Exhibit 10.13


 


*              Portions
of this exhibit have been omitted pursuant to a request for confidential
treatment and have been filed separately with the Commission.


 


MANAGEMENT RIGHTS PURCHASE AGREEMENT


 


THIS MANAGEMENT RIGHTS
PURCHASE AGREEMENT (“Agreement”), dated as of July 27, 2005, is by and
among Parthenon Management Partners,
LLC, a California limited liability company (the “Company”), Andrew A.
Brooks, M.D. and Randhir S. Tuli, both residents of the State of California
(each an “Owner” and, collectively, the “Owners”) (the Company and the Owners
being, collectively, the “Sellers”) and SymbionARC Management Services, Inc.,
a Tennessee corporation (“Purchaser”). 
The Company, Owners and Purchaser are sometimes referred to herein
individually as a “Party” and collectively as the “Parties.”  Symbion Ambulatory Resource Centres, Inc.,
a Tennessee corporation (“SARC”), joins herein solely for the purposes of
manifesting its agreement with Article VIII hereof.


 


RECITALS:


 


WHEREAS, as of the
date hereof, the Owners collectively own 100% of the outstanding membership
interests of the Company; and


 


WHEREAS, the Owners
are the holders of outstanding membership interests comprised of membership
units of ownership (collectively, the “Ownership Interests”) in Specialty Surgical
Centers, LLC, a California limited liability company (the “Beverly Hills LLC”),
Specialty Surgical Center of Encino, LLC, a California limited liability
company (the “Encino LLC”), Specialty Surgical Center of Irvine, LLC, a
California limited liability company (the “Irvine LLC”), Specialty Surgical
Center of Arcadia, LLC, a California limited liability company (the “Arcadia
LLC”) and Specialty Surgical Center of Thousand Oaks, LLC, a California limited
liability company (the “Thousand Oaks LLC”) (each an “LLC” and collectively,
the “LLCs”); and


 


WHEREAS, the Beverly Hills LLC leases space for, owns the assets of,
and operates an outpatient surgery center located at 9575 Brighton Way, Suite 100,
Beverly Hills, CA 90210 (the “Brighton Center”) and owns a 99% general partner
interest in Specialty Surgical Center of Beverly Hills, L.P., a California
limited partnership (the “Wilshire Partnership”), which leases space for, owns
the assets of, and operates an outpatient surgery center located at 8670 Wilshire
Boulevard, Suite300, Beverly Hills, CA 90211 (the “Wilshire Center”);


 


WHEREAS, the Encino LLC owns a 99% general partner interest in
Specialty Surgical Center of Encino, L.P., a California limited partnership
(the “Encino Partnership”), which leases space for, owns the assets of, and
operates an outpatient surgery center located at 16501 Ventura Boulevard, Suite 103,
Encino, CA  91436 (the “Encino Center”);


 


WHEREAS, the Irvine LLC owns a 99% general partner interest in
Specialty Surgical Center of Irvine, L.P., a California limited partnership
(the “Irvine Partnership”), which leases space for, owns the assets of, and
operates an outpatient surgery center located at 15825 Laguna Canyon Road, Suite 200,
Irvine, CA 92618 (the “Irvine Center”);


 


WHEREAS, the Arcadia LLC owns a 99% general partner interest in
Specialty Surgical Center of Arcadia, L.P., a California limited partnership
(the “Arcadia Partnership”), which leases space for, owns the assets of, and
operates an outpatient surgery center located at 51 North Fifth Avenue, Suite 101,
Arcadia, CA 91006 (the “Arcadia Center”);


 

















 


WHEREAS, the Thousand Oaks LLC intends to lease space for, own the
assets of, and operate an outpatient surgery center located at 696 Hampshire
Road, Thousand Oaks, CA 91361 (the “Thousand Oaks Center”);


 


WHEREAS, the Brighton Center, the Wilshire Center, the Encino Center,
the Irvine Center, the Arcadia Center and the Thousand Oaks Center are referred
to individually as a “Center” and, collectively, the “Centers”; and


 


WHEREAS, the Beverly
Hills LLC and the Encino LLC are referred to individually as an “Existing
Center LLC” and, together, as the “Existing Center LLCs”; and


 


WHEREAS, the Irvine
LLC, the Arcadia LLC and the Thousand Oaks LLC are referred to individually as
a “Developing Center LLC” and, collectively, as the “Developing Center LLCs”;


 


WHEREAS, in the case of each LLC that is a member of a Partnership, the
Partnership of which the LLC is a Member is referred to hereinafter as that LLC’s
“Applicable Partnership”;


 


WHEREAS, Affiliates of Purchaser have entered
into a Purchase Agreement, of even date herewith (the “Membership Interest
Purchase Agreement”), pursuant to which such Affiliates of Purchaser will
acquire units of membership interest in each LLC (the “Ownership Interests”)
from the members of each such LLC (including the Owners) and will acquire the
right and option to acquire additional Ownership Interests from such members of
each such LLC (including the Owners), all as further described in the
Membership Interest Purchase Agreements; and


 


WHEREAS, in addition to the Ownership Interests,
the Owners and the Company collectively own rights in and to those certain
economic interests that entitle such Persons to receive consideration for and
obligate such Persons to perform certain management responsibilities for each
Center (collectively, the “Management Rights”) under Sections 5.6(a) and
5.6(b) of the Operating Agreement of the Beverly Hills LLC, Sections 5.6(a) and
6.4(b) of the Operating Agreement of the Encino LLC, Sections 5.7(a) and
6.2(f) of each the Operating Agreement of the Irvine LLC, the Operating
Agreement of the Arcadia LLC and the Operating Agreement of the Thousand Oaks
LLC;


 


WHEREAS, as a
condition to the closing of the transactions contemplated by the Membership
Interest Purchase Agreement, each LLC is required to terminate the Management
Rights and in lieu thereof execute and deliver to one or more Affiliates of
Purchaser identified on Schedule 1 hereto a Management Agreement
substantially in the form of Exhibit 1.2 hereto (each a “Management
Agreement”), pursuant to which such Affiliate(s) of Purchaser shall become
entitled to receive consideration
for and obligate such Affiliate(s) of
Purchaser to perform certain
management responsibilities for and on behalf of each Center from and after the date of the Closing
(as defined in the Membership Interest Purchase Agreement); and


 


WHEREAS, in order to
convey and assign the Management Rights so as to permit the Existing Center
LLCs and Developing Center LLCs to cancel them and execute and deliver the
Management Agreements, the Sellers desire to sell to Purchaser, and Purchaser
desires to purchase from the Sellers, the Management Rights on the terms and
conditions of this Agreement; and


 


NOW, THEREFORE, in
consideration of the foregoing and of the promises and mutual covenants
contained herein, the Parties hereby agree as follows:


 


2

















 


I.  PURCHASE AND SALE OF MANAGEMENT RIGHTS


 


1.1.                              Purchase and Sale of Management
Rights.  Subject to the
terms and conditions hereof, in reliance upon the representations and
warranties of the other Parties set forth herein, and in exchange for the
payment of the Purchase Price hereunder and the other covenants and obligations
set forth herein, at the Closing (as hereinafter defined), Purchaser agrees to
purchase from the Sellers, and the Sellers agree to sell, assign, transfer and
deliver to Purchaser, the Management Rights. 
The Management Rights being transferred hereunder do not include, and
the Sellers shall retain, the right to any compensation earned, or rights to
reimbursement of expenses thereunder with respect to all periods prior to the
Closing.


 


1.2.                              Consideration.


 


(a)                                  Subject to the terms
and conditions hereof, in reliance upon the representations and warranties of
the Sellers set forth herein, and as consideration for the assignment of the
Management Rights and the other covenants and obligations set forth herein,
Purchaser agrees to tender to the 
Sellers as the purchase price hereunder (I) FIVE MILLION EIGHT
HUNDRED SIXTEEN THOUSAND DOLLARS ($5,816,000) (the “Initial Purchase Price”),
and (II) the Deferred Payment (if any) with respect to each Center.  The Initial Purchase Price (less the (i) aggregate
amount of “Individual Escrow Amounts” set forth on Exhibit A to the MIPA
with respect to each Seller’s sale of the Management Rights and (ii) AH
Escrow Amount defined below) shall be payable to the Sellers at the
Closing.  The Deferred Payment with
respect to any Center shall be paid to the Sellers at the end of the Payment
Period (as defined in Consulting Agreement) for that Center.  All payments due hereunder shall be made in
immediately available funds by electronic wire transfer to an account
designated by the Sellers. No party will take any steps intended to delay
collection of Fees.


 


(b)                                 From the Initial
Purchase Price, an amount equal to THREE HUNDRED THIRTY THREE THOUSAND THREE
HUNDRED THIRTY THREE AND NO/100 DOLLARS ($333,333.00) (the “AH Escrow Amount”)
shall be withheld from delivery to the Sellers and, instead, be delivered to
the Escrow Agent in cash at Closing, by wire transfer of immediately available
funds, pursuant to the Escrow Agreement substantially in the form of Exhibit 1.2(b) (the
“Escrow Agreement”) attached to this Agreement and incorporated into this
Agreement by reference. The Parties acknowledge and agree that the AH Escrow
Amount represents that portion of the Initial Purchase Price that is
consideration for the Management Rights of Sellers with respect to the Thousand
Oaks Center.  If there shall have been a
Successful Syndication of the Thousand Oaks LLC on or before December 31,
2005, then within ten (10) days after the Successful Syndication, the
Purchaser shall instruct the Escrow Agent to distribute the AH Escrow Amount to
the Sellers.  If there shall not have
been a Successful Syndication of the Thousand Oaks LLC on or before December 31,
2005, then all of the AH Escrow Amount shall be returned to the Purchaser, and
Purchaser shall have no obligation hereunder to acquire Management Rights with
respect to the Thousand Oaks LLC and the Initial Purchase Price under Section 1.2(a) shall
be deemed to have automatically been reduced by the amount of the AH Escrow
Amount.  As used herein, “Successful
Syndication” means the closing of the sale of not less than sixty percent (60%)
of the membership interests in the Thousand Oaks LLC to not fewer than fifteen
(15) suitable purchasers (for this purpose, individual physician members of a “Physician
Entity” (as defined in the Operating Agreement of the Thousand Oaks LLC) who
are anticipated to use the Thousand Oaks Center as an extension of their
practices will each be counted as an individual purchaser), all of whom must be
acceptable to the Purchaser in such Purchaser’s reasonable discretion.


 


(b)                                 Not later than the
date described in Section 1.2(a), Purchaser shall calculate in good faith
the amount of the Deferred Payment then due and deliver to the Sellers a
statement (the


 


3

















 


“Statement”) setting forth
such calculation in reasonable detail together with a check for the amount
shown as due thereunder.  The Sellers
shall be entitled to audit the books and records of the Manager and its
affiliates upon which any Statement is based. 
The Sellers shall pay all costs and expenses of the audit unless such
examination shows an underpayment of at least ten percent (10%) or more of the
total amount payable during the period covered by the audit, in which case the
costs of the audit shall be paid by the Purchaser.  Any underpayment will bear interest at prime
plus 2%, and the amount of such underpayment shall be paid by Purchaser within
two (2) business days of its calculation.


 


(c)                                  As used herein,


 


(i)                                     “Deferred Payment”
means (i) three and one-half (3.5) times the TTM Fees (defined below) with
respect to an Existing Center LLC, or (ii) two and seventy two
one-hundredths (2.72) times the TTM Fees with respect to a Developing Center
LLC, such calculations being based for purposes hereof on the product of, in
the case of Existing Center LLCs, seven (7.0), and in the case of Developing
Center LLCs, six and eight-tenths (6.8), in all cases multiplied by the
percentage of Fees required by the Consulting Agreement to be paid to Sellers
as a “Consulting and Oversight Fee” (defined that term is defined in Section 2.1
of the Consulting Agreement); provided, however, in the event
that a Repurchase Notice shall have been delivered in accordance with Section 1.4(f) of
the Membership Interest Purchase Agreement and the election provided in Section 1.4(g)(2) of
the Membership Interest Purchase Agreement shall have been made, then the
Deferred Payment with respect to such Developing Center LLC shall instead equal
the Management Agreement Termination Fee (as defined in such Section 1.4(f))
and provided further, however, that the Deferred Payment for any Center
shall be zero in the event the Payment Period ends as a result of (i) a
termination of the related Management Agreement in accordance with Section 1.4(g) of
the Membership Interest Purchase Agreement or (ii) Manager (or its
affiliates) ceasing to be the manager of that Center following the natural
expiration of the term of the relevant Management Agreement.


 


(ii)                                  “Fees” means, with
respect to a Center, all fees payable to Manager and its Affiliates, without
any deductions whatsoever, under a Management Agreement (but not the amount of
any expense reimbursements made under the Management Agreements).  No amendment or termination of any Management
Agreement will affect the calculation of the Fees, which will continue to be
calculated based on the terms of the Management Agreement in force on the date
hereof unless otherwise consented in writing by the Sellers.


 


(iii)                               “TTM Fees” means, with
respect to a Center, the Fees actually received by Purchaser and its Affiliates
under and pursuant to a Management Agreement for the twelve calendar months
ending with the month prior to the date on which the applicable payment is due
(such date being the “Payment Term Ending Date”).


 


1.3.                              Assignment.  The sale, assignment, transfer and delivery
of the Management Rights shall be made by each Seller’s execution and delivery
at the Closing of an Assignment substantially in the form attached as Exhibit 1.3
hereto (the “Assignment”) and the delivery by each LLC (or its Applicable
Partnership) of the executed Management Agreement. From and after the closing
of the transactions contemplated by the Membership Interest Purchase Agreement,
the Management Rights shall be cancelled and, thereafter, the Management
Agreements shall supersede and replace the Management Rights.


 


1.4.                              No Assumption of
Liabilities.  Purchaser shall
not assume, at the Closing or otherwise, any liability of any Seller, and each
Seller covenants and agrees to satisfy, when due, all of its liabilities,
indebtedness and obligations.  Purchaser
shall not be responsible, from and after the Closing or otherwise, for 


 


4

















 


any other of the Sellers’ leases,
contracts, liabilities, indebtedness or any other obligations incurred by a
Seller, fixed or contingent, disclosed or undisclosed.


 


1.5.                              Closing.  The sale and purchase of the Management
Rights and other activities provided for herein (the “Closing”) shall take
place at Waller Lansden Dortch and Davis, PLLC, 511 Union Street, Suite 2700,
Nashville, Tennessee 37219, or at such other place as the Parties may agree
upon, on the first business day following the satisfaction (or waiver) of all
of the conditions to closing set forth in Articles VI and VII hereof (such date
being the “Closing Date”), and the Closing shall be deemed effective at 12:01 a.m.
on the Closing Date.


 


1.6.                              Interpretation.  In this Agreement, unless the context
otherwise requires:


 


(a)                                  references to this Agreement are
references to this Agreement and to the Schedules and Exhibits attached hereto;


 


(b)                                 references to Articles and Sections are
references to articles and sections of this Agreement;


 


(c)                                  references to any Party to this Agreement
shall include references to its respective successors and permitted assigns;


 


(d)                                 references to a judgment shall include
references to any order, writ, injunction, decree, determination or award of
any court or tribunal;


 


(e)                                  references to a person shall include
references to any individual, company, body corporate, association, limited
liability company, firm, joint venture, trust or governmental entity or agency;


 


(f)                                    the terms “hereof,” “herein,” “hereby”
and derivative or similar words will refer to this entire Agreement;


 


(g)                                 references to any document (including
this Agreement) are references to that document as amended, consolidated,
supplemented, novated or replaced by the Parties from time to time;


 


(h)                                 the word “including” shall mean including
without limitation;


 


(i)                                     each representation, warranty and
covenant contained herein shall have independent significance and, if any party
hereto has breached any representation, warranty or covenant contained herein
in any respect, the fact that there exists another representation, warranty or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) which such party has not breached shall not detract from or
mitigate the fact that the party is in breach of the first representation,
warranty or covenant, provided that indemnification for any such breach shall
be only in accordance with and subject to the limitations of Article VIII
hereof; and


 


(j)                                     in respect of a party, the term “Affiliate”
shall mean any entity controlling, controlled by or under common control with
such party.


 


5

















 


II. 
REPRESENTATIONS AND WARRANTIES OF SELLERS


 


Except as set forth in
a Schedule called for hereunder (each of which shall refer to a specific
section to which such Schedule shall apply), the Owners and the Company hereby
jointly and severally represent and warrant to Purchaser as follows:


 


2.1.                              Authorization and
Binding Effect of Owners.  The Company and
each Owner has all necessary authority and power to execute and deliver this
Agreement and consummate the transactions contemplated hereby and has taken all
action required to be taken to authorize the execution, delivery and
performance of this Agreement.  This
Agreement constitutes a valid and binding agreement or commitment against the
Company and the Owners in accordance with its terms.  The execution of this Agreement by the
Company and the Owners, the performance by the Company and the Owners of their
obligations hereunder and the consummation of the transactions contemplated
hereby by the Company and the Owners will not require any consent, approval or
notice under, or violate, breach, be in conflict with or constitute a default
(or an event that, with notice or lapse of time or both, would constitute a
default) under, or permit termination of, or result in the creation or
imposition of any lien upon any properties, assets or business of the Company
or an Owner under any note, bond, indenture, mortgage, deed of trust, lease,
franchise, permit, authorization, license, contract, instrument or other
agreement or commitment or any order, judgment or decree to which any of them
is a party or by which any of them of their respective assets or properties is
bound or encumbered, except as indicated on Schedule 2.1
hereof.  No notice to, filing or
registration with or authorization, consent or approval of any public body or
governmental or regulatory authority is necessary for the consummation by the
Company or the Owners of the transactions contemplated by this Agreement,
except as indicated on Schedule 2.1 hereto.  Each Owner is a resident of the State of
California.


 


2.2.                              Organization of the
Company.  The Company is a
limited liability company duly organized and validly existing in good standing
under the laws of the State of California, has full power and authority to own
and operate its property and to carry on its business as now being conducted,
and is duly qualified to do business in each jurisdiction in which the nature
of its property or business requires.


 


2.3.                              Capitalization.  The Owners own 100% of the issued and
outstanding equity securities of the Company.


 


2.4.                              Representations Regarding the Management Rights.


 


(a)                                  The Management Rights
are being transferred hereunder free and clear of any liens or claims, and upon
amendment of the Operating Agreements, no person will have any further claim
thereunder for periods following the Closing Date.  Attached hereto as Schedule 2.4(a) are
state and local UCC searches on the Sellers and, except as disclosed thereon,
the Sellers have good title to the Management Rights, free and clear of all
liens, claims or encumbrances.  Schedule
2.4(a) reflects all security interests relating to the Management
Rights in every place where security interests created or perfected by filing
are legally required to be filed and include copies of all such financing
statements.


 


(b)                                 Each Seller is in compliance with the terms and
requirements of the Management Rights; no event or circumstance exists that
(with or without notice or lapse of time) contravenes, conflicts with, is in a
violation or breach of, or gives any party the right to declare a default on
such Management Rights or exercise any remedy with respect thereto, or to
accelerate the maturity or performance of, or to cancel, terminate, or modify,
any Management Right; no LLC or Applicable Partnership has given or received
any written unresolved notice or other unresolved written communication
regarding any actual, alleged, possible, or potential violation or breach of,
or default under, any Management Right; and there is no litigation,
arbitration, governmental claim, investigation or proceeding, pending or, to
the knowledge of any Seller, threatened, against any Seller at law or in
equity, before any court, arbitration tribunal or governmental 


 


6

















 


agency, relating to any of the Management Rights, and no
Seller knows of any facts on which claims may legitimately or reasonably be
hereafter made against a Seller and relating to any of the Management Rights.


 


2.5.                              Calculation of
Management Fees.  Each Seller acknowledges that the Initial Purchase Price
for the Management Rights was determined by multiplying the revenues of the
Sellers derived from the Management Rights in the Existing Center LLCs for the
twelve month period ended December 31, 2004, times three and one-half
(3.5), plus an additional one million dollars ($1,000,000) as consideration for
the Management Rights in the Developing Center LLCs.  The revenues of the Sellers derived from the
Management Rights during the twelve month periods ended December 31, 2003
and 2004 were $1,424,180.68 and $1,392,087.78 respectively.


 


2.6.                              Court Orders, Decrees and Compliance with Laws.  There is not
outstanding or, to the Company’s or any Owners’ knowledge, threatened, any
order, writ, injunction or decree or any court, governmental agency or
arbitration tribunal against or affecting the Company, the Management
Rights.  The Company is in compliance
with all applicable federal, state and local laws, regulations and
administrative orders, except where noncompliance therewith would not have an
adverse effect on the Company or the Management Rights, and has received no
unresolved notices of alleged violations thereof.  There are no proceedings against the Company
and, to each Owners’ and the Company’s knowledge, no governmental authority is
currently conducting an investigation and no such investigation or proceeding
is being threatened.


 


2.7.                              No Finders or Brokers.  Neither the Company nor any Owner has engaged
any finder or broker in connection with the transactions contemplated
hereunder.


 


2.8                                 Licenses.  Except as set forth on Schedule 2.8,
no licenses, permits or approvals have been needed and/or have been required by
law for Sellers to exercise the Management Rights or to discharge the
obligations associated therewith.


 


2.9                                 No Untrue or
Inaccurate Representation or Warranty.  No representation or warranty by Owners or
the Company set forth in this Agreement contains or will contain any untrue
statement of fact, or omits or will omit to state a fact necessary to make the
statements therein not misleading.


 


III. 
REPRESENTATIONS AND WARRANTIES OF PURCHASER


 


Purchaser represents and
warrants to the Company and the Owners as follows:


 


3.1.                              Organization
and Standing.  Purchaser
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Tennessee and has full corporate power and authority
to conduct its business as now being conducted and is duly qualified to do
business in each jurisdiction in which the nature of its property or business
requires.


 


3.2.                              Authorization
and Binding Effect.  Purchaser
has all necessary authority and corporate power to execute and deliver this
Agreement and consummate the transactions contemplated hereby and has taken all
action required to be taken by or on the part of Purchaser to authorize the
execution, delivery and performance of this Agreement.  This Agreement constitutes a valid and
binding agreement enforceable against Purchaser in accordance with its
terms.  The execution of this Agreement
by Purchaser, the performance by Purchaser of its obligations hereunder and the
consummation of the transaction contemplated hereby by Purchaser will not
require any consent, approval or notice under, or violate, breach, be in
conflict with or constitute a default (or an event that, with notice or lapse
of time or both, would constitute a default) under, or permit termination of,
or result in the creation or imposition of any lien upon any properties, assets
or business of Purchaser under any note, bond, indenture, mortgage, deed of
trust, lease, franchise, permit, authorization, license, contract, instrument
or other agreement or 


 


7

















 


commitment or any order, judgment or decree
to which Purchaser is a party or by which Purchaser or any of its assets or
properties is bound or encumbered, except as indicated on Schedule 3.2
hereof.  Assuming the accuracy of the
representations in Section 2.2 hereof, no notice to, filing or
registration with or authorization, consent or approval of any public body or
governmental or regulatory authority is necessary for the consummation by
Purchaser of the transaction contemplated by this Agreement, except as
indicated on Schedule 3.2 hereto.


 


3.3.                              Ownership.  Purchaser is a wholly-owned direct or
indirect subsidiary of SARC, which is a wholly owned subsidiary of Symbion, Inc.,
a Delaware corporation.


 


3.4.                              No Finders or
Brokers.  Purchaser has not engaged any
finder or broker in connection with the transactions contemplated hereunder.


 


3.5.                              No Untrue or
Inaccurate Representation or Warranty.  No representation or warranty by Purchaser
set forth in this Agreement contains or will contain any untrue statement of
fact, or omits or will omit to state a fact necessary to make the statements
therein not misleading.


 


IV.  COVENANTS OF PURCHASER


 


4.1                                 Best Efforts.  Purchaser hereby covenants and agrees to take
all necessary corporate action and to use its reasonable best efforts to obtain
all consents and approvals required to carry out the transactions contemplated
herein and to satisfy the conditions specified herein.
Between the date hereof and the Closing Date, Purchaser will use reasonable
efforts to keep the representations and warranties contained in Article III
hereof true and correct at and as of the Closing Date (except for changes
contemplated, permitted or required by this Agreement) and so that the
conditions to be satisfied by Purchaser at the Closing shall have been
satisfied


 


4.2.                              Notification of
Certain Matters.  Until
the Closing Date, Purchaser promptly advise the Sellers in writing of (i) any
change or event that would cause any condition to closing in Article VI or
VII to be unable to be satisfied, (ii) any notice or other communication
from any Person alleging that the consent of such Person is or may be required
in connection with the transactions contemplated by this Agreement and (iii) the
existence of any matter arising or discovered which would have been required to
be set forth or described in a disclosure schedule delivered pursuant to Article III
of this Agreement.  Purchaser shall
promptly notify the Sellers of any action, suit or proceeding that shall be
instituted or threatened against Purchaser to restrain, prohibit or otherwise
challenge the legality of any transaction contemplated by this Agreement.


 


V.  COVENANTS OF SELLERS


 


5.1.                              Best Efforts.  Each Owner and the Company shall take all
necessary action and use reasonable best efforts to obtain all consents and
approvals required to carry out the transactions contemplated herein and to
satisfy the conditions specified herein.


 


5.2.                              Access and
Information.  Between
the date hereof and the Closing, the Sellers shall cooperate fully in the
providing Purchaser full access to all records of the Centers and any Seller,
and Owners shall confer on a regular and frequent basis with one or more
representatives of Purchaser to report material operational matters of the
Centers and to report the general status of ongoing operations of the
Centers.  Owners shall notify Purchaser
of any material adverse change in the financial position, earnings or business
of the Company
after the date hereof and prior to the
Closing and any unexpected emergency or other unanticipated change in the
business of the Company and of any governmental complaints, investigations or
hearings or adjudicatory proceedings (or communications indicating that the


 


8

















 


same
may be contemplated) or of any other matter which may be material to the
Company and shall keep Purchaser reasonably informed of such events.


 


5.3.                              Conduct of
Business.  Between
the date hereof and the Closing Date, except as contemplated by the
transactions completed by the Membership Interest Purchase Agreement and
hereunder, or otherwise approved by Purchaser in its sole discretion, the
Sellers shall
conduct their business insofar as it is
related to the Management Rights only in the ordinary course thereof consistent
with past practice and use reasonable efforts to keep the representations and
warranties contained in Article II hereof true and correct at and as of
the Closing Date (except for changes contemplated, permitted or required by
this Agreement) and so that the conditions to be satisfied by the Sellers at
the Closing shall have been satisfied.


 


5.4.                              Notification of
Certain Matters.  Until
the Closing Date, the Sellers shall promptly advise Purchaser in writing of (i) any
change or event that would cause any condition to closing in Article VI or
VII to be unable to be satisfied, (ii) any notice or other communication
from any Person alleging that the consent of such Person is or may be required
in connection with the transactions contemplated by this Agreement, and (iii) the
existence of any matter arising or discovered which would have been required to
be set forth or described in a disclosure schedule delivered pursuant to Article II
of this Agreement.  Each Seller shall
promptly notify Purchaser of any action, suit or proceeding that shall be
instituted or threatened against such Seller to restrain, prohibit or otherwise
challenge the legality of any transaction contemplated by this Agreement.


 


5.5.                              Exclusivity .  During the period from the date of this
Agreement until its termination in accordance with Article IX hereof, each
Owner and the Company shall not, and will cause each of its and their
respective agents, employees, and affiliates to not, except as expressly
contemplated herein, directly or indirectly, initiate, encourage, conduct or
hold discussions with any corporation, partnership, person or other entity
(other than Purchaser and its Affiliates) (a “Third Party”) concerning:


 


(a)                                  a purchase,
affiliation, joint venture or lease of all, or a material part of, the
Management Rights, the Company or any Center by a Third Party;


 


(b)                                 the management of any
Center by a Third Party;


 


(c)                                  the transfer by any
Seller of any of its ownership in the Company, the Management Rights or the
Centers to a Third Party; or


 


(d)                                 the issuance by the
Company of any debt, equity or hybrid securities.


 


If
an Owner or the Company shall receive any unsolicited offer or correspondence
relating to a transaction of the type described in this Section 5.5, such
Owner or the Company, as the case may be, shall promptly notify Purchaser of
any such transaction or negotiations and disclose the terms of any such
proposal.


 


5.6.                              Acknowledgement
of Reliance and Inducement. 
The Sellers acknowledge and agree that their execution, delivery and
performance of the Consulting Agreement, and specifically the covenants and
obligations set forth in Article IV thereof, were a material inducement
for the affiliates of Manager to enter into and to consummation the
transactions contemplated by this Agreement and the MIPA, and Purchaser would
not have entered into or consummated the transactions contemplated by this
Agreement and the MIPA unless the Sellers had agreed to the provisions of Article IV
of the Consulting Agreement.  This
acknowledgement is not intended to imply or support any increased damages
(beyond those 


 


9

















 


specified herein and/or in the MIPA) for
any breach of this Agreement, nor shall it be used for such purpose.


 


VI.  CONDITIONS TO CLOSING BY
PURCHASER


 


Except as may be
waived by Purchaser, the obligations of Purchaser to purchase the Management
Rights and to consummate the transactions contemplated hereby on the Closing
Date shall be subject to the satisfaction on or prior to the Closing Date of
the following conditions:


 


6.1.                              Compliance.  All of
the representations and warranties of the Company and Owners contained in Article II
of this Agreement shall be true as of the date of this Agreement and as of the
time of the Closing, except as would not individually or in the aggregate have
a material adverse effect on the Company, the Business or the results of
operations or financial condition of any Center and the Company and the Owners
shall have performed or complied with all covenants and conditions required by
this Agreement to be performed or complied with by it prior to or at the
Closing, except for noncompliance which would not individually or in the
aggregate have a material adverse effect on the Company, the Business or the
results of operations or financial condition of any Center.  Purchaser shall have been furnished a
certificate dated the Closing Date and signed by an Owner or authorized
representative of the Company to the foregoing effect.


 


6.2.                              Consents, Authorizations, Etc.  All necessary licenses, certifications,
permits and approvals from federal, state and local governmental units for the
transactions contemplated hereby shall have been issued to the Company in form
and substance reasonably satisfactory to Purchaser.


 


6.3.                              No Action or Proceeding. 
No action or proceeding shall have been brought or threatened before any
court or administrative agency to prevent the consummation of, or to seek
damages in a material amount by reason of, the transactions contemplated
hereby, and no governmental authority shall have asserted that these
transactions constitute a violation of law or give rise to liability on the
part of Purchaser or the Company.


 


6.4.                              Good Standing Certificate. 
Owners shall have delivered to Purchaser a good standing certificate
issued with respect to the Company, issued by the Secretary of State of the
State of California, dated as of a date that is not more than 15 days prior to
the Closing Date.


 


6.5.                              No Material Adverse Effect. 
The operations of the Company shall have been conducted in the ordinary
course of business, consistent with past practice, and from December 31,
2004 until the Closing, no event shall have occurred or have been threatened,
which has or would have a material and adverse effect upon the operations of
the Company, the Business or their respective prospects; and none of the
Company and the Assets shall have sustained any loss or damage, whether or not
insured, that affects materially and adversely the value of the Management
Rights.


 


6.6                                 Membership Interest Purchase Agreement
Closing.  The “Closing” under the Membership Interest
Purchase Agreement shall have occurred.


 


6.7                                 Consulting Agreement. 
The Purchaser shall have executed and delivered to the Company the
Consulting Agreement, in the form attached hereto as Exhibit 6.7 (the “Consulting
Agreement”).


 


6.8                                 Assignment Agreement. 
Each Seller shall have delivered to the Purchaser a duly executed
Assignment.


 


6.9                                 Closing
Certificate.  At the Closing, Purchaser shall have received
copies of the


 


10
















 


following, in each
case certified as of the Closing Date by the managing members of the Company:


 


(a)                                  resolutions of the members of the Company
authorizing the execution, delivery and performance of this Agreement and the
other agreements that the Company is required to execute and deliver pursuant
to the terms of this Agreement; and


 


(b)                                 the signature and incumbency of the
managing members of the Company authorized to execute and deliver this
Agreement and the other agreements and certificates that the Company is
required to deliver on or before the Closing Date pursuant to this Agreement.


 


6.10.                        Opinion of Counsel.  Purchaser
shall have received from counsel to Sellers an opinion in form and substance as
set forth in Exhibit 6.10 attached to this Agreement, addressed to
Purchaser and dated as of the Closing Date.


 


6.11.                        Waiver of Conditions. 
Purchaser may waive any condition of this Article VI to the extent
permitted by applicable law.  Such waiver
shall not affect Purchaser’s remedies under this Agreement with respect to the
waived condition, or otherwise.


 


VII.  CONDITIONS TO CLOSING BY
THE COMPANY


 


Except as may be
waived in writing by Owners and the Company, the obligations of the Company and
the Owners to consummate the transactions contemplated hereby on the Closing
Date shall be subject to the satisfaction on or prior to the Closing Date of
the following conditions:


 


7.1.                              Compliance.  All of
the representations and warranties made by Purchaser contained in Article III
of this Agreement shall be true as of the date of this Agreement and as of the
time of Closing, except as would not individually or in the aggregate have a
material adverse effect on Purchaser’s ability to consummate the transactions
contemplated by this Agreement, and Purchaser shall have performed and complied
with all covenants and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing, except for noncompliance which
would not individually or in the aggregate have a material adverse effect on
Purchaser’s ability to consummate the transactions contemplated by this
Agreement.  The Sellers shall have been
furnished with a certificate, dated the Closing Date, of a duly authorized
officer of Purchaser to the foregoing effect.


 


7.2.                              Secretary’s Certificate. 
At the Closing, the Sellers shall have received copies of the following,
in each case certified as of the Closing Date by a Secretary or an Assistant
Secretary of Purchaser:


 


(a)                                  resolutions of the board of directors of
Purchaser’s authorizing the execution, delivery and performance of this
Agreement and the other agreements that Purchaser is required to execute and
deliver pursuant to the terms of this Agreement; and


 


(b)                                 the signature and incumbency of the
officers of Purchaser authorized to execute and deliver this Agreement and the
other agreements and certificates that Purchaser is required to deliver on or
before the Closing Date pursuant to this Agreement.


 


7.3.                              Consent, Authorizations, Etc. All necessary consents, authorizations,
licenses, certifications, permits and approvals from federal, state and local
governmental units for the transactions contemplated hereby, and for continued
operation of the Business as an ambulatory surgery center following the
consummation of the transactions contemplated hereby, shall have been issued to
the Company in form and substance reasonably satisfactory to Owners.


 


11

















 


7.4.                              No Action or Proceeding. No action or proceeding shall have been
brought or threatened before any court or administrative agency to prevent the
consummation of, or to seek damages in a material amount by reason of, the
transactions contemplated hereby, and no governmental authority shall have
asserted that these transactions constitute a violation of law or give rise to
liability on the part of Owners.


 


7.5.                              Good Standing Certificate. Purchaser shall have delivered to
Owners a good standing certificate issued with respect to Purchaser by the
Secretary of the State of Tennessee.  Such
good standing certificate shall be dated as of a date that is not more than 15
days prior to the Closing Date.


 


7.6.                              Membership Interest Purchase Agreement
Closing.  The “Closing” under the Membership Interest
Purchase Agreement shall have occurred.


 


7.7.                              Consulting Agreement. 
The Company shall have executed and delivered to Purchaser the
Consulting Agreement.


 


7.8.                              Purchase Price. 
The Sellers shall have received the Initial Purchase Price (less the AH
Escrow Amount) and the Escrow Agent shall have received the AH Escrow Amount.


 


7.9                                 Opinion of Counsel.  The
Sellers shall have received from counsel to Purchaser an opinion in form and
substance as set forth in Exhibit 7.9 attached to this Agreement,
addressed to the Sellers and dated as of the Closing Date.


 


7.10.                        Waiver of Conditions. 
Owners and the Company may waive any conditions of this Article VII
to the extent permitted by applicable law. 
Such waiver shall not affect Owners’ or the Company’s remedies under
this Agreement with respect to the waived condition, or otherwise.


 


VIII.  INDEMNIFICATION


 


The Parties acknowledge and agree that the provisions
of Article VIII of the MIPA shall govern and control all indemnification
for breaches of the reps, warranties, and covenants contained herein.  Except for remedies of injunctive and
provisional relief, if the Closing occurs, Article VIII of the MIPA shall
be the sole and exclusive remedy for breach of, or inaccuracy in, any
representation, warranty, or covenant contained herein, or otherwise in respect
of the transactions contemplated hereby.


 


IX.  TERMINATION


 


9.1.                              Termination
Events. This
Agreement may be terminated and the transaction abandoned at any time prior to
the Closing Date as follows:


 


(a)                                  By the mutual written consent of
Purchasers and the Owners;


 


(b)                                 By the Owners (acting together) or
Purchasers if the Closing has not occurred by August 31, 2005.


 


(c)                                  By Purchasers if there has been a
material violation or breach of any of the Sellers’ covenants contained in this
Agreement which has not been waived by Purchasers in writing;


 


12

















 


(d)                                 By the Owners, if there has been a
material violation or breach of any of the Purchaser’s covenants contained in
this Agreement which has not been waived by Owners in writing.


 


9.2.                              Notice of
Termination.  In the
event of such termination by either Purchaser or Owners pursuant to Section 9.1
hereof, written notice shall forthwith be given to the other party or parties
hereto.


 


9.3.                              Consequences of
Termination.  In the event
this Agreement is terminated as provided in Section 9.1 above, (a) Purchaser
shall deliver to Owners all documents (and copies thereof in its possession)
concerning the Company previously delivered by Owners or the Company to
Purchaser; and (b) none of the parties hereto nor any of their respective
shareholders, directors, officers, agents or consultants shall have any
liability to the other party for costs, expenses, loss of anticipated profits,
consequential damages or otherwise, except for any intentional breach of any of
the provisions of this Agreement.


 


X. 
MISCELLANEOUS


 


10.1.                        Schedules and Other
Instruments.  Each
Schedule and Exhibit to this Agreement shall be considered a part hereof
as if set forth herein in full.


 


10.2.                        Additional Assurances.  The provisions of this Agreement shall be
self-operative and shall not require further agreement by the Parties except as
may be herein specifically provided to the contrary; provided, however, at the
reasonable request and expense of a Party, the other Party or Parties shall
execute such additional instruments and take such additional actions as the
requesting Party may deem necessary to effectuate this Agreement.  In addition and from time to time after Closing,
Owners and the Company shall execute and deliver such other instruments of
conveyance and transfer, and take such other actions as Purchaser reasonably
may request, to effectively convey and transfer full right, title and interest
to, vest in, and place Purchaser in legal, equitable and actual possession of
the Management Rights.  Owners and the
Company shall also furnish Purchaser with such information and documents in
that Party’s possession or under that Party’s control, or which Owners and the
Company can execute or cause to be executed, as will enable Purchaser to
prosecute any and all petitions, applications, claims and demands relating to
or constituting a part of the Management Rights. Additionally, each Party
hereto shall cooperate with one another and use their respective reasonable efforts
to have their respective present directors, officers and employees cooperate
with one another on and after Closing in furnishing information, evidence,
testimony and other assistance in connection with any action, proceeding,
arrangement or dispute of any nature with respect to matters pertaining to all
periods prior to Closing in respect of the items subject to this Agreement,
provided that any Party hereto will reimburse the other Parties hereto for all
costs and expenses incurred by the other Parties hereto in connection
therewith.


 


10.3.                        Consented Assignment. 
Anything contained herein to the contrary notwithstanding, this
Agreement shall not constitute an agreement to assign any claim, right,
contract, license, lease, commitment, sales order or purchase order if an
attempted assignment thereof without the consent of the other Party thereto
would constitute a breach thereof or in any material way affect the rights of
Owners and the Company, as appropriate, thereunder, unless such consent is
obtained.  If such consent is not
obtained, or if an attempted assignment would be ineffective or would
materially affect the rights thereunder of Owners and the Company so that
Purchaser would not in fact receive all such rights, the Parties shall
cooperate in any reasonable arrangement designed to provide for the Parties the
benefits under any such claim, right, contract, license, lease, commitment,
sales order or purchase order, including, without limitation, enforcement of
any and all rights of Owners and the Company, against the other party or
parties thereto arising out of the breach or cancellation by such other party
or otherwise.


 


13

















 


10.4.                        Legal Fees and Costs.  In the event a Party elects to incur legal
expenses to enforce or interpret any provision of this Agreement by judicial
proceedings, the prevailing Party will be entitled to recover such legal
expenses, including, without limitation, reasonable attorney’s fees, costs and
necessary disbursements at all court levels, in addition to any other relief to
which such Party shall be entitled.


 


10.5.                        Choice of Law and Venue.  The Parties agree that this Agreement shall
be governed by and construed in accordance with the laws of the State of
California, without reference to its conflicts of law provisions. The Parties
hereto hereby designate all courts of record sitting in Los Angeles County,
California, both state and federal, as the exclusive forums where any action,
suit or proceeding in respect of or arising out of this Agreement, or the
transactions contemplated by this Agreement shall be prosecuted as to all
Parties, their successors and assigns, and by the foregoing designations the
Parties hereto consent to the exclusive jurisdiction and venue of such courts.


 


10.6.                        Benefit/Assignment.  Subject to provisions herein to the contrary,
this Agreement shall inure to the benefit of and be binding upon the Parties
hereto and their respective legal representatives, successors and assigns; provided,
however, that no Party may assign this Agreement without the prior
written consent of the other Party, which consent shall not be unreasonably
withheld; provided, further, however, that any Party may,
without the prior written consent of the other Party, assign its rights and
delegate its duties hereunder to one or more of its affiliates as long as such
assignment will not relieve the assigning Party of its obligations hereunder.
This Agreement is intended solely for the benefit of the Parties hereto and is
not intended to, and shall not, create any enforceable third party beneficiary
rights.


 


10.7.                        Cost of Transaction.  Except as otherwise provided herein, whether
or not the transactions contemplated hereby shall be consummated, the Parties
agree as follows:  (i) Owners and the
Company will pay the fees, expenses, and disbursements of Owners and the
Company and their agents, representatives, accountants, and counsel incurred in
connection with the subject matter hereof and any amendments hereto; and (ii) Purchaser
shall pay the fees, expenses and disbursements of Purchaser and its agents,
representatives, accountants and counsel incurred in connection with the
subject matter hereof and any amendments hereto.


 


10.8.                        Confidentiality.


 


(a)                                  The information, documents
and instruments delivered to Purchaser by Owners and the Company or their
agents and the information, documents and instruments delivered to Owners and
the Company by Purchaser or its respective agents are of a confidential and
proprietary nature.  Each of the Parties hereto
agrees that both prior and subsequent to the Closing it will maintain the
confidentiality of all such confidential information, documents or instruments
delivered to it by each of the other Parties hereto or their agents in
connection with the negotiation of this Agreement or in compliance with the
terms, conditions and covenants hereof and will only disclose such information,
documents and instruments to its duly authorized officers, directors,
representatives and agents.  Each of the
Parties hereto further agrees that if the transactions contemplated hereby are
not consummated, it will return all such documents and instruments and all
copies thereof in its possession to the other Party to this Agreement.  Each of the Parties hereto recognizes that any
breach of this Section would result in irreparable harm to the other
Parties to this Agreement and their affiliates and that therefore each of them
shall be entitled to an injunction to prohibit any such breach or anticipated
breach, without the necessity of posting a bond, cash or otherwise, in addition
to all of their other legal and equitable remedies.  Nothing in this Section 10.8, however,
shall prohibit the use of such confidential information, documents or
information for such governmental filings as in the reasonable opinion of
Owners’ counsel or Purchaser’s counsel are required by law or governmental
regulations, provided that reasonable notice is provided to the other Parties.


 


14

















 


(b)                                 The Parties hereto agree that the terms
and conditions of this Agreement, and all other agreements and instruments
executed and delivered by the respective Parties in connection with this
Agreement (the “Transaction Documents”) shall remain confidential.  Neither Purchaser nor Owners and the Company
nor their respective agents and representatives shall distribute the
Transaction Documents or any drafts thereof, or any part thereof, to any third
party unless required by law to do so or in connection with the required approvals
by the LLCs.


 


10.9.                        Public Announcements.  The Sellers agree that they shall not
release, publish or otherwise make available to the public in any manner
whatsoever any information or announcement regarding the transactions herein
contemplated without the prior written consent of the other Party, except for
information and filings reasonably necessary to be directed to governmental
agencies to fully and lawfully effect the transactions herein contemplated or
required in connection with securities and other laws.


 


10.10.                  Waiver of Breach.  The waiver by any Party of a breach or
violation of any provision of this Agreement shall not operate as, or be
construed to constitute, a waiver of any subsequent breach of the same or any
other provision hereof.


 


10.11.                  Notice.  Any notice, demand or communication required,
permitted, or desired to be given hereunder shall be deemed effectively given
upon receipt or refusal to accept receipt when delivered personally, upon
facsimile (if the sending facsimile machine prints confirmation of receipt by
the receiving machine and notice is given by other means permitted by this Section within
one business day thereafter) or the next Business Day when sent by overnight
courier, with delivery prepaid thereon and overnight delivery specified, or
five days after being deposited in the United States mail, with postage prepaid
thereon, or certified or registered mail, return receipt requested, addressed
as follows:


 


	
  Sellers:

  	
  To the addresses set forth on the signature page.

  
	
   

  	
   

  
	
  With a simultaneous

  	
  Sheppard, Mullin, Richter & Hampton LLP

  
	
  copy to:

  	
  333 South Hope Street, 48th Floor

  
	
   

  	
  Los Angeles, California 90071

  
	
   

  	
  Attention: Lawrence M. Braun

  
	
   

  	
   

  
	
  and to

  	
  Guth | Christopher LLP

  
	
   

  	
  10866 Wilshire Blvd, Suite 1250

  
	
   

  	
  Los Angeles, California 90024

  
	
   

  	
  Attention: Theodore E. Guth

  
	
   

  	
   

  
	
  Purchaser
  or SARC:

  	
  c/o
  Symbion, Inc.

  
	
   

  	
  40
  Burton Hills Boulevard, Suite 500

  
	
   

  	
  Nashville,
  Tennessee 37215

  
	
   

  	
  Attention:
  President

  
	
   

  	
   

  
	
  With a simultaneous

  	
  Waller Lansden Dortch & Davis, PLLC

  
	
  copy to:

  	
  511 Union Street, Suite 2700

  
	
   

  	
  Nashville, Tennessee 37219-1760

  
	
   

  	
  Attention:
  Joseph A. Sowell, III, Esq.

  



 


or
to such other address, and to the attention of such other person or officer as
any Party may designate, with copies thereof to the respective counsel thereof
as notified by such Party.


 


15

















 


10.12.                  Severability.  In the event any provision of this Agreement
is held to be invalid, illegal or unenforceable for any reason and in any
respect, such invalidity, illegality, or unenforceability shall in no event
affect, prejudice or disturb the validity of the remainder of this Agreement,
which shall be and remain in full force and effect, enforceable in accordance
with its terms.


 


10.13.                  Gender and Number.  Whenever the context of this Agreement
requires, the gender of all words herein shall include the masculine, feminine
and neuter, and the number of all words herein shall include the singular and
plural.


 


10.14.                  Divisions and Headings.  The divisions of this Agreement into sections
and subsections and the use of captions and headings in connection therewith
are solely for convenience and shall have no legal effect in construing the
provisions of this Agreement.


 


10.15.                  Survival.  All of the covenants and agreements made by
the Parties in this Agreement or pursuant hereto in any certificate, instrument
or document which are to be performed after closing shall survive the
consummation of the transactions described herein and shall not be deemed
merged into any instruments or agreements delivered at Closing or thereafter,
and no other covenants and agreements shall survive the Closing but shall be
deemed merge into any instruments or agreements delivered at Closing.


 


10.16.                  Entire Agreement/Amendment.  This Agreement supersedes all previous
contracts, and constitutes the entire agreement of whatsoever kind or nature
existing between or among the Parties respecting the within subject matter and
no Party shall be entitled to benefits other than those specified herein.  As between or among the Parties, no oral
statements or prior written material not specifically incorporated herein shall
be of any force and effect.  The Parties
specifically acknowledge that in entering into and executing this Agreement,
the Parties rely solely upon the representations and agreements contained in
this Agreement and no others.  All prior
representations or agreements, whether written or verbal, not expressly
incorporated herein are superseded and no changes in or additions to this
Agreement shall be recognized unless and until made in writing and signed by
all Parties hereto.  This Agreement may
be executed in two or more counterparts, each and all of which shall be deemed
an original and all of which together shall constitute but one and the same
instrument.


 


10.17.                  Waiver of Jury Trial.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHTS IT MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE
RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY.  THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO
DEMAND A TRIAL BY JURY ARISING FROM ANY SOURCE INCLUDING, BUT NOT LIMITED TO,
THE CONSTITUTION OF THE UNITED STATES OR ANY STATE THEREIN, COMMON LAW OR ANY
APPLICABLE STATUTE OR REGULATIONS.  EACH
PARTY HERETO ACKNOWLEDGES THAT IS KNOWINGLY AND VOLUNTARILY WAIVING ITS RIGHTS
TO DEMAND TRIAL BY JURY.


 


10.18.                  Tax Advice and Reliance.  Except as expressly provided in this
Agreement, none of the Parties (nor any of the Parties’ respective counsel,
accountants or other representatives) has made or is making any representations
to any other Party (or to any other Party’s counsel, accountants or other
representatives) concerning the consequences of the transactions contemplated
hereby under applicable tax laws. Each Party has relied solely upon the tax
advice of its own employees or of representatives engaged by such Party and not
on any such advice provided by any other Party hereto.


 


10.19.                  No Rescission.  No Party shall be entitled to rescind the
transactions contemplated hereby by virtue of any failure of any Party’s
representations and warranties herein to have been true or any failure by any
Party to perform its obligations hereunder.


 


16

















 


10.20.                  Counterparts.  This Agreement may be executed in multiple
counterparts (including by means of telecopied signature pages), any one of
which need not contain the signatures of more than one Party, each of which
shall be enforceable against the Parties executing such counterparts, and all
of which together shall constitute one instrument.


 


IN WITNESS WHEREOF,
the parties hereto have duly executed this Agreement as of the day and year
first above written.


 


	
   

  	
  PARTHENON MANAGEMENT PARTNERS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Randhir S. Tuli

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Andrew A. Brooks, M.D.

  
	
   

  	
  Andrew A. Brooks, M.D.

  
	
   

  	
   

  
	
   

  	
  14159 Beresford Dr.

  
	
   

  	
  Beverly Hills, California 90210

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for Notices

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Randhir S. Tuli

  
	
   

  	
  Randhir S. Tuli

  
	
   

  	
   

  
	
   

  	
  19248 Allandale Dr.

  
	
   

  	
  Tarzana, California 91356

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for Notices

  
	
   

  	
   

  
	
   

  	
  SYMBIONARC MANAGEMENT SERVICES,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ William Webb

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Chief Development Officer and Senior Vice President

  



 


The undersigned joins herein solely for the purposes
of Article VIII hereof.


 


SYMBION AMBULATORY RESOURCE CENTRES, INC.


 


	
  By:

  	
  /s/ William Webb

  	
   

  
	
   

  	
   

  	
   

  
	
  Name: 

  	
  William Webb

  	
   

  
	
   

  	
   

  	
   

  
	
  Title: 

  	
  Chief Development Officer and
  Senior Vice President 

  	
   

  



 


17

















 


EXHIBIT 1.2


 


Form of Management Agreement


 


(Attached as Exhibit 6.9A to
the Purchase Agreement)


 
















 


EXHIBIT 6.9A


 


FORM OF
MANAGEMENT AGREEMENT


 


THIS MANAGEMENT AGREEMENT
(this “Agreement”) is made and entered into as of the
         day of
                          ,
2005, by and between SYMBIONARC MANAGEMENT
SERVICES, INC., a Tennessee corporation (the “Manager”), and [[1]],
a California limited liability company (the “Owner”).


 


RECITALS:


 


WHEREAS, Owner owns and operates, directly or
through a partnership of which it is the general partner, the ambulatory
surgery center(s) located at the address identified on Schedule A
hereto (the “Center”).


 


WHEREAS, the Manager has certain expertise in
the management of ambulatory surgery centers; and


 


WHEREAS, the Owner and Manager each desire
that the Owner engage the Manager to assist with the management of the Center
and to provide certain non-medical services to the Center, pursuant to the
terms of this Agreement.


 


NOW, THEREFORE, in consideration of the
foregoing premises, which are hereby incorporated into this Agreement as an
integral part hereof and not as mere recitals hereto, and of the promises and
mutual covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:


 


I.                                         GENERAL


 


1.1.                              As
of the Effective Date, as defined in Section 2.1 below, the Owner hereby
retains the Manager as the sole and exclusive manager of the Center, for the
purpose of rendering management, administration and purchasing services and
support, and other management support needed for the operation of the Center on
the basis hereafter set forth, subject to the written policies established by
the Owner, which policies shall be consistent with applicable state and federal
law, and subject to the terms, conditions, authorizations and limitations set
forth in this Agreement.


 


1.2.                              The
Manager shall perform all of the services described in Article III and Article IV
hereof for the account of and as agent of the Owner. All such services shall be
rendered using the Manager’s commercially reasonable efforts and subject to the
control of the Owner, which shall have final authority in all matters relating
to the Center’s operations.


 


1.3.                              For
the term hereof, the Owner hereby irrevocably appoints the Manager to be the
Owner’s attorney-in-fact with full power on the Owner’s behalf and in its name,
or in the name of the Center, to enter into any and all contracts relating to
the affairs of the Center so long as such contracts are not with affiliates of
Manager, unless otherwise permitted under that certain Amended and Restated
Operating Agreement of the Owner, effective as of the date hereof. The Manager
may incur, in the name of the Owner or Center, any obligation for repairs,
equipment, additions or betterments to the Center, as the Manager reasonably
deems necessary. The Owner agrees to execute a limited power of attorney and/or
any other instrument reasonably requested by the Manager to evidence such
appointment.


 

















 


1.4                                 The
Owner operates a licensed surgical facility and shall have all authority to act
in accordance with applicable law. The Manager shall have no authority
whatsoever with respect to the actual rendition of surgical and/or other
medical and professional services at the Center.


 


1.5.                              The
parties hereby acknowledge and agree that no benefits to the parties hereunder
require or are in any way contingent upon the admission, recommendation,
referral or any other arrangement for the provision of any item or service
offered by the Owner or any of its affiliates, to any patients of the Center,
or the Owner’s employees or agents. The Manager shall neither have nor exercise
any control or direction over the number, type, or recipient of patient
referrals made by physicians, and nothing in this Agreement shall be construed
as directing or influencing such referrals. None of the Manager’s activities
contemplated under this Agreement or otherwise shall constitute obligations of
the Manager to generate patient flow or business to the Center. Further, there
is absolutely no intent for the Manager in any manner to be compensated to
generate patients for the Center. Rather, the Owner has engaged the Manager to
manage the business aspects of the Center in order to enable the Owner to focus
on delivering the highest quality of patient care.


 


II.                                     TERM
AND TERMINATION


 


2.1.                              The
term of this Agreement shall commence as of the date first above written (the “Effective
Date”), and unless this Agreement is earlier terminated pursuant to the
provisions hereof, shall continue for a term of the greater of: (i) fifteen
(15) years, (ii) until any loans made by the Manager or an affiliate of
the Manager to the Owner have been paid, or (iii) until any liability of
the Manager or an affiliate of the Manager for any debt or obligation of the
Owner has been released. This Agreement shall automatically renew for two (2) additional
terms of five (5) years each, unless one party gives the other party one
hundred eighty (180) days’ prior written notice of termination before the
expiration of the then- current term. Nothing herein shall require the Manager
or any affiliate of the Manager to loan money to the Owner or otherwise become
liable for any debt or obligation of the Owner.


 


2.2.                              The
Owner shall have the right to terminate this Agreement upon the Manager’s
material breach of this Agreement. In the event termination is for an alleged
material breach by the Manager, the Owner shall provide the Manager written
notice of such material breach. Such notice shall describe in reasonable detail
the basis upon which the Owner believes such termination is justified and a
suggested method for curing such breach. Upon receipt of such notice, the
Manager shall have sixty (60) days during which to attempt to cure the material
breach under this Agreement, and upon such cure being effected, the Owner’s
right to terminate shall cease and this Agreement will continue in full force
and effect. Furthermore, if upon expiration of such cure period the Manager is
still diligently pursuing effectuation of such cure, or if the Manager has
diligently attempted to effect such a cure within such cure period but cannot
complete such cure because of the failure of a third party (such as a
governmental agency) to act within such period, then the Manager shall have a
reasonable time (not to exceed in any event an additional 180 days) beyond such
cure period to complete its cure of the alleged basis for the Owner’s election
to terminate. Failure of the Owner to deliver a notice of termination of breach
pursuant to this Section 2.2 shall not relieve the Manager of any
liability on account of the breach.


 


2.3.                              The
Manager shall have the right to terminate this Agreement upon the Owner’s
material breach of this Agreement. In the event termination is for an alleged
material breach by the Owner, the Manager shall provide the Owner written
notice of such alleged material breach. Such notice shall describe in detail
the basis upon which the Manager believes such termination is justified and a
suggested method for curing such breach. Upon receipt of such notice, the Owner
shall have the applicable cure period listed below during which to attempt to
cure any alleged default under this Agreement, and upon such cure being
effected, the Manager’s right to terminate shall cease and this Agreement will
continue in full force and effect. The cure periods for a breach of this
Agreement shall be as follows: (i) ten (10) days for the 


 


2

















 


failure of the Owner to pay money hereunder, (ii) thirty
(30) days in the event that the Owner’s breach materially and adversely affects
patient safety and quality of care, and (iii) ninety (90) days for all
other breaches. Furthermore, if upon expiration of the applicable cure period
the Owner is still diligently pursuing effectuation of such cure, or if the
Owner has diligently attempted to effect such a cure within such cure period
but cannot complete such cure because of the failure of a third party (such as
a governmental agency) to act within such period, then the Owner shall have a
reasonable time beyond such cure period to complete its cure of the alleged
basis for the Manager’s election to terminate; provided, however, that this
extension of the applicable cure period shall only apply with respect to the
breaches described in items (ii) and (iii) directly above.
Notwithstanding the foregoing, the Manager shall have the right to suspend the
provision of services under this Agreement in the event that the Owner fails to
pay any of the compensation payable pursuant to Article V as and when due.
The Manager shall also have the right to terminate this Agreement by giving
written notice to the Owner if: (w) the Owner is suspended or prohibited
from participating in the Medicare or Medicaid programs or is excluded from
entering into health care provider agreements with any material portion of the
managed care or health care insurance industry and such suspension, prohibition
or exclusion is not rescinded within thirty (30) days following the
commencement thereof, (x) the Owner allows any physician to be or remain
on the Center’s medical staff who does not comply or no longer complies with
the requirements for membership on such medical staff, (y) the Owner
dissolves or liquidates, or (z) the Owner fails to pay any money owed
under any other arrangement between the Manager and Owner or between the Owner
and any third party.


 


2.4.                             If
either party shall appoint or consent to the appointment of a receiver, trustee
or liquidator of such party or of all or a substantial part of its assets, file
a voluntary petition in bankruptcy, make a general assignment for the benefit
of creditors, file a petition seeking reorganization or arrangements with
creditors or to take advantage of any insolvency law, or if an order, judgment
or decree shall be entered by any court of competent jurisdiction, on the
application of a creditor, adjudicating such party bankrupt or insolvent, and
such order, judgment or decree shall continue unstayed and in effect for any
period of ninety (90) days, then, in case of any such event, the term of this
Agreement shall terminate, at the option of the other party, upon written
notice to the first party.


 


2.5.                             Upon
termination of this Agreement, the Owner shall owe to the Manager the full
amount of any fees owing pursuant to the terms hereof, up through and including
the date of termination, and any sums of money owed by the Owner to the Manager
shall be paid immediately, prorated through the termination date. Upon
termination hereof, the Manager’s obligations to perform services hereunder shall
completely cease; provided, however, that the Owner and Manager shall perform
such matters as are necessary to wind up their activities under this Agreement
in an orderly manner. Each party shall have the right to pursue legal or
equitable relief, as may be available depending upon the circumstances of the
termination.


 


III.                                 MANAGEMENT
SERVICES


 


3.1.                             Subject
to the provisions of this Agreement, the Manager shall during the term hereof
provide the following services and assistance to the Owner in connection with
the operation of the Center:


 


(a)           Assisting
the Owner to maintain the accreditation of the Center (if the Center is
accredited) with the proper agencies and insurance companies, including JCAHO
or AAAHC;


 


(b)           Hiring
and providing certain non-physician personnel to perform services at the
Center, including the administrator of the Center, all as further described
below in Section 3.2;


 


(c)           Negotiating
reimbursement and fee payment methods, in coordination with the Owner, with the
appropriate third party payors and state and federal agencies;


 


3

















 


(d)           Establishing
staffing schedules, wage structures and personnel policies for all
non-physician personnel;


 


(e)           Recommending
to the Owner patient charges for services provided by the Center;


 


(f)            Assisting
Owner in developing operating policies and procedures, and providing standard
operating manuals for operating and procedure rooms, provided Owner shall have
final authority to adopt and implement same;


 


(g)           Providing
standard formats for all charts, invoices, and other forms used in the
operation of the Center;


 


(h)           Assisting
the Owner in the Owner’s purchase, lease or disposition of all supplies and
equipment including information systems hardware and software used in the
operation of the Center;


 


(i)            Directing
the day-to-day non-medical operations of the Center to ensure the operations
are conducted in a businesslike manner;


 


(j)            Performing
all non-medical oversight responsibilities for the Owner;


 


(k)           Assisting
the Owner in the Owner’s negotiation or retention of contractual relationships
for anesthesia services, radiology services, and pathology services, as
appropriate; and


 


(l)            Assisting
the Center to operate in compliance with all laws and assisting the Center and
Owner to develop a comprehensive compliance policy and implement same.


 


3.2.                             The
Manager shall furnish to the Owner the services of all personnel reasonably
necessary for the effective operation of the Center, other than: (i) physicians
and (ii) any and all allied health professionals determined by the Manager
and the Owner to be most properly employed or contracted by the Owner for
purposes of payor requirements or applicable provisions of law. Consistent with
applicable laws, the Manager shall make all hiring, retention, and termination
decisions, determine compensation and staffing levels, individual work hours,
personnel policies, employee benefit programs, and the terms, conditions,
obligations and privileges of employment or retention for all personnel who are
employed or retained by the Manager and who provide services to the Owner. With
respect to any and all clinical personnel (meaning the personnel referenced in
items (i) and (ii) above) (collectively the “Clinical Personnel”)
providing services to, through or on behalf of the Owner, the Owner shall make
all hiring, retention, and termination decisions, determine compensation and
staffing levels, individual work hours, personnel policies, employee benefit
programs, and the terms, conditions, obligations and privileges of employment
or retention of such Clinical Personnel. Furthermore, the Owner shall have the
right and obligation to direct and supervise the delivery of clinical
assistance (if any) by any personnel furnished by the Manager. To the extent
(if any) that an employee of the Manager assists any Clinical Personnel in
performing clinical functions, such employee of the Manager shall be subject to
the professional direction and supervision of such Clinical Personnel with
respect to such assistance only, and in his or her performance of such clinical
functions, shall not be subject to any direction or control by the Manager,
except as may be specifically authorized by the Owner. However, the preceding
sentence does not in any way create an employment relationship between the
Owner and the Manager’s employee and does not in any way modify the employment
relationship between the Manager and such employee. The Owner shall be solely
responsible for the payment of its Clinical Personnel’s compensation and
benefits (if any), any applicable payroll taxes and all other taxes and charges
now or hereafter applicable to them.


 


4

















 


IV.                                ACCOUNTING
AND BOOKKEEPING SERVICES


 


4.1.                             The
Manager agrees to perform the following accounting and bookkeeping services for
the Owner in the operation of the Center:


 


(a)           Receive
for and deposit in a bank account (the “Center Account”) as directed by the
Owner, separate from any monies of the Manager, all funds received from the
operation of the Center and supervise the disbursement of such funds for the
operation of the Center. The Center Account shall be in the Owner’s name and
sole custody without the Manager having the right to draft checks on such
account. The Owner and Manager will ensure that the Center Account is managed
in accordance with applicable law regarding the assignment and reassignment of
Medicare accounts receivable. In addition, the Manager, through its on-site
billing personnel, shall prepare bills for the Owner, with all billing in the
name of and on behalf of the Owner;


 


(b)           Maintain
the books of account, including all journals and ledgers, check register and
payroll records;


 


(c)           Post
all patient and other charges, including necessary analysis and corrections;


 


(d)           Establish
billing, receivables, credit and collection policies and procedures and oversee
such activity;


 


(e)           Process
vendors’ invoices and other accounts payable; prepare cheeks for such payables
and obtain the signature of the Owner’s authorized representatives;


 


(f)            Prepare
or contract for processing payroll checks from time sheet summaries prepared
under the Manager’s supervision including applicable tax deposits;


 


(g)           Contract
for preparation of the Owner’s tax returns provided that the fees paid to
independent accountants will be the responsibility of the Owner;


 


(h)           Prepare
monthly bank reconciliations;


 


(i)            Prepare
monthly and annual financial statements, including without limitation,
unaudited balance sheet, profit and loss statements and statement of cash flow,
the format of which shall be compatible with the information systems of the
Owner;


 


(j)            Conduct
meetings, no less than quarterly, or as otherwise necessary with the Owner’s
personnel, either telephonically or on-site as required; and


 


(k)           Respond
to patient complaints.


 


V.                                    FEE
FOR SERVICES


 


5.1.                             Commencing
upon the Effective Date of this Agreement, for each month during which the
Manager renders services in accordance herewith, the Owner shall pay the
Manager for such services a fee of [      ]
percent ([      ]%) [Note: for
Irvine, Arcadia and AH/TO, this will be: “a fee equal to the greater of (a) *
percent (*%) of Net Revenues (as hereinafter defined), and (b) $*; for
Beverly Hills it’s *%; for Encino it’s *%] of Net Revenues (as
hereinafter defined), payable monthly (the “Accrued Fee”); provided, however,
for purposes of the monthly payment of fees under this Article V, in no
event will actual fees paid to Manager in any month exceed
[      ] percent
([      ]%) [Note, this 


 


5

















 


will be identical to the percentage used
above.] of actual cash receipts in such month (the “Cash
Payment”). In addition, upon termination of this Agreement, Owner shall pay
Manager an amount equal to the difference between the Accrued Fees less the
Cash Payment calculated over the term of this Agreement. “Net Revenues” shall
mean all of the gross revenues of the Owner calculated in accordance with GAAP
(as hereinafter defined), less contractual adjustments and bad debt
adjustments. “GAAP” means United States generally accepted accounting
principles and practices as in effect from time to time, applied consistently
by the Owner throughout the periods involved. A partial month will be prorated
based on a thirty (30) day period. On or before the tenth (10th) day of each
calendar month, the Owner shall deliver to the Manager the fee owed for the
immediately preceding calendar month. In the event of the termination or
expiration of this Agreement, the Manager shall be paid all earned and accrued
compensation provided for hereunder. Notwithstanding the foregoing, contractual
adjustments and had debt allowance shall be evaluated no less than monthly
based on actual experience to be applied to the current period with respect to
determining Manager’s fee.


 


5.2.                              The
Manager shall be reimbursed on a monthly basis for its direct expenses
reasonably incurred for the benefit of Owner in connection with the management
of the Center (it being agreed that where such expenses are also attributable
to other operations of the Manager unrelated to the Owner or the Center, they
shall be allocated among all such operations in a reasonable manner), including
(i) legal fees, consulting, and other professional fees incurred on behalf
of the Owner, (ii) the cost of all of the Manager’s personnel who are on
site at the Center and furnish day to day services to the Owner, (iii) the
cost of the Manager’s personnel who are not onsite, not regularly assigned to
provide services to the Owner and who provide specialized services (e.g.
off-site billing and coding consulting) to the Owner, and (iv) fees
related to monthly closing processes and reporting services provided to the
Owner by Manager’s Nashville-based closing team, and (v) other direct expenses
incurred on behalf of the Owner; including any of Manager’s out-of-pocket
expenses of Manager’s personnel who provide services of benefit to the Owner
but who are not on-site at the Center full-time incurred in connection with its
management of the Center, such as, without limitation, travel expenses such as
transportation, meals, hotels, Manager’s entertainment expenses (not salary)
related to Manager’s in-market personnel who are performing services for
purposes of developing the Center, etc. Subject to the applicable provisions
above, reimbursement shall not include salary and benefits of Manager’s
visiting personnel assigned to oversee the Center’s operations. Any
reimbursable expenses and unpaid fees due to matters outside the control of
Manager or its affiliate (e.g., financial or operating results, payor problems,
reimbursement rates, etc.) shall accrue interest at the lesser of eight (8%)
percent per annum or the highest rate allowed by law.


 


5.3.                              Owner
acknowledges that, pursuant to a Consulting Agreement, of even date herewith
(the “Consulting Agreement”) among Manager and the prior “Managing Members” of
the Owner (the “Consultants”), the Consultants are entitled to receive a
portion of the fees described under Section 5.1 as consideration for
certain services performed by the Consultants for the benefit of the Owner and
the Center, under the terms and conditions set forth in the Consulting
Agreement. At the request of the Manager (revocable at any time), Owner shall
remit directly to the Consultants that portion of the fees under Section 5.1
to which the Consultants are entitled (as calculated by the Manager) pursuant
to the Consulting Agreement, and the fees payable to the Manager shall be
reduced by the amount paid directly to the Consultants. In no event shall Owner
be required to pay in excess of the amount set forth in Section 5.1.


 


VI.                                INSURANCE


 


6.1.                              During
the term of this Agreement, the Owner and the Manager shall, at the Owner’s
sole cost and expense, obtain and maintain with commercial carriers reasonably
acceptable to the Manager (the Owner’s carriers are hereby deemed acceptable to
Manager) the following insurance coverage:


 


6

















 


(a)           appropriate
workers’ compensation coverage for all personnel who are working at the Center
and who are employed by either the Owner or the Manager; and


 


(b)           professional,
casualty and comprehensive general liability insurance covering the Owner and
personnel working at the Center in such amounts, on such basis and upon such
terms and conditions as the Owner and the Manager deem appropriate; and


 


(c)           casualty
and comprehensive general liability insurance which shall insure against loss
of or physical damage to the Center and the furniture, fixtures and equipment
therein, under standard all-risk coverage (including but not limited to fire,
smoke, lightening, wind storm, explosion, vehicle damage, riot, civil
commotion, vandalism and malicious mischief) and shall also include damage due
to flood and earthquake unless waived by the Manager.


 


6.2.                             The
Manager shall be named an additional insured under all insurance policies
procured by the Owner hereunder. The right of the Manager to invoke the
protection of such policies shall be severable from and independent of the
Owner’s rights, and these policies shall not be terminable or non-renewable
except upon thirty (30) days’ written notice to the Manager. No later than
thirty (30) days following the execution of this Agreement and thirty (30) days
following the end of each policy year, the Owner shall give to the Manager a
copy of the endorsements naming the Manager an additional insured. Such
insurance policies shall contain endorsements which reflect the primary
liability of the Owner’s insurance carrier for all covered losses provided for
herein, notwithstanding any insurance which may be maintained by the Manager or
any affiliate of the Manager. The Owner hereby waives any right of contribution
with respect to the loss covered under such policies (or with respect to deductibles
thereunder) against the Manager or any of the Manager’s insurance carriers.


 


VII.                            DUTIES
AND RESPONSIBILITIES OF THE OWNER


 


7.1.                             The
Owner shall operate the Center on a full-time basis and, in conjunction with
the medical staff, shall be responsible for the medical care of the patients of
the Center and shall provide professional medical services to such patients in
a manner that is in accordance with the prevailing standards and practices in
the community and in compliance with all applicable laws and regulations. The
Owner shall establish clinical standards and oversee the performance of such
standards.


 


7.2.                             The
Owner shall admit physicians (the “Medical Staff Physicians”) to the medical
staff of the Center to render the surgical and other medical services at the
Center. The Owner shall ensure that each such Medical Staff Physician shall
maintain: (i) an unrestricted license to practice medicine in the State of
California, (ii) good standing with the medical board of the State of
California, (iii) a Federal Drug Enforcement Administration certificate, (iv) a
State of California controlled dangerous substance certificate without
restrictions, (v) such hospital medical staff memberships and clinical
privileges appropriate to his or her specialty, as determined by the Owner and
sufficient to meet the requirements of payors, (vi) his or her skills
through continuing education and training, (vii) professional liability
insurance for his or her specialty in such amounts as agreed upon by the
Manager and the Owner from time to time, and (viii) such other
requirements as are reasonably requested by the Center of its medical staff.


 


7.3.                             The
Owner, with the assistance of the Manager, may recruit members to the medical
staff of the Center and will carry out such administrative functions as may be
appropriate for such recruitment, including advertising for and identifying
potential candidates, examining and investigating the credentials of such
potential candidates, arranging interviews with such potential candidates, and
interviewing and making the ultimate decision as to whether to admit such
individual to the medical staff of the Center. Any expenses incurred in the
recruitment of medical staff to the Center shall be expenses of the Owner.


 


7

















 


7.4.                              The
Owner shall ensure that at all times during the term, each Medical Staff
Physician complies with the bylaws of the medical staff and the rules and
regulations of the Center. The rendition of all medical services and the
supervision of all personnel rendering medical services at the Center shall be
the sole and exclusive responsibility of the Owner, acting in conjunction with
the Medical Staff Physicians.


 


7.5.                              Subject
to compliance with confidentiality and other applicable laws, if any
disciplinary actions or professional liability actions are initiated against
any Medical Staff Physician or any physician extender or other personnel of the
Center, the Owner shall promptly inform the Manager of such action and the underlying
facts and circumstances after the Owner becomes aware thereof.


 


7.6.                              The
Owner, with the assistance of Manager, shall comply with any and all federal,
state and local statutes, regulations, rules, orders or other requirements that
the Owner is responsible for undertaking which affect the Center and/or its
operations, including without limitation the Center’s billing, coding and
collection practices and systems. The Owner, with the assistance of Manager,
shall obtain and maintain all licenses and accreditations as are necessary for
the provision of medical and health care services and the operation of an
ambulatory surgery center.


 


7.7.                              With
respect to legal compliance issues, the Owner understands and agrees that the
Owner shall be solely responsible for complying with, and ensuring its
compliance with, all applicable federal and state laws, rules and
regulations, including without limitation, all Medicare, Medicaid, billing and
coding laws, rules and regulations related to the obligations of Owner hereunder.
Manager shall be responsible for complying with, and ensuring the Center’s
compliance with, all applicable federal and state laws, rules and
regulations with respect to those actions Manager is solely responsible for
undertaking pursuant to this Agreement. Although the Owner may consult with the
Manager regarding compliance issues, the parties hereby explicitly acknowledge
and agree that it shall be the Owner’s sole responsibility to comply with, and
to determine whether the Owner and the Center are in compliance with, any
applicable Medicare or Medicaid laws, rules or regulations or any other
applicable federal or state laws, rules or regulations.


 


7.8.                              The
Owner shall ensure that the Medical Staff Physicians participate in various
aspects of the managed care arrangements of the Center as required by the
applicable payor contracts. The professional services provided by the Center
and the medical staff shall at all times be provided in accordance with
applicable standards, laws and regulations applying to the medical profession.
The Center and the medical staff shall comply with all payor contracts.
Notwithstanding the foregoing, no physician shall be required to become a party
to any payor contract.


 


VIII.                        INDEPENDENT
CONTRACTOR STATUS


 


Notwithstanding any provision contained
herein to the contrary, each of the Owner and the Manager understand and agree
that the parties hereto intend to act and perform as independent contractors
and that therefore neither the Owner nor the Manager is an employee, partner,
joint venturer, or agent of the other. Nothing in this Agreement shall be
construed as placing the parties in a relationship of employer-employee,
partners, joint venturers, or principal-agent. Neither party shall have the
right to make any promises, warranties or representations, or to assume or
create any obligations, on behalf of the other party, except as otherwise
expressly provided herein. The Owner and Manager agree to be solely and
entirely responsible for their respective acts and for the acts of any of its
employees and agents.


 


IX.                                CONFIDENTIAL
INFORMATION


 


9.1.                              For
the purpose of this Agreement, the term “Manager Confidential Information”
shall include the following: (a) all documents and other materials
primarily developed by the Manager, including but 


 


8

















 


not limited to, all memoranda, clinical
manuals, handbooks, production books, educational material and audio or visual
recordings primarily developed by the Manager which contain information
relating to the Operation of the Center or its programs (excluding written
materials distributed to patients in the operation of the Center as promotion
for the Center), (b) all methods, techniques and procedures primarily
developed by the Manager which are utilized in providing services to patients
in the Center and are not readily available through sources in the public
domain and (c) all trademarks, trade names, service marks, or protected
software of the Manager and their related data files. Additionally, the
specific items listed on Schedule 13 hereto, shall be Manager Confidential
Information. For purposes of this Agreement, the term “Owner Confidential
information” shall include the following: (i) financial information of the
Owner or the Center, (ii) medical records of patients receiving services
at the Center, (iii) data relating to patient care and outcomes (whether
individually identifiable with respect to any one patient or aggregated with
information relating to multiple patients), (iv) risk management records,
and (v) such other information that specifically pertains to the Owner and
is proprietary to the Owner. Notwithstanding anything herein to the contrary,
unless otherwise specified under applicable law, the Owner shall be deemed the
records owner for purposes of California law of all patient records at the
Center. The confidentiality of patient records is governed by the Health
Insurance Portability and Accountability Act (“HIPAA”) and the Business
Associate Agreement discussed in Section 11.2. To the extent of any
conflict between any of this Article IX, Section 11.2 and the
Business Associate Agreement, Section 11.2 shall control, then the
Business Associate Agreement, then this Article IX.


 


9.2.                              The
Owner acknowledges and agrees that the Manager Confidential Information is
owned by the Manager and has been disclosed to it in confidence and with the
understanding that it constitutes valuable business information developed by
the Manager at great expenditure of time, effort and money. The Owner agrees
that it shall not, without the express prior written consent of the Manager,
use the Manager Confidential information for any purpose other than the
performance or enforcement of this Agreement or the operation of the Center nor
allow anyone access to such except on a need to know basis. The Owner further
agrees to keep strictly confidential and hold in trust all Manager Confidential
Information and not disclose or reveal such information to any third party
without the express prior consent of the Manager or in connection with
enforcement of this Agreement. The Manager agrees that the Owner shall have a
non-exclusive, royalty-free right to use the Manager Confidential Information,
subject to the foregoing restrictions, during the term of this Agreement and
for up to twelve months (12) after the expiration or termination of this
Agreement as is reasonably needed to maintain patient quality standard until
such time as replacement materials that do not constitute Manager Confidential
Information may be created and implemented.


 


9.3.                              The
Manager acknowledges and agrees that the Owner Confidential Information is
owned by the Owner and has been disclosed to it in confidence and with the
understanding that it constitutes valuable business information developed by
the Owner at great expenditure of time, effort and money. The Manager agrees
that it shall not, without the express prior written consent of the Owner, use
the Owner Confidential Information for any purpose other than the performance
of this Agreement or the operation of the Center nor allow anyone access to
such except on a need to know basis. The Manager further agrees to keep
strictly confidential and hold in trust all Owner Confidential Information and
not disclose or reveal such information to any third party (other than the
affiliates of the Manager) without the express prior written consent of the
Owner or in connection with enforcement of this Agreement. In connection with
the foregoing, the Manager shall ensure that its affiliates also maintain the
confidentiality of the Owner Confidential Information in accordance with the
terms hereof.


 


9.4.                              If
the Owner or the Manager or any of their respective representatives are
requested by a person or entity to disclose the Manager Confidential Information
or the Owner Confidential Information, respectively, in any legal, quasi-legal
or administrative proceeding, the Owner or the Manager shall promptly notify
the other party of such request so that the other party may take, at its
expense, such steps


 


9
















 


necessary to protect the Manager Confidential
Information or Owner Confidential Information, as applicable. If the Owner or
the Manager is thereafter required to disclose the Manager Confidential
Information or the Owner Confidential Information, as applicable, to the person
or entity compelling such disclosure only the part of such information as is
required by law to be disclosed shall be disclosed.


 


9.5.          Upon
termination of this Agreement by either party for any reason whatsoever, each
party shall forthwith return to the other party all material constituting or
containing Confidential Information of the other party, in a format that is
usable or capable of conversion by such other party to a usable format, and no
party thereafter shall use, appropriate, or reproduce such information or
disclose such information to any third party, provided, however, Manager agrees
to cooperate with Owner and the Center, after termination, in the transition to
different management of the Center. All costs of converting Confidential
Information to a format useable by the recipient shall be borne by the
recipient.


 


9.6.          The
Manager and Owner shall each have the right to use any technical or business
expertise obtained during the course of its engagement hereunder in connection
with its management of any other facility.


 


X.            NOTICES


 


Any notice, demand or communication required,
permitted, or desired to be given hereunder shall be deemed effectively given
upon receipt or refusal to accept receipt when delivered personally, by facsimile
or other electronic means or overnight courier, or five (5) days after
being deposited in the United States mail, with postage prepaid thereon, or
certified or registered mail, return receipt requested, addressed as follows:


 


	
   

  	
  The Owner:

  	
  [[1]]

  
	
   

  	
   

  	
  [[2]]

  
	
   

  	
   

  	
  Attn.: President/Chief Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  The Manager:

  	
  SymbionARC Management Services, Inc.

  
	
   

  	
   

  	
  40 Burton Hills Blvd., Suite 500

  
	
   

  	
   

  	
  Nashville, Tennessee 37215

  
	
   

  	
   

  	
  Attn.: President

  



 


or to such other address, and to the
attention of such other person or officer as any party may designate, with
copies thereof to the respective counsel thereof as notified by such party.


 


XI.           COMPLIANCE PROGRAM/HIPAA


 


11.1.        The
Owner acknowledges that the Manager has implemented a compliance program for
its employed staff, and the Owner agrees to refrain from any activities that
could in any way cause the Manager’s staff to act in a manner that is
inconsistent with such compliance program. Specifically, but without
limitation, the Owner agrees to abide by Medicare and Medicaid billing and
coding requirements, including proper documentation of services, and the Owner
agrees to adopt by-laws for its medical staff which will prohibit the medical
staff from engaging in any activities that could in any way cause the Manager’s
staff to act in a manner that is inconsistent with such compliance program.
Prohibitions contained in the by-laws shall include an adequate remedy for
breach thereof by any member of the medical staff. The Owner will at all times
cooperate with and assist the Manager’s staff in submitting complete and proper
bills on behalf of the Owner. The Manager may, but is not obligated to,
recommend from time to time that the Owner take certain actions that the
Manager deems necessary to comply with applicable laws and regulations, and the
Owner will promptly cooperate with the Manager in determining 


 


10

















 


whether such actions are appropriate and
necessary. The Manager may terminate this Agreement in accordance with Article II
upon its reasonable determination that the Owner’s failure to take the
recommended action could cause the Manager to be in violation of its compliance
program or in violation of applicable laws or regulations. Furthermore, the
Manager shall not be deemed in breach of this Agreement if it prohibits its
staff from taking any actions that it reasonably deems to be in violation of
its compliance program or in violation of applicable laws or regulations.


 


11.2.        The
Owner acknowledges as part of Manager’s compliance program Manager shall be
implementing policies and procedures to comply with the Health Insurance
Portability and Accountability Act (“HIPAA”). Both parties agree to abide by
HIPAA, its regulations and the policies implemented by Manager as well as any
other applicable federal, state, or local privacy or patient confidentiality
laws, and the Manager shall use its commercially reasonable efforts to do the
same. The Owner agrees to adopt any necessary HIPAA provisions in its Medical
Staff by-laws applicable to Medical Staff. The Manager may, but is not
obligated to, recommend from time to time that the Owner take certain actions
that the Manager deems necessary to comply with HIPAA and its applicable
regulations, and the Owner will promptly cooperate with the Manager in
determining whether such actions are appropriate and necessary. The parties
will enter into a Business Associate Agreement mutually acceptable to Owner and
Manager. The Manager may also, if it determines such is necessary, enter into
Business Associate Agreements as defined in HIPAA in the Owner’s Nam and on
behalf of the Owner. Neither party shall be deemed in breach of this Agreement
if fails to take or prohibits its staff from taking any actions that it
reasonably deems to be in violation of HIPAA or its applicable regulations.


 


XII.         INDEMNIFICATION


 


12.1.        The
Owner agrees to indemnify and hold harmless the Manager, its affiliates and
shareholders, and their respective shareholders, directors, officers, employees
and agents (collectively, a “Manager Indemnified Party”) from and against any
and all losses, claims, damages, liabilities, costs and expenses (including
reasonable attorneys’ fees and expenses related to the defense of any claims)
(a “Loss”), which may be asserted against any of the Manager Indemnified
Parties, in connection with the Manager’s provisions of services to Owner,
including Manager’s performance of its duties hereunder if such Loss has not
been caused by the gross negligence or willful misconduct of a Manager Indemnified
Party, including without limitation matters relating to: (i) alleged or
actual failure by the governing body, board of directors and/or similar body of
the Owner to perform any of its duties, (ii) any pending or threatened
medical malpractice or other tort claims asserted against the Manager relating
to the Center, (iii) any action against the Manager brought by any medical
staff members or former employees, or for matters occurring before the
beginning of the Term of this Agreement, (iv) any act or omission by any
medical staff member, or employee, or other personnel who were under the
supervision of a member of the medical staff as a result of providing medical
services to such medical staff member’s patient, and (v) any violation of
any requirement applicable to the Center under any federal, state or local
environmental, hazardous waste or similar law or regulation. In no event shall
the Owner have any liability for any special, exemplary, punitive or
consequential damages (including loss of profit or revenue) suffered or
incurred by any Manager Indemnified Party, other than claims for the
non-payment of fees and expenses under Article V hereof.


 


12.2.        The
Manager agrees to indemnify and hold harmless the Owner and its partners,
members, governors, managers, officers, employees and agents (collectively, an “Owner
Indemnified Party”) from and against all Loss which may be asserted against an
Owner Indemnified Party as a result of the gross negligence or willful
misconduct of the Manager in connection with the performance by the Manager of
its duties hereunder if such Loss has not been caused by the gross negligence
or willful misconduct of an Owner Indemnified Party. *


 


11

















 


12.3.        Other
than claims for the non-payment of fees and expenses under Article V
hereof, this Article XII shall constitute the sole remedy of the parties
hereto with respect to any Loss and/or any claim (including any Loss resulting
from a third party claim) if such Loss and/or claim arises out of this
Agreement, the services provided by the Manager and/or the relationship created
hereby, whether such claim is based in contract, tort, or otherwise, but
excluding claims arising out of willful misconduct or fraud.


 


XIII.        USE OF NAME/PROPRIETARY PROPERTY


 


13.1.        The
Owner hereby grants to the Manager the nonexclusive right, license and
privilege to use the Owner’s logo, if any, and the name “[[1]]” alone or as a
portion of or in connection with the corporate name of the Manager during the
term, and subject to all of the terms and conditions provided herein. The Owner
agrees to provide the Manager with access, without charge, to the outcomes and
other data developed by the Owner for use in the operation of the Center. The
Manager may include its name and the name of the Owner on any letterhead,
professional announcements, brochures, promotional materials, private
placements, public offerings, and the like relating to the Owner or the
Manager.


 


13.2.        The
Manager is and shall be the sole owner and holder of all right, title and
interest to the proprietary property of the Manager consisting of all
copyright, service mark and trademark rights and interests in the logo,
management information and other systems, forms, form contracts, and policy
manuals relating to the Center, but in all cases only if primarily developed by
the Manager and, in all events, excluding any logos purchased or created solely
by the Owner. The Owner agrees that it shall not at any time knowingly harm,
misuse or bring into disrepute the proprietary property of the Manager. The
Manager agrees that the Owner shall have a non-exclusive, royalty-free right to
use such proprietary information, subject to the foregoing restrictions, during
the term of this Agreement and for up to twelve months (12) after the
expiration or termination of this Agreement as is reasonably needed to maintain
patient quality standard until such time as replacement materials that do not
constitute proprietary information of Manager may be created and implemented.


 


XIV.        CHANGES IN LAW


 


The parties hereto have made all reasonable
efforts to ensure that this Agreement represents and memorializes the economic
arrangement between the parties hereto and that it complies with all applicable
laws, including, but not limited to, all applicable health care laws. The
parties are aware that there may be no clear or definitive guidance with
respect to the applicability of various health care laws to the management
arrangement contained herein including, but not limited to, the management fee
arrangement. While the parties have attempted to review and analyze all
applicable laws in an effort to comply with same, the parties acknowledge that
the applicable health care laws, and interpretations thereof, are often vague
and are constantly changing. The parties therefore understand and acknowledge
that as applicable law, and interpretations thereof, become more settled, this
Agreement may need to be amended in order to comply with such law, or
interpretations thereof, as the case may be. In the event there is such a
change in law or the interpretations thereof, whether by statute, regulation,
agency or judicial decision, or otherwise, that has any material effect on any
term of this Agreement, or in the event that reputable counsel with experience
in health law matters to one (1) party determines that any term of this
Agreement poses a material risk of violating such laws, then the applicable
term(s) of this Agreement shall be subject to renegotiation and either
party may request renegotiation of the affected term or terms 


 


12

















 


of this
Agreement, upon written notice to the other party, to remedy such condition. In
the interim, the parties shall perform their obligations hereunder in full compliance
with applicable law. The parties expressly recognize that upon request for
renegotiation, each party has a duty and obligation to the other only to
renegotiate the affected term(s) in good faith and, further, the parties
expressly agree that their consent to proposals submitted by the other party
during renegotiation efforts shall not be unreasonably withheld. The parties
further expressly recognize that in any such renegotiation, the relative
economics to each of the parties shall be preserved. Should the parties be
unable to renegotiate the term or terms so affected so as to bring it/them into
compliance with the statute, regulation, decision or interpretation that
rendered it/them unlawful or unenforceable within thirty (30) days of the date
on which notice of a desired renegotiation is given, then either party shall be
entitled, after the expiration of said thirty (30) day period, to terminate
this Agreement upon sixty (60) additional days written notice to the other
party, provided that such party has received an opinion of reputable legal
counsel, which legal counsel and opinion are reasonably acceptable to the other
party, that it is more likely than not that this Agreement violates applicable
law.


 


XV.         MISCELLANEOUS


 


15.1.        Upon
the written request of the Secretary of Health and Human Services or the
Comptroller General or any of their duly authorized representatives, the
Manager and any of its affiliates providing services with a value or cost of
$10,000 or more over a twelve (12) month period shall make available to the
Secretary the contracts, books, documents and records that are necessary to
verify the nature and extent of the cost of providing such services. Such
inspection shall be available up to four years after the rendering of such services.
The parties agree that any applicable attorney-client, accountant-client or
other legal privilege shall not be deemed waived by virtue of this Agreement.


 


15.2.        The
parties agree that this Agreement shall be governed by and construed in
accordance with the laws of the State of California. The parties hereto hereby
designate all courts of record sitting in Los Angeles County, California, both
state and federal, as the exclusive forums where any action, suit or proceeding
in respect of or arising out of this Agreement, or the transactions
contemplated by this Agreement shall be prosecuted as to all parties, their
successors and assigns, and by the foregoing designations the parties hereto
consent to the jurisdiction and venue of such courts. In the event of any
action, suit or proceeding brought by one party hereto against the other to
enforce any provision of this Agreement, the prevailing party in such
litigation shall be entitled to recover attorneys’ fees and costs of litigation
in addition to all other remedies available at law or in equity.


 


15.3.        Subject
to provisions herein to the contrary, this Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective legal
representatives, successors and permitted assigns.


 


15.4.        No
party may assign this Agreement without the prior written consent of the other
party, which consent shall not be unreasonably withheld; provided, however,
that the Manager may, without the prior written consent of the Owner, assign
its rights and delegate its duties hereunder: (i) to one (1) or more
of its affiliates, provided it is understood that Manager shall remain liable
for the obligations hereunder notwithstanding such assignment and (ii) to
a third party as part of a sale of substantially all of the Manager’s assets.
In addition, Manager may collaterally assign this Agreement to any lending
institution, for security purposes or as collateral, from which the Manager
obtains financing. A merger, consolidation, change in shareholders or controlling
interest, or stock-for-stock exchange by the Manager shall not be deemed to
constitute an assignment of this Agreement.


 


15.5.        This
Agreement is intended solely for the benefit of the parties hereto and is not
intended to, and shall not create any enforceable third party beneficiary
rights.


 


13

















 


15.6.        This
Agreement may only be amended in a writing signed by the parties. The waiver by
any party of a breach or violation of any provision of this Agreement shall not
operate as, or be construed to constitute, a waiver of any subsequent breach of
the same or any other provision hereof.


 


15.7.        In
the event any provision of this Agreement is held to be invalid, illegal or
unenforceable for any reason and in any respect, such invalidity, illegality,
or unenforceability shall in no event affect, prejudice or disturb the validity
of the remainder of this Agreement, which shall be and remain in full force and
effect, enforceable in accordance with its terms.


 


15.8.        Whenever
the context of this Agreement requires, the gender of all words herein shall
include the masculine, feminine and neuter, and the number of all words herein
shall include the singular and plural.


 


15.9.        The
divisions of this Agreement into sections and subsections and the use of
captions and headings in connection therewith are solely for convenience and
shall have no legal effect in construing the provisions of this Agreement.


 


15.10.      This
Agreement supersedes all previous contracts, and constitutes the entire
agreement of whatsoever kind or nature existing between or among the parties
respecting the within subject matter and no party shall be entitled to benefits
other than those specified herein. As between or among the parties, no oral
statements or prior written material not specifically incorporated herein shall
be of any force and effect. The parties specifically acknowledge that in
entering into and executing this Agreement, the parties rely solely upon the
representations and agreements contained in this Agreement and no others. All
prior representations or agreements, whether written or verbal, not expressly
incorporated herein are superseded and no changes in or additions to this
Agreement shall be recognized unless and until made in writing and signed by
all parties hereto. This Agreement may be executed in two (2) or more
counterparts, each and all of which shall be deemed an original and all of
which together shall constitute but one (1) and the same instrument.


 


15.11.      Each
party hereto hereby irrevocably waives any and all rights it may have to demand
that any action, proceeding or counterclaim arising out of or in any way
related to this Agreement or the relationships of the parties hereto be tried
by jury. This waiver extends to any and all rights to demand a trial by jury
arising from any source including, but not limited to, the constitution of the
United States or any State therein, common law or any applicable statute or
regulation. Each party hereto acknowledges that is knowingly and voluntarily
waiving its rights to demand trial by jury.


 


15.12.      The
provisions of Article IX, XII and XV and Article 13.2 shall survive
any termination or expiration of this Agreement.


 


15.13.      Each
party shall, at the reasonable request and expense of any other party hereto,
execute and deliver to such other party all such further instruments,
assignments, assurances and other documents, and take such actions as such
other party may reasonably request in connection with the carrying out of this
Agreement.


 


15.14.      The
language in all parts of this Agreement shall be construed, in all cases,
according to its fair meaning. The parties acknowledge that each party and its
counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement.


 


15.15.      The
Owner shall at all times during the term, and at all times thereafter, make
available to the Manager for inspection by its authorized representatives
during regular business hours, at the principal place of business of the Owner,
any records of the Owner determined by the Manager to be necessary to 


 


14

















 


perform its services and carry out its
responsibilities hereunder or necessary for the defense of any legal or
administrative action or claim relating to said records or necessary for any
other reasonable purpose.


 


15.16.      As
used herein, “affiliate” means, as to the Person (as hereinafter defined) in
question, any Person that directly or indirectly controls, is controlled by, or
is under control with, the Person in question and any successors or assigns of
such Person; and the term “control” means possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a Person whether through ownership of voting securities, by contract or
otherwise. “Person” means an association, a corporation, a limited liability
company, an individual, a partnership, a limited liability partnership, a trust
or any other entity or organization.


 


[Remainder of page intentionally
left blank.]


 


15

















 


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


 


	
   

  	
  MANAGER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SYMBIONARC MANAGEMENT SERVICES, INC., a

  Tennessee corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Charles T. Neal, President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  OWNER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [[1]], a California limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  [                              ]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  



 


16

















 


SCHEDULE A


 


CENTERS


 


[Beverly:


 


1.             9575
Brighton Way, Suite 100, Beverly Hills, CA 90210.


 


2.             8670
Wilshire Boulevard, Suite 300, Beverly Hills, CA 90211.]


 


[Encino: 16501 Ventura Boulevard, Suite 103,
Encino, CA 91436]


 


[Irvine: 15825 Laguna Canyon Road, Suite 200,
Irvine, CA 92618.]


 


[Arcadia: 51 North Fifth Avenue, Suite 101,
Arcadia, CA 91006.]


 


[Thousand Oaks: 696 Hampshire Road, Thousand
Oaks, CA 91361.]


 


[Van Nuys: 6815 Noble Avenue, Van Nuys, CA
91405.]


 


17

















 


SCHEDULE B


 


SARC*/Manager’s Accounting Manual


 


SARC/Manager’s Administrators Manual


 


SARC/Manager’s Corporate Compliance Manual


 


SARC/Manager’s Human Resource Manual


 


SARC/Manager’s Job Description and
Performance Appraisal Manual


 


SARC/Manager’s Clinical Policy and Procedures


 


SARC/Manager’s HIPAA Manual


 






*SARC = Symbion Ambulatory Resource Centers, Inc.


 


18
















 


EXHIBIT 1.2(B)


 


Form of Escrow Agreement


 


(To be attached at Closing)


 

















 


ESCROW AGREEMENT


 


THIS ESCROW AGREEMENT (this “Agreement”), dated
as of                     ,
2005, is by and among Parthenon Management Partners, LLC, a California limited
liability company (the “Company”), Andrew A. Brooks, M.D. and Randhir S.
Tuli, both residents of the State of California (each an “Owner” and,
collectively the “Owners”) (the Company and the Owners being,
collectively, the “Sellers”), SymbionARC Management Services, Inc.,
a Tennessee corporation (the “Purchaser”), and Bank of America, N.A. (the “Escrow Agent”).


 


RECITALS


 


A.                                   Concurrently
with the execution of this Agreement, the Purchaser is acquiring certain
management rights from the Sellers as described in the Management Rights
Purchase Agreement dated                   ,
2005 (the “Purchase Agreement”), a copy of which is attached hereto as Exhibit A.


 


B.                                     The
execution and delivery of this Agreement is a condition to the consummation of
the transactions contemplated by the Purchase Agreement.


 


C.                                     Capitalized
terms used in this Agreement but not defined are used in this Agreement as
defined in the Purchase Agreement.


 


NOW THEREFORE, in consideration of the mutual promises
and subject to the terms and conditions herein contained, and other good and
valuable consideration, had and received, the sufficiency and receipt of which
are hereby acknowledged, the parties hereto agree as follows:


 


1.                                       Appointment
of Escrow Agent.  The Purchaser and
the Sellers hereby appoint and designate the Escrow Agent as the escrow agent
for the purposes set forth in this Agreement, and the Escrow Agent hereby
accepts such appointment under the terms and conditions set forth in this
Agreement.  Notwithstanding the
references in this Agreement to the Purchase Agreement, the Purchaser and the
Sellers acknowledge that the Escrow Agent is not a party to the Purchase
Agreement for any purpose or responsible for its interpretation or enforcement.


 


2.                                       Deposit
in Escrow.  Simultaneously with the
execution and delivery of this Agreement, the Purchaser shall deposit with the
Escrow Agent (for the account of Sellers) an aggregate amount equal to THREE
HUNDRED THIRTY THREE THOUSAND THREE HUNDRED THIRTY THREE AND NO/100 DOLLARS
($333,333.00) (together with all income earned thereon, the “Escrow Funds”).
The Escrow Agent shall hold and disburse the Escrow Funds in accordance with
the terms and conditions of this Agreement. 
The Escrow Funds shall not be
subject to lien or attachment by any creditor of any party hereto and shall be
used solely for the purpose set forth in the Purchase Agreement.  Except as expressly stated herein, the Escrow
Funds shall not be available to, and shall not be used by, the Escrow Agent to set
off any obligations of either the Purchaser or the Sellers owing to the Escrow
Agent in any capacity.


 


3.                                       Investment.  The Escrow Agent shall invest the Escrow
Funds in such manner as is jointly specified in writing from time to time by
the Purchaser and the Sellers.  Absent
such direction, the Escrow Agent shall invest the Escrow Funds in Bank of
America Funds, National Tax-Free Money Market Fund.  Any investment income realized on the Escrow
Funds shall be distributed to the Sellers quarterly in accordance with each
Seller’s respective “Pro Rata Share” as set forth on Exhibit B and
shall not become part of the Escrow Funds. 
Promptly following the conclusion of each calendar quarter, the Escrow
Agent shall deliver to each Seller a written statement of account with respect
to any investment income realized on the Escrow Funds in accordance with their
Pro Rata Shares.


 


In accordance with
Proposed Treasury Regulations §1.468B-8, the Purchaser shall be treated as the
owner of the Escrow Funds for federal and state income tax purposes while it is
held by the Escrow Agent, and the Escrow Agent shall, for each calendar year
(or portion thereof) for which the Escrow Fund is so held report the interest
earned on the Escrow Funds on IRS Form 1099 and corresponding state income
tax forms with applicable law and regulations, showing the Escrow Agent as the
payor and showing the Purchaser as the payee unless the Purchaser


 

















 


and Sellers’ Committees shall have delivered to the Escrow Agent a
statement that specifies otherwise in accordance with Proposed Treasury
Regulations §1.468B-8(f).  As a matter
between the Sellers and the Purchaser with which Escrow Agent need not be
concerned, the Sellers and the Purchaser agree that upon distribution of any
portion of the Escrow Fund to the Sellers (i) a portion of each
distribution made to a Seller out of the Escrow Fund shall be considered a
contingent payment to the Seller by the applicable Purchaser with respect to a
debt instrument described to which Internal Revenue Code Section 1274
applies, (ii) the appropriate portion of each distribution so made to the
Seller shall be treated as original issue discount on a debt instrument issued
by the applicable Purchaser to the Seller, calculated in accordance with
Treasury Regulations Section 1.1275-4(c) based on the short-term
applicable federal rate (as defined in Section 1274(d) of the
Internal Revenue Code) for July, 2005, and (iii) the Purchaser shall not
take any position on a tax return inconsistent with the foregoing or
inconsistent with installment sale reporting by the Sellers with respect to the
portion of distributions to the Sellers out of the Escrow Fund not so treated
as original issue discount.


 


4.                                       Distributions.


 


(a)                                  The Escrow Agent shall disburse the
Escrow Funds not later than the second business day next following receipt of a
statement signed by Purchaser (the “Instruction Letter”) instructing the
Escrow Funds to be distributed to the Sellers in accordance with their Pro Rata
Shares.  Disbursements to each Seller
shall be paid by wire transfer of immediately available funds to the bank
account listed for such Seller on Exhibit A hereto, or as otherwise
indicated by such Seller in a written notice to the Escrow Agent in accordance
with the provisions of Section 10. 
Upon such payment, this Agreement (other than Section 5, 6, 8(b) and
9) shall automatically terminate.


 


(b)                                 If the Escrow Agent shall not have
received an Instruction Letter from the Purchaser on or before December 31,
2005, it will disburse the Escrow Funds to the Purchaser not later than the second
business day next following December 31, 2005.  Upon such payment, this Agreement (other than
Section 5, 6, 8(b) and 9) shall automatically terminate.


 


(c)                                  Without limiting the foregoing, the Escrow Agent shall
not make any payment or distribution of Escrow Funds except as and in the
manner expressly provided by this Escrow Agreement.


 


5.                                       Escrow
Agent Compensation.  The Escrow Agent
is to be compensated $1,500.00 for the performance of its duties under this
Agreement (the “Escrow Fees”). 
All initial Escrow Fees shall be paid in equal amounts by the Purchaser
on the one hand and the Sellers on the other hand, and they shall be jointly
and severally responsible therefor (with a right of contribution as between the
Purchaser for 50% of such fees and the Sellers for 50% of such fees, which
shall be pro rated among the Sellers in accordance with the Sellers’ Pro Rata
Shares).  If any fees or expenses of the
Escrow Agent are not paid in full when due, the Escrow Agent may deduct the
unpaid portion of such additional fees or expenses, if any, from any payment to
be made to the Purchaser or the Sellers hereunder.  This Section shall survive any
termination of this Agreement.


 


6.                                       Obligations
and Liabilities of the Escrow Agent.


 


(a)                                  The
Escrow Agent has no duties or obligations other than those specifically set
forth in this Agreement.


 


(b)                                 The
Escrow Agent is not responsible in any manner whatsoever for any failure or
inability of any party other than the Escrow Agent to honor any of the
provisions of this Agreement.


 


(c)                                  The
Escrow Agent is fully protected in acting or refraining from acting upon and
relying upon any written notice (including, without limitation, any Certificate
of Instruction, Resolution Certificate or Litigation Certificate), direction,
request, waiver, consent, receipt or other paper or document that the Escrow
Agent in good faith believes to have been signed or presented by the proper
party or parties.  The Escrow Agent shall
not be responsible for or have any duty to ascertain or inquire into the
contents of any written notice (including, without limitation, any Certificate
of Instruction, Resolution Certificate or Litigation Certificate), direction,
request, waiver, consent, receipt or other paper or document delivered
hereunder.  Without limiting the
generality of the foregoing, the Escrow Agent shall not be responsible for or
have any duty to ascertain or inquire as to the validity,


 

















 


enforceability, sufficiency or genuineness of any Certificate of
Instruction, Resolution Certificate or Litigation Certificate.


 


(d)                                 The
Escrow Agent will not be liable for any error of judgment or for any act done
or step taken or omitted by it in good faith or for any mistake in fact or law
or for anything that it may do or refrain from doing in connection with this
Agreement, except for its own gross negligence, willful misconduct or act of
bad faith.


 


(e)                                  In
the event that the Escrow Agent (i) shall be uncertain as to its duties or
rights hereunder or (ii) shall receive conflicting instructions, claims or
demands from the Purchaser or the Sellers, the Escrow Agent shall be entitled
to refrain from taking any action other than to keep safely all property held
in escrow as to which a dispute exists until (A) the Escrow Agent shall be
directed otherwise in writing by the Sellers and the Purchaser or (B) in
any event, until the Escrow Agent shall be directed by a court order.


 


(f)                                    The
Escrow Agent may consult with, and obtain advice from, legal counsel in the
event of any dispute or construction of any of the provisions of this Agreement
or its duties under this Agreement, and the Escrow Agent will incur no
liability and will be fully protected in acting or refraining from acting in
good faith in accordance with the advice of such counsel.


 


7.                                       Automatic
Succession; Resignation and Removal of Escrow Agent.


 


(a)                                  Any company into which the Escrow Agent
may be merged or with which it may be consolidated or any company to whom the
Escrow Agent may transfer a substantial amount of its global escrow business,
will be the successor to the Escrow Agent without the execution or filing of
any paper or further act on the part of any parties, except that written notice
must be provided to the Purchaser and the Sellers, notwithstanding anything in
this Agreement to the contrary.


 


(b)                                 The Escrow Agent may resign as escrow
agent at any time with or without cause by giving written notice to the
Purchaser and the Sellers, such resignation to be effective 30 calendar days
following the date such notice is given. 
In addition, the Purchaser and the Sellers jointly may remove the Escrow
Agent as escrow agent at any time with or without cause by an instrument (which
may be executed in counterparts), given to the Escrow Agent, which instrument
must designate the effective date of such removal.  If any such resignation or removal occurs, a
successor escrow agent will be appointed by the Purchaser and the Sellers.  Any such successor escrow agent shall deliver
to the Purchaser and the Sellers a written instrument accepting such
appointment and upon such delivery it will succeed to all of the rights and
duties of the Escrow Agent under this Agreement and will be entitled to receive
the Escrow Funds.


 


(c)                                  If the Purchaser and all of the Sellers
are unable to agree upon a successor escrow agent or have failed to appoint a
successor escrow agent prior to the expiration of 30 calendar days following
the date of the notice of resignation or removal, the then acting escrow agent
shall appoint as a successor escrow agent a banking institution of national or
regional prominence.  Any such
appointment will be binding upon all of the parties to this Agreement.


 


(d)                                 Upon acknowledgment by any successor
escrow agent of the receipt of the Escrow Funds, the then replaced escrow agent
will be fully relieved of all duties, responsibilities and obligations under
this Agreement except (i) with respect to actions previously taken or
omitted by such replaced escrow agent and (ii) the provisions of Articles
5, 6, 8(b) and 9 shall continue in effect for the benefit of such replaced
escrow agent and its affiliates, officers, directors, employees, agents and
advisors with respect to actions previously taken or omitted by such replaced
escrow agent.


 


8.                                       Disputes.


 


(a)                                  In the event of any dispute between the
parties hereto, the Escrow Agent may tender into the registry or custody of any
court of competent jurisdiction all money or property in its hands delivered to
it pursuant to this Agreement, together with such pleadings as it deems
appropriate, and shall, thereupon, be discharged from all further duties and
liabilities under this Agreement; provided, however, that the filing of any
such


 

















 


legal proceedings shall
not deprive Escrow Agent of its compensation hereunder earned prior to such
filing and discharge of Escrow Agent of its duties hereunder.


 


(b)                                 Notwithstanding anything in this
Agreement to the contrary, in the event that the Escrow Agent incurs any fees
and expenses in connection with any dispute under this Agreement for which it
is entitled to reimbursement under this Agreement, the Purchaser and the
Sellers shall promptly reimburse the Escrow Agent therefor in equal amounts by
the Purchaser on the one hand and the Sellers on the other hand, and they shall
be jointly and severally responsible therefor (with a right of contribution as
between the Purchaser for 50% of such expenses and the Sellers for 50% of such
expenses, which shall be pro rated among the Sellers in accordance with the
Sellers’ Pro Rata Shares).  If any fees
or expenses of the Escrow Agent are not paid in full when due, the Escrow Agent
may deduct the unpaid portion of such additional fees and expenses, if any,
from any payment to be made to the Purchaser or the Sellers hereunder.  This Section shall survive any
termination of this Agreement.


 


9.                                       Indemnification
of Escrow Agent.  In partial
consideration of the Escrow Agent’s acceptance of this appointment, the
Purchaser and the Sellers shall indemnify the Escrow Agent and its affiliates,
officers, directors, employees, agents and advisors (each an “Indemnitee”),
and hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses (including, among other things, reasonable
attorneys’ fees and expenses) incurred by it to any person or party (including
Purchaser or any Seller) by reason of its having accepted such appointment or
in carrying out the terms of this Agreement, all of which shall be borne in
equal amounts by the Purchaser on the one hand and the Sellers on the other
hand, and they shall be jointly and severally responsible therefor (with a
right of contribution as between the Purchaser for 50% of such indemnification
and the Sellers for 50% of such indemnification, which shall be pro rated among
the Sellers in accordance with the Sellers’ Pro Rata Shares).  Notwithstanding the foregoing, no indemnity
need be paid in case of the Escrow Agent’s gross negligence or willful
misconduct.  If any amounts owing under
this Section 9 are not paid in full when due, the Escrow Agent may deduct
the unpaid portion of such amounts, if any, from any payment to be made to the
Purchaser or the Sellers hereunder.  This
Section shall survive any termination of this Agreement.


 


10.                                 Notices.  All notices must be in writing and will be
deemed to have been given (i) if delivered in person or by a nationally
recognized overnight courier service or (ii) upon confirmation of receipt
if sent by facsimile, to the following addresses:


 


(a)                                  If to the Purchaser:


 


c/o Symbion, Inc.

40 Burton Hills Boulevard, Suite 500

Nashville, Tennessee  37215

Attention:  President

Facsimile No: (615) 234-5999


 


with a copy to:


 


Waller Lansden Dortch &
Davis, PLLC


511 Union Street, Suite 2700


Nashville, Tennessee
37219


Attention:  Joseph A. Sowell, III, Esq.


Facsimile No.:  (615) 244-6804


 


(b)                                 If to the Sellers:


 


To the addresses set
forth on the signature page


with copies to counsel to
the LLCs and the Sellers, respectively:


 

















 


Sheppard, Mullin, Richter & Hampton
LLP

333 South Hope Street, 48th Floor

Los Angeles, California 90071

Attention:  Lawrence M. Braun

Facsimile No: (213) 443-2776


 


and


 


Guth | Christopher LLP

10866 Wilshire Blvd, Suite 1250

Los Angeles, California 90024

Attention: Theodore E. Guth

Facsimile No: (310) 470-8354


 


(c)                                  If to the Escrow Agent:


 


Bank
of America, N.A.


414
Union Street


Nashville,
Tennessee 37219


Attention:  Elizabeth Knox


Facsimile
No.:  (615) 749-4951


 


with a
copy to:


 


Moore & Van Allen PLLC


100 N. Tryon St., Floor 47


Charlotte, North Carolina 28202-4003


Attention: Win Porter


Facsimile No.: (704)
331-1032


 


11.                                 Binding
Effect.  This Agreement is binding
and inures to the benefit of the parties and their respective successors and
permitted assigns.


 


12.                                 Assignment.  This Agreement may not be assigned or
transferred, by operation of law or otherwise except pursuant to Section 7(a) or
upon a written agreement executed by the Sellers, the Purchaser and the Escrow
Agent; provided, however, that the Purchaser may assign this
Agreement to any of its lenders or any Affiliate of the Purchaser and each
Seller may assign this Agreement to any partner, member or owner (direct or
indirect) of such Seller or any entity controlled by such Seller or its
partner, member or owner.


 


13.                                 Third
Party Beneficiaries.  Nothing in this
Agreement is intended or will be construed to confer on any person other than
the parties or their successors and assigns any rights or benefits under this
Agreement.


 


14.                                 Headings.  The headings in this Agreement are intended
solely for the convenience of reference and will be given no effect in the
construction or interpretation of this Agreement.


 


15.                                 Exhibits.  The Exhibits and other attachments hereto
will be deemed to be a part of this Agreement.


 


16.                                 Counterparts.  This Agreement may be executed in multiple
counterparts, each of which will be deemed an original, and all of which
together will constitute one and the same document.


 


17.                                 Governing
Law and Venue.  This Agreement must
be governed by and construed under California law, without regard to conflict
of laws principles.  The parties hereto
hereby designate all courts of record sitting in Los Angeles County,
California, both state and federal, as the exclusive forums where any action,
suit or proceeding in respect of or arising out of this Agreement, or the
transactions contemplated by this Agreement shall be


 

















 


prosecuted as to all
parties, their successors and assigns, and by the foregoing designations the
parties hereto consent to the exclusive jurisdiction and venue of such courts.


 


18.                                 Amendment.  No amendment of this Agreement is binding
unless made in a written instrument that specifically refers to this Agreement
and is signed by the Purchaser, the Sellers and the Escrow Agent.


 


19.                                 Entire
Agreement.  This Agreement and the
Purchase Agreement (solely with respect to the Sellers and the Purchaser)
contain the entire understanding among the parties and supersede any prior
understanding and agreements between them, in each case respecting this subject
matter.  There are no representations,
agreements or understandings, oral or written, between or among the parties to
this Agreement relating to the subject matter of this Agreement that are not
fully expressed in this Agreement or the Purchase Agreement (solely with
respect to the Sellers and the Purchaser).


 


Signature page follows.


 

















 


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


 


	
   

  	
  ESCROW AGENT:

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name: 

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER:

  
	
   

  	
   

  
	
   

  	
  SYMBIONARC MANAGEMENT SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name: 

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SELLERS:

  
	
   

  	
   

  
	
   

  	
  PARTHENON MANAGEMENT PARTNERS, LLC

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name: 

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for notices:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Andrew A. Brooks, M.D.

  
	
   

  	
  Address for notices:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Randhir S. Tuli

  
	
   

  	
  Address for notices:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  



 

















 


EXHIBIT A


 


Purchase Agreement


 

















 


EXHIBIT B


 


	
  Sellers

  	
   

  	
  Wiring Instructions

  	
   

  	
  Pro Rata Share

  	
   

  
	
  Andrew
  A. Brooks, M.D.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Randhir
  S. Tuli

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Parthenon
  Management Partners, LLC

  	
   

  	
   

  	
   

  	
   

  	
   

  



 
















 


EXHIBIT 1.3


 


Form of Assignment


 


(See Attached)


 

















 


EXHIBIT
1.3


 


FORM OF ASSIGNMENT


 


This ASSIGNMENT (this “Assignment”)
dated as of
                          ,
2005 is between Parthenon Management Partners, LLC, a California limited
liability company, Andrew A. Brooks, M.D., a resident of the state of
California and Randhir S. Tuli, a resident of the state of California  (collectively, “Assignors” and each
individually an “Assignor”) and SymbionARC Management Services, Inc., a
Tennessee corporation (“Assignee”). 
Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to such terms in the Management Rights Purchase Agreement (as
hereinafter defined).


 


W I T N E S S E T H :


 


WHEREAS, as of the date
hereof, Assignors own rights in and to certain economic interests (the “Management
Rights”) that entitle Assignors to receive consideration for and obligate
Assignors to perform certain management responsibilities for each of the
Brighton Center, the Wilshire Center, the Encino Center, the Irvine Center, the
Arcadia Center and the Thousand Oaks Center; and


 


WHEREAS, Assignors and
Assignee are parties to that certain Management Rights Purchase Agreement,
dated as of July 27, 2005 (the “Management Rights Purchase Agreement”),
providing for, among other things, the transfer and assignment to Assignee by
Assignors of all of Assignors’ Management Rights, in consideration of the
payment of the Purchase Price therefor, in the amount and manner and on the
terms and conditions provided in the Management Rights Purchase Agreement; and


 


WHEREAS, the parties now
desire to carry out the intent and purpose of the Management Rights Purchase
Agreement by Assignors’ execution and delivery to Assignee of this instrument
evidencing the vesting in Assignee of all of Assignors’ Management Rights, in
addition to such other instruments as Assignee shall have otherwise received or
may hereafter request.


 


NOW, THEREFORE, in
consideration of the foregoing premises, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereby agree as follows:


 


1.             Transfer and Assignment.  Assignors
hereby convey, assign, transfer and deliver to Assignee, its successors and
assigns, to have and to hold all and singular to its and their use and benefit
all right, title and interest, legal and equitable, in and to Assignors’
Management Rights, free and clear of any and all claims, liens, security
interests, rights of first refusal, options, warrants or other encumbrances of
any nature.


 


2.             Purchase Price.  On the date
hereof, Assignee shall deliver to Assignor the portion of the Purchase Price to
which Assignor is entitled, as provided in the Management Rights Purchase
Agreement.


 


3.             Cooperation.  The parties,
from time to time after the delivery of this Assignment, will to the extent
permitted by law and agreements to which they are a party, upon the reasonable
request of the other party hereto, execute, acknowledge and deliver all such
further documents as may be reasonably required for the assignment and transfer
of the Management Rights to Assignee.


 


4.             Benefit; Purpose; Modification. 
This Assignment shall inure to the benefit of Assignors, Assignee and
their respective legal representatives, successors and assigns.  The sole purpose hereof is to assign and
transfer the Management Rights to Assignee and not to create third party
beneficiary rights. Therefore, this Assignment may be modified by a writing
signed by Assignors and Assignee without the consent of any third party.


 

















 


IN WITNESS WHEREOF, the
parties hereto have caused this Assignment to be duly executed in several
counterparts (each of which shall constitute an original hereof) by their
respective duly authorized officers as of the date first above written.


 


 


	
   

  	
  PARTHENON
  MANAGEMENT PARTNERS, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ANDREW A. BROOKS, M.D.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RANDHIR
  S. TULI

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SYMBIONARC
  MANAGEMENT SERVICES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 

















 


EXHIBIT 6.7


 


Form of Consulting Agreement


 


(See Attached)


 

















 


CONSULTING
AGREEMENT


 


This CONSULTING AGREEMENT (this “Agreement”), dated as
of
                        ,
2005 (the “Effective Date”), is by and between SymbionARC Management Services, Inc.,
a Tennessee corporation (the “Manager”) and Parthenon Management Partners, LLC, a California limited liability company  (the “Contractor”), Andrew A. Brooks, M.D. and Randhir S.
Tuli (each an “Owner” and, together, the “Owners”).  The Owners own all of the outstanding equity
securities of the Contractor.


 


W I T N
E S S E T H:


 


WHEREAS, the Manager manages each of those ambulatory
surgery centers or other healthcare facilities identified on Schedule 1
hereto (each a “Center” and, collectively, the “Centers”), which Centers shall
be classified on such Schedule 1 as being an “Existing Center” or a “Developing
Center” ; and


 


WHEREAS, pursuant to that certain Management Rights
Purchase Agreement, dated
                  ,
2005 (the “MRPA”), Contractor and the Owners have sold to Manager all of their
rights in and to those certain economic interests that entitle Contractor and
the Owners to receive consideration for and obligate them to perform certain
management responsibilities for each Center; and


 


WHEREAS, the Manager desires to enter into this
Agreement with the Contractor pursuant to which Contractor will provide the
Manager with (A) consulting and oversight services relating to the
operation of the Centers and the transition of management of the Centers, and (B) assistance
in the identification and consummation of opportunities to develop and acquire
Surgical Businesses (as defined below), and the Contractor desires to provide
such all such services to the Manager.


 


NOW, THEREFORE, the Manager, the Contractor and the
Owners agree as follows:


 


ARTICLE I

DUTIES OF THE CONTRACTOR


 


1.1.         Generally. 
The Manager hereby retains the Contractor and the Owners for the purpose
of providing consulting and oversight services to the Manager relating to the
operation of the Centers identified on Schedule 1 hereto and the transition
of management of such Centers.  In
performing their obligations under this Agreement, the Contractor and the
Owners shall act in good faith and with reasonable diligence and devote their
reasonable best efforts to the duties set forth herein, in all respects subject
to the reasonable control of the Manager. 
The Manager and the Contractor agree and acknowledge that the Manager is
relying on the efforts and expertise of the Contractor and the Owners.  Contractors will not be required to pay for
any operating costs of the Centers.


 


1.2.         Duties of the Contractor. 
The Contractor and the Owners covenant and agree:


 


a.             to provide those services set forth on Exhibit 1.2
attached hereto for each Center during that Center’s Payment Period;


 


b.             that the Contractor and the Owners shall
perform such services in a business-like manner in accordance with such
reasonable policies and directives adopted by the Manager from time to time and
communicated in writing to the Contractor and the Owners; and


 


c.             to take all reasonable actions and
execute all documents necessary to carry out the terms and purposes of this
Agreement.


 

















 


1.3.         Duties of the Manager. 
The Manager covenants and agrees:


 


a.       to provide such information and guidance
as is reasonably necessary for the Contractor to satisfy its contractual
obligations under this contract in a timely manner; and


 


b.       to take all reasonable actions and
execute all documents necessary to carry out the terms and purposes of this
Agreement.


 


1.4.         No Partnership. 
The Contractor, the Owners and the Manager affirmatively state that they
do not have the intention and are not forming a joint venture or partnership
for tax or any other purposes.  The
relationship created hereby is that of agents (the Contractor and the Owners)
contracting with a principal (the Manager) as independent contractors.


 


1.5          DEA and CLIA Certificates. 
The Manager shall use commercially reasonable efforts to transition
promptly the DEA and CLIA certificates currently in place at the Existing
Centers and Developing Centers held in Dr. Brooks’ name to the name of the
respective Centers.  Until such
certificates are so reissued, Dr. Brooks agrees to have such registrations
and certificates continue in his name, to take any actions required in
connection therewith as reasonably requested by the Manager and to execute any
necessary and appropriate power of attorney or other document to effectuate
this arrangement.  The Manager shall
reimburse Dr. Brooks for his reasonable expenses in connection with this
arrangement.


 


ARTICLE II

FEES PAYABLE TO THE CONTRACTOR


 


2.1.         Consulting and Oversight Fee.  During all Payment Periods (as defined below), the
Manager shall pay the Contractor for the services rendered under Article I
hereof a fee (the “Consulting and Oversight Fee”) equal to the sum of:


 


(A)          fifty percent (50%) of the aggregate
gross amount of all Management Fees (as defined below) actually collected by
Manager from an Existing Center during such Existing Center’s Payment Period;
and


 


(B)           forty percent (40%) of the aggregate
gross amount of all Management Fees actually collected by Manager from a
Developing Center during such Developing Center’s Payment Period.


 


“Payment Period” shall mean, with respect to any
Center, the period commencing on the Payment Commencement Date and ending on
the earlier of (x) the date, if any, on which Manager and/or its
affiliates purchase all of the “Option Interests” (as defined in the MIPA)
owned by Owners and Contractor in such Center pursuant to Section 1.4 of
the Purchase Agreement, dated
            , 2005,
to which Owners, several affiliates of Manager and others are parties (the “MIPA”),
(y) the termination of Contractor’s obligations under Section 1.2
hereof with respect to such Center or (z) the termination of the Agreement
under Section 3.2, 3.3 or 3.4 hereof. 
The “Payment Commencement Date” shall be (I) the Effective Date
with respect to (a) any Existing Center and (b) any Developing Center
at which procedures are being regularly performed as of the Effective Date, and
(II) with respect to any other Developing Center, the date on which the
first procedure is performed at such Developing Center.


 


2.2.         Calculation of Management Fees.  As used herein, “Management Fees” means all fees (but
not the amount of any reimbursements made under the Management Agreements)
payable, without any deductions whatsoever, under Section 5.1 of each of
those certain Management Agreements (the 


 


2

















 


“Management
Agreements”) entered into or to be entered into between the Manager and each of
the Centers.  No amendment of any
Management Agreement will affect the calculation of the Management Fees, which
will continue to be calculated based on the terms of the Management Agreement
in force on the date hereof unless otherwise consented in writing by the
Contractor.  The expiration in accordance
with its terms of the term of a Management Agreement shall not be an amendment
for purposes of the preceding sentence. 
The Consulting and Oversight Fee shall be payable monthly on or before
the fifteenth (15th) day following the month in question and
will be accompanied by a statement setting forth in reasonable detail the
calculation of the amount due (a “Statement”). 
No party will take any steps intended to delay collection of Management
Fees, nor shall the assignment of this Agreement eliminate any obligation of
the Manager to pay to Contractor the amounts provided for herein.  The Contractor shall be entitled to cause an
independent certified public accountant reasonably satisfactory to the Manager
to perform an audit of the books and records of the Manager and its affiliates
upon which any Statement is based.  The
Contractor shall pay all costs and expenses of the audit unless such
examination shows an underpayment of at least five percent (5%) or more of the
total amount payable during the period covered by the audit, in which case the
costs of the audit shall be paid by the Manager.  Any underpayment (or overpayment) will bear
interest at prime plus 2%, and the amount of each underpayment (or overpayment)
shall be paid by Manager (or Contractor, as the case may be) within two (2) business
days of its calculation.


 


2.3.         Reimbursement of Contractor.  The Contractor shall be also reimbursed on a monthly
basis for its reasonable, out of pocket, direct expenses incurred in connection
with the services provided hereunder as are reasonably approved in advance by
the Manager or consistent with its policies for reimbursement of expenses
generally applicable to its senior managers.


 


ARTICLE III

TERM AND TERMINATION


 


3.1.         Term.  The term (the “Term”) of this Agreement shall
commence as of the Effective Date and, unless this Agreement is terminated
pursuant to this Article III, shall continue until the latest to occur of (i) the
date on which all Payment Periods shall have ended, (ii) the fifth
anniversary of the Effective Date and (iii) the date on which there remain
no outstanding Development Notices and Acquisition Notices (as defined
below).  As used herein, the “Initial Term”
shall consist of the period between the Effective Date and the second
anniversary of the Effective Date.  In
the event of the termination or expiration of this Agreement, the Contractor
shall be paid all earned and accrued compensation (but only upon and promptly
after Manager’s receipt of the Management Fees for which Contractor has earned
such compensation) and reimbursements provided for hereunder.


 


3.2.         Termination for the Contractor’s Breach.  The Manager
shall have the right to terminate this Agreement following the occurrence of a
Contractor/Owner Material Breach (as defined below).  In the event termination is for an alleged
Contractor/Owner Material Breach, the Manager shall provide the Contractor
written notice of such alleged Contractor/Owner Material Breach describing in
detail the basis upon which the Manager believes such termination is
justified.  The Contractor shall have
forty five (45) days (but only five (5) days in the case of any payment
default) from receipt of such notice during which to attempt to cure any
alleged Contractor/Owner Material Breach. 
Furthermore, if the Contractor has diligently attempted to effect such a
cure within such cure period but cannot complete such cure because of the
failure of a third party (such as a governmental agency) to act within such
period, then the Contractor shall have a reasonable time (not to exceed 180
days) beyond such cure period to complete its cure of the alleged basis for the
Manager’s election to terminate.  Upon a
cure being effected, the Manager’s right to terminate shall cease, and this
Agreement will continue in full force and effect. As used herein, a “Contractor/Owner
Material Breach” means (a) a breach by any Covered Party of the provisions
of Section 4.4 hereof, (b) a material breach by any Covered Party of
any restrictive covenant to


 


3

















 


which a Covered Party is subject that is contained in
any of the agreements identified on Exhibit 3.2 hereto or, to the
extent not more restrictive than the terms of those covenants, any operating
agreement or partnership agreement of an entity that succeeds any entity
identified thereon or any operating agreement or partnership agreement entered
into as a part of an Acquisition Project or Development Project, (c) the
habitual breach of an Owner to perform the duties set forth on Exhibit 1.2
hereto in any material respect or (d) or the material breach by an Owner
of its obligations under Sections 5.2. 
In addition to the termination right in this Section 3.2, upon any
Contractor/Owner Material Breach which is not cured within the time period
provided for cure (if any), Manager shall recover from the Contractor and
Owners: (I) any and all damages and remedies to which it may be entitled,
and (II) at the option of Manager exercised in writing within sixty (60)
days after discovery of any breach described in clause (a) of the
definition of Contractor/Owner Material Breach which either (i) is a
knowing or willful breach or (ii) occurs during the Initial Term, Manager
may step into (without payment to any Covered Party therefor) the entire
position of any and all Covered Parties (with respect to all interests,
management contracts, remuneration, fees, etc.) in any project or activities
undertaken in violation of Section 4.4. 
The parties acknowledge and agree that clause (II) is provided for
herein because of the inherent uncertainty of the damages that may be proven
under clause (I), and such damages may be claimed not to the exclusion of
damages under clause (I).  The parties
have made provision therefor, not as a penalty, but to compensate the Manager
for the significant damages that would be suffered by the Manager as a result.


 


3.3.         Termination for Manager’s Breach.  The Contractor
shall have the right to terminate this Agreement following the occurrence of a
Manager Material Breach (as defined below) of this Agreement.  In the event termination is for an alleged
Manager Material Breach, the Contractor shall provide the Manager written
notice of such alleged Manager Material Breach describing in detail the basis
upon which the Contractor believes such termination is justified.  The Manager shall have forty five (45) days
(but only five (5) days in the case of any payment default) from receipt
of such notice during which to attempt to cure any alleged Manager Material
Breach, and upon such cure being effected, the Contractor’s right to terminate
shall cease and this Agreement will continue in full force and effect.  Furthermore, if the Manager has diligently attempted
to effect such a cure within such cure period but cannot complete such cure
because of the failure of a third party (such as a governmental agency) to act
within such period, then the Manager shall have a reasonable time (not to
exceed 180 days) beyond such cure period to complete its cure of the alleged
basis for the Contractor’s election to terminate.  As used herein, a “Manager Material Breach”
means Manager’s failure to pay when due any fee payable to Contractor under Section 2.1
or Section 4.3 or its material breach of its obligations under Sections
4.2 or 5.1.


 


3.4.         Termination
on Transfer.  If at any
time Manager or an affiliate of Manager either ceases to own an interest in any
Center identified on Schedule 1 hereto or ceases to be obligated to
perform the services to such center required pursuant to the applicable
Management Agreement (whether because such Management Agreement is terminated,
amended, assigned or Manager or its affiliate otherwise disposes of its
interest therein), then the Manager shall give written notice to Contractor not
later than ten (10) days prior to the disposition of Manager’s or its
affiliate’s interest in such Center and/or the assignment, termination or
disposition of Manager’s (or its affiliates) interest in such Management
Agreement, and during the ninety (90) period thereafter, Contractor may declare
its obligations under Section 1.2 with respect to such Center thereafter
null, void and of no further force and effect, upon which Manager’s obligations
under Section 2 with respect to such Center shall terminate.  In the event that Symbion, Inc., a
Delaware corporation, or its successor or acquiror (by any form of
transaction), shall cease to own, directly or indirectly, all of the
outstanding equity interests of Manager, then Contractor may treat such event
as a disposition of Manager’s interest each of the Centers for purposes of this
Section 3.4; provided, for the avoidance of doubt, a change in control,
acquisition of, or sale of all assets by Symbion, Inc. shall not give rise
to the right of Contractor to treat such event as a disposition of Manager’s
interest under this provision.


 


4

















 


ARTICLE IV

SPECIAL RIGHTS REGARDING DEVELOPMENT; RESTRICTIVE COVENANTS


 


4.1.         Generally. 
The Contractor and the Owners will not be required to provide services
on a full-time or (except as provided in this Article IV) exclusive basis,
but shall devote such time and effort as are reasonably required to perform the
Contractor’s duties hereunder.  The
Owners shall, during the Term, devote such time and effort as reasonably
necessary for identifying and pursuing Development Projects and Acquisition
Projects in the Restricted Area, and shall use reasonable diligence to identify
Suitable Opportunities.  As used in this Article IV:
“Covered Parties” means the Contractor, the Owners, any entity controlled by
the Contractor or an Owner, a member of an Owner’s immediate family, or any
entity controlled by or under common control with an Owner or a member of an
Owner’s immediate family or any combination of the foregoing; “Surgical
Business” means any health care business which provides a facility in which
surgical procedures are performed and shall include, without limitation, a
specialty hospital, hospital or ambulatory surgery center; and “Restricted Area”
means the territory described on Exhibit 4.1 attached hereto.


 


4.2.         Development Opportunities. 
If Contractor or either Owner, anytime prior to the fifth anniversary of
the Effective Date, identifies or learns of a Suitable
Opportunity (as defined below) to develop a Surgical Business within the
Restricted Area, the Contractor shall give written notice to the Manager of
each such Suitable Opportunity (the “Development Notice”).  The Manager shall consult with the Contractor
regarding each such Suitable Opportunity, and Contractor shall reasonably
cooperate with the Manager in ascertaining all information about each such
Suitable Opportunity as Manager shall reasonably request.  Each such Suitable Opportunity that Manager
elects to pursue (a “Development Project”) shall be operated pursuant to the
terms of an Operating Agreement substantially in the form of Exhibit 4.2(A) hereto
and managed by Manager (or an affiliate of Manager) pursuant to a Management
Agreement substantially in the form of Exhibit 4.2(B) hereto,
in each case with such amendments as Manager shall reasonably request without
changing the
substance of the economic relationships or (in any material respects) the
rights or obligations of the Contractor contained in such Exhibits 4.2(A) and
4.2(B).  The Contractor and the
Manager shall initially have equal levels of ownership (prior to the offering
of any ownership interests therein to qualified and suitable third party
purchasers thereof) in
any Development Project; provided, however, to acquire such
ownership, Contractor shall (i) contribute cash for equity in the same
proportion as the Manager (or its affiliate) and on the same basis as
physicians investing in such Development Project and (ii) provide or
guaranty its proportion (based on its ownership interest) of such Development
Project’s indebtedness provided by or guaranteed by the Manager (or its
affiliate), in all cases such amounts to be reasonably determined by the
Manager in good faith.  The Manager shall
not be required to permit ownership by the Contractor as to a particular
Development Project, if neither the closing of an initial investment in or
commencement of material construction on such Development Project shall have
commenced within 18 months after the giving of the Development Notice.  If (i) Manager fails to indicate its interest in pursuing in
good faith and with reasonable diligence any opportunity for developing a
Surgical Business by written notice to Contractor within 45 days after receipt
of the Development Notice, (ii) Manager subsequently decides that it does not intend to
pursue such opportunity in good faith and with reasonable diligence (in which
case Manager will promptly send a written notice to Contractor) or (iii) at
any time Contractor sends Manager a written notice stating that Contractor
believes that Manager has not been pursuing such opportunity in good faith and
with reasonable diligence and describing the action(s) that, if taken by
Manager, would cause Contractor to believe that Manager is pursuing such
opportunity in good faith and with reasonable diligence, and Manager fails to
give reasonable assurances to Contractor of Manager’s good faith and reasonable
diligence in pursuing such opportunity within 20 days of receipt of such
notice, then such opportunity shall be
deemed to be a “Rejected Development”; 
provided, however, no Development Project shall be deemed to be a
Rejected Development any time prior to the second anniversary of the Effective
Date.  As used herein, “Suitable Opportunity” means an
opportunity that is reasonably consistent (as determined in


 


5

















 


good faith by Owners) with parameters established from
time to time by Manager such that a reasonable person might conclude that
Symbion would be interested in pursuing such opportunity.  Consultant and Owners will not have any
obligation to provide services with respect to any Development Project after its
opening unless they reach agreement with Manager on a sharing of the management
fees for that Development Project.


 


4.3.         Acquisition Opportunities. 
If Contractor or either Owner, anytime prior to the fifth anniversary of
the Effective Date, identifies or learns of a Suitable Opportunity for Manager
or any affiliate of Manager to acquire (by any form of transaction, including the purchase
of securities from any Person, including existing owners thereof) an interest
in the equity or the assets of an existing Surgical Business within the Restricted
Area, the Contractor shall give written notice to the Manager of each such Suitable
Opportunity (the “Acquisition
Notice”).  The Manager shall consult with
the Contractor regarding each such Suitable Opportunity, and Contractor shall reasonably cooperate
with the Manager in ascertaining all information about each such Suitable
Opportunity as
Manager shall reasonably request.  The
Manager and/or its affiliates and the Contractor will work in good faith with
regard to such Suitable Opportunity that Manager elects to pursue
(an “Acquisition Project”). Upon the closing of the acquisition of an interest in or the assets
of a Qualified Acquisition Project, the Contractor shall receive from the
Manager a fee, payable in cash, equal to * percent (*%) of the gross purchase
price paid by Manager for its interest in the Qualified Acquisition Project
(inclusive of a proportionate amount of assumed indebtedness but exclusive of a
proportionate amount of any working capital acquired in excess of a normalized
working capital amount, such proportionate amount being equal to the percentage
interest acquired by Manager in the Qualified Acquisition Project).  Additionally, Contractor shall be entitled to
receive from Manager a share of all Management Fees actually collected by
Manager, as and when collected, from an Acquired Facility during the two years
after the later of (x) the closing of the acquisition or (y) with
respect to any center at which procedures are not being regularly performed as
of the closing of the acquisition, the date on which the first procedure is
performed at such center, which share shall equal * percent of the net revenues
of such Acquired Facility (or a comparable share relative to the Manager’s
management fees if based on some other amount). 
As used herein, “Qualified Acquisition Project” shall mean an
Acquisition Project identified in an Acquisition Notice with respect to which
the Manager or its affiliate acquires an interest in the equity or the assets
of within 18 months after the giving of the Acquisition Notice. 
If (i) Manager
fails to indicate its interest in pursuing in good faith and with reasonable
diligence any opportunity for acquiring such Surgical
Business by written notice to Contractor within 45 days after receipt of the
Acquisition Notice, (ii) Manager
subsequently decides that it does not intend to pursue such opportunity in good
faith and with reasonable diligence (in which case Manager will promptly send a
written notice to Contractor) or (iii) at any time Contractor sends Manager
a written notice stating that Contractor believes that Manager has not been
pursuing such opportunity in good faith and with reasonable diligence and
describing the action(s) that, if taken by Manager, would cause Contractor
to believe that Manager is pursuing such opportunity in good faith and with
reasonable diligence, and Manager fails to give reasonable assurances to
Contractor of Manager’s good faith and with reasonable diligence in pursuing
such opportunity within 20 days of receipt of such notice, then such opportunity shall be deemed to be a “Rejected
Acquisition”;  provided, however, no
Acquisition Project shall be deemed to be a Acquisition Development any time
prior to the second anniversary of the Effective Date. Consultant and Owners will not have any
obligation to provide services with respect to any Acquisition Project after
its acquisition unless they reach agreement with Manager on a sharing of the
management fees for that Project.


 


4.4.         Exclusivity; Restrictions on
Ownership; Nonsolicitation.


 


(a)           Restriction on
Activities in Connection with Surgical Businesses.  Prior to the fifth anniversary of the Effective Date,
Contractor and Owners hereby covenant and agree with Manager that Contractor
and Owners will not, and will cause all Covered Parties to not, directly or
indirectly, except in


 


6
















 


connection with (I) Acquisition Projects and
Development Projects being pursued with Manager and/or its affiliates, (II) (after the second anniversary of
the Effective Date) Rejected Developments or Rejected Acquisitions that
are not in any Symbion Facility Zone (as defined below) or (III) the “Center
for Orthopedic Surgery” located at 6815 Noble Avenue, Van Nuys, CA 91405: (i) develop,
acquire or own an interest in, lease, manage, joint venture with or be employed by
a Surgical Business in the Restricted Area, or commence or agree to do any of
the foregoing or enter into discussions with any other person with respect to
the foregoing; or (ii) render any service to (as an employee, independent contractor or
otherwise) intended to assist any person, partnership, corporation or other
entity (other than Manager and/or its affiliates) in any of the activities in
the foregoing clause (i); provided, however, that the purchase of
a publicly traded security of a corporation engaged in such business or service
shall not in itself be deemed violative of this Agreement so long as Covered
Parties do not own, directly or indirectly, more than five percent (5%) of such
corporation.  As used herein, a “Symbion
Facility Zone” means the geographic radius or other defined area that surrounds
any healthcare facility in which Manager or any of its affiliates owns an
interest on the date of the delivery of a Development Notice or an Acquisition
Notice (as the case may be) in which physician members or partners who own
interests in such facility are prohibited, by the terms of an operating
agreement or partnership agreement, from owning interests in and conducting
certain other activities with respect to businesses in competition with such
facility, but in any case not more than a 25 mile radius.


 


(b)                 Nonsolicitation and Interference.  Prior to the fifth anniversary of the
Effective Date, Contractor and Owners hereby covenant and agree with Manager
that Contractor and Owners will not, and will cause all Covered Parties to not,
directly or indirectly, except in connection with Acquisition Projects and
Development Projects being pursued with Manager and/or its affiliates, (i) interfere
with, disrupt or attempt to disrupt any past, present or prospective
relationship, contractual or otherwise, related to or arising from any
agreement, relationship or contractual arrangement between the Manager or any
of its affiliates and any customer, client, supplier, owner or prospective
owner of any Surgical Business of which Manager or its affiliates is also an
owner or employee of the Surgical Business or any of its subsidiaries or
affiliates or (ii) solicit, entice or induce any employee (including all
corporate officers and managers) of the Manager or any of its affiliates to
leave their employment with the Manager or its affiliates, or hire any such
employee to work in any capacity.  For so
long as Manager or its affiliates continues to manage an Existing Center, a
Developing Center, or a center resulting from a Acquisition Project or
Development Project, Contractor and Owners hereby covenant and agree with
Manager that Contractor and Owners will not, and will cause all Covered Parties
to not, directly or indirectly, except in connection with Acquisition Projects
and Development Projects being pursued in conjunction with Manager and/or its
affiliates, solicit, entice or induce any physician who owns an interest in
that center to cease or reduce his or her business relationships with such
center.


 


(c)           Other Provisions. 
The Owners and the Contractor agree that the covenants and
agreements contained herein are, taken as a whole, reasonable and necessary
with respect to the activities covered and will not challenge the geographic
scope and duration of any such covenants in any proceeding to enforce such covenants.  If a judicial determination is made that any
of the provisions of this Section 4.4 constitutes an unreasonable or
otherwise unenforceable restriction against the Owners and the Contractor, the
provisions of this Section 4.4 shall be rendered void only to the extent
that such judicial determination finds such provisions to be unreasonable or
otherwise unenforceable.  In this regard,
the parties hereto hereby agree that any judicial authority construing this
Agreement shall be empowered to reduce any portion of the territory or
prohibited business activity from the coverage of this Section 4.4 and to
apply the provisions of this Section 4.4 to the remaining portion of the
territory or the remaining business activities not so reduced by such judicial
authority.


 


(d)           Acknowledgement of Reliance and Inducement.  The Contractor and the Owners
acknowledge and agree that their execution, delivery and performance of this
Agreement, and specifically


 


7

















 


the covenants and obligations set forth in this Article IV,
were a material inducement for the affiliates of Manager to enter into and to
consummation the transactions contemplated by the MIPA and the MRPA, and that
the affiliates of Manager who were “Purchasers” thereunder would not have
entered into or consummated the transaction contemplated by the MIPA and the
MRPA unless the Contractor and the Owners had agreed to the provisions of this Article IV.  This acknowledgement is not intended to imply
or support any increased damages for any breach of this Agreement, nor shall it
be used for such purpose.


 


ARTICLE V

INDEMNIFICATION


 


5.1.         Indemnification
by the Manager.  The Manager agrees to indemnify and hold
harmless the Contractor and the Owners, their affiliates and their respective
shareholders, members, directors, officers, employees and agents (each, a “Contractor
Indemnified Party”) from and against any and all losses, claims, damages,
liabilities, costs and expenses (including reasonable attorneys’ fees and
expenses related to the defense of any claims) (a “Loss”), which may be
asserted against any of the Contractor Indemnified Parties, in connection with
the Contractor’s provisions of services, including the Contractor’s performance
of its duties hereunder, if such Loss has not been caused by the gross
negligence or willful misconduct of a Contractor Indemnified Party.  In no event shall the Manager have any
liability for any special, exemplary, punitive or consequential damages
(including loss of profit or revenue) suffered or incurred by any Contractor
Indemnified Party.


 


5.2.         Indemnification
by the Contractor and Owners.  The Contractor and each Owner agrees to
indemnify and hold harmless the Manager and its members, shareholders,
partners, directors, and officers, employees and agents (each, a “Manager
Indemnified Party”) from and against all Loss which may be asserted against an
Manager Indemnified Party as a result of the gross negligence or willful
misconduct of the Contractor in connection with the performance by the
Contractor of its duties under Article I hereof if such Loss has not been
caused by the gross negligence or willful misconduct of an Manager Indemnified
Party.  *.  In no event shall the Contractor or Owners
have any liability for any special, exemplary, punitive or consequential
damages (including loss of profit or revenue) suffered or incurred by any
Manager Indemnified Party.


 


5.3.         Exclusivity
of Remedy.  Other than claims arising under Article IV
hereof and claims for the non-payment of fees and expenses under Article II
hereof, and except as provided in Section 3.2 hereof, this Article V
shall constitute the sole remedy of the parties hereto with respect to any Loss
and/or any claim (including any Loss resulting from a third party claim) if
such Loss and/or claim arises out of this Agreement, whether such claim is
based in contract, tort, or otherwise, but excluding claims arising out of
willful misconduct or fraud.


 


ARTICLE VI

MISCELLANEOUS


 


6.1.         This Agreement shall be construed to be
in accordance with any and all federal and state laws, including laws relating
to Medicare, Medicaid, and other third party payers.  In the event there is a change in such laws,
whether by statute, regulation, agency or judicial decision, that has any material
effect on any term of this Agreement, or in the event that counsel to one party
determines that any term of this Agreement poses a risk of violating such laws,
then the applicable term(s) of this Agreement shall be subject to
renegotiation and either party may request renegotiation of the affected term
or terms of this Agreement, upon written notice to the other party, to remedy
such condition. In the interim, the parties


 


8

















 


shall perform their obligations hereunder in full
compliance with applicable law.  The
parties expressly recognize that upon request for renegotiation, each party has
a duty and obligation to the other only to renegotiate the affected term(s) in
good faith and, further, the parties expressly agree that their consent to
proposals submitted by the other party during renegotiation efforts shall not
be unreasonably withheld.


 


6.2.         Should the parties be unable to
renegotiate the term or terms so affected so as to bring it/them into compliance
with the statute, regulation or judicial opinion that rendered it/them unlawful
or unenforceable within thirty (30) days of the date on which notice of a
desired renegotiation is given, then either party shall be entitled, after the
expiration of said thirty (30) day period, to terminate this Agreement upon
sixty (60) additional days written notice to the other party.


 


6.3.         Upon the written request of the Secretary
of Health and Human Services or the Comptroller General or any of their duly
authorized representatives, the Contractor and any of its affiliates providing
services with a value or cost of $10,000 or more over a twelve (12) month
period shall make available to the Secretary the contracts, books, documents
and records that are necessary to verify the nature and extent of the cost of
providing such services.  Such inspection
shall be available up to four years after the rendering of such services.  The parties agree that any applicable
attorney-client, accountant-client or other legal privilege shall not be deemed
waived by virtue of this Agreement.


 


6.4.         Section and Article headings
are for convenience of reference only and shall not be used to construe the
meaning of any provision of this Agreement.


 


6.5.         This Agreement may be executed in any number
of counterparts, each of which shall be an original and all of which shall
together constitute one Agreement.


 


6.6.         Should any part of this Agreement be
invalid or unenforceable, such invalidity or unenforceability shall not affect
the validity and enforceability of the remaining portions.


 


6.7.         The execution and performance of this
Agreement by each party has been duly authorized by all applicable laws and
regulations and all necessary corporate action, and this Agreement constitutes
the valid and enforceable obligation of each party in accordance with its
terms.


 


6.8.         This Agreement and the rights of the
parties shall be construed and enforced in accordance with the laws of the
State of California without regard to its principles of conflicts of laws.  Each party hereby irrevocably and
unconditionally consents to venue in any state or federal court located in (or
the district of which includes) Los Angeles, California (the “Los Angeles
Courts”) for any litigation arising out of or relating to this Agreement, and
each party hereby waives any objection to the laying of venue of any such
litigation in the Los Angeles Courts and agrees not to plead or claim in any
Los Angeles Court that such litigation brought therein has been brought in an
inconvenient forum.  Each party hereby
irrevocably and unconditionally consents to a Los Angeles Court applying
California law to any litigation arising out of or relating to this Agreement.


 


6.9.         This Agreement may not be modified except
in writing executed by the party to be charged.


 


6.10.       This Agreement constitutes the entire
Agreement of the parties hereto and supersedes all prior Agreements and
representations with respect to the subject matter hereof.


 


6.11.       The parties hereto have each negotiated
the terms hereof and reviewed this Agreement carefully.  It is the intent of the parties that each
word, phrase, and sentence and other part hereof shall be


 


9

















 


given its plain meaning, and that rules of
interpretation or construction of contracts that would construe any ambiguity
of any part hereof against the draftsman, by virtue of being the draftsman,
shall not apply.


 


6.12.       This Section 6.13 shall become
effective upon such date as the Manager is required to be in full compliance
with the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”)
and the applicable privacy regulations at 45 C.F.R. Parts 160 and 164, as
amended (“Federal Privacy Regulations”), or at any earlier date mutually agreed
upon in writing by the parties, and shall remain in effect for so long as
required by law.  The Contractor agrees
to comply with the following:


 


a.       The
Contractor shall not use any of the Centers’ “protected health information” as
defined in 45 C.F.R. Section 164.501 (“Protected Health Information”)
other than: (a) as required to perform the Contractor’s obligations under
this Agreement; (b) as is necessary for the Contractor’s proper management
and administration; and (c) as permitted by law.


 


b.       The
Contractor may only disclose the Centers’ Protected Health Information: (a) to
its “workforce” as defined in 45 C.F.R. Section 160.103 (the “Workforce”)
for the purposes of performing its obligations under this Agreement; (b) as
is necessary for the Contractor’s proper management and administration; and (c) to
perform its legal responsibilities.


 


c.       If the
Contractor carries out any of its duties under this Agreement through a
subcontractor, which duties, by their nature, involve the use, custody,
disclosure, creation of or access to the Centers’ Protected Health Information,
the Contractor shall enter into a written contract for such work and the
contract shall contain provisions substantially identical to the restrictions
and conditions set forth in this Section 13.


 


d.       The Contractor
may use or disclose the Centers’ Protected Health Information as is necessary
for the Contractor’s proper management and administration only if: (a) the
Contractor obtains reasonable written assurances from the person or entity to
whom the Centers’ Protected Health Information is disclosed that such person or
entity shall hold the Centers’ Protected Health Information confidentially and
only use or further disclose the Centers’ Protected Health Information as
required by law or for the purpose for which it was disclosed to the person or
entity; and (b) the person or entity agrees to notify the Contractor of
any unauthorized use or disclosure of the Centers’ Protected Health Information
of which the person or entity becomes aware.


 


e.       The
Contractor will implement appropriate safeguards to prevent the use or
disclosure of the Centers’ Protected Health Information by the Contractor or
its subcontractors other than as provided for in this Agreement.  If the Contractor becomes aware of any use or
disclosure of the Centers’ Protected Health Information by the Contractor or
its subcontractors not provided for in this Agreement, the Contractor shall
report such information to the Center.


 


f.        Upon a
patient’s request, the Contractor shall make available all or a portion of the
designated record sets as defined in 45 C.F.R. Section 164.501, containing
the Centers’ Protected Health Information 
which is stored or maintained by the Contractor or otherwise in the
possession of the Contractor or its subcontractors (“Designated Record Sets”)
in accordance with 45 C.F.R. Section 164.524 and 45 C.F.R. Section 164.526.  Upon a patient’s request, the Contractor
shall make available such information in the Contractor’s possession, custody
or control that is required to make the accounting required by 45 C.F.R. Section 164.528.


 


10

















 


g.       To the
extent required by the Federal Privacy Regulations, the Contractor shall make
its internal practices, books, and records relating to the use and disclosure
of the Centers’ Protected Health Information received from, or created or
received by the Contractor on behalf of the Centers available to the Secretary
of the Department of Health and Human Services to the extent required for
determining compliance with 45 C.F.R. 164.504(e). Notwithstanding the
foregoing, no attorney-client, accountant-client, or other legal privilege
shall be deemed waived by virtue of this Section 13.


 


h.       Upon
expiration or termination of this Agreement, the Contractor shall return all of
the Centers’ Protected Health Information. 
In the event that the Contractor determines that returning or destroying
all copies of the Protected Health Information is not feasible, the Contractor
shall extend the protections contained in this Section 13 to that portion
of the Centers’ Protected Health Information which is not returned or destroyed
and limit further uses and disclosures of such Protected Health Information to
those purposes that make the return or destruction of such Protected Health
Information not feasible.


 


6.13.       All notices permitted or required by this
Agreement shall be deemed given when in writing and delivered personally via
overnight courier or deposited in the United States mail, postage prepaid,
return receipt requested, addressed to the other party at the address set forth
below or such other address as the party may designate in writing:


 


	
   

  	
  To the Manager:

  	
  SymbionARC Management Services, Inc.

  
	
   

  	
   

  	
  40 Burton Hills Blvd., Suite 500

  
	
   

  	
   

  	
  Nashville, Tennessee 37215

  
	
   

  	
   

  	
  Attn: President

  
	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  	
  Joseph A. Sowell, III, Esq.

  
	
   

  	
   

  	
  Waller Lansden Dortch & Davis, PLLC

  
	
   

  	
   

  	
  511 Union Street, Suite 2700

  
	
   

  	
   

  	
  Nashville, Tennessee 37219

  
	
   

  	
   

  	
   

  
	
   

  	
  To the Contractor:

  	
  To the addresses set forth on the signature page

  
	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  	
  Guth | Christopher LLP

  
	
   

  	
   

  	
  10866 Wilshire Blvd, Suite 1250

  
	
   

  	
   

  	
  Los Angeles, California 90024

  
	
   

  	
   

  	
  Attention: Theodore E. Guth

  



 


6.14.       EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO DEMAND THAT ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS
AGREEMENT OR THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY.  THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO
DEMAND A TRIAL BY JURY ARISING FROM ANY SOURCE INCLUDING, BUT NOT LIMITED TO,
THE CONSTITUTION OF THE UNITED STATES OR ANY STATE THEREIN, COMMON LAW OR ANY
APPLICABLE STATUTE OR REGULATIONS.  EACH
PARTY HERETO ACKNOWLEDGES THAT IT IS KNOWINGLY AND VOLUNTARILY WAIVING ITS
RIGHT TO DEMAND TRIAL BY JURY.


 


6.15.       The
Contractor shall not assign this Agreement without the written consent of the
Manager, which consent shall not be unreasonably withheld.  Except in the event of the merger or
consolidation of the Manager, or the sale by the Manager of substantially all
of its assets in which all of


 


11

















 


the Management Agreements are also being assigned, the
Manager shall not assign this Agreement, other than to a subsidiary corporation
or other entity controlled by or under common control with the Manager and to
which all of the Management Agreements are being assigned, without the written
consent of the Contractor, which consent shall not be unreasonably withheld.


 


[Remainder of page intentionally left blank.]


 


12

















 


IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date and year first hereinabove written.


 


 


	
   

  	
  “MANAGER”

  
	
   

  	
   

  
	
   

  	
  SYMBIONARC MANAGEMENT SERVICES,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  “CONTRACTOR”

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PARTHENON
  MANAGEMENT PARTNERS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “OWNERS”

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Andrew
  A. Brooks, M.D.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address
  for Notices

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Randhir
  S. Tuli

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for Notices

  



 


13

















 


SCHEDULE 1


 


List of Centers


(as of the Effective Date)


 


Existing
Centers


 


1.                                       an outpatient surgery center located at
9575 Brighton Way, Suite 100, Beverly Hills, CA 90210 (the “Brighton
Center”).


 


2.                                       an outpatient surgery center located at
16501 Ventura Boulevard, Suite 103, Encino, CA  91436 (the “Encino Center”).


 


3.                                       an outpatient surgery center located at
8670 Wilshire Boulevard, Suite 300, Beverly Hills, CA 90211 (the “Wilshire
Center”).


 


Developing
Centers


 


1.                                       an outpatient surgery center located at 15825
Laguna Canyon Road, Suite 200, Irvine, CA 92618 (the “Irvine Center”).


 


2.                                       an outpatient surgery center located at
51 North Fifth Avenue, Suite 101, Arcadia, CA 91006 (the “Arcadia Center”).


 


3.                                       an outpatient surgery center located at
696 Hampshire Road, Thousand Oaks, CA 91361 (the “Agoura Hills Center”).


 

















 


EXHIBIT 1.2


 


Services of Andrew A. Brooks, M.D.


 


Owner
shall use good faith and reasonable diligence in providing consulting and
management advisory services to assist Manager in its oversight of the
efficient operation of the Existing Centers, and Developing Centers.


 


Services of Randhir S. Tuli


 


Owner
shall use good faith and reasonable diligence in providing consulting and
management advisory services to assist Manager in the day to day operation
of  the Existing Centers and Developing
Centers, including, without limitation, monitoring and/or assisting Manager, as
Manager may reasonably request, with the following:


 


A.                                   obtaining or maintaining the
accreditation of a Center (if the Center is accredited) with the proper
agencies and insurance companies, including JCAHO or AAAHC;


 


B.                                     the hiring, employing,
supervising, directing, leasing and discharging all non-physician personnel
performing services at a Center;


 


C.                                     the negotiation by Centers
of reimbursement and fee payment methods, in coordination with Manager with the
appropriate third party payers and state and federal agencies;


 


D.                                    the establishment of
staffing schedules, wage structures and personnel policies for all personnel at
a Center;


 


E.                                      the determination and
setting of patient charges for services provided by a Center;


 


F.                                      the development and
provision by Manager of policies and operating procedures to all departments of
a Center;


 


G.                                     the development of standard
formats for all charts, invoices, and other forms used in the operation of a
Center;


 


H.                                    the purchase, lease or
disposition by a Center of all supplies and equipment used in the operation of
the Center;


 


I.                                         the day-to-day operations of
a Center;


 


J.                                        the negotiating
or retention of contractual relationships for anesthesia services, radiology
services, and pathology services, at a Center.


 


K.                                    the
establishment and functioning of accounting, billing, receivables, credit and
collection policies and procedures for the Centers.


 


L.                                    the development of systems
for handling patient complaints.


 


2

















 


EXHIBIT 3.2


 


Agreements


 


1.                                     Amended and Restated Operating Agreement
of Specialty Surgical Center, LLC, a California limited liability company


 


2.                                     Amended and Restated Operating Agreement
of Specialty Surgical Center of Encino, LLC, a California limited liability
company


 


3.                                     Amended and Restated Operating Agreement
of Specialty Surgical Center of Irvine, LLC, a California limited liability
company


 


4.                                     Amended and Restated Operating Agreement
of Specialty Surgical Center of Arcadia, LLC, a California limited liability
company


 


5.                                     Amended and Restated Operating Agreement
of Specialty Surgical Center of Thousand Oaks, LLC, a California limited
liability company


 


3
















 


EXHIBIT 4.1


 


Restricted Area


 


The Restricted Area shall consist of the following
counties in California:


 




	
  Fresno

  
	
  Imperial

  
	
  Inyo

  
	
  Kern

  
	
  Kings

  
	
  Los Angeles

  
	
  Madera

  
	
  Mariposa

  
	
  Merced

  
	
  Mono

  
	
  Monterrey

  
	
  Orange

  
	
  Riverside

  
	
  San Benito

  
	
  San Bernardino

  
	
  San Diego

  
	
  San Jose

  
	
  San Luis Obispo

  
	
  San Mateo

  
	
  Santa Barbara

  
	
  Santa Cruz

  
	
  Stanislaus

  
	
  Tulare

  
	
  Ventura

  






 


4

















 


EXHIBIT 4.2(A)


 


Form of Operating Agreement


 


The Form of Operating Agreement shall be
substantially the same as the Operating Agreement of Specialty Surgical Center
of Arcadia, LLC executed and delivered at the closing of the transactions
contemplated by the MIPA, except that the provisions in respect of the “Second
Option” contained in the Operating Agreement of Specialty Surgical Center of
Thousand Oaks, LLC executed and delivered at the closing of the transactions
contemplated by the MIPA shall be incorporated therein.  Alternatively, it is agreed that a limited
partnership agreement containing substantially the same provisions shall
qualify as such an Operating Agreement if the entity through which such
opportunity is pursued is determined to be a limited partnership rather than a
limited liability company.


 


5

















 


EXHIBIT 4.2(B)


 


Form of Management Agreement


 


The Form of
Management Agreement shall be substantially the same as the Management
Agreement attached as Exhibit 6.9A to the MIPA providing for a * percent (*%)
management fee.


 


6

















 


EXHIBIT 6.10


 


Form of Sellers’ Opinion


 


(To be attached at Closing)


 

















 


FORM OF LEGAL OPINION


 


SymbionARC Management Services, Inc.


Symbion Ambulatory Resource Centres, Inc.


c/o Symbion, Inc.


40 Burton Hills Boulevard, Suite 500


Nashville, Tennessee 37215


 


Ladies and Gentlemen:


 


We have acted as
counsel to Parthenon Management Partners, LLC (the “Company”)
and Andrew A. Brooks, M.D. and Randhir S. Tuli (each an “Owner”
and, collectively the “Owners” in
connection with the Management Rights Purchase Agreement (the “Purchase Agreement”) between those
parties and SymbionARC Management Services, Inc.. This opinion is given to
you pursuant to section 6.10 of the Purchase Agreement. Unless defined herein,
terms that are defined in the Purchase Agreement have the meanings herein given
them in the Purchase Agreement. The term “Management Documents”
means the Purchase Agreement, the Consulting Agreement between the Owners and
SymbionARC Management Services, Inc. and Symbion Ambulatory Resource Centres, Inc.
and the Escrow Agreement as defined in Section 1.2 (b) of the
Purchase Agreement.


 


In
connection with this opinion letter we have examined certain corporate records,
certificates and documents in rendering this opinion. In making such examinations,
we have made certain customary assumptions, such as the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
lack of any undisclosed modifications, waivers or amendments to any agreements
reviewed by us, the conformity to authentic originals of all documents
submitted to us as certified or photostatic copies and the truth and accuracy
of factual statements contained in such documents and certificates. Except as
expressly set forth herein, we have also assumed that the execution, delivery
and performance of any agreements or consents are within the powers of each
signatory and have been duly authorized and validly carried out. We have
further assumed without investigation the legal capacity of each Owner signing
documents in his individual capacity.


 


Based
upon and subject to the assumptions, limitations, qualifications and exceptions
stated herein, we are of the opinion that:


 


1.                                     The Company is a limited liability
company duly formed and validly existing and in good standing as a limited
liability company under the laws of the State of California and has all
requisite company power and authority to execute, deliver and perform all of
its obligations under the Management Documents to which it is party:


 


2.                                     The execution, delivery and performance
by the Company of the Management Documents to which it is party have been duly
authorized by all necessary company action.


 


3.                                     Each Management Document constitutes a
valid and binding agreement in accordance with its terms of each Owner and the
Company to which it is party.


 

















 


4.                                     The execution and delivery by the Company
and each Owner of the Management Documents to which each is a party do not to
our knowledge violate or conflict with any law or governmental regulation.


 


The
opinions expressed herein are subject to the following assumptions,
limitations, qualifications and exceptions:


 


We
express no opinion with respect to:


 


(a)           the effect of bankruptcy, insolvency,
reorganization, moratorium and other similar laws and legal and equitable
principles relating to, limiting or affecting the enforcement of creditors’
rights generally including, without limitation, preferences and fraudulent
conveyances and concepts of materiality, reasonableness, good faith, fair
dealing and unconscionability;


 


(b)           the discretion of courts in awarding
equitable remedies (regardless of whether considered in a proceeding in equity
or at law), including, but not limited to, specific performance or injunctive
relief;


 


(c)           the unenforceability under certain
circumstances of provisions stipulating a liquidated damages or imposing
penalties or forfeitures upon delinquency in payment or the occurrence of a
default or failure to perform certain acts, including, but not limited to,
provisions imposing penalties, forfeitures, reinstatement of rights or an
increase in interest or dividend rate upon the occurrence of a default or
failure to perform certain acts;


 


(d)           the enforceability of the
indemnification provisions of the Management Documents;


 


(e)           the enforceability of the
restrictions on competition of the Management Documents;


 


(e)           the application or contravention of Section 548
of the federal Bankruptcy Code and comparable provisions of state law or of any
antifraud laws, antitrust or trade regulation laws;


 


(f)            the enforceability of the choice of
law or choice of forum clauses, or any waiver of any right to trial by jury;
and


 


(g)           the effect of judicial decisions or
applicable law which permit the introduction of extrinsic evidence to modify
the terms or the interpretation of any agreement.


 


For
purposes of the opinions set forth in paragraph 1 with respect to good standing
of the Company, we are relying solely upon a certificate of good standing from
the State of California (a copy of which is attached hereto as Exhibit A). We express no
opinion with respect to such matters beyond the date of that certificate.


 


The
opinions set forth above in paragraph 4 are based upon our consideration of
only those statutes, rules and regulations which in our experience are
normally applicable to transactions such as those contemplated by the
Management Documents. We have not undertaken any research for purposes of
determining whether the Company or any Owner is 


 


2

















 


subject to any law or other governmental requirement other than to
those laws and other requirements which in our experience a lawyer in the State
of California exercising customary professional diligence would reasonably
recognize to be directly applicable to persons in their circumstances as we
understand them.


 


We are
relying in part as to certain factual matters on a Certificate of the Company
and of each Owner, a copy of which is attached hereto as Exhibit B.
We have not undertaken any independent investigation to determine the existence
or nonexistence of such facts. Similarly, whenever our opinion herein with
respect to the existence or nonexistence of facts is qualified by the phrase “to
our knowledge”, or any similar phrase implying a limitation on the basis of
knowledge, such phrase means only that the individual attorneys in this firm
who devoted substantive attention to the matters involving the Management
Documents do not have actual knowledge that the facts as stated herein are
untrue. Such persons have not undertaken any investigation to determine the
existence or nonexistence of such facts in connection with the preparation of
this opinion, and no inference as to the extent of their investigation should
be drawn from the fact of our representation of the Company and the Owners. We
have not represented those entities in other matters.


 


We are
admitted to the bar in the State of California. Our opinions are limited to the
laws of the State of California and the United States of America, and we express
no opinion as to the laws of any other jurisdiction.


 


Our
opinion is rendered as of the date hereof and is based solely on existing laws,
present judicial interpretations and the facts as we understand them. We assume
no obligation to revise or supplement this opinion should those change, whether
by legislative action, judicial decision or otherwise.


 


This
opinion letter is rendered solely for your benefit in connection with the
Management Documents, and may not be relied upon by you for any other purpose
or furnished to, used, circulated, quoted or referred to, or relied upon by,
any other person without our prior written consent. Without our written
consent: (i) no person other than you may rely on this letter for any
purpose; (ii) this letter may not be cited or quoted in any financial
statement, prospectus, private placement memorandum or other similar document; (iii) this
letter may not be cited or quoted in any other document or communication which
might encourage reliance upon this letter by any person or for any purpose
excluded by the restrictions in this paragraph; and (iv) copies of this
letter may not be furnished to anyone for purposes of encouraging such
reliance.


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Guth I Christopher LLP

  



 


3

















 


Exhibit A


 


Certificate of Good
Standing of Parthenon Management Partners, LLC


 


4

















 


Exhibit B


 


CERTIFICATE OF 

PARTHENON MANAGEMENT PARTNERS, LLC,

ANDREW BROOKS AND RANDHIR TULI 

IN SUPPORT OF OPINION OF 

GUTH | CHRISTOPHER LLP


 


August 1, 2005


 


The
undersigned, Andrew Brooks and Randhir Tuli hereby certify that they are,
respectively, the duly elected, qualified and acting Manager(s) of
Parthenon Management Partners, LLC, a California limited liability company (the
“Company”), and further certify in
support of the Opinion of Guth I Christopher LLP being rendered
pursuant to that certain Management Rights Purchase Agreement (the “Purchase Agreement”), dated as of July 27,
2005. Capitalized terms used but not defined herein or in the Opinion shall
have the meanings given them in the Purchase Agreement.


 


1.             Attached
hereto as Exhibit 1 are true,
complete and correct copies of resolutions duly adopted at meetings or by
written consents of the managers and members of the Company approving the
terms, conditions and provisions of the Management Documents. Said resolutions
have not been modified, amended or rescinded and remain in full force and
effect as of the date hereof. No other resolutions have been adopted by the
managers or members of the Company with respect to the Management Documents and
the transactions contemplated thereby and referred to therein.


 


2.             Andrew
Brooks and Randhir Tuli are the sole owners and managers of the Company. No other
person has any right to vote or consent with respect to any decision by the
members or managers of the Company.


 


3.             Attached
hereto as Exhibit 2 is a true,
complete and correct copy of the currently effective Operating Agreement of the
Company dated     . There has been no further amendment to
the Operating Agreement since such date, and no further amendment has been
authorized or approved by the managers or the members of the Company as of the
date hereof.


 


4.             Attached
hereto as Exhibit 3 is a true, complete
and correct copy of a certificate of good standing of the Company from the
state of California


 


5.             The
Company’s representations in the Purchase Agreement and each of the Management
Documents are true and correct in all respects as of the date hereof and may be
relied upon by Guth l Christopher LLP in rendering its Opinion.


 


5

















 


IN
WITNESS WHEREOF, the undersigned have executed this Certificate as of the date
first  above written.


 




	
  PARTHENON MANAGEMENT PARTNERS,
  LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Andrew Brooks,
  individually and as managing member of Parthenon

  	
   

  	
  Randhir Tuli,
  individually and as managing member of Parthenon

  






 


6

















 


EXHIBIT 1


 


Resolutions


 


(see attached document)


 


7

















 


EXHIBIT 2


 


Operating Agreement


 


(see attached document)


 


8

















 


EXHIBIT 3


 


Certificate of Good Standing


 


(see attached document)


 


9
















 


EXHIBIT 7.9


 


Form of Purchasers’ Opinion


 


(To be attached at Closing)


 

















 


August 1, 2005


 


To the Persons Set
Forth on Exhibit A Hereto


 


Ladies and
Gentlemen:


 


We have acted as counsel to Symbion Ambulatory Resource Centers, Inc.,
a Tennessee corporation (“SARC”), SymbionARC Management Services, Inc., a
Tennessee corporation (the “Manager”), SymbionARC Support Services, LLC, a
Tennessee limited liability company (“Symbion Support”), and SMBISS Beverly
Hills, LLC, a Tennessee limited liability company, SMBISS Encino, LLC, a
Tennessee limited liability company, SMBISS Irvine, LLC, a Tennessee limited
liability company, and SMBISS Arcadia, LLC, a Tennessee limited liability
company (each a Purchaser and collectively, the “Purchasers”), in connection
with the preparation, execution and
delivery of the Purchase Agreement, dated July 27, 2005 (the “Purchase
Agreement”) among SARC, the Purchasers and the members of Specialty Surgical
Center, LLC, a California limited liability company, Specialty Surgical Center
of Encino, LLC, a California limited liability company, Specialty Surgical
Center of Irvine, LLC, a California limited liability company, and Specialty
Surgical Center of Arcadia, LLC, a California limited liability company (each
an “LLC” and collectively, the “LLCs”) identified on Exhibit A to
the Purchase Agreement (each a “Seller” and, collectively, the “Sellers”), and
the Management Rights Purchase Agreement, dated July 27, 2005 (the “Management
Rights Purchase Agreement”) among SARC, the Manager and Parthenon Management
Partners, LLC, a California limited liability company (the “Company”), Andrew
A. Brooks, M.D. and Randhir S. Tuli (each an “Owner” and, collectively, the “Owners”)
and certain other agreements, instruments and documents related to the Purchase
Agreement and the Management Rights Purchase Agreement. This opinion is being
delivered to you at the request of the SARC pursuant to Section 7.9 of the
Management Rights Purchase Agreement. Capitalized terms used herein and not
otherwise defined herein shall have the same meanings herein as defined in the
Purchase Agreement.


 


In rendering the opinions set forth herein, we have examined and relied
on originals or copies, certified or otherwise identified to our satisfaction,
of the following:


 


(a)                                  the Purchase Agreement;


 

















 


(b)                                 the Management
Rights Purchase Agreement;


 


(c)                                  the Consulting Agreement by and among the
Manager, the Company and the Owners;


 


(d)                                 Escrow Agreement by and among Bank of
America, N.A. (the “Escrow Agent”), the Manager, the Company and the Owners;


 


(e)                                  a certified copy of the Charter of SARC, as filed with the Tennessee
Secretary of State on August 9, 1995, as amended, and a certified copy of
the current Bylaws of SARC (collectively, the “SARC Governing Documents”);


 


(f)                                    a certified copy of the Charter of the Manager, as filed with the
Tennessee Secretary of State on April 15, 1998, as amended, and a
certified copy of the current Bylaws of the Manager (collectively, the “Manager
Governing Documents”);


 


(g)                                 a certified copy of the Articles of
Organization of Symbion Support, as filed with the Tennessee Secretary of State
on July 20, 2005 and a certified copy of the current Operating Agreement
of Symbion Support (collectively, the “Symbion Support Governing Documents”);


 


(h)                                 a certified copy of the Articles of Organization of each of the
Purchasers, as filed with the Tennessee Secretary of State on July 20,
2005, as amended, and a certified copy of the current Operating Agreement of
each of the Purchasers (collectively, the “Purchasers Governing Documents”,
together with the SARC Governing Documents, the Symbion Support Governing
Documents and the Manager Governing Documents the “Governing Documents”);


 


(i)                                     a certified copy of certain resolutions
of the Board of Directors of each of SARC and the Manager adopted on July 27,
2005;


 


(j)                                     a certified copy of certain resolutions
of the respective sole member of Symbion Support and each of the Purchasers
adopted on July 27, 2005;


 


(k)                                  a Certificate of Existence from the
Tennessee Secretary of State, dated July 25, 2005 attesting to the “good
standing” of the Manager and Symbion Support in such jurisdiction;


 


(l)                                     a Certificate of Existence from the
Tennessee Secretary of State, dated July 28, 2005 attesting to the “good
standing” of the SARC in such jurisdiction;


 


(m)                               a Certificate of Existence from the
Tennessee Secretary of State, dated July 27, 2005 attesting to the “good
standing” of each of the Purchasers in such jurisdiction;


 


2

















 


(n)                                 a Certificate of Status from the
California Secretary of State, dated July 26, 2005 attesting to the “good
standing” as a foreign corporation of the Manager in such jurisdiction; and


 


(o)                                 a Certificate of Good Standing from the
California Secretary of State, dated July 27, 2005 attesting to the “good
standing” as a foreign limited liability company of each the Purchasers and
Symbion Support in such jurisdiction.


 


In addition, we have examined such other documents, agreements, and
certificates as we have deemed necessary or appropriate as a basis for the
opinion set forth below.


 


The documents described in clauses (a) through (d) above are
collectively referred to as the “Transaction Documents.”  References in opinion this to (i) “Applicable
Laws” shall mean those laws, rules and regulations of the State of Tennessee and of the United
States of America which, in our experience, are normally applicable to
transactions of the type contemplated by the Agreement without considering the
participation by SARC, the Manager, Symbion Support or any of the Purchasers
(collectively, the “Opinion Parties”) in any regulated industry; (ii) the
term “Governmental Authorities” means any Tennessee or federal executive, legislative, judicial,
administrative or regulatory body having jurisdiction over the Opinion Parties
without considering the participation by the Opinion Parties in any regulated
industry; (iii) the term “Governmental Approval” means any consent,
approval, license, authorization or validation of, or filing, recording or registration
with, any Governmental Authority without considering the participation by the
Opinion Parties in any regulated industry; and (iv) the term “Applicable
Orders” means those orders or decrees of Governmental Authorities which have
been specifically disclosed to us in writing by the Opinion Parties in Exhibit 1
hereto.


 


Assumptions


 


In our examination we have assumed the genuineness of all signatures
(other than those on behalf of the Opinion Parties), the legal capacity of
natural persons, the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents submitted to
us as certified or photostatic copies, and the authenticity of the originals of
such copies.  As to any facts material to
this opinion which we did not independently establish or verify, we have relied
upon statements and representations of the Opinion Parties and each of their
officers and other representatives and of public officials, and have assumed
that such matters remain true and correct through the date hereof.


 


We have further assumed, that:


 


(i)                                     The execution, delivery and performance
by each of the Opinion Parties of the Transaction Documents to which each is a
party does not and will not conflict with, contravene, violate or constitute a
default under (i) any lease, indenture, instrument or other agreement to 


 


3

















 


which each of the
Opinion Parties or its property is subject, (ii) any rule, law or
regulation to which each of the Opinion Parties is subject (other than
Applicable Laws as to which we express our opinion in paragraph 7 herein) or (iii) any
judicial or administrative order or decree of any governmental authority (other
than Applicable Orders as to which we express our opinion in paragraph 7
herein).


 


(ii)                                  No authorization, consent or other
approval of, notice to or filing with any court, governmental authority or
regulatory body (other than Governmental Approvals as to which we express our
opinion in paragraph 7 herein) is required to authorize or is required in
connection with the execution, delivery or performance by each of the Opinion
Parties of any Transaction Documents to which it is a party or the transactions
contemplated thereby.


 


(iii)                               There is no action, suit or proceeding
pending or threatened against or affecting the Opinion Parties before any
court, governmental department, or other authority (other than Applicable
Orders as to which we express our opinion in paragraph 7 herein) which purports
to affect the legality, validity or enforceability of any Transaction Document
or the transactions contemplated thereby.


 


(iv)                              Each Transaction Document is the legal,
valid, and binding obligation of each party thereto other than the Opinion
Parties, enforceable against such other parties in accordance with its terms.


 


Members of this Firm preparing this Opinion are
admitted to practice in the State of Tennessee. 
We express no opinion as to the laws of any jurisdiction other than (i) the
laws of the State of Tennessee and (ii) the federal laws of the United
States of America to the extent specifically referred to herein.  We
call to your attention that all of the Transaction Documents specify that they
are to be governed by the laws of the State of California. In rendering the
opinions set forth herein, we have assumed, with your permission, that
Tennessee law governs the Transaction Documents notwithstanding contractual
choice of law clauses or conflicts of law principles to the contrary.  We call to your attention that the foregoing
assumption does not bind any court and is made solely to facilitate the
rendering of this opinion.  We further
call to your attention that we have made no investigation regarding the
differences, if any, between California law and Tennessee law, and we expressly
disclaim responsibility to do so.


 


Based upon the foregoing and subject to the limitations,
qualifications, exceptions, and assumptions set forth herein, we are of the
opinion that:


 


(1)                                  Each of SARC and the Manager is a
corporation existing and in good standing under the laws of the State of Tennessee.  The Manager is qualified to do business and
is in good standing as a foreign corporation under the laws of the State of
California.


 


4

















 


(2)                                  Each of Symbion Support and the
Purchasers is a limited liability company existing in good standing under the
laws of the State of Tennessee.  Each of
Symbion Support and the Purchasers is qualified to do business and is in good
standing as a foreign limited liability company under the laws of the State of
California.


 


(3)                                  Each of SARC and the Manager has the
corporate power and authority to execute, deliver and perform all of its
obligations under each of the Transaction Documents to which it is a party.  Each of Symbion Support and the Purchasers has
the limited liability company power and authority to execute, deliver and
perform all of its obligations under each of the Transaction Documents to which
it is a party.


 


(4)                                  The execution and delivery of each of the
Transaction Documents to which each of SARC and the Manager is a party, and the
performance of all of its obligations under each such Transaction Document have
been authorized by all requisite corporate action on the part of SARC and the
Manager.


 


(5)                                  The execution and delivery of each of the
Transaction Documents to which each of Symbion Support and the Purchasers is a
party, and the performance of all of its obligations under each such
Transaction Document have been authorized by all requisite limited liability
company action on the party of each of Symbion Support and the Purchasers.


 


(6)                                  The Transaction Documents to which each
of the Opinion Parties is a party have each been executed and delivered by each
of the Opinion Parties.


 


(7)                                  The execution, delivery, and performance
by each of the Opinion Parties of each of the Transaction Documents to which it
is a party do not (i) conflict with each such party’s Governing Documents,
(ii) contravene any provision of any Applicable Law, (iii) require
any Governmental Approval, which has not been obtained or taken and is not in
full force and effect, except as set forth in the Purchase Agreement, or (iv) contravene
any applicable provision of any Applicable Order.


 


(8)                                  Each Transaction Document to which each
of the Opinion Parties is a party constitutes the valid and binding obligation
of such party, enforceable against such party in accordance with its terms.


 


5

















 


Qualifications


 


The
opinions expressed above are subject to the following qualifications:


 


(i)                                     Enforcement may be limited by applicable
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium or
similar laws affecting creditors’ rights generally.


 


(ii)                                  Enforcement may be limited by general
principles of equity (regardless of whether enforcement is sought in equity or
at law).


 


(iii)                               We express no opinion as to: (a) the
enforceability of the indemnification provisions in the Transaction Documents
or (b) the enforceability of any rights to liquidated damages, penalties,
punitive damages, indemnification, or contribution insofar as such rights
purport to limit or affect a claim based on tort or duty imposed by law.


 


(iv)                              We express no opinion as to provisions
that specify the law of a particular jurisdiction as governing law.


 


(v)                                 We express no opinion with respect to the
enforceability of (a) a requirement that provisions of the Transaction
Documents may only be waived in writing, (b) provisions stating that the
failure to exercise or delay in exercising rights or remedies will not operate
as a waiver of such right or remedy, (c) rights to attorneys’ fees to the
extent limited by applicable laws that provide that any recovery of attorneys’
fees is limited to reasonable attorneys’ fees, (d) provisions by which any
of the Opinion Parties waives the right to become a debtor under the U.S.
Bankruptcy Code or other bankruptcy law, (e) provisions stating that the
provisions of the Transaction Documents are severable, and (f) provisions
regarding confession of judgment which violate public policy.


 


(vi)                              We express no opinion as to the effect of
compliance or non-compliance of any party (other than the Opinion Parties) to
any of the transactions contemplated by any of the Transaction Documents with
any laws or regulations applicable because of the legal or regulatory status or
the nature of the business of any party (other than the Opinion Parties) to
such transactions.


 


(vii)                           We express no opinion regarding
provisions of the Transaction Documents that purport to confer jurisdiction
upon any court or which lay venue in a specific court or courts.


 


(viii)                        We express no opinion regarding the
enforceability of any covenants regarding confidentiality contained or
referenced in the Transaction Documents.


 


6

















 


This opinion is given as of the date hereof, and we disclaim any
obligation to update this opinion letter after the date hereof.  This opinion is rendered only to the
addressee and is solely for its benefit in connection with the above
transactions.  This opinion may not be
relied upon by the addressee for any other purpose, or quoted to or relied upon
by any other person, firm, corporation, or other entity for any purpose without
our prior written consent.


 


Very truly yours,


 


7
















 


Exhibit A


 


Parthenon
Management, LLC


Andrew A. Brooks,
M.D.


Randhir S. Tuli


 

















 


Exhibit 1


 


Applicable Orders


 


None


 

















 


SCHEDULE
1


 


Affiliate
of Purchaser


 


SymbionARC
Management, Inc.


 

















 


SCHEDULE
2.1


 


Consents


 


None.


 

















 


SCHEDULE
2.4(A)


 


UCC
Searches


 


See Attached.


 

















 


	
  [CHARLES
  BACLET

  	
   

  	
   

  
	
  AND

  	
   

  	
   

  
	
  ASSOCIATES,
  INC.]

  	
   

  	
  CBA is an affiliate of
  National Registered Agents, Inc.

  



 


Search Report


 


	
   

  	
  REPORT
  DATE:

  	
   

  	
  June 17,
  2005

  
	
   

  	
  JOB
  NUMBER:

  	
   

  	
  54295

  
	
   

  	
  CLIENT REF. #:

  	
   

  	
  BROOKS / TULI

  



 


	
  SUBJECT
  NAME:

  	
   

  	
  PARTHENON
  MANAGEMENT PARTNERS, LLC

  
	
   

  	
   

  	
   

  
	
  JURISDICTION:

  	
   

  	
  SECRETARY OF STATE, CALIFORNIA

  



 


	
  SEARCH:

  	
   

  	
  Through:

  	
   

  	
  Findings:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  U.C.C.
  Filings

  	
   

  	
  06/13/05

  	
   

  	
  NO
  RECORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Federal
  Tax Liens

  	
   

  	
  06/13/05

  	
   

  	
  NO
  RECORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  State
  Tax Liens

  	
   

  	
  06/13/05

  	
   

  	
  NO
  RECORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Abstracts of Judgment Liens

  	
   

  	
  06/13/05

  	
   

  	
  NO RECORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Other:

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


NOTE: SIMILAR NAMES FOUND, PLEASE SEE ATTACHED LISTING FOR DETAILS.


 


PLEASE NOTE:  “CBA”
has made every possible effort to acquire accurate information from the records
searched.  We guarantee the information
to be as accurate as REASONABLE CARE
can make it.  Therefore, the ultimate
responsibility for the accuracy of maintaining files remains with the State
agency from which the information was obtained and we accept NO LIABILITY beyond the exercise of REASONABLE
CARE in obtaining the above information.


 


2030 Main Street, Suite 1030  ·  Irvine, California 92614   Phone : (949) 955-9585   (800) 562-6439   Fax (800) 562-650


Internet Address:  cba@cbaclet.com


 

















 


Search Date:        Jun. 17, 2005


 


CHARLES BACLET AND ASSOCIATES,
INC.


 


California Similar Name Addendum Report


 


Truncated search name:  PARTHENON        Effective Index Date:  Jun 13, 2005


 


Contains all debtor names not included on the final results report.


 


	
  Filing #

  	
   

  	
  Debtor Name

  	
   

  	
  Debtor Address

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  199719560617

  	
   

  	
  THE PARTHENON

  	
   

  	
  7357 E ALONDRA
  BLVD; PARAMOUNT

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  200030962638

  	
   

  	
  PARTHENON
  ENTERPRISES INC. DBA BEAUTY FIRST

  	
   

  	
  10990 FOOTHILL
  BLVD STE 120; RANCHO CUCAMONGA

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  199913160386

  	
   

  	
  PARTHENON
  ENTERTAINMENT

  	
   

  	
  2201 N.
  HOLLYWOOD WY; BURBANK

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  200032760519

  	
   

  	
  THE PARTHENON
  GROUP LLC

  	
   

  	
  200 STTE ST;
  BOSTON

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  200032760523

  	
   

  	
  THE PARTHENON
  GROUP LLC

  	
   

  	
  200 STATE ST;
  BOSTON

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  199428660193

  	
   

  	
  PARTHENON
  RESTAURANT

  	
   

  	
  7357 ALONDRA
  BLVD; PARAMOUNT

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  199605860308

  	
   

  	
  PARTHENON
  RESTAURANT

  	
   

  	
  7357 ALONDRA
  BLVD; PARAMOUNT

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1992197633

  	
   

  	
  PARTHENON
  RESTAURANT

  	
   

  	
  7357 E ALONDRA
  BLVD; PARAMOUNT

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1993138590

  	
   

  	
  PARTHENON
  RESTAURANT

  	
   

  	
  7357 ALONDRA
  BLVD; PARAMOUNT

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1994157769

  	
   

  	
  PARTHENON
  RESTAURANT

  	
   

  	
  7357 ALONDRA
  BLVD; PARAMOUNT

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  200319660058

  	
   

  	
  PARTHENON
  SOFTWARE, INC.

  	
   

  	
  13259 KIBBINGS
  RD; SAN DIEGO

  



 

















 


	
  [CHARLES
  BACLET

  	
   

  	
   

  
	
  AND

  	
   

  	
   

  
	
  ASSOCIATES,
  INC.]

  	
   

  	
  CBA is an affiliate of
  National Registered Agents, Inc.

  



 


Search Report


 


	
   

  	
  REPORT
  DATE:

  	
   

  	
  June 17,
  2005

  
	
   

  	
  JOB
  NUMBER:

  	
   

  	
  54295

  
	
   

  	
  CLIENT REF. #:

  	
   

  	
  BROOKS / TULI

  



 


	
  SUBJECT
  NAME:

  	
   

  	
  TULI, RANDHIR S.

  
	
   

  	
   

  	
   

  
	
  JURISDICTION:

  	
   

  	
  SECRETARY OF
  STATE, CALIFORNIA

  



 


	
  SEARCH:

  	
   

  	
  Through:

  	
   

  	
  Findings:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  U.C.C.
  Filings

  	
   

  	
  06/13/05

  	
   

  	
  NO
  RECORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Federal
  Tax Liens

  	
   

  	
  06/13/05

  	
   

  	
  NO
  RECORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  State
  Tax Liens

  	
   

  	
  06/13/05

  	
   

  	
  NO
  RECORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Abstracts of Judgment Liens

  	
   

  	
  06/13/05

  	
   

  	
  NO RECORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Other:

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


PLEASE NOTE:  “CBA”
has made every possible effort to acquire accurate information from the records
searched.  We guarantee the information
to be as accurate as REASONABLE CARE
can make it.  Therefore, the ultimate
responsibility for the accuracy of maintaining files remains with the State
agency from which the information was obtained and we accept NO LIABILITY beyond the exercise of REASONABLE
CARE in obtaining the above information.


 


2030 Main Street, Suite 1030  ·  Irvine, California 92614   Phone :
(949) 955-9585   (800) 562-6439   Fax
(800) 562-650


Internet Address:  cba@cbaclet.com


 

















 


	
  [CHARLES
  BACLET

  	
   

  	
   

  
	
  AND

  	
   

  	
   

  
	
  ASSOCIATES,
  INC.]

  	
   

  	
  CBA is an affiliate of
  National Registered Agents, Inc.

  



 


Search Report


 


	
   

  	
  REPORT
  DATE:

  	
   

  	
  June 17,
  2005

  
	
   

  	
  JOB
  NUMBER:

  	
   

  	
  54295

  
	
   

  	
  CLIENT REF. #:

  	
   

  	
  BROOKS / TULI

  



 


	
  SUBJECT
  NAME:

  	
   

  	
  BROOKS, ANDREW
  A. M.D.

  
	
   

  	
   

  	
   

  
	
  JURISDICTION:

  	
   

  	
  SECRETARY OF STATE, CALIFORNIA

  



 


	
  SEARCH:

  	
   

  	
  Through:

  	
   

  	
  Findings:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  U.C.C.
  Filings

  	
   

  	
  06/13/05

  	
   

  	
  NO RECORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Federal
  Tax Liens

  	
   

  	
  06/13/05

  	
   

  	
  NO
  RECORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  State
  Tax Liens

  	
   

  	
  06/13/05

  	
   

  	
  NO
  RECORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Abstracts of Judgment Liens

  	
   

  	
  06/13/05

  	
   

  	
  NO RECORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Other:

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


PLEASE NOTE:  “CBA”
has made every possible effort to acquire accurate information from the records
searched.  We guarantee the information
to be as accurate as REASONABLE CARE
can make it.  Therefore, the ultimate
responsibility for the accuracy of maintaining files remains with the State
agency from which the information was obtained and we accept NO LIABILITY beyond the exercise of REASONABLE
CARE in obtaining the above information.


 


2030 Main Street, Suite 1030  ·  Irvine, California 92614   Phone :
(949) 955-9585   (800) 562-6439   Fax
(800) 562-650


Internet Address:  cba@cbaclet.com


 

















 


	
  [CHARLES
  BACLET

  	
   

  	
   

  
	
  AND

  	
   

  	
   

  
	
  ASSOCIATES,
  INC.]

  	
   

  	
  CBA is an affiliate of
  National Registered Agents, Inc.

  



 


Search Report


 


	
   

  	
  REPORT
  DATE:

  	
   

  	
  June 24,
  2005

  
	
   

  	
  JOB
  NUMBER:

  	
   

  	
  54295

  
	
   

  	
  CLIENT REF. #:

  	
   

  	
  BROOKS / TULI

  



 


	
  SUBJECT
  NAME:

  	
   

  	
  PARTHENON
  MANAGEMENT PARTNERS, LLC

  
	
   

  	
   

  	
   

  
	
  JURISDICTION:

  	
   

  	
  LOS ANGELES COUNTY RECORDER, CALIFORNIA

  



 


	
  SEARCH:

  	
   

  	
  Through:

  	
   

  	
  Findings:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  U.C.C.
  Filings

  	
   

  	
  06/17/2005

  	
   

  	
  NO
  RECORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Federal
  Tax Liens

  	
   

  	
  06/17/2005

  	
   

  	
  NO
  RECORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  State
  Tax Liens

  	
   

  	
  06/17/2005

  	
   

  	
  NO
  RECORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Abstracts of Judgment Liens

  	
   

  	
  06/17/2005

  	
   

  	
  NO RECORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Other:

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


PLEASE NOTE:  “CBA”
has made every possible effort to acquire accurate information from the records
searched.  We guarantee the information
to be as accurate as REASONABLE CARE
can make it.  Therefore, the ultimate
responsibility for the accuracy of maintaining files remains with the State
agency from which the information was obtained and we accept NO LIABILITY beyond the exercise of REASONABLE
CARE in obtaining the above information.


 


2030 Main Street, Suite 1030  ·  Irvine, California 92614   Phone :
(949) 955-9585   (800) 562-6439   Fax
(800) 562-650


Internet Address:  cba@cbaclet.com


 

















 


	
  [CHARLES
  BACLET

  	
   

  	
   

  
	
  AND

  	
   

  	
   

  
	
  ASSOCIATES,
  INC.]

  	
   

  	
  CBA is an affiliate of
  National Registered Agents, Inc.

  



 


Search Report


 


	
   

  	
  REPORT
  DATE:

  	
   

  	
  June 24,
  2005

  
	
   

  	
  JOB
  NUMBER:

  	
   

  	
  54295

  
	
   

  	
  CLIENT REF. #:

  	
   

  	
  BROOKS / TULI

  



 


	
  SUBJECT
  NAME:

  	
   

  	
  TULI, RANDHIR S.

  
	
   

  	
   

  	
   

  
	
  JURISDICTION:

  	
   

  	
  LOS ANGELES COUNTY RECORDER, CALIFORNIA

  



 


	
  SEARCH:

  	
   

  	
  Through:

  	
   

  	
  Findings:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  U.C.C.
  Filings

  	
   

  	
  06/17/2005

  	
   

  	
  NO
  RECORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Federal
  Tax Liens

  	
   

  	
  06/17/2005

  	
   

  	
  NO
  RECORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  State
  Tax Liens

  	
   

  	
  06/17/2005

  	
   

  	
  NO
  RECORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Abstracts of Judgment Liens

  	
   

  	
  06/17/2005

  	
   

  	
  NO RECORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Other:

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


PLEASE NOTE:  “CBA”
has made every possible effort to acquire accurate information from the records
searched.  We guarantee the information
to be as accurate as REASONABLE CARE
can make it.  Therefore, the ultimate
responsibility for the accuracy of maintaining files remains with the State
agency from which the information was obtained and we accept NO LIABILITY beyond the exercise of REASONABLE
CARE in obtaining the above information.


 


2030 Main Street, Suite 1030  ·  Irvine, California 92614   Phone :
(949) 955-9585   (800) 562-6439   Fax
(800) 562-650


Internet Address:  cba@cbaclet.com


 

















 


	
  [CHARLES
  BACLET

  	
   

  	
   

  
	
  AND

  	
   

  	
   

  
	
  ASSOCIATES,
  INC.]

  	
   

  	
  CBA is an affiliate of
  National Registered Agents, Inc.

  



 


Search Report


 


	
   

  	
  REPORT
  DATE:

  	
   

  	
  June 24,
  2005

  
	
   

  	
  JOB
  NUMBER:

  	
   

  	
  54295

  
	
   

  	
  CLIENT REF. #:

  	
   

  	
  BROOKS / TULI

  



 


	
  SUBJECT
  NAME:

  	
   

  	
  BROOKS, ANDREW
  A.  M.D.

  
	
   

  	
   

  	
   

  
	
  JURISDICTION:

  	
   

  	
  LOS ANGELES COUNTY RECORDER, CALIFORNIA

  



 


	
  SEARCH:

  	
   

  	
  Through:

  	
   

  	
  Findings:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  U.C.C.
  Filings

  	
   

  	
  06/17/2005

  	
   

  	
  NO
  RECORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Federal
  Tax Liens

  	
   

  	
  06/17/2005

  	
   

  	
  NO
  RECORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  State
  Tax Liens

  	
   

  	
  06/17/2005

  	
   

  	
  NO
  RECORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Abstracts of Judgment Liens

  	
   

  	
  06/17/2005

  	
   

  	
  NO RECORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Other:

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


NOTE: THERE WERE NO RECORDS FOUND REFLECTING THE GIVEN NAME AND
ADDRESS.***


 


PLEASE NOTE:  “CBA”
has made every possible effort to acquire accurate information from the records
searched.  We guarantee the information
to be as accurate as REASONABLE CARE
can make it.  Therefore, the ultimate
responsibility for the accuracy of maintaining files remains with the State
agency from which the information was obtained and we accept NO LIABILITY beyond the exercise of REASONABLE
CARE in obtaining the above information.


 


2030 Main Street, Suite 1030  ·  Irvine, California 92614   Phone :
(949) 955-9585   (800) 562-6439   Fax
(800) 562-650


Internet Address:  cba@cbaclet.com


 

















 


SCHEDULE
2.8


 


Permits


 


Business licenses in each local jurisdiction in which Parthenon
operates.  Copies of such business
licenses are attached hereto.


 

















 


	
  

  	
   

  	
   

  	
  CITY OF BEVERLY HILLS

  	
   

  	
   

  	
   

  
	
  455 N. Rexford Dr.

  	
   

  	
  FINANCE ADMINISTRATION

  	
   

  	
   

  	
  C

  
	
  Beverly Hills, CA
  90210-4817

  	
   

  	
  BUSINESS TAX REGISTRATION

  	
   

  	
  Calendar Year:

  	
  2005

  
	
  310.285.2427

  	
   

  	
  PROFESSIONAL /
  SEMI-PROFESSIONAL

  	
   

  	
  Tax
  No:

  	
  New

  



 


	
  Business
  Address

  	
   

  	
  Business
  Information

  
	
   

  	
   

  	
   

  
	
  Parthenon
  Management Partners, LLC

  	
   

  	
  Starting Date:

  	
  6/29/05

  
	
  Business Name

  	
   

  	
  Class:

  	
  8999

  
	
  8670 Wilshire Blvd.

  	
  # 301

  	
   

  	
  Type:

  	
  Medical / Consulting

  
	
  Street Address

  	
  Suite

  	
   

  	
  Owner / Partners:

  	
  Randhir S. Tuli

  
	
  Beverly Hills

  	
  CA

  	
  90212

  	
   

  	
   

  	
  Andrew A. Brooks

  
	
  City

  	
  State

  	
  Zip

  	
   

  	
  Telephone:

  	
  310-360-3824

  
	
   

  	
   

  	
  Fax:

  	
  310-388-1552

  
	
  Mailing
  Address

  	
   

  	
  Proprietorship: (SS#)

  	
   

  
	
   

  	
   

  	
  Partnership: (FIN)

  	
   

  
	
  Parthenon Management Partners, LLC

  	
   

  	
  Corporation: (FIN)

  	
   

  
	
  Business Name

  	
   

  	
  Email Address:

  	
   

  
	
  8670 Wilshire Blvd.

  	
  # 301

  	
   

  	
  Web Site:

  	
   

  
	
  Street Address

  	
   

  	
   

  	
   

  
	
  Beverly Hills

  	
  CA

  	
  90212

  	
   

  	
   

  	
   

  
	
  City

  	
  State

  	
  Zip

  	
   

  	
   

  	
   

  
							



 


Please make account changes on reverse side


 


TAX
CALCULATION


 


	
  1.

  	
  This registration is for the period
  from:  06/29/05 to 12/31/05

  	
   

  	
   

  	
   

  
	
  2.

  	
  Tax basis: number of people
  employed previous year

  	
   

  	
  2.

  	
  1.60

  
	
  3.

  	
  Base — 1st 2080 hrs. at $1,095.41

  	
   

  	
  3.

  	
  1,095.41

  
	
  4.

  	
  Each additional hr. Pro /
  Semi at $0.52664

  	
   

  	
  4.

  	
  0.00

  
	
  5.

  	
  Each additional hr.
  Non-Prof. at $0.10580

  	
   

  	
  5.

  	
  110.03

  
	
  6.

  	
  Penalty Charge  0%

  	
   

  	
  6.

  	
  0.00

  
	
  7.

  	
  Previous Balance

  	
   

  	
  7.

  	
  0.00

  
	
  8.

  	
  Interest Charges (all)

  	
   

  	
  8.

  	
  0.00

  
	
  9.

  	
  Credit or Debit (other)

  	
   

  	
  9.

  	
  0.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Total

  	
   

  	
  1,205.44

  
	
   

  	
  Payment Date         /       /       

  	
  Payment(s)

  	
   

  	
  0.00

  
	
  Please
  make check payable to:  City of Beverly
  Hills

  	
  Balance Due

  	
   

  	
  1,205.44

  



 


MESSAGE


 


ACCORDING TO SECTION 3-1.201 OF THE
MUNICIPAL CODE, EVERY BUSINESS MUST REGISTER WITH THE CITY AND PAY ALL BUSINESS
TAXES PRIOR TO THE FIRST DAY OF OPERATION. PAYMENTS WILL BE CONSIDERED
DELINQUENT AND A PENALTY WILL BE ASSESSED IF NOT RECEIVED WITHIN 30 DAYS OF THE
FIRST DAY OF OPERATION. PENALTIES ACCRUE AT A RATE OF 10% PER MONTH, TO A
MAXIMUM OF 50%, INTEREST AT 1.5% / MO.


 


I acknowledge that my receipt of a tax
certificate merely confirms that I have completed and filed the required tax
registration form with the Beverly Hills Department of Finance Administration
and paid the required taxes and other lawful charges.  I understand and agree that any tax certificate
which may be issued to me by the Beverly Hills Department of Finance
Administration does not authorize me to engage in any activity or to maintain
any condition in the City of Beverly Hills which violates any municipal laws,
including without limitation, building and zoning codes.  I fully understand that I am subject to all
enforcement remedies for a violation of any municipal code section
notwithstanding the issuance of a valid tax certificate to me.


 


	
  07/01/05

  	
   

  	
  /s/ Gaurav Singh

  	
   

  	
  Gaurav Singh

  	
   

  	
  Controller

  
	
  DATE

  	
   

  	
  AUTHORIZED SIGNATURE

  	
   

  	
  PRINT NAME

  	
   

  	
  TITLE

  



 


SIGN AND RETURN THIS COPY
WITH PAYMENT  REGISTRATION MUST BE FULLY
COMPLETED PRIOR TO ISSUANCE OF CERTIFICATE


 

















 


CITY OF BEVERLY HILLS


 


	
  RECVD BY: CS

  	
   

  	
  CS100423101

  	
   

  
	
  PAYOR: VM

  	
   

  	
   

  	
   

  
	
  TODAY’S DATE:
  07/01/05

  	
   

  	
   

  	
   

  
	
  REGISTER DATE:
  07/01/05

  	
   

  	
  TIME: 13:37

  	
   

  



 


	
  DESCRIPTION

  	
   

  	
  AMOUNT

  	
   

  
	
  BUSINESS TAX

  	
   

  	
  $

  	
  1,205.44

  	
   

  
	
  CUST ID:
  00008317

  	
   

  	
   

  	
   

  
	
  TOTAL DUE:

  	
   

  	
  $

  	
  1,205.44

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  CHECK PAID:

  	
   

  	
  $

  	
  1,205.44

  	
   

  
	
  CHECK NO: 1105

  	
   

  	
   

  	
   

  
	
  TENDERED:

  	
   

  	
  $

  	
  1,205.44

  	
   

  
	
  CHANGE:

  	
   

  	
  $

  	
  .00

  	
   

  



 

















 


SCHEDULE
3.2


 


Consents


 


None.