Unassociated Document


    FINAL
      EXECUTION COPY

    


    


    


    


    


    


    ASSET
      CONTRIBUTION AND EXCHANGE AGREEMENT

    


    dated
      as of February 21, 2006

    


    by
      and between

    


    


    NOVAMED
      ACQUISITION COMPANY, INC.,

    


    NOVAMED
      OF DALLAS, INC.,

    


    PRESTON
      PLAZA SURGERY CENTER, LLP

    


    


    AND

    


    


    ITS
      PARTNERS

    


    


    


    



    
      
        
          i

        

        
        

      

      
        
          

        

      

       

    


     

    ASSET
      CONTRIBUTION AND EXCHANGE AGREEMENT

     

    THIS ASSET
      CONTRIBUTION AND EXCHANGE AGREEMENT
      (this
“Agreement”)
      is
      dated effective as of 12:01 a.m. on February 21, 2006 (the
      “Closing
      Date”),
      by and
      among NovaMed
      Acquisition Company, Inc., a Delaware corporation (“NovaMed”),
      NovaMed of Dallas, Inc., a Delaware corporation (“NOD,”
      together
      with NovaMed, “Buyer”),
      Preston Plaza Surgery Center, LLP, a Texas limited
      liability partnership (“Seller”),
      Cataract and Laser Center Partners, L.L.C., a Delaware limited liability company
      d/b/a Ambulatory Surgical Centers of America, a partner of Seller (“ASCOA”),
      and
      each of the other partners of Seller listed on Exhibit
      1
      (the
“Physician
      Partners,”
      together
      with ASCOA, the “Partners”).
      Certain capitalized terms have the meanings provided in Section
      13.1.

     

    RECITALS

    


    A. Seller
      is
      engaged in the business of owning and operating a licensed ambulatory surgery
      center located at 17950
      Preston Road, Suite 75, Dallas, Texas 75252 (the
      “Business”).
      The
      Partners own all of the equity interests in Seller.

     

    B. Pursuant
      to the terms hereof, immediately prior to the Closing (as defined herein),
      Seller will transfer substantially all of its assets, and certain liabilities
      described herein, to a newly formed Delaware limited partnership, NovaMed
      Surgery Center of Dallas, LP (the “New
      LP”)
      in
      exchange for a ninety-nine percent (99%) partnership interest in the New LP,
      as
      a limited partner. ASCOA, one of the Partners, after an exchange with Seller,
      will initially own a one percent (1%) partnership interest in the New LP, as
      general partner, and the Seller will own a ninety-nine percent (99%) interest
      in
      New LP as limited partner (such partnership interests in the New LP to be
      referred to herein as the “Partnership
      Interests”).

     

    C. As
      a
      condition precedent to Closing, Seller must satisfy certain conditions as
      described in this Agreement. 

     

    D. At
      Closing, (i) Seller desires to transfer to NovaMed, and NovaMed desires to
      acquire from Seller, sixty-four percent (64%) of the New LP’s Partnership
      Interests in exchange for the LP Purchase Price (as defined herein) and (ii)
      ASCOA desires to transfer to NOD, and NOD desires to acquire from ASCOA, ASCOA’s
      one percent (1%) Partnership Interest in exchange for the GP Purchase Price
      (as
      defined herein), all on the terms and conditions hereinafter set forth.


     

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

     

    ARTICLE
      I.

    CONTRIBUTION
      OF ASSETS
      TO NEW LP AND OTHER
      PRE-CLOSING COVENANTS

     

    1.1.  Formation
      of the New LP.
      Prior
      to the Closing, the New LP shall be formed pursuant to the Certificate of
      Limited Partnership in the form attached hereto as Exhibit
      1.1-1. 

     

    1.2.  Transfer
      of Assets to New LP. Immediately
      prior to the Closing, and as a condition precedent to the transactions
      contemplated herein, Seller will transfer (the “New
      LP Asset Transfer”)
      to New
      LP all of the Assets, free and clear of all
      Liens,
      in
      exchange for its ninety-nine percent (99%) Partnership Interest as a limited
      partner. As of the Closing, the assets
      contributed into the New LP as set forth herein will consist of all of the
      assets and property necessary to conduct the Business (the “Assets”),
      including, without limitation, the following (except
      to the extent that any of the following are designated as Excluded Assets in
      Section
      1.3
      below):

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (a) 
      all
      inventory and supplies with respect to the Business (collectively, the
“Inventory”);

     

    (b) 
      all
      of
      the tangible and intangible personal property with respect to the Business,
      including, without limitation, machinery, equipment, fixtures, phone numbers
      (to
      the extent assignable), computer hardware and software that are listed on
Schedule
      1.2(b)
      (collectively, the “Personal
      Property”);

     

    (c) 
      all
      prepaid expenses relating to the Business set forth on Schedule
      1.2(c);

     

    (d) 
      all
      contract rights with respect to those Material Contracts identified as Assumed
      Contracts on Schedule
      4.9
      (collectively, the “Assumed
      Contracts”),
      purchase orders, licenses and leases pertaining to the Business, including
      all
      leasehold improvements, rights under any restrictive covenants accruing to
      the
      benefit of the Business and any provider agreements relating to the operation
      of
      the Business;

     

    (e) 
      all
      names
      and tradenames of Seller and the Business, including, without limitation,
“Preston Plaza Surgery Center” and all derivations thereof;

     

    (f) 
      all
      records, files and papers primarily pertaining to the Business, including
      general business records, accounting records and Medical Records;

     

    (g) 
      all
      Permits, licenses and certificates of need (to the extent assignable) relating
      to the operation of the Business;

     

    (h) 
      all
      causes of action, claims, warranties, guarantees, refunds, rights of recovery
      and set-off of every kind and character, to the extent relating to the Assets
      or
      the Business;

     

    (i) 
      all
      casualty insurance and warranty proceeds of Seller received after the Closing
      Date with respect to damage to, nonconformance of, or loss to, the
      Assets;

     

    (j) 
      to
      the
      extent permitted by law, all accounts receivable or other rights to receive
      payment owing to Seller (the “Accounts
      Receivable”);

     

    (k) 
      all
      rights to the security deposit of $26,026 being held by the lessor of the Leased
      Real Property; and

     

    (l) 
      all
      of
      the goodwill of and associated with the Business.

     

    To
      the
      extent any personal property, inventory, supplies, equipment and contracts
      owned
      by a Partner or any of Seller and Partners’ respective Affiliates are primarily
      used in, or are necessary for the continued conduct of the Business, and would
      otherwise be deemed Assets, then Seller or such Partner will cause such party
      to
      contribute such assets and property to Seller for contribution to the New LP,
      free and clear of all Liens, prior to the Closing Date.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

     

    1.3.  Excluded
      Assets.
      Notwithstanding anything to the contrary contained herein, the Assets do not
      include the following (collectively, the “Excluded
      Assets”):

     

    (a) 
      Seller’s
      rights under this Agreement, including the consideration paid to Seller pursuant
      to this Agreement,
      and
      Physician Partners’ rights under the Partnership Agreement (as hereinafter
      defined);

     

    (b) 
      the
      tax
      records relating to the Business
      and all
      other records of the Seller not related to the development or operation of
      the
      Business;

     

    (c) 
      Employee
      Benefit Plans relating to the employees of the Business and any and all rights
      therein or in the assets thereof;

     

    (e) 
      all
      Material Contracts not identified as Assumed Contracts on Schedule
      4.9;
      

     

    (f) 
      all
      cash-on-hand and cash equivalents as of the Closing Date; 

     

    (g) 
      all
      personal effects of Seller or any Partner not used in connection with the
      operation of the Business as specified in Schedule
      1.3(g);
      

     

    (h) 
      all
      rights under insurance policies and insurance payments covering insured
      liabilities which are not New LP Assumed Liabilities (as defined in Section
      1.4
      below);
      and 

     

    (i) 
      any
      and
      all refunds, rebates, or other amounts paid to Seller relating to the
      termination or cancellation by Seller of any insurance policies owned by
      Seller.

     

    1.4.  Excluded
      Liabilities.
      Notwithstanding anything to the contrary contained in this Agreement or in
      any
      Transaction Document, and regardless of whether such liability is disclosed
      in
      this Agreement, in any of the Transaction Documents or on any Schedule or
      Exhibit hereto or thereto, the New LP will not assume, agree to pay, perform
      and
      discharge or in any way be responsible for any debts, liabilities or obligations
      of the Business, Seller, Partners or any of their respective Affiliates of
      any
      kind or nature whatsoever, arising out of, relating to, resulting from, or
      caused by any transaction, status, event, condition, occurrence or situation
      relating to, arising out of or in connection with the Business, the Assets,
      Seller or any Partner existing, arising or occurring on or prior to the Closing
      Date, including, without limitation, any liabilities or obligations relating
      to
      or arising from the Excluded Assets (the “Excluded
      Liabilities”).
      Notwithstanding the foregoing, Seller will contribute into New LP, and New
      LP
      will assume and thereafter pay and fully satisfy when due, all liabilities
      and
      obligations: (a) which
      arose prior to the New LP Asset Transfer and represent normal and current trade
      payables incurred by Seller in connection with the operation of the Business
      in
      the ordinary course of business, consistent with past custom and practice,
      and
      are specifically set forth on Schedule
      1.4(a)
      (“Accounts
      Payable”);
      (b)
      the other accrued liabilities of Seller which have been incurred in the ordinary
      course of business, consistent with past custom and practice and which are
      specifically set forth on Schedule
      1.4(b)
      (“Accrued
      Liabilities”);
      and
      (c) first arising after the New LP Asset Transfer under any Assumed Contract
      (except for any liability or obligation arising from any breach or failure
      to
      perform under any of the foregoing prior to the Closing Date) (all such
      liabilities and obligations to be so contributed into, and assumed by, the
      New
      LP being collectively referred to herein as the “New
      LP Assumed Liabilities”).

     

    1.5.  Satisfaction
      of Liabilities.
      Excluding the New LP Assumed Liabilities, Seller agrees to satisfy all
      liabilities of Seller relating to the Business prior to the New LP Asset
      Transfer or as soon as is reasonably practicable thereafter,
      which
      liabilities include, without limitation:

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (a) 
      all
      payroll expense and other compensation due and owing Seller’s employees for the
      period preceding the Closing Date (excluding any paid time off or other
      employee-related accruals to the extent they are included in Accrued
      Liabilities); and

    


    (b) 
      all
      Taxes, including payroll taxes, sales taxes and income taxes accrued up to
      the
      New LP Asset Transfer (but excluding any such Taxes to the extent they are
      included in Accrued Liabilities).

    


    ARTICLE
      II.

    SALE
      OF PARTNERSHIP INTERESTS TO NOVAMED
      AND NOD

     

    2.1  Sale
      of Limited Partnership Interests.
      The
      Partnership Interests held by Seller are as a limited partner of New LP. In
      reliance upon the representations and warranties of NovaMed contained herein,
      receipt of the LP Purchase Price (as defined in Section 3.1 below) and on the
      terms and conditions hereinafter set forth, Seller hereby agrees to sell,
      assign, transfer, convey and deliver to NovaMed at the Closing, free and clear
      of all Liens, all of Seller’s right, title and interest in and to sixty-four
      percent (64%) of the New LP’s issued and outstanding Partnership Interests (the
“Transferred
      LP Interests”).
      In
      reliance upon the representations and warranties of Seller and
      Partners contained
      herein, and on the terms and conditions hereinafter set forth, NovaMed hereby
      agrees to purchase the Transferred LP Interests from Seller for the LP Purchase
      Price set forth in Article
      III
      hereof.


     

    2.2  Sale
      of General Partnership Interests.
      The
      Partnership Interests held by ASCOA are as a general partner of New LP. In
      reliance on the representations and warranties of NOD contained herein, receipt
      of the GP Purchase Price (as defined in Section 3.1 below) and on the terms
      and
      conditions hereinafter set forth, ASCOA hereby agrees to sell, assign, transfer,
      convey and deliver to NOD at the Closing, free and clear of all Liens, all
      of
      ASCOA’s right, title and interest in and to one percent (1%) of the New LP’s
      issued and outstanding Partnership Interests (the “Transferred
      GP Interests,” together
      with the Transferred LP Interests, the “Transferred
      Interests”).
      In
      reliance upon the representations and warranties of Seller and
      Partners contained
      herein, and on the terms and conditions hereinafter set forth, NOD hereby agrees
      to purchase the Transferred GP Interests from ASCOA for the GP Purchase Price
      set forth in Article
      III
      hereof.

     

    2.3 Ownership
      of New LP following Transactions.
      As a
      result of the sales described in this Article II, NovaMed will own 64% of the
      Partnership Interests in the New LP, as a limited partner, Seller will initially
      own 35% of the Partnership Interests, as a limited partner, and NOD will own
      1%
      of the Partnership Interests, as the general partner of the New LP. Immediately
      following this transaction, Seller will distribute its Partnership Interests
      to
      certain of the Partners, resulting in such individual Partners owning 35% of
      the
      overall Partnership Interests in the manner set forth on Schedule
      2.3.
      In
      addition, Seller will distribute the LP Purchase Price to the Partners as agreed
      to by the Partners and in the manner set forth on Schedule
      2.3.

     

    ARTICLE
      III.

     CONSIDERATION
      AND MANNER OF PAYMENT

     

    3.1.  Purchase
      Price.
      The
      purchase price for the Transferred LP Interests (the “LP
      Purchase Price”)
      shall
      be Twelve Million and No/100 Dollars ($12,000,000), and the purchase price
      for
      Transferred GP Interests shall be Four Hundred Fifty Thousand and No/100 Dollars
      ($450,000) (the “GP
      Purchase Price,” together
      with the LP Purchase Price, the“Purchase
      Price”).
      

     

    3.2.  Payment
      of Purchase Price.
      At the
      Closing: (a) NovaMed will pay to Seller an amount equal to the LP Purchase
      Price; and (b) NOD will pay to ASCOA an amount equal to the GP Purchase Price,
      all by wire transfer of immediately available funds to Seller and ASCOA’s
      respective designated bank accounts, according to the wire transfer instructions
      attached as Exhibit
      3.2.
      

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      IV.

     SELLER’S
      AND PARTNERS’ REPRESENTATIONS AND WARRANTIES

     

    Each
      of
      Seller and Partners hereby
      represents and warrants, jointly and severally, to Buyer as of the Closing
      Date,
      as follows:

     

    4.1.  Seller’s
      Organization, Good Standing and Authority.
      Seller
      is a limited liability partnership duly organized, validly existing and in
      good
      standing under Texas law.
      Each of
      Seller and Partners has full capacity, power, right and authority to enter
      into
      and perform their respective obligations under this Agreement and each of the
      Transaction Documents to which each of them is a party. This Agreement and
      each
      of the Transaction Documents to which each is a party have been duly executed
      and delivered by each of Seller and Partners, and constitute the valid and
      binding obligations of Seller and Partners, enforceable against them in
      accordance with their respective terms, except as the same may be limited by
      applicable bankruptcy, insolvency, reorganization, moratorium or other similar
      laws affecting the rights of creditors generally and the availability of
      equitable remedies. 

     

    4.2.  Assets.
      Seller
      has full power and authority to carry on the Business as it is now being
      conducted and to own and hold under lease the properties and assets it now
      owns
      or holds under lease. The Assets constitute all tangible or intangible property,
      rights and assets necessary for the conduct by Seller of the Business as
      conducted during the twelve months preceding the Closing Date and, to the
      knowledge of Seller, there is no immediate need to acquire or replace any
      material assets, outside the ordinary course of business. Seller
      has good and marketable title to the Assets, in each case free and clear of
      any
      and all Liens. Upon consummation of the transactions contemplated by this
      Agreement, Seller will have conveyed, and the New LP will be vested with, good
      and marketable title to the Assets, free and clear of all Liens. All
      of
      the Assets that are personal property are in operable condition and repair,
      normal wear and tear expected, and none of such property requires any repair
      or
      replacement except for maintenance in the ordinary course of business. Except
      as
      set forth on Schedule
      4.2,
      none of
      the Assets are held under any lease, security agreement, conditional sales
      contract or other title retention or security agreement is located other than
      at
      the Facility or are encumbered by any other liens. 

     

    4.3.  Approvals.
      Except
      as set forth on Schedule
      4.3,
      no
      consent, approval, order or authorization of, or registration, declaration,
      notice or filing with, any national, state, provincial, local, governmental,
      judicial, public, quasi-public or administrative authority or agency
      (collectively, “Governmental
      Authority”)
      or
      other Person is required to be made or obtained by Seller or any Partner in
      connection with the authorization, execution, delivery and performance of this
      Agreement or any other Transaction Document, or the consummation of the
      transactions contemplated hereby and thereby.

     

    4.4.  Partnership
      Interests.
      

     

    (a) 
      Transferred
      LP Interests.
      Immediately prior to the Closing Date, Seller will be the only record and
      beneficial holder of the Transferred LP Interests. Seller has good and
      marketable title to the Transferred LP Interests free and clear of all Liens,
      and has full right, power and authority to transfer the Transferred LP Interests
      to NovaMed as provided herein, without obtaining the consent of any third party
      (other than the general partner of the New LP, as set forth in the terms and
      conditions of the Partnership Agreement). Upon consummation of the transactions
      contemplated herein, Seller shall have transferred good and marketable title
      to
      the Transferred LP Interests free and clear of all Liens. Immediately prior
      to
      Closing, the Partners own one hundred percent (100%) of the equity interests
      of
      Seller.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (b) 
      Transferred
      GP Interests.
      Immediately prior to the Closing Date, ASCOA
      will be
      the only record and beneficial holder of the Transferred GP Interests. ASCOA
      has
      good and marketable title to the Transferred GP Interests free and clear of
      all
      Liens, and has full right, power and authority to transfer the Transferred
      GP
      Interests to NOD as provided herein, without obtaining the consent of any third
      party (other than the general partner of the New LP, as set forth in the terms
      and conditions of the Partnership Agreement). Upon consummation of the
      transactions contemplated herein, ASCOA shall have transferred good and
      marketable title to the Transferred GP Interests free and clear of all
      Liens.

     

    4.5.     
      Financial
      Statements.
      Seller
      has previously delivered to Buyer (a) audited financial statements of Seller
      for
      the years ending
      December
      31, 2003, December 31, 2004 and December 31, 2005, consisting of an income
      statement and balance sheet
      (“Financial
      Statements”).
      Except as set forth on Schedule
      4.5,
      each of
      the Financial Statements (a) has
      been
prepared
      in accordance with GAAP; (b) is true, complete and correct in all material
      respects as of the respective dates and for the respective periods above stated;
      (c) fairly presents in all material respects the financial position of Seller
      at
      such dates and the results of its operations for the periods ended on such
      dates; and (d) is consistent with Seller’s books and records.

     

    4.6.     
      Absence
      of Undisclosed Liabilities.
      Neither
      Seller nor any Partner, with respect to the Business, has any material debts,
      liabilities or obligations of any nature (whether accrued, absolute, contingent,
      direct, indirect, perfected, inchoate, unliquidated or otherwise and whether
      due
      or to become
      due) arising out of transactions entered into at or prior to the Closing, or
      any
      transaction, series of transactions, action or inaction at or prior to the
      Closing, or any state of facts or condition
      existing at or prior to the Closing (regardless of when such liability or
      obligation is asserted),
      including but not limited to guarantees, liabilities or obligations on account
      of Taxes or governmental charges or penalties, interest or fines thereon or
      in
      respect thereof, except (a) to the extent specifically reflected and accrued
      for
      or reserved against in the Financial Statements, or (b) for liabilities
      specifically delineated on Schedule
      4.6.

     

    4.7.     
      Inventory.
      All of
      the Inventory is usable in the ordinary course of business, is fully paid for
      and not subject to consignment or conditional sales arrangements and no material
      portion of the Inventory is obsolete or damaged.

     

    4.8.     
      Taxes.
      Seller
      has filed all Tax Returns on
      a
      timely basis that it is required to have filed (as of the Closing Date) in
      connection with the operation of the Business, and such returns are true,
      complete and correct. Seller
      has paid
      all Taxes, interest and penalties, if any, reflected on such Tax Returns or
      otherwise due and payable by them, unless such taxes are being contested in
      good
      faith. Any deficiencies proposed as a result of any governmental audits of
      such
      Tax Returns have been paid or settled, and there are no present disputes as
      to
      Taxes payable by Seller in connection with the operation of the Business. With
      respect to all amounts of Taxes imposed on Seller for which Seller is or could
      be liable with respect to all
      taxable periods or portions of periods ending on or before the Closing Date,
      all
      applicable Tax laws and agreements have been fully complied with, and all such
      amounts required to be paid by Seller to taxing authorities or others on or
      before the Closing Date have been paid, or have been fully accrued for or fully
      reserved against on the Financial Statements, unless such taxes are being
      contested in good faith. No issues have been raised and are currently pending
      by
      any taxing authority in connection with any of the Tax Returns. No waivers
      of
      statutes of limitations with respect to the Tax Returns have been given by
      or
      requested from the Partners or
      Seller. There are no Liens for Taxes (other than current taxes not yet due
      and
      payable) upon any asset of Seller. Seller is not a party to any Tax-indemnity,
      Tax-sharing, Tax allocation or other similar agreements or
      arrangements.

     

    4.9.     
      Material
      Contracts.
      Schedule
      4.9
      is a
      correct and complete list of every material written contract, agreement,
      relationship or commitment, every material oral contract, commitment, agreement
      or relationship, to which Seller or any Partner is a party or by which Seller
      or
      any Partner is bound, as they relate to the Business (the “Material
      Contracts”),
      correct and complete copies of which previously have been furnished to Buyer.
      Except as set forth on Schedule
      4.9,
      neither
      Seller nor any Partner is in default, and no event has occurred which with
      the
      giving of notice or the passage of time or both would constitute a default
      by
      such party, under any Material Contract and,
      to
      the knowledge of Seller or any Partner, no event has occurred which with the
      giving of notice or the passage of time or both would constitute such a default
      by any party to any such Material Contract.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    4.10.     
      Real
      Property.
      As it
      relates to the Business, Seller does not own any real property. Seller has
      a
      valid leasehold interest in the real property which it holds
      under
      the lease described in Schedule
      4.10
      (collectively, the “Leased
      Real Property”),
      free
      and clear of all Liens, except for Liens for current property taxes not yet
      due
      and payable. The Leased Real Property constitutes all real properties used
      or
      occupied by Seller in connection with the Business or reflected on the Financial
      Statements.
      Upon
      execution of the Lease Assignment (as hereinafter defined), the New LP will
      have
      a valid leasehold interest in the Leased Real Property, which leasehold interest
      will be free and clear of all Liens, except for Liens created by the New LP.
      With respect to the Leased Real Property: (a) Seller has all easements
      and rights necessary to conduct the Business; (b) no portion thereof is subject
      to any pending or, to the knowledge of Seller or any Partner, threatened
      condemnation proceeding or proceeding by any public
      authority; (c) the buildings, plants and structures, including
      heating, ventilation
      and air conditioning systems, roof, foundation and floors, are in good operating
      condition and repair, subject only to ordinary wear and tear, and are not in
      violation of any zoning or other Rules; (d) to the knowledge of Seller or any
      Partner, there are no leases, subleases, licenses, concessions or other
      agreements, written or oral, granting to any party or parties the right of
      use
      or occupancy of any portion of any parcel of Leased
      Real Property; and (e) the Leased Real Property is supplied with utilities
      and
      other services necessary for the operation of the Business.

     

    4.11.  Litigation.
      Except
      as
      set forth on Schedule
      4.11,
      there
      are no claims, counterclaims, actions, suits, orders, proceedings (arbitration,
      mediation or otherwise), investigations or judgments pending or, to the
      knowledge of Seller or any Partner, threatened against or involving Seller,
      the
      Business or, with respect to the Business, any Partner, or relating to the
      transactions contemplated hereby, at law or in equity, in any court or agency,
      or before or by any Governmental Authority, nor, to the knowledge of Seller
      or
      any Partner, are there any facts, conditions or incidents that could be
      reasonably expected to result in any such actions, suits, proceedings
      (arbitration, mediation or otherwise) or investigations.
      Except
      as set forth on Schedule
      4.11,
      neither
      Seller nor any Partner is subject to any judgment, order or decree of any court
      or Governmental Authority.
      None of
      the matters set forth on Schedule
      4.11 could
      result in any Material Adverse Effect on Seller, the Assets, the Business or
      New
      LP. 

     

    4.12.  Compliance
      with Applicable Laws; Permits.
      

     

    (a) 
      Each
      of
      Seller and Partners, in their conduct of the Business, has complied, in all
      material respects, with applicable federal, state and local laws and the rules
      and regulations of all Governmental Authorities having authority over them,
      including, without limitation, agencies concerned with occupational safety,
      environmental protection, employment practices, Fraud and Abuse Laws and
      Medicare and Medicaid requirements applicable to the Partners’ and
      Seller's
      billing procedures (except denials of claims in the ordinary course of
      business). Neither Seller nor any Partner has received any notice of Seller’s
      violation of any such rules or regulations, whether corrected or not, within
      the
      last five (5) years. Seller is eligible to receive payment under Titles XVIII
      and XIX of the Social Security Act.
      Seller
      has timely and accurately filed all requisite reports, returns, data, and other
      information required by all Governmental Authorities which control, directly
      or
      indirectly, any of Seller’s activities to be filed with any commissions, boards,
      bureaus, and agencies and has paid all sums heretofore due with respect to
      such
      reports and returns, unless such sums are being disputed in good faith. No
      such
      report or return has been inaccurate, incomplete or misleading. Seller has
      timely and accurately filed all requisite reimbursable claims and other reports
      required to be filed or otherwise filed in connection with all state and federal
      Medicare and Medicaid programs in which Seller participates that are due on
      or
      before the Closing Date and which relate to services provided on or before
      the
      Closing Date, and Seller has not billed for any services that were not provided
      at the Facility. There are no claims pending or, to the knowledge of Seller
      or
      any Partner, threatened before any authority, including without limitation
      any
      intermediary, carrier, or other state or federal agency with respect to any
      Medicare and Medicaid claim filed by Seller on or before the Closing Date,
      or
      program compliance matters. Except for routinely scheduled Medicare and Medicaid
      program participation and certification surveys pursuant to Seller’s Medicare
      and Medicaid contracts and filings, no valid program integrity review related
      to
      Seller has been conducted by any authority in connection with the Medicare
      or
      Medicaid programs and no such review is scheduled, pending, or to the knowledge
      of Seller or any Partner, threatened against or affecting Seller, the Business,
      the Facility, or the consummation of the transactions contemplated
      hereby.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (b) 
      Seller
      holds all the permits, licenses, certificates of need and other approvals of
      Governmental Authorities necessary or material for the current conduct,
      ownership, use, occupancy and operation of the Business and the Leased Real
      Property, including, without limitation, those identified on Schedule
      4.12(b)
      (“Permits”).
      Seller is in compliance in all material respects with such Permits, all of
      which
      are in full force and effect, and Seller has not received any notices (written
      or oral) to the contrary. All of the Permits are in good standing, and to
      Seller’s knowledge, no suspension, cancellation or adverse action is threatened
      against the Permits, and there is no basis for believing that any Permits will
      not be renewed upon expiration.

     

    4.13.  Transaction
      Not a Breach.
      Except
      as set forth on Schedule
      4.13,
      the
      execution, delivery and performance by Seller and Partners of this Agreement
      and
      the Transaction Documents will not:

     

    (a) 
      Result
      in
      a breach of any of the terms or conditions of, or constitute a default under,
      or
      in any manner release any party thereto from any obligation under any mortgage,
      note, bond, indenture, contract, agreement, license or other instrument or
      obligation of any kind or nature by which Seller or Business may be bound or
      affected;

     

    (b) 
      violate
      or conflict with any order, writ or injunction of any court, administrative
      agency or Governmental Authority to which Seller or any Partner is subject;
      

     

    (c) 
      Constitute
      an event which would permit any party to terminate any agreement or accelerate
      the maturity of any indebtedness or other obligation;

     

    (d) 
      Violate
      any provision of the organizational documents of Seller;

     

    (e) 
      Result
      in
      the creation or imposition of any Lien upon any property of Seller;
      or

     

    (f) 
      Require
      any authorization, consent, approval, exemption or other action by or notice
      to
      any court, Governmental Authority or any other Person.

     

    4.14.  Conduct
      of Business.
      Since
      the Review Date (as defined in Article XIII), Seller has conducted the Business
      in the ordinary course of business, consistent with past custom and practice,
      and has incurred no material liabilities other than in the ordinary course
      of
      business, consistent with past custom and practice, and there has been no
      Material Adverse Effect on the assets, financial condition, operating results,
      employee or patient relations, business activities or business prospects of
      Seller or the Business. Without limitation of the foregoing, since the Review
      Date, Seller has not, except in the ordinary course of business, consistent
      with
      past custom and practice, or as otherwise set forth on Schedule
      4.14:

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (a) 
      Incurred
      any obligation or liability, absolute, accrued, contingent or otherwise, whether
      due or to become due, whether individually or in the aggregate, that has had
      or
      could be reasonably expected to result in a Material Adverse Effect on the
      Business;

     

    (b) 
      Pledged
      or subjected any of its assets to any Lien or restriction;

     

    (c) 
      Voluntarily
      or involuntarily sold, transferred, abandoned, surrendered, leased or otherwise
      disposed of any of its assets material to the Business;

     

    (d) 
      Canceled
      or compromised any material debt or claim, or waived or released any right
      of
      substantial value;

     

    (e) 
      Received
      any notice of termination of any contract, lease or other agreement, or suffered
      any damage, destruction or loss that, individually or in the aggregate, has
      had
      or could be reasonably expected to result in a Material Adverse Effect on the
      Business;

     

    (f) 
      Instituted,
      settled or agreed to settle any litigation, action, proceeding or arbitration;
      

     

    (g) 
      Made
      a
      purchase commitment in excess of $20,000, other than in the ordinary course
      of
      business, consistent with past custom and practice;

     

    (h) 
      Modified
      the timing, course of conduct or other cash management activities with respect
      to the collection of accounts receivable of the Business;

     

    (i) 
      Failed
      to
      pay any accounts or notes payable or any other obligations consistent with
      past
      practices, except for bona fide disputes arising in the ordinary course of
      business;

     

    (j) 
      Entered
      into any material transaction, contract or commitment other than in the ordinary
      course of business, consistent with past custom and practice, other than the
      transactions contemplated by the Transaction Documents;

     

    (k) 
      Suffered
      any event or events, whether individually or in the aggregate, that has had
      or
      could be reasonably expected to result in a Material Adverse Effect on the
      Business; or

     

    (l) 
      Issued
      any equity interests in Seller or entered into any agreement or understanding
      to
      do so.

     

    4.15.  Health,
      Safety and Environment.
      Seller
      has never generated, transported, treated, stored, disposed of or otherwise
      handled any Hazardous Materials at any site, location or facility in connection
      with its business or any of its assets in violation of any applicable
      Environmental and Safety Requirements (as hereinafter defined). Seller: (i)
      is
      in material compliance with all applicable federal, state and local laws, rules,
      regulations, ordinances and requirements relating to public health and safety,
      worker health and safety and pollution and protection of the environment, all
      as
      amended or hereafter amended (“Environmental
      and Safety Requirements”),
      and
      (ii) possesses all required permits, licenses, certifications and approvals
      and
      has filed all notices or applications required thereby or pertaining thereto.
      Seller has never received any written notice of, any private, administrative
      or
      judicial inquiry, investigation, order or action, or any written notice of
      any
      intended or threatened private, administrative, or judicial inquiry,
      investigation, order or action relating to the presence or alleged presence
      of
      Hazardous Materials in, under or upon any property leased or owned by Seller,
      nor is Seller aware of any such inquiry, investigation, order, action or notice.
      There are no pending, or to the knowledge of Seller or any Partner, threatened,
      investigations, actions, orders or proceedings (or written notices of potential
      investigations, actions, orders or proceedings) from any Governmental Authority
      or any other entity regarding any matter relating to Environmental and Safety
      Requirements. 

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    4.16.  Employees.
      Schedule
      4.16
      is a
      true, complete and correct list setting forth as of the Review Date the names
      and current compensation rate and compensation of all individuals employed
      by
      Seller. There
      has
      been no material increase, other than in the ordinary course of business,
      consistent with past custom and practice, in the compensation or rate of
      compensation payable to any employees of Seller since the Review Date, nor
      since
      that date has there been any promise to any employee listed on Schedule
      4.16,
      orally
      or in writing, of any bonus or increase in compensation, except for increases
      in
      the ordinary course of business consistent with Seller’s past compensation
      practices and listed on Schedule 4.16,
      and
      obligations incurred under existing bonus, insurance, pension or other Employee
      Benefit Plans described on Schedule
      4.19
      or
Schedule
      4.20.
      Except
      as set forth on Schedule
      4.16,
      there
      has been no promise to any employee listed on Schedule
      4.16,
      orally
      or in writing, of any guaranty of employment following the Closing
      Date.

     

    4.17.  Insurance.
      Seller
      has obtained and maintained in full force and effect commercially reasonable
      amounts of insurance to protect it and the Business against the types of
      liabilities, including medical malpractice, customarily insured against by
      Persons operating a business of similar size and nature to the Business, and
      all
      premiums due as of the Closing Date on such policies have been paid. Seller
      has
      complied in all material respects with the provisions of all such policies.
      Seller has previously delivered to Buyer complete and correct copies of all
      such
      policies, together with all riders and amendments thereto in the possession
      of
      Seller. Except as set forth on Schedule
      4.17,
      there
      are no claims or asserted claims reported to insurers under such policies,
      including all medical malpractice claims and similar types of claims, actions
      or
      proceedings asserted against any of Seller and the Partners (with respect to
      the
      Business only) at any time within the past five (5) years.

     

    4.18.  Affiliate
      Transactions.
      Excluding ordinary course distributions to its equity holders, there are no
      transactions involving the transfer of any cash, property or rights to or from
      Seller from, to or for the benefit of any Affiliate or former Affiliate of
      Seller (“Affiliate
      Transactions”)
      during
      the period commencing, January 1, 2004 through the date hereof or any existing
      commitments of Seller to engage in the future in any Affiliate Transactions.
      

     

    4.19.  Employee
      Benefit Plans.
      Except
      as set forth in Schedule
      4.19,
      neither
      Seller nor any Plan Affiliate has maintained, sponsored, adopted, made
      contributions to or obligated itself to make contributions to or to pay any
      benefits or grant rights under or with respect to any “Employee Pension Benefit
      Plan” (as defined in Section 3(2) of ERISA), “Employee Welfare Benefit Plan” (as
      defined in Section 3(1) of ERISA), “multi-employer plan” (as defined in Section
      3(37) of ERISA), any collective bargaining agreement, plan of deferred
      compensation, medical plan, life insurance plan, long-term disability plan,
      dental plan or other plan providing for the welfare of any of Seller’s employees
      or former employees or beneficiaries thereof, personnel
      policy (including but not limited to vacation time, holiday pay, bonus programs,
      moving expense reimbursement programs and sick leave), material fringe benefit,
      excess benefit plan,
      bonus or incentive plan (including but not limited to stock options, restricted
      stock, stock bonus and deferred bonus plans), severance agreement, salary
      reduction agreement, top hat plan or deferred compensation plan,
      change-of-control agreement, employment agreement, consulting agreement or
      any
      other benefit, program, policy, arrangement, agreement or contract
      (collectively, “Employee
      Benefit Plans”),
      whether or not written or terminated, which could give rise to or result in
      Seller or such Plan Affiliate having any debt, liability, claim or obligation
      of
      any kind or nature, whether accrued, absolute, contingent, direct, indirect,
      known or unknown,
      perfected or inchoate or otherwise and whether or not due or to become due.
      Correct and complete copies of all Employee Benefit Plans previously have been
      furnished to Buyer. The Employee
      Benefit Plans are in compliance in all material respects with governing
      documents and agreements and with applicable laws.
      Seller
      acknowledges that it will be solely responsible for administering and/or
      terminating its Employee Benefit Plans following the Closing.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    4.20.  Personnel
      Agreements, Plans and Arrangements.
      Except
      as listed in Schedule
      4.20,
      Seller
      is not obligated to any outstanding contract with any current or former
      employees, agents, consultants,
      or advisers. 

     

    4.21.  Certain
      Payments.
      None of
      Seller (including, without limitation, its officers, directors, agents or
      employees) or the Partners (acting for or on behalf of Seller) has, directly
      or
      indirectly, made any contribution, gift, bribe, rebate, payoff, influence
      payment, kickback, or other payment to any Person, private or public, regardless
      of form, whether in money, property, or services (i) for securing patients
      or
      referrals, (ii) for patients or referrals secured, (iii) to obtain special
      concessions or for special concessions already
      obtained, for or in respect of Seller, or (iv) in violation of any
      law.

     

    4.22.  Workers
      Compensation.
      Schedule
      4.22
      sets
      forth all expenses, obligations, duties and liabilities relating to any pending,
      to the knowledge of Seller or any Partner, threatened or ongoing claims by
      employees and former employees (including dependents and spouses) of Seller
      (or
      its predecessors),
      and the extent of any specific accrual on or reserve therefor set forth on
      the
      Financial Statements, for costs, expenses and other liabilities under any
      workers compensation laws, regulations, requirements or programs. Except as
      set
      forth on Schedule
      4.22,
      to the
      knowledge of Seller or any Partner, no claim, injury, fact, event or condition
      exists which would give rise to a material claim by any employees or
      former
      employees (including dependents and spouses) of Seller under any workers
      compensation laws, regulations, requirements or programs. 

     

    4.23.  Accounts
      Receivable/Accounts Payable.
      

     

    (a) 
      Accounts
      Receivable.
      Except
      as set forth on Schedule
      4.23(a),
      the
      Accounts Receivable are valid, binding and legally enforceable obligations
      and
      are owned by Seller free and clear of all Liens, and, except for contractual
      allowances, reserves for bad debts and other adjustments that are consistent
      with those adjustments made in preparing the Financial Statements, will not
      be
      subject to any offset, counterclaim or other adverse claim or defense, and
      may
      be transferred to the New LP to the extent permitted by law. The Accounts
      Receivable arose in the ordinary and usual course of the business, and the
      Accounts Receivable are set forth on the books and records of
      Seller. Schedule
      4.23(a)
      contains
      a complete and accurate list of all Accounts Receivable as of the date stated
      thereon, which list represents the Accounts Receivable after adjusting for
      contractual allowances and bad debt reserves.
      Although Seller does not know of any reason why the Accounts Receivable would
      not be collectible according to approximately the same ratios as accounts
      receivable have been historically collectible, Seller is not guaranteeing the
      collectibility of such accounts receivable.

     

    (b) 
      Accounts
      Payable and Accrued Liabilities.
      Schedule
      1.4(a)
      and
Schedule
      1.4(b)
      sets
      forth a complete and correct list of the Accounts Payable and Accrued
      Liabilities. Each of the Accounts Payable and Accrued Liabilities are valid
      and
      have been incurred in connection with the operation of the Business in the
      ordinary course of business, consistent with Seller’s past custom and practice.


     

    4.24.  Brokers.
      All
      negotiations relating to this Agreement and the Transaction Documents, and
      the
      transactions contemplated hereby and thereby, have been carried on without
      the
      intervention of any Person acting on behalf of any of Seller or any Partner
      in
      such a manner as to give rise to any valid claim for any broker’s or finder’s
      fee or similar compensation against Buyer.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    4.25.  HIPAA.
      (a) All
      of the Assets being sold and/or provided by Seller to New LP under this
      Agreement, including without limitation, any computer hardware and/or software,
      are in compliance with the Health Insurance Portability and Accountability
      Act
      of 1996 (Public Law 104-91, 42 U.S.C. 1301 et.
      seq.)
      and
      regulations promulgated thereunder (collectively, “HIPAA”),
      and
      applicable state laws having similar subject matter to HIPAA (“State
      HIPAA”),
      and
      (b) Seller has conducted its business and activities, including, without
      limitation, its billing and collection activities, its medical records
      management activities, and its general practice management activities, in a
      manner that complied with HIPAA and State HIPAA.

     

    4.26.  Rates
      and Reimbursement Policies.
      Seller
      does not have any rate appeal currently pending before any Governmental
      Authority or any administrator of any third-party payor program. Seller has
      no
      knowledge of any applicable state or local law, which affects rates or
      reimbursement procedures which has been enacted, promulgated or issued within
      the eighteen (18) months preceding the Closing Date or any such legal
      requirement proposed or currently pending in the applicable state or at the
      federal level which has resulted or may result in any reductions in rates and
      reimbursement. 

     

    4.27.  Physicians.
      None of
      the physicians who utilize the center (collectively, the “Physicians”)
      have,
      to the knowledge of Seller or any Partner, threatened to discontinue or to
      terminate his or her relationship with the Seller and the provision of services
      at the Facility. To the knowledge of Seller or any Partner, none of the
      Physicians have expressed plans to retire from the practice of medicine in
      the
      next five (5) years or to be involved in the development or operations of
      another ambulatory surgery center. During the three (3) years preceding the
      Closing Date, each of the Physicians:

     

    (a) 
      Has
      been
      duly licensed and registered, and is in good standing by their state to engage
      in the practice of medicine, and said license and registration have not been
      suspended, revoked or restricted in any manner; and

     

    (b) 
      Has
      had
      valid professional liability insurance in place in amounts not less than
      commercially reasonable levels and has not indicated any intent to terminate
      or
      reduce his or her professional liability coverage.

     

    4.28.  Certain
      Representations With Respect to the Facility.

     

    (a) 
      The
      Facility is qualified for participation in the Medicare program. Complete and
      accurate copies of the Facility’s existing Medicare contracts have been
      furnished to Buyer. Seller is presently in compliance with all of the terms,
      conditions and provisions of such contracts.

     

    (b) 
      The
      Facility is qualified for participation in the Medicaid program. Complete and
      accurate copies of Seller’s existing Medicaid contracts have been furnished to
      Buyer. Seller is presently in compliance with all of the terms, conditions
      and
      provisions of such contracts.

     

    4.29.  No
      Misrepresentation.
      None of
      the representations and warranties of Seller and Partners set forth in this
      Agreement, in any of the certificates, schedules, lists, documents, exhibits,
      or
      other instruments delivered, or to be delivered, to Buyer as contemplated by
      any
      provision hereof
      (including the Transaction Documents), contain any untrue statement of a
      material fact or omit
      to
      state a material fact necessary to make the statements contained herein or
      therein not misleading.
      To the
      knowledge of Seller or any Partner, there are no material facts which have
      not
      been disclosed to Buyer which have a Material Adverse Effect, or could
      reasonably be anticipated to have a Material Adverse Effect, on the Business
      or
      Seller’s or any Partner’s ability to consummate the transactions contemplated
      hereby.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      V.

    BUYERS’
      REPRESENTATIONS AND WARRANTIES

     

    Each
      of
      NovaMed and NOD hereby represents and warrants, jointly and severally, to Seller
      as of the Closing Date as follows:

     

    5.1.  Organization.
      Each of
      NovaMed and NOD is duly organized, validly existing and in good standing under
      the laws of the State of Delaware. NOD is qualified to do business in the State
      of Texas.

     

    5.2.  Authorization.
      Each of
      NovaMed and NOD has full power, right and authority to enter into and perform
      its obligations under this Agreement and each of the Transaction Documents
      to
      which it is a party. The execution, delivery and performance by each of NovaMed
      and NOD of this Agreement and each of the Transaction Documents to which it
      is a
      party have been
      duly
      and properly authorized by all requisite corporate action in accordance with
      applicable law and with each of NovaMed’s and NOD’s Certificate of
      Incorporation.
      This
      Agreement and each of the Transaction Documents to which NovaMed and NOD are
      a
      party have been duly executed and delivered by them and are the valid and
      binding obligation of Buyer and are enforceable against
      Buyer in accordance with their respective terms, except as the same may be
      limited by applicable bankruptcy, insolvency, reorganization, moratorium or
      other similar laws affecting the rights of creditors generally and the
      availability of equitable remedies. 

     

    5.3.  Transaction
      Not a Breach.
      The
      execution, delivery and performance of this Agreement and the Transaction
      Documents by NovaMed and NOD will not violate and conflict with,
      or
      result in the breach of any of the terms, conditions, or provisions of NovaMed’s
      and NOD’s Certificate of Incorporation or of any contract, agreement, mortgage,
      or other instrument or obligation of any nature to which NovaMed or NOD is
      a
      party or by which NovaMed or NOD is bound.

     

    5.4.  Acquisition
      of Transferred Interests.
      NovaMed
      and NOD acknowledge that the Transferred Interests will be sold to NovaMed
      and
      NOD pursuant to exemptions from registration under the Federal Securities Act
      of
      1933 and the state securities laws of the State of Texas. NovaMed and NOD are
      acquiring the Transferred Interests for their own accounts and not with a view
      to the distribution or resale thereof. Each of NovaMed and NOD has no intention
      of selling the Transferred Interests in a public distribution in violation
      of
      federal securities laws or any applicable state securities laws.

     

    5.5.  Broker.
      All
      negotiations relating to this Agreement and the Transaction Documents, and
      the
      transactions contemplated hereby and thereby, have been carried on without
      the
      intervention of any Person acting on behalf of Buyer in such a manner as to
      give
      rise to any valid claim for any broker’s or finder’s fee or similar compensation
      against Seller.

     

    5.6.  Litigations
      and Proceedings.
      There
      are no claims counterclaims, actions, suits, orders, proceedings (arbitration,
      mediation or otherwise), investigations or judgments pending or, to the
      knowledge of NovaMed or NOD, threatened relating to the transactions
      contemplated hereby, at law or in equity, in any court or agency, or before
      or
      by any Governmental Authority.

     

    5.7.  No
      Misrepresentation.
      None of
      the representations and warranties of Buyer set forth in this Agreement or
      in
      any of the certificates, schedules, lists, documents, exhibits, or other
      instruments delivered, or to be delivered, to Seller as contemplated by any
      provision hereof (including the Transaction Documents), contain any untrue
      statement of a material
      fact or omit
      to
      state a material fact necessary to make the statements contained herein or
      therein not misleading.
      To the
      knowledge of NovaMed and NOD, there are no material facts which have not been
      disclosed to Seller and the Partners which have a Material Adverse Effect,
      or
      could reasonably be anticipated to have a Material Adverse Effect, on NovaMed’s
      or NOD’s ability to consummate the transactions contemplated
      hereby.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      VI.

    ADDITIONAL
      AGREEMENTS

     

    6.1.  Release
      of Liens and Lien Searches.
      Seller
      shall procure all applicable release of liens with respect to those Liens set
      forth on Schedule
      4.2,
      prior
      to the New LP Asset Transfer. Seller shall provide Buyer with all information
      and other assistance required for the parties to file all applicable UCC
      termination statements (in form and manner required by NovaMed or its lenders).
      Following the filing of all such UCC termination statements, there shall be
      no remaining
      financing statements, judgments, taxes or other Liens outstanding against Seller
      or any of its assets as of the Closing Date.

     

    6.2.  Employees;
      Labor Relations.

     

    (a) 
      Continuing
      Employees.
      New LP
      shall offer to employ the employees of Seller listed on Schedule
      6.2(a)
      (the
“Continuing
      Employees”)
      as of
      the Closing Date, on the terms and conditions established by New LP in its
      sole
      discretion. Such offer of employment by New LP shall not be deemed to create
      a
      continuing right to employment for any Continuing Employees. Seller shall be
      solely responsible for all liabilities relating, directly or indirectly, to
      any
      of Seller’s employees who do not accept New LP’s offer of employment. Seller
      shall be solely responsible for any employment-related claims filed by any
      employees of Seller which relate to facts and circumstances existing on and
      prior to the Closing Date, or arise from or relate to completion of the
      transactions contemplated by this Agreement or the Transaction Documents,
      regardless of when filed. 

     

    (b) 
      COBRA
      Notice.
      Seller
      represents that it has complied, in all material respects, with the applicable
      requirements of COBRA through the Closing Date and shall be responsible for
      all
      liabilities arising under COBRA with respect to any event occurring prior to
      and
      on the Closing Date. 

     

    (c) 
      Noncompetition
      Agreements.
      Each of
      Seller and ASCOA hereby waives any noncompetition provision that may apply
      to
      the Continuing Employees with respect to New LP’s hiring of the Continuing
      Employees.

     

    6.3.  Post-Closing
      Remittances; New LP’s Appointment as Attorney-In-Fact.
      If,
      after the Closing Date, Seller shall receive any remittance from any account
      debtors with respect to the Accounts Receivable, Seller shall endorse such
      remittance to the order of the New LP and forward it to the New LP promptly
      following receipt thereof.
      Seller
      hereby irrevocably constitutes and appoints New LP and any officer or agent
      of
      New LP as Seller’s true and lawful attorney-in-fact, with full power and
      authority, in the place and stead of Seller for the limited purposes of
      receiving, collecting, indorsing, negotiating and cashing any and all cash,
      checks, drafts, payments, accounts receivable and other instruments
      (collectively the “Items”)
      which
      are payable to Seller and which represent Items related to payment on Accounts
      Receivable, and which in accordance with the terms of this Agreement, have
      been
      sold, conveyed, assigned or transferred to New LP or are otherwise for the
      account of New LP hereby. Seller further agrees to execute all documents and
      take such other action as New LP may reasonably request to confirm the power
      granted to New LP by this Section
      6.3.
      Notwithstanding the foregoing, in no event shall New LP receive, collect,
      indorse, negotiate or cash such Items pursuant to the above authority if to
      do
      so would be to violate the laws, regulations or other written guidance of any
      state or federal health program. In such event, New LP and Seller agree to
      take
      such actions as necessary to convey such payments to New LP consistent with
      applicable laws and regulations.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    6.4.  Further
      Assurances.
      The
      parties hereto shall execute such further documents, and perform such further
      acts, as may be reasonably necessary to transfer and convey the Assets to the
      New LP, the Transferred LP Interests to NovaMed, and the Transferred GP
      Interests to NOD, all on the terms contained herein, and to otherwise comply
      with the terms of this Agreement and consummate the transactions contemplated
      herein.

     

    6.5.     
      Professional
      Liability Tail Coverage.
      To the
      extent Seller’s professional liability insurance policy for the Facility is on a
      claims-made basis (rather than an occurrence basis), Seller shall obtain an
      extended reporting (“tail”) professional liability insurance policy covering
      acts and omissions occurring at the Facility prior to the Closing Date, in
      an
      amount equal to the professional liability insurance carried immediately prior
      to the Closing Date, or such other amount, and for such period of time, as
      determined by mutual agreement of NovaMed and Seller. Upon NovaMed’s request,
      Seller shall provide New LP with proof of such tail professional liability
      coverage. The cost and expense of such tail coverage shall be borne solely
      by
      Seller. 

     

    6.6.     
      Credentialing.
      As of
      the Closing Date, the Partners who are physicians, and other physicians
      credentialed by the Facility immediately prior to the Closing Date, shall
      receive provisional privileges to perform surgical procedures at the Facility
      that will be owned and operated by the New LP from and after the Closing Date.
      As a condition to receiving these provisional privileges, each of the Partners
      hereby agrees, and shall cause all of such other credentialed physicians to
      agree, that following the Closing Date he or she will comply with all of the
      New
      LP’s credentialing requests (including, without limitation, providing New LP
      with any reasonably requested information and completing any applicable
      credentialing forms) so that the New LP may complete its credentialing review
      process for each physician by the expiration date of the provisional privileges.
      

     

    ARTICLE
      VII. 

    CLOSING

     

    7.1.     
      Time
      and Place.
      The
      closing of the transactions that are the subject of this Agreement (the
“Closing”)
      shall
      occur via facsimile effective as of the Closing Date, with original documents
      to
      be exchanged by nationally recognized overnight courier for delivery on the
      next
      business day after the Closing Date.

     

    7.2.     
      Contribution
      of Assets to New LP.
      As a
      condition precedent to the consummation of the transactions contemplated herein,
      Seller shall have consummated the New LP Asset Transfer in accordance with
      the
      terms and conditions of Article
      I
      hereof.

     

    7.3.     
      Deliveries
      of Seller and Partners.
      At the
      Closing, Seller and Partners will execute and deliver or cause to be executed
      and delivered to NovaMed:

     

    (a) 
      a
      Contribution Agreement to evidence the New LP Asset Transfer and to effectively
      vest the New LP with full, complete and marketable right, title and interest
      in
      and to the Assets, in
      substantially the form of attached Exhibit
      7.3(a) (the
      “Contribution
      Agreement”);

     

    (b) 
      the
      Limited Partnership Agreement of the New LP, in the form attached hereto as
      Exhibit
      7.3(b)
      (the
“Partnership
      Agreement”);

     

    (c) 
      (i)
      amended and restated certificate of limited partnership of New LP reflecting
      ASCOA as general partner, executed by ASCOA, and (ii) second amended and
      restated certificate of limited partnership evidencing change in general partner
      from ASCOA to NOD, to be filed with the Secretary of States of Delaware and
      Texas immediately following the Closing;

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (d) 
      a
      certificate of the Secretary of Seller as to (i) copies of resolutions of its
      managing partner and partners authorizing the execution, delivery and
      performance of this Agreement and the Transaction Documents; (ii) a Certificate
      of Good Standing of Seller issued by the Secretary of State of Texas; (iii)
      its
      partnership agreement; (iv) incumbency and specimen signatures with respect
      to
      its authorized representatives executing this Agreement and any Transaction
      Documents; and (v) its certificate of limited liability partnership certified
      by
      the Secretary of State of Texas.

     

    (e) 
      any
      required third party consents, filings, and certificates from Seller or any
      third party (including, any Governmental Authority) relating to the transfer
      of
      the Assets, including without limitation, all consents from the State of Texas
      regarding the transfer of all Permits and licenses relating to the ownership
      and
      operation of the Facility, and copies of all written consents obtained in
      connection with the transfer of the Material Contracts;

     

    (f) 
      intentionally
      omitted;

     

    (g) 
      the
      Assignment of Partnership Interests, substantially in the form attached as
      Exhibit
      7.3(g) (the
      “Assignment
      of Partnership Interests”),
      duly
      executed by Seller;

     

    (h) 
      intentionally
      omitted;

     

    (i) 
      all
      applicable documentation releasing Liens covering, concerning or relating to
      the
      Assets, in form and substance reasonably acceptable to NovaMed; 

     

    (j) 
      Redemption
      Agreement pursuant to which Seller redeems certain Partners’ ownership interests
      in Seller in exchange for Seller’s interests in the New LP, all in accordance
      with Schedule
      2.3
      and
      effective immediately following the Closing Date; 

     

    (k) 
      Intentionally
      omitted;

     

    (l) 
      A
      third
      party payor contract between New LP and United Healthcare, at reimbursement
      rates equivalent to at least 200% of Medicare rates, duly executed by United
      Healthcare;

     

    (m) 
      Evidence
      of Assumed Name filing on behalf of New LP for “Preston Plaza Surgery Center,
      certified by the Secretaries of State of Delaware and Texas;

     

    (n) 
      Amendment
      to Certificate of Limited Liability Partnership of Seller changing its name
      from
“Preston Plaza Surgery Center, LLP” to “PPSC, LLP;”

     

    (o) 
      Power
      of
      Attorney with respect to DEA and state controlled substance registration, duly
      executed by the Medical Director of Seller;

     

    (p) 
      such
      other documents and instruments as Buyer or its counsel reasonably shall deem
      necessary to consummate the transactions contemplated hereby.

     

    All
      documents delivered to Buyer shall be in form and substance reasonably
      satisfactory to counsel for Buyer.

     

    7.4.     
      Deliveries
      of Buyer.
      At the
      Closing, NovaMed and NOD will deliver, or will cause the New LP to deliver,
      to
      Seller simultaneously with the delivery of the items referred to in Section
      7.3
      above:

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (a) 
      the
      payment of the Purchase Price;

     

    (b) 
      the
      Partnership Agreement;

     

    (c) 
      certificate
      of the Secretary of each of NovaMed and NOD as to (i) copies of resolutions
      of
      its board of directors authorizing the execution, delivery and performance
      of
      this Agreement and the Transaction Documents; and (ii) incumbency and specimen
      signatures with respect to its officers executing this Agreement and any
      Transaction Documents;

     

    (d) 
      intentionally
      omitted;

     

    (e) 
      a
      duly
      executed Management Agreement (the “Management
      Agreement”)
      between NovaMed Management Services, LLC and the New LP, substantially in the
      form of attached Exhibit
      7.4(e).

     

    (f) 
      the
      Assignment of Partnership Interests, duly executed by NovaMed and
      NOD;

     

    (g) 
      intentionally
      omitted; and

     

    (h) 
      such
      other documents and instruments as Seller or its counsel reasonably shall deem
      necessary to consummate the transactions contemplated hereby.

     

    All
      documents delivered to Seller shall be in form and substance reasonably
      satisfactory to the counsel for Seller.

     

    7.5     
      Change
      of Ownership Process; Further Assurances.
      To the
      extent from and after the Closing there are any actions necessary to confirm
      or
      effect all reasonably necessary licensure and regulatory approvals required
      in
      connection with the New LP’s ownership and operation of the Business, Seller,
      Partners and their respective agents and representative agree to cooperate
      with
      Buyer and New LP in connection these approvals, and will use commercially
      reasonable efforts to respond in a timely manner to any information or signature
      requests reasonably required in connection with these approvals.

     

    ARTICLE
      VIII

    INTENTIONALLY
      OMITTED

    


    ARTICLE
      IX.

    INTENTIONALLY
      OMITTED 

     

    ARTICLE
      X.

    INTENTIONALLY
      OMITTED

     

    ARTICLE
      XI.

    RESTRICTIVE
      COVENANTS

     

    11.1.  Acknowledgment.
      Each of
      Seller and Partners acknowledges and agrees that in order to assure that the
      Business will retain its value as a “going concern,” it is necessary that Seller
      and Partners undertake not to utilize their present special knowledge of the
      Business to compete with NovaMed, New LP and the Business during the Restricted
      Period after the acquisition of Transferred Interests; provided
      that
      Buyer acknowledges that certain Partners will continue to have an interest
      in
      the Business through their ownership of a minority interest in the New LP.
      Each
      of Seller and Partners further acknowledges that (a) Buyer has been and/or
      will
      be engaged in the Business; (b) each of Seller and Partners possesses extensive
      knowledge and a unique understanding of the Business, as well as (subsequent
      to
      the transactions contemplated by this Agreement) the proprietary and
      confidential information
      concerning the Business; (c) the agreements and covenants
      contained in this Section 11.1
      are
      essential to protect Buyer and the value of the Business and are a condition
      precedent to Buyer’s willingness to pay for the Transferred Interests; (d) Buyer
      would be irreparably damaged if Seller and/or any Partner were to violate the
      terms and conditions of this Article
      XI;
      and (e)
the
      geographic, temporal and business scope of the restrictive covenants in this
      Article
      XI
      are
      reasonable. 

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    11.2.  Restrictive
      Covenant.
      

     

    11.2.1 
      Physician
      Partners.
      Each of
      Seller and Physician Partners hereby agrees that for the five-year period
      beginning on the Closing Date (the “Restricted
      Period”;
      provided,
      that
      in the
      event that any such party is determined to have violated the covenants set
      forth
      in this Article
      XI,
      the
      Restricted Period shall be extended day for day for the time period that such
      party is in violation of any such covenant), he, she or it shall not, directly
      or indirectly, act
      as a
      director, officer, member or partner of, or own any equity or other financial
      interest in, any Person that owns and/or operates an ambulatory surgery center,
      licensed surgical facility or any other outpatient surgical facility that is
      located within a thirty (30) mile radius of the location of the
      Business.
      Notwithstanding
      the foregoing, and without limiting the terms of the Partnership Agreement,
      Seller and/or any Physician Partner may
      (a)
      be a director on the Board of Trustees of a hospital, (b) serve on the medical
      staff or committees of any hospital, (c) own an interest in the New LP in
      accordance with the terms of the Partnership Agreement; (d) practice medicine
      in
      his or her own office or the office of the professional entity in which
      he
      or she
      is an employee or owner
      even if
      such practice utilizes a competing facility, (e) perform surgery at any
      competing facility, and (f) own no more than 1% of the shares of any publicly
      held corporation. In
      addition, and notwithstanding the restrictions set forth in this Section
      11.2.1:
      (I)
the
      Physician Partners listed on Schedule
      11.2.1(I)
      may
      continue to own their equity interests in the facilities set forth across from
      their names on Schedule
      11.2.1(I),
      provided at no time during the Restricted Period may they increase their
      ownership interests in such listed facilities; and (II) the Physician Partners
      listed on Schedule
      11.2.1(II)
      may
      continue to own the Competitive Equipment to perform procedures within their
      medical practice offices as described across from their names on Schedule
      11.2.1(II)).
        

     

    11.2.2 
      ASCOA.
      ASCOA
      hereby agrees that during the Restricted Period, neither it nor any of its
      Affiliates shall, directly or indirectly, act as a director, officer, member
      or
      partner of, or own any equity or other financial interest in, any Person: (a)
      that owns and/or operates an ambulatory surgery center, licensed surgical
      facility or any other outpatient surgical facility that is located within a
      ten
      (10) mile radius of the location of the Business (the “ASCOA
      Restricted Territory”);
      or (b)
      subject to Schedule
      11.2.2,
      that
      solicits or encourages, or attempts to solicit or encourage, the Physician
      Partners or any surgeon utilizing the Facility to become an owner or user of
      another surgical facility within the Dallas metropolitan statistical area.
      

     

    11.3.  Property
      of the Business.
      All
      memoranda, notes, lists, records and other documentation or papers (and all
      copies thereof), including such items stored in computer memories, or microfiche
      or by any other means, which will become the New LP’s property (after
      the consummation
      of transactions contemplated by this Agreement), are and shall be the New LP’s
      property and shall be delivered to the New LP promptly on the request of
      Buyer.

     

    11.4.  Blue-Pencil.
      If any
      court of competent jurisdiction shall at any time deem the term of this
      Agreement or any particular restrictive covenant contained in this Article
      XI
      too
      lengthy or the territory too extensive, the other provisions of this
Article
      XI shall
      nevertheless stand, the Restricted Period herein shall be deemed to be the
      longest period permissible by law under the circumstances and the territory
      described in Section
      11.2
      shall be
      deemed to comprise the largest territory permissible by law under the
      circumstances. The court in each case shall reduce the Restricted Period and/or
      territory described in Section
      11.2
      to
      permissible duration or size.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    11.5.  Remedies.
      Each of
      Seller and Partners acknowledges and agrees that the covenants set forth in
      this
Article
      XI
      are
      reasonable and necessary for the protection of Buyer and the New LP’s business
      interests, that irreparable
      injury will result if Seller or any Partner breaches any of the terms of said
      restrictive covenants,
      and that in the event of actual or threatened breach of any such restrictive
      covenants, Buyer will have no adequate remedy at law. Each of Seller and
      Partners accordingly agrees that in the event of any actual or threatened breach
      by any of them of any of the covenants set forth in this Article XI,
      Buyer
      shall be entitled to immediate temporary injunctive and other equitable relief,
      without bond and without the necessity of showing actual monetary damages,
      subject to hearing as soon thereafter as possible. Nothing contained herein
      shall be construed as prohibiting Buyer from pursuing any other remedies
      available to it for such breach or threatened breach, including the recovery
      of
      any damages which it is able to prove.
      Notwithstanding the foregoing, any breach of this Article
      XI
      by any
      Partner shall not be deemed a violation of this Article
      XI
      by any
      non-breaching Partner and shall not subject any non-breaching Partner to
      liability under this Agreement. The parties also agree that the existence of
      any
      claim or cause of action by Seller or the Partners against Buyer, whether
      predicated upon this Agreement or otherwise, shall not constitute a defense
      to
      the enforcement of the restrictive covenants set forth herein, but shall be
      litigated separately. Seller and the Partners agree that the rights granted
      in
      this Article
      XI
      may be
      assigned by Buyer at its sole and absolute discretion. All of the provisions
      of
      this Article
      XI
      shall
      inure to any successors of Buyer, all of which are specifically third-party
      beneficiaries of this Article
      XI
      with
      full rights hereunder. In addition, the parties hereto agree that any assignee
      of the rights hereunder is an intended, direct third-party beneficiary of this
      Article
      XI
      and may
      enforce such rights in its own name in addition to or in lieu of
      Buyer.

     

    11.6.  Patient
      Freedom.
      The
      parties hereto agree that the benefits afforded either party hereunder are
      not
      payment for, and are not in any way contingent upon the referral, admission
      or
      any other arrangement for, the provision of any item or service offered by
      any
      party hereto. Nothing in this Agreement shall be construed to limit the freedom
      of any patient of Seller or any Partner to choose the facility
      or physician from whom any patient shall receive health care services or limit
      or interfere with Seller or any Physician’s ability to exercise professional
      judgment in treating patients or their ability to provide medical services
      to
      patients.

     

    11.7.  Texas
      Business and Commerce Code Section 15.50.
      The
      parties hereto agree that each Physician Partner is free to provide professional
      services at any facility such Physician Partner or his or her patients or payors
      select, and such Physician Partner is able to maintain a professional physician
      practice (but not an ambulatory surgery center or any other outpatient surgical
      facility) at any location, including within the geographic radius prescribed
      in
Section
      11.2
      hereof.
      Accordingly, the parties hereto acknowledge and agree that Section 15.50(b)
      of
      the Texas Business and Commerce Code should not apply to the restrictive
      covenants set forth in this Agreement. As such, each Physician Partner hereby
      agrees to waive any rights to challenge the restrictive covenants set forth
      herein on the basis that such covenants are subject to Section 15.50(b) of
      the
      Texas Business and Commerce Code, and neither the Physician Partners nor any
      of
      their agents or representatives shall commence, participate in or be a party
      to
      any litigation or any other type of action which challenges, directly or
      indirectly, the restrictive covenants set forth herein on the basis that such
      covenants are subject to Section 15.50(b) of the Texas Business and Commerce
      Code.  

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      XII.

    POST-CLOSING
      COVENANTS

     

    12.1.     
      Indemnification
      by Seller and Partners.
      From
      and after the Closing, Seller and each of the Partners (on a Pro Rata Basis
      (as
      defined in Section
      13.1))
      agrees
      to severally (and not jointly as more specifically described in Section
      12.5
      below)
      indemnify, defend and save NovaMed, NOD and its respective Affiliates
      (including, without limitation, the New LP) and each of its respective officers,
      directors, employees, agents and fiduciaries (each, a “NovaMed
      Indemnified Party”),
      forever harmless from and against, and to pay to a NovaMed
      Indemnified Party
      or reimburse
      a NovaMed Indemnified Party for (in either case within ten business days of
      its
      receipt of notice in accordance with the terms of this Article from any NovaMed
      Indemnified Party), any and all liabilities (whether contingent, fixed or
      unfixed, liquidated or unliquidated, or otherwise), obligations, deficiencies,
      demands, claims, suits, actions, or causes of action, assessments,
      losses, costs, expenses, interest, fines, penalties, actual or punitive damages
      or costs or expenses of any and all investigations, proceedings, judgments,
      environmental analyses, remediations,
      settlements and compromises (including reasonable fees and expenses of
      attorneys, accountants
      and
      other experts) (individually and collectively, the “Losses”)
      actually sustained or incurred by any
      NovaMed Indemnified Party relating to, resulting from, arising out of or
      otherwise by virtue of any of the following:

     

    (a) 
      any
      misrepresentation or breach of a representation or warranty contained in this
      Agreement or in the Transaction Documents by Seller or any Partner, or
      non-compliance with or breach by Seller or any Partner of any of the covenants
      or agreements contained in this Agreement or the Transaction Documents to be
      performed by any of Seller, Partners or any of their respective Affiliates;
      provided, however than any misrepresentation, breach of warranty or
      non-fulfillment of any covenant or agreement that relates only to a particular
      Partner under this Agreement shall not create liability or responsibility for
      any other Party with respect thereto notwithstanding the joint and several
      representations. 

     

    (b) 
      the
      operation of the Business, including the use of the Assets and the Excluded
      Assets, on or prior to the Closing Date;

     

    (c) 
      any
      Tax
      liability of Seller or any Partner;

     

    (d) 
      any
      violations of or obligations under Environmental and Safety Requirements
      relating to acts, omissions, circumstances or conditions to the extent existing
      or arising on or prior to the Closing Date;

     

    (e) 
      any
      liabilities relating to or arising from the provision of (or failure to provide)
      professional medical services, including any liabilities relating to the
      failure, prior to the Closing Date, to adhere to or comply with any Medicare
      and
      Medicaid requirements or Fraud and Abuse Laws;

     

    (f) 
      any
      action, demand, proceeding, investigation or claim (whenever made) by any third
      party (including Governmental Authorities) against or affecting Buyer or its
      Affiliates which evidences the existence of a misrepresentation or breach of
      any
      of the representations, warranties or covenants contained in this Agreement
      or
      the Transaction Documents of Seller;

     

    (g) 
      the
      Excluded Assets or Excluded Liabilities; or

     

    (h) 
      any
      claim
      for payment of fees and/or expenses as a broker or finder in connection with
      the
      origin, negotiation, execution or consummation of this Agreement based upon
      any
      alleged agreement between the claimant and Seller or any Partner.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    12.2.     
      Indemnification
      by Buyer.
      From
      and after the Closing, each Buyer agrees to indemnify, defend and save Seller,
      Partners and their respective Affiliates, and their respective employees,
      trustees, agents, representatives, heirs and executors other than the New LP
      (each, a “Seller
      Indemnified Party”)
      forever harmless from and against, and to pay to a Seller Indemnified Party
      or
      reimburse a Seller Indemnified Party for (in either case within 10 business
      days
      of its receipt of notice in accordance to the terms of this Article from any
      Seller Indemnified
      Party), any and all Losses actually sustained or incurred by any Seller
      Indemnified Party relating to, resulting from, arising out of or otherwise
      by
      virtue of any of the following:

     

    (a) 
      any
      misrepresentation or breach of a representation or warranty contained in this
      Agreement or in the Transaction Documents by Buyer, or non-compliance with
      or
      breach by Buyer of any of the covenants or agreements contained in this
      Agreement or in the Transaction Documents to be performed by Buyer;

     

    (b) 
      any
      action, demand, proceeding, investigation or claim (whenever made) by any third
      party (including Governmental Authorities) against or affecting Seller, Partners
      or their respective Affiliates which evidences the existence of a
      misrepresentation or breach of any of the representations, warranties or
      covenants contained in this Agreement or the Transaction Documents of Buyer;
      or

     

    (c) 
      any
      claim
      for payment of fees and/or expenses as a broker or finder in connection with
      the
      origin, negotiation, execution or consummation of this Agreement based upon
      any
      alleged agreement between the claimant and Buyer.

     

    12.3.     
      Indemnification
      Procedure for Third Party Claims.
      In the
      event that subsequent to the Closing any Person entitled to indemnification
      under this Agreement (an “Indemnified Party”)
      asserts a claim for indemnification or receives notice of the assertion of
      any
      claim or of the
      commencement of any action or proceeding by any entity that is not a party
      to
      this Agreement or an Affiliate of a party to this Agreement (including, but
      not
      limited to any domestic or foreign court or Governmental Authority, federal,
      state or local) (a “Third
      Party Claim”)
      against such Indemnified Party, against which a party to this Agreement is
      required to provide indemnification under this Agreement (an “Indemnifying
      Party”),
      the
      Indemnified Party shall give written notice together with a statement of any
      available information regarding such claim to the Indemnifying Party within
      60
      days after learning of such claim (or within such shorter time as may be
      necessary to give the Indemnifying Party a reasonable opportunity to respond
      to
      such claim). The Indemnifying Party shall have the right, upon written notice
      to
      the Indemnified Party (the “Defense
      Notice”)
      within
      30 days after receipt from the Indemnified Party of notice of such claim, which
      notice by the Indemnifying Party shall specify the counsel it will
      appoint to defend such claim (“Defense
      Counsel”),
      to
      conduct at its expense the defense against such claim in its own name, or if
      necessary in the name of the Indemnified Party; provided,
      however,
      that
      the Indemnified Party shall have the right to approve the Defense Counsel,
      which
      approval shall not be unreasonably withheld, and in the event the Indemnifying
      Party and the Indemnified Party cannot agree upon such counsel within 10 days
      after the Defense Notice is provided, then the Indemnifying Party shall propose
      an alternate Defense Counsel, which shall be subject again to the Indemnified
      Party’s approval. If the parties still fail to agree on Defense Counsel, then,
      at such time, they shall mutually agree in good faith on a procedure to
      determine the Defense Counsel. The delivery of a Defense Notice shall not
      constitute an admission with respect to the claim for
      indemnification.

     

    (a) 
      In
      the
      event that the Indemnifying Party shall fail to give the Defense Notice, it
      shall be deemed to have elected not to conduct the defense of the subject claim,
      and in such event the Indemnified Party shall have the right to conduct such
      defense in good faith and to compromise and settle the claim without prior
      consent of the Indemnifying Party and the Indemnifying Party will be liable
      for
      all costs, expenses, settlement amounts or other Losses paid or incurred in
      connection therewith.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    (b) 
      In
      the
      event that the Indemnifying Party does deliver a Defense Notice and thereby
      elects to conduct the defense of the subject claim, the Indemnified Party will
      cooperate with and make available to the Indemnifying Party such assistance
      and
      materials as it may reasonably request, all at the expense of the Indemnifying
      Party, and the Indemnified Party shall have the right at its expense to
      participate in the defense assisted by counsel of its own choosing, provided
      that the
      Indemnified Party shall have the right to compromise and settle the claim only
      with the prior written consent of the Indemnifying Party, which consent shall
      not be unreasonably withheld or delayed.

     

    (c) 
      Without
      the prior written consent of the Indemnified Party, the Indemnifying Party
      will
      not enter into any settlement of any Third Party Claim or cease to defend
      against such claim, if pursuant to or as a result of such settlement or
      cessation, (i) injunctive or other equitable relief would be imposed against
      the
      Indemnified Party, or (ii) such settlement or cessation would lead to liability
      or create any financial or other obligation on the part of the Indemnified
      Party
      for which the Indemnified Party is not entitled to indemnification
      hereunder.

     

    (d) 
      The
      Indemnifying Party shall not be entitled to control, and the Indemnified Party
      shall be entitled to have sole control over, the defense or settlement of any
      claim to the extent that claim seeks an order, injunction or other equitable
      relief against the Indemnified Party which, if successful, could materially
      interfere with the business, operations, assets, condition (financial or
      otherwise) or prospects of the Indemnified Party (and the cost of such defense
      shall constitute an amount for which the Indemnified Party is entitled to
      indemnification hereunder).

     

    (e) 
      If
      a firm
      decision is made to settle a Third Party Claim, which offer the Indemnifying
      Party is permitted to settle under this Section
      12.3,
      and the
      Indemnifying Party desires to accept and agree to such offer, the Indemnifying
      Party will give written notice to the Indemnified Party to that effect. If
      the
      Indemnified Party fails to consent to such firm offer within 15 calendar 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 will not exceed the amount
      of such settlement offer, plus costs and expenses paid or incurred by the
      Indemnified Party through the end of such 15-day period.

     

    (f) 
      Any
      judgment entered or settlement agreed upon in the manner provided herein shall
      be binding upon the Indemnifying Party, and shall conclusively be deemed to
      be
      an obligation with respect to which the Indemnified Party is entitled to prompt
      indemnification hereunder.

     

    12.4.  Failure
      to Give Timely Notice.
      A
      failure by an Indemnified Party to give timely, complete or accurate notice
      as
      provided in Section
      12.3
      will not
      affect the rights or obligations of any
      party
      hereunder except and only to the extent that, as a result of such failure,
      any
      party entitled to receive such notice was deprived of its right to recover
      any
      payment under its applicable insurance coverage or was otherwise directly and
      materially damaged as a result of such failure to give timely
      notice.

     

    12.5.  Limitations.
      

     

    (a) 
      Notwithstanding
      anything contained to the contrary in this Agreement, all representations and
      warranties of the parties hereto contained in or arising out of the Transaction
      Documents, or in any schedule or certificate given in connection herewith and
      therewith, shall survive the Closing and shall continue in effect until the
      24-month anniversary of the Closing Date; provided,
      however,
      that
      the representations and warranties set forth in Sections 4.2,
      4.4, 4.6, 4.8, 4.12(b), 4.15 and
      4.19 shall
      survive until the expiration of all applicable statutes of limitation;
provided
      further
      that
notwithstanding
      the foregoing, the rights and obligations with respect to indemnification as
      provided in this Article
      XII shall
      continue with respect to any matter for which indemnification has been properly
      sought in writing pursuant to the terms and conditions of this Agreement prior
      to the expiration of any such survival period. Unless
      a
      specified period is set forth in this Agreement (in which event such specified
      period will control),
      all covenants and indemnities contained in this Agreement will survive the
      Closing and remain in effect indefinitely.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    (b) 
      The
      aggregate amount of the Losses required to be paid by Seller and Partners
      pursuant to Section
      12.1(a)
      and
Section
      12.1(f)
      hereof
      shall not exceed the amount of the Purchase Price; provided,
      however,
      that no
      Partner shall be liable, in the aggregate, for such Losses pursuant to
Section
      12.1(a)
      and
Section
      12.1(f)
      that are
      in excess of such Partner’s allocation of the Purchase Price as set forth on
Schedule
      2.3.
      

     

    (c) 
      The
      NovaMed Indemnified Parties shall be entitled to indemnification under
Section
      12.1(a)
      and
Section
      12.1(f)
      only if
      the aggregate amount of all Losses thereunder (on a cumulative basis) exceeds
      $100,000 (the “Basket
      Amount”),
      in
      which case the Seller and Partners shall be obligated to indemnify the NovaMed
      Indemnified Parties only for the excess of the aggregate amount of all such
      Losses over the Basket Amount.

     

    (d) 
      Seller
      Indemnified Parties shall be entitled to indemnification under Section
      12.2(a)
      and
Section
      12.2(b)
      only if
      the aggregate amount of all Losses thereunder (on a cumulative basis) exceeds
      the Basket Amount, in which case Buyer shall be obligated to indemnify the
      Seller Indemnified Parties only for the excess of the aggregate amount of all
      such Losses over the Basket Amount. 

     

    (e) 
      Subject
      to Section
      13.12
      hereof,
      the rights set forth in this Article
      XII
      shall be
      each party’s sole and exclusive remedy for any claim or dispute relating to any
      breach of a representation, warranty or covenant by the other parties under
      this
      Agreement; provided,
      however,
      that in
      the case of (i) fraud or intentional misrepresentation by a party hereto or
      (ii)
      any claim or dispute arising under or relating to Article
      XI
      hereof,
      the limitations set forth in this Section
      12.5
      shall
      not apply, and the aggrieved party shall have all remedies available at law
      and
      in equity. 

     

    (f) 
      Notwithstanding
      anything to the contrary herein, nothing in this Section
      12.5
      shall be
      deemed to limit or impair Buyer’s rights under Article
      XI
      hereof.
      In addition, for purposes of this Section
      12.5,
      in no
      event shall Losses be construed to include any remedies paid to NovaMed or
      NOD
      under Article
      XI.

     

    12.6.  Right
      of Offset.
      

     

    12.6.1 
      Set-Off.
      If any
      Physician Partner is the Indemnifying Party and fails to make any payment as
      contemplated by this Article XII, or shall fail to make any payment when due
      under the terms of any of the Transaction Documents, then Buyer may elect to
      offset such amount against any amount due and owing by the New LP to such
      Physician Partner pursuant to the terms of the Partnership Agreement
      (including, without limitation, any distributions payable to such Physician
      Partner). 

     

    12.6.2 
      Set-Off
      Procedure.
      If
      Buyer believes it has the right to offset the amount of any Losses against
      a
      party hereto, Buyer shall notify such party(ies) (the “Off-set
      Party”)
      of the
      amount of the Losses and the dollar amount to be offset as determined by Buyer
      in good faith (such notice being deemed a “Notice
      of Claim”).
      Such
      Notice of Claim shall be given to the Off-set Party as soon as reasonably
      practicable after Buyer incurred the Losses or learned of its right to offset
      and shall include an explanation of Buyer’s rationale underlying such belief.
      The Off-set Party shall have 30 days from his receipt of the Notice of Claim
      in
      which to accept or dispute same, which if disputed, shall include an explanation
      of the Off-set Party’s rationale underlying such belief. If the Off-set Party
      fails to respond in writing within such 30-day period, the Notice of Claim
      shall
      be deemed approved by the Off-set Party. If the Off-set Party timely disputes
      the Notice of Claim in writing, Buyer on the one hand, and the Off-set Party,
      on
      the other hand, shall attempt in good faith to agree on the rights of the
      respective parties with respect to such claim. If the parties agree on the
      amount to be offset, then Buyer shall have the right to offset or cause the
      Company to offset such amount against any amounts owed to the Off-set Party
      in
      accordance with this Section
      12.6.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

     

    12.6.3 
      Set-Off
      Dispute.
      If the
      parties cannot agree on the offset amount, Buyer shall have the right to deposit
      or cause the Company to deposit any sums owed or to be paid by Buyer or the
      Company to the Off-set Party that equal the offset amount into an
      interest-bearing escrow which shall be established at an escrow agent (the
      “Escrow
      Agent”)
      mutually acceptable to Buyer, on the one hand, and the Off-set Party, on the
      other hand. The terms and conditions of such escrow account shall be acceptable
      to Buyer and the Off-set Party and the Escrow Agent. The Escrow Agent shall
      hold
      such funds pending its receipt of instructions from either (i) Buyer and the
      Off-set Party, or (ii) an arbitrator or a court of competent jurisdiction,
      directing it as to the disposition of such funds. 

     

    ARTICLE
      XIII.

    MISCELLANEOUS

     

    13.1. Definitions.  For
      purposes of this Agreement, the following terms have the meaning set forth
      below:

     

    “Affiliate”
means
      an affiliate as defined in Rule 405 under the Securities Act of 1933, as
      amended, and includes any past and present Affiliate of a Person; provided
      that
      with respect to determining any Affiliate of Buyer, such Affiliates shall
      include, without limitation, NovaMed, Inc. and any of its
      subsidiaries.

     

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

     

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

     

    “Facility”
means
      the Medicare-certified, state-licensed ambulatory surgery center located at
      17950 Preston Road, Suite 75, Dallas, Texas 75252.

     

    “Fraud
      and Abuse Laws”
means
      all fraud and abuse laws promulgated under Section 1128(b) of the Social
      Security Act, 42 U.S.C. Section 1320a-7(b) and Section 1877 of the Social
      Security Act, 42 U.S.C. Section 1877, and all rules and regulations promulgated
      thereunder; any other federal, state or local law relating to the referral
      of
      patients to medical facilities owned by providers of medical services; and
      all
      federal statutes (whether set forth in Title XVIII of the Social Security Act
      or
      elsewhere) affecting the health insurance program for the aged and disabled
      established by Title XVIII of the Social Security Act and any statues succeeding
      thereto, together with all rules and regulations promulgated
      thereunder.

     

    “Hazardous
      Materials”
means
      (a) hazardous materials, hazardous substances, extremely hazardous substances
      or
      hazardous wastes, as those terms are defined by the Comprehensive Environmental
      Response, Compensation and Liability Act, 42 U.S.C. §9601 et seq., the Resource
      Conservation and Recovery Act, 42 U.S.C. §6901 et seq., and any other
      Environmental and Safety Requirements; (b) petroleum, including crude oil or
      any
      fraction thereof which is liquid at standard conditions of temperature and
      pressure (60 degrees Fahrenheit and 14.7 pounds per square inch absolute);
      (c)
      any radioactive material, including any source, special nuclear, or by-product
      material as defined in 42 U.S.C. §2011 et seq.; and (d) asbestos in any form or
      condition.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    “Liens”
means
      any claims, liens, charges, restrictions, options, preemptive rights, mortgages,
      hypothecations, assessments, pledges, encumbrances or security interests of
      any
      kind or nature whatsoever.

     

    “Material
      Adverse Effect”
means,
      with respect to any Person, a material adverse effect on the business,
      prospects, financial condition or results of operations of such Person or any
      of
      its subsidiaries, taken as a whole.

     

    “Medical
      Records”
      shall
      mean all medical records of patients treated at the Facility, including, without
      limitation, any and all medical charts, files, notes, transcripts, x-ray files,
      lab reports, other diagnostic information or materials, insurance information,
      billing and payment statements or records of any kind, explanations of benefits,
      and other information of or relating to any patient treated at the Facility,
      of
      any kind and in any form whatsoever; provided
      that
      Medical Records shall be limited to the records of the Facility and will not
      include records of the provider of professional medical services. 

     

    “Person”
means
      any individual, sole proprietorship, partnership, joint venture, trust,
      undertaking, unincorporated association, corporation, entity, organization
      or
      Governmental Authority.

     

    “Pro
      Rata Basis”
      shall
      mean each Partner’s percentage interest in Seller as set forth on Schedule
      2.3.
      

     

    “Review
      Date”
means
      December 31, 2004. 

     

    “Tax”
means
      any federal, state, local or foreign income, gross receipts, franchise,
      estimated, alternative minimum, add-on minimum, sales, use, transfer,
      registration, value added, excise, natural resources, severance, stamp,
      occupation, premium, windfall profit, environmental, customs, duties, real
      property, personal property, capital stock, social security, unemployment,
      disability, payroll, license, employee or other withholding, or other tax,
      of
      any kind whatsoever, including any interest, penalties or additions to tax
      or
      additional amounts in respect of the foregoing; the foregoing shall include
      any
      transferee or secondary liability for a Tax and any liability assumed by
      agreement or arising as a result of being (or ceasing to be) a member of any
      Affiliated Group, as defined in Section 1504 of the Code (or being included,
      or
      required to be included, in any Tax Return relating thereto).

     

    “Tax
      Returns”
means
      returns, declarations, reports, claims for refund, information returns or other
      documents (including any related or supporting Schedules, statements or
      information) filed or required to be filed in connection with the determination,
      assessment or collection of any Taxes of any party or the administration of
      any
      laws, regulations or administrative requirements relating to any
      Taxes.

     

    “Transaction
      Documents”
means
      this Agreement and all agreements and instruments contemplated by and being
      delivered pursuant to or in connection with this Agreement.

     

    13.2.     
      Notices,
      Consents, etc.
      Any
      notices, consents or other communication required to be sent or given hereunder
      by any of the parties shall in every case be in writing and shall be deemed
      properly served if (a) delivered personally, (b) sent by registered or certified
      mail, in all such
      cases with first class postage prepaid, return receipt requested, (c) delivered
      by a nationally recognized overnight courier service, or (d) sent by facsimile
      transmission to the parties at the addresses as set forth below or at such
      other
      addresses as may be furnished in writing.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    (i) If
      to
      Seller:

    
      


      
        	 	
                
                  PPSC,
                    LLP

                  c/o
                    Ambulatory Surgery Centers of America, LLC

                  124
                    Washington Street, Suite #4

                  Norwell,
                    Massachusetts 02061

                  Attention:    
                    uke
                    M. Lambert

                  Tel: (781)
                    659-0422

                  Fax: (928)
                    569-7594

                  


                  with
                    a copy to:

                  


                  McGuireWoods
                    LLP

                  77
                    West Wacker Drive, Suite 4100

                  Chicago,
                    Illinois 60601-1815

                  Attention:
                     Scott
                    Becker, Esq.

                  Tel: (312)
                    849-8100

                  Fax: (312)
                    849-3690

                   

                  And
                    

                  Looper,
                    Reed & McGraw, PC 

                  4100
                    Thanksgiving Tower 

                  1601
                    Elm Street 

                  Dallas,
                    Texas  75201

                  Attenton: Andrew
                    N. Meyercord, Esq.

                  Tel: (214)
                    954-4135

                  Fax: (214)
                    953-1332

                

              


      

       

    

    (ii) If
      to
      Partners:

    


    
      	(A)  	
              ASCOA:

               

              Ambulatory
                Surgery Centers of America, LLC

              124
                Washington Street, Suite #4

              Norwell,
                Massachusetts 02061

              Attention: Luke
                M. Lambert

              Tel: (781)
                659-0422

              Fax: (928)
                569-7594

               

              with
                a copy to:

              


              McGuireWoods
                LLP

              77
                West Wacker Drive, Suite 4100

              Chicago,
                Illinois 60601-1815

              Attention:
                 Scott
                Becker, Esq.

              Tel: (312)
                849-8100

              Fax: (312)
                849-3690

            


    

    
 

    
      	(B)  	
              Physician
                Partners (excluding Arnulfo Carrasco, M.D.):

               

              To
                the address listed on Schedule A to the
                Partnership Agreement (or such other address on file with New
                LP)

            


    

    


     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    
      


      
        	 	
                with
                  a copy to:

                 

                Looper,
                  Reed & McGraw, PC

                4100
                  Thanisgiving Tower 

                1601
                  Elm Street</F nt> 

                Dallas,
                  Texas  75201

                Attenton: Andrew
                  N. Meyercord, Esq.

                Tel: (214)
                  954-4135

                Fax: (214)
                  953-1332

              


      

                                                                   
        

    

    


    
      	(C)  	
              Arnulfo
                Carrasco, M.D., one of the Physician Partners:

               

              
                Arnulfo
                  Carrasco, M.D. 

                c/o
                  Abel Carrasco

                7014
                  River Elms

                San
                  Antonio, Texas 78240

              

            


    

     

    (iii) If
      to
      NovaMed or NOD:

    
      


      
        	 	
                
                  NovaMed
                    Acquisition Company, Inc.

                  980
                    North Michigan Avenue

                  Suite
                    1620

                  Chicago,
                    Illinois 60611

                  Attention: Thomas
                    S. Hall 

                  John
                    W. Lawrence, Jr.

                

              


      

       

    

    Date
      od service of such notice shall be (A) the date such noti#e is personally
      delivered, (B) three days after the date of mailing if sent by certified or
      registered mail, (C) one day after date of delivery to the overnight courier
      if
      sent by overnight courier or (D) the next succeeding business day after
      transmission by facsimile.

     

    13.3.     
      Certain
      Taxes.
      Seller
      and Partners will pay all transfer taxes and other taxes and charges, if any
      (except for any sales taxes and income tax of Buyer and its Affiliates),
      which may become payable in connection with the transactions contemplated by
      this Agreement.

     

    13.4.     
      Remedies
      Not Exclusive.
      Except
      as set forth in Section
      12.5,
      no
      remedy conferred by any of the specific provisions of this Agreement or the
      Transaction Documents is intended to be exclusive of any other remedy. Each
      such
      remedy shall be cumulative, and in addition to every other such remedy or any
      other remedy existing at law or in equity.

     

    13.5.     
      Severability
      and Reformation.
      The
      unenforceability or invalidity of any provision of this Agreement shall not
      affect the enforceability or validity of any other provision. If any
      of the
      transactions contemplated herein or provisions hereof violates any applicable
      law, then the parties
      hereto agree to negotiate in good faith such changes to the structure and terms
      of the transactions provided for in this Agreement or the Transaction Documents
      as may be necessary to make these transactions, as restructured, lawful under
      applicable laws and regulations, without materially disadvantaging either party.
      The parties to this Agreement shall execute and deliver all documents or
      instruments necessary to effect or evidence the provisions of this Section
      13.5.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

     

    13.6.     
      Amendment
      and Waiver.
      This
      Agreement may be amended, or any provision of this Agreement may be waived,
      provided
      that
      any
      such amendment or waiver will be binding on a party hereto only if such
      amendment or waiver is set forth in a writing executed by such
      party.
      The
      waiver by any party hereto of a breach of any provision of this Agreement shall
      not operate or be construed as a waiver of any other breach.

     

    13.7.     
      Counterparts.
      This
      Agreement may be executed simultaneously via facsimile or otherwise in two
      or
      more counterparts, each of which shall be deemed an original but all of which
      together shall constitute one and the same agreement and shall become effective
      when one or more counterparts have been signed by each of the parties hereto
      and
      delivered to the other.

     

    13.8.     
      Expenses.
      Except
      as otherwise specifically provided herein, each of the parties shall pay all
      costs and expenses incurred or to be incurred by it,
      him
      or her, as the case may be, in negotiating and preparing this Agreement and
      in
      closing and carrying out the transactions contemplated by this
      Agreement.

     

    13.9.     
      Construction.
      This
      Agreement shall be construed and enforced in accordance with, and all questions
      concerning the construction, validity, interpretation and performance
      of this
      Agreement shall be governed by, the laws of the State of Texas, without giving
      effect to provisions thereof regarding conflict of laws.

     

    13.10.     
      Headings.
      The
      subject headings of Articles and Sections of this Agreement are included for
      purposes of convenience only and shall not affect the construction or
      interpretation of any of its provisions.

     

    13.11.     
      Assignment.
      This
      Agreement may not be assigned by Seller or any Partner without the prior written
      consent of Buyer. 

     

    13.12.     
      Mediation
      and Arbitration. 
      Except
      as expressly set forth herein, the parties hereto agree that any and all
      controversies, disputes or claims arising out of or in connection with this
      Agreement shall be solely and exclusively resolved in accordance with this
      Section
      13.12
      and not
      in any court of law or equity. The parties hereto shall first try in good faith
      to settle the dispute by mediation under the Commercial Mediation Rules of
      the
      American Arbitration Association (“AAA”)
      (such
      mediation session to be held in Dallas, Texas, and to commence within thirty
      (30) days after the appointment of the mediator by the AAA). If the controversy,
      claim or dispute cannot be settled by mediation, then by arbitration
      administered by the AAA under its Commercial Arbitration Rules (such arbitration
      to be held in Dallas, Texas before a single arbitrator mutually agreed upon
      by
      Seller and Buyer and to commence within thirty (30) days after the appointment
      of the arbitrator by the AAA), and judgment on the award rendered by the
      arbitrator may be entered in any court having jurisdiction thereof.
      Notwithstanding the foregoing, nothing herein shall limit Buyer’s rights to seek
      and obtain injunctive relief, specific performance or other equitable relief
      in
      any proceeding commenced in a federal or state court which may be brought to
      enforce any provision in Article
      XI
      hereof. 

     

    13.13.     
      Entire
      Agreement.
      This
      Agreement, the Preamble and all the Schedules attached to this Agreement (all
      of
      which shall be deemed incorporated in the Agreement and made a part hereof)
      set forth the entire understanding of the parties with respect to the subject
      matter hereof, and shall not be modified or affected by any offer, proposal,
      statement or representation, oral or written, made by or for any party in
      connection with the negotiation of the terms hereof, and may be modified only
      by
      instruments signed by all of the parties hereto.

     

    13.14.     
      Third
      Parties.
      Nothing
      herein expressed or implied is intended or shall be construed to confer upon
      or
      give to any Person, other than the parties to this Agreement and
      their respective
      permitted successors and assigns, any rights or remedies under or by reason
      of
      this Agreement.

     

    13.15.     
      No
      Strict Construction.
      The
      language used in this Agreement will be deemed to be the language chosen by
      the
      parties hereto to express their mutual intent, and no rule of strict
      construction will be applied against any party hereto.

     

    13.16.     
      Public
      Announcement.
      Seller
      and Partners acknowledge that Buyer intends to publicly announce the
      transactions contemplated herein, whether through a press release, a filing
      with
      the Securities and Exchange Commission, or some other form or medium selected
      by
      Buyer.

     

    


    *
      *
      *

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    



    IN
      WITNESS WHEREOF,
      the
      parties have executed this Agreement as of the date first above written.


     

    
      	
              SELLER:

               

              PRESTON
                PLAZA SURGERY CENTER, LLP

               

              By:
                /s/
                Gary White, MD

               

            	
              NOVAMED:

               

              NOVAMED
                ACQUISITION COMPANY, INC.

               

              By:/s/
                Thomas S. Hall

                          
                Thomas S. Hall, President

            
	 	
              NOD:

               

              NOVAMED
                OF DALLAS, INC.

               

              By:/s/
                Thomas S. Hall

              Thomas
                S. Hall, President

            
	
              PARTNERS:

               

              CATARACT
                AND LASER CENTER PARTNERS, L.L.C., d/b/a Ambulatory Surgical Centers
                of
                America 

               

              By:
                /s/
                Luke Lambert

            	
               

               

               

               

              /s/
                Gary W. White, MD

              Gary
                W. White, M.D.

            
	
               

              /s/
                Dean A. Cione, M.D.

              Dean
                A. Cione, M.D.

            	
               

              /s/
                T. Al West, M.D.

              T.
                Al West, M.D. 

            
	
               

              /s/
                Kenneth S. Dauber, M.D.

              Kenneth
                S. Dauber, M.D.

            	
               

              /s/
                Randall L. Troop, M.D.

              Randall
                L. Troop, M.D.

            
	
               

              /s/
                Earl R. Lund, M.D.

              Earl
                R. Lund, M.D.

            	
               

              /s/
                Purcell Smith, III, M.D.

              Purcell
                Smith, III, M.D.

            
	
               

              /s/
                John M. Crates, M.D.

              John
                M. Crates, M.D.

            	
               

              /s/
                Jeffery T. Hamm, M.D.

              Jeffery
                T. Hamm, M.D.

            
	
               

              /s/
                John M. Moore, M.D.

              John
                M. Moore, M.D.

            	
               

              /s/
                Mark L. Bailey, M.D.

              Mark
                L. Bailey, M.D.

            
	
               

              /s/
                Warrett Kennard, M.D.

              Warrett
                Kennard, M.D.

            	
               

              /s/
                Duncan C. Ramsey, III, M.D.

              Duncan
                C. Ramsey, III, M.D.

            
	
               

              /s/
                Thomas C. Frank, M.D.

              Thomas
                C. Frank, M.D.

            	
               

              /s/
                Steven L. Remer, M.D.

              Steven
                L. Remer, M.D.

            
	
               

              /s/
                George E. Joseph, M.D.

              George
                E. Joseph, M.D.

            	
               

              /s/
                Jacqueline B. Co, M.D.

              Jacqueline
                B. Co, M.D.

            
	
               

              /s/
                Arnulfo Carrasco, M.D.

              Arnulfo
                Carrasco, M.D.

            	 


    

     

    

 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBITS

     

    
      
        	
                Exhibit
                  1

              	
                —

              	
                Physician
                  Partners

              
	
                Exhibit
                  1.1-1

              	
                —

              	
                Certificate
                  of Limited Partnership

              
	
                Exhibit
                  3.2

              	
                —

              	
                Wire
                  Transfer Instructions

              
	
                Exhibit
                  7.3(a)

              	
                —

              	
                Contribution
                  Agreement

              
	
                Exhibit
                  7.3(b)

              	
                —

              	
                Partnership
                  Agreement

              
	
                Exhibit
                  7.3(g)

              	
                —

              	
                Assignment
                  of Partnership Interests

              
	
                Exhibit
                  7.4(e)

              	
                —

              	
                Management
                  Agreement

              
	 	 	 
	
                SCHEDULES*

              	 	 
	 	 	 
	
                Schedule
                  1.2(b)

              	
                —

              	
                Personal
                  Property

              
	
                Schedule
                  1.2(c)

              	
                —

              	
                Prepaid
                  Business Expenses

              
	
                Schedule
                  1.3(g) 

              	
                —

              	
                Excluded
                  Assets/Personal Effects

              
	
                Schedule
                  1.4(a)

              	
                —

              	
                Accounts
                  Payable

              
	
                Schedule
                  1.4(b)

              	
                —

              	
                Accrued
                  Liabilities

              
	
                Schedule
                  2.3

              	
                —

              	
                Ownership

              
	
                Schedule
                  4.1

              	
                —

              	
                Notifications
                  and Approvals

              
	
                Schedule
                  4.2

              	
                —

              	
                Liens
                  and Encumbered Assets

              
	
                Schedule
                  4.3

              	
                —

              	
                Approvals

              
	
                Schedule
                  4.5

              	
                —

              	
                Financial
                  Statements

              
	
                Schedule
                  4.6

              	
                —

              	
                Liabilities

              
	
                Schedule
                  4.9

              	
                —

              	
                Material
                  Contracts/Assumed Contracts

              
	
                Schedule
                  4.10

              	
                —

              	
                Leased
                  Real Property

              
	
                Schedule
                  4.11 

              	
                —

              	
                Litigation

              
	
                Schedule
                  4.12(b)

              	
                —

              	
                Licenses
                  and Permits

              
	
                Schedule
                  4.13

              	
                —

              	
                Transaction
                  Not a Breach

              
	
                Schedule
                  4.14 

              	
                —

              	
                Conduct
                  of Business

              
	
                Schedule
                  4.16

              	
                —

              	
                Salaries

              
	
                Schedule
                  4.17

              	
                —

              	
                Insurance

              
	
                Schedule
                  4.19

              	
                —

              	
                Employee
                  Benefit Plans

              
	
                Schedule
                  4.20

              	
                —

              	
                Personnel
                  Agreements

              
	
                Schedule
                  4.22

              	
                —

              	
                Workers
                  Compensation

              
	
                Schedule
                  4.23(a)

              	
                —

              	
                Accounts
                  Receivable

              
	
                Schedule
                  6.2(a)

              	
                —

              	
                Continuing
                  Employees

              
	
                Schedule
                  11.2.1(I)

              	
                —

              	
                Ownership
                  in Other Facilities

              
	
                Schedule
                  11.2.1(II)

              	
                —

              	
                In-Office
                  Procedure

              


      

    

    
 

    *
      NovaMed, Inc. agrees to furnish supplementally a copy of any omitted schedule
      to
      the Securities and Exchange Commission upon request. 

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      1

    


    


    Physician
      Partners

    


    


    Gary
      W.
      White, M.D.

    Dean
      A.
      Cione, M.D.

    T.
      Al
      West, M.D.

    Kenneth
      S. Dauber, M.D.

    Randall
      L. Troop, M.D.

    Earl
      R.
      Lund, M.D.

    Purcell
      Smith, III, M.D.

    John
      M.
      Crates, M.D.

    Jeffery
      T. Hamm, M.D.

    John
      M.
      Moore, M.D.

    Mark
      L.
      Bailey, M.D.

    Warrett
      Kennard, M.D.

    Duncan
      C.
      Ramsey, III, M.D.

    Thomas
      C.
      Frank, M.D.

    Steven
      L.
      Remer, M.D.

    George
      E.
      Joseph, M.D.

    Jacqueline
      B. Co, M.D.

    Arnulfo
      Carrasco, M.D.