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Asset Purchase Agreement

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Title:

Asset Purchase Agreement

Entities:

PainCare Holdings, Inc.; McDermott, Will & Emery

Date:

2006

Size:

Preview shows 58KB of 160KB total

Price:

$60

ID:

#2184416

► Purchase & Sale ► Purchase ► Asset Purchase Agreements
► Healthcare ► Healthcare Facilities
► Services ► Legal

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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
	1.1	Assets to be Transferred		1
	1.2	Excluded Assets		4

2.	ASSUMPTION OF LIABILITIES			4
	2.1	Liabilities to be Assumed		4
	2.2	Liabilities Not to be Assumed		5
	2.3	Taxes Arising from Transaction		5
	2.4	Income and Franchise Taxes		5
	2.5	Product, Medical Malpractice and Service Liability		5
	2.6	Litigation Matters		5
	2.7	Infringements		5
	2.8	Transaction Expenses		5
	2.9	Liability For Breach		5
	2.10	Liabilities to Affiliates		6
	2.11	Violation of Laws or Orders		6

3.	PURCHASE PRICE - PAYMENT			6
	3.1	Purchase Price Consideration		6
	3.2	Closing Consideration		6
	3.3	Payment of Closing Consideration		6
	3.4	Closing Time Adjustments		7
	3.5	Promissory Note and Guaranty		9
	3.6	Allocation of Purchase Price		9
	3.7	Escrow Agreement and Transition Management Services		9

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

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TABLE OF CONTENTS
(continued)
			Page


	7.5	Consents	33
	7.6	Other Action	33
	7.7	Disclosure	34

8.	CONDITIONS PRECEDENT TO PURCHASERS 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

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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 Companys 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 Companys 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);

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