Exhibit 10.1

 

 

 

Purchase Agreement

between

FOUNDATION HEALTHCARE, INC.

FOUNDATION SURGERY AFFILIATES, LLC

FOUNDATION SURGERY MANAGEMENT, LLC

and

HEALTHCREST SURGICAL PARTNERS, LLC

Dated as of October 12, 2016

 

 

 

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TABLE OF CONTENTS

 

         PAGE  

ARTICLE 1 DEFINITIONS

     1   

1.1

 

Definitions

     1   

1.2

 

Referenced Terms

     7   

ARTICLE 2 PURCHASE AND SALE; ASSUMPTION OF LIABILITIES

     8   

2.1

 

Purchase and Sale

     8   

2.2

 

Purchase Price

     9   

2.3

 

Transactions to be Effected at the Closing

     9   

2.4

 

Closing

     9   

2.5

 

Withholding Tax

     10   

2.6

 

Adjustments to Purchase Price

     10   

2.7

 

FSM Excluded Assets

     11   

2.8

 

FSM Retained Liabilities

     11   

2.9

 

Assignment of FSM Assumed Contracts

     11   

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER

     12   

3.1

 

Formation and Authority of Seller

     12   

3.2

 

Formation, Authority and Qualification of the Companies

     12   

3.3

 

Purchased Interests and Purchased Assets

     13   

3.4

 

Company Subsidiaries

     13   

3.5

 

No Conflicts; Consents

     14   

3.6

 

Financial Statements

     14   

3.7

 

Undisclosed Liabilities

     14   

3.8

 

Absence of Certain Changes, Events and Conditions

     15   

3.9

 

Material Contracts

     16   

3.10

 

Title to Assets

     16   

3.11

 

Intellectual Property

     17   

3.12

 

Accounts Receivable

     18   

3.13

 

Insurance

     18   

3.14

 

Legal Proceedings; Governmental Orders

     19   

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TABLE OF CONTENTS

(CONTINUED)

 

         PAGE  

3.15

 

Compliance with Laws; Licenses; Permits

     19   

3.16

 

Certain Sensitive Payments

     20   

3.17

 

Certain Healthcare Reports and Documents

     20   

3.18

 

Employee Benefit Matters

     20   

3.19

 

Employment Matters

     22   

3.20

 

Taxes

     22   

3.21

 

Books and Records

     24   

3.22

 

Brokers

     24   

3.23

 

Full Disclosure

     24   

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER

     24   

4.1

 

Formation and Authority of Buyer

     24   

4.2

 

No Conflicts; Consents

     24   

4.3

 

Legal Proceedings; Governmental Orders

     25   

4.4

 

Brokers

     25   

4.5

 

Full Disclosure

     25   

ARTICLE 5 COVENANTS

     25   

5.1

 

Conduct of Business Before the Closing

     25   

5.2

 

Access to Information

     25   

5.3

 

Exclusive Negotiations; Buyer Fee

     26   

5.4

 

Notice of Certain Events

     27   

5.5

 

Healthcare Approvals

     27   

5.6

 

Confidentiality

     28   

5.7

 

Governmental Approvals and Consents

     28   

5.8

 

Books and Records

     29   

5.9

 

Closing Conditions

     30   

5.10

 

Public Announcements

     30   

5.11

 

Further Assurances

     30   

5.12

 

Use of Seller’s Name Post-Closing

     30   

5.13

 

Non-Solicitation of Employees

     30   

 

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TABLE OF CONTENTS

(CONTINUED)

 

         PAGE  

ARTICLE 6 TAX MATTERS

     30   

6.1

 

Tax Covenants

     30   

6.2

 

Termination of Existing Tax Sharing Agreements

     31   

6.3

 

Tax Indemnification

     31   

6.4

 

Contests

     32   

6.5

 

Cooperation and Exchange of Information

     32   

6.6

 

Tax Treatment of Indemnification Payments

     33   

6.7

 

Survival

     33   

6.8

 

Overlap

     33   

ARTICLE 7 CONDITIONS TO CLOSING

     33   

7.1

 

Conditions to Obligations of Buyer

     33   

7.2

 

Conditions to Obligations of Seller

     35   

ARTICLE 8 INDEMNIFICATION

     36   

8.1

 

Survival

     36   

8.2

 

Indemnification by Seller

     36   

8.3

 

Indemnification by Buyer

     37   

8.4

 

Certain Limitations

     37   

8.5

 

Indemnification Procedures

     38   

8.6

 

Payments

     40   

8.7

 

Tax Treatment of Indemnification Payments

     40   

8.8

 

Effect of Investigation

     40   

8.9

 

No Double Recovery

     40   

8.10

 

Exclusive Remedies

     40   

ARTICLE 9 TERMINATION

     41   

9.1

 

Termination

     41   

9.2

 

Effect of Termination

     42   

ARTICLE 10 MISCELLANEOUS

     42   

10.1

 

Expenses

     42   

10.2

 

Notices

     42   

10.3

 

Interpretation

     43   

 

iii

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TABLE OF CONTENTS

(CONTINUED)

 

         PAGE  

10.4

 

Headings

     43   

10.5

 

Severability

     44   

10.6

 

Entire Agreement

     44   

10.7

 

Successors and Assigns

     44   

10.8

 

No Third-party Beneficiaries

     44   

10.9

 

Amendment and Modification; Waiver

     44   

10.10

 

Governing Law; Submission to Jurisdiction; Waiver of Jury Trial

     44   

10.11

 

Counterparts

     45   

 

List of Schedules and Exhibits

  

Schedule A

 

List of Ambulatory Surgical Center Companies

  

Schedule B

 

Form of Buyer Note

  

Schedule C

 

Form of Buyer Note Guaranty

  

Schedule D

 

Form of Security Agreement

  

Schedule E

 

Form of Assignment of Shares

  

Schedule F

 

Form of Bill of Sale, Assignment and Assumption Agreement

  

Schedule G

 

Form of Assistance and Cooperation Agreement

  

Schedule H

 

Form of Subcontractor Management Services Agreement

  

Schedule I

 

Form of Assignment and Assumption Agreement-FSM ASC Contracts

  

Schedule J

 

Form of Assignment of FSM Sublease

  

Schedule K

 

Calculation of Working Capital

  

 

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PURCHASE AGREEMENT

THIS PURCHASE AGREEMENT (this “Agreement”) dated as of October 12, 2016, is
between HEALTHCREST SURGICAL PARTNERS, LLC, an Oklahoma limited liability
company (“Buyer”), FOUNDATION HEALTHCARE, INC., an Oklahoma corporation
(“Foundation”), FOUNDATION SURGERY AFFILIATES, LLC, a Nevada limited liability
company (“FSA”), and FOUNDATION SURGERY MANAGEMENT, LLC, a Delaware limited
liability company (“FSM”). Foundation, FSA and FSM are collectively referred to
herein as “Seller”.

Recitals:

A. Seller owns (i) all of the issued and outstanding membership interests in FSM
(the “FSM Membership Interests), (ii) all of the issued and outstanding
membership interests (the “FSH Membership Interests”) in Foundation Surgery
Holdings, LLC, a Delaware limited liability company (“FSH”), and (iii) all of
the issued and outstanding capital stock (the “ST Shares”) in somniTech, Inc., a
Kansas corporation (“ST”). FSM, FSH and ST are each referred to as a “Company”
or collectively as the “Companies”.

B. Seller wishes to sell to Buyer, and Buyer wishes to purchase from Seller,
(i) substantially all of the assets of FSM, (ii) the FSH Membership Interests,
and (iii) the ST Shares, subject to the terms and conditions shown in this
Agreement. The FSH Membership Interests and the ST Shares are collectively
referred to herein as the “Purchased Interests”.

In consideration of the mutual covenants and agreements hereinafter set forth,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

Article 1

DEFINITIONS

1.1 Definitions. The following terms have the meanings specified or referred to
in this Article 1:

“Acquisition Proposal” has the meaning shown in Section 5.3(a).

“Action” means any claim, action, charge, suit, cause of action, demand,
lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, hearing,
appeal, judicial review, litigation, citation, summons, subpoena or
investigation of any nature (civil, criminal, administrative, regulatory or
otherwise), whether at law or in equity, commenced, brought or conducted by any
Person or Governmental Authority.

“Adjusted Working Capital” means Working Capital less accounts receivable.

“Affiliate” of a Person means any other Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such Person. The term “control” (including the terms
“controlled by” and “under common control with”) means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.

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“ASCs” means the ambulatory surgery centers managed and/or owned by Seller as
listed on Schedule A.

“Assignment of Shares” means the Assignment of Shares in substantially the form
set forth on Schedule E.

“Assignment of FSM Sublease” means the Assignment and Assumption of Sublease
Agreement with regard to the FSM Sublease in substantially the form set forth on
Schedule J.

“Assignment and Assumption Agreement–FSM ASC Contracts” means the assignment and
assumption agreement with regard to the FSM ASC Contracts in substantially the
form set forth on Schedule I.

“Assistance and Cooperation Agreement” means that certain Assistance and
Cooperation Agreement by and between Seller and each of the Buyer Principals in
the form attached hereto as Schedule G.

“Bill of Sale, Assignment and Assumption Agreement” means the Bill of Sale,
Assignment and Assumption Agreement in substantially the form set forth on
Schedule F.

“Business” refers to the ordinary course of operations of the Companies as of
the Closing Date.

“Business Day” means any day except Saturday, Sunday or any other day on which
commercial banks located in Oklahoma City, Oklahoma, are authorized or required
by Law to be closed for business.

“Buyer Note” shall have meaning specified in Section 2.2(b).

“Buyer Note Guaranty” means, individually and collectively, the unconditional
personal, pro rata guaranty or guaranties of the Buyer Principals, guaranteeing
the payment of the principal and interest on the Buyer Note, which shall be in
the form set forth on as Schedule C.

“Buyer Principals” means Thomas A. Newman, Brad Ottwell and Eric Gleichman

“Closing Date Payment” shall have the meaning specified in Section 2.2(a).

“Code” means the Internal Revenue Code of 1986, as amended.

“Company Subsidiary” means any direct or indirect Subsidiary of FSH, FSM or ST.

“Contracts” means all contracts, leases, deeds, mortgages, licenses,
instruments, notes, commitments, undertakings, indentures, joint ventures and
all other agreements, commitments and legally binding arrangements, whether
written or oral.

“Disclosure Schedules” means the disclosure schedules delivered by Seller and
Buyer concurrently with the execution and delivery of this Agreement. Before and
until the Closing Date, Seller and Buyer shall supplement, amend, or update the
Disclosure Schedules with information obtained after the date of this Agreement
that would have been required to be shown in a section of the Disclosure
Schedules had such information been obtained before that date. At Closing, all
information shown in the Disclosure Schedules is deemed to be delivered as of
the Closing Date.

 

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“Dollars or $” means the lawful currency of the United States.

“Encumbrance” means any charge, claim, community property interest, pledge,
condition, equitable interest, lien (statutory or other), option, security
interest, mortgage, easement, encroachment, right of way, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income or exercise of any other attribute of ownership.

“Execution Date” means the date of full execution of this Agreement.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the applicable regulations.

“ERISA Affiliate” means, with respect to any Person, any other Person that,
together with such first Person, would be treated as a single employer within
the meaning of Section 414(b), (c), (m) or (o) of the Code.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Formation Documents” means (a) in the case of a Person that is a corporation,
its articles or certificate of incorporation and its bylaws, regulations or
similar governing instruments required by the laws of its jurisdiction of
formation or organization; (b) in the case of a Person that is a partnership,
its articles or certificate of partnership, formation or association, and its
partnership agreement (in each case, limited, limited liability, general or
otherwise); (c) in the case of a Person that is a limited liability company, its
articles or certificate of formation or organization, and its limited liability
company agreement or operating agreement; and (d) in the case of a Person that
is none of a corporation, partnership (limited, limited liability, general or
otherwise), limited liability company or natural person, its governing
instruments as required or contemplated by the laws of its jurisdiction of
formation.

“FSM ASC Contracts” means the management agreements between FSM and ASCs.

“FSM Assumed Contracts” means agreements to which FSM was a party prior to the
Closing relating to the Business of FSM which are listed on Section 2.9 of the
Disclosure Schedules.

“FSM Assumed Liabilities” means (i) the liabilities and obligations of FSM that
are reflected on the FSM Balance Sheet, as adjusted to eliminate intercompany
accounts and FSM Retained Liabilities, (ii) the liabilities and obligations of
FSM incurred or arising in the ordinary course of Business after the Balance
Sheet Date, and (iii) Taxes of FSM (other than income taxes) that are
specifically reserved for and reflected in the Balance Sheet of FSM as a current
liability and accounted for in the calculation of Working Capital.

“FSM Excluded Assets” shall have the meaning set forth in Section 2.7.

“FSM Excluded Contracts” means agreements to which FSM was a party prior the
Closing which are not FSM Assumed Contracts.

“FSM Retained Liabilities” shall have the meaning set forth in Section 2.8.

 

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“FSM Purchased Assets” means, collectively, all rights, title and interests in,
to and under all of the rights, properties and assets (whether real, personal or
mixed, or whether tangible or intangible) of every kind and description,
wherever located, used in or held for use in, necessary for or otherwise
relating to the Business of FSM as the same shall exist immediately prior to the
Closing (other than the FSM Excluded Assets), including the following:

(a) All assets of FSM reflected on the Balance Sheet of FSM;

(b) All assets used in, or held for use in, necessary for or otherwise relating
to the Business of FSM acquired in the ordinary course of business after the
Balance Sheet Date;

(c) All rights under Contracts relating to the Business of FSM that are
assumable or transferable;

(d) All leases, including real property leases for facilities relating to the
Business of FSM, and any improvements thereunder;

(e) All inventory, accounts, notes, refunds and other receivables, other
current, fixed or prepaid assets, prepaid items and any other personal property,
including any plant, property, equipment or any other tangible personal
property, in each case, used in or held for use in, necessary for or otherwise
relating to the Business of FSM;

(f) All Permits used in or held for use in, necessary for or otherwise relating
to the Business of FSM, except to the extent that the transfer thereof would
violate or would not be permitted or effective under applicable Laws;

(i) All patient medical records relating to the Business of FSM;

(j) All books and records relating to the Business of FSM; and

(k) All of FSM’s causes of action against third parties relating to any FSM
Purchased Asset, any FSM Assumed Liability, or any FSM Assumed Contract.

“FSM Sublease” means the Sublease Agreement dated as of January 14, 2016, by and
between FSM and AdvancePierre Foods, Inc.

“GAAP” means United States generally accepted accounting principles in effect
from time to time.

“Governmental Authority” means any federal, state, local or foreign government
or political subdivision, or any agency or instrumentality of such government or
political subdivision, or any self-regulated organization or other
non-governmental regulatory authority or quasi-governmental authority (to the
extent that the rules, regulations or orders of such organization or authority
have the force of Law), or any arbitrator, court or tribunal of competent
jurisdiction.

“Governmental Order” means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.

“Knowledge of Buyer or Buyer’s Knowledge” or any other similar knowledge
qualification means the actual knowledge of a Buyer Principal, and the knowledge
that each such person would reasonably be expected to obtain in the course of
diligently performing his or her duties for the Buyer.

“Knowledge of Seller or Seller’s Knowledge” or any other similar knowledge
qualification, means the actual knowledge of the Seller’s Chief Executive
Officer, Chief Financial Officer or General Counsel, and the knowledge that each
such person would reasonably be expected to obtain in the course of diligently
performing his or her duties for the Seller; provided, however, that Seller
shall not be deemed to have actual or constructive knowledge of a fact or
circumstance based solely on such fact or circumstance being known by a Buyer
Principal.

 

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“Law” means any statute, law, ordinance, regulation, rule, code, order,
constitution, treaty, common law, judgment, decree, other requirement or rule of
law of any Governmental Authority.

“Losses” means losses, damages, liabilities, deficiencies, Actions, judgments,
interest, awards, penalties, fines, costs or expenses of whatever kind,
including reasonable attorneys’ fees and the cost of enforcing any right to
indemnification hereunder and the cost of pursuing any insurance providers;
provided, however, that “Losses” do not include punitive damages, except in the
case of fraud or to the extent actually awarded to a Governmental Authority or
other third party.

“Material Adverse Effect” means any event, occurrence, fact, condition or change
that is, or could reasonably be expected to become, individually or in the
aggregate, materially adverse to (a) the Business, results of operations,
prospects, condition (financial or otherwise) or assets of a Company or Company
Subsidiary, either on an entity or consolidated basis, or (b) the ability of
Buyer to consummate the transactions contemplated hereby on a timely basis.

“Medicaid” means Title XIX of the Social Security Act, as amended, or any
successor law, and all regulations issued pursuant thereto and any successor
law, and the laws of the States in which the Companies do business passed or
promulgated in connection with programs administered under Title XIX of the
Social Security Act.

“Medicare” means Title XVIII of the Social Security Act, as amended, or any
successor law, and all regulations issued pursuant thereto and any successor
law.

“Permit” means any and all permits, licenses, franchises, approvals,
authorizations, registrations, certificates, variances and similar rights
obtained, or required to be obtained, from Governmental Authorities.

“Person” means an individual, corporation, partnership, joint venture, limited
liability company, Governmental Authority, unincorporated organization, trust,
association or other entity.

“Post-Closing Tax Period” means any taxable period beginning after the Closing
Date and, with respect to any taxable period beginning before and ending after
the Closing Date, the portion of such taxable period beginning after the Closing
Date.

“Pre-Closing Tax Period” means any taxable period ending on or before the
Closing Date and, with respect to any taxable period beginning before and ending
after the Closing Date, the portion of such taxable period ending on and
including the Closing Date.

“Real Property” means the real property leased or subleased by any Company or
Company Subsidiary, together with all buildings, structures and facilities
located thereon.

“Representative” means, with respect to any Person, any and all directors,
managing members, managers, officers, employees, consultants, financial
advisors, counsel, accountants and other agents of such Person.

“SEC” means the United States Securities and Exchange Commission.

 

5

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“Security Agreement” means that certain Security Agreement entered into by Buyer
and Seller to secure payment by Buyer of principal and interest on the Buyer
Note, which shall be in the form attached hereto as Schedule D.

“Seller” has the meaning shown in the preamble.

“Senior Debt” means any loan or financing obtained by Buyer to finance the
Closing Date Payment.

“Senior Lender” means the lender under any Senior Debt.

“Subsidiary” means any corporation, limited liability company, partnership,
joint venture or other entity in which a Person owns, directly or indirectly,
more than fifty percent (50%) of the voting interests. For purposes of this
Agreement, the Subsidiaries refer to the direct or indirect Subsidiaries of each
Company as the context requires.

“Subcontractor Management Services Agreement” means an agreement between Buyer
and FSM in substantially the form attached here as Schedule H, pursuant to which
Buyer, as subcontractor, agrees to perform the obligations of FSM, as prime
contractor, under an FSM ASC Contract.

“Tax Return” means any return, declaration, report, claim for refund,
information return or statement or other document relating to Taxes, including
any schedule or attachment thereto, and including any amendment.

“Taxes” means all federal, state, local, foreign and other income, gross
receipts, sales, use, production, ad valorem, transfer, franchise, registration,
profits, license, lease, service, service use, withholding, payroll, employment,
unemployment, estimated, excise, severance, environmental, stamp, occupation,
premium, property (real or personal), real property gains, windfall profits,
customs, duties or other taxes, fees, assessments or charges of any kind
whatsoever, together with any interest, additions or penalties with respect
thereto and any interest in respect of such additions or penalties.

“Territory” means the United States of America.

“Transaction Documents” means this Agreement, the Buyer Note, the Security
Agreement, the Buyer Note Guaranties, the Assignment of Shares, the Bill of Sale
and Assignment and Assumption Agreement, the Assignment and Assumption
Agreement-FSM ASC Contracts, the Assistance and Cooperation Agreement, the
Subcontractor Management Services Agreement with respect to Huebner Ambulatory
Surgery Center, LLC, the Subcontractor Management Services Agreement with
respect to Physicians West El Paso Surgery Center, LLC, the Assignment of FSM
Sublease, the Transition and Shared Services Agreement and the HVSC Master
Agreement.

“Working Capital” means the current assets within the Companies less current
liabilities within the Companies as of the Closing Date, as calculated in
accordance with the methodology used in Schedule K to calculate working capital
as of July 31, 2016. It is intended that such calculation will eliminate
intercompany accounts and accurately reflect Excluded Assets, Retained
Liabilities and Assumed Liabilities.

“Working Capital Target” means $100,000.

 

6

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1.2 Referenced Terms. Each of the following terms is defined in the Section
shown opposite such term:

 

Term

  

Section

Acquisition Proposal

   5.3(a)

Adjusted Dispute Notice

   2.6(c)

Agreement

   Preamble

Allocation Statement

   6.1(a)

Assignment

   2.3(b)(i)

Balance Sheet

   3.6

Balance Sheet Date

   3.6

Benefit Plan

   3.18(a)

Buyer

   Preamble

Buyer Basket Exclusions

   8.4(a)

Buyer Indemnitees

   8.2

Buyer Fee

   5.3(c)

Closing

   2.4

Closing Date

   2.4

Closing Statement

   2.6(a)

Company or Companies

   Recitals

Company Benefit Plan

   3.18(a)

Company Intellectual Property

   3.11(b)

Direct Claim

   8.5(c)

Financial Statements

   3.6

FSH

   Recitals

FSH Membership Interests

   Recitals

FSM

   Recitals

FSM Membership Interests

   Recitals

Governmental Healthcare Program

   3.15(b)

Health Information Laws

   3.15(a)

Healthcare Approvals

   5.5

Healthcare Laws

   3.15(a)

Healthcare Reports

   3.20

HIPAA

   3.17

HVSC

   7.1(g)

HVSC Master Agreement

   7.1(g)

Indemnified Party

   8.5

Indemnifying Party

   8.5

 

7

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Insurance Policies

   3.13

Intellectual Property

   3.11(a)

Intellectual Property Registrations

   3.11(b)

Liabilities

   3.7

Material Contracts

   3.9(a)

Membership Interest

   Recitals

Permitted Encumbrances

   3.10(a)

Purchase Price

   2.2

Purchased Interests

   Recitals

Qualified Benefit Plan

   3.18(c)

Restricted Parties

   5.3(a)

Restricted Period

   5.3(a)

Review Period

   2.6(c)

Reviewing Accountants

   2.6(d)

Seller Basket Exclusions

   8.4(b)

Seller Indemnitees

   8.3

Sensitive Payments

   3.16

ST

   Recitals

ST Shares

   Recitals

Tax Claim

   6.4

Third Party Claim

   8.5(a)

Transition and Shared Services Agreement

   7.1(a)

Article 2

PURCHASE AND SALE; ASSUMPTION OF LIABILITIES

2.1 Purchase and Sale.

(a) Purchased Interests. Subject to the terms and conditions of this Agreement,
at the Closing Seller shall sell to Buyer, and Buyer shall purchase from Seller,
all of Seller’s right, title and interest in and to the Purchased Interests.

(b) Purchased Assets. Subject to the terms and conditions of this Agreement, at
the Closing Seller shall sell, transfer, convey, assign and deliver to Buyer,
and Buyer shall purchase and acquire from Seller good and valid title to, and
all rights and interests in, to and under, all of the FSM Purchased Assets; and
Seller shall assign to Buyer, and Buyer shall assume, the FSM Assumed
Liabilities, and the FSM Assumed Contracts.

 

8

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2.2 Purchase Price. In exchange for the Purchased Interests and the FSM
Purchased Assets, Buyer shall pay and deliver or cause to be paid or delivered
to Seller the following (the “Purchase Price”):

(a) cash in the amount of $2,500,000 by wire transfer of immediately available
funds to a bank account designated by Seller (the “Closing Date Payment”);

(b) Buyer’s promissory note in the principal amount of $2,750,000 substantially
in the form attached hereto as Schedule B (the “Buyer Note”).

To secure payment of principal and interest on the Buyer Note, Buyer shall grant
Seller a security interest in the assets of Buyer which shall be subordinate
only to any Senior Debt. Payment of principal and interest on the Buyer Note
shall be further secured by the Buyer Note Guaranties and the Security
Agreement.

2.3 Transactions to be Effected at the Closing.

(a) At the Closing, Buyer shall deliver or cause to be delivered to Seller:

(i) the Closing Date Payment;

(ii) the Buyer Note duly executed by Buyer;

(iii) the Security Agreement duly executed by Buyer;

(iv) the Buyer Note Guaranties duly executed by the Buyer Principals; and

(v) the Assistance and Cooperation Agreements duly executed by the Buyer
Principals.

(vi) all other agreements, documents, instruments or certificates required to be
delivered by Buyer at or before the Closing pursuant to Section 7.2.

(b) At the Closing, Seller shall deliver to Buyer:

(i) The Assignment of Shares duly executed by Seller;

(ii) The Bill of Sale, Assignment and Assumption Agreement duly executed by
Seller;

(iii) The Assignment and Assumption Agreement–FSM ASC Contracts duly executed by
Seller,

(iv) The Assignment of FSM Sublease; and

(v) all other agreements, documents, instruments or certificates required to be
delivered by Seller at or before the Closing pursuant to Section 7.1.

2.4 Closing. Subject to the terms and conditions of this Agreement, the purchase
and sale of the Purchased Interests and the FSM Purchased Assets contemplated
hereby shall take place at a closing (the “Closing”) to be held at 10:00 a.m.,
Central Time, no later than two Business Days after the last of the conditions
to Closing shown in Article 7 have been satisfied

 

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or waived (other than conditions which, by their nature, are to be satisfied on
the Closing Date) and in no event later than December 31, 2016, at the offices
of Seller at the offices of Seller at 13900 N. Portland Avenue, Suite 200,
Oklahoma City, Oklahoma 73134, or at such other time or on such other date or at
such other place as Seller and Buyer may mutually agree upon in writing (the day
on which the Closing takes place being the “Closing Date”).

2.5 Withholding Tax. Buyer and the Companies are entitled to deduct and withhold
from the Purchase Price all Taxes that Buyer or and the Companies may be
required to deduct and withhold under any provision of Tax Law. Buyer or the
Companies shall timely remit any such withheld amounts to the appropriate
Governmental Authority as required by Law. All such withheld amounts that are
the obligations of Seller under any applicable Tax law shall be treated as
delivered to Seller.

2.6 Adjustments to Purchase Price.

(a) Buyer’s Delivery of the Closing Statement. Within 60 days following the
Closing, Buyer shall prepare and deliver to Seller a calculation of the Working
Capital and Adjusted Working Capital as of the Closing Date (the “Closing
Statement”). The Closing Statement will be prepared using the same accounting
methods, standards, policies, practices, classifications, estimation
methodologies, assumptions, procedures and level of prudence as were used to
prepare the Balance Sheet. If the Closing Date does not occur at a financial
week or month end for accounting purposes, the Parties shall agree on mutually
acceptable roll forward or roll back procedures.

(b) Adjustment to the Purchase Price. The adjustment contemplated by this
Section 2.6 is intended to show the difference between (i) the Working Capital
Target, and (ii) the Adjusted Working Capital. If the Adjusted Working Capital
shown in the Closing Statement is less than the Working Capital Target, the
Purchase Price shall be adjusted downward by the difference, subject to
subsections (c) through (e). Any such downward adjustment shall reduce the
principal amount of the Buyer Note.

(c) Review Period; Adjustment Dispute Notice. Seller has 30 days after delivery
of the Closing Statement in accordance with the notice provisions of
Section 10.2 (the “Review Period”) to review the delivered Closing Statement.
During the Review Period, Buyer will provide Seller and its Representatives full
access during regular business hours and upon reasonable notice to all relevant
books and records and employees of Buyer to the extent necessary to review
matters and information related to the preparation of the delivered Closing
Statement in a manner not unreasonably interfering with the Business of Buyer.
If Seller disputes the delivered Closing Statement, Seller shall deliver within
the Review Period a written notice to Buyer (an “Adjustment Dispute Notice”),
setting forth in reasonable detail the component or components that are in
dispute and the basis of such dispute. If Seller fails to deliver an Adjustment
Dispute Notice to Buyer before expiration of the Review Period, then Seller will
be bound by the calculations of the Purchase Price shown in the Closing
Statement, and the Purchase Price shall be adjusted accordingly to the extent
that the Working Capital Target exceeds the Working Capital shown on the Closing
Statement.

 

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(d) Dispute Resolution. If Seller delivers an Adjustment Dispute Notice within
the Review Period, then Buyer and Seller will use commercially reasonable
efforts to resolve their dispute within 15 days after receipt by Buyer of the
Adjustment Dispute Notice. If Buyer and Seller resolve their dispute in writing,
the Purchase Price shown in the writing will be the final Purchase Price. If
Buyer and Seller fail to resolve their dispute within 15 days after receipt by
Buyer of an Adjustment Dispute Notice, they shall jointly engage the Oklahoma
City office of Grant Thornton LLP (the “Reviewing Accountant”), to review the
disputed Closing Statement. Within 15 days after the engagement, each of Buyer
and Seller will submit to the Reviewing Accountant and to each other in writing
its computation of the Purchase Price. Buyer and Seller will make available to
the Reviewing Accountant all work papers and all other information and material
in their possession relating to the matters in the Adjustment Dispute Notice.
The Reviewing Accountant will be instructed to use its commercially reasonable
efforts to deliver its determination as promptly as practicable after such
submission of the dispute to the Reviewing Accountant and in any event will
deliver its determination within 75 days after its engagement. In resolving any
disputed item, the Reviewing Accountant: (a) will limit its review to matters
specifically shown in the Adjustment Dispute Notice, (b) will further limit its
review to whether the items in dispute that were previously included in an
Adjustment Dispute Notice were prepared in accordance with GAAP, and (c) will
not assign a value to any item greater than the greatest value for such item
claimed by either Party or less than the smallest value for such item claimed by
either Party. The Reviewing Accountant will determine the Purchase Price based
on such review. Buyer and Seller will be bound by the determinations (absent
fraud or manifest bad faith or error by the Reviewing Accountant). The costs,
expenses and fees of the Reviewing Accountant will be shared by Buyer and Seller
equally.

2.7 FSM Excluded Assets. The “FSM Excluded Assets” are set forth in Section 2.7
of the Disclosure Schedules. Notwithstanding anything contained in this
Agreement to the contrary, the FSM Excluded Assets shall not be included in the
FSM Purchased Assets.

2.8 FSM Retained Liabilities. Notwithstanding anything contained in this
Agreement to the contrary, Buyer does not assume, or agree or undertake to pay,
satisfy, discharge or perform, and will not be deemed by virtue of the execution
and delivery of this Agreement or any document delivered at the Closing pursuant
to this Agreement, or as a result of the consummation of the transactions
contemplated by this Agreement, to have assumed, or to have agreed or undertaken
to pay, satisfy, discharge or perform, any liability, obligation or indebtedness
of FSM, other than the FSM Assumed Liabilities (such liabilities other than the
Assumed Liabilities, the “FSM Retained Liabilities”). The FSM Retained
Liabilities (including the FSM Excluded Contracts) are set forth in Section 2.8
of the Disclosure Schedules.

2.9 Assignment of FSM Assumed Contracts. Section 2.9 of the Disclosure Schedules
includes a list of the FSM Assumed Contracts, including the FSM ASC Contracts
and the FSM Sublease. At the Closing, FSM shall assign to Buyer or an Affiliate
of Buyer (a) all FSM Assumed Contracts other than the FSM ASC Contracts and the
FSM Sublease pursuant to the Bill of Sale and Assignment and Assumption
Agreement, (b) all FSM ASC Contracts pursuant to the Assignment and Assumption
Agreement-FSM ASC Contracts, and (c) the FSM Sublease pursuant to the Assignment
of FSM Sublease. In the event that any FSM Assumed Contract requires consent to
assignment, the parties will use commercially reasonable efforts to obtain such
consent on or prior to the date of Closing. In the event that the parties are
unable to obtain

 

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such consent on or prior to the date of Closing, the parties will use
commercially reasonable efforts to obtain such consent after the date of
Closing. In the event that the parties are unable to obtain consent with regard
to any FSM ASC Contract within 90 days following the date of Closing, the
parties shall execute a Subcontractor Management Services Agreement effective as
of the Closing Date; provided however, that the parties shall execute a
Subcontractor Management Services Agreement with regard to Huebner Ambulatory
Surgery Center, LLC on or prior to the date of Closing which shall be effective
on such date. Notwithstanding the foregoing, in the event that the parties are
unable to obtain such consent despite commercially reasonable efforts, there
will be no adjustment to the Purchase Price based on such inability. Further,
Buyer will not terminate this Agreement or delay the Closing beyond December 31,
2016, solely as a result of the parties’ inability to obtain any consent to
assignment of an FSM Assumed Contract.

Article 3

REPRESENTATIONS AND WARRANTIES OF SELLER

Except as shown in the correspondingly numbered section of the Disclosure
Schedules, Seller represents and warrants to Buyer that the statements contained
in this Article 3 are true and correct as of the date of this Agreement.

3.1 Formation and Authority of Seller. Foundation is a corporation duly formed,
validly existing and in good standing under the Laws of the State of Oklahoma;
FSA is a limited liability company duly formed, validly existing and in good
standing under the Laws of the State of Nevada; and FSM is a limited liability
company duly formed, validly existing and in good standing under the Laws of the
State of Delaware. Seller has full corporate power and authority to enter into
this Agreement and the other Transaction Documents to which Seller is a party,
to carry out its obligations and to consummate the contemplated transactions and
to conduct its Business as it is now being conducted and described in the
reports filed by Seller with the SEC pursuant to the reporting requirements of
the Exchange Act. The execution and delivery by Seller of this Agreement and any
other Transaction Document to which Seller is a party, the performance by Seller
of its obligations, and the consummation by Seller of the contemplated
transactions have been duly authorized by all requisite corporate action on the
part of Seller. This Agreement has been duly executed and delivered by Seller,
and this Agreement constitutes a legal, valid and binding obligation of Seller
enforceable against Seller in accordance with its terms. When each other
Transaction Document to which Seller is or will be a party has been duly
executed and delivered by Seller, such Transaction Document will constitute a
legal and binding obligation of Seller enforceable against it in accordance with
its terms.

3.2 Formation, Authority and Qualification of the Companies.

(a) FSH and FSM are limited liability companies duly formed, validly existing
and in good standing under the Laws of the State of Delaware and have full
limited liability company power and authority to own, operate or lease the
properties and assets now owned, operated or leased by it and to carry on its
Business as it has been and is currently conducted and as is proposed to be
conducted after the consummation of the transactions contemplated herein. ST is
a corporation duly formed, validly existing and in good standing under the Laws
of the State of Kansas and has full limited liability company power and
authority

 

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to own, operate or lease the properties and assets now owned, operated or leased
by it and to carry on its Business as it has been and is currently conducted and
as is proposed to be conducted after the consummation of the transactions
contemplated herein. All corporate actions taken by each Company in connection
with this Agreement and the other Transaction Documents have been or will be
duly authorized on or before the Closing. Complete and correct copies of the
Formation Documents for FSH and ST, including the limited liability company or
operating agreement, of each Company have been made available to Buyer.

(b) Section 3.2 of the Disclosure Schedules sets forth each jurisdiction in
which each Company is licensed or qualified to do business, and each Company is
duly licensed or qualified to do business and is in good standing in each
jurisdiction in which the properties owned or leased by it or the operation of
its Business as currently conducted makes such licensing or qualification
necessary.

3.3 Purchased Interests and Purchased Assets.

(a) Purchased Interests.

(i) Seller is the record owner of and has good and valid title to the Purchased
Interests, free and clear of all Encumbrances. The Purchased Interests
constitute 100% of the total issued and outstanding membership interests or
capital stock in each Company. The Purchased Interests have been duly authorized
and are validly issued, fully-paid and non-assessable. Upon consummation of the
transactions contemplated by this Agreement, Buyer shall own all of the
Purchased Interests, free and clear of all Encumbrances.

(ii) The Purchased Interests were issued in compliance with applicable Laws. The
Purchased Interests were not issued in violation of the Formation Documents of
the Companies, or any other agreement, arrangement or commitment to which Seller
or any Company is a party and are not subject to or in violation of any
preemptive or similar rights of any Person.

(iii) There are no outstanding or authorized options, warrants, convertible
securities or other rights, agreements, arrangements or commitments of any
character relating to any membership interests or capital stock in any Company
or obligating Seller or any Company to issue or sell any membership interests or
capital stock (including the Purchased Interests), or any other interest, in a
Company. Other than the Formation Documents, there are no voting trusts, proxies
or other agreements or understandings in effect with respect to the voting or
transfer of any of the Purchased Interests.

(b) Purchased Assets. FSM is the record owner of and has good and valid title to
the FSM Purchased Assets. Upon consummation of the transactions contemplated by
this Agreement, Buyer shall own the FSM Purchased Assets, free and clear of all
Encumbrances.

3.4 Company Subsidiaries. Section 3.4 of the Disclosure Schedules sets forth
each of the Company Subsidiaries, the Business conducted by the Company
Subsidiary, and the applicable state of formation. Except as shown on
Section 3.4 of the Disclosure Schedule, no Company owns, directly or indirectly,
any ownership interests of any Person or business. Each Company Subsidiary is
duly formed, validly existing and in good standing under the Laws of the

 

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state of its formation, and has full corporate power and authority to own,
operate or lease the properties and assets now owned, operated or leased by it
and to carry on its Business as it has been and is currently conducted.
Section 3.4 of the Disclosure Schedules sets forth each jurisdiction in which
each Company Subsidiary is licensed or qualified to do business, and each
Company Subsidiary is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the properties owned or leased by it or
the operation of its Business as currently conducted makes such licensing or
qualification necessary. Seller, directly or indirectly through each of the
Companies, is the record owners of and has good and valid title to the ownership
interests of each Company Subsidiary, free and clear of all Encumbrances. There
are no outstanding or authorized options, warrants, convertible securities or
other rights, agreements, arrangements or commitments of any character relating
to any ownership interests in any Company Subsidiary or obligating Seller, any
Company or any Company Subsidiary to issue or sell any of its ownership
interests in the Subsidiaries. Other than the respective Formation Documents of
the Subsidiaries, there are no voting trusts, proxies or other agreements or
understandings in effect with respect to the voting or transfer of any of the
ownership interests in the Subsidiaries. All corporate actions required to be
taken by each Company Subsidiary in connection with this Agreement and the other
Transaction Documents have been or will be duly authorized on or before the
Closing. Complete and correct copies of the Formation Documents, including the
limited liability company or operating agreement, of each Company Subsidiary
have been made available to Buyer.

3.5 No Conflicts; Consents. The execution, delivery and performance by Seller of
this Agreement and the other Transaction Documents to which it is a party, and
the consummation of the contemplated transactions, do not and will not:
(a) conflict with or result in a violation or breach of, or default under, any
provision of the Formation Documents of Seller, any Company or any Company
Subsidiary; or (b) conflict with or result in a violation or breach of any
provision of any Law or Governmental Order applicable to Seller, any Company or
any Company Subsidiary.

3.6 Financial Statements. Complete copies of the unaudited financial statements
of each of the Companies consisting of (a) the Balance Sheets of the respective
Companies as of December 31, 2014 and 2015, and the related statements of income
and retained earnings, members’ equity and cash flows for the years then ended,
and (b) the Balance Sheets of the respective Companies as of July 31, 2016, and
the related statements of income and retained earnings for the six months then
ended (the “Financial Statements”) are included in the Disclosure Schedules. The
Financial Statements have been prepared in accordance with GAAP applied on a
consistent basis throughout the period involved. The Financial Statements are
based on the books and records of the Company, and fairly present the financial
condition of such Company as of the respective dates they were prepared and the
results of the operations of such Company for the periods indicated. The balance
sheet of each Company as of July 31, 2016, is referred to herein as the “Balance
Sheet” and the date as the “Balance Sheet Date”. Each Company maintains a
standard system of accounting established and administered in accordance with
GAAP.

3.7 Undisclosed Liabilities. None of the Companies has any liabilities,
obligations or commitments of any nature whatsoever, asserted or to Seller’s
knowledge unasserted, absolute or contingent, accrued or unaccrued, matured or
unmatured or otherwise (“Liabilities”), except

 

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(a) those which are adequately reflected or reserved against in the respective
Company’s Balance Sheet as of the Balance Sheet Date, (b) those which have been
incurred in the ordinary course of business consistent with past practice since
the Balance Sheet Date and which are not, individually or in the aggregate,
material in amount, and (c) those associated with the litigation cited in
Section 3.14(a) of the Disclosure Schedules.

3.8 Absence of Certain Changes, Events and Conditions. Since the Balance Sheet
Date, and other than in the ordinary course of business consistent with past
practice, there has not been, with respect to a Company or any Company
Subsidiary, any:

(a) Event, occurrence or development that has had, or could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect;

(b) Amendment of the Formation Documents of a Company or a Company Subsidiary;

(c) Issuance, sale or other disposition of, or creation of any Encumbrance on,
any membership interests or capital stock in a Company or of any Company
Subsidiary, or grant of any options, warrants or other rights to purchase or
obtain (including upon conversion, exchange or exercise) any membership
interests in a Company or of any Company Subsidiary;

(d) Declaration or payment of any distributions on or in respect of any
membership interests in a Company or redemption, purchase or acquisition of any
of the outstanding membership interests or any Company or Company Subsidiary;

(e) Incurrence, assumption or guarantee of any indebtedness for borrowed money
except unsecured current obligations and Liabilities incurred in the ordinary
course of business consistent with past practice;

(f) Transfer, assignment, sale or other disposition of any of the assets shown
or reflected in a Company’s Balance Sheet or cancellation of any debts or
entitlements;

(g) Action by a Company or any Company Subsidiary to make, change or rescind any
Tax election, amend any Tax Return or take any position on any Tax Return, take
any action, omit to take any action or enter into any other transaction that
would have the effect of increasing the Tax liability or reducing any Tax asset
of Buyer in respect of any Post-Closing Tax Period; or

(h) Any Contract to do any of the foregoing, or any action or omission that
would result in any of the foregoing.

 

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3.9 Material Contracts.

(a) Section 3.9(a) of the Disclosure Schedules lists each material Contract of
FSM and FSH (such Contracts being “Material Contracts”), including, without
limitation:

(i) Each Contract involving aggregate consideration in excess of $25,000 and
which, in each case, cannot be cancelled by a Company or a Company Subsidiary,
as applicable, without penalty or without more than 30 days’ notice;

(ii) All employment agreements and Contracts with independent contractors or
consultants (or similar arrangements) to which a Company or Company Subsidiary
is a party and which are not cancellable without material penalty or without
more than 30 days’ notice;

(iii) Except for Contracts relating to trade receivables, all Contracts relating
to indebtedness (including guarantees, loan agreements, indentures, pledges,
mortgages, security agreements, letters of credit, or equipment leases) of a
Company or Company Subsidiary;

(iv) All management agreements to which a Company or Company Subsidiary is a
party;

(v) All Contracts with any Governmental Authority to which a Company or Company
Subsidiary is a party;

(vi) All Contracts between or among a Company or Company Subsidiary and a third
party payor, to the extent that such agreements have involved payments to a
Company or Company Subsidiaries in excess of $500,000 during the twelve month
period before the date of this Agreement, provided that with respect to this
clause (vi), payments required under multiple Contracts with the same third
party payor or with affiliates of such third party payor will be aggregated in
order to determine if the $500,000 threshold is reached.

(b) To Seller’s Knowledge, each Material Contract is valid and binding on the
applicable Company or Company Subsidiary in accordance with its terms and is in
full force and effect. Complete and correct copies of each Material Contract
(including all modifications, amendments and supplements and waivers) have been
made available to Buyer.

3.10 Title to Assets.

(a) Each Company or the Company Subsidiary has a valid ownership or leasehold
interest in all Real Property and personal property and other assets reflected
in the Financial Statements or acquired after the Balance Sheet Date. The
leasehold or ownership interests are free and clear of Encumbrances except for
the following (collectively referred to as “Permitted Encumbrances”):

(i) Those items shown in Section 3.10(a) of the Disclosure Schedules;

(ii) Liens for Taxes not yet due and payable or being contested in good faith by
appropriate procedures and for which there are adequate accruals or reserves on
the Companies’ Balance Sheets;

(iii) Mechanics, carriers’, workmen’s, repairmen’s or other like liens arising
or incurred in the ordinary course of business consistent with past practice or
amounts that are not delinquent and which are not, individually or in the
aggregate, material to the Business of the Company or Company Subsidiary;

 

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(iv) Easements, rights of way, zoning ordinances and other similar encumbrances
affecting the leasehold interest that are not, individually or in the aggregate,
material to the Business of the Company or Company Subsidiary; or

(v) Liens arising under original purchase contracts, conditional sales contracts
and equipment leases with third parties entered into in the ordinary course of
business consistent with past practice that are not, individually or in the
aggregate, material to the Business of the Company or Company Subsidiary.

(b) Section 3.10(b) of the Disclosure Schedules lists (i) the street address of
each parcel of Real Property; (ii) if such property is leased or subleased by a
Company or Company Subsidiary, the landlord under the lease, the rental amount
currently being paid, and the expiration of the term of such lease or sublease
for each leased or subleased property; and (iii) the current use of such
property. Seller has delivered or made available to Buyer true, complete and
correct copies of the leases affecting the Real Property.

(c) The Companies and Company Subsidiaries lease all Real Property used in their
businesses, and neither the Companies nor Company Subsidiaries own or hold a
right to acquire any Real Property.

3.11 Intellectual Property.

(a) “Intellectual Property” means all of the following and similar intangible
property and related proprietary rights, interests and protections, however
arising, pursuant to the Laws of any jurisdiction throughout the world:

(i) Trademarks, service marks, trade names, brand names, logos, trade dress and
other proprietary indicia of goods and services, whether registered,
unregistered or arising by Law, and all registrations and applications for
registration of such trademarks, including intent-to-use applications, and all
issuances, extensions and renewals of such registrations and applications;

(ii) Internet domain names, whether or not trademarks, registered in any generic
top level domain by any authorized private registrar or Governmental Authority;

(iii) Original works of authorship in any medium of expression, whether or not
published, all copyrights (whether registered, unregistered or arising by Law),
all registrations and applications for registration of such copyrights, and all
issuances, extensions and renewals of such registrations and applications;

(iv) Confidential information, formulas, designs, devices, technology, know-how,
research and development, inventions, methods, processes, compositions and other
trade secrets, whether or not patentable; and

 

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(v) Patented and patentable designs and inventions, all design, plant and
utility patents, letters patent, utility models, pending patent applications and
provisional applications and all issuances, divisions, continuations,
continuations-in-part, reissues, extensions, reexaminations and renewals of such
patents and applications.

(b) Section 3.11 of the Disclosure Schedules lists all Intellectual Property of
the Companies and Company Subsidiaries (the “Company Intellectual Property”)
that is either (i) subject to any issuance, registration, application or other
filing by, to or with any Governmental Authority or authorized private registrar
in any jurisdiction (collectively, “Intellectual Property Registrations”),
including registered trademarks, domain names and copyrights, issued and
reissued patents and pending applications for any of the foregoing; or (ii) used
in or necessary for the current or planned business or operations of any Company
or Company Subsidiary. All required filings and fees related to the Intellectual
Property Registrations have been timely filed with and paid to the relevant
Governmental Authorities and authorized registrars, and all Intellectual
Property Registrations are otherwise in good standing.

3.12 Accounts Receivable. The accounts receivable reflected on each Company’s
Balance Sheet and the accounts receivable arising after the applicable Balance
Sheet Date (a) have arisen from bona fide transactions entered into by a Company
or the Company Subsidiaries involving the sale of goods or the rendering of
services in the ordinary course of business consistent with past practice;
(b) constitute only valid, undisputed claims of a Company or Company Subsidiary
not subject to claims of set-off or other defenses or counterclaims other than
normal cash discounts accrued in the ordinary course of business consistent with
past practice; and (c) subject to a reserve for bad debts shown on a Company’s
Balance Sheet or, with respect to accounts receivable arising after the Balance
Sheet Date, on the accounting records of each Company, are collectible in full
within 90 days after billing. The reserve for bad debts shown on the Balance
Sheet or, with respect to accounts receivable arising after the Balance Sheet
Date, on the accounting records of the Companies and Company Subsidiaries have
been determined in accordance with GAAP, consistently applied, subject to normal
year-end adjustments and the absence of disclosures normally made in footnotes.
Each Company’s and Company Subsidiary’s billing practices are in compliance with
all federal and state laws (including workers’ compensation and insurance laws
and regulations) and, where applicable, all contracts with insurance companies,
health maintenance organizations and other third-party payors (including
Medicare, Medicaid, Tricare and the like).

3.13 Insurance. Section 3.13 of the Disclosure Schedules sets forth a true and
complete list of all current policies or binders of fire, liability, product
liability, umbrella liability, real and personal property, workers’
compensation, vehicular, directors’ and officers’ liability, fiduciary liability
and other casualty and property insurance relating to the Companies
(collectively, the “Insurance Policies”). True and complete copies of such
Insurance Policies have been made available to Buyer. Such Insurance Policies
are in full force and effect and shall remain in full force and effect following
the consummation of the transactions contemplated by this Agreement. Neither
Seller nor any of its Affiliates (including each Company) has received any
written notice of cancellation or alteration of coverage under any of such
Insurance Policies. After the Closing, Buyer shall give Seller no less than
sixty (60) days advance written notice of the cancellation or alternation of any
Insurance Policy including, without limitation, any change in the issuer of any
Insurance Policy.

 

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3.14 Legal Proceedings; Governmental Orders.

(a) Except as set forth in Section 3.14(a) of the Disclosure Schedules, there
are no Actions pending or, to Seller’s Knowledge, threatened (i) against or by
any Company affecting any of their respective assets (or by or against Seller or
any Affiliate and relating to any Company or Company Subsidiary); or
(ii) against or by any Company, Seller or any Affiliate of Seller that
challenges or seeks to prevent, enjoin or otherwise delay the transactions
contemplated by this Agreement. No event has occurred or circumstances exist
that may give rise to, or serve as a basis for, any such Action.

(b) There are no outstanding Governmental Orders and no unsatisfied judgments,
penalties or awards against or affecting any Company or Company Subsidiary or
any of their respective properties or assets.

3.15 Compliance with Laws; Licenses; Permits.

(a) Each Company has complied, and is now complying, with all Laws applicable to
its business, properties or assets. Without limiting the foregoing, each
Company, Company Subsidiary, and its or their directors, officers, managers (or
any similar Person), employees, agents, and contractors have not engaged in any
activities with respect to or on behalf of the Companies which are prohibited
under, and in such capacity have acted in compliance with, the (i) the False
Claims Act, 31 U.S.C. §§3729 et seq, and any similar state law; (ii) the Civil
Monetary Penalties Law, 42 U.S.C. §1320a 7a, and any similar state law;
(iii) the Federal and any applicable state anti-kickback statutes, including but
not limited to, 42 U.S.C. §1320a 7b; (iv) federal or state referral laws,
including but not limited to, 42 U.S.C. §1395nn; (v) all Medicare and Medicaid
statutes and Regulations related to Medicare and Medicaid; (vi) the Health
Insurance Portability and Accountability Act of 1996, as codified at 42 U.S.C.
§1320d, and the applicable current and future regulations (“HIPAA”), and all
applicable Laws relating to the privacy, security and transmission of health
information (collectively, “Health Information Laws”); and (vii) any other
federal or state statute of general applicability to health care fraud or
governing or regulating the management of health care providers (collectively
“Healthcare Laws”), except in each case, where such act or failure to act has
not had, and would not reasonably be expected to have, a Material Adverse Effect
on the Companies. There are no Actions nor, to the Knowledge of Seller, has any
Action been threatened against a Company or any Company Subsidiary in connection
with the Healthcare Laws. Neither the Companies nor any Company Subsidiary has
been given written notice of, and to the Knowledge of Seller, neither the
Companies nor any Company Subsidiary is under (or threatened with) any
investigation or inquiry with respect to any violation of, or under any
obligation to take remedial action ordered by any Governmental Authority
concerning any applicable Law or Company Permits that would reasonably be
expected to have a Material Adverse Effect on the Companies.

(b) None of the Companies, or any of their respective agents, employees or
representatives: (i) is currently, or has received notice that they will be,
excluded, debarred, suspended or otherwise ineligible to participate in
Medicare, Medicaid or any other state or federal healthcare program
(collectively, “Governmental Healthcare Programs”); (ii) has been sanctioned by,
any Governmental Healthcare Programs, except where such sanctions would not
reasonably be expected to have a Material Adverse Effect on the Companies;
(iii) has been

 

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convicted of or charged with any violation of any Law related to any
Governmental Healthcare Programs; (iv) has been convicted of, or entered into
any settlement or reformation agreement with any Governmental Authority to avoid
conviction of, any violation of Healthcare Laws, (v) has been convicted of, or
entered into any settlement or reformation agreement with any Governmental
Authority to avoid conviction of, any criminal offense relating to the delivery
of any item or service under a Federal Health Care Program, as that term is
defined in Section 1128B(f) of the Social Security Act, 42 U.S.C. §1320a-7b(f),
or had a civil monetary penalty assessed against them under Section 1128A of the
Social Security Act or any applicable regulations; or (vi) has been designated a
Specially Designated National or Blocked Person by the Office of Foreign Asset
Control of the U.S. Department of Treasury.

3.16 Certain Sensitive Payments. To the Knowledge of Seller, none of Seller, the
Companies or any Company Subsidiary, nor anyone acting on behalf of Seller, or
the Companies has made or received any Sensitive Payments pertaining to any ASC.
“Sensitive Payments” mean any unlawful (a) payment to any physician or other
Person in a position to influence referrals of patients to any ASC, (b) payment
to or from any official or employee of any Governmental Authority,
(c) commercial bribes or kick-backs, (d) amounts paid with an understanding that
rebates or refunds will be made in contravention of the Laws of any applicable
jurisdiction, either directly or through a third party, (e) political
contributions on behalf of any Company or any Company Subsidiary, and
(f) payments or commitments (whether made in the form of commissions, payments
of fees for goods or services received, or otherwise) made with the
understanding or under circumstances which would indicate that all or part is to
be paid by the recipient to an official or employee of any Governmental
Authority or as a commercial bribe, influence payment or kickback.

3.17 Certain Healthcare Reports and Documents. Seller has made available to
Buyer true and complete copies of all material reports (including cost reports),
statements, returns or declarations filed or required to be filed with any
Governmental Authority or other Person with respect to the Medicare basis or
other cost basis of any Company or Company Subsidiary assets (collectively, the
“Healthcare Reports”).

3.18 Employee Benefit Matters.

(a) Section 3.18(a) of the Disclosure Schedules contains a true and complete
list of each written pension, benefit, retirement, profit-sharing, deferred
compensation, incentive, performance award, phantom equity or other equity,
change in control, retention, severance, vacation, paid time off, fringe-benefit
and other similar agreement, plan, policy, program or arrangement, in each case
whether funded or unfunded, including each “employee benefit plan” within the
meaning of Section 3(3) of ERISA, whether tax-qualified and whether subject to
ERISA (each, a “Benefit Plan”), which is or has been during the past six years
maintained, sponsored, contributed to, or required to be contributed to by a
Company or any Company Subsidiary (i) for the benefit of any current or former
employee, retiree, independent contractor, consultant, member or manager of a
Company or any Company Subsidiary or any spouse or dependent of such individual,
(ii) under which a Company or any Company Subsidiary has or may have any
Liability, or (iii) with respect to which Buyer or any of its Affiliates would
reasonably be expected to have any material Liability, contingent or otherwise
(each Benefit Plan described in this sentence, a “Company Benefit Plan”). Each
Company Benefit Plan (other than

 

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any multiemployer plan within the meaning of Section 3(37) of ERISA) has been
established, administered and maintained in all material respects in accordance
with its terms and in compliance with all applicable Laws. None of the welfare
Company Benefit Plans that are subject to ERISA are self insured.

(b) With respect to each Company Benefit Plan, Seller has made available to
Buyer accurate, current and complete copies of each of the following: (i) the
plan document together with all amendments; (ii) where applicable, copies of any
trust agreements or other funding arrangements, custodial agreements, insurance
policies and contracts, administration agreements and similar agreements, and
investment management or investment advisory agreements, now in effect or
required as a result of the transactions contemplated by this Agreement;
(iii) copies of any summary plan descriptions, summaries of material
modifications, employee handbooks and any other written communications relating
to any Company Benefit Plan; (iv) in the case of any Company Benefit Plan that
is intended to be qualified under Section 401(a) of the Code, a copy of the most
recent determination, opinion or advisory letter from the Internal Revenue
Service; (v) in the case of any Company Benefit Plan for which a Form 5500 is
required to be filed, a copy of the most recently filed Form 5500, with
schedules attached; (vi) actuarial valuations and reports related to any Company
Benefit Plans with respect to the two most recently completed plan years; and
(vii) copies of material notices, letters or other correspondence from the
Internal Revenue Service or Department of Labor relating to the Company Benefit
Plan.

(c) Each Company Benefit Plan that is intended to be qualified under
Section 401(a) of the Code (a “Qualified Benefit Plan”) is so qualified and has
received a favorable and current determination letter from the Internal Revenue
Service, or with respect to a prototype or volume submitter plan, can rely on an
opinion letter from the Internal Revenue Service to the prototype or volume
submitter plan sponsor, to the effect that such Qualified Benefit Plan is so
qualified and that the plan and the trust related thereto are exempt from
federal income taxes under Sections 401(a) and 501(a), respectively, of the
Code, and nothing has occurred that could reasonably be expected to cause the
revocation of such determination letter from the Internal Revenue Service or the
unavailability of reliance on such opinion letter from the Internal Revenue
Service, as applicable, nor has such revocation or unavailability been
threatened. Nothing has occurred with respect to any Company Benefit Plan that
has subjected or could reasonably be expected to subject a Company or, with
respect to any period on or after the Closing Date, Buyer or any of its
Affiliates, to a material penalty under Section 502 of ERISA or to material tax
or penalty under Section 4975 of the Code. All benefits, contributions and
premiums relating to each Company Benefit Plan have been timely paid in
accordance with the terms of such Company Benefit Plan and all applicable Laws
and accounting principles, and all benefits accrued under any such unfunded
Company Benefit Plan have been paid, accrued or otherwise adequately reserved to
the extent required by, and in accordance with, GAAP.

(d) Neither of the Companies nor any Company Subsidiaries has incurred or
reasonably expects to incur, either directly or indirectly, any material
Liability under Title I of ERISA or related provisions of the Code or foreign
Law relating to employee benefit plans.

(e) No Company Benefit Plan is (i) subject to Title IV of ERISA or Section 412
of the Code or (ii) a “multiemployer plan” within the meaning of Section 3(37)
of

 

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ERISA. No Company Benefit Plan is a “multiple employer plan” within the meaning
of Section 413(c) of the Code or a “multiple employer welfare arrangement” (as
defined in Section 3(40) of ERISA).

(f) There has been no amendment to, announcement by Seller or any Company
relating to, or change in employee participation or coverage under, any Company
Benefit Plan that would materially increase the annual expense of maintaining
such plan above the level of the expense incurred for the most recently
completed fiscal year (customary increases in cost of service excluded) with
respect to any member, manager, employee, consultant or independent contractor,
as applicable. None of Seller, the Companies, or any of their Company
Subsidiaries has any commitment or obligation or has made any representations
since January 1, 2015, to any member, manager, employee, consultant or
independent contractor, whether or not legally binding, to adopt, amend or
modify any Company Benefit Plan.

(g) Each Company Benefit Plan that is subject to Section 409A of the Code has
been operated in all material respects in compliance with such section and all
applicable regulatory guidance (including notices, rulings and final
regulations).

(h) No Company Benefit Plan will be terminated as a result of the consummation
of the transactions contemplated by this Agreement.

3.19 Employment Matters. Section 3.19 of the Disclosure Schedules contains a
list of all persons who are employees, consultants, or contractors of each
Company as of the date of this Agreement, and sets forth for each such
individual the following: (i) name; (ii) title or position (including whether
full or part time); and (iii) hire date. As of the date of this Agreement, all
compensation, including wages, commissions and bonuses, payable to employees,
consultants, or contractors of any Company for services performed on or before
the date of this Agreement have been paid in full (other than services performed
during the current payroll period for which payment is not yet due) and there
are no outstanding agreements, understandings or commitments of a Company with
respect to any commissions, bonuses or increases in compensation.

3.20 Taxes.

(a) At all times since August 18, 2003, Seller has been a C corporation for
income and state income tax purposes (in those states that recognize such
status). At all times, FSM and FSH have each been treated as a so-called
“disregarded entity” for tax purposes, and Seller has timely filed all elections
necessary in connection with such treatment. At all times since June 1, 2013, ST
has been a C corporation for Federal income and state income tax purposes (in
those states that recognize such status), whose activity has been consolidated
with that of Seller.

(b) All material Tax Returns required to be filed on or before the Closing Date
by Seller, any Company or any Company Subsidiary have been, or will be, timely
filed. Such Tax Returns are, or will be, true, complete and correct in all
material respects. All material Taxes due and owing by Seller, any Company or
any Company Subsidiary (whether or not shown on any Tax Return) have been, or
will be, timely paid.

 

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(c) Seller, each Company and each Company Subsidiary have withheld and paid each
Tax required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, customer, member or
other party, and complied with all information reporting and backup withholding
provisions of applicable Law.

(d) No claim has been made by any taxing authority in any jurisdiction where
Seller, any Company or any Company Subsidiary does not file Tax Returns that it
is, or may be, subject to Tax by that jurisdiction.

(e) No extensions or waivers of statutes of limitations have been given or
requested with respect to any Taxes of Seller, any Company or any Company
Subsidiary.

(f) The amount of each Company’s Liability for unpaid Taxes for all periods
ending on or before December 31, 2014, does not, in the aggregate, exceed the
amount of accruals for Taxes (excluding reserves for deferred Taxes) reflected
on the Financial Statements. The amount of each Company’s Liability for unpaid
Taxes for the period immediately following the end of the most recent period
covered by the Financial Statements shall not, in the aggregate, exceed the
amount of accruals for Taxes (excluding reserves for deferred Taxes) as adjusted
for the passage of time in accordance with the past custom and practice of a
Company (and which accruals shall not exceed comparable amounts incurred in
similar periods in prior years).

(g) Section 3.20 of the Disclosure Schedules sets forth those taxable years for
which examinations by taxing authorities are presently being conducted.

(h) All deficiencies asserted, or assessments made, against Seller or, where
applicable, any Company as a result of any examinations by any taxing authority
have been fully paid.

(i) Neither Seller nor any Company is a party to any Action by any taxing
authority. There are no pending or threatened Actions by any taxing authority.

(j) Seller has delivered to Buyer copies of all federal, state, local and
foreign income, franchise and similar Tax Returns, examination reports, and
statements of deficiencies assessed against, or agreed to by, any of the
Companies for all Tax periods ending after December 31, 2014.

(k) There are no Encumbrances for Taxes (other than for current Taxes not yet
due and payable) upon the assets of any Company.

(l) No Company or any Company Subsidiary is a party to, or bound by, any Tax
indemnity, Tax-sharing or Tax allocation agreement.

(m) No Company or any Company Subsidiary is a party to, or bound by, any closing
agreement or offer in compromise with any taxing authority.

(n) No private letter rulings, technical advice memoranda or similar agreement
or rulings have been requested, entered into or issued by any taxing authority
with respect to any Company.

 

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(o) Seller is not a “foreign person” as that term is used in Treasury
Regulations Section 1.1445-2.

(p) None of the assets of any Company is property that the Company is required
to treat as being owned by any other person pursuant to the so-called “safe
harbor lease” provisions of former Section 168(f)(8) of the Internal Revenue
Code of 1954, as amended.

3.21 Books and Records. The minute books of each Company and each Company
Subsidiary have been made available to Buyer. Such books and records have been
maintained in accordance with sound business practices.

3.22 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement or any other Transaction Document
based upon arrangements made by or on behalf of Seller, any Company or Company
Subsidiary.

3.23 Full Disclosure. No representation or warranty by Seller in this Agreement
and no statement contained in the Disclosure Schedules to this Agreement or any
certificate or other document furnished or to be furnished to Buyer pursuant to
this Agreement contains any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements contained therein, in
light of the circumstances in which they are made, not misleading.

Article 4

REPRESENTATIONS AND WARRANTIES OF BUYER

Except as shown in the correspondingly numbered section of the Disclosure
Schedules, Buyer represents and warrant to Seller that the statements contained
in this Article 4 are true and correct as of the date of this Agreement.

4.1 Formation and Authority of Buyer. Buyer is an Oklahoma limited liability
company duly formed, validly existing and in good standing under the Laws of the
State of Oklahoma. Buyer has full limited liability company power and authority
to enter into this Agreement and the other Transaction Documents to which Buyer
is a party, to carry out its obligations and to consummate the contemplated
transactions. The execution and delivery by Buyer of this Agreement and any
other Transaction Document to which Buyer is a party, the performance by Buyer
of its obligations and the consummation by Buyer of the contemplated
transactions have been duly authorized by all requisite limited liability
company action on the part of Buyer. This Agreement has been duly executed and
delivered by Buyer, and this Agreement constitutes a legal, valid and binding
obligation of Buyer enforceable against Buyer in accordance with its terms. When
each other Transaction Document to which Buyer is or will be a party has been
duly executed and delivered by Buyer, such Transaction Document will constitute
a legal and binding obligation of Buyer enforceable against it in accordance
with its terms.

4.2 No Conflicts; Consents. The execution, delivery and performance by Buyer of
this Agreement and the other Transaction Documents to which they are party, and
the consummation of the contemplated transactions, do not and will not:
(a) conflict with or result in a violation or breach of, or default under, any
provision of the Formation Documents of Buyer;

 

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(b) conflict with or result in a violation or breach of any provision of any Law
or Governmental Order applicable to Buyer; or (c) require the consent, notice or
other action by any Person under any Contract to which Buyer is a party. No
consent, approval, Permit, Governmental Order, declaration or filing with, or
notice to, any Governmental Authority is required by or with respect to Buyer in
connection with the execution and delivery of this Agreement and the other
Transaction Documents and the consummation of the contemplated transactions,
except for such filings as may be required under the terms of this Agreement and
such consents, approvals, Permits, Governmental Orders, declarations, filings or
notices which, in the aggregate, would not have a Material Adverse Effect.

4.3 Legal Proceedings; Governmental Orders.

(a) There are no Actions pending or, to Buyer’s Knowledge, threatened
(i) against or by Buyer or any Affiliate of Buyer affecting any of their
respective properties or assets; or (ii) against or by Buyer or any Affiliate of
Buyer that challenges or seeks to prevent, enjoin or otherwise delay the
transactions contemplated by this Agreement. No event has occurred or
circumstances exist that may give rise to, or serve as a basis for, any such
Action.

(b) There are no outstanding Governmental Orders and no unsatisfied judgments,
penalties or awards against or affecting Buyer or any Affiliate of Buyer or any
of their respective properties or assets.

4.4 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by the Agreement or any other Transaction Document
based upon arrangements made by or on behalf of Buyer.

4.5 Full Disclosure. No representation or warranty by Buyer in this Agreement
and no statement contained in the Disclosure Schedules to this Agreement or any
certificate or other document furnished or to be furnished to Seller pursuant to
this Agreement contains any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements contained therein, in
light of the circumstances in which they are made, not misleading.

Article 5

COVENANTS

5.1 Conduct of Business Before the Closing. From the date of this Agreement
until the Closing, except as otherwise provided in this Agreement or consented
to in writing by Buyer (which consent shall not be unreasonably withheld or
delayed), Seller shall, and shall cause each Company and Company Subsidiary to,
conduct their respective Businesses in the ordinary course of business
consistent with past practice; and use reasonable best efforts to maintain and
preserve intact their respective organizations, businesses and franchises and to
preserve their respective rights, franchises, goodwill and relationships of its
employees, customers, lenders, suppliers, regulators and others having business
relationships with each of them.

5.2 Access to Information. From the date of this Agreement until the Closing,
Seller shall, and shall cause each of its Affiliates to, (a) afford Buyer and
its Affiliates and their Representatives full and free access to and the right
to inspect all of the Real Property,

 

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properties, assets, premises, books and records, Contracts and other documents
and data related to their respective Businesses; (b) furnish Buyer, its
Affiliates and their Representatives with such financial, operating and other
data and information related to their respective Businesses as Buyer, its
Affiliates or any of their Representatives may reasonably request; and
(c) instruct their Representatives to cooperate with Buyer and its Affiliates in
their investigation of the Business of the Companies and their Affiliates. Any
investigation pursuant to this Section 5.2 shall be conducted in such manner as
not to interfere unreasonably with the conduct of the business of Seller, any
Company or any Company Subsidiary. No investigation by Buyer or its Affiliates
or other information received by them shall operate as a waiver or otherwise
affect any representation, warranty or agreement given or made by Seller in this
Agreement.

5.3 Exclusive Negotiations; Buyer Fee.

(a) During the Restricted Period, Seller will, and will assure that all of its
Affiliates and Representatives (collectively, the “Restricted Parties”) will,
negotiate exclusively with Buyer regarding any proposed acquisition of the
Companies in whole or in part, or any of the Companies’ assets. The Restricted
Parties shall not, directly or indirectly, (i) encourage, solicit, initiate,
facilitate or continue inquiries regarding an Acquisition Proposal; (ii) enter
into discussions or negotiations with, or provide any information to, any Person
concerning a possible Acquisition Proposal; or (iii) enter into any agreements
or other instruments (whether or not binding) regarding an Acquisition Proposal.
The Restricted Parties shall immediately cease and cause to be terminated, all
existing discussions or negotiations with any Persons previously conducted with
respect to, or that could lead to, an Acquisition Proposal. For purposes of this
Agreement, “Acquisition Proposal” means any inquiry, proposal or offer from any
Person (other than Seller or Buyer) concerning (A) a merger, consolidation,
liquidation, recapitalization or other business combination transaction
involving any of a Company or Company Subsidiary; (B) the issuance or
acquisition of membership interests in any Company or Company Subsidiary; or
(C) the sale, lease, exchange or other disposition of any significant portion of
any properties or assets of any Company or Company Subsidiary. The “Restricted
Period” extends from the date of this Agreement until 90 days after its
termination.

(b) In addition to the other obligations under this Section 5.3, Seller shall
promptly (and in any event within three Business Days after receipt by Seller or
its Representatives) advise Buyer orally and in writing of any Acquisition
Proposal, any request for information with respect to any Acquisition Proposal,
or any inquiry with respect to or which could reasonably be expected to result
in an Acquisition Proposal, the material terms and conditions of such request,
Acquisition Proposal or inquiry, and the identity of the Person making the same.

(c) If the transactions contemplated by this Agreement do not close due in whole
or in material part to a breach by Seller of the terms of this Agreement or
other fault of Seller, Seller shall reimburse Buyer for direct costs incurred by
Buyer in connection with the transactions contemplated by this Agreement
(subject to cost substantiation) in an amount not to exceed $50,000 in the
aggregate (the “Buyer Fee”). The Buyer Fee shall be paid by wire transfer of
same day funds to an account designated in writing by Buyer not later than 15
Business Days after such event of termination specified in this subsection.

 

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(d) The Buyer Fee represents reimbursement of costs and expenses (including
legal, accounting and advisory fees and expenses) incurred by Buyer in
connection with this Agreement and the contemplated transactions. The Buyer Fee
is not a remedy for contractual breach or other violation, and is not exclusive
of and does not limit the remedies that may be available to Buyer.

5.4 Notice of Certain Events.

(a) From the date of this Agreement until the Closing, Seller and Buyer shall
promptly notify the other party in writing of:

(i) any fact, circumstance, event or action the existence, occurrence or taking
of which (A) has had, or could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect, (B) has resulted in, or could
reasonably be expected to result in, any representation or warranty made by
Seller or Buyer, respectively, hereunder not being true and correct or (C) has
resulted in, or could reasonably be expected to result in, the failure of any of
the conditions shown in Section 7.2 to be satisfied;

(ii) any notice or other communication from any Person alleging that the consent
of such Person is or may be required in connection with the transactions
contemplated by this Agreement;

(iii) Any notice or other communication from any Governmental Authority in
connection with the transactions contemplated by this Agreement; and

(iv) any Actions commenced or, to Seller’s Knowledge or Buyer’s Knowledge,
threatened against, relating to or involving or otherwise affecting Seller,
Buyer or any of their Affiliates that, if pending on the date of this Agreement,
would have been required to have been disclosed pursuant to this Agreement or
that relates to the consummation of the transactions contemplated by this
Agreement.

(b) Buyer’s or Seller’s receipt of information pursuant to this Section 5.4
shall not operate as a waiver or otherwise affect any representation, warranty
or agreement given or made by either of them in this Agreement, and shall not be
deemed to amend or supplement the Disclosure Schedules.

5.5 Healthcare Approvals.

(a) Upon the terms and subject to the conditions shown in this Agreement, Seller
and Buyer each agree, and Seller agrees to cause the Companies and Company
Subsidiaries to cooperate with Buyer, to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, to
obtain as promptly as practicable all authorizations and any other exemptions,
variances, waivers, and other authorizations of all Governmental Authorities
under all Healthcare Laws and each reimbursement program or contract with
Governmental Healthcare Programs, which are necessary in connection with the
consummation of the transactions contemplated by this Agreement (where required
to be made or obtained before or after the Closing) (all of the foregoing,
collectively “Healthcare Approvals”) and to comply with the terms and conditions
of all such Healthcare Approvals.

 

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(b) Seller and Buyer shall use commercially reasonable efforts to file within 15
Business Days after the Execution Date all required initial applications and
documents in connection with obtaining the Healthcare Approvals, and shall act
reasonably and promptly thereafter in responding to additional requests in
connection therewith.

(c) Nothing in this Section 5.5 obligates Seller to take any action that would
require the voluntary surrender, forfeiture or other termination by it of a
Healthcare Approval, if Seller determines in good faith that it is inadvisable
to do so.

5.6 Confidentiality.

(a) From and after the Closing, Seller shall, and shall cause its Affiliates to,
hold, and shall use its reasonable best efforts to cause its or their respective
Representatives to hold, in confidence any and all information, whether written
or oral, concerning Buyer, except to the extent that Seller can show that such
information is generally available to and known by the public through no fault
of Seller, any of its Affiliates or their respective Representatives. If Seller
or any of its Affiliates or their respective Representatives are compelled to
disclose any information by judicial or administrative process or by other
requirements of Law, Seller shall promptly notify Buyer in writing and shall
disclose only that portion of such information which Seller is advised by its
counsel in writing is legally required to be disclosed.

(b) From and after the Closing, Buyer shall, and shall cause its Affiliates to,
hold, and shall use its reasonable best efforts to cause its or their respective
Representatives to hold, in confidence any and all information, whether written
or oral, concerning Seller and its Affiliates (other than the Companies and
Company Subsidiaries), except to the extent that such information is generally
available to and known by the public through no fault of Buyer, any of its
Affiliates or their respective Representatives. If Buyer or any of its
Affiliates or their respective Representatives are compelled to disclose any
information by judicial or administrative process or by other requirements of
Law, Buyer shall promptly notify Seller in writing and shall disclose only that
portion of such information which Buyer is advised by its counsel in writing is
legally required to be disclosed.

5.7 Governmental Approvals and Consents.

(a) Each party shall, as promptly as possible, (i) make, or cause or be made,
all filings and submissions required under any Law applicable to such party or
any of its Affiliates; and (ii) use reasonable best efforts to obtain, or cause
to be obtained, all consents, authorizations, orders and approvals from all
Governmental Authorities that may be or become necessary for its execution and
delivery of this Agreement and the performance of its obligations pursuant to
this Agreement and the other Transaction Documents. Each party shall cooperate
fully with the other party and its Affiliates in promptly seeking to obtain all
such consents, authorizations, orders and approvals. The parties shall not
willfully take any action that will have the effect of delaying, impairing or
impeding the receipt of any required consents, authorizations, orders and
approvals.

 

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(b) Without limiting the generality of the parties’ undertakings pursuant to
subsections (a) and (b) above, each of the parties shall use all reasonable best
efforts to:

(i) Respond to any inquiries by any Governmental Authority with respect to the
transactions contemplated by this Agreement or any Transaction Document;

(ii) Avoid the imposition of any order or the taking of any action that would
restrain, alter or enjoin the transactions contemplated by this Agreement or any
Transaction Document; and

(iii) If any Governmental Order adversely affecting the ability of the parties
to consummate the transactions contemplated by this Agreement or any Transaction
Document has been issued, to have such Governmental Order vacated or lifted.

(c) If any consent, approval or authorization necessary to preserve any right or
benefit under any Contract to which any Company or Company Subsidiary is a party
is not obtained before the Closing, Seller shall, after the Closing, cooperate
with Buyer and each Company or Company Subsidiary in attempting to obtain such
consent, approval or authorization as promptly thereafter as practicable.

(d) Notwithstanding the foregoing, nothing in this Section 5.7 requires Buyer or
any of its Affiliates to agree to (i) sell, hold, divest, discontinue or limit,
before or after the Closing Date, any assets, businesses or interests of Buyer,
the Companies or any of their respective Affiliates; (ii) any conditions
relating to, or changes or restrictions in, the operations of any such assets,
businesses or interests which, in either case, could reasonably be expected to
result in a Material Adverse Effect or materially and adversely impact the
economic or business benefits to Buyer of the transactions contemplated by this
Agreement; or (iii) any material modification or waiver of the terms and
conditions of this Agreement.

5.8 Books and Records.

(a) To facilitate the resolution of any claims made against or incurred by
Seller before the Closing, or for any other reasonable purpose, for a period of
two years after the Closing, Buyer shall (i) retain the books and records
(including personnel files) of each Company relating to periods before the
Closing in a manner reasonably consistent with the prior practices of the
Company; and (ii) upon reasonable notice, afford the Representatives of Seller
reasonable access (including the right to make, at Seller’s expense,
photocopies), during normal business hours, to such books and records.

(b) To facilitate the resolution of any claims made by or against or incurred by
Buyer or any Company or Company Subsidiary after the Closing, or for any other
reasonable purpose, for a period of two years following the Closing, Seller
shall (i) retain the books and records (including personnel files) of Seller
that relate to the Companies and Company Subsidiaries and their respective
operations for periods before the Closing; and (ii) upon reasonable notice,
afford the Representatives of Buyer or any Company reasonable access (including
the right to make, at Buyer’s expense, photocopies), during normal business
hours, to such books and records.

(c) The covenants specified in subsections (a) and (b) are subject to Article 6
with regard to tax records.

 

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5.9 Closing Conditions. From the date of this Agreement until the Closing, each
party shall use reasonable best efforts to take such actions as are necessary to
expeditiously satisfy the closing conditions specified in Article 7.

5.10 Public Announcements. Unless otherwise required by applicable Law or stock
exchange requirements (based upon the reasonable advice of counsel), no party to
this Agreement shall make any public announcements in respect of this Agreement
or the transactions contemplated hereby or otherwise communicate with any news
media without the prior written consent of the other party (which consent shall
not be unreasonably withheld or delayed), and the parties shall cooperate as to
the timing and contents of any such announcement.

5.11 Further Assurances. Following the Closing, each of the parties shall, and
shall cause their respective Affiliates to, execute and deliver such additional
documents, instruments, conveyances and assurances and take such further actions
as may be reasonably required to carry out the provisions of this Agreement and
give effect to the transactions contemplated by this Agreement.

5.12 Use of Seller’s Name Post-Closing.

(a) Within 90 days following the Closing, Buyer will cease using names and logos
that include “Foundation” and all trademarks of Seller, and will change the name
Foundation Surgery Holdings, LLC to a name that does not include the word
“Foundation” or any reference to Seller.

(b) After the Closing, Buyer will use best efforts to cause the ASCs to
(i) cease using the name “Foundation” and any logos or trademarks of Seller on
signage or otherwise; and (ii) change any legal names that include references to
“Foundation” or Seller to a name that does not include the word “Foundation” or
any reference to Seller.

5.13 Non-Solicitation of Employees. For a period of one year after the Closing,
the parties shall not, and shall cause their Affiliates not to, directly or
indirectly, without the prior written consent of other party, solicit any
employee of such party or any Affiliate thereof to provide employment,
consulting or similar services. Notwithstanding the foregoing, this Section 5.13
shall not prohibit a party or its Affiliates from performing, or having
performed on their behalf, a general solicitation for employees not specifically
focused on employees of the other party (or its Affiliates) through the use of
media, advertisement, electronic job boards or other general, public
solicitations.

Article 6

TAX MATTERS

6.1 Tax Covenants.

(a) Buyer and Seller acknowledge and agree that FSM and FSH have each been a
disregarded entity for income tax purposes and therefore that the transfer of
the FSM Purchased Assets and the Purchased Interests will be treated as a
taxable asset sale by Seller. Buyer and Seller shall mutually agree upon a
statement (the “Allocation Statement”) setting forth the value of the FSM
Purchased Assets and the Purchased Interests, which shall be used for the

 

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allocation of the Purchase Price attributable to the FSM Purchased Assets and
the Purchased Interests (together with the Liabilities) among the assets of each
of FSM and FSH within 30 days after the Closing. Buyer and Seller agree to
report an allocation of such Purchase Price among the FSM Purchased Interests
and the Purchased Assets in a manner entirely consistent with the Allocation
Statement and agree to act in accordance with such Allocation Statement in the
preparation of financial statements and filing of all Tax Returns (including
filing Internal Revenue Service Form 8594 with its federal income tax return for
the taxable year that includes the Closing Date) and in the course of any Tax
audit, Tax review or Tax litigation matter relating hereto. If Seller and Buyer
are unable to agree on such allocation, Seller and Buyer agree to retain an
appraisal firm experienced in valuing businesses similar to FSM and FSH’s
Businesses to appraise the Purchased Assets and the Purchased Interests. The
appraisal firm shall perform such appraisal promptly. Seller and Buyer shall
each pay one-half of the costs of such appraisal.

(b) All transfer, documentary, sales, use, stamp, registration, value added and
other such Taxes and fees (including any penalties and interest) incurred in
connection with this Agreement and the other Transaction Documents (including
any real property transfer Tax and any other similar Tax) shall be borne by
Buyer and deducted from the Purchase Price. Buyer shall, at its own expense,
timely file any Tax Return or other document with respect to such Taxes or fees
(and Buyer shall cooperate with respect thereto as necessary).

(c) Seller shall, and shall cause its Affiliates to, cooperate in providing
information to Buyer to determine what consents may be necessary to (i) enable
Buyer to make any tax elections determined to be necessary in connection with
the transactions contemplated by this Agreement, including elections under
Section 754 of the Code and (ii) permit the transfers of the interests in each
Company and each Company Subsidiary under their respective operating agreements.

6.2 Termination of Existing Tax Sharing Agreements. Any and all existing Tax
sharing agreements (whether written or not) binding upon a Company terminate as
of the Closing Date. After such date, none of Companies, Seller, any of Seller’s
Affiliates or their respective Representatives shall have any further rights or
liabilities under any Tax sharing agreement.

6.3 Tax Indemnification.

(a) Seller shall indemnify each Company, Buyer, and each Buyer Indemnitee and
hold them harmless from and against any Loss incurred by them (a) attributable
to any breach of or inaccuracy in any representation or warranty made in
Section 3.20; (b) attributable to any breach or violation of, or failure to
fully perform, any covenant, agreement, undertaking or obligation in Article 6;
(c) for the payment of Taxes of Seller or any Company for all Pre-Closing Tax
Periods; (d) for the payment of Taxes required to be paid or withheld by Seller
or any Company for all Pre-Closing Tax Periods; (e) for the payment of Taxes of
any member of an affiliated, consolidated, combined or unitary group of which
each Company (or any predecessor of a Company) is or was a member on or before
the Closing Date by reason of a liability under Treasury Regulation
Section 1.1502-6 or any comparable provisions of foreign, state or local Law;
and (f) for the payment of Taxes of any person imposed on a Company arising
under the principles of transferee or successor liability or by contract,
relating to an event or transaction occurring before the Closing Date, in each
of the above cases, together with any

 

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out-of-pocket fees and expenses (including attorneys’ and accountants’ fees)
incurred in connection therewith. Seller shall reimburse Buyer for any Taxes of
a Company that are the responsibility of Seller pursuant to this Section 6.3
within ten Business Days after payment of such Taxes by Buyer or a Company.

(b) Buyer shall indemnify Seller and each Seller Indemnitee and hold them
harmless from and against any Loss incurred by it for the payment of Taxes
required to be paid or withheld by any Company or Buyer for all Post-Closing Tax
Periods, or attributable to any breach or violation of, or failure to fully
perform, any covenant, agreement, undertaking or obligation in Article 6, in
each case, together with any out-of-pocket fees and expenses (including
attorneys’ and accountants’ fees) incurred in connection therewith.

6.4 Contests. Buyer agrees to give written notice to Seller of the receipt of
any written notice by a Company, Buyer, or any Affiliates of Buyer that involves
the assertion of any claim, or the commencement of any Action, in respect of
which an indemnity may be sought by Buyer pursuant to this Article 6 (a “Tax
Claim”); provided, that failure to comply with this provision shall not affect
Buyer’s right to indemnification except and only to the extent that the such
failure results in the forfeit of rights or defenses of Seller. Buyer shall
control the contest or resolution of any Tax Claim; provided, however, that
Buyer shall obtain the prior written consent of Seller (which consent shall not
be unreasonably withheld or delayed) before entering into any settlement of a
claim or ceasing to defend such claim; and, provided further, that Seller shall
be entitled to participate in the defense of such claim and to employ counsel of
its choice for such purpose, the fees and expenses of which separate counsel
shall be borne solely by Seller. Seller agrees to give written notice to Buyer
of the receipt of any written notice by Seller or any Affiliates of Seller that
involves the assertion of any claim, or the commencement of any Action, in
respect of which indemnity be sought by Seller pursuant to this Article 6 (a
“Seller Claim”); provided, that failure to comply with this provision shall not
affect Seller’s right to indemnification except and only to the extent that the
such failure results in the forfeit of rights or defenses of Buyer. Seller shall
control the contest or resolution of any Seller Claim; provided, however, that
Seller shall obtain the prior written consent of Buyer (which consent shall not
be unreasonably withheld or delayed) before entering into any settlement of a
claim or ceasing to defend such claim; and, provided further, that Buyer shall
be entitled to participate in the defense of such claim and to employ counsel of
its choice for such purpose, the fees and expenses of which separate counsel
shall be borne solely by Buyer.

6.5 Cooperation and Exchange of Information. Seller and Buyer shall provide each
other with such cooperation and information as either of them reasonably may
request of the other in filing any Tax Return pursuant to this Article 6 or in
connection with any audit or other proceeding in respect of Taxes of a Company.
Such cooperation and information shall include providing copies of relevant Tax
Returns or portions, together with accompanying schedules, related work papers
and documents relating to rulings or other determinations by tax authorities.
Seller and Buyer shall each retain all Tax Returns, schedules and work papers,
records and other documents in its possession relating to Tax matters of a
Company for any taxable period beginning before the Closing Date until the
expiration of the statute of limitations of the taxable periods to which such
Tax Returns and other documents relate, without regard to extensions except to
the extent notified by the other party in writing of such extensions for the
respective Tax periods. Before transferring, destroying or discarding any Tax
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papers, records and other documents in its possession relating to Tax matters of
a Company for any taxable period beginning before the Closing Date, Seller or
Buyer (as the case may be) shall provide the other party with reasonable written
notice and offer the other party the opportunity to take custody of such
materials.

6.6 Tax Treatment of Indemnification Payments. Any indemnification payments
pursuant to this Article 6 shall be treated as an adjustment to the Final
Purchase Price by the parties for Tax purposes, unless otherwise required by
Law.

6.7 Survival. Notwithstanding anything in this Agreement to the contrary, the
provisions of Section 3.20 and this Article 6 shall survive for the full period
of all applicable statutes of limitations (giving effect to any waiver,
mitigation or extension) plus 60 days.

6.8 Overlap. To the extent that any obligation or responsibility pursuant to
Article 8 may overlap with an obligation or responsibility pursuant to this
Article 6, the provisions of this Article 6 shall govern.

Article 7

CONDITIONS TO CLOSING

7.1 Conditions to Obligations of Buyer. The obligations of Buyer to consummate
the transactions contemplated by this Agreement are subject to the fulfillment
or Buyer’s waiver, at or before the Closing, of each of the following
conditions:

(a) Seller and Buyer enter into an agreement (the “Transition and Shared
Serviced Agreement”) regarding the separation of shared services between Seller
and the Companies, including human resources administration (currently
outsourced to RealTime HR) and information technology services (currently
provided in-house).

(b) No Governmental Authority shall have enacted, issued, promulgated, enforced
or entered any Governmental Order which is in effect and has the effect of
making the transactions contemplated by this Agreement illegal, otherwise
restraining or prohibiting consummation of such transactions or causing any of
the transactions contemplated hereunder to be rescinded following completion.

(c) The representations and warranties of Seller contained in this Agreement,
the other Transaction Documents, and any certificate or other writing delivered
pursuant hereto shall be true and correct in all respects on and as of the
Closing Date as if made on such date.

(d) Seller shall have duly performed and complied in all material respects with
all agreements, covenants and conditions required by this Agreement to be
performed on or prior to the Closing Date.

(e) No Action shall have been commenced against Seller, any Company or any
Company Subsidiary that would prevent the Closing. No injunction or restraining
order shall have been issued by any Governmental Authority, and be in effect,
which restrains or prohibits any transaction contemplated hereby.

 

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(f) From the date of this Agreement, no Material Adverse Effect shall have
occurred, nor shall any event or events have occurred that, individually or in
the aggregate, with or without the lapse of time, could reasonably be expected
to result in a Material Adverse Effect.

(g) FSH and Buyer or its subsidiary, HealthCrest Surgical Management, LLC, shall
have entered into a master agreement effective as of the Closing Date, with
Foundation Surgery Affiliate of Huntington Valley, LP d/b/a Huntington Valley
Surgery Center (“HVSC”) and Foundation Surgery Affiliate of Huntingdon Valley,
LLC, providing for the purchase of FSH’s interest in HVSC, and amendments to the
management agreement with HVSC (the “HVSC Master Agreement”).

(h) The other Transaction Documents shall have been executed and delivered by
the parties thereto and true and complete copies shall have been delivered to
Buyer.

(i) Buyer shall have received a certificate, dated the Closing Date and signed
by a duly authorized officer of Seller, that each of the conditions shown in
Section 7.1(c)-(f) have been satisfied.

(j) Buyer shall have received a certificate of an officer of Seller certifying
(i) as to true and complete copies of all resolutions adopted by Seller’s Board
of Directors authorizing the execution, delivery and performance of this
Agreement and the other Transaction Documents and the consummation of the
contemplated transactions, and that all such resolutions are in full force and
effect and are all the resolutions adopted in connection with the contemplated
transactions and (ii) the names and signatures of the officers of Seller
authorized to sign this Agreement, the Transaction Documents and the other
documents to be delivered hereunder and thereunder.

(k) Seller shall have delivered to Buyer a good standing certificate (or its
equivalent) for each Company and each Company Subsidiary from the secretary of
state or similar Governmental Authority of the jurisdiction under the Laws in
which a Company or Company Subsidiary is formed.

(l) Seller shall have delivered to Buyer a certificate pursuant to Treasury
Regulations Section 1.1445-2(b) that Seller is not a foreign person within the
meaning of Section 1445 of the Code.

(m) Seller shall have delivered to Buyer such consents as are necessary to
(i) enable Buyer to make any tax elections determined to be necessary in
connection with the transactions contemplated by this Agreement, including
elections under Section 754 of the Code and (ii) permit the transfers of the
interests in each Company under its Formation Documents.

(n) Seller shall have delivered to Buyer such other documents or instruments as
Buyer reasonably requests and are reasonably necessary to consummate the
transactions contemplated by this Agreement.

(o) Buyer shall be reasonably satisfied that all of the due diligence requests
of Buyer to Seller have been fulfilled by Seller and with the results of the due
diligence review of such requested documents and information.

 

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7.2 Conditions to Obligations of Seller. The obligations of Seller to consummate
the transactions contemplated by this Agreement are subject to the fulfillment
or Seller’s waiver, at or before the Closing, of each of the following
conditions:

(a) No Governmental Authority shall have enacted, issued, promulgated, enforced
or entered any Governmental Order which is in effect and has the effect of
making the transactions contemplated by this Agreement illegal, otherwise
restraining or prohibiting consummation of such transactions or causing any of
the transactions contemplated hereunder to be rescinded following completion.

(b) All approvals, consents, authorizations, orders and waivers that are listed
in the Disclosure Schedules shall have been received, and executed counterparts
shall have been delivered to Seller at or before the Closing, and no such
approvals, consents, authorizations, orders or waivers shall have been revoked.

(c) The representations and warranties of Buyer and/or the Buyer Principals
contained in this Agreement, the other Transaction Documents, and any
certificate or other writing delivered pursuant hereto shall be true and correct
in all respects on and as of the Closing Date with the same effect as though
made at and as of such date.

(d) Buyer shall have duly performed and complied in all material respects with
all agreements, covenants and conditions required by this Agreement to be
performed or complied with by it before or on the Closing Date.

(e) No injunction or restraining order shall have been issued by any
Governmental Authority, and be in effect, which restrains or prohibits any
material transaction contemplated hereby.

(f) From the date of this Agreement, no Material Adverse Effect shall have
occurred, nor shall any event or events have occurred that, individually or in
the aggregate, with or without the lapse of time, could reasonably be expected
to result in a Material Adverse Effect.

(g) The Transaction Documents shall have been executed and delivered by the
parties thereto and true and complete copies shall have been delivered to
Seller.

(h) Seller shall have received a certificate, dated the Closing Date and signed
by a duly authorized officer of Buyer, that each of the conditions shown in
Section 7.2(d)-(g) have been satisfied.

(i) Buyer shall have delivered to Seller such other documents or instruments as
Seller reasonably requests and are reasonably necessary to consummate the
transactions contemplated by this Agreement.

(j) Seller shall be reasonably satisfied that all of the due diligence requests
of Seller to Buyer have been fulfilled by Buyer and with the results of the due
diligence review of such requested documents and information.

 

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Article 8

INDEMNIFICATION

8.1 Survival. Subject to the limitations and other provisions of this Agreement
(other than the representations and warranties in Sections 3.1, 3.2, 3.3, 3.4,
3.22, 4.1 and 4.4, which shall survive indefinitely) the representations and
warranties in this Agreement shall survive for a period of one year following
the Closing Date. All covenants and agreements of the parties in this Agreement
(other than any covenants or agreements contained in Article 6) shall survive
the Closing indefinitely or for the period explicitly specified therein.
Notwithstanding the foregoing, any claims asserted in good faith with reasonable
specificity (to the extent known at such time) and in writing by notice from the
non-breaching party to the breaching party before the expiration date of the
applicable survival period shall not later be barred by the expiration of the
relevant representation or warranty and such claims shall survive until finally
resolved.

8.2 Indemnification by Seller. Subject to the other terms and conditions of this
Article 8, Seller shall indemnify and defend each of Buyer and its Affiliates
(including the Companies and Company Subsidiaries from and after the Closing)
and their respective Representatives (collectively, the “Buyer Indemnitees”)
against, and shall hold each of them harmless from and against, and shall pay
and reimburse each of them for, any and all Losses incurred or sustained by, or
imposed upon, the Buyer Indemnitees based upon, arising out of, with respect to
or by reason of:

(a) any inaccuracy in or breach of any of the representations or warranties of
Seller contained in this Agreement or in any certificate or instrument delivered
by or on behalf of Seller pursuant to this Agreement (other than in respect of
Section 3.20, it being understood that the sole remedy for any such inaccuracy
in or breach shall be pursuant to Article 6), as of the date such representation
or warranty was made or as if such representation or warranty was made on and as
of the Closing Date (except for representations and warranties that expressly
relate to a specified date, the inaccuracy in or breach of which will be
determined with reference to such specified date);

(b) any breach or non-fulfillment of any covenant, agreement or obligation to be
performed by Seller pursuant to this Agreement (other than any breach or
violation of, or failure to fully perform, any covenant, agreement, undertaking
or obligation in Article 6, it being understood that the sole remedy for any
such breach, violation or failure shall be pursuant to Article 6); or

(c) any FSM Retained Liability.

Notwithstanding subsection (a), Seller shall have no obligation to indemnify
Buyer for any inaccuracy in or breach of any of the representations or
warranties of Seller contained in this Agreement or in any certificate or
instrument delivered by or on behalf of Seller pursuant to this Agreement, if a
Buyer Principal knew or should have known that the applicable representation,
warranty or certificate was inaccurate or incorrect.

 

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8.3 Indemnification by Buyer. Subject to the other terms and conditions of this
Article 8, Buyer shall indemnify and defend each of Seller and its Affiliates
and their respective Representatives (collectively, the “Seller Indemnitees”)
against, and shall hold each of them harmless from and against, and shall pay
and reimburse each of them for, any and all Losses incurred or sustained by, or
imposed upon, the Seller Indemnitees based upon, arising out of, with respect to
or by reason of:

(a) Any inaccuracy in or breach of any of the representations or warranties of
Buyer contained in this Agreement or in any certificate or instrument delivered
by or on behalf of Buyer pursuant to this Agreement, as of the date such
representation or warranty was made or as if such representation or warranty was
made on and as of the Closing Date (except for representations and warranties
that expressly relate to a specified date, the inaccuracy in or breach of which
will be determined with reference to such specified date);

(b) Any breach or non-fulfillment of any covenant, agreement or obligation to be
performed by Buyer pursuant to this Agreement (other than any breach or
violation of, or failure to fully perform, any covenant, agreement, undertaking
or obligation in Article 6, it being understood that the sole remedy for any
such breach, violation or failure shall be pursuant to Article 6);

(c) Any third party claim arising out of Buyer’s ownership or operation of the
FSM Purchased Assets, the Purchased Interests or the Business on or after the
Closing Date; and

(d) Any unreleased guaranty or other payment obligation of Seller or any
Affiliate of Seller in connection with any debt or financing incurred by any
Company prior to the Closing Date, including any FSM Assumed Liability.

8.4 Certain Limitations. The indemnification provided for in Sections 8.2 and
8.3 is subject to the following limitations:

(a) Seller is not liable to the Buyer Indemnitees for indemnification under
Section 8.2(a) (other than with respect to a claim for indemnification based
upon, arising out of, with respect to or by reason of any inaccuracy in or
breach of any representation or warranty in Sections 3.1, 3.2, 3.3, 3.4 and 3.22
(the “Buyer Basket Exclusions”)), until the aggregate amount of all Losses in
respect of indemnification under Section 8.2(a) (other than those based upon,
arising out of, with respect to or by reason of the Buyer Basket Exclusions)
exceeds $50,000, in which event Seller shall pay or be liable for all such
Losses from the first dollar.

(b) Buyer is not liable to the Seller Indemnitees for indemnification under
Section 8.3(a) (other than with respect to a claim for indemnification based
upon, arising out of, with respect to or by reason of any inaccuracy in or
breach of any representation or warranty in Sections 4.1 and 4.6 (the “Seller
Basket Exclusions”)) until the aggregate amount of all Losses in respect of
indemnification under Section 8.3(a) (other than those based upon, arising out
of, with respect to or by reason of the Seller Basket Exclusions) exceeds
$50,000, in which event Buyer shall pay or be liable for all such Losses from
the first dollar.

(c) For purposes of this Article 8, any inaccuracy in or breach of any
representation or warranty is determined without regard to any Material Adverse
Effect or other similar qualification contained in or otherwise applicable to
such representation or warranty.

 

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8.5 Indemnification Procedures. The party making a claim under this Article 8 is
referred to as the “Indemnified Party”, and the party against whom such claims
are asserted under this Article 8 is referred to as the “Indemnifying Party”.

(a) Third Party Claims. If any Indemnified Party receives notice of the
assertion or commencement of any Action made or brought by any Person who is not
a party to this Agreement or an Affiliate of a party to this Agreement or a
Representative of the foregoing (a “Third Party Claim”) against such Indemnified
Party with respect to which the Indemnifying Party is obligated to provide
indemnification under this Agreement, the Indemnified Party shall give the
Indemnifying Party reasonably prompt written notice, but in any event not later
than 30 calendar days after receipt of such notice of such Third Party Claim.
The failure to give such prompt written notice shall not, however, relieve the
Indemnifying Party of its indemnification obligations, except and only to the
extent that the Indemnifying Party forfeits rights or defenses by reason of such
failure. Such notice by the Indemnified Party shall describe the Third Party
Claim in reasonable detail, shall include copies of all material written
evidence and shall indicate the estimated amount, if reasonably practicable, of
the Loss that has been or may be sustained by the Indemnified Party. The
Indemnifying Party shall have the right to participate in, or by giving written
notice to the Indemnified Party, to assume the defense of any Third Party Claim
at the Indemnifying Party’s expense and by the Indemnifying Party’s own counsel,
and the Indemnified Party shall cooperate in good faith in such defense;
provided, that if the Indemnifying Party is Seller, such Indemnifying Party
shall not have the right to defend or direct the defense of any such Third Party
Claim that (x) is asserted directly by or on behalf of a Person that is a
supplier or customer of a Company, or (y) seeks an injunction or other equitable
relief against the Indemnified Party. If the Indemnifying Party assumes the
defense of any Third Party Claim, subject to Section 8.5(b), it shall have the
right to take such action as it deems necessary to avoid, dispute, defend,
appeal or make counterclaims pertaining to any such Third Party Claim in the
name and on behalf of the Indemnified Party. The Indemnified Party shall have
the right to participate in the defense of any Third Party Claim with counsel
selected by it subject to the Indemnifying Party’s right to control the defense.
The fees and disbursements of such counsel shall be at the expense of the
Indemnified Party, provided, that if in the reasonable opinion of counsel to the
Indemnified Party, (A) there are legal defenses available to an Indemnified
Party that are different from or additional to those available to the
Indemnifying Party; or (B) there exists a conflict of interest between the
Indemnifying Party and the Indemnified Party that cannot be waived, the
Indemnifying Party shall be liable for the reasonable fees and expenses of
counsel to the Indemnified Party in each jurisdiction for which the Indemnified
Party determines counsel is required. If the Indemnifying Party elects not to
compromise or defend such Third Party Claim, fails to promptly notify the
Indemnified Party in writing of its election to defend as provided in this
Agreement, or fails to diligently prosecute the defense of such Third Party
Claim, the Indemnified Party may, subject to Section 8.5(b), pay, compromise,
defend such Third Party Claim and seek indemnification for any and all Losses
based upon, arising from or relating to such Third Party Claim. Seller and Buyer
shall cooperate with each other in all reasonable respects in connection with
the defense of any Third Party Claim, including making available records
relating to such Third Party Claim and furnishing, without expense (other than
reimbursement of actual out-of-pocket expenses) to the defending party,
management employees of the non-defending party as may be reasonably necessary
for the preparation of the defense of such Third Party Claim.

 

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(b) Settlement of Third Party Claims. Notwithstanding any other provision of
this Agreement, the Indemnifying Party shall not enter into settlement of any
Third Party Claim without the prior written consent of the Indemnified Party,
except as provided in this Section 8.5(b). If a firm offer is made to settle a
Third Party Claim without leading to liability or the creation of a financial or
other obligation on the part of the Indemnified Party and provides, in customary
form, for the unconditional release of each Indemnified Party from all
liabilities and obligations in connection with such Third Party Claim and the
Indemnifying Party desires to accept and agree to such offer, the Indemnifying
Party shall give written notice to that effect to the Indemnified Party. If the
Indemnified Party fails to consent to such firm offer within ten days after its
receipt of such notice, the Indemnified Party may continue to contest or defend
such Third Party Claim and in such event, the maximum liability of the
Indemnifying Party as to such Third Party Claim shall not exceed the amount of
such settlement offer. If the Indemnified Party fails to consent to such firm
offer and also fails to assume defense of such Third Party Claim, the
Indemnifying Party may settle the Third Party Claim upon the terms shown in such
firm offer to settle such Third Party Claim. If the Indemnified Party has
assumed the defense pursuant to Section 8.5(a), it shall not agree to any
settlement without the written consent of the Indemnifying Party (which consent
shall not be unreasonably withheld or delayed).

(c) Direct Claims. Any Action by an Indemnified Party on account of a Loss which
does not result from a Third Party Claim (a “Direct Claim”) shall be asserted by
the Indemnified Party giving the Indemnifying Party reasonably prompt written
notice, but in any event not later than 30 days after the Indemnified Party
becomes aware of such Direct Claim. The failure to give such prompt written
notice shall not, however, relieve the Indemnifying Party of its indemnification
obligations, except and only to the extent that the Indemnifying Party forfeits
rights or defenses by reason of such failure. Such notice by the Indemnified
Party shall describe the Direct Claim in reasonable detail, shall include copies
of all material written evidence and shall indicate the estimated amount, if
reasonably practicable, of the Loss that has been or may be sustained by the
Indemnified Party. The Indemnifying Party shall have 30 days after its receipt
of such notice to respond in writing to such Direct Claim. The Indemnified Party
shall allow the Indemnifying Party and its professional advisors to investigate
the matter or circumstance alleged to give rise to the Direct Claim, and whether
and to what extent any amount is payable in respect of the Direct Claim and the
Indemnified Party shall assist the Indemnifying Party’s investigation by giving
such information and assistance (including access to a Company’s premises and
personnel and the right to examine and copy any accounts, documents or records)
as the Indemnifying Party or any of its professional advisors may reasonably
request. If the Indemnifying Party does not so respond within such 30-day
period, the Indemnifying Party shall be deemed to have rejected such claim, in
which case the Indemnified Party shall be free to pursue such remedies as may be
available to the Indemnified Party on the terms and subject to the provisions of
this Agreement.

(d) Cooperation. Upon a reasonable request by the Indemnifying Party, each
Indemnified Party seeking indemnification hereunder in respect of any Direct
Claim, hereby agrees to consult with the Indemnifying Party and act reasonably
to take actions reasonably requested by the Indemnifying Party in order to
attempt to reduce the amount of Losses in respect of such Direct Claim. Any
costs or expenses associated with taking such actions shall be included as
Losses hereunder.

 

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(e) Tax Claims. Notwithstanding any other provision of this Agreement, the
control of any claim, assertion, event or proceeding in respect of Taxes
(including any such claim in respect of a breach of the representations and
warranties in Section 3.20 or any breach or violation of or failure to fully
perform any covenant, agreement, undertaking or obligation in Article 6) shall
be governed exclusively by Article 6.

8.6 Payments. Once a Loss is agreed to by the Indemnifying Party or finally
adjudicated to be payable pursuant to this Article 8, the Indemnifying Party
shall satisfy its obligations within 30 Business Days by wire transfer of
immediately available funds; provided, however, that in the case of Seller
indemnification in accordance with Section 8.2, such Loss shall reduce the
principal amount of the Buyer Note to the extent that the amount of the Loss is
equal to or less than the then outstanding principal amount of the Buyer Note.
The parties agree that should an Indemnifying Party not make full payment of any
such obligations in accordance with the previous sentence, any amount payable
shall accrue interest from and including the date of agreement of the
Indemnifying Party or final, non-appealable adjudication to and including the
date such payment has been made at a rate per annum equal to the prime rate as
reported by The Wall Street Journal. Such interest shall be calculated daily on
the basis of a 360 day year and the actual number of days elapsed.

8.7 Tax Treatment of Indemnification Payments. All indemnification payments made
under this Agreement shall be treated by the parties as an adjustment to the
Purchase Price for Tax purposes, unless otherwise required by Law.

8.8 Effect of Investigation. The representations, warranties and covenants of
the Indemnifying Party, and the Indemnified Party’s right to indemnification
with respect thereto, are not affected or deemed waived by reason of any
investigation made by or on behalf of the Indemnified Party (including by any of
its Representatives) or by reason of the fact that the Indemnified Party or any
of its Representatives knew or should have known that any such representation or
warranty is, was or might be inaccurate or by reason of the Indemnified Party’s
waiver of any condition shown in Sections 7.1 or 7.2, as the case may be.

8.9 No Double Recovery. Notwithstanding the fact that any Indemnified Party may
have the right to assert claims for indemnification under or in respect of more
than one provision of this Agreement in respect of any fact, event, condition or
circumstance, no Indemnified Party is entitled to recover the amount of any Loss
suffered by such Indemnified Party more than once, regardless of whether such
Loss may be as a result of a breach of more than one representation or warranty
or covenant. Payment to Buyer or any other Buyer Indemnitee of any interest or
other earnings pursuant to the Indemnity Escrow Agreement, however, shall be in
addition to, and not part of, any indemnification payable to it pursuant to this
Article 8, and shall not be taken into account for purposes of applying the
limitations shown in Section 8.4.

8.10 Exclusive Remedies. Subject to Sections 5.3 and 5.6, the parties
acknowledge and agree that their sole and exclusive remedy with respect to any
and all claims (other than claims arising from fraud, criminal activity or
willful misconduct on the part of a party in connection with the transactions
contemplated by this Agreement) for any breach of any representation, warranty,
covenant, agreement or obligation shown herein or otherwise relating to the
subject matter of this Agreement, shall be pursuant to the indemnification
provisions shown in Article 6

 

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and this Article 8. In furtherance of the foregoing, each party hereby waives,
to the fullest extent permitted under Law, any and all rights, claims and causes
of action for any breach of any representation, warranty, covenant, agreement or
obligation shown herein or otherwise relating to the subject matter of this
Agreement it may have against the other parties and their Affiliates and each of
their respective Representatives arising under or based upon any Law, except
pursuant to the indemnification provisions shown in Article 6 and this
Article 8. Nothing in this Section 8.10 shall limit any Person’s right to seek
and obtain any equitable relief to which any Person shall be entitled or to seek
any remedy on account of any Person’s fraudulent, criminal or intentional
misconduct.

Article 9

TERMINATION

9.1 Termination. This Agreement may be terminated at any time before the Closing
under the following circumstances:

(a) Seller and Buyer may terminate this Agreement by mutual written consent.

(b) Buyer may terminate this Agreement by written notice to Seller if:

(i) Buyer is not then in material breach of any provision of this Agreement and
there has been a breach, inaccuracy in or failure to perform any representation,
warranty, covenant or agreement made by Seller pursuant to this Agreement that
would give rise to the failure of any of the conditions specified in Article 7
and such breach, inaccuracy or failure has not been cured by Seller within ten
days of Seller’s receipt of written notice of such breach from Buyer;

(ii) Any of the conditions shown in Section 7.1 shall not have been fulfilled,
or if it becomes apparent that any of such conditions will not be fulfilled, by
December 31, 2016, unless such failure shall be due to the failure of Buyer to
perform or comply with any of the covenants, agreements or conditions of this
Agreement to be performed or complied with by it before the Closing; or

(iii) Seller has notified Buyer of its receipt of an Acquisition Proposal.
Seller’s notification or Buyer’s termination does not change Seller’s liability
for the Buyer Fee as provided under Section 5.3 or its exposure to other
remedies for breach as provided in this Agreement.

(c) Seller may terminate this Agreement by written notice to Buyer if:

(i) Seller is not then in material breach of any provision of this Agreement and
there has been a breach, inaccuracy in or failure to perform any representation,
warranty, covenant or agreement made by Buyer pursuant to this Agreement that
would give rise to the failure of any of the conditions specified in Article 7
and such breach, inaccuracy or failure has not been cured by Buyer within ten
days of Buyer’s receipt of written notice of such breach from Seller;

 

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(ii) Any of the conditions shown in Section 7.2 shall not have been, or if it
becomes apparent that any of such conditions will not be, fulfilled by
December 31, 2016, unless such failure shall be due to the failure of Seller to
perform or comply with any of the covenants, agreements or conditions of this
Agreement to be performed or complied with by it before the Closing; or

(iii) Seller has notified Buyer of its receipt of an Acquisition Proposal.
Seller’s notification and termination does not change Seller’s liability for the
Buyer Fee as provided under Section 5.3, or its exposure to other remedies for
breach as provided in this Agreement.

(d) Buyer or Seller may terminate if (i) there shall be any Law that makes
consummation of the transactions contemplated by this Agreement illegal or
otherwise prohibited or (ii) any Governmental Authority shall have issued a
Governmental Order restraining or enjoining the transactions contemplated by
this Agreement, and such Governmental Order shall have become final and
non-appealable.

9.2 Effect of Termination. Upon termination of this Agreement in accordance with
this Agreement, this Agreement shall forthwith become void and there shall be no
liability on the part of any party except:

(a) As shown in this Article 9, Sections 5.3 and 5.6, and Article 10; and

(b) That nothing herein shall relieve any party from liability for any willful
breach of any provision of this Agreement.

Article 10

MISCELLANEOUS

10.1 Expenses. Except as otherwise expressly provided herein, all costs and
expenses, including fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the contemplated
transactions shall be paid by the party incurring such costs and expenses,
whether or not the Closing occurs; provided, however, Seller is responsible for
all costs and expenses of Seller, each Company and each Company Subsidiary
incurred in connection with the transaction, including fees and expenses of
counsel to Seller.

10.2 Notices. All notices, requests, consents, claims, demands, waivers and
other communications hereunder shall be in writing and shall be deemed to have
been given (a) when delivered by hand (with written confirmation of receipt);
(b) when received by the addressee if sent by a nationally recognized overnight
courier (receipt requested); (c) on the date sent by facsimile or e-mail of a
PDF document (with confirmation of transmission) if sent during normal business
hours of the recipient, and on the next Business Day if sent after normal
business hours of the recipient or (d) on the third day after the date mailed,
by certified or registered mail, return receipt requested, postage prepaid. Such
communications must be sent to the respective parties at the following addresses
(or at such other address for a party as shall be specified in a notice given in
accordance with this Section 10.2):

 

If to Seller:   Foundation HealthCare, Inc.   13900 North Portland Ave., Suite
200   Oklahoma City, Oklahoma 73134   Facsimile: (405) 608-1801   E-mail:
stanton.nelson@fdnh.com   Attention: Stanton Nelson, Chief Executive Officer

 

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with a copy to:   Reed Smith, LLP   7900 Tysons One Place   Suite 500   McLean,
VA 22102   Facsimile: (703) 641-4340   E-mail: lpatterson@reedsmith.com  
Attention: Lorin Patterson, Esquire If to Buyer:   HealthCrest Surgical
Partners, LLC   3540 S. Boulevard, Suite 225   Edmond, OK 73013   Facsimile:
(405) 697-2496   E-mail: Thomas.Newman@fdnh.com   Attention: Thomas A. Newman,
Chief Executive Officer with a copy to:   Derrick & Briggs, LLP   Chase Tower,
28th Floor   100 N. Broadway Ave.   Oklahoma City, OK 73102   Facsimile:
(405) 235-1995   E-mail: derrick@derrickandbriggs.com   Attention: Gary W.
Derrick, Esq.

10.3 Interpretation. For purposes of this Agreement, (a) the words “include”,
“includes” and “including” are deemed to be followed by the words “without
limitation”; (b) the word “or” is not exclusive; (c) the words “herein”,
“hereof”, “hereby”, “hereto” and “hereunder” refer to this Agreement as a whole,
(d) references to gender include all genders, and (e) words (including defined
terms) in singular form include the plural form and vice versa. Unless the
context otherwise requires, references herein: (1) to articles, sections,
disclosure schedules and exhibits mean the articles and sections of, and
disclosure schedules and exhibits attached to, this Agreement; (2) to an
agreement, instrument or other document means such agreement, instrument or
other document as amended, supplemented and modified from time to time to the
extent permitted by the provisions and (3) to a statute means such statute as
amended from time to time and includes any successor legislation and any
applicable regulations. This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting an instrument or causing any instrument to be drafted. The disclosure
schedules and exhibits referred to herein shall be construed with, and as an
integral part of, this Agreement to the same extent as if they were shown
verbatim herein.

10.4 Headings. The headings in this Agreement are for reference only and shall
not affect the interpretation of this Agreement.

 

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10.5 Severability. If any term or provision of this Agreement is invalid,
illegal or unenforceable in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other term or provision of this Agreement
or invalidate or render unenforceable such term or provision in any other
jurisdiction. Upon such determination that any term or other provision is
invalid, illegal or unenforceable, the parties shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the greatest extent possible.

10.6 Entire Agreement. This Agreement, the other Transaction Documents and all
other documents, instruments, schedules and exhibits delivered in connection
with this Agreement constitute the sole and entire agreement of the parties to
this Agreement with respect to the subject matter contained herein and therein,
and supersede all prior and contemporaneous understandings and agreements, both
written and oral, with respect to such subject matter. In the event of any
inconsistency between the statements in the body of this Agreement and such
other documents (other than an exception expressly shown as such in the
Disclosure Schedules), the statements in the body of this Agreement will
control.

10.7 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties and their respective successors and
permitted assigns. Neither party may assign its rights or obligations hereunder
without the prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed; provided, however, that before the Closing
Date, Buyer may, without the prior written consent of Seller, assign all or any
portion of its rights under this Agreement to one or more of its direct or
indirect wholly-owned subsidiaries. No assignment shall relieve the assigning
party of any of its obligations hereunder.

10.8 No Third-party Beneficiaries. Except as provided in Article 8, this
Agreement is for the sole benefit of the parties and their respective successors
and permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person or entity any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.

10.9 Amendment and Modification; Waiver. This Agreement may only be amended,
modified or supplemented by an agreement in writing signed by each party. No
waiver by any party of any of the provisions of this Agreement shall be
effective unless explicitly shown in writing and signed by the party so waiving.
No waiver by any party shall operate or be construed as a waiver in respect of
any failure, breach or default not expressly identified by such written waiver,
whether of a similar or different character, and whether occurring before or
after that waiver. No failure to exercise, or delay in exercising, any right,
remedy, power or privilege arising from this Agreement shall operate or be
construed as a waiver; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further exercise or
the exercise of any other right, remedy, power or privilege.

10.10 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.

(a) This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Oklahoma without giving effect to any choice or
conflict of law provision or rule (whether of the State of Oklahoma or any other
jurisdiction) that would cause the application of Laws of any jurisdiction other
than those of the State of Oklahoma.

 

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(b) ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS
AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES
OF AMERICA OR THE COURTS OF THE STATE OF OKLAHOMA IN EACH CASE LOCATED IN
OKLAHOMA CITY AND THE COUNTY OF OKLAHOMA, AND EACH PARTY IRREVOCABLY SUBMITS TO
THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR
PROCEEDING. SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO
SUCH PARTY’S ADDRESS SHOWN HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY
SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. THE PARTIES
IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF
ANY SUIT, ACTION OR ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND
AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER
TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH
PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION,
(B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO
THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 10.10(c).

10.11 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall be deemed to
be one and the same agreement. A signed copy of this Agreement delivered by
facsimile, e-mail or other means of electronic transmission shall be deemed to
have the same legal effect as delivery of an original signed copy of this
Agreement.

[Signature Page Follows]

 

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The parties have caused this Purchase Agreement to be executed as of the date
first written above.

 

BUYER:     HEALTHCREST SURGICAL PARTNERS, LLC     By:  

/S/ THOMAS A. NEWMAN

      Thomas A. Newman, Chief Executive Officer SELLER:     FOUNDATION
HEALTHCARE, INC.     By:  

/S/ STANTON NELSON

      Stanton Nelson, Chief Executive Officer     FOUNDATION SURGERY AFFILIATES,
LLC     By:  

/S/ STANTON NELSON

      Stanton Nelson, Chief Executive Officer     FOUNDATION SURGERY MANAGEMENT,
LLC     By:  

/S/ STANTON NELSON

      Stanton Nelson, Chief Executive Officer