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EXHIBIT 2.2
PURCHASE AGREEMENT
BY AND AMONG
THE MEMBERS OF
SURGERY CENTER PARTNERS, L.L.C.,
SYMBION AMBULATORY RESOURCE CENTRES, INC.
AND
SMBIMS KIRKWOOD, INC.
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TABLE OF CONTENTS
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I. PURCHASE AND SALE OF SUBJECT
INTEREST.........................................................
1
1.1.
Purchase and Sale of Subject
Interest........................................... 1
1.2.
Consideration...................................................................
1
1.3.
Post-Closing Purchase Price
Adjustment.......................................... 2
1.4.
Assignment......................................................................
2
1.5.
Expenses........................................................................
2
1.6.
Closing.........................................................................
3
1.7.
Further Acts and
Assurances.....................................................
3
1.8.
Interpretation..................................................................
3
II. REPRESENTATIONS AND WARRANTIES OF
SELLERS....................................................
4
2.1.
Authorization and Binding Effect of
Sellers..................................... 4
2.2.
Organization of the
Company.....................................................
4
2.3.
Capitalization..................................................................
4
2.4.
Subsidiaries....................................................................
4
2.5.
Ownership of
Properties.........................................................
5
2.6.
Absence of Certain Recent
Changes............................................... 5
2.7.
Agreements and
Commitments......................................................
5
2.8.
Litigation, Etc.
...............................................................
5
2.9.
Court Orders, Decrees and Compliance with
Laws.................................. 5
2.10.
Taxes...........................................................................
6
2.11.
Financial
Statements............................................................
6
2.12.
Extraordinary Liabilities and
Encumbrances...................................... 6
2.13.
Licenses........................................................................
6
2.14.
Regulatory
Compliance...........................................................
6
2.15. No
Finders or
Brokers...........................................................
7
2.16.
Pension, Etc.
..................................................................
7
2.17.
Employees.......................................................................
8
2.18.
Insurance
Coverage..............................................................
9
2.19.
Payments to
Sellers.............................................................
9
2.20.
Appraisal Reports and
Surveys...................................................
9
2.21.
Absence of Certain
Changes......................................................
9
2.22.
Environmental
Conditions........................................................
10
2.23.
Medical
Waste...................................................................
11
2.24.
Certain Representations With Respect to the
Center.............................. 12
2.25. No
Untrue or Inaccurate Representation or
Warranty.............................. 12
III. REPRESENTATIONS AND WARRANTIES OF
PURCHASER.................................................
12
3.1.
Organization and
Standing.......................................................
12
3.2.
Authorization and Binding
Effect................................................ 12
3.3.
Ownership.......................................................................
12
3.4.
No Finders or
Brokers...........................................................
12
3.5.
Adequate
Funding................................................................
12
3.6.
No Untrue or Inaccurate Representation or
Warranty.............................. 13
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IV. COVENANTS OF
PURCHASER.......................................................................
13
4.1.
Best
Efforts....................................................................
13
4.2.
Short Period Tax
Return.........................................................
13
V. COVENANTS OF
SELLERS..........................................................................
13
5.1.
Best
Efforts....................................................................
13
5.2.
Reserved........................................................................
13
5.3.
Conduct of
Business.............................................................
13
5.4.
Additional Financial
Information................................................
13
5.5.
Notification of Certain
Matters.................................................
13
5.6.
Exclusivity.....................................................................
14
5.7.
Covenant Not to
Compete.........................................................
14
5.8.
Termination or Merger of Benefit
Plans.......................................... 15
VI. CONDITIONS TO CLOSING BY
PURCHASER...........................................................
15
6.1.
Compliance......................................................................
15
6.2.
Due Diligence Review; Accuracy and Completeness of
Schedules.................... 15
6.3.
Consents, Authorizations, Etc.
................................................. 15
6.4.
No Action or
Proceeding.........................................................
16
6.5.
Good Standing
Certificate.......................................................
16
6.6.
No Material Adverse
Effect......................................................
16
6.7.
Assignment
Agreement............................................................
16
6.8.
Reorganization of Company in Delaware; Adoption of Operating
Agreement.......... 16
6.9.
Ancillary
Transactions..........................................................
16
6.10.
Waiver of
Conditions............................................................
16
VII. CONDITIONS TO CLOSING BY
SELLER.............................................................
16
7.1.
Compliance......................................................................
16
7.2.
Secretary's
Certificate.........................................................
17
7.3.
Consent, Authorizations, Etc.
.................................................. 17
7.4.
No Action or
Proceeding.........................................................
17
7.5.
Good Standing
Certificate.......................................................
17
7.6.
Waiver of
Conditions............................................................
17
VIII.
INDEMNIFICATION............................................................................
17
8.1.
Indemnification of
Purchaser....................................................
17
8.2.
Indemnification of
Sellers......................................................
18
8.3.
Notice and Control of
Litigation................................................
18
8.4.
Notice of
Claim.................................................................
19
8.5.
Limitations.....................................................................
19
8.6.
Indemnification as Sole Legal
Remedy............................................ 20
IX.
TERMINATION..................................................................................
20
9.1.
Termination.....................................................................
20
9.2.
Notice of
Termination...........................................................
20
9.3.
Consequences of
Termination.....................................................
20
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X.
MISCELLANEOUS.................................................................................
21
10.1.
Schedules and Other
Instruments.................................................
21
10.2.
Additional
Assurances...........................................................
21
10.3.
Consented
Assignment............................................................
21
10.4.
Legal Fees and
Costs............................................................
21
10.5.
Choice of Law and
Venue.........................................................
21
10.6.
Benefit/Assignment..............................................................
21
10.7. Cost
of
Transaction.............................................................
22
10.8.
Confidentiality.................................................................
22
10.9.
Public
Announcements............................................................
22
10.10. Waiver of
Breach................................................................
22
10.11.
Notice..........................................................................
23
10.12.
Severability....................................................................
23
10.13. Gender
and
Number...............................................................
23
10.14. Divisions
and
Headings..........................................................
23
10.15.
Survival........................................................................
23
10.16. Entire
Agreement/Amendment......................................................
23
10.17. Waiver of
Jury
Trial............................................................
24
10.18. Tax
Advice and
Reliance.........................................................
24
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PURCHASE AGREEMENT
THIS
PURCHASE AGREEMENT ("Agreement"), dated as of November 11, 2004,
is
by and among the several members of Surgery
Center Partners, L.L.C., a Missouri
limited liability company (the "Company")
who are identified on Exhibit A hereto
(each a "Seller" and collectively the
"Sellers"), and SMBIMS Kirkwood, Inc., a
Tennessee corporation ("Purchaser"). The
Sellers and Purchaser are sometimes
referred to herein individually as a
"Party" and collectively as the "Parties."
SYMBION AMBULATORY RESOURCE CENTRES, INC.,
a Tennessee corporation ("SARC"),
joins herein solely for the purposes of
manifesting its agreement with Article
VIII hereof and Section 3.5.
RECITALS:
WHEREAS,
as of the date hereof, the Sellers collectively own 95 of the
101
outstanding units of membership interest
(such 95 outstanding units being,
collectively, the "Interests") of the
Company in the percentages set forth on
Exhibit A hereto; and
WHEREAS,
the Company's sole business is to own and operate an outpatient
surgery center known as the Surgery Center
of Kirkwood located at 1028 South
Kirkwood Road, Kirkwood, Missouri (the
"Center"); and
WHEREAS,
the Sellers desire to sell to Purchaser, in the proportions set
forth on Exhibit A, a 50.00% membership
interest in the Company (the "Subject
Interest"); and
WHEREAS,
in addition to the Subject Interest, Purchaser has entered into
two additional agreements (such agreements
being the "Galanis Call Option" and
the "Sudekum Put Option", respectively,
and, together, the "Option Agreements")
providing for (1) Purchaser to have the
right, but not the obligation, to
acquire from John C. Galanis, M.D.
("Galanis") any remaining interest in the
Company held by Galanis (the "Galanis
Option Interest"), and (2) Tony Sudekum,
M.D. ("Sudekum") to have the right, but not
the obligation, to require Purchaser
to purchase from Sudekum three (3) units of
Membership Interest in the Company
held by Sudekum (the "Sudekum Option
Interest" and, together with the Galanis
Option Interest, the "Option Interests");
and
WHEREAS,
Purchaser is ready, willing and financially able to take such
actions to enable it to purchase such
Subject Interest in conformity with the
terms hereof.
NOW,
THEREFORE, in consideration of the foregoing and of the promises
and
mutual covenants contained herein, the
Parties hereby agree as follows:
I. PURCHASE AND SALE OF SUBJECT INTEREST
1.1.
Purchase and Sale of
Subject Interest. At the Closing (as defined in
Section 1.6 hereof), Purchaser agrees to
purchase from Sellers, and each Seller
agrees to sell, assign, transfer and
deliver to Purchaser, the Subject Interest,
free and clear of any and all claims,
liens, security interests, rights of first
refusal, options, warrants or other
encumbrances of any nature ("Encumbrances").
1.2.
Consideration. Subject
to the terms and conditions hereof, in
reliance upon the representations and
warranties of Sellers set forth herein,
and as consideration for the purchase and
sale of the Subject Interest as herein
contemplated, Purchaser agrees to tender to
Sellers as the purchase price
hereunder (the "Purchase Price"), subject
to adjustment as provided in Section
1.3 below, an aggregate amount of
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$25,755,000. The Purchase Price, as
adjusted in accordance herewith, shall be
payable to Sellers by delivery at the
Closing in cash or by checks payable to
each of the Sellers in the amounts set
forth on Exhibit A.
1.3.
Post-Closing Purchase
Price Adjustment.
(a)
Not more than
120 days after the Closing Date, Purchaser shall
deliver to Sellers a balance sheet of the
Company as of the Closing Date
prepared in accordance with generally
accepted accounting principles,
consistently applied (GAAP) (the "Closing
Balance Sheet") and prepared on a
basis consistent with the balance sheet of
the Company as of July 31, 2004 (the
"Sellers' Balance Sheet") that was prepared
by Sellers and is attached hereto as
Exhibit 1.3(a). The Net Working Capital of
the Company reflected on the Closing
Balance Sheet is referred to herein as the
"Purchaser's Working Capital
Position." Except as provided in Section
1.3(b) hereof, on or before the 160th
day after the Closing Date (the "Adjustment
Payment Date") either (i) Sellers
shall pay Purchaser in immediately
available funds an amount equal to 50.00% of
the amount by which the Purchaser's Working
Capital Position is less than
$2,500,000, or (ii) Purchaser shall pay
Sellers in immediately available funds
50.00% of the amount by which the
Purchaser's Working Capital Position exceeds
$2,500,000. Any payments to or from Sellers
hereunder shall be paid by or to
each Seller in proportion to such Seller's
percentage ownership of the Subject
Interest immediately prior to the Closing.
All payments under this Section
1.3(a) shall be by wire transfer to an
account designated by the party entitled
to receive any such payments. For purposes
of this Agreement, "Net Working
Capital" shall mean, as of the date of
determination, an amount equal to (a) the
sum of the current assets, including,
without limitation, the following items:
(i) cash, (ii) accounts receivable-net,
(ii) inventories and supplies, and (iii)
prepaid expenses, minus (b) the sum of the
current liabilities, including,
without limitation, the following items:
(i) accounts payable, and (ii) accrued
expenses, but excluding the current portion
of long-term debt.
(b)
Within 30 days
after Purchaser's delivery of the Closing Balance
Sheet, Sellers holding not less than a
majority of the Subject Interest
immediately prior to the Closing (a
"Sellers' Majority") may, in a written
notice to Purchaser, describe in reasonable
detail any proposed adjustments to
the Closing Balance Sheet and the reasons
therefor, and shall include pertinent
calculations. If Sellers' Majority shall
fail to deliver notice of objection to
the Closing Balance Sheet within such 30
day period, then all Sellers shall be
deemed to have accepted the Closing Balance
Sheet. In the event that, following
delivery of such a notice, Purchaser and
such Sellers' Majority are not able to
agree on the Closing Balance Sheet within
30 days from and after the receipt by
Purchaser of any objections raised by such
Sellers, Purchaser and such Sellers'
Majority shall each have the right to
require that such disputed determinations
be submitted to Deloitte & Touche LLP
or to such other certified public
accounting firm as such Sellers' Majority
and Purchaser may then mutually agree
upon in writing, for computation or
verification in accordance with the
provisions of this Agreement. The foregoing
provisions for certified public
accounting firm review shall be
specifically enforceable by the Parties; the
decision of such accounting firm shall be
final and binding upon Purchaser and
all Sellers; there shall be no right of
appeal from such decision; and such
accounting firm's fees and expenses for
each such disputed determination shall
be borne by the Party whose determination
has been modified by such accounting
firm's report or by all Parties in
proportion to the relative amount each
Party's determination has been modified.
Any payments due under this Section 1.3
shall bear interest at eight percent (8%)
per annum from the Adjustment Payment
Date.
1.4.
Assignment. The sale,
assignment, transfer and delivery of each of
the Subject Interest shall be made by each
Seller's execution and delivery at
the Closing of an Assignment substantially
in the form attached as Exhibit 1.4
hereto (the "Assignment") and such other
recordable instruments of assignment,
transfer and conveyance as Purchaser shall
request.
1.5.
Expenses. All expenses
of the preparation of this Agreement and of
the transactions provided for herein shall
be borne by the respective Parties
incurring such expense, whether or not
such
2
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transactions are consummated.
Notwithstanding the foregoing, Purchaser
understands and agrees that Company may pay
expenses of the Sellers incurred in
the transactions or make other
distributions to Sellers on account of their
Interests preceding the Closing, which
expenses and distributions shall be taken
into account in calculating Purchaser's
Working Capital Position for purposes of
Section 1.3 hereof.
1.6.
Closing. The sale,
purchase and other activities provided for herein
(the "Closing") shall take place at Waller
Lansden Dortch and Davis, PLLC, 511
Union Street, Suite 2700, Nashville,
Tennessee 37219, or at such other place as
the Parties may agree upon, as soon as
practicable following the satisfaction
(or waiver) of all of the conditions to
closing set forth in Articles VI and VII
(such date being the "Closing Date"), and
the Closing shall be deemed effective
at 12:01 a.m. on the Closing Date.
1.7.
Further Acts and
Assurances. Sellers shall, at any time and from
time to time at and after the Closing, upon
request of Purchaser, take any and
all steps necessary to place Purchaser in
possession and operating control of
the Subject Interest and will do, execute,
acknowledge and deliver, or will
cause to be done, executed, acknowledged
and delivered, all such further acts,
deeds, assignments, transfers, conveyances,
powers of attorney and assurances as
may be required for the better transferring
and confirming to Purchaser or to
its successors or permitted assigns, or for
reducing to possession, such Subject
Interest.
1.8.
Interpretation. In
this Agreement, unless the context otherwise
requires:
(a)
references to
this Agreement are references to this Agreement and to
the Schedules and Exhibits attached
hereto;
(b)
references to
Articles and Sections are references to articles and
sections of this Agreement;
(c)
references to
any Party to this Agreement shall include references
to its respective successors and permitted
assigns;
(d)
references to a
judgment shall include references to any order,
writ, injunction, decree, determination or
award of any court or tribunal;
(e)
references to a
person shall include references to any individual,
company, body corporate, association,
limited liability company, firm, joint
venture, trust or governmental entity or
agency;
(f)
the terms
"hereof," "herein," "hereby" and derivative or similar
words will refer to this entire
Agreement;
(g)
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;
(h)
the word
"including" shall mean including without limitation;
(i)
each
representation, warranty and covenant contained herein
shall have independent significance and, 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, provided
that indemnification for any such breach
shall be only in accordance with and
subject to the limitations of Article VIII
hereof; and
3
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(j)
in respect of a
party, the term "Affiliate" shall mean any entity
controlling, controlled by or under common
control with such party.
II. REPRESENTATIONS AND WARRANTIES OF SELLERS
The
Sellers hereby jointly and severally represent and warrant to
Purchaser as follows:
2.1.
Authorization and
Binding Effect of Sellers. Each Seller has
all necessary authority and power to
execute and deliver this Agreement and
consummate the transactions contemplated
hereby and has taken all action
required to be taken to authorize the
execution, delivery and performance of
this Agreement. This Agreement constitutes
a valid and binding agreement or
commitment against the Sellers in
accordance with its terms. The execution of
this Agreement by the Sellers, the
performance by the Sellers of their
obligations hereunder and the consummation
of the transaction contemplated
hereby by the Sellers will not require any
consent, approval or notice under, or
violate, breach, be in conflict with or
constitute a default (or an event that,
with notice or lapse of time or both, would
constitute a default) under, or
permit termination of, or result in the
creation or imposition of any lien upon
any properties, assets or business of the
Company under any note, bond,
indenture, mortgage, deed of trust, lease,
franchise, permit, authorization,
license, contract, instrument or other
agreement or commitment or any order,
judgment or decree to which the Company is
a party or by which the Company or
any of its assets or properties is bound or
encumbered, except as indicated on
Schedule 2.1 hereof. No notice to, filing
or registration with or authorization,
consent or approval of any public body or
governmental or regulatory authority
is necessary for the transfer by Sellers of
the Subject Interest as contemplated
by this Agreement (and the Option
Interests, if acquired pursuant to the Option
Agreements), except as indicated on
Schedule 2.14 hereto. Each Seller, except
David Hauschild ("Hauschild"), is an
individual licensed to practice medicine
and residing in the State of Missouri.
Hauschild resides in the State of
Missouri.
2.2.
Organization of the
Company. The Company is a limited
liability company duly organized and
validly existing in good standing under the
laws of the State of Missouri, has full
power and authority to own and operate
its property and to carry on its business
as now being conducted, and is duly
qualified to do business in each
jurisdiction in which the nature of its
property or business requires. Sellers have
delivered to Purchaser true,
accurate and complete copies of the
Company's Articles of Organization, which
reflect all amendments made thereto at any
time prior to the date of this
Agreement. The Company is not in default
under or in violation of any provision
of (i) its Articles of Organization, or
(ii) any outstanding note, bond,
indenture, mortgage, contract, instrument
or other agreement or commitment or
any order, judgment or decree to which
either is a party.
2.3.
Capitalization. All of
the issued and outstanding equity securities
of the Company, other than the Option
Interests, are owned by the persons set
forth on Exhibit A hereto under the heading
"Units Before Closing." The Subject
Interest constitutes a 50.00% membership
interest in the Company. All Interests,
including the Subject Interest and the
Option Interests, are validly issued,
fully paid and nonassessable. Sellers are
the record and beneficial owners and
holders of the Interests as set forth on
Exhibit A. Other than the Option
Agreements, there are no existing
agreements, options, warrants, rights, calls
or commitments of any character to which
the Company or any Seller is a party or
by which it is bound providing for the
issuance of any additional Interests, or
for the repurchase or redemption of any
Interests, and there are no outstanding
interests or other instruments convertible
into or exchangeable for Interests
and no commitments to issue such
Interests.
2.4.
Subsidiaries. The
Company does not own and is not obligated to
purchase any equity interest in or any
other interest convertible into or
exchangeable for an equity interest in any
entity.
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2.5.
Ownership of
Properties.
(a)
Attached hereto
as Schedule 2.5(a) are state and local UCC
searches on the Company. Except for the
real property which is leased by the
Company and except as disclosed in such
Schedule 2.5(a), the Company has good
and marketable title to all of the
operating assets of the Company necessary or
appropriate for the continued operation of
the Center, all of which are listed
on Schedule 2.5(b) (collectively, the
"Assets"), free and clear of all liens,
claims or encumbrances, and any mortgages
or other indebtedness secured by any
real estate or other property. Schedule
2.5(a) reflects all security interests
relating to the Assets in every place where
security interests created or
perfected by filing are legally required to
be filed and include copies of all
such financing statements.
(b)
All Assets are
located at the Center and to the best of Sellers'
knowledge and belief, are in good operating
condition and state of repair,
subject only to ordinary wear and tear,
which is not such as to affect adversely
the operation of the Assets in the ordinary
course of business. Such Assets are
reflected in the Financial Statements at
net book value. Except as disclosed on
Schedule 2.5(b), the Assets constitute all
of the Assets required to operate the
Center in accordance with historical
practice and as the Center is being
operated by Sellers on and as of the
Closing Date. No Person has indicated that
any Asset needs to be replaced or that any
new item of equipment needs to be
acquired by the Company.
2.6
Absence of
Certain Recent Changes. To the best of Sellers'
knowledge, since December 31, 2003, there
has not been any law, regulation,
event or condition of any character that
has had or is reasonably likely to have
an adverse effect on the business of the
Company.
2.7
Agreements and
Commitments. Schedule 2.7 sets forth a list of each
Material Provider Contract, as hereinafter
defined, and each Business Contract,
as hereinafter defined, to which the
Company is a party or by which the Company
is bound or which may have an effect on the
Subject Interest or business carried
on by the Company (the "Contracts"). Except
as noted in Schedule 2.7, all such
Contracts are in full force and effect,
there has been no threatened
cancellation thereof, there are no
outstanding disputes thereunder, each (except
the Management Agreement) is with an
unrelated third party and was entered into
on an arm's length basis in the ordinary
course of business, and all will
continue to be binding in accordance with
its terms as of the Closing Date.
"Material Provider Contract" means any
contract with a network of healthcare
providers or a third party payor,
including, without limitation, employers and
insurance companies, to provide healthcare
services to patients and which during
the twelve-month period ending September
30, 2004 reimbursed the Company for
four or more cases performed at the Center.
"Business Contract" means any
written or oral commitment, contract, lease
agreement or other instrument which
is not with a network of healthcare
providers or a third party payor to provide
healthcare services to patients.
2.8.
Litigation, Etc.
Except as noted in Schedule 2.8, there is no
litigation, arbitration, governmental
claim, investigation or proceeding,
pending or, to any Seller's knowledge,
threatened, against the Company at law or
in equity, before any court, arbitration
tribunal or governmental agency. All
claims and professional liability incident
reports relating to the Center have
been submitted to the Company's insurer(s).
All claims made or, to each Seller's
knowledge, threatened against the Company
or the Center in excess of the
deductible are covered under the Company's
current insurance policies. Sellers
have provided Purchaser with a complete
list of all general liability incidents,
incident reports and malpractice claims
that have occurred at the Center since
July 1, 2003.
2.9.
Court Orders, Decrees
and Compliance with Laws. There is not
outstanding or, to any Seller's knowledge,
threatened, any order, writ,
injunction or decree or any court,
governmental agency or arbitration tribunal
against or affecting the Company or the
Interests, including the Subject
Interest. The Company is in compliance with
all applicable federal, state and
local laws, regulations and administrative
orders, except where noncompliance
therewith would not have an adverse effect
on the Company or the Interests,
including the Subject Interest, and has
received no notices of alleged
violations thereof. To the best
5
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of Seller's knowledge, no governmental
authority is currently conducting an
investigation, there are no proceedings
against the Company and no such
investigation or proceeding is being
threatened.
2.10.
Taxes. All tax returns ("Tax Returns") required to be filed by or
on
behalf of the Company or any predecessor
entity have been timely filed with the
appropriate tax authorities or requests for
extensions have been timely filed
and any such extensions have been granted
and have not expired, each such Tax
Return was true, complete and correct in
all respects and all Taxes (as defined
below) with respect to taxable periods or
portions thereof covered by such Tax
Returns and all other Taxes (without regard
to whether a Tax Return was or is
required) for which the Company is
otherwise liable have been paid in full or,
to the extent are not yet due, have been
adequately reserved against on the
Company's balance sheet. For purposes of
this provision, "Taxes" means all
applicable taxes, charges, duties, fees,
levies or other assessments, including
income, excise, property, sales, use, gross
receipts, recording, insurance,
value added, profits, license, withholding,
payroll, employment, net worth,
capital gains, transfer, stamp, social
security, environmental, occupation and
franchise taxes, imposed by any
governmental entity, and including any interest,
penalties and additions attributable
thereto, federal, state, local and foreign
tax returns, reports, declarations,
statements and other documents.
2.11.
Financial Statements. Schedule 2.11(a) hereto consists of true,
correct and complete copies of internally
prepared financial statements of the
Company for the year ended December 31,
2003 and for the nine-month period ended
September 30, 2004 (collectively, the
"Financial Statements"). Subject to the
foregoing, the Financial Statements are
true, correct and, except as expressly
limited by the reports therein, complete in
all respects and, except as provided
in Schedule 2.11(b), have been prepared in
accordance with GAAP. The balance
sheets included in the Financial Statements
present fairly the financial
position of the Company, as of the
respective dates thereof and the other
financial statements included therein
present fairly the results of operations
for the periods indicated. The Financial
Statements reflect or adequately
provide for all claims against, and all
debts and liabilities of, the Company,
fixed or contingent, existing at the dates
thereof except as provided on
Schedule 2.11(b). There has not been any
change between December 31, 2003 and
the date of this Agreement which has had or
is likely to have an adverse effect
on the financial position or results of
operations of the Company. Sellers
acknowledge and agree that Purchaser relied
upon the financial information set
forth in the Financial Statements in order
to determine the consideration paid
under Section 1.2 hereof.
2.12.
Extraordinary Liabilities and Encumbrances. Except as disclosed
in
Schedule 2.5(a) and Schedule 2.12, there
are no Encumbrances on the Interests
(including the Subject Interest) or the
Assets, and the Company has no
liabilities of any nature, whether accrued,
absolute, contingent or otherwise.
Except as disclosed in Schedule 2.5(a) or
Schedule 2.12, there are no facts in
existence on the date hereof known or which
should be known to Sellers which
might reasonably serve as the basis for any
Encumbrance or other liability or
obligation of the Company.
2.13.
Licenses. The Company has all licenses, permits and approvals
which
are needed or required by law to operate
the business related to or affecting
the business of the Company. Sellers have
delivered to Purchaser an accurate
list and summary description (attached as
Schedule 2.13 hereto) of all such
licenses and permits and of all other
franchises, trademarks, trade names,
service marks, patents, patent applications
and copyrights, owned or held by the
Company relating to the ownership,
development or operations of any of the
assets, all of which are now and as of
Closing shall be in good standing and not
subject to meritorious challenge.
2.14.
Regulatory Compliance. The Company is and has at all times been
in
compliance with all applicable statutes,
rules, regulations, and requirements of
all federal, state, and local commissions,
boards, bureaus, and agencies having
jurisdiction over the Company and the
operations of the Company, including, but
not limited to, the false claims, false
representations, anti-kickback and all
other provisions of the Medicare/Medicaid
fraud and abuse laws (42 U.S.C.
Section 1320a-7 et seq.) and the physician
self-referral
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provisions of the Stark Law (42 U.S.C.
Section 1395nn). The Company timely filed
all reports, returns, data, and other
information required by federal, state,
municipal or other governmental authorities
which control, directly or
indirectly, any of the Company's activities
to be filed with any commissions,
boards, bureaus, and agencies and has paid
all sums heretofore due with respect
to such reports and returns. No such report
or return has been knowingly
inaccurate, incomplete or misleading. The
Company has not engaged in any
activities that are prohibited under 42
U.S.C. Section 1320a-7b or the
regulations promulgated thereunder, or
under any statutes or regulations, or
which are prohibited by rules of
professional conduct.
2.15. No
Finders or Brokers. No Seller has engaged any finder or broker
in
connection with the transactions
contemplated hereunder.
2.16.
Pension, Etc.
(a)
Schedule 2.16
hereto sets forth a true, complete and correct list
(all of which are collectively referred to
as the "Benefit Plans") of all
"employee benefit plans," as defined in
Section 3(3) of the Employee Retirement
Income Security Act of 1974 ("ERISA"), all
specified fringe benefit plans as
defined in Section 6039D of the Internal
Revenue Code of 1986, as amended (the
"Code"), and all other bonus, incentive
compensation, deferred compensation,
profit sharing, stock option, severance,
supplemental unemployment, layoff,
salary continuation, retirement, pension,
savings, health, life insurance,
disability, group insurance, vacation,
holiday, sick leave, fringe benefit or
welfare plan, or any other similar plan,
agreement, policy or understanding
(whether oral or written, qualified or
non-qualified) which is currently and
within the past six (6) years has been
maintained or contributed to by Seller,
the Company or any of their affiliates for
the benefit of the employees of the
Company (or their dependents). Neither
Seller, the Company nor any affiliate has
ever contributed to, or had an obligation
to contribute to, any multiple
employer plan (other than as set forth on
Schedule 2.16), multiemployer plan
(within the meaning of Section 3(37) of
ERISA) or any plan subject to Title IV
of ERISA. For purposes of this Section
2.16, the term "affiliate" is any person
or entity which, together with the Seller,
would be treated as a single employer
under Sections 414(b), (c), (m) or (o) of
the Code.
(b)
Contributions
required to be made under the terms of any of the
Benefit Plans as of the date hereof have
been timely made or, if not yet due,
have been (and will be) properly reflected
on the Closing Balance Sheet, as
applicable. No prohibited transaction(s)
(within the meaning of the Code) has
occurred in respect of the Benefit
Plans.
(c)
To the knowledge
of Seller and the Company, each Benefit Plan has
been established and administered in all
material respects in accordance with
its terms and the applicable provisions of
ERISA, the Code and other applicable
laws, rules and regulations. Each Benefit
Plan that is intended to be qualified
within the meaning of Section 401(a) of the
Code has received a favorable
determination letter as to its
qualification, (or, in the case of a standardized
form or paired plan, a favorable opinion or
notification letter) and nothing has
occurred, whether by action or failure to
act, that could reasonably be expected
to adversely affect the qualified status of
any such Benefit Plan or the exempt
status of any such trust. The Benefit Plans
do not discriminate in operating in
favor of employees who are officers or
highly compensated.
(d)
There are no
pending or, to the knowledge of Seller and the Company,
threatened claims by or on behalf of the
Benefit Plans or by any employee of the
Company alleging a breach or breaches of
fiduciary duties or violations of other
applicable state or Federal law which could
result in liability on the part of
the Company or the Benefit Plans under
ERISA or any other law, nor is there any
reasonable basis for such a claim.
(e)
Seller and the
Company have at all times complied and currently
comply in all material respects with the
applicable continuation coverage
requirements for their welfare benefit
plans, including
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the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") and any
applicable state statutes mandating health
insurance coverage for employees.
(f)
Except as
required by Title I, Part 6 of ERISA, no Benefit Plan
provides welfare benefits to any person
following termination of employment with
Seller or any affiliate and no Seller or
affiliate has any obligations (written
or oral) to provide any post-employment or
retiree welfare benefits.
(g)
Except as set
forth on Schedule 2.16 hereto, all returns, reports,
disclosure statements and premium payments
required to be made under ERISA and
the Code with respect to the Benefit Plans
have been timely filed or delivered.
The Benefit Plans have not been audited or
investigated by either the Internal
Revenue Service or the Department of Labor
within the last five years, and there
are no outstanding audit issues with
reference to the Benefit Plans pending
before said governmental agencies. No event
has occurred and no condition exists
that would subject Seller or any affiliate
to any material tax, fine, lien,
penalty or other liability imposed by
ERISA, the Code or other applicable laws,
rules and regulations with respect to each
Benefit Plan.
2.17.
Employees.
(a)
Schedule 2.17(a)
hereto sets forth a true, correct and complete
list, as of the date hereof, of the names
of all employees and other such
individuals (independent contractors) who
provide service for the Company,
including, without limitation, employees of
the Company currently on a leave of
absence or disability leave (the
"Employees"). Except as set forth in Schedule
2.17(a), all of Employees are "at will"
employees. Except as set forth in
Schedule 2.17(a), Seller is not a party to
any oral (express or implied) or
written (i) employment agreement, (ii)
consulting agreement, or (iii)
independent contractor agreement with any
individual or entity owned entirely by
medical professionals. The Company is in
compliance with all federal, state and
local laws and regulations respecting
employment and employment practices, labor
practices, terms and conditions of
employment and wages and hours. The employee
relations of the Company are good. There is
no pending or, to the best knowledge
and belief of Sellers, threatened employee
strike, work stoppage or labor
dispute. No union representation question
exists respecting any employees of the
Company, no collective bargaining agreement
exists or is currently being
negotiated by the Company, no demand has
been made for recognition by a labor
organization by or with respect to any
employees of the Company, no union
organizing activities by or with respect to
any employees of the Company are
taking place, and none of the employees of
the Company is represented by any
labor union or organization. There is no
unfair practice claim against the
Company before the National Labor Relations
Board, or any strike, dispute,
slowdown, or stoppage pending or threatened
against or involving the business of
the Company, and none has occurred. The
Company is not engaged in any unfair
labor practices. Except as set forth on
Schedule 2.17(a), there are no pending
or, to the best knowledge and belief of
Sellers, threatened EEOC claims, wage
and hour claims, unemployment compensation
claims, workers' compensation claims
or the like
