5.2 

Authorization of Transaction 

29 

 

5.3 

PainCare Shares 

 

29 

 

5.4 

No Conflicts; Consents 

 

29 

 

5.5 

Consents 

 

30 

 

5.6 

Brokers 

 

30 

 

5.7 

Full Disclosure 

 

30 

 

6. 

RESTRICTIVE COVENANTS 

 

30 

 

6.1 

Restricted Period 

 

30 

 

6.2 

Confidentiality, Press Releases, and Public Announcements 

32 

 

6.3 

Bulk Sales Compliance 

 

33 

 

7. 

FURTHER COVENANTS OF SELLERS 

33 

 

7.1 

Access to Information and Records 

33 

 

7.2 

Maintain Organization 

 

33 

 

7.3 

No Breach 

 

33 

 

7.4 

Maintenance of Insurance 

33 

 

-ii-   




TABLE OF CONTENTS

(continued)

 

 

 

 

Page 

 

 

 

7.5 

Consents 

 

33 

 

7.6 

Other Action 

 

33 

 

7.7 

Disclosure 

 

34 

 

8. 

CONDITIONS PRECEDENT TO PURCHASER’S OBLIGATIONS 

34 

 

8.1 

Representations and Warranties True on the Closing Time 

34 

 

8.2 

Compliance With Agreement 

34 

 

8.3 

Absence of Litigation 

 

34 

 

9. 

CONDITIONS PRECEDENT TO SELLERS’ OBLIGATIONS 

35 

 

9.1 

Representations and Warranties True on the Closing Time 

35 

 

9.2 

Compliance With Agreement 

35 

 

10. 

CLOSING 

 

35 

 

10.1 

Closing 

 

35 

 

10.2 

Documents to be Delivered by the Sellers 

36 

 

10.3 

Documents to be Delivered by the Purchaser 

37 

 

11. 

POST-CLOSING COVENANTS 

37 

 

11.1 

General 

 

37 

 

11.2 

Option Agreement 

 

38 

 

11.3 

Tax Returns 

 

38 

 

11.4 

Transition 

 

38 

 

11.5 

Litigation Support 

 

38 

 

12. 

REGISTRATION 

 

38 

 

13. 

SURVIVAL AND INDEMNIFICATION 

38 

 

13.1 

Survival of Representations and Warranties 

38 

 

13.2 

Indemnification Provisions for the Benefit of PainCare and the 

 

 

 

Subsidiary 

 

39 

 

13.3 

Indemnification Provisions for the Benefit of the Sellers 

39 

 

13.4 

Matters Involving Third Parties 

39 

 

13.5 

Limitation 

 

40 

 

14. 

MISCELLANEOUS 

 

41 

 

14.1 

Disclosure Schedules 

 

41 

 

14.2 

Assignment; Parties in Interest 

41 

 

14.3 

Notice 

 

41 

 

14.4 

Entire Agreement 

 

42 

 

14.5 

Counterparts 

 

42 

 

   -iii-   




TABLE OF CONTENTS

(continued)

 

 

 

Page 

 

 

 

14.6 

Headings 

43 

 

14.7 

Governing Law; Jurisdiction 

43 

 

14.8 

Attorneys’ Fees 

43 

 

14.9 

Amendments and Waivers 

43 

 

14.10 

Severability 

43 

 

14.11 

Expenses 

43 

 

14.12 

Further Assurances 

43 

 

14.13 

Construction 

44 

 

14.14 

Survival 

44 

 

14.15 

Incorporation of Exhibits and Schedules 

44 

 

15. 

DEFINITIONS 

44 

 

 

-iv-



ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT (the “Agreement”) is entered into effective the 26th day of September, 2005 (the “Execution Date”), by and among MARK H. COLEMAN, M.D. (“Dr. Coleman”), PRABAAL DEY, M.D. (“Dr. Dey”), MARC A. LOEV, M.D. (“Dr. Loev”), LESTER A. ZUCKERMAN, M.D. (“Dr. Zuckerman”), CENTER FOR PAIN MANAGEMENT ASC, LLC, a Maryland limited liability company (the “Company”), PAINCARE HOLDINGS, INC., a Florida corporation (“PainCare”) and its wholly owned subsidiary, PAINCARE SURGERY CENTERS III, INC., a Florida corporation (the “Subsidiary”). Dr. Dey, Dr. Loev, Dr. Coleman and Dr. Zuckerman are sometimes referred to herein as the “Members.” The Company and the Members are sometimes referred to herein as the “Sellers” and PainCare and the Subsidiary are sometimes referred to herein as the “Purchaser.” The Purchaser and the Sellers are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

W I T N E S S E T H:

     A. The Company owns and operates four (4) Medicare certified and state licensed ambulatory surgical centers that are located at the following locations: (i) 11921 Rockville Pike, Suite 505, Rockville, Maryland 20852; (ii) 3901 Greenspring Avenue, Suite 304, Baltimore, Maryland 21211; (iii) 1150 Professional Court, Suite L, Hagerstown, Maryland 21740; and (iv) 305 Hospital Drive, Suite 304, Glen Burnie, Maryland 21061 (collectively, the “Centers”).

     B. The Company desires to sell and the Purchaser desires to buy substantially all of the assets, properties, rights, and claims of the Company and the Centers, which assets, properties, rights and claims shall collectively be referred to herein as the “Business.”

     C. The Members own one hundred percent (100%) of the total issued and outstanding membership interests of the Company, free and clear of any and all Liens (as defined in Section 4.5(a) below).

     NOW THEREFORE, in consideration of the mutual promises and covenants herein contained and the sum of ten dollars ($10.00) and other good and valuable consideration paid by the Purchaser to the Company, the receipt and sufficiency of which are hereby acknowledged by the Company, it is mutually covenanted and agreed by the parties hereto as follows:

1. PURCHASE AND SALE OF ASSETS

1.1 Assets to be Transferred. Subject to the terms and conditions of this Agreement, on the Closing Time (as defined in Section 10.1 below), and except as otherwise stated, the Subsidiary shall purchase, and the Company shall sell, transfer,



convey, assign, and deliver to Subsidiary, all of the Company’s Business rights, claims and assets (of every kind, nature, character and description, whether real, personal or mixed, tangible or intangible, accrued, contingent or otherwise, and wherever situated other than the Excluded Assets specified in Section 1.2 below) which are used, held for use or acquired or developed for use by the Company in the Business, or developed in the course of conducting the Business or by Persons employed by the Company in the Business (collectively the “Purchased Assets”), free and clear of any and all Liens other than those Liens set forth on Disclosure Schedule 4.5(a) . The Purchased Assets shall include, without limitation, all the following assets or rights of the Company, to the extent so used, held, acquired or developed in the Business:

     (a) Cash and Cash Equivalents and Accounts Receivable. All cash, cash equivalents, and the Accounts Receivable of the Company as of the Closing Time, including without limitation those described in Disclosure Schedule 1.1(a);

     (b) Personal Property. All of the Company’s rights in, to and under all, instruments, equipment, furniture, machinery and other items of tangible personal property including, without limitation, the personal property leases described in the Disclosure Schedule 1.1(b);

     (c) Inventory. All inventories including, without limitation, supplies, merchandise and durable medical equipment, together with related packaging and delivery materials (collectively the “Inventory”);

     (d) Books and Records. All books and records of the Company, including without limitation, all credit records, payroll records, computer records, computer programs, contracts, agreements, operating manuals, schedules of assets, correspondence, books of account, files, papers, books and all other public and confidential business records but excluding the Company’s corporate minute books and tax records (together the “Business Records”), whether such Business Records are in hard copy form or are electronically or magnetically stored;

     (e) Intellectual Property. The Company’s interest in all of its Intellectual Property. As used herein, the term “Intellectual Property” shall mean and include: (i) all trademark rights, business identifiers, trade dress, logos, service marks, trade names and brand names, all registrations thereof and applications therefore and all goodwill associated with the foregoing; (ii) all copyrights, copyright registrations and copyright applications, and all other rights associated with the foregoing and the underlying works of authorship; (iii) all patents and patent applications, and all international proprietary rights associated therewith; (iv) all contracts or agreements granting any right, title, license or privilege under the intellectual property rights of any third party; (v) all inventions, mask works and mask work registrations, know-how, discoveries, improvements, designs, trade secrets, shop and royalty rights, employee covenants and agreements respecting intellectual property and non-competition and all other types of intellectual property; (vi) all computer software (including all data and related documentation); (vii) all other proprietary rights; (viii) all copies and tangible

- 2 -



embodiments of the foregoing (in whatever form or medium); and (ix) all claims for infringement or breach of any of the foregoing;

     (f) Contracts. All of the Company’s rights in, to and under all contracts, agreements, license agreements, purchase orders and sales orders (hereinafter “Contracts”) of the Company as it relates to the Business (third party payors, licenses, etc.). To the extent that any Contract for which assignment to Subsidiary is provided herein is not assignable without the consent of another party, this Agreement shall not constitute an assignment or an attempted assignment thereof if such assignment or attempted assignment would constitute a breach thereof. The Sellers and the Purchaser agree to use their reasonable best efforts (without any requirement on the part of the Purchaser to pay any money or agree to any change in the terms of any such Contract) to obtain the consent of such other Party to the assignment of any such Contract to the Subsidiary in all cases in which such consent is or may be required for such assignment. If any such consent shall not be obtained prior to the Closing Time, the Sellers agree to cooperate with the Purchaser in any reasonable arrangement designed to provide for the Purchaser the benefits intended to be assigned to Subsidiary under the relevant Contract, including enforcement at the cost and for the account of the Purchaser of any and all rights of the Sellers against the other Party thereto arising out of the breach or cancellation thereof by such other Party or otherwise. If and to the extent that such arrangement cannot be made, the Purchaser, upon notice to the Sellers, shall have no obligation pursuant to Section 2.1 or otherwise with respect to any such Contract and any such Contract shall not be deemed to be a Purchased Asset hereunder;

     (g) Computer Software. To the extent transferable by the Company, all computer programs and other software, documentation and related property and information of the Company;

     (h) Licenses; Permits. To the extent transferable by the Company, all franchises, licenses, permits, certificates, approvals and other governmental authorizations necessary to own and operate any of the Purchased Assets, a complete and correct list of which is set forth in the Disclosure Schedule 1.1(h) (the “Licenses”);

     (i) General Intangibles. All causes of action arising out of occurrences before or after the Closing Time, and other intangible rights and assets;

     (j) Telephone Numbers. All of the Company’s right, title and interest in, to and under all telephone numbers used in connection with its Business, including all extensions thereto;

     (k) Warranties. All rights in, to and under all representations, warranties, covenants and guaranties made or provided by third parties to or for the benefit of the Company with respect to any of the Purchased Assets;

     (l) Prepaids. All of the Company’s prepaid expenses, prepaid insurance, deposits and other similar items (“Prepaid Items”);

- 3 -



     (m) Leasehold Improvements. All rights, titles and interests in, to and under all structures, fixtures, landings, constructions in progress, improvements, betterments, installations, and additions constructed or located on or attached or affixed to the leasehold estates conferred on the Company under or by virtue of, all real property lease and sublease agreements (such real property lease and sublease agreements are hereinafter referred to as “Real Property Leases” which are described on the Disclosure Schedule 1.1(m));

     (n) Patient Information. All of the patient lists, ledgers and information (“Patient Information”) relating to past and current patients of Seller (a “Patient” or the “Patients”);

     (o) Other Assets. All other tangible and intangible assets, properties, rights, and claims in, to or arising from the business of the Business; and

     (p) Facility Agreements. All of the Company’s and Business’ contracts, agreements and understandings (collectively, the “Facility Agreements”) with any party regarding the provision of ambulatory surgical services to patients, including without limitation, all the Facility Agreements with health maintenance organizations, preferred provider organizations, third-party payors, independent practice associations, physician hospital organizations, management services organizations, employers, labor unions, hospitals, clinics, ambulatory surgery centers, and Medicare and Medicaid intermediaries, (a copy of each of the Facility Agreements has been provided to Purchaser and is described on the Disclosure Schedule 1.1(p)) .

     1.2 Excluded Assets. “Excluded Assets” shall mean those assets listed on the Disclosure Schedule 1.2.

2. ASSUMPTION OF L